Kevin's Korner

Some people have breathed a sigh of relief, after the recent “fiscal cliff” agreement was reached. “Oh, they only raised taxes on the richest people and it won’t hurt me” is the common retort from those who believe this is “over”. Well, it’s no where near over. The Left will always want to raise taxes. They believe the bigger the government the better. For them, it has nothing to do with reducing the deficit, it has to do with increasing government spending, even more.

First, let me put to rest the thought that “only the rich” had their taxes increased. The agreement included, a rise in the payroll tax for Social Security, from 4.2% to 6.2%. That is a very real tax increase for all those who work. We are told, that the increase was only supposed to be “temporary”, so this was just “allowing” the rate to go back to “normal”. Tell that to the people who will see their paychecks go lower this week. In reality, any tax rate hike, or cut, is permanent until changed. Inaction is still acceptance of an increase. Otherwise, Congress just uses this type of set up, to be able to claim they stood for “principle” without even voting on it. They must take responsibility for their action and inaction.

But back to the real issue. The Left win never, ever be satisfied with current taxes. They will always want more money to spend.

On CBS’s Face the Nation program Sunday, the Democrats’ leader in the House, Nancy Pelosi (D-CA), left the door wide open for even higher taxes. When asked about even higher taxes on the “rich” she replied “I’m saying that’s not off the table”.

In an article a few months ago, Left Wing “economist” Paul Krugman, wrote in his New York Times article, that we could go back to the tax rates of the “50′s”, and be very prosperous. He praises a return to the time when we had a high tax rate of 91%.

Paul Krugman:
http://nyti.ms/S66kD5

Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today.

So, does that sound like Mr Krugman and his Left Wing friends will be satisfied by a federal top income tax rate of a “measly” 40%? Kind of ironic he uses the “twinkie” as a metaphor, when they are closing up Hostess due to their unions and this economy.

Obviously, Mr Krugman plays fast and loose with the facts here. He makes no mention of the labor force post World War 2. It was reduced by the men killed during the war. We also had a long period of pent up demand, that was just waiting to be spent when the economy got better. So, the growth in the 50′s was due to a lot of different factors, that Mr Krugman conveniently fails to mention.

Last year I wrote an article on Taxes “Increasing Taxes will Hurt the Economy”:
http://bit.ly/oC5x0z

I won’t recount the whole article here, but invite you click it and to read it. Now, my main purpose, or objective, was to lay out the fact, that taxes affect people’s behavior.

Increasing taxes and government spending may increase government activity, but it reduces Domestic economic activity, which is where most jobs are created.

Really what we need are tax cuts, but at the very least the House Republicans must stand their ground on any new taxes. The Left never gets tired of spending money and increasing taxes. You can bet, it won’t take long for President Obama to declare, that recent tax increases “Are not enough”, and begin to push for even higher taxes.

Even higher taxes would be a disaster for this economy. Time to stop the out of control government spending and stand our ground on taxes. We will be watching.

Back in 1995, President Bill Clinton and the Republican Congress, had failed to reach agreement on a budget. The government was funded by a temporary Continuing Resolution that expired on November 13th at Midnight. The government shut down all non-essential services from November 14th until the 19th, and then December 16th until January 6, 1996.

President Clinton used this as a way to try and paint Republicans as extremists. Sound familiar? From the very beginning of this budget struggle, President Clinton was using this confrontation to gain politically. In fact, it is likely, that the whole thing was just a political strategy of the Clinton Administration. The Democrats lost big in the 1994 mid-term elections. For the first time in over 40 years, the Republicans took control of the U.S. House of Representatives.

It looked like the strategy might backfire, and hurt President Clinton. But in the end, a lot of the public blamed the GOP. It probably helped Clinton win reelection in 1996.

Fast Forward to 2012. President Obama has just won reelection, and the “fiscal cliff” is approaching quickly. With our huge budget deficit showing no signs of being brought under control, we need real solutions. The President campaigned on using a “balanced approach” to deal with the deficit. Tax increases on the “rich”, and some unspecified budget cuts, were the way to fix the deficit, the President Claimed.

So what did the White House come up with as a “proposal”? A $1.6 Trillion tax increase, with additional $50 Billion in “stimulus” spending. No cuts to the budget at all, except some possible, in the future, in some galaxy far, far away. In other words, none.

Reportedly, Republican Minority leader, Senator Mitch McConnell, laughed when it was presented to him, and other Republicans, by Treasury Secretary Tim Geithner. It was obvious to all, that this was not a serious proposal. It seems the administration did not even care to make it appear to be serious.

Why would the administration do it? It’s pretty simple really, the Obama administration is playing politics with it. They feel that the public will blame the GOP, if we go over the fiscal cliff. It’s been more then obvious, that this President doesn’t care about a budget deficit, or our total National Debt of over $16 Trillion.

The Republicans must stand strong. Don’t fall for this expensive game of “chicken”, the Obama Administration is playing. Taxes can’t be raised, or it will hurt this already weak economy. Isn’t it more then enough, that we are getting taxes increased because of Obamacare?

Conservatives must keep the pressure on the GOP to not give in to this. The future of our country depends on it.

(L) Senate Minority Leader Senator Mitch McConnell–(R-KY), Speaker of the House Representative John Boehner–(R-OH)

It seems apparent, by now, that the “Fiscal Cliff” will be the excuse for raising of taxes. It is, however, obvious that we have a spending problem, not a tax problem. But let me address something that the Left has so much trouble admitting. Tax rates affect people’s behavior.

You would think this would just be common sense. But the Left seems to insist that Life is lived in a vacuum, or some ivory tower, dedicated to the Left Wing idea of economic Utopia. The truth is, in the real world, changes in taxes affects behavior of people and businesses.
In 1979 the top marginal tax rate for a married couple was 70%. Remember, that is only federal income tax, and does not include the State taxes and fees and other Federal taxes such as employee payroll taxes.

After President Reagan was elected, the top rates were lowered to 50%, and then in 1986, to a little over 38%, and then finally to 28%. What followed, was one of the biggest economic expansions in American history.It was also the longest, running from 1982 to 1990.

Investment spending slows down in the second year following a recession; however, investment still grows, on average, at an annual rate of 13 percent in the first two years following a recession. In the first year of the Reagan recovery, investment grew 41 percent. In the first two years of the Reagan recovery, investment grew at an annual rate of 27 percent. The 1980s expansion saw investment spending growth almost double, the post-war average for investment spending growth following recessions.

A persistent complaint with the Reagan expansion was that it created high deficits. However, the revenue growth was substantial . The economic boom benefited the Treasury. The deficits were the result of excessive government spending. Congress consistently appropriated more money than the President requested.

For More on The Real Reagan record Read CATO:
http://bit.ly/N7WHy1

Tax cuts spurred the economy to unprecedented growth, because of the simple fact that business had more money to spend, to expand and grow and thus hire more employees.

Fast forward to today. No serious politician is now advocating a top rate increase to 70%. Why? Because it would kill the economy. So, in other words, no one wants taxes to go as high as pre-Reagan. At least, no one publicly admits that.

“But the tax increase will be much smaller and won’t have much affect on anyone”, will be the argument. That, and this concept of paying one’s “fair share” of taxes. Of course, they never mention the fact that the rich pay a much higher percentage of their income in taxes and much of the poor pay no taxes at all. They expect you to ignore the fact, that the top 10% of income earners pay 70% of all federal income taxes.

In fact, the Left will actually even try to convince people that tax rates do not affect behavior.

In the 1990′s, a Senate Committee was questioning a Clinton economic adviser on taxes. Then Senator Bob Packwood (R-OR), asked how much income would be collected if the rates were raised to a certain percentage, and then he proceeded to ask what happened if we increase the rate to 100%? The economist gave the answer and Sen. Packwood asked, how about the same 100% rate the following year? The baffled economist gave the same number. Senator Packwood then said, No you would not, you would collect nothing. People would move, or go to an underground economy. Taxes will affect their behavior.

The Left has never really acknowledged any of this. But it is pretty simple, really. If people and businesses have less money to spend because the government takes more of it, then they will not have as much to spend for growth and expansion. And this would include hiring of new employees. The money pie is not limitless. Only in Washington DC do they believe that it is.

The Government has had an explosion of growth the last 10 years. It is time to reign that in. This spending must be decreased. Raising taxes will hurt the economy. The past is a perfect example of this. It’s time we said “Stop” before it is too late.

When I look back to the 1992 Presidential Campaign, there are many things that come to mind, but one stands out more then anything else. The Clinton campaign had “It’s the Economy, Stupid” as almost a motto or oath. It was, to say the least, extremely effective.

I have to say, I really admire the campaign the Democrats ran that year. No, I wasn’t happy when they won, but I understood why. They were extremely disciplined and focused. Everything hinged on the economy, and that’s where the Clinton campaign wanted the debate to focus on.

A year before, no Democrat wanted to run against President Bush (41). He had lead the nation during the Persian Gulf war, and the military performed like clockwork. This was really the first time America was in a “Major” war after Vietnam. Bush understood the mistakes of Vietnam. America was thrilled to finally cheer a returning army. Many remembered the Vets returning from Vietnam, and how poorly they were treated, and wanted to make up for it, in a way. The successful war made President Bush extremely popular. He was getting approval ratings in the high 80′s. It was almost surreal.

But the economy turned south on President Bush. It wasn’t a deep recession, but it was very ill timed for the President. The Clinton campaign took advantage of that perfectly.

Fast Forward to today. President Obama’s campaign is talking about anything and everything, but the economy. Abortion, Medicare, The Mormon Church, Romney’s taxes and accusing the Romney campaign of racism every step of the way.

The Romney campaign must stay focused. Yes, they need to hit back hard when attacked, just like the Clinton campaign did in 1992. But turn immediately back to the economy and jobs. Romney should focus on his positive vision of America at the RNC next week, and just let surrogates attack President Obama and his administration.

People are unhappy with the President and the economy. But they have not yet embraced Governor Romney. Next week will go a long way toward trying to accomplish that. But his vision, while positive, must still focus on the economy and jobs. Governor Romney should have no trouble in doing that, and highlighting his business experience, at the same time.

That is where this election will be won or lost, on the economy. After all these years we have almost come full circle. Once again, “It’s the economy stupid”.

Former Governor of Massachusetts, and GOP nominee for President, Mitt Romney

President Obama, in his latest attempt to use class warfare against Governor Romney, claims that Romney’s tax plan is “Robin Hood” in reverse. He called it “Romney Hood”. Clever sound bite. However, let’s take a look at the President’s latest fairy tale.

First, let me just take a look at the Robin Hood myth in context. Robin Hood, is said, to have lived around the 13th century and is popularly thought of as, “robbing the rich and giving to the poor”. Now at first glance, it sounds like he was being a criminal. After all, “robbing” is considered a crime in most places and for good reason. But that is not what could really be said of the context this myth is in.

Let me give some context here, because I think this is important. Yes, Robin Hood was considered a hero by many people over the centuries. But, what was really happening, was in a society much different then ours today. The poor paid ALL the taxes in many societies at the time. In fact, most of this money ended up in the hands of the rich. For “protection” from a feudal lord or alms to the clergy of the church. In fact, most of their income went to these taxes, and it was a highly corrupt system. One, in which France, much later of course, revolted against during the French Revolution of the 1790s. The poor paid numerous taxes and “tolls” to the rich.

The bottom line was much of the wealth accumulated at the time, was taken by the corrupt Aristocracy, who overtaxed the poor. Robin Hood was thus viewed, obviously, as a hero to all these victims of this tax system.

Now, lets look at President Obama’s use of this to try and paint Romney as evil. Well, in fact, Obama is the one wanting to raise taxes, not Romney. Today the poor aren’t overtaxed. In fact, most of the poor pay no federal income taxes. They do, however, get “help” from the government in the form of welfare, food stamps, WIC and the rest.

The truth is, the rich today, are nothing like the medieval Aristocrats. They normally have gained wealth by providing goods or services to the public via companies. Sure, some inherent wealth, but none of that is “taken from the poor”. It is simply the result of good businesses that they or their families have operated. It was earned, not given.

On the other hand, the poor today benefit from numerous government programs. These programs are paid for, in large part, by taxes that the rich pay.

So now, the President claims Governor Romney is trying to rob the rich to “give” to the poor. This is, of course, not true since the rich have earned, for the most part, their wealth and the poor, for the most part, are not taxed but actually given benefits from the government. The truth is, Governor Romney doesn’t want them to pay anymore taxes then is necessary.

The fact is the President is once again playing the class warfare card by trying to equate this to a totally different society. In many ways, today, it is the ones who do not work who are living off the rich instead of the other way around.

Maybe the Presidents program should be called Obama hood. He robs from those productive members of society to give to those who are not productive. And he wants MORE money for his programs.

Only the Left, and it’s class warfare tactics, could come up with this type of convoluted explanation of the tax system. but, the Democrats have been using class warfare and populism to get elected since at least 1896.

The President needs to be called out, for this lie, and all the other lies about taxes, and his plans to raise taxes even higher. It is just one more example of President Obama pandering to a targeted group just so he can get votes for reelection.

Voters should not be fooled by this insanity anymore. The Democrats are not the champions of the poor, rather they are the real reason those in poverty can’t get out. It is time to change all that and give the poor real hope for a better future.

I have always thought that being a White House Press Secretary was a thankless job. If they do a good job, then they are not really noticed, and not part of a news story. But when a Press Secretary gets a lot of notice, it usually means the Press Secretary is making gaffs or misstatements. It also could mean, the Administration they serve, is in trouble in some way.

Last week, White House Press Secretary Jay Carney, said that “Tax cuts represent spending”. It seems hard to believe you could keep a straight face when saying such a thing. But this is how far this administration has sunk. They blatantly lie, just so they can use a “favorable” term for them.

First let me look at the actual statement. By saying Tax Cuts represent spending, he is equating Tax Cuts with expenses. So if government was a business they would need to place this amount (the tax cut) on the income statement as an expense.

No accountant in this country would do that. Under GAAP (General Accepted Accounting Principles) there are guidelines that must be followed when making out any statement or making bookkeeping entries and so forth. If an accountant did this in business, on an income statement, he would get fired.

The basic idea of the income statement is to list revenues (taxes in government), and then subtract total expenses (government outlays), to get the net income or the net loss. Now, what a tax cut does, is decrease government revenue. It really is that simple. Some income statements can be much more complicated but this is the general idea. (This is putting aside for now, the supply side economic argument, that tax cuts can increase revenues).

Now, why would they do this? It is the power of words. People have certain thoughts, (negative or positive) many times, based on the word you use. For example, “government investment” sounds much better then “government spending”. And tax cuts sound great, everyone loves a tax cut. But if we call it government spending, then most people don’t like it.

So just for sake of impression they are lying about what tax cuts really are? Yes, words can be much more powerful then people generally believe. Turning words “positive” for you, is a long time, sales technique.

This is even more then that though. It is trying to turn one thing (tax cuts), into something completely different (government spending). They have taken a simple sales technique and turned it into just a big lie.

This shows signs of Desperation from the Obama Campaign. The President can’t possibly run on his record so, he must try to portray everything Republicans want to do (cut taxes) and turn it into something sounding bad. Democrats are simply afraid of using the words “government spending”. It really is as simple as that.

The Obama campaign won’t be able to hide from the reality. The reality that the Obama Administration, plans tax increases, by the first of the year, is crystal clear.

White House Press Secretary Jay Carney

We have seen over the last few weeks, efforts by the Obama campaign, and it’s surrogates, to attack anything and everything about Mitt Romney’s business dealing or his actions as a 15 year old teenager. It is fairly obvious that the Obama campaign wants to talk about anything, ANYTHING but the President’s record.

This really is not a big surprise. What can President Obama point to as any kind of success during his first term? Most certainly he cannot point to the economy. Unemployment has been a huge problem during his whole term.

The record government spending has done nothing to help the economy. The 2011 budget deficit was estimated to be $1.3 Trillion by the Congressional Budget Office (CBO). The estimate for 2012 is $1.2 Trillion which was raised from the January estimate.

Unemployment has stayed above 8% (on the U-6 official chart) for 40 straight months. That is the longest stretch in over 30 years. We have also seen record lows in the labor participation rates. That is the percentage of people who are actually in the workforce. The May number was 63.8%. That means almost 37% of working age adults are not currently in the workforce.

There are plenty more facts and figures that can illustrate the bad economic record of the Obama administration. The Romney campaign must remain focused on making this election about Obama’s economic record.

In 1992 with a weak recovery under way, the Clinton campaign did an excellent job of keeping the focus on the economy. The economy was in much better shape in 1992 compared to the current economy. But the lesson is clear, focus on the economy and don’t let the focus off of it until election day. As Reagan once asked, “Are you better off then you were 4 years ago?”.

Governor Mitt Romney

The Department of Labor released November job numbers today, giving us some different signals. The numbers offered a mixed bag of economic news. It also delivers a curve ball, that many people will, and have, overlooked, but we will get to that.

First the good news. The official unemployment rate dropped in November to 8.6% from 9%. But really I will explain that more in the “bad news” part. The good news is the upward revisions to the job numbers of September and October. The November numbers indicate that 120,000 job were created in that month. October was revised upward from 80,000 to 100,000 new jobs. September was revised upward from 158,000 to 210,000 new jobs created. That new September number of 210,000 is a solid number. Also the Household data numbers indicate 278,000 more people finding work from the month before. Again, fairly good news. This doesn’t show a roaring recovery, but it is good after so much bad news on the job front. Speaking of bad news, let’s look at that.

The bad news is that the unemployment rate fell so drastically, is because 310,000 people stopped looking for work. That is a huge number and not a good sign at all. The labor participation rate fell from 64.2% to 64%. That is a direct result of people not looking for work any longer.

This really is a very mixed picture right now. 310,000 people dropping out of the work force is troubling, but we shouldn’t ignore some of the positives out of this jobs report.

On a bit of a side note, I watched CNBC’s interview with former Secretary of Labor under President Clinton, Robert Reich. I must say I agreed with most of what the former Secretary had to say. I know that is probably the only time I have said that. He also pointed to that 310,000 number as being really bad news. The economy, he suggested, has a long way to go. I must say, I was impressed with his honest assessment, while a fellow Left wing Democrat is President.

So what does all this mean? It means this economy has a long way to go. We see some mixed news here, but let’s not kid ourselves, the problems for this economy run deep and the crisis in Europe hangs over the head of the U.S. economy as well.