Did anyone really think that the government was just going to extend tax credits without hiking taxes elsewhere? I didn't. Even so, it is astonishing that Senator Reid has introduced an amendment to eradicate the deductibility of punitive damages for business in an effort to off-set the first-time homebuyer tax credit extension.
Naturally, people are concerned. The move runs contrary to 30 years of public policy; it also applies tort law principle on the tax code.
In plain English: it's just a bad idea. As Andrew Moylan says, "this is yet another great example that this Congress will, at every turn, raise taxes instead of addressing runaway spending."
If you want more details, read this letter to the Senate from R. Bruce Josten, Executive VP of Government Affairs with the US Chamber of Commerce:
The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, opposes the offset included in Senator Reid’s amendment on the first-time homebuyer tax credit, SA 4344, to H.R. 4213, the “American Jobs and Closing Tax Loopholes Act of 2010,” that would deny the deductibility of punitive damages for businesses.
The denial of deductions for punitive damages runs counter to 30 years of strong public policy and applies principles of tort law to the tax code. Under longstanding current law, companies are permitted to deduct almost all ordinary and necessary business expenses, including compensation, operating expenses, and compensatory and punitive damages. By denying the deductibility of punitive damages, the Reid amendment imposes increased costs on businesses, forcing them to spend more money litigating claims and thus forgoing their ability to use these funds to stimulate job creation and economic growth. Further, by taxing punitive damages, this amendment would incentivize the generation of more lawsuits since it would result in increased costs for companies for lawsuits while simultaneously decreasing the costs of lawyers to file lawsuits on behalf of plaintiffs by, among other things, increasing their leverage to force settlements. For example, plaintiffs’ lawyers would use this provision to force the hand of business to settle frivolous or speculative cases, so that companies might deduct the amounts of those settlements rather than risking incurring non-deductible punitive damage awards. Finally, requiring insurance proceeds to be taxed as income would add unnecessary and unmitigated strains on American businesses. ...
You'd think they would realize by now that money really doesn't grow on trees.
Newsweek intern and Princeton senior Isia Jasiewicz apparently needs to see the illustrated Road to Serfdom. Hayek's actual book is a very readable and short book on how fascists can takeover a country. It was recently the number one bestseller on Amazon for a week in case you hadn't heard.
Jasiewicz calls it a libertarian treatise read only by those "stalwart enough to wade through the 60-page introduction..."
What version of Road to Serfdom even has a 60-page introduction? Hayek's own introduction was about 12 pages, and Milton Friedman's was the same length.
For weeks now conservative pundits have been complaining that President Obama is a weak president and displays poor leadership skills. And there is no question that this is true. But do we really want someone with his radical left wing agenda and ideology to be a strong leader? We saw how lethal that combination could be throughout the 20th Century.
The bill would extend, count ‘em, 70 expiring subsidies at a cost of $28.5 billion over the next two years. There is little or no evidence that any of these goodies have ever created jobs, and thus it is unreasonable to believe they will produce any in the future—or that their long-postponed deaths would cost jobs.
To be sure, the bill includes many other proposals, including yet another delay in a scheduled Medicare payment cut for doctors and another $24 billion in extra federal Medicaid assistance to states. But to keep it simple, let's focus on the expiring tax breaks.
It is, for instance, hard to see how continuing to allow generous tax depreciation for NASCAR racetracks will create many jobs. It is easier, however, to imagine how this will continue a windfall for the track owners. It is similarly hard to see how the national economy benefits from special tax-exempt bonds for investments in New York City’s “liberty zone.” Good for developers and contractors doing work in lower Manhattan, as well as investment bankers and bond lawyers. Not so good for developers trying to build projects just outside the specially-designated zone.
If this sounds familiar, that's because it is: The federal jobs bill was similar to the jobs bill presently in the North Carolina House of Representatives. Both rely on dubiously effective tax incentives targeted at politically favored industries in order ostensibly to drive economic recovery and job creation. Both cut against economic research suggesting that targeted tax incentives just don't work. Both illustrate the gulf between the political incentives driving policy-makers and incentives that lead to rational tax policy decisions.
Of course, the two bills aren't identical. The biggest difference between them: Congress' version is dead. North Carolina's is still alive and kicking.
In The Wall Street Journal, Democratic pollsters Doug Schoen and Pat Caddell find a passion for anti-incumbency among significant numbers of American voters. They write: "for the first time in recent memory, inexperience has become a badge of honor, as opposed to an impediment to winning office."
Beyond the "throw the bums out, mentality," they say, are some pretty sound principles:
The American people are looking for candidates and parties that champion fiscal discipline, limited government, deficit reduction and a free market, pro-growth agenda. The tea party movement grew as a result of this desire, and its support is a reflection of a broad-based desire to elect candidates who are fiscally conservative and not tied to current policies.
Voters are growing increasingly concerned with the mounting deficit, a trend that is likely to be exacerbated with the national debt now exceeding $13 trillion. A Wall Street Journal/NBC News poll in mid-May found a notable increase in recent months in those who believe cutting the deficit and spending should be the government's highest priority—20% of those surveyed wanted the deficit and spending to be the government's top priority, up from 13% in January.
With unemployment still above 9%, the idea that the government could sustain economic recovery on its own with a new stimulus package doesn't appeal to the cynical electorate. And the thought of adding a trillion dollar health-care reform program is terrifying — notwithstanding the Congressional Budget Office's estimate that ObamaCare will reduce the federal budgetary commitment to health care in the coming decade.
These same voters don't trust Republicans to be any more responsible than Democrats. But the burgeoning anti-deficit, anti-megaspending, anti-bailout mentality clearly should lead to a little reticence from the statists in Washington ... and on Jones Street, too.
Many of the concerns addressed in the bill such as caps on salaries, location of stores, accepting gifts, conflicts of interest, discharging employees, performance standards, performance reports and audits, travel reimbursements, nepotism, obedience to a central board, requiring a balanced budget, and strong-arming appointments would be eliminated if only the ABC system were privatized. Stores would be located where they would be profitable, a competitive market would dictate employee salaries and the free market, not corruption, would determine success and failure in the liquor business. If a supplier wanted to take the owner of a store out to dinner, well, who cares? If they really want to "modernize" the system, legislative leaders should consider privatizing the system.
My colleague, Jon Sanders, presents some interesting arguments on privatization of the ABC system well worth consideration here.
Recently, State Board of Education chairman, Bill Harrison, trashed charter school during testimony before the NC Senate Education Committee. That is nothing new. But his claims to have actually visited charter schools have come under scrutiny by charter school advocates.
UPDATE: As of June 16, 2010, OVER 90% of ALL Charter Schools in the state have been contacted... STILL.... NONE have ever had Chairman Harrison visit their school... INCLUDING the Charter School in his HOME county AND the one at the center of a legal battle with the State Board of Education!)
In his column today, Deroy Murdock writes about Obama's refusal to waive the anti-competitive, pro-union Jones Act so as to allow foreign ships to help contain and remove oil from the BP spill.
This should be devastating. Bush II suspended the Jones Act (which ought simply to be repealed) almost immediately after Hurricane Katrina. I'd love to see someone ask Obama to explain why that was a bad move and why his refusal to allow foreign vessels to assist is really the intelligent policy move.
Obama likes to use the self-pitying line that he has to "clean up the mess" left by his predecessor. For whomever succeeds Obama, it will literally be true to say that.
The good news in North Carolina's latest unemployment data? The state rate dropped half a percentage point. The bad news? The rate is still 10.3 percent and still more than half a percentage point higher than the national average.
Some advocates have urged state lawmakers to throw more money at targeted job-creation schemes to boost North Carolina employment. Joe Coletti explains here and in the video clip below why that's a bad idea.
Days after 2nd District Rep. Bob Etheridge got more national attention for manhandling a questioner on a Washington, D.C., street than he had in a quarter-century of elected office, another man comes forward to say he got similar treatment from the Democrat more than a decade ago.
The Pilot in Southern Pines reports that in 1996, when Etheridge was running for his first term in Congress (and before the days of cheap camera phones), Brandon Leslie, then a senior at Pinecrest High School, approached Etheridge at a football game and asked him a question about an education issue.
He said Etheridge didn't answer his question, so he pressed him two more times.
"And that's when he grabbed me by the shoulders, he shook me, and I'll never forget it, he said, 'Son, you need to learn to respect your elders,'" he said by phone on Wednesday. "I was just so taken aback, I think my jaw just dropped, and he walked off."
Leslie said he was angrier about Etheridge's attitude and "patronizing" tone than the physical contact.
"It wasn't to hurt me, it wasn't to harm me," he says. "It was that he was irritated and wanted to get my attention."
Leslie said the incident caused somewhat of a firestorm at the time, and he was contacted by a few newspapers, but no stories ever appeared.
That should be easy enough to verify.
Leslie is now an attorney in Oxford, Miss., and says he's both a Democrat and "supports of the Obama agenda."
Even so, his flashback of that evening brought up a thought many of us had about the seven-term congressman.
To everyone convinced that the Bob Etheridge they saw in the “Who Are You?” video bears no relationship to the man they’ve known for decades as a county commissioner, state legislator, state school superintendent, and congressman, I’m going to pass along something you don’t want to hear: you didn’t really know him.
Brandon Leslie, who moved away seven years ago and is now an attorney
in Oxford, Miss., said he had an encounter with the now seven-term
Democratic congressman from Lillington almost 14 years ago.
In the fall of 1996, when Leslie was a senior at Pinecrest High
School, he said he met Etheridge at a Pinecrest football game. Etheridge
- then the state superintendent of public instruction - was challenging
incumbent Republican David Funderburk for his congressional seat. At
the time, Moore County was part of the 2nd District, which Etheridge now
Leslie said he introduced himself to Etheridge and asked him about
his stance on a particular education program. He said Etheridge didn't
answer his question, so he pressed him two more times.
"And that's when he grabbed me by the shoulders, he shook me, and
I'll never forget it, he said, 'Son, you need to learn to respect your
elders,'" he said by phone on Wednesday. "I was just so taken aback, I
think my jaw just dropped, and he walked off."
By the way, Leslie is a liberal Democrat who does, indeed, support the Obama agenda. He just doesn’t support politicians acting like jerks.
Just as the character Flounder was castigated at Faber College in "Animal House" for going through life "fat, drunk, and stupid," it appears that President Obama was considered by colleagues on the University of Chicago law faculty to be "lazy," "unqualified," and "with the lowest intellectual capacity in the building."
He was initially turned down for an adjunct's position, but word came from on high to give him an office and a class to teach (funny how that seems to happen a lot with Obama). Of course, instead of teaching constitutional law, as he was supposed to, he actually taught what he knew--Alinskyite rabble-rousing.
It's hard to imagine that somebody with such a stellar intellectual background can't do anything but read a speech from a teleprompter and shake down vulnerable corporate types (and party like a Delta).
It certainly offers some valuable information about the historical basis for democratic government. But Keane's liberal (in multiple senses of the word) take on what constitutes democracy in modern times skews the later part of his narrative. He also spoils the last quarter of the 900-page tome with a bizarre device of creating a "future historian" who looks back on early 21st-century democracy. Basically, it's a not-quite-effective tool for Keane to throw out his opinions about democracy, George W. Bush, big business, the American military, and other topics without feeling compelled to offer any proof or justification.
Still, the book has many highlights. Among them is the following passage:
One of the unavoidable lessons to be learned from the history of democracy is that, when compared with the many different types of earthly regimes, democracy is utterly unique. Exactly because it means, minimally, the self-government of equals — their freedom from bossing, violence, injustice, dogmas, and metaphysical claims — it demands more than humans seem willing or are often capable of giving. During the darkest moments of World War II, the Irish man of letters C.S. Lewis (1898-1963) put his finger on the point. "I am a Democrat," he wrote, "because I believe in the Fall of Man. I think most people are democrats for the opposite reason. A great deal of democratic enthusiasm descends from the ideas of people ... who believed in a democracy because they thought mankind so wise and good that everyone deserved a share in the government. The danger of defending democracy on those grounds is that they're not true." Lewis added: "The real reason for democracy is ... Man is so fallen that no man can be trusted with unchecked power over his fellows. Aristotle said that some people were only fit to be slaves. I do not oppose him. But I reject slavery because I see no men fit to be masters."
Good stuff, but if you're looking for a 900-page to tackle in the coming months, I'll offer a different option.
In his column today, Thomas Sowell slays one of the most pernicious statist myths, namely that the government's inaction under Herbert Hoover caused the economic downturn that began in 1929 to turn into the Great Depression.
The Obamacrats want people to believe that the free market is terribly unstable and it takes constant federal intervention to stabilize the economy, including massive "stimulus" spending from time to time. That's pure bunk.
One of the 20th Century's greatest economists, Murray Rothbard, pointed out that the state depends on an elaborate mythology to keep people docile in the face of its constant attacks on their liberty and property. A big part of that myth is that we desperately need government experts to "fine tune" the economy; without government intervention, we'd be in horrible depression much of the time, so the tale goes. The truth is that (as Rothbard showed) only government has the power to disrupt the smooth functioning of a laissez-faire economy. All of our numerous economic recessions and depressions have been preceded by government blundering in its manipulation of money and credit. Far from needing governmental policy to stabilize the economy, what we need is for the feds to stop throwing it out of adjustment.
North Carolina lawmakers are haggling over roughly $20 billion in state spending for the 2010-11 budget year. Lost in the debate is the total cost of state government, which reaches more than $49 billion. Joseph Coletti discusses this “shadow budget” during the next edition of Carolina Journal Radio.
Daren Bakst joins us to explain why a U.S. Supreme Court ruling in an Arizona case should prompt North Carolina leaders to place a moratorium on a major piece of their taxpayer-financed election campaign system.
N.C. State economist Lee Craig will discuss his research into the history of North Carolina’s disenfranchisement of black voters, and we’ll hear concerns about the unintended consequences of the state’s 2009 Racial Justice Act.
Plus you’ll learn why N.C. House Republicans were happy to win bipartisan support for some amendments to the state budget.