I spent some time today reading through the extensive literature available at FairTax.org, the tax reformation organization which GOP front runner Mike Huckabee supports as part of his economic policy. I have to say, they have done their homework there to answer questions I had from the snippets I had read about the FairTax plan.
As a general concept, I utterly support the concept of abolishing the federal income tax, and replacing it with a Federal Sales tax. It's a system which has the ability to completely solve all the inequities in tax law which allow loopholes and shelters to be built for the ultra-rich, and place a disproportionate burden on the middle and lower classes. A tax on consumption is the most honest tax possible, and rewards fiscal responsibility, while also drawing revenue on sources currently exempt from the system, such as money earned in illegal operations including drug sales and gambling, and pure cash ("under the table") jobs in adult and other cash heavy industries. It also provides a channel for dealing with the very expensive issue of illegal immigrants who draw from the system without paying into it. Taxation on their consumption allows them to contribute to the system they benefit from.
The biggest concern with any flat federal sales tax system is that it provide true tax relief for the middle and lower class, both in simplification, and in exemption of certain basic goods and services from taxation. In the FairTax plan, this is handled using a "Prebate" system, by which qualified families receive a refund check for the value of taxation up to the poverty line of spending. This is where the plan begins to fail in exactly the same place as previous flat tax legislation attempts.
Any bureaucratic system which must "qualify" who is allowed to receive benefits designed to address socioeconomic inequities will become the failing point for that system, as evidenced by the welfare and social services system. The application, review, and enforcement of those guidelines, which themselves change frequently, lead to massive overhead in administration, and poor service to the taxpayer in question.
Additionally, when parsing the qualifications necessary to be a "qualifying family" (PDF) , I was extremely disappointed to find that the parameters in place to denote qualifications are remarkably skewed in favor of a stereotypical Right Wing Family Values poster. Gay couple? Sorry, you don't qualify as family. Non-custodial Dad who still buys all the school clothes and supplies? Nope, only goes to the custodial parent. Six artists sharing a loft in order to make ends meet and produce beautiful art? Oh, hell no. You don't qualify.
The solution to potential inequities is very simple, and works across the board. The consumption tax must be sliding scale based on product type and cost. This is not as complicated as you might think. Grocery stores are already equipped for the WIC program, which issues vouchers for certain classes of foods up to a certain cost. That value is sorted out during scanning of groceries, and the balance of the bill is paid in cash. In a sliding scale system, uncooked food and household items with a value of less than twenty dollars would be completely tax exempt. A poor family spending twenty five dollars on mostly one and two dollar grocery items would pay no sales tax at all. Additionally, exempt the first hundred dollars on home utilities and car payment, and the first five hundred dollars on mortgage/rent. Add an additional 5% in in taxes to purchases over $25,000. Tie those exemptions and additional levies across the board to the Federal inflation rate, so that the system remains equitable over time.
A pure consumption tax would represent an astounding evolution in fair, simple taxation for American citizens, while remaining revenue neutral. Given the currently untaxed revenues which would be swept in, it actually has the potential to earn more, on lower percentages of taxation. However, there must be an integrated set of exemptions built into the lowest consumption level, that does not discriminate against households which do not conform to a white bread Ward and June Cleaver template. It's the only way any FairTax actually would be.
Sunday, January 6, 2008
Saturday, January 5, 2008
Oh That Hillary...(untangling the Clinton rhetoric)
I didn't wake up this morning intending to write a pick on Hillary post, but to be perfectly fair, she started it.
I was watching the caucus coverage on CNN this morning, and heard her stumping out at the cauci. It was a perfect example of the two biggest problems I have with her as a candidate:
1. She equates eight years as First Lady with political leadership experience. I don't think we'd accept that qualification for Nancy Reagan, or Laura Bush, and I find it disingenous to the extreme for her to expect us to do so for her.
2. She came out with this gem of a quote:
"It took a Clinton to clean up after fhe first Bush, and it just might take a Clinton to clean up after the second Bush."
Now, first of all, I don't approve of legacy politics. A continuous family line of political leadership just smacks a little to close to monarchic ruling class to me. More importantly, though, the sheer unmitigated rhetoric in this statement just floored me, until I realized what a calculated play it was at manipulating the emotions of younger voters.
She had made economic conditions a repeated point in her speech, and it seemed at that moment to have been the foundation for the Bush cleaning quote. It's pertinent, as well, for when it comes to the most positive indicators of Bill Clinton's terms in office, favorable economic conditions are the strongest testimonial anyone can offer. For those of you who weren't old enough to be politically conscious during the Reagan years, a little clarifying history is in order, so here's an utterly over-simplified crash course in recent economic history, with a pdf full of pretty colored charts illustrating what I'm describing: (you might want to right click and open that in a new window)
Coming out of the oil crisis in the 70's, Reagan inherited a critically high inflation rate, which led to a massive market correction, in the form of a recession, in 1981. He made economic conditions his priority (along with a strong defense, and muscular foreign policy), and was able to create controlled growth with a well managed inflation rate that pulled the country out of recession, and into a strong growth period.
However, as in all things, the economy is based on cycles, known as business cycles. Inflation, GDP, and unemployment will rise and fall over time based on the birth, growth, and death or transformations of the companies which form the framework of our economy. (There's a much more detailed explanation on how the cycles work, related to manufacturing inventory, in the PDF) When the first Bush was elected, he rode the coat tails of the exiting incumbent, but didn't have the economic savvy to well mitigate the coming downturn in the economic cycle. History shows us that this was a short term correction in market valuation, but with his built in reputation of being the weaker half of the Reagan cowboy team, the economic downturn destroyed any remaining public confidence he had by forcing him to break the one economic policy he had stumped with: "Read my lips: No. New. Taxes."
I know, it sounds a bit lame now, but believe me, in 1988, it was bold and daring, cocky, and utterly economically naive and infeasible. One thing that politicians should have learned by now is that if you don't make good on your least common denominator stances, populist support is out of the question. (You hear that, Charlie Crist? "Drop like a rock", buddy.)
So, out with the old, and in with the daring and dashing William Jefferson. The market correction had stabilized by 1993 when he took office, so all Mr. Clinton had to do to win was let it ride. His first term was economically unremarkable, and marked by slight growth. He was globally diplomatic while remaining somewhat of an isolationist in practice on foreign military policy (which explains the lack of strong military response to terrorist attacks during his tenure). However, lo and behold, along came the grand invention of the interwebs, and the economy took off like a shot. Companies were building fortunes on the new technology, and online trading allowed hundreds of thousands of average shmoes to pump and dump their life savings into Wall Street just like the pros. Obscene speculative valuations on companies with seven figures in debt, combined with the tens of millions of dollars controlled by nervous, naive and inexperienced amateur day traders, led to a market so amazingly over inflated that it had nowhere to go but down, leading to the recession of 2001 when the dot com bubble burst.
And who was there to reap that benefit? The second Bush. Amazingly enough, some people were so irrationally and illogically deranged in their anger about the election of Bush, that they tied that recession to Bush himself, as though his evil influence was so pervasive, that in a matter of mere months after he was elected, he had flushed the entire economy down the drain. That mindset exhibits such an utter lack of understanding of the economy as to be mind boggling, especially when coming from otherwise seemingly intelligent people.
If ever there had been a time in the US, since the Great Depression, when some Executive and Congressional oversight of the economy was needed, it was during the Clinton Administration, when some conservatism on growth and valuation could have helped the dot com bubble grow into a full fledged industry a little more slowly, securing itself with strong fiscal foundations, and forcing the superstart ups of that time to earn their keep. Responsible economic oversight would have been the legacy of Bill Clinton, evidenced in a lasting era of prosperity. Instead, Bush the Second inherited the mess left by Clinton the first, and for Clinton the second to refer back to that as an achievement in her campaign rhetoric speaks strongly of her belief in the short memories and attention spans of the electorate.
Bush the second, has indeed, earned his poor reviews on his administration. However, the economy during his administration has made some progressive growth, and picked itself out of the hole left for it by the previous administration. The two weakest areas in the US economy right now are related to hedge funds and the sub-prime industry, both lobbies who have been heavily coddled by the Democratic party.
If that's what Clinton means by "cleaning up after the Bushes", then thanks, but I'll pass. If that's not what she means, then it's just one more example of disingenuousness from a candidate who's built a career on it.
I was watching the caucus coverage on CNN this morning, and heard her stumping out at the cauci. It was a perfect example of the two biggest problems I have with her as a candidate:
1. She equates eight years as First Lady with political leadership experience. I don't think we'd accept that qualification for Nancy Reagan, or Laura Bush, and I find it disingenous to the extreme for her to expect us to do so for her.
2. She came out with this gem of a quote:
"It took a Clinton to clean up after fhe first Bush, and it just might take a Clinton to clean up after the second Bush."
Now, first of all, I don't approve of legacy politics. A continuous family line of political leadership just smacks a little to close to monarchic ruling class to me. More importantly, though, the sheer unmitigated rhetoric in this statement just floored me, until I realized what a calculated play it was at manipulating the emotions of younger voters.
She had made economic conditions a repeated point in her speech, and it seemed at that moment to have been the foundation for the Bush cleaning quote. It's pertinent, as well, for when it comes to the most positive indicators of Bill Clinton's terms in office, favorable economic conditions are the strongest testimonial anyone can offer. For those of you who weren't old enough to be politically conscious during the Reagan years, a little clarifying history is in order, so here's an utterly over-simplified crash course in recent economic history, with a pdf full of pretty colored charts illustrating what I'm describing: (you might want to right click and open that in a new window)
Coming out of the oil crisis in the 70's, Reagan inherited a critically high inflation rate, which led to a massive market correction, in the form of a recession, in 1981. He made economic conditions his priority (along with a strong defense, and muscular foreign policy), and was able to create controlled growth with a well managed inflation rate that pulled the country out of recession, and into a strong growth period.
However, as in all things, the economy is based on cycles, known as business cycles. Inflation, GDP, and unemployment will rise and fall over time based on the birth, growth, and death or transformations of the companies which form the framework of our economy. (There's a much more detailed explanation on how the cycles work, related to manufacturing inventory, in the PDF) When the first Bush was elected, he rode the coat tails of the exiting incumbent, but didn't have the economic savvy to well mitigate the coming downturn in the economic cycle. History shows us that this was a short term correction in market valuation, but with his built in reputation of being the weaker half of the Reagan cowboy team, the economic downturn destroyed any remaining public confidence he had by forcing him to break the one economic policy he had stumped with: "Read my lips: No. New. Taxes."
I know, it sounds a bit lame now, but believe me, in 1988, it was bold and daring, cocky, and utterly economically naive and infeasible. One thing that politicians should have learned by now is that if you don't make good on your least common denominator stances, populist support is out of the question. (You hear that, Charlie Crist? "Drop like a rock", buddy.)
So, out with the old, and in with the daring and dashing William Jefferson. The market correction had stabilized by 1993 when he took office, so all Mr. Clinton had to do to win was let it ride. His first term was economically unremarkable, and marked by slight growth. He was globally diplomatic while remaining somewhat of an isolationist in practice on foreign military policy (which explains the lack of strong military response to terrorist attacks during his tenure). However, lo and behold, along came the grand invention of the interwebs, and the economy took off like a shot. Companies were building fortunes on the new technology, and online trading allowed hundreds of thousands of average shmoes to pump and dump their life savings into Wall Street just like the pros. Obscene speculative valuations on companies with seven figures in debt, combined with the tens of millions of dollars controlled by nervous, naive and inexperienced amateur day traders, led to a market so amazingly over inflated that it had nowhere to go but down, leading to the recession of 2001 when the dot com bubble burst.
And who was there to reap that benefit? The second Bush. Amazingly enough, some people were so irrationally and illogically deranged in their anger about the election of Bush, that they tied that recession to Bush himself, as though his evil influence was so pervasive, that in a matter of mere months after he was elected, he had flushed the entire economy down the drain. That mindset exhibits such an utter lack of understanding of the economy as to be mind boggling, especially when coming from otherwise seemingly intelligent people.
If ever there had been a time in the US, since the Great Depression, when some Executive and Congressional oversight of the economy was needed, it was during the Clinton Administration, when some conservatism on growth and valuation could have helped the dot com bubble grow into a full fledged industry a little more slowly, securing itself with strong fiscal foundations, and forcing the superstart ups of that time to earn their keep. Responsible economic oversight would have been the legacy of Bill Clinton, evidenced in a lasting era of prosperity. Instead, Bush the Second inherited the mess left by Clinton the first, and for Clinton the second to refer back to that as an achievement in her campaign rhetoric speaks strongly of her belief in the short memories and attention spans of the electorate.
Bush the second, has indeed, earned his poor reviews on his administration. However, the economy during his administration has made some progressive growth, and picked itself out of the hole left for it by the previous administration. The two weakest areas in the US economy right now are related to hedge funds and the sub-prime industry, both lobbies who have been heavily coddled by the Democratic party.
If that's what Clinton means by "cleaning up after the Bushes", then thanks, but I'll pass. If that's not what she means, then it's just one more example of disingenuousness from a candidate who's built a career on it.
Thursday, January 3, 2008
The Kennedy Factor, or, Why You Shouldn't Write Off Obama
48 years ago, the Democrats controlled congress, and a two term Republican President was stepping down. In competition to replace him were an accomplished Republican insider, and a young but upwardly mobile Democratic senator. He religion was an issue to some, but his progressive ideas on social policies, and an enthusiastic belief in America resulted in his being the youngest President ever elected.
Forgive me if that was a bit over simplistic. I'm aware of the subtelties and nuances of that time and place, but I wanted to briefly ilustrate those basic facts because I thought about all this for a while this evening after a minor epiphany. It starts with a confession. I have written Barak Obama off from the start. In my mind, a candidate who is young, black, and most of all, a Senator, simply faces too great a statistical improbability. Why, I thought to myself smugly, there hasn't been a Senator elected president since JFK.
And that's when myself began to suggest to me that our current election and JFK's election share quite a bit more in common than I was realizing. Oh, and if one Kennedy been elected, wasn't it possible another could be?
So, the question now became, how alike were Kennedy and Obama?
Some of the comparisons were obvious, as listed above. Obama is a young Senator, who has been described as follows:
"...In short, Obama -- young, thoughtful, intelligent, charismatic -- seems the only candidate with the potential to spark a true progressive revival."
JFK became the first Roman Catholic President. Becoming the first African American president is an obvious correlation. His wife is a modern Jackie O, glamorous in a 2008 kind of way, as a striking lawyer of imposing presence, and yet, dedicated to husband and family. Everywhere I go, I read that Obama is a hopemonger, an optimist, working for change, wanting to get people involved in the political process, and move America forward. These are the exact same phrases used to describe JFK's political appeal, and policies.
It's easy for me to be cynical, to predict a Hillary-Romney run off leading up to another four years of the same corrupt and self serving governance that has become the norm, but every now and then I have a moment where there is truly hope. I'm not implicity endorsing Obama; nor have I decided yet that he's who I'll vote for. The fact that I was able to truly feel some optimism in the possibilities, however, is a win for today.
Forgive me if that was a bit over simplistic. I'm aware of the subtelties and nuances of that time and place, but I wanted to briefly ilustrate those basic facts because I thought about all this for a while this evening after a minor epiphany. It starts with a confession. I have written Barak Obama off from the start. In my mind, a candidate who is young, black, and most of all, a Senator, simply faces too great a statistical improbability. Why, I thought to myself smugly, there hasn't been a Senator elected president since JFK.
And that's when myself began to suggest to me that our current election and JFK's election share quite a bit more in common than I was realizing. Oh, and if one Kennedy been elected, wasn't it possible another could be?
So, the question now became, how alike were Kennedy and Obama?
Some of the comparisons were obvious, as listed above. Obama is a young Senator, who has been described as follows:
"...In short, Obama -- young, thoughtful, intelligent, charismatic -- seems the only candidate with the potential to spark a true progressive revival."
JFK became the first Roman Catholic President. Becoming the first African American president is an obvious correlation. His wife is a modern Jackie O, glamorous in a 2008 kind of way, as a striking lawyer of imposing presence, and yet, dedicated to husband and family. Everywhere I go, I read that Obama is a hopemonger, an optimist, working for change, wanting to get people involved in the political process, and move America forward. These are the exact same phrases used to describe JFK's political appeal, and policies.
It's easy for me to be cynical, to predict a Hillary-Romney run off leading up to another four years of the same corrupt and self serving governance that has become the norm, but every now and then I have a moment where there is truly hope. I'm not implicity endorsing Obama; nor have I decided yet that he's who I'll vote for. The fact that I was able to truly feel some optimism in the possibilities, however, is a win for today.
A Quick Interlude Regarding SPAM Blogs...
For some reason, I've been flagged as a SPAM blog in the last couple of days. I'm not sure if this was merely the failure of an automated security function, or what the situation is, but the emails I got suggested that I wouldn't be able to publish for a few days while they sorted it all out.
Clearly, this isn't a SPAM blog, and I hope we're quickly back on track. If this post goes through, then I'll get to work on our next post...
Clearly, this isn't a SPAM blog, and I hope we're quickly back on track. If this post goes through, then I'll get to work on our next post...
Wednesday, January 2, 2008
The Power of Gridlock
MW over at Divided We Stand (in my opinion, a must read blogger) seems like the kind of person I would enjoy a few hours of good coffee and conversation with. We don't agree across the board (sorry MW, I'm sorely unimpressed with Pelosi, and the job the dems have done since winning the majority in congress), but that's to be expected. He's part of a growing consortium of folks who think the best way to disempower government corruption is to work in unison to make sure no single party controls the government. Historically, this has meant one party in the white house, the other party in control of congress. Recently, some in the divided government camp have been pushing for that division to be even more individual, with congress also split evenly down bipartisan lines. In concept, this should force a slowdown of congress' ability to sail legislation through unchecked, and an increase in cooperation between the two sides.
I can't say I'm a huge supporter of this concept; in my mind, the only absolutely effective way to force the parties to act like they believe in their respective campaign platforms is to all register as independents, and to get behind a viable third party solution. I think the big boys could use a lesser watchdog in congress to remind them it doesn't have to be just red or blue, and it's kind of hard to polarize three ways. However, noting that Divided Government is eminently more possible (by which I mean has been successfuly accomplished for 44 of the last 100 years or so), I think I have to at least say that making divided government a focus is the least we can do, the most basic step in the right direction that we can take.
I can't say I'm a huge supporter of this concept; in my mind, the only absolutely effective way to force the parties to act like they believe in their respective campaign platforms is to all register as independents, and to get behind a viable third party solution. I think the big boys could use a lesser watchdog in congress to remind them it doesn't have to be just red or blue, and it's kind of hard to polarize three ways. However, noting that Divided Government is eminently more possible (by which I mean has been successfuly accomplished for 44 of the last 100 years or so), I think I have to at least say that making divided government a focus is the least we can do, the most basic step in the right direction that we can take.
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