Minor Thoughts from me to you

Alaskan Senator Ted Stevens (supposedly a Republican) seems dedicated to wasting money -- he's setting aside Federal money for the development of baby food made from salmon. I'm not sure why this is a Federal issue. Millions of children have grown up without the benefit of baby food made from salmon. I do know that it's just one more wasteful use of my tax dollars. If you want to know why my wife and I complain about losing $600 a month to the Federal government -- this is one of those reasons.

Senator -- if you believe in the project so much, please put your own money into it. Don't put my money into it and then try to tell me that you're doing it for my own good.

(Hat tip to Radley Balko.)

From Boston Gal's Open Wallet:

Today's Christian Science Monitor explains: Why the rich get the most tax goodies.

He suspects one reason Americans tolerate tax cuts favoring the wealthy is that many anticipate becoming rich themselves and thereby benefiting.

It is true that when I made the most (as an independent contractor) was also when I paid the least in taxes (write-offs, write-offs, write-offs!) Sometimes I wish the tax code could be written to heavily tax people like Paris Hilton - we could call it the "stupidly wealthy tax". Money generated from the Paris Hilton tax would directly fund educational programs with the goal to produce as many anti-Paris Hilton's as possible.

Well, the Fair Tax would certainly accomplish that goal. Err, the goal of taxing Paris Hilton, not the goal of funding educational programs to produce anti-Paris Hilton's. Still, by taxing consumption rather than income, the Fair Tax would certainly make rich playboys/ playgirls actually pay taxes for the first time in their lives.

Fortunately, the Fair Tax wouldn't just tax Paris Hilton. It would make all of us better off by removing all federal taxes (income, investment, capital gains, business income, etc) and replacing them with a single consumption tax. It would simplify the entire tax code and increase the tax base (tax everyone, not just those earning an income). It would make American exports cheaper. American made products and foreign made products would -- finally -- be taxed at exactly the same rate.

What's not to like?

There's a very simple way to demonstrate that high taxes are a bad idea. Rich people have lots of money. The best thing possible for everyone else is that rich people spend that money. Every dollar spent by a rich person is a dollar that helps employ someone else. If buying a car, auto works are employed; if buying a suit, textile workers are employed; if buying a house, construction workers are employed; if buying a yacht, dock workers are employed.

The more government taxes someone, the less likely they are to put their money in places where it can be taxed. If they stop spending, the entire economy suffers. If government lowers their taxes, they will be more likely to spend their money, thus creating jobs for everyone else.

Call it trickle down economics. Call it Reaganomics. Or call it psychology. Whatever you call it, it works. Tax someone more, they'll spend less; tax someone less, they'll spend more. I'm better off when they spend more. Aren't you?

The biggest problem with our current tax code is that it's too complex. Millions of hours worth of effort are wasted every year calculating who owes what, to whom, for what, in what quantities. Every year Congress makes the entire enterprise more complicated. For instance, after Hurricane Katrina, Congress wrote all kinds of breaks into the tax code for those who had been harmed by the hurricane or those who were helping those harmed by the hurricane. The result is a mess of new forms, qualifications, deductions, credits, required documentation, and -- most of all -- confusion.

It turns out that there's actually a very good reason for all of this confusion:

Three of the four top lawmakers on the Senate Finance and House Ways and Means committees, which are in charge of writing tax laws, pay professionals to file their annual tax returns with the Internal Revenue Service.

(The fourth files his own taxes every year.) Will any of the other law makers ever consider filing their own taxes?

"Absolutely not," said Rep. Jim McCrery (R-La.). "I'm not an accountant. I'm a lawyer."

Well, buddy, I think you should feel the pain that American taxpayers feel. I propose -- beginning next year -- that all Congresspeople and Senators be required to fill out their tax returns by hand. No calculators. No computers. No tax advisors. No visits to H&R; Block. Furthermore, any errors will be prosecuted to the full extent of the law. And why not -- they're writing laws that all Americans are expected to follow fully. It's only fair that they themselves face the same expectations and the same penalties for failure.

As for not allowing the lawmakers to have any help when filing their taxes, just consider it an incentive to simplify the tax code. After all, not everyone can afford fancy software of expensive advisors. If the people that write the code (who are supposedly experts on the topic) can't follow the code, maybe the code needs to be changed. Left to its own devices, I don't expect Congress to ever simplify the tax code. But maybe if we make them feel the full and undiluted pain of the tax code, they'll see the light.

Larry Kudlow reported this morning on a pathetic state of affairs in the U.S. Senate. Currently, Senator Gregg's (R-N.H.) Budget Committee is writing and debating the Senate's budget resolution. So far, the commitee has managed to drop out entitlement cuts and is currently working on adding even more pork to the budget. Good job guys. You've succeeded in completely losing whatever small modicum of support I was willing to give to Congressional Republicans.

Let me make this perfectly clear: from this moment on, I will actively work to defeat every Republican Congressman or Senator up for reelection. I will actively work to reelect every Democrat Congressman or Senator up for reelection. For out of state races, I will donate money to Democrat candidates, not Republican candidates. For in-state races, I will make phone calls and literature drops on behalf of Democrat candidates. I will do anything and everything I can to ensure that only Democrats are elected. There is only one thing you can do to change my mind: grow a backup and stand up for the American taxpayer. Short of that, I see no reason why I should work for a Republican majority rather than a Democrat majority.

To all Republicans working to cut the budget -- you'd better find a way to convince your big spending colleagues to toe the line. You might start out by reminding them of all of the Congressional perks and committee assignments that they'll lose if Republicans lose the majority. At this point, I see no reason to give time, money, or effort to the Republican party as long as it is unserious about practicing fiscal conservatism. True, Democrats won't be any better. On the other hand, if big-spending budget bills are passed by a Democrat majority, President Bush just might remember where he hid the veto pen.

I'm willing to gamble. Are you?

It's something Christine and I aren't doing. However, it looks like Alan Greenspan's legacy just might be helping millions of Americans to get comfortable with debt. The entire linked article is worth reading, but I'll provide a few excerpts:

Today, borrowing against equity in real estate occurs at rates never seen before. Mortgage equity withdrawal was unheard of generations ago - a second mortgage was the last recourse for a family in trouble.

Today it is routine.

Septuagenarians shake their heads as they see young people living lifestyles which don't square with what they know of their incomes and expenses. Debt it seems has not taught any hard lessons lately - debt has become too friendly, too tame, and too forgiving.

In the last three years alone, nearly three trillion dollars of new mortgage credit has been extended - first mortgages, second mortgages, home equity loans, and lines of credit.

Some dismiss concerns of too much debt by pointing to the bottom line.

Debt, they say, is not a problem because household balance sheets are the best they've ever been. Today, household net worth does look impressive - against a meager 12 trillion dollars in debt stands a hefty 64 trillion dollars in assets.

A closer look at net worth, however, shows that while liabilities have marched steadily upward, assets can go up or down

What happens if real estate assets suffer the same fate as equities did a few years ago? Or, what if real estate values simply go flat for an extended period of time?

If you have any doubts whatsoever about the desparate need for reforming government spending, I'd invite you to read The Great American Pork Barrel from Harper's Magazine. I am disgusted by the manner in which our Congressional "representatives" act when spending the nation's tax dollars.

There was no time to produce a clean copy, so the version of the omnibus bill that Congress voted on was a fourteen-inch-thick clump of papers with corrections, deletions, and additions on virtually every page. Handwritten notes peppered the margins; typefaces varied from section to section and from paragraph to paragraph. First made available to lawmakers at around 12:15 A.M. on November 20 (and only to those who happened to be browsing the House Rules Committee website, where it was posted), the omnibus bill came to a vote before the full House some sixteen hours later, at approximately 4:00 that afternoon, and before the Senate at 8:42 that evening. For the legislators who approved it"”by a margin of 344"’51 in the House and 65"’30 in the Senate"”reading the 3,320-page bill before the vote would have been a mathematical impossibility.

As approved at the November 17 appropriations meeting, the Foreign Operations bill had contained a mere nine earmarks. The omnibus measure, which was completed after two feverish days of work, allocated money for 11,772 separate earmarks. ... In the end, the bill's earmarks were worth a combined total of nearly $16 billion"”a figure almost as large as the annual budget of the Department of Agriculture and roughly twice that of the Environmental Protection Agency. It was the biggest single piece of pork-barrel legislation in American history.

If you still believe that Congress should be in charge of medical care, education, retirement savings, and a host of other issues, I'd love to hear your reasons why. Any business that operated in this manner would find itself facing bankruptcy in short order. That supposedly mature adults would behave in this manner is frightening.

Thanks goes to Wisconsin Senator Russ Feingold for co-sponsoring the Pork Barrel Reduction Act along with Senators Coburn, McCain, Bayh, Kyl, Ensign, Graham, Sununu, DeMint, and Cornyn. Pork Busters is asking for you to help get this bill passed. Many people in the Senate (I'm looking at you, Senators Murkoswki and Stevens) will oppose this effort to reign in government waste.

You can read the full text of the Pork Barrel Reduction Act (S.2265) online and track the Senators who support it and oppose it.

Growing up, I was upset about Congress's spending. I was convinced that if we only had a Republican President and a Republican Congress we could really cut the fat out of the Federal budget. Well, not so much.