Monthly Archives: October 2017

Russia. Finally, the Missing Puzzle Piece – Jay Davidson

Finally, the Missing Puzzle Piece

For the original link to the article, please go here.

It has always niggled me as to what the always arrogant 44th President of the United States, Barack Hussein Obama, actually meant when he was caught on an open microphone telling Russian President Dmitry Medvedev that he needed more “flexibility” from the Russians. They needed to give him “space” since “it was [his] last election” but “after ‘[his] election, [he] would have more flexibility.”

Medvedev’s retort was “I understand. I will transmit this information to Vladimir.”

While Medvedev may have understood what Obama was saying, most Americans were left quite bewildered by this cryptic message.

Until now.

Enter the breathtaking information that the most intricate and shady backroom deals were happening both nationally and internationally while Congress and the American public were deliberately kept in the dark, not only by the Obama administration, but also by Obama’s Department of Justice and the very same FBI officials who are now attempting to concoct a fictitious collusion story about Trump.

John Solomon and Alison Spann have discovered that

Before the Obama administration approved a controversial deal in 2010 giving Moscow control of a large swath of American uranium, the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States.

And even though it would have been an unbelievable law enforcement achievement “to have brought down a major Russian nuclear corruptionscheme that compromised a sensitive uranium transportation asset inside the U.S. and facilitated international money laundering,” nary anything substantial was done to expose this deep-seated corruption.

For those who have, over the years, watched with horror and ire as Obama usurped power and ran the government like a dictator, the latest revelations are not especially surprising.  For in our hearts we always believed that Obama was intent upon destroying this country in as many ways as he could.  Now the facts have been established with incontrovertible evidence and they confirm what we always felt given Obama’s unending anti-American stance. An extremely serious national security breach was permitted under his watch.

But now that the smoking guns are being exposed, we also wonder if the few good people who have the power to effect change will now use that power. Will they recall the Psalmistwho cried out

“O God, keep not Thou silence; Hold not thou silence, O God: hold not thy peace, and be not still, O God.

For, lo, thine enemies make a tumult: and they that hate thee have lifted up the head.

They have taken crafty counsel against thy people, and consulted against thy hidden ones.

When will “righteousness and peace” come together again?  When will our country be restored and our faith in our leaders be re-gnited?  “How long shall the wicked exult” and “speak arrogantly” as the “workers of iniquity bear themselves loftily”?

Until the swamp is truly cleaned out and our elected officials “stand up for ‘us’ against the workers of iniquity” and ensure that “the right shall return unto justice,” Obama and his ilk (Hillary Clinton, Lois Lerner, Eric Holder, Loretta Lynch, Bill Clinton, Samantha Power, James Comey, and Robert Mueller) will continue to wreak their evil.  And we cannot look to the mainstream media to faithfully execute their job.

It is with gratitude that we salute the few brave voices that have never given up in exposing the corruption of Obama. Rush Limbaugh, Sean Hannity, Mark Levin, and brave journalists such as Sara Carter and John Solomon who have diligently and faithfully led the way to exposing one of the most corrupt administrations Americans have had to endure.

But the voices must become stronger.

Eileen can be reached at middlemarch18@gmail.com

A Turnabout on Corporate Taxes – Jay Davidson

Big government politicians and bureaucrats, Republican and Democrat alike, know full well that high corporate taxes depress the economy and depress wages of non-government or private employees.  They couldn’t care less.
Their job is to increase revenue to the federal government and to federal employees.  How ironic (or is it moronic) that private citizens continue to elect public officials intent on reducing the private economy to increase the public government.  No wonder Trump is so hated.
– Jay Davidson
For the original link to the WSJ article, please go here.

A Turnabout on Corporate Taxes

Economists who favored rate cuts under Obama suddenly deny they’d result in higher wages.

Photo: iStock/Getty Images

Suddenly, an idea that has been accepted by economists and by policy makers on both sides of the political aisle—that high taxes on business hurt investment, workers and the economy—is considered “absurd.”

In 2012, President Obama and his advisers proposed lowering the corporate tax rate because it “creates good jobs with good wages for the middle-class folks who work at those businesses.” In 2013, Lawrence Summers, President Clinton’s Treasury secretary and chairman of Mr. Obama’s Economic Council, argued that the tax on corporate profits creates a burden without commensurate revenues for the government, and that changing it “is as close to a free lunch as tax reformers will ever get.”

In 2015, Democrat Chuck Schumer and Republican Rob Portman co-sponsored a Senate bill to reduce the top corporate tax rate, which is the highest of any of the 35 countries in the Organization for Economic Cooperation and Development. “Our international tax system,” Mr. Schumer argued back then, “creates incentives to send jobs and stash profits overseas, rather than creating jobs and economic growth here in the United States.” Bill Clinton in 2016 said he regretted raising the corporate rate to its current level.

Yet President Trump’s Council of Economic Advisers (of which one of us is a member) is now being accused of partisanship and unscientific analysis. When the council released areport using standard and widely accepted methods of the economics profession to find that cutting the corporate tax rate from 35% to 20% would raise the wage income of an American household by an average of $4,000 within a 10-year time-frame.

The critics include Mr. Summers and Jason Furman, who served as chairman of the CEA under Mr. Obama—both of whom backed cutting the corporate tax rate during Mr. Obama’s presidency. Their main methods of criticism include qualitative introspection—the world works this way because I think so—without reference to a supporting scientific base. Other arguments use economywide times-series correlations—taxes are not as bad because both taxes and America grew in the 1990s—omitting other variables driving them, such as the explosion of the internet. Neither method is accepted by the economics profession.

One of the few substantive quantitative points they raise is that they believe the government will receive $200 billion less in corporate tax revenue if the corporate rate drops from 35% to 20%. They write: “We see from the CEA estimates that they predict American households will receive two to three times this amount in the form of higher incomes! That’s impossible!” That’s a fundamental misunderstanding of the CEA paper—and, more important, of how the economy works. Not only is it possible, it happens every single time.

This argument also contradicts several decades of standard tax analysis. To illustrate, consider a $1 million tax on airline tickets. People wouldn’t fly, so no government revenue would be collected—and thus the harm of the tax would be infinitely as large as the revenue. Likewise, a tax cut in which the expansion of the base exactly offset the reduction in the rate would have no revenue effect, so society’s gain from the cut would be infinitely larger than the revenue loss.

In the standard economic framework, including Mr. Summers’s own work, the long-run loss in revenue to the government is always less than the addition to workers’ wages, because resources are freed up to engage in more productive activities.

The gains to factors from a tax cut is always more than 100% of the loss in Treasury revenues, but how much larger? Standard economic models of capital investment predict it’s 200% to 300% of revenue losses—as a $4,000 wage increase implies. That is supported by many different strands of the literature and why economists Edward Lazear (a CEA chairman under George W. Bush ) and Laurence Kotlikoff, a father of many organizations’ tax models, among others, find worker wage effects similar to those found by CEA. Nevertheless, according to Mr. Summers, anyone using these standard models—which includes Mr. Summers in his own work—is “dishonest, incompetent, and absurd.”

Messrs. Summers and Furman now belatedly acknowledge that standard economic analysis vividly contradicts their initial proclamations. So they have tried to backtrack by saying that basic economics omits “complex issues” and so must now be irrelevant. But these so-called complex issues are not new. Nor are they complex. Nor do they change our analysis and conclusions. Economists Robert Hall and Dale Jorgensen first analyzed these issues in 1967, and improvements of that literature have been used by CEA in both past and recent analysis.

Among these issues, the economists profession is fully aware that the corporate tax favors—among other things—investments that are debt financed, have quicker depreciation, or can be assigned to foreign jurisdictions. All these distortions by the corporate tax code suggest larger, not smaller, output expansions per dollar of revenue by the proposed tax reform.

The Obama economists go on to favor the current corporate tax rate because, although most corporations are not monopolies, the corporate tax is absorbed by those that are. Widely accepted facts contradict that argument. In particular, economists have mountains of evidence that monopolies are a problem as they withhold production to raise prices. This means that too little capital and labor get used in their industries compared with the rest of the economy, and that too little is used in the economy overall. Thus, keeping the corporate tax only exacerbates this labor underutilization.

CEA of course welcomes debate on the merits, or the existing science, of the case. But these types of argument are neither.

Mr. Mulligan is a professor at the University of Chicago and author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy” (Oxford, 2012). Mr. Philipson is a professor at the University of Chicago and a member of the President’s Council of Economic Advisers.

Appeared in the October 25, 2017, print edition.

The Wages of Corporate Taxes – Jay Davidson

In a closed system, what one gets, another pays for.  The federal tax cycle is closed.  You work for your wages, the government first taxes the company for whom you work and then taxes you.  Ergo, your wages are reduced by the corporate tax and your take-home earnings are reduced by personal income tax.  You just paid two taxes on earnings.  Then, in a twist of the proverbial knife, when you leave this earth, the government taxes your estate, again.
Next time a big-government politician wants to “help” some disadvantaged group, or even build roads, remember that higher taxes are behind his beneficence.  Consider: politician’s are perfectly fine with raising taxes at your expense – because you are paying for his great idea and the politician is getting credit for being so “nice.”  Second, ask yourself what are you getting for all the cost (taxes.)  Don’t fear the answer: Not much.
Closed markets are manipulated by a federal government; Socialism and Communism are perfect examples.  America’s economic system has been moving toward a closed system for decades.  It culminated in Obama’s regime with the attempt at final take-over through ObamaCare, Dodd-Frank, EPA takeovers, IRS manipulations, the list is long.  Citizen reaction to Obama’s socialism was extreme: Trump, majorities in the House and Senate, over 60% of state governments went Republican.  Too bad Republican politicians are so unprepared.
Economic systems, those based upon free markets, are open systems.  Free markets are simply a willing buyer and a willing seller agreeing on a transaction, without outside coercion.  In a free market economy, the gross production of the nation actually increases with less government, lower taxes and less regulation.  That fact is immutable and clearly evident in past economies: JFK’s tax reduction, Gingrich / Clinton and Reagan / Tip O’Neil.  As production increases, so too do the benefits accruing to the entire workforce.
Federal and State taxes take around 60% of gross earnings (34% Federal, 5% State, and 20% personal.)  When is it too much?  Demand that both parties implement severe reduction is federal spending.  Demand that tax rates drop significantly.  Politicians won’t do anything on their own, it’s human nature.  But they will react to massive reactions by citizens.  You get the government you deserve; you deserve better. – Jay Davidson
For the original link to the WSJ article, please go here.

The Wages of Corporate Taxes

Kevin Hassett earns the wrath of the left by showing how tax rate cuts will help workers.

 

Kevin Hassett, chairman of the Council of Economic Advisers, at a Senate Banking Committee nomination hearing in Washington, June 6.

Kevin Hassett, chairman of the Council of Economic Advisers, at a Senate Banking Committee nomination hearing in Washington, June 6. Photo: Andrew Harrer/Bloomberg News

By

The Editorial Board

What do left-of-center economists have against a tax cut that would raise wages for American workers? They’re always telling us that America needs a raise, and that labor isn’t capturing enough of corporate profits, yet along come Republicans promising to raise wages by encouraging more investment in the U.S., and they react with shock and smears.

That’s the only way to describe the remarkable attack on economist Kevin Hassett for marshaling the considerable economic evidence that cutting the corporate tax rate to 20% from 35% will benefit workers. Mr. Hassett is an expert in this field, having done his own research over the years, and now he is chairman of the White House Council of Economic Advisers.

Mr. Hassett didn’t start this fight. But he felt obliged to respond to the recent political assault on tax reform by the Tax Policy Center. The TPC, which fancies itself nonpartisan but has a record of opposing every Republican tax reform, assailed the Trump-Congress tax policy framework by inventing details that don’t exist. So on Oct. 5 Mr. Hassett responded in a speech at the TPC.

It was “scientifically indefensible,” Mr. Hassett said, for the TPC to assert that there would be little growth from the proposed reform. The static analysis, Mr. Hassett added, was “based on many fictions.” And by promoting its attack before the final details were known, the TPC had behaved “irresponsibly” and undermined hopes for “bipartisan cooperation.”

In speaking so forthrightly, Mr. Hassett unleashed the furies. Not only was he wrong, thundered former Treasury Secretary Larry Summers, the plan he defended is “an atrocity,” a combination of “ignorant, disingenuous and dishonest.” The Summers-ettes in the economic press corps all kicked in unison, and Sen. Chuck Schumer called it “fake math.”

***

There is a long and legitimate debate about who pays corporate taxes. Corporations essentially collect taxes that are ultimately paid by someone else: a combination of workers in lower wages, customers in higher prices, or shareholders in lower after-tax returns.

For many years the dominant belief was that shareholders bore the biggest burden, but this has changed in recent decades with new research on the impact of capital mobility in a global economy. While labor is relatively immobile, especially across national borders, capital can go whereever it wants with relative ease.

U.S. companies have taken advantage of this reality by investing more abroad in lower-tax countries. The benefits accrue to Irish or Singaporean workers whose jobs are created by that capital investment. In his speech at the TPC, Mr. Hassett noted that in 1989 the average statutory corporate tax rate in the OECD was 43%—compared with 39% for the U.S. Today the average corporate tax rate for the Organization of Economic Cooperation and Development—a proxy for the industrialized world—is 24%.

Yet the combined average U.S. federal and state rate is still 39%. By making the U.S. rate competitive in a global market, capital will flow back to the U.S. for new investment. Much of that investment will go to increase worker productivity, which would boost wages.

What really angers the liberals is that, in a paper released this month by the White House, Mr. Hassett collected years of economic evidence to make the case that cutting the U.S. rate to 20% would raise average wages by $4,000 to perhaps more than $9,000. Outrageous, says Mr. Summers.

But Mr. Hassett isn’t alone. Economist Laurence Kotlikoff wrote on these pages last week that the GOP framework would “raise real wages by 4% to 7%, which translates into roughly $3,500 a year for the average working household.” Other economists have found the increase closer to $1,000. Still others say it’s higher, but the debate is over the magnitude of the raise, not the fact that American workers will benefit if the U.S. cost of capital falls.

In their blogs, economists Casey Mulligan of the University of Chicago and Greg Mankiw of Harvard dissect Mr. Summers’ academic arguments in rigorous detail, and Mr. Mulligan does him the service of citing some of his earlier work. In a 1981 paper Mr. Summers referred to “the increase in gross wages which results from the increased capital intensity arising from eliminating capital taxation.”

In his response, Mr. Summers has grabbed for the lifeline that a small economy like Ireland has no relevance to America and that Britain saw no increase in wages after it cut the corporate tax rate. But the corporate tax rate isn’t the only factor in the cost of capital, and the U.K. partially offset the benefit of the rate cut with other tax changes. And until Brexit, the U.K. economy was still one of the strongest in Europe.

Other large economies are also cutting their corporate rates, and Emmanuel Macron wants to cut the French rate to 25% from 33%. In his paper Mr. Hassett points out that wage growth has been far greater since 2013 in the 10 developed countries with the lowest statutory tax rate compared with those with the highest.

***

Which brings us back to why Mr. Summers and his followers are so upset now. Our guess is that it has something to do with the disastrous record of their own policies in lifting wages. Mr. Hassett had the audacity to point out that real corporate profits rose 11% a year under President Obama, but “the pass-through to workers” was only 0.3%.

The Summers crowd that preaches about the dangers of inequality presided over an economy that increased it. Obamanomics was great for Wall Street, not for the American middle class. How dare conservatives try to do better—and with policies that look to increase supply-side incentives rather than by redistributing income, fixing prices and regulating business to the point that capital investment has been historically weak.

If we presided over that liberal record, we’d be sore, too. But if they look in the mirror with some honesty, they might understand that the failure of their policies in lifting wages is one reason Donald Trump is President. Meanwhile, why begrudge Americans a raise?

Soros has funded Socialism, Communism, death, and destruction. What is the devil’s greatest success? – Jay Davidson

Soros has funded Socialism, Communism, death, and destruction.  What is the devil’s greatest success?  That he hides in plain sight and misdirects the unwary…

Go here for the original Wall Street Journal Link.

George Soros Transfers $18 Billion to His Foundation, Creating an Instant Giant

By Juliet Chung and Anupreeta Das

George Soros, who built one of the world’s largest fortunes through a famous series of trades, has turned over nearly $18 billion to Open Society Foundations, according to foundation officials, a move that transforms both the philanthropy he founded and the investment firm supplying its wealth.

Now holding the bulk of Mr. Soros’s fortune, Open Society has vaulted to the top ranks of philanthropic organizations, appearing to become the second largest in the U.S. by assets after the Bill and Melinda Gates Foundation. Open Society has funded refugee relief, public-health efforts and other programs.