Tuesday, May 31, 2011

The Relationship between Taxes, Income, Social Benefits, Spending, and Debt with the Trade Deficit (Part IV)

Below are the results from the same linear error model described in Part I of this series of blogs, but this time the model takes more quintile variables into account:


R2 1.00
Adjusted R2 0.98
SE 3.366E+04

Term Coefficient 95% CI SE t statistic DF p
Intercept 21059554 -30137429 to 72256537 18439763 1.14 4 0.3171
Q1 Tax -37479 -155898 to 80939 42651 -0.88 4 0.4292
Q2 Tax 139401 6977 to 271824 47695 2.92 4 0.0431
Q3 Tax -81591 -440482 to 277299 129263 -0.63 4 0.5622
Q4 Tax -104546 -826096 to 617005 259883 -0.40 4 0.7080
Q5 Tax 33972 -204834 to 272779 86012 0.39 4 0.7130
Q1 ISB 14.28 -85.82 to 114.38 36.053 0.40 4 0.7122
Q2 ISB -9.003 -115.469 to 97.462 38.3461 -0.23 4 0.8259
Q3 ISB -61.86 -204.68 to 80.96 51.441 -1.20 4 0.2955
Q4 ISB -6.985 -64.307 to 50.338 20.6459 -0.34 4 0.7521
Q5 ISB -1.831 -50.935 to 47.273 17.6860 -0.10 4 0.9225
Q1 Spend -184300 -737154 to 368554 199123 -0.93 4 0.4071
Q2 Spend -310334 -1047012 to 426344 265331 -1.17 4 0.3071
Q3 Spend -172793 -735579 to 389993 202700 -0.85 4 0.4420
Q4 Spend -119840 -630579 to 390898 183954 -0.65 4 0.5503
Q5 Spend -226944 -722706 to 268818 178560 -1.27 4 0.2726

Source of variation Sum squares DF Mean square F statistic p
Model 1.120E+12 15 7.465E+10 65.88 0.0005
Residual 4.533E+09 4 1.133E+09
Total 1.124E+12 19

Coefficients Coefficient Value Value Trade Deficit (Oil) Ave Trade Deficit (Oil)
Intercept 21059554 1 2.11E+07 1 21059554
Q1 Tax -37479 -6.8 2.55E+05 -6.8 254857.2
Q2 Tax 139401 -0.04 -5.58E+03 -0.04 -5576.04
Q3 Tax -81591 3.3 -2.69E+05 3.3 -269250.3
Q4 Tax -104546 6.2 -6.48E+05 6.2 -648185.2
Q5 Tax 33972 17.5 5.95E+05 13 441636
Q1 ISB 14.28 1.98E+04 2.83E+05 1.98E+04 282744
Q2 ISB 9 1.96E+04 1.76E+05 1.96E+04 176458.8
Q3 ISB -61.86 2.10E+04 -1.30E+06 2.10E+04 -1299060
Q4 ISB -6.985 2.88E+04 -2.01E+05 2.88E+04 -201168
Q5 ISB -1.831 4.68E+04 -8.57E+04 5.08E+04 -93014.8
Q1 Spend -184300 9.00E+00 -1.66E+06 8.50E+00 -1566550
Q2 Spend -310334 13 -4.03E+06 12 -3724008
Q3 Spend -172793 17.5 -3.02E+06 16.5 -2851084.5
Q4 Spend -119840 23.5 -2.82E+06 23 -2756320
Q5 Spend -226944 36 -8.17E+06 40 -9077760
1.56E+05 -276726.84
Result 1.56E+11 -2.76727E+11

The above model has perfect correlation as shown by the R² variable equal to 1. The results are vastly different to yesterday’s result with the annual national trade deficit varying from a gain of 156 billion to a loss of 277 billion dollars annually. These result variations are dependent on changing the fifth quintiles (highlighted in red) effective tax rate from 13 to 17.5%, its income from 46,800 to 50,800 dollars, and its consumer spending rate from 36 to 40%. Remember, spending between all the quintiles must add up to 100%. Hence, if spending for the fifth quintile is lowered, then spending must go up for the other quintiles by the same percentage and vice versa. These values were updated accordingly in the above table. For instance, when spending for the fifth quintile was reduced from 38 to 36%, spending for the first quintile was increased from 8.8 to 9%, spending for the second quintile was increased from 12.6 to 13%, spending for the third quintile was increased from 16.9 to 17.5%, and spending for the fourth quintile was increased from 23.2% to 23.5%. The results are highly dependent on the fifth quintiles spending percentage. The bottom line from this analysis: if the fifth quintile has less money to spend, it does not import as many products thus the trade deficit goes down.

In summary, it is interesting how two similar models show vastly different results: one showing that increasing taxes increases the national trade deficit level and another one showing increasing taxes lowers the national trade deficit level. The models obtain these same trends if the trade deficit is adjusted for oil imports. Both results make sense. On one hand, higher taxes could lower business productivity and they therefore have few products to export but on the other hand, higher taxes also means businesses and individuals have less money to buy foreign products. Thus, these two analysis probably offset meaning that United States’ tax levels, income levels, national debt, social benefits, and spending levels do not affect the trade deficit as much as one may suspect.


Saturday, May 28, 2011

Progressive Harmonization

What can be done to stop federal government monopolies and their continual need for power that is infringing on the rights of American citizens and corporations? The answer is that states need to fight any federal government attempts to increase power. Many conservative states have low tax rates and pro-business laws. States such as Texas, Florida, and Wyoming have no state income taxes. Twenty-Two states have “right-to-work” laws which protect corporations and employees who do not wish to be unionized. Many of these same states have other pro business laws which eliminate the influence of government and special interests from interfering into their day to day activities.

The laws of these conservative states which protect individuals and corporations from high taxes, special interests, and government bureaucracy are keeping those liberal states with anti-business laws in check. Liberal states with high individual and corporate taxes coupled with anti-business laws, such as being union friendly, are struggling during this current recession. California, New York, New Jersey, and Illinois are examples of states with anti-business laws. These states penalize hard working individuals and profitable businesses with high taxes to pay for their social entitlement programs. This has forced many businesses and individuals to reconsider their residence. Hence, many individuals and corporations are fleeing liberal states for more personal freedom that can be found in conservative states. This, in turn, has drastically reduced the tax revenue base in liberal states and the problem is being magnified during the current recession. Thus, these states are in dire financial trouble.

One could surmise that this predicament would force liberal states to rethink its tax rates and restructure its welfare programs. Yes, to certain extent it has. On the other hand, liberals are stubborn and really do not like reducing taxes on wealthy corporations and individuals at the expense of the poor. Hence, many liberal politicians are crying foul. They think it is unfair that conservative states have laws to protect residents and corporations while lacking social programs to help the needy. Thus, liberal politicians believe in a concept called “progressive harmonization”.

Progressive harmonization means that all states should be complying with similar tax rates, restrictions, mandates, and regulations for businesses and individuals. Of course, liberals believe the taxes and laws of conservative states should mimic liberal states and not vice versa. This is obviously absurd since each state should have the right to tax and regulate industry as it sees fit, right? The answer to this should be unequivocally yes. After all, why bother having states if all state laws must be uniform and consistent. All of that being stated, in this day and age, the federal government can force states to do just about anything. Think about it, the recent ObamaCare legislation is mandating citizens to buy healthcare insurance. So is it really that far fetch to think the federal government cannot force states to conform to tax and business laws? No, it isn’t!

How can the federal government force states to conform to tax and business laws? They can claim the “commerce clause” of the constitution is being violated. The commerce clause was originally drafted to prevent states from developing “protectionism” laws that may yield unfair advantages within interstate trade. Today, the commerce clause has such a broad view it has been used to control everything including intra state commerce. In fact, liberals’ broad interpretation of the commerce clause is their reasoning behind the legality of ObamaCare mandates.

So what is to stop the Supreme Court from ruling that conservative states have “unfair” taxes and laws that are violating the commerce clause since it is allowing individuals and business to move from liberal states? They can certainly argue this a form of “protectionism”. Besides, the federal government can enact state tax and business laws that each state will have to follow since federal laws are the “Supreme” law of the land.

If the federal government pulls off this coup d’ tat, it will be the end of any state rights to combat the spread of socialism and government monopolies. Yes, progressive harmonization is the ultimate goal of Obama and his posse of liberal elitists.


Minority Leadership (Part IV)

Hurricane Katrina was the largest catastrophic natural disaster in United States history, and although it helped unite Americans in support of the victims, the media instantaneously turned this into a race issue as well. New Orleans is predominately black. Hence, those affected by the disaster were predominately black. There is no question that the local, state, and federal government’s response was poor, and they were obviously unprepared. The issue soon became that the conservative federal government was discriminating against blacks because they had a slow response. They argued if it were whites stranded, the federal government response would have been prompt with their recovery efforts. There is plenty of blame to go around, and the liberal local and state governments did much less than the federal government to help. The only thing that could make such a devastating catastrophe worse was to turn it into a black and white issue. It turned an already terrible situation into a worse situation. The media and the local, state, and federal governments played the blame game and polarized our country instead of trying to unite us. All levels of government failed, regardless of the color of a person’s skin. The Katrina problem arose from a set of coincidences that turned into the worst possible scenario. First, one of the strongest hurricanes hit U.S. soil; secondly, it hit a very large populated city; third, the city it hit had an average elevation that is under sea level; fourth, it hit a predominately black city. It took all of these coincidences to turn this tragedy into a race issue. This is a natural disaster. The government did not premeditate a local disaster in New Orleans to conspire to wipe out its black population. Two days prior, there was evidence that Katrina could hit New Orleans, and the results could be devastating. In fact, Bush had already declared New Orleans and the state of Louisiana a disaster area. Never in American history had a President declared a disaster area before one actually occurred. Therefore, this should have been the fastest federal response, but it was not. Instead, it demonstrated the flaws of the Homeland Security department. While all levels of the government were slow to put together a recovery plan, many citizens ignored mandatory evacuation. This does not sound like the government is one hundred percent to blame, since citizens did not listen to the warnings to evacuate. The government response would not have been better if New Orleans were a predominately white city, but it would not have made for as big a news story without the race spin. It would not have been as big a news story because race would have been eliminated from the equation. If the same number of whites failed to heed to the warnings to evacuate, Katrina would not have been a big news story. Race and perceived racism is what made Katrina a big story.

The most alarming issue about hurricane Katrina was why all those citizens remained when there was an evacuation warning. Hundreds of buses were left behind in Katrina’s wake that could have been used to evacuate people. The liberal local government failed to put together an evacuation plan, and so they should hold the highest responsibility for the poor response. It is their responsibility to be ready for a hurricane and have an evacuation plan. New Orleans has been hit by hurricanes in the past, so it was not a mystery that it would happen again.

The second alarming issue is how helpless the stranded were. They did absolutely nothing to help themselves. Anyone who lives or moves to an area of the United States should understand the risks of natural disasters happening in that area. I lived in Texas, and tornados are the biggest threat. If a tornado were to threaten my neighborhood, I already know what I would do to help mitigate the risk of being killed. A person that moves to California should be aware of what to do in an earthquake and so on. Ignorance is not an excuse for being helpless. Hurricanes should be the safest natural disasters because they generally have warnings several days in advance, while that is not true for tornados or earthquakes which can happen in a split second with very little warning. However, if you know a massive storm is coming, and no risk mitigation or survival plans have been formulated, the results can be deadly. The stranded victims from Katrina showed absolutely no survival skills. Baton Rouge and other cities are within fifty miles, and most people can walk that in under sixteen hours. The bottom line is that the stranded victims expected to be rescued and bailed out by the government. It makes sense because these people are the same people that rely on government welfare and other social programs for their survival. When our government policies promote laziness and the inability to exercise one’s brain, nobody should be surprised by the lack of ingenuity displayed by the stranded victims to help himself or herself. It is ironic that an argument can be made how government social programs helped fuel the Katrina race issue.


Wednesday, May 25, 2011

Obama's Weekly Lowlights (5/25/11)

Government workers – Today, there are 22.5 million people that work for local, state, and federal governments. Only 11.5 million people work in manufacturing facilities across the country. In fact, there are more government workers than farming, fishing, forestry, mining, utilities, and manufacturing combined.

Families – One in four American children are raised in single parent households. This is one of the worst rates amongst the top industrialized nations around the globe.

Campaign Contribution Disclosure – The White House wants full disclosure of all company campaign contributions. However, they are against having organizations, such as labor unions, disclosing their campaign contributions. Opponents of this plan are also fearful this information could be used against companies bidding on government projects.

Herb Kohl – The Democratic Senator from Wisconsin will retire in 2012. This is another seat that the GOP is capable of winning.

U.S. Debt – The House GOP introduced a bill to tie government spending with GDP.

Georgia – New governor, Nathan Deal, signed an immigration law that is similar to the Arizona law which is currently being challenged by the DOJ.

Oil – The administration has outlined new restrictive guidelines to start more drilling in the U.S. This is a step in the right direction.

U.S. Debt Ceiling – The U.S. officially reached the debt ceiling this past week.

Guns – A California Judge ruled there is no Constitutional right to carry a handgun in public.

Unions – Ohio’s teacher union has increased due levels to fight the new collective bargaining ban.

Polls – Forty-Four percent of all Pakistanis see bin Laden as a martyr.

The Stimulus – One economist, Tim Conley, from the University of Western Ontario has posted a report citing the Recovery Act killed 1 million private sector jobs. However, it did create or save about 450 thousand government jobs.

The Budget – Bipartisan talks amongst the “Gang of Six” (3 Democrat and 3 Republican Senators) is unraveling. It is reported, that Republican Senator, Tom Coburn has walked away from the bargaining table.

Light Bulbs - Leading light bulb manufacturers have produced LED bulbs to replace the conventional 100-watt light bulbs, which will be removed from shelves in January 2012. The catch: these new light bulbs cost about $50 each.

ObamaCare - National Review Online’s Mona Charen reports on the unprecedented power granted to the Department of Health and Human Services under Obamacare and the suspect abuse of its new powers in playing favorites when it comes to handing out waivers. Meanwhile, the White House has issued another 200 waivers for the newly introduced legislation. This is in addition to the 1100 waivers that have been previously issued. And what’s worse, over 20% of the latest waivers granted where in Nancy Pelosi’s district.

Israel – Palestine – Obama says Israel and Palestine should return to their 1967 borders and eliminate 45 years of history.


Tuesday, May 24, 2011

Minority Leadership (Part III)

Jackson and Sharpton are both hypocrites. When Jackson ran for President, he used racial slurs against the Jews by calling New York City “Hymie Town”. As civil rights leaders, he and Sharpton go after anyone who uses racial slurs against blacks. Don Imus was their latest victim. What Don Imus did was wrong and repulsive, but he did not deserve to be fired. Don Imus is an as* and always will be one, but people do not have to listen to him. At least he apologized emphatically for what he did. Jackson never apologized, nor did Al Sharpton for falsely accusing three white men who were wrongfully imprisoned for allegedly raping a black woman back in the early eighties. This was Sharpton’s first attempt at practicing civil rights. Jackson and Sharton are like vultures rallying the community to protest any white crime against a black person.
People commit irreprehensible and horrific hate crimes (not just white on black), and it fuels our growing divide. Jackson and Sharpton love to pour fuel on a fire. It is almost as if it is their goal to divide Americans and keep the racial barrier as strong as possible. Consider another racial issue flooding the news in 2007, the “Jenna Six”. This is where six black boys beat a random white person into unconsciousness in response to the white boy’s bigotry when nooses were hung from a tree where the black boys gathered. Jackson and Sharpton are out in force making this a national issue because they feel the local authorities excessively charged the black boys and are discriminating against them. This is a very sad situation where no one wins, especially when tempers flair. Whether the charges are correct or not, it is never a good idea to throw fuel on an already burning fire. Can anyone really believe that their actions are really helping to unite Americans? In fact, their actions divide Americans more, and this is their intent. They would be out of work if this racial divide would go away. The Jenna Six issue could have been resolved locally once tempers and passions cooled off, and level heads prevailed. Jackson and Sharpton only believe that the issue could be resolved if they are involved. Does this sound familiar? These are the qualities of super ego personalities.

Within two weeks of the Jenna Six case getting national attention, over ten reported similar incidents occurred throughout the country where nooses were used to intimidate a black person. This certainly would not have happened had it not been made a national issue. If six white kids beat one black kid, then Jackson and Sharpton would be in Louisiana arguing for the original penalty given to the black boys. Conversely, under that same set of circumstances, the local authorities would have given the white boys lesser charges than what the six black boys originally received. The bottom line is that no matter how anyone rolls the dice on this subject, it was going to be an issue regardless of how it went down. Hence, everyone loses.


Sunday, May 22, 2011

Obama's Pro-Muslim Policies (Part II)

Obama’s Middle East policy towards Muslim uprisings and revolutions across the region is even more confusing. The Arab spring, as predicted by many pundits, has come to fruition. Many Arabs want democracy, similar to the one created in Iraq, but many of the revolutionary groups have ties to radical Islam or terrorism. For instance, groups such as the Muslim Brotherhood, has ties to Hamas, now have a voice in Egypt. Obama’s use of military force in Libya would be acceptable, if and only if, those people he is supporting will build a democracy. First of all, Obama is not seeing the Libya mission through, and second of all, we do not know what the revolutionists envision for the future of Libya. One thing is certain, were there is chaos, there are extreme Islamic groups trying to gain power amongst the masses. And these radical groups have one primary vision – to annihilate Israel and to terrorize the West. Where Obama and our intelligence agencies are failing to install democracies in these Arab nations, countries like Iran are succeeding at influencing protestors to implement their radical ideology in their new government. Obama has a great opportunity to influence the outcome of these protests, but his Libya strategy shows he is unwilling to see the conflict through to its conclusion. And implementing sanctions against a current government that is using force to end protests does not ensure a democracy will prevail. But what is most confusing is that as these uprisings occur, Obama is resonating a message that Israel (the only stable government in the region), not Muslims, need to make huge concessions and sacrifices to ensure peace in the region. Obama’s strategy seems to be one to sit back and see what happens with all the protests and uprisings. It does not seem to matter to Obama if more anti-Israel or anti-American governments take form in the Middle East. After all, Obama is practicing his Laissez Faire foreign policy in the region, except of course, with Israel.

Yes, the Obama Middle East policy is to turn its back on the only stable democratic state in the region and to support a plethora of archaic regimes. Regimes that fail to recognize the rights of women and homosexuals. Regimes that oppress their people while they live a lavish lifestyle gained from oil riches. Regimes that may soon be overrun by extremists with ties to radical Islam and terrorist organizations. Is this a sound foreign policy that will guarantee stability in the region?

Sure, Obama has stated that Palestine must recognize Israel’s right to exist. But at what cost? The cost of erasing 65 years of history! And do we really think that Muslims will agree to allow Israel to exist as a state even at the proposed pre-1967 borders? Absolutely not! Muslims cannot handle a racist cartoon let alone allowing their enemies the right to exist. So, if Muslims fail to agree to pre-1967 borders, what is the next step? Maybe the answer is to eliminate a few more years of history and dismantle Israel completely and forcibly remove 7 million Jews. And if that is not sufficient enough, maybe we can eliminate a few more years of history and deny the Holocaust ever happened. That may finally be a proposal acceptable to Palestinians, Muslims, and maybe even Obama. Obama can then claim another historical precedent – resolving the Middle East conflict.


Obama's Pro-Muslim Policies

Obama may not be a Muslim, but there is no question where his loyalties lie over the Middle East peace process. Let’s summarize Obama’s Middle East foreign policy.

First, Obama claims his foreign policy is not to dictate or interfere, but to listen to other nations (Laissez Faire). This policy seems to apply to all countries like Cuba, Venezuela, Russia, Iran, North Korea, and other rogue nations, but not Israel. That is right, Obama clearly sides with Palestine over Israel.

Obama has ties to Pro-Palestinian historian Rashid Khalidi and Obama’s Middle East policies mirror Khalidi’s radical ideology for the region.

Obama, as President, has visited and given speeches in several Muslim nations including Egypt and Turkey, but he has not stepped foot inside Israel. And what’s worse, Obama’s speeches are an apology for U.S. involvement to save persecuted Muslims in Iraq, Afghanistan, and the Balkans.

Obama has pressured Israel to stop building settlements in disputed 1967 territories such as the West Bank, Golan Heights, Gaza, and East Jerusalem, their capital. What’s worse, Israel can’t build new settlements to accommodate for natural population growth. Israel is a very small nation, about 20,600km². When the disputed territories from 1967 are added, Israel is about 27,700km² or about 1/7th the size of New York State. Israel’s population (including disputed territories) is about 7.75 million people. Of which only 76% are Jews and about 16% are Muslims. Israel agreed and stopped building new settlements in all disputed territories with the exception of East Jerusalem, but this was not acceptable for Obama and obviously the Palestinians. Jewish population growth is very modest, under 2%, so why can’t they expand to meet this population growth? On the other hand, what concessions did Obama dictate from Palestine? Nothing! All concessions for Peace must come from Israel. Is this fair? Of course not! Imagine the outrage if Israel asked the Muslims that live within their borders to stop procreating and building new homes. In fact, Muslims that live in Israel are the biggest burden on its welfare system, but Israel is not trying to rid themselves of this burden – they know that would be wrong.

In a more recent speech, Obama not only wants Israel to stop building settlements, but he expects them to concede all the disputed territories from 1967 to Palestine. No President in U.S. history has ever echoed such an extreme Mideast foreign policy. Once again, what is Palestine going to concede in this compromise? Nothing! The only reason these disputed territories were formulated was because Israel needed a buffer zone to protect themselves from constant missile attack and invasion. Muslim aggression brought about these boundaries. Arab nations tried everything to wipe out Israel including cutting off their water supply.


Minority Leadership (Part II)

If a black person speaks against and warns other blacks about using the “race card”, Jackson and Sharpton would label this individual as an “Uncle Tom”. “Uncle Tom” was a term used to characterize a slave during the nineteenth century who became institutionalized. In other words, they became used to being a slave and would do everything the “master” wanted. They did not fight for freedom or misbehave; they simply accepted their situation. This is an unfair label for anyone to place on another human being. If Congress required work in return for welfare compensation, Jackson and Sharpton would use the “race card” and say this discriminates against blacks because more blacks use welfare benefits (by percentage) than any other race. Why should it be discrimination to expect a black person to work for their welfare check? It should not. Every other race and gender is required to work. At the same time, it would not be discriminatory to force poverty stricken whites to work for their welfare check, and that is the double standard. Why is everyone in our society expected to work to get paid, but it is discriminatory if the government asks poor minorities to work for their welfare check? If they worked for their welfare check, they could actually earn more income because the government would be forced to pay them a minimum wage.
Just like the Democrats, Jackson or Sharpton do not want blacks to better themselves, they want to keep them oppressed. If more blacks improved their financial status to middle or upper class, then they would not necessarily need their assistance anymore. On the flip side, it would also be political suicide for the Republicans to try to eliminate or change any social programs because they would be labeled as racists who are discriminating against blacks. If Republicans tried to change welfare, then Jackson and Sharpton would be front and center to fight the proposal. The bottom line is that it is not in the best interest of either party to try to change any social programs because it would be political suicide. This is the dilemma our government faces: minority leadership exploits both the minorities and the government to manipulate the system. Poor minority leaders believe African-Americans are owed entitlement programs such as welfare since it was slavery that put them into the oppressed situation they are in today. All races, genders, and religious factions have been persecuted in the past, but have not used it as an excuse to hold them back. The Jews, for example have endured more recent persecution. During World War II, over six million were killed and millions more tortured, but they have since created their own nation. Today, the Jewish people are one of the most successful races in the world. They are still surrounded by their enemy and face terrorism threats everyday. Despite all this, they excel as a people. They have used their persecution as incentive and motivation to succeed, whereas the opposite is true for nearly seventy percent of the African-Americans living in this country. Democrats have brainwashed the African-American people that Republicans and most whites are against them. This is a fallacy. Remember Abraham Lincoln was a Republican and nearly 300 thousand white Northern soldiers lost their lives to free slaves during the Civil War.

An excellent present day example of using the “race card” is by Illinois Governor, Rod Blagojevich. He appointed an African-American (Roland Burris) to fill the vacated Senate seat by President-Elect Obama. He appointed Burris despite being told by Illinois and U.S. Legislators they would not accept anyone appointed by him. Since Blagojevich is under federal investigation for a number of crimes, most legislators agree, any appointee by Blagojevich would be tainted. Blagojevich, who obviously has a super ego, did not like other law makers trying to mitigate his gubernatorial powers. Thus, he concocted an ingenious plan. He purposely appointed an African-American to replace Obama. Thus, if Congress voted to block the African-American appointee, they would be viewed as racists. After all, Roland Burris would be the only African-American in the Senate. On the other hand, if Congress accepts the appointment of Burris, they may be seen as caving into Blagojevich’s devious ploy of using the “race card”. Thus, Congressional members are in a “lose/lose” situation. They cannot win regardless of how they vote on the Burris appointment. Nothing good ever materializes when the “race card” is used.


Minority Leadership (Part I)

As a white male, some may argue I have no right to comment on minority issues. They may be right, however to overcome racial stigmas and tensions we should all be open minded and honest about our feelings. I certainly would not have a problem with an African-American outlining the problems with Republican or conservative leadership. In fact, I would welcome it and probably find it insightful. Remember, I am only outlining my personal observations as to the problems with minority leadership in this country. I should also point out that minority leadership is no worse than government and corporate leadership. They are all horrible and getting worse each day. To me, the intriguing part about African-Americans is why over 90 percent of them are liberals. The answer to this in my opinion is bad and misguided minority leadership. I am sure a liberal African-American may come to same consensus as to why white males tend to be conservative – bad and misguided leadership.
What are the reasons that the percentage of people living in poverty, especially minorities, continue to grow? A social program such as welfare which pays folks to be lazy is one reason, but minority leadership is also a major contributing factor. Government and minority leaders work in the same way as corporate leaders. They do what is best for them and not what is best for the people. These leaders also have another trait in common. They are generally extremely wealthy. Poor people generally do not have the means to get elected to public office. The scary thing is that most of the people getting elected to public office obtain their wealth through inheritances. Most of these people have not done anything constructive to qualify for the position other than being a wealthy heir. Many that have any corporate leadership experience obtain that through inheritances as well. Americans should favor those leaders who have worked hard to earn their wealth and created their own opportunities and successes. The point is that our leadership today does not know the first thing about solving our nation’s problems because they have not experienced any of them. How can they solve poverty and other social economic issues that divide America if they do not understand them because they have not experienced them? Wealthy leaders think the answer to all of our problems is to throw money at them. After all, that is exactly how they got elected into their political leadership role. The bottom line is that a large portion of the people developing our legislation had their success handed to them, and they have absolutely no credible experience that they can rely on to develop good solutions.

Who sticks out as our country’s main minority leaders? It seems a week cannot pass without hearing about Jesse Jackson and Al Sharpton. Are they good leaders? Absolutely not, because the only thing they accomplish is to polarize Americans through the use of the “race card”. They claim they are preaching for civil rights, which is only partially true. The civil rights movement is the fight for equal rights for African-Americans. Part of civil rights is to stop discriminatory behavior, but the other part is to improve the livelihoods of African-Americans and their role in society. Jackson and Sharpton only fight discrimination. They do absolutely nothing to help African-Americans from an economic standpoint. It is unacceptable to use the ‘race card’ as an excuse for civil rights protests and activity. The “race card” defeats the purpose of any civil rights protests because it is only an excuse for the activity. Civil rights protests should be done in a proactive way instead of being reactive to every racist and discriminatory act that comes up across the United States. Reactive protests only anger both sides of the issue, whereas proactive ones create less tension and are constructive in nature. It was discussed earlier how ineffective arguments are when people allow emotions to dictate control of the situation. The civil rights movement started by Martin Luther King Jr. was about being peaceful and respectful, not about agitating and disrespectful behavior. This is exactly what happens when civil rights protests start as a reaction to a racially sensitive issue. Unfortunately, this is exactly the type of reaction minority leaders want to accomplish. The bigger the public reaction is to a problem, the more headlines and chaos it creates. The more headlines and chaos they receive from a protest, the more the African-American public is brainwashed into believing Jackson and Sharpton are needed to help them. The “race card” is getting a bit old. Unfortunately, we live in a society where it is not politically correct to speak against people using the “race card”. The “race card” is when minorities exploit their heritage and use it as an excuse to get what they want. One example of the race card is when my wife, who is a school teacher, disciplines a black child. The child’s parents would accuse her of being a racist, punishing their child only because the child is black. Therefore, these parents are using their race to manipulate the situation. This is just one example of how the ‘race card’ is used at an alarming rate throughout the country on a daily basis. Although a person using the “race card” is a very common occurrence today, the problem cannot be solved unless African-Americans realize that minority leadership is only sidestepping the problem-solving portion of conflict resolution.


Wednesday, May 18, 2011

It is Really Getting Old

Obama delivered another speech, this time about reducing our debt, and it was redundant like all his speeches. Obama hits on the same talking and fear mongering points in all his speeches. Obama is becoming very predictable.
First, Obama generally waits too long before he addresses a problem. The debt issue was no different. Obama finally came forward after the “Party of No” put forth a detailed plan, and after a budget compromise had already been met for the fiscal year of 2011. If Obama was serious about the debt, he should have had a detailed plan on the table prior to the 2011 budget deal.

If Obama was serious about tackling the debt, then why is his budget proposal for fiscal year 2011 (submitted a few months back) absent of the proposals he spoke about this past Wednesday? This is because he is not serious about the issue.

The Obama debt speech was loaded with “Obama speak” including the typical talking points of blaming Bush and demonizing opposition plans with fear mongering claims that they want the elderly, poor, and handicapped to “fend for themselves”.

As usual, the Obama plan to cut 4 trillion dollars over the next 12 years was vague and absent of any significant details to corroborate his budget numbers. For instance, Obama’s Medicare, Medicaid, Social Security, and corporate tax reform details in his budget plan were absent in his speech.

The Obama plan to cut spending includes spending increases in education, transportation, clean energy, and job training. Remember, the 862 billion dollar stimulus (Recovery Act) already poured hundreds of billions of dollars into these causes, but it failed to create jobs, save jobs, or fix our crumbling infrastructure. This is the flawed liberal philosophy suggesting we can spend our way out of debt and a recession. America already spends more money (per capita) in these areas than any other country in the world – we do not need more spending, we need to spend the money more wisely. The average U.S. classroom costs the American taxpayer over 250 thousand dollars a year and teachers receive less than 40% of that money (classroom teachers and special teachers [physical education, music, art, etc]). This means overhead and administration costs are over 60% of our education budget. And let’s not forget that school districts raise an additional 700 dollars per student through the sale of tickets to events, fund raising drives, concessions, and meal plans.

Obama claims he will reduce spending by reforming the tax code. The Obama tax code reform, by his own admission, is to raise more tax revenue (not reduce spending) on the top 2% of American wealth earners. First, these are the people that create jobs. Secondly, I will post mathematical models that will show that raising taxes on the wealthy not only hurts the economy (reduces consumer spending), but the government does not use the increased revenue to pay down the debt. Instead, the government spends more on entitlements.

Obama is delusional to think that ObamaCare legislation will cut healthcare costs and it will cut the deficit by 1 trillion dollars over the next 12 years. There is a reason that the approval for the legislation is at its lowest level – healthcare premiums skyrocketed last year. ObamaCare will fail to cut healthcare costs because it does not hold all the players in the healthcare industry accountable to make sacrifices. ObamaCare merely attacks health insurance companies but does nothing to hold big pharmaceutical companies, hospitals, doctors, individuals, trial lawyers, or health industry providers accountable to lower costs.

Let’s face facts; Obama and his team of economic bureaucrats do not understand the first thing about simple math, money, how to create a job, or the economy in general. Most have not run a business and they are all prisoners to flawed progressive economic philosophies and special interest groups that want continued government spending to support their causes (ACORN, Planned Parenthood, environmental groups, etc.). No charity, business, group, or organization should receive any government compensation – they should raise their funding solely through private charitable contributions. If the cause is noble, people will donate to it.


The Man with a Plan

Finally, someone in Congress has the fortitude to stick their neck on the line and propose an unpopular financial plan. That man is Paul Ryan, the head of the House Budget Committee. The plan is politically risky because it affects most Americans in both the short and long term, but whether or not we think so, the plan is necessary. The Congressional Budget Office (CBO) economic model crashes by the year 2037. This means, in 25 years our government and economy will not only be broke, but it will be beyond repair. The longer we wait to fix the problem, the harder the problem is to fix and the solution becomes more painful. Thus, it is necessary to act quickly.
The Ryan plan proposes to cut over 4 trillion of our 14 trillion dollars of debt over the next decade. This plan is bold because it cuts more spending than the unpopular plan proposed by the Debt Commission this past November. Democrats are already crying foul and have begun demonizing the proposal. Remember, Obama refused to incorporate any of the Debt Commission budget recommendations into his proposed budget plan for this year. Here is a summary of Ryan’s proposals:

•By 2021, the government will subsidize seniors to help pay for insurance premiums instead of enrolling them into the government run Medicare system. This change will only effect people that are younger than 55. The plan would also require the wealthiest seniors to pay more for health insurance premiums. This proposal will undoubtedly be unpopular to all Democrats who want a single payer healthcare system, especially since Ryan’s plan repeals ObamaCare. The Ryan plan also reforms Medicaid. Under Ryan’s plan the federal government will no longer cover half of the states’ Medicaid payments. States will get a flat payment based on persons enrolled in the program. This will force states to better manage the program and to implement cost saving ideas.
•The plan calls for dramatic cuts and slashing of discretionary spending to below 2008 levels. His plan also identifies and targets outdated and redundant federal programs.
•The plan calls for tax reform including lower tax rates across the board – but many popular exemptions will be eliminated. The upper individual and corporate tax rate will be decreased from 35% to 25%.
•The Ryan plan calls for 178 billion dollars in defense spending cuts identified by Secretary of the Defense Robert Gibbs.
•The plan calls for private sector realities for government civilian workers. This means no more outrageous salaries or job security.
•Surprisingly, the Ryan plan does not call for any significant changes to social security except that Congress and the President must ensure the program’s solvency. He probably thought it would be hard for Americans to accept the Medicare changes let alone more changes to another sacred entitlement - social security.
Obviously, the closer one is to 55 years old, the more this plan affects us. I am one of those of people, but this plan needs to be incorporated. Heck, I am willing to bet that retirement healthcare for those of us under 55 will be better than those enrolled in Medicare for a few simple reasons. First, there will be more doctor choice since doctors will not have a reason to opt out of seeing patients on Medicare. Secondly, there will be less bureaucracy to get claims identified and settled in a timely manner. Thirdly, there is a better chance we will have better coverage – in other words, we do not have to worry about insurance (ObamaCare) not covering certain procedures or preventative care.


Obama's Weekly Lowlights (5/18/11)

Hamas - Secretary of State Hillary Clinton refuses to rule out negotiations with Hamas, the terrorist group that rules Gaza and recently mourned the death of Osama bin Laden.

Pakistan - Pakistan's foreign minister has called into question the legality of the operation to kill Osama bin Laden, stating that the US might have breached his country's sovereignty.

UN - Fox News reports, "A United Nations-sponsored report into the causes of a deadly cholera outbreak that ravaged Haiti in the wake of its disastrous 2010 earthquake has discovered a culprit -- the U.N. itself."

ObamaCare - The House GOP are back to work writing legislation to dismantle Obamacare this week.

Offshore Drilling – The House passed a bipartisan bill to make it easier for oil companies to drill off our shores to help combat oil prices. In other news, Democrats in the Senate have a proposal to eliminate 21 billion dollars in tax incentives for oil companies.

Rights of Nature – A liberal group (including Van Jones) is trying to give animals, water, and air the same rights as humans in a court of law.

Bowl Championship Series (BCS) – The Department of Justice has a new target and that is college football’s BCS. They feel the BCS system violates anti-trust laws. Besides, Obama has made it clear he wants to see a playoff system over the current BCS system.

Lifeguards – California lifeguards have retired on million dollar pensions and lived lavishly on 200,000 dollar salaries.

Education – The department of education sent letters to school districts around the country last week reminding them they cannot deny any child an education regardless of their citizenship. This was the result of a 1982 Supreme Court decision (Plyler v. Doe).

Corporations – A new report by the Wall Street Journal showed that the evil CEOs of the top 20 Fortune 500 companies donated more money to the Democrats in 2010 than to Republicans (55% to 45%). I wonder if they still want to repeal the Supreme Court’s “Citizens United” decision?

Guantanamo – In a speech in Paris, France, Attorney General, Eric Holder, vowed that he will still close Gitmo. In other news, there is talk about allowing detainees to have visitors at the detention center.

Ethnic Studies – The battle continues in Tucson, Arizona over whether or not to allow a Mexican-American studies program (La Razza). Much of the material used to teach ethnic studies to 3rd graders is loaded with explicit language.

Immigration Reform – The Obama administration has started to push his amnesty reform legislation again. I guess a budget will have to wait. And the Center for Immigration Studies came out with a report that 57% of all legal and illegal immigrant families use at least one welfare program compared to 39% of native born Americans.

McDonalds – Over 25% of the private sector jobs added in April 2010 were filled by McDonalds. Not sure if this is exactly what the President and Democrats had in mind for economic growth?

Greece – They received a 110 billion dollar bailout by other members of the European Union, but it has failed to work and they are demanding more money.

1984 – Orwell may have been off by 27 years. San Antonio, Texas schools have spent 2 million dollars to install cameras to watch what food and how much food is ingested by each child to record calorie intake.


Tuesday, May 17, 2011

The Laffer Effect

With the federal debt at record levels, most people are anticipating higher taxes. Because of this, the Laffer Effect is once again part of the debate over what tax rate would maximize federal government revenues. The Laffer Effect theorizes that federal revenues collected from a 0% and 100% tax rate would be zero. Obviously, if the government does not tax the public, it will not collect any revenues. Likewise, if the government overtaxes its population, there is less incentive for people to earn money. Thus, extremely high taxes become counterproductive and decrease federal revenue. A higher tax rate also means individuals will try to find loopholes in tax laws such as finding offshore tax shelters and even fraudulent methods to avoid paying large sums of money to the federal government. A higher tax rate also means people will spend less money on charities to help the needy. In other words, higher tax rates create more uncertainty and strain economic variables more so than lower tax rates.

The Laffer effect is most often cited by conservatives, who advocate supply side economics, to keep both income and capital gain taxes low. This, in turn, will keep the size of the federal government small and therefore; reduce regulation in the private sector. This cultivates an economy with a greater supply of goods and services at lower prices. Meanwhile, progressives argue that the Laffer Effect is advantageous to the wealthy and therefore, neglects the poor. But liberals fail to point out that the United States pays more money, per capita, for education and entitlements for the poor than any other nation in the world. Liberals are also quick to point out that Russia had very high tax rates, but they still collected enough revenue to support armies and a space program.

Over the course of our history there have been plenty of studies and empirical data to support the Laffer Effect does truly exist in economics. One study indicated the specific tax rate that will maximize federal revenues is between 33 and 36%, but this study did not include local and state taxes. In 1924, Secretary of the Treasury, Andrew Mellon, worked to reduce the upper tax bracket from 73% to 24%. Federal government revenues grew nearly 300 million (30%) over the next 5 years prior to the Great Depression. The Kennedy tax cuts in the 1960s also resulted in greater federal revenue and economic growth. The Kemp-Roth tax act in 1981 reduced the upper tax bracket from 70% to 28%. This too led to increased federal government revenue because it resulted in tremendous economic growth over the next two decades. Some critics of the Laffer Effect point to a 2005 Congressional Budget Office (CBO) study. The study suggests that a United States tax cut of 10%, across the board, would only make up 28% of the lost tax revenue in a 10 year period. However, conservatives quickly point out that the CBO study only assumes a modest 1% increase in the Gross National Product (GNP) from the tax cuts. Whereas, the other tax rate cuts cited above, saw GNP increases of several percentage points.

The result of lower tax rates was not only successful in the United States to generate higher revenues, but around the globe. Russia and the Baltic states instituted a 35% flat tax rate that resulted in economic growth and therefore, higher federal government revenues. Between 1979 and 2002 over 40 countries, mostly socialized Western European nations, decreased the top tax rates to stimulate economic growth.

There is little question, as suggested from global empirical data, that decreasing federal tax rates does more to stimulate and grow the economy and therefore; increases federal revenues. On the other hand, raising taxes to very high levels decreases incentives for the economy to grow and therefore, federal tax revenues stagnate and decrease. Remember the Joe the Plumber example from the 2008 election? He decided not to risk buying a business because he feared higher taxes. Hence, he concluded there was no monetary incentive to take the risk. This is why the Laffer Effect is an accurate economic theory.

Obama the Executioner

First, it is important for me to point out that I completely agree 100% with Obama’s decision to ignore Pakistan’s sovereignty and kill Osama Bin Laden. I also believe this event will go down as Obama’s crowning achievement of his first (and hopefully last) administration. I have routinely characterized Obama as being weak and indecisive on issues of importance, but in this case Obama was strong and decisive.
With all that said, I am still wondering where is the liberal outrage over the Bin Laden assassination? Liberals have routinely chastised and bashed the Bush administration for the improper treatment of enemy combatants proclaiming he had violated their civil liberties. Of course, an argument has been made that without the use of enhanced interrogation techniques (torture if you are liberal) intelligence agencies would never have found Osama Bin Laden. In any event, it is becoming increasingly apparent that the raid on the Bin Laden compound in Pakistan was a “kill mission”. In other words, the Obama administration never intended to take Bin Laden or any of the male members in the compound alive. Obama decided he was going to put the complete judicial system in his hands and execute Bin Laden.

The Bin Laden compound was not heavily fortified with guards and ammunition because that would attract too much attention. Bin Laden himself was unarmed and many of those that died along side with him were not identified as civilians or terrorists. It is completely possible that Bin Laden was holding and hiding behind innocent civilians to enhance his cover – this is what terrorists do. Thus, it is probable that innocent civilians were also murdered on this mission.

Throughout the Bush administration a great deal of time and energy was not only placed on condemning enhanced interrogation methods, but also at the loss of innocent civilian lives. Scott Pelley went after Blackwater employees who had itchy trigger fingers and consequently killed over a dozen innocent civilians in Iraq. However, in combat, it is hard to decipher who is the enemy when they blend in society. And no one should ever question the actions of military personnel unless they too have experienced combat. It is solely up to the military to determine if the law had been broken, not liberals or progressives. Still, where are the media and ACLU pundits condemning the Bin Laden mission as violating the civil liberties of human beings? Eric Holder, Obama, and progressives alike want to give enemy combatants civilian rights and trials – but those in the Bin Laden compound will never get these privileges because they were executed. Where is the liberal outrage? Why aren’t Obama’s actions being scrutinized by the media and the Left the same way that Bush was?

This is not the only time Obama crossed the liberal civil rights line and has been given a pass by progressives and the media. Obama went to war in Libya without congressional consent. For the first time in American history Obama has placed a death warrant on an American born civilian - al-Qaeda terrorist Anwar al-Awlaki. And let’s not forget that Obama is continuing with Bush policy of holding enemy combatants indefinitely without a charge and is trying them in military tribunals. By liberal definitions all of these actions can be viewed as civil liberty violations (Conservatives rightfully do not view terrorists as prisoners of war). So where is all the outrage and negative publicity over these so called civil liberty violations? If a conservative president executed civilians or terrorists alike the progressive media would be pushing for war crime indictments. Once again, the left is being hypocritical by only seeing crimes when questionable actions (in eyes of liberals) are carried out by conservatives, but they conveniently look the other way when the left commits these crimes.


Big Oil vs. Big Government

We hear it all the time: “big oil companies are evil”! They charge a fortune for a gallon of gas and reap record profits. People are 30 times more likely to Google big oil profits than big oil taxes (97% to 3%). Why? This is the picture that the media, environmentalists, and progressives paint. Actually, I have absolutely no problem with these folks ganging up on oil companies so long as they live the way they preach. If people are living with a small carbon footprint (can calculate it at http://epa.gov/climatechange/emissions/ind_calculator.html) and or are working on green technology, then please complain. My experience with so called righteous environmentalists is that they are hypocrites and are no better than “armchair quarterbacks”. In other words, they not only expect others to make sacrifices but they expect them to be the innovators to fix greenhouse emission problems. This is life, it is full of people that have strong opinions and who love to complain, but when push comes to shove they are no better than carbon emitting oxygen thieves. If your carbon footprint is lower than mine, then please complain (my wife and I combine to have footprint that is half that of the average American).
Let’s clarify a few things about big oil companies first. The oil and gas industry profit margins rank 60th overall at about 8.1 cents per dollar spent. The pharmaceutical industry rakes in about 19 cents profit for every dollar, banks about 18 cents per dollar, financial services about 13.5 cents per dollar, telecom about 9 cents per dollar, and food and beverage about 8.5 cents per dollar. The average U.S. industry averages about 7 cents profit for every dollar spent. In 2009, Exxon was Forbes “Green Company of the Year”. They spent billions in research and building algae farms to generate gas. And they finished a 30 billion dollar natural gas field that is expected to lower carbon emissions by a billion cubic tones per year. Heck, the CEO of Exxon has no problem with cap and trade and paying a higher share in taxes.

From 2003 to 2008 Exxon paid nearly 100 billion in income taxes – enough to pay for the budget of the Department of Education, Department of the Interior, Department of Justice, the Environmental Protection Agency, and the Department of Commerce in 2011. In fact, Exxon’s yearly tax contribution is equal to more than what the bottom 50% of Americans pay in taxes (160 million people). That statistic includes only Exxon and it does not include the likes of Chevron or Conoco. It is true, due to tax loopholes (that need to be closed), Exxon paid no income taxes in 2009. They paid about 15 billion in income taxes to foreign countries (but foreign income taxes can be written off in the U.S.). Overall, in 2009, their products resulted in nearly 80 billion dollars in tax revenues for the U.S. and foreign countries (an effective tax rate of 47% on their product – no other American industry has an effective tax rate near this high). Yes, this does include sales tax and I realize that people pay sales tax, but there is no denying that both foreign and U.S. governments are collecting massive tax revenues off oil products. It may surprise some, but depending on the year, the government (including local, state, and federal) collects anywhere from 3 to 6 times more in tax revenues than oil companies receive in profits.

While oil companies receive about 25 cents profit from a gallon of gas. The federal government collects 18.5 cents per gallon and states collect, on average, 29 cents per gallon for a total of 47.5 cents in sales taxes (15 to 20% sales tax rate!). Exxon is paying about 35 to 50 cents a gallon in federal income taxes (including foreign – remember their profits include what is generated globally – not just in the U.S.). Thus, governments are collecting nearly a dollar for a gallon of gas whereas, oil profits are much lower. Thus, it is government greed that is driving up the cost of gas, not oil companies whose profit margins are less than 10%.

I think liberal politicians love big oil! They may complain about them in public, but big oil companies are a cash cow that supports their liberal agenda. Besides, politicians are generally some of the biggest carbon emitters (look at the monthly electric bill of government buildings). Here is a question to ponder - Where will struggling state and federal governments recoup these tax dollars if we go green?


The Relationship between Taxes, Income, Social Benefits, Spending, and Debt with the Trade Deficit (Part III)

Starting posting some of my blogs from my other site at Townhall at http://patrickbohan.blogtownhall.com/

A new linear error model was created similar to the one used in Part I of this series of blogs except a new column of data was added – the annual national trade deficit (adjusted for oil imports). Once again to understand how a linear error model is created and analyzed please refer to my blog post: Creating an Election Model (Part I, Part II, and Part III) posted on October 4, 5, and 6 2010. Below is the result of the first linear regression analysis using this new linear error model.

n 20

R2 0.98
Adjusted R2 0.96
SE 4.785E+04

Term Coefficient 95% CI SE t statistic DF p
Intercept 1213554 -267292 to 2694400 679657 1.79 12 0.0994
STAX 1.091 -0.224 to 2.406 0.6036 1.81 12 0.0959
SCS -0.175 -0.341 to -0.009 0.0761 -2.30 12 0.0402
TaxSB 0.2228 -1.0321 to 1.4778 0.57598 0.39 12 0.7056
Debt 0.007289 -0.010171 to 0.024748 0.0080134 0.91 12 0.3810
E Tax -52214 -187754 to 83326 62208 -0.84 12 0.4177
Q1 ISB -16.86 -75.02 to 41.30 26.693 -0.63 12 0.5394
Q5 ISB -18.37 -48.60 to 11.86 13.874 -1.32 12 0.2102

Source of variation Sum squares DF Mean square F statistic p
Model 1.097E+12 7 1.567E+11 68.43 <0.0001
Residual 2.748E+10 12 2.290E+09
Total 1.124E+12 19

Intercept 1213554 1 1.21E+06 1 1213554
Q5 ISB -1.84E+01 5.08E+04 -9.33E+05 4.68E+04 -859716
SCS -1.75E-01 1.25E+07 -2.19E+06 1.25E+07 -2187500
Stax 1.091 1.15E+06 1.25E+06 1.15E+06 1254650
Etax -52214 8 -4.18E+05 11 -574354
Q1 ISB -16.86 1.78E+04 -3.00E+05 2.18E+04 -367548
TaxSB 0.2228 6.97E+05 1.55E+05 6.97E+05 155291.6
Debt 0.007289 1.00E+08 7.29E+05 1.00E+08 728900
-4.86E+05 -636722.4
Result -4.86E+11 -6.36722E+11

The above model has a very good correlation as shown by the R² variable equal to .98. The results indicate that the annual national trade deficit would increase from a loss of 486 billion to 637 billion dollars (remember this is based on data through 2008) by raising the effective tax rate (Etax) from 8 to 11%. I also varied the first quintile’s income (Q1 ISB – takes government entitlement income into account) from 17,800 dollars to 21,800 dollars. On the other hand, I reduced income earned by the fifth quintile from 50,800 dollars to 46,800 dollars. Tomorrow I will post a similar analysis that shows a different trend. The bottom line: higher taxes means U.S. businesses will be less productive and therefore; export fewer goods and services increasing the national trade deficit.
