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18 May 2008

Comments

Russ

Well said George. That picture on Drudge was most unsettling, thousands of group feelers, rather than thinkers, all gathered to hear about hope and change without any understanding of the what the speaker really has in mind for them. We have seen the gather of mindless crowds before an accomplished manipulator and look at the consequences. Are we going to have a historical repeat?

Wade

Hitler gave political speeches before large crowds and Obama gives political speeches before large crowds ergo... um, what exactly? They also both are known to have worn pants.

The smorgasbord narrative about Obama emerging from the right lacks even minimal coherence. He is a Nazi AND a Communist AND a Muslim AND a Radical Christian AND a Dangerous, Angry Black Man AND an Effete, Elitist Snob Milquetoast and a Shia Hamas al-Qaeda Druze Phalangist French Canadian Who Immigrated Here Illegally From Mexico In Order To Take Our Guns And Make Us Gay. Oh, and he's in that gang, the "Blood Crips."

"In such throngs it is hard to evaluate and assess the words of the speaker..."

Really? I've seen him speak in a crowd and had no such trouble. I've also seen Kerry and Bush 1 speak to crowds and understood what they had to say sans a trembling, troubling haze of quasi-religious paralysis born of my infantile desire to be ruled by a charismatic dictator. I guess that assertion serves to bolster the notion that people who attend Obama's speeches are "mindless," regardless of the fact that his supporters' demographics skew solidly to the most educated classes we have. Which leads us to the right's resurgent anti-intellectualism which, of course, means that Democrats are simultaneously pointy-headed AND obtuse; union members but somehow not normal, working class folks; Silicon Valley, Denver, and New York City but somehow anti-capitalism.

Is that image really so scary? Scarier than this one? http://www.jamd.com/search?assettype=g&assetid=698933&text=unification+church+moon+wedding

One need not merely hint at the worrisome, cult-like, anti-Constitutional nature of the Republican right's "spiritual guides," for it is explicit in their Dominionist dogma and agenda. If we would be prudent to read James Cone before we pull the lever, should we not also limn the words of Rod Parsley and John Hagee, in which McCain has been prostrate for so many decades? How many times has Rev. Moon been to the White House? On Air Force One? How is that we, just now, so suddenly, earnestly, urgently realized that the religious figures associated with our democratically elected leaders are VERY, VERY important? If only we had known this sooner.

Douglas Keachie

Maybe if the Ryghtys has been a bit less nearsighted and greedy, the country would not be facing Obama as you describe him. The Ryghtys have handed this election to the Dems on a Golden Platter.

Douglas Keachie

Maybe if the Ryghtys has been a bit less nearsighted and greedy, the country would not be facing Obama as you describe him. The Ryghtys have handed this election to the Dems on a Golden Platter.

J Galt

George, your thoughts (mirrored by many) will ruffle a lot of feathers. You are dealing with people's emotions whereby rational gets checked at the door. It is amazing the bad decisions people make while following charismatic salesmen with no track records or experience.

I keep hearing/reading of Obama's "change" and "hope" but no specifics. With no experience, no track record, no specific plans he must sell the intangibles of "hope" and "change". He is a hell of a salesman.

J Galt

Hold your horses Keachie, there are no "Ryghtys" or "rights" in politics (save maybe Ron Paul). There is just a far left and a middle. I agree wholeheartedly that the middle has handed this election over. Too much spending, too many handouts, too many wars...

Wade

J Galt:

No specific plans? Say that does sound bad; he must lack substance. Oh, wait-

http://www.barackobama.com/issues/

You may not like them, but simply pretending they don't exist is kind of silly.

J Galt

BO's issues site lacks rational thinking. A goal of increasing taxes on the rich AND generating jobs? Forcing employers to fund social security, employee pensions AND strengthening the economy? Increase taxes and responsibilities (via regulations/expenses)of the employers to offset the costs of socialized medicine? In what f'ed up world does this guy live in? A simple econ 101 course would be beneficial to BO (and McCain). When you attack employers you inadvertently attack would-be employees.

BO's issues pages identify the USA as a wealth generating powerhouse (“I believe that America's free market has been the engine of America's great progress. It's created a prosperity that is the envy of the world. It's led to a standard of living unmatched in history."BO New York, NY, September 17, 2007) then he goes into sound bites on how to destroy the machine he admired.
My favorite BO quote is still the following: "My friends, we live in the greatest nation in the history of the world. I hope you'll join with me as we try to change it."
Capitalism is not bad, unless you are lazy/liberal.

Wade

I'm going to take the jump from "Obama has no specific plans." to "Obama's many specific plans really suck." as the obvious, albeit woefully tacit, admission of guilt that it is.

That being said, "A goal of increasing taxes on the rich AND generating jobs?" I know, it sounds crazy, but only if you subscribe to supply-side fundamentalism (speaking of Econ. 101). However we need not speculate as our last two Presidents provide an instructive contrast in this respect.

Clinton: Raised taxes on rich
Average monthly job creation: 237,000
Budget: Surplus

Bush: Cut taxes on rich
Average monthly job creation: 72,000
Budget: Record deficit

For additional perspective, let's throw in someone who both raised and cut taxes on the rich, Reagan.

Reagan: Cut taxes on rich & raised taxes on rich
Average monthly job creation: 162,000
Budget: Record deficit (at time)

Capitalism is great for job creation, supply-siders are just not that good at it. Those capital gains cuts should be cranking out jobs shouldn't they?

Average Monthly Job Creation By Presidential Party since WWII

Democratic Presidents: 171,000 jobs created per month
Republican Presidents: 78,000 jobs created per month

George Rebane

The following comment was sent to me by my friend James 'Dick' Dickenson, retired journalist and author, formerly political editor for the Washington Post. Dick has previous contributions to Ruminations, and here again brings to us the perspective of a self-declared 'New Deal Democrat' for which I am always grateful. We look forward to more insights from Dick as this election year progresses. gjr

"There are two points about Obama in Portland:

One is that large crowds per se don't prove anything. The context obviously is what matters. Jay Leno's line about this particular one in Portland is that "Obama managed to feed the whole crowd with just five loaves and fishes" suggests one context. Another is the great civil rights "March on Washington" in the summer of 1963, which drew an estimated 350,000, blacks and whites, young and old, etc., who peacefully listened to Martin Luther Kings' famous "I have a dream" speech. Mollie and I and our two children and my parents were in that crowd and it was a great experience despite my parents' initial apprehension.

As for Obama's renunciation of Cone I'm satisfied by his distancing himself from Wright and I have seen no evidence at all to indicate that Obama buys into black liberation theology any more than you and I do. Cutting off Wright was a difficult personal decision for him because of their close personal relationship--Wright apparently is the one who brought Obama into Christianity, married him, and baptized his children. I heard some pretty outrageous things in my parent's Southern Baptist church in Lemon Grove, Calif.--apologies for slavery and Jim Crow segregation for instance (this was right after WWII and many of the parishioners were from the Old Confederacy who had moved to San Diego to get war industry jobs and stayed on). I suggested to my mother that we might look somewhere else but she, while no more a racist than I am, liked it there (a lot), was a leader in the church for more than 30 years, and decided that that was one undesirable element she could overlook. We hear similar outrageousness from white preachers like Robertson and Falwell that Katrina and other natural disasters such as the Florida hurricanes are God's retribution for our tolerance of gays and Newt Gingrich's preposterous suggestion several years ago that the white mother in South Carolina who drowned her children was due to liberals' tolerance of immorality and "situational ethics."

I don't think you have to worry that Obama has put it behind him and won't have to spend some time on it during the campaign. If I know the Republicans they're planning to hit him on it early and often. It will probably play well in parts of the South. He may have to address Cone yet."

J Galt

Who are you quoting WADE ""Obama's many specific plans really suck.""? I did not contend that BO had specific plans, maybe I should use smaller words? What I was trying to say was the following: the BO website which was supposed to point out specific plans did not. The 30,000 ft. overview of the issues mentioned on the site spoke of the federal government as a taxpayer funded philanthropic organization, funded by the producers of wealth. ....the hand that feeds you.

J Galt

Wade, I just want to make sure I read you correctly.. do you believe that higher taxes will fuel economic growth and generate jobs?

For the record I am not in the McCain camp either.

Wade

J Galt:

Was that an unfair use of quotation marks? My apologies, I thought the implied paraphrasing was perfectly clear. And, really? You're sticking to "[no] specific plans?" Indexing the minimum wage to inflation is "[a] 30,000 ft.overview?" We must be using different yardsticks.

No, you do not read me correctly. I do not believe there is any such relationship between tax rates and job creation numbers. I think reality (the actual, historical numbers) plainly shows that the economy can grow faster and create more jobs with higher tax rates in place than it does with lower ones. I do not, however, think that one causes the other. That would be a logical fallacy and, given the number of other inputs in the system and high degree of complexity and noise, the very worst sort of armchair economics. I think the Laffer curve is only useful at its binary extremes and it's utility is limited to the following morals: "Don't kill the golden goose." and "There is no such thing as a free lunch."

I am what used to be called a "deficit hawk." What we are doing now is attempting to inflate and devalue the deficit away. That is, pay back good dollars in nominal numbers with bad ones. That means sharply negative real wage growth which is bad for everyone, which is bad for business, which is bad for job creation. I oppose this policy and see a real need to crank up interest rates, halt the dollar's slide, and pay the deficit with tax revenue.

And, yes, please use smaller words. I am of the "dumbest generation."

Wade

GJR:

That insight is helpful. I concede there may be some sort of messianic zeitgeist I'm missing (sorry, too young for Leno). On the ground there are no such fuzzy hosannahs, just a hard-fought war in the Democratic Party between new guard (Dean, Obama) and old (Clinton, Lieberman). It started over the Iraq War but has since come to encompass any number of policy differences as well as tactical and strategic considerations. One of it's defining features is the flip of the political fundraising model from low volume / high margin to high volume / low margin. Retail chain politics, if you will.

So no, it's not about emotions and it's not about CommuniNazis.

In the MLK context, I think the crowd numbers actually do say something and I think Dick's comments help illuminate it. Americans were out in those numbers because they could clearly see that something was wrong. I think we've reached that state again.

J Galt

Wade, I confer with your "deficit hawk" thoughts. I think our sentiments are better suited for the Fed than our next president.

I hope I am not wealthy? I would hate to be lynched by BO because of a strong work ethic and the success that follows.

Speaking of specifics, at what income level does one become "wealthy" and thus a target(evil) in BO's world?

May is not a good month to bring up a tax discussion. I am still trying to pay off my equity line that I used to pay my '07's. I am not so pleased to be a part of the government ran philanthropy brigade.

J Galt

Obama's Tax Evasion
April 18, 2008; Page A16 WALL ST JOURNAL http://online.wsj.com/article/SB120847505709424727.html

The parsons of the press corps are furious with Charlie Gibson and George Stephanopoulos of ABC News, which means the pair must have done a pretty good job moderating Wednesday's Democratic debate in Philadelphia. Barack Obama had an off-night, so his media choir wants to shoot the questioners.

We thought the debate was one of the best yet, precisely because it probed the evasive rhetoric we've heard from both Democratic candidates throughout the campaign. Nowhere was this more apparent than during the exchanges between Mr. Gibson and Mr. Obama over taxes.
[Barack Obama]

Time and again, the rookie Senator has said he would not raise taxes on middle-class earners, whom he describes as people with annual income lower than between $200,000 and $250,000. On Wednesday night, he repeated the vow. "I not only have pledged not to raise their taxes," said the Senator, "I've been the first candidate in this race to specifically say I would cut their taxes."

But Mr. Obama has also said he's open to raising – indeed, nearly doubling to 28% – the current top capital gains tax rate of 15%, which would in fact be a tax hike on some 100 million Americans who own stock, including millions of people who fit Mr. Obama's definition of middle class.

Mr. Gibson dared to point out this inconsistency, which regularly goes unmentioned in Mr. Obama's fawning press coverage. But Mr. Gibson also probed a little deeper, asking the candidate why he wants to increase the capital gains tax when history shows that a higher rate brings in less revenue.

"Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20%," said Mr. Gibson. "And George Bush has taken it down to 15%. And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28%, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?"

Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "to make sure . . . that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free."

But Mr. Gibson had noted that higher rates yield less revenue. So the news anchor tried again: "But history shows that when you drop the capital gains tax, the revenues go up?" Mr. Obama responded that this "might happen or it might not. It depends on what's happening on Wall Street and how business is going." And then he went on a riff about John McCain and the housing market.
[Obama's Tax Evasion]

This is instructive. The facts about capital gains rates and revenues are well known to our readers, but we'll repeat them as a public service to the Obama campaign. As the nearby chart shows, when the tax rate has risen over the past half century, capital gains realizations have fallen and along with them tax revenue. The most recent such episode was in the early 1990s, when Mr. Obama was old enough to be paying attention. That's one reason Jack Kennedy proposed cutting the capital gains rate. And it's one reason Bill Clinton went along with a rate cut to 20% from 28% in 1997.

Either the young Illinois Senator is ignorant of this revenue data, or he doesn't really care because he's a true income redistributionist who prefers high tax rates as a matter of ideological dogma regardless of the revenue consequences. Neither one is a recommendation for President.

For her part, Hillary Clinton said that she, too, was open to hiking the capital gains tax rate, just not by as much as her rival. "I wouldn't raise it above the 20% if I raised it at all," she said. Of course, she too promised during Wednesday's debate not to raise "a single tax on middle-class Americans, people making less than $250,000 a year."

Both candidates would have voters believe that taxes on investment income only affect the rich. But that's not what Internal Revenue Service returns show. The reality is that the Clinton and Obama rate increases would hit millions of Americans who make well under $200,000. In 2005, 47% of all tax returns reporting capital gains were from households with incomes below $50,000, and 79% came from households with incomes below $100,000.
* * *

By the way, a higher capital gains tax rate isn't the only middle-class tax increase that Mr. Obama is proposing. He also wants to lift the cap on wages subject to the payroll tax. That cap was $97,500 in 2007 and is $102,000 this year. "Those are a heck of a lot of people between $97,000 and $200[,000] and $250,000," said Mr. Gibson. "If you raise the payroll taxes, that's going to raise taxes on them." Ignoring the no-tax pledge he had made five minutes earlier, Mr. Obama explained that such a tax increase was nevertheless necessary.

In other words he dodged the question, as he so often does with impunity. But thanks to Mr. Gibson's persistence, for 90 minutes Wednesday night Mr. Obama didn't get away with it. The voters learned a lot about Mr. Obama, who needs to learn a lot more about taxes and revenue.

George Rebane

Wade - the insightful comment you refer to is from 'Dick' Dickenson; I just posted it from an email he sent me because of some computer problems he has.

Re your point about higher taxes having a salutary relationship to (I assume non-govt) job creation. I'm intrigued by this notion as it has arisen from time to time since Marx's earliest writings. I would invite you to guest author a longer piece on these thoughts citing the recent national experience that informs you. Ultimately the election will come down to that kind of question and the voter decisions that its answers will invoke. I think your piece would prompt a useful discussion.

Wade

George -

I would love to. But, just to be clear, I do not believe there is any direct, causal relationship (either salutary or, you know, un-salutary) between tax rates and job creation except at or very close to the extremes of the Laffer curve. The historical data show that you can have booming markets and stronger job creation with income taxed higher than it is now, with the capital gains rate nearly double what it is now. We have had 8 years now of pure supply side theory implementation and the numbers just don't add up.

I can however, discuss the differences between job creation as an explicit policy goal in and of itself (Rubinomics) and job creation as rationalization for tax cuts (Voodoo Economics, or supply side theory). Deficit reduction takes center stage as a driver for everything else and if you have to raise taxes to accomplish it you do it.

p.s. I did reference Dick's name when I mentioned his comment.

Wade

Oh and yes, your assumption was right, I'm talking about the private sector.

George Rebane

Go for it Wade. A reasoned and reasonable presentation on that topic by a young professional of the liberal persuasion would be most welcome, and the ensuing discussion may even be a more useful one. Please email to me so I can post it as a separate article.

Wade

Done.

I will write about the rough "Paper > Oil > Land (assets) > Paper" economic cycle of the US, how both political parties manage this cycle similarly, how they differ in approaches to fiscal vs. monetary policies (especially the notion that lower taxes are always better), why we need to break this cycle, why, in the context of the "free market" as popularly (and politically) understood, we probably won't, and how, in the context of a declining state, we just might.

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