It’s Tuesday, April 10th, 2012….and here’s The Gouge!

First up, courtesy of the Morning Examiner, Conn Carroll coins The Obamao’s slogan for Campaign 2012:

Double Down

 

“Change we can believe in.” By this time in 2008 every American knew President Obama’s official campaign slogan. But what about 2012? What catchphrase will Obama use to motivate voters to turn out for him this November? The White House has failed to come up with anything that fits so far.

“Winning the Future.” Newt Gingrich wrote a book with that title. “We Can’t Wait.” For what? “An America Built to Last … An Economy Built to Last.” Too wordy. Everything the White House has thrown out there has failed to catch on. But how about this phrase, borrowed from the energy section from Obama’s State of the Union:

“It’s time to end the taxpayer giveaways to an industry that rarely has been more profitable and double down on a clean energy industry that never has been more promising.“

“Double down.” In his first State of the Union since Solyndra spectacularly filed for bankruptcy after wasting $500 million in taxpayer money, Obama told the American people he wanted to “double down” on his clean energy policies. Talk about audacity.

If that is the line Obama is going to use on energy, why not deploy it to defend the rest of his record? Our national debt is up $5 trillion since Obama took office; let’s double down! The U.S. economy supports 740,000 fewer jobs today than when Obama became president; let’s double down! Gas prices are up more than 200% since Obama took office; let’s double down!

It is hard to see why the Obama campaign hasn’t adopted this as its official slogan.

No….it’s hard to see why REPUBLICANS aren’t already choking the airwaves with commercials containing the theme.  After all, the possibilities are….

….practically perpetual!

In a related item, the WSJ offers the cold, hard reality behind….

Obama’s Revenue Soup

A history lesson on capital gains taxes.

 

In “Annie Hall,” Woody Allen tells the joke of two women complaining about a restaurant. The first says the food here is awful and the second replies, yes, and they serve such small portions. Sounds like President Obama’s proposal to raise the capital-gains tax: It will hurt the economy and it won’t raise much new revenue.

Mr. Obama’s plan would raise the capital-gains rate on January 1 to 20% on those who earn more than $200,000 ($250,000 for couples), plus a 3.8% investment surtax to finance ObamaCare. That 23.8% rate amounts to a nearly 60% increase from the 15% rate in effect since 2003. And that’s without his new “Buffett rule,” which would take the rate to 30% for many taxpayers.

This and other rate hikes aimed at higher-income earners are supposed to raise about $700 billion in tax revenues over the next decade. Fat chance. Ever since the famous 1978 bipartisan capital-gains tax cut sponsored by the late William Steiger of Wisconsin, the same pattern has repeated itself: raising the capital-gains rate reduces revenues, and lowering it leads to revenue increases. (Yo!  BO!  Ever heard of George Santayana?!?)

The nearby chart shows the 35-year trend in capital-gains revenue and tax rates—through 2008, the last year data are available. The Steiger amendment cut the top rate to 28% from nearly 40% in what was a watershed moment in U.S. tax policy and a preview of the Reagan era. Revenue from capital gains quickly jumped to $11.8 billion in 1979 from $9.1 billion the year before.

Congress cut the rate again in 1981 to 20% as part of the Reagan tax cuts, and the striking fact is that revenues didn’t fall in 1982 despite the steep recession. By 1983 they were rising again, to $18.7 billion, and they kept rising along with the Reagan boom. (But Team Tick-Tock’s mission isn’t maximizing revenue, it’s “fairness”.)

The next policy break came in 1986, when Congress returned the capital-gains rate to 28% as part of tax reform. A funny thing happened: Revenues soared in 1986 to $52.9 billion as investors cashed in their gains before the tax increase hit in 1987. But then revenues plunged, despite the higher tax rate, to $33.7 billion. They rose slightly in 1988 but then stayed flat for nearly another decade.

In 1997, Bill Clinton and the Gingrich Republicans cut the rate back to 20%, and revenues really took off—doubling to $127.3 billion in 2000 from $66.4 billion in 1996. These were also the years of a stock-market boom, and investors cashed in their gains along the way.

Capital-gains revenues fell amid the dot-com bust, but in 2003 George W. Bush and Republicans in Congress chopped the rate to 15%. Even at that lower rate revenues started to climb again (along with the economy), rising from $51.3 billion in 2003 to $137.1 billion in 2007. They understandably fell again in 2008 as the recession hit and stock values fell.

The data clearly show that the overall economy is the single biggest factor in capital-gains realizations and revenue. But the data also show that time and again revenue has multiplied despite a lower rate, and arguably because of it.

The capital-gains levy is an elective tax on owners of stock and other assets. Investors only pay the tax when they sell their assets, so they can hold unrealized gains until the tax rate falls. This is called the “lock-in effect” of high capital-gains tax rates. It reduces economic efficiency because at a higher tax rate capital hibernates in older companies with lower growth potential and isn’t available to new ventures with higher returns. A higher capital-gains tax also makes equity ownership less valuable (because of the lower after-tax returns), so there is less appreciation in stock values when the tax rate is higher.

Congress shouldn’t be fooled by government forecasters who predict a revenue boom from a higher capital-gains rate. They have blown this call every time. After Bill Clinton signed the 1997 cut, revenues came in about one-third higher than the government had predicted from 1997-99. The same thing happened with the 2003 rate cut. The government’s forecasts of tax collections were too low for 2003, 2004, 2005, 2006 and 2007. From 2005-2007 tax collections from capital gains were at least 40% higher than originally predicted.

In our view the optimal capital-gains tax rate is one that leads to the most capital investment, jobs and wealth gains for American workers. That economically optimal rate is somewhere close to zero and would lead to more overall tax revenue as the economy grew faster. But if Congress wants a capital-gains tax, history suggests the revenue maximizing rate is closer to 15% than to 23.8%.

As John F. Kennedy put it in 1963 when he endorsed a cut in this tax: “The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital” as well as “the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.”

Today’s Democrats in Washington are no Jack Kennedys. As President Obama told Charlie Gibson of ABC News in 2008, whether or not a higher capital-gains tax raises more revenue is irrelevant to him. He wants a higher rate as a matter of “fairness.” The soup may be lousy but he wants more of it.

We can only hope and pray that come November 7th, our 57th birthday….

Since we’re on the subject of cold, hard reality, as James Pethokoukis notes in AEI‘s Enterprise Blog….

The big March jobs miss — and why the real unemployment rate sure ain’t 8.2%

 

Swing and a miss. A big miss. A really big miss. U.S. employers added just 120,000 jobs last month, the Labor Department said on Friday. That’s the smallest increase since October. Economists polled by Reuters had expected nonfarm employment to increase by 203,000. And as economist Robert Brusca points out, “The strong amazing run in household jobs came to a crashing halt as employment in that survey fell by 31,000 after rising by 42,000 last month and 847,000 the month before that.”

Then there’s the unemployment rate, which dipped to 8.2% from 8.3% the month before. (A number which is significantly lower….sigNIFicantly lower….than the actual figure.) That extends the longest streak of 8%-plus unemployment since the Great Depression. The U.S. economy hasn’t been below 8% unemployment since Obama took office in January 2009. And back in May 2007, unemployment was just 4.4%. (And keep in mind that average hourly wages are up just 2.1% over past year. But inflation up 2.9% (2.2% core). American workers are losing ground.) As Barclays Capital puts it: “Overall, the report had an undeniably weak tone and will raise doubts about the strength of the labor market. Given that the report reflects only one month of data and some of the underlying cyclical sectors registered payroll gains, we do not view it as conclusively signaling a shift to a lower trend rate of employment growth.”

And here’s how economic consulting firm IHS Global Insights views the report:

March was expected to bring another good jobs report, and it failed miserably. The streak of 200,000-plus monthly payroll gains ended at three. Job gains were almost 100,000 below expectations, the workweek shrank, and the decline in the unemployment rate reflected not more employment, but fewer people looking for work.

The big disappointments were in private services, where retail had a second successive bad month, and temp jobs fell for the first time since last June. Construction jobs fell for the second month in a row, but that is not too surprising – although the weather was exceptionally warm in March, it probably didn’t help construction as much as in January or February.

One disappointing jobs report is not reason to panic, but it will dampen some of the optimism about the strength of the recovery this year.

Recall that back in 2009, White House economists Jared Bernstein and Christina Romer used their old-fashioned Keynesian model to predict how the $800 billion stimulus would affect employment. According to their model—as displayed in the above chart, updated—unemployment should be around 5.8% today.

But the true measure of U.S. unemployment is far worse:

1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today down from last month—the U-3 unemployment rate would be 10.9%.

2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.5%.

3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.4%.

4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.5%.

5. The employment-population ratio dipped to 58.5% vs. 61% in December 2008. An historically low level of the U.S. population is actually working.

6. The number of long-term unemployed (those jobless for 27 weeks or longer) account for 42.5% of the unemployment. That number is basically stuck. It was the same, for instance, in August 2010 and last December.

Bottom line: The economy is adding jobs but not very quickly, which is to be expected given GDP growth of around 2% or so. A Great Recovery after the Great Recession? More like the Great Stagnation.

The only work Team Tick-Tock seems able to produce are snow jobs….and they’re literally inundating the public with them every single day.

Meanwhile, in the “We Don’t Call Them ‘Dimocrats’ for Nothing!” segment, James Taranto presents….

Dumbing Down Dumb

 

One Brent Budowsky has a piece in the Hill on ObamaCare and the Supreme Court that is so staggeringly dumb, the only explanation we can come up with for it is that he’s trying to make President Obama look smart by comparison. Here’s the lead paragraph:

President Obama is absolutely right about this: If the Supreme Court rules the healthcare bill unconstitutional, it would be an overreach that would be an extreme example of judicial activism that violates the most core principles of what is called conservatism and, I would argue, would lead to a destructive historical break point in the history of the United States Supreme Court that would tarnish forever the reputation of the chief justice and the conservative majority of justices for centuries to come.

This may be the worst-written opinion piece in history, including college papers. He also tries an appeal to the ladies:

I find it ironic, outrageous and profoundly troubling that a Supreme Court majority of five men would join and at times lead an ideological attack on laws and programs that benefit women. This is unbecoming and unwise for a partisan party in the legislative and executive branches. It is radical, unprecedented and outside of American judicial tradition when a Supreme Court majority of five men wage an ideological crusade that places laws and programs benefiting women, by result if not design, under attack by the judicial branch while under attack by Republican partisans in Congress.

He adds: “My warning to the Supreme Court majority is this: Be careful.” We’re sure the justices are losing sleep over that one.

A Hill piece on the same subject by Juan Williams isn’t nearly as bad (a low standard, to be sure) but still contains some howlers:

When the Court decided Brown vs. Board of Education in 1954, Chief Justice Earl Warren made sure that the decision was unanimous. Segregation of public schools was such an extraordinary case that Warren knew that many Americans, especially in the South, would question the Court’s ruling if the decision split even 8-1.

Yeah, good thing nobody in the South questioned the court’s ruling!

All we question is Juan Williams’ intelligence….along with his sanity.

Next up, in the Environmental Moment, Jonah Goldberg definitively details The Obamao’s energy “policy”….or lack thereof:

Very few of the above

Obama’s energy policy is rather picky

 

In his speech before the Newspapers Association of America/American Society of News Editors Wednesday, likely GOP presidential nominee Mitt Romney accused the president of changing positions to get reelected. For instance, Romney charged that “as president,” Obama “delayed the development of our oil and coal and natural gas. Now, as candidate Obama, he says he favors an energy policy that adopts an all-of-the-above approach.”

That’s not exactly right. Yes, Obama still says he’s in favor of an all-of-the-above energy policy, but that hasn’t slowed him down in his pursuit of his very-few-of-the-above policy.

Back in 2008, Senator Obama explained that under his energy plan, electricity prices would “necessarily skyrocket.” The explosion in costs wouldn’t be a bug of his plan either, but a feature. The idea under so-called cap-and-trade is that if you tax fossil fuels, you will, over time, reduce the use of fossil fuels. It’s really basic economics. One wishes the president saw the logic of this proposition when it came to taxing business and investment as well. (Or the impact increased domestic drilling would have on prices at American pumps.) But that’s a topic for a different column.

The president’s defenders have long complained that it’s unfair to dredge up this old soundbite, particularly in a climate of gas-price outrage, because Republicans — and a lot of Democrats — successfully prevented cap-and-trade from ever becoming law. Absent cap-and-trade, they claim, he is pursuing an all-of-the-above strategy. Coal! Oil! Natural gas! Solar! Wind! And, of course, algae, algae, algae! We’re doing it all, Obama says. Just the other day, Vice President Joe Biden insisted that “our energy policy’s the best it’s ever been.” Why? Because, he said, we’re doing “everything,” i.e., all of the above, to make energy affordable.

Except that’s simply not true. It’s not remotely true. A new rule from the Obama administration’s Environmental Protection Agency, according to an Associated Press analysis, will force 32 mostly coal-fired power plants to shut down and threaten to close 36 others. Moreover, the new “blackout” rule will effectively prevent the creation of any new coal-fired plants in America unless they adopt new technologies that will make it unprofitable to burn coal at all. So there’s that.

Now, I don’t have much affection for coal. I think mountaintop-removal mining should be phased out. But you can’t really say you’re pursuing an all-of-the-above energy policy, or deny that you want energy prices to go up, and declare war on coal at the same time.

The inanity of all this is that the real impulse behind the war on coal is the belief that we need to stamp it out to reduce global warming. But even if you believe the full suite of global-warning-crisis complaints, the policy is nuts, because the net result will be to lower the price of coal and increase the amount we sell to places like China. Is it better if we burn the coal here, with cleaner emissions and more jobs for Americans, or there, with dirtier emissions?

But forget coal. What about oil? The president killed the Keystone XL pipeline. After the BP oil spill, his administration overruled its own panel of experts to implement a moratorium on offshore drilling (while suggesting it was the experts’ idea). Obama wants to revoke “subsidies” for oil companies, which are in fact the same tax write-offs that any business gets. He takes credit for the increase in oil drilling on U.S. soil but leaves out that drilling on federal and American Indian lands has gone down under his administration. He also forgets to mention that he opposes drilling off the mid-Atlantic coast and the Florida coast, and anywhere in the Gulf of Mexico, the Arctic National Wildlife Refuge, or the Rockies.

When those resources aren’t exploited, oil rigs don’t sit and rust, they go to other countries (often ones with fewer environmental safeguards) to find oil elsewhere — oil we will then buy.

Romney is right to suggest that Obama is saying things he doesn’t believe in order to get reelected. But, at least on energy, he’s not taking a new position. When you’re the incumbent president, you can say that your position is whatever you want. But the truth of the matter isn’t determined by what you say, but by what you do. And judged against what he is doing, Obama’s all-of-the-above strategy isn’t a policy change, it’s just a lie.

Speaking of lies, remember listening to this tripe?

Here’s a subsequent development we can’t recollect reading in the morning paper or seeing on the evening news:

Obama’s $2 billion to Brazil ends up helping send oil to China

 

Remember this?

The U.S. is going to lend billions of dollars to Brazil’s state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil’s Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil’s planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.

The U.S. Export-Import Bank tells us it has issued a “preliminary commitment” letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-I’m Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some readers as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas.

And this?

“We want to work with you. We want to help with technology and support to develop these oil reserves safely, and, when you’re ready to start selling, we want to be one of your best customers.”

Mr. Obama was saying that while he was drastically slowing down leasing and permitting in the US and whining about “subsides” to US oil corporations. We apparently can subsidize government controlled oil companies in foreign countries, but not here (and I’m not arguing for subsidies here – just pointing out the usual Obama contradiction – kind of like he’s against bailouts, except for Chrysler, GM, Solyndra, etc.)

Well, that little jump-start of ObamaDollars has indeed helped “develop these oil reserves”. And the beneficiary?

Off the coast of Rio de Janeiro — below a mile of water and two miles of shifting rock, sand and salt — is an ultradeep sea of oil that could turn Brazil into the world’s fourth-largest oil producer, behind Russia, Saudi Arabia and the United States.

The country’s state-controlled oil company, Petrobras, expects to pump 4.9 million barrels a day from the country’s oil fields by 2020, with 40 percent of that coming from the seabed. One and a half million barrels will be bound for export markets.

The United States wants it, but China is getting it. Less than a month after President Obama visited Brazil in March to make a pitch for oil, Brazilian President Dilma Rousseff was off to Beijing to sign oil contracts with two huge state-owned Chinese companies.

Well done, Mr. Obama.

Put another way….

On the Lighter Side….

Finally, we’ll call it a day with the “Be Careful What You Vote For” segment, courtesy of Best of the Web and the dishonorable Dianne “That’s Two N’s….As In ‘Ninny'” Feinstein:

Easy Come, Easy Go

 

Dianne Feinstein auditioning for The Ring 3:

Sen. Dianne Feinstein asked the Federal Elections Commission for special permission to raise money from contributors who’d already maxed out on her campaign, reports blogger Richard Winger (citations omitted):

The Feinstein campaign learned last year that Kinde Durkee apparently embezzled at least $4,545,386 from the campaign. The Feinstein campaign wishes to replace as much of this money as possible, and requested permission to let contributors who had already given the maximum to this year’s campaign to give again.

But the draft opinion denies the request. It says, “The purpose of the contribution limit, and the basis for the Supreme Court’s decision to uphold its constitutionality, is to prevent corruption or the appearance of corruption ‘stemming from the dependence of candidates on large campaign contributions.’ . . . The larger the contribution, the greater the danger of actual and apparent corruption. . . . That danger does not disappear because some of the Committee’s funds were embezzled. To the contrary, if a campaign commottee [sic] were to accept second contributions to ‘replace’ those that were made, deposited, and then misappropriated, the candidate’s indebtedness to those contributors would increase.”

This column is of the view that contributors should be able to donate as much money as they want to candidates. But given the laws in place, the FEC’s ruling makes sense to us. And it shows almost New York Times-level chutzpah for Feinstein, who voted in favor of the infamous McCain-Feingold law, to ask for a dispensation.

In other words, be careful not only what you wish for, but what legislation you sponsor….and vote into law.

Magoo