Tuesday, July 29, 2008

Obama's Missing Thesis

Yet more of the documentation of Obama's past is "missing"

The latest report on Obama's missing thesis comes from MSNBC. Written his senior year at Columbia University, Obama's thesis was about Soviet nuclear disarmament. It's only natural to wonder what the budding socialist turned presidential candidate thought of nuclear proliferation in the early 1980s.

The Obama campaign, proving every bit as secretive as the Office of the Vice President, has been less than forthcoming with details. "Spokesman Ben LaBolt wouldn't even say whether Sen. Obama threw out his copy or lost it." At an earlier date, an aide actually told the New Republic the junior senator couldn't recall what he had written about, but as that editor notes, "who doesn't remember their senior thesis?" To get the inside scoop, MSNBC contacted the former professor who taught Obama's senior seminar and who recalls the content of the paper better than Obama himself.
His former professor, Michael Baron, recalled in an interview with NBC News that Obama easily aced the year-long class. Baron described the paper as a "thesis" or "senior thesis" in several interviews, and said that Obama spent a year working on it. Baron recalls that the topic was nuclear negotiations with the Soviet Union.

"My recollection is that the paper was an analysis of the evolution of the arms reduction negotiations between the Soviet Union and the United States," Baron said in an e-mail. "At that time, a hot topic in foreign policy circles was finding a way in which each country could safely reduce the large arsenal of nuclear weapons pointed at the other . For U.S. policy makers in both political parties, the aim was not disarmament, but achieving deep reductions in the Soviet nuclear arsenal and keeping a substantial and permanent American advantage. As I remember it, the paper was about those negotiations, their tactics and chances for success. Barack got an A."

What MSNBC doesn't report is that Baron, or at least a Michael Baron who also happens to run an electronics company in Florida, has given $1,250 to Obama. Maybe if the Obama campaign would release the thesis and Obama's college transcript like a normal presidential campaign, we could all decide for ourselves whether Obama deserves an A.


Obama Promises WHAT?

Barack Obama at Meet the Press, July 27, 2008:
"Our Campaign has been based on the idea we need to fundamentally change the way we do business both domestically and internationally that we should have a different kind of foreign policy where we are deploying all of America's power not just our military but also our diplomatic, economic, cultural and political power. That domestically we've got to promote not just "trickle down" economics but bottom up economic growth and reinvest for example in the clean energy sector. All those things, any time you're bringing about big change, there are some risks involved."

Rhetoric like this indicates the man thinks he can part the waters while gingerly walking on them. However, he has hidden in this pronouncement "from on high" the phrase "promote not only trickle down economics". By implication Obama is saying that trickle down economics has not only worked but that he plans to promote it. This is not only an acknowledgment of the success of capitalism but his endorsement of it. Needless to say this is a departure from the beliefs of his socialist friends and mentors and those of the folks at MoveOn.org and the Daily Kos.

Obama, of course, follows up that phrase with the caveat that we "need to promote.. bottom up economic growth". Here Obama runs into one of the massive contradictions in his political philosophy. His website's only solution to generate "bottom up growth" is to tax the rich and redistribute those monies to the middle-class (the poor have been left behind in his campaign). Well when you tax the rich you take money out of the capital pool that keeps America creating businesses and jobs thus diverting it from investment to consumption. Taxes are the socialist's punishments for the capitalist's success. You can't have it both ways. The way to growth is not taxation but investment by individuals.

Everyone knows that the Democrats and their entitlement industry will be thrilled with Obama. He is going to tax the rich unmercifully and add more programs to that burgeoning industry. However, hidden from sight is the fact that entitlements have never delivered "bottom up growth" - they have never made the poor richer just more dependent on their socialist handlers in Washington that keep the bandages of poverty clean while lying about their promises of a cure.

Right now Obama is hitting all the right notes to get elected in what is a "Democrat election year". The question is whether or not he can go from the soft education of socialism to the hard education of capitalism. Will he remain an undergrad or use the hard education of capitalism to get his masters. He recently became a multi-millionaire selling his books - hopefully that will mute this street organizer's fellow travelers and bring him into the sunlight. On Meet the Press he didn't have teleprompters to read and did a creditable job of handling some very tough questions.

His leftisy street creds took a beating by saying that trickle down worked and he will promote it - now let's see if that was just another Marxian trick.


Obama's Social Security Fine Print

Last week, Barack Obama revealed his plan to shore up Social Security's shaky finances by raising the income level on which the payroll tax is applied. Currently, incomes above $102,000 are exempt, with that threshold rising every year indexed to wage inflation. Mr. Obama would keep that limit in place, but then assess payroll taxes on incomes above $250,000, which his campaign claims would apply to only the richest 3% of Americans.

Mr. Obama angered liberals last year when he admitted that there was a "Social Security crisis." But at least Mr. Obama's base should be appeased now that his solution to the "crisis" is to soak the rich. One liberal columnist actually noted with glee the fact that this would take us back to top tax rates not seen since the 1970s.

According to the nonpartisan Tax Policy Center, Mr. Obama's new tax would siphon off 0.4% of gross domestic product annually. Combined with Mr. Obama's other tax-hike initiatives, "the total tax on labor would be close to 60 percent. In high-tax states like California and New York, the top rate would be even higher."

Would it help Social Security's financing problems? Mr. Obama has no idea. One of his senior economic advisers admitted to me that no one on the campaign has run any detailed models or performed any rigorous analysis. When one proposes an enormous tax increase, shouldn't there at least be a spreadsheet somewhere?

But the most alarming thing about Mr. Obama's proposal is that the $250,000 threshold, above which the payroll tax would be applied, refers to household income, not individual income. So it's quite deceptive when he claims that the $250,000 threshold will "ensure that lifting the payroll tax cap does not ensnare any middle class Americans."

Suppose your household consists of you and your spouse, each earning wages of $150,000 per year. Currently, you are each subject to the payroll tax up to $102,000 of wages, so together you are taxed on $204,000. Under the Obama plan, you'd be taxed again on another $50,000 of wages. At the current payroll tax rate of 12.4% - 6.2% from wage-earners and 6.2% from their employers - your household would be looking at a tax hike of $6,200 per year. You probably didn't consider yourself rich before, and you certainly won't after paying that tax bill.

But that tax bill could be higher still. While the payroll tax has always been calculated just on wages from labor, Mr. Obama hasn't decided yet what forms of income will be included in the $250,000 threshold. It's an open question whether it might include interest on savings and capital gains income.

And neither has Mr. Obama said whether the rich - and, truth be told, the middle class - paying his new higher taxes will get correspondingly higher Social Security benefits when they retire. Throughout the history of the Social Security program, there has always been a connection between what you contribute in taxes and what you get back in benefits. If Mr. Obama uncaps the wages subject to tax, but doesn't uncap benefits, then he has severed the link between them. Social Security would stand revealed not as a work-related contributory retirement system, but simply as a tax-funded welfare and income-redistribution program.

And for all that, Mr. Obama's proposal won't help Social Security's long-run solvency problems. According to the Social Security Administration actuaries, uncapping all wages subject to the payroll tax (not just those above $250,000) doesn't make much difference to the system's long-run solvency. If the increased payroll tax payments earn increased benefits, then only about one third of the system's 75-year shortfall is addressed. Even if there is no corresponding benefit increase, only about half the shortfall is addressed.

Remember, that inadequate result is what you get when all wages are subject to payroll taxes. Mr. Obama's plan - even with his household definition of $250,000 income - would collect far less than that. No wonder Mr. Obama's economic advisers aren't interested in doing any detailed analysis.

Worst of all, even the small contribution to Social Security solvency that Mr. Obama's plan might make is entirely illusory. In fact, the more taxes his plan collects, the worse Social Security's long-term situation gets. That's because all plans based on collecting taxes and saving them in the Social Security Trust Fund for future benefit payments rely on the U.S. government being able to redeem the Treasury bonds that trust fund holds.

There's only one place that the money to redeem those bonds can come from: taxes. So ironically, any tax dollars collected today will have to be collected all over again - plus interest. You like the idea of paying more taxes today for Mr. Obama's Social Security plan? Then just wait 20 years or so, because you'll get to pay more taxes all over again.


Monsieur Obama's Tax Rates

Celebrity chef Alain Ducasse insists that his change of citizenship this week from high-tax France to no-income-tax Monaco wasn't a financial decision but an "affair of the heart." Right. But even if he's being sincere, plenty of other Frenchmen have moved abroad to escape their country's confiscatory taxes.

Americans should be so lucky: Theirs is the only industrialized country that taxes its people even if they live overseas. That hasn't been a big problem as long as U.S. tax rates have been relatively low. But with Barack Obama promising to lift rates to French-like levels, this taxman-cometh policy could turn Americans into the world's foremost fiscal prisoners.

And make no mistake, taxes under a President Obama could be truly a la francaise. The top marginal tax rate, including federal, state and local levies, could approach 60% for self-employed New Yorkers and Californians. Not even France's taxes are that high now that President Nicolas Sarkozy has capped the total that high-earning Frenchmen like Mr. Ducasse can pay in income, social and wealth taxes at 50% of earnings.

Mr. Sarkozy set this "fiscal shield" because he knows that tax rates affect behavior. When he visited London this year, he observed that the British capital is now home to so many French bankers and other professionals seeking tax relief that it's the seventh-largest French city. Those expatriates choose not to use their creativity and investment capital to benefit France and its economy.

Senator Obama's plans to raise income, Social Security and capital-gains taxes amount to a belief that people don't react to punitive tax rates. If so, he needn't worry about people leaving the country and could let them pay taxes in whichever part of the globe they choose to live in. Once Americans are paying French-style tax rates, they ought to have the same freedom to move as Alain Ducasse.


Obama's old and discredited economics

In an election campaign in which not only young liberals, but also some people who are neither young nor liberals, seem absolutely mesmerized by the skilled rhetoric of Barack Obama, facts have receded even further into the background than usual. As the hypnotic mantra of "change" is repeated endlessly, few people even raise the question of whether what few specifics we hear represent any real change, much less a change for the better.

Raising taxes, increasing government spending and demonizing business? That is straight out of the New Deal of the 1930s. The New Deal was new then but it is not new now. Moreover, increasing numbers of economists and historians have concluded that New Deal policies are what prolonged the Great Depression.

Putting new restrictions of international trade, in order to save American jobs? That was done by Herbert Hoover, when he signed the Hawley-Smoot tariff when the unemployment rate was 9 percent. The next year the unemployment rate was 16 percent and, before the Great Depression was over, unemployment hit 25 percent.

One of the most naive notions is that politicians are trying to solve the country's problems, just because they say so-- or say so loudly or inspiringly. Politicians' top priority is to solve their own problem, which is how to get elected and then re-elected. Barack Obama is a politician through and through, even though pretending that he is not is his special strategy to get elected.

Some of his more trusting followers are belatedly discovering that, as he "refines" his position on various issues, now that he has gotten their votes in the Democratic primaries and needs the votes of others in the coming general election.

Perhaps a defining moment in showing Senator Obama's priorities was his declaring, in answer to a question from Charles Gibson, that he was for raising the capital gains tax rate. When Gibson reminded him of the well-documented fact that lower tax rates on capital gains had produced more actual revenue collected from that tax than the higher tax rates had, Obama was unmoved.

The question of how to raise more revenue may be the economic issue but the political issue is whether socking it to "the rich" in the name of "fairness" gains more votes.

Since about half the people in the United States own stocks-- either directly or because their pension funds buy stocks-- socking it to people who earn capital gains is by no means socking it just to "the rich." But, again, that is one of the many facts that don't matter politically.

What matters politically is the image of coming out on the side of "the people" against "the privileged."

If you are a nurse or mechanic who will be depending on your pension to take care of you when you retire-- as Social Security is unlikely to do-- you may not think of yourself as one of the privileged. But unless you connect the dots between capital gains tax rates and your retirement income, you may fall under the spell of the well-honed Obama rhetoric.

Obama is for higher minimum wage rates. Does anyone care what actually happens in countries with higher minimum wage rates? Of course not. Economists may point to studies done in countries around the world, showing that higher minimum wage rates usually mean higher unemployment rates among lower skilled and less experienced workers. That's their problem. A politician's problem is how to look like he is for "the poor" and against those who are "exploiting" them. The facts are irrelevant to maintaining that political image.

Nowhere do facts matter less than in foreign policy issues. Nothing is more popular than the notion that you can deal with dangers from other nations by talking with their leaders.

British Prime Minister Neville Chamberlain became enormously popular in the 1930s by sitting down and talking with Hitler, and announcing that their agreement had produced "peace in our time"-- just one year before the most catastrophic war in history began.

Senator Obama may gain similar popularity by advocating similar policies today-- and his political popularity is what it's all about. The consequences for the country come later


McCain and Obama differ on colorblind equality!

In an interview with George Stephanopoulus finally stepped away from ("abandoned" might be too strong) his ridiculous refusal to endorse colorblind equality and announced that, after all, and his previous reluctance to the contrary, he really does believe the state should treat its citizens without regard to race, ethnicity, or sex.
STEPHANOPOULOS: "Opponents of affirmative action are trying to get a referendum on the ballot here that would do away with affirmative action. Do you support that?"

MCCAIN: "Yes, I do. I do not believe in quotas. But I have not seen the details of some of the proposals. But I've always opposed quotas."

STEPHANOPOULOS: "But the one here in Arizona you support?"

McCAIN: "I support it, yes."

Obama, predictably, continues to attack the requirement that everyone be treated without regard to race as "divisive." Speaking to "journalists of color" in Chicago, Obama said:
"I think in the past he [McCain] had been opposed to these kinds of Ward Connerly referenda or initiatives as divisive. And I think he's right. You know, the truth of the matter is, these are not designed to solve a big problem, but they're all too often designed to drive a wedge between people" Obama said to a question asked from an audience of journalists.

So, treating everyone without regard to race, ethnicity, or sex is to "drive a wedge between people." Welcome to Obamaland.


Another comment on the above matter:

Senator John McCain said today that he supports the Arizona Civil Rights Initiative, which would ban preferences based on race, ethnicity, and sex in the state's public contracting, education (including university admissions), and employment programs. Essentially identical initiatives will be before voters this fall in Colorado and Nebraska, and have been enacted in California, Washington, and most recently Michigan.

Disappointingly, Senator Barack Obama immediately criticized McCain: "I think in the past he'd been opposed to these Ward Connerly initiatives as divisive. And I think he's right. These are not designed to solve a big problem, but they're all too often designed to drive a wedge between people."

Obama's criticism is wrongheaded for at least three reasons: (1) it is obviously preferential policies that are divisive, not their abolition; (2) the "big problem" of helping people from disadvantaged backgrounds can be addressed by helping people of all colors who are disadvantaged, rather than crudely and unfairly using race as a proxy for disadvantage; and (3) Obama himself has recognized as much, albeit fitfully and inconsistently, in his own statements-for instance, acknowledging the divisiveness of preferential treatment (in his Philadelphia speech), and the fact that his own daughters, for starters, come from privileged backgrounds and thus are "probably" not deserving of preferential treatment.

Kudos to John McCain! This is a solid, important commitment by him to the principle of E pluribus unum, and Americans across the political spectrum, but especially conservatives, should applaud him. As for Barack Obama: This is a critical moment in his campaign. Is he a candidate of change who will transcend race and bring us all together, rejecting divisive policies he knows in his heart are outdated and irrelevant-or just another Democratic pol who lacks the courage to stand up to powerful but aging interests in his own party, which remain hopelessly infatuated with identity politics and insist on perpetuating a set of policies that have always been unfair and divisive and are now outmoded to boot?



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