Still Not Ready for Prime Time

Obama seems to be sauntering still. Let's take a cursory look at a few examples.

No luck with foreign policy:

Poor Obama. He's "Too Tired"

Um, what exactly did this man and his cadre of buffoons expect?

He's the leader of the free world.

He can't afford the luxury of being "overwhelmed". This is further proof that he and his administration just had no clue what they were getting themselves into.

It's not just enough to win a campaign, and you can't run a country with speeches rife with rhetoric.

I guess I would be tired too if my goal was to demolish a 233 year old capitalistic democracy into a fully functioning socialist regime in a 5 week period.

Mr. Obama thought that running the government was going to be as smooth and easy as running his "well-oiled machine" of a campaign.

If he can't even accomplish getting dinner and gifts right with another family, what the hell kind of faith should we have in his ability to hold the office?

We're in trouble...

Too Tired For Diplomacy or Foreign Affairs? Not Interested? Or Overwhelmed By The Job?

And here we were led to believe Mr. Obama was this cool, multitasker under full control and able to handle everything the job entailed.

That’s what we were led to believe.

Some of us, however, said that of all the jobs on the planet this wasn’t the one for OJT. This isn’t a job where one aspect of the duties can be ignored to concentrate on others.

Guess which group looks more prescient at the moment?

Obama Reassures Nation: I Didn't Deliberately Snub Brits, I'm Just "Overwhelmed"

That's what I want to hear from my president -- that he's "overwhelmed."

This excuse is weak coming from a UPS customer satisfaction representative.

But then, this is the first real job Obama's ever held, so I guess we'll just have to bear with him as he gets on the job training at being at an actual job.

He's not filling me with confidence with his handling of the economy:

Is It Any Wonder The Market Continues To Sink?

[An extensive list.]

All this in barely a month's time. And to think that more of the same is on the way seems to be sinking in. Investors are watching closely and not caring for what they see. Sooner or later, the market will rally — but not without good reason to do so.

The President's Radicalism is killing the Dow

Any questions?

Or his ability to appoint a Cabinet...

Hope and Change: Another Cabinet appointee with tax problems

The good news? After the back taxes owed by Tim Geithner and Tom Daschle, Hilda Solis’ bill looks like petty cash. The nominee for Secretary of Labor became the third Barack Obama Cabinet appointee to have undisclosed tax problems.

[...]

That makes 25% of Obama’s original Hope and Change Cabinet picks comprised by tax evaders. Add that to the fourth scandal of Bill Richardson’s pay-for-play federal grand jury investigation, and we have a full-blown vetting disaster. And that doesn’t even count new Attorney General Eric Holder’s politicization of Justice ten years ago on behalf of Bill Clinton in the FALN and Marc Rich pardons, or the dozen-plus lobbyists hired by the President Who Hates Lobbyists.

[...]

Have we had a more incompetent vetting process in the White House over such a short period of time? When we criticized Barack Obama’s lack of executive experience, even we didn’t think it was going to be this bad.

What can you do other than laugh? And who better to help with that than iowahawk?

If I don't try to find some humor in this, I'd be stuck dwelling on the proposition that this country has elevated a completely unqualified individual to "lead" us in a time of great crisis, and that he might not have a clue as to what he's doing.

Update: Great minds think alike -or- I somehow managed to write up a piece right before someone else did it better: The 10 Biggest Amateur Mistakes By the Obama Administration So Far

More Thoughts on the Economy

There are a few more items on the economy I wanted to mention, continuing from earlier. First, income tax rates:

Now let's take a look at corporate tax rates. In general, corporate tax rates are falling:

AS THE effects of the financial crisis ripple out into the wider economy, businesses are struggling. With access to credit all but choked off and global demand falling, firms are keen for any help they can get. America's big companies have a friend in John McCain, who says he will cut the top federal corporate tax rate from 35% to 25%. Once state and local taxes are added, the combined rate amounts to an average 40% of profits, the second highest in rich countries. Over the past decade, corporate-tax rates have fallen considerably, especially in the countries of the European Union.

Why is it so difficult to consider that tax relief can stimulate economic growth?

Cut Payroll Tax Rates:

• For about the cost of the $825 billion House version of the stimulus bill, payroll taxes for Social Security could be cut in half, says former Federal Reserve Board member Lawrence B. Lindsey.
• A 3 percentage-point reduction in payroll taxes would increase workers' take home pay an average of $1,500.
• Reducing the employer's tax share by 3 percentage points would increase businesses' cash flow an average of $1,500 per worker.
• This tax cut would reduce unemployment by lowering labor costs.

Cut Corporate Tax Rates:

• Cutting taxes on future profits is much more likely to spur new investment.
• Congressional Republicans propose a step in the right direction: reducing the corporate income tax rate from 35 percent to 25 percent -- the average rate in the European Union.
• This would encourage businesses to hire additional workers, accelerate investment and make American companies more competitive internationally.

Cut Capital Gains Tax Rates:

• Republicans have also proposed reducing the capital gains tax levied on the increased value of an asset, such as stock or real estate, when it is sold.
• The current 15 percent rate is scheduled to rise to 20 percent as the Bush tax cuts expire.
• Making the lower rate permanent would be helpful.
• Past capital gains tax cuts have yielded an immediate increase in government revenue.

Lately in the news there have been Liberals griping about the Republican party being about nothing but tax cuts. Well, why not? It seems that in the US our taxes are still too high. And these high taxes are exasperating the effects of the recession we are now in. Or maybe they could at least consider that high small business corporate tax rates hurt the economy? Can we not at least consider tax competition?



The last piece I wanted to mention was The Optimum Government.

If you knew economic growth and new job creation begin to slow when total government spending is larger than about 25 percent of the economy, and you knew total government spending in the United States is about 36 percent of gross domestic product (GDP), would you propose policies to make government larger or smaller to create more jobs and boost economic growth?

Over the last few decades, many economists have done studies on the "optimum" size of government. A new study just completed shows the optimum size of government is less than 25 percent of GDP.

So we have a bit of evidence here to suggest that the highest marginal tax rate should be no more than 20%, and that the optimal size of government is around 25% of the GDP.

Rather than increasing the size of government, the empirical evidence shows that sharply reducing taxes, regulations, and government spending down to at least 25 percent of GDP would do the most to spur economic growth and create more jobs over the long run.

Again, is the Obama economic plan doing everything in its power to chase business out of the US?

Thoughts on the Economy

Did you ever run across an interesting item and then forget or lose a reference to it? Search as you might, you just can't remember the keywords that would ordinarily conjure it up in a search engine? I've had that happen more times than I care to recall, despite efforts to avoid just that. But occasionally good fortune smiles upon you, and something new brings it to you. I did have a bit of good fortune the other day, so I want to jot a few things down.

The item I was searching for was a chart in the article You Can't Soak the Rich.

The chart nearby, updating the evidence to 2007, confirms Hauser's Law. The federal tax "yield" (revenues divided by GDP) has remained close to 19.5%, even as the top tax bracket was brought down from 91% to the present 35%. This is what scientists call an "independence theorem," and it cuts the Gordian Knot of tax policy debate.

What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser's Law says it will also lower tax revenue. That's a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice. It would surely be unpopular today with those presidential candidates who plan to raise tax rates on the rich – if they knew about it.

Mentioned in the WSJ article, the Laffer Curve might be quickly explained in this video I found here:



Thomas Sowell helps break down "the rich" a bit in his article, Who's Rich?

A number of other rich people have at various times likewise declared that they do not need what are called "tax cuts for the rich." But, whatever political points such rhetoric may score, it confuses issues that are long overdue to be clarified.

One of the most basic confusions is between income and wealth. You can have high income and low wealth or vice versa. We have all heard of athletes and entertainers who have earned millions and yet ended up broke. There are also people of relatively modest incomes who have saved and invested enough over the years to leave surprisingly large amounts of wealth to their heirs.

Income tax cuts apply to income, not wealth. So the fact that some rich people say that they do not need a tax cut means nothing because they are not getting a tax cut on their wealth, since their wealth is not being taxed anyway.

Looked at differently, high tax rates hit people who are currently earning high incomes -- usually late in life, after having worked their way up in their professions over a period of decades. Genuinely rich people who have never had to work a day in their lives -- people like Congressman Kennedy -- are unaffected by income taxes, except on what they are currently earning, which may be a tiny fraction of what they own.

In other words, soak-the-rich tax rates do not in fact soak the rich. They soak people who are currently earning the rewards of having contributed to the economy. High income taxes punish people for becoming prosperous, not for having been born rich.

The wealthy can elude taxes; they always have, they always will. Some might just choose to take their business elsewhere. The real question, to me, are:

• In this economy, why is Obama trying to Soak the Rich!?
• Won't that just drive us further to the right on the Laffer Curve, decreasing tax receipts and increasing our debt?
• And all done by way of the massive 'stimulus' plan which is already increasing our debt?

When you find yourself stuck in a hole, aren't you supposed to stop digging?

What's New Here?

The other day a news item popped up in my news reader:

Iraq Withdrawal Plan Gains G.O.P. Support

WASHINGTON – President Obama won crucial backing Thursday for his Iraq military drawdown plan from leading Congressional Republicans, including Senator John McCain, the party’s presidential nominee who spent much of last year debating the war with Mr. Obama.

As the president prepared to fly to Camp Lejenue, N.C., on Friday to announce his decision to pull combat forces out by August 2010 but leave behind a residual force of 35,000 to 50,000 troops, he reassured Congressional leaders from both parties that his plan would not jeopardize hard-won stability in Iraq.

I know that I was supposed to be thinking that this was Obama following through on his campaign pledge that "we will be out of Iraq in 16 months at the most". But to me it sounded more familiar; it sounded like the Patraeus plan begun under Bush:

US draws down forces as Iraqis stand up security forces

The plan for the Iraqi Security Forces (ISF) to take over Iraq security is directly linked to the US plan to draw down forces and as briefed by General Petraeus in September 2007.

I recommend reading the whole article. Here I will just grab some numbers...

Reduction from 20 to 15 combat brigades.

Multinational Forces Iraq completed the drawdown from 20 to 15 combat brigades in July 2008.

Reduction from 15 to 12 brigades.

The decision to draw down forces will be made by September 2008 so that the drawdown can be completed by January 2009.

Reduction from 12 to 10 brigades.

The decision to draw down forces will be made by March 2009 so that the drawdown can be completed by July 2009.

Reducing from 10 to 7 brigades.

The decision to draw down forces will be made by September 2009 so that the drawdown can be completed by January 2010.

Reduction from 7 to 5 brigades.

The decision to draw down forces will be made by March 2010 so that the drawdown can be completed by July 2010.

Reducing from 5 to 0 brigades.

The decision to draw down forces will be made by September 2010 so that the drawdown can be completed by January 2011.

I was a bit slow in writing this, and I see that in the meantime I was not the only one who noticed this similarity. I found IBDeditorials captured my thoughts best:

The Bush Pullout
Iraq War: President Obama traveled to Camp Lejeune, N.C., on Friday to announce that the U.S. would stay in Iraq at least until 2012 and keep 50,000 troops there even after combat ends. Sound familiar?

Obama's withdrawal plan would take U.S. forces in Iraq down from a current 142,000 troops to 35,000 to 50,000. Under the status of forces agreement between the U.S. and Iran, negotiated and signed last year by the Bush administration, all forces must be out of Iraq by the end of 2011.

In short, though President Obama will get credit, it was Bush's plan — not Obama's.

Again, I recommend reading the whole article.

The devil, I guess, is in the Details:

The Status of Forces Agreement and Strategic Framework Agreement with Iraq have vanished from the White House web page - but they're apparently still being implemented.

It's official: any combat forces in Iraq after August 2010 will be called something else.

Of course, much of this was entirely predictable, given the logistics. Is there anything new here that Obama has done, other than twiddling numbers and dates a bit and claiming credit for others' efforts?