Coyote Blog

Obama Secretary of State John Kerry, in his famous Winter Solider remarks to Congress about the Vietnam War:

... it seems the Government of this country is more concerned with the legality of where men sleep than it is with the legality of where they drop bombs.

Obama Spokeman Jay Carney, today:

these [drone] strikes are legal, they are ethical, and they are wise

Remember, Jay Carney is talking about the President's claimed right to bomb US citizens, as well as anyone else he thinks (but can't necessarily prove in a court) might kind of sort of have something to do with a terrorist group.  And civilian casualties, so much a part of Kerry's concerns back in the 1970's?  They are just asking for it.

Anyway, I have not had a chance to digest the Administration's white paper on targeted killing (I can't even believe I am writing that phrase -- our Constitution specifically banned bills of attainder but now the executive claims the ability to kill at whim).  Jacob Sullum has some thoughts at the link.  I will write more if and when I have a chance to read it, but I am sure I will find it horrifying.

The Kennedy's have never been shy about using the government as their own personal plaything:

Senator Ted Kennedy, who is gravely ill with brain cancer, has sent a letter to Massachusetts lawmakers requesting a change in the state law that determines how his Senate seat would be filled if it became vacant before his eighth full term ends in 2012. Current law mandates that a special election be held at least 145 days after the seat becomes available. Mr. Kennedy is concerned that such a delay could leave his fellow Democrats in the Senate one vote short of a filibuster-proof majority for months while a special election takes place...

What Mr. Kennedy doesn't volunteer is that he orchestrated the 2004 succession law revision that now requires a special election, and for similarly partisan reasons. John Kerry, the other Senator from the state, was running for President in 2004, and Mr. Kennedy wanted the law changed so the Republican Governor at the time, Mitt Romney, could not name Mr. Kerry's replacement.

"Prodded by a personal appeal from Senator Edward M. Kennedy," reported the Boston Globe in 2004, "Democratic legislative leaders have agreed to take up a stalled bill creating a special election process to replace U.S. Senator John F. Kerry if he wins the presidency."

The Republicans are having fun beating on John Kerry again.  The stated reason for their anger is that Kerry implied only the lazy and uneducated dregs of society go into the military.  The real reason for their focus on Kerry is that he was such a terrible, weak candidate last time around, they would love to run against him again, rather than whomever they are actually facing in their Congressional races this year.

I do think Kerry's remark betrayed a general liberal assumption that the army is made up mainly of uneducated southern rednecks and poor urban blacks.  Its hard to get an exact demographic handle on this, because the army does not really ask how much money your parents make when they recruit you.  However, they do ask you what zip code you are from, and this analysis seems to belie the common liberal assumption, showing the army is actually made up disproportionately of recruits from the richest rather than the poorest zip codes. 

More on this analysis here.

Update: LOL;  Also this

I suppose a large number of Americans must support the free speech restrictions embodied in McCain-Feingold and other campaign finance laws, or they wouldn't have passed.  The logic of such laws is apparently to reduce the influence of "big-monied interests" in elections, I suppose by being able to saturate media with their point of view.

So here is my question - have you ever met anyone (other than John Kerry with his Iraq vote) who thought that they had been duped or unduly influenced by election advertising?  Have you met anyone who says "yep, I voted for the guy with the most ads instead of what I believed in?"

The fact is that I have never met such a person, even among those who support campaign speech restrictions.  Their position is always that they are of course too smart to be gulled by the ads but "a lot of other people are not as smart".  But who are these other people?  They are like the friend of a friend who swears his grandmother put her cat in the microwave to dry it off.  They don't exist.  The fact is that no one thinks that they personally are unduly influenced by campaign ads, but they think everyone else is. 

Here is a rule of thumb:  When supporters of a law take the position that "This law is not necessary for me but for all those people who are not as smart as I am", it is a bad law.

Congress is probably going to extend Daylight Savings Time, despite complaints from airlines that their rescheduling and reprogramming costs will be exorbitant. Virginia Postrel points out that while a boon for the Northeast, southerners are not amused:

The source of this bright idea is, not surprisingly, the ever-meddlesome Ed Markey, who calls the bill
"a huge victory for sunshine lovers." As a certified sunshine lover, I'd say it
looks more like Massachusetts's revenge on Texas (and the rest of the Sunbelt)
for George Bush's victory over John Kerry. There are some places--and Dallas is
definitely one of them--that need just the opposite: shorter sunny evening
hours. Once the sun goes down and the temperature falls to the high 80s, you can
actually enjoy sitting outside.

The ostensible goal of the bill is energy saving, but the evidence
is weak.... 

Oddly missed even in fairly
thorough accounts is
any consideration of the extension's most obvious cost: More demand for
energy-eating air conditioning in the fast-growing, very hot Sunbelt. A lot more
people live down here than did back during the Nixon administration.

Southerners, come join Arizona on the "dark" side of this issue.  Arizona decided long ago that it had plenty of daylight, did not need to save it, and therefore was not going to play with the other kids.  We sometimes catch some grief for being out of step, but you don't see any of us scrambling around the house twice a year looking for our VCR manual to figure out how to change the clock.

The Boston Globe has an article on John Kerry's recently released Yale grades.  Humorously, after all the sturm and drang of him supposedly being an intellectual titan to George Bush's dim-wittedness, his GPA was actually a notch lower than George's at Yale.  Personally, I could care less - grades are important for getting into grad school or that first job out of college.  I can't even imagine GPA coming up much in assessing one's suitability for a job in his forties or fifties.

Anyway, the point I take from this is more about grade inflation that suitability for the presidency.  Both Kerry and Bush got a selection of D's, C's, and B's, and no A's.  And while these may have not been standout grades, they certainly didn't seem to be out of the norm for the time.  My question:  Does any student today who can fog a mirror in the Ivy League today get grades this low?  My guess is no.

Postscript: By the way, Kerry released his military records (which were the source of the Yale grades) and there does not appear to be any ticking time bombs in it.  In fact, there are several pieces of information that would have helped him in the campaign, including commendations from several of his swift boat vet critics.  Why in the hell did he drag his feet on this and give the Republicans a free campaign issue?

We libertarians are often argue that both the left and the right are equally guilty of stepping on key freedoms.  We currently have an excellent example of that in the case of freedom of speech in broadcast media (radio and TV).

From the Right:  New initiatives to crack down on "bad language" and sexual content in broadcast media, most famously driving Howard Stern to satellite.

From the Left:  While bent out of shape about the right's crackdown on immoral speech, the left turns around and attempts a crackdown, via renewal of the Fairness Doctrine, on political speech.  See hapless John Kerry decrying loss of the Fairness Doctrine here, and a more coherent history here.

Can't we just agree to allow everyone free speech and turn off what we don't want to hear?

I am willing to make a bet.  I will bet that at least 90% and probably 100% of US Senators have money invested in equities.  Why?  Because, for long term investments, you would be insane not too.  Even with substantial drops in the market form time to time, equities outperform bonds and government securities by miles and miles.  From this chart, you can see that even if you had the misfortune at age 30 to invest all you savings in stocks the day before the 1929 stock market crash, you STILL would be better off by age 45 having invested in stocks than bonds and your investment would be worth 10 times more at age 65 than if it had been in bonds.  And remember, that is the case of investing on the worst possible day of the last century.  Any other comparison is even more favorable for stocks.  The difference in wealth between stocks and government securities at retirement age is staggering.  Any financial adviser who told a person under 50 saving for retirement not to invest some of their money in stocks should be fired on the spot for malpractice.

However, just like Senators who put their kids in private school but oppose school choice for the rest of us, Senators do not think the rest of us are mature or smart enough to invest in stocks.  Quoting Senator Specter:

On the issue of privatization, I had some time ago considered an idea to place a relatively small portion of benefits in an investment account, providing that the "security" aspect of Social Security was retained and the investment was under professional management. However, with the severe fluctuations of the stock market, I have since rejected that idea.

Men like John Kerry get most of their wealth from stocks, and would fire any financial adviser who did not invest a good portion of his wealth in equities. He understands that stocks will fluctuate from time to time, but that over decades (which is how one invests for retirement) they are the best choice. How hypocritical is it that he and others are saying "Stocks are great for me, they make me wealthy, but trust me, they're not right for you".  More on distrust of individual decision-making here.

Disappointed that the presidential candidates have skipped your town? Its not too late - now you can create your own stump speech by either of the major presidential candidates:

George Bush
John Kerry

LOL, thanks Mr. Sun. Heads up from Captains Quarters

In part 1, which you should read first, we discussed how the US has crossed a milestone where fewer than 50% of the taxpayers in this country pay about 100% of the personal income taxes. We also discussed how the recent tax cuts actually shifted personal income tax burden more onto the rich, rather than less.

However, John Kerry has cited the same CBO Report I used to make the points in the previous post to say just the opposite - i.e. that the recent tax cuts actually shifted the tax burden away from the rich to the middle class. Assuming he is reading the study correctly (which he is) how can this be?

The answer is in the difference between Federal income taxes and total federal taxes. The tables I used in part 1 were for income taxes only. It strikes me as reasonable to use income tax numbers for analyzing income tax changes. The total tax numbers Kerry uses includes not only income taxes but social security and Medicare taxes (including the employer contribution), federal excise taxes (such as the gasoline tax) and the corporate income tax. Lets look at who bears the brunt of these taxes.

1. Social security taxes are regressive. Very regressive. While your paycheck may show 6.2% FICA, the bill is really 12.4% because your employer matches this payment with funds they probably would otherwise pay you in wages. What makes this tax regressive is that it is a straight 12.4% of every dollar up to a limit, currently $87,900, after which the tax is zero. This kind of profile would never be tolerated in the income tax system. The reason for this is the carryover of the original idea that social security is not a tax and social benefit program but an insurance and retirement plan, a characterization that is becoming increasingly out of whack from reality. (If it was a private retirement plan, the managers would all be in jail right now for the terrible long term returns it pays out).

2. Gas and excise taxes are generally considered regressive as well, since gasoline is probably a much higher percentage of lower and middle class spending than for the rich (those rich who own Hummer H2's notwithstanding).

3. Its harder to pinpoint who pays corporate income taxes. The CBO report allocates corporate income taxes in proportion to dividends reported on income tax statements, which seems reasonable. Fifty years ago, one would have said that this meant the rich pay it, since we pictured the rich as owning all the stock. Today, in our mutual fund world, a lot is probably born by the middle class, particularly middle class retirees.

As a result, the sum of these non-income taxes are probably net regressive - i.e. they disproportionately hit the lower and middle classes. This means that an income neutral income tax cut, i.e. one that does not shift the tax burden but lowers it proportionately for everyone, will still shift the total tax burden to the middle class, because it reduces the amount paid in the progressive system (e.g. income taxes) in proportion to the amount paid in the regressive system (e.g. social security).

This leads me to a couple of thoughts. First, I think while he is quoting correct stats, Kerry is using the data a bit disingenuously. First, it implies to people that the middle class is paying more so the rich can pay less, which is untrue - everyone is paying less. Second, he is trying to use the data to show that personal income tax burden is shifting to the middle class, which we showed in post 1 that it is not - it is actually going the other way. Third, he uses it to justify a tax increase (or a tax cut rollback) on the richest Americans. We showed that already the Bush tax cuts shifted more of an already ridiculously high burden to the rich. This will shift even more.

However, there is a point here if Kerry wanted to latch on to it. Forget the class rhetoric about the income tax system - focus instead on social security. There are two good reasons for this: 1) Social Security is broken, and the financial reckoning is coming 2) unlike the income tax system, social security is truly indefensibly regressive. Yes, you can dig through Kerry's web site and find something on this, but he is for some reason so drawn to the income tax issue he never really hits it hard.

If John Kerry really wants to take up a populist tax banner, leave income taxes as they are (for all the fiscal deficit crisis talk, an economic recovery plus fewer new military invasions will bring the deficit back in line without tax increases). He should instead propose a reduction in the 12.4% FICA tax rate and then an elimination of the $87,900 wage cap. To make this palatable to Congressional Republicans (and me, if I were voting) it should be tied to a package of other reforms such as allowing some investment choice by individuals.

Of course, this is not going to happen. Politicians have used Social Security scare tactics with retired and older people so often that these folks have come to react negatively to any hint of change to Social Security. Reasonable discussion about the future of Social Security is just not possible in the last five weeks of an election, particularly with Florida in play.

This has actually become part 1 of a two-part post. In part one, we will look at the unbelievable proportion of income taxes paid by a small percentage of people in this country, and reflect on how crazy it is to talk about the rich getting a free ride. In post 2, we will look at a couple of truly regressive taxes where the rich really do get a free ride, and wonder why these issues get mostly ignored.

Something interesting has happened in this country over the last decade, and it is shown below in one of my favorite statistics. There is much talk in the media about this or that group paying their "fair share" of taxes, but as is usually true in the media, there are depressingly few facts in these articles. This is strange, since there are several government reports that pretty clearly outline the share of taxes paid by various income brackets. The numbers below are from a Congresional Budget Office Report, but the same numbers are buried in the IRS web site as well.

For 2003, the estimated share of total individual income taxes paid by:

Wealthiest 1%: 33.6%
Wealthiest 5%: 55.1%
Wealthiest 10%: 67.9%
Wealthiest 20%: 83.0%
Wealthiest 40%: 97.8%
Wealthiest 60%: 103.0%

The way to read this is that the wealthiest 10% of taxpayers pay 67.9% of the country's individual income taxes. And yes, that 103% is not a typo - the bottom 40% in income as a group pay negative personal income taxes (because of the EITC).

This leads to the following fascinating conclusion: Half of the people in this country pay more than 100% of the personal income taxes. The other half get, as a group, a free ride (though there are individuals in this group that pay paxes, net, as a group, they do not). We are basically at the point in this country where 51% of voters could vote themselves all kinds of new programs and benefits knowing that the other 49% have to pay for them.

Extra Credit Exercise: Given the numbers above, and all the talk about "tax cuts for the rich", craft an income tax cut that does not disproportionately benefit the top half of the income spectrum.

Hard, huh? The same CBO report had an interesting comparison. They estimated what these same numbers would have been without the recent tax cuts. Without the "George Bush tax cuts that unjustly benefit the rich" these same numbers in 2003 would have been:

Wealthiest 1%: 31.9%
Wealthiest 5%: 51.8%
Wealthiest 10%: 63.9%

OOPS - Coyote, that can't be right? That means that the wealthiest people pay a higher share of income taxes after the Bush tax cuts. That must mean that the tax cuts disproportionately helped the lower income brackets? Can that be right?

Yes, thats right. Without the Bush tax cut, the top 60% would have paid 99.9% of all individual income taxes. Now, after the tax cut, they pay 103%, meaning the bottom 40% have gone from paying about 0% to actually getting a bunch of money in net EITC.

Which just goes to prove a related point I make a lot - agree with him or disagree with him, G.W. Bush has got to be one of the worst presidential communicators in recent memory. For further proof, see debate #1.

Interestingly, John Kerry used this same report to say that these tax cuts shifted the burden of taxation to the middle class. And, in one way, he is right, though not in the way that his statement is generally interpreted. For more, see part 2, coming soon. (hint - think total taxes, not just income taxes)

UPDATE

Reason, my favorite libertarian rag, has a related analysis from Nick Gillespie and Mike Snell here. I don't think I trust either Bush or Kerry on fiscal discipline. Neither, apparently, do Gillespie and Snell:

But the fact remains that Bush's cuts have reduced the amount of income tax we all pay. Though Kerry will certainly suggest otherwise in Friday's debate, the trouble with Bush's budget policy isn't that he cut income taxes. It's that he hasn't cut spending. Indeed, perhaps the strongest case for electing Kerry may be that he will usher in an age of divided government that will restrain federal spending and the various problems that accompany it.

UPDATE #2

Fixed an unbelievably bad triple negative - Even I could not figure out what I was trying to say.