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Sometimes politicians, journalists and the liberal left exclaim; “It’s just a tax cut for the rich!” and it is just accepted to be fact.

But what does that really mean?

Just in case you are not completely clear on this issue, I hope the following will help. Please read it carefully.

Let’s put tax cuts in terms everyone can understand.

Suppose that every day, ten men go out for dinner and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

a. The first four men (the poorest) would pay nothing.
b. The fifth would pay $1
c. The sixth would pay $3
d. The seventh would pay $7
e. The eighth would pay $12
f.  The ninth would pay $18
g. The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” Dinner for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still eat for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share?”

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to eat their meal.

So, the restaurant owner suggested:
a. The fifth man, like the first four, now paid nothing (100% savings).
b. The sixth now paid $2 instead of $3 (33% savings).
c. The seventh now paid $5 instead of $7 (28% savings).
d. The eighth now paid $9 instead of $12 (25% savings).
e. The ninth now paid $14 instead of $18 (22% savings).
f. The tenth now paid $49 instead of $59  (16% savings… the least proportionate savings).

Each of the six was better off than before.  The first four continued to eat for free, but once outside the restaurant, the men began to compare their savings:

“I only got a dollar out of the $20,”  declared the sixth man. He pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The first nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works.   The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start eating overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D
Professor of Economics
University of Georgia

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A “Sound” Economy?

by Thomas Sowell

(reposted from here.)

“The truest thing that Senator John McCain said during this election campaign is what got him into the most trouble: “The economy is sound.”

“Sound” does not mean bullet-proof. Nor does it mean that everything is going wonderfully at the moment or that nothing needs to be done.

You may be as sick as a dog from having eaten the wrong thing. But that does not mean that you need to have your arm amputated or to receive massive doses of morphine. In other words, your body may be perfectly sound– and radical medical treatment can do more lasting damage than your temporary suffering will.

The political left has always known how to exploit temporary economic problems to create lasting institutions reflecting their ideology. The “progressives” did that during the brief time that America was involved in the First World War, less than a year and a half.

In that brief time, they clamped on all kinds of economic controls and even restrictions on free speech that led to landmark Supreme Court cases.

When the Great Depression of the 1930s brought many of those same “progressives” back to power, led by one of the “progressives” from Woodrow Wilson’s administration, Franklin D. Roosevelt, they brought the same mindset to government again, calling themselves “liberals,” now that the label “progressives” had been discredited by their previous actions.

By the end of the 20th century, “liberals” had again discredited themselves, to the point where they went back to calling themselves “progressives” to escape their past, much as people do when they declare bankruptcy.

Wars, economic crises and other disruptions all provide opportunities for the left to seize on current problems to create enduring changes in the institutions of society. That is what we are witnessing today.

The media have hyped current economic problems to the point where you might think we were heading for a replay of the Great Depression of the 1930s. They have been dying to use the word “recession” but there is a clear definition of recession– two consecutive quarters of negative growth– and we have yet to reach that.

If the meaning of words can be changed to suit political convenience, then discussions become an exercise in futility.

Official data show that the output of the economy in the most recent quarter is down– by less than one-half of one percent– but at last the media have one of those two quarters required to qualify as a recession.

Whether they will get the other quarter that they need, in order to start using the word “recession” legitimately, is another story. In fact, the data-gathering process is by no means so precise that we can expect the one-half of one percent decline to hold up, since such statistics often get revised later.

It is not just a question of being able to put scare headlines on newspapers or alarmist rhetoric on television. Such things are just the prelude to massive political “change” in fundamentally sound institutions that have for more than two centuries made the American economy the envy of most of the world.

If the left succeeds, it will be like amputating your arm because of a stomach ache.

To add to the painful irony, many of those who are most eager to have a massive government intrusion into the market are among those whose previous intrusions into the market are largely responsible for the current financial crisis.

It was the left– the “liberals” or “progressives”– who led the charge to force lending institutions to lend to people whose credit history made them eligible only for “subprime” loans that were risky for both borrowers and lenders.

It started way back in the Carter administration, with the Community Reinvestment Act, and gained momentum over the years with legal threats from Attorney General Janet Reno and thuggery from ACORN, all to force lenders to lend where third parties wanted them to lend. Now we have a bad stomach ache– and now the left wants to start amputating the market.”

– reposted by Julian

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While walking down the street one day a US senator is tragically hit by a truck and dies.

His soul arrives in heaven and is met by St. Peter at the entrance.

‘Welcome to heaven,’ says St. Peter. ‘Before you settle in, it seems there is a problem . We seldom see a high official around these parts, you see, so we’re not sure what to do with you.’

‘No problem, just let me in,’ says the senator.

‘Well, I’d like to, but I have orders from higher up. What we’ll do is have you spend one day in hell and one in heaven. Then you can choose where to spend eternity.’

‘Really, I’ve made up my mind. I want to be in heaven, ‘ says the senator.

‘I’m sorry, but we have our rules.’

And with that, St. Peter escorts him to the elevator and he goes down, down, down to hell. The doors open and he finds himself in the middle of a green golf course. In the distance is a clubhouse and standing in front of it are all his friends and other politicians who had worked with him.

Everyone is very happy and in evening dress. They run to greet him, shake his hand, and reminisce about the good times they had while getting rich at the expense of the people.

They play a friendly game of golf and then dine on lobster, caviar and champagne.

Also present is the devil, who really is a very friendly guy who has a good time dancing and telling jokes. They are having such a good time that before he realizes it, it is time to go.

Everyone gives him a hearty farewell and waves while the elevator rises .

The elevator goes up, up, up and the door reopens on heaven where St. Peter is waiting for him.

‘Now it’s time to visit heaven.’

So, 24 hours pass with the senator joining a group of contented souls moving from cloud to cloud, playing the harp and singing. They have a good time and, before he realizes it, the 24 hours have gone by and St. Peter returns.

‘Well, then, you’ve spent a day in hell and another in heaven. Now choose your eternity.’

The senator reflects for a minute, then answers: ‘Well, I would never have said it before, I mean heaven has been delightful, but I think I would be better off in hell.’

So St. Peter escorts him to the elevator and he goes down, down, down to hell.

Now the doors of the elevator open and he’s in the middle of a barren land covered with waste and garbage.

He sees all his friends, dressed in rags, picking up the trash and putting it in black bags as more trash falls from above…

The devil comes over to him and puts his arm around his shoulder. ‘I don’t understand,’ stammers the senator. ‘Yesterday I was here and there was a golf course and clubhouse , and we ate lobster and caviar, drank champagne, and danced and had a great time. Now there’s just a wasteland full of garbage and my friends look miserable. What happened?’

The devil looks at him, smiles and says “Yesterday we were campaigning. Today you voted.”

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As the election approaches there is certainly no shortage of issues to distinguish the candidates, however one area which gets an unfortunately small amount of attention is the future President’s potential appointees to the federal courts.

Front and center to a President’s nominee selection process rests on the question of judicial philosophy. McCain has said he will appoint “strict constructionists” who would follow in the Antonin Scalia and Clarence Thomas mold. These judges attempt to interpret the Constitution in accord with its original meaning and context. The argument for this constitutional reading is that if we in fact live in a democracy only democratically elected officials can change our laws.

By contrast Obama has stated he would appoint judges like Steven Breyer and Ruth Bader Ginsberg, who can be described as adherents to the “Active Liberty” interpretation of the Constitution. Under this view Judges take it upon themselves to go beyond the original intent of the Constitution. This view point supported cases such as Roe v. Wade, and Miranda v. Arizona. The argument in favor of this review standard is that courts require the authority to override democratic rule in the areas deemed important by the Court, even though not addressed explicitly by the Constitution.

Here are links from the dueling view points, Justices Scalia and Breyer over the question of judicial philosophy

As you think about how the Constitution should be interpreted, consider the following cases:

Boumediene v. Bush, 5-4 decision addressing the War on Terror: The Court ruled that alleged terrorists have a Constitutional right of access to domestic courts. This ruling overrode the Congresses’ specific denial of domestic court access to alleged terrorists. In my own research and reading of the opinion I have not found one prior instance in this nation’s history where warring alien enemies of this nation had access to our domestic courts.

Kennedy v. Louisiana, 5-4 decision addressing the Death penalty. The Court ruled that child rape did not qualify as a crime warranting the death penalty under the “evolving standard of decency”. This opinion overrode Louisiana’s democratic decision to permit the execution of a child rapist and the history of the American death penalty which allowed State to execute far far less horrid offenses.

Gonzales v. Carhart, 5-4 decision addressing the ban of a particular partial birth abortion ban. The Court upheld a state law prohibiting a particular form of partial birth abortion. The ruling affirmed the right of state’s to democratically pass laws on the termination of late term fetal life

Kelo v. City of New London, 5-4 decision addressing the reach of Eminent Domain. In this opinion the Court ruled that the Takings Clause permitted government’s to seize homes and other forms of private property for any “public purpose” despite the 5th Amendment’s much more restrictive language.

– Ignacio

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Senator McCain’s selection of Sarah Palin has brought this election to a time for choosing. The candidates finally squared and centered in the politically arena, I am more than content stand with the McCain/Palin ticket, which provides a man and woman of action rather than hollow words.

To appreciate the selection of Palin at its core, we have only to open our eyes fully at Senator McCain. McCain, much to my chagrin, is and has always been a maverick, breaking with the party, and sometimes conservative principles, to serve his understanding of America’s best interest. The campaign finance reform and the immigration debates should have taught us all that McCain is interested in serving his understood vision of the greater good, whatever the political risk. In keeping with this spirit McCain has selected an individual who is not of Washington, not even by train. He has selected a person whose zeal and competence have shown like diamonds in the rough. Sarah Palin’s gender is of significance only to the women who will grow to admirer her, yet it is her fierce commitment to the soul of the conservative movement that will make her an outstanding Commander and Chief in waiting.

For months I have followed Governor Palin, intrigued by her willingness to grab government by the nose and force it to work. Whether standing up to Republican Senator Ted Stevens’ bridge to nowhere or her zealous advocacy for American energy independence, Palin has tackled the issues that trouble our party and challenge our nation. The Governor has tackled ethics reform and public corruption in the spirit of the old saying, Let Justice be Done Through the Heavens Fall. She has neither bent to power or party, committed to the cause of public service no matter the consequence. This is the leader McCain has aspired to be, Country First, no matter the cost.

Further, it should be comforting that at least one party will have a member of their ticket who has served as a government executive. Sarah Palin’s time as a Mayor and Governor make her the lone candidate on ether ticket who has enforced the laws passed by legislators, upheld a budget and been charged with crisis management. It is amazing that following Katrina and disasters of her sort that anyone would think this nation could go without a strong executive minded leader at the helm of our government. As an admirer of the Great State of Alaska, I have come to know that the north country is challenged by a climate that is harsh and unforgiving. Calamity is a daily occurrence on the North Slope, making Alaska a unique training ground by fire. No other candidate, on either ticket, knows the weight of managing a crisis. As a nation we are lucky to have a steady and experienced hand at helm should we meet rough seas.

On Domestic issues the Alaskan Governor has also proved to be McCain’s kindred spirit on issues of taxation and budget control. The sad reality is the Republican party has come off its ideological moorings on issues of spending. To lead the nation, our party must realize our cause is to control spending not race the Democrats to the trough of waste. Sarah Palin has led the revival of the Republican spirit in Alaska, and has the credentials to do so for our national party. McCain has not picked the oldest, most experienced, most en vogue running mate, he has selected the best bearer of his ideals.

On issues of State, Sarah Palin also provides our nation with an executive who has shared an international border with one sovereign nation in Canada, and abutting the Bering Sea with Russia. Any person with an inch of depth in geopolitical history will know that U.S. Russian relations on the Bering Sea have never been easy. Russian and Canada’s stance on the Law of Sea Convention put Alaska in the crossfire of an intense debate over sovereignty disputes between three nations, all with undertones related to resource exploitation and sea passage. An executive who has been able to navigate these issues without incident is more than qualified to aspire to the Vice-Presidency.

This election the American people will come to a time for choosing. On one end of the ballot John McCain and Sarah Palin will stand with careers of work and accomplishment. On the other side Barack Obama and Joe Biden will have careers of words. As a nation who values “walk over talk” I am confident the American people will choose Country First and elect the McCain/Palin team to lead our people.

~ Ignacio

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