California Keeps Whistling Past The Graveyard

San Bernardino joins the ranks of Stockton and Mammoth Lakes in filing for bankruptcy. 

San Bernardino on Tuesday became the third California city in less than a month to seek bankruptcy protection, with officials saying the financial situation had become so dire that it could not cover payroll through the summer.

The unexpected vote came at the suggestion of the interim city manager, who said the city faces a $46-million deficit and depleted coffers.

Six paragraphs into the story, you get to the reason why:

The city's fiscal crisis has been years in the making, compounded by the nation's crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento's raid on redevelopment funds and a city reserve that is tapped out, officials said.

Miller told the council that the city faced major deficits for the next five years.

The deficits remain even after the city negotiated $10 million in concessions from employees and slashed the workforce 20% over the last four years.

So having unfunded liabilities tied to lifelong pensions, catering to every public union demand and having a state government playing shell games with state finances drained whatever reserve the city had.

San Bernardino's tax revenues have declined by as much as $16 million annually over the last few years, primarily because of drops in sales and property taxes.

The end result of having progressive policies in place means people end up voting with their feet and leaving the state. 

Be sure to read the rest to find out about Stockton and Mammoth Lakes. 

Video: Chuck Woolery Explains Taxing The Rich

It's only a little bit longer than 'Two and Two' but worth it.

Dan Mitchell On The Debt Ceiling Deal

Yes, the threat of taxes being raised is very real.

Politicians last night announced the framework of a deal to increase the debt limit. In addition to authorizing about $900 billion more red ink right away, it would require immediate budget cuts of more than $900 billion, though “immediate” means over 10 years and “budget cuts” means spending still goes up (but not as fast as previously planned).

But that’s the relatively uncontroversial part. The fighting we’re seeing today revolves around a “super-committee” that’s been created to find $1.5 trillion of additional “deficit reduction” over the next 10 years (based on Washington math, of course).
[. . .]
there is a risk of tax hikes, just as I warned last week. Indeed, the five-step scenario I outlined last week needs to be modified because now a tax-hike deal would be “vital” to not only “protect” the nation from alleged default, but also to forestall the “brutal” sequester that might take place in the absence of an agreement.

Please read the entire thing.

By the way, Dan Mitchell is a Senior Fellow at the Cato Institute, so he understands how Keynesian economics (dosn't) work better than the economists who studied Keynes.

This is from about two years ago but it's still timeless.

Video: Why Aren't The Rich Paying 50% in Taxes?

It's the theme of the day. Via Insty.

Walter Williams On The "Tax The Rich" Meme

I touched on it here last night, Walter E. Williams takes it on so much better than I ever could because, well, he's Walter E. Williams:

This year, Congress will spend $3.7 trillion dollars. That turns out to be about $10 billion per day. Can we prey upon the rich to cough up the money?

According to IRS statistics, roughly 2% of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It's not even yacht and Learjet money.

All told, households earning $250,000 and above account for 25%, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100% tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there's a problem because there are 224 more days left in the year.
[. . .]
According to the Forbes 400, America has 400 billionaires with a combined net worth of $1.3 trillion. Congress could confiscate their stocks and bonds, and force them to sell their businesses, yachts, airplanes, mansions and jewelry. The problem is that after fleecing the rich of their income and net worth, and the Fortune 500 corporations of their profits, it would only get us to mid-August.

The fact of the matter is there are not enough rich people to come anywhere close to satisfying Congress' voracious spending appetite. They're going to have to go after the non-rich.

Be sure to read the entire thing.

I'm pretty sure this happens to most people but when I was a kid, whenever I would happen upon an extra buck or two, it would usually be spent 5 different ways in my mind. Usually before I got a block away from my house on the way to the corner store.

Same thing with Congress. Increasing revenues only allow more spending when more spending is what is not needed.

I Don't Look At This MoveOn Video And Wonder Why 30,000 People Are Fasting. . .

I wonder if any of the people featured holding empty plates have given to a local charity out of their own pockets to feed the poor?



That's besides the point.

"Politicians never accuse you of 'greed' for wanting other people's money --- only for wanting to keep your own money." (Joseph Sobran)

It's funny how most people who do say "Tax the Rich" never say what the next step is. To crib the business model from the Underpants Gnomes, it's:

Step One: Tax the Rich.
Step Two: ???
Step Three: Government profits!*

So to indulge those who do say, "Tax the Rich" let's do this. Forbes released their list of the 400 richest people in America last year. The combined wealth for everyone on that list was 1.37 trillion. If at the stroke of a pen the President can take that 1.37 trillion via executive order and distribute that to the roughly 300 million Americans, there would be about $4,500 per person.

According to the Cato Institute, there's roughly a 70% administration cost per dollar that is budgeted toward welfare.

Today [This was back in 1995. I can't imagine that the bureaucracy of government has miraculously improved over that time. The only other place I found that had this stat was the highly polarized and slanted Media Matters.], 70 cents of every dollar goes not to poor people, but to government bureaucrats and others who serve the poor. Few private charities have the bureaucratic overhead and inefficiency of government programs.

$.70 would go to the government to help run the program and $.30 to the actual poor. Using those percentages with taxing the rich would put that amount to a little over $1,300. If that.

And I'm not even going to go into the US deficit or budget either. Suffice it to say should Congress find $1.37 trillion plopped into it's lap, it won't be used to pay off anything.

Anyway, most of that exercise is pointless. Turns out, those cuts were phantom cuts. Reductions in future spending. Where (via Insty) “Only in Washington can a budget that spends more than it did the year before, with a larger deficit, be portrayed as ‘cutting.’”

*Looking that over, Step 2) should be 'Government profits' THEN Step 3) would be 'Distribute a small portion to special interest group'.

Update: Walter Williams weighs in.

Tim Geithner: The President's Budget Is "Unsustainable"

For those who have been following along, this isn't anything new.

For everyone else, the Secretary of the Treasury-- Tim "Turbo Tax" Geithner-- admits that this debt is unsustainable.

Admission is the fist step.

Video: Four Reasons Why Big Government Is Bad Government

I think I've argued about a couple of these points a time or two in the past here. Here it is again in a format most high schoolers should be able to follow along with.

Video: The Debt Limit Made Simple

It's a little over five minutes in length but simplifies how the Debt Limit works.



The video is a little over a year old but still timely.

Cross posted at The Daley Gator and Disrupt The Narrative.

JFK vs. BHO

This John F. Kennedy fellow obviously must have been some sort of right wing wacko.

Cutting taxes to increase jobs and revenue? That's lunacy.



Thanks to Mickey.

So Now It's A Tax

So much for that 'Not Raising Taxes' pledge.

When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”

And that power, they say, is even more sweeping than the federal power to regulate interstate commerce.

Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations.

Unless the plan is to push the 95% onto the public plan, letting the highest 5% pay for everyone else. Because that will work.

Joe "Scranton" Biden: Looking Out For The Little Guy

This video has been making the rounds. Joe Biden telling someone not to be "A Smart-ass". Videos of the event here and here and here and some background information here.

I do have an answer for Vice President Bite Me. No, the custard shop owner wasn't being a smart-ass. He was as serious as a brain aneurysm.

The VAT In Europe Today And Other Monday Links.

The future is now in Europe on how the VAT works.

After almost two months of waiting for the iPad to arrive in their country of residence, international users are now complaining about the inflated price some of them must pay for the tablet, compared to the U.S. prices. For example, in the U.K., the entry-level 16GB Wi-Fi-only iPad costs £429, which equates to almost $150 more than in the U.S.. In Canada, the price difference is of almost $40 for this model, while in the Euro currency area, the difference can reach $150 as well.
[. . .]
Apple CEO Steve Jobs has once again taken to his iPhone to respond to complaints. Jobs reportedly said in an e-mail to an obfuscated U.K. customer that he needs to educate himself, explaining that U.K. prices must by law include VAT (17.5 percent), while U.S. price do not include tax -- hence the difference

There's some more nuances than that but the VAT is the big difference so far.

Shocker! Fannie Mae has lost even more money. $13.1 billion in the first quarter of this year. For perspective, the court has estimated that Bernie Madoff has lost about $18 billion of investor's money with his ponzi scheme. Piker's work compared to Fannie and Freddie.

And after the Federal Government's handling of FM/FM, Social Security, Medicare, Medicaid and their soon to be mishandled ObamaCare, why not put everyone's 401K's in their hands?

One way they might do this is to confiscate the cash on hand in exchange for a promise to make future payments in the form of an "annuity." An involuntary annuity, in that scenario.

Sounds like how Social Security is treated. Cash will go into a "lockbox" (The general fund) and IOU's will be paid out later. What could possibly go wrong?

Political Cartoon For The Week

Why Is This Surprising?

The government offers a commodity as a 'right' and costs rise? Who knew?

Barack Obama's health care overhaul law is getting a mixed verdict in the first comprehensive look by neutral experts: More Americans will be covered, but costs are also going up.

Economic experts at the Health and Human Services Department concluded in a report issued Thursday that the health care remake will achieve Obama's aim of expanding health insurance — adding 34 million to the coverage rolls.

But the analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable, the report warned.
[. . .]
In addition to flagging provider cuts as potentially unsustainable, the report projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular alternative. Enrollment would plummet by about 50 percent. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.

In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces "a very serious risk" of insolvency. [Emphasis mine]

Who saw this coming? Tea Parties.

Don't Forget. April 15th. Tax Day Protest.

Same place as last year.

Directions to downtown and locations available for parking are here.

Kanawha Plaza.

Downtown Richmond

5:30 – 6:30pm Music and Doc Thompson
6:30 – 8:00pm Rally

Speakers Include:

Charles Payne of FOX News

and also these amazing speakers…

Doc Thompson, WRVA Radio
Matt Whitworth, College Student at VCU
Chris Kinsel, American Family Radio
Colleen Owens, Chairman of Richmond Tea Party Action/Events Committee
Kay James, Former Secretary of Health and Human Resources for Virginia
Joe Guarino, Chairman of Richmond Tea Party Legislative Committee
Donna Holt, Virginia 10th Amendment Revolution
Patrick McSweeney, Constitutional Lawyer
Chuck Hansen, Motivational Speaker and Columnist
Jamie Radtke, Richmond Tea Party
Karen Cooper, Richmond Tea Party Activist

Video: Value Added Tax Explained

Dan Mitchell lays out how the VAT works, in theory and in real life applications by using other countries as examples. Sort of a preview of things to come.

Wow: "Nearly Half Of US Households Escape Federal Income Tax"

I'm overly simplifying it but this would mean that half the country is some sort of producer and the other half is some sort of Moocher.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.
[. . .]
Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

Be sure to read the entire thing.

One thing that the article never takes in account is what if a significant amount of that top ten percentile should decide to 'Go Galt'? Creating a revenue vacuum that would need to be filled. The easiest way to do that is move the scale down by making it the top 15% or so of earners to keep the tax revenue flowing.

Thanks to Stacey.

Sure, Now He's Worried About The Deficit. Updated and Bumped.

UPDATED: Found the current graph. Now with longer bars to indicate more debt.



Previously. . .
Keep in mind that:

• In 2007 and 2008, the Democrat party controlled both the Senate and the House.
• Barack helped with the budget for those two years.
• The Democrat controlled Congress helped craft TARP, all the bail outs and the Stimulus Package.
• Whatever Bills Obama signed into law at the start of the year, he helped create while he was a Senator that previous year.
• And he's said something like this before in the past and nothing has come of it. Far from it, in fact (from back in May of 09).

So now he's going to crack down on that pesky deficit. The same way the alcoholic will stop drinking after the liquor cabinet is empty.

Barack Obama plans to announce in next year's State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning.

The president's plan, which the officials said was under discussion before this month’s Democratic election setbacks, represents both a practical and a political calculation by this White House.

On the practical side, Obama has spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion. This leaves little room for big spending initiatives.
[. . .]
The big question for Obama – and the country – is whether the sudden concern about deficits will be more rhetoric than reality once his first State of the Union address concludes.

Nothing is stopping him now from trying to cut deficits. But seeing how he's never cut a budget in his life, only increase them, which can mean only one thing. He'll need to bring in more revenue, i.e., taxes. After all, this deficit is a crisis he 'inherited' and he needs to do something to fix the problem he created.

The Press Asks, Gibbs Answers, Press Laughs Back

Just another day in the life of being Robert Gibbs.

Remember that campaign promise that Barack Obama made about not raising taxes on anyone making underneath $250 K a year?

That was from Candidate Obama. Not President Obama. There is a difference, it's subtle but it's there.

The Press Corp can't even take Gibbs with a straight face. Cue the laughter at the end of the clip.

The other point to this? The White House and Congress are looking for ways to pay for nationalized health care. Remember this when the next idiot of an ass clown starts griping about wanting 'free health care'.



Via Moe Lane