An interesting artice in the WaPo caught my eye this morning. The headline “LaHood talks of Mileage-Based Tax” made me wonder if they were actually suggesting a tax per mile you drive. As it turns out, they were. But oddly, that’s not the interesting part of the story.

In the interview, he also ruled out raising the gas tax, the primary source of transportation funding…

Revenue from gas taxes is becoming problematic as cash-strapped Americans drive less and buy more fuel-efficient cars, leaving the government with a growing hole in funds to pay for the nation’s aging highway system.

Until recently, the 18.4-cent-a-gallon federal gas tax had been a steady and growing pot of revenue. Over the past half-century, it has paid for the interstate highway system, which has crisscrossed the nation with asphalt, and since 1982, it has been kicking in for transit needs…

The current system also assumes that Americans will drive more every year. And for many years that was true, with miles traveled increasing about 3 percent a year, Basso said. But when gasoline prices hit $4 a gallon last year, people began driving less. According to AAA, Americans drove 107.9 billion fewer miles in 2008 than in 2007.

Apparently, that combined with advances in fuel efficiency have led to declining revenue for transportation projects – an unintended consequence of greening our automobiles.

In what may be the shortest flight ever of a trial balloon, the government immediately shot down the idea of the mileage tax. However, there have already been pilot projects to test the idea.

As an Oregon DOT spokesman said, “[G]as-powered vehicles are going away. When that point comes, how do you collect money for your transportation system if your revenues are based on gasoline?”

Only in the final two paragraphs do they even raise the privacy concerns about this – namely the government tracking the movement of its citizens.

I suspect that the police – now aware of the lengthy record of your travels – would demand access to the data to track the movement of suspects (or “people of interest” or… well, you get it.

It is frightening to think of the implications. But it is interesting to see that while the previous administration wanted to violate our freedom for the purpose of homeland security, this one may do it just for the tax revenue.

There is a lot of chatter on the wires today about the 2001 radio interview in which Barack Obama discussed the Supreme Court’s role in addressing “political and economic justice” and redistribution of wealth. Taken together with his “spread the wealth around” comments to Joe the Plumber, a lot of people are seeing a pattern. Many have begun to suggest that Obama is a closet socialist just waiting to spring a trap on an unsuspecting America.

Well, let’s look at this analytically beginning with an accepted definition of Socialism. For sake of a common source, I’ll use Wikipedia. I’m not a big fan of it for discussions like this, but since the people have collectively “spoken” and regard it is sound, it’s common ground, I guess. It’s definition of socialism includes this:

Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and creates an unequal society. All socialists advocate the creation of an egalitarian society, in which wealth and power are distributed more evenly, although there is considerable disagreement among socialists over how, and to what extent this could be achieved.^[1]

Socialism is not a discrete philosophy of fixed doctrine and program; its branches advocate a degree of social interventionism and economic rationalization, sometimes opposing each other. Another dividing feature of the socialist movement is the split on how a socialist economy should be established between the reformists and the revolutionaries. Some socialists advocate complete nationalization of the means of production, distribution, and exchange; while others advocate state control of capital within the framework of a market economy.

Many people equate socialism with communism and Marxism, but those are really false analogies. Communism is predicated on a classless society with no government. To that extent, what we call communist nations are not actually communist at all. There have been countries that attempted to create a communist state, but most ended up totalitarian regimes. Even China, one of the stalwart adherents to communism, has realized they need to open the door to capitalism more and more.

So what’s the difference between communist/Marxist, and socialist societies? Well, the answer to that is long enough to earn you an advanced degree in most colleges, but let’s define it as a question of two things – revolution and control.

Under Marxist theory, a revolution would be necessary to wrest control of the means of production from the hands of the upper class. That would be followed by a period of control by a type of revolutionary council, and then eventually the abolition of government in favor of the collective. This latter period is where most Marxist states have gone wrong. They get caught up in the fervor of being in power, and end up inviting a revolution.

Socialism, by comparison, doesn’t necessarily require revolution. In fact, many argue that despite the fear of an Obama administration, the US is already well on the road to socialism thanks to the collapse of Wall Street and the intervention of the Bush economic team.

All socialism requires, per the definition above, is either “complete nationalization of the means of production, distribution, and exchange or state control of capital within the framework of a market economy.”

It is in the latter framework that we need to address the question of “Obama’s socialism”. Obama’s team has reiterated, ad nauseum, their claims that Obama is committed to the free market. In response to the 2001 radio interview, his team had this to say.

In the interview, Obama went into extensive detail to explain why the courts should not get into that business of ‘redistributing’ wealth. Obama’s point — and what he called a tragedy — was that legal victories in the civil rights led too many people to rely on the courts to change society for the better.

Actually, that’s not what he said. If you listen to the interview, he said that he could easily develop an argument that the court’s could carry out the task of ordering redistributive policies, but that the administrative overhead would be too great for the courts so such change must come through Congress.

He also, quite specifically, never said he opposed redistributive policies, only that they must originate in legislation, not court doctrine.

So where is Congress on this? Even Nancy Pelosi, a devout liberal, is on the free market bandwagon, right?

We are all believers in the free market — it’s part of our democracy. We know that the free markets create jobs, create capital, and create wealth — that’s very important. But recently, left unregulated and undisciplined and unsupervised, they create chaos.

Well, frankly we don’t know if that’s true because we don’t have a free market. We have a regulated market. “Free markets” by definition, are free of outside influence. All transactions are between buyer and seller. When you introduce even basic constraints – say fraud protection, lemon laws, etc. – you no longer have a free market. Pelosi’s comments seem to indicate that she’s in favor of a regulated market.

So which does Obama favor? A free market or a regulated market? From his statement about the plan for government taking ownership stakes in banks, it appears to be the latter:

[T]he plan appears to extend a broader set of guarantees to banks without requiring any additional regulation, which represents more of the same failed philosophy that got us into this mess.

Ok. So Obama wants government regulation. So what’s wrong with that?

Well, let’s look back at that “widely accepted” definition of Socialism.

[O]thers advocate state control of capital within the framework of a market economy.

We now have government with a sizable ownership interest in banks, insurance, and securities. We’re also heavily involved in an automotive bailout. You can argue the current wave of nationalization started under Bush – which is true – but it’s not like Obama has opposed it.

Further, I suspect we’ll start to see justifications for expanding that reach into energy and telecommunications. The government is encroaching more and more on the people.

While it is not yet the complete nationalization of the means of production, it’s getting a lot closer.

Obama is in support of the government role in banks, wants more regulation (read: control) of the market. His cheerleaders in Congress want the same. He has talked openly of using government power to “spread the wealth” around. He has made coherent arguments that redistributive policies must come from government. (That alone leads me to believe he has spent a good deal of time thinking about it.)

With all that, I ask you, is there honestly anyone alive who can make that claim that the term “socialist” doesn’t apply here?

(Cross posted at The Next Right)

The Washington Times reports on the fuzzy numbers behind Obama’s tax “cut”. WashTimes looks at the rather questionable assertion that you can give a tax cut to people who already pay no taxes. To achieve their goal of “cutting” taxes for 95% of America, it seems Team Obama will simply take $500 or $1000 from some people, and give it to somebody else – no questions asked.

That idea caught the attention of AFP’s Phil Kerpen (a very bright guy):

It’s got to raise alarm bells when you claim you are going to cut taxes for 95 percent of working families when more than 40 percent of them pay no income taxes.

Obama’s folks are justifying this wealth redistribution scheme by suggesting that Social Security taxes paid are now “refundable” through income tax rebates even if no income taxes were paid.

Unlike conservatives who have consistently pointed to the cumulative amount of taxes, the Democrats have suddenly discovered the “total tax burden”. They will use income taxes paid by some to rebate back Social Security taxes paid by others.

How exactly will that work, given that the Social Security trust is broke and about to start paying out far more that it takes in? Well, I suspect we’ll soon see another “soak the rich” campaign removing the social security cap so “the rich” will see dramatic increases in Social Security taxes to make up for the gap created by Obama’s rebates.

If you doubt that, you should read the quote from Obama’s campaign advisor. It may be the scariest thing you’ll ever see in print.

“Senator Obama believes that the tens of millions of families working hard and paying payroll taxes do not think that tax cuts are a form of ‘welfare’ or ‘redistribution’ – they think it is only fair to reward work,” said Jason Furman, the Obama campaign’s chief economic adviser.

You heard that right. Work that results in someone not getting ahead is to be rewarded with money taken from those whose work results in them actually making money (which is apparently work that needs to be punished).

An Obama administration will first absolve a huge segment of taxpayers from any tax responsibility at all, and then shift that obligation to those who create jobs and get ahead. The wealth redistribution schemes the Obama team wants to put in place should scare the bejeezus out of anybody with one ounce of grey matter in their brain case.

(Cross posted at The Next Right)

The Politico today covers the decision by the NRCC to pull funding from Congressional races for good, conservative challengers so they can prop up the campaigns of flailing Republicans.

Under normal circumstances, I would expect the NRCC to behave this way. They are, after all, a campaign organization run by friends and colleagues of those currently serving. They will protect their own first, and build our numbers second.

What makes me uneasy with that now, is the specific names the Politico mentions.

GOP Reps. John B. Shadegg of Arizona, Lee Terry of Nebraska, Henry Brown Jr. of South Carolina and Dan Lungren of California are all fighting for their political lives, a reversal of fortunes that has caught even the most astute campaign observers by surprise.

Frankly, it hasn’t caught me by surprise. All of those listed voted for the $700 billion – or is it $850 billion or $1.5 trillion, I guess it depends on whose scoring it – boondoggle foisted upon the taxpayers. These guys are solidly Republican living in solidly Republican districts, and they’re suddenly at risk of losing their seats just two short weeks after pissing on the taxpayer? Hrrrrmmmm… I wonder why.

What should stand out in particular are the names Shadegg and Terry. They’re among the sellouts who switched from No votes to Yes votes. Apparently they guessed wrong. That vote for political expediency may cost real conservatives – like Bernalillo County Sheriff Darren White, perhaps the best candidate we have running this cycle – a seat. It may guarantee that the one chance we have to hold a seat – any seat – in NM is lost.

It is unfortunate that the NRCC feels it’s better to protect weak Republicans than to elect strong ones.

Well I won’t be supporting the NRCC until we see a new Chairman – one who is willing to support good candidates, not just good friends.

Let’s be clear about one thing. The economic disaster we find ourselves in is not entirely the making of Wall Street. For the Democrats in the audience, it is not entirely the fault of Republicans. For the Republicans in the audience, this is not entirely the fault of Democrats. This is, to put it plainly, the net result of the perfect storm of stupidity.

If you have ever read The Perfect Storm, there is a great explanation of the three weather phenomenon that came together to create the system that is the focus of the book. The movie glosses over the explanation, so read the book instead.

What we are witnessing this week is the same interaction of three deadly factors. Any one of the three would be destructive. In total, however, they have just cost you and I a trillion dollars. And don’t for a moment think the total will end there. Mark my words, this bailout has only begun to cost us.

The Three Factors

Under a Republican congress and Democratic President, Washington expanded a Carter era relic called the Community Reinvestment Act.

The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.

In other words, banks will make loans for houses to people who are ill-equipped to pay them back. The “encouragement” came in the form of penalties for not doing so.

Add to that another bill passed by a GOP controlled Congress with a Democratic President. That bill, the Gramm-Leach-Bliley Act sought to:

Enhance competition in the financial services industry by providing a prudential framework for the affiliation of banks, securities firms, insurance companies, and other financial service providers, and for other purposes.

In other words, prior to the law, Insurance companies could sell insurance, banks could do loans, securities firms sold stock, and never the three should meet. After the law, it was a free for all. Banks created securities out of the shitty loans they issued under the CRA, Insurance companies under wrote those while creating their own shitty securities, etc, etc.

Now into the mix you have to throw the American people. They look at the news and see home values going through the roof. The react the same way they did during the Beanie Baby craze. They rush out to get a piece of that action. They can buy a $5 stuffed animal and sell it for $300 on eBay, so they buy the hell out of Beanie Babies.

Unfortunately, economic laws will only support that for so long. The company will make more (thereby reducing demand for the things), people will lose interest, or some other force will enter the market and suddenly your left with crates full of stuffed animals rotting in closets. Beanie Babies were an artificial market.

In the same way, people saw home ownership as a great way to make money. Home flipping became the rage, people took out second mortgages to buy second homes, and suddenly everyone had to buy a house.

The Perfect Storm

The trouble is when you have people who can’t afford to buy houses meeting up with people who have to sell houses to keep from running afoul of laws designed to promote home ownership among the poor, you wind up with a) a guy who will lie about his income or b) a guy who will lie about the value of the house or the terms of the loan.

So suddenly a lot of people are invested in houses they can barely afford anyway, and the real terms of those notes go into effect. People can’t pay, so the value of that note becomes worthless.

Since you have built shitty securities on the value of that house, the value of those securities go into the toilet. When that happens, the debt that the mortgage company is carrying becomes unsustainable and the house of cards comes tumbling down.

This is exactly what we’re witnessing. We’re seeing exactly what happens when an artificial market comes tumbling down. There never was a market for housing for people who can’t afford it. The government created one, took their eyes of the guys who were managing it, and is now asking us to throw another deck on the house of cards so people who can’t afford to borrow can keep doing so.

DC is Fundamentally Broken

I have said that Washington DC is so fundamentally broken it is going to drag the rest of the country down with it. I am more convinced of that than ever today.

With this bailout, we’re solving nothing. We’re simply allowing people who shouldn’t have credit to keep on borrowing. We’re enabling addictive behavior. The Congressmen who voted for the bailout should be tried as traitors.

Despite all of that, I was forced to watch to politicians on TV last night both of whom blamed “the greed and corruption of Wall Street” for the mess while giving a pass to the incompetence and stupidity of Washington. Make no mistake. This dismal situation was the result of horrible policy that started with, and was supposed to be overseen by, Congress. They passed the laws that allowed this to happen and ARE TAKING ABSOLUTELY NO RESPONSIBILITY for the mess they created.

What’s worse, is both candidates for President, and both candidates for Vice President, appear to have learned absolutely nothing from watching this happen and are pursuing the same ridculous policies that have crippled our nation.

I believe you can absolutely count on two things.

First, when the next Administration is about 6 months or a year into its term, they will have to deal with an economic disaster of Biblical proportions. This is a band-aid fix for a missing leg. It’s stupid and will do nothing but punt the problem into an off-year when the sheep aren’t watching.

Second, if you think we dodged a bullet with this bill today, you haven’t seen anything yet.