Monthly Archives: February 2009

Don’t mind the dismal economy, local governments want more of your money

Prepare your wallet to get squeezed again.

Since 2000, there has been an effort to have the U.S. Congress pass legislation in compliance with the Streamlined Sales Tax Project. This is a bureaucratic way of saying that local governments want more of your hard-earned money. They’re not entitled to it now under the law, but approving federal legislation would give taxing bodies an additional entryway into your personal finances.

This project is a response to a previous U.S. Supreme Court ruling that said states may not compel businesses selling merchandise online to collect sales tax if these companies are not located in those states. If I buy something from a company in Texas, for example, Illinois does not have the authority to force the firm to collect sales tax for Illinois.

The Supreme Court ruled that the varying formulas used by different states made it too complex to enforce interstate sales tax measures. However, if Congress passed legislation that would uniform much of this process, then states would be allowed to collect sales tax off purchases from out-of-state companies.

So guess who’s been working hard to have Congress pass such legislation? People representing municipal governments, such as members of the DuPage Mayors and Managers Conference. They met Tuesday in Oak Brook to discuss some common goals, including their desire to wrench more money out of residents already worn out by months of dismal economic news.

Members of the DuPage Mayors and Managers Conference appear favorable to having Congress enact legislation that would open the door for municipalities to collect sales tax revenue from online transactions. Nothing is out of reach of the hands of local tax collectors.

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Kaiser Watch: Dave Diersen has shocking take on speech given by U.S. attorney general

Which of these do you find more incendiary?

“MOORE HEADLINE: Dave Diersen of Wheaton doesn’t believe racial minorities are Americans”

or

“MOORE HEADLINE: Dave Diersen of Wheaton creates public persona as Web site editor — without ever learning how to read”

It’s been quite a while since my blog has featured my very close friend Dave Diersen of Wheaton, editor of GOPUSA Illinois. This Web site is a daily collection of links to stories on the Internet regarding politics and public policy matters.

It’s not that he hasn’t provided me with plenty of fodder. But as a longstanding member of the MSLEM (mainstream liberal elite media, for those of you waiting for the next great text-messaging acronym), I — of course! — love diversity. And as tempting as it would be to perpetually feed off of Diersen’s logically challenged diatribes, there are other important things happening in the western suburbs.

But an entry Diersen makes today on his Web site really got my attention. Here is his comment on a speech delivered yesterday by U.S. Attorney General Eric Holder for Black History Month:

“DIERSEN HEADLINE: Obama’s Attorney General Eric Holder says White Americans are ‘cowards’ and constructively blames White Americans for all problems that minorities have had in the past, have now and will have in the future. Those who blame White Americans for their past problems, their present problems and their future problems will certainly be motivated to take action against White Americans. It seems that Holder’s goal is start a race war. Is that what Obama wants?”

Wow, that’s pretty provocative! Now if you put aside the fact that Diersen’s analysis is also wrong, … OK, so I can’t put aside the fact that Diersen’s analysis is also wrong.

The story to which Diersen referred, a blog posting by Josh Meyer on the Chicago Tribune’s The Swamp, reported that Holder said “the United States is ‘a nation of cowards’ that needs to finally — and urgently — begin confronting the issue of race relations before it polarizes the country even further.”

“Though this nation has proudly thought of itself as an ethnic melting pot, in things racial we have always been and continue to be, in too many ways, essentially a nation of cowards,” Holder was quoted telling employees of the U.S. Department of Justice. “It is an issue we have never been at ease with, and given our nation’s history this is in some ways understandable. And yet if we are to make progress in this area, we must feel comfortable enough with one another and tolerant enough of each other to have frank conversations about the racial matters that continue to divide us.”

Holder’s admonition was on the entire population of the United States. Holder used the word “we” several tmes, so his intent was to include all Americans. I didn’t read anything in this blog posting about anyone being blamed for the problems that minorities have had or are experiencing.

But when Diersen read “the United States,” he saw white Americans. So I must conclude that he either doesn’t consider anyone but white people to be Americans or he is unable to read and, therefore, has no idea what’s reported in this article.

Now do you see how easy it is to misconstrue someone else’s writings? I grossly oversimplified Diersen’s comments (which is incredibly difficult given Diersen’s habit of oversinplifying just about everything he comments on) to draw my conclusions. And this is what Diersen does quite often in commenting on the articles he links to on his Web site.

Regardless of the truth, Kaiser Dave has spoken. And in his mind, this is all that’s important.

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Like the crooks on Wall Street, greed is driving government officials insane

Does anyone truly believe that the root cause of our economic woes is that we have far too few roads? Or that we don’t have a sufficient number of school construction projects going on?

How about Pell Grants to college students? Did the financial industry implode last year because the government hasn’t issued enough of them? Or could it be that what’s really lacking in the economy is the right number of cars owned by government employees?

No, none of these is at the heart of our recession. While some of these items are important and could use a boost (not the government cars thing, though), addressing these concerns is not going to do much to get the economy back on track.

Yet these items — and a whole slew more — are part of the $787 billion stimulus plan approved last week by both the U.S. House of Representatives and Senate. President Obama is set to sign the massive spending plan tomorrow.

A good portion of the stimulus plan is devoted to tax cuts, particularly to lower-income people. Lower taxes are always helpful, so we’ll see what impact these tax cuts have on the economy.

But the spending portion of the plan sounds more like a cascade of gifts to politicians than a reasonable strategy to move the economy forward. If the recession was brought on largely by a subprime mortgage crisis and the resulting credit crunch in the financial sector, these areas must be addressed if the economy is going to move beyond them.

Merely putting people to work on capital improvement projects isn’t going to unfreeze credit or stir a spending spree. This does nothing to stabilize people’s job situation, and that’s the key to once again growing the economy.

How can we know this? Look at the unemployment rate. It recently jumped to 7.6 percent — the highest it’s been in a long time. But this leaves 92.4 percent of the U.S. workforce with their jobs intact.

So why are those in the 92.4 percent afraid to spend with a 7.6 percent unemployment rate? They’re scared that they might lose their jobs tomorrow. And the halt of spending is what is hurting other businesses, causing them to lay off people and increase others’ insecurities about their own positions.

As we saw during the Great Depression, massive spending on public works projects has very little stimulative impact on the economy, even when millions of people are put to work. As exemplified by the spending halt we now have even with an incredibly high employment rate, the public works projects didn’t create a stabile job environment for workers.

People will start spending again when they believe their stream of income isn’t threatened. And since the stimulus plan has little to do with what caused the recession, it won’t relieve the biggest drag on our economy. And with these factors continuing to pull our economy down, the kind of spending needed to pull us out of recession is unlikely to happen.

But the billions of dollars involved here makes public officials and bureaucrats drool, just like it did when Congress passed the $850 biliion bailout plan last year. Mostly everyone was so eager to pass it that they ignored the details.

It’s as though they can’t control themselves with enormous sums of money. Despite the fact that they know passing this bill will do little but add to the already huge deficit, they all line up to get their share for pet projects.

It’s clear they don’t know what in the world they’re doing. And just like the crooks on Wall Street who got us into this mess, we’re going to pay in the end for the government’s greed.

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State officials must get tough on people who drive cars while intoxicated

How is it that some repeat DUI offender doesn’t receive any jail time until he commits his fifth arrest?

John Ambrose, a 51-year-old Batavia resident, was sentenced to eight years in prison Tuesday in a Kane County courtroom. He was arrested Sept. 14 driving eastbound on I-88 near the Orchard Road exit. He was clocked by a Illinois State police officer traveling 65 mph in a construction zone with a posted 45 mph limit.

According to police, Ambrose not only was drunk when he was stopped but his license had previously been revoked. The state’s limit on blood-alcohol content is .08; Ambrose’s BAC was .282 when he was stopped. He was arrested four previous times for drunken driving.

Why was this guy not already spending time in prison? A warrant for his arrest was issued last year when he twice failed to appear in court for a previous DUI. But why was he free to commit this DUI?

The state must drastically increase the penalties for committing DUIs, even for first-time offenders. Any crime involving alcohol and automobiles should include some prison time.

I know it sounds harsh, but the alternative is to keep letting people like Ambrose get behind the wheel of a car when they’re intoxicated. This is a tragedy waiting to happen.

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Congress, Obama coddle stragglers in push to convert to digital television

I wish the federal government would grow a backbone.

President Obama sadly made a request of Congress, which Congress even more sadly granted, that the deadline for television stations switching over to all-digital broadcasts be extended from Feb. 17 to June 12. The drive to get all stations to convert from analog broadcasts to digital broadcasts has been going on for about a year.

So for about a year, I’ve heard all the public service announcements and read numerous articles on how people can make sure their older-model TVs are equipped to receive digital broadcasts. And all of them have been prefaced with the warning that the deadline is Feb. 17, so get this done ASAP.

I guess Obama thought the TV-watching American people weren’t paying enough attention, although I have no clue how anyone could have missed the message. But he figured they should be granted an additional four months to obtain digital TV converter boxes.

This is a bad strategy, and here’s why. No matter how many times you reiterate when a deadline is, some people won’t make it. I work in an industry that’s dominated ny daily deadlines, and it seems as though someone always misses the deadline (admittedly, sometimes that’s been me).

If we pushed back deadlines merely because we knew some people weren’t going to make them, we’d never have a final time/date set for anything. What’s going to happen now if Obama believes many people are still unprepared come June 12? Is he going to ask Congress to postpone the deadline further?

As I said, there will always be people not ready to go with the flow when the deadline approaches. Often the best solution is to set and enforce the deadline and compel stragglers to face the consequences.

Now we’re all going to have to listen to four more months of warnings about not being prepared for the digital TV switch. If people can’t get themselves ready for this in a year, will they ever have enough time to get ready?

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Roosevelt serves as example of what not to do during economic crisis

The Democratic Party of DuPage County pulled in the big guns Sunday to press the case about the urgent need for a massive economic stimulus plan.

At the Presidents Day Gala at the Drury Lane Conference Center in Oakbrook Terrace, President Franklin Roosevelt made an appearance. I’m presuming that since FDR died in April 1945, the man who appeared was a re-enactor. But he did an excellent job in portraying the Depression-era president.

What he didn’t do so well was in convincing me that we neeed to follow FDR’s plan of trying anything to get the economy back on track. Roosevelt inherited an economic crisis the likes of which we had never seen before and haven’t experienced since.

The FDR re-enactor regailed the Democratic audience of stories regarding his bold experimentation in tinkering with fiscal policy to restore confidence in the free market system and put people back to work. This impressed me as a not-to-subtle message that members of Congress need to pass something — anything — to pull us out of our recession.

The problem with this message is that FDR is not a good example of what to do in case of an economic crisis. The unemployment rate when he took office in 1933 was 25 percent. By the time we entered World War II, the unemployment rate had lowered to about 15 percent.

Yes, 15 percent is better than 25 percent, but this is a drop of a little more than a third in eight years. I would expect at least that much of an incremental decrease in the unemployment rate in eight years by the mere inertia of the free market.

So I have to conclude that Roosevelt didn’t do much of anything to improve the economy, but he spent a ton of money while not doing it. Sure, it resulted in an abundance or roads and buildings being constructed, and this has its benefits. But if the goal was to push the economy into high gear, it was a dismal failure.

We know this not just by the anemic decrease in the unemployment rate but also the rapid economuc growth that occurred once we entered the war. The unemployment rate dropped to below double-digits in a few years. And we can pinpoint what made the difference.

The key to sustained economic growth is not simply government spending, particularly the way FDR did it. He put “millions of people to work” (as the re-enactor said Sunday) through his many government programs. But the government funded these programs with higher taxes on wealthy people, the very ones who run companies and offer steady jobs to people.

So how can the government put so many people to work yet still keep the economy from growing? It does this by not creating new wealth but by merely taxing the that wealth exists. Michael Steele, the newly named chairman of the Republican National Committee, attempted to explain the distinction between having work and having a job to George Stephanopoulos on ABC Sunday morning. Despite Steele’s best efforts, Stephanopoulos said he didn’t “get it.”

Here is the difference: Government-funded work programs create short-term contracts for public improvements. This is OK, but it doesn’t ensure economic stability for the worker. As Steele said, these contracts will all eventually end. They could end in a few months; they could end in several years. But they will last only as long as it takes to complete the project.

A private company survives by creating work not just for the short term but for the long term. And when it contracts with another firm, new wealth is created. Thus it has a greater chance of surviving by perpetually creating interest in its goods or services.

So what the private company offers a person is a job, something that has the potential of lasting for a long time. No, there’s no guarantee that this job will last forever, but the likelihood is higher because the company is doing what it can to stay competitive in its industry and is always seeking new contracts.

Consumers are more likely to spend money when they believe their stream of revenue is steady. If you know you’ll have work for the next three months or have a job for the next three years, the job situation will stimulate more consumer activity because people feel more stable when they work for a company that shows it can sustain itself and continue to offer employment. And because new wealth is created in the private sector in terms of money and goods/services, the economy grows.

Government-funded work programs are not predicated on creating new wealth; they merely tax the wealth that exists (or they run up huge debts to be paid later). Roosevelt tied up so much capital in his New Deal programs that private companies couldn’t grow enough to produce new wealth and put people back to work in sizable numbers.

When we entered World War II, the military infrastructure had to be rebuilt. The U.S. military largely demobilized after a war, so the tanks, plans and ships (as well as everything needed to equip them) had to be developed from scratch. The government ran up huge debts to pay for it all, but it worked in that case because the contracts rebuilt the weatlh of these companies and ensured the debts could be paid off later (it really was a matter of smoke and mirrors).

We don’t have the same situation now. There is not a demand for as massive a military build-up as there was in World War II, so the chance to pump huge sums of IOUs into these firms is pretty slim. The economic stimulus plan offers little in the way of true incentive for companies to create more jobs.

What could help with this? Cutting the payroll tax and reducing or eliminating the capital gains tax would stimulate the economy better than the kind of spending this plans promotes. It would put money back into the hands of entrepreneurs and employees, and their conficence in the market would improve. Result? More spending, reaping additional benefits on the economy.

So FDR may be a good example, but more for what we shouldn’t do in an economic crisis than what we should do. The facts are right in front of us, but we have to accept what they’re saying.

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Chicago Cub-dome demands deep devotion and even deeper pockets

Killing some time yesterday in a local sporting goods store, I came across an item that truly amused me.

The store had quite a display of professional baseball merchandise, virtually all of it promoting the Chicago Cubs. I’d say the ratio of Cubs paraphernalia to Chicago White Sox items easily ran five-to-one. For some unsettling reason, the western suburbs have attracted a noticeably unbalanced numbe of Cubs fans.

I’m a native South Sider, so it’s no mystery where I come down on the “Cubs or Sox?” question. But I want to stress that I’m not a rabid Cubs-hater.

If people wish to root for the Cubs, God bless them. I don’t understand why a team as pathetic as the Cubs are draw such unconditional love and devotion from so many baseball fans, but that’s not my problem. Live and let live.

Noe given that people from the western suburbs are mired in Cubs-mania, it didn’t surprise me that this sporting good store had an ample supply of all things Cubs and a more modest offerings of Sox items. You cater to your base.

But I came across one item that took me aback. It was a premier leather varsity-style jacket dripping in Cubbie blue. On the back were the words “World Series Champions” and then the dates “1907” and “1908.”

Wow, that’s devotion! I own a White Sox jacket promoting the team’s 2005 World Series victory, and even this is getting a tad dated — but it was still im my lifetime. But to go back 100 years?

Who in the world would pay about $300 for a jacket that admitted your team hasn’t won it all in a century? At first I thought the item was a joke, but it’s for real. And it’s there for any diehard Cubs fan to buy.

People are free to do whatever they want with their money, but I’d have second thoughts about buying something like that. Perhaps that shows the difference between us. Cubs fans will never relinquish the dream (despite an entire century’s worth of evidence that it’s nothing but an illusion), and we Sox fans know our limits.

And we know a bad deal when we see one.

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