What A Laffer!

So, our Trophy President (as I still choose to call Obama) is attempting to extend the Bush tax cuts, but only for those making less than $250,000 per year. In other words 98% of all Americans, leaving out the 2% of affluent people at the top. Romney, while trying to distract people away from his off shore accounts in the Cayman Islands and Switzerland, is vowing to protect the remaining 2% from the passive/aggressive tax increase upon these wealthy few that would result.

This one’s a Laffer.

No, I spelled it right. Laffer is the name of a curve on a graph which describes how government income relates to tax rates. That’s right, folks, you’re in for an economics lesson. The Laffer curve looks like this:

Where the y-axis (up-down) shows how much the government gets in tax revenue, and the x-axis (back-forth) shows what the tax rate is. With me so far? Now, this is a simplified form of the graph, because it’s nice and symmetrical, whereas on most actual graphs the arch would lean to one side or another. Also, it’s only really accurate for the upper 2% of income earners, because for most people, the curve would be so short and flat that it would barely even be a hill, and it wouldn’t make much difference where anybody put the tax rate on the x-axis. But we’re talking about the upper 2% anyway, aren’t we? Besides, it gets the general idea across, and that’s all I’m trying to do here.

The ideal, of course, is to have the tax rate set where it makes the government the most money, which is right there at the top of the arch. (See that dashed line up the middle?) We need to pay down a huge deficit and debt, don’t we? So we need to maximize the money coming in so as to pay that bill down. But we also need to add jobs, too, and that adds a little twist. You see, to create jobs, the Laffer curve looks a little bit different. To show you what I mean, let me overlay the original curve in red with the jobs curve in blue:

As you can see, the peak of the curve for job growth is at a slightly lower tax rate than the one for maximizing government income. That means, by maximizing job growth, you hurt government revenue a bit. Or, conversely, by maximizing government income, you’d hurt job  growth a little. What’s the best thing to do here? Keep in mind, we need jobs and the ability to pay down our national debts to China. So, there’s really only one thing to do, and that’s aim here:

That sweet spot in the middle. See that? We need to adjust our tax rates upon the rich right there. That way, we maximize both national income and job growth at the same time.

Okay, now here comes the billion dollar point: Republicans say that we can create more jobs and maximize tax revenue by lowering the tax rate. But that’s only true if you are somewhere around this green-dotted on the graph to begin with:

Democrats argue the opposite, saying that more jobs and maximized tax revenue will come by raising taxes on the upper 2%. That’s true of you are on the opposite side of the graph, like this:

So which one’s right? Fortunately, we have some empirical proof. Under the Clinton administration, tax rates upon the upper 2% were higher than they are today. That means the green dotted line was shifted to the right. And job growth was also higher than it is today, so we were closer to the top of the blue arch. The budget was also balanced and unemployment was hovering down around 3.5%, or less than half what it is today. That means, logically, that we are currently about HERE on the Laffer curve:

There can be no other logical conclusion! That means (just this once if nothing else) that Democrats are right. Republicans are arguing that we should shift the arrow to the left, which would clearly hurt job growth and tax revenue at the same time – the LAST thing we need! And not only do they want to do that, but they’re signing (get this) a pledge to never shift the arrow on the curve to the right! They are promising to do exactly the wrong thing for our economy, permanently, and irrevocably!

And here, I simply hang my head. Please excuse me while I go laugh my ass off, then cry my eyes out.

That’s why I put these curves up here for you. So you could see what I see, and know what I know. Even without women’s reproductive rights on the line, even without the erosion of Church/State separation, even without the destruction of education, and even without the homosexuality witch-hunt, the economic message Republicans are putting out is exactly the opposite of what’s needed.

THIS is what those taking advantage of the Citizens’ United ruling are destroying voter equity in order to buy. This is what your local conservative talk show dudes are bitching for. They want to shift the arrow on the curve THE WRONG WAY.

It doesn’t matter if you’re a Keynsian or a Hayak economist, fresh-water or salt-water. It doesn’t matter if you’re on the Right or the Left. It doesn’t matter if you believe Obama is the Antichrist or not. It doesn’t matter if you accept Romney as the liar that his fellow Republicans called him or somehow aren’t bothered by his beliefs over silly sanctified skivvies.

All that matters is what you see on that Laffer curve.

Let’s aim for that sweet spot in the middle!


Eric

How Will Exxon Vote?

I wonder, who will Wal-Mart vote for? Seriously. Will the big department store chain vote for Romney or Obama? Not sure? How about Apple Computers? Could be a vote for Obama, there. General Motors is likely to vote for Obama as well. Goldman Sachs, on the other hand, is a sure vote for Romney.

Hang on, you might be thinking, why do corporations get a vote? Isn't that a bit awkward? Would that be decided at the next shareholders meeting? What about who gets to cast on behalf of the corporation? The CEO? The Chairman of the Board?

All this is silly, of course. Voting is only something individual people do.

Ah, but corporations ARE individual people, according to Citizens' United, and that's my point.

The thing is, corporations can do some things that individual people can do. They can own property, buy and sell goods, and they have certain rights. But these things do not make up a person any more than having a face gives a clock the ability to express emotions.

You see, in the labarynth of logical syllogisms, smart people get all twisted into dumb conclusions. For example: Poe is a raven. All ravens are black. Mr. Magic is black. Therefore Mr. Magic is also a raven. Fine, except that Mr. Magic is a black cat! Or how about this one that any child knows: If God is love, and love is blind, and Stevie Wonder is blind, is Stevie Wonder God? (It's pretty clear to me that infatuation, not love, is blind, so although God may certainly be blind, it's quite possible that Stevie Wonder is infatuated.)

These conclusions are silly because the assumptions based upon them are silly. Start with one or more false statements, pair them together, and you get an absurd conclusion.

Nowhere is this more apparent than in certain areas of law. Clever lawyers will draw conclusions based on bad laws in order to twist their clients out of jail or worse. But the Supreme Court is not immune to such mental traps. The one they fell for goes like this: Corporations are people. People have free speech. Free speech means being able to buy up as much air time as one can afford. Therefore, corporations can buy up as much air time as they can afford.

Great, except that corporations are not people! They are a government made up of other people. Always have been. But because The Law (notice I capitalized it) recognizes corporations, wrongly, as people, it gets forced into asserting that corporations are people with free speech rights.

I'll believe it when they pay taxes. Subchapter S corporations are tax-exempt, you know. That means that they have representation, without taxation.

Alexander Hamilton would have thrown a conniption!

Let's end this nonsense as soon as possible. And let's vote for it ahead of time by voting down the darling of this corporate clusterfuck, Mitt Romney.

In the meantime, I wonder who Exxon would vote for?

Eric

Why Some Businesses Hate Health Reform

Since Romneycare/Obamacare was given the green light by SCOTUS, there have been some small business owners who have loudly griped that this will cost them either the ability to fully ensure their workers or be able to hire more. In fact, they are rather vocal about the new health care law costing jobs. Are they right?

This is one that really bugged me when I first heard it, because I understood what these businessmen were saying without understanding why they were saying it. I'm certain I'm not alone in that regard. Why would these businesses be staging press conferences with Scott Walker and Rebecca Kleefisch to insist that Romneycare/Obamacare is bad?

I think I understand, now. I promised I'd share that info, and here it is: It all has to do with the provisions for businesses who have 50 or more employees.  Under the Healthcare Reform Act, any employer with that number of employees would have to either provide insurance to 100% of their employees, or else pay a penalty of $750 per employee.  Employers with 49 or less employees don't have this penalty and will, in most cases, end up saving money.

That's ultimately not a bad deal. When an employer provides health insurance coverage, the employee pays part of it, usually with a percentage out of his or her paycheck, and the employer pays the rest. (Why doesn't the employee pay all of it? Or the employer? Well, for the tax benefits to each, you see.) Now, the average cost per year for an insurance plan these days is about $2,200 per year.  If that cost is split between employer and employee, then each pays $1,100 per year. (It's not always that simple, but I need to keep this brief.) That means that an employer who covers his employees could save $350 per year if he dropped the insurance coverage and paid the penalty. But his employees would end up being covered anyway if he did.

So what's the problem?

The problem came when an employer did a poor job of providing insurance coverage before all this happened. If an employer had a lousy plan, or didn't encourage employees to sign up for insurance, or even covered only a small portion of the insurance payments and left the employee to pay the rest, the result was an employer where only some of the workers had insurance. These businesses, the "bad insurers" were in for a nasty shock with Health Care Reform.

Say a certain employer has 50 employees, but only 25 opted for the insurance plan. That means the employer, if he's paying half of the national average, is paying $1,100 for each of them. (It's probably less than that, since he's a bad insurance boss, but we'll ignore that for this example.) That means he's paying $27,000 annually (25 X 1,100). But look out, here comes Romney/Obama-Care. Now, he might have to pay $750 for each uninsured employee. If he persuades all of his employees to drop their coverage in order to help the company save money (which would be very mean of him) he would still have to pay $37,000 (50 X 750), or 10,000 more. All his employees now have health insurance, which is good, but this employer is mad about it.

He'll bitch and moan about "Obamacare" hurting his business. He may even pose with conservative politicians and publicly declare that he can't afford to hire any more workers, or might even have to fire a few, because of this new health care law.

Ah, but here's the catch: Over 95% of businesses provide 100% of their employees with insurance coverage already! It's only the remaining 5%, the dead-beats when it comes to making sure employees are covered, the ones who might even be trying to skimp on coverage in order to undercut their competitors or line their own pockets, who are upset. These are the minority cheap skates who will be hurt. But the only reason they will hurt is because they no longer have the ability to cut those corners which they shouldn't have cut in the first place.

These are the businesses who stand in front of a podium with Walker and Kleefisch and declare how bad "Obamacare" is. Because now (gasp!) they have to balance their books a little bit more responsibly.

Cry me a river!

Look, I'm not insensitive to the realities of business.  Sometimes the margin between success and failure is a tenth of a penny per sale. But at least each of the other competing businesses now have the same problem of how to provide health insurance for all their employees as well, so there won't be any competitive disadvantage. And those markets which have gotten used to being cheap on the health care in order to make ends meet will all have to learn how to not cheat that way anymore. That may mean, in a few cases, temporarily lower salaries as these employers try to pass the costs of the insurance payments onto their employees, but it won't mean less jobs. And then the market will adjust, the salaries will bounce back, and everyone will have better access to health coverage.

In the meantime, these employers are reacting to all this by donating lots of money to the Romney campaign after being insensitive to their workers' needs in the first place.

Yeah, well, I could think of a few better uses for their money. And so could their employees!

Eric

Would 5 to 4 The Other Way Have Been Better?

I've said it before: 5 to 4 should govern nobody. If a Supreme Court reaches a 5 to 4 decision, it should be thrown out, and the original lower court ruling should stand, and/or the original legislation should hold.

By a 5 to 4 margin, Citizens' United has released a tsunami of money weighted to only one side of the political debate, creating an unfair playing field where "one man one vote" no longer has meaning. On top of this comes another 5 to 4 vote upholding "Obamacare" (a misnomer). This has energized the anger of radical conservatives who are taking advantage of Citizens' United to dump even MORE money into the campaign of a candidate who, in all honesty, they don't even like, and who was the original author of the legislation they so ardently oppose. (We should really be calling it "Romneycare" if we're to be fair about it).

So what I want to know is, would it have been better the other way around? Would our world be better off if the 5 to 4 decision had gone the other way, and healthcare reform had been struck down? Wouldn't then the Democratic base have been energized, the poor offended, and Obama swept back into office for another four years by a comfortable margin? Wouldn't we then have a better chance at healthcare reform a second time around, only this time, we'd tell the insurance companies to stay the fuck out of it?

I don't know. We might have a classic case of a Pyrrhic victory, here. The end result of this might be a Romney win, the repeal of the whole shebang, and back to business as usual. I know, the Republicans say that they'll enact real reform afterward, but we all know that's bullshit. It took 70 years for one president to finally do anything, and that with a near super-majority! If Republicans think that they can simply enact reform more easily, they're dreaming. No, it will be back to being mired in a broken system of insurance companies denying care, stomping on the poor, and Medicare and Medicaid being slowly raided.

This all began with a 5 to 4 ruling. That came in 2000 when the Supreme Court ruled that Al Gore had lost. That decision led to stocking the Court with more conservatives, who then went on to ensure more 5 to 4 decisions, not the least of which was Citizens' United. Justice Roberts, to his credit, doesn't believe the Supreme Court should be used as a political tool in this way, which was probably his main motivation for finding a way to rule in favor of healthcare reform. But he violated his own principle of non-judicial activism in order to prevent the other justices from their judicial activism.  The result of this, quite possibly, will be even more judicial activism to come.

Have we lost by winning?

Aside from this could likely be the national embarrassment of having a Mormon in the White House, even more conservatives added to the supreme court, making for even more imbalance, even more nonsense, the overturning perhaps of Roe v. Wade, the stomping of civil liberties, the erosion of church/state separation, and who knows what other evils.

Was it really worth it?

I don't know. I intend to research the true aftermath of healthcare reform very closely, as I'm convinced that nobody, and I mean NOBODY, knows what we have with Romneycare/Obamacare yet. You'll hear all about what I discover on this blog. But one thing's for sure. Liberals cannot use the argument that Obama has not delivered on his promise of bringing change to Washington. We wanted change, and holy shit, we got it!

Now, if only we can keep it.

Eric

How To Ruin An Economy

The best way to ruin any economy is to create an environment where employers don't hire people. Simple, right?

So, say for example that you're a wealthy person.  A potential job-creator, you would assume. Ah, but no, you've been influenced by right-wing media, and so instead of hiring more workers, you'll take tons of your money and dump it into campaign contributions instead.  Every dollar spent on campaign contributions is one dollar not spent on salaries, you know.  So, the more you spend, the worse the economy gets. (Way to go, genius!)

And now (get this), thanks to the Citizens' United 5 to 4 ruling, you get to not spend money on job-creation to your heart's content and REALLY wreck the economy! All the while, you'll be making things worse and worse leading up to November, all because of your reckless checkbook.

AND (here's the best part), you get to blame the President for all of it. Nobody will blame you, or the other legislators your extravagant spending helped put into office to block any progress from being done. How ironic! You were so concerned about government's wasteful spending that you didn't mind your own.

America. What a country! It puts up with the likes of you.

I've got a better idea: How about one man, one vote? Remember that one? And since money amounts to voting influence, the rich get more voting power than the poor under Citizens' United. That may be just fine for China, but I happen to think that America should be setting a higher standard for freedom and equity in the democratic process.

It's the Romney campaign, and Citizens' United, that is escalating all this. But liberal big money goes into it too. There are left-wing rich people just like there are right-wing rich people. And neither of them will be hiring so long as the runaway train of campaign finance keeps bleeding them dry. That means every dollar (One.) spent on Romney means one more dollar which has to be spent on Obama in order to catch up. (That's two.) Every Romney dollar means a dollar for each campaign, federal state and local, for like-minded legislators to support Romney. (Hundreds more.) That means one more competing dollar for each federal state and local campaign to support Obama. (Hundreds more on top of that.) When the rich people on both sides of the political aisle are done throwing away all this cash, there simply won't be enough to hire anybody! Unless, of course, you work for the television executives who are raking in all this extra dough, and stashing it away in the Grand Cayman Islands.

After all the multipliers, it's safe to say therefore that every dollar given to Romney is the equivalent of creating one less job! Maybe more!

Ha! Stick THAT in your pipe and smoke it!


If we can have spending caps in professional sports, we can damned well have them in politics where the final score actually counts for something!

Fuck campaign finance reform. Let's just end ALL the campaign financing. That money is needed for jobs! Shoe-leather and handshake politics only from now on! Let's end the needless political warfare, which is nearly entirely comprised of irrational hatred for our president. End it! End it now!

(Well, I can dream, can't I?)

Eric