Tag: Obama

Micro Topics – 2016 Election – Latest from BHO

George Noga
Capitalism makes our lives better without any plan for doing so; having such a plan however is a guarantee that our lives will become miserable.
Micro Topics – 2016 Election – Latest from BHO
By: George Noga – December 9, 2018

Micro Topics: Give a man a fish and he eats for a day; promise enough men free fish and you win elections. . . . .  Obama famously said “I have a pen”. Trump has an eraser and it is huge. . . . . The family deported together stays together. . . . . In California you go to jail for using a plastic straw, but crossing the border illegally gets you sanctuary and free stuff. . . . . Che Guevara: “I don’t need proof to execute a man; I only need proof it is necessary.”. . . . Capitalism makes our lives better without any plan to do so; having such a plan assures our lives will be miserable. . . . . There is only one everyday product in America that we must wait in long lines to purchase: a postage stamp.

Micro Topics II: Seen recently around a cauldron auditioning for Macbeth: Maxine Waters, Diane Feinstein, Kamala Harris, Nancy Pelosi and Barbara Boxer. California is like the mythical Germanic kingdom where candy grows on trees, lemonade flows in rivers and the fattest, ugliest and stupidest person is king or, in this case, queen . . . . .  “You can observe a lot just by watching.” (Yogi Berra) . . . .  Jubilee soon will be on the progressive agenda; it’s their version of biblical every 50-year debt forgiveness. . . . . If Trump nominated Hillary for SCOTUS, we could have had the FBI investigate her.

Hidden in Plain Sight: What really happened November 8, 2016? Two reporters spent the entire campaign on parts of the old Lincoln Highway in the American heartland. Their new book, What Really Happened, explains Trump’s victory. The book describes Bonnie Smith, from a small Ohio town. Her parents were Democrats; her husband is a Democrat, she was a Democrat and the county she lives in had not voted Republican for as long as anyone remembers. The county (Ashtabula) went for Obama by 55% twice but Trump beat Clinton by 19 points – a swing of 30 points. The same story played out in hundreds of similar communities throughout the area. Trump stumped there 18 times while Hillary was in California raising megabucks from elites.

Bonnie Smith is a mother of three who worked long and hard to save enough money to open a donut shop. She gets up at 1:30 AM to begin making donuts by 2:30 AM. Following are her words: “I am not sure what happened, but I started to look around my town and country and I was just not in the mood anymore to show up and vote for who my party tells me to vote for. I am kind of like that voter that was hiding in plain sight that no one saw coming. I was right there all along. I’ve seen the job losses here, the rise in crime, the meth and heroin problem, society losing hope and something just gave in with me.” Bonnie’s story speaks for many millions of other Americans.

Barack’s Baaaack: Obama now claims credit for the roaring economy. This from the same person who said, “Two percent growth is the new normal and we should get used to it.” Now, BHO and his acolytes put forth a metaphor of a lid screwed tightly onto a container. They assert BHO exerted superhuman efforts to loosen the lid such that once Trump took over, the lid (presumably holding back the economy) was easily removed and, voila, boom times followed – all due to Barack Obama loosening the lid.

For his entire eight years, BHO did all he could to tighten the lid on the economy, all the while preaching his little sermons whose subtext always was how smart he was and how his opponents were dim-witted, Neanderthal racists. I don’t believe Bonnie Smith and the other good folks in Ashtabula County, Ohio buy into Obama’s metaphor.

Our next post, about the four gifts of Christmas, is the last for this year. 

Ultra Short Medley of Pithy Tidbits

George Noga
A collection of ultra short but pithy nuggets from MLLG’s treasury
Ultra Short Medley of Pithy Tidbits
By: George Noga – August 13, 2017
      This summer I am experimenting with different formats. This post presents several ultra short, but blog-worthy, tidbits that have accumulated over the past year.
Dakota Access Pipeline now open Environmental protesters left 250 truckloads of detritus spread over 50 acres. The army cleaned up the toxic sludge before it flowed into Lake Oahe, the same lake protesters said would be polluted by the pipeline. This is not just a one off story; liberal protesters never clean up after themselves.
Who’s your progenitor? In Spain, birth certificates no longer use mother or father; instead they use “progenitor A” and “progenitor B“. Marriage licenses list “spouse 1” and “spouse 2“. Chimps, apes and orangutans have been granted full human rights.
The Chavez Diet is a sure way to lose weight. Just move to Venezuela and eat all the food you can scavenge. Last year 80% of Venezuelans lost at least 20 pounds. If you go, be sure to bring your own toilet paper to this socialist workers’ paradise.
When is climate change global warming? Progressives prefer climate change; but when summer rolls around, they revert to global warming. Canny, these liberals!
Obamacare for dummies To insure the uninsured, Obamacare first must uninsure the insured and then mandate they become reinsured at higher cost. The extra premium they pay is for the original uninsured now to become insured at far below cost.
Liberal Dogma: You can kill the golden goose but continue to get golden eggs.
The difference a day makes Young lovers born a day apart break no law until the day one of them turns 18. For that one day only, sex can be rape. The next day, when both are 18, everything is again legal. Teenagers have been prosecuted for this. Government has rendered the sex offender registry meaningless because of such lunacy.
Latest liberal food paranoia Celiac disease, a serious reaction to gluten, affects 1% of Americans although only 100,000 have been diagnosed. Nonetheless, 110 million progressives avoid gluten – equal to 1,100 for each person diagnosed. To make food gluten-free, many polysyllabic chemicals are substituted. Watch what you wish for.
Circus never closes Barnum & Bailey closed but the Washington circus never ends. Circuses, carnivals and freak shows have not disappeared; they simply moved to Washington and cable news shows. They feature prestidigitation, illusion, fake news, people who talk incessantly without saying anything – even bloody severed heads.
GMOs turn 20 The first GMO was used in 1997. Since then, not one person has gotten even a bellyache. Crop yields are up over 20% while pesticide usage declined nearly 40%. Without GMOs, an additional 100,000 square miles (Ohio and Indiana) would have to be cultivated. Someone please remind me why GMOs are Frankenfood.
Obama living the high life He gets $400,000 for speeches to Wall Street firms and jets all over the world cocooned in luxury and leaving a gargantuan carbon footprint. Pocahontas, a/k/a Elizabeth Warren, said he is out of touch with most Americans. And this coming from someone who received $430,000 to teach one class at Harvard.

The Russians Hacked My Email!

George Noga
MLLG’s inimitable analysis and perspective on Russian election hacking 
The Russians Hacked My Email!
By: George Noga – June 29, 2017
      This special posting provides analysis and perspective about Russian hacking and is in keeping with MLLG’s goal to focus more attention on current events.
Russian meddling in US elections goes back over 50 years

       In 1968, Russia desperately sought to prevent virulent anti-communist Nixon from being elected and secretly offered to subsidize Humphrey’s campaign. Petrified about Reagan, Russia again tried desperately to prevent his nomination (1976) and election (1980 and 1984). Russia’s attempts to influence our elections proved unsuccessful, but the crafty Russians discovered they could wreak more harm by sowing distrust in our institutions and governments. Hence, Russia’s recent actions were directed mainly at undermining confidence in US institutions rather than favoring specific candidates. Russia also interferes in other countries’ elections, most recently Brexit and France.
Obama interfered in numerous foreign elections

      In 2016 Obama intervened in Great Britain by threatening trade sanctions if the UK voted for Brexit. In 2015 he tried to defeat Netanyahu in Israel by illegally funneling money to opposition groups. In 2012 he intervened financially and otherwise in Egypt in favor of Morsi. Obama meddled big time in Honduras in 2009 in favor of a Castro and Chavez puppet. While still a senator in 2006, Obama interfered in Kenya to help elect his relative, Raila Odinga. Obama also intervened in Macedonia and  Libya.
The real Russia hacking story

     Election interference is old news; so, what made it a cause celebre in 2016? In one word: Trump. The Democrats, having lost an unloseable election, couldn’t accept voter rejection of their insipid candidate and failed policies; there had to be something else and the Russia-hacked-the-election meme fit the bill. Following is the real story.
    No one, not even the diabolical Russians, believed Trump would win. If Russia attempted to harm Hillary, it was to weaken her future presidency and because she is an avowed Russophobe. Russia had zero impact on the election. Hillary lost because she and liberal elites had undisguised contempt for the deplorable, racist, homophobic, sexist, xenophobic and Islamophobic middle Americans in fly-over land.
    The idea of Trump-Russia collusion is preposterous on its face; even Democrats know it is crazy-stupid. They keep it alive only to thwart Trump in every way possible. They would rather see Trump fail than to see America succeed. If Hillary were in similar circumstances: (1) her AG never would have been recused; (2) the Deputy AG would have been a sycophant; (3) no special counsel would have been appointed; and (4) the media would be 100% okay with all that. This story will persist as the narrative morphs as necessary, from collusion to obstruction to who knows what is next.
    Preoccupation with Russian election hacking is symptomatic of our toxic political culture. While we consternate over election hacking, we ignore Russian hacking of our electrical grid that could shut down power and result in untold horror. Russia already penetrated a Vermont utility and shut down the Ukraine power grid. Nevertheless, the media have focused for an entire year on the Russia-hacked-the-election chimera.
   When it comes to the integrity of American elections, there is much more to fear from voter fraud in blue states and cities than there is from Putin and the Russians.
Our not-to-be-missed Independence Day posting is next on July 4th.

Kitty Genovese and Congressional Democrats

George Noga
Kitty Genovese was murdered while 38 witnesses looked on and did nothing. The US
Constitution was murdered while 225 Democrats in Congress looked on and did nothing.
Kitty Genovese and Congressional Democrats
By: George Noga – January 29, 2017
     On March 13, 1964 Catherine (Kitty) Genovese was murdered in New York City, raped and stabbed to death over a harrowing 30 minute period, while 38 indifferent neighbors observed from their apartment windows, heard her repeated screams and did nothing to help. This bystander indifference became known as “Genovese Syndrome“, led to the nationwide 911 emergency telephone number and spawned numerous books and movies. The recent 50th anniversary of Kitty’s murder was marked by a new play, “38 Witnesses”, new movies, “The Witness“, and “37” and a “Girls” HBO episode.
     Over a harrowing eight year period (2009 to 2016) the United States Constitution was savagely attacked in Washington, D.C. The Constitution (and the rule of law) was repeatedly abused and violated with multiple attacks to its beating heart. Just as Kitty Genovese’s neighbors stood idly by, over 200 congressional Democrats indifferently watched, refusing to lift a finger to defend the Constitution. Not only did they observe the vicious attacks, they actively abetted Obama, Reid and Pelosi in the carnage.
     Following are but a few of the mortal wounds to the Constitution and the rule of law. Altogether there are over 50 more such violations – too numerous to list herein.
1. Treaties were fraudulently termed executive agreements and not submitted to the senate as required by the Constitution because Obama knew they would not be ratified. Principal among them were the Iran deal and the Paris Treaty on Climate Change.
2. Obama made recess appointments when the senate was not in recess and, in fact, when it was following the exact same protocol Harry Reid instituted to forestall recess appointments while Bush was president. These were serious body blows to the Constitution. The illegal appointments have since been invalidated by the courts.
3. Many (about 45) unaccountable czars were appointed without senate confirmation, an action not permitted constitutionally. Obama’s creation of the CPSC circumvented congressional appointment, budgeting and oversight powers – another clear violation. Again, the courts have stepped in and invalidated such illegal appointments.
4. The EPA, NLRB, IRS, DOJ and various regulatory agencies issued unconstitutional regulations and the FCC violated the law with its net neutrality rules. Once again, many of these actions already have failed constitutional muster in the courts.
5. Obama unilaterally altered the ACA, delaying the employer mandate, extending subsidies to non-exchange plans, not enforcing transparency provisions, delaying out-of-pocket caps, delaying insurance requirements and exempting Congress. This would be de rigueur in Venezuela, Cuba or North Korea but is a serious crime in the USA.
6. Obama unilaterally refused to enforce immigration law and, in effect, conferred legal status on illegal aliens. He violated his oath to faithfully enforce the law.
7. Harry Reid changed filibuster rules for cabinet and judicial appointments, violating long established rules. Tim Kaine, expecting to be VP and to have a senate majority, stated Democrats would further change the filibuster rules for SCOTUS to assure their nominee of approval. Reconciliation (Obamacare) circumvented the rule of law.
   Many of the witnesses to Kitty Genovese’s murder later regretted not taking action. Now, some Democrat senators and representatives regret staying silent while Obama, Reid and Pelosi trampled the Constitution. However, their tears are crocodile tears because they know that what was sauce for the goose is now sauce for the gander.
    The 38 witnesses to Kitty’s murder were ordinary people reluctant to get involved, perhaps at personal risk and Kitty was but one person. The Democrat Congressional witnesses to the evisceration of the Constitution were elected officials sworn to protect and defend the Constitution of the United States and were not at risk of personal harm. Yet approximately 225 of them stood idly by as wound upon wound was inflicted on the Constitution, on our beloved republic and on 323 million Americans.
   There is an appalling moral equivalence between the refusal to act by the 38 silent witnesses to Kitty Genovese’s murder and the 225 Democrat members of Congress passively witnessing the prolonged and vicious assault on our Constitution!
Our next post February 5th addresses the issue of fake news

Why the Left is Unhinged

George Noga
This special MLLG posting explains why the left is so apoplectic after the election.
With a government so powerful it could incarcerate Mother Theresa, no one is safe.
Why the Left is Unhinged
By: George Noga – January 17, 2016
     Many of our fellow citizens on the left have become unhinged in the election’s aftermath. The main reason, thanks largely to Obama, is that presidents have become more like kings, wielding enormous power unthinkable to the founders. If presidents and all elected and appointed officials honored the Constitution, it would matter little who occupied the oval office, Congress or the judiciary. We are supposed to have a national government of few, limited and enumerated powers within a federalist system. Who is mayor or governor should be more important than who is president. However, kings affect our lives infinitely more than presidents acting within the Constitution.
     For those on the latte-left, government has supplanted religion. There was a time when we Americans saved most of our passion for religion. No more. The progressive herd not only has abandoned religion but now mocks and condemns it. They have transferred all their passion to politics, explaining much of their post-election angst.
     They not only lost an election but now see a veritable Lucifer wielding the same unchecked power Obama usurped. The progressive religion explains why libs have a messianic fervor about climate, guns, environment, identity, etc. They regard honest differences over policy as apostasy. If you have a different view about immigration, you are a racist, Islamaphobe and xenophobe – no discussion permitted. Moreover, they want to criminalize expressing your views as hate speech and to throw you in jail.
     Thirdly, everything is now political, including many things never before considered political such as science, religion, news, media and education. Science has been corrupted due to the vast quantities of federal money doled out in grants. The federal government spends $3,000 to every $1 spent by others for climate research. You get what you pay for. The media are now advocates; honest reporting has disappeared and fake news proliferates. Even fact checkers are corrupted. Facebook employs liberal censors and uses tainted, ideological fact checkers to control content.
    Finally, there is SCOTUS with one seat open and the federal judiciary with 100 open seats. There was a time when seasoned (older) largely apolitical judges were chosen on merit, served for a limited time (10-15 years), retired and soon moved on to the great court in the sky. Today, young judges are appointed because they don’t have a record that can be used against them and more importantly because, with today’s longer life expectancy, they can serve forever. As a result, the stakes for SCOTUS are sky high.
     I close with a favorite anecdote to illustrate the frightening power of the federal government. During the 1980s when Rudy Giuliani was US attorney for New York, he and his staff had a favorite game. They would select well known people from all walks of life and determine for how many federal crimes they could be indicted. Everyone, no matter how good his/her character, could be sent to prison. Included in this group was Mother Theresa. And that was 30 years ago; today it is worse – infinitely worse.
Next on January 20th is our special MLLG Inauguration Day posting.

President Obama and King George III

George Noga

President Obama’s actions eerily parallel many of those of King George III. Our founders judged the king’s actions tyrannical enough to start a revolution

Special Independence Day Posting

By: George Noga – July 4, 2016

    The Declaration of Independence catalogues a long train of abuses by King George III that Americans considered oppressive enough to revolt against and to fight a long, bloody war for independence. Now, 240 years later, an American president has committed many of those same abuses; the similarities are striking as itemized below.

1. “He (George III) has suspended laws in their operation” (from the Declaration). Obama suspended and changed several parts of the ACA (ObamaCare) law. He granted his political supporters exemptions and illegally gutted the welfare reform law.

2. “He has dissolved representative houses” (Declaration). Obama recess appointments while the Senate clearly was not in recess are tantamount to dissolving a representative house. Courts ruled his actions unconstitutional but his appointees remain in office.

3. “He has erected a multitude of new offices and sent hither swarms of officers to harass our people and to eat out their substance” (Declaration). Obama appointed a multitude of unaccountable czars, covered up IRS abuse of political opponents and unleashed his EPA, NLRB, et al. to wreak havoc with innumerable illegal regulations.

4. “He has combined with others to subject us to jurisdictions unacknowledged by our laws” (Declaration). Obama wants US courts to be subject to rulings of international and foreign courts. He supports treaties (UN Law of the Sea) that subjugate Americans to the UN, international organizations and foreign courts. He refused to submit the Iran Nuclear Treaty for Senate ratification – dishonestly calling it an executive agreement.

5. “He has forbidden his Governors to pass laws of immediate and pressing importance” (Declaration). Obama, through his Attorney General, prevented Arizona and other states from enforcing laws to protect their citizens from imminent harm.

6. “He has refused his assent to laws necessary for the public good” (Declaration). Obama refuses to agree to critically needed laws without quid pro quo or poison pills;  a good example is failing to reduce corporate tax rates to end job-killing inversions.

7. “He has obstructed laws for the naturalization of foreigners” (Declaration). Obama refuses to enforce immigration laws and takes actions directly contrary to such laws. The only difference between Obama and George III is the direction of the immigration.

8. “He has excited domestic insurrections against us” (Declaration). Obama has given succor and cover to violent groups and criminals; he fanned the flames for the current war against police and the violent crime wave sweeping our inner cities.

  There are far more homologies between Obama and George III, but you get the idea.

  King George III was a non compos mentis hereditary sovereign monarch of a despotic foreign occupying power bent on the utter destruction of our liberty and the subjugation of the American people. President Obama is an elected representative of the American people sworn to uphold the Constitution and faithfully enforce the laws of the United States. It shouldn’t be hard to distinguish Obama’s actions from those of George III; however, Obama has proven to be one heck of a caricature of George III.

The next post scheduled for mid July begins our summer series, Montana Moments.

If the Election Goes to the House of Representatives

George Noga
What happens if the presidential election goes to the House of Representatives?
You could be in for a surprise; the process may not work the way you believe.
By: George Noga – March 2, 2016

      MLLG is providing this post as a service to our readers. It is way too early to speculate about the outcome of the election; however, the possibility of a third (or fourth) party candidate is much greater this year. Michael Bloomberg is poised to enter the race and to spend billions of his own money under a variety of scenarios such as a Trump nomination or a Clinton indictment or medical crisis. Trump could run if denied the Republican nomination. There are some other plausible scenarios as well.

    Most Americans know if no candidate receives a majority in the Electoral College, the election goes to the House of Representatives (“House”). Once the election goes to the House however, the process operates much differently than is generally believed. You may want to print this post and retain it for future reference just in case.

    In early January 2017 in a joint session of the new Congress, the President of the Senate opens the Electoral College ballots; tellers count them; and the results are announced by state in alphabetic order. If there is no majority, the Twelfth Amendment prescribes what happens. The House must choose among the top three receiving votes in the Electoral College – the 12th Amendment says this is to be done “immediately”.

    Each state gets one vote regardless of size; Wyoming counts the same as California. To be elected president, the winner must receive 26 votes. Under a rule of the House (not a Constitutional provision) a majority of each state’s delegation must vote for one candidate. Florida has 27 house members; a majority of 14 is needed for Florida’s vote to count. There are 7 states with only one house member (AK, DE, MT, ND, SD, VT and WY); how they vote determines their entire state. If there is no majority (a tie for example) that state’s vote is not recorded. The process continues as long as necessary.

    Meanwhile, the Senate chooses the vice president from the two highest vote getters for vice president. Each senator gets one vote and a majority of 51 is needed for election. There is no requirement that the Senate coordinate its vote with the House and it is possible the president and vice president could be from different parties. Note: The 12th Amendment requires a quorum of two-thirds of the Senate to be present before voting for vice president; thus, any party with 34 senators could prevent a vote.

    The term for President Obama and Vice President Biden ends at noon on January 20, 2017. If the House has not acted by that time but the Senate has, then the Senate’s choice for vice president becomes Acting President. If neither the House nor the Senate has acted by January 20, then the Speaker of the House becomes Acting President with the President Pro Tempore of the Senate next in line.

    The president has been elected only once before under the 12th Amendment. In 1824, a four way election between Andrew Jackson, John Quincey Adams, William Crawford and Henry Clay left Jackson 32 votes short of an electoral college majority. Clay threw his support to Adams and on the first ballot Adams received 13 votes of the 25 states then extant – giving him a bare majority and the presidency.

    The next time you find yourself in a conversation and someone brings up the possibility of the 2016 election going to the House, you will be loaded for bear.

 The next post on March 6th revisits our favorite topic – climate change.

Guns in America – Liberal Bogeyman

George Noga
Progressives use guns as a bogeyman because they do not have real solutions. They
won’t confront the reality of evil so they inveigh against the instruments of evil.
 By: George Noga – January 24, 2016

     To begin this Guns in America series, there is one categorical truth to be chiseled in granite. The right to own and bear arms is not about target shooting, hunting, militias or even self-defense. It is first and foremost a political right put in the Constitution specifically for citizens to protect their liberty against tyrannical government. The literature is rife with quotes from the founding fathers to that effect.

Let’s turn to President Obama’s recent actions. First some history. The 1968 Gun Control Act mandated gun sellers obtain a federal firearms license even if they sold only a few guns from home. President Clinton changed that in 1994 by requiring a storefront operation for retail sales but licensing exemptions for other gun sales. Fast forward to 2016; Obama reversed Clinton, claiming storefronts are irrelevant and mandated home, gun show, flea market and internet sellers be licensed. All Obama has done is take the country back to where it was 48 years ago – basically rearranging the furniture. Predictably, this will have absolutely no effect on anything.

Gun control is a progressive kabuki. Liberal politicians dog whistle to their base but kowtow to the 42% of gun owning households. They promote toothless incremental changes. When the inevitable tragedy occurs, they resort to the same antediluvian canards knowing they will fail and then blame the NRA when it happens.

Despite all evidence and logic against it, gun control has become part of the liberal pantheon along with climate change, organic food and recycling. Following is but a partial list of the contradictions and disingenuity inherent in their beliefs.

  • No Obama action would have prevented any mass shooting. Reporters asked Josh Earnest (Obama press secretary) at a news conference to name any mass shooting that would have been stopped by Obama’s actions; he couldn’t.
  • Gun homicides in America decreased by nearly 50% since 1993; gun violence not resulting in death plummeted by way over half. This happened while population increased 60 million and gun ownership proliferated.
  • Over half of gun deaths are suicides and fewer suicides are from guns than from prescription drugs. The US suicide rate is similar to countries with strict gun laws and is far below paradigms of gun control such as Japan and South Korea. The ultimate liberal contradiction is they favor assisted suicide and euthanasia all the while railing shamelessly against gun suicides. Go figure.
  • Gun violence is greatest where there is liberal governance with uber-strict gun laws; think, inter alia, Chicago, Washington, Cleveland and Detroit.
  • Guns are used 2.5 million times a year to stop or prevent crimes. The only time terrorists were foiled was in Texas by an armed off-duty cop. Other mass killings stopped by armed citizens: Appalachian State, Shoney’s, Pearl Mississippi High School, Clackamas Mall, Edinboro School and New Life Church.
  • Broken window policing (gun control for bad guys) was working until liberals put an end to it. They don’t just want the bad guys’ guns, they want yours.
  • Liberals’ revulsion of guns is cultural. They live in a plastic bubble and never meet gun owners. They hear of guns only in connection with crimes. They are arrogant and condescending such as in “clinging to their guns and religion“.
  • Every time the left has a paroxysm over guns, there is a rush to buy more guns and ammo. It is a godsend to gun stores; you’d think they would learn.

Liberals use guns as an imaginary monster because they have no real solutions to problems such as Islamic terrorism, failing schools, a torpid economy or mass shootings. They just trot out their same fusty, doctrinaire, dog-eared shibboleths.

Next up is Part II – Guns in America compared to Canada and other countries.
MLLG

What You Should Know about Tax Inversions

George Noga
By: George Noga – October 24, 2014
      I had not planned a posting about corporate tax inversions but I am working this in because I believe you will read a perspective herein not to be found anywhere else and, as a CPA, I don’t need to invest a lot of time in research. To begin, a tax inversion is the relocation of a US corporation’s headquarters to a lower tax nation so that it “inverts“, i.e. becomes a foreign corporation for US tax purposes. The US, unique among developed nations, imposes taxes on income earned abroad by American corporations – but the tax is not payable until the income (cash) is repatriated, i.e. returned to the US from abroad. Although there often are crucial non-tax considerations involved in inversions, the main driver usually is avoidance of US tax on income earned abroad and the ability to repatriate such funds.
    Because US taxes are not due until the foreign-earned profits are repatriated, US corporations with foreign operations keep the money offshore. For perspective, 75% of US corporations’ cash is kept outside the US – about $2.1 trillion currently. For example, Microsoft has $70 billion but less than $10 billion is in the US. Money held outside the US can’t be used for investment in plant, equipment or training in the US or to hire Americans; instead, it stays abroad.
       The Obama administration rails against inversions because they assert it reduces the amount of corporate income tax collected. Bear in mind that most companies currently do not pay the tax anyway – that’s why they keep the $2.1 trillion overseas. Following an inversion however, profits (cash) can be brought back into the US without tax and be used to invest within the US to create new American jobs. The increased productivity from this added investment in capital goods, job training and hiring of new workers helps all Americans and increases their standard of living. Arguably, inversions are a net blessing to America in the long run even if corporate tax collections suffer in the short run.
       I return to tax inversions and repatriation infra, but inversions do not exist in a vacuum. They are but one part – and a rather small one at that – of the overall US tax scheme. To put inversions into a proper framework, we must step back, understand what is really going on and look at US tax policy from 30,000 feet.
Getting the Most Feathers from the Geese with the Least Amount of Hissing
       As described in the above aphorism from Louis XIV’s finance minister, Jean-Baptiste Colbert, politicians approach taxation as an art form in which they pluck the geese (taxpayers) to get the most feathers with the least hissing. The main alternatives (cutting spending or raising taxes directly) are anathema. Politicians always enact or raise taxes to make everything as opaque as possible to taxpayers. This, of course, is diametrically opposed to the best interests of taxpayers who should want all taxes to be as transparent and direct as possible. The best tax for taxpayers would be a tax on consumption or a flat tax on income with no deductions or exemptions whatsoever.
“Don’t tax me; don’t tax thee; tax the man behind the tree.” 
       Let’s postulate the US had a flat consumption tax of 19% with no other federal taxes, exemptions, or  deductions whatsoever and that 19% tax represented 100% of the revenue to the government. If politicians wanted to increase spending, the only alternative would be to raise the tax rate to 20% or higher. Such a tax increase would be 100% transparent to every American every time he/she purchased anything. Citizens would know the true cost of government and everyone would have an interest in keeping spending under control. The reason we have a corporate income tax (and are now discussing tax inversions) is because it is a tax that takes many feathers from the geese without the geese ever being aware they are missing feathers. This is an important concept and is explained below.
Corporations Never Pay Taxes – Only People Pay Taxes
        Wouldn’t it be nice if no homo sapiens ever again paid tax? Only artificial constructs like corporations, with no heartbeat or pulse, would be taxed. This is like the mythical Germanic kingdom where candy grew on trees, lemonade flowed in rivers and the fattest, ugliest and stupidest  man was king. Alas, non humans paying tax can’t happen even though politicians would like you to believe it. All taxes always are paid by real, living, breathing people; corporations never have, do not now and never will pay a penny of tax. If the government increases the tax on a company by “say” $1 gazillion, there are three, and only three, possibilities for bearing the burden of the tax.
       It is true that businesses may remit tax revenue to the government, but it is not their money; they are simply transmitting funds to the government they have collected from other people. If the business chooses to pay the tax by reducing its profits by $1 gazillion, the owners (stockholders) pay the tax via lower dividends and/or a lower stock price. Most stockholders are ordinary thinking, feeling Americans investing through mutual funds, IRAs or 401(k) plans. Second, the company can cut its costs $1 gazillion; this of course means firing employees –  again, very much alive ordinary Americans. Third, the company can increase its prices by $1 gazillion (and this is what happens 90% of the time) meaning consumers, again scient, feeling ordinary Americans, are paying the tax in the form of higher prices.
       In reality, unlike in the mythical German kingdom, corporations don’t pay income taxes; there are only real-life human beings paying taxes; but politicians want to beguile you into believing fat-cat corporations are somehow not paying their fair share. Politicians want you to buy into their class warfare canard and they are counting on keeping you ignorant. In reality, the issue of tax inversions is moot and is a contrived tempest-in-a-teapot. Moreover, as observed supra, inversions in the long run may be a net benefit to ordinary Americans as it enables more money to be repatriated which can be used in America for capital investment to increase productivity and to employ more Americans.
       Now that we all understand just how inconsequential inversions are, we still are faced with a political issue searching for a solution. The US corporate tax rate is the highest in the world at 35% federal and 6% state for a total of 41%. Everyone, including President Obama, agrees it should be lowered. Everyone also agrees the $2.1 trillion being kept abroad should be repatriated. A reasonable compromise would be to lower the US tax rate to 20% for a combined federal/state rate of 26% even though this still is higher than many countries that are between 12.5% and 20%. This should be combined with a tax holiday for companies to bring home the $2.1 trillion being held offshore by paying a nominal one-time tax. This was done in 2004 and 800 companies participated, repatriating over $300 billion in overseas profits.
       In any other time with any other president, a compromise would be easy. However, President Obama, is intransigent; he will only compromise to lower the tax rate and to repatriate the funds if new and highly punitive corporate tax measures are part of the deal. Consequently, nothing will happen while Obama remains president. Inversions will continue; trillions of dollars will remain offshore; and ordinary Americans will suffer the consequences. Obama is banking that these same ordinary Americans will succumb to his anti-business, class warfare narrative that corporations pay tax and that inversions are a manifestation of corporate greed. In short, he is demagoguing the issue to death.

Into the Eye of the Debt Hurricane

George Noga

Update on the Crisis of Spending, Debt and Deficits
By: George Noga – September 20, 2014

     By some metrics the debt storm has abated. Compared to earlier deficit projections published herein, the USA is slightly better off, with the difference due entirely to the massive Obama tax increases. The deficit this FY ending September 30 is $500 billion, equal to 3% of GDP; meanwhile GDP is increasing around 2%, meaning the deficit is growing only slightly faster than the economy, a marked improvement. However, great damage already has been done; moreover, we are merely in the eye of the debt hurricane – it may appear sunnier at the moment, but the deficit storm will soon resume with even more ferocity and we will all be blown away.

The Seen and the Unseen

     The US economy already has sustained massive body blows. The reason we don’t clearly see the damage is due to the difference between the seen and unseen – or, more to the point, the difference between the reported and unreported.

  • In past recoveries following major recessions, the US economy has grown by an average of 5% for the subsequent 5 years; this results in a compound growth rate of 27.6%. Instead, we have experienced 2% compound growth yielding only 10.4%. The difference of 17.2% is the growth deficit. Simply, the average American today is 17% worse off than he/she should be; but we don’t see what should be; we only see what is. Nevertheless, the reality is that every American has been impoverished by 17% just during the past 5 years.
  • We see the increase in federal tax revenue and the concomitant reduction in the deficit. Unseen are the massive tax hikes that produced the revenue. Individual tax brackets increased with the top rate going to 39.6 % – a 13% increase. Investment related taxes were savaged with capital gains rates going from 15% to 23.8% (59% increase) and dividends from 15% to 43.4% (289% increase). Medicare taxes increased 62% and the upper limit was removed. There was a new surtax on investments of 3.8% and the death tax went from zero to 40%. New individual and employer Obamacare taxes took effect along with scores of other Obama tax hikes. The 35% corporate tax rate (world’s highest) is responsible for shifting jobs and investment abroad and businesses keeping $2 trillion overseas. The unseen effects of these massive tax increases will hobble the economy until abnegated.
  • We can see the reduction in the official unemployment rate; what is unseen is the jobs disaster that is America today. There are 12 million out of work, 12 million on disability and nearly 50 million (one in 5 households) in breadlines – err, on food stamps. The labor force participation rate hit a 35 year low. All (net) jobs being created are part time; there are legions of 29ers and 49ers. The true rate of unemployment is 15%, not the 6.2% reported.
  • We see Social Security and Medicare meeting their current obligations but we do not see the demographic time bomb looming for both programs. There is nothing on earth as certain as demographics; 77 million more boomers will retire (10,000 every day) and begin Social Security and Medicare. Spending on both these programs will grow by 8% compounded – doubling every 9 years. Within 10 years we will spend our entire budget on entitlements and interest on the debt leaving nothing left over for defense or for the rest of the government.
  • We see interest rates on federal debt hovering around record lows costing only $225 billion currently. We blissfully do not see what the interest would cost given a return to average interest rates, i.e. interest cost would increase $500 billion per year to $725 billion, or triple today’s cost. And that’s the rosy scenario. This is a no-win situation: keep rates low and the economy is grotesquely distorted and savings and investment are savaged or raise rates where they should be and the budget deficit goes thermonuclear.
  • We see government regulation exploding, uncertainty rampant and the scepter of Obamacare hanging over all of us like the sword of Damocles. We do not see the stultifying effects of all these on job creation and the economy.

     Looking at the gestalt paints a funereal picture. Average Americans already are 17% poorer over the last 5 years than they would have been in a normal economic recovery – and they will continue to get relatively poorer and poorer each year without any end in sight. The tax and regulatory burden, particularly on investment, has skyrocketed, halting new investment and job creation. Behind the “official” 6.2% unemployment rate lays a dystopian jobs nightmare; we are turning into a country of part time workers. We are reaping a demographic whirlwind still in its early stage. We are living on the razor’s edge regarding interest rates; we have a Hobson’s choice: ballooning interest costs or maintaining negative real interest rates. Finally, all this exists within a milieu of hyper-regulation, vast uncertainty and, of course, Obamacare.

Current CBO Projections for Spending, Debt and the Deficit

     Recently (July) the CBO released its latest forecast. The CBO alternate baseline forecast (its most realistic) assumed the average middle class family’s tax burden doubles over the coming generation; it also assumed no more recessions, wars, terrorist attacks, natural disasters and that interest rates remain low perpetually. Despite these horrific (taxes doubling) and grossly unrealistic assumptions, the results are disastrous. The deficit increases by over $100 trillion and the CBO stops forecasting because it can’t conceive of a functioning economy under those circumstances. And all this, dear readers, is based on an uber-optimistic forecast; the reality is much, much worse!

     We have been grazing on the fiscal commons for a long time; the pasture is about to give out and the spring lambs are doomed to a life of quiet desperation. We can muddle through for a few – perhaps several – years with temporizing and half measures. Soon enough time will run out and the ineluctable tipping point (Minsky Moment) will be reached. It will get ugly for an extended period, i.e. a lost generation., Eventually, when we emerge from the rubble, we may get it right again – only because there are no other choices – and America will again enjoy more liberty and less government!