George Rebane

[This is the addended transcript of my regular KVMR commentary broadcast on 21 January 2015.]

Last night President Obama gave a well-delivered yet futile State of the Union speech.  It contained a list of shibboleths of the kind that the Democrats have long pilloried congressional Republicans during the last six years.  All of the president’s new “middle class economics” proposals targeted the tastes of true progressives and their low-information constituencies.  None have a snowball’s chance in hell of gaining traction in a Republican congress, especially since the President confirmed that last November’s historic election results have yet to reach the White House.

The main initiative that the president floated was another massive tax increase for his favorite populist target – America’s “rich” who are seen luxuriating in their filthy lucre ignominiously grabbed from the pockets of the poor and the middle class.  They must now be made to give a good portion of it back, and the federal government is just the agent to decide who pays and who gets how much of it.

The impact on the economy?  Not to worry, because all correct thinkers know that the efforts of businesses and individuals are not affected by how much of what they earn they get to keep.  Want proof? Just look at the booming 50s when the top tax rate on earnings was 90%, and even the 31% rate under President HW Bush.  But pay no attention to the actual revenues that these tax rates brought into the Treasury.  (more here)

However, it has been that no matter the tax policy in force, federal revenues have hovered in the 17 to 19% of GDP range for decades.  The only thing higher taxes affected was the state of our economy as measured by the likes of GDP growth, median earnings, consumer confidence, and unemployment.  And the acid test for this progressive proposition has always been ‘If tax rates don’t matter, why stop?  Let’s keep raising taxes until the government is fully funded.’  Now at this point, some little voice deep inside even the most devout liberal will call out, ‘Don’t do it, the Laffer curve really works.’ (more here)

Here in California there is another theory similar to the president’s on how local economies can be improved.  This local wisdom holds that a community’s economic fortunes depend not on economic factors – such as taxes, fees, regulations, codes, development costs, available labor pool – but on the hue of a community’s politics.  This wisdom teaches that conservative politics inhibit entrepreneurship, investing, and job creation, while liberal politics do exactly the opposite to induce economic growth.  But to sell such policies, even to a left-leaning electorate, they must first be coated with a pleasant shade of purple.

All this comes home to us in Nevada County as we search for ways to encourage our faltering local economy.  Our county’s leftwing pundits tell us we are doing poorly because we do not ‘play ball’ with Sacramento, but are instead ‘thumbing our noses’ at the state’s liberal power brokers by electing too many conservatives.  According to this view, businesses that consider relocating to Nevada County are sensitive to such political obstinacy, and will therefore choose to go elsewhere.  Many have even been driven as far as Nevada and Texas.

There’s more to be said about what we heard last night and what we are being told daily about how our earnings should be redistributed.  For now let me leave you with some words from Benjamin Franklin who said, “When the people find they can vote themselves money, that will herald the end of the republic.”  If we listen carefully, we may already hear the trumpets of a new age approaching.

My name is Rebane, and I also expand on this and related themes on georgerebane.com where the addended transcript of this commentary is posted with relevant links, and where such issues are debated extensively.  However my views are not necessarily shared by KVMR.  Thank you for listening.

[Addendum]  President Obama’s speech was just the plain vanilla wrapper hiding some pretty dreadful details given that you are one of the country’s wealth producers.   On the economy the man did his best to run up the ‘Mission Accomplished!’  The ‘facts’ presented were positioned to fool all but the most skeptical who have been paying attention these past six years.  Associated Press – no conservative outfit by any measure – did a quick fact check.  Here are some findings.

Job growth still lags 1.7M full time workers from the start of the recession.  The job growth has been mostly in lower paying and part time jobs.  Tepid wage growth has been about 2% annually, compared to better managed recoveries that have typically seen 3.5 to 4% in recession recoveries.  Median household income is still 4.5% lower than when the recession began.

Obama’s promised free community college attendance is really an unfunded mandate on the states which have to pay a quarter of the tuitions.  There is no greater guarantee under this freebie that students will be making better decisions about studying job qualifying skills or going on to complete a four year degree.  But it does guarantee a new government bureaucracy and a $60B bill over ten years for taxpayers.  The stealth gotcha going along with this bamboozle is the gutting of the current 529 program that lets families set aside money for their kids and grandkids education.  The earnings from these funds have passed on to the kids tax-free, making it possible for families to self-fund the school costs of their offspring.  Obama intends to start taxing these earnings at the increased capital gains rate – talk about being pernicious or butt stupid, take your pick. (more here and here)

And Obama proposes to increase the death tax to 60% and change the cost basis of inherited assets to the original value paid by the deceased.  Now these are added taxes on accrued wealth on which taxes have already been paid.  The harm that such a government wealth grab will do, not only to beneficiaries, but to earners who are working to assemble an estate for their progeny. (more here)

Then we have the attempt to cover up a disastrous foreign policy by claiming that the abject failures in Syria, Iraq, and Afghanistan (I could go on) have been successes.  We have screwed over our allies and ignored advances of militant Islam on three continents.  The Mission Accomplished banner should now read ‘Mission Amended’ as we plan to send ever more military into the fray in the attempt to recover what we already won with great sacrifice and treasure.  (Can anyone name just ONE foreign policy accomplishment of Hillary Clinton that would justify her using ‘Secretary of State’ on her resume?)

Finally, the Big Lie about climate change and “hottest years on record” was unbelievable.  Controllable AGW is still the biggest single global lie being swallowed by the carelessly ignorant and the terminally stupid.  Holman Jenkins summarizes the latest here.