Our Populist President

President Obama took his act on the road today, hosting a Town Hall style (read: continuous campaign) event in Ohio. In this carefully managed bit of Kabuki, the President debuted his new Al Gore like populism, this time in the guise of going after the greedy Fatcats on Wall Street--specifically the banks who were "bailed out" by TARP, and who now have the temerity to pay their people bonuses while the rest of us are "hurting".

I like Barack Obama personally--or at least I think I'd like him. What I like about him is his intellect, his wide ranging mind. I disagree mightily with his politics, but I like him. I can tell you though, if he decides that this dip into Huey Long populism is his new schtick, I'll be unrestrained in my attacks. This is beneath him.

The FACTS are that the banks are paying back what was lent them, with interest. The American people are MAKING MONEY off of many of the TARP loans. Go ahead, Mr. President--get Congress to pass special taxes on investment transactions--yeah, that's it. Hit the Fatcats where they live! What was that? You mean the investment firms are likely to raise their fees to pass the tax along to the customer? You mean my 401K might become more expensive to administer because the President wants to screw the Fatcats? Why am I getting screwed? HOPE AND CHANGE!

Republican populism will target big government--Democratic populism will target big business. This is a race to the bottom.

Could Obama Be Losing the Sage of Omaha?

Tigerhawk links to a CNBS Squawkbox segment including an interview with Warren Buffet, talking about the new series of "bank taxes" being proposed by the Obama Administration. Warren's right, of course. What was done in the Fall of 2008 (by the Bush Administration, let us not forget) was done to save THE ECONOMY, not the "banks". The US economy was in free-fall, and the most efficient, most effective way to staunch the bleeding was to provid instant liquidity to the system through the banks. Those banks are now paying back that money WITH INTEREST (as it was intended from the beginning to be--let's also not forget that little fact). Warren's also right that the Obama Administration's tax is wrong--just plain wrong.

So Warren--how's that Faustian bargain feel now?

Some Lefty Views on Soaking the Rich for Healthcare

Greg Mankiw provided us with these two views of left-of-center economists, neither of whom believes soaking the rich is the way to improve healthcare. Wahooligan asked in a post yesterday for this blog to cover the issue of healthcare more meaningfully, and so in an effort to do so, I'll be looking for more information to distribute.

Simply put, soaking the rich to pay for everyone else's healthcare does NOTHING but reinforce the notion that healthcare has no costs (except of course, to those whose taxes are raised). Soaking the rich does nothing to impact THE DEMAND side of healthcare, the side in which defensive medicine and a detachment from the true cost of procedures to the consumer conspire to drive up healthcare costs beyond the rate of inflation.

So if we did raise taxes on the rich to finance universal healthcare, it might ensure more of the uninsured (but not all of them) , but it would do nothing at all to help the lot of everyone else who believes that there is a problem with our healthcare system.

One thing I'd like to put out there for public discussion...I was talking with a friend recently who was talking about the costs of healthcare to him, his wife and three children. I asked him how much it cost him to cover his family, and the answer was in the neighborhood of $800 a month. This was--to him--excessive. So I did a little math in my head and asked him straight up..."dude, you're bitching about paying $2000 a year per person for 1) the piece of mind of knowing that your family won't be financially crippled in the event of a catastrophic health condition and 2) for truly world class healthcare along the way?" This fellow was pulling down somewhere are $120K a year, so what this boiled down to was about a tenth of his annual take home. This is to much to take? Other people should be taxed at a higher rate so that you don't have to put out a tenth of your income for healthcare? And let's not forget--because he's "insured", when his family members do go into the system for some reason, they are very likely to be ridiculously over treated and overtested...something for which he will suffer very little additional financial penalty.

What value did he place on that piece of mind? Clearly not $9600 aggregate dollars....but you see, that's the trouble with insurance. It's an expensive nuisance....until you really need it.

WaPost on Soaking the Rich to Pay for Health Care

The Washington Post came out this morning with an editorial criticizing Congressional Democrats plan to surcharge high earners in order to pay for the President's breathtaking expansion of government control of health care. The key sentence for me:

"Pretending that "the rich" alone can fund government, let alone the kind of activist government that the president and Congress envision, is bad policy any way you look at it. "

That said, the Post simply couldn't completely shake off its left of center biases--witness the tripe from the first paragraph:

"THERE IS a serious case to be made that the U.S. income tax system should become more progressive. The average rate paid by the top 1 percent of households shrank from 33 percent in 1986 to about 23 percent in 2006. At the same time, the share of adjusted gross income claimed by that highest-earning sliver of American society doubled, from 11 percent to 22 percent. So, in principle, higher taxes for the well-heeled could make sense -- as part of a broader rationalization of the unduly complex tax code."

What the Post fails to mention is the significant increase in the share of total income taxes PAID by the top 1% in that time. While their rate may have fallen, their contributions as a part of the total have GREATLY increased.