themarketswork

a common sense approach to a liberal world

Obama’s Betrayal of Israel

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“Israel can either be Jewish or democratic – it cannot be both” – John Kerry

“The entire Middle East is going up in flames, entire countries are toppling, terrorism is raging and for an entire hour the secretary of state attacks the only democracy in the Middle East.” – Benjamin Netanyahu

“There are roughly 50 majority-Muslim countries in the world. There is one — only one — Jewish state. The Israeli Knesset has 17 elected Arab members. It has Muslim members and Christian members. In contrast, one searches in vain for Muslim countries that have elected Jewish representatives. Obama and Kerry choose to attack the only inclusive democracy in the Middle East, while turning a blind eye to the Islamic terrorism that grows daily.” – Ted Cruz

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The Syrian Cost of Obama’s Iran Deal

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“We have been very clear to the Assad regime, but also to other players on the ground, that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized.” – President Barack Hussein Obama – August 20, 2012

On July 14, 2015, six world powers – United States, Russia, China, United Kingdom, France and Germany – reached an agreement with Iran on Iran’s Nuclear Program. When Obama decided to assume personal leadership of the Iran nuclear negotiations, the Iranian economy was straining under a decades old series of economic sanctions. Rather than support Congressional wishes to further tighten sanctions, thereby maintaining pressure on the ruling Mullahs, Obama decided to loosen economic restrictions as a prelude to his negotiations. The Iranian economy began growing again in 2014 and so did Iran’s negotiating power. And so, in 2015, the U.S. signed a deal with Iran that allowed the Iranians to hide much of their nuclear activities, lacked any semblance of enforcement and penalties, ended all economic sanctions, ended embargoes on ballistic missiles – and begins to expire in ten years – on January 2027 Iran can replace and upgrade its centrifuges. Obama himself has admitted that Iran will have full nuclear capability almost immediately after the deal expires. And for this we gave the Iranians access to almost $120 billion – perhaps more – Iran itself says it has already accessed $100 billion. It has been called the worst agreement in diplomatic history.Continue Reading

Merry Christmas Reclaimed

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The other day someone told me to “Have a Merry Christmas”. But that’s not what they really said. What they really said was “Have a good Holi….Have a Merry Christmas”. That’s a direct quote – and a good sign.

Last night I turned on the news to watch the Trump Rally in Wisconsin – in order to see what new announcements and appointments were forthcoming (think on that statement for a moment). To my pleasant surprise I saw a podium flanked by Christmas Trees with the words “Merry Christmas” emblazoned across its top. President-Elect Trump came onto the stage amidst chants of “USA, USA”, and he spoke these words;

“When I started eighteen months ago, I told my first crowd in Wisconsin that we’re gonna come back here some day and we are going to say Merry Christmas again. So Merry Christmas everyone. Happy New Year – but Merry Christmas.“

And I applauded.Continue Reading

Building Better Infrastructure Plans

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Recently, I was asked what I thought of the $1 trillion infrastructure plan that Trump has repeatedly mentioned in his campaign – and more specifically, my thoughts on the white paper put forth by Wilbur Ross and Peter Navarro. While I had originally looked at their proposal I hadn’t thought about the Ross-Navarro Plan in some time so I went back for a re-visit.

Before we move forward I want to explicitly state at the outset that I am not in favor of Keynesian Spending (Demand-Side Economics). Trump’s infrastructure plan has always been the one part of his platform that I have been uncomfortable with. I am opposed to any government-funded infrastructure stimulation program. As a proponent of free markets and a conservative, I favor reductions in overall government spending and lowering of taxes. Federal expenditures on capital projects simply in order to boost economic growth and employment is a failed policy approach. Any resulting economic stimulus is inherently long-term in nature and should always be done for fundamental needs only. This does not mean I am against any infrastructure spending but I believe infrastructure spending is best done at the state and local level and with as much private participation as possible. Infrastructure spending should be allocated carefully and should not done with the primary goal of achieving economic growth. Federal expenditures used to stimulate economic growth through infrastructure builds could be more efficiently deployed simply by cutting taxes and allowing private companies to grow. Federal spending on infrastructure projects for short-term economic stimulation is akin to taking water out of one end of a pool and pouring it in the other. The only real economic stimulation from such a program is inherently long-term.Continue Reading

Abolish the Corporate Tax

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President-Elect Trump has proposed lowering the Corporate Tax Rate from 35% to 15%. And that’s a good idea – but it doesn’t go far enough. The Corporate Tax Rate should really be lowered to Zero.

Some quick facts: The United States’ 39% marginal corporate tax rate (35% federal and 4% average state and local) is the third highest in the world. It is the highest of the 34 industrialized nation members of the OECD – and it compares poorly with Europe’s average tax rate of 19% (26% weighted by GDP).

Why do we have differing corporate and individual taxation systems in the first place?

Our nation’s tax system evolved in fits and starts with various taxes being implemented and then repealed – some ruled unconstitutional. Our modern tax era began in 1909 – in response to rising political pressure to tax the rich – when Congress enacted an excise tax on corporations at the urging of President William Howard Taft. In a concurrent move, President Taft proposed the 16th Amendment to establish a personal income tax. The excise tax on corporations did not require a constitutional amendment and was originally intended to be a temporary measure until the passage of the 16th Amendment which occurred in 1913. Like all things government, legislation once enacted does not die and so the two concurrent tax systems – corporate and individual were born. And they have been creating inefficiencies and needless complexities for our nation ever since.Continue Reading

Trump’s Deregulation Gift

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The United States’ 39% marginal corporate tax rate is the third highest in the world and the highest of the 34 industrialized nation members of the OECD.

Regulatory burdens placed on business under the Obama Administration have become staggering – and even more costly. Here are some data points directly from the Competitive Enterprise Institute:

  • Federal regulation amounts to nearly $15,000 per U.S. household each year.
  • In 2015, 114 laws were enacted by Congress during the calendar year, while 3,410 rules were issued by agencies. Thus, 30 rules were issued for every law enacted last year.
  • Many Americans complain about taxes, but regulatory compliance costs exceed the $1.82 trillion that the IRS is expected to collect in both individual and corporate income taxes from 2015.
  • Some 60 federal departments, agencies, and commissions have 3,297 regulations in development at various stages in the pipeline. The top five federal rule-making agencies account for 41 percent of all federal regulations. These are the Departments of the Treasury, Commerce, Interior, Health and Human Services, and Transportation.
  • The 2016 Federal Register (the daily depository of rules and regulations) currently contains 81,640 pages, the highest page count in its history – and is still climbing. Obama also held the prior record, 81,405 pages in 2010. The 80,000 page mark has been passed in only three previous years (2010, 2011, 2015).
  • Of the ten all-time-highest Federal Register total page counts, seven occurred under President Obama.

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Populism – The Road Back to Capitalism

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“Many observers have noted that populism is inherent to representative democracy; after all, do populists not juxtapose ‘the pure people’ against ‘the corrupt elite’?” Cas Mudde

Consider these statements I am going to put forth and see if you agree.

  • Globalism is a political goal – not an economic one.
  • Globalism is not the same as Global Integration.
  • Populism is a generalized term to describe the responses by citizens across the world to the failures of their various political parties.
  • What was once called Sovereignty is now dismissed as Populism.
  • Populism is a rightful response against centralized government and central decision-making.
  • Populism is labeled as a movement against free markets and yet the exact opposite is true.
  • Globalism hinders free trade.
  • Globalism begets Socialism.
  • Populism begets Capitalism.

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The Euro’s Failings

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I remember when the European Union, and the creation of the Euro, was being discussed and formulated. I was sitting in an economics class in college.

The European Union would be the culmination of a series of efforts to unify Western Europe – starting in 1951 with the creation of the European Coal and Steel Community (ECSC) and later, the 1957 creation of the European Economic Community (EEC) – which removed many barriers of trade between member nations. Over time, the EEC added additional European nations and expanded its influence and scale. Fast forward to 1987 and the creation of the Single European Act (SEA) which strengthened both legal and foreign policy influence and concentrated the decision-making power of the EEC. It also established a timetable of 1992 for the completion of a common market. And thus, the Maastricht Treaty was signed on February 7, 1992 and formally created the European Union (EU) – it also called for a common currency – the yet to be named Euro.Continue Reading

Carrot not Stick – Fixing our Economy

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“Underlying most arguments against the free market is a lack of belief in freedom itself.” – Milton Friedman

“Government’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.” – President Ronald Reagan

“I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” – Milton Friedman

Yesterday I wrote on Why I Support the Carrier Deal – an unusual response from a free markets proponent.

I liked the Carrier Deal because it highlighted the much larger story that lay hidden behind the headlines – as is often the case.

The Carrier deal unto itself was actually small news and would likely have gone unnoticed in differing times. The real story is why United Technologies CEO Greg Hayes came and listened. He came to hear President-Elect Trump’s broader blueprint for our future. He came to hear about plans to reduce taxes, to remove regulations – plans and policies to make the United States a place that attracts, rather than repels, business activity. And that is the real story.Continue Reading

Why I Support the Carrier Deal

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President-Elect Trump’s decision to push Carrier to keep 1,000 jobs in the United States was hailed by some and condemned by others. The left and many fiscal conservatives on the right condemned the act as a $7 million payoff to Carrier, a shakedown, a poor deal, a ransom, soak the taxpayer. I understood the consternation of the fiscal conservatives as I am one of them. I found the uproar from the left a bit amusing given Obama’s $800 million American Recovery and Reinvestment Act and its failure to never once produce GDP growth in excess of 3% over his eight years – a dubious record never before accomplished in this country – with or without stimulus. The uproar on the left may have had a bit to do with who did the negotiating and who it was that benefited from the deal. Ironic, given that the Democratic Party was once upon a time the party of the American worker.

Personally, I am in favor of free markets, fiscally conservative and firmly believe in Supply Side Economics – and yet, I supported Trump’s decision. Why?Continue Reading