Current Commentary

Detailed Action Plan to Balance the Budget and Create Jobs

Problems

• 10% unemployment as far as the eye can see.
• Deficits that are 10% of gross domestic product (GDP) and 40% of spending.
• Stagnant real wages for the last 40 years.
• We could completely eliminate every program other than defense and entitlements, and we’d still have huge deficits.

Growth Solutions

• The best way to expand payrolls is to cut the payroll tax.
• Exempt the first 100 employees from the payroll tax. 95% of all business and 40% of the work force would be exempted from an oppressive, regressive regulatory and tax burden. Revenue loss: $320B/year.
• Close the $106k earnings loop hole and revenue neutral adjust everyone’s payroll tax from 7.65% down to 3.5%.
• Encourage states to deregulate small businesses. Aside from the payroll tax, most small business regulation happens at the state level. Regulation is an anti-competitive government aid for big business.
• Replace our centrally planned predatory banking system with a free market and honest banking system. End the Fed. Return to a gold standard.

Spending Cut Solutions

• Raise full eligibility for Social Security and Medicare to 71. It’s the only solution in keeping with the original intent of Social Security. Savings: $452B/year.
• Cut defense spending to inflation adjusted Cold War levels. Savings $260/year.
• Close the federal government pay advantage over the private sector. Savings $50B/year.
• Cut contractor spending 10%. Savings $54B/year.
• Zero-based budgeting, especially on entitlements. No automatic increases; every department must justify every dollar. Savings undetermined.
• Privatize/end welfare. Replace it with a dollar-for-dollar tax credit to private charities, capped at 10% less than current welfare. Savings: $57B/year.
• Cap future spending growth at half of GDP growth.
• The result, a realistic plan to balance the budget.
• Keep it balanced with a balanced budget amendment.

August 30, 2010

Most direct way to expand payrolls
is to cut payroll tax

There will be a debate tonight (Monday the 30th) from 7-8:30pm at the main Towson public library on York RD. Here's what I I intend to focus on: If the main goal is to expand payrolls, then cutting the payroll tax is the best, most direct tax to cut. The best way is not to cut the top corporate rate, top marginal rate, estate tax, capital gains tax, or dividends tax. Cut them only if your goal is to create a society modeled after pre-revolutionary France where the top 3% paid no taxes, and everyone else paid it all.

For years, proponents of trickle-down economics have tried to trick the masses into believing that a tax cut for someone else is better for them than a tax cut for themselves. Of course tax cuts for the rich will help the masses as compared to no tax cuts at all. But when you compare tax cuts for the rich to tax cuts for the masses and then ask which scenario is better for the masses, the answer is obvious. It’s as if you and I are in a closed economy and someone else comes along and gives $100 to me. Of course that’s going to be better for you relative to the $100 never coming along, but it’s certainly not better than had the $100 been handed to you. If trickle down proponents want to argue based on fairness, based on the fact that the top 5% pays 36% of all the income taxes, fine. But don’t try to argue that it’s in my best interests to pass a tax cut onto you.

Speaking of fairness, the top 1% pays the same total tax rate as the bottom 50% when accounting for the payroll tax, about 28%. If you make over $402k/year, you’re in the top 1% and you pay an average federal income tax rate of 21.8%. In addition, you pay Medicare tax of 2.9% and Social Security tax of 3.3% (because only the first $106,500 of your income was taxed), bringing the total to 28%. If you make less than $30,588/year, you’re in the bottom 50% and pay an average federal income tax rate of 12.8%. But you also pay Medicare tax of 2.9% and Social Security tax of 12.4% bringing your total to 28.1%.

My plan would exempt the first 100 employees from complying with the payroll tax at all. 95% of all businesses in this country would be completely exempted from the biggest regulatory burden most face, and would have their payroll costs reduced by 7.65%. With this savings, they could hire, reinvest/grow, or pay their employees more, and the employees would then in turn circulate it through the economy. In any case, payrolls and the would economy expand. 40% of the US labor force would get a 7.65% raise in their take home pay. This would also increase the amount of money circulating through the private sector, real economy. Additionally, I would close the $106k Social Security earnings cap, thereby subjecting all income to the SS tax, just like Medicare is. This would bring in enough extra revenue to lower the rate for everyone from 7.65% to about 3.65%. If you think the math through, you’ll see that this would result in a tax cut for every individual earning under about $188k/year.

One of the many causes of the Great Depression was the fact that the average worker couldn’t afford to purchase his own production. The economic collapse we have faced in the last few years was also caused by this; however, unsustainable credit bridged the gap for awhile. We must abandon dogmas, and we must apply common sense and facts if we are to find the path to prosperity.

August 29, 2010

Debate Monday night in Towson

Monday the 30th (tomorrow) 7PM-8:30PM at the main Towson public library on York RD, there will be a debate among all 5 Republican primary candidates vying to take on Dutch Ruppersberger. The purpose: to shift the discussion from a platform of platitudes and onto policy specifics.

Some questions that need answering:

Q. Everyone running believes in smaller government. What specifically would you cut beyond the cop out answer of “Cutting government waste?”
A. Unless your definition of government waste is grandma’s Social Security check, there just isn’t enough to cut to close the deficit. We could completely eliminate every program aside from entitlements and defense spending, and we’d still have a huge deficit. The following is what I would cut:

• Raise the full eligibility age for both Social Security and Medicare to 71. Nobody likes this, but it’s better than the alternatives of tax increases, benefits cuts, or insolvency, and it’s the option that is most in-keeping with the original intent of the Social Security Act of 1935.  Life expectancy at age 65 has increased 6 years since 1935, but the full retirement age has only increased 2 years.  71 brings it back in line.
• Bring all the troops home/cut defense spending. We spend as much as the entire rest of the world combined, 8 times as much as the #2 nation, and twice as much as we did at the end of the cold war, even adjusting for inflation. Bringing it back in-line with cold war levels would save $300B/year.
• Close the pay gap between federal and private employees. Even controlling for the same job, federal employees make 54% more than their private sector counterparts. We’d save $50B/year closing this gap.
• Clampdown on government contractors, AKA beltway bandits. Their fraud, abuse, and waste make government employees look like a bargain. Cut contractor spending 10%/year and re-evaluate each year.  We spent 545B on contracts last year, 31% of that was non-compete. Savings: 54B/year.
• Zero based budgeting/no automatic budget increases applied to everything --- even entitlements. Currently, departmental managers justify only increases to the budget, many of which are automatic. By contrast, in zero-based budgeting, all expenditures must be justified; there are no automatic increases, and there is the constant possibility of year-over-year cuts.

Q. Everyone wants lower taxes, but not all taxes are equal. Given budget constraint realities, which taxes would you cut?
A. We must cut taxes on the middle class and small business, not on the rich and huge corporations. That means cutting and exempting the payroll tax. Specifically:

• Exempt the first 100 employees from having to comply with the payroll tax. This would be a huge tax and regulatory relief for 95% of the businesses in the country, cutting their payrolls by 7.5%, and it would give 40% of the nation’s labor force at least a 7.5% raise.
• Close the Social Security earnings cap with a revenue neutral cut for everyone. Currently, after you make 106k, your SS tax rate falls to ZERO. If we closed that loophole, we could drop every employee’s rate to about 3.5% from the current 7.5%. It would be a revenue neutral 3.5% tax increase for those making over 106k, and a 4% tax decrease for everyone making under 106k, aside from the 40% of the labor force that works for a business with fewer than 100 employees who would see a 7.5% tax decrease.

August 27, 2010

Repubs oppose middleclass/small biz tax cuts;
prefer AIG tax cuts

For immediate clarification, I am NOT one of these Repubs, but I was confronted by one at last night’s candidate forum at Ropewalk Tavern in Federal Hill.

In a room filled with other candidates, I addressed the fact that not only does this country have a major economic problem, but the R party has a major PR problem. Broadly framed, the D solution to fix our broken economy is to spend money that we don’t have. The R solution is to cut taxes on big corporations and on the rich and to hope that we’ll Laffer Curve our way to a balanced budget. I offered a solution: cut taxes on small business and on the middle class, specifically the payroll tax, and acknowledge that we must cut the sacred cows of entitlements and defense spending because we could eliminate everything else and we’d still have a huge deficit.

This idea didn’t go over too well with the room.  The most Republican of responses were, “Don’t you think the middle class has already gotten enough tax relief?” And, “Since big companies like AIG employ way more people than small businesses employ, shouldn’t we be cutting taxes on the big companies?”

My answer to both responses was “No.”  On the topic of AIG, there couldn't be a worse corporate example. This is a company that would be in the gutter were it not for bailouts; thus its very existence today was the result of central planning, not free enterprise. Additionally, dollar for dollar, we get more bang for the buck and more job growth by cutting taxes on small businesses than by cutting them on big businesses.

The best response I got to the idea of cutting the payroll tax was, “You can’t do that. It’s impossible.” The reason: payroll taxes fund Social Security/Medicare, and both of these problems (almost said programs but this Freudian slip stands) are already on a runaway freight train to insolvency. This is true, but it’s also true that the government has been combining and commingling funds for years and spending SS/Medicare tax on the general fund.  In other words, a tax is a tax. The government can label it whatever they want to try to trick us into thinking it is some sort of savings plan, as FDR originally tried to pass it off, but don’t fall for it.  If we can cut the capital gains tax, or the top corporate tax rate, we can cut the payroll tax.

One of the causes of the Great Depression was that people couldn’t afford to buy what they made.  The prices of consumer goods ran up to unsustainable, unaffordable levels relative to the wages of the average worker.  We have that problem today. Look at all of the consumer spending of recent years that was unaffordable based on income, so we used loose credit to pay for it. WE MUST RAISE THE WAGES OF THE AVERAGE WORKER, and there are 3 ways to do it. One way is cutting the payroll tax. A second way is reducing small business regulations to improve the labor market.  And the third way is replacing predatory central planner banking with free market honest banking.

August 26, 2010

Candidate forum tonight 6 PM Fed Hill

I will be at a candidate forum tonight (Thursday the 26th) from 6PM onwards at Ropewalk Tavern in Federal Hill at 1209 S. Charles St. It looks like a bunch of other primary candidates for state, federal, and local office will be there to speak and answer questions.

Then, this coming Monday the 30th at 7PM at the Towson Library on York RD, there will be a 2nd District debate among all 5 Republican candidates running to take out Dutch Ruppersberger.

August 25, 2010

ABC Interview

ABC interview is HERE.

August 25, 2010

CBO Report claims stimulus added 3M jobs

The Congressional Budget Office (CBO) just released a report quantifying huge successes for the Obama stimulus plan. Judging by the lack of media coverage, others besides me may be concluding this report is sheer nonsense. The report claims that the stimulus act:

• Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 and 4.5 percent.
• Lowered the unemployment rate by between 0.7  and 1.8 percent.
• Increased the number of people employed by between 1.4 million and 3.3 million.

The simplest argument against their faulty logic: You can’t pull yourself up by your bootstraps, but you sure can waste time and effort trying. The CBO report uses mathematical modeling that is akin to that impossibility.

Specifically, the CBO’s model started by automatically assuming that government spending increases GDP by pre-set multipliers, such as:

• Every $1 of government spending that directly purchases goods and services ultimately raises the GDP by $1.75.
• Every $1 of government spending sent to state and local governments for infrastructure ultimately raises GDP by $1.75.
• Every $1 of government spending sent to state and local governments for non-infrastructure spending ultimately raises GDP by $1.25.
• Every $1 of government spending sent to an individual as a transfer payment ultimately raises GDP by $1.45.

This directly conflicts with research by Harvard’s Robert Barro that has shown real world multipliers closer to 0.6-0.8. A multiplier of anything less than 1.0 indicates loss which is logically consistent with government waste. Applying Barro’s multipliers cuts the CBO numbers by more than half, but that’s not the end of it. The CBO model doesn’t account for the future tradeoff cost of pulling forward consumption. The Keynesian IS-LM model would like you to believe that monetary policy can increase both consumption and savings, but it’s really just using central planning to force the tradeoff to favor consumption now over savings and investment for later. A separate, earlier CBO projection did take that into account and actually projected that the stimulus would shrink the economy as far out as 2019.

By the government's own admission, these central planner Keynesian accounting tricks only work in the short term and only at the expense of the long-term, yet this theory is the underpinning of long-term policy making. You can’t dig yourself out of a hole. You can’t borrow yourself out of debt. There is no free lunch. We need honest middle class and small business tax relief through a payroll tax cut. We need to restore long-term solvency by cutting the sacred cows of defense and entitlements. We need an honest, free market banking system, not a predatory central planner banking system.

August 24, 2010

I stand with Ron Paul on the NYC Mosque

Ron Paul to Sunshine Patriots:
Stop Your Demagogy About The NYC Mosque!

Congressman Ron Paul today released the following statement on the controversy concerning the construction of an Islamic Center and Mosque in New York City:

Is the controversy over building a mosque near ground zero a grand distraction or a grand opportunity? Or is it, once again, grandiose demagoguery?

It has been said, “Nero fiddled while Rome burned.” Are we not overly preoccupied with this controversy, now being used in various ways by grandstanding politicians? It looks to me like the politicians are “fiddling while the economy burns.”

Congressman Paul's statement continues here.

August 23, 2010

No bailouts. Instead, transfer and adjust

Allowing banks to fail under a transfer and adjust plan would be no different from firing your financial planner, or closing your savings account at one bank and opening it at another.

The taxpayer continues to pour hundreds of billions of dollars down the black holes of Fannie Mae and Freddie Mac with no end in sight. We also continue to allow big banks to “borrow” from the public at 0% and then loan it right back to the public, risk free at 3%. Under this arrangement, the banking sector is a blood sucking leach on the productive sector of the economy. We continue to pursue policy that impoverishes the masses for the direct benefit of the few, the powerful, and the elite.

There's a better alternative to the continued bailouts: transfer and adjust.

Transfer: We use FDIC to transfer FDIC-insured checking and savings accounts and the corresponding consumer loans from failed banks to unfailed, and if necessary newly created banks.

Adjust: The Federal Reserve would adjust the reserve requirements for the new banks to account for all of the defaulted and defaulting consumer loans. The new banks didn’t make these bad loans, so no need to penalize them.

Effect: FDIC-insured checking and savings accounts would be unaffected, aside from the name and logo at the top of your statement. The broad money supply and general price level would stay the same.
Total cost: Negligible administrative costs. No money or resources would be pumped into any banks.
Winners: Everyone who didn’t have to pay for a bailout. Small prudent banks that would become large prudent banks.
Losers: Big banks and the Hamptons class who would be blown into the gutter where they belong.

August 21, 2010

48% of Americans bigoted, don’t support 1st Amendment

The Economist Magazine just conducted a mosque poll with the following results:

Should be able to build wherever other religions can build: 52%
Some places are not appropriate for mosques, although they would be appropriate for other religions: 34%
And the goose-stepping grand dragon of all responses: Mosques should not be permitted anywhere in the US: 14%

Mosque haters all make the same error -- equating Muslims with 9/11 terrorists.

In the United States of America, we believe in freedom of religion.

In the United States of America, we believe in individual guilt, not group punishment.

In the United States of America, constitutional rights exist “particularly to protect the rights of the minority against the tyranny of the majority, precisely because popular people and ideas rarely need protecting.” -- Adam Serwer from the linked Economist Blog

To argue that there are certain areas where Muslims are not welcome is dangerously close to the first step of the final solution. Leadership from both parties echoing this sentiment is very dangerous. The only right answer on this issue for anyone in a position of elected power is this: It’s their 1st Amendment right, period. None of this cutesy, “Just because you have the right to do something doesn’t mean it’s the right thing to do.” I’d love to see a politician say the same thing about Jews or Catholics and see how it went over.

History has shown repeatedly that during times of widespread economic suffering, such as now, majority groups are inclined to band together and blindly hate minority groups. If we don’t come to our senses and stop this, if those with clarity and morals don’t standup, fight, and call out narrow-minded bigots for what they are, then we are heading on a path to take us someplace far uglier than we are now.

Finally, could a Christian group go into Pakistan, Iran, Iraq, or Saudi Arabia and build a church anywhere that a mosque is welcome in those Muslim countries?  No, probably not.  That’s what makes US better than THEM.

August 20, 2010

Help the economy: Let home prices fall

Were the government to stop the central planning, and allow natural free market forces to prevail in the housing market, the economy would be much better off.  Real GDP would increase by about 2%, and about 1.5 million people would be put back to work.

As the cost to keep a roof over your head fell, the American consumer would have more disposable income to spend to get the economy moving and put people back to work. Simply put, the primary function of housing is as a consumer good, and expensive consumer goods, especially basic ones that take up a huge portion of your budget like housing, are NOT good for the economy, employment, prosperity, or freedom. No one desires expensive food, or fuel, or even cars or washing machines, so why the exception for housing? This would have the exact same effect as $200B/year of “stimulus” spending, only instead of borrowing, taxing or printing for it, it would come out of the hides of bankers and real estate investors, unfortunately two very powerful special interest groups.

***Econ theory explanation, skip if you don’t care***
Due to both the income effect, and substitution effect, it would have the same effect as giving everyone a raise, and would increase aggregate demand for every other good or service within the economy. Increasing aggregate demand would increase the equilibrium output point and put people back to work.

***Attempt to quantify, skip if you don’t care***

• Total US annual housing expenses: $2.06 Trillion as of April 2009.
• Savings from a 10% reduction (Case Shiller expects another 10-20% absent intervention): $206B/year.
• Conventionally agreed on multiplier for new (exogenous) spending: 1.5.
• Total increase in GDP (new spending x multiplier): $309B/year, or 2% of GDP.
• According to Okun’s law: A 2% increase in GDP will drop unemployment by 1%.
• Total US labor force is 153M, so a 1% drop in unemployment puts 1.5M people back to work.

Allowing prices to collapse would have a negative impact on the wealth effect.  However, the observed wealth effect from housing is no more than 5%, and keep in mind that is a one time 5%, not an annual recurring 5%.  Given a current housing stock value of $14T, a 10% reduction would have a one time $70B hit to spending/aggregate demand via the wealth effect.

It should also be noted that such a free market policy would result in most banks failing, but by transferring FDIC insured assets and liabilities to new banks and then adjusting reserve requirements to account for loan destruction, there would be virtually no cost to society outside the sphere of the failed banker.  Letting banks fail under a transfer and adjust strategy, is functionally no different than firing your financial planner.

August 19, 2010

Corporatism now official in mortgage market

Corporatism: the collusion of big business with big government to crush the little guy.

Big bank execs met this Tuesday to discus the future of the American mortgage market. The overall consensus: Government needs to keep propping it up. No belief in free markets here. Central planning is fine by us as long as we get to keep our record banker bonuses.

Some of the panelist statements were definitely in the “you’ve got to be kidding me category.” For example, Wells Fargo’s CEO saying government needs to continue to guarantee against widespread loss from loan defaults. Excuse me, but just what exactly are you getting paid for? Making risk-free government backed loans? No risk = no reward = no pay for you. If your only function is administrative, and you bear no risk, you get paid as an administrator, not a banker.

Another great logical inconsistency was when another executive began her monologue by voicing concern for the 20% of US households who spend more than half their income on housing, but who then went on to say that the government needs to keep propping up housing prices. Am I the only one being beaten over the head by the irony and hypocrisy of her statement? “Housing is too expensive….We can’t let housing prices fall!”

The truth is that if government pulled their guarantee, the mortgage market would dry up like the Sahara. This would send housing prices into freefall. While that would be good for anyone who is struggling to pay for housing and would be good for the economy as a whole (topic of tomorrow’s blog), it would also bankrupt many banks. Given that banks own many politicians, this is politically unacceptable, and we are left with policy specifically designed to artificially drive up or prop up the price of most American’s #1 expense: the place they call home.

August 17, 2010

Government closes 7-year-old’s lemonade stand

Portland, Oregon: County health inspectors shutdown a 7 year old’s lemonade stand for failure to obtain a $120/day temporary license.

“Inspectors told Julie Murphy and her mother, Maria Fife, to stop selling lemonade at the monthly Last Thursday arts festival in Northeast Portland last week. State law technically requires that even lemonade stands have temporary restaurant licenses, which cost $120 for one day.”

Sure thing. That makes sense to me. You wouldn’t want people getting sick or anything. How’s that for a lesson on the American free enterprise system?

August 16, 2010

Republican who ran against Ruppersberger gives him $1000. WHY?

Helen Bentley, who was in Congress from 1985-1995 and who ran against but lost to Dutch Ruppersberger in 2002, just donated $1000 to her former opponent.

The question: WHY?

The Answer: Dutch Ruppersberger just sold a $5M earmark. Think Rod Blagojevich. Ruppersberger, who has gone on record multiple times as being a supporter of earmarks, accepted the $1000 from Bentley who is now a lobbyist for Smith Detection, a defense contractor. This Edgewood, MD, firm has spent $1.8M on lobbying expenses this year. When your lobbying costs are 40% of your project revenue, you have to mark your prices up to cover it. “But just think of all the jobs it probably brought to the area” will be the defense. Jobs provided with stolen money are not a benefit to the country as a whole.

Who wins? Lobbyists like Helen Bentley, politicians like Dutch Ruppersberger, and the predatory businesses like Smith Detection who are in bed with them.

Who loses? Everyone else.

August 12, 2010

Deconstructing Dutch Ruppersberger’s dogma

Dutch Ruppersberger continues to show his central planner, statist ideology in his blog today to justify his support of the teacher bailout. I'll quote excerpts and then fill in missing info and point out the central planner tendencies. I will keep this up throughout the campaign for as long as he or whoever is writing for him keeps writing.

the bottom line is that this legislation provides state aid that will create and save nearly 320,000 jobs for teachers, police officers, firefighters and nurses

Is the employment level of state and local level services the concern of the central government? Given that half of all who are employed in education are not even teachers, isn’t it best for state and local governments to sort out their priorities? In simple terms, there is no free lunch. You cannot give to one party without taking from another.

In this tough economy, creating and preserving jobs is my number one priority.

If this truly were his #1 priority, he would advocate real middle-class and small business payroll tax relief as well as small business regulatory relief.

This bill … will be completely paid for by closing tax loopholes … and cutting spending elsewhere.

“Cutting spending elsewhere” means cutting food stamps. In this new economy where corporatism prevails over capitalism, 40 million Americans are on food stamps.

Economists agree that extending this emergency aid is the most immediate and cost-effective thing Congress can do to stimulate the economy. In fact, research shows that every $1 spent on unemployment benefits generates more than $1.60 in new economic growth

When it comes to policy matters, economists agree on virtually nothing; that’s his first lie. His $1.60 magically being created from $1.00 is NOT BASED ON RESEARCH. It is based on Keynesian theory that one man published and that others with pre-conceived dogmatic notions then re-published. ACTUAL RESEARCH by Harvard Economist Robert Barro has shown that government “stimulus” and aid spending actually has a NEGATIVE EFFECT ON GROWTH, specifically 0.6-.8 for every dollar spent, or a loss of 20-40 cents on the dollar.

August 12, 2010

Ruppersberger plays Hungry Hungry Hippos

The entrenched incumbent who voted for the bank bailouts has started using the Baltimore Sun blogs, and his first post shows that he sees his job in Congress is bringing home as much bacon as possible. Essentially, he sees it as a “race to feed your face” with as much federal tax money as possible. A video of Dutch Ruppersberger at a Chamber of Commerce luncheon also shows this; the good stuff starts at minute marker 3:30.

What is the role of a Congressman? Is it to fight the other pigs at the government trough to bring home as much bacon as possible? Or is it to fight to build a system that will result in more broad based prosperity for all? To fight for such causes as:

• REAL small business payroll tax relief
• REAL middle-class payroll tax relief
• Being HONEST about the budget and saying that entitlement and defense spending must be cut
• An HONEST banking system
• Ending the bank bailouts

August 10, 2010

Fed to print money again: the Japan deflation lie

1990s Japan is probably the most misunderstood and misrepresented economic case study in history. The ruling class would like us to believe that the deflation experienced in Japan was a horrific experience that the US needs to avoid at all costs. The truth is that, by any measure aside from their stock market, the deflationary 1990s were a GREAT decade for Japan. Specifically, GDP per capita in current dollars increased by 50% from 1990-2000, while unemployment never cracked 5%. Full employment, falling prices, and you can buy more with your paycheck year over year; where’s the problem? The problem for the ruling class is that the Japanese stock market’s broad index value fell by 50%, but therein lies my main point: Deflation favors those who work for their money and disfavors those whose money works for them, a big reason why modern day, mainstream econodemia is attempting to brainwash us that deflation should be fought at all costs.

I make this point today because our Federal Reserve Board is currently debating new steps to take to avoid deflation. These steps all fall under the broad category of printing money. It doesn’t take a PhD in economics to see that when one party loses his money through a risky bet, replacing his lost money with newly printed money helps no one but the privileged and politically powerful recipient, and it hurts everyone else, even if the total supply of money remains constant. The reason is that, in the absence of gifting this new money to fat-cat bankers, the rest of us would enjoy increased purchasing power of the dollars we hold.

August 9, 2010

How to fix the economy and jobs:
Reject both the Dem and Rep plans

Friday’s jobs report showed a 9.5% unemployment rate with no end in sight. We’ve been floating around 10% for over a year now. The worst part about it is that, in broad terms, we have thus far been presented with only 2 choices:

The Democrat plan: Spend money we don’t have

The Republican plan: Cut taxes on the rich and the big corporations

Here's the Josh Dowlut plan:
Cut taxes on the middle class and small businesses and acknowledge that we must cut the sacred cows of entitlement and defense spending if we are to avoid a disastrous insolvency scenario.

Specifically, there is an invisible 7.5% tax on our wages that few are aware of because it is the responsibility of your employer to pay it. However, it is widely agreed that if it were not for this tax, our wages would be higher. In other words, workers ultimately pay this tax. We could exempt small businesses from complying with this tax, and that would lead to an increase in wages for workers and a decrease in wage costs for employers. This would grow the economy 4 ways:

1. Workers would have more money in their paychecks to spend or save and invest
2. With lower payroll costs, employers could hire more workers
3. The payroll tax is incredibly complex and burdensome to comply with. Therefore, it is a regulatory burden in addition to being a tax burden. It is disproportionately burdensome on small businesses, and it serves as a barrier to entry and a barrier to growth. In the interest of competitive free markets, we must lift this burden from small businesses.
4. A payroll tax cut is the only tax cut that can help a struggling business with no profits. Last year, 3000 businesses in Maryland shut their doors, and a cut to the traditional profits tax wouldn’t have helped them one bit.

August 5, 2010

Capitalism vs. Corporatism

Capitalism: The best and the brightest, and the hardest working and the hungriest rise to the top.

Corporatism: The most powerful and the politically connected stay on top.

August 4, 2010

Primary debate, GOP 2nd District:
Monday August 30th

There will be a Republican primary debate to see who will have the honor of taking on Dutch Ruppersberger in Maryland’s 2nd Congressional District.

Monday, August 30th, 7:00-8:30 PM
Towson Public Library: 320 York Road, Towson, MD

It will be a moderated open forum with questions from the audience and an open time at the end for voters to speak directly, one on one with candidates.

UPDATE: All five candidates for the GOP nomination for Maryland's 2nd District have agreed to be there.

August 3, 2010

Baltimore Sun blog, and facebook page

As a public service, the Baltimore Sun is kindly providing free hosting for candidate blogs. Mine is here: Josh Dowlut's Blog.

And my facebook campaign page is HERE:
Josh Dowlut for Congress, on facebook

August 1, 2010

Moody’s: 'Stuff' to hit the fan as early as 2013

US debt rating downgrade forecast as soon as 2012: America’s looming Greek Tragedy.

Moody’s has run numbers based on Congressional Budget Office (CBO) budget-deficit projections and their own debt-service risk-tolerances that forecast a US Treasuries ratings downgrade sometime between 2013 and 2018. Moody’s considers debt payments to only be AAA-quality up to 18-20% of tax revenue. Under CBO numbers, the Obama budget is scheduled to hit that figure by 2018. Under a more pessimistic assumption that assumes higher interest rates, the hit-the-fan moment happens in 2013. A ratings downgrade would lead to an interest rate spike resulting in potentially unaffordable payments — the Greek tragedy.

Original article from investors.com