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Thursday, November 29, 2012

The Fiscal Cliff Bargain is Peanuts



The internet and print media are full of accounts of an evolving bargain in the fiscal cliff negotiations. The Republicans will accept $1.2 trillion in tax hikes on the “rich,” and the Democrats will accept $400 billion of spending cuts. (Past experience shows the spending cuts never occur other than for defense). These increases and cuts are to be spread over a ten year period. Annualized, taxes are supposed to increase $120 billion ($.12 trillion) per year and spending cuts by $40 billion ($.04 trillion) per year.

Citizens are supposed to be impressed by figures such as $1.2 trillion or $400 billion. News accounts mention the “over ten years” in passing or not at all.

To see how small these figures are, we apply them to 2012 federal spending and revenues. If this agreement had been in place for 2012 (and had gone as planned), federal revenues would have gone up from $2,468 billion to $2,588 billion. Expenditures would have fallen from $3,795 billion to $3,755 billion. The deficit would have decreased from $1,327 billion to $1,167.

In a word, the fiscal cliff deal yields, at best, small, marginal, and even trivial changes.

In reality, the “rich” will alter their behavior, and tax revenues will rise (if at all) by a fraction of the “agreed upon” change. (Remember Congress can only set rates and rules. It cannot dictate what taxpayers actually pay). As Obama Care’s price tag becomes evident, federal expenditures will exceed expectations, and if interest rates rise, soaring interest payments on the federal debt will send Congress back to the drawing boards.

The fiscal cliff negotiations do not touch the looming disaster of almost $100 trillion in unfunded federal government liabilities under its existing entitlement programs. The Obama administration will leave that problem for the next administration to tackle. The next administration must decide whether to cut the welfare state or tax the middle class at European levels, which requires doubling social security taxes, applying the top marginal rates to the upper middle class, a 20 percent national sales tax, and $10 gasoline.

Such draconic measures will likely prove too much for the next administration and it will try to kick the can down the road to the next administration. Greece: We are not that far behind you unless we get a truly transformational President.

go to forbes.com

Tuesday, November 27, 2012

Let’s Stop Beating on Romney and Talking About the 2016



Instead of beating on Mitt Romney, we should thank him for a valiant campaign in which he had to contend not only with an incumbent president but also a cheer leading mainstream media. His debate performances were good but not perfect. It is always possible to nit pick. His campaign speeches in the last three weeks of the campaign were good to excellent, and he proved a tireless campaigner. It is not good form or a good incentive system to throw a losing candidate to the wolves, as many are doing.

We would be in good hands had he been elected. What a shame.

It is my layman’s impression that Romney would be president elect without Hurricane Sandy, without Candy Crawley, and without the overheard 47 percent remark.  There is no telling how many equivalents to the 47 percent remark that the press did not report for Obama.

It is sheer craziness that the press is already watching every move of possible 2016 Republican candidates. Give it a rest, please.

Saturday, November 24, 2012

The Giant Sucking Sound Is Hostess Jobs Moving to Mexico (And Media Give Democrat Private Equity a Pass)

November 21, 2012 was a dark day for us Gen X-ers, who grew up with calorie-rich Twinkies and Ding Dongs in our school lunch boxes. (Nowadays, they would probably be confiscated by the food police, but that is now not then). After a failed mediation, Hostess Brands announced last Tuesday it would proceed with liquidation after 82 years of operations. Its various brands – among them, Wonder Bread, Twinkies, Dolly Madison, and Home Pride – go on the auction block as Hostess’s competitors, such as Flowers Foods, ConAgra, and Mexico’s El Grupo Bimbo, are poised to pick up Hostess’s iconic Twinkies, Ding Dongs, Ho Hos, and Dolly Madison brands.

A successful bid from Grupo Bimbo, the world’s largest baker, means Twinkies labeled “Hecho en Mexico” – the ultimate insult to the American baker and delivery man. News reports claim this result is likely. Twinkies can return as a highly profitable Mexican expat free from U.S. tariff-inflated sugar prices and unions.

The liquidation leaves Hostess’s 18,500  workers, most members of the Teamsters or bakery workers union, out in the cold. They are probably asking: President Obama: Where are you when Twinkies and Ring Ding Juniors need saving rather than Detroit?

go to Forbes.com

Monday, November 5, 2012

Obama Knew by 2PM on September 12 but Invented a False Narrative Nevertheless (and the media does not care)

The American people must believe in the veracity and forthrightness of their commander in chief. Barack Obama concurs (November 2, New York Times): “You do want to be able to trust your president.  You want to know that the president means what he says, and says what he means. And after four years as president, you know me.”

We’ll we may know more than we wish to.

Despite the media’s confusing Fog-of-War” coverage of the Benghazi tragedy, we know the President deliberately provided false and misleading information on the  most important security failure of his administration. He misled the American public for political advantage by asserting that the Benghazi attacks were caused by an anti-Muslim video and carried out by a spontaneous mob. He knew this narrative was false by 2PM September 12 at the latest, but he continued to spread it for personal political gain.
The Washington Post in its Security breakdown in Benghazi is not interested in whether Obama told the truth about the video and the spontaneous mob. Such questions raise what the Post calls a “political and mostly pointless issue.” Since when is the president’s veracity “pointless?”

Only Fox News, with its “aggressive reporting,” addresses Obama’s veracity, but Fox is automatically discredited “by the blustery and often scurrilous commentary” of Bill O’Reily and Shawn Hannity, among others. Serious media need pay no attention to such amateur rabble rousers, despite Fox’s Jennifer Griffin’s stellar investigative reporting.

go to forbes.com


Paul’s recommendation: Read Good Intentions, By Bob Zeidman, before voting.

Saturday, November 3, 2012

Obama's Own "Let Detroit Go Bankrupt" Destroys Foundation of Campaign


Mitt Romney’s factually-accurate but mischievous Jeep ad baited the Obama campaign into admitting that the charge against Romney (“Let Detroit Go Bankrupt”) on which its campaign is based is false.

Romney’s TV spot: “Obama took GM and Chrysler into bankruptcy, and sold Chrysler to Italians who are going to build Jeeps in China,” is 100% factually accurate. That is its beauty.

Yes, it is true that the Obama administration took GM and Chrysler through Chapter 11bankruptcy. GM and Chrysler shares became worthless and their creditors lost most of their investments. Chrysler was indeed sold to Italy’s Fiat. Chrysler’s Jeep has indeed announced that it intends to produce Jeeps in China.

The Jeep ad brought forth a furious counter attack by Obama operatives, media allies, and self-appointed “independent” fact checkers. In its cry and fury, the Obama juggernaut made a fatal mistake: They admitted that Obama “let Detroit go bankrupt,” as Romney proposed. Staunch Obama supporter, the LA Times, could not bring itself to utter the dreadful word: “Chapter 11.” It chose instead to call what happened at GM and Chrysler “brief bankruptcy restructurings.”

A self-declared (but really democrat) independent fact checker really stepped in it with its dismissal of the nefarious and outrageous (but true) Romney ad:
“It’s also misleading to say ‘Obama took GM and Chrysler into bankruptcy’ without mentioning that Romney, too, advocated a bankruptcy plan. In fact, Romney wrote a 2008 op-ed that said: ‘A managed bankruptcy may be the only path to the fundamental restructuring the industry needs’.” At last, we have the two candidates agreeing on a truly important issue. (FactCheck.org: I guess you would love to take that back).

Note the irony: After three years of “I saved the auto industry and Romney wanted Detroit to go bankrupt” in his stump speeches, the Obama team is using Romney to defend the Detroit bankruptcies Obama orchestrated. You mean Bain capitalist Romney did not want to decimate both Detroit and the Ohio auto industry as you have been telling us?  So Obama “saved” millions of auto jobs by following Romney’s advice?

But wait, the LA Times is ready with the standard Obama comeback:  Obama forced GM and Chrysler through a government imposed Chapter 11 because “other sources of financing became unavailable during the recession.”  Not true at all. The treasury could have provided a neutral bankruptcy court with the small amount of creditor-in-possession financing at no taxpayer risk needed to reorganize GM and Chrysler at a small fraction of the $80 billion it actually spent.  With its recognized brand, billion dollar revenues, and inflated costs begging to be pared, GM would have attracted bidders out of the Gazoo, even in 2009.

When cornered with this truth, Obama supporters will play the blame-Bush-game: “Well Bush provided government funds to keep GM and Chrysler running as he passed the baton to Obama. Yes, but then Obama should say: “Bush saved Detroit, not me.” Strange, but I have yet to hear these words.
Although the two candidates are on the same “let Detroit go bankrupt” page, their approaches could not have been more different. Obama used government pressure and blackmail to reward his UAW allies. He knew that the UAW wage and pension contracts could not survive the regular bankruptcy proceeding that businessman Romney wanted. Obama is now getting his payback. Organized labor is his biggest contributor and the organizer of the fabled Obama “ground game.”

Main Stream Media: Where were your fact checkers when Obama was distorting Romney’s “let Detroit go bankrupt”? You seem to notice only when Mitt finally played hardball and reversed the tables.

Where is the Obama apology:  “American voters: Forget what I said earlier. Both Mitt and I agree to ‘Let Detroit Go Bankrupt’.”

Paul’s recommendation: Read Good Intentions, By Bob Zeidman, before voting.

go to forbes.com

Friday, November 2, 2012

Barack Obama Will Regret He Took Ownership of Hurricane Sandy Recovery

The New York Times (Obama Promises Speedy Aid as Storm Takes on Political Weight) described the President  as “eager to project the image of a president responding forcefully to the crisis” as he promised on Wednesday “storm’s victims in New Jersey, New York and elsewhere that federal help is on the way.” He assured them that his administration will “get resources where they’re needed as fast as possible.” If governors and mayors are “getting ‘no’ for an answer somewhere in the federal government, they can call me personally at the White House.” The Times even threw in praise from New Jersey Governor Chris Christie: “The President has been all over this. He deserves great credit.” Christie wisely did not add: “And he gets the blame when things go wrong.”

If Obama were an experienced hurricane survivor like me (hailing from Houston), he would not have said these words. No hurricane works to the benefit of public officials, high or low.

go to forbes.com