Tag: Washington Post

Obama’s Back-Door Tax Hike on American Workers

A column in the Washington Post makes an excellent general observation about how taxes on business are actually paid by people. The piece also cites a couple of examples, including an explanation of why the Administration’s big tax hike on American multinational firms will backfire - which is the same argument I made in this video. The moral of the story, of course, is that a bigger burden of government is good for politicians, but bad for regular people.

Geoff Colvin explains:

The average citizen had to conclude that most big U.S. companies are tax cheats. Only a dedicated student of accounting would figure out that the term “tax haven” as defined by the Treasury Department means any country with a lower corporate tax rate than America’s, which is all countries except Japan.

The reality is that the administration is lashing out against perfectly legal behavior. A U.S. company that makes money in Country X pays Country X’s taxes on that money. If the company ever brings the money back to the United States, it must also pay the tax that would be due under America’s higher rate. The administration argues that because the United States has almost the world’s highest corporate tax rate (and even Japan’s is only a fraction of a point higher), current rules create incentives for U.S. companies to operate anywhere but here, at the cost of U.S. jobs. The White House therefore proposes charging all American companies full freight – the whole difference between their overseas taxes and the U.S. corporate rate – on all their profits as soon as they’re earned, no matter where. This measure, in their minds, would bring jobs home.

If the logic eludes you, you’re not alone. The bottom-line effect of the change would be a steep tax hike – more money vacuumed out of corporate coffers. Would that make U.S. companies competing in a global economy more inclined to hire additional workers in the highly expensive United States? The answer is clear. It’s why Microsoft chief executive Steve Ballmer said recently that if the change is enacted, “we’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

…Tax-wise, a company is just a bunch of incorporation papers; all taxes are paid by people – customers, shareholders and employees. And guess who would bear most of the burden of these tax increases? It’s the U.S. employees of the companies being taxed.

Research has shown that when business taxes are raised by a dollar, 70 to 92 cents comes out of employees’ pay. When workers wake up to that fact, they may decide this is one time they don’t want the White House beating up on business.

Americans Want Smaller Government

A new Washington Post-ABC News poll again shows that voters prefer “smaller government with fewer services” to “larger government with more services”:

Obama has used the power and financial resources of the federal government repeatedly as he has dealt with the country’s problems this year, to the consternation of his Republican critics. The poll found little change in underlying public attitudes toward government since the inauguration, with slightly more than half saying they prefer a smaller government with fewer services to a larger government with more services. Independents, however, now split 61 to 35 percent in favor of a smaller government; they were more narrowly divided on this question a year ago (52 to 44 percent), before the financial crisis hit.

The Post calls a 54 to 41 lead for smaller government “barely more than half,” which is fair enough, though it’s twice as large as Obama’s margin over McCain. It’s also twice as large as the margin the Post found in the same poll in November 2007.

I’ve always thought the “smaller government” question is incomplete. It offers respondents a benefit of larger government–”more services”–but it doesn’t mention that the cost of “larger government with more services” is higher taxes. The question ought to give both the cost and the benefit for each option. A few years ago a Rasmussen poll did ask the question that way. The results were that 64 percent of voters said that they prefer smaller government with fewer services and lower taxes, while only 22 percent would rather see a more active government with more services and higher taxes. A similar poll around the same time, without the information on taxes, found a margin of 59 to 26 percent. So it’s reasonable to conclude that if you remind respondents that “more services” means higher taxes, the margin by which people prefer smaller government rises by about 9 points. So maybe the margin in this poll would have been something like 59 to 37 if both sides of the question had been presented.

For more on “smaller government” polls, see here and here.

My Morning Tabloid

Why is a U.S. senator’s extramarital affair on the front page of The Washington Post this morning?

Don’t get me wrong, I like a juicy sex scandal as well as the next guy. And I’m amused at my friend and former colleague Radley Balko’s Facebook comment (or was it a tweet? who can keep up with the new media?) that ”sadly, growing public acceptance for gay marriage has given yet another conservative politician no choice but to cheat on his wife.”   But this affair fit Bill Kristol’s definition of good Republican behavior:  “Republicans have old-fashioned extramarital affairs with other adults.” No prostitution, no underage interns, no public toilets.

So why is it front-page news?

Meanwhile, you know what’s not on the front page, today or any day so far? President Obama’s firing of the AmeriCorps inspector general, in apparent violation of a law that Senator Obama voted for, perhaps in retaliation for the IG’s investigation of Sacramento mayor Kevin Johnson, an Obama supporter. It’s an interesting story. As a Wall Street Journal lead editorial explained:

In April 2008 the Corporation [for National and Community Service] asked Mr. Walpin to investigate reports of irregularities at St. HOPE, a California nonprofit run by former NBA star and Obama supporter Kevin Johnson. St. HOPE had received an $850,000 AmeriCorps grant, which was supposed to go for three purposes: tutoring for Sacramento-area students; the redevelopment of several buildings; and theater and art programs.

Mr. Walpin’s investigators discovered that the money had been used instead to pad staff salaries, meddle politically in a school-board election, and have AmeriCorps members perform personal services for Mr. Johnson, including washing his car.

Other papers have been on the story, notably the Washington Examiner. But as even The Washington Post’s ombudsman notes, not a word in the Post (until a small story on page A19 today, featuring the Obama administration’s spin on the issue). The Post is, however, ahead of The New York Times, which has apparently not run a word on the story, even online, though it did have room for the senatorial affair. 

And I have to wonder: If George W. Bush had fired an inspector general who had alleged fraud by a key Bush supporter, would the Post and the Times have covered the story?

Rotating Congress

In today’s Washington Post, Dana Milbank does a typically brilliant job deconstructing the activities of Congress. He looks at how members of the various defense committees put their energies into fighting for home-state hand-outs rather than focusing on broader defense issues from a national perspective.

The dominance of parochial interests over the general public interest is, of course, a long-standing problem in Congress. Members from cotton-growing states gravitate to the farm committees in order to defend cotton interests, while members from inner cities gravitate to committees overseeing urban affairs to defend programs that subsidize their constituents.

The result is that Congress spends a lot of money on items that don’t have broad public support, and it spends little time actually considering policies from a national perspective.

A partial solution to the problem would be mandatory committee rotations every two years in the House and Senate. All committee assignments would be made by random selection at the beginning of each Congress.

People will say: “You can’t do that because members on particular committees are often experts in their field.” That would be a good argument if members used their expertise to serve the general interest of the public. Rep. Jack Murtha is an expert on defense issues, and in theory he could be spending his and his staff’s time probing Pentagon operations, reviewing administration defense strategies, overseeing procurement programs to reduce waste, and other public-spirited activities.

But that is apparently not what Murtha and most other members of Congress spend their time doing. Anyone who watches congressional committee action on C-SPAN can see the pattern that Milbank describes–members use their brief time with important witnesses to get in on-the-record statements in support of favored special interests. And their staffs spend most of their time figuring out how to maximize the home-state grab from the budget, not examining big-picture policy issues.

We have a $3 trillion government because members of Congress love to spend money, as a sort of general proclivity. But they are particularly addicted to spending money on their home states. Random committee assignment would help to disrupt that addiction, and it would allow members to adopt a more neutral and critical eye on matters in front of the committees that they were assigned.

O’Hanlon on Defense

Maybe you have wondered, is it possible to get an op-ed published in the Washington Post advocating increased US defense spending without any mention of the enemies the defense budget is meant to defend us against or the wars we might fight with them?  Yes! Michael O’Hanlon proves it.

He says: 1. The Pentagon needs two percent annual growth above inflation to maintain its current plans. 2. Therefore the zero percent real growth the Obama administration plans for the next five years is unwise and we need to add $150 billion over that period.

The first part is reasonable, but why should the Pentagon maintain all its current programs? O’Hanlon doesn’t say. What the article amounts to is an argument for higher defense spending because defense spending is expensive. That is not persuasive.

Also omitted is that fact that O’Hanlon is repeating the Secretary of Defense’s view. Here’s what Robert Gates said on April 7.

I don’t think that the department can sustain the programs that we have with flat growth. And therefore I believe that we need at least 2 percent real growth going forward.

Here’s O’Hanlon:

For the Defense Department to merely tread water, a good rule of thumb is that its inflation-adjusted budget must grow about 2 percent a year (roughly $10 billion annually, each and every year)…we need roughly 2 percent real growth per year, while Obama offers zero.

The zero percent real growth in defense spending figure that O’Hanlon takes issue with is from budget charts prepared by OMB. Time will tell whether that, Gates’ view, or something else becomes policy.  So it appears that O’Hanlon, knowingly, one hopes, is taking Gates’ view in an intramural Obama administration squabble. I’d say that’s worth knowing when you read this article.

School Choice, Not Stalemate

A Washington Post editorial today rightly laments the seemingly insurmountable impasse reached by D.C. Schools Chancellor Michelle Rhee and the Washington Teachers Union. Actually, scratch the WTU – I mean the American Federation of Teachers, the WTU’s parent organization, which has essentially taken over the negotiations because it thinks giving into much higher pay for somewhat less job security would be a disaster of national proportions. But the union’s stifling full court press isn’t what primarily bothers the Post. It’s that lowly John Q. Public isn’t getting even a crumb of information from the power brokers about major decisions that are all supposed benefit his kids.

But since when did the best interests of kids or the public really matter in public schooling decisions? Sure, parents and regular citizens can vote every few years, but what the heck else can they do? They can’t stop paying the taxes that fund both chancellors and teachers. They can’t form their own union and require teachers and chancellors to negotiate with them. All they can do is complain, and it’s pretty hard to hear them when you’re behind closed doors, arguing with some other guy about which one of you should be king.

And to think, someone thought it was a good idea to kill a program that actually gives parents some power…

Americans Want Global Warming Action Now

Dana Milbank has the evidence:

For the past few years, liberal activists have gathered in Washington each spring for the Take Back America conference….

But now that Obama has actually taken back America, the activists at this year’s gathering feel a bit like the dog that finally caught up with the car. Organizers changed the name from Take Back America to America’s Future Now, but that didn’t prevent a sharp decline in participation. …

Hickey estimates attendance dropped from 2,500 last year to 1,500 this year, and even that may overstate things. At yesterday morning’s four concurrent “issue briefings,” 585 chairs were set out. Only 213 of them were occupied, including just 15 for the session on global warming.