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Smart Grid is Kinda Dumb

Smart Grid is one of those phrases that everyone likes the sound of, but know little about.  What is the Smart Grid?  On the surface it would seem it is like the electric grid we have now, only better.  Wikipedia says…”A smart grid is an electrical grid that uses information and communications technology to gather and act on information, such as information about the behaviors of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.” (http://en.wikipedia.org/wiki/Smart_grid)  Wow, that sounds great when do we start? electrocuted man

Whenever “experts” are interviewed about this they concentrate on the supply chain “smartness”, but they rarely dwell on the demand solutions of the “Smart Grid”.  Supply chain changes are very good, in that they reroute supply of energy on the fly, to make sure the grid stays electrified.  The demand side is where manufacturers install devices on your appliances, so the Public Utility can control them.  This is said to be necessary if you as the consumer are using more than your fair share of electricity, and more is needed for high priority customers.  So the solution to not enough power, is to ration who gets the power.

An early sign that we are headed in this direction is PSE&G’s (NJ utility) Cool Customer Program.  There may be similar programs being rolled out throughout the country.  It is said to “Save energy…save money…and help the environment at the same time.  An easy, voluntary way to manage your home energy use in the summer…and all year round.”  This voluntary program gives you a setback thermostat, and a $50 credit on your bill.   This sounds like an awesome program, since the setback thermostat is worth over $200.  If you read more of the details, they let you know how you get to save the environment too.  On those particularly hot days when the utility does not have enough supply of electricity to satisfy their customers, THEY TURN OFF YOUR AIR CONDITIONING!  Just think how much energy you will save when they cycle off your air conditioning every 15 minutes.  They assure you that this will only happen on the hottest days of the year.

Why wait for manufacturers to install the monitoring devices on your dishwasher, when Air Conditioning is one of the heaviest uses of electricity.  It is not surprising that this is the earliest demand target.  If there are not enough volunteers, however, we can logically assume where this program goes next.  Phase two probably makes the set back thermostat required in order to receive power.  Phase three is when they just come and take away your air conditioner.  Phase four they have another family move into your house.  You are probably using more than your fair share of electricity anyway.

In the old days, price would regulate the use of products such as electricity.  If you use more, you pay more.  Markets would lead us to the right balance between supply and demand.  As the price goes up, we find cheaper energy, or invent more efficient ways to use it.  This does not seem to be enough anymore.  ‘If we are to save the environment we must force people to behave a certain way’, seems to be the vision.  The standard solution to every problem out of government, or quasi-government such as public utilities, is more control and less freedom.    

Sick, not Stupid

In the aftermath of the Sandy Hook shootings there has been talk of trying to do something about mental illness.  The idea people are grappling with is trying to determine before the fact; who may be likely to commit the kind of horrific mass shootings as what happened in Connecticut.  Along these lines the President, in his media event of a week ago, wants to have the CDC do a study on the subject.  It should go without saying that there is certainly a mental problem no gunsinvolved when someone decides to commit mass murder.  The goal should be to find the best way to prevent these events from occurring.  Is this the best way to achieve that goal?  

John Lott (“More Guns, Less Crime” author) in a recent Wall Street Journal Op Ed pointed out that there has been only one shooting where more than 3 people have been killed, in the last 60+ years where the victims were allowed to be armed.  All other shootings took place where guns were prohibited.  In a country where 39 of our states allow concealed carry, this fact cannot be a coincidence.  Two recent examples of mass shootings drive this point home.  These examples took place in states that allowed concealed weapons, but the location of the shooting did not.    

Colorado allows the concealed carry of guns for those who have a permit.  In the Aurora Colorado shooting at the premier of Batman where 12 were killed and 58 wounded last summer, the theater strictly prohibited guns.  There were 9 theaters within a 20 minute drive of the home of the shooter that were showing this premier that night.  This was not the largest, it was not the closest, but it was the only one of the 9 theaters that did not allow guns.  This meant that he could kill with impunity without the risk of being shot himself.  The act surely shows the behavior of a sick individual, but the location was thought out.

In the Ft. Hood shooting in 2009 where 13 soldiers were killed and 30 more were injured, guns were not allowed.  It may seem strange that an army base does not allow weapons.  In fact, it was civilian police who stopped the shooter.  The largest Army base in the world called 9-1-1.  This federal property located inside the state of Texas is under federal law, not the concealed carry law that Texas has adopted.  If this sick perpetrator had tried this act anywhere outside the army base he would have likely been shot dead by a citizen or army personnel who are only allowed to be armed outside the base.  It seems surreal that these trained professional soldiers can carry their weapons outside the base but not inside.  The state of Texas trusts them more than the federal government who trained them.  Again, if you analyze the decision of where the shooter decided to commit this heinous act, there is logic to it.

It is revealing that all of these sick, mentally ill, deranged people made the rational, thought out, logical decision to shoot people where they could do the most damage.  They were almost guaranteed that their victims could not shoot back.  Perhaps there are times when it can be determined who will commit such acts, but there is one sure way to allow people to protect themselves.  A federal law allowing concealed carry would permit people to greatly reduce the impact of these shooters.  The fact that these shooters and others made a cold calculated decision to only commit these killings where the victims were unarmed is instructive.  Concealed carry could have prevented the attempt completely.

Social Security and Medicare are already Welfare

We have a basic problem in this country that we are not willing to face.  Over time our retirement programs of Social Security and Medicare have changed from insurance type of programs into Welfare programs.  We have overpromised and underfunded retirement benefits that we cannot afford.  Even these current “fiscal cliff” negotiations, which were supposed to force some tough decisions on the main drivers of our debt, appear to be headed toward postponing hard decisions.  The continual avoidance of dealing with these issues is partly due to the false notion that people paid into these programs, and are entitled to the benefits they are receiving.  They did pay in, but not nearly at the rate they are collecting.  The US government is either the worst insurance company ever, or these are welfare programs. Cane batter

Any fair analysis must combine the pay in, and benefits of both Social Security and Medicare.  To analyze only the one that is reasonable (Social Security), without the other (Medicare) is completely dishonest, since nearly all seniors are on both programs.  This would be like getting a great deal on your cable and ignoring your lousy internet rates when both are supplied by the same company.  There have been many different studies that look at the pay in and pay out of both programs.  Generally each senior will get back $100,000 – $200,000 more in benefits than they paid in (http://money.usnews.com/money/blogs/planning-to-retire/2011/01/06/will-you-get-back-your-social-security-taxes-in-retirement).  The older you are the better your deal, since the current rates of pay into Social Security (12.4%) have only been in place since 1990.  A transfer of wealth like this from taxpayers to beneficiaries is usually defined as welfare. 

Medicare benefits are going to be roughly the same throughout the income range once the changes are in place to the drug benefit next year.  There is, however, a skew in Social Security benefits for low end workers.  Namely, those at the low end of the pay scale receive 4x their yearly pay in amount, while those the top end receive 2.6x their yearly pay in amount (http://www.justfacts.com/socialsecurity.basics.asp).  In addition, the program which was originally designed to distribute benefits tax free, now subjects nearly all benefits to income taxes.  This also lessens the benefits for those with higher incomes.  There is no private insurance plan that is set up to discriminate based on income, but this is an element in most welfare programs.

If we want to have a serious discussion about solutions, we need to start speaking the truth about these programs.  During everyone’s working life, they receive a document from the Social Security Administration which shows how much he/she has contributed, and what payout they can anticipate.  This document should add Medicare, and continue to be sent to people after retirement.  Perhaps if the numbers start going negative on retirees yearly forms, they will have a better understanding of the problem.  There may even be some humility on the part of seniors, particularly if they fear they are burdening their grandchildren.  This could be a good start toward appreciating our predicament.

Once people have a proper understanding of the problem, solutions are much easier to discuss.  When Social Security began, average life expectancy was about 65, it is now 78 (http://www.cdc.gov/nchs/data/hus/hus11.pdf#022).  The annual cost of living increase was in 1974.  There are some simple solutions to the problem once the mindset is corrected.  There was a proposal to raise the retirement age by 1 month per year for the next 48 years.  Perhaps add to this raising the eligibility of Medicare by 2 months per year until it catches up to Social Security.  Still allow people to still start on SS at 62, but at an even lower payout.  Even add Medicare at 62, but with higher copays.  Reduce the cost of living increase by 1%.  Even implementing just some of these will extend the solvency of these programs.  

People receiving the Social Security and Medicare Bundle are always willing to talk about reductions in Welfare programs, and not the programs they benefit from.  It is not their fault, because they have been told for decades that they are collecting on an insurance type of program that they paid into.  Until we change the understanding of how our retirement programs have morphed into welfare programs, we will not be able to deal with solving these problems.

For the Children

Access to information and the broad education of the public should mean that cheap stunts or manipulative ploys would be difficult to get away with.  Well that certainly doesn’t seem to be the case, as we saw one heart tugging attempt after another this week.  At issue is the use of children to manipulate the public to your political advantage.  The President of the United States, and the NYC bus driver’s union both exploited children in their pitch for people to rally to their causes this week.  It is amazing that this does not turn people against them, but it must be working on oliversomeone.

The President showed up at his much anticipated speech about gun control surrounded by children and their parents.  These were children who had written letters saying they were scared in the aftermath of the Sandy Hook shootings.  Did he use this opportunity to point to things that have worked in the past to reduce gun violence?  Is he pushing for something like concealed carry laws, which have reduced gun violence wherever they have been tried?  No, he just wanted to borrow these children as background props for a speech used to badger congress to pass gun control legislation.  It doesn’t really matter that the laws he is pushing for have no proof of being successful in the past.  He got a chance to stand in front of children, and look like he cares.  Apparently this means that whatever he says will help the children.

The NYC school bus driver’s union decided to outdo even the President in child exploitation.  They are on strike because the mayor is going to put the contract for school bus driving out for bid.  The city uses a private company for bus service, but has not put it out for bid since 1979.  As part of the bid process the union wants the mayor to require that all bidders must honor the union contract.  The mayor has refused, and the union has gone on strike.  The drivers can apply for work at the company who wins the bid, and likely will, but may not get the sweetheart contract they have currently.  Of course the taxpayers and parents will benefit if the routes are more efficient and less expensive.  It is a good guess that waiting 33 years before bidding out the work has led to some complacency.  Mayor Bloomberg took the rare step of apologizing for not addressing this sooner, since he has been the mayor for 11 of the years.

The TV and radio ad being run by the union to try to rally support to their position is perhaps the most shameful use of children in a long time.  The 30 second ad playing on local media has pictures of crashed buses, while a voice talks about how inexperienced drivers and “for profit” companies will put your children at risk.  Also, in the background are children singing “the wheels on the bus”.  http://www.youtube.com/watch?feature=player_embedded&v=DyGG_WzAdJs.  The ad is so despicable in so many ways.  No one is calling for less qualified drivers.  In fact, there is nothing keeping the possible new company from hiring all existing drivers.  The current company who the drivers work for is “for profit”, and private already!  The ad is basically laying out the case for ‘no change or your children will die’, and it is probably just a coincidence that this sounds like blackmail.

Whenever someone advocating a position is surrounded by children or invokes “protecting the children”, we should all know that the manure is about to start flowing and run to turn off the broadcast.  If their argument could stand on its own merits, they wouldn’t need the children.  We live in the age of communication, with more outlets for information than ever before.  This type of sideshow pitch should not work with today’s highly educated, highly informed public.  This tactic is as common as ever, so it must work.  Otherwise, why would they continue to do it?

Christian Damnation

There’s a pervasive misnomer in society which suggests that America is a Christian nation of some kind.  More specifically, that America was founded on Christian values.  It’s not.  And it wasn’t.  America is a free democracy, not a Christian theocracy.  That’s why there has never once in our history been an instance of legislation, policy or decision making which references a Christian foundation.  When was the last time a lawmaker or official said, “Well, we are a Christian nation and Christ says ‘xyz’.  So let’s do ‘xyz’.”  The idea of Christian foundation is nothing more than tired rhetoric from religious flakes who are either trying to indulge their arrogance or satiate their insecurity.Preacher

I have searched high and low to find any spiritual reference or reference to a higher power in any of our country’s writings or legislation and the few places where it shows up don’t even have anything to do with Christianity.  We have ‘In God We Trust’ on our currency which is little more than some formalized looking slogan of sorts.  We mention God in our Pledge of Allegiance.  We mention it secondarily to the colorful flag itself.  Some courtrooms still use “So help you God” in a witness’s oath.  When it is used, I wonder if jurors are then more so convinced the witness’s testimony will in fact be the truth.  Even in the constitution, the few references to a higher power come in terms like ‘creator’ and ‘inalienable rights’. 

“The founding fathers who wrote our constitution were all Christian.”  This is a defense which is often trumpeted by the spiritual brain wash victims who feel they must link their faith to their patriotism.  Well, even if that’s partly true, the founding fathers who wrote our constitution were also all male.  They were all white.  They were all heterosexual (as far as we know).   I guess it makes just as much sense to say this country was founded on white, male, heterosexual values.  How can people be so arrogant as to decide which of our founding fathers’ common traits is the trait which signingserved as their primary motivation in writing the constitution?  And if there was a foundation of values which served as the impetus in writing the constitution, don’t you think the founding fathers would have mentioned it?  The constitution is one of the most clearly written documents in history.  They belabored over every portion of it to avoid any confusion or ambiguity.  Yet, its supposed foundation of Christianity was left to be some kind of cryptic cipher or a Where’s Waldo search?  That would be like writing the Communist Manifesto without ever once mentioning socialism.

A further constipation of thought in claiming Christian foundation within our constitution is to suggest that the rules and laws and values in the constitution mirror those of Christianity.  Once again, how dare anyone suggest that’s where the motivation must have come from?  Had none of the founding fathers ever been associated with Christianity, don’t you think they would still have been able to make laws under the constitution making murder illegal?  The fact that murder is bad was a notion shared by just about every civilization prior to America.   Are Christians so arrogant as to think they had cornered the market on that notion?   

After conceding to the fact that there’s no means of proving Christian foundation through anything that’s written, a lot of bible thumping nuts will then resort to claiming this is a Christian nation simply because Christians account for over 60% of the population.  Is that all it takes?  Any numerical majority status within the population is grounds to title that nation accordingly?   If that’s the case, then titling America as a Christian nation counts just as much as titling it a white nation.  A heterosexual nation; A right handed nation; An overweight nation; A nation who doesn’t like anchovies.  Etc, etc, etc…

constitutionTrue faith is a very introspective entity.  It manifests itself in body, mind, heart and soul.  It shouldn’t be some badge that has to be worn on the sleeve.  A true believer should not have to validate their beliefs by insisting those beliefs serve as the foundation of their country’s structure.  If you feel compelled to satisfy the term ‘foundation’ with reference to our country why not simply say this is a nation which was founded on ideals like life, liberty and the pursuit of happiness?  Although, Christians will probably claim they invented those ideals.  If they didn’t, then it must have been Al Gore.

Gun Solutions Not Gun Control

In the wake of the Connecticut school shooting, there is a desire to do something to try to prevent similar types of incidents from occurring again.  The liberals understand this, and have run with it.  They have run in the direction that feels good, but has no proof of effectiveness.  Conservatives have the solution that has been proven everywhere it has been tried, yet are silent on this issue.  Rather than Republicans answering questions about bad Democratic ideas, the President should be answering questions about Republican legislative proposals.  Where is the proposal from gun bana republican to allow for concealed carry rights throughout the country?  This has helped reduce gun violence everywhere it has been tried, and could be administered by each state.  With one proposal the conversation could be changed from what feels good to what works.

There are now 39 states that have concealed carry laws (where you can receive a concealed weapon permit if you meet certain criteria).  This is up from 9 states that had these laws in 1986, and has been pointed to as being instrumental in the drop in gun violence in these states. (http://en.wikipedia.org/wiki/Concealed_carry_in_the_United_States).  The recent shootings in CT and Colorado were cases where concealed carry guns were not allowed.  In the case of Sandy Hook school, it is not allowed in the entire state.  In the case of the Colorado movie theater, there is concealed carry allowed in Colorado, but specifically not allowed in that particular theater.  Imagine if the 5-10% of the population who typically carry guns when permitted, had them in that Colorado theater that night, or in the Sandy Hook school that day.  How many lives might have been saved?  Concealed carry should be part of the national debate on guns.

In 2008 some of the strictest gun control laws were lifted in Chicago and Washington DC.  According to the conventional wisdom in the media, this was supposed to lead to the “wild west”.  Instead gun crime and murder rates have plummeted in both cities.  (http://www.foxnews.com/opinion/2011/09/30/media-silence-is-deafening-about-important-gun-news/).  The fact that you have heard nothing from the media in terms of the removal of these gun control laws, is all that you need to know.  If there was a case to be made that the elimination of gun control led to more crime, rather than hearing crickets, it would be force fed to us daily in the anti-gun media!  This is typically what happens when these laws are removed or concealed carry is implemented.  John Lott has been a leading light on this issue started with his book, “More Guns, Less Crime”.

Right now all we hear from Democrats and the media is which guns we can eliminate, or what restrictions we can put on the law abiding citizenry.  Even gun advocates are taking a narrow, elitist view with the idea of one armed guard in each school.  Where are the voices advocating more freedom to defend ourselves from horrific crimes such as these?  With over 200 million guns currently in the US, we already know the bad guys can get them.  Let’s let the good guys to have them as well.

Shut it Down

The Republicans need a new strategy for their upcoming negotiations with President Obama.  The last round, they had a distinct disadvantage where doing nothing would have led to a terrible consequence, namely everyone’s taxes going up.  With these negotiations behind us, we no longer have the sun setting of good policy, which requires action for it to continue.  We now have 3 events that are coming in the first quarter of 2013 which will allow for more reasonable negotiations.  The “sequester” (automatic cuts in defense and other departments), the “debt ceiling” (increasing borrowing authority for the government), and the end of the “Continuing Resolution” (aka CR, that funds the government daily).  Of these opportunities, republicans should use the CR to make their stand.

government closedAll of the media is talking about the debt ceiling as the big showdown.  The last negotiations were bad PR for republicans in 2011.  They were also quickly followed by a credit downgrade of US debt by the rating agencies.  It is popular belief that the status of the negotiations in Washington, and the dysfunction of these discussions, is what led to the downgrade.  In fact, the lack of seriousness of the President to deal with our debt problem is what led to the downgrade.  Using the debt ceiling to be the threat, will only continue to have people wrongly looking at the process not the true problem.  Republicans should raise it enough for a year of deficit, and take default out of the discussion.

Democrats were looking to delay the sequester, which gives republicans an advantage in this area.  It is likely that the democrats will agree to different cuts to avoid this, but if not $500 billion over 10 years will be cut out of defense.  Republicans should be prepared to let the cuts stand.  It is roughly 10% of the defense budget.  If Republicans are serious about shrinking the government, they should be willing to cut this much out of the defense budget.  We won WWII 67 years ago, we can start by bringing troops home from Germany and Japan.

This leaves the CR for Republicans to make their stand.  If the President doesn’t agree to entitlement spending cuts that will be phased in over time, in order to save our country, let the government shut down.  This will accomplish the following…

-          No one can report that the republicans are risking the first possible default on US Treasuries.

-          If a credit downgrade comes, it will not be because there is a risk that we will not pay our bills, it will be because we are borrowing too much, and the president is not serious about addressing spending cuts.

-          The negative PR from the government shutdown of 1995-96 had many different scenarios at play.  It was heading into a presidential election year which had the senate majority leader running against the sitting president.  This shutdown would be 3+ years from a presidential election, current leader Mconnell is not running for higher office, and neither is the President.

-          We would actually save money during the shutdown, and cutting costs is the point.

-          It would fire up a disheartened conservative base.

-          It would highlight the real differences between the parties, not focus on credit worthiness.

-          Non essential functions are shut down.  Maybe they can stay that way.

There is only one party in Washington who is serious about cutting spending, but it needs to be made clear to the American people.  The president keeps talking about reducing spending, but never seems to have any cuts in his plans.  The best way to highlight this is letting the CR end on its expiration date of March 27, unless the President approves meaningful cuts.  If the government shuts down due to this standoff it will not roil world markets, we will not default on our debt, and it will highlight the different philosophies in Washington D. C.

Negotiating Towards Different Goals

sheep off a cliffThe discussions in Washington DC have been reported on ad nauseam.  There are more reports on the politics than the actual issues, which is typical.  Another popular storyline is the concern over the fiscal cliff.  The idea being that any deal must get done in order to avert automatic tax increases and budget cuts set to occur at the end of the year.  One interesting aspect that has not been discussed very much is the goals of the participants.  The republicans and democrats seem to be trying to solve two completely different problems, and the President has the upper hand. 

The republicans think they are trying to solve the problem of our huge federal debt, and how we can set ourselves up to not add a trillion dollars to it each year.  The concern is that it is only a matter of time before this will lead to a debt crisis.  Devalue of the dollar, hyperinflation, economic turmoil, and a much worse standard of living would be the ultimate result of their worst fears.  A real possibility in the eyes of republicans is the crisis going on in Europe, and that if we do not curb our spending we will end up like Greece.

The democrats think that the debt has always been there, and the real problem we face is that the United States is not a fair place.  These negotiations are a way to implement policies to fix the disparate results of our system.  One can simply look at the president’s proposal to avoid the fiscal cliff.  This included double the tax increase than just letting the Bush tax cuts expire on the top 2% of earners would garner, and no further cuts in entitlement programs.  There is also an additional stimulus of $50 billion and elimination of the debt ceiling, which limits the government’s ability to borrow. 

This is just the latest example that the debt is of no consequence to Mr. Obama and democrats.  He has been in office for 4 years, and has never suggested any changes to entitlements, which all agree are unsustainable, and the main drivers of our long term debt.  Perhaps they believe that all of this excess borrowing hasn’t hurt us yet, so let republicans worry about it.  They have much more pressing problems to deal with like income inequality.

Until the republicans realize that they are not negotiating toward the same goal, they are not really in the game.  The high debt can be used as an excuse to raise taxes now and in the future.  These types of negotiations have been in the past compared to Lucy pulling the football away from Charlie Brown.  Republicans, of course, are always represented by Charlie Brown.  That comparison seems too mild.  Maybe if Lucy hit Charlie over the head with a baseball bat it might be more appropriate.  These negotiations may determine how often the President will be able to play whack-a-republican in the future.      

How to Become a Racist at Age 76

This is a story that’s the opposite of your typical coming of age in terms of racism.  We often hear about stories of people who were born or raised as a racist, and come to learn that there is no reason to harbor such hate.  These are sometimes rural people who did not have much education, or exposure to those of a different race.  Typically, these are feel good stories about someone seeing they are wrong and changing their ways.  There are not too many people who go through their life loving all races equally, and at a late age succumb and convert to racism.  John McCain has arrived at age 76 living such a life, only now to apparently become a racist.john mccain

The reason that we know John McCain is racist is that important and respected people have told us that his objection to the possible nomination of Susan Rice (current Ambassador to the UN) to the post of Secretary of State proves he is racist.  Mr. McCain along with other Senators has raised concerns about Ms. Rice due to her statements after four Americans were killed in Libya.  Ms. Rice appeared on 5 Sunday news shows on behalf of the Obama administration five days after the Consulate in Libya was attacked, and mislead the public about the cause of the attack.  Mr. McCain claims that this is important because she either knew she was lying or should have known she was lying.  Countless pundits, hosts on MSNBC, and the Congressional Black Caucus have accused Mr. McCain of being a racist, because he has stated that Ms. Rice is unfit for office. 

John McCain has been in the public eye since 1973 when he returned from Viet Nam after being tortured as a POW.  He has served in elective office since 1982, and run for office 9 times including twice for president.  He enthusiastically supported 2 different nominees for Secretary of State who were black in Colin Powell & Condoleezza Rice.  In 1991 his wife returned from Bangladeshi with a three month old baby from Mother Teresa’s orphanage, they adopted this baby of color, and she is their daughter Bridget.  Somehow through all of this public scrutiny and acts of colorblindness, we have all somehow missed that John McCain is a racist.  Maybe this is that rare case of late life conversion to racism.

Perhaps it is possible that you don’t become a racist at 76 with zero history of harboring these thoughts of hate.  Maybe Mr. McCain deserves the benefit of the doubt that his problem with Ms. Rice is what he says it is.  You can say he is overreacting, judging to harshly, or even putting too much weight on one statement, but shouldn’t there be a track record of questionable behavior before you can accuse someone of being a racist?  What is it about today’s political environment that allows this to occur nearly unchallenged?

How do you become a racist at age 76?  Ask a Democrat to tell the truth.

Capital Losses

There are discussions underway in Washington D.C. between Democrats and Republicans to come to a compromise in order to avoid the country going over the so called “fiscal cliff”.  This is the year end arrival of tax increases and spending cuts that many economists think will send the country into recession if it is allowed to occur.  During these discussions there is a fundamental change in one of the party’s views on an element of encouraging growth in the economy.  This is the concept that low capital gains taxes help the economy, and actually increase revenue to the Federal Government.  Today’s Democratic Party no longer believes this is true.

Capital gains tax rates have not gone up in 26 years.  One of the few things that the Dem donkeyparties had agreed upon up until recently was that when you tax capital at a higher rate, you reduce investment, you reduce investment…you get less growth, you get less growth…you receive lower revenues and unemployment goes up.   Conversely lower rates on capital leads to greater investment, more growth, more jobs, and even higher revenue to the government.

In the media’s near hysterical reporting on the risks of the “fiscal cliff” there has been very little discussion of what are the ways to promote growth.  All that is reported is that a deal is needed or we will fall off the cliff.  This is similar to the way that Europe’s issues were reported on last year.  ‘Any deal will do’ seemed to be the mantra.  Now there is stagnant growth across Europe, and their debt problems are worse.  Without an eye toward growth, or what hurts it, we will face the same fate.  The Democratic Party is much more interested in fairness, and the media is willing to go along.

We can get into the issues of how low capital gains rates are “fair” in that the money used to invest is already taxed, or that any gains are also taxed at the corporate level.  That, however, is not the most important issue.  The most important issue is supposed to be economic recovery, growth in the economy, and the creation of jobs.  Low capital gains rates help all of these things, and higher capital gains rates make these things harder. 

John Kennedy used to say regularly that, “a rising tide lifts all boats.”  Jimmy Carter and Bill Clinton signed bills to lower Capital Gains rates.  After years of agreement between the parties in terms of understanding that economic growth is generated by private investment, one of the parties has decided to abandon this point of view.  The current Democratic Party, under President Obama, no longer seems to care that raising these particular taxes may hurt the economy or the prospects of growth.  They seem to be much more interested in living up to their rhetoric of fairness, income inequality, jealousy, and even revenge. When you tax something more you get less of it.  Now is not the time for less Capital.

 

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