Wednesday, February 22, 2012

Quick Hits - February 22, 2012

Marie Colvin, an American journalist working for the Sunday Times, and Remi Ochlik, a French photojournalist, were killed earlier today, and 4 other journalists wounded, under Syrian artillery bombardment in Homs, Syria.  The Syrian strike of shells and rockets hit the safe house they were staying in...
Just a day before, on Tuesday, Colvin, from Oyster Bay, New York, had talked movingly about the attacks on Homs and, in particular, its Baba Amr suburb by Assads forces.

"The Syrians are not allowing civilians to leave. Anyone who gets on the street, if they are not hit by a shell, they are sniped," she told the U.K.'s ITN television news.

"There are snipers all around Baba Amr on the high buildings," Colvin added. "I think the sickening thing is the complete merciless nature ... they are hitting civilian buildings absolutely mercilessly, without caring. The scale of it is just shocking."

Colvin, 57, had worked as a foreign correspondent for The Sunday Times for the past two decades. She was instantly recognizable for an eye patch she wore after being injured by shrapnel while covering conflicts in Sri Lanka in 2001.
London's Telegraph newspaper is reporting today that intercepted Syrian Army communications reveal direct orders for troops to target the makeshift press center where Colvin and Ochlik died.

Meanwhile, 2 Iranian warships which transited the Suez Canal and entered the Mediterranean earlier this week have docked in Syria.  It is unknown if they are making a support visit - or a support visit delivering weapons to the Assad regime.  We do know that Russia is continuing its supply of military arms to Syria.

New issues are threatening the Greek bailout approved yesterday by the European Union Finance Ministers.  The International Monetary Fund is indicating that they will only contribute a maximum of 10% of the 140 billion euro bailout fund - far less than was expected to be made by the IMF.  This means that either the EU nations or the European Central Bank has to make up the shortfall within the bailout package.  The IMF also says that the EU must increase the size of the 'firewall' fund from 500 billion Euros to 750 billion Euros. 

Germany, in particular, is incensed with the IMF - saying it will neither contribute more towards the Greek bailout or increase the bailout firewall fund.

There are also strong indicators that the German Bundestag may vote against the bailout package for Greece - withholding German funds from the package based on concerns that Greece will be able to honor their terms of the deal.  One of the elements of this concern comes from a report from the Greek Parliament that the current year budget deficit will be 6.7% rather than the planned / required 5.4%.

Large protests continue in Athens over the bailout package and the demands being placed on Greece by the 'troika' - the European Union, the European Central Bank, and the IMF.  Greek hospital workers have announced that they will start a 24 hour strike today.

Ratings company Fitch has announced that it is cutting its credit rating of Greece from CCC to C - the level that indicates default.  Fitch is saying that the debt swap that is part of the bailout package which results in a 75% reduction in value of bonds held by private investors constitutes a 'default' on that debt.

One last international note before we switch to the domestic news which unsurprisingly demonstrates the increasing direction of the US to follow Greece down the path of fiscal irresponsibility...  In the UK, after boosting the top income tax rate to 50% in order to generate additional government revenues as well as addressing 'fairness' - they are finding that the higher income tax rate is 'failing to boost revenues'.  This is what happens when one ignores the Laffer Curve...

The Obama Administration is proposing a major corporate income tax reform which will result in the lowering of the top corporate tax rate to 28% from 35%.  In exchange for the decrease in the top tax rate, the Administration is proposing to eliminate dozens of deductions and loopholes which will have the effect of raising overall revenues from corporate taxes.
The administration's plan would raise an additional $250 billion in taxes over 10 years to offset or eliminate many temporary deductions, credits and other measures that are extended every year, such as a research and experimentation tax credit, a senior administration official said.

Other key details couldn't be learned Tuesday night, such as the exact treatment of large subsidies for manufacturers, the precise rate the White House wants to charge on overseas earnings and how the plan would affect companies structured so they don't pay the corporate income tax.

One theme of the proposal is offering new tax benefits for U.S. manufacturers while raising taxes on U.S. companies with large operations in other countries.
As with most initiatives from this Administration, the devil is in the details. 

For example, this reform of corporate taxation will again highlight the Administration's efforts to not only pick 'winners and losers' but to use tax policy to define behavior.  The reform plan will give tax breaks to manufacturers (who employ union workers) and new energy companies (think Solyndra) while hiking taxes for oil companies and charging a minimum tax on firms for revenues that they earn outside of the United States.

Unfortunately, while in concept tax reform is good and needed, one needs to make sure that the goals for reform are the right goals - and not based around picking winners and losers or trying to define / influence behavior...particularly when it comes to corporate taxation.  We need to remember that corporations really do not pay taxes.  Their customers pay the tax obligations of the corporations.

Stephen Green, Vodkapundit'Economics for Dummies or Presidents (But I Repeat Myself) -
Let’s say Corporation D is smart and lucky enough to show a profit — and in our perfect world, it doesn’t need to form any shelters to dodge any taxes. What does Corp D do with the money? It has several choices, including:

• Hire more workers
• Pay dividends
• Increase pay and/or benefits
• Deposit a rainy day fund
• Invest in expanded production or merger

That’s not a complete list, but you get the idea.

Now, perfect worlds never last, so let’s say some smart laddie gets himself elected President, sees all that money Corporation D made, and says, “Those greedy corporations need to pay their fair share!” And Congress goes along and imposes a 25% tax on profits. What happens next? That tax gets paid, all right.

It gets paid by the new workers who weren’t hired, by the retirees and mutual funds who got smaller dividend checks, by the employees who didn’t get a pay raise, by the banks who got smaller deposits to loan out, by the entrepreneur who couldn’t get a loan, and it’s paid by each and every one of us, in the form of reduced investment and lower economic growth.

Yes, Corporation D holds the receipt for taxes paid. But the money came out of our hides, not “theirs.”

We have met the greedy corporation, and he is us.
Then there is the President's economic assault on corporate dividends...
President Obama's 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.

Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.

Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.
This isn't reform.  It's about bring more money into the government so the government can spend it as it see fits.  It's as vapid as the Administration's whinging about 'fairness'...
Four years ago, TV interviewer Charles Gibson pointed out to candidate Barack Obama that raising capital gains tax rates had on a number of occasions led to less capital gains tax revenue being collected -- and, conversely, lowering the capital gains tax rates had on other occasions increased the amount of capital gains revenue collected by the government.

Obama readily admitted that. But he said that "fairness" justified a higher tax rate on "the rich." Yet how does a higher tax rate on paper, without a real increase in the amount of taxes actually collected, promote fairness?

However, raising tax rates on "the rich" pays off politically, even if the government loses revenues when the rich put their money into tax shelters.

High tax rates in the upper income brackets allow politicians to win votes with class warfare rhetoric, painting their opponents as defenders of the rich. Meanwhile, the same politicians can win donations from the rich by creating tax loopholes that can keep the rich from actually paying those higher tax rates -- or perhaps any taxes at all.
Once again, Laffer Curve and failing to learn from the experiences of the UK (and other European nations).

One of the biggest problems of the President and this Administration is that they seem to have the belief that their academic theories seem to work perfectly in the real world outside of academia....or is it just that they are true economic dummies?

Senior Presidential Adviser Valerie Jarrett is the latest to prove the 'stuck on stupid' logic when it comes to economics - as she echoes a vapid talking point made by former Speaker of the House Nancy Pelosi - "People who receive that unemployment check go out and spend it and help stimulate the economy..."

"Even though we had a terrible economic crisis three years ago, throughout our country many people were suffering before the last three years, particularly in the black community," Jarrett said. "And so we need to make sure that we continue to support that important safety net. It not only is good for the family, but it's good for the economy. People who receive that unemployment check go out and spend it and help stimulate the economy, so that's healthy as well."

Collecting unemployment is not like winning the lottery for most people. If one here in SoCal earned $100,000 and goes on unemployment when they were downsized, they will receive only about $400 per week - about $1600 per month. That's quite a drop from a $8250 month income before taxes. They will spend that unemployment - on housing, on food, and on gasoline - but at a far lower level than when they earned 5 times as much.

Want to know a better way to stimulate consumer spending - enact pro-growth economic policies, lower corporate costs via taxation and excessive regulations, stop using tax policy to define behavior, lower energy costs and taxes so people have more as opposed to being forced to give it to the government.

The White House has announced that President Obama will be delivering a major speech on domestic energy and soaring gasoline prices tomorrow at the University of Miami.

I wonder how he will frame his positions tomorrow - as compared to his position as a candidate in 2008 when he castigated President Bush on high prices, and then advocated still higher prices, but at a more gradual increase rate...

HARWOOD: As difficult as this is for consumers right now, is, in fact, high gas prices what we need to let the market work, a line incentive so that we do shift to alternative means of energy?

Sen. OBAMA: Well, I think that we have been slow to move in a better direction when it comes to energy usage. And the president, frankly, hasn't had an energy policy. And as a consequence, we've been consuming energy as if it's infinite. We now know that our demand is badly outstripping supply with China and India growing as rapidly as they are. So...

HARWOOD: So could these high prices help us?

Sen. OBAMA: I think that I would have preferred a gradual adjustment. The fact that this is such a shock to American pocketbooks is not a good thing. But if we take some steps right now to help people make the adjustment, first of all by putting more money into their pockets, but also by encouraging the market to adapt to these new circumstances more quickly, particularly US automakers, then I think ultimately, we can come out of this stronger and have a more efficient energy policy than we do right now.
Hmm, putting more money into their pockets.  Got that covered - $40 / month via the temporary Social Security Payroll Tax reduction.  Encouraging the market to adapt to new circumstances?  Got that covered as well - massive subsidies for GM Volt, massive taxpayer loans to green energy companies - particularly those that donated heavily to the Obama campaign, and domestic policies to reduce fossil fuel production and usage in the name of 'climate change'.  All of this brings us to an efficient energy policy and Euro-style gasoline prices..

The Obama Administration is getting more and more Orwellian / Ministry of Truth.  During yesterday's White House Press Briefing, former Time Magazine correspondent, and now Chief Spinmeister, Jay Carney rewrote history when questioned by the WH Press Corps about the high gas prices and the linkage to the Keystone XL pipeline cancelled by the President....

"In terms of Keystone, as you all know, the history here is pretty clear. And the fact is because Republicans decided to play political with Keystone, their action essentially forced the administration to deny the permit process because they insisted on a time frame in which it was impossible to completely approve the pipeline," Carney said when asked about the pipeline by ABC News' Jake Tapper.

Later in the briefing, Carney says it is the Republicans' fault.

Jake Tapper: "How can you say that you have an all the above on approach if the President turned down the Keystone pipeline? And you blame the Republicans for making it political."

Carney: "But the President didn't turn down the Keystone pipeline. There was a process in place, with long precedent, run out of the State Department because of the issue of the pipeline crossing an international boundary, that required an amount of time for proper for review after an alternate route was deemed necessary through Nebraska at the request of the Republican Governor of Nebraska and other stakeholders in Nebraska and the region that needed to play out, to be done appropriately. You can't review and approve a pipeline, the route for which doesn't even exist.

Yes, that's right. The President didn't cancel Keystone XL - the Republicans did. When all else fails, tell the Big Lie.

Another Big Lie being advanced by the mainstream media - that the Obamacare mandate developed by HHS directed at religious organizations isn't about religious freedom, it's all about contraception, birth control, and a women's choice. The Hill takes this to the next level in this pathetic article which tries to position the GOP argument on religious freedom grounds as their 'fallback' found out of 'desperation' after losing the debate on contraception...
Democrats successfully shifted a debate over religious liberty to birth control last week, but opponents of the contraception mandate are trying to shift it right back.

The political debate over the birth-control mandate in the healthcare law is largely a fight over how to frame the issue.

Actually, the one's fighting to frame the issue are those defending the Obama Administration's unconstitutional assault on religious freedoms.  Seeing this as an assault on religious freedoms isn't the GOP 'desperation' position, it's been the position of the GOP and conservatives from the moment that HHS announced their mandate on religious organizations.

I'm not surprised.  A report finds a spike in earmarks to Democratic lawmakers during controversial votes in Congress...
"When you examine the recipients of those grants, there were at least 32 vulnerable house Democrats who received significant federal grant money during the run-up or directly after the votes on those pieces of legislation," says Lachlan Markay, one of the authors of the report.

The amount of earmarks spiked around the time of difficult votes such as cap and trade, then dropped, only to spike again around controversial financial regulations known as Dodd/Frank, and spiked the most just before the vote on the health care bill.

Cap and trade was tough for many Democrats, especially in the Midwest, because even the president acknowledged it would, as he put it, cause energy prices to "skyrocket."

The health care law remains controversial even today, with many polls showing majority of Americans oppose to it.

On their websites, lawmakers didn't advertise their votes, but did tout at length the money they'd gotten for various local projects.

Press Secretary Jay Carney reminds us - "The president's opposition to earmarks is well known. The fact of the matter is I'm confident the issuance of grants from agencies are done ... in a merit based way," White House spokesman Jay Carney said.

How do we know Carney's lying? His lips are moving.

Wrapping up today's report, we have this gem from a member of OccupyWallStreet writing a Letter to the Editor of the USA Today promising that OWS will storm Wall Street and Washington DC with guns... more peace and love from the anarchists, marxists, rapists, and thugs of OWS...  I think they are also tiring of 'Hope and Change'.

On This Day in History

1732 - George Washington is born

1942- President Roosevelt orders General Douglas MacArthur out of the Philippines as the American defense of the islands collapses.  MacArthur delays leaving until early March - shifting to Australia to take command of US forces there.

1946 - George Kennan sends his 'long telegram' to the State Department - sets the strategic path towards the US Cold War policy of 'containment' vis a vis the Soviet Union and communist expansion.

1980 - 'Miracle on Ice' - the US Olympic hockey team upsets the 4 time defending gold medal Soviet team by a score of 4 - 3 in the XIII Olympic Winter Games at Lake Placid, NY.  This is the first Olympic hockey loss for the Soviet team dating back to the 1968 games.  3 days prior to the start of the games in Lake Placid, the Soviet team defeated the American amateurs 10 - 3 in an exhibition game.  The US team would go on to win the 1980 Olympic gold medal.

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