Taxes on wealth creation are about "social justice," not revenue

There is an old saying, one that people of all philosophical persuasions seem to concur with, that "the more you tax something, the less you get of it." Those who support less government and more economic freedom have argued this for years. That was the reason behind the "supply side" tax cuts that proceeded periods of enormous economic growth. They came in the early 1920s, 1960s, 1980s, and at the beginning of this decade. In each case they resulted in huge increases in revenues and widespread job creation. Although "across the board," these cuts have a more immediate impact on those with higher incomes, because those are the ones who pay more in taxes. Why do these type of cuts increase revenue? The answer to that is simple -- such cuts increases taxable economic activity.

Those on the political left seem to understand the impact taxes have on an economic activity as well. One of the first things Obama did as president was raise taxes on cigarettes for the purpose of both getting revenue to pay for government programs and to discourage smoking. In fact, some in the Administration argued there would be a 10 percent decrease in the consumption of cigarettes after the tax increase. We all know this to be true, the more it costs to do something, the less likely we are to do that activity.

The founders of the US government understood this idea as well. They wrote in Article I, Section 9 of the Constitution that "No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken." This clause prohibited income taxes until the Sixteenth Amendment in the 20th century. These much wiser leaders than today believed that the government has no right to know how much an individual makes and even the sources of revenue. They believed taxes were purely for revenue and not any particular political or agendas, they merely taxed imports and did so at the same levels and at a very low rate (since government was very small in the beginning).

To tax the earnings of individuals, especially in a progressive manner in which the rate gets higher as the income grows, will eventually undermined the desire to earn. This is even more the case with businesses. Higher taxes on their activities makes them work all the harder to be less subject to the tax (rather than on the economic activities that benefits everyone). Businesses are not wood, they function with the same "fight or flight" behaviors as humans. When government causes a massive increase of taxes on those companies with 50 or more employees, like that which will come with Obamacare, they will layoff enough employees to avoid the tax. If the US decides to have one of the highest tax rates on businesses of any industrialized country in the world (it is in a battle for that top spot with Japan), businesses will either downsize or move to countries with friendlier tax environments (which are not hard to find).

Politicians get angry when businesses export these jobs to other countries. Governments know that businesses do not pay taxes, they are merely tax collectors. The government prefers to make the businesses do its dirty work. Now more than ever, businesses do not have to tolerate it and they can easily dispose of the burden by moving their activities to more profitable locations. Journalist Thomas Friedman has noted that "The World is Flat" and business can move capital with more ease and speed than in any time in history. Policy makers in Washington know this and they are casually observing and even supporting the greatest depletion of jobs we have since the Great Depression. Furthermore, as those jobs and businesses disappear, so does the revenue. It is how economies work.

This administration seems blinded by these realities because it is driven by ideas such as "social justice" and not in the creating of a wealthy and free nation. Its excessive taxes on the job creators seems to be far more personal than business. It is not about generating revenues or jobs, it is clearly about punishing those who are successful. It is driven by blind ideology and not common sense. Conspiracy theorists surmise that the Obama administration is in the process of creating more poverty, since the poor are among his primary constituents. After all, if incomes of all Americans increased and we had a significant increase in jobs creation, who would be left to support Obama's agenda? Any party that depends on poverty to succeed is dangerous to a healthy nation. This is the liberals' dilemma. If a political philosophy depends on poor voters for success, you need more poverty.

Now even the most reasonable of individuals are asking, "are these crazy conspiracy theories or painfully obvious truths?" What we know that is true is that Obama's policies are not working, unless the goal is move poverty and less prosperity.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Timing of Health Care Report leads to Charges of Deception

The Department of Health and Human Services has finally released its controversial report on the costs that will surround the recently passed Obamacare legislation and questions are being asked as to why it was not released earlier, when it might have made a difference during the health care debate. The simple answer is that the report would only further damage a bill that passed by the thinnest of margins and with the most questionable of means.

The American Spectator is reporting in its blog that "The economic report released last week by Health and Human Services, which indicated that President Barack Obama's health care 'reform law would actually increase the cost of health care and impose higher costs on consumers, had been submitted to the office of HHS Secretary Kathleen Sebelius more than a week before the Congressional votes on the bill, according to career HHS sources, who added that Sebelius's staff refused to review the document before the vote was taken." The reason why they would not review it? Because they did not want the results of the report to influence the health care debate. That is very odd, considering that is the reason such reports are produced in the first place.

This should create serious problems for an administration and Congress that has pounding the "cost savings" drum since the 2008 elections. We knew that the way any savings would be obtained were unsettling. They would come through death panels and rationed care, price and regulatory controls on physicians (driving them into other professions), and reducing the rewards for the risks that comes from innovation (which means that health care progress would slow or decline). Now we see that, in spite of the fact this bill promises to turn a visit to the doctor into something that resembles a trip to the Department of Motor Vehicles, we will fail to see actual savings. No wonder why the ideologues in the administration that are more interested in agendas than the public good held this information hostage until it could do little or no good. According to the American Spectator, the information about the timing of the report is from an official of HHS who is remaining nameless at this time. The report is based on the analysis performed by the Medicare's Office of the Actuary, which is described as being a "nonpolitical" office. It was certainly nonpartisan in its content, but not in its timing.

The administration and its Congressional apologists have been arguing, all along, that Obamacare would have immediate savings and, more importantly, long term cost containment. Not so, according to the analysis in the report. The Kansas City Star notes that "The report was controversial because it was a direct rebuttal of President Obama's claims that the bill would 'lower costs for families and for businesses and for the federal government.'" The Star also notes that "The report found that the law would raise costs, as many critics of ObamaCare had argued. The actuary said some parts of the bill would help lower costs, but they would be 'more than offset through 2019 by the higher health expenditures resulting from the coverage expansions.'"

This is just one more scandal that would significantly damage earlier administrations, but is simply business as usual for Obama.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Taxes on Wealthy lead to Pain for All

"Soak the rich" is a favorite battle cry for politicians seeking reelection and advocates of social justice, but in the end, it creates injustice for all. This will clearly be seen as a consequence of the recent health care bill, as well as with the President's ambitious efforts to dramatically increase the tax on capital gains.

Numerous major corporations have announced projected loses in the hundreds of millions of dollars due to Obamacare. These tax hikes will have an adverse effect on the capital stock and will undermine job creation among small businesses. You would think the Obama administration, which is presiding over the worse unemployment this nation has seen in over a generation, would do everything in its power to keep unemployment down. To look at the obvious consequences of Obamacare, however, one would think that increased job losses is a policy objective. But the damage does not end with the President's ambitious health care agenda, but is also seen in his desire to change the taxes on capital gains.

Pamela Villarreal, a senior policy analyst with the National Center for Policy Analysis, notes that:
The 2001 Bush tax cuts reduced the lowest marginal income tax rate from 15 percent to 10 percent and the highest from 39.6 percent to 35 percent. This tax situation led to a job creation environment that was one of the best in recent history and brought the US unemployment down to around 5 percent. Simply put, the cost of using an asset got smaller and the profit got higher. This led to business activity taking place that resulted in more jobs and more tax revenue (because revenue comes from business activities that take place, like the selling of assets).
President Obama proposes to raise the two top marginal rates to 36 and 39.6 percent beginning in 2011 for the highest-income earners while leaving the other tax brackets unchanged. This will be temporary, however and will be followed with additional changes in the brackets and the amount taxed.

Starting in 2013, Obamacare will impose an additional 0.9 percent Medicare tax on wage income for individuals earning more than $200,000 a year and couples earning more than $250,000.
To make matters worse, the new law imposes a 3.8 percent Medicare tax on unearned income, such as "rent, royalties, dividends and capital gains for the same high-income earners."
The Obama administration also wants to increase long-term capital gains tax rates from 15 percent this year to 20 percent in 2011 for the two highest tax brackets, and taxing dividends at ordinary income tax rates for those earning $200,000 a year or more.

So what kind of impact will this have on the most affluent? Villarreal suggests we should "suppose an individual owns $50,000 worth of stock that has accumulated an 8 percent capital gain and 3 percent dividend after one year:"

• By 2013, the tax on the $4,000 gain (just after one year) would be as much as $1,309, compared to $825 if we simply left taxes at the current rate.
• With the current tax rate on capital gains (15 percent), the tax on the sale of $50,000 in stock would be $825, and the after-tax rate of return would be 9.35 percent.
• If President Obama's proposed capital gains and dividends increases of 20 percent go into effect, along with the excessive new taxes that will come with Medicare, the tax bill rises to $1,352 and the after-tax rate of return falls to 8.38 percent (a drop of almost 1 percent).
• For ordinary dividends, a higher marginal tax rate and the new Medicare taxes could nearly double the individual's effective tax rate from 15 percent to more than 29 percent, essentially doubling the tax burden.

The US already has the unwelcome distinction of having one of the highest tax rates of any industrialized country in the world. After Obama's pro-tax, anti-prosperity, agenda, we will likely be the world's number one tax collector among modern countries. For those who are more affluent, this will result in an after tax rate of return on this type of investment that would have the return on the profit be reduced by approximately 10 percent. The ironic result of such is that increasing the capital gains tax could actually lower government tax revenues (as witnessed in the past), because people will hold on to assets in order to avoid the tax. Remember, unlike the vast majority of people who sell things because they need to move, or they need a different vehicle, or there is some other cost driving necessity, the rich simply sit on the asset and wait until the tax environment changes. They can afford to do that and it is in their self interest. For much of the country, however, it leads to the depletion of jobs and even the hope of jobs.

Instead of increasing taxes on wealth creation (e.g., capital gains, taxes on businesses, etc.), this administration should consider dramatically reducing such barriers between people and jobs.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

What Pro-life Democrats got for their Vote

The vote seemed suspicious enough. At the 11th hour of the notorious health care vote, 11 "pro-life" Democrats who were adamant in their opposition of the President's legislation decided to vote with him. The stated reason for the shift was assurances from the Administration that the law would not be used to federally fund abortions, even though the legislation clearly allows for such. In order to bolster his claim, President Obama even signed an Executive Order prohibiting such funding. However, Congressman Bart Stupak (D-MI), the leader of the pro-life Democrat coalition, knows that the same pen that prohibits abortion funding can just as easily sweep it away, and it is likely Barack Obama will do just that. After all, the most famous vote of state Sen. Barack Obama in Illinois was to be the lone member of that body to vote against a bill to rescue victims of a botched abortion. His position was to simply let such victims to die. To think the funding of abortion is not a part of the Obama agenda is ridiculous and those who oppose abortion, but supported this bill, leads many critics to believe they must have received something in return for their votes.

Judas Iscariot only received 30 pieces of silver for being a traitor. He could have learned a great deal from the Stupak 11. It appears these members made several deals through the earmark process, which is a favorite of politicians. In the past, crafty members would sneak appropriations for the home district in massive spending bills with little notice since they would receive final approval after the vote (in this case in June or July by the Appropriations committee). However, Bill Allison of the Sunlight Foundation and other spending critics are watching expenditures as they relate to the health care bill. There will be no simple "pass" this time.

FoxNews.com reveals what the eleven members requested:

Rep. Jerry Costello of Illinois.: $1,418.7 million ($256.4 million in 2010)
Rep. Solomon Ortiz of Texas: $618 million ($726.1 million in 2010)
Rep. Stupak of Michigan: $578.9 million
Rep. Marcy Kaptur of Ohio: $294 million ($305.7 million in 2010)
Rep. Kathy Dahlkemper of Pennsylvania: $236.8 million ($54 million in 2010)
Rep. James Oberstar of Minnesota.: $207 million ($226 million in 2010)
Rep. Brad Ellsworth of Indiana.: $115.4 million ($82.3 million in 2010)
Rep. Charles Wilson of Ohio: $84 million ($62.3 million in 2010)
Rep. Paul Kanjorski of Pennsylvania.: $67.1 million
Rep. Steve Driehaus of Ohio: $33.2 million
Rep. Joseph Donnelly of Indiana: $19.8 million ($11.65 million in 2010)

Regardless of whether these members get the prize for their vote, their "sacrifice" may not be over when it comes to the health care bill. For example, Bart Stupak's race has gone from an "easy" election in 2010 to someone who is now facing a serious challenge. The GOP challenger, Dan Benishek, was limping along and was hoping to put together a campaign in the six digits by November. Politico reports that, after Stupak voted for the health care bill, the Republican challenger saw $125,000 in donations on one day alone. It is now a completely different ball game. It is likely that many of these "pro-life" members will be fighting to avoid extinction. For many voters it is no longer revenge. It is a reckoning.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Government Chooses Green Policies over Job Creation

Every day we see news stories that discredit the hysteria of "Global Warming." Winters have been colder for the past five years and those of us who grew up in the 1960s and 1970s remember when the fear was another "ice age." To make matters worse for "green" advocates, thousands of discovered emails written by Global Warming scientists show the agenda was more about control and politics than improving the environment. Add to the fact that the barriers between people and jobs are so numerous, the last thing you would think that policy makers would want to do is add regulations and taxes in pursuit of a green economy, but that appears to be the priority of the Obama Administration.

President Obama has made the creation of green jobs one of the biggest priorities of his energy and environmental agenda. Becoming the "leader in developing the clean energy technologies that will lead to the industries and jobs of tomorrow"' is described by Obama and his Administration as "'critical to the future of our country." They are investing billions in pursuit of this goal, according to Carrie Lukas of the Independent Women's Forum.

The stimulus bill of 2008 and 2009 had huge amounts allocated to "'green"' enterprises, including:

• $6 billion for a loan program targeted for "green" industry.
• $5 billion for weatherization aid, and $11 billion for "'smart grid"' technology and modernized high-tech transmission lines
• $500 million to help train workers for "green-related" careers.
• The new budget doubles down with similar "'green"' investments.

In addition, the subsidies allocated hundreds of millions for the research and development of new technologies in the energy field. There are also billions of tax breaks for companies investing in projects that pursue clean energy. Finally, you will find $74 million for initiatives to encourage young people to pursue careers in clean energy.

Taxpayers should be warned that creating a "'green job"' is not affordable, says Lukas:

• State and local "green job" creation efforts have cost in excess of $100,000 per position.
• Instead of creating domestic "green job" industries, much of the dollars for such projects are actually being sent overseas. For example, ABC News has reported that nearly 80 percent of the almost $2 billion in the stimulus bill dedicated to wind power, went directly to foreign manufacturers for wind turbines.

In the end, what may be of greatest concern are policymakers who know that direct government spending alone will not usher in a new "'clean"' economy, so they are also pursuing a more deliberate path to "'green"' job creation -- driving up the costs of traditional energy sources either through regulation or a costly cap-and-trade system that acts as a carbon tax. Essentially, the government will try to force businesses to use "green" fuels at the expense of their international competitive edge. This will mean that average American families will find that these policies cost them thousands of dollars as the price of everything from food (transported by gas power vehicles) to fuel itself, rises. Something with this kind of cost should generate "green" jobs, but will likely do so at the lost of many traditional jobs. Businesses will be forced to put more resources into cutting energy costs rather than on business expansion or job creation. The US already has the highest unemployment it has experienced in a quarter of a century. One has to wonder what our economy will look like after the radical health care agenda and an environmental plan that is simply not needed.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obamacare will Harm Working Americans

There is something that is clearly seen in the policy changes that will come with Obama's radical health care agenda, but is largely being ignored by the mainstream media. It is being called by some health care watchers as "the President's dirty little secret." Essentially, Obama's policies will wage a war on America's labor markets, says Benjamin Domenech who was a political appointee at the Department of Health and Human Services and is now the managing editor of Health Care News.


The United States is suffering from the highest unemployment in a quarter of a century and in such an economic environment you would think the government would do everything in its power to soften or eliminate the barriers between people and jobs. Instead, Obama's health care legislation will place millions of American workers out of work or move them to contract employees. This, in turn, will only create turmoil for families that are already concerned about one of the weakest economies in US history.The President promised a health care bill that would allow one to keep their private insurance and give business owners some needed relief (such as in taxes and mandates) to make it more affordable. Thanks to record deficits and the largest percentage of government spending in the Gross Domestic Product since the Great Depression, there will not only be any additional relief, but there will be a dramatic increase on the costs for business owners when it comes to health care.


In fact, the President's legislation is full of pitfalls and paradoxes when it comes to the President's goal of making health care more available. These include:

• Obama's proposal actually punishes employers for not providing health insurance. These type of provisions will lead to layoffs or the shifting of employees to contract status.


• Meanwhile, the president will subsidize the health care of employers without employer-provided insurance. These dollars will largely come from employers, which will further create barriers between people and jobs.


• This strange series of policies will essentially allow workers to receive the same compensation package they have today (assuming they can keep their jobs), but with Uncle Sam paying the health benefits of the bill, employers will have neither the need or the incentive to make up the difference in cash.


• On paper, this proposal looks great for low income workers (those making less than $17,000 a year), but there is a terrible thing called reality, because the layoffs and other issues that will follow.

The heart of liberal policies is that they are filled with, what appears to be, good intentions, but are plagued with terrible consequences. Domenech notes that small businesses that employ lower-income workers will not find it sensible, economically, to offer health insurance. Any business that does so will virtually always fail because of the higher costs they will suffer compared to competitors.

Obama's health care agenda is full of paradoxes and odd agendas that, in the end, will make health care cost more, or lead to higher unemployment, or foster a less stable economic environment, or all the above. Solutions to health care problems continue to be found in the market and not in government.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The Massive Shift Towards Government Dependence

How much would the income of US households have dropped without being propped up by government benefits, welfare, and tax cuts last year? According to Patrice Hill of the Washington Times, it would have been a breathtaking $723 billion. This amount is more than five times the record $167 billion drop reported last month by the Commerce Department.

Most of the dependence is linked to the huge number of job losses in the last year. A major priority of government should be to eliminate the barriers between people and jobs. This should be done, not only in order to improve the situation of those who are unemployed, but to help provide relief for a government that finds itself supporting such people. The impact of unemployment is devastating in a way not found by other economic problems. The economists are claiming that we are in a recovery, but explain that to the close to ten percent of the population that has yet to find a job.

Hill cites the reports of economic analysts who find that:

• While wages and other job-related income fell by a record $206 billion last year to $7.84 trillion, government transfer payments (such as unemployment checks and Social Security) grew by $231 billion to $2.1 trillion.
• Wages have plunged at unprecedented levels, down to $256 billion in private wages, which was more than forty times larger than the last wage drop, during the recession of 2001.
• Unemployment not only means more money going from the government to individuals, but a significant drop of income going to the government (this seems obvious, but many policy makers do not seem to understand it). As a result, the amount of taxes paid by individuals dropped by $325 billion to $2.1 trillion due to middle-class tax cuts (which have none of the revenue generating effects of a supply-side tax cut across all income groups) and the fact that there are 6 million people who lost their jobs and are no longer paying payroll taxes.
  

Many in the Obama Administration believed that there would be a revival in consumer spending in the latter part of 2009. This would have led to more tax revenues and job growth, we were told. Instead, virtually all new spending was done by government and dollars that went to consumers were used to pay off debt, rather than jump start the economy.

The prospects do not look good in the immediate future, because virtually all opportunities for new spending appear to be on the government, rather than on the consumer, side. Such government funding cannot be sustained without continually raising taxes and will, at best, only produce temporary and expensive jobs.

If the administration is serious about reducing unemployment, it will have to be aggressive in its approach. Steps should include a dramatic reduction in capital gains and business taxes, making the minimum wage a state (rather than federal) issue so they can set such according to the unemployment situations in their particular areas, and curtailing ambitious programs (such as cap and trade, health care reform, and other major initiatives) that create an unpredictable environment for jobs to be created.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obama's Mentors included Hoover, as well as FDR

Calvin Coolidge oversaw one of the greatest expansions in the history of the US economy. When Coolidge took office, he believed tax rates were too high. With top rates at over 70% following World War I and facing a protracted recession, Coolidge believed it was time to take serious actions. The combined top marginal normal and surtax rate fell from 73 percent to 58 percent in 1922, and then to 50 percent in 1923 (for incomes over $200,000). In 1924, the top tax rate fell to 46 percent (for incomes over $500,000). The top rate was just 25 percent (for incomes over $100,000) from 1925 to 1928, and then fell to 24 percent in 1929.

The reduction in tax rates fueled the productivity engine of the US during these years, leading to inflation rates below 2 percent, unemployment below four percent, and the number of people who made over $100,000 a year actually quadrupling over his years in office. In addition to leading to economic expansion, these policies led to a dramatic increase in tax revenue. I call it the "Wal-Mart Principle" of taxation. Charge as little as possible per item (or activity) and you will make more than any of your competitors in your profits. Low tax rates lead to much greater economic activity and a huge increase in revenue.

Many historians perceived Coolidge's successor, Herbert Hoover, as one who continued his predecessors limited government policies. Coolidge was actually quite critical of Hoover, stating "That man has given me nothing but advice, and all of it bad." Hoover actually pursued several policies that remind one of Barack Obama, not Calvin Coolidge.

In fact, Hoover turned the depression into a "Great" one through several, government interventionist, policies:

• Supporting artificially high wages. When unemployment reaches approximately 25 percent, your objective should be eliminating the barriers between people and jobs. Wages are a huge barrier to employment The Hoover Administration pressured businesses to keep wages high and prices low. The Secretary of Labor at the time, James Davis said "There never has been a crisis such as we have had as the stock market crash that threw...millions out of employment that there wasn't a wholesale reduction in wages...If Hoover accomplishes nothing more in all of his service to the government, that one outstanding thing of his administration -- no reduction in wages -- will be a credit that will be forever remembered not by the working classes alone but by business men as well, because without money in the pay envelope business is the first to suffer" (The Politically Incorrect Guide to the Great Depression and the New Deal, by Robert P. Murphy, Ph.D.). What a legacy, backing a policy that forced widespread unemployment.


• Undermining international trade. The Smoot-Hawley Tariff Act of 1930 unleashed a chain of events that was seen first in the stock market crash of that year and crippled any efforts towards recovery for years to come. The tariff act put a huge cost on all goods coming into the United States. Investors on Wall Street knew that this would lead to retaliation and would greatly devalue the companies and the stock that represents them. This led to massive sock selling and lit the fuse to the depression. It took until the 1940s before the barriers finally began to fall and economy recover.

In addition, Hoover raised taxes to levels not seen since Coolidge took office (when the country was in an other recession) and he implemented domestic programs that were precursors of the New Deal (including subsidies and loans similar to what we see today).

In the end, Hoover was a big government proponent who sounded similar to Barack Obama today. At the Republican National Convention of 1932, Herbert Hoover stated, when receiving his party's nomination that "We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action." I'm sure advocates of free markets at the time find themselves asking, "how's that change working for you?" The differences between FDR and Hoover were simply in the scope of their activities, not in their nature. They both believed in massive government and they both failed miserably, placing this country into a decade and a half of despair. Obama is taking the US on a similar course and on a fast track that would be the envy of Hoover or FDR. We need to go back to what works -- less government and not more. We need to create a predictable economic environment that can only be created through less taxes and regulations. It is obvious that we need freedom and not government expansion.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

FDR was Cautious Compared to Obama

Back when I worked for Sen. Gordon Humphrey (R-NH) in the 1980s, there was a saying among members of the Budget Committee he served on and the staff: "A million here and a million there, and eventually you are talking about serious money." Those now appear to be the "good old days" compared to the fiscal mayhem we see today.

Last week President Obama signed a law authorizing the United States Treasury to borrow an additional $1.9 trillion, during that time he did another one of his favorite paradoxical quips in a speech in which he discussed his commitment to frugality. Terrence P. Jeffrey of Human Events, suggests we all review the White House website and review the President's Office of Management and Budget's (OMB) own figures.

I love the title on the top of the OMB page: "A new era of responsibility." This from a budget that is adding to the deficit annually, what was the entire national debt for the first 180 plus years of this republic. The propagandists at the White House have nothing over the advocates of "newspeak" in Orwell's 1984.

Jeffrey observes that:

When calculated by the average annual percentage of the gross domestic product (GDP) that Obama will spend during his presidency, he is on track to become the biggest-spending president since 1930, the first year reported on the OMB's historical chart of spending as a percentage of GDP.

When calculated by the average annual percentage of GDP that Obama will borrow during his presidency, he is on track to become the greatest spender and debtor since Franklin D. Roosevelt in terms of real spending.

Thought George Bush was bad? Obama will outspend and out-borrow the man that the Obama Administration routinely uses as a punching bag because of Bush's fiscal irresponsibility and who, when in office, was often seen by friends and foes alike as a "Big Government Republican."

Obama does not enjoy the excuses that FDR had for his dramatic expansion of government. After all, we do recall the Great Depression and World War II. In spite of this, Obama will even out spend this icon of big government.

Spending as a percentage of the Gross Domestic Product is the gold standard for determining real spending. Under FDR (from 1933 to 1945), federal spending averaged 19.35 percent of the GDP. Under Obama, the estimates from the President's own Office of Management and Budget is 24.13 percent of the GDP. That is about 25 percent more than FDR's expenditure during the two greatest challenges of the 20th century -- worldwide war and global depression.

What may be most startling is the unique distinction that both Obama and FDR share. According to the OMB's calculations, they are the only two presidents since 1930 to have annual deficits that reached double figures as a percentage of GDP.

In the same vein, Obama will have a deficit this year of 10.6 percent of the Gross Domestic Product; the last time the deficit hit double digits as a percentage of GDP was 1945 -- at the end of World War II.

Jeffrey's most profound observation in the article was in regards to comparing our current challenges with those of Ronald Reagan in the 1980s in the latter's efforts to end the Cold War. Without firing a shot and without having a budget that exceed 6 percent of our GDP, Reagan put the Soviets into bankruptcy and ended the Cold War. Obama is going to have a difficult time explaining the fiscal mess he has created for us.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Republicans and the Health Care Summit

President Barack Obama's health care bill is on the fast track to no where. He made a radical, socialized medicine, health care bill the center piece of his legislative agenda in 2009, even though unemployment had reached a high we have not seen in a quarter of century. Those who opposed a bill that would lead to higher unemployment, higher taxes, health care rationing, and injury to innovation have won the battle. This was seen in the rapidly falling approval ratings of many moderate Democrats who voted for the bill the first time around. This was also clear as the state of Massachusetts, which is 3 to 1 Democrat, voted Republican on a Senate seat held by a Kennedy for a half of a century. What is the connection? Massachusetts had a government health care program very similar to the President's plan for five years now and it has failed in virtually all of its policy objectives. The special election became a referendum on Obamacare and that agenda failed.

President Obama, with the determination and single focus of the Energizer battery bunny, keeps "going and going." In the last month we have had over 200,000 more jobs lost and almost 2,000 massive layoffs (sizable layoffs of 50 or more employees at one time), and instead of focusing on the important issue of jobs, he goes back to his socialized medicine agenda. He needs the Republicans involved in the discussion to give it legitimacy. He is providing the forum for the opposition's input, we are told, at a health care summit. The big question is, what should the GOP do?

I have been watching the GOP leaders on the news and in lockstep they are declaring that they will show up at the President's summit. They plan to pack the Blair House (across the street from the White House) and sit politely as the President lectures them again. After all, that is what they have been doing for years. The debate is ranging as to an appropriate GOP response and those arguments include:

• There are those who believe the GOP should show up to the event and demand equal time for their views. Unfortunately, many Republicans are only offering a lighter version of the Democrats' fast track program. Essentially they are saying, "we know we are all heading to socialism, but we would rather stroll than run."


• There are some who are actually saying they should go there but be silent. This would represent the voices of millions of Americans that have not been heard to this point. Unfortunately, I believe the media will simply interpret this as though the GOP has nothing to contribute to the debate.


• Some are arguing that he GOP might like to learn that the definition of insanity is to "do the same thing over and over again, expecting different results." Congressional Republicans should simply say that "enough is enough" and stay on the floor of their respective Houses and argue for free market and other approaches that honor our federal system based on the powers reserved for the states. This, in my opinion, would send the strongest message to those who are advocating socialism in our health care system, both in and out of government. To not show up would lead to an instant reaction from the media and constituents who will want to know why they did not attend. That would lead to the type of debate that those opposed to socialized health care can win.

To simply show up would be interpreted as "business as usual" and I believe that would be a fair assessment. It is time for Republicans to make the loudest statement of all...the statement of silence in the Blair House halls.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Areas of Waste in Obama Budget

It is that time of the year when Presidents rant and rave about the problem of government spending being out of control and they produce budgets that only add to the waste. Barack Obama is no different; in fact, his budgets are the largest seen in US history. Furthermore, his annual deficits are higher than the national debt was just a couple of decades ago. Rhetoric aside, Obama is operating as if it is business as usual.

Peter Morici's article title at FoxNews.com says it all, "Obama's Budget -- Straight From La La Land." In it, Morici notes that "Today, President Obama released his proposed 2011 budget, which forecasts the federal deficit will fall to $706 billion by 2014 or just 3.9 percent of GDP before rising again in 2015." The fantasy continues by noting that "To accomplish this feat, he proposes letting the Bush tax cuts expire and other spending cuts the Congress has rejected in the past. More extraordinary, though, the document assumes that real GDP grows at better than 4 percent a year over the four years from 2011 to 2014, and the economy does not encounter a serious recession." What is particularly interesting is that we have yet to recover from the economic down turn that we are currently in, yet Obama's forecast is filled with optimism.

The truth of the matter is there are plenty of areas to cut spending. In a perfect world, the Congress would be obliged to abide by its oath of office in which members agree to defend the US Constitution. If they did such, they would find they are allowed to spend in seventeen different areas according to Article I, Section 8 of that document. If they did that, budgets would always be balanced and our economic freedom would be vast. Unfortunately, our world is anything but perfect.

There are numerous "real world" ways in which we can seriously cut the deficit and Elizabeth MacDonald points out some of them in a recent article at FoxBusiness.com. The title will certainly get your attention: "$1.5 Trillion Ways to Cut the Deficit." The suggestions make sense, even if they do not have much hope in the political environment we live in today. Here are some examples:

An estimated $1.2 trillion in unused federal property. She notes that "The government owns and leases 3.87 billion square feet of property, and 55.7 million acres of land-meaning, one out of every forty acres. Real property asset value for all these holdings is estimated to be $1.2 trillion, says Citizens Against Government Waste, based on data from the Federal Real Property Profile created by the Bush administration, which helps federal agencies manage and dispose of their excess property." The examples that follow are numerous, and include Chicago's Old Main Post Office, which is a 2.5 million square foot structure that costs over $2 million annually to maintain. Than there is the John Murtha Airport in Johnstown, Pennsylvania. This airport cost over $200 million in government subsidies, even though the place has fewer passengers than security guards. The list continues and it would be very easy to get to $1.2 trillion with little or no impact on any of our lives.

Than she notes "there is the $123.5 billion on government programs that have consistently failed." She may be a little kind with such a low number, but she covers makes perfect sense. The Office of Management and Budget's (OMB) Program Assessment Rating Tool found 218 government programs that were either "inadequate" or "ineffective" virtually throughout the entire government. The OMB may be generous too, but there seems to be plenty of areas begging to be cut.

Than there is $98 billion in agency over payments that MacDonald notes. The following are only a few examples:

--Health and Human Services: $55.1 billion, or 9.4%. Includes overpayment rates of 7.8% and 15.4% in the Medicare fee for service and Advantage programs, respectively.

--Labor: $12.3 billion, or 9.9%. Most of the overpayments were in the unemployment insurance program.

--Treasury: $12.3 billion, or 25.5%. These are attributed to overpayments in the earned income tax credit.

--Social Security Administration: $8 billion, or 1.2%, in overpayments.

--Agriculture: $4.3 billion in overpayments, or 5.9% of total department spending. Much of the waste was found in food stamp, school meals and federal crop programs.

--Transportation: $1.5 billion, or 3%. This waste was primarily found in the Federal Highway Administration planning and construction program.

--Veterans Affairs: $1.2 billion, or 2.7%. Waste here includes overpayments in the pension and other compensation programs.

--Housing and Urban Development: $1 billion, or 3.5%. All of the waste in this department was found in public housing and rental assistance.

--Defense: $849 million, or 0.5%.

--Homeland Security: $644.5 million, or 3.7%. The Homeland Security grant program as well as Disaster Relief Fund Vendor Payments were the primary guilty parties at this agency.

--Education: $599 million, or 2.1%.

One of my favorite issues to attack is corporate welfare. What that means any more has changed significantly after the bailouts of Bush and Obama, but MacDonald's article (referring to the research of the Cato Institute) points out $92 billion of easily identifiable spending. "The figure includes direct cash payments, to farmers and research funds to high-tech companies, as well as indirect subsidies, such as funding for overseas promotion of specific U.S. products and industries. The cash payments come from the Departments of Agriculture, Commerce, Defense, Energy, HUD, and State."

Than there are the earmarks, which we seem to all love to hate more than any other area of government expenditures. Although they only come in at $19.6 billion (on over 10,000 earmarks), they are despised because they are part of a government approach to funding that is filled with deception. The list, again, is impressive and here are a few examples:

$75,000 for Wayne Gomes Youth Baseball Diversity Foundation

$381,000 for Jazz at Lincoln Center, New York, NY

$254,000 for Wool Research, Montana Sheep Institute

$2.2 million for Center for Grape Genetics, Geneva, NY

$1.8 million for swine odor and manure management research in Ames, Iowa

$4.4 million for the Army Center of Excellence in Acoustics

This, again is only the obvious...$1.5 trillion. Imagine what we could accomplish if we were willing to suffer a little pain for the better of our Republic?

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obama's Pay Czar goes on the Defensive

President Barack Obama's TARP Executive Compensation Master (also known as the "Pay Czar") was on the defensive in an interview with Neil Cavuto of the Fox Business Network. The latest trend in the administration is to place the President in the role of seeing no evil, speaking no evil, and hearing no evil. First, it was Attorney General Eric Holder stating that the President had nothing to do with the decision to place Umar Farouk Abdulmutallab with criminal charges rather than to treat him as a military combatant. Now Fienbert tells Cavuto that he "never, ever" spoke to President Obama or anyone in the White House about AIG. This defensive tone was heard through out the interview.

On the AIG bonus controversy

"First of all, understand these contracts that are being honored occurred years ago before the top law was even implemented-not on our watch. These are valid, binding contracts."

"Under the law that I'm administering, I will do what I can in 2010 compensation where I do have jurisdiction to try and make sure that these retention payments are taken into account when I set prospective pay in 2010, but I'm not prepared to challenge valid contracts entered into years ago.""This is the end of the retention contract problem."

It is interesting how he speaks so casually about taking "into account when I set prospective pay in 2010." The financial destiny of individuals is in the hands of a bureaucrat. It reads like an Ayn Rand novel. His distancing himself from autocratic action when it comes to the bonus situation is only in the present tense. He gives every impression that he plans to expand the government's role at his first opportunity.

On whether his jurisdiction should be expanded to include companies who pay back TARP

"Absolutely not. Not only do I believe my purview should not be expanded, I think the administration has made it very clear-Secretary Geithner repeatedly has made it very clear-we are not here to micromanage these companies. I think it is fair to assume there will be no effort to expand my jurisdiction." Incongruence seems to be a hallmark of the Obama administration. The more the Administration claims that it plans no harm to business, the more companies feel threatened.

On whether what he is doing will chase talent out of the industry

"I think it's vital. I am not trying to be vindictive or revengeful-that's not what I'm here to do…I'm trying to get these companies to reign in their pay and repay the taxpayer."

Major companies should not had participated in TARP and the government had no business in allocating funds in such a way. But the government spent the money and it appears they forced many institutions to participate in the program. However, to argue that the majority of these businesses are dragging their feet in paying back this program is to ignore the headlines. The Christian Science Monitor asks, "Why are big banks like Citigroup rushing to pay back TARP funds?" It goes on to note that Citigroup is "joining the likes of Bank of America, Goldman Sachs and JP Morgan. Why are they in such a hurry?" The "rush" is due to the fact that these businesses have faced the kind of scrutiny discussed in this interview. The penalties have been huge and the government reach has been expansive, there should be no surprise that these businesses want to move on.

The Obama Administration has become famous for its "double speak." It is shocking since Obama claimed to have championed the idea of "transparency" in government. It is time for the public to hold this government accountable.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Not all Blacks Support the Obama Message

A black that opposes the Obama agenda? If you view the mainstream media and read your daily news, such a thing does not seem possible? Fortunately, the good people of Project 21 and the National Center for Public Policy Research decided to do a little homework of their own and to size up the opinion of those black Americans we don't often hear about following the President's State of the Union address.

Bishop Council Nedd II of the Chesapeake and the Northeast for the Episcopal Missionary Church and a member of the Project 21 national advisory council noted that "After virtually walking away from the gay community after the election, President Obama is all of a sudden taking up their cause again? Last week's election (in Massachusetts) shows he has problems with Americans of all political stripes, but he appears to be focusing most intently on quelling the civil war rising against him in the left-wing of his party. One would think that -- as his approach to national security is being questioning in the wake of the underwear bomber and his dithering on Afghanistan -- that he would think of some other military-related issue to champion than one that could fracture his 2008 base even further. And then there is his post-Obamacare pivot to jobs that seems to be uneducated and aimless. Is 2010 to be consumed with 'don't ask, don't tell' for the military and 'don't ask, don't know' on jobs?"

Mychal Massie, who is the chairman of Project 21 stated that "It is time that President Obama realized his job is more than giving speeches and blaming former President Bush. Instead, from his performance tonight, he continues to show his disconnect with what the American people want and need. With record numbers of people unemployed and home ownership at risk or lost for so many, to point out just two problems, we needed to hear more from him than blaming others. It is time for Obama to own up to this malaise as his own."

Kevin L. Martin, also with Project 21's national advisory council argues that while "Watching President Obama's State of the Union Address, it felt like he was back on the campaign trail. Like on the trail, tonight's rhetoric tends to differ from reality. What was on display was a bait-and-switch in which broken promises were rehashed and more pandering was thrown at the middle class as he pledged tax cuts, tax credits and job creation."

R. Dozier Gray, a combat veteran and also a Project 21 member stated that "The President reminds us that one in ten Americans still cannot find work. Hard as I try, I simply cannot think of anything he has done to truly mitigate the problem. Mr. President, if you hated the bank bailouts why did you support them. Own it, sir."

In addition to her work with Project 21 Lisa Fritsch is a writer and talk show host from Austin, Texas. She observed that "President Obama wonders why there is so much 'cynicism' out there. While his speech was full of ironies and folly, this is the worst. It is President Obama who is the cynic, because he doesn't seem to believe in anything but the government. Though President Obama worked hard to try to connect with Americans, it is clear that his position on some of Americans' top concerns -- taxes, terrorism and health care reform -- remain the same. And his idea of change is at odds with the average voter..."

Ellis Washington who is a member of the national advisory council for the Project 21 black leadership network and a former editor of the Michigan Law Review noted that "Obama in his first year raised the spending limit to unsustainable levels ($1.35 trillion); more than GWB did in 8 years and now Obama is championing a freeze on spending? President Obama's first State of the Union Address painfully exemplifies that this clear and present danger to America is not Mr. Obama, but a citizenry capable of entrusting a man of this ilk with the presidency. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails us -- lack of common sense and good judgment."

You will not typically find these opinions among black Americans in the mainstream media. The reason for this is simple, there is a disdain by the media and by the left in general when it comes to a "diversity of opinion" among minorities and women. Liberals have "fought" for the freedoms of the "down trodden" for years we are told. One of the freedoms they did not fight for, it appears is freedom of thought.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obama Continues to Show Immaturity

President Barack Obama has plenty of enemies and they flank him on both the left and the right. He is oblivious to the interests of voters and consistently interprets political events in a manner completely contrary to the facts. His presidency is barely a year old and it is in serious trouble.

While the rest of the nation sat in awe of the events that took place in a special election in Massachusetts that put a Republican in a Senate seat held by a Kennedy for a half of century, President Obama concluded that such was a result of policy makers going too slow on health care reform. He came to this conclusion in spite of the following:

The state of Massachusetts had been under a socialized health care system since 2006 and it has led to higher prices and rationed care.

In spite of the fact that Massachusetts is 3 to 1 Democrats, it still chose a Republican for the Senate.

If the voter rage in Massachusetts was due to Republican resistance to reform, why would they elect a member of the GOP to this office?

As I read these obvious facts it seems like the need for an explanation is laughable. These points should be clear to the most casual observer, but Obama is building a policy strategy that is contrary to these facts. This indicates that either he questions the intelligence of his constituents or his constituents should worry about the "Emperor's new clothes" or, in this case, strategy. This approach to governing may work with petty dictators who are not accountable to voters or other branches of government, but it is still highly questionable in the United States.

In regards to the branches of government, Obama has developed this knack of attacking the Legislative and Judicial branches as if they are not necessary in accomplishing his policy objectives. In a special joint session of Congress in September 2009, Obama claimed that members of Congress who stated that the President's health care bill would include illegal immigrants were distorting the facts. Members had seen enough of the bill to know that the President was misleading the audience and compelled Cong. Joe Wilson (R-SC) to exclaim out loud, "You lie!" We have rarely seen such a reaction from a member of Congress, then again, we have rarely seen such an attack by a president on the Legislative branch. In the President's State of the Union address, the President again went on the war path at another branch of power. In this case it was the Judicial branch and the Supreme Court.

During the President's speech, Obama openly criticized a recent Supreme Court decision on corporate and other group funding of judicial races. The President claimed that the Court reversed a century worth of opinion on the subject by allowing for such funding. The reality is, there was very little court opinion on the subject until a few decades and virtually all of that was without precedence. In spite of this, it was still surprising than that one Justice (Samuel Alito), actually shook his head and said something to the effect of "not true." This was another demonstration we have not witnessed during an event such as this, but we have never had a president quite like Obama. All of these incidents point to problems in his future when it comes to governing.

Obama's last job was US Senator, which he did not finish one term. Before that he was a part time State Senator from Illinois and community organizer, neither of which are typical springboards for the highest office of the land. What we do know from his experience and temperament is that he does not bring the necessary skills and understanding to serve in the highest office of our land.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obama's New "Tax Cuts" are Designed to Create Votes and Not Jobs

When it comes to income taxes there are basically two ways you can cut them. You can either have taxes that benefit consumption (geared primarily towards the large middle class in modest amounts and are designed to encourage consumer purchases) and those that are across the board (the same percent for each income group) and encourage production (also known as a "supply-side" tax cut). President Obama favors the former because he considers them more "fair" and they have the ability to help him with the middle class which has become increasingly unhappy with his policies. Rumor has it, he is considering such cuts as we approach the 2010 mid term elections. Someone needs to teach him some history.

For decades Republicans have resisted Democrat attempts to provide small and modest tax cuts for the middle and lower class at the expense of those with higher incomes, simply because such polices do not work. In 2008, as Republicans were fighting for their political lives, President Bush passed just such a consumption tax cut package of his own with very weak results. Most Americans received checks that were designed to make them go out and buy a new TV, maybe take a vacation, or even use it towards the down payment on a car. However, because of the rampant economic fear that our country has been suffering from, people used those checks to pay off credit cards, to make a payment on their mortgages, or to do other things to reduce debt.

These demand side, or consumption tax cuts, are very different from those on the supply side. Supply side cuts are usually long term (multi-year in scope) and proportional (giving as big of a percentage to the affluent as those in lower income brackets). The amount of savings for the affluent -- who pay the vast majority of all the revenues the government acquires annually -- are typically significant enough to lead to the creation of new jobs, the expansion of businesses, and to stimulate the economy. History has repeatedly proved this to be true.

Calvin Coolidge passed a huge tax cut that led to one of the greatest expansions of the economy in US history during the 1920s. In the 1960s, presidential candidate John F. Kennedy eloquently stated that it was imperative to "get the economy going again" and believed that tax cuts would lead to a "rising tide that will lift all boats" (rich as well as those who wish to be rich). Those tax cuts, which were predicted to lead to a depletion in revenue, led to one of the last balanced budgets the US enjoyed for decades and economic expansion. In 1980 Ronald Reagan inherited one of the worst economies since the Great Depression (similar to the one today) and he attacked taxes with a plan that was largely modeled after the Kennedy tax cuts. That tax bill was called a "jobs creation act," which is exactly what supply side tax cuts achieve, and it contributed to one of the strongest periods of economic growth in US History. Finally, following the technology bubble burst at the end of the Clinton Administration and the tragedy of September 11th, President George W. Bush used supply-side tax cuts to create an economy that sustained the lowest unemployment for the longest period of time since the early part of the 20th century (in terms of years of full employment). He followed that up with the ridiculous consumer tax cut of 2008 that did nothing to move things in the right direction (including voters that he was trying to appeal to) and has left many scratching their heads. We have learned that all tax cuts are not alike.

Part of the dramatic decline in the economy is actually linked to the end of the Bush supply-side tax cuts that had to be approved each year by the Congress in order to stay in effect. In 2006, pro supply-side Republicans were beat by Democrats who opposed those policies. The businesses that largely drive the economy knew their days were numbered. Hostility towards a pro-business view of taxes has become even worse following the election of Obama. After a few years since the 2006 elections unemployment went from 4.5 percent to around 7 in no time (and is now pushing double digits), consumer confidence reached a record low. 2008 should have been a Referendum on the Democrats. Instead, Americans decided to consume more of the poison that is destroying the economy.

Americans need to know the difference between consumption and supply-side tax policies, and remind their representatives of those differences in the up coming election cycle. Meanwhile, pro-growth candidates for Congress should use 2010 as a year to remind their constituents of what works and to use this as a wedge issue for Obama and his Democrats who seem to hate wealth (and, thus, job) creation.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Barack Obama's Anniversary

It seems much longer, but it has only been a little over 12 months since Barack obama became the President of the United States. For those who oppose the radical shift in the way our country is governed, this administration has been frightening to watch. President Obama has pursued a fast track for socializing the greatest health care system in the world, has used government subsidies to control major parts of the US economy (even firing CEOs), has added to the deficit at levels equaling our entire national debt just a couple of decades ago, and has created international instability due to a foreign policy based on indecision.

In recent months, the bad dream suffered by Obama's critics has become the President's nightmare as well. There are numerous examples:

In spite of the speed that the Democrats have applied in its pursuit of "health care reform," White House Adviser David Axelrod has declared that the Scott Brown win in Massachusetts was a result of "going too slow." Reality check: Massachusetts has been under this type of care when it passed its own bill under Romney for the past five years and the people want less and not more of that type of medicine.

The governor's race in New Jersey -- a solidly blue state -- has fallen into the hands of the GOP.
Virginia's governor has been "purple" for years and is open season to either party, but is now in the GOP's hands.

Two leaders of the Democratic party in the Senate -- Dorgan of North Dakota and Dodd of Connecticut -- have decided to retire rather than face a serious GOP challenge. One Democratic Congressman, Parker Griffith of Alabama, has actually switched parties.

The mainstream media does not seem to get it. Esquire magazine wrote an article about Obama that read like a teen magazine of its favorite celebrity. In the January issue there is an article entitled "Papa in Chief," in which the President's frequent indecisions are praised as deliberateness while many Americans see it as nothing short of dangerous. The article essentially sees Obama as a very paternal character indeed. Meanwhile, US deaths in Afghanistan doubled in 2009 as the President spent most of the year determining what -- if anything -- he would do about the insurgents' growing violence. I doubt our troops would consider this the "thoughtfulness" of a fatherly figure.

This administration spent much of 2009 scrambling in many different directions in an effort to get some of its sweeping legislation passed. As a result, many Americans saw the President's agenda as more political than practical and more about ideology than people. With Senators retiring, and seats changing parties even before the off-year election takes place, Obama is in serious trouble. Politically, this president is looking more and more like a "dead man walking."

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The Results of a Complicated Tax System

The Obama Administration loves to sing the praises of "transparency," but finding such in any aspect of our government is difficult to say the least. Recently the Internal Revenue Service started to bang the drum on the importance of reducing errors and fraud by placing pressure on tax preparation services like H & R Block. These companies are taking the blame for poorly filling out forms that really need to be simplified. Steve Malanga, editor for Real Clear Markets and a senior fellow at the Manhattan Institute believes that the end of errors could be found in the act of simplicity.

There is, of course, the old joke where we get a two line tax form. The first line asks, "How much did you make last year?" Second line, "Send a check or money order for that amount." That would be simple, but it would also not work because we would all either stop working or become liars about how much we make. However, this joke does put us in the right direction, according to Malanga.

The vast majority of the modern economies are moving rapidly towards a "flat tax" as a way of guaranteeing a predictable amount of revenue coming in, avoiding the punishment of individuals for earning more income (with a flat tax people pay more if they make more, but it is not in punitive way), and to eliminate the problems of complexity.

How complex is our tax code? According to Malanga, some 80 percent of households now use tax preparers or software to complete their tax returns. Furthermore, we spend 7.6 billion hours on tax compliance, according to the IRS Taxpayer Advocate, which in turn costs nearly $200 billion a year.Over the past decade (since 2001), Washington initiated 3,125 changes to the tax code, or more than one a day. Malanga refers to one recent study that ranked the U.S. tax code 122nd in complexity among 175 nations worldwide. This happens because political forces have decided to use our tax code for social engineering rather than for raising revenue. Any time a politician says he or she wants to promote policies that encourage home ownership or energy savings, they want to do so in the context of changing the tax code to encourage such. This only makes the tax system more complicated.

The system is complex, both for the taxpayer and those who prepare forms for them. A flat tax would be an improvement, although it is still a tax on wealth creation, which makes no sense for any country interested in promoting opportunity and growth. A sales tax would be better still, because it would be a simple tax on consumption. If our government did the things it is allowed to do in Article I, Section 8 of the Constitution, a very modest tariff, like our Founders intended, would be sufficient. But simplicity with either a flat or sales tax would move us in the right direction.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Making 2010 a great year for America

So we are starting a new year. All of us have our personal aspirations. Some are seeking a new job, others want new business opportunities, others still want to make major purchases for their home or companies. Than there are those who simply want good things for themselves and those they love. I also think that people, more than we have seen in years, have hopes and dreams for this country. That is certainly the case with me. Below are some of my personal desires for the country this year. It is a really small list in light of how great our national need, but it would be an excellent beginning.

• That members of Congress would get a healthy sense of fear starting right now. The Democrats seem like people in a trance, with no sense of reality or consequence. Their agenda seems more important to them than their careers and, certainly, their constituents. Meanwhile, the Republicans blindly see the conservative revolt as its movement, when many of these angry voters would be likely to vote for a candidate under the "Tea Party" banner than the GOP. The Democrats need to come to their senses and weigh the damage they are doing to both the country and themselves. Meanwhile, the Republican party should be made up of people in repentance because they have been a part of the problem and not the solution.
• That there is a major shift in the US House and Senate races to candidates who support liberty. This does not seem likely in the US Senate because of the number of states that lean towards smaller government being up for reelection and are more vulnerable. However, I expect the US House to actually have a new Speaker. It is my hope that leader is not just another Republican.
• That more Americans hold their elected officials accountable. There is an old adage that seems to be true that "people hate Congress, but love their elected member of Congress." For the vast majority of people their members of Congress are the problem. If your member of Congress is not honoring his or her oath of office to defend the Constitution, make that person have to look for other employment.
• That the states demand for the restoration of its rights. We are seeing more states argue against the national government's rapid and unconstitutional expansion. Thirteen state Attorneys General, led by South Carolina Attorney General Henry McMaster, have recently notified US House Speaker Nancy Pelosi and US Senate Majority Leader Harry Reid and informed them that the Obamacare proposal is unconstitutional and that they intend to fight it every step of the way. Specifically, they warned in the letter to the congressional leaders that legal action may result if they do not remove the unconstitutional "Cornhusker Kickback" Medicaid provision inserted into the senate health care bill to secure the vote of Nebraska US Senator Ben Nelson.
• That provision allows Nebraska to have the benefits of the socialized health care program without paying for it. We have also had governors cite Article I, Section 8 and the Tenth Amendment of the Constitution to remind the federal government of its proper role. In addition to states fighting back, I would love them to win these battles in the courts.
• That America's international prestige would be restored and our troops would be protected. As Obama tried to figure out the US strategy in Afghanistan, we saw our troop casualties double last year. This President is far more dangerous to our friends and our armies than to its obvious enemies. I hope that does not remain the case in 2010.
  

This is a short list, but imagine if we could accomplish these few things alone? 2010 could be remembered as a very good year. One that set the groundwork for the restoration of this great Republic.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.