Predictability | Eastern North Carolina Now

    Publisher's Note: Jim Bispo's weekly column appears in the Beaufort Observer.

    After a lot of bickering we finally agreed on a bi-partisan approach to identify how we should go about getting our National finances back in order. We agree to set up a "super committee" to develop recommendations as to how to begin to get our finances in order. If they are able to agree on something, it will be subjected to an "up or down" vote in the congress. I was under the impression that we had agreed on the amount which this super committee is charged with "finding". The motivation for coming up with something is in what happens if agreement is not reached. The deal includes a provision that dictates actions that will not be very pleasing to either the Reps or the Dems if the super committee is unable to reach a consensus...

    And now, guess what. After the "super committee" was established, but hardly had time to meet, here comes the community organizer with a "plan" (right after he got back from his Martha's Vineyard vacation). What we were told was that this plan would be presented to the "super committee" with a suggestion for their inclusion in their recommendations. We no more than get a target set up and here comes the anointed one it with a "new" plan which effectively moves the goal posts. "New" is clearly a misnomer - which will likely fool a lot of folks into believing that the prez is trying to work toward something productive. There are folks who are unwilling to call it a plan unless the CBO finds it specific enough to score. (That actually happened to one of his earlier "plans".) Here we go again looking for something "comprehensive" - which is almost always a formula for failure. What it looks more like is an effort to give the anointed one some talking points in his run for reelection. "I offered up all these big savings, but as the result of Rep recalcitrance, none of them was accepted." What you are not likely to hear is that the "revenue enhancements" (read tax increases) will happen in the near term and the spending reductions will happen later - likely after the anointed one is out of office - even if he gets reelected in 2012. (Bite your tongue!!) Ronald Reagan got "sucked into" a deal like that and guess what. The taxes came but the savings never materialized. Let's face it, one congress cannot commit another unless they decide to be committed. And who in congress wants to reduce spending or entitlements or anything else to fulfill someone else's promise. Not so many. Truth be known, they have a hard time fulfilling their own commitments to reduce spending, never mind someone else's.

    And then the Dems try to do it again. We heard "suggestions" of a ten to one reduction in spending for every dollar of increased revenue (read increased taxes). It was in a recent Dem talking points paper and we heard it over and over ad nauseam. The "ad nauseam" is only partly due to the repetition. It's also due to the fact that many of the Dems don't seem to be able to read the "talking point" papers they have been provided very well.

    What do you suppose would happen if we were to push the notion of spending reductions first with "revenue enhancements" to come later?? Now that is a situation that could really come to fruition (future congresses not withstanding). If taxes (and regulations) are significantly reduced, there are a lot of well respected economists (respected by everybody except the Keynesians and Paul Krugman) who would predict an expansion of the economy which would, in turn, increase revenues, albeit without increasing tax rates. Maybe the 10 to 1 ratio of cuts to increases isn't such a bad deal after all - as long as we keep them in the right order; decreases first with increases to follow a few years later.

    But wait!! Here comes another plan; this one looking even more like an effort to get the Reps into a corner for the upcoming election season (which seems to have already started ) rather than a true effort to reduce unemployment. So when is a deal apparently not a deal?? This latest plan is reputed to be aimed at improving our unemployment situation. The anointed one trying to "fix" the unemployment situation with another stimulus plan. (A rose by any other name...) The Prez even has the temerity to tell us that this "plan" is insurance against a "double dip" recession - even though it's simply more of the same old stuff that hasn't worked before. It would, however, provide yet more talking points if we do end up with a double dip. And suddenly the "super committee" is charged with finding enough additional savings to make the Pres' pronouncement that his latest flight of fancy is "paid for" be true as he claimed when he announced. It would seem that the past, present, and future tenses are all the same in the Prez' vernacular - when it serves his purpose. He has proposed some additional tax increases to help pay for this latest adventure. Perhaps the most disingenuous is the so called Buffett tax increase. If Mr Buffett really want's a tax increase, he should not be taking advantage of loopholes like shielding a lot of his income by making contributions to foundations (his or someone else's). Between he and his pal, Bill Gates, they could together probably take care of the national debt all by themselves. Well, maybe not; but it might be worth a try... Do you suppose an individual who wants to be taxed at a higher rate would be willing to show us his tax return so we can judge for ourselves just how serious he is about paying more taxes?? Don't hold your breath waiting for that to happen.

    Reportedly Warren Buffett gets paid about $100,000 per year. Also reportedly, most, if not all, of that money is paid as capital gains which are taxed at 15%. The first question is, "Who is it that pays Mr. Buffett??" I believe that the short answer is, "Mr. Buffett". If it is Mr. Buffett paying Mr. Buffett, and the pay he receives is taxable at capital gain rates (15%). and he would prefer to pay the higher "earned income" rate that his secretary pays, why do you suppose he doesn't he simply pay himself a salary that is taxable at "earned income" rates. That shouldn't be such a difficult trick for someone as smart as he is. As an aside, we can only wonder, if Mr. Buffett is paid only $100K per year, how he ever got to be a billionaire. But I digress..

    It seems that perhaps it is the behavior being demonstrated by the anointed one that is holding back any the recovery. First of all, he proposes lots of short term "fixes" (temporary extension of Bush Tax cuts, temporary reduction in FICA taxes, one time tax credits for hiring or promoting folks and the like) and expects them to pull us out of the fiscal morass in which we find ourselves. We are told by business people that what they need is predictability. Unfortunately short term and one time "fixes" do not provide predictability. About the only predictability we have is that whatever we agree on today will likely be changed tomorrow. That is not the kind of predictability that encourages entrepreneurs to act like entrepreneurs. As long as it seems as though every morning while they are shaving or showering or whatever, the community organizer or his minions come up with new ideas that could provide political talking points or a political edge, we will not have predictability. An idea a day didn't seem to work for FDR; what do you suppose makes anyone think it will work for BHO?? We have an administration where long range planning seems to be on the order of a day or two. As long as most of the "new" ideas tend to focus on providing a near term political advantage rather than serving the long suffering taxpayers, it is likely to be some time before we can ever achieve the degree of predictability required to encourage our businesses to implement long term investment and business plans.

    And fomenting class warfare is not likely to help much either.

    D'ya think??