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Archive for October, 2012

In this modern era where we’re all supposed to share our innermost thoughts, I’ve openly discussed my fantasies.

I confessed to the world, for instance, that I have a fantasy that involves about one-half of the adults in America. And I’ve also admitted to a fantasy involving Gov. Rick Perry of Texas.

Now I’m fantasizing about something new, and it’s all the fault of the Cato Institute. In a violation of the Constitution’s prohibition against cruel and unusual punishment, I have to watch tonight’s presidential debate in order to add my two cents to Cato’s live-blogging of the clash between Obama and Romney.

That got me thinking about some of my least-favorite episodes from past debates, and this moment from 1992 is high on my list (I had to watch that debate because my then-wife worked for the Bush Administration and I had to offer some insincere moral support).

The clip is a bit over three minutes, but it will only take a minute or so to see why this was such an unpleasant segment.

Here’s my latest fantasy. If there’s a similar question tonight, I hope either Romney or Obama gives the following response:

I’m not your daddy and you’re not my child. I’m running to be the President of the United States in order to oversee the legitimate executive branch responsibilities of the federal government. And I hope to reduce the burden of government to give you opportunities, not to take care of your needs. You’re an able-bodied adult. Take responsibility for your own life and provide for your own needs.

But I don’t expect my fantasy to get fulfilled. If a question like this is asked, both Obama and Romney almost surely will express sympathy and support.

The good news is that there have been a few politicians in American’s history who have been willing to say the right thing. Here’s a quote from Barry Goldwater that warms my heart.

I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them. …I will not attempt to discover whether legislation is “needed” before I have first determined whether it is constitutionally permissible. And if I should later be attacked for neglecting my constituents’ “interests,” I shall reply that I was informed that their main interest is liberty and that in that cause I am doing the very best I can.

The bad news is that he got his you-know-what kicked in the 1964 election.

On the other hand, America did elect a President who said during his inauguration that “government is not the solution to our problem, government is the problem.”

And a 2011 poll showed that Americans – unlike their European counterparts – do not believe it is government’s job to guarantee that “nobody is in need.”

In other words, Julia, the fictional moocher woman created by the Obama campaign, is not representative of America. At least not yet.

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I talked a couple of days ago to Neil Cavuto about whether the Obama Administration is slightly modifying its class-warfare tax policy.

As you can see, I’m not overly fixated on the parsing of Biden’s comments since I’m against higher tax rates for anyone.

And my takeaway message from the segment is that we need some discussion on the need to reduce the burden of government spending.

But the purpose of this post isn’t to share my appearance on the Fox Business Network. While I like to think that I offer coherent analysis and occasionally can be persuasive, I’m the first to admit that this second video is far more compelling. It features an old guy who escaped from Hungary after World War II and is now worried about creeping statism in the United States.

He does have a political message at the end, but ignore those final few seconds (after all, GOPers can be just as bad as Democrats).

I especially like his point about how class-warfare policy hurts the poor. Very similar to what Margaret Thatcher says in this powerful video.

Please share this post so more people are exposed to his message.

P.S. Since everyone is making fun of Biden, I may as well hop on the bandwagon. Here’s a joke about our feckless Vice President, and you can see a photoshop contest about “Lunchbucket Joe” by clicking here and here.

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Paul Krugman assured us back in 2009 that, “In Britain, the government itself runs the hospitals and employs the doctors. We’ve all heard scare stories about how that works in practice; these stories are false.”

If that’s the case, then the British press is filled with liars who deliberately make up horror stories about their nation’s healthcare system, as you can see here, here, herehereherehereherehereherehere, here and here.

We now have another nightmare to add to this list. Here are some of the horrific details from the UK-based Daily Mail.

An elderly woman died alone after doctors failed to tell relatives they were ending her life on the controversial Liverpool Care Pathway. Olive Goom, 85, passed away with no one by her side after medics neglected to consult with her family about her treatment at Chelsea and Westminster Hospital. …As Miss Goom lay dying alone, staff reassured relatives on the phone just hours before her death that there was no urgent need to visit – even though doctors had already removed tubes providing vital food and fluids. Her family discovered that she had died only when her niece went to visit her and found she was already being prepared for the mortuary. They said last night that they will never be able to stop feeling guilty that no one was there in her final hours. The Mail has been contacted by several families who claim that relatives were put on the Liverpool Care Pathway – the controversial system designed to ease the suffering of the dying in their final hours – without any consultation. Some said they found out that their relatives were on the pathway only after they happened to read their medical notes; and by that time it was too late.

Keep in mind, by the way, that the Liverpool Care Pathway is sort of akin to the IPAB “death panel” in Obamacare.

Defenders of government-run healthcare say that’s nonsense and assert that there won’t be any rationing, denial of care, or requirements for euthanasia. That’s technically true, but the Obamacare death panel will be determining what’s an acceptable treatment and what’s the government-approved payment schedule.

Crushed by Obamacare?

So it’s sort of like holding a rock in your hand, standing over a kitten, letting go of the rock, watching it hit the kitten, but then claiming that you did nothing wrong because gravity caused the rock to fall.

Okay, that’s a morbid example, but you get the point. And my concern isn’t that rationing only exists with a government-run system. Any healthcare system will involve rationing. The real issue is whether individuals are part of a free society so they can make the choice of how to ration.

(h/t: Ben Domenech)

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Sometimes it’s no fun to be an economist. Or, to be more specific, it’s rather frustrating to understand Bastiat’s insight about the “seen” and the “unseen” and to always be asking “at what cost?” and “to what effect?” when politicians make inane statements.

The GM bailout is a good example. Politicians want us to believe that it was a success because the company is still in business. Heck, the Vice President’s favorite campaign statement is that “Osama bin Laden is dead and General Motors is alive

But if you’re the type of person who recognizes the importance of tradeoffs and incentives, then it’s easy to see how a political success can be an economic failure. Which is the message of this new video from the Center for Freedom and Prosperity Foundation.

This is music to my ears. I’ve been saying for years that any company can be kept afloat indefinitely with taxpayers subsidies. So if that’s the definition of success, we can party until we hit the fiscal brick wall. But that wall won’t feel good, as we can see from the fiscal chaos in Greece and other European welfare states.

But this issue involves more than just inefficient subsidies. I’m also concerned about the corruption that inevitably exists when cronyism replaces capitalism.

It’s quite likely, after all, that GM is spending lots of money on the Chevy Volt because of pressure from Washington rather than demand from consumers. And when you have a car company executive endorsing higher gas taxes, it’s reasonable to think that he’s currying favor with the political masters in DC rather than looking out for the best interests of drivers.

The GM bailout may be a win-win situation for politicians and lobbyists, but it’s a lose-lose proposition for taxpayers and the economy.

P.S. If you want some auto bailout humor, here’s a spoof on the Chevy Volt, an advertisement for the new GM Obummer, a couple of good political cartoons, and a very funny video on the Pelosi GTxi SS/RT.

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Actually, the title is an exaggeration. I think this Chuck Asay cartoon best captures the Obama political game plan, but I did enjoy this pair of Glen McCoy cartoons (and, given Obama’s weak track record on the economy, I do think there is a lot of truth to the notion that the White House would rather the election be determined by social issues).

The above cartoon reminds me of some of the amusing material that was put together when Sandra Fluke was getting her 15 minutes of fame for demanding subsidized birth control. You can enjoy some of that humor by clicking here, here, and here.

Here’s the second McCoy cartoon.

For what it’s worth, I don’t think it’s a role of government to sanction any kind of marriage (or to persecute people based on their beliefs), so I definitely think this issue is a distraction.

P.S. As far as I can remember, I’ve only shared on other McCoy cartoon, which can be seen here.

P.P.S. Here’s another Asay cartoon about the election, though note my important caveats.

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I’ve previously shared an amazing chart that shows how more government spending on public schools has yielded zero positive results.

Well, it seems that government spending on colleges and universities also leaves a lot to be desired.

Three academics investigated the relationship between higher-education spending and economic performance and it turns out that this perverse form of redistribution from poor to rich is counterproductive. Here’s the key sentence from the abstract.

Results from a series of fixed-effects regressions using a 1992-2002 panel of state-level data indicate that increased spending on higher education generally exhibits a relatively large negative effect on private sector employment or gross state product growth when the increase in education spending is financed through own-source revenue.

Yet Obama and most of the other politicians in Washington want to increase the subsidies for colleges and universities – even though the macroeconomic effects are dismal.

But I guess that doesn’t matter since politicians seem more concerned about creating more comfortable lives for unproductive professors and bloated school bureaucracies.

By the way, let’s not forget that students also suffer. As the federal government has squandered more money on higher education, colleges and universities have responded by jacking up tuition and fees, leaving more and more students deeply in debt.

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That’s a clunky title for this post, but I couldn’t think of any other way of expressing the potential political impact of a very muddled employment situation.

Let’s start with the obvious. The White House is very happy about the recent numbers showing that the unemployment rate has dropped to 7.8 percent. And since I predicted a long time ago that Obama would win reelection if the joblessness rate dropped under 8 percent, I can understand their relief.

But in this CNN interview, I point out that we still have a big problem with labor force participation and I explain that Obama is way behind Reagan in terms of job creation (as shown in this remarkable info-graphic).

I also make the point that the unemployment rate is far higher than Obama promised when we enacted the so-called stimulus.

But most importantly, I cite the Minneapolis Fed to show that Obama has the worst performance – whether looking at GDP growth or job creation – of any post-World War II president.

P.S. Apologies for being underdressed. I was in Virginia Beach for a softball tournament and didn’t expect to be in front of a camera (and I wasn’t full of smiles since my one-a-year achievement didn’t occur until the following day).

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I’ve previously shared the famous parable that uses beer drinking to explain the tax system and here’s a funny video of a comedian talking about taxes and Halloween.

I also found this bit of tax humor from England, though it’s really more about redistribution than taxes, and I think this cartoon about class-warfare taxation and the economy hits the nail on the head.

But in all my years of blogging, I’ve never found a worthwhile cartoon on the death tax.

So I was very pleased when a professor of tax law gave a presentation in the Cayman Islands earlier this week and showed this clever cartoon about the death tax. He was kind enough to share it with me so I could share it with you.

If you want a serious but concise explanation of why the death tax is very bad policy, check out my column from USA Today. And here’s some very depressing data on how the death tax undermines American competitiveness.

P.S. One final serious point about the death tax. If you have a nest egg for your kids, it’s better to die in Australia than New Jersey.

P.P.S. There are a lot of jokes targeting the IRS, which isn’t really the same as tax policy humor. But many of them are worth sharing, including a new Obama 1040 form, a list of tax day tips from David Letterman, a cartoon of how GPS would work if operated by the IRS, an IRS-designed pencil sharpener, two Obamacare/IRS cartoons (here and here), a sale on 1040-form toilet paper (a real product), a song about the tax agency, the IRS’s version of the quadratic formula, and (my favorite) a joke about a Rabbi and an IRS agent.

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I’ve explained on many occasions that Franklin Roosevelt’s New Deal was bad news for the economy. And the same can be said of Herbert Hoover’s policies, since he also expanded the burden of federal spending, raised tax rates, and increased government intervention.

So when I was specifically asked to take part in a symposium on Barack Obama, Franklin Roosevelt, and the New Deal, I quickly said yes.

I was asked to respond to this question: “Was that an FDR-Sized Stimulus?” Here’s some of what I wrote.

President Obama probably wants to be another FDR, and his policies share an ideological kinship with those that were imposed during the New Deal. But there’s really no comparing the 1930s and today. And that’s a good thing. As explained by Walter Williams and Thomas Sowell, President Roosevelt’s policies are increasingly understood to have had a negative impact on the American economy. …what should have been a routine or even serious recession became the Great Depression.

In other words, my assessment is that Obama is a Mini-Me version of FDR, which is a lot better (or, to be more accurate, less worse) than the real thing.

To be sure, Obama wants higher tax rates, and he has expanded government control over the economy. And the main achievement of his first year was the so-called stimulus, which was based on the same Keynesian theory that a nation can become richer by switching money from one pocket to another. …Obama did get his health plan through Congress, but its costs, fortunately, pale in comparison to Social Security and its $30 trillion long-run deficit. And the Dodd-Frank bailout bill is peanuts compared to all the intervention of Roosevelt’s New Deal. In other words, Obama’s policies have nudged the nation in the wrong direction and slowed economic growth. FDR, by contrast, dramatically expanded the burden of government and managed to keep us in a depression for a decade. So thank goodness Barack Obama is no Franklin Roosevelt.

The last sentence of the excerpt is a perfect summary of my remarks. I think Obama’s policies have been bad for the economy, but he has done far less damage than FDR because his policy mistakes have been much smaller.

“Hey, don’t sell me short. Just wait to see how much havoc I can wreak if reelected!”

Moreover, Obama has never proposed anything as crazy as FDR’s “Economic Bill of Rights.” As I pointed out in my article, this “would have created a massive entitlement state—putting America on a path to becoming a failed European welfare state a couple of decades before European governments made the same mistake.”

On the other hand, subsequent presidents did create that massive entitlement state and Obama added another straw to the camel’s back with Obamacare.

And he is rigidly opposed to the entitlement reforms that would save America from becoming another Greece.

So maybe I didn’t give him enough credit for being as bad as FDR.

P.S. Here’s some 1930s economic humor, and it still applies today. And I also found this cartoon online.

And here’s a good Mini-Me image involving Jimmy Carter. I wasn’t able to find one of Obama and FDR.

If anybody has the skill to create such an image, please send it my way.

P.P.S. The symposium also features an excellent contribution from Professor Lee Ohanian of UCLA.

And from the left, it’s interesting to see that Dean Baker of the Center for Economic and Policy Research basically agrees with me.

But only in the sense that he also says Obama is a junior-sized version of FDR. Dean actually thinks Obama should have embraced his inner-FDR and wasted even more money on an even bigger so-called stimulus.

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This election season has seen lots of talk (and demagoguery) about whether investors, entrepreneurs, and small business owners should be hit with class-warfare tax policy.

And there’s also been lots of sturm and drang about the best way of averting bankruptcy for Medicare, which is the federal government’s health care program for the elderly.

But there’s been surprisingly little discussion so far about the issue of Medicaid, which is the federal government’s health program for poor people.

I’m not prone to optimism, but I can’t help but wonder if this is because even statists grudgingly accept that the program needs to be reformed.

If so, the right approach is block-granting the program back to the states. Here’s some of what Paul Howard and Russell Sykes had to say about the issue in the Wall Street Journal.

Medicaid, America’s safety-net program for more than 62 million low-income uninsured Americans, is broken. It’s broken at the state level, where program costs are swamping state budgets. It’s broken for federal taxpayers, as Medicaid waste, fraud and abuse drain tens of billions of dollars from federal coffers every year. …The best hope for Medicaid reforms that can improve care for low-income enrollees, reduce fraud, and put the program on a sustainable trajectory is to cap federal spending to the states by using block grants. Block grants would offer states a predictable source of federal funding in return for broad state flexibility in Medicaid administration, benefits and copays.

Howard and Sykes explain that the federalism approach already has been tried with welfare reform, which was very successful.

We know that well-designed block grants can work and attract bipartisan support. The best example is the successful 1996 Temporary Assistance for Needy Families program for welfare reform, which helped move millions of women and children out of poverty and into the workforce. Critics of Medicaid block grants argue that they would leave insufficient funds to cover new state expenses, creating a “race to the bottom” as states slashed funding on services for the poor. But such objections were also raised about block-granting welfare, and they turned out to be wrong.

They also reveal some very useful and interesting information about a test program in Rhode Island that shows the benefits of shifting health care decisions to the state level.

In 2009, Rhode Island accepted a five-year cap on combined state and federal Medicaid spending as part of a waiver from the federal government. ..To date, Rhode Island projects that by various new measures—focusing on community-based care that keeps seniors out of expensive nursing homes, for instance, and medical supervision that can keep children and adults out of emergency rooms—the state has saved $100 million. The flexibility to plan care has also helped reduce its projected Medicaid spending rate to 3% from 8% annually.

It’s worth noting, by the way, that Rhode Island is a very left-leaning state. Indeed, one of the reasons why I’m semi-optimistic about Medicaid reform is that governors and state legislatures – regardless of partisan affiliation – know that the current Medicaid system is unsustainable.

For more information, here’s my video explaining why block grants and federalism are the right way of dealing with Medicaid.

Since I’m not used to being optimistic, let me also give you a nightmare scenario for how this issue could evolve. My greatest fear is that a future president (perhaps Romney!) will decide to impose a value-added tax. In normal circumstances, that might upset state politicians since it would complicate their efforts to impose sales taxes.

But if a future President promised to have the federal government take over 100 percent of Medicaid financing, I suspect state politicians would jump at the trade.

So we would get the worst of all worlds. A giant new tax and more centralization.

P.S. Here’s the full three-part video series on entitlement reform.

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Since part of my job is to persuade skeptics to support a free society, I’m always trying to figure out how best to convince people to favor liberty over statism.

I start with the premise that most statists are misguided rather than evil and I try to understand how they see the world. If I know what makes them tick, after all, then perhaps I can explain to them how freedom is preferable to big government.

In my efforts to win people’s hearts and minds, I run into the same obstacles over and over again.

  • Many people equate Republicans with limited government, so you have to explain that there’s a giant difference between the views of the Cato Institute and the decisions of statists like Richard Nixon or George W. Bush.
  • Some folks think capitalism and cronyism are the same thing. I try to show them that there is no role for corrupt favoritism in a genuine free market, which is why it is doubly counterproductive when Republicans support policies and programs such as TARP, the Export-Import Bank, agriculture subsidies, and Fannie Mae/Freddie Mac handouts.
  • Lots of people mistakenly believe the economy is a fixed pie, so they think if someone such as  Steve Jobs becomes wealthy, then other people necessarily have less money.

I have ways of dealing with all these myths. I don’t pretend to be successful in all or even most cases, but I think I’ve helped lead some people out of the darkness.

One of the other challenges I face is that some people believe in equality of outcomes. It’s hard to reason with these folks. I try to explain to them that this system requires massive redistribution, which cripples incentives for productive behavior by both rich and poor.

I cite the famous Churchill quote about “equal sharing of the misery.” And I ask them to show me evidence of one nation – anywhere in the world or at any point in history – that has ever succeeded with this approach.

But the folks with this ideological outlook seem impervious to logical argument or moral reasoning. Indeed, they sometimes go to absurd lengths. Here are some Orwellian details from a Swedish news service.

Annika Eriksson, a lunch lady at a school in Falun, was told that her cooking is just too good. Pupils at the school have become accustomed to feasting on newly baked bread and an assortment of 15 vegetables at lunchtime, but now the good times are over. The municipality has ordered Eriksson to bring it down a notch since other schools do not receive the same calibre of food – and that is “unfair”. …”A menu has been developed… It is about making a collective effort on quality, to improve school meals overall and to try and ensure everyone does the same,” Katarina Lindberg, head of the unit responsible for the school diet scheme, told the local Falukuriren newspaper. …From now on, the school’s vegetable buffet will be halved in size and Eriksson’s handmade loafs will be replaced with store-bought bread. Her traditional Easter and Christmas smörgåsbords may also be under threat.

I’m almost at a loss for words. What sort of sickness is required to deny something to one group of kids just because the same benefit is not universally available?

Equality of outcomes is catnip to the left, but it doesn’t apply to the ruling class

I’ve written some nice things about Sweden in recent years, noting that the government has sought to minimize the damage of the welfare state with free market reforms in other areas.

Sweden has a good school choice program, for instance, and the country has reformed its pension system so that it has personal retirement accounts and is more fiscally stable.

But this story shows that Sweden still has a long way to go.

P.S. Using Elizabeth “High Cheekbones” Warren as a philosophical punching bag, here’s another example of redistribution and equality of outcomes run amok. But at least this is satire and not reality.

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President Obama supports higher taxes, but he usually claims he only wants higher tax rates on evil rich people as part of his class-warfare agenda. Heck, he promised back in 2008 that, “no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

I guess we’re supposed to forget the higher tax burdens that were imposed on the middle class by Obamacare in 2010 and the SCHIP legislation in 2009.

Obama’s other rhetorical trick is to claim he wants a “balanced approach.” Translated from Washington-speak to English, that means he wants more of our money. But it’s a soothing way to demand more money. After all, who’s against “balance”?

I actually agree with Obama – but only if one uses honest math. Needless to say, Obama wants to use Washington math, where spending increases get redefined as spending cuts if the burden of government spending doesn’t rise as fast as was projected in some artificial baseline.

This is why the budget deals put together by politicians almost always are awful. In order to protect the goodies they hand out to various special interests, the politicians use fake numbers to pretend they’re restraining spending, but when the dust settles, it turns out that the only real result is that taxpayers are forking over more of their hard-earned cash to the clowns in Washington.

Actually, that statement is incomplete. We need to remember that taxpayers in other nations also get screwed by the political elite. Take a look at this stunning chart that was shown at yesterday’s Cato Institute conference on “Europe’s Crisis and the Welfare State.” Put together by Veronique de Rugy of the Mercatus Center, it shows that politicians across the Atlantic have imposed nine euro of higher taxes for every one euro of spending cuts.

And keep in mind, as Veronique noted in her comments, that many of these so-called spending cuts were merely reductions in planned increases!

This matters because I’m getting increasingly worried that gullible Republicans will get seduced into some sort of budget summit designed to trick them into supporting the Simpson-Bowles tax-hike package.

As I’ve previously explained, this would be a terrible idea. It means a big tax hike with, particularly an increase in the double taxation of income that is saved and invested. It also relies on gimmicks rather than real entitlement reform.

I don’t like higher taxes, but I wouldn’t be completely upset if at least we got some permanent reforms to control the growth of government. But that’s definitely not the case with Simpson-Bowles. And, as Veronique showed, it’s not the case in Europe either.

P.S. It’s rather ironic that the New York Times inadvertently revealed that the only budget deal that worked was the one in 1997 that cut taxes rather than raising taxes.

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Ever since Clint Eastwood’s speech at the GOP convention, I’ve received lots of emails showing empty chairs.

Very few of them are clever enough to earn a chuckle, but here are two that stand out.

This first one made me think of Obama winning a Nobel Prize, even though he hadn’t actually done anything other than not being Bush (though he then proceeded to copy almost all of Bush’s policies).

So, in keeping with the “nothingness” theme, why not also put him on Mt. Rushmore? Only carve an empty chair into the rock to symbolize the same lack of achievement.

The second one exploits the theme of Obama’s excessive deference to foreign leaders (sort of like the funny Burger King image in this post).

I confess that there’s no policy content to these jokes, so I feel a bit chagrined for simply taking some cheap shots.

But I have done it before, as you can see here, here, and here.

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I periodically mock the crazy statists of California. The state is almost surely doomed to suffer a Greek-style fiscal chaos. The only unknown is whether Illinois will beat the Golden State into default.

Governor Jerry Brown’s new “taxpayer restraint” fence?

The politicians in Sacramento impose very high taxes to fund a bloated bureaucracy that oversees a bunch of politically correct nonsense.

But the scam may be coming to an end. Margaret Thatcher famously warned that the problem with socialism is that sooner or later you run out of other people’s money.

Well, that’s happening sooner in California because more and more people are deciding to leave the state.

Yet the moochers and looters than run the state aren’t learning the right lesson. They think that successful people are a pinata that can be endlessly beaten in the search for more revenue.

But there will come a point when they realize that the geese with the golden eggs are flying away. What will they do when reality slaps them in the face?

In a just and good world, they will realize they screwed up and reverse the horrible policies that crippled California. They will reduce the burden of government spending and replace the state’s class-warfare tax system with a simple and fair flat tax.

Unfortunately, we don’t live in that world. I’m worried that politicians in Sacramento will read the latest column by Walter Williams and not realize he’s being satirical. Walter starts out with a good description of what’s happening in the state.

California was once the land of opportunity, but it is going down the tubes. …people are already leaving California in great numbers. …roughly 225,000 residents leave California each year — and have done so for the past 10 years. They take their money with them. …California’s out-migration results in large shares of income going to other states, mostly to Nevada ($5.67 billion), Arizona ($4.96 billion), Texas ($4.07 billion) and Oregon ($3.85 billion). That’s the problem. California politicians can fleece people in 2012, but there’s no guarantee that they can do the same in 2013 and later years; people can leave.

He then speculates, tongue in cheek, about what sort of totalitarian measures a state government might take to prevent taxpayers from escaping.

…there might be a way for California politicians to solve their fiscal mess. They can simply stop wealthy people from leaving the state or, alternatively, like some Third World nations, set limits on the amount of assets a resident can take out of the state. …California [could] set up border controls to stop people, as East Germans did at Checkpoint Charlie, before they cross the state line… What California Attorney General Kamala D. Harris might do is sue Nevada, Arizona, Texas and Oregon in the federal courts for enticing, through lower taxes and less onerous regulations, wealthy California taxpayers.

Walter is joking, of course, but keep in mind that the federal government already has ventured into this territory with Orwellian laws such as “FATCA” that create a global reach for bad American tax policy.

And does anyone think the kleptocrats that run California will do the right thing so long as they have any hope that some new expansion of government power will prop up the welfare state for a few more years?

I’m predicting that California will continue its relative decline, particularly when compared to zero-income-tax states like Texas, followed by a nightmare scenario as the special interests groups and their political lackeys look for some way of prolonging the scam.

P.S. Here’s some anti-California humor, including a cartoon that’s very relevant for the upcoming tax-hike referendum, an amusing joke feature Texas and a coyote, a Humpty Dumpty cartoon, a photo that shows the California bureaucracy in action, and a cartoon featuring archaeologists from the future.

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I’ve narrated a video on why Keynesian economics is bad theory, I’ve also narrated a video specifically debunking Obama’s failed stimulus, and I’ve put together a post with data from the Minneapolis Fed showing how Reaganomics worked far better than Obamanomics.

But this video from the Center for Freedom and Prosperity Foundation does all that – and more – in only about six minutes.

By the way, for those who like gory details, a previous video in the CF&P Foundation’s Economics 101 series looked at how the so-called stimulus was a rat’s nest of waste and corruption.

Not that anybody should be surprised. Big government facilitates corruption in the same way that a dumpster attracts rats and cockroaches.

My concern is long-term trends. Politicians should be complying with Mitchell’s Golden Rule, which means reducing government spending as a share of GDP (to put it in terms that make economists feel warm and fuzzy, gov’t exp/GDP should be decreasing).

What irks me about Obama is that he wants to increase the burden of government spending, which means the numerator in the equation is going in the wrong direction. And he wants class-warfare tax policy and more red tape, which makes it even harder for the denominator to move in the right direction.

And if that ratio continues to deteriorate, as both the BIS and OECD are predicting, then it’s just a matter of time before the United States becomes Greece.

P.S. Welcome Instapundit readers. This Chuck Asay cartoon and this Michael Ramirez cartoon use humor to say the same thing as the video.

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One of my favorite Cato publications is the Fiscal Policy Report Card on America’s Governors, which is produced by my colleague Chris Edwards.

The report card uses variables such as the burden of government spending and the degree of class warfare tax policy to determine which states are moving in the right direction and which ones are moving in the wrong direction.

The new version was released today and it shows that Sam Brownback of Kansas and Rick Scott of Florida are the best governors in the nation.

Here are the top 8.

The top Democrat, for those who care about party affiliation, is John Lynch of New Hampshire.

What about the worst governors? Well, that field is more crowded, but somebody has to be the worst of the worst, and that honor goes to Pat Quinn of Illinois, who seems determined to have his state beat California in the race to Greek-style default and fiscal chaos.

No Republican was in the bottom 8, but Bill Haslam of Tennessee was in the bottom 10, and Gary Herbert of Utah and Jan Brewer of Arizona also had dismal D grades.

As Chris explains in his report, legislatures play a role in how well (or poorly) a state does in the report card – much as Bill Clinton’s reasonably good performance presumably was impacted by the GOP Congress. But Chris also looks at policies proposed by governors, so that enables a more accurate measure of each governor’s fiscal philosophy.

The Fiscal Policy Report Card is a great resource document, enabling apples-to-apples comparisons among states, just as the Economic Freedom of the World makes it easy to compare nations.

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Every so often, I come across some statement by President Obama that is either jaw-droppingly misguided or unintentionally revealing, and I place it in my is-this-the-worst-thing-he-ever-said file.

His “spread the wealth” comment to Joe the Plumber is the most famous example, but that was before I started this blog. Previous entries on my list include.

But our Secretary of State also likes saying odd things.

Now we have another Hillary Clinton quote, as reported by the Guardian.

There are rich people everywhere, and yet they do not contribute to their growth of their own countries.

Wow, that’s remarkable. She’s actually claiming that rich people somehow get a lot of money without boosting growth, even though they obviously provided some value and benefit in order get people to voluntarily pay money for whatever it is that made the person wealthy.

But that’s not the most offensive part of her statement. What really stuns me is the assertion that growth will be enhanced if these successful people give a greater share of their money to a corrupt and venal political class.

For all intents and purposes, she is asserting that government in these nations is too small, even though the evidence from western nations shows that small governments were very conducive to growth. Moreover, we’re supposed to believe that high tax rates won’t discourage productive economic behavior.

Which leads me to ask a simple question: Can anybody show me a poor nation that became a rich nation while imposing high tax rates and having a bloated public sector?

P.S. Even though Mrs. Clinton wasn’t making any distinction, allow me to stipulate that there are some rich people who got money dishonestly. I addressed this issue in a post last year and I suspect that some politicians think rich people are sleazy crooks because the rich people they hang out with are sleazy crooks.

P.P.S. Click here to get the answer to the question about nations that became rich with high tax rates and big government.

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Regular readers know that Washington is a very sleazy city. Just as rats and cockroaches are attracted to a dumpster, con artists and fraudsters are attracted to big government.

A bloated budget means many opportunities to get unearned wealth by being politically well connected. A loophole-ridden, 72,000-page tax code creates a sandbox for lobbyists. And special interest groups view Washington’s massive regulatory apparatus the way pigs view a mudbath.

You won’t be surprised to learn that politicians figure out how to get a cut of the action. Here are a few of the sordid details from a report in the Washington Post.

73 members of Congress…have sponsored or co-sponsored legislation in recent years that could benefit businesses or industries in which either they or their family members are involved or invested, according to a Washington Post analysis. The findings emerge from an examination by The Post of financial disclosure forms and public records for all 535 members of the House and Senate. The practice is both legal and permitted under the ethics rules that Congress has written for itself, which allow lawmakers to take actions that benefit themselves or their families except when they are the lone beneficiaries.

To be fair, the actions identified by the Washington Post are not necessarily immoral. A politician who supports a lower capital gains tax rate, for instance, presumably will benefit directly because of less double taxation on his investments and indirectly because of more prosperity.

I don’t view that as wrong. Indeed, the lawmakers use this kind of excuse to justify their behavior.

The legislators, in interviews and through spokesmen, said they saw no conflicts between their legislative actions and holdings. They added that they have a duty to advocate for their constituents, even when those interests align with their own.

But just because they use that excuse, that doesn’t mean their behavior is appropriate. There’s a simple way to determine what’s wrong, immoral, and corrupt.

If politicians take steps that enable everyone – including themselves – to keep more of their own money (or to earn additional money), that’s fine.

If they do something that enables anybody – including themselves – to take money or value from other people, that’s wrong.

Here’s my video explaining the connection between big government and corruption.

The moral of the story shouldn’t be that difficult to understand. Don’t take things that don’t belong to you, which is one of the rules of libertarianism that we hopefully learn in kindergarten (to see the rest of the rules, see the David Boaz quote in this post about Obama’s socialism-for-kids proposal).

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As part of my comments and analysis about the Obama-Romney debate, I shared a couple of Big Bird jokes.

But as you can well imagine, Leno, Letterman, and the rest found lots of good material.

Let’s review their debate jokes, as well as the other good one-liners they had in the past few weeks.

Jay Leno

  • The consensus is that Mitt Romney won the presidential debate last night. The only people who thought Obama won were the replacement refs.
  • They’re saying close to 60 million people may have watched the debate. In fact, the only person who didn’t tune in was President Obama.
  • President Obama talked last night about finding other sources of energy for the future. Other sources? He couldn’t muster up enough energy for the 90-minute debate!
  • To make matters worse, last night was President Obama’s wedding anniversary. Let me tell you something. The only way his anniversary could’ve been worse is if he’d forgotten it.
  • At a campaign rally in Charlotte, Vice President Joe Biden said, “The middle class has been buried the past four years. Buried.” Which candidate is he campaigning for? I’m confused.
  • Al Gore is going to be covering the debate for his network, Current TV. Al Gore on Current TV, talking about Mitt Romney. That is like the perfect storm of boring.
  • The minute the replacement refs were fired, President Obama said, “See, sometimes losing a job can be a good thing.”
  • A new survey shows how much time we waste every day. For example, we waste seven minutes in line waiting for coffee, 28 minutes getting through airport security, and four years waiting for President Obama to do something about the economy.
  • President Obama is so confident that he’s thinking about letting Joe Biden start speaking again.
  • Congratulations to Mitt Romney and President Obama. They both won Emmys for their performance on “60 Minutes” last night. Obama won for acting as if everything has gotten better over the last four years, and Romney won for pretending to care about that other 47 percent.
  • The president’s re-election campaign slogan is “Forward,” which is also his policy on paying for stuff.
  • A woman in Tampa, Florida, who is in danger of being foreclosed on, put a giant sign on her roof reading, “Obama, please save my home.” To which Obama said, “Hey lady, I’m trying not to get thrown out of my own house, OK?”

David Letterman

  • Here’s another blow to the Romney campaign. Earlier today, that empty chair endorsed Obama.
  • It’s fall in New York City and today Mayor Bloomberg banned 16-ounce cups of chowder.

Conan

  • At one point last night, President Obama said the one thing about being president is learning to say no. Especially when someone asks, “Do you feel ready for this debate?”
  • Mitt Romney went after PBS last night. It’s about time someone went after those guys. It’s about time someone took some starch out of their collars.
  • During last night’s debate, Mitt Romney said he would cut funds to PBS even though he loves Big Bird. And he said he’s definitely against whatever Bert and Ernie are up to.
  • Today was not only the first presidential debate, it was also President Obama’s 20th wedding anniversary. I think the president got a little confused. At one point, he told Michelle that she was out of touch with the middle class and Romney that he looks as beautiful as the day they first met.
  • The presidential debate is on Wednesday. Mitt Romney has been preparing for the debate by debating a Republican senator who plays the part of President Obama. Meanwhile, President Obama has been preparing for Romney by debating an ATM machine.
  • Pig farmers are predicting a global bacon shortage. However, they say the shortage can be averted if Chris Christie converts to Islam.
  • It’s rumored that in a recent Univision interview, Mitt Romney wore makeup to appeal to Latino voters. I can’t wait to see Romney’s appearance on BET.
  • At a recent concert, Madonna told the audience she would strip naked if President Obama is re-elected. In a related story, President Obama is now trailing in the polls by 97 percent.

Jimmy Kimmel

  • Most analysts think Mitt Romney won the debate last night. Which means President Obama lost two fights on his anniversary last night.
  • The only thing that could have salvaged the president’s performance would have been if the body of bin Laden fell from the ceiling onto the stage.
  • Tonight also happens to be Obama’s 20th wedding anniversary. That seems very convenient. “Honey, I’d love to go to the ballet with you, but I’m debating Mitt Romney that night.”
  • You have to figure Snooki will vote for Obama. She might be the only person in America who is better off now than she was four years ago.

Jimmy Fallon

  • Last night was the first presidential debate at the University of Denver. Of course, a lot of big names didn’t show up for the event — Joe Biden, Nancy Pelosi, President Obama.
  • Tonight was the first presidential debate between Barack Obama and Mitt Romney. Not only that, it was also Obama’s 20th wedding anniversary. It was a little weird during the debate when Obama promised to balance the budget, lower taxes, and be home by 10:00 for cuddle time.
  • While campaigning yesterday in Colorado, Mitt Romney made a stop at the fast-food restaurant Chipotle. The guy behind the counter was like, “Burrito?” And Romney was like, “Hey there, Burrito. My name is Mitt Romney. Pleasure to meet you.”
  • With the first presidential debate less than a week away, both the Obama camp and Romney camp are being careful not to overhype their candidates. They’re asking voters to lower their expectations and not get too excited. Or as voters put it, “Way ahead of you. Don’t worry about that.”
  • Security workers at JFK Airport are complaining that they don’t have enough time to do their jobs thoroughly. Last time I flew, the TSA guy said, “Uh, just grope yourself.”
  • A new poll found that Mitt Romney is behind in Florida by 1 percent. Which is weird because if there’s one group that loves Romney, it’s definitely the 1 percent.

Craig Ferguson

  • Michelle Obama won Family Circle’s bake-off with her chocolate chip cookies. Hasn’t she spent the last four years leading a crusade against sugary treats? She’s contradicting her own position. Maybe she should be the one running for office.
  • The president of Iran is in New York today. President Mahmoud Ahmadinejad is visiting the U.N. He’s been in America one day and he’s already surged past Mitt Romney in the polls.

Thanks to News-Max.com for compiling these. If you want to see more of my favorites, click herehereherehereherehere,hereherehereherehereherehere, and here.

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Last March, I shared a narcissistic post to self-congratulate myself on knocking a home run over the fence at a tournament in Richmond.

This almost never happens now that I’ve become a decrepit old guy, so I decided to share the news.

Well, 560 days later, it happened again. Earlier today, at our final tournament of the year, I managed to line one over the left field fence.

Here’s the satellite view of City View Park in Virginia Beach, VA, with an approximate illustration of what may be the last over-the-fence home run of my lengthy softball career.

Some day, I expect there will be a historical marker to commemorate this important event.

But there is also some bad news to share.

  • My home run put us up by seven runs going into the other team’s final at-bat, yet we managed to lose.
  • My beloved Georgia Bulldogs got spanked last night by the South Carolina Gamecocks.
  • At our seeding games on Friday, I hit a triple in the last inning when we were down by two runs. Why is that bad news? Well, our third base coach thought it would be a good idea to wave me home – even though we had zero outs and I almost certainly would have scored the tying run if I stopped at third. As you probably already have guessed, I got thrown out at the plate. But we did manage to rally for two more runs and win that game, so I guess all’s well that ends well.

In any event, these unfortunate happenings pale into insignificance. Thanks to the home run, I can enjoy Walter Mitty-type fantasies for the next few months.

P.S. I’m also taking off in a couple of hours for a few days in the Cayman Islands, so life isn’t all that bad. Maybe I’ll be able to scout out a nice place that I can escape to when America descends into Greek-style fiscal chaos. I’ll just have to re-remind the local politicians not to wreck a great place by imposing an income tax.

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Some people are grumbling that the First Lady has taken the joy out of school lunches. She’s identified with the “Healthy, Hunger-Free Kids Act of 2010,” which uses federal funding to coerce schools into providing meals with fewer calories.

Here’s a radical idea for the First Lady. Parents should be responsible for their own kids.

But I think this criticism misses the point. The problem is not overweight kids, as one side argues, or politically correct micro-managing, as the other side claims.

Instead, we should be asking the fundamental question about whether subsidizing school lunches is an appropriate function of the federal government.

I’ve previously argued that the federal government should get out of the business of income redistribution and means-tested programs. In part, this is because the Constitution does not authorize any federal involvement in this area.

But I also think the evidence is very clear that the welfare state is undermining progress in reducing poverty, often by trapping people in lives of dependency.

And it also sometimes brings out the worst in people, as you can see in this horrifying story about a welfare couple in Florida and this sad story about a girl in Connecticut (though England has equally reprehensible examples, as you can see here, here, and here).

Getting back to the main topic of this post, here are some passages from a report in the New York Times.

Outside Pittsburgh, they are proclaiming a strike, taking to Twitter and Facebook to spread the word. In a village near Milwaukee, hundreds staged a boycott. In a small farming and ranching community in western Kansas, they have produced a parody video. And in Parsippany, N.J., the protest is six days old and counting. They are high school students, and their complaint is about lunch — healthier, smaller and more expensive than ever. The Healthy, Hunger-Free Kids Act of 2010, which required public schools to follow new nutritional guidelines this academic year to receive extra federal lunch aid, has created a nationwide version of the age-old parental challenge: persuading children to eat what is good for them.

No big surprise here. Kids want junk food. I’m actually on Michelle Obama’s side on the general issue of wanting kids to eat better and exercise more.

Where we part company is that I think bureaucrats and politicians in Washington are ill-suited to do anything right, and they’re especially unlikely to succeed in a task that has more to do with parents than government.

Here are some details about the meddling from DC.

According to the new restrictions, high school lunches must be no more than 850 calories, middle school lunches no more than 700 calories and elementary school lunches no more than 650. Before, there were no maximums. At the same time, prices have gone up about 10 cents in many districts for students who do not qualify for free lunch, both to pay for fresh fruits and vegetables and to obey a federal requirement that lunch prices gradually increase to help cover their cost. …In New York City, where school officials introduced whole-wheat breads, low-fat milk and other changes several years ago, the most noticeable change this year is the fruit and vegetable requirement, which has resulted in some waste, according to Eric Goldstein, the Education Department official who oversees food services. It is not hard to see why. At Middle School 104 in Gramercy Park on Friday, several seventh graders pronounced vegetables “gross.”

Again, I don’t sympathize with the kids who prefer junk food.

But the federal government’s clumsy efforts to intervene generate nonsense like this.

Few school districts have been as extreme in their efforts as Los Angeles, which introduced a menu of quinoa salads, lentil cutlets, vegetable curry, pad Thai and other vegetarian fare last fall. When students began rejecting the lunches en masse, the district replaced some of the more exotic dishes with more child-friendly foods, like pizza with whole-wheat crust, low-fat cheese and low-sodium sauce. But this year, even the whole-wheat pizza is gone, replaced by calzones, fajitas and other, smaller entrees with side dishes of fruits and vegetables. Nicole Anthony, the cafeteria manager at one Los Angeles school, Nimitz Middle School in Huntington Park, estimated that out of the 1,800 students, almost all of whom qualify for a free or reduced-price lunch, only 1,200, “on a good day,” now eat the cafeteria’s offerings.

At the risk of being politically incorrect, allow me to stress my earlier point that parents should be responsible for raising their kids in general, and feeding them in particular.

P.S. I can’t resist sharing this post about the “Battle of the Bums.”

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On the big issue of who wins the presidential election, I’ve been as constant as the north star.

But for state-by-state estimates, I’ve been flipping back and forth like a corrupt politician (pardon my redundancy) trying to decide between two interest groups.

This month, I’m reversing everything from last month. I give Florida back to Romney, largely on the basis of his performance in the debate. Moreover, I was thinking of giving Virginia and Colorado back to Obama, thus changing what I did in July and August, but decided to leave those states in the GOP camp because of what happened on the stage in Denver.

But I decided I was wrong about Iowa and Wisconsin. The polls from those two states are simply too unfriendly and I’m guessing the Obama turnout operation will be stronger.

However, I’ve decided to shift New Hampshire to Romney, again because of the debate, so the net effect is a very close election. But Obama still prevails.

For what it’s worth, the folks at Real Clear Politics show Obama winning 303 electoral votes. The difference in our projections is that they give Nevada, Colorado, Virginia, and New Hampshire to Obama.

Are they right? Well, their estimates are based on polling data, so you have to ask yourself if the polls are accurate and/or if the polls today reflect what will happen on November 6.

Intrade says Obama is a 2-1 favorite, so the people putting money on the table certainly think the election isn’t that close. Then again, Intrade had Obama as a 3-1 favorite before the debate, so that number also can move a lot.

P.S. I realize Romney supporters probably aren’t very happy with my prediction. To compensate for being the bearer of bad news, you can see some viciously funny anti-Obama jokes here, here, and here.

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When I first saw this polling data, I thought we had some great news. After all, it shows that Americans – by a margin of more than 4-to-1 – want to reduce the burden of government spending.

This comports with data from previous polls, including the recent survey showing nearly three-fourths of Americans don’t think Obama’s spending helped the economy, the 2011 poll showing Americans overwhelmingly view big government as the greatest threat to the nation, the strong support for spending cuts in a survey earlier that year, and the 2010 poll revealing that Americans saw excessive spending as the real fiscal challenge facing the country, not deficits.

But then I noticed that Americans in this new survey are to the left of both the French and the Italians. That’s embarrassing. Sort of like losing a foot race to 500-lb elderly lady with one leg.

This isn’t the first time that Americans have lagged some of their European counterparts.  Back in 2010, I reported on a survey showing people in the U.S. were to the left of both the Germans and the French.

How shameful. Now the old lady is blind as well, but still beating us.

But let’s conclude by looking at the glass as being half full. At least the American people are to the right of Obama. His most recent budget proposed to increase the federal budget by $2 trillion over the next 10 years.

Only 14 percent of the population is crazy enough to think that’s a good idea.

P.S. The United Kingdom is the only country where more people want to increase spending rather than cut spending. Not a good sign for that nation’s future. Seems I was quite prescient back in August.

P.P.S. As you can see from this post, if we simply freeze spending (i.e., keep the current level of spending), the budget is balanced in about six years.

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Geesh, this has been a tough week for the President.

First he has a difficult debate.

Then his loose cannon of a Vice President brags that the White House wants a trillion-dollar tax hike.

Now he’s getting abused in viral emails.

Here are the two funniest images that have landed in my inbox in the past couple of days.

The first one exploits the teleprompter theme that was in this Super Bowl joke, this cartoon, and these two funny videos.

And this one mocks his penchant for bowing before foreign leaders.

But the person who put this together deserves the cleverness award.

Who knew that Big Bird would bite the hand that feeds him? Just goes to show that people (or, um…, birds) aren’t happy when they lack self sufficiency. Maybe there’s a lesson here?

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Since the greatest threat to America’s future is a growing burden of government spending, I watched last night’s debate with hopes of seeing some evidence that either candidate understood that challenge and was determined to put Washington on a diet.

Needless to say, I didn’t have much hope for Obama, who has spent the past four years recycling Bush’s mistakes.

And I wasn’t too optimistic about Romney, either, though he’s tentatively open to entitlement reform.

Romney, however, did provide my favorite moment in the debate. He unambiguously said it’s time to wean PBS from the public teat.

I’ve already written about the need to defund state radio and state TV, so this was music to my ears.

But, as you can see from the attached image, I wonder whether Romney inadvertently put himself at risk.

We’ve already seen from the riots in nations such as Greece and England that people who get lured into government dependency have a tendency to lash out when faced with even minor cutbacks in their subsidies.

Well, Romney is suggesting cold turkey for the moochers at National Public Radio and the Public Broadcasting system, so the Secret Service needs to be prepared for Big Bird run amok.

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In a violation of the 8th Amendment’s prohibition against cruel and unusual punishment, my brutal overseers at the Cato Institute required me to watch last night’s debate (you can see what Cato scholars said by clicking here).

Tweedle Dee and Tweedle Dum

But I will admit that it was good to see Obama finally put on the defensive, something that almost never happens since the press protects him (with one key exception, as shown in this cartoon).

This doesn’t mean I like Romney, who would probably be another Bush if he got to the White House.

On the specifics, I obviously didn’t like Obama’s predictable push for class warfare tax policy, but I’ve addressed that issue often enough that I don’t have anything new to add.

I was irked, though, by Obama’s illiteracy on the matter of business deductions for corporate jets, oil companies, and firms that “ship jobs overseas.”

Let’s start by reiterating what I wrote last year about how to define corporate income: At the risk of stating the obvious, profit is total revenues minus total costs. Unfortunately, that’s not how the corporate tax system works.

Sometimes the government allows a company to have special tax breaks that reduce tax liabilities (such as the ethanol credit) and sometimes the government makes a company overstate its profits by not allowing it to fully deduct costs.

During the debate, Obama was endorsing policies that would prevent companies from doing the latter.

The irreplaceable Tim Carney explains in today’s Washington Examiner. Let’s start with what he wrote about oil companies.

…the “oil subsidies” Obama points to are broad-based tax deductions that oil companies also happen to get. I wrote last year about Democratic rhetoric on this issue: “tax provisions that treat oil companies like other companies become a ‘giveaway,’…”

I thought Romney’s response about corrupt Solyndra-type preferences was quite strong.

Here’s what Tim wrote about corporate jets.

…there’s no big giveaway to corporate jets. Instead, some jets are depreciated over five years and others are depreciated over seven years. I explained it last year. When it comes to actual corporate welfare for corporate jets, the Obama administration wants to ramp it up — his Export-Import Bank chief has explicitly stated he wants to subsidize more corporate-jet sales.

By the way, depreciation is a penalty against companies, not a preference, since it means they can’t fully deduct costs in the year they are incurred.

On another matter, kudos to Tim for mentioning corrupt Export-Import Bank subsidies. Too bad Romney, like Obama, isn’t on the right side of that issue.

And here’s what Tim wrote about “shipping jobs overseas.”

Obama rolled out the canard about tax breaks for “companies that ship jobs overseas.” Romney was right to fire back that this tax break doesn’t exist. Instead, all ordinary business expenses are deductible — that is, you are only taxed on profits, which are revenues minus expenses.

Tim’s actually too generous in his analysis of this issue, which deals with Obama’s proposal to end “deferral.” I explain in this post how the President’s policy would undermine the ability of American companies to earn market share when competing abroad – and how this would harm American exports and reduce American jobs.

To close on a broader point, I’ve written before about the principles of tax reform and explained that it’s important to have a low tax rate.

But I’ve also noted that it’s equally important to have a non-distortionary tax code so that taxpayers aren’t lured into making economically inefficient choices solely for tax reasons.

That’s why there shouldn’t be double taxation of income that is saved and invested, and it’s also why there shouldn’t be loopholes that favor some forms of economic activity.

Too bad the folks in government have such a hard time even measuring what’s a loophole and what isn’t.

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I’ve shared evidence from around the world (England, Italy, the United States, and France) and from various states (IllinoisOregonFlorida,Maryland, and New York) to argue that it is foolish to ignore the Laffer Curve.

Not that it makes any difference. I’m slowly coming the conclusion that my friends on the left will never learn – in large part because they’re more interested in punishing success with class warfare tax policy than they are in collecting extra revenue for government.

But surely there are some statists who are motivated by emotions other than spite, so I refuse to give up. Let’s look at some evidence from Spain to further confirm that high tax rates aren’t necessarily the way to maximize tax revenue (this also is a story showing that tax competition between nations is a good way of disciplining governments that are too greedy, but that’s another issue).

Here are some details from a CNBC report.

Spain’s corporate tax take has tumbled by almost two thirds from pre-crisis levels as small businesses fail and a growing number of big corporations seek profits abroad to compensate for the prolonged downturn at home. …Spain has a headline corporate tax rate of 30 percent, broadly in line with other large European economies. Switzerland, however, has a headline rate of 8.5 percent, and lawyers say deductions can be made to reduce this further. “A fundamental right of EU law is the freedom of establishment. All companies and taxpayers look after their tax affairs, and if they can pay a lower rate somewhere else, it’s better for their business and natural that they would do so,” a global tax lawyer based in Spain said. …Rajoy did eliminate some corporate tax breaks in 2012, a policy he will continue in 2013, and has also brought forward some tax payments, though that could be storing up problems.

Much of the decline in corporate tax revenue can be attributed to Spain’s dismal economy, of course, which has been exacerbated by a bunch of tax hikes imposed by a supposedly right-of-center government.

The one tax rate that hasn’t been increased, though, is the top rate of corporate tax. So how can this be a story about the Laffer Curve?

Well, sometimes standing still is a recipe for defeat. And sometimes moving in the right direction isn’t enough when everybody else is going in the right direction at a faster rate.

Here’s a chart showing changes in the average EU corporate tax rate compared to Spain’s corporate tax rate.

Spain’s corporate tax rate has dropped by five percentage points. That’s progress, but other nations have moved more rapidly in the right direction. Back in 1995, the Spanish corporate rate was slightly lower than the EU average. Now it’s noticeably higher.

And as the excerpt above notes, there are nations such as Switzerland that have far lower tax rates and much better fiscal policy.

To be sure, Spain’s main challenge is the need to dramatically reduce the burden of government spending. That will help long-run growth because more resources will be allocated by private markets.

But Spain also should seek an immediate boost to growth by reducing tax rates on productive behavior. A lower corporate tax rate should be part of the answer.

It also would be a good idea for the United States.

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There have been lots of studies showing that there’s no benefit to job training programs. People who sign up with these government schemes are not more likely to either get jobs or to earn more money.

Heck, even the New York Times was forced to acknowledge that these programs are a costly failure.

To really understand how these programs operate, John Stossel put together an investigative mission. The results excerpted below would be funny, other than the fact that taxpayers are getting ripped off and people are getting lured into lives of dependency.

“There are no jobs!” That is what people told me outside a government “jobs center” in New York City. …I sent four researchers around the area. They quickly found 40 job openings. Twenty-four were entry-level positions. One restaurant owner told me he would hire 12 people if workers would just apply. It made me wonder what my government does in buildings called “job centers.”

So Stossel sent one of his interns to investigate.

Here’s what she found: “First I went to the Manhattan Jobs Center and asked, “Can I get help finding a job?” They told me they don’t do that. ‘We sign people up for food stamps.’ I tried another jobs center. They told me to enroll for unemployment benefits.” So the “jobs” centers help people get handouts. Neither center suggested people try the 40 job openings in the neighborhood.

I shudder to think how many people walking in off the streets get hooked on government dependency. It’s disgusting that the government is encouraging people to ride in the wagon instead of getting jobs.

But Stossel’s intern was told not to give up.

My intern persisted: “I explained that I didn’t want handouts; I wanted a job. I was told to go to ‘WorkForce1,’ a New York City program. At WorkForce1, the receptionist told me that she couldn’t help me since I didn’t have a college degree. She directed me to another center in Harlem. In Harlem, I was told that before I could get help, I had to come back for an 8:30 a.m. ‘training session.'” Our government helps you apply for handouts immediately, but forces you through a maze if you want to work.

Amazingly, the intern was told to show up at 8:30 when the building didn’t open ’til 9:15. But, again, she was under orders to keep going.

Workforce1 directed 30 of us into a room where we were told that WorkForce1 directs candidates to jobs and provides a resource room with ‘free’ phone, fax and job listings and helps people apply for unemployment insurance and disability handouts. This seemed like the only part of the presentation when people took notes. “One lady told me that she comes to WorkForce1 because it helps her collect unemployment. One asked another, ‘What do you want to do?’ The second laughed, ‘I want to collect!’ One told me, ‘I’ve been coming here 17 months; this place is a waste of time.’

The intern, following orders, refused to take the dependency option that the bureaucrats kept offering. She finally got results…sort of.

“Finally, I met with an ‘adviser.’ …she scheduled an interview at Pret, a food chain that trains employees. At Pret, I learned that my ‘interview’ was just a weekly open house, publicized on the company’s website. Anyone could walk in and apply. Workforce1 offered no advantage. Despite my ‘scheduled interview,’ I waited 90 minutes before meeting a manager. He told me that WorkForce1 had ‘wasted my time, as they always do.’ He said, ‘They never call, never ask questions.’ He prefers to hire people who seek out jobs on their own, like those who see Pret ads on Craigslist.'”

The last comment in the excerpt makes a lot of sense. If you’re hiring people, it makes a lot of sense to choose those who show the initiative to seek out positions rather than those who come through some sort of government program that teaches them first and foremost to be a moocher.

Here are some concluding thoughts from Stossel’s column.

It’s easier to get welfare than to work. The government would rather sign me up for welfare than help me find work. America has taxpayer-funded bureaucracies that encourage people to be dependent. They incentivize people to take “free stuff,” not to take initiative. It was easier to find job openings on my own. The private market for jobs works better than government “job centers.” …Job training does help — when employers do it. But government does everything badly. …America now has 47 federal jobs programs. They fail. Yet politicians want more. They always want more.

That’s the problem. The politicians always gravitate to “solutions” that means more government intervention, more government dependency, and more government spending.

One would think that honest left wingers would look at the research, understand that these programs hurt people, and recognize that the right approach is free markets and limited government.

But they don’t, which suggest that there are no honest leftists. Or maybe there aren’t any smart and honest leftists. Because all they ever do is come up with ideas that make this satirical poster a reality.

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In the past, I’ve shared Federal Reserve humor, including this special Fed toilet paper, Ben Bernanke’s hacked Facebook page, the Bernanke-who-stole-Christmas image, a t-shirt celebrating the Fed Chairman, and the famous “Ben Bernank” video.

But this film from Bernanke’s childhood years may be the best of all of them. It is a good symbol of how he learned to conduct monetary policy.

Though, to be fair, it is theoretically possible that the Fed Chairman’s monetary easing is simply the well-timed provision of liquidity and he will soak up all the extra money at precisely the right moment.

But I’m skeptical, as you can see here, here, and here.

The real problem, though, is that we’ve given government a monopoly over money. This video is a good introduction to how governments replaced market-based money with central banking.

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I try to be self aware, so I realize that I have the fiscal version of Tourette’s. Regardless of the question that is asked, I’m tempted to blurt out that the answer is to reduce the burden of government spending.

But sometimes that’s exactly the right prescription, particularly for an economy weighed down by a bloated public sector. And, as you can see from this chart, the French welfare state is enormous.

Only Denmark has a bigger burden of government spending, but at least the Danes are astute enough to compensate with hyper-free market policies in other areas.

So is France also trying to offset the damage of excessive spending with good policy in other areas? Au contraire, President Hollande is compounding the damage with huge class-warfare tax hikes.

Here’s what the Wall Street Journal says about Hollande’s fiscal proposal – including the key revelation that spending will go up rather than  down.

Remember all that euro-babble before the French election about fiscal “austerity” harming growth? Well, meet the new austerity, same as the old austerity, which means higher taxes on the private economy and token discipline for the state. Growth is an afterthought. That’s the lesson of French President François Hollande’s new “fighting” budget, which is supposed to reduce the deficit to 3% of GDP from 4.5% and represent the country’s toughest belt-tightening in three decades. …More telling is that two-thirds of the €30 billion in so-called savings is new tax revenue, and one-third comes from slowing spending growth. Total public expenditure—already the second most lavish in Europe—will increase by €6 billion to 56.3% of GDP.

The spending cuts are fictional, but the tax increases are very, very real.

The real austerity will be imposed on taxpayers, and not only on the rich. Income above €150,000 will now be taxed at 45%, up from the current 41%. Mr. Hollande’s 75% tax rate on income over €1 million comes into effect for two years, reaping expected (and predictably paltry) revenue of €200 million. That’s dwarfed by the €1 billion from reducing the threshold for the “solidarity” tax on wealth to €800,000 from €1.3 million. The French Socialists will also now tax investment income at the same high rates as regular income. The rates have been 19% for capital gains, 21% for dividends and 24% for interest income. If Mr. Hollande’s goal is to send capital out of France, that should help.

Anybody want to take bets, by the way, on whether the “temporary” two-year 75 percent tax rate still exists three years from now?

I say yes, in large part because the tax almost surely will lose revenue because of Laffer Curve effects. But rather than learn the right lesson and repeal the tax, Hollande will argue it needs to be maintained because revenues are “unexpectedly” sluggish.

It’s also remarkable that Hollande wants to dramatically increase tax rates on capital gains, dividends, and interest. These are all examples of double taxation.

And when you factor in the taxes at both the personal and business level, these charts show that France already has the highest tax on dividends in the developed world and the third-highest tax on capital. And Hollande wants to make a terrible system even worse. Amazing.

I’ve already predicted that France will be the next major economy to suffer a fiscal crisis. I was too clever to give a date, but Hollande’s policies are accelerating the day of reckoning.

P.S. The WSJ also takes some well-deserved potshots at the latest fiscal plan in Spain. Since I endorsed Hollande in hopes that he would engage in suicidal fiscal policy, this post is focused on the French fiscal plan. But Spain also is a disaster.

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