- "Galt-Meter"
- To Big Not to Fail
- The Anti-Industrial Coup
- The "Race Card" Republican
- Who Cares About the Constitution?
- Title 6
Top News Stories
Commentary by Robert Tracinski
1. "Galt-Meter"
Barack Obama has talked about wanting to be a "transformative" president. And we can see the transformation in progress. It is a transformation of America from a society in which the majority of people are producers, to one in which the majority are parasites.
Here is one small measure: Nearly half of Americans now pay no income taxes, way more than just a few years ago, when the number was more like one-third. And a significant number of those non-taxpayers are actually getting welfare payments disguised as "tax credits." The goal the administration is trying to achieve is to make the majority of Americans feel as if they get government benefits showered upon their heads for free—so that they will constantly clamor for more benefits.
Blogger Doug Ross gets a "hat tip" and credit for the headline he gives this news item: Galt-Meter Hits the Red Zone as Half of US Households Escape All Federal Income Taxes. That's a measure of the growing influence of Ayn Rand's Atlas Shrugged: "Galt" has become a universal code word for the exploited producer of wealth.
The non-payment of incomes taxes is, of course, an illusion. Those who don't pay income taxes directly pay them indirectly. The taxes paid by the rich constitute an enormous amount of wealth removed from the productive economy, which means a significant diminution of everyone's standard of living.
And the AP article below notes that "The vast majority of people who escape federal income taxes still pay other taxes, including federal payroll taxes that fund Social Security and Medicare, and excise taxes on gasoline, aviation, alcohol and cigarettes. Many also pay state or local taxes on sales, income and property."
And don't worry, for those who now escape income taxes, the folks in Washington are working on a national value added tax, a kind of sales tax on steroids that will hit everyone.
"Nearly Half of US Households Escape Fed Income Tax," Stephen Ohlemacher, Associated Press, April 7
Tax Day is a dreaded deadline for millions, but for nearly half of US households it's simply somebody else's problem.About 47 percent will pay no federal income taxes at all for 2009….
In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17….
The result is…a system in which the top 10 percent of earners—households making an average of $366,400 in 2006—paid about 73 percent of the income taxes collected by the federal government.
The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes….
In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center….
Many [tax] credits are refundable, meaning if the credits exceed the amount of income taxes owed, the taxpayer gets a payment from the government for the difference….
The government could provide the same benefits through spending programs, with the same effect on the federal budget, Williams said. But it sounds better for politicians to say they cut taxes rather than they started a new spending program, he added.
2. To Big Not to Fail
The dishonesty of the left is captured in the fact that they hysterically attack the alleged "failures" of the free market—while relentlessly expanding every failed government program.
After all, wasn't the financial crisis a giant example of the "moral hazard" of offering trillions of dollars in implicit government guarantees to back big financial institutions, thereby blunting the market's sensitivity to risk? So naturally, the government's regulatory response to this disaster has been to make the guarantees bigger, more explicit, more permanent.
That is the essence of the explanation offered below of Senator Christopher Dodd's financial reform bill, which makes permanent the idea that certain institutions are "too big to fail" and will be backed by government funds.
The reality is that statists have made government so big and responsible for so many different, gargantuan, impossibly complicated tasks that government itself is now too big not to fail.
"The Dodd Bill: Bailouts Forever," Peter J. Wallison and David Skeel, Wall Street Journal, April 7
[T]he policies the FDIC follows when it closes small banks would be positively harmful if they were used to close a huge nonbank financial institution. The agency is used to operating in secret, over a weekend; its strategy is always to find a buyer. When applied in the case of a large, failing nonbank financial institution, this means that some other large, "too big to fail" institution will only become that much larger….It didn't get a lot of media attention, but an important financial event occurred on March 15, when Lehman Brothers offered a blueprint for its reorganization and exit from Chapter 11—18 months to the day after it filed its bankruptcy petition. In the course of Lehman's resolution, its creditors, shareholders and management all took severe losses….
The difference between the Lehman bankruptcy and what the Dodd bill proposes is important to understand. The Dodd bill provides for a $50 billion fund, collected in advance from large financial firms, that will be used for the resolution process. In other words, the creditors of any company that is resolved under the Dodd bill have a chance to be bailed out. That's what these outside funds are for. But if the creditors are to take most of the losses—as they did in Lehman—a fund isn't necessary.
Which system is more likely to eliminate the moral hazard of too big to fail? In a bankruptcy, as in the Lehman case, the creditors learned that when they lend to weak companies they have to be careful. The Dodd bill would teach the opposite lesson. As Sen. Richard Shelby (R., Ala.) wrote in a March 25 letter to Treasury Secretary Tim Geithner, the Dodd bill "reinforces the expectation that the government stands ready to intervene on behalf of large and politically connected financial institutions at the expense of Main Street firms and the American taxpayer. Therefore, the bill institutionalizes 'too big to fail.'"
3. Anti-Industrial Coup
The anti-industrial coup—the process by which global warming regulations are imposed on us by executive decree—is already under way.
The EPA has just issued its first new regulations targeting harmless carbon dioxide emissions: a drastic increase the mandates for the average fuel efficiency of automobiles. The other news is that regulations for "stationary sources"—i.e., big factories and power plants—are coming next year.
So why bother with cap-and-trade legislation? The EPA is already issuing regulations for everything that moves, and for everything that doesn't move.
For anyone who imagines it will be easy to undo the damage of the Obama years, the New York Times report on the new fuel efficiency regulations contains a passage that reminds us what a banana republic we have become.
The car companies, particularly the domestic makers, had little choice but to accept the deal. Two of the Detroit Big Three, Chrysler and General Motors, were facing bankruptcy and taking federal bailout money. Ford said it was already moving to clean up its fleet and welcomed the certainty of a five-year plan.
Did the residents of Stalin's Russia welcome the certainty of his five-year plans?
Of course, the joke is on these government-connected, government-controlled businessmen, because there was no certainty in Stalin's capricious, ever-shifting plans—nor will there be in our government's new energy dictatorship.
Thus, the article below notes, the EPA is imposing new gasoline mileage standards at the same time that the government is requiring higher ethanol content—as a sop to the "renewable energy" crowd, and to the corn lobby—even though ethanol reduces a car's gas mileage.
Welcome to the green energy dictatorship, in which the producers of oil and automobiles will be crushed between contradictory regulatory requirements.
"Green Washington Wants Less-efficient Fuel," Henry Payne, National Review Online, April 5
By the same date—2015—that the new 35.5 mpg EPA mandate is due to go into effect, oil companies are also mandated by Congress to double the amount of corn ethanol use (from 2007 levels) to 15 billion gallons. The current mandate of a 10 percent ethanol mix in fuel won't get us there, so the powerful corn lobby is demanding EPA increase the mandate to a 15 percent ethanol mix.Trouble is, a gallon of ethanol is 30 percent less efficient than a gallon of gas meaning that the more ethanol you mix in, the worse your gas mileage. Department of Energy studies show steadily decreasing fuel economy as ethanol blends rise from so-called E10 (fuel composed of 10 percent ethanol and 90 percent gas) up through E15 and E20—with E20 suffering a 7.7 percent fuel efficiency loss.
4. The "Race Card" Republican
This November's election is an unprecedented political opportunity for Republicans, a chance to win a strong majority in Congress in the largest "wave" election in modern political history. But the Republicans have always found a way to undermine any political advantage.
Here's the political context. President Obama and ObamaCare both continue to drop in the polls. Incumbent Democrats continue to announce their resignations rather than seek re-election; the latest is Bart Stupak, the one man most responsible for the passage of the health care bill.
So now at least one Democratic political analyst is predicting that his party could lose up to 79 seats in the House this November, which would pretty much reverse the current balance of power.
Yet the Republicans now have to face the ill effects of a stupid and cowardly decision they made in the wake of Barack Obama's election victory. Terrified of being accused of racism for opposing the agenda of the nation's first black president, Republicans chose a black man, Michael Steele, as the chairman of the Republican National Committee. This is basically an election fundraising group, but its chairman is often put in the position of being the public face of the party.
Steele has proven ineffective, erratic, and prone to gaffes. But I agree with the article below: his really unforgivable act has been to join with the Democrats in "playing the race card," accusing his Republican critics of holding him responsible for his mistakes because he is black. Yet Steele was hired precisely to defuse the "race card," not to legitimate it.
"GOP Should Fire Steele for Sake of Racial Equality," Chris Stirewalt, Washington Examiner, April 8
Reporters are poring over the Republican National Committee's expenditures for further evidence of the culture of profligacy Steele has fostered.Steele picked a Hawaiian resort for the party's winter meeting and uses corporate jet charters to keep up with a schedule packed with book events and speaking engagements that profit him personally.
The employee who sprang for a $2,000 bar tab at an LA nightclub and the unnamed staffer that spent almost $1,000 for "office supplies" at a Vermont winery were reflections of a corporate culture, not rogue agents.
Steele is touting the party's $11.4 million fundraising in March—more than any previous March in a midterm year but less than the Democratic National Committee brought in….
When Barack Obama won the presidency, Republicans panicked and embraced identity politics. If the Democrats had a black president, Republicans would have a black chairman.
Now, that black chairman has repeatedly suggested that racism is to blame for his troubles and insinuated that his own party cannot handle having a black man in charge. It's the most damaging part of the whole Steele affair….
Barring Steele's racially motivated selection and subsequent cries of racism, Republicans can make a credible claim that they favor a color-blind society….
The racially uncool move to pick Steele as chairman was the kind of pandering that voters expect from Democrats.
5. Who Cares About the Constitution?
When Democrats passed the health care bill, they displayed a revealing indifference toward the whole idea of constitutionally limited government. When challenged on whether they had the constitutional authority for various provisions of the bill, they opined that the Interstate Commerce Clause gives them plenipotentiary power to do anything they please, essentially declaring the rest of the Constitution irrelevant.
And that's when they show any interest in the question at all, unlike Congressman Phil Hare, who says the Constitution "doesn't matter to me."
Well, at least it matters to someone. A federal court has just struck down an FCC ruling intended to enforce "net neutrality"—basically, a regulatory takeover of the Internet—on the novel grounds that the executive branch requires Congress to actually pass a law to provide the basis for its authority. It is the most basic, bare minimum way of asserting constitutional rules, but given that the EPA is now regulating carbon dioxide without any statutory authority to do so, I guess we should be thankful.
"Court: FCC Has No Power to Regulate Net Neutrality," Declan McCullagh, CNet News, April 6
The Federal Communications Commission does not have the legal authority to slap Net neutrality regulations on Internet providers, a federal appeals court ruled Tuesday….Because the FCC "has failed to tie its assertion" of regulatory authority to an actual law enacted by Congress, the agency does not have the power to regulate an Internet provider's network management practices, wrote Judge David Tatel of the US Court of Appeals for the DC Circuit.
Tuesday's decision could doom one of the signature initiatives of FCC Chairman Julius Genachowski, a Democrat. Last October, Genachowski announced plans to begin drafting a formal set of Net neutrality rules—even though Congress has not given the agency permission to do so….
Supporters of Net neutrality claim that new Internet regulations or laws are necessary to prevent broadband providers from restricting content or prioritizing one type of traffic over another. Broadband providers and many conservative and free-market groups, on the other hand, say that some of the proposed regulations would choke off new innovations and could even require awarding e-mail spam and telemedicine the identical priorities.
Net neutrality proponents responded to Tuesday's ruling by saying the FCC should slap landline-style regulations on Internet providers, which could involve price regulation, service quality controls, and technological mandates….
In a statement on Tuesday, the FCC indicated that it was thinking along the same lines. The DC Circuit did not "close the door to other methods for achieving this important end," the agency said….
The FCC had known all along that it was on shaky legal ground. Its vote to take action against Comcast was a narrow 3-2, with the dissenting commissioners predicting at the time that it would not hold up in court. FCC Commissioner Robert McDowell, a Republican, said at the time that the agency's ruling was unlawful and the lack of legal authority "is sure to doom this order on appeal."
6. With Friends Like Us
The consistent message the Obama administration has sent to America's allies is that, in this "post-American" era, they are on their own. Unless they are in a really tight jam—and then America will be hostile to them. See, for example, the ongoing struggle for liberty and constitutional government in Honduras, where the US ambassador has weighed in on the side of Chavez-style socialist dictatorship.
But if you're hostile to America, you will find this president to be a patsy. Thus, after giving the Russians an arms reduction deal that was supposed to secure their support for sanctions against Iran, President Obama is finding that the Russians are still balking.
The ally who is mostly likely to feel this administration's hostility is Israel. Already, they're feeling the consequences of Obama's new policy on nuclear weapons. By arguing that the good guys should unilaterally disarm, Obama has turned an upcoming international conference on nuclear policy into a forum intended to force Israel to give up its "never again" nukes.
More ominous is the fact that the administration now seems to be busy crafting a plan for the Middle East in the Situation Room of the White House—which they will then impose on Israel through external pressure.
That is what the Israelis are expecting, and they know what its consequences will be: it will encourage the intransigence and eventually the renewed violence of the Palestinian terrorist groups.
"Israel Fears Obama Heading for Imposed Mideast Settlement," Ari Shavit, Haaretz, March 29
US President Barack Obama's demands during his meeting with Prime Minister Benjamin Netanyahu last Tuesday point to an intention to impose a permanent settlement on Israel and the Palestinians in less than two years, political sources in Jerusalem say.[A]nother key demand—to discuss the dispute's core issues during the indirect talks that are planned—is perceived in Jerusalem as problematic because it implies that direct negotiations would be bypassed. This would set up a framework through which the Americans would be able to impose a final settlement.
It is not just Obama's demands that are perceived as problematic, but also the new modus operandi of American diplomacy. The fact that the White House and State Department have been in contact with Israel's European allies, first and foremost Germany, is seen as part of an effort to isolate Israel and put enormous political pressure on it.
[S]ources in Jerusalem say that the new American positions undermine the principle of credibility that has guided US foreign policy since the end of World War II. Ignoring specific promises made to its Israeli ally would make other American allies lose trust in its commitments to them.
Robert Tracinski writes daily commentary at TIADaily.com. He is the editor of "The Intellectual Activist (TIA)" and contributor to "The Freedom Fighter's Journal."
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