As GM goes, so goes the nation

And don't forget...What's good for GM is good for America. I like those phrases less each time I hear them. Even more, now that GM and Chrysler both are becoming nationalized companies. Government officials are now not just bailing out the companies, setting salaries and making management hiring decisions, they're also going to guarantee warranties?

The Daily Show With Jon Stewart	M - Th 11p / 10c
Carmageddon '09 - Lemon Aid
comedycentral.com
Daily Show Full Episodes Economic Crisis Political Humor

And, from the folks at Reason:



As one fellow said after seeing the piece from Reason...

GM + Government Motors. If Amtrak is any guide, future cars will break down often, get bad miliage, and cost $100,000 each.

Sometimes a shrug is just a shrug

I've been reading a lot about "going Galt" lately. I was catching up on some reading while waiting through a couple of dentist and orthodontist appointments on Monday, and hit three pieces in one sitting. Plus comments. Lots of discussion board topics popping up out there, too.

• An editorial by Stephen Moore, on WSJ online, Atlas Shrugged - from fiction to fact in 52 years.
• Over at Angry Bear, a historical look at "going Galt", with a comparison of GDP growth under the last dozen or so presidents.
• Articles about conservatives making plans to drop out, to cut the amount of taxes they'll pay, as a way of battling the policies being passed by the democrat run congress and signed by President Obama.

”Do you ever wonder,” wrote Dr. Helen Smith, “after dealing with all that is going on with the economy and the upcoming election, if it’s getting to be time to ‘go John Galt?’”
...

The themes had stuck with her readers, too. Within days, Smith had collected nearly 200 comments and a steady stream of e-mails from readers who were responding to the possibility of a Democratic victory by brainstorming ways to pull out of the economy. Four months later, Smith — a host of “Ask Dr. Helen” on the right-leaning web site PajamasTV — is collecting stories and suggestions from readers scattered across the country, all of them using the “Atlas Shrugged” analogy as a rallying cry against President Barack Obama’s economic policies.

Smith was a little ahead of the curve of what has become an incredibly popular meme. Across the broad conservative movement, from members of Congress to activists to economists, Rand’s final, allegorical novel is being looked at with fresh eyes. According to the Atlas Society, a think tank that promotes and analyzes Rand’s work, sales of “Atlas Shrugged” have tripled since the presidential election. One congressman says that Rand wrote a “rulebook” that can guide conservatives through the age of Obama; another calls Obama’s policies something right out of the mind of Rand. One economist says that Rand’s fantasies have become reality. Smith is one of many activists citing Rand to explain their decisions to sell their stocks, or to explain why the president’s “demonization” of run-amok CEOs is aggravating the economic slowdown. The popular meme is giving critics of the president’s policies a way to explain why, they believe, it’s doomed to fail — because Rand predicted all of this.

“Just this weekend,” said Rep. John Campbell (R-Calif.) on Wednesday in an interview with TWI, “I had a guy come up to me in my district and tell me that he was losing his interest in the business he’d run for years because the president wanted to punish him for his success. I think people are reading ‘Atlas Shrugged’ again because they’re trying to understand what happens to people of accomplishment, and people of talent and energy, when a government turns against them. That’s what appears to be happening right now.”

The plot of Rand’s novel is simple, despite its length — 1,088 pages in the current paperback edition. The United States is governed by bureaucrats, “looters” and “moochers,” who penalize and demonize creative people. The country is in decline because creative people are disappearing — they have followed the innovative John Galt to a mountain enclave, “Galt’s Gulch,” where they watch society crumble. Creativity has gone on strike (the working title of the novel was “The Strike”), and the engine of capitalism cannot run without it.

...

For Dr. Smith’s readers, like their counterparts writing in to libertarian blogs and protesting Obama at “tea parties, ” the novel is most useful for the concept of “going Galt.” “I do some consulting on the side and the taxation on that income is unbelievable,”wrote one reader to Michelle Malkin. “So, to heck with this. I’m ‘going Galt’ on my consulting.” “I’m considering moving to a small family farm in a foreign country,” wrote a reader to Smith, “and looking into the practical side of the issue right now. It will take a year or two of preparation, but might be feasible and even comfortable.”

Smith, who’s still mulling over ways that she can “go Galt,” sees a possibility for a moral stand. During the Iraq War, she read about a painter who’d painted less, reducing his income, in order to dodge taxes and thereby make sure he didn’t fund the war. “I’d go John Galt just to not pay for programs I don’t believe in,” said Smith. “If we’re opposed to socialistic concepts — if we know they don’t work — why should we pay to support them?”

That's just what I read in one morning, but there's a whole lot more. I know it isn't something new. Radio talk show hosts have been talking about it for years. It's not always about quitting and walking away, either. Back in December, Neal Boortz proposed the top income earners cut spending to the level of the middle class, to show the impact of their money in our system. (I remember this, because I thought this made more sense than the threat to sit at home & do nothing - which was too much like the far left democrats who annouce plans to leave the country if republicans are elected.)

Why does shrugging have to be a battle strategy? I'm thinking about it, and not as part of lodging a protest.

It's tax season, and I'm looking at the numbers for my work as a freelancer. My total invoices have gone up, but the money we get to keep has dropped. I figured it was a good time to sit down with all the tools available online to help answer "Should I keep working?" for the modern working mom. They weren't that helpful for my situation, so I ended up using the tax calculators from the IRS and TurboTax websites.

Just for fun, I put myself in the mindset of being stuck in a conversation between my ultra right mother and far left brother-in-law or uncle. (Okay, so it wasn't just for fun. I know I'll have to tell my mom this has nothing to do with any protest/movement, as well as being on the spot for my "real" reasons.)

Whether or not I bill another hour this year, our tax rate does not change. As long as that is the case, a liberal does not see it as an increase in taxes. It does not matter that the additional income wipes out eligibility for deductions and tax credits, the underlying tax bracket remains unchanged.

Our federal income tax bill for 2009 goes up by a little over $5,000 with my income. Less than $3,000 of that is the income tax. The remainder of the increase comes from the phase out of the tax credits for dependents, along with a reduction in the allowable deductions for a few other items. But, to the folks in charge, that's not a tax increase. Technically, they're correct.

The folks "fighting for the middle class" are doing exactly what they've said. They're keeping us in the same tax bracket. They may raise the cap on social security, meaning there's more deducted from the paycheck over the year. But, social security is not income tax. The income phase out for child credits, or the amount eligible for the IRA, childcare and mortgage deductions may be lowered, but it's not a tax increase, it's closing a deduction / loop hole.

Add to the $5,000 in increased federal taxes:
Self employment taxes - $2,000 (Which I wouldn't have if not working.)
State taxes - $1,200 (Over the amount due without me)

There are extra expenses which go into me working, beyond the deductible business expenses. There's afterschool childcare, at about $4,000 per year. Summer/Day camp, $3,600 per year. And the weekly maid, another $4,000 per year. If I wasn't working, there'd still be summer enrichment activities; but it would be a few weeks of half day tennis, swimming or art, at about half the cost. And, I might still keep maid service, but it would be every other week. (Note that I'd be cutting my housekeeper's income by $2-4,000, and reducing payments to afterschool programs and camps by at least as much. That's a different rant though)

There's also the extra time and effort. I juggle schedules and care for five people - work, school, meals, laundry, music lessons, sports/activities, doctors, dentists, etc.... it would be much simpler if not bound to print deadlines.

I work part time. I do it because I enjoy it. Finishing a project gives me a sense of satisfaction. That is the second part of the argument made by those who poo-poo the idea of middle class workers giving extra effort the shrug. Yes, there is more than just the monetary reward for working. But the money does make a difference. When me having a job nets a profit, even after all those things mentioned above, it adds to my incentive to work.

For me, the decision whether or not to "go Galt" is not part of a battle plan. I'm just looking for the answer to a simple question. As the "not-an-income-tax-increase" reduces the amount of money I get to keep at the end of the day, the number of times I ask myself the question goes up.

"Is it worth it?"

It's only a matter of time before the answer becomes no.

Stimulus - Sticker Shock

The stimulus package passed. Instead of everything being sunshine & lollipops, I'm hearing there's already talk about a second stimulus, and possibly a third. Why not? TARP led to TARP 2, and the auto bailout didn't last more than a couple of months before it became known as the first auto bailout.

I've read about costs for individual portions of the bill, the total amount of spending, the number of jobs to be created, the various tax credits - both those which were cut and those kept. I was finding it hard to locate the actual cost to the individual tax payer. Until Monday or Tuesday of this week.

William La Juenesse was on Fox Business (my favorite cable news/business channel, by the way), with exactly the numbers I'd been searching for. I found his earlier interview at FoxNews.com - in the Videos section, under "Sticker Shock." I couldn't find a written copy of the numbers, the automatic transcript was jumbled, and the video couldn't be embedded, so I listened through the clip, pencil in hand.

La Juenesse started with the official cost of the Stimulus Bill - $787 Billion, and questioned where the money would be coming from. 15% of the taxes collected in the US come from corporate taxes, so the majority will be paid by individuals. (That individuals also pay corporate taxes in the form of higher prices is a completely separate topic.)

La Juenesse spoke with John Lott, Economics Professor and author of Freedomnomics (great book), and with Kevin Hassett, a Columbia Univ. Economic Professor about the costs to the individuals.

Heritage has the cost at $8,000/year, per household, but Lott and Hassett answered questions I find much more interesting.

Current Deficit + Bank Bailout = $3.7 Trillion Cost per Household = $27,000 With Stimulus Expense = $40,000
The average household income is pretty close to $40,000, in case you didn't know.

Question 1: If we had to pay for the Stimulus Package tomorrow, in a lump sum, how much would it cost?
Tax Bracket Tax Bill
$25,000-30,000........$2,500
$75,000-100,000......$14,000
$100,000-200,000...$28,000
$200,000-500,000...$90,299

Question 2: If we finance at today's interest rates (30 years @ 4.5%), what will it cost?
Tax Bracket Tax Bill
$25,000-30,000........$4,687
$75,000-100,000......$26.250
$100,000-200,000...$52,500
$200,000-500,000...$168,750

That's almost double the lump sum cost.

In all the talk of the spending - sorry - stimulus, the politicians are quick to point out the tax breaks. Sounds great, until you hear that the tax breaks amount to $400/year.

$400, against a personal tax bill of $2,500 to $90,000. Or, over 30 years, $12,000, against the $5,000 to $168,000 of borrowed money. This is without any additional deficit spending on new & improved stimulating bailouts.

We all know this is how it's going to be paid. There's nothing there. The treasury will be printing money, causing us all to pay the hidden tax of inflation. And when that's not enough, what's next? Increasing income tax? Extra payroll deductions? Value Added Tax?

As La Juenesse closed his segment...

It's going to cost either you and I or our children. One or the other, but we have to pay the piper.

The video clip continues with Peter Morici, Economic Professor from University of Maryland, discussing why the stimulus will fail, even when it delivers portions of what's promised - such as over 2 million jobs (temporary jobs, he points out). If you don't know Morici, you should watch his congressional testimony during hearings on the first auto bailout .


Adding two blogs to my regular reading list:
Angry Bear. Good stuff, even when it's not good news.
Predictably Irrational. Dan Ariely, author of the book Predictably Irrational. Also links up to the feed for his Arming the Donkeys podcast.

Reason TV: Stimulis Ad

I'm avoiding conversations about the current battle over bailouts and stimulus packages as much as possible. It's gotten tiresome, both with liberal friends and with my ultra-right wing mother. Thanks to Reason TV, I no longer have to say a word. I can just send this link:

Putting the (R) back in RNC

I officially became a republican again about five years ago. Not because I agree with everything the party stands for - that's far from the case. I left the Libertarian Party because of the kook factor. The 9/11 conspiracy talk and increasing importance placed on being the purest Libertarian in the room... it was too much for me. The DNC was never an option. I just can't embrace the idea that the money I earn is public property. I prefer candidates who are fiscal conservatives AND social liberals. The RNC platform of less regulation, lower taxes, and lower spending was the best I could hope for, right?

I held my nose and voted for (R) candidates who had supported no child left behind and drug coverage for seniors, while allowing partial privatization of social security to drop off the radar. After all, it was better than the (D). That ended in 2008.

I voted for a few republican candidates on the ballot this past November. (Not Saxby Chambliss.) I didn't cast a vote for President. I skipped that section of the ballot. I couldn't vote for Barak Obama. He seems to be a good man, but I have a family to take care of - I didn't think I could afford him. I wouldn't vote for John McCain. His stance against pork barrel projects didn't translate to opposition for other government spending, and he was proud of the job he did on campaign finance reform. RINO!

The last few months of bailouts have only served to give me confirmation that I made the right choice. I knew I wasn't the only fed up republican out there. Even my mother, who joined as a young republican back in the 60s, admitted to feeling the need for a shower after leaving the voting booth this year.

Well, somebody at RNC headquarters seems to have remembered the R:

(from the washington times) Republican Party officials say they will try next month to pass a resolution accusing President Bush and congressional Republican leaders of embracing "socialism," underscoring deep dissension within the party at the end of Mr. Bush's administration.

Those pushing the resolution, which will come before the Republican National Committee at its January meeting, say elected leaders need to be reminded of core principles. They said the RNC must take the dramatic step of wading into policy debates, which traditionally have been left to lawmakers.

"We can't be a party of small government, free markets and low taxes while supporting bailouts and nationalizing industries, which lead to big government, socialism and high taxes at the expense of individual liberty and freedoms," said Solomon Yue, an Oregon member and co-sponsor of a resolution that criticizes the U.S. government bailouts of the financial and auto industries. Republican National Committee Vice Chairman James Bopp Jr. wrote the resolution and asked the rest of the 168 voting members to sign it.

Finally! It's a case of too little, too late, but (raising coffee mug in toast) here's hoping it catches on.

W.W.A.R.H.D?

What Would Ayn Rand Have Done?
From Time/CNN, 9/19/08

I know it's not as warm and spiritually fulfilling as the WWJD - What Would Jesus Do? bumper stickers, but I think it's a really good question, especially in today's social and political climate.

Don't get me wrong. I'm a big fan of thinking about living my life in a "do unto others as you would have them do unto you" fashion , and think the world would be a better place if more individuals thought in the terms of The Golden Rule. That's a rule for the individual, though, not for the Government.

The Government's job is to protect my life, my liberty, and my property from invaders, both of the foreign and domestic variety. Someone breaking into my house? I want the police to show up and arrest him - assuming I didn't exercise my 2nd amendment right before calling 911. Should Canada decide it's a good idea to march south in order to seize our excellent health care facilities, I'd expect the US armed forces to fend them off at the border. (Sorry. Had to clean up the coffee I snorted towards the monitor at this thought.) If a bank or investment institution lies to my grandfather about the securities backing his accounts, I want the weasels to either make it right through restitution, or go to jail.

That's it. That's all I want my government to do. I do not want the government to seize a portion of my income to fund the bailout of mortgage backed securities. That job is for the individual corporations to handle, while being accountable to stockholders and customers.

I do not want government wasting my time, tax dollars and patience to come up with bridge loans for struggling corporations. Not even if, as I've heard pointed out in several interviews this last week, the government stands to make money on the deal as the assets are sold off. That's not quite accurate. I should have said Especially if... as the government is not supposed to be a profitable enterprise. The only money making the government is allowed is the minting of currency, and even that it's been doing to excess lately.

If regulatory agencies set up the "guidelines" under which all these failing companies have been operating, how exactly are these same bureaucrats qualified to fix the even bigger problems we have now? They take over more of the operations and asset management, all in the name of the "public good". I'm not that far into my stack of economic books, but I'm pretty sure public (government) ownership of industry is called Socialism. And the government management of ostensibly privately held companies? That's Nationalism.

The Fed and Treasury are taking the step of removing from power the company heads who were in charge during the plunge into the current mess. As more companies approach the government for help, and from industries other than banking, who is going to pull the plug on Paulson and Bernanke for their gross mismanagement?

What's wrong with this picture?

Click the photo. See the full-size $100,000 gold certificate.

First off - Why? Advertising is supposed to be the means for a business to promote its goods and services over that of the competition. The FDIC has no competition. It's a monopoly.

That's a gold certificate. A guarantee that there is gold stored in vaults of the federal treasury to cover that amount. How long has it been since banks handled gold & silver certificates? I'm pretty sure it's not even legal to own one. You darn sure couldn't walk in and exchange it for gold bullion. (Quick look at lewrockwell.com & wikipedia - private citizens are prohibited by law from owning gold certificates)

I know this is propaganda, designed to make us feel good about our financial institutions and markets, but... come on... without anyone losing a penny?! The penny isn't worth a penny these days, so I'm not sure that's going to inspire confidence. The dollar is weak. Inflation is rising, no matter how the Fed and Treasury try to juggle the numbers. At the rate we're going, I'm more likely to think about the $100,000 gold certificate and the penny as an example of exchange than to breathe a sigh of relief at how the government is protecting my savings.