Romney and Huntsman Face Off on Afghanistan

During the 11/22/2011 National Security Debate, Mitt Romney faced off against Jon Huntsman on troop levels and tactics in Afghanistan, which the US is currently funding to the tune of roughly $2 billion a week.

Jon Huntsman took the first stab at Afghanistan policy when a separate question arose about US-Pakistan relations.

HUNTSMAN: You've got a nation-state that is a candidate for failure. And I say it's a haven for bad behavior. It's a haven for training the people who seek to do us harm. And an expanded drone program is something that would serve our national interest.

I think it must be done. And I think it must be consistent with recognizing the reality on the ground of what we need out of Afghanistan: we don't need 100,000 troops in Afghanistan.

We don't need to nation-build in Afghanistan when this nation so desperately needs to be built.

When making an independent appraisal of the region, it's useful to recall who we are fighting and why.

In Afghanistan, the US is primarily fighting the Taliban, who ruled Afghanistan in 2001. They were given an ultimatum to turn over al Qaeda members who trained in their country. To this day, the Taliban is not classified as a terrorist organization by the state department. To be placed on that list, an organization has to be foreign, engage in terrorist activity, and threaten the security of the US or its citizens.

Nationality-wise, the 9/11 hijackers consisted of 15 Saudis, two UAE, one Lebanese and one Egyptian.

Romney justified his support of current troop levels in Afghanistan.

ROMNEY: We spent about $450 billion so far, 1,700 or so service men and women have lost their lives there, and many tens of thousands have been wounded. Our effort there is to keep Afghanistan from becoming a launching point for terror against the United States. We can't just write off a major part of the world.

He then segued to address our $4.5 billion annual investment in Pakistan.

ROMNEY: We can do a lot better directing that to encourage people to take advantage of the extraordinary opportunities of the West and freedom represent for their people.

HUNTSMAN: I totally disagree. I think we need to square with the American people about what we've achieved. We need an honest conversation in this country about the sacrifices that have been made over nearly 10 years. We have dismantled the Taliban. We've run them out of Kabul. We've had free elections in 2004. We've killed Osama bin Laden. We've upended, dismantled al Qaeda. We have achieved some very important goals for the United States of America.

Now, the fact that we have 100,000 troops nation-building in Afghanistan when this nation so desperately needs to be built, when, on the ground, we do need intelligence gathering, no doubt about that. We need a strong Special Forces presence. We need a drone presence. And we need some ongoing training of the Afghan National Army.

But we haven't done a very good job defining and articulating what the end point is in Afghanistan. And I think the American people are getting very tired about where we find ourselves today.

ROMNEY: Are you suggesting, Governor, that we just take all our troops out next week or what's your proposal?

HUNTSMAN: Did you hear what I just said? I said we should draw down from 100,000. We don't need 100,000 troops. many of whom can't even cross the wire. We need a presence on the ground that is more akin to 10,000 or 15,000. That will serve our interests in terms of intelligence gathering and Special Forces response capability. And we need to prepare for a world, not just in South Asia, but, indeed, in every corner of the world in which counter-terror -- counter-terrorism is going to be in front of us for as far as the eye can see into the 21st century.

ROMNEY: And the commanders on the ground feel that we should bring down our surge troops by December of 2012 and bring down all of our troops, other than, perhaps, 10,000 or so, by the end of 2014. The decision to pull our troops out before that, they believe, would put at risk the extraordinary investment of treasure and blood which has been sacrificed by the American military.

To consider the varying costs between the approaches, the US is spending about $1 million per troop per year.

GOP Candidate Economic Plans and Income Inequality

Rick Perry's alternative 20% tax plan came out the same week as the Congressional Budget Office report "Trends in the Distribution of Household Income Between 1979 and 2007".

Of the three current top polling candidates, Cain's 9-9-9 plan does the most to accelerate income inequality. Mitt Romney was criticized by Newt Gingrich for capping capital gains tax exemptions. He responded that the middle-class has had a tough go of things under Barack Obama.

Inequality Chat

Paul Solmon, who I remember entertainingly explained the role arbitrage played in the 1987 Black Friday stock fall, followed his PBS NewsHour series with a Twitter chat on 10/28/11, which is re-organized and somewhat translated into English below. I apologize for deleting comments that Solman did not address but it was helpful for the sake of a coherent Q&A.

Without getting into arguments about whether or not the United States Government taxes too much or spends too little, this independent voter is primarily interested in two issues. How does income inequality affect the ability of the private sector to function?

Question: Why a series on economy inequality?
Solman: I think it's the most important economic issue of our time, has been for years. Can America Dream, US survive inequality like Gilded Age, '20s?

JRRuss67: What happened in mid-70s to cause the gap to widen so much?
Solman: Lots: Globalization (cheap labor) I. Deregulation. Diminished influence of unions. Big boost came from '80s with "tax reform."

Question: Why feature Libertarian Epstein? Don't they get enough air time?
Solman: Maybe, but not from us. I thought he made his case so blatantly, viewers could evaluate it for themselves. Disagree?

tniblett: How have we convinced ourselves that inequality is good for USA?
Solman: Because it's in the interest of the economy's winners to champion the notion that they deserve what they get?

tniblett: True, but why is it in the interest of economy's losers to believe it?
Solman: A puzzle why economy losers believe it. But polls now suggest we increasingly DON'T believe inequality is good for economy.

Question: Doesn't inequality always contribute to inequality or repression?
Solman: No, inequality doesn't ALWAYS contribute to political instability or repression. But it doesn't seem help either one & if wide enough.

tkmalone: How does concentrated wealth affect consumer spending? More money on fewer individual needs, food, houses, cars, etc.?
Solman: Concentrated wealth hurts consumer spending because wealthy save a higher percentage of their income. Much higher.

Question: Why not "income disparity" instead of "inequality," which implies something wrong, INequitable?
Solman: Because "inequality" is a clear and true description? Would you prefer "income asymmetry"? Folks would feel even better.

Question: It seems the corporations have written off consumer demand and are still making profits?
Solman: US corps are selling more and more abroad. That's presumably why the US market has gyrated so because of events in Europe, China.

norrisj: 12th grade economy class here. We are concerned about equal opportunity vs. equal result.
Solman: "Equal opportunity" sounds great. But if only some folks have marketable skills in this economy and others don't, then what? Can those of us with skills that aren't "marketable" opt out of this market in ignorance, deceit and obedience? Aside from unemployment? The grim truth is, choices are to opt out via downshifting (living with folks? At Zucotti Park?) or getting the skills. Opportunity inequality based on marketable ability. Needs to be role for folks with limited ability, be it factory or massage.

policylink: How do the coming racial demographic changes play into this debate? US will be majority people of color by 2042
Solman: I don't know. You'd think poorer minorities would vote for equality policies, wouldn't you?

AFWorkforce: People need choice. Many people feel like they are looking at glass ceiling and shackled to job
Solman: Yes, hard to move if you can't sell your house or are terrified that if you quit your job, you won't find another.

BerylSchewe: How do we widen the chances for equal opportunity without increasing entitlements?
Solman: Why "entitlements"? How about real jobs that need doing, done by sidelined Americans? CCC anyone?

norrisj: What would you propose for equality policy? Income cap? Tax the rich? confiscate?
Solman: Taxing the wealthy seems such an obvious starting point. Top tax rate under Wilson: 77%; FDR: 94%. Today: 35%!

mediacodex From London: Isn't raising opportunities for lower classes more important a focus than on lower inequality?
Solman: Yes, focus on job opportunities for the low downs but can it be done without investing in them? Who will invest but high ups?

bwmcr: How do we begin to showcase that economic policies that increase equality are not socialist, and gaining acceptance.
Solman: FDR was accused of being a socialist and, compared to what had preceded him, perhaps he was.

DgwilsonDave: What about putting fees on fossil fuels and emissions and rebating equally per person?
Solman: Charging the true cost of negative externalities like pollution is basic economics. But wouldn't do much to affect inequality.

bwmcr: How about tax breaks for companies that have more equal pay like Ben and Jerry's? Reward socially-mindedness.
Solman: It would be very difficult to legislate. Got to be easier to tax the wealthy. And if government owns, to pay top dogs less.

tsheely67 Why does such a high percent pay NO federal tax? Wouldn't more stakeholders insist on less waste?
Solman: Interesting point. Flat taxers say simple is better. But you can have simple and progressive both. Check out original tax form.

JohnMesserly: Paul, recall when you did your first story on it?
Solman: For PBS Boston, inequality stories in early '80s. For NewsHour, "Upstairs, Downstairs" in '87. Reported "Hourglass economics" in '89.

Rick Perry's "Cut, Balance and Grow Plan" Alternative 20 Percent Flat Tax

Rick Perry's "Cut, Balance and Grow Plan"

Rick Perry proposed an optional 20% flat tax that preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and increases the standard deduction to $12,500 for individuals and dependents.

The Economist features a selection of evaluations.

An independent voter may agree with Reihan Salam's characterization in National Review that "Rick Perry’s proposal is not a flat tax. Rather, it is an alternative maximum tax or MAXTAX."

It would likely ease compliance costs for top earners but, as Len Burman writes in Forbes, "Millions of middle-income taxpayers will have to figure their taxes two ways to figure out which plan is better for them."

There are also the usual questions raised about how much revenue would be raised, what the deficit impact would be, and what would be cut in order to balance the budget.

Rick Perry, Flat Tax, and Inequality

Rick Perry's "Cut, Balance and Grow Plan"

Rick Perry proposed an optional 20% flat tax that preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and increases the standard deduction to $12,500 for individuals and dependents.

The Economist features a selection of evaluations.

An independent voter may agree with Reihan Salam's characterization in National Review observation that "Rick Perry’s proposal is not a flat tax. Rather, it is an alternative maximum tax or MAXTAX."

It would likely ease compliance costs for top earners but, as Len Burman writes in Forbes, "Millions of middle-income taxpayers will have to figure their taxes two ways to figure out which plan is better for them."

There are also the usual questions raised about how much revenue would be raised, what the deficit impact would be, and what would be cut in order to balance the budget.

It's coincidental that Rick Perry's plan came out the same week as the Congressional Budget Office report "Trends in the Distribution of Household Income Between 1979 and 2007".

Of the three current top polling candidates, Cain's 9-9-9 plan does the most to accelerate income inequality. Mitt Romney was criticized by Newt Gingrich for capping capital gains tax exemptions.

Inequality Chat

As to the implications of inequality, Paul Solmon followed his PBS NewsHour series with a Twitter chat on 10/28/11, which is re-organized and somewhat translated into English below.

Without getting into arguments about whether or not the United States Government taxes too much or spends too little, this independent voter is primarily interested in two issues. How does income inequality affect the ability of the private sector to function?

Question: Why a series on economy inequality?
Solman: I think it's the most important economic issue of our time, has been for years. Can America Dream, US survive inequality like Gilded Age, '20s?

JRRuss67: What happened in mid-70s to cause the gap to widen so much?
Solman: Lots: Globalization (cheap labor) I. Deregulation. Diminished influence of unions. Big boost came from '80s with "tax reform."

Question: Why feature Libertarian Epstein? Don't they get enough air time?
Solman: Maybe, but not from us. I thought he made his case so blatantly, viewers could evaluate it for themselves. Disagree?

tniblett: How have we convinced ourselves that inequality is good for USA?
Solman: Because it's in the interest of the economy's winners to champion the notion that they deserve what they get?

tniblett: True, but why is it in the interest of economy's losers to believe it?
Solman: A puzzle why economy losers believe it. But polls now suggest we increasingly DON'T believe inequality is good for economy.

Question: Doesn't inequality always contribute to inequality or repression?
Solman: No, inequality doesn't ALWAYS contribute to political instability or repression. But it doesn't seem help either one & if wide enough.

tkmalone: How does concentrated wealth affect consumer spending? More money on fewer individual needs, food, houses, cars, etc.?
Solman: Concentrated wealth hurts consumer spending because wealthy save a higher percentage of their income. Much higher.

Question: Why not "income disparity" instead of "inequality," which implies something wrong, INequitable?
Solman: Because "inequality" is a clear and true description? Would you prefer "income asymmetry"? Folks would feel even better.

Question: It seems the corporations have written off consumer demand and are still making profits?
Solman: US corps are selling more and more abroad. That's presumably why the US market has gyrated so because of events in Europe, China.

norrisj: 12th grade economy class here. We are concerned about equal opportunity vs. equal result.
Solman: "Equal opportunity" sounds great. But if only some folks have marketable skills in this economy and others don't, then what? Can those of us with skills that aren't "marketable" opt out of this market in ignorance, deceit and obedience? Aside from unemployment? The grim truth is, choices are to opt out via downshifting (living with folks? At Zucotti Park?) or getting the skills. Opportunity inequality based on marketable ability. Needs to be role for folks with limited ability, be it factory or massage.

policylink: How do the coming racial demographic changes play into this debate? US will be majority people of color by 2042
Solman: I don't know. You'd think poorer minorities would vote for equality policies, wouldn't you?

AFWorkforce: People need choice. Many people feel like they are looking at glass ceiling and shackled to job
Solman: Yes, hard to move if you can't sell your house or are terrified that if you quit your job, you won't find another.

BerylSchewe: How do we widen the chances for equal opportunity without increasing entitlements?
Solman: Why "entitlements"? How about real jobs that need doing, done by sidelined Americans? CCC anyone?

norrisj: What would you propose for equality policy? Income cap? Tax the rich? confiscate?
Solman: Taxing the wealthy seems such an obvious starting point. Top tax rate under Wilson: 77%; FDR: 94%. Today: 35%!

mediacodex From London: Isn't raising opportunities for lower classes more important a focus than on lower inequality?
Solman: Yes, focus on job opportunities for the low downs but can it be done without investing in them? Who will invest but high ups?

bwmcr: How do we begin to showcase that economic policies that increase equality are not socialist, and gaining acceptance.
Solman: FDR was accused of being a socialist and, compared to what had preceded him, perhaps he was.

DgwilsonDave: What about putting fees on fossil fuels and emissions and rebating equally per person?
Solman: Charging the true cost of negative externalities like pollution is basic economics. But wouldn't do much to affect inequality.

bwmcr: How about tax breaks for companies that have more equal pay like Ben and Jerry's? Reward socially-mindedness.
Solman: It would be very difficult to legislate. Got to be easier to tax the wealthy. And if government owns, to pay top dogs less.

tsheely67 Why does such a high percent pay NO federal tax? Wouldn't more stakeholders insist on less waste?
Solman: Interesting point. Flat taxers say simple is better. But you can have simple and progressive both. Check out original tax form.

JohnMesserly: Paul, recall when you did your first story on it?
Solman: For PBS Boston, inequality stories in early '80s. For NewsHour, "Upstairs, Downstairs" in '87. Reported "Hourglass economics" in '89.

Commander in Chief Reports on Libya and Iraq, Republicans and Two Democrats Vote Against Helping States Keep Teachers

Excerpts from Weekly Address:

This week, I was proud to announce that—as promised—the rest of our troops in Iraq will come home by the end of this year.

In Libya, the death of Moammar Qadhafi showed that our role in protecting the Libyan people, and helping them break free from a tyrant, was the right thing to do.

In Iraq, we’ve succeeded in our strategy to end the war. Last year, I announced the end of our combat mission in Iraq. We’ve already removed more than 100,000 troops, and Iraqi forces have taken full responsibility for the security of their own country. Thanks to the extraordinary sacrifices of our men and women in uniform, the Iraqi people have the chance to forge their own future. And now the rest of our troops will be home for the holidays.

In Libya, our brave pilots and crews helped prevent a massacre, save countless lives, and give the Libyan people the chance to prevail. Without putting a single U.S. service member on the ground, we achieved our objectives. Soon, our NATO mission will come to a successful end even as we continue to support the Libyan people, and people across the Arab world, who seek a democratic future.

These successes are part of a larger story. After a decade of war, we’re turning the page and moving forward, with strength and confidence. The drawdown in Iraq allowed us to refocus on Afghanistan and achieve major victories against al Qaeda and Osama bin Laden. As we remove the last of our troops from Iraq, we’re beginning to bring our troops home from Afghanistan.

To put this in perspective, when I took office, roughly 180,000 troops were deployed in these wars. By the end of this year that number will be cut in half, and an increasing number of our troops will continue to come home.

At Home:

On 10/20/2011, the Senate split 50-50 on a vote to debate the portion of Obama's Jobs Act to help the cash-strapped states hire teachers and first responders. The Republicans would have filibustered any vote short of 60 to debate the bill.

All 47 Republicans plus Democratic senators Ben Nelson (Nebraska) Mark Pryor (Arkansas), and Independent Joseph Lieberman (Delaware) decided that an additional 0.5% tax on earned income over $1 million was too great a price for helping the states stabilize their unemployment rates by keeping teachers, firefighters and policemen on the job.

The Man Behind Cain's 9-9-9 Plan

During the 10/12/11 GOP debate on the economy, when Herman Cain was asked who he turned to for political advice, he replied, "One of my experts that helped me to develop this was a gentleman by the name of Rich Lowrie out of Cleveland, Ohio. He is an economist and he has worked in the business of wealth creation most of his career."

What kind of economist is Rich Lowrie?

According to his Linkedin page he has a BS in Accountancy from Case Western Reserve University.

How did Rich Lowrie create wealth?

He is currently a wealth management adviser at the Pepper Pike, Ohio branch of Wells Fargo.

"We offer comprehensive wealth management solutions for business owners, executives, professionals, families and fiduciaries."

Is a background in economics important?

Here's an exchange from the debate.

JULIANA GOLDMAN (Bloomberg TV): Mr. Cain, you say that your plan is revenue-neutral. And last year, the U.S. collected $2.2 trillion dollars in tax revenue, but Bloomberg Government has run the numbers, and your plan would have raised no more than $2 trillion. And even with that shortfall, you'd still be slapping a 9 percent sales tax on food and medicine.

CAIN: The problem with that analysis is that it is incorrect. The reason it is incorrect is because they start with the assumptions that we don't make. Remember, 9-9-9 plan throws out the current tax code.

Cain uses this statement as a means of getting back to his talking points. I don't believe that Bloomberg Government would "forget" that 9-9-9 throws out the current tax code because analyzing the alternative tax code was the purpose of their calculation.

CAIN: We have had an outside firm, independent firm dynamically score it. And so our numbers will make it revenue neutral.

Now we have a comparison of one named independent firm Bloomberg Government using existing numbers to evaluate Herman Cain's "simple, transparent, efficient, fair, and neutral" plan refuted by an unnamed independent firm's "dynamic scoring." Dynamic scoring is not an accounting principle but an economic one.

GOLDMAN: But then explain why under your plan all Americans should be paying more for milk, for a loaf of bread, and beer?

CAIN: You have to start with the biggest tax cut a lot of Americans pay, which is the payroll tax, 15.3 percent. That goes to 9 percent. That is a 6 percentage point difference. And the prices will not go up. So they have got a 6 percentage point difference to apply to the national sales tax piece of that, and in doing so, they have the flexibility to decide on how much they want to spend it on new goods, how much they want to spend it on used goods. Because there is no tax on used goods.

Here we get a look at Cain's assumptions.

Fact: Americans who pay only a payroll tax will have 6.3 percent more cash in their pocket to pay the new 9 percent sales tax.

Assumption: Prices will never go up.

Assumption: Purchasing used goods will mitigate any net tax increase from the new 9 percent tax.

Here is another fact not questioned during the debate about categories of income exempted from the 9 percent tax.

Fact: Taxes for capital gains and dividends and the estate tax go away completely.

For an independent voter it is often as important to know who advocates a proposal as the nuts and bolts of the proposal itself.

In terms of 9-9-9, how would a wealth management advisor and his clients fare under the new tax code?

Herman Cain's 9-9-9: Shifting the Tax Burden from Producers to Consumers and Suggestions for How the Poor Can Pay the Higher Taxes

Herman Cain's Message

If you visit HermanCain.com, Kent Short, an American butcher, has some glowing words for his candidate of choice. "When they asked him a question, he was just very up front and honest and says, 'I can't give you an answer because I don't know what all the facts are. And that's what we're doin' wrong.' People were giving answers without facts. And as soon as I heard him say that, I said, this is the only guy who's got any sense in the whole thing."

Herman Cain won the Florida Straw Poll with this message.



He begins with a subtle dig at his fellow candidate speakers by asking, "whose teleprompters are these? I'm not using them." It's true. He has lots of experience as a motivational speaker and radio talk show host.

"It must be borne in mind that the tragedy of life does not lie in not reaching your goals, the tragedy lies in having no goals to reach for. It is not a calamity to die with dreams unfulfilled, but it is a calamity to have no dreams." an unattributed quote from Benjamin E. Mays, who was President of Morehouse College when Cain graduated from there with a B.S. in 1967.

He lists the crises that America faces and offers the good news that we can solve these crises by identifying and hitting the target called "fix it", a reference to his days as a ballistic analyst "working for the Department of the Navy." This is not to be confused with Cain serving in the Navy. He did not.

When he states his bold solution to fix the economy, the audience chants in unison: "9-9-9." But for the independent voter, what exactly is 9-9-9?

Throw out all of the current tax code. Impose a 9 percent business flat tax, a 9 percent personal income tax, and a 9 percent national sales tax. It would be revenue neutral. It replaces all corporate and personal income taxes, capital gains, estate taxes, payroll tax. It provides certainty to the engine of economic growth: the business sector.

Energy: "America is going to dig here, drill here, and explore here first…we have the resources to become energy independent."

Restructuring Social Security: "Seniors don't worry. You won't be affected. Near retirement seniors. You don't have to worry. Because a personal retirement accounts option for younger workers will allow us over time to take care of those where promises were made." Younger workers would have an option to establish their own accounts.

National Security: "Peace through strength and clarity." We would "clearly identify who our friends are, clearly identify who our enemies are, and stop giving money to the enemies." When it comes to defense, he wouldn't look for what to cut but what to enhance. "If we are not in it to win it, we will not be in it."

The Founding Fathers: "'When any form of government becomes destructive of those ideals' (all men are created equal with unalienable rights to life, liberty, and the pursuit of happiness 'it is the right of the people to alter or abolish it.' We've got some altering and abolishing to do." Here he cites not the Constitution, which he would have to swear to protect and defend, but the Declaration of Independence, a document to spell out our grievances against King George III.

He ends with an appeal to "help me to push that shining city on a hill back to the top of the hill. Vote Cain in 2012."

9-9-9 Analysis:

On 09/30/11, the Christian Science Monitor took a look at 9-9-9 in Herman Cain's '999 plan': long overdue tax reform or job killer?" Some highlights:

9 Percent National Sales Tax

Rich Lowrie, Cain’s senior economic advisor claims it would shift the tax burden from production to consumption, allowing exporters to pay less tax on goods they produce and impose a 9% tax on imported goods.

Possible implications of the national sales tax included a negative impact on consumer demand and the possibility of retailers cheating by offering a lower price for wink, wink cash purchases.

9 Percent Corporate Tax

The possible implication of eliminating the business deduction for labor but not investment was favoring heavy industry over the service sector, such as Cain's former business: Godfather's Pizza.

Overall Tax Burden

Using an economic measure called "marginal propensity to consume" (necessary to evaluate the impact of a national sales tax), the article estimated that those who earned:

$20,000 would pay 17 percent vs. the current 12.8 percent.
$55,000 would pay 17.95 percent vs. the current 16.9 percent.
$300,000 would pay 16.3 percent vs. the 27.97 percent.

When asked about this disparity and the regressive nature of sales tax by Chris Wallace on the 10/02/11 Fox News Sunday, Cain responded with a figure for a $50,000 income earner that worked out in his favor according to his plan but without taking into account deductions allowed under the current tax code. Perhaps he should have stuck to "I can't give you an answer because I don't know what all the facts are."

Another concern voiced in the article was the impact shifting to a consumption tax would have on senior citizens who would face the new 9% sales tax on the way to a 30% national sales "fair tax" (a total shift away from income taxation) while the payroll tax supporting Social Security was eliminated.

For criteria on deciding whether independent voters should consider this "fair share" or "class warfare" see Barack Obama's Balanced Approach: Fair Share or Class Warfare?

Impact on Deficit

Chief Economist at Moody's Analytics Mark Zandi opines that the 9-9-9 plan is revenue neutral at the current rate of federal income: 15% of GDP.

The country currently spends 24% of GDP. The last time the budget was balanced was at 19.5% of GDP with $496 billion more in revenue than it collects today.



For more independent voter's perspective on the path to a balanced budget, see Balanced Budget Amendment

Poor People

On the 10/09/11 edition of Face the Nation, Bob Schieffer asked Cain about the provision that exempted used goods from the 9 percent national sales tax (I couldn't find this on hermaincain.com).

Schieffer: "Aren't poor people also going to get to pay a tax on food and a tax on medicine?"

Cain: "You give poor people more opportunity to stretch their dollar and leverage their income based upon their decision whether to buy new or used goods."

I can't help it but the option of poor people buying used food brought to mind a variation on a famous quote by Marie-Thérèse, the wife of Louis XIV, often falsely attributed to Marie Antoinette.

"Let them eat _ _ _ _. "

Barack Obama's Balanced Approach: Fair Share or Class Warfare?

On 09/19/2011, Barack Obama made some remarks on how the select committee should approach deficit reduction.

"If we’re going to make spending cuts -- many of which we wouldn’t make if we weren’t facing such large budget deficits -- then it's only right that we ask everyone to pay their fair share."

Obama's definition of fairness: "Middle-class families shouldn’t pay higher taxes than millionaires and billionaires."

Newt Gingrich was the only GOP presidential candidate to refer to Obama's "class warfare" during the 09/22/2011 debate but Paul Ryan, John Boehner, and Lindsey Graham were all characterizing Obama's "fair share" as "class warfare" by then.

In an 08/15/2011 New York Times op-ed piece by the Chairman and CEO of Berkshire Hathaway, "Stop Coddling the Super Rich," Warren Buffett argued that because he received much of his compensation as "carried interest," taxed at 15 percent, his overall tax rate of 17.4 percent was significantly lower than that of his employees, who averaged 36 percent.

An independent voter who isn't issued Republican or Democratic talking points for characterizing Obama's view as "class warfare" or "fair share" has to evaluate some facts, so here goes.

Chris Wallace interviewed White House Senior Adviser David Plouffe on Fox News Sunday 09/25/11.

Wallace used the following figures to question whether top earners were paying their fair share.


Fair Share?
Top 1% = 38% of Federal Income Taxes
Top 10% = 70% of Federal Income Taxes
The Tax Foundation Oct. 2010

Non-Payers
46% = No Federal Income Taxes
The Tax Policy Center July 2011

Looking at these numbers, it seems that the wealthy may be paying a higher percentage of their income to the federal government. Note that the first set of numbers, stating what the wealthiest pay, and the second set, what 46% of households don't pay, come from two different organizations. The second study would appear to be excluding FICA taxes, which Buffett argues disproportionately hit those who derive all their income from salary. Are those numbers also excluded from the first study?

Is seeking to adjust the tax code for high earners class warfare?

On the 08/16/2011 PBS Newshour story Land of the Free, Home of the Poor Paul Solmon reports some different numbers.

Distribution of Financial and Housing Wealth in the United States
Top 20%: 84%
2nd 20%: 11%
3rd 20%: 4%
4th 20%: 0.2%
Lowest 20%: 0.1%
Study by Dan Ariely of Duke University and Michael I. Norton of Harvard

Here we get a story that deals more with "class" and class mobility. Because it deals with quintiles instead of deciles, the numbers don't directly stack up but the underlying numbers don't appear to be necessarily inconsistent.

When it comes to the fair share or class warfare of the Buffett rule, Jon Huntsman advocates cutting the 15% taxation on capital gains and dividends to zero. Mitt Romney supports cutting tax on capital gains, dividends, and interest to zero for those who earn less than $200,000. That makes him more of a "class warrior."

Rick Santorum would cut corporate taxes for manufacturers to zero. Massachusetts Democratic senatorial candidate Elizabeth Warren would beg to differ with that approach.



"There is nobody in this country who got rich on his own. Nobody. You built a factory out there - good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory and hire someone to protect against this because of the work the rest of us did. Now look. You built a factory and it turned into something terrific or a great idea - God Bless! Keep a Big Hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along."

Mitt Romney's Economic Priorities

While Barack Obama’s American Jobs Plan is the most detailed document by a presidential candidate to date, Mitt Romney laid out significantly more detail than Jon Huntsman or Herman Cain in an e-book: Believe in America: Mitt Romney's Plan for Jobs and Economic Growth announced during a speech given at the McCandless International Trucks Company in North Las Vegas, Nevada. Here are his "day one" priorities.

Day One
Introduce Legislation to:

1. Reduce the corporate income tax rate to 25 percent.
2. Implement the Colombia, Panama, and South Korea Free Trade Agreements.
3. Direct the Department of the Interior to undertake a comprehensive survey of American energy reserves in partnership with exploration companies and initiates leasing in all areas currently approved for exploration.
4. Consolidate the sprawl of federal retraining programs and return funding and responsibility for these programs to the states.
5. Immediately cuts non-security discretionary spending by 5 percent, reducing the annual federal budget by $20 billion.

Sign Executive Orders to:

1. Direct the Secretary of Health and Human Services and all relevant federal officials to return the maximum possible authority to the states to innovate and design health care solutions that work best for them.
2. Direct all agencies to immediately initiate the elimination of Obama-era regulations that unduly burden the economy or job creation, and then cap annual increases in regulatory costs at zero dollars.
3. Direct the Department of the Interior to implement a process for rapid issuance of drilling permits to developers with established safety records seeking to use pre-approved techniques in pre-approved areas.
4. Direct the Department of the Treasury to list China as a currency manipulator in its biannual report and direct the Department of Commerce to assess countervailing duties on Chinese imports if China does not quickly move to float its currency.
5. Reverse the executive orders issued by President Obama that tilt the playing field in favor of organized labor, including the one encouraging the use of union labor on major government construction projects.

President Obama's American Jobs Act: How the Money is Spent

On Thursday, President Obama addressed a joint session of Congress to introduce his “American Jobs Act.”

Rather than giving a speech stressing core principles, the plan is concrete and actionable and Obama urged its passage.



The $447 billion program breaks down like this:

Fact Sheet and Overview (scroll to bottom for larger print of table)

President Obama asked Congress to come up with additional spending cuts over the next ten years to cover the cost of the program and promised a more ambitious deficit plan to cover the cost of the jobs bill and stabilize debt in the long run on September 19.

Ron Paul: Freedom, Liberty, the Constitution, Limited Government and a Balanced Budget

Ron Paul made it onto the August 28 edition of Fox News Sunday.

Some highlights: 

On FEMA:
Save a billion dollars from overseas warmongering, bring half that home, put it against the deficit and tide people over.

Unconventional Libertarian Views:
Isn’t it strange that we can apply that term (unconventional) to freedom and liberty and the Constitution, limited government, a balanced budget?

More Interested in Influence or Political Power?
I’m in it to win it and I’m more interested in influence and power. As president I would reduce the power of government. I would not go to war without Congressional approval.

Libya
We should be dealing for national security in defense of our country and not pretending that we can pick the dictators around the world. Military people want to defend this country but they don’t want perpetual war when it’s undeclared and they don’t see the end and you don’t know who the enemy is. Guard units should be here taking care of us when we have floods.

How Austrian School of Economics Would Boost Economy and Deal with National Debt
Let bankruptcy and liquidation occur. Give country a sound currency. Free up the markets. Property rights. Enforce contracts.

Ben Bernanke
All he needs to do is quit monetizing debt. Interest rates would go up and Congress would be forced to cut. Gold backing of currency restrains big government.

Jon Huntsman's American Jobs Plan

On Wednesday, Jon Huntsman came out with his American jobs plan "Time to Compete."

Some highlights submitted for your approval:

Tax Reform:

Introduce a revenue-neutral tax plan that eliminates all deductions and credits in favor of three drastically lower personal tax rates of 8%, 14% and 23%.

Eliminate the Alternative Minimum Tax, which is not indexed for inflation.

Eliminate taxes on capital gains and dividends.

Reduce corporate rate from 35% to 25%.

Regulatory Reform

Repeal existing regulations, including Obamacare (Affordable Care Act) and Dodd-Frank (Wall Street Reform).

Dramatically rein in the EPA. Oppose new ozone rule that would effectively halt new construction. On Friday, White House asked EPA administrator Lisa Jackson to withdraw the draft of the National Ambient Air Quality Standards plan. 

Ensure that NLRB and other agencies abandon their “job-destroying” policies.

Reform the FDA by streamlining the testing and approval process.

Enact comprehensive patent reform to weed out rent seeking and foster invention. "This American Life" episode "When Patents Attack" illustrates some flaws of current patent system.

Privatize Fannie Mae and Freddie Mac.

Energy Independence

Expedite the process for reviewing and approving safe, environmentally sound energy projects, including the development of North American oil and gas reserves; oil and gas in the Gulf of Mexico and Alaska; shale gas and oil in the U.S.; and Canadian oil sands.

Eliminate the subsidies and regulations that support foreign oil and inhibit domestic alternatives such as compressed natural gas (CNG), electricity, biofuels, and coal-to-liquids, which are not price-controlled by OPEC.

Free Trade

Make trade agreements with South Korea, Colombia and Panama a priority. Pursue new trade opportunities with Japan, India, and Taiwan.

Is Jon Huntsman too Reasonable to be a Republican?

Jake Tapper of "ABC News This Week" started off his interview with Republican presidential candidate Jon Huntsman by quoting Tim Pawlenty: “‘What I brought forward I thought was a rational, established, credible, strong record of results, based on experience governing, a two-term governor of a blue state, but I think the audience, so to speak, was looking for something different.’ Isn't Governor Pawlenty describing the same problem you're having on the campaign trail right now?”

Jon Huntsman was making his debut on a Sunday news show during a week when the full-time host, the president, and Congress were on vacation.

After a week when most major news outlets had played Rick Perry’s sound bites about the treasonous Fed chairman Ben Bernanke, the questionable theory of evolution, and the uncertain causes of climate change, Huntsman was able to elbow his way into the ambient light of the media spotlight, not with a bold ill-considered remark but with a tweet.

“To be clear, I believe in evolution and trust scientists on global warming. Call me crazy.”




Interview Transcript | Link to Full Interview

Huntsman's Views On:

Perry’s Scientific Views:
“I think there's a serious problem. The minute that the Republican Party becomes the party -- the anti-science party, we have a huge problem. We lose a whole lot of people that would otherwise allow us to win the election in 2012.

Perry’s Bernanke Treason Statement:
“And every time we have these sideshows take place, finger-pointing and name-calling, it takes us that much further off the ball, which is fixing our core in this country, is getting our economy fixed and creating jobs.”

Michele Bachmann’s Promise of Gas Under $2.00 a Gallon:
“You know, I just -- I just don't know what -- what world that comment would come from, you know? We live in the real world. It's grounded in reality. And gas prices just aren't going to rebound like that.”

Republican Candidates' Refusal of Debt Ceiling Deal:
“You can imagine -- even given the uncertainty of the marketplace the last several days and even the last couple of weeks -- if we had defaulted, the first time in the history of the greatest country that ever was, being 25 percent of the world's GDP and having the largest financial services sector in this world by a long shot, if we had defaulted, Jake, this marketplace would be in absolute turmoil. And people who are already losing enough as it is on their 401(k)s and retirement programs and home valuations, it would have been catastrophic.”

The Media:
Tapper asked why he had raised his hand, along with all the other Republican candidates in response to Bret Baier’s Iowa debate question about refusing to raise even $1 of taxes for $10 of spending cuts.

“Well, I'm just sorry that the debate resorted to a raising of hand as opposed to some discussion about where this country needs to go in terms of overall tax policy.”

The Theocracy of Michele Bachmann

After GOP presidential candidate and Minnesota representative Michele Bachmann won the Iowa Straw Pole, edging out Texas representative Ron Paul and causing former Minnesota Governor Tim Pawlenty to leave the race, voters in other early primary states may be taking a closer look at her background. 

Ryan Lizza’s article, “Leap of Faith: The Making of a Republican Front Runner,” in “The New Yorker” proves a valuable tool.

As Lizza explained during a Fresh Air interview, “She comes out of a religious evangelical conservative movement that is very much concerned with developing a biblical world view and applying it to all corners of one's life.” 

Apparently, her campaign manager, Ed Rollins, has asked her to remove that Christianity from all aspects of her biography.

Using Lizza’s article as a skeleton key, here’s how Bachmann describes her qualifications on the 08/14/11 edition of “Meet the Press.”

Visit msnbc.com for breaking news, world news, and news about the economy

I'm 55 years old. I've been married 33 years. I have five children. I've raised 23 foster children.

I also am a federal tax litigation attorney.

I have a law degree and then a post-doctorate degree from William & Mary.
Law degree was from Coburn School of Law at Oral Roberts University where she worked with Professor John Eidsmoe on his book Christianity and the Constitution. She studied at William & Mary while her husband Marcus got a degree in counseling from Pat Roberts’ C.B.N. University (now Regent University).

I've worked for years in the United States Federal Tax Court. So I know up close and personal how devastating high taxes are on businesses and families and farmers.
She worked for the IRS for a total of four years. She took maternity leave twice during that time and left to become a stay at home mom.

But also my husband and I started a successful company. We're job creators. We get it how you have to turn a profit and, and keep a margin in line.
Bachmann and Associates is a Christian Counseling service.

So I've lived life, but also--I've also been in the state senate, where I've been very successful turning around education reform in Minnesota. I led that effort in Minnesota. I brought Republicans and Democrats and independents together. I did that.
She led the effort to overturn a Minnesota education law known as Profile of Learning, which set state education standards because she thought they were socialist.

But in Congress, I've been at the tip of the spear and a champion for what people have been calling for and that's fiscal responsibility and accountability. For the last two months, I was the leading voice in Washington against raising the debt ceiling. Now that doesn't mean default. I introduced a bill to make sure that we would not default, but also to get our spending priorities in line.
The Promise Act recommended paying the principal and interest on the debt and active service military. Although Bachmann stated several times that it was wrong for Obama to scare senior citizens about social security, the act didn’t mention them.

Obama’s Economic Growth Agenda: Payroll Tax Cut, Unemployment Insurance Extension, and an Infrastructure Bank

President Barack Obama laid out three ideas for growing the economy during his August 8 address on the Standard & Poor’s credit downgrade and its impact on the markets.





“We should extend the payroll tax cut as soon as possible, so that workers have more money in their paychecks next year and businesses have more customers next year.

“We should continue to make sure that if you’re one of the millions of Americans who’s out there looking for a job, you can get the unemployment insurance that your tax dollars contributed to. That will also put money in people’s pockets and more customers in stores.”

The last time Obama got Congress to agree on these ideas, it was tied to an extension of the Bush era tax cuts on top-bracket earners.

“We should also help companies that want to repair our roads and bridges and airports, so that thousands of construction workers who’ve been without a job for the last few years can get a paycheck again. That will also help to spur economic growth.”

Obama doesn’t specifically mention an “infrastructure bank” here by name but describes the concept. Such a bank would extend targeted loans and limited loan guarantees to projects that would repay them through future revenue streams. Examples, as explained in this “New York Times” op-ed, would include toll roads and power plants.

Michele Bachmann's Thoughts on Debt, Taxes, and "Great Society" Programs (the largest of which is Medicare)

When Republican presidential candidate Michele Bachmann spoke before the National Press Club on the Thursday before the debt ceiling deal was reached, she spoke about how things would be different if she were in office.

She admonished President Obama for mounting so much debt and turned to praising President Ronald Reagan’s trimming of taxes and the federal budget. She spoke of the Obama administration as being "borrow and spend." But looking at the percentage of debt increase under the last five Democratic and Republican presidents, one name stands out: Ronald Reagan.

Based on US Office of Management and Budget Data (Obama estimated).

As David Stockman, a director of the Office of Management and Budget under President Ronald Reagan recently wrote in a "New York Times" op-ed, "Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts." 

Michele Bachmann voted against lifting the debt ceiling and promised to resist lifting it in the future. She promised to cut spending without raising taxes. She wasn't specific about what cuts she would make but implied that a good place to start would be the elimination of "the Great Society," programs (the largest of which was Medicare). Here's what she said:

Audition to be Michele Bachmann's Treasury Secretary!

In a speech before the National Press Club today, Michele Bachmann reiterated that she would not vote to raise the debt ceiling.

Your mission, should you choose to accept it, is to show Michele Bachmann (and perhaps Secretary Geithner) how the federal government should prioritize its payments using this nifty little tool from the Washington Post!

 

 You Choose Who Gets Paid

Obama to Congressional Leaders: "Explain to Me How It is We're Going to Avoid Default"

On Friday afternoon, after the stock market closed, House Speaker John Boehner (R-OH) and President Barack Obama issued dueling press conferences to explain that Boehner had decided to discontinue debt ceiling negotiations with the president and instead pursue a solution in Congress.



Boehner claimed that Obama had asked for $400b in revenue over ten years by increasing taxes, in addition to $800b that would be achieved through tax reform. Obama claimed that the deal had been structured to avoid raising taxes because so many Republicans had signed an anti-tax pledge (see I Pledge Allegiance to Grover Norquist). It was unclear from Obama’s press conference whether or not the deal breaking $400b would, indeed, require something other than closing loopholes but it was something that his fellow Democrats had demanded after seeing the ratio of cuts to revenues Obama and Boehner had negotiated.

Coincidentally, earlier Friday morning, Senate Majority Leader Harry Reid (D-NV) held a vote to kill the “Cut, Cap and Balance” bill, passed by the House, without allowing debate.

Harry Reid said, “I think this piece of legislation is about as weak and senseless as anything that has ever come on this senate floor… perhaps some of the worst legislation in the history of this country.”

The vote was killed (51-46) along party lines with two Democrats, John Kerry and Kirsten Gillibrand, and one Republican, John McCain, not voting.

By its refusal to consider this legislation, the senate Democrats joined Republican presidential candidates Michele Bachmann and Ron Paul in voting against raising the debt ceiling. Boehner did not cite the way the House’s legislation was handled as a reason for his leaving the debt ceiling talks but mentioned "partisan sniping" in answering a question.

In terms of deficit reduction, the House Republican’s line in the sand has been “no tax increases.” The Democratic line in the sand has been “no entitlement cuts without shared sacrifice.”

Later in the press conference, Obama expressed some thoughts on additional future uses of revenue. “If you’re a progressive, you should want to get our fiscal house in order because once we do it, it allows us to then have a serious conversation about the investments we need to make: like infrastructure, like rebuilding our roads and bridges, airports, like investing more in college, education, like making sure we’re focused on the kinds of research and technology that’s going to help us win the future.”

With these two press conferences, Boehner and company are faced with a new deadline. They have to come up with something to sooth the stock market by Monday morning.

Ron Paul and Michele Bachmann Reject Raising Debt Ceiling and "Cut, Cap and Balance"

Republican presidential candidates Ron Paul and Michele Bachmann have voted not to raise the federal debt ceiling and not to support "Cut, Cap, and Balance" (the bill that passed the House on Tuesday that would raise the debt limit by $2.4 trillion accompanied by mandatory spending cuts and a balanced budget amendment).

Michele Bachmann has said elsewhere that Secretary Geithner should pay the interest on the debt and the brave men and women in uniform.



Ron Paul says we won't stop sending out the checks but we will default.




Based on their votes, the federal government would still be able to pay 59% of its bills.

I Pledge Allegiance to Grover Norquist

Grover Norquist wants less government, less regulation and lower taxes.

Norquist takes a libertarian viewpoint and wants those running for public office to sign a simple pledge.

One of the signatories to Norquist’s pledge (here is a complete list) is House Majority Leader (R-VA) Eric Cantor, who has lived up to the pledge but not to Norquist’s vision of less government.

Cantor voted for deficit spending to fight wars in Afghanistan and Iraq, to start up a new unfunded entitlement program, Medicare Part D, and to support George W. Bush’s TARP legislation to bailout the banking system. Cantor has remained true to his pledge by refusing $1 of revenue increase for every $3 dollars of spending cuts in recent deficit reduction negotiations.

If you're thinking to yourself, "I've never heard of this Grover Norquist fellow," Terry Gross conducted an engaging interview with him in 2003 that started like this:

“Last month, I interviewed Paul Krugman, a columnist for the New York Times and an economic professor at Princeton University. Krugman opposes President Bush’s tax cuts and believes his economic policies could send us into a spiral of fiscal collapse. Krugman said that behind Bush’s economic policies is a plan to deprive the government of revenue so that it’s forced to dismantle most of the federal system that’s been built up since the 1930s. Krugman cited Grover Norquist as being one of the leading architects of the current administration’s policies.”

Norquist's view differed slightly from today's official Republican line. He didn’t argue against taxing wealthy people because they are the “job creators” but because taxing a small group of people based on their income is “the morality of the holocaust.”

When Gross asked a question about what the government would do when the Bush tax cuts left it billions and billions less money to work with, Norquist corrected her by saying “Trillions.”

Balanced Budget Amendment

At today's press conference, House Speaker John Boehner (R-OH), Majority Leader Eric Cantor (R-VA) and fellow House Republicans proposed the passage of a balanced budget amendment to the Constitution.

Both Boehner and Cantor have pointed out time and again that "Washington doesn't have a revenue problem. It has a spending problem."

To achieve a future balanced budget, it might be useful to see what the revenue and spending looked like the last time the budget was balanced.

The table above comes from a press release Senate Appropriations Chairman Daniel K. Inouye: "Domestic Discretionary Spending Flat Since 2001; Not Responsible for Growing Debt (PDF)"

If the Republicans chose to balance the budget by cutting all expenses back to 2001 levels, current revenues would still produce a $407 billion deficit.