The first debate, tonight at 6pm PST, 9pm EST will focus on domestic policy. If I were asking questions they would include:
1. Social Security and Medicare are structurally unsustainable what is your plan to solve the problem?
2. The national debt is 16 trillion, what does that mean for America and how do we reduce it?
3. The Health and Human Services Department recently changed the policy governing welfare to weaken its work requirements. Meanwhile, the number of people relying on food stamps has doubled under the current Administration. Should all able-bodied recipients be required to work or prepare for work as a condition of receiving aid in public housing, food stamps, and cash assistance? (From the Heritage Foundation)
4. Domestic energy production is up overall but down from 2010 to 2011 on federal lands. How can we better utilize federal lands for energy. What role does the EPA have and what are the limits of its’ authority?
5. Do you support the Keystone Pipeline, why or why not?
6. What is governments role in job creation?
7. How would you reform the tax code and why? Governor Romney: can you be more specific about your tax plan? President Obama: four times in American history the income tax rate has been reduced and each time revenue went up- why do you think increasing the tax rate is a good idea?
9. Governor Romney, you supported a state government healthcare program in Massachusetts was that a mistake?
10. Mr President you promised to right the economy and lower unemployment yet under your watch net employment is down as workers give up and new workers can’t find employment. Your promise came with a prediction that if you failed you would only be a one term president what has changed your mind?
11. President Obama has previously stated that, in the most important 5 percent of cases before the courts, it matters more what is in a judge’s heart (what has come to be known as his empathy standard) than what the rule of law requires. Is this the correct standard by which to evaluate judicial nominees? If not, what standard would you apply? (From the Heritage Foundation)
12. Former Attorney General of Mexico Victor Humberto Benítez Treviño estimated that approximately 300 Mexican citizens have been killed using Fast and Furious weapons in addition to U.S. Border Patrol Agent Brian Terry. Should Eric Holder resign as Attorney General because of his failures related to Operation Fast and Furious, including his failure to properly supervise the operation? If not, why not? (From the Heritage Foundation)
13. The president is sworn to uphold the constitution, how do you interpret the constitution?
14. Governor Romney, if elected how will you break the impasse in Congress? President Obama, what is your plan to make sure that Congress works and finally passes a budget?
15. Over the past 50 years, the number of working age American drawing government disability payments has exploded. According to government statistics, in fact, there may now be more working age beneficiaries of disability programs than employees in the entire U.S. manufacturing sector. All this despite the fact that Americans of working age are healthier than ever before in history. The Social Security Program alone is paying out more than $100 billion each year to such disability claims. What will you, as president, do to reduce or eliminate abuse of our federal disability entitlement programs? (From the American Enterprise Institute)
The giving pledge was started by Bill Gates and Warren Buffet.
Description of pledge
The official website states that it “is an effort to invite the wealthiest individuals and families in the United States to commit to giving the majority of their wealth to philanthropy.” As of April 28, 69 billionaires in the US have joined this campaign and pledged to give 50% or more of their wealth to charity. A minimum total of at least $125 billion has been promised from the first 40 donors based on their aggregate wealth as of August 2010.
This is great, I truly believe the Gates foundation and other charities will do great things with this money. It brings up an interesting point though. With all this wealth being given to charity, where does the government fit in? Many on the list are big democrats such as Buffet and Ted Turner. Buffet has called for higher taxes on the rich including the “Buffet” rule which would force the wealthy to pay at least 30% as a minimum. I must point out to Mr. Buffet that the tax rate is only a suggested minimum- he is free to write a check to the treasury for any amount he wishes. He has yet to do so and he and his businesses maximize the tax code to pay less. Why? Clearly Buffet thinks private charities like the Gates Foundation will do a much better job with his money. While he is living he thinks his money is better spent investing in companies to grow even larger. I agree with Buffet, his money is much better in the free market now and in smart well managed charities like the Gates Foundation later. Billionaires and millionaires have been very generous with their endowments, just walk around New York City and you will see Carnegie and Rockfellers’ name everywhere. Here in Los Angeles we have institutions set up by Getty and Annenberg. These captains of industry valued their money too much to turn most of it over to the government via estate taxation or voluntarily. Government is a poor stewart of money and the men & women who understand money and business the best know it; despite what they might say politically.
The following are signatories to the Giving Pledge as of April 2011:
- Paul Allen
- John D. Arnold and wife Laura
- Nicolas Berggruen
- Michael Bloomberg
- Eli Broad and wife Edythe
- Charles Bronfman
- Edgar M. Bronfman
- Warren Buffett
- Steve Case and wife Jean
- Leon G. Cooperman and wife Toby
- Ray Dalio and wife Barbara
- John Paul DeJoria
- John Doerr and wife Ann Doerr
- Barry Diller and Diane von Furstenberg
- Larry Ellison
- Chuck Feeney
- Ted Forstmann
- Bill and Melinda Gates
- David Green and wife Barbara
- Jeff Greene
- Harold Hamm and wife Sue Ann
- Barron Hilton
- Jon Huntsman, Sr. and wife Karen
- Carl Icahn
- Irwin M. Jacobs and wife Joan
- George Kaiser
- Vinod Khosla and wife Neeru
- Sidney Kimmel
- Richard Kinder and wife Nancy
- Kenneth Langone and wife Elaine
- H.F. Lenfest and wife Marguerite
- Lorry I. Lokey
- George Lucas
- Alfred E. Mann
- Joe Mansueto and wife Rika
- Bernie Marcus and wife Billi
- Michael Milken and wife Lori
- George P. Mitchell
- Tom Monaghan
- John Morgridge and wife Tashia
- Dustin Moskovitz
- Elon Musk
- Pierre Omidyar and wife Pam
- Bernard Osher and wife Barbro
- Ronald Perelman
- Peter George Peterson
- T. Boone Pickens
- Julian Robertson
- David Rockefeller
- David M. Rubenstein
- Herb and Marion Sandler
- Denny Sanford
- Lynn Schusterman
- Walter Scott, Jr.
- Thomas Secunda and wife Cindy
- Harold Simmons and wife Annette
- Jim and Marilyn Simons
- Jeff Skoll
- Tom Steyer and wife Kat Taylor
- James E. Stowers and wife Virginia
- Ted Turner
- Sanford Weill and wife Joan
- Shelby White, widow of non-signatory Leon Levy
- Mark Zuckerberg
The media has been reporting that Mitt Romney paid a lower effective tax rate than the “middle class”. No he did not, the middle class as defined by up to $75,000 in taxable income paid less than 9% effective tax rate in 2011. In order to get to this assertion the media calls Social Security and Medicare a tax.
I find it incredibly ironic that the left suddenly considers Social Security and Medicare a “tax”. Aren’t these government entitlements or benefits? Current beneficiaries are also getting dramatically more money out of the system than they put in- it is one hell of an investment for them. I call it a Ponzi scheme and I stopped counting on ever getting my money out a very long time ago.
Now onto tax rates; cutting tax rates has happened 4 times in American history once even under JFK. All 4 times revenue went up not down and the rich paid a greater percentage of the revenue than before. The president who last cut capital gains Georg— oh wait; Bill Clinton- also generated greater revenues after the cut. How can this be? It is actually quite simple, people changed their behavior and the economy grew enough to cause revenues to rise. We need a broader tax base and lower overall rates to get our economy moving. We need to encourage investment and stop taxing income multiple times. I would prefer a consumption tax or flat tax but the bigger problem is endless government spending not tax revenues. The fair tax as embraced by many Republicans would be a great start.
Signs are passed out at all the conventions. As I watched President Clinton speech I notice the sign du’ jour was: “Middle Class First.” The democrats have gone to great pains to say they are not using class warfare but they clearly are. It is not the function of government to put anyone first- it is the obligation of the federal government to apply equal protection under the law. When Democrats say they want a fair playing field what they really mean is they want to tilt the field to get more equal results. Clinton went on to say that Obama would not raise taxes on the middle class and poor and repeated the assertion that taxes will be raised on high income individuals. At least Clinton did not say millionaires and billionaires as President Obama is fond of repeating. So who is really paying more?
Obama’s plan is pretty straightforward and available to anyone who seeks it out:
Families making $250,000 or more will have their income tax raised by about 10%. Their capital gains rate 33% more.
The alternative minimum tax and the estate tax would also be restored at levels of 1 million and 3.5 million respectively.
The top corporate tax, already the highest in the western world- would go from 28% to 35%.
Obama has also targeted many exemptions and tax breaks as well.
So approximately what percentage of the individuals having their income tax raised make over 1 million dollars a year? The answer is less than 1 out of 10, meaning 90% of those paying more are families and individuals making as little as $250,000 a year. $250,000 a year allows for a comfortable life to be sure but it is hardly rich as most people define it and can be just getting by in a city like New York or San Francisco for a family. The other problem is that when we assess tax policy we do it one year at a time. Say that you are a small business person and have struggled for years and years and finally have a good year. That good year suddenly puts you in a much more confiscatory tax bracket and acts as a disincentive to your productivity and expansion. This also would apply to virtually anyone selling a home after more than 20 years in Northern or coastal California. That sudden big profit would elevate even the most average income to a high tax level.
Higher tax rates are also a disincentive to productive work. Ronald Reagan said he learned about the disincentive of taxes when he found that he would take the rest of the year off from working when he reached the highest rate. The problem with tax policy is that too often policy makers think in a vacuum. They do not bother to try to assess the changes in behavior tax policy brings about and when they do they frequently underestimate the effect.
With the globalization of the economy America must compete for capital. Our corporations and foreign corporations have global options and they must exercise them or risk going out of business to a competitor who does. We want our corporations to be competitive and hire our labor, we also want to attract global foreign companies to do business in America.
When President Kennedy and President Reagan cut taxes both saw increases in the amount of tax dollars collected. Economist Art Laffer developed a curve that tried to represent the correlation between tax rates and taxes paid in gross dollars. His curve demonstrated that at a certain level increases brought diminishing returns.
We are also very close to becoming a society were taxpayers are a minority; that is the percentage of Americans who pay any federal income taxes is close to 50%. Do we really want a society were the majority pay absolutely nothing to the federal government? We fought a revolution over taxation without representation and in modern America fewer of us and paying and being asked to pay more by those who pay nothing.
Of even greater importance is the productiveness of that money. Do we want our businessmen and industrialists using more of their capital or do we want our government. Wealthy people do not put their money under the mattress, they put it to work for them. Can anybody argue that money is better spent in Washington where the congress has disapproval numbers in the 70-80% range. Capital is better spent in the markets where it can fund businesses large and small who will expand and hire with that capital. Do we want to discourage investment with higher capital gains? Obama has decried the wealthy investing in so called tax havens overseas, through smart policy he can convince many more of them to put capital to work in the United States.
In the United States we have a mixed economy. Contrary to what some may think we do not have pure capitalism. Our government intrudes on the economy in a number of ways including regulation and social policy laws such as minimum wage. Democrats made the case for government last night, and traditionally Republicans haven’t done much to stop the march towards a more socialistic country. If you do believe that government can and should manage the economy the debate really becomes how much. The benefits of capitalism vs. socialism or mixed economics can be debated theoretically but lets look at history and results.
The largest and best example of a socialistic managed economy was the USSR. This society utterly and completely failed and dissolved within 100 years. China is an example of a socialistic country embracing capitalism. The more free China’s economy becomes the better it does. China still manages its’ economy today in many ways however as it has allowed for more free market reform and private business its economy and the lives of its’ citizens have dramatically improved. Hong Kong is widely considered the freest economy in the world. It takes less than a day to start a simple business. Hong Kong has very little natural resources but has been an economic superpower for many decades. Singapore like Hong Kong is also a former British colony and has had similar success. Countries on the opposite end of the spectrum in economic freedom also tend to be among the poorest such as Cuba and North Korea. People vote with their feet and freedom wins hands down. South Koreans aren’t trying to get into North Korea and East Germans used to try anything to get over the Berlin Wall into free West Germany.
Other mixed economies have tipped the balance to government faster and sooner than the US. Japan poured almost a trillion dollars into its’ own economy after growth stalled in the late 80’s and early 90’s. Despite all the spending GDP grew only .2% from ’96 to ’02. In Europe countries like France, Italy, Greece and Portugal have been the most socialistic and have had the worst results while countries like Germany with more freedom have faired much better.
Very few Democrats and progressive will say they support socialism; but they favor socialist policies arguing that we need some government intervention and they can decide how much. The problem is that markets are infinitely complex and no one person or committee no matter how experienced or educated can manage them. Mixed economy proponents believe that without government intervention free markets will become destructive and hurt people. Governments cannot alter human behavior or reality and frequently miss crucial unintended consequences as their policies are adjusted to by markets. For example: the federal government wanted more Americans to own their homes so they created Frannie and Freddie with a mandate to buy mortgages and strongly encourage banks to loan to people with lower standards. The banks, heavily regulated complied and became more and more creative and risky both to stay in line with regulators and because they knew they could sell their mortgages anyway. This altered the healthy supply and demand curve and lead to an unsustainable bubble in prices. It hurt the very people it was intended to help as people bought way more home than they could afford and paid far too much because of the easy government money flooding the market. The result was disastrous and the single biggest factor in the recession.
I am not suggesting zero federal government or anarchy. Government has a vital role to play. The US federal government as the constitution brilliantly laid out exists to enforce laws against force and fraud, maintain a national defense and specifically regulate dealings between states in the union. In the example of Hong Kong the British brought strong and simple rule of law and then left the native Chinese to mostly do as they pleased, the same is true for Singapore and Taiwan. With basic safety and a society that protected against force and fraud these colonies thrived. We need to stop expecting our federal government to fix the economy. The best thing government can do is to get out of the way.
Thursday was of course all about Mitt. We heard from speakers from Romney’s church and community about the man he was to them. How he gave selflessly to them in their time of need. The dying child he helped, the lost girl he helped find, and the family with a sick daughter.
We also heard a strong defense of Bain Capital from the CEO of Staples and other companies Bain helped fund. We heard about the 2002 Olympic games and Mitt’s time as governor. I have study Mitt’s record and it is clear this is a successful, accomplished man who is loved and praised by many. If elected I believe Mitt will be the most accomplished man in the private sector of any president. Clint Eastwood praised Romney’s success in business and said it is time we had a businessman as president. Eastwood added some levity in an off the cuff speech that I enjoyed but will be strongly criticized for its’ lack of polish.
It is time for a businessman- for far too long businessmen have been unfairly maligned and misunderstood. The media and politicians are quick to blame business for the failings in society.
It is the businessman who elevates society by bringing ideas, capital and hard work together to create wealth. Wealth that enriches all around him. I am glad to see Romney standing up for his business success; he is right to be proud. While at Bain he put capital to work for many businesses and in the process helped create real jobs and real wealth for hundreds of thousands of people. A record of success will always bring with it room to criticize. One of Obama’s strengths in 2008 was that he really didn’t have a record and therefore little to criticize. Romney is not my perfect candidate but I believe he is an honorable man and he understands success and the capitalist system. He has a strong record of leadership with honor and integrity.
We need a businessman in the White House.