Saturday, September 24, 2011

What was Santorum Thinking?

In Thursday's Republican presidential debate, former Senator Rick Santorum was asked whether as President he would make any changes to the military that would undermine the recent repeal of Don't Ask-Don't Tell.

Santorum responded by saying "Yeah, I -- I would say, any type of sexual activity has absolutely no place in the military."


Did he think that, before the repeal of DADT, the military was chaste?

And then he went on to say: "And the fact that they're making a point to include it as a provision within the military that we are going to recognize a group of people and give them a special privilege to -- to -- and removing 'don't ask/don't tell' I think tries to inject social policy into the military."

Does he think that the repeal of DADT gives gay and lesbian soldiers a special privilege to engage in sex at times or in places not permitted to heterosexual soldiers?

So what was he thinking?

He seems to have a perspective that 180 degrees opposite from the majority of American people who believe that the repeal of DADT will remove social policy from the military.

Tuesday, September 20, 2011

Taxing the Wealthy

President Obama's proposal to impose higher taxes on those earning more than $1 million each year (which would certainly qualify as "wealthy" by anyone's definition) in order to insure that the wealthy pay at least the same rate of tax as middle income Americans, has produced the usual claims that higher taxes on the wealthy will hurt economic growth.

Claims which are absolute nonsense (to put it politely).

Economic growth generally comes from increasing demand for goods and services, and demand comes from four areas:

  1. Domestic consumer spending (including housing);
  2. Investments by businesses in plant and equipment;
  3. Exports (i.e., sales to other countries); and
  4. Government spending on goods and services.

Increasing taxes on the wealthy would have no effect on exports, and would allow more spending by the government (which is expansionary), so increasing taxes on high-income Americans would reduce only the first and second types of demand, if its going to reduce anything.

Almost by definition, wealthy people earn more than they spend on themselves. Someone who earns $1 million each year is not going to be spending that $1 million, but is going to be saving or reinvesting most of it. So increasing taxes on the wealthy is not going to reduce consumer spending.

Increasing taxes on the wealthy might affect business investments, because wealthy people who invest in stocks and corporate bonds help those businesses raise capital for investments in new plant and equipment. But that's not what's happening right now.

  • Because demand is down, businesses currently have excess capacity, meaning that they have plants and equipment that they are not using to full capacity and have no need to invest in more.
  • As a result, businesses are currently holding hundreds of billions of dollars of uninvested cash.
  • Because businesses don't need cash to invest and aren't looking for capital or loans, investors are putting their money into federal securities, which is driving interest rates on federal securities down to record lows. (At the August 31 auction of inflation-protected bonds, four-year bonds actually sold at a negative yield, meaning that investors were willing to pay the United States to hold their money for them as long as they got back money with the same value.)
What that means is that, if you let a wealthy person keep more of their income, they are going to take that money and buy more government securities and not invest the money in the economy.

Right now, the best way to expand the economy is through increased government spending that will put more money in the hands of consumers, and that means tax breaks for middle-income taxpayer and more government spending on construction, which provides more employment.

Which is what President Obama is proposing.

Monday, September 05, 2011

God's Wrath

Every time a major storm hits a major city (e.g., Katrina and New Orleans or Irene and New York), someone, somewhere, says that God is punishing that city because of its acceptance (or tolerance) of homosexuality.

But isn't the opposite claim just as easy to make?

Isn't it possible that the extended and extreme drought in Texas is God punishing Texas being hostile to homosexuals?