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The Politics of the “Fiscal Cliff”

by Edward Posted: Sunday, 12/2/2012

ThePoliticsOfTheFiscalCliff  <– PDF version

So the elections are finally over and our illustrious federal officials now turn their attention to the so-called “fiscal cliff”.  At issue here is whether the Bush-era tax cuts will expire, along with the Social Security withholding reduction enacted in 2010 as a temporary stimulus measure.  The “fiscal cliff” came about per an interim agreement reached last year, as a result of the debt-ceiling escalation in Aug 2011 and the subsequent failure of Congress to come to a consensus on a fiscal policy.  The idea behind the interim agreement was simple: impose across-the-board spending cuts of $1 trillion over ten years and let the Bush-era tax cuts expire on 1 Jan 2013 unless a long-term fiscal policy is enacted.  The $1 trillion in spending cuts, spread over ten years, result in $100 billion in cuts every year, split approximately equally between defense and non-defense.  This was regarded by its designers as so abhorrent that it would provide sufficient motivation for Congress and the President to actually make a deal.  But the negotiations since the election have not been going too well; and of course both sides are busy blaming each other.

I will review the situation, and show how the Republicans, contrary to conventional wisdom, actually hold all the cards here.  First, a few undisputed facts:

1.  The President campaigned successfully on two notions: that tax rates must go up for the wealthy, and must come down for the middle class.  He has said the marginal rates on the wealthy should go back to the 1990’s; in other words, from 35% now to 39.4% as they were in theClintonera.

2.  If the “fiscal cliff” occurs, tax rates will go up for both the wealthy and the middle class.

3.  The long-term fiscal problem of the nation cannot be solved by spending cuts alone, nor by tax increases alone; a combination of the two is necessary (i.e., a comprehensive package).

4.  The history of past “comprehensive” reforms, as enacted under Reagan and Bush, Sr., shows that the Democrats always insist on tax increases immediately, with a promise of spending cuts in the distant future.  Of course, politicians being who they are, those cuts never happen.  It is safe to say that no Democrat in Congress will ever vote for any bill that actually cuts spending in the near term unless he is forced to do so.

5.  No Democratic President will sign a bill that results in immediate spending cuts, unless he is forced to do so (like Bill Clinton).

6.  If anything bad happens to the economy, the propaganda wing of the Democratic Party (i.e., CNN, CBS, ABC, NBC, and PBS; plus the major newspapers led by The New York Times) will blame the Republicans; if anything good happens in the economy, they will give Mr. Obama all the credit.

7.  The Democrats and their propaganda wing have long held that the Republicans are the party of the rich (conveniently ignoring the fact that tax provisions favoring the wealthy were passed mostly by Democratically-controlled Congresses over the last 50 years).

8.  The Democrats and their propaganda empire have claimed that the Republicans are holding the middle class hostage to protect the rich.

9.  Mr. Obama has stated that he will only accept a “fiscal cliff” deal if it raises tax rates on the wealthy.  He has claimed the wealthy are those with incomes over $250,000.

10.  The Republicans have thus far admitted that revenue increases are necessary and are willing to do so by removing some loopholes used by the wealthy and limiting some deductions.  They do not want to raise tax rates on the wealthy due to a “tax pledge” made some years ago.

Here are a few observations and applications.  First, consider the cuts in the “fiscal cliff” legislation.  The cuts are across-the-board, without the necessary and prudent prioritization that rational people would do.  However, let’s be realistic: it actually imposes spending cuts immediately, and for that reason alone is probably the best that our ruling elite can do as things stand presently.

Secondly, the wealthy already pay a large portion of income taxes.  So, if revenues are to be increased via the Republican preference (closing loopholes and limiting deductions), or increased by Mr. Obama’s preference (raising marginal rates), the wealthy are going to pay more either way.  In reality, the best thing for the nation is the Republican way, since it will do more to promote fairness in the tax code, and limits the ability of Congress to punish their enemies and reward their friends through the tax code.

Third, if we go over the “fiscal cliff”, taxes will go up for those of us in the middle class.  So taxes will go up — what else is new; and how will it matter all that much?  State and local taxes of all types have been going up all along.  Recall that the Social Security withholding reduction was intended to be temporary anyway (it was also a bad idea).  The increase in taxation via federal marginal rate increases is small compared to the already-occurring increases in the cost of living due to the Federal Reserve’s currency-printing machine.  If either side truly cared about the middle class, perhaps they would take action to restrain Mr. Bernanke.

Fourth, although most Republicans were dumb enough to sign “no-tax” pledges at the urging of Mr. Grover Norquist, the simple fact is that both the expiration of the Bush-era cuts and the repeal of the Social Security withholding reduction are already accomplished facts if a deal is not made.  They cannot be accused of raising taxes if they allow law per a vote already taken in 2011 to occur.  Only a moron would sign such a pledge anyway; since when did Mr. Norquist assume the authority to supersede the needs of the nation and the powers of Congress contained in the Constitution?  If Mr. Norquist wishes to be emperor, perhaps he should run for the office.

Fifth, the “smart money” has known for months that our ruling elites are incapable of anything better than the impending “fiscal cliff”.  As for the future of the stock market, the “smart money” managers have probably already priced-in the effects.

Sixth, if one is going to be accused of something, one may as well do it.

With these facts and observations in mind, it seems to me that the Republicans hold all the cards here, and it is possible to get true reform that actually helps the nation.  Mr. Obama needs to score political points by raising taxes on the wealthy (it won’t solve the fiscal problem, but he needs to score points).  He won re-election, so let him have his political points.  The increases on the wealthy are his most famous political need, but not his most important one.  Many of his supporters are middle-class.  He needs a tax cut for them much more than he needs a tax increase on the wealthy.  The Republicans in the House should immediately pass legislation that raises marginal rates on the wealthy to 50%, with no corresponding demands for spending cuts and no other conditions subject to objection.  This is far above the rates that prevailed in the Clinton era.  In fact, they should pass a series of bills that raise rates on the wealthy to 60, 70, 80, or 90%, and let the Senate Democrats and the President choose the one they want.  This turns the argument around while costing the Republicans nothing: taxes are going up on the wealthy either way.  If the Democrats think those marginal rates are too high, it will be incumbent on the Democrats to negotiate lower rates for the wealthy to protect their friends in the tall buildings in Manhattan.  If the Democrats do not really want higher rates on the wealthy, by all means they shall have their “fiscal cliff”.  If they settle on the new rates for the wealthy, Mr. Obama will have his political points, but leaves the Republicans in control of what he needs more (the middle class tax cut).  Then the Republicans can actually do what they’ve been accused of: hold the middle class tax cuts hostage — not to protect the rich, but to get spending under control and thus stabilize and secure the nation’s long-term financial health.  They should demand immediate spending cuts in return for an immediate reduction in tax rates for the middle class, thus forcing the Democrats to do what is necessary but have never done before.

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How Obama Got Re-Elected in 2012

by Edward Posted: Sunday, 11/11/2012

HowObamaGotReElectedIn2012   <– PDF version

So it turns out that I was right all along, having predicted back in April of 2011, even before Osama bin Laden was killed, that President Obama would be re-elected.  How could a hayseed nobody like me have gotten this correct 18 months in advance, along with most of the other predictions related to the election?   It’s actually pretty easy.  This essay will review my previous ones on the topic, and along the way I’ll explain my rationale for the assertions previously made.

If you recall, my first essay, from 15 Apr 2011 [1], I simply pointed out the overwhelming Electoral College advantage possessed by the Democratic Party, which is to say, that the Democrats are virtually guaranteed 227 Electoral College votes without having to campaign at all.  These confirmed Democratic votes include all the New England states, Maryland, New Jersey, New York, Illinois,Michigan, Wisconsin, Minnesota, California, New Mexico ,Oregon, Washington State, Hawaii, and Washington DC.  If the Democrats run Adolph Hitler, they start off with 227.  If the Democrats run Joseph Stalin, they start off with 227.  If the Democrats nominate Pol Pot or Mao Tse-Tung or Fidel Castro, they get 227 without trying.  Since only 270 are required to win, the Democrats have the luxury of being able to focus their campaign on a few states, whereas the Republicans have to campaign in about 30 states.  I believe there are two simple reasons for this.  The first reason is that these states are populated by people who have come to believe certain things in the face of contrary facts.  First, about 15% believe that government and unions are the source of all freedom and prosperity; about 10% believe the government owes them something; about 15% are susceptible to the idealistic wishful thinking so common among Democratic operatives, and about 10% vote Democratic because they believe the Republicans are inherently racist.  The second reason is that the mainstream media is able, even in its weakened state, to deliver about 5 or 10% for the Democrats, since those organizations are devoted to the ideological cause.  Add those numbers up, and the Democratic Party wins somewhere between 55-45 and 60-40 in each of these states.  Then the race is on to get 43 more Electoral votes; the message can be tailored as required, and the mainstream media, just as powerful in every state, can tip the balance enough in a few of the more diverse states to permit the Democratic candidate to win.  I concluded then that the mainstream media would never allow any adverse circumstances (or facts) deter them from helping to elect the Democrat.  Hence no word on Fast and Furious, Benghazi, unemployment, decline of the middle class, the true inflation rate, or the inability of FEMA to locate Staten Island after the hurricane.  It would have been much different if a Republican had been in office.

These facts mean that the Republicans can win only if either they have a very strong candidate, or the Democrats have a very weak one.  Mr. Obama, the Black Liberation Marxist Messiah, was certainly not a weak candidate, despite the fact that he has broken every promise and promoted a failed economic policy.  Conversely, in my second essay [2], I recounted the weakness of the Republican field, as was evident a year ago.  Of all the Republicans in the field at that time (Mr. Herman Cain, Governor Mitt Romney, Representative Michele Bachmann, Governor Rick Perry, Speaker Newt Gingrich, Senator Rick Santorum, Governor Gary Johnson, Governor Jon Huntsman, and Representative Ron Paul), I would have rated Mr. Romney in the lower third as far as electability.  I stated my basic reason then: that Mr. Romney has changed positions too many times, and although he may embrace some of the traditional values that made America great, he does not articulate them well.  The two that would have made the best presidents, Mr. Johnson and Mr. Paul, were guaranteed to be shut out by the Republican establishment.  Mr. Perry seemed generally confused, Mr. Cain did not understand his own policy, and Mr. Gingrich cannot be trusted because of his embrace of the United Nations.  All would have made better Presidents than Mr. Obama, but that is not saying much.  The two most electable, Mr. Huntsman and Mr. Santorum, could not overcome the money and organization of Mr. Romney.  The Republican field was weak; it left a lot to be desired for traditional conservatives; the eventual nominee did not inspire sufficient confidence to get the non-Marxist voters to the polls.

My third essay came out in late April 2012 [3], in which I laid out my thoughts on how the mainstream media would play their part, given that Mr. Romney had nearly secured the Republican nomination.  I listed what I believed would be the 10 basic thrusts of the Obama campaign and their media associates (eight of which turned out to be correct).  But that list did not come from any secret inside information.  I made the list by referring back to the Chapter 2 of Marx and Engels’ The Communist Manifesto, and simply updated it for modern times and modern issues.  Here is the original text of that chapter — see if it sounds familiar from the campaign just ended:

“Nevertheless, in the most advanced countries the following will be pretty generally applicable:

1.  Abolition of property in land and application of all rents of land to public purposes.

2.  A heavy progressive or graduated income tax.

3.  Abolition of all right of inheritance.

4.  Confiscation of the property of all emigrants and rebels.

5.  Centralization of credit in the hands of the state by means of a national bank with state capital and an exclusive monopoly.

6.  Centralization of the means of communication and transport in the hands of the state.

7.  Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands; and the improvement of the soil generally in accordance with a common plan.

8.  Obligation of all to work.  Establishment of industrial armies, especially for agriculture.

9.  Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country by a more equitable distribution of the population over the country.

10.  Free education for all children in public schools.  Abolition of child factory labor in its present form.  Combination of education with industrial production, etc.”

If we translate these to modern times: we have the following general principles followed by the Obama campaign and the media, which I expanded to 10 items in that essay:

a. (Numbers 1 and 2): Higher taxes, especially on businesses and the wealthy; greater regulation for the common good.

b. (Number 4): Demonization of those who have offshore bank accounts, like Mr. Romney

c. (Number 5): Free-enterprise capitalism such as practiced by Mr. Romney is bad.

d. (Number 6):  Only media that supports Mr. Obama are worthy of your attention.

e. (Number 7): Only unions help the working man, and Mr. Romney hates unions.  Secondly, the government must protect the environment from extremists like Republicans in general and Mr. Romney in particular.

f. (Number 10): Private schools are evil.

So it is easy to see the formula.  The members of the mainstream media, whether they see it or not, and will never admit it if they did, generally embrace the Socialist free-lunch theory: if some people give their liberties to the Democratic Party, all the people will receive peace and prosperity.  Republicans are rich, evil, and racist, and their nominee is out of touch with reality.  And so it was for the eight months prior to the election.

My fourth essay [4] was an example of the hypocrisy practiced by the media concerning the budget, Medicare, and Obamacare.  No fact has ever inconvenienced the Democrats or the mainstream media.

In the fifth essay [5] from Sep 2012, I predicted there would be a disparity between the types of questions posed to the candidates in the upcoming debates. I think I was generally correct about that.  Ms. Crowley famously saw fit to aid Mr. Obama outright in one instance regarding the incident inBenghazi, even though she and Mr. Obama were both wrong.

To summarize, there were no real surprises in the 2012 Presidential election.  The Republicans failed to put up quality candidates, and the mainstream media, owned and operated by the Democratic Party, took care of the rest.  It was only necessary, given the inherent Electoral College advantage, to ideologically bludgeon Mr. Romney in five or six critical “swing” states; they were successful in all but one (North Carolina).

[1]  Edward D. Duvall, “How Obama Gets Re-Elected in 2012”, 15 Apr 2011

[2]  Edward D. Duvall, “How Obama Gets Re-Elected in 2012, Part 2”, 4 Nov 2011

[3]  Edward D. Duvall, “How Obama Gets Re-Elected in 2012, Part 3”, 23 Apr 2012

[4]  Edward D. Duvall, “How Obama Gets Re-Elected in 2012, Part 4”, 12 Aug 2012

[5]  Edward D. Duvall, “How Obama Gets Re-Elected in 2012, Part 5”, 29 Sep 2011

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How Obama Gets Re-Elected in 2012, Part 5

by Edward Posted: Sunday, 9/30/2012

HowObamaGetsReElectedIn2012_Part5   <== PDF version

Now that the respective nominating conventions are over, it is safe for the mainstream media to start the traditional mantra “the Democrats are running unopposed”.  Governor Romney’s odd rhetorical missteps haven‘t helped his cause.  While there continue to be debates about the merits of one poll as against others, the fact remains that media will continuously seek ways to help the Democrats get elected or re-elected.  This year is no different.

The next phase of the Presidential race is the series of joint press conferences, laughingly referred to as “debates”.   The paid Democratic operatives/moderators will of course make 90-second speeches about the evils of “predatory capitalism”, then follow up with a question to Governor Romney demanding he explain in 15 seconds why he hates the working class so much, and does he feel bad about all those defenseless foreign workers he exploited when Bain Capital invested in Chinese companies while laying off American workers.  President Obama, on the other hand will be faced with “tough” questions such as “Do you like ice cream, and if so, what is your favorite flavor?”  Mr. Obama can then re-assure us that he likes vanilla and chocolate equally, and that anyone who says differently is a right-wing race-baiter.

But that is not Mr. Romney’s biggest problem.  As I alluded to in an earlier edition of this series, Mr. Romney’s main problem is that he is unable or unwilling to lay out a consistent set of policies (translation: ones that do not directly contradict the policies announced during the nominating campaign).  His secondary problem is that he appears to be weak and vacillating in describing the things that differentiate him from Mr. Obama.  He will no doubt come fully armed with every variety of gentlemanly wet noodles to match up against Mr. Obama’s Chicago-style ideological gunfight.  It will be a hostile environment, but Mr. Romney should emphasize the significant differences between Mr. Obama and himself, and ignore the rudeness of the Democratic Party’s hand-picked audience.

The first of these is the basic difference in their experience.  The difference between Mr. Romney, businessman, and Mr. Obama, community organizer, that that a businessman can read numbers.  Mr. Obama seems unfazed by consistently high unemployment and the $6 trillion addition to the national debt.  Mr. Obama has claimed that the private sector is doing well; proving that he believes 8% unemployment (14% true unemployment) is evidence of a successful economic policy.  Mr. Romney can say that while he might be a dumb businessman, he at least knows that the present course cannot be sustained because the numbers suggest the middle class is shrinking and the debt will further reduce future economic opportunity.

Secondly, Mr. Romney, businessman, knows the importance of keeping track of the competition, which requires monitoring of trends and activities in the industries, looking out for both opportunities and risks.  On the other hand, one can prepare a daily Presidential Security Brief, but you can’t make Mr. Obama read it.  Perhaps if Mr. Obama had been paying attention, the fiasco in Libya could have been averted.  Mr. Romney can say that he may be another out-of-touch CEO, but he at least knows enough to listen to the advice and threat assessments made by his expert subordinates.

Speaking of the fiasco in Libya, Mr. Obama insisted for ten days that the killing of four American employees was the work of a mob angry about a video.  Let me get this straight: Mr. Obama, who claims to be familiar with the Moslem religion, and shows respect for all religions equally, believes that regular Moslems engaging in a peaceful protest will spontaneously invade a consulate, kill people, and burn it to the ground?  Peaceful Moslems went berserk over a video?  If Mr. Obama believes that, then he must also believe we are at war with all of Islam, not just the radical lunatic fringe.  Here is the third difference: Mr. Romney can say that he may be a white-guy Mormon, but he at least knows that we are in a shooting war with only a small contingent of Islamic retards, not the entire faith.

The Bolshevik communists ran a dictatorship in the Soviet Union for over seventy years.  During that time, the official price of bread was fixed at 10 kopecks (100 kopecks to a ruble).  The plan was that the dictatorship, founded on the centrally planned economic theory of Karl Marx, would provide bread for all citizens at 10 kopecks.  There was only one small problem: even with the entire agricultural workforce consigned to slave labor under collective top-down management, and with every other available resource (including the army) enlisted to aid with harvest and production, the dictatorship could not produce bread for 10 kopecks.  Hence, for over seventy years, the official price remained unchanged, but there was never any available to buy except on May Day, the dictator’s birthday, and other important economic milestone anniversaries.  Mr. Obama’s health care plan will turn into the same thing: health care is getting “cheaper”, except that premiums are actually going up now.  When Obamacare comes into its full fruition, health care will be “free”, except you won’t be able to get a doctor’s appointment because they’ve all been forced out of business, not being able to provide the service for the price the government dictates.  Here is the fourth difference: Mr. Romney can say that he might be a rich profit-taker, but he at least knows that everything of value must have a price, and that price is best regulated by free competition, not by top-down central planning as was bread in theSoviet Union.

Mr. Romney, even with all his other weaknesses, does have some significant advantages compared to Mr. Obama.  I am doubtful he will find the will to bring them up and defend them against the sneering media.  If he doesn’t, he will lose by allowing the Democrats and their media allies to frame the debate.

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The Extent of Election Fraud

by Edward Posted: Monday, 9/3/2012

TheExtentOfElectionFraud   <– pdf version

It’s election time again, and as usual the two main Parties are riling up their base by claiming the other Party is attempting to steal the election.  The Republicans are whimpering that too many voters are ineligible, and are passing laws in some states requiring voters to show an ID despite the fact that there is no evidence as yet that such fraud has tilted an election result.  If the Democrats were smart (which they’re not) they would use their large monetary assets to provide people with the means to obtain whatever legitimate ID is required; this would open up other doors to full participation in the society.

Meanwhile, the Democrats are whimpering about the manipulation of voting hours in some states, claiming that closing the polls early or regulating early voting somehow deprives poor people on welfare of their voting rights, even though the pressing schedule of a welfare recipient on the first Tuesday after the first Monday in November is no different than any other Tuesday. If the Republicans were smart (which they’re not), they would keep the polls open until midnight on Election Day and give the working people extra time to cast their ballot.

Those arguments are about being able to cast a ballot.  But I have a more fundamental problem with our election system, one that has bothered me for a long time, and which neither main Party has ever chosen to discuss.  That is: how do you, the voter, know that your vote has even been counted after you cast your ballot?   Every ballot is numbered and associated with a precinct.  Those ballots are supposedly collected and counted, usually by machine.  Although the ballots are numbered, and the list of those who voted is collected at the polling place, there is no feedback by which a voter can prove to themselves that their vote was actually counted.  The two main Parties, who control the counting of ballots, insist that we blindly trust them on this.

We now have the technology to implement a verification system to prove to every voter that his ballot was indeed counted.  We the people should demand that the ballots be re-engineered such that each voter obtains a numbered receipt for his ballot, and that within three days of the election, the entire vote tally shall be publicly accessible, and indexed by ballot receipt number (and precinct, district etc.).  Each voter should be able to enter in his receipt number, and verify that his ballot was accepted and that the preferences he chose were correctly interpreted.  Only then will each interested voter be able to ensure that his ballot was received; and any discrepancy may be challenged by presenting the original ballot receipt.  This is the first step required to gauge the true extent of any election fraud.

The preceding receipt method is necessary but not sufficient to demonstrate that a voter’s ballot was actually counted.  Although the voter may verify that his ballot was accepted, it would not in and of itself allow the voter to determine if his ballot was actually included in the vote totals.  The voter would require the capability to observe all the ballots in one place, and verify that the total thereof, including his, came to the same value as the reported total for each race (an example is for the election commission to arrange all the ballots in a spreadsheet and allow each user to independently verify the totals).  There is another way: every voter should vote for himself in at least one race on the ballot.  Surely, every ballot contains one race in which a candidate is running unopposed, or a race for an office that is unfamiliar, or one for which the voter does not care about the outcome.  Every voter should choose one such race on the ballot and vote for himself.  If every ballot is counted, as the Parties continue to tell us, and every vote accounted for, the official returns should reflect the names of every voter; granted, they would be spread around various races.  If the voter, armed with his receipt, found his name listed in the race for which he wrote in his own name, he may be reasonably certain that the rest of the votes he cast on that ballot were included in the other totals.  There is no way to guarantee it of course, but the probability that his other votes were counted is much higher than with any other simple system.

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