Tag Archives: Ronald Reagan

Lies, Damn Lies, and Republican Lies.

Do we have a dream team here? Ready for slashed spending? Are we scared yet?

Mitt Romney and Paul Ryan appear to be basing their 2012 Presidential campaign upon the theory that Obama is a tax and spend President and that his “runaway spending” policies have been responsible for the biggest deficit and the fastest growing national debt in the history of the country.

The Republican ad machine tells us that were we to re-elect him, we would be endorsing more of the same, as well as increased spending for entitlements, that would push the deficit to historic levels and cost more jobs while creating an even larger national debt.

Oddly, the actual facts tell a very different story. Compared to George W. Bush and Ronald Reagan, Obama’s record in office shows that he has embraced fiscal conservatism more than any other president in recent history, with the exception of fellow Democrat Bill Clinton.

Economics Professor Mark Thoma provides a helpful chart on his blog that puts President Obama’s per capita spending into context, comparing it with the spending of every president in the last 40 years:

The data is going to be difficult for Obama’s critics, who have spent years hammering his administration for record spending and fiscal irresponsibility. The Atlantic’s Derek Thompson put it best: “Going by federal expenditures…it would seem that if Obama’s a socialist, Ronald Reagan is Karl Marx with an ICBM.”

Here’s a look at  public sector employment during the Obama Expanding Government era; the 1981, 1990 and 2001 recessions were under Reagan, Bush I and Bush II. The red line is the 2007 Obama recession:

Or, how about a look at Obama’s big-government policies in action. They should have led to a massive growth in our bureaucracy, right? Well, believe it or not, there have been 607,000 jobs lost in the public sector, largely from state and local cutbacks due to no federal aid. Here’s what that looks like:

I could go on, and there are endless charts that all say the same thing, no matter how you slice and dice the data. This guy is a conservative.

At the end of the day, it is really, truly time for the myth about Big Spender Obama to die. If anything, it is remarkable that, after the worst recession in history and a private sector implosion, the public sector expanded less under this administration than it did under Bush or Reagan. Them’s the facts.


The Price of Gas, and a Reasonable Man.

Someone named Winghunter, called me Stevey and referred to my post, “Gas Prices Go Up Under Obama. Really?” (sic) with disdain, citing about 10 stories relating to the Obama Administration’s efforts to stop drilling for oil here in this country, and his opposition to the pipeline project which would of course, “create tens of thousands of jobs.”  He then assumed I am a left wing radical and closed his rant with “not expecting to hear from you” or something along those lines. Well, Winghunter, you SHOULD expect to hear from me,  and here it is.

To your surprise, I am not a left wing radical. I am actually a capitalist and a member of the 1% club. I voted for Reagan, Bush, Bush and Obama

I voted for Obama because he is a reasonable person (as my partner Tim Handley would say) and a really cool guy. This was after 8 years of being embarrassed by a really un-cool guy. I voted for Reagan and the Bush’s because I thought they were the best chance I had at protecting my earnings and keeping the tax rate the lowest. I was right. And, I was wrong.

I was raised in an Irish Catholic and Jewish household by parents who couldn’t be more opposed when it comes to politics and business. My Mother had worked hard at being a secretary to officers of the US Navy and finished her career as secretary to the base commander at Hunter’s Point Naval Shipyard in San Francisco. She was a self-described Jew, daughter of Hungarian immigrants, a conservative Democrat and capitalist. My father was the 12th child of Irish-Catholic immigrants, drove Yellow Cab in San Francisco for 38 years, was a Teamsters Union steward and thought of himself as a liberal Democrat. From the time I was old enough to remember, we had animated discussions over dinner, about politics, race, religion, taxes, education and movies.

My Father hung with a group of guys who drove cab like him. French, Irish, Albanian, Italian, Spanish, Portuguese and Greek. No African-Americans allowed. They drank and smoked and shot pool and mostly liked working the night shift. My Mother hung with me. I grew up thinking that she was mostly right and he was mostly wrong.

I attended a Catholic elementary school (Our Lady of Angels) and a Catholic High School (Junipero Serra). I met my first African American at UC Berkeley. My Mother held a severely racist view of African Americans based on her experience managing “Negroes” at Hunter’s Point. She didn’t like Italians much better, and we never ate “Italian food”. Whether her stories were true or not, I walked out into life with roughly the same prejudicial inclination. It took ten years for me to lose the prejudice. I think I was lucky.

Somehow, my high school girlfriend became impregnated, so I had to turn down an appointment to the US Naval Academy that my Mother had worked hard to get me, and marry her. This did not make my Mother happy. Just to really slam it to her, I married an Italian later.

Me – Summer of 67

My first exposure to public protestation occurred when Mario Savio held free speech rallies on the UC Berkeley Campus during my freshman year. Our country was just getting going for real in Vietnam, but I was granted a 3A draft status because I had 2 children at the time, and was unable to participate. A couple of years later, the Chicago riots over the Vietnam war turned our National attention to the voice of the people, while Bobby Kennedy got shot and killed and the Summer of love kicked off the hippie movement in San Francisco. By this time, I had developed a social conscience and participated in all of that, including Woodstock a few years later. Divorced by then, I lived in a communal home in Los Altos Hills. An oxymoron, I know. But, through all of that, I never quit my job in the “establishment”.

Like almost every other Californian my age, I hated Ronald Reagan when he was Governor, but managed to get over it when I was making $250,000 a year in 1972, and voted for his second term. Someone once said that if you weren’t a liberal when you were in college and aren’t a conservative when you were in business, there was something wrong with you. But, that didn’t exactly apply to me.

The view that I have always held was tempered by the question, “What would a reasonable person do or think under these circumstances?” And, I think I owe this to watching and listening to my parents “debate” issues over dinner. Neither one of them was ever reasonable. It was sort of like watching John McCain argue with Nancy Pelosi. Though, my Mom and Dad were more articulate.

Was I a proponent of the power to the people movement in the 1960s and 70s? Sure. I saw then, just as I see now, a disproportionate distribution of attention, power and leverage to a small group of individuals at the expense of an increasingly disenfranchised majority of Americans. Nothing has changed in the way our government manages its business. Make love, not war? Give peace a chance? Of course. Was I a proponent of the hippie movement? Absolutely. Drugs and sexual freedom seemed like a great idea in 1967. Catholic, all male high school boy gets key to the city. Now, not so much.

So, here’s the deal Mr. Winghunter:

First fact, the POTUS has almost no control over the price of gas at the pump. Fact. Mr. Gingrich needs to stop it.

Second, if he agreed to go along with the Keystone pipeline from Canada to Texas, the bulk of that oil ends up being shipped to other places and it would have almost no effect on the price of gas at the pump. It would not create tens of thousands of jobs either (an independent study conducted by the Cornell ILR Global Labor Institute found that the Keystone Pipeline would result in 2,500 to 4,650 temporary construction jobs). It also crosses an active seismic zone and is the dirtiest source of transportation fuel currently available. The proposed route additionally crosses the Sandhills in Nebraska, the large wetland ecosystem, and the Ogallala Aquifer, one of the largest reserves of fresh water in the world. The Ogallala Aquifer spans eight states, provides drinking water for two million people, and supports $20 billion in agriculture. A leak could ruin drinking water and devastate the mid-western U.S. economy.

Third, The price of gas at the pump is affected mainly by commodity futures trading. Yes, the same 27 year-old MBA gamblers in pin-stripes and yellow neckties who took the economy down. Supply and demand, taxes, transportation, cost of crude, refining margins and competition make up the rest of the equation. Are the oil companies making a huge profit. Of course, and why not? As long as we stay stuck on this insane dependency on oil, they will continue to make huge profits.

So, commodity future trading based on the current supply in terms of output, especially the production quota set by OPEC, is the biggest single impact on the price of gas at the pump. If traders believe supply will decline based on say, threats to the straits of Hormuz, or a war with Iran, they bid the price up. If they believe supply will increase, the price falls. Another influence for traders is Oil reserves, including what is available in U.S. refineries and what is stored at the Strategic Petroleum Reserves. These reserves can be accessed very easily, and can add to the oil supply if prices get too high. Saudi Arabia also has a large reserve capacity. If it promises to tap those reserves, traders allow oil prices to fall. The last influence is Oil demand, particularly from the U.S. Demand usually rises during the summer vacation driving season. To predict summer-time demand, forecasts for travel from AAA are used to determine potential gasoline use. During the winter, weather forecasts are used to determine potential home heating oil use.

And, those are the facts, Mr. Winghunter. Facts. Not my opinion.

Mr. Obama is a reasonable man, has a great singing voice, is the ultimate in cool, has done a really good job of trying to lead this dysfunctional country during a time of unprecedented economic disaster, and I intend to vote of him again this November because I know that he will continue to resist terrible ideas like the Keystone Pipeline. As any reasonable man would.

Based on your call sign, Mr. Winghunter, I would guess you are a bird hunter, and like my brother-in-law, a proud owner of a large cache of guns and ammo. I have nothing against that and I applaud your ability to do so, but when the neighbors took me hunting when I was 10 years old, and I had an 8 point buck in my sights at 20 yards, I couldn’t pull the trigger. I personally don’t think it is reasonable for men to kill other living things when it is not necessary for survival. Just my view. Enjoy your day.


Romney’s Returns Refute His Tax Argument.

For all the attention devoted to Mitt Romney’s tax returns last month, one element went largely unnoticed: They directly refute the Republican candidate’s argument that higher tax rates deter capital investment.

Simply put, all of the investments made by Bain Capital LLC, the private-equity company Romney cofounded in 1984 and ran until 1999, occurred when capital-gains rates were much higher than they are today. Yet Bain consistently attracted massive amounts of private capital, and thrived.

Bain’s haul is further evidence that fair tax rates don’t hold back profit-seeking capitalists, at least until those rates reach a point that no one is proposing. From 1984 until 1999, the top rates on capital gains — the profit from investments as opposed to compensation for work — were often at 28 percent, and never lower than 20 percent. Indeed, in 1987, under President Ronald Reagan, the 20 percent rate rose to 28 percent — a 40 percent increase in potential taxation of Bain investment profit. (Yes, Reagan did raise taxes, even on capital.)

An analysis by the Wall Street Journal of 77 Bain deals in that time period showed that the firm “produced about $2.5 billion in gains for its investors,” on about $1.1 billion invested. Clearly, even with capital-gains rates almost double those today, fund managers such as Romney didn’t lack investors.

No Deterrent

Others can debate whether the private-equity crucible created more jobs than it destroyed. One thing is certain, though: Investors signing up for a chance to earn, say, a gross $10 million profit on a deal weren’t deterred by the prospect that taxes meant they would only keep a net $7.2 million.

Potential taxes were certainly disclosed to investors, and figured into the expected rate of return. And individual investors might have had offsets, such as the carried-forward losses from other deals reflected in the Romney tax return.

Particularly remarkable is the windfall Romney received from steep reductions in the capital-gains rate that took place after most of the deals he oversaw had closed. In 1997, the rate was cut to 20 percent, from 28 percent. It was reduced to the current 15 percent in 2003.

No one investing in a private-equity deal in 1990 could possibly say they anticipated the rate would be only 15 percent on profit still being paid out in 2010. Applying the reduced rate to deals previously closed couldn’t possibly be viewed as an incentive to investors.

At the same time, because these rate cuts were applied retroactively, the Romney family enjoyed a windfall of about $600,000 each year in lower taxes paid (assuming the Romneys received the same $12 million in income from carried interest and other capital-gains returns since 2001 as they did in 2010).

When multiplied by thousands of similarly situated taxpayers, this after-the-fact tax-cut windfall contributed significantly to the budget deficit, even though its value to the economy remains dubious, as numerous analysts of capital- gains rate cuts have concluded.

At a time of ballooning federal deficits and frayed social safety nets, higher capital-gains rates can contribute meaningfully to deficit reduction and to helping a middle class that is struggling to stay afloat, without hampering good investments in American businesses.

The Romney tax returns vividly illustrate that fair tax rates don’t deter those whom Republicans now routinely call “job creators” from investing.

As Warren Buffett so aptly put it, “I have worked with investors for 60 years and I have yet to see anyone — not even when capital-gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain.”

Conservative commentators will continue to recite their credo that letting the lower Bush-era tax cuts on capital gains expire — and returning to the pre-2001 percent rate of 20 percent — would kill investment and jobs. It will be hard for them to ignore the window provided by Romney’s returns into the real world of private-equity investing and the economy.


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