This happens every four years, I see articles written by supposed former members of the Republican Party advocating for the Democrat candidate for the upcoming Presidential election. Each and every time, I read the article, expecting to see some evidence of the author's bona fides as one of us, or at least a decent argument as to why I should change my coat and seek shelter in the tent of my adversaries. Each and every year, I am struck by the sheer lunacy of the entire farcical experience. It is not that the arguments in and of themselves are not coherent, but that they are word for word the exact same things which can be read from the Talking Points memo distributed to every politically left activist for the previous decade regurgitated to me as some sort of new revelation.
My question is, why the subterfuge? I am all for free expression and open debate. I just feel that this debate should be honest. Most often these letters are decently written, as this year's candidate seems to be. The arguments are straight forward, well articulated, if also wrong, and even done in an effort to keep the vitriol and destructive emotional tone out of the debate. Why the need to couch this author's deeply held convictions in a premise that begins with a lie. I say have the confidence in your convictions to say that these are my beliefs, and here is why I hold those beliefs. There is no need to bolster those beliefs with false gravitas. Such attempts are invariably a distraction to your point anyhow, and as such only serve to turn people who you are trying to convince away from your premise. I am sure you get plenty of atta-boys from the people on your side, but are they the ones you are actually trying to convince? They already agree with you.
Here is this year's first salvo. A facebook friend put this up as a link, and now I feel it is my job to counter the argument. I hope that the author reads it, and agrees to meet me in the arena of ideas for an honest discussion of the day's issues.
The letter ostensibly meant for Republicans is rather lengthy, but reasonably well written. I invite you to read it so that you may understand the context with which I will now be arguing against certain things written. Lest anyone level the charge of, "you took my words out of context," it would be impossible to reprint the entire article here, but it is available for review, simply by clicking the link provided above.
Our author starts off by stating his Republican bona fides, apparently, he voted for John McCain. I also held my nose in 2008 and voted for John McCain, cursing the Republican party for selecting this man as the standard bearer the whole time. I have never understood the reason that the leadership of the Republican party always seems to feel that our brand is best represented as Democrat Lite. John McCain has spent his entire political career making it a real point to be thorn in the side of the Republican voting base at every opportunity. What exactly did it net him, in 2008, for the most important 60 days of his political life, he was savaged in the press just exactly like every single other Republican candidate for the Presidency before him. Somehow, the apparatchiks of the GOP, which I will concede straight away is always at odds with the voting base of their party, never seem to learn this lesson. Mitt Romney and Newt Gingrich have shown signs of learning this recently, and I can only hope that they continue to exhibit that level of understanding. What came next was this little gem.
I did not share Rush Limbaugh's view expressed in January 2009: “I disagree fervently with the people on our side of the aisle who have caved and who say, ‘Well, I hope he succeeds'... I hope he fails.” Nor do I agree with Senate Minority Leader Mitch McConnell who in October of 2010, was asked what "the job" of Republicans in Congress was. McConnell answered, "The single most important thing we want to achieve is for President Obama to be a one-term president."
I feel that these need to be addressed, as I have heard both of these quotes being bandied about for some time now, and the context for them is never given, and in one case, McConnell's, the quote itself is actually a victim of a dishonest tactic called quote mining, where half of what's said is used without the clarifying sentences that follow. In the case of Rush Limbaugh, what he actually said is that he hopes that Barack Obama fails to inflict his agenda upon us. That is a far cry from wishing him failure. There are many of us who opposed and still oppose Barack Obama politically because we feel that his policies are disastrous for America. In that regard, yes, we wish to see him fail to enact that agenda, because we feel that our nation would be better served to not follow that path. The Democrats did not just roll over and allow Ronald Reagan to do as he wished, they fought him at every single phase of his agenda. As a matter of fact, I can not think of a single President who had the full support of the opposition party for his agenda at any point of American History.
In terms of the McConnell quote, please click the link to hear the entire quote. This is just a malicious falsehood, start to finish, and there can be no decent excuse for it. What McConnell said, and without equivocation, was that in 2010 is top priority was to support his party's position on the budget battle, and that in 2012, as every leader of an opposition party in American history he would in fact be working to get someone from his party elected President. If this shocked you, which I suspect that this claim is intellectually dishonest, than you have clearly not taken the time to read a single thing about the history of our great nation.
In the past, Republicans were pragmatic, not ideological; they would ask "does it work", not "does it fit into my theory." Ronald Reagan is known for his tax cuts, but he also pragmatically raised taxes 11 times to address the growing budget deficit, and had a good relationship with Democratic Speaker of the House Tip O'Neill. Since Reagan was pragmatic, not ideological, he compromised and worked with congress and accomplished what needed to be done to help the economy.
As someone who more often than not votes Republican, and furthermore is a fan of our 40th President, It gives me pause each and every time the political left attempts to revise history and the legacy of Ronald Reagan. Hated by the left as he was during the time that he was alive and our President, I find it mildly humorous and really annoying that his legacy is claimed to support everything he stood against today. One of the most pernicious claims is that he raised taxes 11 times during his eight years in office. While this may be technically true, it is stated completely without context, which one can understand by clicking the preceding link. What our author is referring to, are the tax law changes of 1986, which lowered the marginal rates from 70% to 28%, lowered the number of brackets from 16 to 2, and closed off many of the egregious deductions that the hated rich used to shelter their earnings and wealth from being considered. It was the closing of those, "loopholes," that our friend is referring to as a tax hike. While technically, this may be true, a flat tax while ending all deductions is something many of us have been advocating for, for years. Supplying tax credits or deductions for federally approved behaviors is nothing more than a system to allow people with means the ability to cheat and manipulate the system. What perplexes me most is that when ever I debate someone from the political left, they will claim to be against the hated rich and for the little guy, all while advocating for programs designed to do exactly the opposite. That deserves a Dennis Moore award nomination.
Republican President Nixon created the Environmental Protection Agency (EPA) and Republican President Theodore Roosevelt created the Food and Drug Administration (FDA). Republican President Ford created the first federal regulatory program in education, with a program for special needs children. Republican President George Bush Sr. signed the Americans with Disabilities Act of 1990, and raised taxes to fight the deficit. Republican President Eisenhower warned: "we must guard against the acquisition of unwarranted influence, by the military–industrial complex" and was responsible for one of the largest Infrastructure projects in American history (Interstate Highway System).
I will concede his point that often times the Republican Party is at odds with its own base, in fact this is true most of the time. I will even conclude that the Interstate Highway system is a good development in our country, and that clearly some government spending on infrastructure is necessary. Nobody is advocating for anarchy. However, Eisenhower largely privatized the entire project, and sent control of it all back to the states. The states proceeded at their own pace, and it was well into the late 70's and early 80's before it was all finished. Outside of the highway system, each and every thing you've mentioned in that paragraph has turned out to be a disastrous albatross around the neck of our economy, and while it is true that is was the doing of big government Republicans who inflicted these bureaucracies upon us does not mean that they were right in doing so.
the recent revelations about the secrecy with which he handles his financial affairs.
I have been trying to remain diplomatic with my response. This statement right here is at a level of ignorance and innuendo that I find offensive. Mitt Romney is at a level of earning that triggers an IRS audit of his taxes each and every year that he draws breath. After he passes, the IRS will continue to audit the returns of his estate to make certain that the IRD taxation is in line with their codes. People who hold Swiss bank accounts for the purposes of skirting U.S. Law do not report those accounts on their tax returns. This entire line of attack on Mitt Romney is nothing more than a smear campaign being coordinated by a petty little man who is terrified that Americans might wish to focus on the very real and horrendous performance of his job duties while President of The United States of America.
Also, please take note that most Americans today, have a foreign account associated with their own names. If you have money in a 401k. 403b, 457 plan or an IRA in which your adviser suggested that you put some of your money into an international mutual fund, than you are painted with the same thoughtless and sloppy brush with which you have attempted to smear Mitt Romney. The major difference is that with the wealth that Mitt Romney has, his small percentage of assets invested overseas is beyond the mutual fund amount, and well into opening a brokerage account overseas.
While I question many of President Obama's policies, I can not be sure Mitt's policies regarding the economy would have been any better. Mitt's business experience and wealth come from Wall Street, not Main Street, and I doubt he would have broken up the banks "too big to fail." As he said "The TARP (bank bailout) program was designed to keep the financial system going," and as a CEO of a private equity firm, he was a part of this financial system. If anything, given his background and avowed dislike of government regulation, I believe Mitt would have been even more hands off overseeing Wall Street and the banks "too big to fail." I know this non-involvement would NOT help a small business on Main Street. The firms which benefited from TARP, acted completely irresponsibly and contrary to the intent of the program by giving their executives huge bonuses, while restricting credit to small businesses. The problem with TARP, a program devised under President Bush, was too little regulation not too much.
There is a misunderstanding as to what Venture Capital firms actually do. Mitt Romney was not Wall Street, his company did something different. Bain capital provided capital investment for companies that needed funds, but were unable to raise cash through more conventional means. Since GST Steel is the topic du jour, we'll use them. In 1993, GST had shut her doors, she was done. Many people who worked there, were members of the various GST communities etc., wished to keep her going. Banks, who will as a general rule not lend money to a company that has at best limited prospects, refused GST. The owners sought out Bain, who did their due dilligence and decided to raise capital for GST. Part of the Deal with Bain buying a company, is that Bain gets to have a say so in how to run the company, turn it around, and what the final disposition will be. Bain kept GST going for 8 full years longer than they would have operated had Bain not saved GST in the first place. In the end, it was the unreasonable demands made by the unions that GST had to deal with that which it impossible for Bain to keep it going.
Mitt Romney did not buy and sell stocks, or trade in derivatives, or even spend his days structuring corporate raids. He invested money in businesses who needed investment and could not get it from conventional sources. He then helped build those businesses to being successful entities and then sold his investor's shares as the market warranted. Staples, Burger King, Best Buy, AMC Theaters, are just a few of his success stories.
Attempting to place Mitt Romney at the center of the financial crisis is too silly to be really mad about. More to the point, it completely misses the point on what the actual cause of the crisis was. Turns out, I have written previously about that cause, and you can read it here.
There seems to be a difference of opinion as to why people with capital to invest are choosing not to do so. The political left believes that bankers and the other assorted members of the evil rich are sitting on their cash due to some pernicious attempt to make President Obama look bad. This, as well as anything else highlights the problems inherent with Socialism. It never considers the very real consequences of its own actions. People with money to invest are sitting on their cash precisely because of what happened to the bond holders and share holders of General Motors. The lawless manner in which our debt subordination laws were tossed aside due to political expediency and the shareholders of GM had their company literally stolen from them and just handed over to the UAW, in an unfriendly corporate takeover in which the federal government played the role of corporate raider, has the rest of the investing world truly concerned. What would prevent Barack Obama from doing the same to their investments, and in fact he has already stated that he believes this is a good idea.
It was once said, "As GM goes, so goes the nation." As people lost purchasing power, the demand for new cars dried up as people stopped buying them. This caused the car companies, including GM, to become threatened with bankruptcy. If the car companies went bankrupt, more then 100,000 additional workers would be unemployed. It was feared this would only be the tip of the iceberg as people wondered what would be the ripple effect on car part manufacturers, and what would be the effect on consumer confidence? Obama deviated from TRAP's stated purpose when he, without congressional authorization, used TARP to bail out GM and Chrysler thereby saving them from bankruptcy. Mitt would have not done this, as he stated: "Let Detroit Go Bankrupt." However, who would bid for these companies at this time of economic uncertainty, even Mitt's former company, Bain Capital, had reduced their acquisitions.
All of this does not even consider the point that GM is not the tremendous success that it is touted as being today. GM is on the verge of collapse, and is expected to implode by January of 2013. As it turns out, Barack Obama is every bit as incompetent at running an auto company as he is at everything else he does. There are 19 other auto manufacturers building cars in America besides GM. GM's collapse had more to do with those idiotic cafe standards inflicted by previous governmental intervention and the fact that they built cars that people did not want to buy for a price that people were willing to pay. Other companies, GM among them have entered bankruptcy and successfully emerged a stronger and better run company. All that happens when you subsidize a company that should be allowed to die is that people are building goods that no one will ultimately buy. The result of course is that GM will still collapse, and now they are taking our $53 Billion with them.
How can you expect to fill a 14.5 TRILLION DOLLAR HOLE caused by lost potential purchasing power with a program of less then one trillion dollars? The Stimulus should have been twice the size that it was.
For those of you without a working knowledge of economics, I apologize. I have yet to meet an adherent of the Keynesian School who did not posit the belief, each and every time the theory's many failures are mentioned, that we just didn't do it big enough. It should be noted that when Maynard Keynes first stated his theory, his original statement was that aggregate demand could be jump started through small increases in autonomous spending. At the end of his life, Keynes stated that he always felt regret for having ever shared his theory with Franklin Roosevelt. Make no mistake about it though, the $1 Trillion Stimulus price tag represents the largest such an attempt to jump start an economy in the history of our planet. How much bigger than the biggest attempt ever must be put into place before we will accept the folly that is the modern Keynesian School? In the end, this is nothing more than our old friend, the broken window fallacy grown fat, and well beyond our reckoning.
We should not be worrying about the annual deficit. If a tax is money being removed from the economy, then government spending is money being added to the economy, and the deficit is the measure of degree the economy is being stimulated by the government. The problem with deficits, it is said, is that interest rates on government bonds will go up, yet the interest rate paid by government bonds now are the lowest they have ever been.
I could have almost believed that you were one of us, until this statement right here. There is so much wrong with this statement, it's difficult on where to begin. Putting aside for the moment that it steps on everything every Republican holds as their one unifying core belief, that individual property rights, as guaranteed by the Constitution are at stake with our system of taxation, and that wealth redistribution is itself anathema to every belief that we have, this very simple fact is true. The government produces nothing on its own. Every penny any government spends must first be forcibly removed from the possession of its citizens. That is not a political statement, but merely a statement of fact. The political discussion is whether or not our government should be in that particular business. Our nation was founded on the answer being no to that question. You could never have been a Republican having answered yes to that question.
Here is the problem with your discussion on deficits so far, and again I apologize to the non economists who might find this a bit wonkish. You fail to address what a deficit actually means to a populace. There is a misconception among many of my fellow citizens that our taxes are only equal to what the government actually collects. That in fact is not true. Taxation is equal to what our government spends. Meaning, the taxes we actually pay are equal to the revenue collected plus the deficit spent. Who do you believe pays the difference, the tooth fairy? When the government monetizes the debt by printing more pieces of green paper, and then compounds the problem by artificially keeping the interest rates low, we pay for all of that by having the pieces of green paper already in our possession losing the ability to purchase the same amount of goods and services. When Barack Obama was sworn in, gasoline averaged $1.79 per gallon, today, not so much. Milk, Eggs, and every commodity has shot up in price, electricity, natural gas, all are more expensive today. Politically, this is a winner for irresponsible politicians who have perverted the theory of Maynard Keynes for their own turn to grasp power. It allows them to buy as many votes as they wish while inflicting a tax that no one has to vote for. Rising prices and runaway interest rates are a symptom of inflation, and should not be confused for inflation itself. Just because we have not noticed the symptoms of the sickness yet does not mean that we will be exempted from paying this price.
I can use myself as an example since I am considered a successful businessman. I have never made a business decision based on taxes. They never deterred me from expanding my business when I saw an opportunity to meet a demand by consumers. Taxes never took 100% of any additional income I made by expanding my business. They were just a cost of doing business like any other necessary cost. They paid for services my business and I, as an individual, needed, such as policemen, firemen, and road maintenance. On the other hand, while I always appreciate lower taxes, they would not effect how I ran my business. If my taxes were lowered, but there was no additional demand by consumers, I would not expand my business. However, I would take a nice European vacation and see Paris or Rome, or buy a Mercedes-Benz rather then a Ford, or perhaps buy a second home on a Caribbean island and open up a bank account there. Like any successful businessman, I am not ideological, I am pragmatic; I just wish government behaved the same way.
Your own experiences not withstanding, and by the way, they are completely opposite of my experiences, the lens of history is crystal clear on this point. What we have, by mentioning our personal experiences, is nothing more than anecdotal evidence to support our disparate positions. The work done by Thomas Sowell, Art Laffer, Walter Williams, and Andrew Mellon, to name a few, proves the exact opposite to your statement above. When tax rates increase, investment and expansion decline savagely.
No business actually pays its own taxes anyhow. All such enterprises pass along those costs ultimately to the consumers, the very people you claim to care about. Your supposition that business owners do not care about the taxes they pay because those taxes are no different than other expenses is foolish, from the start. This argument assumes that business owners do not care about their expenses to begin with. I can assure you that when the expenses come out of my pocket, I care, and do what I can to mitigate those expenses.
Mitt Romney has said "entitlement programs" such as Social Security should be cut back or made voluntary. This is necessary since these programs make up most of the budget of the United States and the deficit cannot be dealt with unless we change these programs. Making Social Security voluntary for young workers raises several questions. Should it be replaced with the equivalent to an "Individual Retirement Account" of some type? This idea would be the death of Social Security as we now know it.
Before you get the vapors, what Mitt Romney, and before him George W. Bush have done, was to suggest a program that is currently in effect in Chile, and has been since they adopted the free market system during the 1970's. They never told us it was the Chilean system, wanting the credit for themselves I guess, but you should know before your screams of, "the sky is falling," is that this system has been wildly successful for the people of Chile. Workers who wish to avoid market risk may do so, it is called the fixed account. Workers who make less money will have the option to self direct in any manner that they choose. If you believe that Social Security is a guaranteed benefit, you haven't read your letter from the Social Security Administration this year on your birthday. Remember Lyndon Johnson's great society, well he cracked open that lock box, and guess what, all that remains is a few iou's with not so much as a hint of cash. Today's benefits are being funded with today's receipts, making the program a huge ponzi scheme. The plain and simple fact is this, with the money that you have invested in Social Security, you could have outperformed the government's handling of these funds by placing the money into a pass book savings account and accepting bank interest for your returns. The return that the government has shown since the inception of Social Security is the single greatest example of governmental incompetence as has ever been highlighted.
This next paragraph proves my point about Social Security exactly, and that it was written as a means to support the program is simply astounding.
The Social Security and Medicare programs are called "entitlement programs" because people pay a special tax in order to be "entitled" to them. In the case of "Social Security" it is the "FICA Payroll Tax." This tax can be thought of as being the equivalent to an insurance premium. Under the present "FICA Payroll Tax" system, the person who earns $110,000 pays the same exact amount in taxes as the person who earns $1,100,000, or $10,000,000. Mitt Romney had an income of $21.6 million in 2010; instead of a FICA tax of $1,404,000 without the cap, he paid $7,150. President Obama had an income of $1.72 million in 2010; instead of a FICA tax of $112,327 without the cap, he paid $7,150. The actual FICA tax rate for the ditch-digger, garbageman, or teacher is 10 or 100 or 1000 times that for a CEO, corporate financier, or government official. Rather then making it voluntary or reducing benefits or delaying the retirement age, shouldn't we be talking about ending the $110,000 cap on incomes that are taxed, while capping the present maximum benefit, and maintaining the cost of living adjustment? Adopting this program would mean the system would be fairer since the tax would then become a defined flat tax for all Americans rather then the present regressive tax. The Social Security trust fund should be put in a "locked box" which is not used as part of the General Federal Government Budget. The new taxes collected would help reduce the budget deficit by relieving the problem with the Social Security trust fund in the future. Perhaps if the increase in revenue was great enough, the FICA tax rate could be reduced for everyone. However, neither Mitt nor Obama has suggested this type of solution.
I'll let Milton Friedman explain my point here.
Uninsured medical costs was the biggest reason people filed for bankruptcy.
You got this half correct. The number one cause for this is long term chronic medical needs, or incapacity. It is also a sore point with me. The fact is that there are things that people can do as a part of their personal financial planning to mitigate, or protect themselves in this regard ahead of time. That people chose not to is their own fault. As someone who is in the planning industry, and have met with people who have looked at me and called me dirty for suggesting that they purchase a private disability policy or a long term care policy to protect their assets in case this happens to them, I can say this with confidence. I have absolutely zero sympathy for someone who is in this boat. By and large, where we are in life is the cumulative result of the choices we make. If someone chooses to ignore the advice of financial professionals, or live their lives as though we have no value to add, then the results are their own to bear, and not the responsibility of society as a whole.
Why is Bain important? We must not forget a major contributing cause of the Financial Crisis of 2008 was the filing of false or misleading documents with the SEC. This is no small matter; since 2009 the SEC has collected fines of over 3 Billion dollars for this violation from financial institutions such as, among others: Bank of America, Goldman Sachs, Citigroup, Merrill Lynch, Credit Suisse, J.P. Morgan, and UBS. Even if Mitt Romney actually left all operational control of Bain Capital in 1999, he sanctioned and acquiesced to the filing of false and misleading documents with the SEC until 2002. While this violation may not rise to the level of these other institutions, it does indicate a certain attitude towards these filings: The complete and truthful disclosure of all facts is not important. This was an attitude all too prevalent in the financial community prior to 2009, and all of us paid the price.
I will be blunt here. You do not have the slightest inclination of Finra or SEC rules to be making this statement. Those papers were filed according to the guidelines set forth by the appropriate agencies, by lawyers who are experts as to how those forms should be answered. This entire argument is fallacious, and completely ignores the fact that the people who worked at Bain at the time, all 100% of them, have corroborated Romney's recollections of events. The SEC has reviewed everything and said, yes Romney left Bain in 1999, and that all the paperwork was in order.