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We Need a Responsible Congress, Not a “Responsible” Increase in Taxes

The Washington Post has whacked President Obama for his “irresponsible” promise that “he would never raise taxes on the middle class.” This, says The Post, is irresponsible because “it’s impossible to tackle the federal debt by taxing only the wealthy.”
CongressSetting aside the debate over who qualifies as “middle class" to Democrats these days, there’s a certain comical -- but at the same time infuriating -- aspect to the DC establishment’s advocacy of higher taxes that should not go without comment.

The Washington compromiser class's preferred alternative to accomplish the goal of balancing the federal budget -- tax increases coupled with spending cuts as agreed to in last year’s debt ceiling deal -- will, according to the Congressional Budget Office, cause a recession.

The Washington Post’s answer to that problem is to suggest that, “If the only way to achieve tax reform with a reasonable increase in revenue is to reset everyone’s rates at Clinton-era levels and then argue about which to reduce, that would be preferable to continuing on the road to catastrophe.”

This means raise taxes first, cut spending at some point in the future, or more likely never.

Nowhere in the liberal analysis of the “fiscal cliff” and what to do about it is there any mention of the real cause of the problem: the congressional addiction to spending.

As Stephen Moore and Richard Vedder pointed out in “Higher Taxes Won’t Reduce the Deficit,” an article in The Wall Street Journal that every voter should read before voting for their Representative in Congress, congressional spending always expands to consume the revenue available. And over the long run, spending never goes down.

Moore and Vedder “found that over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending. Politicians spend the money as fast as it comes in – and a little bit more.”

The infuriating thing is that everyone in Washington’s business-as-usual establishment -- of both political parties -- knows this, and thinks that the average voter is too dumb to figure it out, and can be suckered into the idea that there is some magical “responsible” level of taxes that will get us off the road to national insolvency.

Let’s be clear going into the debate over the “fiscal cliff” and the idea of a “responsible” level of taxes: The problem is not that the federal government doesn’t take in enough revenue to fulfill its constitutional responsibilities; it is that Congress continues to spend beyond its constitutional mandate.

Until we get a responsible Congress, that will stop the unsustainable spending, no level of taxation is “responsible.” As Moore and Vedder showed, and experience has proven, “Politicians spend the money as fast as it comes in – and a little bit more."

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Feds Warned of Theatre Attack in May


Feds Warned of Theater Attack in May


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Kurt Nimmo
July 24, 2012

In June, the Public Intelligence website posted a DHS-FBI bulletin warning that terrorists planned to attack theaters in the United States. The official use only “Roll Call Release” issued on May 17 states that terrorists have an interest in attacking theaters and “similar mass gatherings.”

“An early April 2012 suicide bombing of a theater in Somalia and a violent extremist communication advocating attacks on US theaters highlight terrorists’ continued interest in attacking such venues,” the unclassified document explains. “Although we have no specific or credible information indicating that terrorists plan to attack theaters in the United States, terrorists may seek to emulate overseas attacks on theaters here in the United States because they have the potential to inflict mass casualties and cause local economic damage.”

The DHS and FBI cited an alleged call by al-Qaeda to replicate the 2002 Moscow Dubrovka Theater hostage attack. The attackers, described as Chechens who claimed allegiance to the Islamist militant separatist movement in Chechnya, held 850 hostages in the theater for two and a half days. The siege came to an end after Russian Spetsnaz forces pumped a chemical agent into a theater, killing 129 hostages and 39 attackers.

Chechen rebel armies received training from the CIA and Pakistan’s ISI respectively. The leadership of the Chechen armies underwent “intensive Islamic indoctrination and training in guerrilla warfare in the Khost province of Afghanistan at Amir Muawia camp, set up in the early 1980s by the CIA and ISI and run by famous Afghani warlord Gulbuddin Hekmatyar,” according to Levon Sevunts, writing for The Gazette in Montreal in 1999.

The DHS and FBI encouraged theater owners to monitor their patrons and report any suspicious behavior to them. “These recent instances [in Mogadishu, Somalia ] demonstrate that mass gatherings such as those associated with theaters likely remain attractive terrorist targets. We encourage facility owners and operators, security personnel, and first responders to remain vigilant and report suspicious activities and behaviors that may indicate a potential attack.”

Movie theaters will now be included in the Department of Homeland Security’s Constitution free Gestapo zone – along with mass transit hubs, hotels, and sports stadiums – that is now rapidly expanding from the confines of the nation’s airports. In 2010, the mega-agency announced it planned to step up “security at ‘soft targets’ like hotels and shopping malls, as well as trains and ports, as it counters the evolving Al-Qaeda threat,” according to AFP.

“A decade after the terrorist attacks, at ballparks and concerts, bag checks are now common when entering a venue. Sometimes, there are metal detector wand scans at sporting events. Some movie theaters already have random bag checks” and are looking at “additional measures,” reports Security InfoWatch.

Tax Reform You Will Love and Hate: Solves all Economic Issues

"t’s impossible to tackle the federal debt by taxing only the wealthy"


Tax Reform You Will Love and Hate: Solves all Economic Issues

Our tax code has been a great experiment in income and wealth redistribution. According to a July 2012 report from the Congressional Research Service, in 1995 the top 10% of the country had 67.8% of the country’s wealth while the bottom 50% shared only 3.6% ($1,912 billion [in 2010 dollars]). The bottom share eroded to 2.5% before the Great Recession of 2007 and by 2010 it had tumbled to 1.1% ($584 billion) – (a 70% loss of $1,333 billion over 15 years). The loss of wealth to the bottom half the country was offset by a 6.7% gain for the top 10%. This gain of $3,558 billion over 15 years is equal to 6 times the wealth that half the country lives on. A wealth distribution (“wealth gap”) of this extreme has not been seen in the U.S. since the Great Depression of 1929 (when unemployment was also as bad). Top income tax rates were increased from 24% to: 63%, 79%, 81%, 88% and finally to 94% in 1944 in order to correct the economic imbalance.

Today payroll taxes make conditions worse than in 1929 because they add 7 ½% to the cost of each job (business share) and further reduce consumer spending power by 7 ½% (employee share). This 15% tax on jobs is the main reason why the economy is less resilient to recession. Replacing payroll taxes with a 2% net wealth tax (excluding $15,000 cash and retirement funds) is the tough medicine needed to create millions of jobs through increased consumption. University of Chicago Economics Professor, Casey Mulligan, estimated in September 2011 that each, “percentage-point reduction in employers’ [payroll] costs raises employment by about a percentage point and real gross domestic product by about 0.7 percentage points”.

Income tax expenditures (“loopholes”) would be unnecessary if the tax rate was lowered to 8% (and capital gains, estate and gift taxes were eliminated). These changes encourage maximum business development (by eliminating all artificial “tax” excuses against investment) and complement the healthy negative reinforcement (“use it or lose it”) of the wealth tax (which encourages productive use of capital rather than idle consumption).

Completing the perfect tax reform plan would be a 4% value added tax (VAT) on business and an 8% corporate income tax rate for the most competitive business rates in the world. Foreign profits would escape the 35% corporate rate and return to the U.S.

Let us know at if you can identify a logical, legal or economic reason why this 2-4-8 Tax Blend would not produce a sustainable economic recovery as promised. Otherwise let your representatives in Washington know that the right blend of taxes can create jobs and restore wealth and a stable economy without government spending.

Eugene Patrick Devany, JD, MPA