Posts Tagged ‘Mitt Romney’

Clear choice: live off coerced charity or by self-reliance

November 5, 2012

When voters go to the polls on November 6, for the most part their individual votes will be indecisive: though one never knows until the fat lady sings.  The economic and philosophical choice confronting voters with respect at least to the presidential ballot is clear-cut.

A vote for Barack Obama is a vote for serfdom within a ballooning welfare state. Every mouth forced onto the government breast from the cradle to the grave. That is the progressive Utopia; and that also is Barack Obama’s primary goal. The president may not fully succeed in this ambition: after all the United States still retains the shreds of a Constitution that provides for the separation of powers. But he surely will advance that agenda as effectively as a man of limited intelligence and low work-rate can possibly achieve.

A vote for Mitt Romney is not a vote for any kind of Utopia. The candidate is a deal-maker rather than a zealot and some form of mixed economy compromise is inevitable. But the progressive advance surely will be reined in and the growth in the relative size of the welfare state will be aborted.

Whether or not a decisive Electoral College majority manifests itself for self-reliance, individual liberty, and economic sanity is pretty much a toss-up. And that is a terrible indictment of a population that once prided itself as being the home of the brave and the land of the free. One thing, however, is certain. A democracy secures the government that it deserves. Those decisive voters carry a heavy burden going into this election.

If the winner turns out to be Barack Obama, the decisive voters will have imposed irredeemably bad consequences on their children and on their children’s children.

“Fool me once, shame on you.  Fool me twice, shame on me!”

And for those who voted wisely and lost:

Atlas Shrugged.

Decisive win for Romney in the third debate

October 23, 2012

The third presidential debate – primarily on foreign policy – should have been an easy victory for an incumbent president.  After all the President has been center-stage in making foreign policy. Challengers frequently show themselves to be less well-informed and less confident. In consequence they tend to look less presidential.

Not so in this debate. Governor Romney from the outset exuded a mastery of detail and a confidence in communication that demonstrated presidential caliber. In contrast, President Obama utilized an aggressive slash and burn approach that simply diminished his stature.

Throughout the debate, Romney avoided the pitfall of making statements that might brand him as a bellicose warmonger. For the most part, he  stayed close to current American policies, while repeatedly underscoring the importance of a strong economy for a credible U.S. foreign policy. He focused always on the big picture and on the future. Too often the President was reduced to making small points and slashing at alleged past statements by the Governor.

To my mind, the most telling thrust by Romney was that emphasizing the importance of Israel to U.S. foreign policy and noting the daylight between the two countries engineered by the President. “Your apology tour of the Middle East, Mr. President, omitted Israel. That omission was noted throughout the Arab world.’

The second most telling thrust by Romney was his forthright warning to China that a Romney administration would immediately brand the country as a currency manipulator, thereby allowing the introduction of trade sanctions.  This will be welcome news in the mid-West where so many jobs have been lost to artificially cheap imports, counterfeiting and intellectual theft.

One could sense how the debate was going by the features of the two candidates. Throughout the debate, Governor Romney smiled without smirking, and hugged the high ground in repartee. The President began with a smile and a confident delivery. As the debate proceeded his face became taut to the point of meanness, his smile disappeared and his neck muscles bulged with irritation.

Governor Romney did not offer any red meat to the bellicose  right-wing of his party in this debate. But that would have been a strategic error. Americans, at this moment in time, are not looking for new wars. They pray fervently for peace. Both candidates leaned into that prayer, albeit acknowledging that any attack on Israel, by any nation or group, would be met by US military  retaliation. And that is as it should be.

A good debate with meaningful commentaries by both candidates. A clear win for Governor Romney.

Do voters believe the lies told by political candidates

October 2, 2012

A few months ago, Francois Hollande was voted into the Presidency of France on promises to target the wealthy with punitive taxes while avoiding austerity programs for France and the euro-zone. He is delivering on the former promise while radically reneging in the latter. The latter renege will impact on the large majority of the electorate while the former delivery will impact only on a select few.

Question: Did those voting for Francois Hollande truly believe that he would veto austerity measures?

The question is important for the United States because in the presidential debate scheduled for October 3, 2012, BarackObama and Mitt Romney will both lay out huge lies before the viewers. How many lies, we shall not know until the debate is over. But here are two lies that you will surely hear:

Barack Obama: 90 per cent of the US debt that has occurred during my first term is due to the policies of George W Bush . Truth: President Obama signed into law two bills alone that account for $1.6 trillion of the $5.2 trillion in deficits over the last four years. This is approximately 31 per cent, not 10 per cent.

Mitt Romney:  Five studies show that my plan to cut taxes by 20 per cent will not lower revenue or raise taxes on the middle class.  Not true. Only three such studies exist and their results are based on significant eliminations of middle class tax preferences (mortgages and employer-based health benefits) that Mitt Romney surely does not want to divulge at this stage in the election race.

How far will voters stretch their imaginations to believe either of these two fairy tales?  Who knows.  Electors choose between an agenda-manipulated set of two candidates,  presented to them by a two party duopoly, so they may just accept the lesser evil as they perceive it.

I doubt that many voters would buy a second-hand car from either Barack Obama or Mitt Romney.

When in doubt review the candidates’ resumes

August 31, 2012

Most Americans are disappointed in the first-term performance of President Barack Obama.  This disappointment runs across the political spectrum.  The man talked an uplifting talk in 2008 but could not walk the walk in the following four years. In every aspect of his portfolio, President Obama has failed to deliver. His failure is most marked in the most important responsibility – helping to create an environment conducive to job creation and economic growth.

Obama made two crucial errors of judgment in the first year of his administration. First he chose as key economic advisers  Lawrence Summers and Christina Romer, two left-leaning Keynesian economists who locked his economic policies into job destruction and economic stagnation.  Those advisers gave the President exactly what he requested, with a  gift that almost certainly will take him out of the White House in 2013. Second, he allowed his attention to switch from the economy to health care reform at a moment of economic crisis. That was a completely unforgivable error for which surely he will be punished

Barack Obama came to the White House with the slimmest of resumes. His principal career in Chicago was that of a community activist. His record of non-attendance in the United States Senate  was a disgrace to his office and to those who voted him into the upper Chamber. Since then, I suggest, a poor resume has spiraled downhill.

Mitt Romney, of course, has no prior White House experience to put on the table – that is always the handicap of the challenger. However, he has built an impressive, diversified resume both in the private and in the public sector that should attract national attention:

“If a resume decided the question, the former Massachusetts Governor would win in a walk.  As convention viewers have heard this week, his range of experience, and success in multiple endeavors, far exceed anything Barack Obama could boast in 2008 or today.  It’s clear that he can make decisions and delegate authority and his choice of Paul Ryan as a running mate suggests good judgment and an eye for talent.  The Mormon Church elder has led what is by all accounts an exemplary life.  He has an admirable marriage and family that seem odd in this era only because they are so free of obvious dysfunction.  Mr. Romney also seems to be comfortable enough in his own skin that Americans needn’t worry about another President with deep but hidden flaws.  He is competitive but not obsessive.  He would not be another paranoid Nixon, bullying LBJ, or Slick Willie.” Editorial, ‘The Romney Opportunity’, The Wall Street Journal, August 31, 2012

Of course, resumes alone are an insufficient basis on which to base one’s vote in a presidential election. Because Governor Romney had to fight off challenges from two trash-talking lightweights – Newt Gingrich and Rick Santorum – he was dragged away somewhat from his admirable focus on job-creation and economic growth into areas that should lie outside the scope of the legislative and executive branches of government – abortion, religion and marriage.

So now that he has been nominated, a courageous Mitt Romney should forcefully explain that economic and not social or religious policy will be his exclusive domestic focus, should he be elected into office. The religious right will not like to hear that message. But will their fanaticism be better served under Obama than under Romney?  Some may not turn out, but they will be overwhelmed by the independents who carry Governor Romney into a White House newly- focused on helping to revive an ailing economy.

 

It is the economy, Governor Romney

August 23, 2012

Most Americans dislike, even fear, Islamic fundamentalism. They fear it because it is irrational and encourages crazy behavior on the part of its adherents.

So why do many Americans relish Christian fundamentalism, even desire to eliminate the separation between Church and State, so that evangelical Christianity can flourish across the Republic?  Why do so many Tea Party members support the outrageous ranting of Representative Todd Akin, about ‘legitimate’ rape and the ability of women to shut down their bodies against intruding sperm?

Surely what is sauce for the goose is sauce for the gander, to mix a metaphor. Do Americans not understand that if Todd Akin had the power once wielded by Osama bin Laden, he  would be out on a similar warpath against liberated woman?

Akin’s rant, and subsequent intransigence against stepping aside from the upcoming Missouri Senate race, offers Governor Mitt Romney a unique opportunity to focus the presidential race where it surely must be: on the economy.

Romney, if he is in any sense a statesman, should grasp the nettle that threatens to tear the GOP apart. He should clearly and unequivocally distance his campaign from the social positions held by the right-wing of his party including, to some extent, by his running-mate.  He should emphasize that a Romney presidency will not pursue any active role on such issues as gay marriage and abortion.  He should stress that his exclusive focus, following an election victory, will be on the economy and foreign affairs.

Of course, such a stance would provoke unrest from the extreme right. But where else will they go?  Turn out and vote for Romney and conservative economics; or stay at home and endure another four years of Barack Obama!  For sure, most of them will turn out. And the independents – including independent women –  will then flock to Romney’s court.

The 2012 US presidential election farce

May 21, 2012

So far I have not commented on the 2012 US presidential election campaigns of Barack Obama and Mitt Romney. The reason for my silence is that neither candidate, so far, is addressing effectively the key economic issues that confront the United States economy. Instead, both Obama and Romney – most especially Obama – insult the intelligence of the electorate by talking with a profundity that one might expect late on Saturday night in an Irish bar.

The United States economy currently is in a shocking condition. Unemployment, correctly measured, stagnates in the mid- teens, the rate of economic growth for an economy emerging from a recession is anaemic, the level of federal debt as a ratio to gross domestic product is dangerously high, and  the federal budget spills red ink as far as the eye can see.  Whichever of the two candidates accesses the White House in November 2012, these are the issues that will confront his administration. If they are not resolved by 2016, the United States will look like Greece in 2012.

If the election campaigns of the two candidates were real and not phony, the electorate by now should be comparing detailed economic policy plans printed and distributed  widely across the country. The press should be analysing and evaluating the two  prospectuses against the 2016 horizon, questioning and querying apparent inconsistencies wherever they are to be found.

Instead, what we hear from the President is Chicago street-talk about vulture capitalists, economic royalists, fat-cats and job-destroyers. When is the last time that the President has presented an economic model through which to seive the implications of his litany of accusations and threatened reprisals against the most successful participants in a market economy?

Instead we hear from Mitt Romney a proposal for tax reform that does not remotely identify the specific  tax exemptions that must be eliminated if tax rates are to be cut. We hear from Mitt Romney lip-service to Paul Ryan on spending cuts without any details of the precise hits that Social Security, Medicare and Medicaid must take in order to move the budget into the surplus that is required to bring down the burden of the debt. Romney’s campaign undoubtedly is closer to economic reality than Obama’s, but it also is riddled with obfuscation wherever electoral pain is involved.

The truth is, given demographics, past commitments, and current burdens, that federal spending must be reduced from 24 to 20 percent of gross domestic product  by 2014 while federal tax revenues must rise from 15 to 21 percent of gross domestic product  by 2014  in order to begin lower the debt burden by 2016.

If Obama and Romney feel unable to address those realities, they should not be running for office at this time. Until they do so, I shall not be paying attention to the meaningless anodynes that emanate from their lips. There are more important issues on which to expend my energy than to review platitudes in a phony election competition between two weak and cowardly candidates who dare not confront the electorate with the dire reality of the  situation that confronts their nation.

How nasty is Newtie?

February 7, 2012

To all intents and purposes, Newt Gingrich has spent his presidential bolt.  Thrashed in Florida and Nevada, heavily in campaign debt, his message of hope twisted into a calumny of rage and envy of Mitt Romney, this ex-professor, ex-Speaker, ex-lobbyist, several time loser, confronts the most significant lifetime loss of all – his unrealistic dream of occupying the White House.

The character question that now confronts this twisted personality is whether to weaken the presidential chances of the Republican Party by continuing to besmirch  the character of the most decent man in America’s political arena, or whether to act, for once, like a statesman, and quit the field with what dignity he has left, in order to allow the GOP to take up arms against the real enemy, President Barack Obama.

From the record of his infamous past, the expectation must be that the Nasty Newtie will prevail and that he will carry his message of hate and destruction right throiugh to the GOP Convention in Tampa.

At 68 years of age, Newt Gingrich can have no realistic expectation of ever running again for the nation’s most prestigious office. So a decision to quit will not come easily, especially for a man whose third marriage is to a woman some quarter of a century his junior, who undoubtedly covets the position of First Lady much as her husband eyes the presidency.

That is the nature of life in the fast lane, however, when only one contestant can win. Newt Gingrich is no Seabiscuit, and his third wife should have been aware of that when she stepped on the unsuspecting toes of wife number two, just as wife number 2 had stepped on the unsuspecting toes of wife number one, so many years ago. Better sometimes to go quietly into the dark night than to soar high and then self-destruct, like a Roman Candle on the Fourth of July.

Mitt Romney: a right-of-center platform for November 2012

February 5, 2012

I am going to assume that by the early fall of 2012 the United States economy is more assuredly moving back towards the natural rate of unemployment – which  now hovers approximately between  6 and 7  percent as a consequence of  the post-2008 growth of  federal government.  This implies that the specter of long-term high unemployment will not hang over the head of the incumbent. The election, therefore, will be fought out on the basis of an even playing-field.

How should Mitt Romney prepare for the upcoming battle?

First, it is now clear that Mitt Romney must repair important gaps in his understanding of the American economy. Benefiting from Barack Obama’s disastrous first term, Romney should take out one month prior to the general election to immerse himself in market economics and public choice. N. Gregory Mankiw and John B.  Taylor for economics and Charles K. Rowley for public choice would surely set him on a  beter political economic foundation than presently he has mastered; or that Barack Obama ever will.

Three salient issues will determine the 2012 presidential election. First, and most important, is whether the United States should hold to a more laissez-faire capitalist or to a more social market economy model. Barack Obama is already located left-of-center on the social market economy model. Mitt Romney should identify his position a little right-of-center, tilting in favor of  laissez-faire capitalism. But not too far to that right. The electorate will expect supportive evidence before they will move too far out of the middle ground.

Second, is the issue of the public debt crisis, an issue that cannot be avoided in a global economic system. A sound right-of-center position would be that of moving towards budgetary balance by 2016, with the federal budget accounting for 20 percent of GDP. This implies a 4 percent of GDP increase in tax revenues and a four percent of GDP reduction in federal spending.

To achieve this goal, right-of-center, tax reform is inescapeable. All households other than the truly poor will be required to pay more in federal taxes. The key issue is that of incentives and excess burdens. A flat tax devoid of all exemptions save for the very poor, is the best solution.  No personal exemptions, no child allowances, no mortgage relief, no charitable donations relief, no tax-subsidies to business enterprise of any kind. Almost every tub would be expected to stand on its own bottom.

The same  flat tax would apply to all dividends and capital gains. Only households would be taxed, at the point of receipt. The corporation tax and the payroll tax would be eliminated (as would the entirely fictitious Social Security Trust Fund).  The flat tax rate would have to be slightly above 20 percent across all income for all non-poor households to reach the tax revenue target. The flat tax ensures that all households – other than the poor – pay exactly the same proportion of their income to the federal government. Of course, the rich pay far more in absolute taxes than do their less rich compatriots.

Regarding federal expenditures, the Romney goal would be to remove the government from the business sector. Bureaucrats have neither experience nor skill in picking winners and losers, except in terms of a political calculus. The removal of all subsidies would be center-stage.

Entitlement reform would have to be central to down-sizing government expenditure. Again, the electorate will be understandably suspicious of excessive radicalism. Raising the age of eligibility for Social Security and Medicare to 70 years is widely anticipated, although doing so very quickly is politically dangerous. A 10 year laddered movement to that  target is feasible .  More means testing of Social Security and Medicare benefits is inevitable. The most attractive methods of so doing require more debate. Medicaid should not be deal with at the level of the federal government. The individual states should become fiscally responsible for the entire program.

The military role of the United States is also politically salient. Barack Obama has chosen a reactive, declining role.  In an increasingly dangerous world, this is electorally unattractive. Romney should pursue a more robust defense budget designed to maintain U.S. hegemony as a world power. He should pursue much more proactive roles with respect to North Korea, Iran, Syria and Palestine.  Such a policy position should be attractive to the politically important Jewish vote.

This column offers a broad-brush framework for a right-of-center election platform that should take Mitt Romney to the White House. In many respects, it is similar to the policy platform that took Ronald Reagan to the Oval Office in November 1980.  Not a bad model to follow, one might justifiably speculate.

Mitt Romney: the relevance of salience for the 2012 general election

February 4, 2012

Public choice analysts tend to place more emphasis on salience than on valence as ultimate determinants of political elections under conditions of democracy. Valence – as we noted yesterday – focuses on issues of character. Valence differences will determine presidential elections when the candidates are closely matched in terms of salience. Jimmy Carter defeated Gerald Ford on valence differentials, of which the Nixon pardon was center-stage. Ronald Reagan defeated Jimmy Carter in 1980 on valence differentials, perceived strength versus perceived weakness on the international stage playing a key role.

The 2012 presidential election will not be determined primarily by valence. The salience differences between the two candidates will be enormous. In such circumstances, all except the most rationally ignorant among the voters will vote political position rather than personal character.

Salience is the term used to define the positions in political space adopted by the competing candidates. When public choice first began in the 1940s, it was thought that political space was completely defined on a single left-right spatial dimension. By the 1960s, public choice scholars had rejected that hypothesis. Using exit poll data archived at the University of Michigan, they retrieved three significant spatial dimensions: economic,  social and military, each  definable, albeit imperfectly, on a left-right line. So work proceeds now much more cautiously in identifying the multi-dimensional political positions of the competing candidates.

Presidential elections are determined, of course, not by the popular vote, but by vote majorities within the Electoral College.  Thus, small States bat above their population weights in determining the final outcome. Nevertheless, the closer a candidate is able to position himself in terms of the median voter in economic,  social and military space, as perceived by those voters,  in general, the better his chances of victory. So the task of estimating such voter positioning – or of edging  median voters through campaign spending to  positions favored by the candidate –  is key to the election outcome.

In any event, an incumbent president cannot move easily in political space. He is defined in such space largely by his record. So President Obama is irreversibly defined for 2012 on the left of center divide of  the economic and the social spectra.  Despite success in pursuing terrorists, he is also irreversibly defined as left-of-center on Iran, North Korea and Syria. In economic terms, Stimuli II and III, Obamacare, and the automobile bail-outs rule out any run from the capitalist corner. His adoption of fairness over efficiency as a campaign mantra confirms this positioning. In social terms, regulatory policy defines him well to the left of center.  In military terms, the early withdrawals from Iraq and Afghanistan suggest a reactive rather than a proactive future role for America under his leadership.

Mitt Romney, as a political outsider, will define his salience during the GOP primaries. Thereafter, he also will be significantly, though not as  irreversibly, locked into political space. As the challenger, this provides him with a flexibility that counter-balances his rival’s greater brand image. Whatever balance of policy initiatives he adopts, they will be recognizably somewhat to the right of center, in terms of economic, social and military policy. So each voter will enjoy a clear, if ultimately limited, choice between the two major candidates for office.

Those voters located in the left hand and those in the right hand tail of the voter distribution may feel much more intensely about policies than do those in the middle.  But that makes no difference to election outcomes. With secret ballots, voters cannot trade their votes. Those in the tails will always be disappointed. Rarely will a presidential candidate run to the tail. Barry Goldwater and Walter Mondale are startling examples of the political annihilation that follows such a gamble.

In tomorrow’s column, I shall outline for Mitt Romney the salience that I would identify for myself, were I running for the Presidency. In choosing that salience, I shall be concerned to win the election and not to  end up annihilated. So policy compromises will be essential. I shall refrain from any ‘lost cause  presentation. Lost causes are just that.  They are not the basis for effective politics.

Who pays more federal taxes?

January 21, 2012

Because few media columnists and – it would seem – even fewer rich individuals understand the nature of tax incidence a lot of rubbish is published about the tax burden of rich Americans. Warren Buffet and Mitt Romney both display gross ignorance about tax incidence when positioning their personal average federal tax burdens at between 15 and 17  per cent. Back to Economics 101 for all of you!

Those who earn their income in the regular work- place pay two principal  kinds of federal taxes – income tax and payroll tax. Income tax rates rise in line with income from a minimum rate of 10 per cent to a maximum rate  of 35 percent. A range of exemptions apply through which households are able to reduce their income tax liabilities or turn them into tax subsidies. 

Payroll taxes also apply to earned income, up to a limit of $106,000 of earned income. Although employees technically only pay 50 per cent of the payroll tax, the incidence of the employer’s contribution pretty much falls on the employee through wage reductions. The payroll tax rate currently runs at some 13 per cent as a result of a temporary tax holiday of 2 per cent.

For those who live entirely off unearned income – and for those who live partially off that same source – the federal tax implications differ sharply. Capital gains and dividends – for smart investors – are taxed at 15 per cent. And,of course, payroll taxes do not apply.

Herein, however,  lies an error of calculation by the Buffets and the Romneys of this world.  Dividends and capital gains reflect profit performance by the corporations involved. Those profits are taxed at the corporate tax rate of 35 per cent before they provide the basis for capital gains and/or dividends.  So unearned income is taxed at an effective rate of 50 per cent, not 15 per cent. The full incidence of the corporate tax falls on the recipients of unearned income. The US corporate tax rate is one of the highest in the world.

On this accurate restatement of federal tax rates, Table 1 identifies who paid more federal taxes in 2011.

                                                                               Table 1

                            Average taxes paid as a share of income

                                            Income taxes                 All federal taxes

Top 1 per cent                     18.8 %                         29.5%

81st-99th percentile      11.8%                             22.8%

21st to 80th percentile    4.2%                           15.1%

Bottom 20th percentile -5.6%                           4.7%

Source Congressional Budget Office 2011

Table 1 shows that some 30 per cent of all federal taxes are paid by the richest 1 per cent of households, hardly a number that is bandied about by the liberal media.  It also shows that the poorest 20 per cent of US households receive income tax subsidies. Their federal tax burden becomes positive only because of the payroll tax.  Again, these are not numbers that are popularized by the liberal media.

The average effective tax rate for the richest 1 per cent of households is already twice that for the middle class. Contrary to the words of the Sage of Omaha, secretaries and plumbers do not on average pay a higher tax rate or less in taxes than the CEOs of their companies.  They pay dramatically higher average rates and far far more in federal taxes.  Indeed, the top 1 per cent  pays a lion’s 30 per cent share of all federal taxes.

Hat Tip: The Wall Street Journal, January 20, 2012


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