Hypocrisy 1

We delight in the fact that capitalism provides opportunity for anyone to become rich. We applaud those clever/industrious/lucky  people who have achieved great wealth in our  (comparatively) free society. We feel energized and encouraged by the happy spectacle of “conspicuous consumption” that some visible billionaires display with their mansions, their yachts, their jets, their football teams … For we see them as the living proof to us all that it is perfectly possible to become “filthy rich”. If they can do it, maybe we can to. They’re a spur to noble effort.

We are therefore bewildered by the cognitive dissonance of those self-made billionaires who vote Democratic. For instance, those who have made their fortunes in Silicon Valley by their marvelous inventions precisely because they were able to take advantage of circumstances – freedom, leisure, investment – which capitalism alone can provide. Do they not realize that to vote for Obama and the Democratic Party is to vote for socialism? Do they not know that socialism is a killer of private enterprise? That collectivism puts an end to innovation? We cannot suppose them to be so mean-spirited that, having made their own fortunes, they want to prevent others following in their footsteps. We’d rather conclude that very clever people can be very stupid about things outside their expertise.

The Democrats of course notoriously pour scorn on “the 1%” and long to make them poorer and ashamed of themselves. So a question arises: How come the extremely wealthy political elite of the Left are not ashamed of their hypocrisy?

This is from PJ Media, by Victor Davis Hanson:

I confess I never admired John Edwards …  I didn’t think much of Al Gore or John Kerry …  I was not surprised when Susan Rice just disclosed that she is worth considerably over $30 million — and has money in Keystone no less. Are they all part of the “one percent”? Did they pay “their fair share”? Do they “spread the wealth”? At what point in his life did Al Gore know that he had made enough money (before barreling ahead and making more)?

Why do a Timmy Geithner and John Kerry preach about raising taxes while trying their best … to avoid them? I remember the Clintons seeking write-offs for the donation of their underwear, Tom Daschle not counting limo service as income, and Hilda Solis with a lien on her husband’s property. Why wouldn’t the above pay too much rather than too little? If Barack Obama did not get free government everything … would he still preach that guys like him need their taxes raised?

Of course, I accept without much worry that government service can lead to the contacts that lead to big money. Dick Cheney and Don Rumsfeld made millions in the private sector in between D.C. jobs. I grant too that old-boy networking is lucrative. George W. Bush’s Texas Rangers small fortune came from having powerful friends in the right places. No doubt Colin Powell and Bill Clinton are multimillionaires. Bravo to them both.

And Cheney, Rumsfeld and Bush are not of the Party that pretends to despise the rich. Democrats who are keen on redistributing wealth should start by redistributing their own.

What we cannot stomach is all the sermonizing about “fair share” and “play by the rules” and “the one percent” from those who seek to be exempt from their own rhetoric. Can’t Warren Buffett keep quiet and just leave his $50 billion to his heirs — and let the wonderful federal government do what it must with a $30 billion estate tax on his earnings? … His estate will dodge more tax liabilities than what millions of his proverbial overtaxed secretaries pay. Why isn’t George Soros one of the despised money speculators of the sort that Occupy Wall Street was enraged about? … So weird what constitutes good and bad riches!

I guess the rub is not big or small money, or what you must do to get it and keep it. No, the lesson instead is what you say when you get it. If I were to advise a young rich man, I would promote entering politics or the media and talking up the liberal redistributionist state, the model being a sort of Chris Matthews, Katie Couric, Nancy Pelosi, Jon Corzine, or Jay Rockefeller.

If you know what to say against the rich –

You may meet and marry a rich person …  all sorts of doors will open that allow you to keep and compound what you garner — and you will feel wonderful in the bargain.

And Larry Elder writes at Townhall:

Ah, the hypocrisy of tax-hikers who do everything they can to avoid the taxes they wish to impose on others.

Sen. John Kerry  tried to avoid $500K in his home state’s sales and excise taxes by docking his newly purchased $7 million 76-foot yacht in Rhode Island.

Massachusetts lowered its state income tax in 2001. Given the presumably large number of rich people who pine to pay more taxes, the state allowed tax filers to check a box and voluntarily pay the old, higher rate. In a liberal state of over 3 million tax filers, how many volunteered to pay the higher rate in 2004? A tiny fraction of 1 percent — 930 taxpayers.

We’re astounded that there were any. To the well-known statement, “tax payers are entitled to arrange their affairs to attract the least taxation”, the retort must be, “what sort of fool would  arrange his affairs to attract the most taxation?”

Among those who refused to pay the higher rate? Sen. Kerry and Rep. Barney Frank. …

John Edwards, former senator and Democratic presidential candidate: His wife, Elizabeth, once called him a person of “character” because Edwards voted against his own economic “interests” by voting for higher taxes. Well, OK, but like billionaire investor Warren Buffett, who urges higher taxes, Edwards is less than keen on paying them. As a lawyer winning major jury awards, John set up a subchapter S corporation to pay himself through dividends — and thus avoid $600K in Medicare payroll taxes.

Well, the guy may be nasty – is infamously so! – but he’s not an idiot.

Ted Kennedy and his family shield[ed] their money through a series of complicated family trusts first begun by father Joe Kennedy. The trusts transfer wealth from generation to generation while avoiding estate taxes.

The late Ohio Democratic Sen. Howard Metzenbaum … enjoyed a lifetime rating from Americans for Democratic Action of 95 (100 being perfect) and a zero from the American Conservative Union. He never met a tax hike he did not like. [But] he moved to Florida when he retired from the Senate. Why Florida? No state estate or personal income taxes.

“Civil rights” leader and MSNB-Hee Haw host Al Sharpton: Though he supports increasing taxes on the rich, Sharpton, it seems, fails to do his part as a member of the 1 percent. As of last year, according to the New York Post, Sharpton owed $3.5 million in state and federal income taxes. His nonprofit, the National Action Network, as of 2011 owes nearly $900K in unpaid federal payroll taxes.

What do these individual instances of hypocrisy say about whether taxes should be increased on the so-called rich? …

The Congressional Budget Office just issued a report on what would happen to the economy if Congress fails to retain the Bush-era tax rates. Keeping the Bush-era rates for all but the rich, the CBO says, adds 1.25 percentage points to GDP. Retaining tax rates for all, including the rich, however, adds 1.5 percent to the economy. In other words, raising taxes on the rich lowers economic output.

Obama cannot really believe that making the rich pay more will help the economy out of recession. Even he knows it won’t. His reason is ideological. He is a communist by breeding and instinct, which is to say an egalitarian, a leveler. He must inform his voting fans, both rich and poor, that he is against the rich in principle. He knows that just so long as he talks that way, it’s okay for him to be rich himself. Okay to be a hypocrite.

Obama and the Seven Dorks 0

Posted under Commentary, Humor, United States by Jillian Becker on Sunday, August 8, 2010

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Fannie and Freddie: the dirty dance goes on 0

Lending to borrowers who could not afford to buy homes was the root cause of the economic collapse which has plunged America into debt for generations to come.

Lending to borrowers who cannot afford to buy homes continues as before under the Obama administration.

Leading the dance of corruption is Fannie Mae and Freddie Mac.

The lords of the dance are Barney Frank and Chris Dodd.

The leader of the band is Pay Czar Kenneth Feinberg.

Obama calls the tune.

Today at Townhall, Bruce Bialosky writes this about it:

[Fannie Mae and Freddie Mac], which together own or guarantee over one half of home mortgages, and which had previously been injected with a $111 billion bailout, received an unexpected Christmas present from the Obama Administration: an executive order, issued in the dark of the night … The Treasury announced they were eliminating the $400 billion limit available to these two entities – in essence giving them license to fritter away as much money as they want while the American people (and their grandchildren) pick up the tab…

The story gets even better. The top executives are in line to receive $6 million compensation packages for 2009. Apparently, the fact that Fannie Mae lost $56.9 billion and Freddie Mac has lost $14.1 billion in the first 9 months of 2009 did not stop the Obama Administration from approving these payments. The Treasury claims that the compensation meets the guidelines set out by Kenneth Feinberg, the Pay Czar; however, it appears that the minimum salaries of $900,000 far exceed the $500,000 limit that Feinberg had previously established.

Compensation of Fannie and Freddie executives has been suspicious for a long time. Typically, executives would be given huge pay packages, and then funnel some of the money back to their favorite politicians to impede the oversight process. Franklin Raines and James A. Johnson, two directors who received enormous sums of money, ran Fannie Mae into the ground only to be rewarded by the Obama Administration until political pressure forced them into private life.

Skepticism abounds as to why the Obama Administration would make such a move when we already have a $289 billion commitment for additional funding to underwrite losses from the twin entities. Treasury Secretary Geithner claimed that they just wanted to stabilize the mortgage market, but, if this was of such great importance and urgency, why was it done so secretively?

What seems to be missing is major reform of the lending practices. There’s no evidence that they’ve become more vigilant in their loan procedures, or more attentive to the credit-worthiness of the borrowers. In fact, it seems pretty clear that they have resumed their lending habits of old.

Proportional fault has never been placed on Fannie Mae and Freddie Mac for the subprime loan crisis.

Because these entities have been protected by Barney Frank in the House and Christopher Dodd in the Senate, the two lenders have escaped the kind of brutal public scrutiny visited upon banks and other lenders. While bankers have been on the hot seat and skewered by late night comedians, the people who run these behemoths have escaped unfazed.

Crippling the economy 0

Here’s more on the subject of how state interference in the economy kills innovation.

From the Wall Street Journal:

Here’s a stumper: In the Treasury financial reform proposal, who comes in for more regulatory retooling: Fannie Mae, or your average 14-man venture capital shop? If you said venture capital, you understand why one of America’s greatest competitive advantages is now at risk in Washington.

 As part of their regulatory redesign, Team Obama and Congress still don’t have a plan for reforming the giant taxpayer-backed institutions like Fannie that caused the credit crisis. Yet they’re moving to rewrite the rules for investing in tiny technology companies that had nothing to do with the meltdown. Under the proposed rules, venture firms will be declared systemic risks until they can prove themselves innocent. The typical venture capital (VC) firm has nine principals plus five support staff and doesn’t use leverage. Yet Treasury Secretary Timothy Geithner wants VCs to be regulated as investment advisers by the Securities and Exchange Commission…

Venture firms were invented in the 1960s to fund the California semiconductor companies that would change the world but needed investors willing and able to take a flying leap into the unknown. Under the Silicon Valley model that has since spread around the country, experienced technology executives at VC firms inject advice and cash into young businesses.

 Neither too big nor too interconnected to get a taxpayer bailout, VCs are nonetheless critical to America’s ability to stage an economic rebound. While early-stage venture investments are tiny by Wall Street standards—often $3 million or less—they are a big part of the reason the United States has for decades grown faster than other industrialized economies. Companies once backed with venture capital now generate more than 20% of U.S. gross domestic product. Looking forward, will America be better off if venture investors are justifying themselves to Washington regulators, or evaluating new software platforms?…

Treasury’s position is that if it doesn’t drag VC firms into the bureaucratic swamp, then high-rolling hedge funds playing with borrowed money will present themselves as venture funds to avoid regulation. Yet any firm calling itself a VC is already subject to the antifraud provisions of federal securities laws. VCs also have to describe the funds they raise in annual Form D filings with the SEC. Washington could let the SEC address any concerns simply by adding three questions to the form: Do you use leverage? Do you trade equities or debt? Do you trade derivatives? Anyone answering “no” to all three would be free to go find the next Microsoft.

 The reality is that the venture industry is already shrinking, for market and political reasons. Too many funds chasing too few ideas after the dot-com boom have limited returns. And thanks in part to earlier VC investments, cheap tech tools are allowing some Web entrepreneurs to bootstrap their businesses without having to sell pieces to VCs.

As for the politics, Sarbanes-Oxley compliance costs, Eliot Spitzer’s stock-analyst settlement and the economic downturn have created an historic drought in venture-backed companies going public. This week Dow Jones VentureWire warned readers not to expect more such companies going public “anytime soon.” It boggles the mind that Washington would enact new policies sure to prolong this drought and strike at the heart of American innovation.

Posted under Commentary, Economics, United States by Jillian Becker on Friday, August 7, 2009

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