Tax Increases = Employment Cost Increases

Campaign rhetoric about Republicans supporting "tax cuts for the rich" demonstrates economic ignorance and/or intentional incitement of class warfare. Either way, it's bad for our country.

Let's get one thing straight: increasing taxes on the top bracket kills job creation. Why? Because—surprise, surprise—the highest earning Americans tend to be the job creators, and increasing taxes deprives them of business capital and effectively increases the cost of employment.

Free market economist and investment adviser Donald Luskin clearly illustrates this point by describing how a tax increase would affect his company, TrendMacro:

Little companies like mine don't pay corporate taxes like big companies. They are organized as sole proprietorships, S-corporations, or limited liability corporations (like TrendMacro), so the profits are passed on to the people who own them (me, in the case of TrendMacro), who in turn pay taxes on them as personal income. . . . Under the Bush tax policy, that means paying 35%. If those cuts expire at year-end, next year the top rate will rise to 39.6%.

Now, suppose I want to hire a new employee at TrendMacro. I'd only do it if I thought I could make enough money on it to justify the trouble of recruiting, training, supervising -- and taking the risk that it might not work out. So, just for example, let's say I'd have to think I could make an extra $65,000 a year with my new employee.

At the current tax rate of 35%, my new employee would have to generate profits of $100,000 to leave me with $65,000. If that rate climbed to 39.6%, I would keep only $60,400. So to hit my $65,000 target for hiring, I would have to expect my new employee to generate profits of $107,616.

So what do you know? Raise my taxes, and all of a sudden it's not as easy for me to hire someone. The guy or gal who could make me only $100,000 wouldn't get the job. And unless I met someone who could make me $107,616, no one would get the job.

Asking Congress to stick it to your boss may feel good, but ultimately our workforce will feel the pain.

Judge Steeh: participation in the "health care market" through abstention

Federal Judge George Steeh dismissed a legal challenge to Obamacare's individual mandate in Michigan. Specifically, Judge Steeh held that choosing not to purchase a medical plan constitutes "Commerce . . . among the several States" under the Commerce Clause.

Oddly, Judge Steeh does not characterize not purchasing insurance as "inaction," but rather as a delayed action. Which may or may not occur. But probably will. He supposes. Right? Bueller? Bueller?

Specifically:

The health care market is unlike other markets. No one can guarantee his or her health or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true. The question is how participants in the health care market pay for their expenses—through insurance, or an attempt to pay out of pocket with a backstop of uncompensated care funded by third parties.

This phenomenon of cost-shifting is what makes the health care market unique. Far from "inactivity," by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later . . . .

The Pacific Legal Foundation argues that this reasoning is flawed because "we are not active participants in the market for medical care until we seek medical attention."

Or, think about it like this: the fact that I will inevitably become hungry does not immediately make me a participant in the food market. After all, I have no idea what time I will want to eat, where I will eat, what I will want to eat, how much I want to spend on food, or any number of other decisions that affect the supply-demand mechanism inherent in the food market.

PLF also argues that the individual decision of whether to purchase insurance "is simply a decision against one possible way of financing health care, which one may or may not ever need."

Yes, that's right: it is entirely possible (and hopefully the case) that an individual who chooses not to purchase insurance will either not get sick, or will incur minor medical costs. Moreover, as PLF notes, "Congress could regulate" individuals who choose not to purchase insurance but attempt to shift their costs onto the public. This is a critical point because many people who do not have health insurance can afford it, but calculate that they can better spend their money elsewhere. And what right do we have to question such a decision?

Oh, of course, proponents of socialized medicine argue that we wind up paying for the health care of the uninsured anyway. This reveals its circular absurdity: they claim they want socialized medicine because they want everyone to receive medical care, but respond to criticism by alleging that it's better for society to provide everyone with insurance because the uninsured will receive medical care anyway. Pretty soon, they're going to need to make up their minds on this.

Regardless, the statists reason that engaging in an activity that may impose a future cost upon society (in this case, life) merits federal regulation. Doesn't this place us on a slippery slope? Since so many of our decisions can affect our health, providing us with medical care will give the government ample pretext to regulate . . . well, just about any decisions we make.

Let me count my medical sins for today: I started off with an inadequate breakfast; stressed out over a trial (that I eventually won); inundated my system with caffeine; ate a high-cholesterol steak salad for lunch; consumed more caffeine; and I've been typing this blog with my hot laptop resting on my legs (which probably isn't good for me). Oh yeah, and I'm skipping the gym for the second day in a row.

Those are my decisions, right? Well, using Judge Steeh's logic, perhaps my (and your) personal habits are quickly becoming society's business. If society pays for our health care, then society gets to regulate behaviors that affect our health.

I'm pretty sure this is not what the Founding Fathers had in mind.

It's the Business Capital, Stupid!

Check out this video showing a fantastic Kudlow Report debate over the ramifications of allowing the Bush tax cuts to expire. It features conservative pundit Herman Cain, liberal pundit Mark Walsh, and free market economist Donald Luskin.



Cain and Luskin make an extraordinarily strong case for extending the tax cuts in their entirety, including the top-end earners. Cain in particular argues (starting at 4:02) that raising taxes on the top bracket will cost Americans jobs: "Small business people—two thirds of them—file their taxes as sub-S corporations."

Cain hits the nail on the head!

Increasing taxes increases the cost of business, thereby leaving less capital for business owners to use to hire (or maintain) their employees. And by what voodoo economics will

Walsh responds by making the terribly false assertion that this will tax business owners' incomes, not their working capital. Absolutely untrue. Sub-S corporations do not file tax returns; instead, their shareholders report the corporation's profits and losses as personal income. If you don't believe me, look up Section 1363 of the Internal Revenue Code.

It's pretty simple: taking money away from job creators kills job growth.

My medical premium just increased—thanks, Obamacare!

Image found on PekoeJoe.com.

A Washington Examiner editorial vindicates many of our warnings that Obamacare would increase the cost of American medical care and limit a number of our coverage options. And, regrettably, a letter I recently received from my insurer supports this contention.

Here are three excerpts from the Examiner, the first dealing with our freedom to choose the plan we like best:

» Obamacare won't allow employees or most small businesses to keep the coverage they have and like. By Obama's estimates, as many as 69 percent of employees, 80 percent of small businesses, and 64 percent of large businesses will be forced to change coverage, probably to more expensive plans.

Now, check out this letter I received from my insurer:

In other words, I should be able to keep my existing coverage options so long as I do not materially alter . . . well, just about anything about my plan. Because if I decide to make any changes or, God forbid, shop around for a better deal elsewhere, then the new Obamacare mandates may butt into my medical choices. Awesome.

Second, the Examiner addresses increases in premiums:

» Obamacare will increase insurance premiums -- in some places, it already has. Insurers, suddenly forced to cover clients' children until age 26, have little choice but to raise premiums, and they attribute to Obamacare's mandates a 1 to 9 percent increase. Obama's only method of preventing massive rate increases so far has been to threaten insurers.

My insurer also confirms this (you'll have to excuse me for redacting my personal information):

So basically, my insurance premiums are increasing in part due to a new set of federal mandates that neither I nor most of the people in this country even wanted. Fantastic. I'm not going to divulge the size of this increase, but I will say that it's substantial enough for me to lackadaisically ponder other ways I'd rather spend that money.

Some Obamacare proponents (are you guys still out there?) may be saying, "Wait a minute. That letter lists a few other reasons your premium is increasing, so don't just blame it on Obama!" Well, wasn't Obamacare supposed to mitigate the outside factors that increase medical costs? But then again, we really shouldn't be surprised that levying extensive new mandates upon insurers—including forcing them to lose money by insuring individuals who are already ill—increases their costs.

Last, but not least, the Examiner reports on a job-killing behemoth of red tape:

» Obamacare imposes a huge nonmedical tax compliance burden on small business. It will require them to mail IRS 1099 tax forms to every vendor from whom they make purchases of more than $600 in a year, with duplicate forms going to the Internal Revenue Service. Like so much else in the 2,500-page bill, our senators and representatives were apparently unaware of this when they passed the measure.

Wow. Imagine all the financial resources that businesses will be forced to divert from making money to hiring accountants to prepare tax documents. Maybe I should have gone into tax law after all.

In sum: thanks, Obamacare!

News Flash: Communism still an abject failure

Fidel Castro admitted to reporter Jeffrey Goldberg that communism has failed in Cuba.

Castro's exact words in response to Goldberg's question of whether the Cuban model is worth exporting: "The Cuban model doesn't even work for us anymore."

Gee, surprise us some more.

Obama the "Man of the Year"—for Free Marketeers

The Cato Institute's Dan Mitchell points to the Libertarian Party's tongue-in-cheek designation of President Obama as its "Man of the Year" to support his contention that the free-market movement needed to take one step back in 2008 in order to take two steps forward.

Mitchell first notes that Senator McCain would not have implemented a free-market agenda:

McCain’s healthcare plan also was bad, and surely would have become even worse as it meandered through a legislative process controlled by Harry Reid and Nancy Pelosi. Moreover, cap-n-trade and a value-added tax would have been much more likely under a McCain Administration. . . . In short, a McCain victory would have meant continued growth of government with no prospect of a conservative/libertarian renewal. Obama’s victory has been giving us bad policy, of course, but at least there’s now a backlash for freedom.

Mitchell then proceeds to argue that President Obama's statist policies have spurred a "renaissance" in the free-market movement. He also points out that the 1976 Carter and 1992 Clinton victories resulted in the 1980 Reagan and 1994 Republican Congressional victories.

Hopefully the 2008 Obama victory will result in similar Republican revolutions—and the Republicans will implement a solid free-market agenda.

Reversal Likely in 10th Circuit Cross Case

Image found on foxnews.com

A Tenth Circuit panel just ordered the removal of 14 crosses memorializing fallen Highway Patrol officers from a Utah roadside.  The court held that these crosses violate the Establishment Clause because they "have the impermissible effect of conveying to the reasonable observer the State endorses a certain religion."

Ah, the endorsement test: Justice O'Connor's proposed means of further convoluting the Supreme Court's hopelessly tangled web of Establishment Clause jurisprudence known as the Lemon test.

The Court adopted the Lemon test almost forty years ago for adjudicating Establishment Clause issues. Lemon v. Kurtzman provides that government action satisfies the Establishment Clause only if it (1) involves a secular purpose; (2) does not have the primary effect of advancing or inhibiting religion; and (3) does not result in "excessive government entanglement" with religion.

Justice O'Connor opined about 25 years ago in a concurring (read: non-binding) opinion that a government endorsement of religion helps determine whether the government has violated Lemon's "secular purpose" prong.

And so, the Tenth Circuit concluded that "the cross memorials would convey to a reasonable observer that the state of Utah is endorsing Christianity."

My first response is . . . how does that violate the Establishment Clause? Let's set Supreme Court precedent aside for a second and examine the First Amendment's text. It states that "Congress shall make no law respecting an establishment of religion. . . ." Its underlying principle is that government may not establish religion. Is the State of Utah establishing Christianity by simply allowing the Utah Highway Patrol Association to use its own money to place crosses on public property? I can't imagine how—this does not coerce or intimidate anyone into adopting Christianity, nor does it prevent anyone from practicing another religion (or the lack thereof). In fact, private money pays for the crosses and there is no other demand for usage of the barren roadside space, so it costs the taxpayers nothing.

The inevitable rebuttal is that people of other faiths may feel uncomfortable with the potentiality that the government endorses Christianity (regardless of whether that is the actual case). I'm not unsympathetic to that argument on public policy grounds. However, public policy is the realm of the legislature, not the judiciary. If you have a problem with it, then write a letter to your local legislator. Don't use the judiciary as a tool to effectuate an agenda unsupported by our constitutional text.

However, even if you support the endorsement test, the crosses are still constitutional because a reasonable observer is unlikely to conclude that they constitute a state endorsement of Christianity. When I see a series of white crosses placed alongside a roadside, the image of Christ's crucifixion is not the first thing that enters my mind—the crosses bring to my attention that someone died there. In fact, unless opponents of the memorial advocate the morbid placement of skulls or coffins along the roadside, I cannot think of a more conspicuous symbol of death.

Fortunately, the Supreme Court is likely to clean up this mess. First Amendment expert Eugene Volokh points out that the majority of the Court opposes the endorsement test. Moreover, perennial swing voter Justice Kennedy recently wrote in the Salazar v. Buono opinion that a "cross by the side of a public highway marking, for instance, the place where a state trooper perished need not be taken as a statement of governmental support for sectarian beliefs."

This strange coincidence seems to make it clear that the endorsement test will soon be thrown to the wayside, and the crosses may ultimately remain in place.

New iOS Update to Fix iPhone 3G Problems

Here is a pretty fantastic video parodying the damage the new iPhone OS (4.0) has done to the iPhone 3G:



Sad, but true.

Fortunately, it looks like iOS 4.1 will fix these problems. Hopefully Apple will release it sooner than later.

Fed Monetizes 10% of National Debt

"Helicopter Ben," as depicted on investletters.com.

...and almost no one noticed.

The Federal Reserve announced today that it would reinvest the proceeds of its $1.3 trillion in mortgage-backed security (MBS) purchases into long-term Treasuries. Here is the official announcement, as reported by CNBC:

To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.

Translation: we fear deflation, so we're going to combat it with inflation.

Here are the facts: the Fed purchased $1.2 trillion in mortgage-backed securities over the past two years to drive down mortgage interest rates. The idea was to increase home sales by making mortgages more affordable. Today, the Fed announced what it will do with the proceeds of those investments: use them to finance our national debt.

In other words, the Fed is printing money out of thin air to pay our national debt.

This really shouldn't be a surprise, either. Ben Bernanke infamously stated in 2002 that he would fight potential deflation at all costs, including a "'helicopter drop' of money" into our economy. Again: fighting deflation with inflation.

Moreover, our politicians have no plan for paying off the $13.3 trillion debt they have created. Their only solution is to print more money.

Enter "Helicopter Ben." By purchasing $1.3 trillion of our $13.3 trillion debt, the Fed is wiping out 10 percent of our national debt simply by printing more money.

This "easy out" may sound attractive, but it devalues—or inflates—our currency. The more you have of something, the less valuable it becomes. After all, there is a reason why a nickel no longer buys you a cup of coffee. Unfortunately, wages—especially blue collar wages—rise much slower than prices. Savers especially suffer because the purchasing power of their cash drops like a rock, and the Fed is always late in raising interest rates.

But, politicians are OK with this because this allows them to pay back our debt with less valuable dollars.

The takeaway: inflation is coming. Bernanke stated this is his plan, and our political spendthrifts agree. Don't sit on large piles of cash, because you'll get slaughtered. Invest in gold and other hard assets, including real estate.

[Disclosure: I am long DGP, a gold ETN. Dammit Jim, I'm a lawyer, not a financial planner, so do your homework and consider consulting with an investment professional before you take my advice. Whatever you do, please don't sue me. Thanks.]

AP's Report of Miranda Rights' Death Greatly Exaggerated

STOP WHINING! Part I.

STOP WHINING! is a new segment dedicated to the refutation (and occasional mockery) of needless whining. Just ask Arnold.

Most reporters do a poor job of covering court decisions. They tend to regard the courts as a public policy creator on par with the executive and legislature, rather than as an interpreter of the other branches' laws. This leads them to focus on political ramifications, rather than the substance of the interpretation itself.

Case in point: AP writer Jesse J. Holland's opinionated lamentation—thinly disguised as a news article—of the Supreme Court's recent Miranda-related holdings.

For context, the "Miranda rights" (to remain silent and request an attorney) are mandated by the Supreme Court's holding in Miranda v. Arizona, based upon an expansive reading of the Fifth Amendment's right for an individual to not "be compelled in any criminal case to be a witness against himself."

The headline itself declares Holland's personal bias: "High court trims Miranda warning rights bit by bit." This incendiary language is entirely inappropriate. First, the Supreme Court may only interpret—rather than create—our rights under the law, so these holdings do not "trim" our rights; they just signify that the Court previously erred in deciding that certain rights existed in the first place.

Second, regardless of Holland's opinion, it is poor form for a journalist to conspicuously inject his own bias into a news piece; that's why our newspapers are divided between "news" and "opinion" sections. I learned that basic lesson during high school journalism.

Substantively, the author's sarcastic, indignant tone demonstrates his ignorance of opposing viewpoints just as strong as his contempt for those who hold them.

The lead sentence previews one of his critical themes: "You have the right to remain silent, but only if  you tell the police that you're remaining silent."

Clever.

He later elaborates that "the court's conservatives used their 5-4 advantage to rule that suspects must break their silence and tell police they are going to remain quiet if they want to invoke their 'right to remain silent' and stop an interrogation, just as they must tell police that they want a lawyer."

In other words, the police must cease an interrogation once a suspect signals a desire to speak to an attorney. Until then, the police may continue asking questions. Holland's indignation is odd, since this "new" rule just spells out a premise that any law student studying Miranda assumes to be true.

After all, it's pretty humorous to imagine a police interrogation under the author's apparently preferred rule that police must stop interrogating a suspect who does not request an attorney, but simply doesn't speak:

Detective: So, we caught you covered in the victim's blood, while clutching a bloody knife in a stabbing posture, and hovering over the victim's corpse. What do you have to say for yourself?

Suspect: ...

Detective: OH! You didn't respond to my question, so the Fifth Amendment obviously compels me to stop asking you questions! Forget that there are a thousand reasons you may not have answered me completely independent of your right to remain silent. The last thing society wants is for me to offend your delicate sensibilities by repeatedly talking until you admit that you just killed someone. After all, I just might bore you into uttering a false confession!

Me: This is preposterous! I as a libertarian believe that the primary purpose of law is to protect us from other persons, and from the state. This means the state certainly cannot compel us to confess against our will; this is the United States, not the Spanish Inquisition. But the law certainly does not prevent law enforcement officers from using reasonable means of securing honest, willful confessions from criminal suspects.

More importantly, why do we want the law to protect a suspect who honestly confesses to a crime absent illegitimate coercion? Justice Antonin Scalia once quipped in a dissenting opinion:

Nonthreatening attempts to persuade the suspect to reconsider that initial decision are not, without more, enough to render a change of heart the product of anything other than the suspect’s free will. Thus, what is most remarkable about the Miranda decision ... is its palpable hostility toward the act of confession per se, rather than toward what the Constitution abhors, compelled confession. The Constitution is not, unlike the Miranda majority, offended by a criminal’s commendable qualm of conscience or fortunate fit of stupidity. Dickerson v. United States, 530 U.S. 428 (2000) (Scalia, J., dissenting).

Indeed.

I'm sure Holland's heart is in the right place—preserving our civil liberties. Hopefully, Holland can see that the battle for the individual right against coerced confessions was won years ago—seeing as how we're squabbling over whether a suspect must burden himself by vocalizing his desire to remain silent, rather than sit in the interrogation room like a bump on a log.

Perhaps, then, Holland and other reporters will re-channel their energy and champion individuals whose property is seized in large quantities and redistributed to other individuals by the government.

OK, a blogger can dream, can't he?

Sinking Floatopia Is Not the Solution

Photo courtesy of San Diego Entertainer Magazine

Funny things happen when the government tries to curtail liberty—people find ways to get around those restrictions.

San Diego's wrong-headed ban on alcohol at city beaches provides a classic example. Party goers keep discovering creative new means of skirting the ban, each more troubling to the City than the last.

It all started with a beach brawl involving about 70 drunken idiots during Labor Day 2007. This sparked major outrage, and San Diego voters in 2008 chose to permanently ban alcohol consumption along city beaches.

Of course, the City and the voters had the option of increasing punishments for being drunk in public or beach fighting, or even banning alcohol only on holiday weekends when the large crowds—consisting largely of non-San Diegans—reach critical mass.

But, no. The knee-jerk reaction is to ban the substance, rather than its abuser. Forget all the people out there (about 99.9 percent of us) who manage to consume alcohol without starting a riot. And forget that the trouble makers will inevitably find ways to drink on the beach anyway, while the rest of us sip Capri Sun.

In the meantime, many of the ban's supporters are happily sipping Kool-Aid in the comfort of their homes, assuring themselves that they've done right by the attendees they don't know of a beach they never visit.

Well, San Diegans predictably rebelled by starting Floatopia parties, where literally hundreds of revelers float along Mission Bay and drink all the alcohol they want. After all, the ban only extended to the beach itself—it mentioned nothing about the water!

Of course, boozing on a small float surrounded by hundreds of revelers really isn't the brightest idea—it's a good way to drown. Lifeguards were forced to rescue dozens of drunk idiots. So, the City Council recently reacted by sinking Floatopia:

The council voted unanimously Monday to extend the beach alcohol ban off the shoreline for bathers — almost everyone who is not in a kayak or boat — effectively ending the floating parties where mostly college-aged revelers drink in inner tubes or on other inflatable devices.

Well, that will show them! Why, the only way those darn kids can party on the beach is by renting kayaks! Wait...

Kayaks, that can easily capsize. That are propelled by long, heavy plastic paddles. Operated by people who are heavily drinking. Potentially in very close proximity to one another.

So, in other words, we've gone from allowing people to drink on the beach, to moving the drinking onto inner tubes, and now restricting drinking to kayaks. Is it just me, or does each "solution" cause more danger than the original problem? People are still finding ways to drink at the beach, and will continue to do so no matter what the City throws their way.

They will have their booze; the law only punishes those who want cold a beer or two on a hot day at the beach.

And me? Heck, I'm not even a beach goer; I just want to have the right to responsibly drink on the beach if I so choose, just as I want other adults to have that right.

Can't we just live our lives, and punish legitimate offenders?

New Masthead

The Audacity of Reason is sporting a sleek new masthead, courtesy of my prodigious friend Magie Brennan. Please take some time to view her portfolio at http://playwithmyheart.deviantart.com/. She does very good work, and is always accepting new clients!

Here is a really cool sample from her site:

iOS 4 Slows Down the iPhone 3G

iOS 4 — the new iPhone operating system — is wreaking havoc upon the iPhone 3G by all accounts (including my personal experience).

It immediately became clear to me after upgrading to the new OS that it was really slowing down my iPhone 3G. I've taken good care of my second-generation iPhone, and it performed very well until I installed the free iOS 4 upgrade.

Everything from my Maps app to text messaging functioned far more slowly. This lag is underscored by the sudden delay of several seconds between pressing the "Sleep" button and hearing that reliable clicking noise. iOS 4 is apparently so bad that my iPhone 3G can't even sleep well!

Unsurprisingly, other 3G owners share my dissatisfaction. This has been reported by a score of sources, such as Product Reviews. Fortunately, AppleToolbox has posted the following methods for improving performance:

Perform a “hard reset.” Hold down the sleep/wake and home buttons simultaneously for roughly 15-20 seconds, until the screen powers off then an Apple logo appears, which signifies a reboot. Some users have (oddly enough) reported that performing two hard resets resolves the slowness issue.

Restore, but not from backup. It appears that bad holdover data from iPhone backups can cause performance problems. Restoring as a new phone will delete contacts and other data, but may resolve this issue.

To do so, connect your iPhone or iPod touch to your computer, click “Restore” in iTunes, then choose “setup as new phone.”

Free up space. Make sure that your iPhone has at least 10% of its available memory free. OS X-based systems, such as iOS 4.0, may require some free space to operate properly.

Close open Safari windows. One iOS application that consumes memory in the background is Safari. Close all unused windows in the application by pressing the page switch button in the lower right portion of the screen then clicking the X at the top left of each page. See this page for screenshots.

These methods do improve performance, but they are simply quick fixes that do not restore the iPhone to its pre-upgrade performance level, nor do they change the bad taste left in loyal Apple customers' mouths.

If customer satisfaction is as crucial as Apple CEO Steve Jobs trumpeted during his iPhone 4 press conference, then I certainly hope Apple is working on fixing this most regrettable problem.

No "Change" Toward Dissenting Voices

President Obama's deliberate exclusion of the CEOs of JP Morgan Chase and Goldman Sachs from the Dodd-Frank Act signing ceremony further proves that Obama was about as serious about "change" as Bush was about being "a uniter, not a divider."

"Change" was President Obama's campaign centerpiece. Changing the political culture by eliminating Washington's cynical business practices. Adding transparency to government. Getting rid of the dirty tricks, pay-offs, and pay-backs.

Well, the administration invited to the ceremony the bank CEOs who have been the "most sycophantic" while "rebuking" those who "don’t instantly agree that every policy coming out of the Democratic caucus on Capitol Hill is the most brilliant idea ever," according to anonymous Wall Street executives.

How fitting, then, that Citi and Bank of America, essentially wards of the state, served as the perfect yes-men, and were then invited to the signing ceremony. Sort of like tossing a treat to an obedient lap dog, isn't it?

Forget that Morgan and Goldman are two of the largest firms on Wall Street. Forget, even, that Goldman's recent SEC flogging provides a colorable excuse for the administration to deny its invitation.

The bottom line, as CNBC reports, is that the administration is retaliating against Morgan and Goldman:

JP Morgan Chase was very active in the efforts to shape the legislation. Its chief, Dimon, publicly critiqued aspects of the bill. Goldman Sachs was less active and prominent but still played a role in lobbying lawmakers to have some aspects of the bill changed.

Bear in mind that Obama was not striking against Republican ideologues. Morgan CEO Jamie Dimon is a long-standing Democratic donor and was once referred to as "Obama's favorite banker." Goldman was Obama's second-largest donor.

But, cross the administration, and you will feel its wrath.

This "change" sure sounds like business as usual.

Phonebook Waste

I'm no environmentalist, but the printing and distribution of all these phone books seems like a tremendous waste of resources.

I'd guess that we're looking at about 350 phone books (split between white and yellow pages) placed alongside the mailboxes in my building.

A building consisting of about 200 apartments' worth of predominantly young, professional residents. I can probably count the number of residents over 40 on one hand.

When was the last time anyone under 40 used a phone book? The Internet is a far more useful database for finding business phone numbers.

And what of residential phone numbers? Well, if I didn't give you my phone number, and if you don't know how to reach me via e-mail, Facebook, LinkedIn, Twitter, foursquare, or MySpace, then you probably don't have much business calling me!

You really don't have to be an environmentalist to object to this waste. Paper may figuratively grow on trees, but trees don't grow back overnight. I would much rather leave all that timber intact for use in other products, to drive down the cost of timber, or just for the sake of having a few extra trees lying around.

Similarly, the resources used to pay people to print and distribute these phone books—among any number of collateral tasks—could be used to pay people for things we would rather have.

This also doesn't mean we need the government to force the telephone company to stop printing all these phone books. Instead, we need to shout to the phone companies, "HEY, DUMMIES! We don't use your crummy phone books, so stop printing so many of them!"

Partisan Hackery at the NAACP

The NAACP's recent denouncement of alleged racism within the tea party movement reeks of dirty tricks and shallow race baiting.

The resolution's premises are absurd because the tea party movement already opposes racism, and tea party leaders have already denounced the isolated incidents that purportedly prompted the resolution.

First, there is no need for the tea party movement to denounce something it already opposes. It draws much of its ideological inspiration from the principles of natural law enshrined in our Declaration of Independence, including that all men are created equal—the very antithesis of racism.

The NAACP, on the other hand, bases its case on isolated, anecdotal evidence. But, as it turns out, tea party leaders have already denounced such misbehavior within their ranks!

So, what's the NAACP's real goal? Simple: a political cheap shot during an election year.

The resolution has drummed up slanted headlines like "NAACP Says Tea Party Tolerates Racism" (CBS) and "NAACP accuses tea party of tolerating bigotry" (AP). A misleading frontpage headline is worth a thousand backpage retractions.

Fortunately, this cheap trick is backfiring on the NAACP. Haphazardly decreeing opposing voices as racist is one of the oldest tricks in the book, and the American people have rejected this kind of race baiting for years.

That's probably why Jesse Jackson and Al Sharpton are trying to downplay the resolution.

This is a pretty revolting development, since the NAACP was so instrumental during the civil rights movement. Hopefully the backlash will convince its leadership to focus on its mission of strengthening the black community, and shy away from partisan adventurism.

Obama: Government's "Unconscionable Ineptitude"

"If there's any bright light that's come out of this disaster, it's the degree to which ordinary Americans have responded with speed and determination . . . even as their government has responded with what I consider to be unconscionable ineptitude."

Who unleashed that excoriating criticism?

Why, none other than Sen. Barack Obama, back in 2006. When someone else was mishandling a disaster along the Gulf Coast.

So, does waiting nearly two months before meeting BP's CEO constitute "unconscionable ineptitude"? Or does making it abundantly clear he has no clue how to solve this mess?

Probably.

But, hearing the President of the United States talking about kicking people's asses makes for great primetime television.

And hilarious YouTube remixes, apparently.

Rep. Etheridge Assaults Private Citizen

Rep. Bob Etheridge (D-N.C.) was recently filmed assaulting a college student who had the audacity to question his voting record.

The video clearly shows Rep. Etheridge forcefully grabbing the student first by the arm and then by his neck and shoulders, effectively demobilizing him for 30 seconds while demanding the student to divulge his identity. Another video captured from the student's perspective is available here.

Rep. Etheridge clearly committed a battery against the student because being confronted with non-violent questioning on a public sidewalk does not grant him the privilege of forcefully detaining the questioner.

It would be an open-and-shut case even if Etheridge were a private citizen, but his status as a Congressman is even more appalling. Is Bob Etheridge really so arrogant that he believes his actions are immune to his constituents' scrutiny? Why, for that matter, does he believe he has the right to use physical force to intimidate his critics? The government is answerable to the governed, not the other way around.

Or, does Bob Etheridge believe he belongs to a ruling class?

He apologizes profusely because he got caught, and probably only because he got caught.

We deserve better than this.

John Eastman for Attorney General

I strongly encourage you to support John Eastman for California Attorney General.

I have enjoyed the privilege of studying under John as one of his law school pupils, and then working for him on a number of his constitutional law cases. My experience with him leaves no doubt in my mind that John Eastman is the real deal.

John truly is a Renaissance man. He is a fantastic lawyer, a skillful administrator, a brilliant scholar, and a talented educator. His litigation of over 50 cases before the Supreme Court and other appellate courts uniquely qualifies him to defend the constitutionality of California law. Chapman Law's leap from Tier 4 to Top 100 during his deanship proves his leadership and administrative talents. And, let's face it --- we need more intelligent politicians.

It is important to note that John Eastman is an unabashed conservative. Social conservatives will appreciate his vow to defend Prop 8 and stringently enforce 3 Strikes, while libertarians should enjoy his legal advocacy of economic liberty and limited government.

His primary opponent, Steve Cooley, is far less conservative. The Eastman campaign recently enumerated the stark differences between Eastman and Cooley. My personal favorite is that Cooley is poised to collect approximately $5 million in state pension payments while excessive pensions are driving California bankrupt.

My experience with John Eastman convinces me that he possesses the skills, experience, intelligence, ideas, and character necessary to brilliantly serve as California's next Attorney General. You can learn more information about him at eastmanforag.com.

U.S. May Soon Lose AAA Credit Rating

The United States is precariously close to losing its AAA credit rating, according to Congressional Budget Office projections. Jed Graham of Investor's Business Daily reported:

In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis — so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.

The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail.

Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects.

But under more adverse scenarios than the CBO considered, including higher interest rates, Moody's projects that debt service could hit 22.4% of revenue by 2013.

So, what is the Obama administration doing about it? Piling on more debt, of course! Sure seems like a great time to create an expensive new medical entitlement program, doesn't it?

Hat tip to James Pethokoukis.

Obamacare Already Harming Coverage

The Wall Street Journal reported that Verizon notified its employees that Congress' recently enacted health care litigation will likely result in diminished coverage:

[T]he telecom giant warned that "we expect that Verizon's costs will increase in the short term." While executive vice president for human resources Marc Reed wrote that "it is difficult at this point to gauge the precise impact of this legislation," and that ObamaCare does reflect some of the company's policy priorities, the message to workers was clear: Expect changes for the worse to your health benefits as the direct result of this bill, and maybe as soon as this year.

Most provisions will not come online for another few years, but some tax consequences are immediate:

Mr. Reed specifically cited a change in the tax treatment of retiree health benefits. When Congress created the Medicare prescription drug benefit in 2003, it included a modest tax subsidy to encourage employers to keep drug plans for retirees, rather than dumping them on the government....

In a $5.4 billion revenue grab, Democrats decided that this $665 fillip should be subject to the ordinary corporate income tax of 35%. Most consulting firms and independent analysts say the higher costs will induce some companies to drop drug coverage, which could affect about five million retirees and 3,500 businesses. Verizon and other large corporations warned about this outcome.

So, the legislation will cause a lot of employers to either dump retirement drug benefits onto Medicare, or slash coverage. Fantastic. But wait, there's more!

In its employee note, Verizon also warned about the 40% tax on high-end health plans, though that won't take effect until 2018. "Many of the plans that Verizon offers to employees and retirees are projected to have costs above the threshold in the legislation and will be subject to the 40 percent excise tax." These costs will start to show up soon, and, as we repeatedly argued, the tax is unlikely to drive down costs. The tax burden will simply be spread to all workers—the result of the White House's too-clever decision to tax insurers, rather than individuals.

This deal keeps getting worse all the time.

Prop Them Up, and Knock 'Em Back Down

"[G]overnment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." -Ronald Reagan

In 2008, the government convinced the American people that our financial system was on the verge of collapse.

In 2009, it assured us that it averted such a disaster.

In 2010, President Obama wants to tax the banks into the stone age.

Talk about smoke and mirrors! I have no doubt that policy makers legitimately believed that swift actions were necessary to maintain the flow of credit and prevent another Great Depression. Unfortunately, that apparent necessity gave way to politics as usual. The government is now transforming the TARP from a shield used to block financial Armageddon, and into a spear used to attack the banks—odd, since TARP's premise was that the banks are vital economic components.

The bottom line is that the Democratic leadership is fighting for political survival, and the banks are as good a bogeyman to target as any. Their primary policy objectives of economic stimulus, health care reform, and cap-and-trade have fallen flat, so they're resorting to economic populism—find someone that most people hate, and punish him.

Well, this new tax will punish the banks—along with their customers. Loans are terribly difficult to procure as it is because banks—still in survival mode—want to preserve their capital. So, if the government forcibly extracts more capital from the banks, does that mean the banks will increase or decrease their lending? The answer must even be obvious to those who support this terrible idea, but apparently they prefer populist theatrics over good policy. Hopefully this intensifies the drubbing they will incur during this year's midterm elections.

Avatar: a Film about Property Rights?

People are raving about the new film Avatar, and I can attest that it's living up to the hype—frankly, I've never seen anything like it. I won't give away anything vital, but most Americans perceive an underlying theme of racial and ethnic tension. The Chinese, however, appear to view it as a defense of private property rights. The Wall Street Journal reports:

Hollywood blockbusters aren't usually notable for their artistic or political subtlety. And James Cameron's latest sci-fi hit, "Avatar," would seem to be no exception, going by the lament of some critics that the film's impressive special effects are undercut by a skimpy story line and flat dialogue.

That, however, is not how many Chinese see the film, which tells the story of rapacious humans trying to evict the blue-skinned natives of the planet Pandora in order to extract some exceedingly valuable mineral. This is standard politically correct fare for a Western audience, conveying a message of racial sensitivity and environmental awareness. In China, however, it has more rebellious undertones.

That's because Chinese local governments in cahoots with developers have become infamous for forcibly seeking to evict residents from their homes with little compensation and often without their consent. The holdouts are known as "nail households," since their homes are sometimes left stranded in the middle of busy construction sites. More often, however, they are driven away by paid thugs. Private property is one of the most sensitive issues in the country today, and "Avatar" has given the resisters a shot in the arm.

Even in Hong Kong, the "Avatar" banner has been taken up by antigovernment activists trying to defeat a plan to demolish a village to make way for a new high-speed railway line. One mysterious benefactor reportedly donated movie tickets to the villagers to stoke their enthusiasm for protests.

Fascinating. I need to watch that movie again with that perspective in mind.

Hat tip to Prof. Donald Boudreaux at Cafe Hayek.