Thursday, October 30, 2008

"Kevorkian Economics"

Found this interesting blog post, "Kevorkian Economics," over at

Let's state the obvious simply because no one else will. Investors, small and large, are afraid of Democrat control. Enacting their policies on a sick economy would be like asking Jack Kevorkian to perform your grandmother’s triple bypass. Enacting McCain’s plan is the equivalent of sending grandma to world renowned Johns Hopkins Hospital in Baltimore. You don’t know how long it will take for grandma to get well, but you do know that she will be getting the very best care for a speedy recovery.

Nothing like getting right to the point!

Tax policy affects a million small decisions every day. Recently Miami Dolphins owner H. Wayne Huizenga said the election is affecting his decision on whether to sell his share of the team. Citing Obama’s tax plan he said, "He wants to double the capital gains tax, or almost double it," Huizenga said. "I'd rather give it to charity than to him."

Average citizens are now discussing whether they should take their money out of their 401Ks before Democrats take control of the accounts. Small business owners are bracing for cutbacks. And yes, even Joe the Plumber is wondering whether it is worth it to buy a business. Multiplied, these decisions will continue the economy on a downward spiral.

Tax policy does matter-especially when we want to get our country's economy back on track.

Wednesday, October 29, 2008

In case you missed it: "Socialism in disguise"

DE SILVA: Socialism in disguise
Obama's Third-World radicalism
Ian de Silva
Washington Times
Tuesday, October 28, 2008

Intoxicated by the mantra of change, those who support Sen. Barack Obama appear to be gleeful about the new era that would come if he won. But is America
such a fundamentally flawed country that it needs the kind of change that Mr. Obama promises? If you answer yes, then you have no idea how good a country this is compared to the rest of the world.

As a naturalized American who grew up in the Third World and experienced firsthand the economic misery and impenetrable corruption under socialism, I know socialism when I see it - and I see socialism in Mr. Obama's plans. He has skillfully disguised his socialist agenda by an oratorical cloak of populism. So, just as it takes an alert eye to spot the proverbial wolf in sheep's clothing, it takes an experienced eye to spot the incipient but insurgent socialism inside Mr. Obama's agenda.

Monday, October 27, 2008

Why do rich liberals support "spreading the wealth?"

Maybe because they aren't the ones who end up really footing the bill.

In this great editorial by Richard Rahn in last Friday's Washington Times, "You lose, Soros wins," Mr. Rahn gives us some insight as to why billionaires, like George Soros, support guys who say they will "tax the rich."

Have you ever wondered why billionaires like George Soros financially support politicians who say they will "increase taxes on the rich"?

The answer quite simply is that the tax increases are most often put on people trying to become rich, not those already rich. Hence, the rich, big government advocates can gain far more by "buying" the politicians. The "bought" politicians then provide them with confidential information about administrative decisions, which these donors then use to place big bets in the market, making themselves much richer. If you have deep financial pockets and inside information, you can make huge amounts of money when markets drop.

Surely this can't be happening, right? Mr. Rahn continues, discussing the recent failures of Fannie Mae and Freddie Mac.

As recently as this past spring, House Financial Services Committee chairman Barney Frank, Massachusetts Democrat, and Senate Banking, Housing, and Urban Affairs Committee chairman Chris Dodd, Connecticut Democrat, were claiming both Fannie Mae and Freddie Mac (for which they had oversight responsibility) were fiscally sound and needed no additional regulation. At the same time, many independent financial experts were sounding the alarm about these two government-sponsored behemoths.

It would be in the public interest to know which members of the Democratic leadership, members of Congress, and their financial contributors were selling shares of (or shorting) Fannie Mae and Freddie Mac this year, and of other financial institutions overseen by the congressional Democrats. (Note: In the private sector, if someone with insider knowledge - as Mr. Frank and Mr. Dodd had access to - makes misrepresentations about the health of a company, that person is subject to criminal penalties.) The press should demand full disclosure before Election Day, given the hundreds of billions of dollars the misrepresentations by Messrs. Frank, Dodd, etc. are costing taxpayers.

Full disclosure should be demanded. But we aren't holding our breath for the press to push for that one any time soon.

Friday, October 24, 2008

Regrets? "Not at all"

Yesterday we shared with you a Wall Street Journal examining the dangerous "spend and tax" policies being proposed by some Democrats in Washington, and on Wednesday we looked at the dangers of Barack Obama's economic policies and a "European-type social democracy."

Again, Obama reaffirms his position on "spreading the wealth around" as a good idea. We disagree.

Thursday, October 23, 2008

Spend and Tax

In another interesting editorial from the Wall Street Journal, we get a glimpse of "Obamanomics," a scary policy of spend then tax, that is pretty well summed up by this headline quote from Barney Frank.

"I think at this point there needs to be a focus on an immediate increase in spending and I think this is a time when deficit fear has to take a second seat . . . I believe later on there should be tax increases. Speaking personally, I think there are a lot of very rich people out there whom we can tax at a point down the road and recover some of the money." -- Barney Frank, October 20, 2008

Scary, right?

Federal budget deficits are not something we obsess about, but eventually this new spending has to be paid for, and Barney Frank's comments only underscore that big tax increases are coming. The prospect of these tax increases is now hanging over the economy like a pall, as investors and businesses wonder where and how heavily an Obama Administration and Congress would strike. The pall is likely to continue well into 2009, as millions of Americans delay their investment decisions until they know how much their after-tax returns are likely to fall.

Wednesday, October 22, 2008

The Danger of "Fairness"

In today's Wall Street Journal, Mr. Lerrick a professor of economics at Carnegie Mellon University and a visiting scholar at the American Enterprise Institute, takes a detailed look at how dangerous Barack Obama's tax plan is for America in "Obama and the Tax Tipping Point."

The sequence is always the same. High-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues. Fiscal and trade deficits soar. Public debt, excessive taxation and unemployment follow. The central bank tries to solve the problem by printing money. International competitiveness is lost and the currency depreciates. The system stagnates. And then a frightened electorate returns conservatives to power.

The economic tides will not stand still while Washington experiments with European-type social democracy, even though the dollar's role as the global reserve currency will buy some time. Our trademark competitive advantage will be lost, and once lost, it will be hard to regain. There are too many emerging economies focused on prosperity and not redistribution for the U.S. to easily recapture its role of global economic leader.

Tomorrow's children may come to question why their parents sold their birthright for a mess of "fairness" -- whatever that will signify when jobs are scarce and American opportunity is no longer the envy of the world.

Monday, October 20, 2008

Community Reinvestment Act: The Risk of Unintended Consequences

Great reading from the Heartland Institute on the unitended consequences of government programs, as evidenced by the Community Reinvestment Act and the resulting financial crisis.

As policymakers consider ways to address the current mortgage crisis, it is important to evaluate new proposals with an eye toward their future effects on the economy. The unintended consequences of government programs can have far-reaching economic and social effects. It’s important to keep in mind that government intervention played a central role in creating and elevating the
current crisis: Interest rate manipulation, tax code loopholes, and “smart growth” land-use policies all contributed to artificially inflating home prices and shifting nvestment counter to real demand.

A prime example of a public program gone awry—and one of the key causes of the current credit crisis—is the Community Reinvestment Act (CRA). CRA was designed to ensure that all homeowners were treated “equally” by avoiding “redlining,” the deliberate shifting of financing away from low-income or
high-risk areas. While CRA was designed to serve a positive goal, the economic implications of the new regulation were far more complicated. CRA required mortgage lenders to provide loans to riskier clients, often in stark contrast to what market forces may have dictated. This was done by incentivizing mortgage lenders to make loans for homes in certain zip codes and also by penalizing perceived failures to do enough.

These new loans spawned the subprime mortgage market, a financial sector that is now embroiled in controversy, whose collapse triggered the current downward economic trend. CRA is in many ways socialized financing, forcing banks to lend counter to market trends, thus increasing the risk of failure. We are now caught in a financial downturn that has emerged as a direct result of these risky loans. Any expansion of CRA that limits market flexibility and unnecessarily increases risk is not good policy: A financial collapse benefits no one.

Friday, October 10, 2008

Budget cutting

Once again, Jim Bacon has an insightful post up on Bacon's Rebellion - this time on the Governor's proposed budget cuts.

What really concerns us though, is the continuing "culture of government" problem that failed to enact meaningful long-term reforms the last time this happened. Rather than using the past budget shortfalls as an opportunity to truly re-think the way government operates and put into place substantive reforms to the overall operations of government, it was easier to settle for quick-and temporary-fixes that didn't get to the real root of the problems.

Bacon's bottom line: Emergency measures are fine for emergencies, which the current budget crisis clearly is. But the culture of state government is such that the costs inevitably creep back ito the system. The Warner administration cut hundreds of jobs, but a few years later, state employment levels hit new highs. In other words, there were few long-term gains in productivity that allowed the state to do the same work with fewer employees. Imposing temporary austerity measures is no way to run an organization for long-term efficiency.

Tuesday, October 07, 2008

Transportation trust fund fixes

Don't forget Delegate Saxman's "Question of the Day" from yesterday- what should be done to fix VITA?

And in other news, this interesting read over at the Reason Foundation from former Virginia Secretary of Transportation, Shirley Ybarra.

Temporary Fix for Transportation Trust Fund
States should look to private sector for help building, maintaining infrastructure
By Shirley Ybarra

States that take advantage of private sector resources will continue to provide improvements for the travelling public, despite budget woes. For example, the $1.4 billion high-occupancy toll (HOT) lanes project on Virginia Beltway was funded and the deal was finalized less than a year ago will continue on schedule. The Chicago Skyway and the Indiana Toll Road long-term lease deals, both public-private partnerships, will continue to accomplish their goals to deliver more service to the roads. The Pocahontas Parkway near Richmond, Virginia, which was completed 18 years ahead of schedule and is about to be extended to the Richmond Airport, needs no further state revenue support. Numerous projects in California, Florida and Texas provide further instances in which the private sector has taken the risk, built the project and will continue construction, operation and maintenance without turning to the states for additional monies.

Monday, October 06, 2008

Today's "Question of the Day"

The most common complaint I hear from state employees is what a disaster VITA is…. What should we do about it?

Thursday, October 02, 2008

New Question of the Day

Thanks to everyone who responded to my last Question of the Day. I appreciated hearing your thoughts.

Now our new question:

Bailout Bill - Necessary or Not?

Reason's 2008 Innovators in Action

Reason's 2008 Innovators in Action is now available, and worth a read.

Leonard Gilroy, editor of the report and director of government reform at Reason Foundation comments:
"At every level of government there are officials of all political stripes who are implementing programs that give taxpayers more bang for their buck and improve accountability," Gilroy said. "Now we need these types of innovators to become the norm, rather than the exception."

Cost Cutting Caucus Chairman, Delegate Chris Saxman, was included in Reason's 2007 Innovators in Action, which can be viewed online here.


Jim Bacon has an interesting post up on Bacon's Rebellion about Virginia Department of Transportation Comissioner David Ekern.

Bacon writes:
In a logical and dispassionate fashion, he makes the case for focusing on the "basics" and the "have-to-haves," such as maintenance of pavement and bridges, over desirables such as mowing and hedge trimming. Ekern also talks about targeting 18,000 to 20,000 miles of roads that bear the most traffic, and
consolidating VDOT's organizational structure.

Wednesday, October 01, 2008

Did you see this one yet?

A video you shouldn't miss...