In This VAT, There Be Billions

Scrambling to come up with money (i.e., take it from us taxpayers), Congress and the White House are experiencing a taxing time figuring out sources of revenue that won't have serious political repercussions.

One that is almost sure to be enacted in the name of "healthcare reform" (since when did health care become one word?) is a tax on employer-provided health benefits, which will probably be skewed toward those with the highest wages and/or highest priced plans.

Inevitably, however, the good ol' value-added tax, or VAT, has resurfaced. In this tax scheme, a tariff is assessed each time a value is added to a product--when it's made, when it's shipped and when it's bought or consumed. Some 130 nations currently employ VATs, and one wag even argues that a VAT of 24 percent (!) would enable the federal government to balance the budget and drop all income taxes to zero for those earning $100,000 or less and to 25 percent for high-earners.

Of course, it would also horrifically raise the cost of everything from eggs to excess consumption--and everything in between.

Now, if Congress would actually incorporate a VAT in the name of ending most income taxes, I'd say it's worth a look, but I doubt you could get many Democrats to go along in the face of a) "lost" revenue from income tax and b) constituent outrage over soaring living costs. Plus, Republicans, theoretically at least, are opposed to all taxes, especially those proposed by donkeys. (Not that the elephants have much power anymore.)

The most commonsensical and best approach is, as always, an across-the-board flat tax on all incomes above..., well, fill in the blank. Or we could revisit Richard Nixon's plan for a guaranteed income for all and thus end the welfare debacle.

However, things that make sense can never make it past Democrats, whose sole purpose in life is to create constituencies that will be indebted to them forever and therefore always vote Democratic--even if the world is falling apart around them.

The Democrats, after all, have a program for everything--and a solution for nothing.

Countrywide Leads the List of Top 25 Bandits

I don't usually agree with AlterNet, which is generally a left-leaning (to say the least) site, but The Center for Public Integrity has a well-reasoned piece on "The Bad Guys of Subprime Lending Are Raking in Bailout Billions."

The article details the woeful and sordid spectacle of non-banks (for the most part) dishing out $1.4 trillion in subprime (paradoxically, actually meaning higher than prime rate) loans that could never be repaid, with ever-lowered standards of loan qualification.

Now, with 20 of the top 25 lenders either out of business or swallowed up, many of the worst culprits are now zinging Uncle Same to bail them out. I'm reprinting the chart that lists the top 25 bandits at right (click on image to enlarge).

Interesting, but how did $1.4 trillion in bad loans cause $3 trillion of federal expenditures in response? Wouldn't it have been easier just to buy up the foreclosed homes and take them off the books?

Answers: Government never takes the easiest or most sensible route since the goal is to buy support and votes, not necessarily to solve any problem.

Weird Weed Being Smoked in Budget Office

Budget Director Peter Orszag's proclamation over the weekend to CNN that health care reform will not increase the federal deficit must mean the administration plans to create health care collateralized debt obligations (CDOs) and sell them to hedge funds to get the trillions needed and keep the debt off record.

Otherwise, Mr. Orszag has found some kind of noxious weed to smoke while on the job. Clearly, insuring an additional nearly 50 million people ain't gonna be paid for by passing individual mandates or even employer mandates. The fed guv, like Massachusetts' Commonwealth Care, will find itself either subsidizing tons of people or exempting them from the mandate.

Let's get real here, folks. Otherwise, make that weed available to the general public so we can all live in the same unreal world.

Obama Admits Not Enough Votes for EFCA

President Obama told a town hall meeting yesterday in New Mexico that "there aren't enough votes in the Senate to get it passed," referring to the controversial Employee Free Choice Act (EFCA), or what's known as "card check."

“There may be areas of compromise to get this bill done,” Obama said at a town hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “That’s what we’re working on.”

Filmmaker and radical liberal Michael Moore suggested months ago that the card check provision, which allows unionization through the collection of a majority of employees' signatures, could be jettisoned, and the bill would still accomplish its goal of strengthening unions.

Reason? Fines on employers (but not unions) would skyrocket, and employers would also have a gun held to their heads to cave into a contract within 90 days of unionization or have one crammed down their throats by an arbitrator.

In fact, card check may have been thrown into the bill just to assure passage through compromise of the other measures. Recent statistics show that unions win 67 percent of unionization votes, but that employers stall on the negotiations front so that only 56 percent of new unions ever get a signed contract. EFCA would solve that dilemma tidily for the unions.

My suggestion: Scrap the whole sorry piece of legislation and read this article on why unions already hold the advantage.

Database Shows Scheduled California Layoffs

Amazing the things you can stumble upon. Today I was reading an article in the online edition of the San Jose Mercury-News when I noticed a sidebar link for a California Layoffs Database.

The database is aggregated from advance layoff notifications given under the WARN (Worker Adjustment and Retraining Notification) Act. My curiosity was to see if my company was on the list (it wasn't, confirming what I thought), but I was struck by some of companies that are planning huge layoffs.

Such as: the San Francisco Chronicle, which by the numbers listed looks almost as if it is going out of business; JPMorgan Chase, which appears to be gutting every banking branch in the state; USAA, my insurer, which is planning a grand total of two layoffs in Sacramento; and retailer Gottschalks, which is actually shutting down, I believe.

The site also incorporates a search function, so you can enter your company's name and location, or you can search by either company or city.

The site provides a type of morbid satisfaction where one can say to oneself, "There but for the grace of (fill in your religion's deity) go I," or if the other shoe is falling, "Uh, oh! What do I do now?"

Oh, Happy Day: Health Care Deform Pledged

President Obama and the Democrats announced yesterday that absolutely, certifiably and whether we need or like it or not, health care reform will be passed by July 31.

I've begun dubbing it "health care deform," as in deformation, since the consequences are going to be so awful. Read what Labor Law Guy wrote about the consequences of nationalized health care in Great Britain--if your treatment costs too much, you're on your own; the government won't pay for it. Oh, happy day, and this is exactly where we're headed.

Obama said the job must be done because "the stars are aligned." Yeah, and they were for Julius Caesar on the Ides of March.

Obama Budget: Punish Foes, Reward Supporters

There's probably nothing unusually (okay, let's take the "probably" out) about a president's slashing the budget in areas that his opponents favor and increasing it for items and programs his supporters favor. Witness Barack Obama, who has in his first budget has already cut defense, cut union oversight, cut abstinence education, and etc., etc. (though somehow the funding for E-Verify, bane of unions and liberals alike because it's so efficient and accurate in identifying illegals, got increased funding).

The author over at Sweetness and Light sums it up pretty well:

Defense, national security, prisons holding illegals, nuclear and coal production, farmers and those in rural areas – and anybody who might carp about his giveaways to his constituents are the ones having their funding slashed.

And this is just on-the-books funding. Think of all extra-budgetary funding for TARP and other programs that rely on conjured (i.e., printed or fake) money. And what about billions and billions every year to run Obama's new plaything, Government Motors (formerly General Motors) to proceed imaginary green cars that no one wants?

Welcome to the Great Repression (of freedom and capitalism).