“Steve, the math is the math. You can’t lower rates and raise revenue, unless you’re getting revenue from someplace else,”

That student was Barrack Hussein Obama.  He is right if you ignore economics and assume that the economy never grows…never and you want to over simplify to fool voters.  Oh you also have to assume that citizens don’t adjust their behavior based on what things cost and that includes how much taxes there are (i.e. more income tax = less money to spend or higher sales tax means your income does not go as far).  I happen to think that is his intention.  That is all that I can surmise since we are told that he may just be the smartest president we’ve ever had.  HIs above quote says he is either dumb or a liar.

Economics in the economics…

History is the history…

First what happens – historically when taxes are raised?

“periods of higher tax rates are associated with sub par economic performance and stagnant tax revenues. In other words, when politicians attempt to “soak the rich,” the rest of us take a bath. Examining the three major United States episodes of tax rate reductions can prove useful lessons.”

 Second what happens – historically when taxes are lowered?

“There is a distinct pattern throughout American history: When tax rates are reduced, the economy’s growth rate improves and living standards increase… tax revenues grow and “rich” taxpayers pay more tax when marginal tax rates are slashed. This means lower income citizens bear a lower share of the tax burden – a consequence that should lead class-warfare politicians to support lower tax rates.”

 This video explains the principle, the “Laffer Curve”;

The thing to remember is that rates do not equal revenues.  So increasing tax rates does not automatically tax increase revenues.  To imply or state that as Obama did is a lie.  Shame on 60 Minutes’ Steve Kroft for not challenging him.

Also why is there rarely a mention of several key facts:

1. Nearly fifty percent of American workers do NOT pay income taxes.
2. The top percent of wage earners pay MOST of the income taxes.
3. Folks who continue to tell us that they don’t pay enough taxes (i.e. Warren, Barrack, etc.) NEVER volunteer to pay more taxes.
4. You (Barrack and Congress) wouldn’t need to steal so much of our money if you CUT spending…real cuts…not cuts sometime in the future…not cuts over ten years that don’t even equal the money you spend in six months…money that you borrow each year from China.
5. Stop the spending!
6. Stop the spending!
7. God just stop the spending!

“The 100% mark means that your entire debt is as big as everything you’re producing in your country.”

“Economist Mark Zandi of Moody’s Analytics says reaching the 100% mark shows ‘the grave need to address our long-term fiscal problems.”

Our debt now exceeds $15,000,000,000,000.00 (15 TRILLION DOLLARS) and is climbing.  In a related story Obama is set to request an increase in his spending limit by $1.2 trillion.  So we have Obama and Congress (including Republicans) literally bragging about cutting spending by $1 trillion OVER THE NEXT TEN YEARS while seeking yet another debt ceiling increase that is significantly more than their phantom cuts.  It’s exasperating!

A few years ago I had heard about a conservative lecturer, William Boetcker, who published some of his more famous lectures.  Unfortunately I have never been able to find a copy.  One of his more famous messages was The Ten Cannots.  Originally published nearly one hundred years ago it has some very practical lessons that should be learned, no, should have been learned, NO should be pounded into our heads so that we no longer fall for the lies spread by elected officials and the machine that perpetuates our slanted system. 

The Ten Cannots

You cannot bring about prosperity by discouraging thrift.

You cannot strengthen the weak by weakening the strong.

You cannot help little men by tearing down big men.

You cannot lift the wage earner by pulling down the wage payer.

You cannot help the poor by destroying the rich.

You cannot establish sound security on borrowed money.

You cannot further the brotherhood of man by inciting class hatred.

You cannot keep out of trouble by spending more than you earn.

You cannot build character and courage by destroying men’s initiative and independence.

And you cannot help men permanently by doing for them what they can and should do for themselves

I am exagerating about the date 514 years from now, but consider that until recently most historical accounts of the Great Depression give FDR credit for ending it.  There have been books like The Forgotten Man which set the record straight, but few probably read this.  However nearly seventy years after the depression ended two UCLA economists place the blame where it belongs…on FDR.

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

This is interesting in that the research was published in 2004 and I only heard about it on talk radio (Jim Quinn).  Perhaps in a prophetic moment the authors made this statement four years before our current economic meltdown and politicians’ weak attempts to “fix” the problem.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”  [emphasis added]

While it is refreshing that the record is starting to be set straight my guess is that most school history books, if they teach about the Great Depression at all, still give credit to FDR.  Perhaps students should learn about this historical period in their economics class rather than U.S. History.

It is not surprising that the organization is touting the special events of the games like “Free Shirt Day” and an appearance by The Steve Miller Band (Mr. Miller has been anchoring the end of season concert for many many years) as a number of weeks ago they were eliminated from playoff contention and more recently had secured another record for the 19th losing season in a row. Nearly two decades of losing should be an embarrassment, but there is always next year. Many find comfort that this season was “different” as the Pirates owners opened their checkbooks and signed some potential stars and didn’t dump/trade their better players to contending teams.

What is also different is the fact that the team usually finishes strong as the younger players seem to grow together and improve. This has not been the case for the 2011 campaign. In July the team actually was in first place in their division even though they were only a few games over 0.500. It helps to be in a weak division. There actually was a little buzz about them in the Burgh and even die-hard Pirate bashers briefly jumped on the band wagon. I even heard one sports commentator compliment the team owners to whom he usually derided. I believe at that point they had one of the top records in baseball. That was before their precipitous fall. Fast forward two months and they now can brag about the fact that there are worse teams in the league, unfortunately there are only seven. I guess that is better than being the worst team in baseball though little constellation.

There was some good news last week as Ross Ohlendorf got a win, his first this year, against the Dodgers, but the joy did not last long as he lost another today bringing his total losses to three. With the end of the season approaching it is unlikely that he can achieve a 0.500 record, but with a win he’ll earn over $1 million dollars per win. Ohlendorf spent the majority of the season injured and has battled back yet by giving up seven runs in two innings today his ERA is a season high of 8.29. He has pitched 33.2 innings (or $60,993.98 per inning pitched) and has given up over twice as many hits as strike outs (55 : 24). Baseball is a game of millionaires (players) and billionaires (owners) and the fans pay the price.

At least the money from the fans is voluntary.

This is an excerpt from a letter from Mr. Larson that was included with the official notice:

“What impact this unauthorized use has had (and is having) in tangible terms is, naturally, of great concern to my publishers and therefore to me — but it’s not the focus of this letter. My effort here is to try and speak to the intangible impact, the emotional cost to me, personally, of seeing my work collected, digitized, and offered up in cyberspace beyond my control…I only ask that this respect be returned, and the way for anyone to do that is to please, please refrain from putting The Far Side out on the Internet. These cartoons are my “children,” of sorts, and like a parent, I’m concerned about where they go at night without telling me.”

Here is an open letter to Mr. Larson…

Dear Mr. Larson;

Just admit that it’s all about the money and there is nothing wrong with that.  You own the cartoons, but to somehow equate the cartoons to your children is silly and disingenuous.  I somehow suspect that should I be in the position to pay you a sum of money you would somehow find your way to allowing me to use your “children” on the Internet.  Again that is what capitalism is and I am all for it.  Just admit it.

Sincerely,

FramingThe Dialogue

Ohlendorf has rough return to major leagues

The $2 million dollar pitcher had to return to the line up sooner than expected due a colleague’s injury.  The Pirates didn’t do Ross Ohlendorf any favors by starting him against one of the better teams in the National League and the team the Pirates historically have struggle against. 

“Making his first start for the Pirates since early April, Ohlendorf allowed 14 baserunners in five innings. The Brewers roughed him up in the second and cruised to an 11-4 victory. Ohlendorf (0-1) gave up seven runs, 11 hits and two walks, with four strikeouts.”

“It has been a tumultuous year for Ohlendorf. In February, he beat the club in an arbitration hearing and was awarded a $2.025 million salary. Considering he went 1-11 with a 4.07 ERA in 2010, Ohlendorf became a poster boy for baseball’s out-of-control salary structure.”

Ross Ohlendorf, in my mind, became the “poster boy” because of his seeming arrogant attitude that he somehow deserved that salary following underperforming, injury-palgued seasons.

The Great Vilsacko performs his money magic trick.

I am currently reading Return to Prosperity by Phd economist Arthur Laffer and I’ll review the book as usual after I finish it, but a recent statement by President Obama’s Agriculture Secretary had me referring to the “Econ 1” phrase Dr. Laffer uses frequently when describing politicians lack of knowledge that is taught in a basic economics class. Secretary Vilsack appeared on MSNBC’s Morning Joe to tout the benefits of the Supplemental Nutrition Assistance Program (“SNAP” or Food Stamps as we used to call it). Vilsack called SNAP the “most direct stimulus you can get into the economy during these tough times.” I guess that he also considers the fact that America has vastly increased the number of people “stimulating” the economy as 1 in 7 people are in the program. Let that sink in…NEARLY 15 PERCENT OF OUR FELLOW AMERICANS GET FOOD FROM THE GOVERNMENT!

What ever happened to the desire to teach a man to fish rather than giving him a fish? Vilsack was not satisfied with his statement about the “stimulating” effects of enslaving our fellow citizens with handouts and added this gem,

“Obviously it’s putting people to work. Every dollar of SNAP benefits generates $1.84 in the economy . . . If people are able to buy a little bit more in the grocery store and then someone’s got to stock it, shelve it, package it, process it, ship it, all of those are jobs.”

That convinced me! For every dollar of SNAP government money an additional 84 cents is generated!  His number was so exact; down to the penny therefore it must be true!  This is perhaps the greatest economic discovery on Earth! Why don’t we give EVERYBODY SNAP benefits? Think how fast the economy will recover if everyone got free food. This is exciting for me! (you can see how excited I ambecause I am using so many exclamation marks! – see I did it again) I ran some rough numbers using Mr. Vilsacks ratio of one dollar generates $1.84 into the economy to see how much free food needs to be given away to fix the economy:

• Our debt is around $14 trillion
• A Harvard University study determined that we pay approximately 23 percent in federal taxes (that’s income tax, fuel taxes, corporate taxes passed on to the consumer, other hidden taxes, etc.)
• In order to get $14 trillion in revenue we need to “stimulate” the economy using the Vilsack Plan by around $56 trillion dollars (that’s $14 trillion divided by the tax rate – I rounded to 25%) or esenntially we need to have $56 trillion income to put $14 trillion in the Treasury.
• Since the Vilsack Plan pays $1.84 for every dollar infused into the economy we only have to give out $30 trillion dollars in free food to fix the economy! (that’s $54 trillion divided by 1.84).

In order to simplify the calculations I ignored the administrative costs associated with the SNAP program and assumed that all the folks who help administer the program do it for free.  Simple and yet effective. I would suggest to Mr. Vilsack that if the tax rates were increased to 100 percent we would not have to spend as much money to fix the economy. We’d only need $7.5 trillion in free food give aways. No wonder these brilliant folks are in charge of the economy. They are so smart.

A nagging question keeps popping up from the back of my mind. I should push it back down, but sometimes logic and Econ 1 principles just cannot be ignored. So Mr. Vilsack where did you get the money to give away under SNAP? Did you not have to first take money away from some other citizen who earned the money in order to give to another person (we’re not even sure they are all citizens)? Why is better to take money away from someone who earned it? Could they not have spent the money themselves and generated the same result? Are you not taking the purchasing power away from one person and giving it to another who did not earn it? At what point will the wage earner figure out the scam and decide to go for SNAP instead of working or go Galt?

There is still one nagging question that I have.  Why won’t anyone, just once, ask one of these guys where their numbers come from.

The Pirates’ news is rather mixed at this point in the season:

• They are 13 games out of first place in perhaps one of the weakest divisions.
• They are 5 games under 0.500 and are looking more like they’ll “achieve” the ignominious 19th losing season in a row.
• They just spent a butt load of money on some mid-season help which shows that perhaps they don’t mind spending some money. Their impact has not exactly translated into wins.
• They just spent a butt load of money signing their draft picks including the first overall pick. The bad news is that their impact may not be felt for several years.
• They may not bring up $2 million dollar pitcher, Ross Ohlendorf, until September when teams are allowed to have expanded rosters. Ross’ mega pay hike was the inspiration for the original post due to the seeming disparity between the his big pay hike and his on-field productivity. It perhaps says a lot when a $2 million dollar pitcher coming off an injury cannot make it on to a ball club with a losing record.

So with more bad news than good what do you suppose the Pirate organization decided to do? Right they are raising ticket prices. It was explained that they had not raised prices in years. I understand, but they have not fielded a winning team in 18, almost 19 years.

You may read the last update here.

…There is nothing to add!

A time is coming when I have to make a decision on whether to put a lot of money in a vehicle that still may not be totally reliable. Do I spend the money on this or take the leap and take on a car payment. Which path gives me the better return? Why spend $3,000 to get another month out of the car? Many of us face similar choices. Do I upgrade the windows in our house to save some energy costs? Should I get one of those fancy on-demand water heaters or go with the tried and true tank heaters? Should I pay $10,000 more for a hybrid car? Should I take paper or plastic at the supermarket?

Those of us with limited funds usually sit down and look at the returns expected between the choices. For instance when we needed a new washer and dryer we went for the high efficiency front loading models. The water where we live is fairly expensive and our savings have been significant enough to make the extra cost of the washer worthwhile. We did not opt for the higher end model with steam cleaning and other bells and whistles due to their diminishing returns. In other words the value of those features were not worth the money to us.

Sometimes I wonder what it would be like to not have to worry so much about the cost of things. You know like our federal government. I heard an example of this recently regarding New York City. NYC has long been the provider of some of the best drinking water in the world. I remember a number of years ago that they actually won a blind taste test against many other waters including popular bottled water. The folks in charge of the water supply have done some pretty creative things to protect their supply, much of which comes from neighboring Pennsylvania. In fact they have spent a great deal of money protecting the watershed where their water comes from. It is easier to keep something clean than to clean it later and by “easier” I mean cheaper.

That is not, however, enough for Obama’s EPA. It seems that NYC had 100 cases of intestinal diarrhea suspected to be caused by bacteria in the water supply. If you are thinking statistics that is 100 cases out of a population of nine million. If you really want to dilute the statistic think about 100 cases over how many billions of gallons of water they treat and supply. As a result of EPA requirements NYC is in the process of completing a $1.6 billion ultraviolet light disinfection system, but even that is not enough. EPA rules require “a concrete cover” over all treated water storage facilities. Try to imagine the size of water storage reservoirs needed to serve nine million people. Try to imagine the cost. One such “cover” is likely to be the largest of its kind in the world…and for what? To save 100 cases of loose bowels? If that doesn’t seem like diminishing returns I don’t know what is.

It is not hard to find examples of government’s ability to ignore the “return” factor that you and I have to consider in our decisions. A ban on Gulf Coast and Alaskan oil drilling may provide some protection for the environment, but the result is higher fuel costs, bringing the fuels from greater distances, and supporting countries who then use that money to attack us. Also consider air quality regulations that will cost billions to comply with yet seem to do little more than avoid nuisances for a vast majority of the population. Consider how the federal government forces banks to give loans to people who cannot pay them back. What is the return for that program…2008 happened with the housing bust and near economic collapse.

I do feel for the folks in NYC and the fact that their water bills have been raised significantly and promises to continue their ascent, however, they do routinely elect Democrats so perhaps they deserve what they get. Local politicians are trying to petition EPA for a waiver. What I frighteningly find happening more frequently is a significant diminishing return on my votes for conservatives and/or Republicans.