Tuesday, October 31, 2006


Seven days left. Seven days to see if we give Bush two more years of the blank check. So far, every public relations blow-up seems to be going against the GOP. Which is good.

But you know what? We've seen this before. Rebublican leadership has one week to bust out the big guns. I believe they'll try. And experience tells us the Dems'll be anything but blunt & tough in their response. So far, during the skirmishes leading to the culminating battle, I'm surprised no one's talking more about Saddam's verdict and sentence coming down 48 hours before Election Day. I'm surprised Democrats aren't hammering more at the inequities and shaky fundamentals in the economy. I'm surprised advertisements aren't focusing more on the concrete failures of the last 6 years. In all areas, not only Iraq. I'm surprised Bush's lies & incompetence aren't always in the spotlight. I'm surprised every ad doesn't include the name "Bush" early & often. Bush should be the main character in this story.

Is it "fair" for every Democrat links his Republican opponent to Bush? Yes & no. Not to the degree that rank-and-file GOP congresspeople had little to do, affirmatively, with the policy brush-strokes of the past half-decade or so. Especially if they served only two years.

But on the other hand, every member of Congress (Democrat included) has been complicit in national policy, if only through passivity in the face of Administration directives. And if someone's likely to continue that passivity, or even worse, actively foment hard-line strategies, then that person's gotta go. And simply playing the odds, who's more likely to fall into those categories?

The passive? Slightly more likely for a Republican, but the Democrats get no free pass on this count. But the active? That's the crux of this year's election. It's that large body of "normal" GOP Representatives and Senators that need to go. They may not want to support Bush anymore, and they may even pay lip service to opposing him. But you know what? They won't.

Because they can't. A position that creates hurdles for the party leadership's program, means death next time around: no money, no campaign help, no quid pro quo on sponsored legislation next term. To be sure, the Dems also will remain beholden to lobbyists, corporate influence, and pandering to quasi-official bodies like the Fed. But, for all that, it's in their best interests to actively & directly oppose an unpopular President. And what the hell, strange though it'll look after 25 years of backsliding, political suicide, and a failure of will, maybe the Democrats will actually do that. And if they do, it'll be good for the country. And that's why a lesser-of-two evils approach, which I've always railed against, is the answer right now. Unpalatable as it is in the ideal, in the abstract, it's the only reasonable choice in 2006.

One week left. Let's hope they don't screw it up.


Blogger DED said...

Bush's failures and lies have figured in some attack ads against incumbents up here in CT.

Nationally, the GOP's response has been to go negative in a big way. Nothing is out of bounds. Just last week in Virginia's Senate race, Jim Webb (the Dem challenger) was accused of being sexist because of a novel he wrote 30 years ago. I wonder what they'd say about Stephen King if he ever ran.

8:50 AM  
Anonymous Applesaucer said...

A case for the Republicans:

The Republicans are scoundrels, to be sure. I might even stipulate to their being bigger scoundrels than the Democrats.

However, on the fiscal and monetary front, with the Republicans at least I know how I'm getting it in the neck and what measures to take to counter Republican predations.

Republicans will spend and roll over the debt by borrowing more. They'll keep taxes lower than Democrats will, so they'll have to inflate money supply to meet government obligations. Overall, inflation will act like a tax.

Inflation is horrible, but at least I know how to take care of myself in this situation: I can buy precious metals, land or other hard assets.

The Democrats will spend, roll over debt (though probably less) and INCREASE taxes. How do I fight their hands reaching into my pockets? I can't. Maybe I could hire fancy lawyers and accountants to pick apart the tax code for me. But that's expensive. Maybe I could take advantage of whatever new fancy programs -- if any -- the Dems have to offer. But that's payment in kind. I'd rather decide myself what to do with my cash.

Maybe with divided government new spending programs and government growth will stall relative to what they would do under one-party government. Fair enough -- I'll buy it (though it didn't really work that way in the Reagen years). Unfortunately, it will also mean that many of the temporary tax cuts which could have become permanent over the next two years will now lapse.

How do you allay my fears about tax policy for the next two years?


10:00 AM  
Anonymous Mike said...

How do you allay my fears about tax policy for the next two years?

I can't, and I won't. Though, before addressing either nitty or gritty, you'll have to admit that unless the Dems win a super-majority, Bush will issue vetoes number 2, 3, etc to halt any legislative tax increases.

I also doubt that with the 2008 election so relatively close at hand the Dems would attempt such a maneuver. But political suicide has been their MO for a quarter century, so what do I know?

As to the "Choose Your Poison, Direct Income Taxation vs. Indirect Taxation via Inflation" construction, I neither have the economic know-how nor the facts to answer that. I will say, however, that both options seem pretty bad, and while it's unlikely to arise, hyper-inflation will cause more harm than heightened income taxes.

But, again, what do I know? Maybe you're right and a Democratic congress'll take more money out of our pockets than a GOP one will. I'm not sure of that, but I'm willing to grant it to you.

So now . . . we come to the topics on which I suppose we just might agree: foreign policy, separation of powers within government, overreaching by the executive branch, a general level of intrusiveness in our lives under the guise of the War on Terror, small-but-incremental chipping away at the foundations of our Constitutional government, the general level of competence in the White House, the potential for corruption/cronyism that comes with any entrenched majority government & seems to be a big problem with this administration, the well-documented lies eminating from the White House, the inherent dangers of a one-party government.

And on-and-on. I think Bush & his boys in Congress have spent and inflated us into an economic mess. You seem to agree. You think there's more potential for even more harm under a Democratic congress in that this spend-and-inflate regime could be exacerbated by higher taxes. I don't agree, but I'm in no position to "prove" I'm right.

But, there's more to life and the quality of life in America than can be determined by economics alone. I care about the rule of law, the separation of powers, and honestly & accountability from public officials. In those terms, the status quo is unacceptable.

10:25 AM  
Anonymous Applesaucer said...

"you'll have to admit that unless the Dems win a super-majority, Bush will issue vetoes number 2, 3, etc to halt any legislative tax increases.

I also doubt that with the 2008 election so relatively close at hand the Dems would attempt such a maneuver. "

There are a bunch of tax cuts/eliminations from the 2001-2003 period that are set to lapse or resume unless congress extends them. If nobody does anything, those taxes will go up or resume; Bush won't have anything to veto and the Democrats won't have anything to propose.

I'll admit that inflation hurts the country just as much (maybe more) as high taxes, overall; but it hurts different people in different ways. I think I can protect myself against inflation; it's highly unlikely that I could protect myself against the higher and heretofore abolished taxes (e.g., the Estate Tax; Capital Gains taxes) that are sure to reappear merely with the passage of time.

As for this "But, there's more to life and the quality of life in America than can be determined by economics alone."

True, but Democrats directly threaten me on the economic and regulatory front (relative to Republicans -- they both threaten me on an absolute level); the Republicans only indirectly affect me in those other areas (relative to Democrats -- they both threaten me on an absolute level).

I've heard this argument for years -- accept the higher taxes for the common good, or accept the higher taxes now to battle the greater evil. As to the former argument, nobody has made the case to me yet.

As to the latter -- in general, I find that people making this argument have NEVER actually acted (through voting, for instance) when they could to fight higher taxes or support lower taxes. They've complained about one thing or another (usually on the grounds that it's a giveaway to the rich -- as opposed to just a straightforward tax hike).

In other words, they either actually like higher taxes on a conscious or unconscious level (makes them feel altruistic, they want to punish the rich, etc.) or tax policy is way down on their priority list. And they've ALWAYS been this way no matter what they say.


11:26 AM  
Anonymous Mike said...

I've heard this argument for years -- accept the higher taxes for the common good, or accept the higher taxes now to battle the greater evil.

If you choose to formulate my argument as "I want to replace the GOP in congress because I'm unwilling to make any & all sacrifices to avoid paying taxes," then I guess you've got me.

I think it's a tad more complex than "taxes vs. no taxes" in this election, but if that's the way you see it, I can't tell you you're wrong, or that you're analyzing it incorrectly under that rubric. If taxes are the number one issue to you, then you'd be nuts to vote anything but GOP or Libertarian.

Anyway, as you offered in one of the "answers" to the "latter" argument. I won't say taxes are "well down" on the priority list, but they're not number one, or even two or three.

Taxes are but one issue to me, admittedly less important than aggrandizement of power in the executive's hands, and the culture of dishonesty & covertness I see from the Administration. If you think that makes me naive or self-righteous, there's little I can do to dissuade you.

12:30 PM  
Anonymous Applesaucer said...

"I won't say taxes are "well down" on the priority list, but they're not number one, or even two or three."

By my standards, that's "well down." This is the key difference between me and those voting for Democrats this election, even those holding their nose while doing so.

Taxes are a core issue to me, from a moral, public policy and personal standpoint.

More and higher taxes are, with respect to government collectively, "aggrandizement of power" defined.

1:19 PM  
Anonymous Mike said...

Chief Justice John Marshall said as much, I believe.

Anyhow, if that's how you feel, that's your thing. Seems to me, however, that your definition of power aggrandizing paints George Bush as one of the least power-hungry men in America.

I see it differently, and I hope to see some of his power disaggrandized from him next week. Hopefully we'll make it through November '08 without any tax increases, but a sharp reduction in the military (and other areas) budget. We'll see.

2:06 PM  
Anonymous Applesaucer said...

"Hopefully we'll make it through November '08 without any tax increases,"

If Democrats take the House and/or Senate, then I believe that tax increases are guaranteed, since sunset provisions would kick in and the Bush Administration wouldn't have the votes to extend the tax cuts (and, in some cases, prevent abolished taxes from coming back to life).


2:15 PM  
Anonymous Mike said...

Well, that's not a good thing, to be sure. And if one, like you, sees taxes as the most important issue, I can see why it's a deal-breaker.

2:33 PM  
Blogger Ed in Westchester said...

The estate tax hits an extremely small portion of estates. Many of the super rich support it (Gates, Buffett et al). "But you are taxing money that was already taxed" is the rallying cry. Sometimes yes, sometimes no. The ultra rich are able to use shelters and what not to lessen their taxes. Heck, I could make the same argument about sales taxes. My "estate" would not be subject to the old bill, that's for sure.

The bottom line is that the govt exists to better the people of the land. This invovles protecting them from outside forces wishing to do harm (defense) as well as helping those less fortunate and building an infrastructure to support everyone.

We can all wish that taxes would be lower, but the fact is, until we can find some way to get rid of pork barrel projects like bridges to nowhere and highways (driven through N. Carolina, lots of blacktop down there that is new), it is going to be real hard.

Factor in the contractors who overspend and stick the govt with the tab, and you have a self propelling system of waste.
We can all hope that someone will come along to clean up the mess, but the way things are, it is real hard to do. Heck, we can't even get it done on the local level, how is it going to be done on the Federal level. We have medicare fraud by doctors, companies, and recipients themselves (my wife's grandfather used to go to the doctor to get his toenails trimmed for Pete's sake, that's just plain freaking wrong).

And if anyone thinks that republicans aren't hiring attorneys and CPA's to find out how to lessen their tax load, they should look at the news a little more closely. Perhaps if companies and individuals paid their fair share, we would not need higher taxes. Stop moving company headquarters offshore to lessen taxes guys.

2:33 PM  
Anonymous waitingforthealiens said...

Taxes, stimulative effects of fiscal policy, debt, etc.; it is difficult to make the other variable stand still when you want to measure the effect of any particular action on economic performance. One relationship that I personally think gets too little attention in the debate is government borrowing and interest rates. When the deficits started to decline in the ‘90’s, interest rates went right along side.

I’m an old guy. I’ve bought homes with mortgage rates 13-14%. We bought our most recent home in 2002 with a 15 year note at about 5 ½ %. Bush says the economy has expanded due to tax cuts. My take is that opening up home ownership to millions more people, and making business expansion much more affordable were more relevant factors. Young families going into their first homes were not going to be reaping that much from the tax cuts.

Tax and spend, borrow and spend. The one constant is the spending. And as Brother Dave pointed out in the ‘60’s, “A Democrat wants something for nothing and a Republican wants nothing for something.”

I don’t know that I have ever voted my pocket book. I know I won’t be this time (or actually I didn’t. I used early voting Saturday.) But as Governor Edwin Edwards of Louisiana said when he was running against Klansman David Duke, “You will just have to hold your nose and vote for me.” Well, I did.

4:21 PM  
Anonymous Mike said...

Bush says the economy has expanded due to tax cuts. My take is that opening up home ownership to millions more people, and making business expansion much more affordable were more relevant factors. Young families going into their first homes were not going to be reaping that much from the tax cuts.

I honestly can't state with any confidence whether tax cuts stimulate greatly, stimulate a little, don't stimulate at all. Maybe someone else knows better than I.

That said, I'll agree with you that opening up home ownership to millions more people, and making business expansion much more affordable were more relevant factors. Of course, it was monetary and not fiscal stimuli that drove that engine.

The falling rates you spoke of earlier accompanied an increase in the supply of money and credit, from the Fed, foreign central banks, and other US & international banks. The good part? The economy grew.

The bad? The value of that growth, adjusted for inflation, is not so clear. I've seen analyses showing that most of the post-DotCom bust "expansion" is reflected purely in inflation. It's not clear that anything has actually grown, except for anyone (read: institution) that got first dibs on that expansive credit.

4:35 PM  
Blogger George said...

I'm not sure how you can say it's best to trust the Republicans fiscally when they cut taxes and run up the debt at the same time. You can't have tax cuts and a huge war. And that's not even getting into the Iraq War being morally repugnant on numerous levels, from non-existent WMDs to existent torture.

And then there's the whole issue of who the tax cuts really help, and applesaucer, if you're making more than $300K, more power to you. As Paul Krugman writes:

"At this point, one must be blunt: the selling of the tax cuts has depended heavily on chicanery. The administration has used accounting trickery to hide the true budget impact of its proposals, and it has used misleading presentations to conceal the extent to which its tax cuts are tilted toward families with very high income.

The most important tool of accounting trickery, though not the only one, is the use of 'sunset clauses' to understate the long-term budget impact of tax cuts. To keep the official 10-year cost of the 2001 tax cut down, the administration's Congressional allies wrote the law so that tax rates revert to their 2000 levels in 2011. But, of course, nobody expects the sunset to occur: when 2011 rolls around, Congress will be under immense pressure to extend the tax cuts.

The same strategy was used to hide the cost of the 2003 tax cut. Thanks to sunset clauses, its headline cost over the next decade was only $350 billion, but if the sunsets are canceled -- as the president proposed in a speech early this month -- the cost will be at least $800 billion.

Meanwhile, the administration has carried out a very successful campaign to portray these tax cuts as mainly aimed at middle-class families. This campaign is similar in spirit to the selling of estate-tax repeal as a populist measure, but considerably more sophisticated.

The reality is that the core measures of both the 2001 and 2003 tax cuts mainly benefit the very affluent. The centerpieces of the 2001 act were a reduction in the top income-tax rate and elimination of the estate tax -- the first, by definition, benefiting only people with high incomes; the second benefiting only heirs to large estates. The core of the 2003 tax cut was a reduction in the tax rate on dividend income. This benefit, too, is concentrated on very high-income families.

According to estimates by the Tax Policy Center -- a liberal-oriented institution, but one with a reputation for scrupulous accuracy -- the 2001 tax cut, once fully phased in, will deliver 42 percent of its benefits to the top 1 percent of the income distribution. (Roughly speaking, that means families earning more than $330,000 per year.) The 2003 tax cut delivers a somewhat smaller share to the top 1 percent, 29.1 percent, but within that concentrates its benefits on the really, really rich. Families with incomes over $1 million a year -- a mere 0.13 percent of the population -- will receive 17.3 percent of this year's tax cut, more than the total received by the bottom 70 percent of American families. Indeed, the 2003 tax cut has already proved a major boon to some of America's wealthiest people: corporations in which executives or a single family hold a large fraction of stocks are suddenly paying much bigger dividends, which are now taxed at only 15 percent no matter how high the income of their recipient."

4:56 PM  
Anonymous Dumas said...

These mid-term elections are more of a referendum on the current administration than is normally the case. Given the unending quagmire in Iraq and the iffy state of the economy (to put it mildly) the only "positive" is the drop in gas prices, but then again from very high levels.

All in all I believe the Democrats will put in a very strong show - stronger than most analysts predict and perhaps even more than Dems dare dream...

I have this sneaking suspicion that Dems will take both chambers.

7:05 AM  
Anonymous Mike said...

stronger than most analysts predict and perhaps even more than Dems dare dream...

I think a lot of folks agree with you, Dumas. But, as you say, they dare not dream it. At least not following the outcome of November 2 a few years back. Whether Diebold, unexpected turn-out, voter-intimidation, lying to pollsters, that one seemed not to turn out the way the the predictions made it seem.

7:17 AM  
Blogger DED said...

Given a choice between lower taxes and an intrusive government or higher taxes and a less intrusive government, I'll opt for the latter.

Pork is the real problem. Our government spends and spends and spends and spends. If this spending were reigned in, the need to tax wouldn't be so great.

We have a national debt (I'm not talking about the annual budget deficit) that is truly staggering. It's doubled since Bush took office. If you go to the GAO website (gao.gov), they'll show you just how unsustainable the current fiscal situation is. If spending is not reigned in, then taxes WILL have to be raised in order to keep up with the interest on the debt.

The tax cuts have worked in the sense that tax revenue has actually increased. However, the spending rate has far outpaced it. Neither party seems willing to demonstrate fiscal restraint. Whether it's massive social programs, pure pork, or wars of convenience, whoever is in power spends taxpayer money like little girls shopping at the mall with Daddy's platinum credit card.

10:30 AM  
Anonymous Applesaucer said...

As of ~9:15PM, Wednesday, Tradesports gamblers give Republicans a ~69% chance to retain the Senate and a ~33% chance to retain the House.



9:24 PM  
Anonymous Mike said...

Looks like it's gotten worse for them in the House since last night, but a little better, actually, in the Senate.

I'd guess that folks who "play" this market may be a little more inclined towards the GOP. I know they don't think they're allowing opinion to influence their investments, but who knows if they're successful doing so.

5:28 AM  

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