I was in the process of crafting a post about the Obama spending bills and the jerks in Congress who are going to pass them. But then I just got mad, and the whole thing degenerated into a nasty bit of name calling and acrimony. I don't mind that so much; for me and my lawyer-wife that's a Friday night. But since there's no possibility I'll get lucky at the end of a nasty blog (no matter what the emails in my junkmail folder say), I decided to change the subject and start over. Before I do that, let me just summarize the points I was making before I thought better of it: Senate Majority Leader Harry Reid is an androgynous weasel, and Nancy Pelosi is the product of his having impregnated Tammy Faye Bakker by accidental cross-pollination or some other means of asexual reproduction. Unlikely, you say? Maybe. But not as unlikely as Harry Reid reproducing sexually.
Now let's move on to something else you've never heard of. Archaeologists call it the Tenth Amendment to the Constitution of the United States.
During my third year of law school, I took a class in contemporary Constitutional Law, taught by a famous scholar on the First Amendment. (Famous is a relative term, of course. He didn't defend O.J. or get custody of Britney's kids for K-Fed. But Timothy Hutton did play him in the movie he wrote about his biggest case. And he gave me an A in his class.) (Before you ask, I did nothing for that A that I should be ashamed of. Every professor needs his erasers banged, and I am not going to apologize for a few back rubs. And his marriage was in trouble long before I came along.) Unfortunately, while he may have known all about the First Amendment, he was far less versed on some other provisions of the Bill of Rights.
I found this out the day he led our class in a discussion of the tension between the First Amendment's separation of church and state (which, by the way, isn't really there. Seriously. You can look it up.) and the "freedom of speech" clause (that one's totally there). The question of the day was essentially this: does the Constitution permit the teaching of creationism in public schools? The discussion went back and forth, the lefties versus the (two lonely) social conservatives. Usually, I love a good debate, but this one proceeded without me; the question presents a false dichotomy, and relies on an underlying Constitutional error that I refuse to give implicit acceptance. And my professor would not have recognized it even if I had pointed it out.
Their error? A failure to recognize that the United States government has no role whatsoever in education. None. Or, rather, that government is not supposed to have a role, because the Constitution gave the federal government no power to act with regard to education.
That's important, since the Constitution is a document that sets forth explicitly and exclusively ALL the powers permitted to the Federal Government of the United States of America. Line by line, clause by clause, the Founding Fathers put it all on paper; each and every power that the national government was permitted to exercise. How do I know? Because they said so, right there in black and yellow.
Amendment 10 - Powers of the States and People
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
Maybe you never read that one before. Sure, you knew there were ten of 'em, but you probably thought the other six Bill of Rights amendments--the ones you never heard of--preserved the right to health care, housing, and heterosexual marriage. Legend says that the Bill of Rights is only in the Constitution because a bunch of paranoid schizophrenics calling themselves Anti-Federalists got the crazy notion that the Federal Government might someday do things that weren't in the Constitution.(!) To prevent that from happening, Anti-Federalists demanded that the rights of the people and states be explicitly (and redundantly) carved out of the federal government's exclusive Constitutional powers by the first eight amendments to the constitution. They also inserted two catch-all provisions just to make sure the intentions of the framers weren't misunderstood.
Those last two amendments were never heard from again.
I'm serious. It's like the Tenth Amendment never existed. But just as an historical exercise, what did the Tenth Amendment to the Constitution of the United States of America actually mean? Well, I'm not a famous Constitutional scholar, I'm just a guy who knows how to read. And it's pretty clear to me that the Tenth Amendment says that if it ain't in the Constitution, the Federal Government isn't supposed to do it. Period. And if the Federal government does do something it was not empowered to do by the Constitution, that action would be what smart Constitutional scholars like to call unconstitutional.
And no, the Tenth Amendment has never been repealed. Only ignored.
Some say that's a good thing. How can a few smart guys from the 18th century know what kinds of stuff we'll want government to do in the 21st century? It's not a bad question. Inarguably, the Founding Fathers never envisioned a federal government as big and officious as ours is today. (I'm pretty sure that on quiet nights up here in Virginia you can hear a few of them spinning in their graves.) But the founders knew very well they could not think of everything, and left us two clear ways to get around the imperfections of a Constitution made up of explicit and exclusive reservations of government powers.
First, they intended that most necessary government functions could and should be performed by the states' governments. And where those state powers were insufficient, inappropriate or impractical, the Founding Fathers provided several ways to amend the Constitutional. Yeah, every method by which the Constitution can be amended is slow, ponderous, and a pain in the butt. But I guess that's the way the Founding Fathers wanted it.
Ok, so where was I? Oh yeah, in a class of thirty law students and one handsome First Amendment scholar, considering the question of the day: whether the Constitution requires that public school teachers teach that random mutation and natural selection will cause evolutionary leaps sufficient to explain multi-cellular life and diversity of species. But the question of the day should have been this: where in the hell does the federal government get the power to mandate, fund and oversee public education? The answer is, of course, nowhere. There is no public education clause in the Federal Constitution. But there is a provision that says that public education is therefore not a proper purview of federal governance. They just chose to ignore it.
So, which is it, class? Do we teach the children we force into classrooms that God made everything in a single work-week and a little overtime, or do we give them Darwin's tautology as the sole explanation for the existence of multi-celled intelligent life on earth? I, for one--maybe the only one--refuse to be goaded into picking sides. It's my opinion that neither "survival of the fittest" nor "let there be light" should be taught to students in a federally funded classroom, because the Tenth Amendment forbids the establishment of a federally funded classroom. If we are going to be governed by the Constitution, the people must either educate their kids in the schools of their choice on their own dime--or maybe on the dime taken from them by the state in which they live--or else they must amend the constitution so that the federal government can do it for them. If not, then our courts will continue to address the same scientific and philosophical issues that the greatest minds of three millennia have been unable to resolve, and force whatever answer they come up with down our children's collective throat.
I am well aware that despite the spectacular and expensive failure of the public education system, some of you recoil in shock from the idea of a separation of education and state--even if the Tenth Amendment requires it. You like the freedom of speech, religion, and even the press, but are dubious about the prospect of getting government out of the educational system. We can't have it both ways, however. Either we are governed by the Constitution, or we are not. Isn't it intellectually dishonest to sit in a classroom, or in a court house, or in a legislative body, bleating about one inviolable Constitutional right or another, while at the same time ignoring the parts that are inconvenient?
I realize this might be a tough sell. But if I am all alone here, could you at least be consistent? If you demand that the Federal Government teach your kids that God created man in His own image, or else that man was a fortuitous happenstance, don't be so hypocritical as to make your demand on Constitutional grounds. Don't say that your child has a Constitutional right to be free from unreasonable search of his public school locker if you aren't going to object to the fact that the Federal Government bought the locker for him in the first place. And don't assert a Constitutional right to free speech or religious practice as a justification for having your Bible study group or your gay alliance meeting in the public school library, if you also support the construction of that library in clear contravention of the Constitution's less-popular provisions.
And, please, when you advocate that the federal government run education, argue that it's more practical than complying with the Constitution. Point out that it's easier for parents not to have to worry about finding cheap education in a free market. Whine about the children. Put your fingers in your ears and recite over and over that it has always been done that way, and you simply can't imagine it being done any other. Just ignore the Constitution; I promise you aren't the first one to do so.
And the next time you complain about the sorry state of public education, try to remember whom you put in charge of it.
Sunday, April 5, 2009
Saturday, April 4, 2009
Who's at fault in the global economic death spiral? Opinion and commentary by special guest blogger President Barack Hussein Obama.
This is an actual transcript of BHO's answer to the following two-part question asked by a member of the European press (apparently the prompter was off): did the U.S. and Britain cause the present economic crisis, and does the answer to that question inform our choices as to what should be done to fix it?
"I, I, would say that, er ... [pause] ... if you look at ... [pause] ... the, the sources of this crisis ... [pause] ... the United States certainly has some accounting to do with respect to . . . [pause] ... a regulatory system that was inadequate to the massive changes that have taken place in the global financial system ... [clintonian pause with closed eyes]... I think what is also true is that ... [pause] ... here in Great Britain ... [pause] ... here in continental Europe ... [pause] ... around the world. We were seeing the same mismatch between the regulatory regimes that were in place and er ... [pause] ... the highly integrated, er, global capital markets that have emerged ... [pause]. So at this point, I'm less interested in ... [pause] ... identifying blame than fixing the problem. I think we've taken some very aggressive steps in the United States to do so, not just responding to the immediate crisis, ensuring banks are adequately capitalised, er, dealing with the enormous, er ... [pause] ... drop-off in demand and contraction that has taken place. More importantly, for the long term, making sure that we've got a set of, er, er, regulations that are up to the task, er, and that includes, er, a number that will be discussed at this summit. I think there's a lot of convergence between all the parties involved about the need, for example, to focus not on the legal form that a particular financial product takes or the institution it emerges from, but rather what's the risk involved, what's the function of this product and how do we regulate that adequately, much more effective coordination, er, between countries so we can, er, anticipate the risks that are involved there. Dealing with the, er, problem of derivatives markets, making sure we have set up systems, er, that can reduce some of the risks there. So, I actually think ... [pause] ... there's enormous consensus that has emerged in terms of what we need to do now and, er ... [pause] ... I'm a great believer in looking forwards than looking backwards."
10 minutes for a single paragraph answer. Ladies and gentleman, the world's smartest man and its the greatest orator.
I was going to let the President speak for himself, but maybe I'm not being fair. Let's do a transcript without the elipses and pauses.
"I would say that if you look at the sources of this crisis the United States certainly has some accounting to do with respect to a regulatory system that was inadequate to the massive changes that have taken place in the global financial system. I think what is also true is that here in Great Britain, here in continental Europe, [and] around the world, we were seeing the same mismatch between the regulatory regimes that were in place and the highly integrated, global capital markets that have emerged. So at this point, I'm less interested in identifying blame than fixing the problem. I think we've taken some very aggressive steps in the United States to do so, not just responding to the immediate crisis, ensuring banks are adequately capitalised, dealing with the enormous, drop-off in demand and contraction that has taken place. More importantly, for the long term, making sure that we've got a set of regulations that are up to the task, and that includes a number that will be discussed at this summit. I think there's a lot of convergence between all the parties involved about the need, for example, to focus not on the legal form that a particular financial product takes or the institution it emerges from, but rather what's the risk involved, what's the function of this product and how do we regulate that adequately, much more effective coordination, between countries so we can, anticipate the risks that are involved there. Dealing with the, problem of derivatives markets, making sure we have set up systems, that can reduce some of the risks there. So, I actually think there's enormous consensus that has emerged in terms of what we need to do now, and I'm a great believer in looking forwards than looking backwards."
That's better, but still pretty opaque. Let's break it down:
"I would say that if you look at the sources of this crisis the United States certainly has some accounting to do with respect to a regulatory system that was inadequate to the massive changes that have taken place in the global financial system. I think what is also true is that here in Great Britain, here in continental Europe, [and] around the world, we were seeing the same mismatch between the regulatory regimes that were in place and the highly integrated, global capital markets that have emerged."
Say what? Simply that government oversight of financial systems has been an abysmal failure in the United States and elsewhere. So far so good, and I agree with him entirely. Next:
"So at this point, I'm less interested in identifying blame than fixing the problem. I think we've taken some very aggressive steps in the United States to do so, not just responding to the immediate crisis, ensuring banks are adequately capitalised, dealing with the enormous, drop-off in demand and contraction that has taken place. More importantly, for the long term, making sure that we've got a set of regulations that are up to the task, and that includes a number that will be discussed at this summit."
I'll translate. "My government will instead exercise plenary control over the mechanisms that they failed so thoroughly to manage by mere oversight." That's certainly accurate, too. Although I'm not sure why he believes complete control will be easier than mere oversight.
Let's continue:
"I think there's a lot of convergence between all the parties involved about the need, for example, to focus not on the legal form that a particular financial product takes or the institution it emerges from, but rather what's the risk involved, what's the function of this product and how do we regulate that adequately, much more effective coordination, between countries so we can, anticipate the risks that are involved there. Dealing with the, problem of derivatives markets, making sure we have set up systems, that can reduce some of the risks there."
This part's easy. "I don't understand what the hell it is we're taking control of, I'm more a 'big picture' kind of guy." Again, I agree (I can even empathise a bit). His lack of familiarity with--or perhaps his refusal to explicate--the policies he would implement has never mattered, whether as a candidate or as a president. His policies are to be implemented by sheer force of oratorical style and racial novelty, so all that really matters is that he say pretty words well. He'll let his minions implement the policies he either doesn't understand or else dares not explain. Off-prompter, however, it's clear that he can only fail his end of that bargain. (Though, after eight years of Bush the Younger, I was impressed that he spit out the word 'derivatives' on his first try.)
The President of the United States of America gives us a big finish:
"So, I actually think there's enormous consensus that has emerged in terms of what we need to do now, and I'm a great believer in looking forwards than looking backwards."
Another easy translation: "So as long as a majority here and back home likes me, my actual policies are irrelevant to this discussion. It doesn't matter what I do, only that I do it. And don't go pressing me for details, just watch what happens."
Thank you, Mr. President. You're actually not as dumb as you sound.
"I, I, would say that, er ... [pause] ... if you look at ... [pause] ... the, the sources of this crisis ... [pause] ... the United States certainly has some accounting to do with respect to . . . [pause] ... a regulatory system that was inadequate to the massive changes that have taken place in the global financial system ... [clintonian pause with closed eyes]... I think what is also true is that ... [pause] ... here in Great Britain ... [pause] ... here in continental Europe ... [pause] ... around the world. We were seeing the same mismatch between the regulatory regimes that were in place and er ... [pause] ... the highly integrated, er, global capital markets that have emerged ... [pause]. So at this point, I'm less interested in ... [pause] ... identifying blame than fixing the problem. I think we've taken some very aggressive steps in the United States to do so, not just responding to the immediate crisis, ensuring banks are adequately capitalised, er, dealing with the enormous, er ... [pause] ... drop-off in demand and contraction that has taken place. More importantly, for the long term, making sure that we've got a set of, er, er, regulations that are up to the task, er, and that includes, er, a number that will be discussed at this summit. I think there's a lot of convergence between all the parties involved about the need, for example, to focus not on the legal form that a particular financial product takes or the institution it emerges from, but rather what's the risk involved, what's the function of this product and how do we regulate that adequately, much more effective coordination, er, between countries so we can, er, anticipate the risks that are involved there. Dealing with the, er, problem of derivatives markets, making sure we have set up systems, er, that can reduce some of the risks there. So, I actually think ... [pause] ... there's enormous consensus that has emerged in terms of what we need to do now and, er ... [pause] ... I'm a great believer in looking forwards than looking backwards."
10 minutes for a single paragraph answer. Ladies and gentleman, the world's smartest man and its the greatest orator.
I was going to let the President speak for himself, but maybe I'm not being fair. Let's do a transcript without the elipses and pauses.
"I would say that if you look at the sources of this crisis the United States certainly has some accounting to do with respect to a regulatory system that was inadequate to the massive changes that have taken place in the global financial system. I think what is also true is that here in Great Britain, here in continental Europe, [and] around the world, we were seeing the same mismatch between the regulatory regimes that were in place and the highly integrated, global capital markets that have emerged. So at this point, I'm less interested in identifying blame than fixing the problem. I think we've taken some very aggressive steps in the United States to do so, not just responding to the immediate crisis, ensuring banks are adequately capitalised, dealing with the enormous, drop-off in demand and contraction that has taken place. More importantly, for the long term, making sure that we've got a set of regulations that are up to the task, and that includes a number that will be discussed at this summit. I think there's a lot of convergence between all the parties involved about the need, for example, to focus not on the legal form that a particular financial product takes or the institution it emerges from, but rather what's the risk involved, what's the function of this product and how do we regulate that adequately, much more effective coordination, between countries so we can, anticipate the risks that are involved there. Dealing with the, problem of derivatives markets, making sure we have set up systems, that can reduce some of the risks there. So, I actually think there's enormous consensus that has emerged in terms of what we need to do now, and I'm a great believer in looking forwards than looking backwards."
That's better, but still pretty opaque. Let's break it down:
"I would say that if you look at the sources of this crisis the United States certainly has some accounting to do with respect to a regulatory system that was inadequate to the massive changes that have taken place in the global financial system. I think what is also true is that here in Great Britain, here in continental Europe, [and] around the world, we were seeing the same mismatch between the regulatory regimes that were in place and the highly integrated, global capital markets that have emerged."
Say what? Simply that government oversight of financial systems has been an abysmal failure in the United States and elsewhere. So far so good, and I agree with him entirely. Next:
"So at this point, I'm less interested in identifying blame than fixing the problem. I think we've taken some very aggressive steps in the United States to do so, not just responding to the immediate crisis, ensuring banks are adequately capitalised, dealing with the enormous, drop-off in demand and contraction that has taken place. More importantly, for the long term, making sure that we've got a set of regulations that are up to the task, and that includes a number that will be discussed at this summit."
I'll translate. "My government will instead exercise plenary control over the mechanisms that they failed so thoroughly to manage by mere oversight." That's certainly accurate, too. Although I'm not sure why he believes complete control will be easier than mere oversight.
Let's continue:
"I think there's a lot of convergence between all the parties involved about the need, for example, to focus not on the legal form that a particular financial product takes or the institution it emerges from, but rather what's the risk involved, what's the function of this product and how do we regulate that adequately, much more effective coordination, between countries so we can, anticipate the risks that are involved there. Dealing with the, problem of derivatives markets, making sure we have set up systems, that can reduce some of the risks there."
This part's easy. "I don't understand what the hell it is we're taking control of, I'm more a 'big picture' kind of guy." Again, I agree (I can even empathise a bit). His lack of familiarity with--or perhaps his refusal to explicate--the policies he would implement has never mattered, whether as a candidate or as a president. His policies are to be implemented by sheer force of oratorical style and racial novelty, so all that really matters is that he say pretty words well. He'll let his minions implement the policies he either doesn't understand or else dares not explain. Off-prompter, however, it's clear that he can only fail his end of that bargain. (Though, after eight years of Bush the Younger, I was impressed that he spit out the word 'derivatives' on his first try.)
The President of the United States of America gives us a big finish:
"So, I actually think there's enormous consensus that has emerged in terms of what we need to do now, and I'm a great believer in looking forwards than looking backwards."
Another easy translation: "So as long as a majority here and back home likes me, my actual policies are irrelevant to this discussion. It doesn't matter what I do, only that I do it. And don't go pressing me for details, just watch what happens."
Thank you, Mr. President. You're actually not as dumb as you sound.
Saturday, March 28, 2009
getting my groove back: my next post
Whew! That last post took a lot out of me. What was I thinking biting off the housing crisis? 70 years of government malfeasance there, and somehow I thought I'd knock it out in a single little essay. Not only did my "road to hell" post grow so long that I had to break it up into two parts (for my readers of small attention spans, you know who you are), it also involved some actual research, the gathering of information, fact checking, not to mention the construction of some fairly compelling imagery. (Loyal readers will be happy to learn that I haven't heard anything from McDonalds' lawyers. Yet.) So I approach my next post somewhat enervated, perhaps in need of topic less fact-intensive, more opinion related. (I never feel compelled to check my opinions for accuracy.) Or maybe what I need is an easy target....
I suppose I could address the Democrats and their plan to nationalize the economy. But while making fun of leftist principles is easy, it's too much like criticizing an obnoxious 6-year-old’s coloring. Even when the kid stomps his feet and threatens to hold his breath if we do not immediately hang his latest masterpiece on the refrigerator, it's just no fun to tell him he didn't stay inside the lines, or to point out that grass is not orange. Admittedly, ridicule is easier when there are college professors praising the artistry and genius of the latest page ripped from his coloring book, especially when the kid's pictures cover every wall, are clogging the plumbing, and create a fire hazard. All the while, the little brat is calling you a racist, or a sexist, or big dumb poopyhead because you can't tell whether the picture you're looking at is a stunted yellow flower or the sun wearing green pants.... I digress.
My point is this: when I hear an idea like Cap 'n' Trade, I feel like the joke has already been set-up and the punch line delivered. Emissions Trading enforced by a global, quasi-governmental, tax-imposing carbon-hunting bureaucracy that will ensure you put a cork in it until you pay someone else to license you to be his emitter-by-proxy. What can I add to that, other than LOL and an eyeroll smiley? (you probably didn't see it, but An Inconvenient Truth was actually narrated by a fat, flatulent, effeminate clown running in circles tooting a horn. Amusing, but I really don't recommend it.) In any event, to ridicule Cap 'n' Trade just seems too easy. And it's been done to death--brilliantly, I might add. (see my previous post, "Kyoto is cool.")
I must give the matter some thought.....
I suppose I could address the Democrats and their plan to nationalize the economy. But while making fun of leftist principles is easy, it's too much like criticizing an obnoxious 6-year-old’s coloring. Even when the kid stomps his feet and threatens to hold his breath if we do not immediately hang his latest masterpiece on the refrigerator, it's just no fun to tell him he didn't stay inside the lines, or to point out that grass is not orange. Admittedly, ridicule is easier when there are college professors praising the artistry and genius of the latest page ripped from his coloring book, especially when the kid's pictures cover every wall, are clogging the plumbing, and create a fire hazard. All the while, the little brat is calling you a racist, or a sexist, or big dumb poopyhead because you can't tell whether the picture you're looking at is a stunted yellow flower or the sun wearing green pants.... I digress.
My point is this: when I hear an idea like Cap 'n' Trade, I feel like the joke has already been set-up and the punch line delivered. Emissions Trading enforced by a global, quasi-governmental, tax-imposing carbon-hunting bureaucracy that will ensure you put a cork in it until you pay someone else to license you to be his emitter-by-proxy. What can I add to that, other than LOL and an eyeroll smiley? (you probably didn't see it, but An Inconvenient Truth was actually narrated by a fat, flatulent, effeminate clown running in circles tooting a horn. Amusing, but I really don't recommend it.) In any event, to ridicule Cap 'n' Trade just seems too easy. And it's been done to death--brilliantly, I might add. (see my previous post, "Kyoto is cool.")
I must give the matter some thought.....
Monday, March 23, 2009
The road to hell is paved with good intentions . . . if by hell you mean total economic meltdown. Parts I & II.
Part I
I've had a lot of fun ridiculing social conservatives and leftists in my previous posts. In the spirit of fairness, I'd like to take a moment to tell a joke at the expense of all those hopeless political vagabonds who think like I do.
How many Libertarians does it take to screw in a light bulb? None. The market will take care of it.
Yeah, guys like me are always railing against the government. The government taxes me too much. The government destroyed health care. The government ruined education. The government spent too much money freeing a country that didn't really deserve it. I apologize to all my friends and acquaintances who have had to sit through one of my libertarian rants. I just can't help it. It’s like a super power: the uncanny ability to trace any societal malady back to some action of government. (I also have the power to extract sexual innuendo from any sentence containing a direct object, and it's by far the more useful of the two.) But sometimes they screw something up so thoroughly and so obviously (that's what she said), you don't need tights and a cape to see it. And, invariably, it begins with the best of intentions.
Take housing for instance. All government wanted was to allow more people to buy a home. (As you can see, I like to anthropomorphize government.) To that end, Fannie Mae was created as a part of the New Deal, and Freddie came along 1970. These untaxed “government sponsored entities” (GSE) paid their politically selected officers millions of dollars and made exorbitant political donations to the--mostly democrat--members of congress who were responsible for their continued funding and existence. Few cared that the reflexive quid pro quo created from this relationship encouraged rampant corruption (more on this later). What mattered to everyone is that government’s intentions were good: if a home buyer could show that he was able to afford a reasonable mortgage and could drop a 20% down payment, the government would ensure that his mortgage would be funded, using money government had taken from everyone else. (For purposes of this post only, when you mentally picture my anthropomorphized government, it should look like Grimace, the large purple mutant shake fiend from McDonald’s commercials; skipping through an idyllic McDonaldland, obliviously crushing the other denizens beneath his huge feet. Hereafter, you can go back to picturing government as a larger, more bloated version of Rosie O’Donnell.).
But what if you can’t convince your bank that you can afford to repay a home loan?
The Community Reinvestment Act (CRA) signed by President Jimmy Carter in 1977 forced banks to lend to borrowers who were not good credit risks. The CRA was a law perfectly crafted to advance the government's benevolent desire to make it easier to buy a home. Yet for almost 20 years the act wasn't really enforced. Why? It has been posited that executive-branch grunts tasked with CRA’s implementation simply chose not to do so, perhaps realizing how ill-advised it is to force banks to lend money to people who can’t pay the money back. But I think the reason is more likely that making loans to people who can’t repay them hadn’t been properly incentivized yet. In other words, there was no way to make a bad loan profitable, so lenders avoided doing so.
Hello President Clinton.
In an approach to loans described by then HUD Secretary Andrew Cuomo as race motivated “affirmative action,” the Clinton administration in the mid-nineties imposed high-risk minority loan quotas upon lending institutions. The Clinton administration then led the 800 pound GSE gorillas into the subprime mortgage market to “benefit lower income families” who otherwise could not obtain loans. Of course, the reason low-income folks used to have trouble getting a home loan was because there was a higher-than-acceptable probability that they could not pay it back. But now such loans had the imprimatur of the government treasury, and their value was therefore so far beyond question that they could be bundled--often with less-risky loans--to back securities traded on Wall Street. And the more such loans that could be handed out, the more of the mortgage backed securities could be produced. And all of a sudden there was money to be made on risky loans.
Around this time, the Clinton administration began to support lawsuits brought against lending institutions under the CRA. These lawsuits were settled for billions of dollars. But more importantly, lenders were terrorized by extortionist tactics of groups—like the infamous ACORN—seeking to prove that lenders were not complying with the CRA. And compliance with the CRA could be accomplished only one way: more risky loans.
Every externality was now driving lenders to make as many loans to as many poor credit risks as possible. But lenders weren’t feeling the deleterious effects of the bad loans. Why? Because everyone and anyone could get a home loan, causing demand for homes to shoot through the roof. Don’t believe me? Click below.
Look at the right side of the chart. From 1997 to 2007, there was such a steep increase in home values, it didn’t matter that one guy might default on his loan. Sure, the lender might be stuck foreclosing on a house, but he knows that someone else will buy the house tomorrow, when the damn thing will be worth thousands more. Besides, why would a mortgagee let his house get foreclosed when he can sell it himself for twice what he paid; or, rather, twice what the bank loaned him to pay for it?
This is when things really went crazy. When banks rely on housing prices in an eternal upswing, they can offer ridiculous things like no-down-payment loans, interest-only loans, adjustable rates, and loans to people with no income. Banks around this time would sooner have refused your kid a lollipop than turn down your loan application. And why would they? Let’s say I ask for a loan of 100,000 dollars to buy a 100,000 dollar house on whatever terms they were advertising that day. There is no need to check my income or credit history; if I default, the bank is left with a 100,000 dollar asset that will simply accrue value at an astronomical rate until they sell it again. And as long as every lender in town is looking to finance the next buyer, it can go on like that indefinitely. The lender can also rely on my built-in incentives not to default that arise out of the fact that my home will be worth more and more money as the years progress. And they get to count my subprime loan on their CRA compliance stat sheets.
This is approximately where we were when George W. Bush took his place on his father’s throne.
Part II
George W. Bush called his brand of governance “compassionate conservatism,” and, like the name implies, he had the best of intentions. That doesn’t make his administration an aberration, since most presidents take office with good intentions. LBJ intended to end poverty in America. Nixon wanted to keep the world safe for America. Carter wanted to keep the world safe from America. And even though Bill Clinton probably regarded the presidency as no more than a vehicle to having semi-consensual, quasi-sexual relations with some rather plain women, feminists are certain that his intentions were good. But Bush the Younger’s policy of using government resources to increase home ownership in poor and minority areas might seem peculiar because it seemed to stand in contrast to the principles of conservatism he championed. It was not.
If you have perused the rest of my blog you might remember that I once complained (well, more than once. if you read my blog, you know that I complain about something or other in every post. It’s sort of a theme.) that conservative principles only seem to remove government from your life if you work hard and raise a decent family. The Bush policy on low-income home loans was probably an extension of that principle, in that he believed owning a home ought to make poor folks settle down and work hard to stay out of foreclosure. Home ownership might even—-as the New York Times posited on December 20, 2008, without hint of sarcasm—-turn low income minorities into Republicans . . . . apparently because gaining a sense of responsibility and a willingness to work hard will make even the poor unfit for the Democrat party. (Don’t blame me for trafficking in these lurid stereotypes, blame those right-wingers at the New York Times.)
Whatever the reason, Bush wanted low income folks buying homes whether or not they could afford them. New housing developments rose with much fanfare--even personal visits from the president--in “blighted” areas, where home buyers of every income and race were eligible for taxpayer funded down-payments with adjustable rate mortgages. Unfortunately, incomes could not keep up with the astronomical rate at which housing prices were climbing. This--coupled with all the stupid policies preceding Bush that were still in place--led to more risky lending behavior in order to drive more sales, which pushed housing prices even higher, meaning even fewer people could afford new mortgages, causing more risky lending behavior, leading to higher housing prices, then fewer qualified buyers, followed by more risky loans, ad infinitum. Actually, not infinitum. More like about 11 years.
That's about when the adjustable rates went up, and some interest-only payments became bloated-interest-plus-principle payments. And then houses began to go into foreclosure. These were mostly the houses bought by people who couldn't afford them to begin with. If your income is high enough to take a real mortgage, why would you accept and ARM or an interest only mortgage? You might as well take a rent-to-own, or a payday-loan, or pawn something.
All of a sudden, there was an excess of homes on the market, and housing prices dropped. Without a large down payment, there was no stake to keep the more-recent buyers in their homes, especially the flippers and speculators. Many simply accepted foreclosure over making payments on a depreciated asset. Excess became glut, and the bottom fell out of the market. All those mortgage backed securities lost their value, Fannie and Freddie fell apart, and it's brother-can-you-spare-a-dime all over the place.
Bush apologists are quick to point out that he saw that Fannie and Freddie were ripe for disaster in 2002. They say he tried to do something about it several times, only to be rebuffed by the Democrats in the House of Representatives. And it's true that Barney Frank and the rest of the pimps on the House Financial Services Committee bear the blame for the collapse of the GSE's. Even the New York Times recognized Bush's prescience and lack of culpability in the hit piece it put together to blame everything else on him. But if Bush saw the underlying problem, why did his administration continue to push home ownership on anyone who could grip a pen?
"We absolutely wanted to increase homeownership,” Bush says. “But we never wanted lenders to make bad decisions.” Well if Fannie and Freddie were in the kind of shape his administration warned, then what other kind of decisions are there? None. Bush, like Clinton, pushed lenders over the edge. He can't say now that he didnt think they'd fall.
But I guess we shouldn't blame him. I mean, his intentions were good.
I've had a lot of fun ridiculing social conservatives and leftists in my previous posts. In the spirit of fairness, I'd like to take a moment to tell a joke at the expense of all those hopeless political vagabonds who think like I do.
How many Libertarians does it take to screw in a light bulb? None. The market will take care of it.
Yeah, guys like me are always railing against the government. The government taxes me too much. The government destroyed health care. The government ruined education. The government spent too much money freeing a country that didn't really deserve it. I apologize to all my friends and acquaintances who have had to sit through one of my libertarian rants. I just can't help it. It’s like a super power: the uncanny ability to trace any societal malady back to some action of government. (I also have the power to extract sexual innuendo from any sentence containing a direct object, and it's by far the more useful of the two.) But sometimes they screw something up so thoroughly and so obviously (that's what she said), you don't need tights and a cape to see it. And, invariably, it begins with the best of intentions.
Take housing for instance. All government wanted was to allow more people to buy a home. (As you can see, I like to anthropomorphize government.) To that end, Fannie Mae was created as a part of the New Deal, and Freddie came along 1970. These untaxed “government sponsored entities” (GSE) paid their politically selected officers millions of dollars and made exorbitant political donations to the--mostly democrat--members of congress who were responsible for their continued funding and existence. Few cared that the reflexive quid pro quo created from this relationship encouraged rampant corruption (more on this later). What mattered to everyone is that government’s intentions were good: if a home buyer could show that he was able to afford a reasonable mortgage and could drop a 20% down payment, the government would ensure that his mortgage would be funded, using money government had taken from everyone else. (For purposes of this post only, when you mentally picture my anthropomorphized government, it should look like Grimace, the large purple mutant shake fiend from McDonald’s commercials; skipping through an idyllic McDonaldland, obliviously crushing the other denizens beneath his huge feet. Hereafter, you can go back to picturing government as a larger, more bloated version of Rosie O’Donnell.).
But what if you can’t convince your bank that you can afford to repay a home loan?
The Community Reinvestment Act (CRA) signed by President Jimmy Carter in 1977 forced banks to lend to borrowers who were not good credit risks. The CRA was a law perfectly crafted to advance the government's benevolent desire to make it easier to buy a home. Yet for almost 20 years the act wasn't really enforced. Why? It has been posited that executive-branch grunts tasked with CRA’s implementation simply chose not to do so, perhaps realizing how ill-advised it is to force banks to lend money to people who can’t pay the money back. But I think the reason is more likely that making loans to people who can’t repay them hadn’t been properly incentivized yet. In other words, there was no way to make a bad loan profitable, so lenders avoided doing so.
Hello President Clinton.
In an approach to loans described by then HUD Secretary Andrew Cuomo as race motivated “affirmative action,” the Clinton administration in the mid-nineties imposed high-risk minority loan quotas upon lending institutions. The Clinton administration then led the 800 pound GSE gorillas into the subprime mortgage market to “benefit lower income families” who otherwise could not obtain loans. Of course, the reason low-income folks used to have trouble getting a home loan was because there was a higher-than-acceptable probability that they could not pay it back. But now such loans had the imprimatur of the government treasury, and their value was therefore so far beyond question that they could be bundled--often with less-risky loans--to back securities traded on Wall Street. And the more such loans that could be handed out, the more of the mortgage backed securities could be produced. And all of a sudden there was money to be made on risky loans.
Around this time, the Clinton administration began to support lawsuits brought against lending institutions under the CRA. These lawsuits were settled for billions of dollars. But more importantly, lenders were terrorized by extortionist tactics of groups—like the infamous ACORN—seeking to prove that lenders were not complying with the CRA. And compliance with the CRA could be accomplished only one way: more risky loans.
Every externality was now driving lenders to make as many loans to as many poor credit risks as possible. But lenders weren’t feeling the deleterious effects of the bad loans. Why? Because everyone and anyone could get a home loan, causing demand for homes to shoot through the roof. Don’t believe me? Click below.
Look at the right side of the chart. From 1997 to 2007, there was such a steep increase in home values, it didn’t matter that one guy might default on his loan. Sure, the lender might be stuck foreclosing on a house, but he knows that someone else will buy the house tomorrow, when the damn thing will be worth thousands more. Besides, why would a mortgagee let his house get foreclosed when he can sell it himself for twice what he paid; or, rather, twice what the bank loaned him to pay for it?
This is when things really went crazy. When banks rely on housing prices in an eternal upswing, they can offer ridiculous things like no-down-payment loans, interest-only loans, adjustable rates, and loans to people with no income. Banks around this time would sooner have refused your kid a lollipop than turn down your loan application. And why would they? Let’s say I ask for a loan of 100,000 dollars to buy a 100,000 dollar house on whatever terms they were advertising that day. There is no need to check my income or credit history; if I default, the bank is left with a 100,000 dollar asset that will simply accrue value at an astronomical rate until they sell it again. And as long as every lender in town is looking to finance the next buyer, it can go on like that indefinitely. The lender can also rely on my built-in incentives not to default that arise out of the fact that my home will be worth more and more money as the years progress. And they get to count my subprime loan on their CRA compliance stat sheets.
This is approximately where we were when George W. Bush took his place on his father’s throne.
Part II
George W. Bush called his brand of governance “compassionate conservatism,” and, like the name implies, he had the best of intentions. That doesn’t make his administration an aberration, since most presidents take office with good intentions. LBJ intended to end poverty in America. Nixon wanted to keep the world safe for America. Carter wanted to keep the world safe from America. And even though Bill Clinton probably regarded the presidency as no more than a vehicle to having semi-consensual, quasi-sexual relations with some rather plain women, feminists are certain that his intentions were good. But Bush the Younger’s policy of using government resources to increase home ownership in poor and minority areas might seem peculiar because it seemed to stand in contrast to the principles of conservatism he championed. It was not.
If you have perused the rest of my blog you might remember that I once complained (well, more than once. if you read my blog, you know that I complain about something or other in every post. It’s sort of a theme.) that conservative principles only seem to remove government from your life if you work hard and raise a decent family. The Bush policy on low-income home loans was probably an extension of that principle, in that he believed owning a home ought to make poor folks settle down and work hard to stay out of foreclosure. Home ownership might even—-as the New York Times posited on December 20, 2008, without hint of sarcasm—-turn low income minorities into Republicans . . . . apparently because gaining a sense of responsibility and a willingness to work hard will make even the poor unfit for the Democrat party. (Don’t blame me for trafficking in these lurid stereotypes, blame those right-wingers at the New York Times.)
Whatever the reason, Bush wanted low income folks buying homes whether or not they could afford them. New housing developments rose with much fanfare--even personal visits from the president--in “blighted” areas, where home buyers of every income and race were eligible for taxpayer funded down-payments with adjustable rate mortgages. Unfortunately, incomes could not keep up with the astronomical rate at which housing prices were climbing. This--coupled with all the stupid policies preceding Bush that were still in place--led to more risky lending behavior in order to drive more sales, which pushed housing prices even higher, meaning even fewer people could afford new mortgages, causing more risky lending behavior, leading to higher housing prices, then fewer qualified buyers, followed by more risky loans, ad infinitum. Actually, not infinitum. More like about 11 years.
That's about when the adjustable rates went up, and some interest-only payments became bloated-interest-plus-principle payments. And then houses began to go into foreclosure. These were mostly the houses bought by people who couldn't afford them to begin with. If your income is high enough to take a real mortgage, why would you accept and ARM or an interest only mortgage? You might as well take a rent-to-own, or a payday-loan, or pawn something.
All of a sudden, there was an excess of homes on the market, and housing prices dropped. Without a large down payment, there was no stake to keep the more-recent buyers in their homes, especially the flippers and speculators. Many simply accepted foreclosure over making payments on a depreciated asset. Excess became glut, and the bottom fell out of the market. All those mortgage backed securities lost their value, Fannie and Freddie fell apart, and it's brother-can-you-spare-a-dime all over the place.
Bush apologists are quick to point out that he saw that Fannie and Freddie were ripe for disaster in 2002. They say he tried to do something about it several times, only to be rebuffed by the Democrats in the House of Representatives. And it's true that Barney Frank and the rest of the pimps on the House Financial Services Committee bear the blame for the collapse of the GSE's. Even the New York Times recognized Bush's prescience and lack of culpability in the hit piece it put together to blame everything else on him. But if Bush saw the underlying problem, why did his administration continue to push home ownership on anyone who could grip a pen?
"We absolutely wanted to increase homeownership,” Bush says. “But we never wanted lenders to make bad decisions.” Well if Fannie and Freddie were in the kind of shape his administration warned, then what other kind of decisions are there? None. Bush, like Clinton, pushed lenders over the edge. He can't say now that he didnt think they'd fall.
But I guess we shouldn't blame him. I mean, his intentions were good.
Friday, March 13, 2009
Sunday, March 8, 2009
Obama and the income tax
The time has come to talk about the policies of Barack Hussein Obama. It can be a tricky thing, criticizing our new president, and I feel like a scamp just typing his full name. Of course, we all know that since the inauguration the wall has fallen, and the name taboo is no more. Still, just uttering those magical syllables really had the Chief Justice rattled, didn’t it? Well, rattled or not, I will be choosing my words more carefully than John Roberts did. And I won’t allow Obama to interrupt me.
Now I don’t want this post to be a complete splenetic diatribe against the president. That sort of thing has been done before by people who have sharper pens and more animus against Obama than I do. Besides, no one wants to read page after page of personal invective. Personal attacks are cheap and classless, and they accomplish nothing. So I’ll confine them to the single paragraph that follows.
You see, I just don’t get the whole Obama mystique. What is the allure? When I look at him I see an empty suit pseudo-intellectual who somehow rose to prominence on a platform of reform in the most corrupt political machine since Tammany Hall, and he did it by . . . organizing the community? What the hell does that mean? To me it means that he became a senator despite having accomplished nothing more impressive in life than somehow getting into Harvard Law School with a GPA under 3.3. How far under 3.3? No one knows, because his transcripts are apparently documents of import to national security not fit for public consumption. (Maybe that’s what has embittered me. If only I could suppress my high school transcripts, maybe I could be president, too. . . I mean, if I were also over 35 years of age....shut up.) It’s clear that Obama has risen to prominence swaggering from one sinecure to another. Along the way the people who hold his strings have put some nice copy on his teleprompter, and he’s managed to read it pretty well. But he’s still just a socialist metro-sexual incapable of a creative thought, gift-wrapped by his handlers into an attractive package. And they did a fine job, too, except they probably should have taped the ears down a little better.
Okay, I'm done.
But my real problems with the President is his fantasy that he can pay for his socialist utopia—or, as he likes to call it, hope 'n' change—with an income tax on the rich. What he fails—or refuses—to understand is that, even if it were a morally justifiable or economically feasible for the government to take money from the rich at the point of a gun to pay for his welfare state, he cannot get at a rich person’s money using an income tax. No, an income tax can only confiscate money belonging to people trying to become rich; the indolent rich are spared.
Consider a doctor fresh off of her residency who just landed a three hundred thousand dollar a year job to go along with her two hundred thousand dollars of debt. Inarguably, the income tax is a wonderfully effective method for the seizure of her money. Now consider a divorcee’ fresh out of marriage with three hundred million dollars and no job. (If you have three hundred million, why work?) The income tax can't touch her assets.
Now, which of these two women is rich? And which woman will feel the effects of Obama’s "tax on the rich"?
Warren Buffet falls into the same category as our imaginary divorcee’: rich and, for all relevant intents and purposes, unemployed. He is, in fact, one of the world’s richest people, yet, compared to his lifestyle and reputation, he has admitted that he has little of what the IRS would call “income.” (Incidentally, Buffet proudly voted for Obama, but since the Republican candidate was John McCain, it’s hard to blame him). Instead, Buffet lives very comfortably on his capital gains, stock dividends, and the huge pile of cash upon which he rolls around naked every night. Warren Buffet may be rich, but he is not a potential target of the income tax.
Consider again the stinking rich doctor I hypothesized in a previous paragraph. She lives off the money she receives in trade for the value of the work she does, or what her accountant might call her income. She pays her huge student loans, her exorbitant mortgage, her kids’ college fund, and her spendthrift husband’s credit card bills out of the portion of her income the government didn’t confiscate. And I suppose it serves her right after she put herself through medical school on the backs of the poor. More importantly, she is the “rich” Obama’s tax plan intends to soak.
Buffet commented indirectly on this paradox when he lamented the fact that his secretary pays a higher tax rate than he. And she does. Why? Because his secretary, the doctor I invented, my barber,and everyone else in the universe who pays an income tax has their “contribution” calculated based not on the assets they have, but on the money they receive for the work they do. The more productive you and I are, the more we are charged for the privilege of plying our respective trades. One of the great things about plying one’s trade in the United States is that it can make us rich. But Obama’s plan does not tax the rich; it taxes people trying hard to become rich.
Obviously, by removing more and more of what we earn, an income tax makes becoming rich a whole lot harder. This is bad for you greedy bastards that want to be rich, but it's possibly worse for the economy as a whole; quite literally, an income tax punishes productivity, and therefore discourages it. Not to sound too erudite/full of myself here, but a high national income tax represents a government policy to discourage productivity directly proportional to the rate of the tax. (I would address the effects of the tax on capital gains that Warren Buffet does get to pay, but I don’t want to remind the Obama puppeteers that he promised to raise that one to over 30%. Not only that, it’s a really boring subject. Frankly, I’ve never attempted a capital gains tax smirk-jerker, and I’m not sure I could pull it off without an emoticon or a rim-shot. I’m pretty sure the best I could do is snarky sarcasm.)
Yet we hang a halo of selfless patriotism over the heads of those luminaries—like Warren Buffet, George Lucas, George Soros, Bruce Springsteen, et cetera and ad nauseum—brave enough to support Obama’s income tax hikes. And what do those people have in common? They are already filthy rich. Obama could impose a 100% tax tomorrow and these paragons of altruism could continue living like kings until the country collapses around them—as it surely would.
If Obama wants to implement a confiscatory income tax, he has the majorities in congress to do so. But don't fall for the tax-on-the-rich line he has been tossing around. Rich or poor, the income tax is a tax on productivity, and it is only paid by those who choose to be productive, whatever the state of their portfolio.
The question is, at what tax rate do people say, "why bother?"
Now I don’t want this post to be a complete splenetic diatribe against the president. That sort of thing has been done before by people who have sharper pens and more animus against Obama than I do. Besides, no one wants to read page after page of personal invective. Personal attacks are cheap and classless, and they accomplish nothing. So I’ll confine them to the single paragraph that follows.
You see, I just don’t get the whole Obama mystique. What is the allure? When I look at him I see an empty suit pseudo-intellectual who somehow rose to prominence on a platform of reform in the most corrupt political machine since Tammany Hall, and he did it by . . . organizing the community? What the hell does that mean? To me it means that he became a senator despite having accomplished nothing more impressive in life than somehow getting into Harvard Law School with a GPA under 3.3. How far under 3.3? No one knows, because his transcripts are apparently documents of import to national security not fit for public consumption. (Maybe that’s what has embittered me. If only I could suppress my high school transcripts, maybe I could be president, too. . . I mean, if I were also over 35 years of age....shut up.) It’s clear that Obama has risen to prominence swaggering from one sinecure to another. Along the way the people who hold his strings have put some nice copy on his teleprompter, and he’s managed to read it pretty well. But he’s still just a socialist metro-sexual incapable of a creative thought, gift-wrapped by his handlers into an attractive package. And they did a fine job, too, except they probably should have taped the ears down a little better.
Okay, I'm done.
But my real problems with the President is his fantasy that he can pay for his socialist utopia—or, as he likes to call it, hope 'n' change—with an income tax on the rich. What he fails—or refuses—to understand is that, even if it were a morally justifiable or economically feasible for the government to take money from the rich at the point of a gun to pay for his welfare state, he cannot get at a rich person’s money using an income tax. No, an income tax can only confiscate money belonging to people trying to become rich; the indolent rich are spared.
Consider a doctor fresh off of her residency who just landed a three hundred thousand dollar a year job to go along with her two hundred thousand dollars of debt. Inarguably, the income tax is a wonderfully effective method for the seizure of her money. Now consider a divorcee’ fresh out of marriage with three hundred million dollars and no job. (If you have three hundred million, why work?) The income tax can't touch her assets.
Now, which of these two women is rich? And which woman will feel the effects of Obama’s "tax on the rich"?
Warren Buffet falls into the same category as our imaginary divorcee’: rich and, for all relevant intents and purposes, unemployed. He is, in fact, one of the world’s richest people, yet, compared to his lifestyle and reputation, he has admitted that he has little of what the IRS would call “income.” (Incidentally, Buffet proudly voted for Obama, but since the Republican candidate was John McCain, it’s hard to blame him). Instead, Buffet lives very comfortably on his capital gains, stock dividends, and the huge pile of cash upon which he rolls around naked every night. Warren Buffet may be rich, but he is not a potential target of the income tax.
Consider again the stinking rich doctor I hypothesized in a previous paragraph. She lives off the money she receives in trade for the value of the work she does, or what her accountant might call her income. She pays her huge student loans, her exorbitant mortgage, her kids’ college fund, and her spendthrift husband’s credit card bills out of the portion of her income the government didn’t confiscate. And I suppose it serves her right after she put herself through medical school on the backs of the poor. More importantly, she is the “rich” Obama’s tax plan intends to soak.
Buffet commented indirectly on this paradox when he lamented the fact that his secretary pays a higher tax rate than he. And she does. Why? Because his secretary, the doctor I invented, my barber,and everyone else in the universe who pays an income tax has their “contribution” calculated based not on the assets they have, but on the money they receive for the work they do. The more productive you and I are, the more we are charged for the privilege of plying our respective trades. One of the great things about plying one’s trade in the United States is that it can make us rich. But Obama’s plan does not tax the rich; it taxes people trying hard to become rich.
Obviously, by removing more and more of what we earn, an income tax makes becoming rich a whole lot harder. This is bad for you greedy bastards that want to be rich, but it's possibly worse for the economy as a whole; quite literally, an income tax punishes productivity, and therefore discourages it. Not to sound too erudite/full of myself here, but a high national income tax represents a government policy to discourage productivity directly proportional to the rate of the tax. (I would address the effects of the tax on capital gains that Warren Buffet does get to pay, but I don’t want to remind the Obama puppeteers that he promised to raise that one to over 30%. Not only that, it’s a really boring subject. Frankly, I’ve never attempted a capital gains tax smirk-jerker, and I’m not sure I could pull it off without an emoticon or a rim-shot. I’m pretty sure the best I could do is snarky sarcasm.)
Yet we hang a halo of selfless patriotism over the heads of those luminaries—like Warren Buffet, George Lucas, George Soros, Bruce Springsteen, et cetera and ad nauseum—brave enough to support Obama’s income tax hikes. And what do those people have in common? They are already filthy rich. Obama could impose a 100% tax tomorrow and these paragons of altruism could continue living like kings until the country collapses around them—as it surely would.
If Obama wants to implement a confiscatory income tax, he has the majorities in congress to do so. But don't fall for the tax-on-the-rich line he has been tossing around. Rich or poor, the income tax is a tax on productivity, and it is only paid by those who choose to be productive, whatever the state of their portfolio.
The question is, at what tax rate do people say, "why bother?"
Friday, March 6, 2009
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