Nutter's Washington

Lucy Ricardo, Milo Minderbender and Senator Harry Reid: A Common Link on Economics

The current slow down and delays in air travel by the Federal Aviation Administration demonstrated the worst of government and the worst of politics. It also show a callous disregard for the safety of passengers and a Machiavellian mind set by the White House that the public be damned, we want more taxes.

 

But wait, there is even worse example than the bumbling “we do not care attitude” of the Administration. It is something that really highlights why Washington does not work.

Senate Majority Leader Harry Reid has suggested the air traffic problem can be solved and government largesse can continue by eliminating the budget sequester reduction by making up the difference from savings from troop draw downs in Iraq and Afghanistan. My goodness, this does not even pass a laugh test. It is intellectually dishonest and a sad display of leadership

Let me get it straight, we will pay for something that was meant to be reduced by claiming that it will come from savings from events that were going to happen anyway. Confusing?

It is no wonder with financial geniuses like this in charge the fiscal affairs of the government are in such a mess. Hey, can you count to $17 trillion in debt or maybe count to $3 billion a day in borrowing to keep the government operating?

The whole situation brings a famous television episode to mind where Lucy Ricardo goes on a spending spree, vastly overspending her budget. She tells Ricky when he questions how is she going to pay for all the things she bought by saying, she saved on each thing she bought and as soon as the saving add up to more than she spent, it would all be taken care of. Ricky, of course, almost fainted, slapping that Cuban forehead with a big shot of “Carumba”!

Or maybe Senator Reid is a disciple of Milo Minderbinder from the classic novel Catch 22 where the crafty Milo is buying eggs in Egypt for 5 cents each and then selling them for 2 cents In Italy.  He proclaims all will be well because he will make up the loss by selling in volume.

The proposal by Senator Reid and the complete cynical attitude by the Administration shows those in control of government are not trying seriously to do anything. I thought these guys were elected to solve problems?  

The Department of Transportation has had a year of more to plan for less money available. Instead of approaching the situation in a way to make the best of it, they have tried to inflict the maximum amount of inconvenience on the public, which by the way is all of us. It that is true, it is shameful, if it not true, then it is a showing of pure incompetence.

This is a starring example on why we are in the mess we are in and why nothing improves. It makes one want to weep but then we get what we deserve. 

Senator Baucus Retiring: Big Changes in the Tax World

Senator Max Baucus (D-MT), the Chairman of the Senate Finance Committee announced today he will not seek office again at the end of his term next year. One of the prime movers of the Affordable Care Act, it seems he decided it is time to end public service. He has been in the Senate since 1979 and served on the Finance Committee when I just started there also. I remember him as being a very congenial fellow. Cautious but aware on how things worked. A team player for the Democrats in most cases but he did support many of the major tax reductions of the last 20 years. (plus a lot of recent tax increases) 

His decision to retire is very significant in the tax world. From the Chairmanship position--tax policy, social programs (like social security)  and trade  issues are deeply influenced.  The Chairman also has increased clout over other members who come to him to curry approval for their favorite tax provision. Of course, the Chairman has an almost unrivaled ability to raise political funds from the business community.

Mr Baucus lost a bit of the usual influence some of the Chairmen in the past had, such as Russell Long, Robert Dole. This is due as much to his personality as it is to the confrontation politics of today. However, the pox on Senator Baucus will be his critical role in imposing ObamaCare. His recent " trainwreck" remarks about the unpopular health program were very telling. In essence, it will be his legacy. 

So the Baucus reign is going to close out. Perhaps, it will be on a high note of meaningful and useful tax reform. 

A Different View of Tax Reform: Taxing Wealth

Tax reform in the legislative melee going on in Congress means rearranging to some extent the furniture.  Moving this  deduction here, getting rid of that credit, encouraging this type of conduct, punishing businesses out of favor. It is all based on the concept of income and has been for the last 100 years.

I have become acquainted with a gentlemen who takes a different approach. It is based on taxing property and wealth. Of course, most states and jurisdictions already levy taxes on property. The area I live in Virginia puts punishing taxes on my residence so they can build big government centers and mismanage the working of government, but that is a different story.

I any event here is a link to a thoughtful piece with a different approach entitled- It is time to Debate a Constitutional Landmine by Douglas Hopkins.http://bigthink.com/experts-corner/its-time-to-debate-a-constitutional-landmine

Give it a try. 

Observations and Questions: Revenge for Boston, Stinkbugs and 11 million

I have some observations and questions today. 

1.  The explosions in Boston were ghastly, a new favorite word of mine. The President calls for justice. Justice is an overworked term from the Bush Administration and is not an appropriate word here. Justice is subjective, I learned in law school. The concept should be revenge. Once the culprits are caught and convicted, they should be thrown in the deepest, darkest hole in all North America.

However, I also suggest prior to entering into the abyss,  bringing up some of the old guys from the Pinochet regime in Chile with a couple of car batteries, a bucket of mountain spring water and some jumper cables. That is the Justice part. 

2. Stinkbugs are back. They are the worse export from China ever, probably some sort of Commie trick to drive us all crazy.

3. I keep reading there are 11 million illegal aliens in this country. A few years ago, the number was 20 million. What is it? From where does this number come? If they are counting them, why aren’t they detaining them? If someone is detained at the border, why isn’t the same person detained in Fairfax County, Virginia. I fail to see the difference in the crime each committed and the immigration status of the two. Is it two hundred yard rule? 

Is it possible the government is putting out a low number so we do not feel like the country has taken in the whole of humanity? Push one for English. The only thing I am certain, it is not 11 million but more like 50 billion! That is fine, just be honest about it.

 

Tax Filing Deadline: Time to do Something Different

The deadline for filling the individual 2012 tax return is today.

The dreaded 1040, W-2, 1099 and 1098 forms and many more will become a distant memory until next year. Many taxpayers spend hours gathering information, collecting receipts and then filling out the appropriate forms on a computer program, by hand or paid a professional service for the privilege of contributing to this great Republic.

Some taxpayers will get a “refund” but many others will have to write a check to the U.S. Treasury.  Almost everyone will be grumbling for one reason or the other. It is interesting to note that a “refund” is just getting back you own money.

 At this time of year, politicians, tax advocacy groups, small business and individual taxpayers wail about the complexity of the tax system. Overall, taxpayers collectively spend a few measly billions of hours and billions of dollars to create the fuel for this great engine of voluntary tax collection. 

It is obvious the current system is horrible. The Internal Revenue Code is more than 4500 pages. The last major revision was in 1986 but since then there have been thousands of changes. More credits, more exemptions, more special provisions. There are also three very thick volumes of interpretation of the law under the Code of Federal Regulations. The Code and Regs weigh about 8 pounds or the weight of 3 modern laptop computers.

Post Office Blues: No Taxes to Mail, No Lines at All

I was in my local post office yesterday to mail a state tax return.  It was empty. No one was in the building collecting mail, or buying stamps, or mailing a package out. The sole clerk- a man who has worked there probably since Ben Franklin set up the USPS- and I chatted about tax season. He told me that by now, there would be a lots of beleaguered ( my word, not his) taxpayers sending in returns. He said he could hear the crickets.

I said, it is all about electronic filing. Taxpayers are not only encouraged to file electronically but in same cases discouraged for not doing it. Slower refunds, possible lost returns, requirements to supply additional information. He said, it was just part of the string of bad news for the Post Office. People do not mail bills, they pay electronically. They do not send letters, they have e-mail and idiotic things like Facebook. They do not send cards, they send impersonal e-cards! Mail to book to a friend, a lost art. 

The Post Office is broke, both financially and as business model. Saddled with union work rules, inability to adjust service, oppressive benefit packages. It is a dinosaur that did not die but is waiting for the next meteor

I like to use the post office, I still write letters, although i get very few. 

In any event, I thought it was interesting how the old rush to file,  a mile line deep at the post office at tax season is another casualty of the  techno-age. Now, if we could just get rid of the whole tax filing thing at all? Hmmmmmmm! 

 

Federal Budget: What is the point? Late, predictable and more taxes

The Administration has delivered its 2014 fiscal year budget to Congress, two plus months late and weeks after both he House and Senate have already passed their separate Budget Resolutions. Many have characterized it as a political document, dead on arrival. It is certainly does not reflect the legislative and economic realties of present day. I guess I have to ask, what is the point of all of this?
 
First, like many budgets of the past, the projections have to be viewed with skepticism and unfortunately despite the rhetoric are in some cases just plain deception. One thing is for sure, under the Obama plan, taxes are proposed to go up for higher income taxpayers, for non-favored business (such as oil and gas, coal) and higher for multinational companies. People who do not pay taxes will get increased subsidies.
 
The other thing that is apparent, the deficit would continue to increase. The Administration boasts about all the cuts, but in reality, the national debt would increase even under the projection put forward to over $23 trillion in ten years.
 
The revenue portion is always interesting and amusing but not very realistic and I do not know why the fiscal blueprint is presented on unlikely or wished for events.

Reform and Legacy: Good or Bad all depends

 There are a couple of words out there that seems to be in vogue but their meaning in a political context puzzles me. I used them but until I thought about it this morning, the terms do not really mean precisely what we may all think they mean.

 

The first word is “reform”. According to my dictionary, and I do use the book version, reform is defined as a transitive verb:  to put or change into an improved form or condition or to amend or improve by change of form or removal of faults or abuses. And finally,  “to put an end to (an evil) by enforcing or introducing a better method or course of action”.

The word reform is used for such things as “health care” reform, “tax” reform, and ”immigration” reform. However, the real questions are these really reforms or merely changes to the current way. Do they improve a condition? Or are they just political jargon dressing up something. I mean, how could one be against reform?

Let’s just take “health care” reform enacted in 2010 in the all time legislative partisan political hatchet job. The “reform” is still very unpopular and with its implementation lunching forward-raising insurance premiums, creating further regulation and costing hundreds of billions of dollars- one could wonder if this is reform at all. Maybe, it is your perspective.

Tax reform is a big issue and there is no doubt the current tax system is almost irretrievably broke. However, what will replace it and will it be better? At the end of the day, if changes drastically increase taxes and force taxpayers and business into a more dictatorial corner by the government then, it would seem reform is a misnomer. Again, how can anyone be against reform?

One man’s reform does not make it reform, I suspect. My conclusion is not all reform is good and I shall be careful how I used the word. 

The other word is legacy. There was an article today discussing the need and desire of Mr. Obama to have his legacy, leaving something significantly good left behind.

Is legacy a good thing or a bad one? Turns out it can be either. If someone invents a vaccine, that is a good thing. However, in another context a legacy can be bad, as say the legacy of war caused by despotic leaders is destruction and suffering.

In the context of Mr. Obama, it is what he will leave behind. So his legacy could be one-in-five children now in poverty, increased debt burden to be born by generations to come, or the creation of a subclass of people dependent on government to illustrate a few.

The point being legacy is not always a positive as being used in the political jargon today. Visualize Mr. Obama's legacy as you choose but use the word carefully.

 

 

The Budget is coming, the Budget is coming: Tax, Spend and Point the Finger

Details of the Administration’s tardy Budget for the next fiscal year are now being leaked through friendly press outlets. I read words like tough, cuts, balanced.  The Budget was due to be sent to Congress in February but for political reasons, and it is always for political reasons, it will not be sent to Congress until next week.

 

The federal deficit under the unwatchful eye of Mr. Obama has increased more than $6 trillion. Red ink has been over $1 trillion each year for the past 4 years and total federal debt is more than $16 trillion and will exceed $17 before the end of the year.

Dire economic consequences will result if this unsustainable trend continues. It is an absolute certainty. As I have written before, I am not sure the dreadful fiscal house has not already past the point of no return.

Mr. Obama has never shown any interest in anything other than increasing taxes and enlarging the size and scope of government.  As he states, the country does not have a spending problem.

So, what can be expected in this budget proposal? More taxes on upper incomes, a litany of suggestions to increase corporate taxes on out-of-favor industries such as oil and gas. More on this in a moment.

Reports indicate, there will be some proposals for a slight haircut of a few of the entitlement programs like the formula for benefits increases for Social Security and few Medicare changes. These are not new suggestions and have been discussed in the past, even as late as last year in the fiscal cliff debacle.  There will also be new spending initiatives like establishing a national kindergarten program (can not get them away from their parents fast enough, I guess), more job programs, more energy subsidies, extended benefits for this and that. I give the Administration credit for at least putting a few spending reductions out, which most Republicans will support.

The trade off for all of this is the reduction of the otherwise increases dictated by the sequester will disappear.

I do not want to go into the debt increase projections. Anytime crowing about projected deficit reduction is calculated by what is NOT going to be paid in future interest payments does not deserve the attention.

The real issue here is the tax portion. Mr. Obama keeps dangling some deficit reduction, some projected spending reduction, if the Republicans will only increase revenue. If the Republicans do not bite on this notion, then, they will continue to be branded as obstructionists. Mr. Obama seems to believe that he can persuade some Senate Republicans to this notion. I have no idea how he will convince members of the House.

It is highly unlikely Republicans will give in to the call for higher taxes this year-on anyone. First of all, Republicans believe Mr. Obama got his tax increases, some $600 billion in the last deal.  Secondly, Republicans want to change the tax code. Simpler, lower rates, based broadened. This is a difficult task on its own; it will be impossible if taxes are raised again before this process proceeds in earnest. Lastly, the Mitch factor. Senator Mitch McConnell is up for re-election and will oppose any kind of tax increase. His Republican Senate colleagues will not abandon him.

There are a few other things that will weaken the President as the year proceeds. The jobs numbers today show the economy is weak, very weak. The anemic increase does not even cover new people joining the work force. The fact the overall rate decreased a tick is due to people just giving up looking for work. 

Finally, I am not an expert on health care but it seems the Obamacare system going into effect soon will do some very unpopular things, such as increase insurance rates, overwhelm medical providers, cause companies to drop employee coverage, and add to the deficit, as it is clear that the original budget projections were grossly inaccurate. This disgruntlement will take a toll on those that supported this gigantic government monster now that it is a reality. People care more about the health care cost than gun background checks. 

Anyway, the Budget coming, the Budget is coming.  It is an important document and I will be very interested, amused and smug over reading the tax portions.

 

 

 

 

 

 

Is this all there is? Guns, Same Sex Marriage and Immigration? I guess so!

The chilly weather still lingering in Washington will eventually go away to better days. It is a climatic certainty.

 

In contrast, the political climate is stuck. Everyday brings the same and has been so for some period of time. The issues de jure have nothing to do with the economy but are, in no particular order,-guns, acceptance and non-rights of homosexuals and what to do with the 5 billion or so illegal aliens in the country.

I am not very excited or interested in these topics. First of all, I know little about them. However, let us recap because they are all political. 

It seems you either want to get rid of guns or you do not. Further restrictions (outside of confiscation) cannot prevent crazy people from going amuck and shooting people and restrictions have shown criminals can still get guns and plenty of them, so the whole gun issue is political. Mr. Obama runs around the country with his gun control program and fund raise along the way (like you can control the billion guns in existence) but Congress is not going to do anything meaningful. A glancing blow for the President, it would seem.

The issue of same sex marriage is before the Supreme Court in two cases. The first one is the validity of a California voter approved initiative added the State Constitution forbidding same sex marriage and the second involves a Clinton-era Federal statute essentially denying martial status (and the benefits bestowed on traditional married people, (i.e. man and women), like tax rates and much more) to those who are married but not man and woman)

I know, confusing. This is a political issue also. Each day it seems some politicians comes out for same sex marriage or reveals some family member is gay or lesbian. If I was to guess, I believe the Supreme Court will strike down the Federal law. Remember this is the same Court that rendered a legally tortured opinion that the Affordable Healthcare Act was Constitutional. It was probably the most significant decision affecting the economy and expansion of government since the 1930’s. The California challenge probably gets struck down but they can always re-vote or do whatever they do there. The Court has become not a legal institution interpreting the law and Constitution but the arbitrator and slave to public opinion. Sad, I think.

The final issue is the huddle of 4 Democrat Senators and 4 Republicans to put forward a proposal to change the immigration laws. Their proposal will be the starting point for what is sure to be a legislative donnybrook again.  It is, of course, more than just immigration, the act of entering the country. It is about the millions of people who entered the country illegally, it also about the future waves of people to come across the border. It is also about the economy and conferring benefits to those that did not follow the rules and then allowing them to vote.   

The Federal government has failed to protect the border since, well, forever.  Spurred on by business wanting cheap labor and the desire by millions to have a better life here, the numbers are staggering. No reason whatsoever, that will change. The Washington metro gave up as well as it now gives loudspeaker announcements in Spanish. How could it be, you may ask?

This is also a political issue. Republicans lost a great deal of the Hispanic voters in 2012. They know it and the Democrats know it. The Democrats will push for all the amnesty, open border, granting of benefits and voter status as possible. Republicans will squirm and who knows how it will end.

It may be impossible to secure the border but until there is a real effort made and employers are forced to check immigration status and only hire legal workers, the scenario will be replayed again.

In any event, that is the issue report, not very exciting for a person who has been known to take the Internal Revenue Code on vacation. However, I can also report, the government borrowed about $3 billion plus today like every day to keep its operation going. But, cheer up; tax filing is here so plenty to really moan about.