Freedom Line Blog

For a man of such supposed intellectual prowess, Barack Obama certainly seems oblivious to any sense of irony.

Attempting to stanch his hemhorraging public aproval numbers, Obama yesterday retreated to phony populism by proposing $90 billion in new taxes upon American banks. It must be noted that many of these banks have already repaid the questionable bailout funds that they received, and are now staring at a form of double jeopardy.

Obama’s misguided proposal contradicts his own stated goal of encouraging bank lending in this choppy economy, because the new tax will undercut banks’ ability to create new loans.  Further, the tax will merely be passed on to strapped American consumers, as all corporate taxes ultimately are.  It’s such a terrible idea that even Democrat Senator Kristen Gillibrand voiced opposition, saying it “could disproportionately affect New York City’s economic recovery, which relies on a growing financial services industry.”

Disregarding this reality, Obama was undeterred, sanctimoniously thundering, “we want our money back, and we’re going to get it.”

We feel the same way, Mr. President.  In just the first year of your administration, we have seen you squander our hard-earned dollars on failed “stimulus” behemoths and bureaucratic boondoggles on behalf of labor unions and other favored special interests.  We have seen you triple the budget deficit after telling us duirng your campaign that you were going to reduce it by scouring the budget “line by line.”

Yes, Mr. President, we also want our money back.

Maryland lawmakers are in trouble.  They’ve spent too much money over the past decade; with the economic recession, they now have a $2 billion deficit.

Cutting spending would seem to be the logical way to reduce the deficit but since Maryland already has the fourth highest state/local tax burden in the nation, state politicians are now proposing another tax hike in an attempt to get to number one.  Someone’s got to stick it to New Jersey.

This time Annapolis is out to get the partygoers in Fells Point and Bethesda with a new 10 cents-per-drink tax on alcohol.  In total, the booze tax is expected to raise $200 million, though this is still just a fraction of the sum needed to fill the state’s budget gap.

Bars and liquor stores have an obvious motivation to oppose the new legislation but ole “Joe Sixpack” should shudder as well.  The tax would total about 55 cents for a bottle of wine and 75 cents on a handle of liquor.

Perhaps the crowds at Fells Point and Bethesda will finish their drinks and then let Annapolis know that the booze tax is a horrible idea that won’t fill the state’s budget gap.  It will, however, upset a lot of drinkers. That’s never promising.

The Commissioner of the IRS doesn’t even do his own taxes.   After all, the Tax Code is large, incomprehensible and it takes days to prepare a detailed return.

As IRS Commissioner Doug Shulman told C-SPAN this weekend, “I’ve used one [tax preparer] for years.  I find it convenient.  I find the tax code complex so I use a preparer.”

Thanks for those words of hope Commissioner Shulman.  If you can’t do your own taxes, maybe it’s time to hold off on the thousands of regulations that the IRS issues every year.

Not surprisingly, even members of the tax-writing House Ways and Means Committee use a “professional” to complete their tax returns.  Nobody in Washington, D.C. appears to know what’s going on with our Tax Code.  That’s not surprising at all.

Well, the Nanny State never tires at trying to run every aspect of our lives.  The San Francisco shopping bag ban appears to be making its ugly migration eastward.

Virginia and Maryland are now looking to follow the lead of other meddling jurisdictions as they consider a 5-cent tax on shopping bags.  This is not only an affront to individual liberty but also another pathetic attempt by government to raise a little extra cash.

What’s most disturbing about this scheme to tax “paper or plastic” is that most grocery stores in the area already incentivize recycling.  Local stores like Giant, Whole Foods (run by a libertarian who eschews most state involvement) and Harris Teeter already offer 5-cent discounts (per bag) for customers who bring in their own.

Politicians can’t complain that the market hasn’t taken the lead because most private companies are already ahead of career politicians on the issue.

Delegate Alfred Carr of Montgomery County, Maryland opined, “We need to do this as a region.”  Really?   Your state is mired in recession, most private companies already promote recycling and you believe a new tax on plastic bags is a pressing issue?  Your state has the fourth highest tax burden in the nation and you think that increasing that burden will help your constituents?

As former Chief Justice John Marshall famously stated, “[T]he power to tax involves the power to destroy.”  Perhaps we should tax running for reelection.  Stopping career politicians like Mr. Carr from regulating our shopping habits would surely be a greater advancement for society than a marginal reduction in plastic bag consumption.  After all, reducing the number of career politicians is always a worthy cause.

The White House has made the decision that debt, all $12 trillion worth of it, no longer matters in America.  Instead of attempting to lower the $1.4 trillion annual budget deficit, the White House is looking for another round of stimulus pork.

According to White House Economic Advisor Christina Romer, it would be “suicide” to focus on deficit reduction to the exclusion of “job creation.”  Her solution, of course, is to repeat the past two/three failed stimulus bills and spend another $50 billion on infrastructure.   In Washington, D.C. that means $5 billion on infrastructure and $45 billion on pork and other preferred government handouts.

Romer’s solution is odd considering this paper she authored with her husband in April (after she began working at the White House) that concluded each dollar of tax cuts historically raised Gross Domestic Product (GDP) by $3, greater than many similar estimates of government stimulus spending.

Romer also concluded that tax increases can easily lower GDP.  As she wrote, “Our results indicate that tax changes have very large effects on output.  Our baseline specification implies than an exogenous tax increase of 1% of GDP lowers real GDP by almost 3%.”  There appears to be a big difference between Doctor of Economics Romer and White House employee Romer.

With all this knowledge about the virtues of tax cuts and the harm of tax increases, Dr. Romer should pay a visit to the West Wing occasionally and remind President Obama that his policies will continue to shrink GDP and impede job creation.

The Small Business & Entrepreneurship (SBE) Council this week released its annual ranking of individual states by business friendliness, and the results aren’t surprising to anyone who understands the importance of lower taxes, less regulation and fewer labor burdens.

After noting the inhospitable business environment cultivated by the Obama White House and the Pelosi-Reid Congress at the national level, SBE Council chief economist Raymond Keating highlights the critical role played by individual states in fostering small business growth.  As Mr. Keating notes, “small businesses, of course, drive innovation, economic growth and job creation.  If we want to get our economy back on a solid, robust growth track, then we need pro-entrepreneur policies at the federal, state and local levels.”

The study incorporates some 36 government-related factors, including tax rates, regulatory costs, state government spending, property rights and energy costs.  And the results are not shocking.  Pro-growth states like Texas, Florida and South Dakota lead, whereas notoriously basket-case states like California and New York sink toward the bottom.

It’s often said that the states serve as policy test laboratories in our federal system, so here’s hoping that someone directing our national levels of government learn the simple lessons offered by the SBE Council’s latest report.

This week Congress will vote on whether to increase the Death Tax from 0% to 45%.  That’s quite the tax hike for an economy with 10.2% unemployment.

Under current law, the Death Tax is set to expire in 2010, but under the misleading, “Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009,” Congress could give the gift of a 45% tax hike during this holiday season.

Only in Washington is a 45% tax hike called “Tax Relief.”

You can find the text of the legislation here, but you’ll notice in the bill that the tax threshold is not indexed for inflation.  As a result, in approximately 40 years, half of the U.S. will be hit with the Death Tax.  So much for only soaking the rich.

Call your representative at 202-224-3121 and tell them to vote “No” on H.R. 4154.  Real tax relief means a 0% rate, not 45%.

Taxes, higher premiums and rationing.  That’s what consumers will face if the Senate’s version of health care reform becomes law.

According to a new report released by the Congressional Budget Office (CBO), some self-insured individuals could see a jump in premiums if the Senate bill becomes law.   In some instances, the hike in premiums could be upwards of 13%.  As CBO Director Doug Elmendorf wrote on his blog yesterday, “The average, unsubsidized premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.”

And for those of you who have employer-based “platinum” health insurance?  Expect new taxes on you and your employer.  The CBO projects that 1 in 5 people with employer-based coverage will be subject to the new 40% excise tax on health insurance.

With projected costs of the Senate bill reaching $6 trillion over ten years, it’s no wonder that 53% of the nation opposes this sordid version of “reform.”

Ah, the world of Democratic fiscal policy.  If you pass three massive stimulus bills that not only fail to stimulate job growth, but partly contribute to 10.2% unemployment, why not go back to the well and push for tax hikes?

According to the Hill, Democrats are seeking a $150 billion tax on the sale and purchase of financial instruments like stocks and derivatives.  The thinking is that since Wall Street is finally recovering and unemployment is still lingering above 10 percent that Wall Street needs to involuntarily fund a “Job Creation Reserve” for the unemployed.  If that’s all it takes to lift a $14 trillion economy out of recession, why didn’t our exalted class of politicos think of this before?

Now that Wall Street is starting to recover, what better way to welcome it back to prosperity than with a massive new tax hike?  This failed line of thinking reminds me of the old Ronald Reagan quote, “If it moves, tax it.  If it keeps moving, regulate it.  And if it stops moving, subsidize it.”

For real life illustrations of this quote see: Wall Street bailouts/new taxes, taxing “rich people,” bailing out Detroit, subsidizing Amtrak, subsidizing the postal service, subsidizing agriculture, and the regulation of pretty much every productive economic venture in the U.S.

It’s sad when American leaders must look to “Old Europe” for economic wisdom, but that’s where we stand with this Obama White House.

Speaking this week to media, German Chancellor Angela Merkel stated that the worldwide recession demands tax cuts, not higher taxes and redistribution, to jump-start economic growth.  Impressively, she’s standing firm even in the face of fierce opposition, saying, “the government has opted for growth.  I indeed face very critical treatment, as does the whole government, regarding the course that we have chosen.”  A spokesman for Merkel’s partner Free Democrats added, “this is the right path.  This will create jobs and this is the condition for healthy public finances.”  Meanwhile, Obama, Harry Reid and Nancy Pelosi offer more government, higher taxes and more regulation to somehow “stimulate” America out of recession.

Hmmm…  Perhaps this recent trend of economic sense out of Germany helps explain why Obama was so reluctant to visit Berlin to celebrate the fall of the Berlin Wall this month?

As Majority Leader Harry Reid scrambles to put together the pieces on his economy-busting health care “reform” bill, the Senate Finance Committee today began  hearings on that other job-killing legislation… Cap-and-Trade.

The Committee’s Ranking Member, Charles Grassley (R-Iowa), rightly used some of the time he had for opening remarks to remind his colleagues that unlike the Environment and Public Works Committee, which is controlled by some of the Senate’s most liberal members and which passed its version of a Cap-and-Trade energy tax last week, the Finance Committee’s job is to focus on the economic impact and costs of the legislation.

According to Roll Call, Grassley stated:

This committee’s expertise is in the costs and economic impacts of new taxes. It therefore has the relevant expertise for evaluating the costs associated with climate change legislation. An honest cost-benefit assessment requires that we first stop trying to sell this policy as if it will have no cost for Americans and accept the basic economic principle that there is no such thing as a free lunch.”

Acknowledging Grassley’s remarks, Chairman Max Baucus (D-Montana) said:

While we must always be mindful of the cost of legislation, that’s particularly true in today’s economy. Our unemployment rate remains far too high. And we must be diligent to create jobs, including in the energy sector.”

Considering the federal government’s own estimates warn that the legislation would cost the U.S. economy far more jobs than it may create, wouldn’t the most diligent thing be for Baucus to scrap the idea of a Cap-and-Trade energy tax altogether?

During a week in which Nancy Pelosi force-fed her job-killing healthcare bill to America, it was timely that the Kauffman Foundation released a report on how jobs are created in this country.

According to their study released last week, two-thirds of jobs created as recently as 2007 came from enterprises less than five years old.  Indeed, according to the U.S. Census Bureau, almost all of America’s net job creation since 1980 came from new businesses.  This stands to reason in our dynamic economy, where giant firms tend to become complacent and wither, whereas new innovators with novel ideas rapidly expand and create new jobs.  Think of General Motors and Microsoft, for instance.   Before that, the horse-and-buggy industry lost employees to the auto makers.  This is the nature of our economic system.

With this in mind, what are Barack Obama, Nancy Pelosi and Harry Reid doing to create jobs?  We’re not referring to temporary work funded by dollars borrowed from future generations or wrenched from more productive uses via taxation – actual jobs?  Stated differently, what entrepreneur in his or her right mind would consider this a promising moment to take risks and hire new employees?  From healthcare “reform” to carbon cap-and-tax legislation to higher taxes to financial regulation, Obama, Pelosi and Reid see employers as mere scapegoats who should be saddled with even higher costs of employment.  They bail out dinosaurs like GM and Chrysler, but leave smaller entrepreneurs to suddenly subsidize ObamaCare and the ever-expanding federal government.

The unemployment rate just jumped to 10.2% despite Obama’s promise that it wouldn’t exceed 8% if we swallowed his “stimulus” medicine.  At what point does he wake up and smell the real-world coffee?  Will he ever?

There are a lot of awful provisions in Speaker Pelosi’s 1,990 page stab at health care “reform.”  For millions of small businesses across the country, a 5.4 percent surtax is high on the list of undesirable provisions.

The Congressional Joint Committee on Taxation (JCT) released an estimate that determined one-third of small businesses will be hit with the new 5.4 percent surtax.  Roughly speaking, small businesses can look forward to forking over another $150 billion next year in new taxes to feed Washington’s spending binge.

The lesson: Small businesses must trust Congress.  Only Congress knows that the best way to bring down a 10.2 percent unemployment rate is to tax small businesses, raise utility rates through Cap-and-Trade legislation, take over $2 trillion from the private sector through taxes and determine corporate pay scales… Congress knows best.

Here is the JCT cost estimate.  To read more on health care, click here.

1. $729.5 billion in new taxes and fees on small businesses and individuals.
2. $1.055 trillion in new federal spending over the next ten years, according to the Congressional Budget Office.
3. 114 million people could lose their current health care coverage, according to the Lewin Group.
4. 43 new entitlement programs that the bill creates, expands or extends.
5. 3,425 uses of the word “shall” in the legislation.

If you haven’t already done so, please call your representative at 202-224-3121 and tell them to vote “No” on Speaker Pelosi’s health care bill.  A vote is expected in the House this week.  Learn more about health care here and here.

After taking intense criticism for not being open and transparent, the House of Representatives just posted a new version of health care “reform” online.

If you have a slow Internet connection, then you better take a coffee break while downloading.  The bill is 1,990 pages or more than six football fields long when placed end-to-end.

Pelosi’s pledge on the legislation, “It will not add one dime to the deficit.”  How does she get there you ask? Of course by raising taxes in an effort to make the bill “deficit neutral.”

More analysis to come…

You just can’t make this stuff up.

Democrat Congressman Charlie Rangel, in conjunction with Senator Max Baucus (D – Montana) has introduced a bill targeting tax evasion by Americans, of all things.  And even more ironically, Rangel’s bill targets offshore tax evasion.

This is the same Charlie Rangel who shamelessly failed to report up to $780,000 of his own overseas income, and is currently attempting to dodge a thorough investigation into the matter.  Under his legislation, overseas bank customers would suffer a punitive 30% tax on income from domestic assets unless their banks agreed to disclose the identities of American customers and report their annual balances and account activities.  Proponents claim that it would raise some $8.5 billion more for spendthrifts like Rangel and his Congressional cohorts to waste away.

Here’s an alternative:  why not simply itemize the outstanding tax liabilities of Charlie Rangel, Tim Geithner and the rest of Congress and the Obama Administration?  Perhaps that would make $8.5 billion seem like peanuts by comparison.

A new poll released by the Pew Research Center for the People and the Press found that Americans are becoming less enthusiastic about capping greenhouse gas emissions.  According to the survey, only 35% say global warming is a very serious problem.

Senator James Inhofe (R-OK) commented, “Perhaps the most interesting finding in this poll, aside from the precipitous drop in the number of Independents who believe global warming is a problem, is that the more Americans learn about cap-and-trade, the more they oppose cap-and-trade.”

Surprisingly, 55% of respondents said that they have heard “nothing at all” about cap-and-trade (legislation that would impose new energy taxes) proposals being debated in Congress.

For more info see here and here.

Call Congress at 202-224-3121 and urge your representatives to oppose new energy taxes.

It is straightforward logic that taxes discourage production and investment.  But judging by their latest bright idea to tax financial transactions, Democrats such as Barney Frank and their Big Labor overlords either don’t understand this or simply don’t care.

Fresh off a worldwide crisis from which it hasn’t even yet recovered, the financial industry is hardly the sector that tax-hungry liberals should attempt to further cripple.  This is particularly true in an era when market participants can relocate operations almost anywhere in the world, as the past decade’s out-migration from the United States has shown.  Ignoring this, liberals are now proposing a tax of 0.1% to 0.25% on almost every form of financial transaction.  So how exactly is this supposed to help America’s financial industry recover?

Worse, the proceeds would be directed toward (you guessed it) ObamaCare or more futile “stimulus” spending, despite warnings from economists about the negative consequences for markets.  “I was one of the ones who suggested the idea,” says Congressman Frank.

Which, come to think of it, is almost argument enough for any sane person to oppose this bizarre new proposed tax-grab.

Sales of regular soft drinks have declined by almost 10% during the past decade according to Beverage Digest, but since when are facts an impediment to Barack Obama’s smug foolishness?

In a recent interview with Men’s Health Magazine, Obama conveniently scapegoats soft drinks, saying that a soda tax is “an idea that we should be exploring.”  He added, incorrectly, that “there’s no doubt that our kids drink way too much soda. And every study that’s been done about obesity shows that there is as high a correlation between increased soda consumption and obesity as just about anything else.”

Except that there’s not.  In a devastating commentary today, Coca-Cola CEO Muhtar Kent notes that sales of regular soda have actually declined, as has consumption of added sugar as a percentage of daily calories, even as obesity rates increased.  He shows that America’s increasing obesity is actually attributable to declines in exercise, as well as to increased fat and flour/cereal consumption.  Facts, however, are small hurdles for Obama in his campaign to dictate every aspect of our lives and tax us in every conceivable way.

There is something distinctly undignified when a Nobel Prize-winning economist goes postal, but then no one has accused Paul Krugman of dignity in some time.

In one of his harangues on behalf of the Waxman-Markey bill (you know, otherwise known as cap-and-tax) to supposedly prevent some future tropical creature’s diet from including boiled people, Krugman makes the argument that in 2020 the bill would cost the average family “roughly the cost of a postage stamp a day.”

Krugman did not originate the line, around a while now, one of those analogies invariably conjured up by elitists to explain to us plain folks in plain language why we can afford to fund this or that government program.

With regard to this one, we would never stoop so low as to ask what the Postal Service, yet another already bankrupt government service, will do when all those average families, who really must live within their budgets, have to sacrifice just that one postage stamp a day (and that’s if you accept Krugman’s and the government’s math).  Do Nobel Prize-winning economists ever address the idea that resources which are not infinite cannot be infinitely taken?

No, we want to be positive by urging President Obama to begin selling ObamaCare by saying it’s only going to cost every senior citizen just two-and-a-half Depends diapers a day.