Saturday, February 20, 2010
Friday, February 5, 2010
Saturday, November 21, 2009
A Cornucopia of Consequences
Harry Reid’s Senate health care bill includes what is being called the “Botox tax”, a five percent excise tax on the cost of elective cosmetic surgery. That reminded me of a piece of federal excise tax history that should be known (but isn’t) to every Washington reporter and taught in every high school civics class (if we were ever again to teach high school civics) as an abject lesson in the all too common unintended consequences of legislation.
President George H.W. Bush broke his "read-my-lips" pledge to not allow any new taxes (and in doing so probably lost any chance of reelection) when he signed the Budget Reconciliation Act of 1990. Among other new taxes the bill contained a bit of demagogic class warfare embodied in an excise tax on boats costing in excess of $100,000 and other “luxury” items like jewelry and upscale cars. This was heralded far and wide by liberals with full court media support as a means of making the rich pay their “fair share” to reduce the deficit! To provide proper perspective some television news broadcasts would show footage of Donald Trump’s yacht, the Trump Princess while discussing the proposed tax. At 282’ the boat was almost the length of a WWII Evarts Class Destroyer Escort. Any politician opposing that tax risked being demonized as protecting the extravagant lifestyle of the rich against the interests of the common folk.
There were a few sensible but unheeded voices that tried to warn that the torch and pitchfork bearing mob being led up the hill to attack the castle may end up slaying other than the monster. Among the few was the late William F. Buckley. Buckley pointed out the crux of the problem in that it was reasonable to assume that people who were rich did not became or stay rich by paying for something considerably more than its actual value!
In 1990 a Congressional Committee on Taxation projected that the “luxury taxes” would bring in $31 million deficit reducing dollars. The actual result was very different. Revenues in 1991 were only $16.6 million, because sales of such taxable products plummeted. With the boats, people either didn’t buy them or bought them overseas where the tax didn’t apply. Yet that was only the beginning of the unintended consequences:
The excise tax caused people to change their behavior and buy fewer of the taxed products. Over the next few years it got even worse. The NY Times reported:
A trade magazine reported:
By 1993 Congressman John Kasich had this to say:
Republican Senator Slade Gorton in 1993 said with biting irony:
The Congressional Research Service reported in classic bureaucratic understatement:
A tax that was intended to raise revenue and soak the rich ended up costing the federal government millions in lost revenue and unemployment payments while devastating thousands of middle class families and hundreds of small businesses. The excise tax on boats was eventually repealed in 1993 (with far less media fanfare than its passage).
Now we may have an excise tax on elective cosmetic surgery, as Politico reports:
Yes, the $5 billion was needed to make the numbers add up in the Senate health care bill. However, the “global medical tourism” sector has already been growing rapidly for procedures like elective cosmetic surgery. Should anyone be surprised if this excise tax results not only in a revenue shortfall from projections but also in more such surgery being done in places like Costa Rica with commensurate job and income losses in the U.S.?
Having said all of this, while focus on the excise taxes is worthwhile in itself, it can obscure the looming larger danger. Here is the text of the Budget Reconciliation Act of 1990 relating to the tax on boats:
That is it, in total. Those relatively few lines, a fraction of a page, caused terrible even if unintended harm to many thousands! The health care bill passed by the House is over 1900 pages. The proposed Senate bill is over 2000. If that passes, the two bills are brought together to breed a kind of mutant offspring in reconciliation. It is hard to imagine that the result of that will be a smaller piece of legislation.
These bills have been rushed, and not widely read or understood even by those who will vote on them. They have been cobbled together by Congressional staff members and lawyers with little or no experience in health care. It is one thing and terrible enough to have thousands of blue collar workers in the ship building industry lose their livelihoods to satisfy other people’s envy made manifest in ill-thought legislation. It is quite another order of magnitude to have thousands of pages of legislation passed that could potentially effect the health, medical care and well being of every American with all manner of unintended consequences lurking in those pages!
NPR’s Mara Liasson accurately summed up the Democrats’ position this way:
It took the Congress three years to “fix” the excise tax on boats by repealing it, even in the face of the devastation to thousands of blue collar workers and a decline in tax revenue. Of course, the problem need never have happened in the first place if Congress had thought through their proposed legislation. What damage will have to be done to the health and medical well being of how many American citizens before Congress might “fix” the things they get wrong now, the unintended consequences in those thousands of unread pages they are rushing to pass?
President George H.W. Bush broke his "read-my-lips" pledge to not allow any new taxes (and in doing so probably lost any chance of reelection) when he signed the Budget Reconciliation Act of 1990. Among other new taxes the bill contained a bit of demagogic class warfare embodied in an excise tax on boats costing in excess of $100,000 and other “luxury” items like jewelry and upscale cars. This was heralded far and wide by liberals with full court media support as a means of making the rich pay their “fair share” to reduce the deficit! To provide proper perspective some television news broadcasts would show footage of Donald Trump’s yacht, the Trump Princess while discussing the proposed tax. At 282’ the boat was almost the length of a WWII Evarts Class Destroyer Escort. Any politician opposing that tax risked being demonized as protecting the extravagant lifestyle of the rich against the interests of the common folk.
There were a few sensible but unheeded voices that tried to warn that the torch and pitchfork bearing mob being led up the hill to attack the castle may end up slaying other than the monster. Among the few was the late William F. Buckley. Buckley pointed out the crux of the problem in that it was reasonable to assume that people who were rich did not became or stay rich by paying for something considerably more than its actual value!
In 1990 a Congressional Committee on Taxation projected that the “luxury taxes” would bring in $31 million deficit reducing dollars. The actual result was very different. Revenues in 1991 were only $16.6 million, because sales of such taxable products plummeted. With the boats, people either didn’t buy them or bought them overseas where the tax didn’t apply. Yet that was only the beginning of the unintended consequences:
According to a study done for the Joint Economic Committee, the tax destroyed 330 jobs in jewelry manufacturing, 1,470 in the aircraft industry and 7,600 in the boating industry. The job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. So the net effect of the taxes was a loss of $7.6 million in fiscal 1991, which means the government projection was off by $38.6 million.
The excise tax caused people to change their behavior and buy fewer of the taxed products. Over the next few years it got even worse. The NY Times reported:
Another consequence of the tax, contends the National Marine Manufacturers Association, has been the layoffs of thousands of skilled boatbuilders. ‘In a nutshell, this tax has been devastating,’ says Carl Herndon, president of Blackfin Yacht in Fort Lauderdale. ‘The rich are still rich. But the people who are on the unemployment rolls are blue-collar workers.’
A trade magazine reported:
According to a survey of the largest boat dealers in Connecticut, conducted by the Marine Retailers Association of America (MRAA), sales of boats costing $100,000 or more have fallen 93 percent… Nationwide, more than 19,000 people have been put out of work at boat making plants.
By 1993 Congressman John Kasich had this to say:
The 1990 budget deal also slapped a hefty luxury tax on boats… to draw more money from wealthy yacht owners. What actually happened? People bought fewer boats. So who really paid the price? The many nonwealthy boat builders who were put out of work by the tax… The [Washington] Post article reported estimates that 25,000 to 30,000 jobs were lost. These effects were so obvious that even the tax raisers in Congress now plan to repeal the yacht tax.
Republican Senator Slade Gorton in 1993 said with biting irony:
What went wrong with the luxury tax was that, in trying to go after the rich guys' toys, Congress put the toymakers out of business.
The Congressional Research Service reported in classic bureaucratic understatement:
The luxury excise taxes enacted in 1990 were all based on sales prices exceeding statutory amounts, suggesting congressional desire to shift some or part of the overall tax increase to upper-income individuals. Opponents argued, however, that the taxes depressed sales and employment in the affected industries and this actually burdened lower-income workers. Congress accepted this argument in 1993, repealing all the taxes except that on automobiles in the Omnibus Budget Reconciliation Act of 1993.
A tax that was intended to raise revenue and soak the rich ended up costing the federal government millions in lost revenue and unemployment payments while devastating thousands of middle class families and hundreds of small businesses. The excise tax on boats was eventually repealed in 1993 (with far less media fanfare than its passage).
Now we may have an excise tax on elective cosmetic surgery, as Politico reports:
The bill levies a 5 percent tax on elective cosmetic surgery. The provision raises $5 billion and was needed to make the numbers work, according to a Democratic Senate aide.
Yes, the $5 billion was needed to make the numbers add up in the Senate health care bill. However, the “global medical tourism” sector has already been growing rapidly for procedures like elective cosmetic surgery. Should anyone be surprised if this excise tax results not only in a revenue shortfall from projections but also in more such surgery being done in places like Costa Rica with commensurate job and income losses in the U.S.?
Having said all of this, while focus on the excise taxes is worthwhile in itself, it can obscure the looming larger danger. Here is the text of the Budget Reconciliation Act of 1990 relating to the tax on boats:
SEC. 4002. BOATS.
`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail sale of any boat a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $100,000.
`(b) EXCEPTIONS- The tax imposed by this section shall not apply to the sale of any boat for use by the purchaser exclusively in the active conduct of--
`(1) a trade or business of commercial fishing or transporting persons or property for compensation or hire, or
`(2) any other trade or business unless the boat is to be used predominantly in any activity which is of a type generally considered to constitute entertainment, amusement, or recreation.
That is it, in total. Those relatively few lines, a fraction of a page, caused terrible even if unintended harm to many thousands! The health care bill passed by the House is over 1900 pages. The proposed Senate bill is over 2000. If that passes, the two bills are brought together to breed a kind of mutant offspring in reconciliation. It is hard to imagine that the result of that will be a smaller piece of legislation.
These bills have been rushed, and not widely read or understood even by those who will vote on them. They have been cobbled together by Congressional staff members and lawyers with little or no experience in health care. It is one thing and terrible enough to have thousands of blue collar workers in the ship building industry lose their livelihoods to satisfy other people’s envy made manifest in ill-thought legislation. It is quite another order of magnitude to have thousands of pages of legislation passed that could potentially effect the health, medical care and well being of every American with all manner of unintended consequences lurking in those pages!
NPR’s Mara Liasson accurately summed up the Democrats’ position this way:
… the message that the White House and President Clinton is sending to doubting Democrats is: Swallow hard, vote for this even if it's not perfect. We can fix it later, because this is our chance and probably our one chance in this presidency to get this thing we have wanted for so long.
It took the Congress three years to “fix” the excise tax on boats by repealing it, even in the face of the devastation to thousands of blue collar workers and a decline in tax revenue. Of course, the problem need never have happened in the first place if Congress had thought through their proposed legislation. What damage will have to be done to the health and medical well being of how many American citizens before Congress might “fix” the things they get wrong now, the unintended consequences in those thousands of unread pages they are rushing to pass?
Thursday, November 12, 2009
Muslims Bombing Muslims!!!
Muslims (Saudis) are shelling and bombing Muslims (Yemenis) and we are not getting hourly photos of the civilian casualties!
Read the rest at American Thinker.
Wednesday, November 11, 2009
Rep Cao vs retired Lt Gen Honoré
The single Republican to vote for Speaker Pelosi's version of ObamaCare was Rep. Anh "Joseph" Cao, who replaced William "Cold Cash" Jefferson in Louisiana's 2nd Congressional District. Rep. Cao's engagement in bi-partisanship immediately raised the obvious question as to what was offered in return, and Michelle Malkin provides an answer:
Read the rest at The American Thinker.
Cao wrote he obtained commitment from President Obama that he would work together to address...issues related to Charity and Methodist Hospitals.
Read the rest at The American Thinker.
Tuesday, October 27, 2009
President Obama: Afghanistan is yours! You wanted the job, you've got it!
Make of this what you will.
US Military Fatalities In Afghanistan/OEF By Year (from icasualities)
Year-----US
2001-----12
2002-----49
2003-----48
2004-----52
2005-----99
2006-----98
2007-----117
2008-----155
2009-----276
Total-----906
Note the numbers for the last four months (June - October) as compared to all the previous history. President Obama announced his new strategy last March, three months before the monthly death toll jumped into the seventies from previous highs in the forties.
Coalition Military Fatalities by Month and Year.
Note the sharp upward trend in KIA by IED:
Charles Krauthammer points out what should be obvious:
From a CRS (Congressional Research Service) Report to Congress, November 2007, entitled "Improvised Explosive Devices (IEDs)in Iraq and Afghanistan: Effects and Countermeasures":
UPDATE: As to what Krauthammer calls Obama's "disgusting" continuous bashing of his predecessor, there is a precedent for that and it might be what Obama is following. That was how FDR and the New Dealers treated Hoover, with never ending attacks for years that were often bold faced lies but served a political purpose for FDR. Roosevelt stands as a giant success to Democrats not because he ended the Great Depression but because he won four Presidential elections in a row. Truman respected and came to rely on Hoover for counsel, but Truman didn't carry the FDR baggage.
US Military Fatalities In Afghanistan/OEF By Year (from icasualities)
Year-----US
2001-----12
2002-----49
2003-----48
2004-----52
2005-----99
2006-----98
2007-----117
2008-----155
2009-----276
Total-----906
Note the numbers for the last four months (June - October) as compared to all the previous history. President Obama announced his new strategy last March, three months before the monthly death toll jumped into the seventies from previous highs in the forties.
Coalition Military Fatalities by Month and Year.
Note the sharp upward trend in KIA by IED:
Washington Post, March 28, 2009
Obama Outlines Afghan Strategy
He Pushes Stability and Regional Partnerships
By Karen DeYoung
Washington Post Staff Writer
Saturday, March 28, 2009
President Obama introduced his new strategy for Afghanistan and Pakistan yesterday with a threat assessment familiar from the Bush administration. "The terrorists who planned and supported the 9/11 attacks," he said, are continuing to devise plots designed to "kill as many of our people as they possibly can."
Charles Krauthammer points out what should be obvious:
From a CRS (Congressional Research Service) Report to Congress, November 2007, entitled "Improvised Explosive Devices (IEDs)in Iraq and Afghanistan: Effects and Countermeasures":
In July 2007, DOD officials reportedly accused four captured Iranians of smuggling explosives and personnel from Iran into Iraq. Iran is suspected of supplying Iraq insurgents with training and new IED technology, such as “passive infrared” electronicsensors that are used for triggering roadside bombs. The new sensors are more resistant to electromagnetic countermeasures now employed by U.S. forces. DOD officials also suspect that Iran is supplying Iraq insurgents with a more lethal IED bomb design called an explosively formed projectile (EFP). An EFP is made from a pipe filled with explosives and capped by a specially shaped metal disk. When the explosives detonate, they transform the disk into a jet of molten metal capable of penetrating armor. EFPs reportedly strike with enough power to cause pieces of a targeted vehicle’s heavy armor to turn into shrapnel, making them much more deadly than traditional IED weapons.
DOD officials report there were 69 attacks utilizing EFPs in April 2007. The same type of EFP device has been used by Shiite organizations in Lebanon, where Hezbollah receives military support from Iran. However, Iranian government officials deny involvement with any transfer of these weapons to Iraq.
UPDATE: As to what Krauthammer calls Obama's "disgusting" continuous bashing of his predecessor, there is a precedent for that and it might be what Obama is following. That was how FDR and the New Dealers treated Hoover, with never ending attacks for years that were often bold faced lies but served a political purpose for FDR. Roosevelt stands as a giant success to Democrats not because he ended the Great Depression but because he won four Presidential elections in a row. Truman respected and came to rely on Hoover for counsel, but Truman didn't carry the FDR baggage.
Sunday, October 25, 2009
AP: Jerusalem's Holiest Site Is - Muslim!!!???
Yes, that's the AP headline:
Is this journalistic objectivity or is the AP being religiously correct or merely allowing a certain amount of editorializing from a Muslim point of view so as to prevent troubles to - AP? If that had read "Jerusalem's holiest Muslim shrine" or "holiest" Muslim site", it would be entirely accurate and fair. Or perhaps the AP editors are blissfully unaware of the Jewish and Christian shrines in Jerusalem, every one of which predates the Al-Aqsa mosque! There is the Jewish Western Wall and the Christian Church of the Holy Sepulcher, for example!
Or is this one of those cases that if the AP didn't call the Muslim shrine the holiest site in Jerusalem some would consider that blasphemy?
By way of contrast, Israel Today calls the Temple Mount, upon which the Al-Aqsa mosque site, "the holiest site in Judaism".
We can expect reports of crowds of angry Christians shouting "death to AP" for the blasphemous insult any moment now...
UPDATE: AP has probably noticed a problem that maybe got through those layers of editors! At the Yahoo News link above to the AP story by Rawhi Razim there is now an updated AP story by Matti Friedman in its place. The stories have switched but not the title, which still alludes to the Al-Aqsa mosque being the holiest site. However, the body of the story now calls that mosque Israel's most volatile shrine!
UPDATE #2: Even Drudge has the headline "Israeli police storm Jerusalem's holiest site..."
UPDATE #3: For those who may not know;
The Western Wall (or Wailing Wall) is a remnant of Herod's Temple, built about 20 B.C. The Temple was virtually destroyed by the Romans about 70 A.D.
The Church of the Holy Sepulcher was first built around 330 A.D. by Helena, the mother of the Roman Emperor Constantine. It was believed to have been built on the spot where Jesus' body was laid to rest in the tomb provided by Joseph of Arimathia and that therefore was also the place at which Jesus rose from the dead. It is also believed to have been built on the Hill called Golgotha where Jesus was crucified. The original church was destroyed by the Persians during a siege of Jerusalem around 614 A.D. and rebuilt. The Muslim Egyptian caliph al-Hakim destroyed that church around 1010 A.D. Most of the current standing church was built by the Crusaders who completed their construction in 1168 A.D.
The Al-Aqsa mosque is where Mohammed is believed to have prayed and received from Allah the commandment to pray fives times a day. Mohammed is believed to have traveled from Mecca to Jerusalem on a flying white horse. The mosque was built over what was the remains of the mostly destroyed Jewish Temple in about 709 A.D. It is considered the third holiest Muslim site after Mecca and Medina.
Israeli police storm Jerusalem's holiest site
By RAWHI RAZIM, Associated Press Writer Rawhi Razim
JERUSALEM – Israeli forces stormed Jerusalem's holiest shrine Sunday, firing stun grenades to disperse hundreds of stone-throwing Palestinian protesters in a fresh eruption of violence at the most volatile spot in the country.
A wall of Israeli riot police behind plexiglass shields closed in on the crowd, sending many protesters — overwhelmingly young men — running for cover into the black-domed Al-Aqsa mosque.
Is this journalistic objectivity or is the AP being religiously correct or merely allowing a certain amount of editorializing from a Muslim point of view so as to prevent troubles to - AP? If that had read "Jerusalem's holiest Muslim shrine" or "holiest" Muslim site", it would be entirely accurate and fair. Or perhaps the AP editors are blissfully unaware of the Jewish and Christian shrines in Jerusalem, every one of which predates the Al-Aqsa mosque! There is the Jewish Western Wall and the Christian Church of the Holy Sepulcher, for example!
Or is this one of those cases that if the AP didn't call the Muslim shrine the holiest site in Jerusalem some would consider that blasphemy?
By way of contrast, Israel Today calls the Temple Mount, upon which the Al-Aqsa mosque site, "the holiest site in Judaism".
We can expect reports of crowds of angry Christians shouting "death to AP" for the blasphemous insult any moment now...
UPDATE: AP has probably noticed a problem that maybe got through those layers of editors! At the Yahoo News link above to the AP story by Rawhi Razim there is now an updated AP story by Matti Friedman in its place. The stories have switched but not the title, which still alludes to the Al-Aqsa mosque being the holiest site. However, the body of the story now calls that mosque Israel's most volatile shrine!
UPDATE #2: Even Drudge has the headline "Israeli police storm Jerusalem's holiest site..."
UPDATE #3: For those who may not know;
The Western Wall (or Wailing Wall) is a remnant of Herod's Temple, built about 20 B.C. The Temple was virtually destroyed by the Romans about 70 A.D.
The Church of the Holy Sepulcher was first built around 330 A.D. by Helena, the mother of the Roman Emperor Constantine. It was believed to have been built on the spot where Jesus' body was laid to rest in the tomb provided by Joseph of Arimathia and that therefore was also the place at which Jesus rose from the dead. It is also believed to have been built on the Hill called Golgotha where Jesus was crucified. The original church was destroyed by the Persians during a siege of Jerusalem around 614 A.D. and rebuilt. The Muslim Egyptian caliph al-Hakim destroyed that church around 1010 A.D. Most of the current standing church was built by the Crusaders who completed their construction in 1168 A.D.
The Al-Aqsa mosque is where Mohammed is believed to have prayed and received from Allah the commandment to pray fives times a day. Mohammed is believed to have traveled from Mecca to Jerusalem on a flying white horse. The mosque was built over what was the remains of the mostly destroyed Jewish Temple in about 709 A.D. It is considered the third holiest Muslim site after Mecca and Medina.
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