American Elephants


It’s Simple. Democrats Do Not Know How to Do Growth. by The Elephant's Child

“A prominent Democratic polling firm has found that voters don’t view reducing income inequality as a top priority. Instead, they want economic growth.”
(emphasis added) WSJ columnist William Galston has the story:

Surveys of 3,000 Americans conducted between January and March of 2014 by the Global Strategy Group found that fully 78% thought that it was important for Congress to promote an agenda of economic growth that would benefit all Americans. Support for policies that help the middle class and bolster equal opportunity for everyone were also highly rated. Strategies to spread wealth more evenly and reduce income inequality received the least support. 53% believe that fostering economic growth is ‘extremely important,’ compared with only 30% who take that view about narrowing income inequality.” (emphasis added)

Well, well, well, well. But I thought that reducing income inequality was the bright shining goal of all Democrats. This is a leftist polling group! The results didn’t receive much attention when they were released in April, nor since. James Freeman suggests that  “the findings would have rudely interrupted the months-long media celebration of Thomas Piketty and his error-filled and widely unread book on income inequality. And the survey data suggest that the core message of President Obama and his political outfit Organizing for Action is off target. From increasing the minimum wage to forgiving federal student loans to mandating more pay for women, the Obama economic message is all about redistributing wealth, not creating it.”

Specifically, Mr. Galston notes that by “a remarkable margin of 64 percentage points (80% to 16%)” voters “opt for a candidate who focuses on more economic growth to one who emphasizes less income inequality.”

Trouble is, there is a deep secret on the Left. Democrats do not know how to create growth. The basic idea behind this version of the Democratic Party is that all good things are done by government, and only by government.  All the stuff that Obama has done to benefit his cronies — the wind farms, the solar arrays, the rejection of the Keystone pipeline extension, the rejection of private enterprise are meant to create growth, but to reward Obama’s bundlers and supporters first. Cast your mind back across the Obama administration’s efforts at progress. Any rapid economic growth there? Anywhere?

Have you not noticed that whenever the subject comes up, Obama starts talking about roads and bridges or infrastructure—apparently with no recognition of the fact that such governmental projects require layers and layers of permissions and plans and approvals and fundraising that would put any such project off for at least five years, probably more with the usual environmental lawsuits. Any jobs involved go only to union workers, but that is by design. Jobs for ordinary people seem not to be involved. Who listens to the people anyhow?

War on Women. ObamaCare. Minimum Wage. Renewable Energy. Building from the Middle Class Out. More Government Job Training. Economic Patriotism.

Their new focus on “economic patriotism” is exactly the problem. They cannot conceive of allowing American companies to escape any taxes by moving, and the only solution is to devise laws to prevent their doing so. I rest my case.



Treasury Will Pull Out All The Stops to Enforce Economic Patriotism! by The Elephant's Child

The Treasury Department could act as early as next week to stop companies from moving their headquarters out of the United States for tax purposes. “Economic Patriotism.” Where is these companies’ economic patriotism? Representative Sander Levin, ranking Democrat on the House Ways and Means Committee, which has jurisdiction over tax issues warned that “They’re preparing to act and they’ll act as soon they are ready.”

Treasury Secretary Jack Lew told Levin on Wednesday that he would not necessarily wait for Congress to go home before he would take unilateral action.  Wonder where he learned that trick?

With his brother Senator Carl Levin, (D-MI) Sander Levin has written legislation to” tighten the rules restricting so-called tax inversions, which are tax maneuvers in which U.S. businesses buy a company in a low-tax country to move their headquarters there.”

It’s the Burger King deal with Tim Horton’s Coffee Shops, and the move of their corporate headquarters to Canada, where total tax costs will be 46.4 percent lower, that has driven Democrats to start writing more confiscatory laws immediately. Burger King will continue to pay taxes on business done in the United States.

The Obama administration and Congressional Democrats have raised the alarm over possible consequences to the U.S. tax base.  Republicans  have been suggesting for some time that they should lower or eliminate the corporate tax, because the U.S. corporate tax is not only the highest in the industrial world, but the U.S. also taxes income earned abroad —which no other country does.

There is a long history going back to Martin Van Buren, of administrations that helped an economy to recover from a recession by cutting taxes. Cutting taxes allows companies more confidence in the future, and they are more apt to grow, expand, and hire — creating a better business climate— which in turn grows the economy.  Canada’s corporate tax was 43 percent in 2000, and is 26 percent today, and their economy is booming.

Democrats are fundamentally unable to grasp the idea that cutting taxes could  produce more income and make the economy grow. It simply does not compute. Treasury Secretary Jack Lew trained as a lawyer, but has simply moved through the corridors of government as a bureaucrat in one office or another. He got all huffy about the Burger King move, in a video at Bloomberg, mentioning all the advantages the U.S. provides —roads and bridges (you didn’t build that) and infrastructure!

So far as I can tell only 9 companies have actually done a tax inversion. A number have started to and backed out after being threatened.

Speaker John Boehner and Senate Finance Committee ranking member Orrin Hatch have warned that any Treasury measure that would be effective would likely lie beyond Lew’s authority.



The Difference Between Republicans and Democrats Spelled Out Clearly! by The Elephant's Child

Treasury-Secretary-Jack-Lew-seeks-rational-budget-approach

Here’s the difference between Democrats and Republicans —clear and simple.

President Obama has nattered on about “Economic Patriotism” and what they call “Corporate Tax Inversion.” Some corporations are finding it to their advantage to locate their headquarters in a country with significantly lower taxes. Medtronic is acquiring the Irish company Coviden and moving its corporate headquarters to Ireland.

The problem is American corporate taxes — which are the highest, at 35 percent, among the advanced economies in the world. Not only that, but the U.S. also taxes the income that American corporations earn overseas — something no other country does.

Democrats are up in arms. How dare they pick up and move? It’s not even patriotic to not pay taxes in your own country. Democrats intend to make “Economic Patriotism” a major issue in the fall campaign. (Good Democrats all hate big business).

Treasury Secretary Jack Lew, who should know better, has advocated “anti-inversion legislation.” Democrats are afraid that if a few companies do this it will open the floodgates and all sorts of American companies will locate abroad. Corporations who operate in the United States would still pay taxes on all the income earned in the U.S. but they won’t be paying double taxes to a foreign country and to the U.S. That gets very expensive, very fast.

There is, of course a very simple solution. You cut the corporate tax rate back to a rate more in line with other nations — or, gasp, even below. Yes, this is a Republican thing. Republicans like to cut taxes. The result would be a burst of activity from business, hiring, expanding, growing. The economy might even actually recover. It is how we have recovered so quickly from past recessions when Republicans are in charge.

Burger King has purchased Canada’s Tim Horton chain of coffee and donut shops, and plans to move their headquarters to Canada, where tax costs will be 46.4% lower. Canada has lowered their corporate tax rate from 43 percent in 2000 to 26 percent today. How much tax revenue did Canada lose by the dramatic reduction in their corporate tax rate? None. The lower tax rate raises more money.

For Democrats, this simply does not compute.

Secretary Lew said the corporate tax moves would mean that “all other taxpayers —including small businesses and hardworking Americans—will have to shoulder more of the responsibility of maintaining core public functions that everyone, particularly U.S. businesses, depends on.” Sigh. This man is the Secretary of the Treasury!

Lew’s remarks, delivered at an event hosted by the Tax Policy Center in Washington, came the same day Bloomberg News reported that Sen. Charles Schumer (D-NY) will soon introduce a bill that would slash the amount of interest an inverted firm can deduct from its U.S. income from 50 percent to 25 percent.
That will fix everything. Cut their deductions. Maybe they will lay off a few more people, and Obama’s recession will go on and on and on.


Haven’t Heard Much About August Jobs? Bad Report. Hushed Up! by The Elephant's Child

Didn’t we just hear Obama making a speech in which he extolled how well the economy is doing — that was in Minneapolis at the “laborfest,” in which he celebrated his “middle-out economics.” Over the past 53 months, he said, our businesses have created nearly 10 million new jobs, and in the last six months we have created  more than 200,000 jobs each month.

But in August there were only 142,000 jobs, for the first time since January. Participation in the labor market was 62.8 percent, the worst since the 1970s.

Those who have been unemployed for more than 27 weeks is high at 2.963,00031.2 percent of all unemployed. Those who are working part-time when they would prefer to be working full time dropped a  little to 7,277,000. If you add the under-employed to the unemployed, the broader unemployment rate is 12 percent.

This is a slow, sluggish recovery because of government action. Recessions are nothing unusual. There is a business cycle. When the signs turn positive businesses start to grow and expand and hire. The more things improve and the more they start making money, some enthusiasm is going to go too far. Over-expansion, a little greed, too much enthusiasm, and first thing you know there are some bankruptcies, and people get laid off, expansion plans are put on hold and a lot of marginal businesses go out of business.

We have a long record of recessions and recoveries and how they happen. Swift, short recessions happened because the administration clamped down hard on spending, cut the budget, cut taxes (especially on business) and eliminated unnecessary regulation.

The Obama administration believed that more money circulating in the economy (Keynesian economics) would somehow boost the economy just by moving around. (magical thinking, doesn’t work).

They believed the extra money circulating from government food stamps would somehow boost the economy, neglecting to notice that money came from the pockets of taxpayers. Obama invested enormous amounts of taxpayer money in solar energy and wind turbines, which observation of Spain’s disastrous history with renewable energy  should have dissuaded him. And of course business had to be controlled more. Americans were getting fat, and Michelle had just the remedies — more regulation. The auto companies couldn’t be allowed to go through a normal bankruptcy, but required a special government effort.

The Keystone pipeline would have created 20,000 jobs right off the bat in pipeline building with thousands of spin-off jobs in servicing the project. The Greens objected, end of project.

But perhaps the most notable example of government stupidity was the Great Gibson Guitar Raid. On the vague possibility that the tiny bits of ebony or rosewood used for guitar frets might have been imported without proper papers, Gibson was raided with an armed Swat Team, business shut down, raw materials and finished guitars confiscated. Huge losses from inability to conduct business. Gibson had the necessary permissions from all the countries involved, but the feds weren’t about to be embarrassed. Do you think that businesses pondering whether to expand a little didn’t notice that?  Or the Sacketts who were irrationally accused by the EPA of attempting to build a house on a “wetland” on an ordinary subdivision overlooking a lake? That’s regulation gone bat-excrement. Business put their plans on hold, waiting for a better business climate.

The left does not understand cutting taxes. They do not understand cutting regulation, because business must be controlled, or who knows what would happen? We have fairly large numbers of members of Congress who have never done anything else but government. Who believe firmly that good people do government and make nice benefits for the people, which will make the members of Congress feel good. Only bad people who are greedy work for private business, and they must be controlled. That’s where we are, and why.

As you have noticed, he’s not doing too well with foreign policy either.



U.S. Has Dropped to 17th in Economic Freedom! by The Elephant's Child

Flag_of_the_United_States_Picture

The Fraser Institute, a British Columbia think tank in Vancouver, studies economic freedom in the world, and regularly ranks countries in order of the economic freedom they grant. Between 1980 and 2000, the United States has ranked third behind the two city states of Hong Kong and Singapore.

In the latest survey, the United States has fallen to 17th out of the 152 countries the Fraser Institute has surveyed. Seventeenth! The survey’s authors suggest the legal system of the U.S., protection of property rights, freedom of international trade and increasing regulations are stifling economic freedom in the United States.  Worse, the US has tied Venezuela (which comes in dead last —152nd — for the largest reduction in economic freedom ratings.

The Fraser Institute study said “Unless policies undermining economic freedom are reversed, the future annual growth of the US economy will be half its historic average of 3%.”

The Top Ten Economically Free Countries Are:

  1. Hong Kong
  2. Singapore
  3. New Zealand
  4. Switzerland
  5. United Arab Emirates
  6. Mauritius
  7. Finland
  8. Bahrain
  9. Canada
  10. Australia

Belgium, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, and Spain have tumbled down the rankings over the past thirty years. Switzerland fell to 4th from 2nd, but the U.S. decline from 3rd to 17th was one of the largest — except for Greece which fell from 33rd to 78th, Italy fell from 49th to 70th, and Luxembourg fell from 6th to 25th.

Denmark, Finland, Iceland, New Zealand, Poland, Sweden and the United Kingdom (from 17th up to 9th), have all markedly improved.

The Bottom Ten

  1. Algeria
  2. Democratic Republic of the Congo
  3. Burundi
  4. Central African Republic
  5. Angola
  6. Chad
  7. Zimbabwe
  8. Republic of Congo
  9. Myanmar
  10. Venezuela

Countries formerly colonized by the United Kingdom have done better than countries colonized by other European colonial powers, which the authors attributed to the English common law system left behind by colonial administrators.

The English common law system provides for greater stability and protection under the law than French civil law. Under English common law legal changes occur as a result of precedents derived from judicial decisions rendered by judges. This leads to more gradual changes and greater constraint on the ability of political decision-makers to alter the law. No such check is present under civil law. Former English colonies had a higher mean per-capita income of $4,415 compared to others $3,725.

The object of the Left is always more control of the economy. And they just controlled us into the biggest drop, a tie with Venezuela, in the entire study. President Obama frequently remarks that excessive regulation has nothing to do with business. Nothing to see here, just move along. Of course over-regulation puts a damper on business, and on entrepreneurship. Who wants to start a new business when they don’t know what might be regulated next? There is a reason why so many businesses are sitting on hoards of cash. Business keeps telling the administration, and the administration keeps ignoring the problem. That’s what they are talking about when they speak of “the business climate.” High taxes and over-regulation adds up to a bad business climate.



We Have No Strategy and No Prospect of Getting One. by The Elephant's Child

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I find it truly interesting that Liberals are so much less concerned than Republicans are about the threat of terrorism, of militant Islam, of the actual threat to the United States, and why this should be so.

Liberals care about power — theirs. They don’t like mass democracy (in spite of their party name), middle class capitalism, the individual businessman’s pursuit of profit as well as the individual citizen’s self-interested pursuit of success. They care about being in charge, about the administrative state. Liberal social programs don’t work, they are not as good at administration as they like to think, and their experts aren’t all that expert — but the next program will surely work. Liberals have no foundational principles, but react to events on a case by case basis as they occur.

They essentially bypassed the Wars in Iraq and Afghanistan by lumping them under their hatred for George W. Bush, and didn’t learn much of anything about the countries, the wars, the people or the threats, and their only interest was in getting past it. It has left them dreadfully ill-prepared to understand foreign policy and national power and its needful uses. Nor, lost in a mush of political correctness and tolerance, are they even able to call mass murder and genocide — terrorism. They are simply unprepared to grasp the potential threat that faces us, nor able to plan how to treat with it. We are easy prey.



What Do You Do When Politics Trumps National Security? by The Elephant's Child

President Obama , back from vacation and the labor day holiday, remains — what? Uninvolved? Unconcerned? No, his primary concern is politics, which trumps lesser concerns like beheadings, invasions, genocides and other minor concerns. Funniest headline yesterday came from The Federalist: If You Are Not Using the Presidency, Do You Mind If We Borrow It?  Obama’s is not an activist presidency, but a  v e r y  s l o w  reactive presidency, after all other possibilities have been thoroughly exhausted, and maybe not even then.*

He ran for the job because he made a the keynote speech to the Democrat convention in 2004. He told the Democrats his (improved version) personal story and they loved it and cheered wildly, and he surely told himself that he was destined for such triumphs.  And the speeches have worked for him. He has a great baritone voice (when he’s not complaining about Republicans or how hard he works), and the bits of folksy stuff, the dropped  ‘g’s’ , calling everybody ‘folks,’ and using black preacher’s rhythms.

But now, he’s slipped into sheer demagogurey. Everything he has done has been successful, and the country would be made whole if it weren’t for those dastardly Republicans who keep spoiling everything.

Reminder: The 113th House of Representatives, has passed 297 bills, the previous 112th passed 301. The 113th Democrat Senate, under Majority Leader Harry Reid has passed 59 bills, the fewest number since 1972. Who is obstructing whom?

Obama did several fundraisers over the weekend, and spoke to the big Union Laborfest event in Milwaukee, which was much more ‘folksy’ that the fundraising speech. He told them he’d been coming to laborfest since 2008, and two weeks later “our financial system collapsed.” He said he doesn’t believe in “top-down economics” (whatever that is) he believes in bottom-up economics (redistribution, take away money from the wealthy and give it to the poor, and this accomplishes what?), and “middle-class out” economics, (whatever that is).

I placed a bet on you.  I placed a bet on America’s workers. I put my money on American workers and the belief that our economy grows best when everybody has got a shot — when folks who are willing to work hard can get into the middle class and stay in the middle class.  And I’ve come back to Laborfest to say that because of your hard work, because of what we’ve been through together, that bet is starting to pay off.

That is sheer gobbledygook. He goes on to take credit for the energy boom, credit for our leadership in worldwide energy production. He takes credit for our wonderful economy and our economic recovery. And he did all this wonderfulness by getting every inch of progress  working against a “lockstep opposition that is opposed to everything we do.” This same weekend, a noted Keynesian economist said that we’re really in a depression.

Median household income is down by more than $2,000 in real terms since Obama has moved into the Oval Office, and dropped $1,600 since the recession formally ended 6 months later. Labor force participation has fallen by 3 percentage points, an added 7 million workers who are not even looking for work. “This is half the normal pace of recovery, and the weakest rebound since the Great Depression. “And Obama has added $7 trillion  to the national debt, with little to show for it, unless you count 46 million Americans on food stamps as an accomplishment.”

The nonpartisan Congressional Budget Office has slashed its predictions for American economic growth in 2014. They forecast that the U.S. economy will grow by just 1.5 percent in 1014. That’s undermined by a poor performance during the first three months of the year. But that, of course, was blamed on the snow. Well, this is expected to be an even colder winter than last year.

President Obama seems to live in a fantasy world of his own concoction, or perhaps Valerie Jarrett’s. Everything’s fine except for the obstruction of the Republicans who won’t let him do anything important, which is why politics trumps national security, government transparency, immigration, failing government departments, whatever, and leaves him free to spend more time on the golf course. An increasingly desperate time for America.

ADDENDUM: *The Elephant pointed out that I said Obama was not an activist president and correctly objected as he is very activist in pursuing his America changing agenda. He’s right. I was thinking, and writing,  entirely in terms of national security and foreign policy where Obama apparently doesn’t want to be involved at all. My bad.




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