Posts Tagged ‘GOP’

It’s All About Balance AKA Boy Are We Selfish

August 2, 2011 Leave a comment

I wouldn’t consider myself an expert on history, but I have been reading quite a bit to try to better understand how things in the economy, politics and our government work so I can make better decisions in the voting booth. I also want to start being more involved in the process so that I feel that my little voice somehow makes a small difference in making things better. This summer has been a learning experience. I have come to realize one of the biggest biases in politics, the economy and government is our own personal selfishness. Being selfish does not make one a bad person, but not being aware of it is where problems can arise.

David Frum posted a great blog yesterday about how the ideological stance of the Republican party is harmful to the American economy and political process. Mr. Frum worked for President Bush (43), has written books on the conservatism and believes in smaller government. He also understands that the political process is about balance and getting there is sometimes about compromise and leadership, and not always about getting through all of your ideals. It is a great read and not very long – I recommend checking out the link.

The other thing I’ve come to realize is I am thinking that for all of his flaws that President Clinton really was a great President because he understood our selfishness, and somehow was able to find bits of leadership and find ways to make it work for everyone. We had a balanced budget, yet for the rich and conservatives he signed welfare reform and a massive cut in capital gains taxes. For the middle class he raised income taxes on higher incomes. For the military protectionist types, we went to war in the Balkans. There was some level of gun control with the Brady Bill. There was something for everyone in President Clinton’s policies, and he knew it. Everyone got a little of what they wanted, and it fed their selfish desires.

Certainly there were things that people didn’t like about the policies. Not everything was perfect. I don’t think the policies of Clinton would have prevented a tech stock bubble or the housing bubble. In fact, a case could be made that the capital gains cut made that problem worse. The overall point is that leadership and political discussion requires understanding we are all selfish. If we start with that premise, then we know to be careful anytime we want to start or change a government program or give the government more money.

I wanted to cover that after a Twitter discussion I had with State Representative Ryan Winkler this morning. I thank the Representative for taking the time to discuss some issues with me. He seems to be reasonable in his views. But the initial post that brought on the discussion was his tweet this morning that said:

Moody’s downgrade of MN finances due to ‘political intractability’. In other words, GOP obstructionism lowers our credit score.

I stated that intractability simply means “complex.” His response is the government needs to spend more money on education and taxes should be raised based on the ability to pay (later stating the rich should pay more). Now there is no doubt that education is important. But there is a selfish bias to assume that the rich who already foot over half the bill for education should pay even more for it.

The other point is that if taxing more and spending more were the solution to our economic problems, then why not do it ad infinitum? There must be a point in taxation and government spending (and government hiring for that matter) where the benefit stops or we would just have the government tax us 100% and hire all of us so unemployment would be 0%. Obviously that doesn’t work. So we have to realize that it is our very selfish nature, the desire to make more money, that drives our economy. The government must exist to protect us, so it will always be a cog in the machine that is our economy. It is not easy to find that point where it isn’t doing enough, and when it is doing too much. In either case, it is hurting our economy. The danger on the “too much” side is that can also affect our freedom.

Look at it another way. If unemployment benefits were a great driver of our economy, then why not just start sending checks to everyone so that they could go buy more stuff? If government work was a big driver of the economy, then why not double the government work force? Now don’t take this as me saying to stop those benefits or saying we don’t need government workers. What I am saying is that there is a point where government money becomes ineffective in the economy. We have to be aware of that. Based on the last 20 years and my humble opinion, government is probably spending about enough. What we need to do is get the size of the federal government reduced and get more spending brought back to the state and local level. We are going to need to raise taxes to get the budgets balanced. That would do much more for the economy than what is happening now.

So you can see, I will freely admit we are going to have to raise taxes in order to ensure that our standard of living doesn’t suffer during this economic malaise we are in. Likely, that is going to fall on those with higher incomes more. We can debate on how we should accomplish that, which I think can be done by fixing the tax code more than by raising the rates. But we are going to have to go back to the rates of 10-15 years ago to make sure we don’t lose all we have gained. But we have to be careful that we don’t allow those taxes to be spent on other things due to selfish motivations.

Do You Really Think We Are That Selfish?

I’d like to ask all of you how many televisions you own? How many iPods? How many PCs? How many pairs of designer jeans? How many times did you eat out this year so far? How many magazines do you subscribe to? Do you have cable? Premium cable? How many major sporting events have you attended? How many of the things in your house are made in the US? How many of you have mutual funds in your retirement accounts that benefit from the very corporate profits you are now claiming to despise.

My point is we are all selfish – rich, middle-class, and poor alike. We must first admit that we are selfish and step outside of that selfishness before we start shouting about the problems we face in our country. We must also realize that part of being free is the right to be selfish and the only way to maintain that freedom is to make sure that whatever we do, it is applied equally.

We need to do things to support and encourage freedom and success, but we cannot buy success through wealth transfer. We cannot spread out way of life throughout the world to people who do not want it.

Name calling and demonizing a group of people or one certain party is not going to solve the problem. that is what these politicians want, and you are playing right into their hands – they want this polarization, as it solidifies their base for the next election. Realize we all have our own self-motivating factors, and lets all work to try to bring out the better in people instead of continuing to grow the self-interest.

OK, I Get It. But What About The Math?

July 30, 2011 1 comment

For the handful of you who have been reading my blog have come to realize, I am very wary of the size of government. The essence of the American government was for it to be small with enumerated powers in order to keep the maximum number of freedoms with the individual. There were those that didn’t have freedoms, but history tells us our very brightest of our Founding Fathers struggled with this and did there best to put us on a path of increased freedom. We also cannot ignore human nature, and that an overly socialistic government cannot be sustained simply because people will not work harder for something which they can get for free. There are moral implications, including the idea that giving government more will allow government to spend money on things you may morally object to. I will continue to be cautious whenever it comes to government and its programs.

I also want people to understand that I get it. We have a different society than we had in 1776 and 1787. We have a different set of expectations with a different standard of living. We have an aging population. Our tax burden is lower than it has been in the last many decades. We have military in Iraq, Afghanistan, Libya, Kosovo, Japan, Korea, Germany and other places along with all of the troops we need to care for at home. The point is we have national expenses we are incurring and we haven’t really asked the nation to pay for them.

First a Word On The Debt Ceiling

If you think your party has the right stance on this issue, than you are already wrong. I’m sorry, but that’s just a fact. We are going to have to get a budget plan that puts us on a path that gets us back to a balanced budget. The President simply wants to raise taxes and raise the ceiling while raising spending even faster (thus adding to the debt instead of reducing it over the next 10 years). The Tea Party faction of the GOP seems to think they can put a stop to spending right here and immediately balance the budget right now without any increase in taxes which is also unreasonable. Neither is sustainable. Both plans are a disaster. Don’t BS yourself into thinking otherwise. Not raising the debt ceiling becomes a problem very soon. Raising the debt ceiling under the President’s plan is a problem just a little while later.

In fact, I am going to call out one liberal website specifically. The Daily Kos. While there is truth that you could put a majority of the debt blame on the Republicans who spent against their conservative nature from 2001 on, the truth is the democrats controlled both houses in 2006. In 2008, The democrats took a firmer control of the Senate and also gained the White House. Now granted, it wasn’t filibuster proof, but it was a powerful majority. Not only did they not do anything about tax policy or the tax rates, but the house didn’t even finish a budget for 2011 before the GOP took over control of the house (which should have been done in 2010). For the Daily Kos to pin it all on the GOP is a total joke and does nothing to make real progress on the issue. The democrats had a pretty good opportunity to make some changes, and the only changes they made were to spend more without figuring out how to pay for it.

Some Math On Taxing the Rich

I took a look at the Forbes billionaire list to get an idea of how much money the richest people in the United States really have. In order to take care of just the deficit…just this year… we would have to take every dollar and asset of the richest 400 people in the United States. I am not saying their income. I am saying taking everything they own, leaving them with nothing would only run 1/3 of just the federal government. We would have to take roughly the next 3,000-4,000 richest people’s entire net worth in order to run the rest of the government for just one year. It wouldn’t take too many years to run out of rich people. I sure hope we aren’t going to resort to taking stuff people have already earned. We already do that at death through the estate tax.

As far as taxing the rich, it simply won’t fill the gap for several reasons. First, those that are already rich receive large amounts of income from capital gains. The top rate there is 20%. Now you could make a case to reverse the Clinton tax cut and go back to 28 % and see a decent bump in revenue. But let’s assume all of the AGI reported on the latest numbers available is regular income. If we taxed the top 5% of incomes (meaning the top 5% by number of returns filed with positive AGI or about 7 million returns) at a 3% higher rate, the federal government would take in an extra $87 billion. Keep in mind this calculation is based on raising their effective tax rate 3%, meaning the true top rate would have to go up much higher, and the top rate tier would have to have to begin lower than the $159,000 mark. Now you are hitting the small business sector. Also keep in mind, this top 5% already pays over 58% of all income taxes.

Let’s say we really want to generate income. Let’s hit the top 10% with a 10% effective tax increase, making their average effective rate over 28%. Now you are talking some real money. This would raise over $385 billion in revenue for the government. Keep in mind this tier starts at $113,799 and already pays nearly 70% of all income taxes. That $385 billion would only take care of about 20-25% of the deficit. To cover the entire federal budget, you would have to take every dollar that everyone making over $110,000 earns. Not the money over $110,000. All of their money (after their personal exemption). Hey, then the rest of us wouldn’t have to pay taxes.

Looking at Table 1 in this article, you will see that about half the people in the US pay little to no taxes. If we look at the top half, we see an effective rate on average of 13.65%. In order to fill the budget deficit this year, we would have to increase the effective rate on the top half by over 20%, nearly tripling our tax burden. I hope I’ve proved my point…taxes alone won’t solve the deficit problem. History has also shown that tax increases can only do so much.

Anything You Can Do I Can Do Better

One of my favorite things to hear is someone defend Obama’s change of heart on the debt ceiling because Bush was a big spending president. It is now quite well know that then Senator Obama made a speech in the senate in 2006 calling the raising of the debt ceiling distasteful and a sign of a failure of leadership. Now not raising the debt ceiling is the same according to the same man. His supporters will say that the GOP did the same with President Bush, and it is true, many did. But putting the long-term future of our country in jeopardy because we made mistakes in the past is not a reason to keep making those mistakes. In most cases, this out of control debt has been a bi-partisan effort.

I was never a supporter of President Bush, and I never voted for him. I voted for President Obama based on my social values, his overall record in the senate, and his word given in the debate that his spending programs would be matched by cuts elsewhere. Instead, spending has increased over 30% since he has taken office. The debt has grown by $4 trillion. Unemployment and housing are stagnant. This from the same candidiate who told us that, “…But there is no doubt that we’ve been living beyond our means and we’re going to have to make some adjustments.”

Other countries have higher tax rates than us, and some have lower. Some have larger income and asset gaps, and some have smaller. That doesn’t always make it the right policy for our country. Sure, we should look at those countries and their policies and look at the successes and failures of those types of policies, but we do need to also realize some of the variables are different and know that it might not work here in our country.

What Does All This Spending Look Like?

Yes, I know. The Heritage Foundation has a conservative bias. But these are charts generated from government data, so I am presenting just the graphics so you can hopefully draw some of your own conclusions before you look at the source article. The first is a table showing spending in decending order of 2010 dollars. It is a good way to view how the government spends and also shows how it might not be so easy to decide where to start trimming.

Federal Spending Table

Also interesting is the chart showing the growth of the new major components of spending.

Spending being crowded

It’s alot of money.

So What Conservative Crap Are You Pushing Today?

My point all along in my blog is to be skeptical of the status quo. The government is such a massive entity and is not well equipped to act quickly and adjust to changes in society, the economy, or to act on the will of the people. Often it doesn’t want to for the fear of change and the lack of leadership. Both parties and both sides need to realize the paths they want to take are not going to bring us prosperity. They are only paths to short-term votes, and some of us, like me, are seeing right through it.

Let’s look at a few major components of spending. The military needs to come home. We can’t force people to be like us. Yes, a national security threat or a mass genocide we should act on, but we can’t be occupiers and supervisors of the world. Time to bring the troops home. We also need to be prepared for the costs of taking care of those who served, and give them the benefits we promised them. We are going to have to look at trimming benefits for future military service members. It is a voluntary military, and if we are not having to send them into as many dangerous situations it is one area we can consider. As long as everyone knows what to expect, there is nothing wrong with looking at those benefits.

People of my generation are going to have to shore up social security for our parents and grandparents by taking less and working longer. There is no way around it. Yup, we might be the first generation in quite awhile not as well off as the previous one. I am willing to do that for my parents…and for my kids. Sacrifice is part of the American spirit. I will never have to go to war and see the things those people had to see, so instead I am going to have to work a little harder and a little longer. We all have to make sacrifices at times in our lives. Get used to it.

We are going to have to find more reasonable ways to control medical costs and find reasonable ways to provide medical coverage. The outline of Obamacare is a mess and will spiral costs completely out of control. It was bad before, and this new system did nothing to really fix it. There are smart people out there with ideas, and we have to be willing to listen. Again, it isn’t going to be perfect. We won’t all get our hangnails removed for free by a plastic surgeon. But we can find a reasonable approach to make it work that won’t spend us into oblivion.

We do need to discuss what we mean by poor. What is poverty? Many of my liberal friends were appalled at this article would dare say anything about air conditioning or televisions as a luxury item. That wasn’t really the point of the article at all. The point is if a person has all of these things, shelter, food, etc., and yet because we base poverty simply on income and provide them with some sort of income transfer payment, are we really helping them? Does that payment really move them out of poverty? If they are safe, fed, etc., is that really poverty? Even Gene Simmons on his twitter stepped in a little when he quoted Winston Churchill, “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”

I am not saying there are not people that don’t need help and that there won’t always be people that need help. Transferring income or basing help just on income alone isn’t going to solve the problem with finite resources. For example, the article shows 32.2% of poor households have more than 2 TVs, 17.9% have a big screen TV, 29.3% have a game system, yet only 29.3% have internet service. Somehow I would think more opportunity would be available if we could get more internet to those people instead of having resources going to big screen TVs and game systems.

Please my liberal friends, I understand the system can’t be and never will be perfect. Just try to understand my point of this section. We have a limited set of resources. We need to spend them wisely. I think we could do better. Often the solution given is spend more and tax more. Even if we tax more, we are still in the hole. To my conservative friends, we are going to have to tax more. We cannot cut that much money all at once. We cannot continue to fight the wars President Bush started and President Obama has continued while spending on both of their social agendas and not have a tax increase. Even if we cut all of those programs, we’ve spent the money for 10 years and we need to pay for that.

Yes, Raise The Debt Ceiling and Tax the Rich – Just Remember the Math

So, Congress better get on it and raise the debt ceiling at least a little bit to get us by until they can get us a plan that hurts everyone. That’s what good leadership will do. This fiscal policy of the last 10 1/2 years is a total nightmare, and getting out of it is going to take guts and some pain. It is going to take some taxes. A judicious increase with long-term stability. In fact, it could be accomplished best with a massive simplification of the tax code so that the effective rates come much closer to the real rates without raising the real rates at all. It would also make things much more fair. There are going to be cuts to programs to the poor.

There are going to have to be sacrifices from us all, because as the math shows, even the rich can’t do it all. Yes, the rich are going to have to be a part of the solution. Let’s not call it their “fair share” since the richest do pay most of the taxes anyway. Let’s just be honest and say we want to increase the progression of the taxes. At least that is intellectually honest. Then, I can be OK with it.

The math should show that trying to balance this all on the rich is just as foolish as the GOP trying to force the President’s hand by not raising the debt ceiling. If we try to solve this through taxes only, the math shows we will fail. If we try to plunder existing wealth, we will have lost our freedom. We can’t do it without some shared sacrifice. Everything needs to be on the table. We need new thinking. We need to rethink our priorities. Let’s get it done.

Taxes Do Change Behavior and A Few Other Things

July 8, 2011 Leave a comment

I heard an interesting tidbit on a podcast today and I thought I should look a bit further into this tidbit to see if there is some truth to it. It turns out Governor Dayton has spent years avoiding taxes in Minnesota by setting up trusts in South Dakota and setting up limited partnerships in the Cayman Islands. Now as Joe Soucheray rightly points out, this wasn’t necessarily solely a decision made by Governor Dayton since he is not the only family member affected by the money. It does show a couple of broader points. First, when you have guaranteed money coming, a person has a tendency to be willing to part with it. If taxes go up a little, a person in this situation might not care because more money keeps coming all the time. So for Governor Dayton, even if the money he makes that is taxed in Minnesota goes down, would he really care when he has a nice stream of tax-free income from South Dakota? Second, the very fact that the family set up these trusts and partnerships with the intent of avoiding taxes shows that taxes are an important factor for the wealthy in deciding where to invest their money.

Another interesting issue is the state employees laid off during the state shutdown. I don’t want to be misunderstood, so I want to be clear that I am sure this is a hardship for some since it is a reduction in income. However, let’s put a few things in perspective. State employees that are laid off are collecting unemployment benefits, meaning they do still have some income. State employees are also having their health benefits are still being paid. Employees are continuing to accrue vacation time at the normal rate during the shutdown. And while all of that is happening, those employees deemed essential have had to report to work and have had their vacation time cancelled. Anyone laid off for any amount of time faces a certain amount of stress, but it is always important to understand your situation and know it could be worse.

One last little tidbit about the shutdown. I really hate the little political lies that get blown up and used for media fodder. The GOP says the budget is being increased by about 6% over the last budget biennium. The democrats say their spending deal is about flat or slightly below the previous biennium. So who is right? Actually, both parties are right in this case because the truth is in the language used. The GOP uses the word “budget,” which in the previous biennium was about $32 billion dollars. However, after the budget was passed, the federal government provided some additional one-time stimulus money which we spent. That means the state spent roughly $35 billion in the last biennium. So, the GOP budget proposal is about a 6% increase over the last budget passed, but would represent a decrease in spending over the last biennium. The democratic proposal would actually increase the budget about 11%, but would keep spending about flat. I hope everyone can see that. A simple analogy would be if you set your budget for the whole year to be $20,000, but in the middle of the year your grandma gives you a gift of $2,000 that you blow on a TV and a PS3. Next year you budget $22,000. You have an increase in your budget of 10%, but your spending would be flat.

Does anyone else feel like they are watching reality TV when watching news on the shutdown?

Where is the truth in the MN state shutdown?

July 1, 2011 Leave a comment

I may edit this a few times in the next few days as I learn things about the shutdown in the State of Minnesota. One thing I do know to start – neither side is telling us the complete truth. For the GOP and the democrats, it is all posturing for the next election (this goes at the national level too). Am I being to hopeful that leaders will emerge from the politicians that are running our government now?

If you spend less than you are expecting, it is not a cut.

I hate the word cut as it is used, mostly by democrats. I cannot stress this point enough. It is dishonest and misleading. It would be more accurate to say we are cutting back on projected spending. It could even be stated as we are cutting our inflationary adjustments for this budget cycle. But to call a real-dollar increase that is smaller than projected a “cut” is wrong.

A deficit is not a deficit if the money isn’t spent.

This is another word that makes me crazy. In Minnesota, our constitution requires a balanced budget every budget cycle. In all reality, we can’t have a deficit. I’ve said it before – if I expect a $10,000 raise next year and plan on buying a boat with the extra money and I don’t get the raise, I don’t have a deficit. I can cancel the boat purchase. I can get a second job. But I didn’t buy the boat, so it isn’t a deficit. A smaller projected revenue to projected spending is not a deficit.

The GOP in Minnesota proposed a 6% increase in spending.

Since it seems most news stories only repeat the party talking points, some of these are harder to decipher. From what I gather, the GOP is making the claim of a spending increase based on state money that was spent in the last budget cycle, while excluding money that was spent from one-time stimulus money from the federal government. So the GOP isn’t being truthful here. It would be more honest to state we are keeping real dollars spent level, and we are lucky to have the extra revenue to do so.

Spending shifts are not revenue.

Both parties are to blame here. This will be one spot where I will say the Governor came out like a star in his speech regarding the shutdown. For years, the federal government has been doing this. More recently the state has been using this “strategy” as well. Both parties in the past are to blame. At the federal level, the promised payments to schools for special education is 2 to 3 years behind. They also only pay somewhere around 30-40% of the total cost of special education. At the state level, schools are owed well over $1 billion thanks to the past democratic legislature and republican governor. “Borrowing” from schools is a stupid idea, and it isn’t revenue. If you can’t afford to pay the schools, then just tell them that. They’ve already gone without the money, so let’s stop “delaying” payments, give them what we can afford, and stop lying about it to the public.

Inserting social control into small government.

I am seeing conflicting reports over whether or not the GOP inserted their social agenda into the last budget offer they sent to Governor Dayton. I’ve said many times I am for smaller government. I’m sorry GOP, but you are a big loser here. You can’t push a religious-based, social control agenda and be for smaller government. So, whether or not issues of abortion, stem cells, etc. were in the last proposal, the GOP already showed its hand by trying to pass an amendment against gay marriage. Some GOP candidates for President have already stated they don’t believe in evolution and want intelligent design taught in schools. Why don’t we ask other countries who are far ahead of us in science and math what they teach in their biology classes (hint: Charles Darwin wrote about it).

Defending spending and tax increases

Please read this section carefully. I do think when all things are weighed out we do need to ask the wealthy for more money. As circumstances change, we are going to need to adjust tax rates. It has happened in the past and will continue to happen. Even the Laffer Curve theory admits that the “sweet spot” maximizing revenue changes over time. However, I have a very hard time supporting taking money from anyone when I can’t get an honest explanation or be offered any kind of accountability. I don’t care if Reagan raised taxes 11 times. I don’t care if you “need” it. I need a new truck too, can I get a subsidy for it? <– This question is just for effect. What I mean by it is show me how the new money is going to be spent and how we are going to reduce waste and abuse before I give my support.

This is where the Democrats get it wrong. They hold up a picture of the kids or the elderly and say “this is who we are hurting.” It is a terrible strategy because people don’t believe it. I bet almost everyone reading this can give anecdotes of waste and abuse in Health and Human Services, Education, Housing…all of the big budget items have some level of waste and abuse. Governor Dayton in his shutdown speech said it can be fixed, but we have to give more money first. But we don’t. The waste and abuse continue as they always have. And people have grown tired of waiting to reduce the problem. You can’t use the talking point of “we are only going to tax 2% of the citizens of Minnesota.” They are people too, even if they are rich. Show me you are going to use the money wisely, and I will support it.

The Independence Party tweeted the night of the shutdown that no one has mentioned why HHS needs more money. Our population is getting older. This is true. It is going to get more expensive to care for the baby boom people. We are going to have to be smart in how we handle these people, our friends, neighbors, and family. But is it fair to ask a few people (the people with high incomes) to pay for all of our parents, friends, and neighbors? We are all going to have to do a little more to help out each other. We don’t need to take the money from the rich by force. There are better ways to get the wealthy to help. We also might have to take a little more out of our own pocketbooks.

A couple of thoughts on how we might ask the wealthy for help. We are so willing to give out state funds to the rich to build stadiums for their sports teams, maybe we could do something similar with buildings that would be useful to more people. Help us build a new school and you can have the property across the street and charge for parking at high school sporting events. Help us build a nursing home and you can put your pharmacy right next door. These might not be perfect ideas, but I’m just throwing them out to get us thinking differently so we can all feel like we walk away with something.

Why do I insist on protecting the rich?

I am adding this section due to some current and previous responses to my blogs about taxes and government spending. Let me just say I am not advocating my position to protect the rich, nor am I saying that we absolutely should not raise taxes on the rich. But there are a few reasons we need to think very carefully before we let this happen.

First, before we raise any taxes on anybody, we need to be asking what we are getting for the money. In any political discussion, have you ever heard an agreement on the government has enough money. Imagine if the parties came out united and said “Great news! We have more money than last year, so we don’t need any more from anyone. Thanks!” When we continue to ask the small percentage at the top for more money, it is a bit like the spoiled rich kid asking for more money for books at college, when all he is really doing with it is buying pot. At some point, the rich start asking why their friends kids Texas and South Dakota never ask for any money (TX and SD have no income tax).

Second, we have to recognize they are people too. People at all levels want to keep what they have and what they feel they earned. The very rich already avoid taxes by changing their behavior. They take income from investments, so they can pay the much lower capital gains rate. They buy municipal bonds that have tax-free interest payments. It doesn’t make what they do “right.” It is reality. We have to be judicious in asking for more money, or the rich will change their behavior. In the end, the person we hurt the most is the person who finally opened that 5th restaurant and made their first million or the family farm who have a good year but take a great risk every year in what they do.

Third is my assertion that government needs to stay small and we should generally not give them more. Once we give them more money or power, it is very hard to get it back. In MN for example, Governor Dayton may have all good intentions to spend the extra money on important things like education, the sick, the poor, etc. But what happens when the next election comes around and someone else is running the show. We have no guarantee that the next person will be as pure in intention or have the same goals as the current person. It is hard to make a complete judgment of that character simply based on a campaign. What if the next person decides to take this new money away from education and use it to develop a long-term nuclear waste storage facility in the state? What if this person uses the money to build a pipeline from Lake Superior to the desert southwest? Once government has the money, we have no way to control how they spend it. I don’t know if anyone remembers the Patriot Act, but we gave that control away to the government and despite his campaign promise, President Obama has yet to give that power back to us.

Finally, I am not saying in this instance a tax increase isn’t justified. What I am saying is we need to have the discussion of how much is enough. The rich do have a big influence on our economy through investments as well as the taxes they already pay. I have advocated in my previous posts that one of the most important things in tax policy is stability. We can’t keep threatening to change the tax code or raise tax rates every time the wind blows. So let’s take a look and have the discussion of how much does government need. Let’s be honest as to what it is going to be used for. And once we’ve decided what level of taxes is appropriate for our needs, let’s set it there with some assurance it won’t change for the next 10-15 years unless there is some disaster far beyond what we could ever anticipate. That’s tax stability, which is nearly as important as the rate. Tax fairness and keeping taxes reasonable is also important, but stability can help offset the other two aspects.

I apologize for a bit of a straw man argument here, but here’s something to consider about tax rates. If we raise the tax rate by 1% every year, where will the tax rate end up (Answer is 100%)? If we raise the rate every time we need money, we soon run out of rate to raise. Tax rates on income are set a percentage. So if the economy grows and incomes go up, the government already gets more revenue. In fact, the state of MN has had an increase in revenue, but because we shifted payments in the past and we spent one-time money from the federal government, the tax revenue projected is about even with spending because we got money from elsewhere in the last budget cycle.

Some sobering numbers

Mark Dayton’s latest proposal wanted to raise taxes on those making over $1 million per year. He said in his shutdown speech that amounted to about 7,800 people in the state we would be taxing. To make up the extra revenue the Governor is requesting of roughly $1.5 billion, each of those people would have to pay an average of over $192,000 each. Do you think $192k will change someone’s behavior?

At the national level, our debt is approaching $14.3 trillion. According to the IRS, the top 1% of income earners pay 40% of all taxes, the next 4% pay the next 20%, the next 45% pay the remainder while the bottom 50% pay no net tax. If I assume every person is a taxpayer (making the following numbers as low as possible), here is the break down of debt per each segment: The top 1% each owe about $1.9 million, the next group owes over $283,000 each, while the rest of us that pay taxes owe over $42,000 each. I think that’s also enough to change behavior.

My twitter discussions

I’ve challenged quite a few politically active tweeters to some questions they don’t like. To them I’d like to apologize if I offended you. My purpose is I really want to challenge your thinking, and I want you to challenge mine. I want to learn more, and I would hope that rather than be insulting you would grant me the same education.

The thing that irritates me more than anything is blind party loyalty. If you think your party is the solution to all of our problems in government or society, you are simply wrong. I have no problem with someone backing a party that mostly aligns with their principles, but when you call out the other party’s hypocrisy while ignoring your own, you lose credibility. We have to call out the “leaders” on both sides on their hypocrisy and by doing so be leaders ourselves. We will all be better for it.

Logical Fallacies in Politics

June 1, 2011 Leave a comment

I am still seeing two issues come across the news and social media quite a bit in regards to Minnesota politics. One is the lack of a budget (vetoed by Gov. Dayton)/upcoming special session/tax rates. The other is the gay marriage amendment. My idea here today is to show how rampant the use of logical fallacies in defending each side, and to give a lesson on common logical fallacies so we can all spot them and make more informed decisions.

One of my favorite podcasts is The Skeptics’ Guide to the Universe. Their website carries a great explanation on what is a logical fallacy:

All arguments have the same basic structure: A therefore B. They begin with one or more premises (A), which is a fact or assumption upon which the argument is based. They then apply a logical principle (therefore) to arrive at a conclusion (B). An example of a logical principle is that of equivalence. For example, if you begin with the premises that A=B and B=C, you can apply the logical principle of equivalence to conclude that A=C. A logical fallacy is a false or incorrect logical principle. An argument that is based upon a logical fallacy is therefore not valid. It is important to note that if the logic of an argument is valid then the conclusion must also be valid, which means that if the premises are all true then the conclusion must also be true. Valid logic applied to one or more false premises, however, leads to an invalid argument. Also, if an argument is not valid the conclusion may, by chance, still be true.

Most of us will be guilty of using logical fallacies often. I am guilty of it myself, but for most of us it is done by accident. It takes reflection and discussion to uncover the fallacies and form a more sound, logical argument. Politicians are guilty of using logical fallacies purposely to advance their personal or party views.

Here is an egregious logic fallacy committed by AFSCME. The key statement here is this:

The Republican majorities are choosing to protect the richest 2 percent. They’re making sure these households – making $300,000 or more – don’t have to do their share to fix the state’s budget problems.

This claim falls under a few different categories. The first would be a False Dilemma. AFSCME’s assumption here is the only way to solve the state’s budget problems is to raise taxes on the rich. I haven’t looked at the budget in detail, but my understanding is the budget vetoed by Gov. Dayton was roughly a 6% increase in spending (with no tax increases). According to the BLS, inflation from 2010 was under 3%. If inflation stays at the same pace, then the 6% increase in dollars is a true increase in spending as well since the extra dollars should be able to buy more even when considering inflation. So is the state’s budget truly dire when we can increase spending without a tax increase? Yes, I know this could be construed as it’s own logical fallacy since government is only one sector of the economy and it is possible inflation in those sectors is much higher. The counter-argument to that is to then ask why is inflation higher in those sectors since the government is so heavily invested in those certain sectors of the economy, it could be partially due to their own doing.

The second fallacy of AFSCME’s statement is an example of an Appeal to Emotion, more specifically an Appeal to Spite. Saying the GOP is “protecting” the rich is a way of inciting an emotional class warfare. These people have way more than most people, and that “isn’t fair.” You could even say this is an Ad Hominem attack, saying the GOP’s position is wrong simply because they are protecting those people which most people hate.

Finally, AFSCME uses an Appeal to Belief that the rich don’t pay a fair share of taxes. Statistics on the federal level are readily available and reported. The top 1% of income earners pay 40% of federal income taxes and the top 5% of income earners pay 60% of federal income tax. The democrats want to tax the top 2% of Minnesota incomes on the premise that they don’t pay enough. Think of an analogous situation: If 100 people are in a bar and in total ring up a $5000 bar tab. 1 person in the bar pays $2000, 4 more people pay another $1000, leaving the rest of the people in the bar to pay just over $21, even though the average bar bill was $50. Did the first 5 people pay their fair share? Let’s say they each drove away in a Bentley, would you then feel cheated by how much of the bar bill they paid? Maybe you could make a moral argument that they should pay more, but claiming they didn’t even pay a fair share is simply a bad conclusion.

In the gay marriage amendment debate, I have heard 2 arguments for passing a gay marriage ban. The first one is the idea that being homosexual is biologically unnatural because it doesn’t lead to procreation and that it would be like saying “sand is food.” Human psychology and physiology is much more complex than simple procreation. While it is true that humans are animals and sex is mostly about procreation, Wikipedia has a great summary showing examples in other animals where sex is more than just a mechanism for procreation. To get very basic, it is unnatural for human males to be with only one partner in marriage. In many large mammal species, the biggest and strongest males get to breed with several females to best ensure the survival of the species. Another example where we go “against biology” is when men shave their face or women shave their legs. Biology intended that hair to be for warmth and protection. Should we ban shaving too because it is “biologically unnatural?”

Yes, that last question is a Straw Man argument, but I was employing it in this case as an exaggeration to prove a point that the “sand is food” argument is also the same type of argument. Homosexuality isn’t a biological “wrong” and cannot be explained that way. There are layers of biology, psychology, and other reasons beyond a simple “yes or no” explanation. So the “sand is food” argument doesn’t prove anything.

The other argument used is the past history of voting on this issue in the U.S. I haven’t looked at each vote and what was specifically addressed, but the claim is 34 votes banning gay marriage have taken place and all have had the outcome of supporting a ban. This is wrong based on both the Appeal to Popularity fallacy, as well as the Appeal to Common Practice fallacy. This is easy to explain. I am sure everyone remembers a parent saying to you, “If friend A and B jump off a bridge, are you going to as well?” Just because something is popular or has always been done doesn’t automatically make the position or action correct.

Both major parties are horrible at explaining their logic and presenting evidence for their positions on issues. Most usually want to ignore past data to support an idealistic position that is popular. For example, raising taxes on the rich sounds like a great idea in theory, but it never comes out in practice because we ignore the fact people will adjust their behavior to derive maximum benefit for the amount of work they do. It is human nature. If we taxed every dollar above $1 million at 95%, do you think many people are going to work much past that $1 million mark? Stated another way, if I make $1 million for working 6 months out of the year and make $2 million if I work 12 months, but I keep $500,000 if I work 6 months and keep $550,000 to work 12 months, how many months do you think I am going to work?

My example above doesn’t mean a tax increase isn’t warranted in this budget cycle. Maybe it does need to be part of the solution. But to say tax increases on the rich are always justified is wrong. It is also wrong to assume raising taxes will raise the revenue needed to solve the budget concerns.

If the GOP gets its budget passed in Minnesota, it does look like some people are going to lose their access to the social programs they rely on. That could affect them negatively in the short-term. However, we can’t simply look at the first layer of the consequences in a government policy and make our political decisions based on those outcomes. Taxing the rich gains us money in the short-term, but what if that change prompts a corporation to relocate? What if the rich work less or change their investments and the revenue doesn’t pan out to the projected amounts? What if a person dies due to lack of coverage?

As callous as it sounds, we do have to look at the cost/benefit in these decisions. People die more often because of the 70 MPH speed limit on the interstates in Minnesota than they would if the speed limit were 40 MPH. The higher speed limit saves everyone time (and time is money), thus costing less to transport goods, giving us more time for production, etc. We have chosen to set the speed limit at a reasonable human cost in balance with our own financial interest. Most insurance policies have a co-pay to prevent unnecessary trips to the doctor. Maybe someone skips going to the doctor because they think they just have a mild flu (rather than pay the $20) and end up dying when their infection quickly worsens. (Yes, this is more anecdotal because it is harder to quantify scientifically, but I thought it made some sense to discuss here).

Hopefully you are still reading and didn’t get too bored with some basic insights on logic. My point is to stress the importance of analyzing your political positions carefully, especially if you are perfectly aligned with the ideals of a particular political party. Be especially wary if your party or candidate uses an Ad Hominem Tu Quoque attack, where the attack is simply based on the fact the opponent changed their mind. Use your mind, think logically, discuss with a measured reason, and don’t be afraid to change your mind.

The ability to debate gay marriage.

May 22, 2011 1 comment

I was tweeting pretty heavily tonight, mostly trying to understand both sides of the gay marriage amendment here in Minnesota. Early this morning, the measure passed and will appear on the ballot in 2012. I once again want to point out how both sides have really failed to clearly define government’s role on this subject. I also want to point out the arguments for and against the amendment that I have yet to get an answer to.

Typically, this is an issue that falls along party lines. The Democrats in the Minnesota House gave passionate speeches, some shedding tears and talking about discrimination. It is not personal discrimination as I see it. A gay couple with some planning can enter into a contract with each other that would be able to mimic a marriage as the law in Minnesota treats it. The name of the contract is different (it couldn’t be called a marriage contract), but it would still act much like a marriage. So in reality, it is the definition that is taken away.

This is, however, is contract discrimination. Marriage is defined in Minnesota as, “Marriage, so far as its validity in law is concerned, is a civil contract between a man and a woman…” First, imagine if you inserted a race description before man and/or woman. Those races excluded from the law could still enter a contract as up above, but for the government to pick and choose what type of people can enter this specially defined “civil contract” is outside of the very essence of the United States Constitution which gives us the freedom to associate with who we wish. The argument that a gay couple could draw up a contract that mirrors marriage law cannot cover all things because other laws refer to marriage specifically. Also, if marriage law changes, the contract wouldn’t automatically adjust to those changes. The DFL in Minnesota should have argued it from this more specific point.

I also find the emotional outpouring from the Democrats a bit disingenuous. The law was modified in 1977 to include the phrase “between a man and a woman…” It was further modified in 1997 to add another phrase “ Lawful marriage may be contracted only between persons of the opposite sex…” If the democrats were so concerned about the rights for homosexual couples, why didn’t they do something to remove this language for the many sessions where they held a majority? It concerns me that their passion is a political points passion, and not a genuine concern for gay couples.

From the conservative side, I heard a few different arguments. A couple of Twitter users had civil discussions with me 140 characters at a time, but I found some of my questions went unanswered. The main argument was “let the voters of Minnesota decide.” That was probably the strongest argument. The issue I have is it is so specific and if the amendment fails, it doesn’t change the existing law nor does it prevent it from coming up again. This argument seems to really be an attempt to mask the religious motivation for proposing this amendment.

One Twitter user wrote, “The gay marriage crowd has it’s work cut out convincing people that sand is food,” referring to the assertion that homosexuality is “unnatural” biologically. This is what you might call a “straw man” argument. If one were to extend this idea, should we ban everything that is not biologically natural? Should it be illegal to eat sand? It is readily apparent that arguing from this position is silly. Homosexuality is very common in the animal kingdom. The only counter-argument I saw to this was that animals have also been known to advance on inanimate objects. While that fact is true, it doesn’t negate the occurrence in nature, including in humans long before Christianity. Humans have also come up with things such as the love doll. Do we ban those as well? My point here is that sex outside of procreation does exist. Note: I did use Wikipedia links here because they are good summaries of large subjects.

Another argument used studies showing kids do best when they have a mom and dad at home as parents. The studies are too many to link here, but those studies are very weak correlations and often done as surveys. We just don’t have enough good data to make a comparison between heterosexual couples and homosexual couples. Also, since kids of homosexual couples are often because of adoption (yes, there are a few surrogates, etc), are we not improving that child’s situation? Even if it could be proved a heterosexual couple was better, wouldn’t having a pair of loving parents still be an improvement over no parents? A recent study showed that kids of homosexual couples attend college at a higher rate and graduate at a higher rate than the general population. The protecting the kids argument is very weak at best.

One argument that bordered on offensive was using the rates of STDs in comparison to the general population. It does need to be addressed. My brief search didn’t turn up much for research, but some reading and general knowledge of psychology would lead me to this conclusion: The higher rate is partly due to the continued marginalization of homosexuality. When a person feels they need to hide something, they may not make rational decisions regarding the situation. It would be interesting to look at rates of STDs in countries where gay marriage is legal.

The last argument from conservatives I will address here is homosexual promiscuity. There are some survey studies that have been done that weakly conclude that homosexuals tend to have more partners and tend to be less committed than married couples. What isn’t addressed in this data is: 1) It is hard to get people to be completely truthful, even in an anonymous survey. Perhaps married people feel more shame about their previous partners or are afraid to share the information. And 2) How does not being allowed to marry affect commitment in a homosexual couple. Would married homosexual couples stay more committed knowing they have the contract between them and could lose 1/2 their stuff? The promiscuity argument is weak because the comparison is not equal.

I have a personal plea to make to Republican politicians. I’ve always voted DFL until recently. I voted for the most Republicans I ever have in the last election because I really thought the platform was focused on being fiscally responsible and minimizing government’s interference in our lives. This issue is not what I voted for, it is not high on the priority list, and it is not in the spirit of the Libertarian, non-intrusive government that many of you ran on during the campaign season. You are quickly losing my faith that you will take care of the things that really need to get done.

In my previous blog, I talk about the lack of logic used in this issue. If marriage is indeed a civil contract allowed between two people and a person can be in only one contract at a time, then that contract law needs to be applied equally. Some religious officials are OK with gay marriage. Some religions define marriage as only a man and a woman. We cannot choose which of these religious beliefs to follow, or to me it is in violation of the free exercise clause in the first amendment. The law might not always be fair (i.e. we don’t allow polygamy), but it should be applied equally.

2012 is going to be a very difficult vote. Right now, logic and reason seems to escape anyone in office. Without logic and reason, there is no debate – or at least no progress being made.

Common sense isn’t found in headlines or sound bites

April 9, 2011 2 comments

I’ve been watching headlines go through my various social media outlets, and, to put it bluntly, it pisses me off.  The amount of spin by the 2 major parties is out of control, and the blind supporters of these parties are as bad or worse.  What is frightening is people are making decisions based on these polarized headlines or blogs or party statements.  And even when a party is making a decision that is probably for the best when you look at a pros and cons list, they justify it from a completely different point of view, which can actually cause people to lose support for their position.  Here’s a few examples:

Headline #1 : Total jobs lost under the GOP budget = 30,699

This was a tweet posted by the MN House DFL.  Previous to that, the MN DFL posted an MPR story as their proof.  As the story says, what the DFL is claiming is true, but the truth is stretched to its limit.  First, the jobs actually haven’t been lost yet.  Second, a number of the jobs will be eliminated through attrition (retirements, people leaving etc.) and simply not replacing those workers.  Even the MPR article states this in the verdict – the DFL leaves out important points in its claim.

To me the tweet is very misleading because it insinuates the jobs have already been lost.  Even if they had, the GOP has only been in charge of the MN legislature for only 2 months.  It would be like the GOP trying to take credit for the unemployment in MN dropping.  They haven’t had enough time for any of their actions to have large effects on the MN economy.  Besides that, state government action has very little effect on the economy or jobs.  The jobs referred to in this headline are government jobs, which is one of the biggest ways to save money in government.  Even President Obama’s debt commission suggested eliminating government jobs through attrition by replacing 3 workers with 2 new ones.

Headline #2: Harry Reid says social security is fine.

In a sense this is true. But take a look at the details.

If you look at this Washington Post article, you will see that even Social Security’s own actuaries have said if we don’t start reforms now,  payroll deductions will increase by 16.1% in 2037, and benefits will be reduced by 22%.  Thinking of my own parents, uncles, aunts, and other relatives that will be heavily dependent on social security at that point.  A 22% cut would be devastating.  Social security is already spending in the red ($54 billion in 2010).  None of the money is actually there since it was borrowed back to the federal government, which means our retirees are dependent on foreign creditors to pay part of the retiree benefits.

I don’t know too many of my friends that have confidence in social security being a big portion of our retirement by the time we are of age.  It would be ludicrous to think so.  Let’s start working on changing it for our generation so our parents and grandparents can spend their retirement confident we will take care of them, knowing we made the right choices on their (and our) behalf.  Raise the age of full benefits for those under 40.  As much as I hate to think about it, raise the payroll tax a small amount.  Let’s change the social security tax window to increase collections.  We need to take care of our older generations, and  I would be proud as someone younger to do so if it is done correctly.

Harry Reid is right, technically the trust fund wont run out for 20 years.  But that evaluation has serious problems.  We have to fix it, or as I’ve said many times, we will leave alot of people with nothing.

Headline #3: NPR funding is vital to the nation.

I love NPR, and more specifically MPR.  Who doesn’t love Car Talk, Wait, Wait Don’t Tell Me, A Prairie Home Companion, the great news coverage, and many other things they provide.  But is the funding from the government vital?  Here’s where I have a problem with the justification.

First, by NPR’s own admission, government financing only accounts for 5.8% of the overall revenue for public radio.  I don’t know too many companies that haven’t had revenue go down in this recession, so is it unreasonable for NPR to have to make some cuts if they lost 6% of their revenue?  Second, government funding for NPR was originally put in place so they could be an independent news source free from influence by businesses or other outside influences.  Note: I couldn’t find a good resource for this point, so I won’t expect it to have as much weight, but I am making it anyway. 22% of public radio finance now comes from businesses (and don’t we all love those underwriting messages in our programs).  It is hard to believe that some of the programming doesn’t carry some bias to those companies and organizations that sponsor programs.

Finally, is it really fair to say that everything NPR does is vital to the nation?  I love the weekend programming, but does Car Talk really educate the public (or is that its primary mission)?  No, they entertain, and we should have the option of patronizing the entertainment of our choice, and not be forced through taxation.  Full disclosure: I used to contribute yearly to MPR until I saw how much tax money is given to public radio.  It was disturbing to me, especially when you see the salaries of some of the people that work there.  I will say if all public funding goes away, I will contribute again because I do enjoy the radio and online content.  I just don’t want to pay twice.

Headline #4: GE paid no taxes.

The New York Times really worked hard to stir the pot on this one.  It was a very cleverly written article, which made it seem GE not only didn’t pay taxes but they were getting a $3.2 billion refund.

This article does a pretty good job of explaining what the article is really about.  GE did dramatically reduce their tax bill from the normal 35% corporate tax rate (second highest corporate tax in the world by the way).  There is no company in the United States that pays 35% of their profit to the IRS.  That’s why every large company has accountants and lobbyists – to make sure they don’t pay too much.  Even small companies take write-offs to reduce their tax burden.  It’s not unusual.

GE is not getting a refund.  the $3.2 billion tax benefit is a way to report what GE did to save money over the standard tax rate through various activities.  Let’s say they sold a $200 item that cost $100 to make.  GE is going to record it as $200 revenue with a cost of goods of $100 and a $35 tax on the $100 profit.  At the end of the year when they write off various tax benefits, they need to put the difference back on the books to report the profit to shareholders.  Not a refund, but in a sense a correction.

GE plays the tax game like every other corporation.  In fact, one of their major tax credits is green energy tax credits.  It is so ironic that progressives push so hard for green energy tax credits, but when a corporation uses them for producing green energy, they get attacked by the same people.  Republicans are guilty too.  In 1997, they passed a tax law allowing companies to hide alot more profit overseas which costs the treasury billions.  The easy way to solve this is to dramatically simplify the corporate tax code.  Lower the rate.  Eliminate almost all write-offs.  Allow expenditures to be taken all in the year they are incurred.  This would keep the flow of money more stable, it would be easier for smaller companies to plan for taxes, and it could even spur spending since buying equipment or inventory would be one way of still getting a write-off through immediate expenditure write-off.

Headline #5: The budget for the rest of 2010

It’s a tiny start, but still a disaster. $39 billion in cuts doesn’t come close to filling a $1500 billion deficit (yes, I put $1500 billion on purpose so the scale of the numbers is more obvious).

The democrats got their Planned Parenthood funding.  I know it has importance, but if President Obama’s health care is supposed to take care of everyone, why do we need Planned Parenthood?  Also, the democratic blogs saying republicans are against women?  Come on, get real.  We are trying to cut the budget and put more responsibility on people.  The government can’t take care of everyone all the time.

The republicans got a $5 billion increase in defense spending.  Another joke.  We are in 3 wars and several peace-keeping missions.  Time to get out.  We have no clear mission in Libya, in Iraq, in Afghanistan.  If our mission is to stabilize these countries, is it working?  If we left today, what would happen?  We can’t make every country like our country, so we need to keep our troops safe and our country safe by bringing them home.  Then we can cut the military budget.

As an aside: I love how the $100 million a day we are spending in Libya is used as an excuse to spend elsewhere (If we can spend that on Libya, why can’t we fund programs X,Y, and Z).  Because, we need to cut them all.  Get out of Libya and cut programs X, Y, and Z.  It isn’t a choice of one or the other, it should be all.

Overall, I see both parties telling have truths.  The blogs are worse.  It’s politics as usual with the “That side is wrong and sucks,” rather than compromise or solutions.  We need to think differently.  We need to get back to real American values of hard work, self-reliance, and liberty and freedom.  Leave us alone government, we can take care of most things by ourselves.