Bush tax cuts

I see a lot of conservatives hyperventilating over the extension of the Bush tax cuts on the wealthy. To my mind, this is not a critically important issue. We had a good economy under Clinton, before he enacted the tax cuts.

I am an anti-Keynesian–since his policies were intended to foster socialism–and therefore what has come to be called a “supply sider”, which is to say “anti-demand sider”, which again is to say “anti-Keynesian” and by extension anti-socialist/fascist.

Common sense economics is embodied in the Laffer Curve, which stipulates that actual goverment revenues will in fact increase up to a certain point as tax rates are increased, then begin to decrease, both as economic investment becomes de-incentivized (the government takes the rewards of your risks, and you suffer any losses privately, a lose/lose situation), and as money is simply invested in more productive places.

It is far from clear, though, that we have reached the point of diminishing returns. Clearly, if we are to have a government, we must pay taxes.

The bigger, much, much, much more important question–which Republicans seem too cowardly to pose in a serious fashion–is the size of the government. The Bush tax cuts worked. Overall revenue increased. And yet with a Republican Congress and a Republican President, overall expenditures skyrocketed.

Did we really need a Dept. of Homeland Security, when the root problem was a series of fuckups by the agencies tasked with intelligence gathering? To the extent the problems were political correctness, do we fix them by giving more power to the same sorts of people, people like Janet Napolitano, whose agency ignored the pleadings of the underwear bombers own father, and whose response to that fuckup is to grope small children or take nude photos of them?

And to be clear, I personally do not think Bush had a hand in it, but 9/11 was clearly perpetrated by a larger group than those men who hijacked the planes. Most conspiracy theorists are not sufficiently light on their feet to see the places where their narrative splits from the necessary to the possible. It is in my view necessarily the case that bombs were set in at least Building 7, and by extension that they were likely set in Buildings 1 and 2. This leads necessarily to the conclusion that people were involved who have not been identified or–probably–caught. This is a serious shortcoming, which manifestly has not been fixed by our so-called Dept. of Homeland Security, which at the moment is refusing even to defend our borders. Nothing desirable was accomplished for this massive expenditure. We need to recognize this, and learn from it.

Perhaps we need to consider abolishing the DHS.

Certainly, and this is the point I intended to make, we need to fire everyone Obama just hired. We then need to continue firing. We need to abolish all Departments and agencies that are not a part of the core mandate of the Federal Government to protect our borders, and regulate relations–within reason–between the States.

We do not need Department of Energy. What do they do? Is it helping? Are we energy independent?

We do not need a Department of Education. Our system is failing, and they are doing nothing to help it.

What we need more urgently than anything is an end to public sector unions. All of them. Teachers unions, AFSME (or whatever it is), and the rest.

In Capitalism, a union is a counterbalance to the ability of business owners to collude to fix wages. The price of labor is set by free market forces, in negotiation between two entities that in theory both want the business to succeed. I say “in theory” since some union leadership–for example the UAW–really cares more about keeping their six figure salaries and power–which itself is an aphrodisiac and desirable for some in its own right–than in protecting ordinary workers. They are quite happy to see mass layoffs and permanent unemployment, if they can keep enough people on the gravy train to keep themselves on the gravy train.

Actually, I should expand on this point, before making the next one.

What Democrats enable, by their economic meddling, is the use of coercive government power to maintain labor monopolies in perpetuity. The UAW bankrupted GM and Chrysler. Their members get extremely generous pensions and healthcare benefits, which are simply unaffordable. Their benefit packages add several thousand dollars to every car which rolls off an American assembly line.

In a free market, these benefits would have been written down to maintain employment. Given a choice, many Union members would have preferred keeping their jobs at a lower wage and benefit package, than to play a lottery where if they win, they keep everything, and if they lose, their job is lost forever. Self evidently, many people have lost, and continue to lose, as jobs leave our shores, preventably and likely permanently. But the government allows unions to mandate membership. This is collusion and is both morally and economically wrong.

What has happened with Obama is that the government has provided the money to keep union pensions and healthcare packages solvent. This means that tax money has been diverted from legitimate public use, and used to fund a minority of American workers, who have gamed the system without creating compensating economic benefits. This is my understanding. It is my further understanding that under Obamacare these same union benefit packages will be immune from taxation, whereas everyone elses–the people producing actual wealth–will be subject to taxation.

Finally, I wanted to comment that public sector unions do not engage in market forces at all. It is one set of politicians negotiating with another. Union leaders negotiate with Democrats, in the main, for wage increases, which are funded with taxpayer money. It is thus a redistributive scheme which is utterly immune from market forces. This means that it is effectively a system of bullying and favor buying, rather than a legitimate activity.

Witness, for example, the teachers unions in New Jersey that wanted continuing pay increases far in excess of inflation, during a recession. This is unconscionable.

In my view, public sector employees need to take what they are given. If we don’t pay enough, we won’t attract good people. If we pay too much, the taxpayers need to revolt.

Right now, we need to revolt, since the average Federal employee makes a third more than his equally trained and able private sector counterpart.

This is the important issue. We need mass firings, the cessation of large Federal bureaus, the end of public sector unions, the normalization of Federal salaries to their private sector equivalents, and an overall decrease in the size of the Federal Government by perhaps one third.

In exchange for that, I would be extremely happy to let the Bush tax cuts–all of them–expire.

Will stupid people scream? Of course.

Is it certain we will continue as a democracy, or as a prosperous nation? No.

Do we deserve to? That is a really good question. Our response to our current fiscal crisis will provide the answer. If we choose to remain as children, and not adopt the ways of mature adults, then no, we do not deserve to remain free or prosperous.

All nations end. It is just a question of how long they endure. I like to think we are capable of exercising mature judgment, but the jury is still out, and there are many many feeble and yet vocal minds among us.