I am a big fan of the creative, out of the box ideas to solve seemingly intractable problems. Sometimes when an idea is good enough, you can solve more than one problem with the same idea. I think I have a winner here, a homerun, a grandslam, the idea of the decade, maybe the century.
I think we should sell Alaska.
Look, if we are not going to make the best use of Alaska's resources, dadgummit, let's sell it to someone with enough capitalist moxy who will. Why does this make so much sense?...Easy:
1) Energy and commodity prices are at record highs and going higher.
2) We are drowning in debt.
This is one of those rare opportunities to help solve multiple problems with one stroke of genius. Alaska is chocked full of natural resources....and not just oil. We apparently are too timid or too preoccupied with other things, like congressional hearings into steroid use in baseball or what kind of coffee cups to use on Capitol Hill to get around to making the best use of Alaskan resources, so, our time is up. Time to sell Alaska to a country that will make Alaska the breadbasket (or barrel) of natural resources for the world. We have shown for 50 years that we are not interested in making Alaska all that it can be. Alaska has been misallocated, so it is time to reallocate.
All proceeds from the sale of Alaska go directly to retiring debt. I doubt we will get 14 trillion for it, but who knows, those Chinese have a lot of cash sitting around. The good news for whoever buys Alaska is that at least they will have a tangible asset for their money instead of just a promise by the US Government to pay them back. This will help our debt problem. It will deliver a tremendous supply of oil and natural gas tothe market driving down energy costs. Let's face it, other than a few displaced Alaskans, this is a win/win/win.
I am hoping England can come up with the cash to buy Alaska. They already know how to do the oil business and I feel like we kind of owe them one for kicking their butts in the Revolution.
The only fly in this ointment is how to make 49 stars look good on the American flag. I hope this is not a deal breaker, because I think this idea, once in the market, will quickly get legs.
Tuesday, April 26, 2011
Friday, April 22, 2011
Stop the Silliness from Washington
Well, the budget debate has morphed into campaign blather a full 18 months before the 2012 elections. I am not sure I can take 18 months of electioneering, but I wish we could at least put to rest some of the inane and silly rhetoric coming out of the mouths of our politicians and particularly our president.
I know the president is a smart guy and I know he knows that the reality of this comment is as ridiculous as it sounds, but the comments continue - to the effect that, "if we could just get back to the top marginal tax rates of the Clinton years...." fill in the blank here because the president and his minions have said them all..."we would solve the budget problem, we would restore economic growth, we would lower unemployment"...I think we solve world hunger too. The reality is, and the president knows it, there is no causal relationship, no magic that made the top marginal rate of just 39.6% the driver for all that was economically good in the United States in 1999. It was just one part of the equation of the economic expansion of the time...that ended BTW, like all expansions eventually end. Who is to say if the marginal rate had been 29.6% the expansion would not have been greater and lasted longer? I don't know, but neither does anyone else. Maybe it would have had the opposite effect (I doubt it)but no one knows. So the proclamations that better times lie ahead if we could just raise the top rate are just silliness.
Here is what we do know. In 1999:
Top marginal tax rate: 39.6%
US population: 278M
Total Federal Spending: $ 1.702T
Federal Spending per Ca pita: $6,123
Here is more of what we know. In 2010:
Top marginal tax rate: 35%
US population: 308M
Total Federal Spending: $ 3.456T
Federal Spending per Ca pita: $11,194
Hmmm, it seems to me that a couple of the variables have changed if we were going to roll back to the 1999 top marginal rates.
While the population increased from 1999 to 2010 by 10.8%, federal spending increased by 202%. If we rolled back tax rates to 1999 levels and rolled back spending per ca pita to 1999 levels then our federal budget would be just under $ 1.9T. I would suggest given the increases in productivity and technological advances over that time period, one could argue that government should be able to deliver more and better services to the population for less money - in absolute terms, not per ca pita. Business across the country are massively more productive and tremendously more efficient now than they were in 1999. So why not the Feds?
The everyday reality is that this is a complex problem with many variables. However, as evidenced by some pretty simple math, we have a spending problem, not a revenue problem. Statements of fantasy about "the Clinton tax rates" as a panacea or even a major part of the solution are not only false, but down right silly. If people support higher tax rates for punitive reasons, if they want to stick it to those greedy rich people and redistribute other people's money to the rest of the country, fine, I don't think it is smart policy, but I respect the point of view. To put out falsehoods that a reversal of policy to the Clinton top marginal rates is part of a serious national get well program is not just misleading, it is dishonest and hides what is likely a broader agenda - it also makes people distrust the rest of the president's agenda because this cornerstone suggestion is so clearly false.
Look, if you want to redistribute wealth, just say so and let's have the debate. Don't mask that objective with claims that are easily debunked in 10 minutes with a couple of Google searches and a calculator. It just cheapens your position. I am all for transparency in math and motives. If we could get this from Washington, it might make the next 18 months a little more bearable.
I know the president is a smart guy and I know he knows that the reality of this comment is as ridiculous as it sounds, but the comments continue - to the effect that, "if we could just get back to the top marginal tax rates of the Clinton years...." fill in the blank here because the president and his minions have said them all..."we would solve the budget problem, we would restore economic growth, we would lower unemployment"...I think we solve world hunger too. The reality is, and the president knows it, there is no causal relationship, no magic that made the top marginal rate of just 39.6% the driver for all that was economically good in the United States in 1999. It was just one part of the equation of the economic expansion of the time...that ended BTW, like all expansions eventually end. Who is to say if the marginal rate had been 29.6% the expansion would not have been greater and lasted longer? I don't know, but neither does anyone else. Maybe it would have had the opposite effect (I doubt it)but no one knows. So the proclamations that better times lie ahead if we could just raise the top rate are just silliness.
Here is what we do know. In 1999:
Top marginal tax rate: 39.6%
US population: 278M
Total Federal Spending: $ 1.702T
Federal Spending per Ca pita: $6,123
Here is more of what we know. In 2010:
Top marginal tax rate: 35%
US population: 308M
Total Federal Spending: $ 3.456T
Federal Spending per Ca pita: $11,194
Hmmm, it seems to me that a couple of the variables have changed if we were going to roll back to the 1999 top marginal rates.
While the population increased from 1999 to 2010 by 10.8%, federal spending increased by 202%. If we rolled back tax rates to 1999 levels and rolled back spending per ca pita to 1999 levels then our federal budget would be just under $ 1.9T. I would suggest given the increases in productivity and technological advances over that time period, one could argue that government should be able to deliver more and better services to the population for less money - in absolute terms, not per ca pita. Business across the country are massively more productive and tremendously more efficient now than they were in 1999. So why not the Feds?
The everyday reality is that this is a complex problem with many variables. However, as evidenced by some pretty simple math, we have a spending problem, not a revenue problem. Statements of fantasy about "the Clinton tax rates" as a panacea or even a major part of the solution are not only false, but down right silly. If people support higher tax rates for punitive reasons, if they want to stick it to those greedy rich people and redistribute other people's money to the rest of the country, fine, I don't think it is smart policy, but I respect the point of view. To put out falsehoods that a reversal of policy to the Clinton top marginal rates is part of a serious national get well program is not just misleading, it is dishonest and hides what is likely a broader agenda - it also makes people distrust the rest of the president's agenda because this cornerstone suggestion is so clearly false.
Look, if you want to redistribute wealth, just say so and let's have the debate. Don't mask that objective with claims that are easily debunked in 10 minutes with a couple of Google searches and a calculator. It just cheapens your position. I am all for transparency in math and motives. If we could get this from Washington, it might make the next 18 months a little more bearable.
Thursday, April 14, 2011
Did I Miss Something? Really?
Thanks to the miracle of Youtube (which was founded, developed, and brought to market with zero government assistance) I was able to watch the president's campaign speech last night...
Did I miss something? Have we all been transported to a parallel universe? Tax rates are now called "spending in the tax code"? I think I need my tin foil cap and some kite string, because we are not in Kansas any more.
First, let's get a few things straight. The current top marginal tax rate is just that, the current top rate. It is not "the Bush Tax Cut". That phrase, so well worn in the media, assumes that the current rates, implemented by former president Bush, broke some natural equilibrium for tax rates that is higher than the current rates. Such an assumption is pure hogwash. The top marginal tax rate has changed over 30 times since 1913. The current rates are not "cuts" that need to be restored to their natural order. They are simply the current rates, that are every bit as legitimate and natural as the 7% marginal rate or the 91% marginal rate. The argument is what rate optimizes revenue - through economic growth.
Second, reducing tax rates is not "spending". At least not in the universe in which we used to live. Apparently, according to Obama's speech, my income belongs to Washington and the amount I am allowed keep is now "spending". Well, that is in interesting turn of events. I guess the post office lost that piece of mail, because no one told me that my income belongs to Washington and that money I don't send to Washington is now classified as spending. Does Obama really believe this or was he just ginning up his base...of loonies who do believe that?
Let's agree on a few things before whatever planet we have been transported to explodes from the sheer madness of the inane budget talking points. First, the United States is broke. We are borrowing 40 cents of every dollar we are spending in the budget that just passed today. At some juncture, the rest of the world will be unable or unwilling to lend us the money we need. Second, the money we are spending today and will spend tomorrow is uncollateralized debt...there is no tangible asset to back this spending other than the promise of the US government to pay. China can't re posses grandma's knee replacement. The rest of the world is lending us trillions of dollars so we can continue to provide unsustainable government commitments. I wonder how much longer that will last? Second, people who are serious about getting the United States fiscal house in order don't hate old people, they don't want people in poverty, and they do not want kids eating dirt for dinner as many on MSNBC, Solon.com, moveon.org, etc suggest.
However, let's agree that there are choices we are going to be forced to make. If a federal school lunch program is our top priority, then fine. Fund it. But what are you going to be willing to give up? If keeping seniors medical care costs low is the best use of our scarce resources, great. What are you willing to give up so granny can get her sugar pills? We have no money, so in order to get those pills, somethng has to give. We don't have a revenue problem, we have a spending problem. The discussion moving forward needs to be centered not around whose pie can we confiscate so we can flush it down the toilet like we have done in the past, but rather deciding what are we willing to fund? What are the priorities of the country? This is the "national conversation" that needs to occur.
Suggestions? Okay, I have a few.
Cut the crap in the tax code. Get rid of loopholes and deductions? Fine, done. Broaden and lower that rates so anyone can file their tax returns with a pencil and paper in 30 minutes.
While we are at it, lower the corporate rate to 15% get trapped earning repatriated to the US and get GE, Google, and Boeing etc back on the tax rolls.
1% national sales tax...I am fine with that as it gets everyone vested in pulling the wagon....but only if we eliminate capital gain taxes to get the economic engine running again. However in order to raise the national sales tax, congress must have a super majority.
Raise the retirement age for Social security and medicare for anyone under 50 to age 70. Let anyone under 50 opt out of both if they so choose.
Base line for domestic spending...pick a year any year....2008...2005...2003. I don't care. Just pick one and that will be the baseline for domestic spending and we will make choices in what we fund and don't fund and go from there.
I can go on, but it is too easy. Hopefully the next time I get transported to another universe it will be one where people let me make the decisions and where UVa football wins at least 8 games a year :) Now that would be way out there.
Did I miss something? Have we all been transported to a parallel universe? Tax rates are now called "spending in the tax code"? I think I need my tin foil cap and some kite string, because we are not in Kansas any more.
First, let's get a few things straight. The current top marginal tax rate is just that, the current top rate. It is not "the Bush Tax Cut". That phrase, so well worn in the media, assumes that the current rates, implemented by former president Bush, broke some natural equilibrium for tax rates that is higher than the current rates. Such an assumption is pure hogwash. The top marginal tax rate has changed over 30 times since 1913. The current rates are not "cuts" that need to be restored to their natural order. They are simply the current rates, that are every bit as legitimate and natural as the 7% marginal rate or the 91% marginal rate. The argument is what rate optimizes revenue - through economic growth.
Second, reducing tax rates is not "spending". At least not in the universe in which we used to live. Apparently, according to Obama's speech, my income belongs to Washington and the amount I am allowed keep is now "spending". Well, that is in interesting turn of events. I guess the post office lost that piece of mail, because no one told me that my income belongs to Washington and that money I don't send to Washington is now classified as spending. Does Obama really believe this or was he just ginning up his base...of loonies who do believe that?
Let's agree on a few things before whatever planet we have been transported to explodes from the sheer madness of the inane budget talking points. First, the United States is broke. We are borrowing 40 cents of every dollar we are spending in the budget that just passed today. At some juncture, the rest of the world will be unable or unwilling to lend us the money we need. Second, the money we are spending today and will spend tomorrow is uncollateralized debt...there is no tangible asset to back this spending other than the promise of the US government to pay. China can't re posses grandma's knee replacement. The rest of the world is lending us trillions of dollars so we can continue to provide unsustainable government commitments. I wonder how much longer that will last? Second, people who are serious about getting the United States fiscal house in order don't hate old people, they don't want people in poverty, and they do not want kids eating dirt for dinner as many on MSNBC, Solon.com, moveon.org, etc suggest.
However, let's agree that there are choices we are going to be forced to make. If a federal school lunch program is our top priority, then fine. Fund it. But what are you going to be willing to give up? If keeping seniors medical care costs low is the best use of our scarce resources, great. What are you willing to give up so granny can get her sugar pills? We have no money, so in order to get those pills, somethng has to give. We don't have a revenue problem, we have a spending problem. The discussion moving forward needs to be centered not around whose pie can we confiscate so we can flush it down the toilet like we have done in the past, but rather deciding what are we willing to fund? What are the priorities of the country? This is the "national conversation" that needs to occur.
Suggestions? Okay, I have a few.
Cut the crap in the tax code. Get rid of loopholes and deductions? Fine, done. Broaden and lower that rates so anyone can file their tax returns with a pencil and paper in 30 minutes.
While we are at it, lower the corporate rate to 15% get trapped earning repatriated to the US and get GE, Google, and Boeing etc back on the tax rolls.
1% national sales tax...I am fine with that as it gets everyone vested in pulling the wagon....but only if we eliminate capital gain taxes to get the economic engine running again. However in order to raise the national sales tax, congress must have a super majority.
Raise the retirement age for Social security and medicare for anyone under 50 to age 70. Let anyone under 50 opt out of both if they so choose.
Base line for domestic spending...pick a year any year....2008...2005...2003. I don't care. Just pick one and that will be the baseline for domestic spending and we will make choices in what we fund and don't fund and go from there.
I can go on, but it is too easy. Hopefully the next time I get transported to another universe it will be one where people let me make the decisions and where UVa football wins at least 8 games a year :) Now that would be way out there.
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