Rossputin.com: Rational Thinking About Our World

In my blog posting for yesterday, I asked "What's a libertarian/conservative supposed to do?" in terms of whether to support John McCain, if he's the eventual nominee, simply in order to avoid having President Hillary or President Barack.

In last night's Republican debate at the Reagan Library, McCain offered good reason to go with what I've said earlier on these pages: If John McCain is the GOP nominee, I'll vote Libertarian. While there are still more than 9 months to the election, plenty of time for McCain to try to change the minds of people like me, he took a giant step down the wrong path in last night's debate.

McCain's performance was a repetition of one note: That he's "proud of his conservative record", which, as far as I could tell extends as far as supporting the surge in Iraq. He also looked petty and foolish in his attacks on Mitt Romney who gave much more conservative, particularly fiscally conservative, Reagan-like answers and who seemed much more in touch with a wider range of issues than did McCain.

Mike Huckabee and Ron Paul were both understandably distressed with how little time they got to speak, but both gave the answers we've come to expect when they had the chance.

The following is a longer version of an article I submitted to Human Events about the debate. You can read the Human Events article, titled "Rudy Endorsed the Wrong Man" here:
http://www.humanevents.com/article.php?id=24758

The four remaining Republican candidates for president took part in their last debate before Super Tuesday, in the Reagan Library in Simi Valley, California, in front of Reagan’s Air Force One. With the Gipper’s legendary rhetorical ability as well as his consistent adherence to true conservative principles, it’s hard to imagine the debate would have made him proud, particularly with regard to the GOP’s current front-runner, John McCain.

After a routine question about whether we are “better off than we were eight years ago”, to which each candidate gave an entirely predictable answer, a questioner from the LA Times then asked Mitt Romney whether John McCain was a mainstream conservative. Romney’s answer was a laundry list of the many issues which have conservatives uncertain at best about whether they would support McCain if he is the eventual nominee. Not only did Romney mention McCain’s initial opposition to the Bush tax cuts, but he also took on McCain’s positions on free speech, immigration, and energy policy by (accurately) naming the hyphenated bills for which McCain has allied himself with liberal Democrats: McCain-Feingold, McCain-Kennedy, and McCain-Lieberman.

McCain responded with his usual line of being “proud of (his) conservative record”, then fired off some economic criticism of Romney, almost all of which was effectively rebutted by Romney who told McCain twice that “facts are stubborn things”. Indeed, Romney’s retorts again made McCain look like he was willing to say things which are either highly misleading or outright false, much as he was accused of doing regarding Romney’s position on Iraq “timetables” at the end of last week.

An interesting moment was McCain’s naming some of the impressive economic advisers he has, including Phil Gramm and Jack Kemp, and saying “I will rely on people to judge me by the company I keep.” I could not help but infer that McCain would prefer people not judge him based on him.

All four candidates said they supported California governor Arnold Schwarzenegger’s right to impose stricter emissions standards in California. Huckabee had the best answer, saying that if the Governator was right, others would copy him. And if his plan failed, other states would recruit the jobs they lose in California. Along the same lines, regarding the McCain-Lieberman “cap and trade” proposal, McCain gave the worst answer, along the lines of Pascal’s Wager: “Suppose the governor and I are wrong and there is no such thing as climate change…then all we’ve done is give our kids a cleaner world.” Romney rightly attacked the plan as a massive tax increase on Americans and likely to cause energy-intensive industry to leave the United States for places without such plans, doing nothing for global climate change.

On the question of the stimulus plan, the LA Times questioner asked Mike Huckabee why he suggested using the money to widen Interstate 95 from Maine to Florida instead. Romney made Huckabee look rather silly by pointing out that infrastructure plans take years to implement whereas the stimulus plan is something aimed to be completed in six months. Huckabee made himself look even sillier by saying that his initial proposal was made when he was in Florida, so “today we might look at a western highway”. Ron Paul’s comment on infrastructure was a reprise of his usual line: “We have a foreign policy where we blow up bridges overseas. Then we tax the people to go over and rebuild the bridges overseas, and our bridges are falling down….We have a trillion dollar foreign operation to operate our empire.”

In a question about the current “mortgage crisis”, John McCain said he thought “efforts so far are laudable” but that there are “some greedy people on Wall Street who perhaps need to be punished”. He suggested that “we ought to adjust the mortgages of people who were eligible for better terms, but were somehow convinced” to get worse mortgages than they could have received. In other words, McCain remained true to his very tenuous grip on an understanding of the importance and value of free markets, and the danger of moral hazard.

Another constant for McCain was his general refusal to answer difficult questions about his record, such as why he opposed the Bush tax cuts initially. Instead, he said again that he was “proud of his conservative record” and of having been “a foot soldier of the Reagan revolution”. He also said that “lower- and middle-income Americans need more help…which is part of the reason we’re giving them rebates.” In other words, McCain gladly accepted the liberal turn of a tax rebate to a redistribution plan.

When Senator McCain went into his usual rhetoric about controlling spending (one of the few areas in which he and most conservatives agree), Romney emphasized that the majority of our budget problems come from entitlements, and noted that no (other) candidate is talking about addressing those programs.

On immigration, Romney emphasized “no amnesty” and said that what he found “so offensive” about the McCain-Kennedy immigration bill was the ability of all illegal aliens to stay here permanently with a $3,000 “Z-visa”. One of the most interesting questions and answers of the evening came when Senator McCain was asked whether he would vote for his own immigration bill if it came up for a vote now. He said multiple times that it wouldn’t come up for a vote, but, when pressed, quietly said that he would not vote for it because he “knows now that the American people want the border secured first.” Interesting that he somehow missed that fact earlier.

Mitt Romney was asked whether the Republican Party was better off than it was eight years ago, to which he responded that it wasn’t, but that it wasn’t primarily the fault of President Bush, whose agenda was diverted by 9/11, Afghanistan and Iraq. He noted that “even discretionary spending has gone up by more than inflation”. Romney had one of the better lines of the evening: “It’s important that we, as Republicans, stay in the House that Reagan Built. If we want to take the White House again, social, economic, and foreign policy conservatives have to come together.”

Bringing up the dispute of the last week, Romney was asked whether he had supported time tables for withdrawing from Iraq, Romney said that McCain’s assertion that Romney had done so was “a lie”…with McCain smiling uncomfortably in the next seat. Romney also called McCain’s timing of that assertion, just before the Florida primary, the type of “dirty trick that Ronald Reagan would have found to be reprehensible.” Romney’s harsh words brought the loudest applause any candidate received during the evening. Strangely, even though media outlets across the political spectrum have backed up Romney’s position, McCain started his response with “Of course, he (Romney) said he wanted a timetable.” Then McCain described how he (McCain) was strongly supporting the surge while Romney said he “didn’t want to weigh in” because he was a governor. Romney interrupted McCain asking him “How is it that you’re the expert on my position?”, again getting loud applause. McCain’s persistence in the face of Romney’s convincing rebuttal and even the moderator’s implication that McCain was wrong earned McCain the only boos of the debate.

One of McCain’s few bright spots came when he replied to Romney’s charge of “old-style Washington politics” by noting that Romney has been the primary source of negative ads in the Republican contest so far, and saying to Romney of the millions of dollars Romney has spent on such ads “a lot of it is your own money. You’re free to do what you want to. You can spend it all. But the fact is that your negative ads, my friend, have set the tone, unfortunately, in this campaign.”

Congressman Ron Paul’s answer on Iraq was interesting and amusing. Paul said he finds the argument between McCain and Romney “rather silly, because they’re arguing technicalities of a policy they both agree with….We should be debating foreign policy, whether we should be intervening or not, whether we should be the world’s policeman or not….and you’re arguing about technicalities of who said what when?!?” Paul then went into his usual rant about the Iraq war being a mistake and unconstitutionally undeclared war, having nothing to do with Al Qaeda or 9/11, and bankrupting the country. Mike Huckabee said that we must leave as soon as we can, but with victory and with honor. McCain then made an important point that the question of how long we might have troops in Iraq must not be “about American presence, but about American casualties.”

John McCain was asked why he was better suited to manage the economy than Mitt Romney to which McCain gave a rather generic “because I’m a leader” answer and then proceeded to talk about his leadership in the war against Islamic extremism, rather than actually address the economic issue raised specifically by the question. He then emphasized his military record and his time as a POW, all of which was true but which did not answer the question. Romney, after saying that he respected McCain’s service to our country, noted that Americans tend to turn to governors rather than senators because governors as executives “are actually leading something. Senators and Congressman are fine people, but they’re legislators. They sit in committees. They’re committee chairs. And they call that leadership.” Romney then described his 25-year successful career in the private sector and turning around the Salt Lake City Olympics. “In order to have someone strengthen our economy, you’ve gotta have somebody who’s actually done some work in the private economy, who understands how it works.”

Turning the question around, Romney was asked why he would be better than McCain as Commander-in-Chief. Romney said that he didn’t believe you had to have served in the military to do a good job in that position, and that his leadership experience would serve him well. McCain attempted a ham-handed jab at Romney’s business when responding, mentioning that sometimes people lost their jobs when Romney bought and sold companies; Romney just laughed. Then McCain argued that this is not the time for on-the-job training and named the many military endorsements he has received, such as Norman Schwarzkopf.

Ron Paul gave another interesting answer to those questions, noting that “the constitution is very clear that the president is commander-in-chief of the military, but the president is not commander-in-chief of the economy or of the people”. He said the question shows “a lack of understanding” of the economy and the proper role of government. “We don’t want to manage the people and tell them how to live.”

Mike Huckabee emphasized his executive experience, also noting that “Washington doesn’t know how the states work, but the states know how Washington works”, mentioning unfunded mandates destroying states’ budgets. Huckabee also took a jab at legislators “who have the luxury of specializing in an issue” whereas governors “have to be able to handle on any given day several dozen different issues.”

The debate ended with the candidates being asked “Would Ronald Reagan endorse you, and if so, why?” Romney and McCain said “Yes”; Paul said “I don’t know”. Huckabee ended with a great line: “I’m not going to pretend he would endorse me. I wish he would…but I endorse him.”

Of those two candidates who believed Reagan would endorse them, Romney was the more convincing. Mike Huckabee and Ron Paul got little time during the debate as most of the questions were about arguments between John McCain and Mitt Romney. To this viewer, Romney had a much better performance than McCain; indeed, had this debate happened just a few days earlier, I would not have been surprised to see Romney win Florida.

There will be more than enough post-mortem of Rudy Giuliani's campaign that I don't need to spend a lot of time on it.

As I write this at 8:30 PM mountain time on Tuesday, Fox News is announcing that Rudy will endorse John McCain, yet another octane boost (as if one were needed) for a candidate who was thought by everyone (including me) to be dead in the water just a month ago.

Not only was McCain's thought to be over, but most people who consider themselves true conservatives or conservative-leaning libertarians (like me) were quite pleased about it. After all, McCain is responsible for the greatest assault on the First Amendment since the Alien and Sedition Acts. Although he's always been strong on spending cuts, he's been weak on tax cuts and his rhetoric around the Bush tax cuts could easily have come from a Democrat. McCain's greatest strength is on national security, especially the degree to which he is the candidate most closely tied to "the surge" in Iraq which is now widely viewed to be working.

I supported Rudy because I believed he was as strong as McCain in understanding the nature of our enemy, but far better in economic issues.

However, it started becoming clear a few weeks ago that Rudy's strategy was much more dangerous than he originally believed. Also, even to people like me who strongly supported Rudy, the thought that his children weren't supporting him seemed like a possibly fatal (politically) problem, particularly in the party of "family values".

So, that leaves me thinking about Romney and McCain. (I don't take Huckabee seriously, and I think that if he were the nominee, the GOP would suffer their biggest loss in at least two generations.)

I have written in these pages that I would vote libertarian if McCain were the GOP nominee. I am wondering to myself, and interested in your thoughts, as to whether I should give him the opportunity to change my view.

My gut instinct is that McCain-Feingold makes him unfit to be president, even if that view means we get Hillary.

But during these days when we are facing Islamic terrorism, would it be irresponsible to support a Democrat (at least any other than Joe Lieberman) even if the Republican candidate is mostly repellent to my views?

After the last election, I noted that in two states the Republican candidate lost by fewer votes than the Libertarian received. If you assume that the Libertarian votes would have broken substantially Republican had there been no Libertarian candidate (something I believe was true in '06 but may not be in '08), the GOP would still have control of the Senate if not for Libertarians. And I argued that was a good thing because the GOP is basically worthless if it's going to act like Democrats, and it was that big-spending, corrupt behavior which used to be the province of Democrats which caused the Libertarian and fiscal conservative Republican backlash.

So, why shouldn't I believe the exact same thing in the upcoming Presidential race if McCain is the nominee? Isn't it better just to elect a Democrat than a Democrat-lite, and let the Dems wear the damage that their policies cause? Or is the "war on terror" risk too high to try to prove that point in good conscience?

The Wall Street Journal, maybe also dealing with the potential reality of a McCain nomination, is arguing that McCain has the most (or second-most) talented team of economic advisers, including Phil Gramm, Jack Kemp, and Art Laffer. And that is important, particularly given that McCain knows that he's not an expert on economics. Maybe he has come to truly understand how wrong he was to oppose the Bush tax cuts.

But still, there's McCain-Feingold....

Maybe, in the reverse of George Bush running as a conservative but governing as a big-government radical, McCain will surprise us and actually govern us as an economic conservative. Is that hope likely enough to effect my thinking?

And still, there's McCain-Feingold....

If the Democrat presidential candidates are as dangerous as I believe they are, especially with my assumption that they will increase their majorities in Congress, how much should I care about electability? In other words, I prefer Mitt Romney to John McCain on almost every level, but I have a feeling that McCain is far more likely to win in November than Romney is. It seems clear that if I wouldn't support McCain in November, I shouldn't care about electability.

At the end of the day, I'm really torn about what to do, whom to support. I'm very disappointed in the implosion of Giuliani's campaign. One thing McCain could do which might encourage me to be able to hold my nose and support him would be at least hint that he'd have Giuliani involved in his administration, possibly as Attorney General.

Next week comes Super Tuesday, during which time we are likely to see Romney and Huckabee split the conservative vote, giving McCain an even larger victory than he otherwise might have, especially with no other "moderate" in the race. (I don't like calling Rudy a "moderate" since he was only "moderate" on social issues, but exceptionally "conservative" on economics and foreign policy...the areas where the federal government actually has constitutional authority to act.)

Comments from any of you who can help me untangle my muddled thoughts would be much appreciated.

Since the president's final State of the Union Address will already be over-analyzed by every form of media, I'll keep my comments about it short.

I was very pleased to hear him say he'll veto any bill that includes a tax increase. However, that also serves to highlight Bush's failure for nearly 7 years to veto anything important or to do his part to keep the cost and size of government under control.

It was stunning to see how frequently the GOP side of the room stood and applauded while the Democrats sat there. On issues from school choice to health care to national security, they could easily have been a bunch of Soviet commissars from the 1970s watching bitterly as ideas of liberty and free markets oppose their Marxist plans to control everything people do.

It was gratifying to hear the president announce the return home of about 20,000 American troops who will not be replaced in Iraq. It is primarily good news because it is that many fewer young Americans who will not be risking life or limb in a far away desert. But it is also an interesting political issue as it substantially weakens the raison d'être for the Democratic party unless you are a socialist or a union member (or is that redundant?).

I think the president has gone way too far in supporting "alternative energy" such as ethanol and in particular with his support of subsidies for industries which are more than economically viable without gifts of taxpayers' hard-earned money. I also oppose No Child Left Behind, regardless of whether the president is right that test scores went up last year. I wonder how the president can reconcile his correct support of vouchers, school choice, and increasing parental involvement with his unconstitutional federalization of education. Maybe it's the same way he could sign the McCain-Feingold Incumbent Protection Act while saying that he believed it to be unconstitutional. President Bush started his speech with a reference to the oath that our elected federal officials and judges take to protect and defend the constitution. He's done a poor job of honoring that oath himself, but I hope that his last year in office will be one that lets me raise my very low view of his presidency in that regard.

All in all, the speech was good enough, not over-reaching for a president with low popularity and whose party is in the minority in both houses of Congress. He made some important points on major issues. It remains to be seen whether his success will come anywhere close to his rhetoric. If history and the current state of DC politics are any guide, it's hard to be too optimistic.

re "Money from Uncle Sam", Boulder Daily Camera, 1/25/08
http://www.dailycamera.com/news/2008/jan/25/money-from-uncle-sam/

One of the biggest problems with the federal government’s so-called “stimulus package” is well represented by your January 25th headline, “Money from Uncle Sam”. The implication of such a description makes a reader feel that he’s getting a birthday gift or an inheritance rather than simply a return of his own money or, even worse, money which the government pilfered from someone else who had the political misfortune to earn a decent living.

I am not implying that the Daily Camera is creating this “free lunch” perception among voters; the Camera is simply reflecting a tremendous lack of economic understanding by the average American. (Indeed, it is this sort of confused thinking which encouraged President Bush’s creation last week of a “President's Advisory Council on Financial Literacy”, to be chaired by Charles Schwab.)

This “stimulus package” will not stimulate the economy in any meaningful way; after all, who would go hire more workers or build a new factory to accommodate a short-term burst of spending which is specifically designed to be temporary? Instead, the package is a transparent attempt by politicians to buy our votes with our own money. Even worse, the Republicans have let Democrats co-opt the plan so that if you are in the group of Americans who pay over 60% of all federal income taxes, you get nothing. The plan has become pure redistribution. Economically it will do nothing except increase our deficit and politically it just re-emphasizes how far Republicans, especially President Bush, have strayed from fiscal conservatism. Unless you have an uncle named “Sam” who makes a good living, your check is coming from some other real person whom you don’t know but whose money the government has decided you should have instead of him.

Please join me in welcoming to the world our son Jasper Rand Kaminsky, born 15 minutes after midnight on January 25, 2008. Jasper was born 20 1/4 inches long and weighing in at a hefty (for our family) 6 pounds, 13 ounces. Mother and baby are already home, and other than mom suffering from sleep deprivation as expected, everyone is doing well.

Luckily for us, Kristen's mom, "Nana" Dianne, is here helping us cope with Lili and lots of things around the house. And luckily for Nana, she was at the hospital and got to see Jasper within 5 minutes of his arrival.

Jasper arrives in the atmosphere

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A proud father

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Kristen readies Jasper to go home

(wearing a bonnett my grandmother knitted for me more than 40 years ago)

Here's a great article by Bill Wilby in the Wall Street Journal discussing the tremendous damage being done to our economy and our nation by the Fed's abandoning any pretense of caring about the strength of the dollar:

The Dollar and the Market Mess
By Bill Wilby, WSJ, 1/23/08
http://online.wsj.com/article/SB120105077515308369.html

Right back into the realm of economic literacy, here's a brilliant opinion piece by Don Boudreaux regarding the futility (or worse) of the "stimulus package" we're likely to get from our government:

The foolishness of economic 'stimulus'
Do we really want to risk prolonging a bad economy?
Don Boudreaux, Christian Science Monitor, 1/24/08
http://www.csmonitor.com/2008/0124/p09s02-coop.html

If any of you are interested in receiving short daily or almost-daily emails from Brian Wesbury (mostly about the real economy, economic statistics, financial markets, etc.) and/or from Don Boudreaux (mostly about political economy, economic philosophy, taxation and regulation, etc.), please contact me with your email address and I will ask either or both to add you to their distribution list.

Here are examples of each gentleman's writing.

First, Brian Wesbury:

Fed Makes Emergency Rate Cut
To view the full report, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein - Senior Economist
Date: 1/22/2008

Early this morning, as an emergency action, the Federal Reserve cut both the federal funds rate and discount rate by 75 bps. The funds rate is now 3.50%; the discount rate is now 4.00%. This is the first inter-meeting change in rates since September 17, 2001.

The next scheduled Fed meeting is on January 30th. Unless the stock market is up sharply between now and then, maybe even if it is, rates will be cut again. The Fed is no longer treating the situation like the 1987 stock market crash or the freezing of credit market conditions in 1998. In those situations, the Fed cut by no more than 75 basis points. The Fed is increasingly treating the current situation like the economic slowdown and recession of 2001.

We do not believe the economic outlook is nearly as bleak as the Fed believes and remain very concerned about inflation. That said, the Fed clearly does not share our view.

Please follow the above link to access the entire Research Report

And here's Don Boudreaux:

23 January 2008

The Editor, New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

Len Burman proposes to avoid recession by repealing the Bush tax cuts two years early, in 2009 ("Make the Tax Cuts Work," January 23). He asserts that "If people knew that their tax rates were going up next year, they'd work to make sure that more of their income is taxed at this year's lower rates." And investors would "cash out their capital gains now to avoid paying higher taxes later."

Strange argument. First, Milton Friedman's permanent-income hypothesis (which has much empirical support) shows that people spend according to their expected incomes over the long-run. Promising to raise taxes next year, especially because doing so reduces people's future take-home incomes, would do little to promote more spending in 2008. Second, since when is disinvestment - which is what cashing out capital gains amounts to - good for the economy?

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

The one minute a day you might spend reading these guys' work will add to your economic literacy more than any course you took in college.

If you'd like to be added to the list, click on the "e-mail Rossputin" link near the top right of the page and send me a note, or just post a comment to this article. I won't make the comments publicly visible, so you don't have to worry about your email address being viewed by the world.

In a timely move (and ironic, given the blog posting I had already written for today) which I hope was caused by Brian Caplan and me and others repeating so frequently that the average voter is economically illiterate, President Bush on Tuesday signed an executive order forming the President's Advisory Council on Financial Literacy.

The 19-member group, which will be chaired by Charles Schwab, will advise the president and the Secretary of the Treasury on how to improve the economic and financial literacy of Americans.

As far as the government's creation of councils, task forces, etc., this is one that I think could be quite a good idea.

There is no doubt that many Americans believe a lot of incorrect things, such as that increasing free trade and (legal) immigration are net economic losses for the country, or that the Bush tax cuts were a gift to "the rich". Particularly on economic issues, ignorance can be very damaging since the ignorant can vote for politicians who share their views.

My only real concern with this council is that in his announcement on television, President Bush mentioned three example constituencies who would have representatives serving on it: Business, non-profits, and faith-based organizations. Of course charities and churches have an interest in the economy and to some degree in financial literacy, but any groups which rely on the tax code to "encourage" citizens to spend on them rather than on other things has an interest in perpetuating certain economic myths or parts of the tax code which modify what people would do, left to a system which were more economically free and rational.

For example, charities tend to lobby against repealing the Death Tax because they believe that people donate to charities in order to lower estate tax liability. Of course, it's true that some gifts to charities are for that reason, but that does not mean we should conclude that charitable giving would decline if people got to keep more of their own (or their parents') money. In any case, it isn't a proper role of government effectively to force me to give to charity.

I hope that this council will really work toward increasing objective financial and economic literacy and not toward reinforcing the tendencies in our tax code which simply serve the interests of council members.

A reader of these pages wrote a comment which was chock full of the worst sort of populist nonsensical economic proposals. It's the kind of stuff that we get, usually in pieces...not all in one place...from Democrats, isolationists, and populist panderers like Lou Dobbs.

I wrote a comment in response, but I also thought this excellent letter to the NY Times by Don Boudreaux was to the point.

The more I read of writing by "the public", the more I realize that Brian Caplan is right: The average person's views of the economy and sound political economic theory are not only incorrect, but they are dangerous. Everyone should have to read Don Boudreaux and Brian Wesbury. For today, here's Don:

To the Editor:

Bob Herbert says that "the average income for the vast majority of Americans actually declined" [from 1980 to 2005]. The standard of living for the average family has improved not because incomes have grown, but because women have gone into the workplace in droves" ("Good Jobs Are Where the Money Is," January 19).

The data suggest otherwise. First, in every Census Bureau breakdown of families according number of spouses working, real median, as well as real mean, income is higher today than in 1980* - a fact nearly impossible to square with Mr. Herbert's claim that average incomes have fallen for the "vast majority of Americans." More to the point, median income for families in which both spouses worked in 1980 was (in 2005 dollars) $60,313. In 2005 median income for families in which both spouses worked was $78,755 - higher that the 1980 figure by 31 percent. Because, in these data, both spouses worked in 1980 and in 2005, this increase in median real income for these families cannot be the result of spouses entering the workforce since 1980.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

For today's reading, please see my article at HumanEvents.com:

"Market Madness, Ross Kaminsky, HumanEvents.com, 1/23/08
http://www.humanevents.com/article.php?id=24608

Americans for Tax Reform, headed up by Grover Norquist, has released this "matrix" which shows the major presidential candidates' positions on various tax-related matters, from repealing the AMT and the Death Tax to cutting corporate tax rates and improving the way the tax code deals with health care.

From my point of view, it's a strong argument in favor of Rudy Giuliani.

You can see the matrix here:
(Left-click to view, right-click to download/save)
http://www.atr.org/content/pdf/2008/Prez%20Tax%20Matrix_3ed.pdf

As I write this note on Monday evening, Dow Jones Industrial Average futures are down more than 500 points, with S&P 500 futures down about 60 points.

The Australian market is down 5.5%, following similar or larger losses through most of Asia and Europe on Monday.

The market panic seems to be a combination of recession fear and worries about banks having to write down assets as they revalue holdings tied to real estate, especially "sub-prime".

[It wouldn't surprise me if we see the Fed cut rates in the next few days, in advance of their scheduled meeting at the end of the month, but if the market rallies on a "surprise" cut, that rally should probably be sold...and quickly.]

What I wonder is whether the markets are more likely to predict a recession or to cause one. Same story for mainstream media. Will people hearing repeatedly on TV or in newspapers that the odds of a recession have increased dramatically cause them to restrain their spending, and make the prophecy self-fulfilling?

To answer my own questions: I think the markets are more likely to predict a recession than to cause one whereas I think the media is more likely to cause a recession than to predict one.

I have no idea what to make of professional economists at this point. Some believe the economy isn't as fragile as the media would have us believe. Very few are yet predicting recession, though I believe that will change a lot in the next few weeks. On the other hand, it's commonly said that economists "have predicted 12 of the last 4 recessions."

All that said, Tuesday's likely near-crash in the stock market must have a negative impact on the economy, on consumer spending, on capital formation. While the market is predicting a recession and has been for a few weeks in stocks and arguably for 6 months in bonds, in its own way it will also help cause one.

I, like most of you, am losing a lot of money in my retirement account and other investments. I, like most of you, don't yet know what if anything to try to do about it. I assume that I, like most of you, will be cutting back on my spending in the coming year and doing my part to ensure that the recession actually does come. While I realize that recessions are necessary to squeeze excesses out of the economy and that they're a necessary fact of life in a sustainable economic system, it doesn't mean they're any fun. This one won't be any fun either. I encourage you all to be very careful out there, financially speaking. Don't forget that losing money is much worse than not making money.

Sorry I didn't put this link up on Friday...

Here's an article I wrote for Human Events about Clinton and Obama's ads going into the Nevada caucuses:

"Clinton, Obama Ads Reveal Big Government 'Change'", Ross Kaminsky, Human Events, 1/18/08
http://www.humanevents.com/article.php?id=24536

For those who wonder why fiscal conservatives are extremely skeptical of John McCain's position on tax cuts, I recommend this little group of cuts assembled by Human Events:

John McCain's Top 10 Class-Warfare Arguments Against Tax Cuts
HumanEvents.com, 1/16/08
http://www.humanevents.com/article.php?id=24421

I'm writing a long piece for Human Events today, so allow me to offer you, for your Friday enjoyment, these two excellent pieces:

First, by Russ Roberts, on the subject of the sudden proliferation of "economic stimulus" plans being put forth by politicians:

(You can either read the text, or click on the "Listen Now" link near the top of the page.)

Economist: Don't Jump the Gun on Stimulus Plans
by Russell Roberts, NPR, 1/10/08
http://www.npr.org/templates/story/story.php?storyId=18159629

And second, by Brian Caplan, on the economic illiteracy of the general public, particularly as related to "economic stimulus" plans:

(Audio only, click on "Listen Now" near the top of the page)

Voters Clueless About the Economy
Brian Caplan, NPR, 1/17/08
http://www.npr.org/templates/story/story.php?storyId=18176724

They say that two things you never want to see made are laws and sausages, and I learned why last night.

In a Boulder County hearing room, in a two-and-a-half-hour scene that bounced between inanity, brief flashes of political insight, interesting public comment, and some of the worst committee management I've ever seen, somehow a fairly reasonable outcome was achieved.

The issue, as I discussed in yesterday's posting, was a rule proposed by the Land Use director regulating "Home Events", including concerts given at peoples' homes or on their property.

The first hour was interesting, and to some even inspiring.

After the Land Use director, Graham Billingsley, described the intent and details of the proposed "text amendment" to "the code", the panel took public comment.

I was second to speak, following a lady who has a neighbor who puts on large, loud, apparently for-profit concerts right next to their property. It was a real issue and a real problem, but one which seemed to me more an issue of enforcement of existing law (i.e. noise ordinance) than of needing a new law.

I spoke about property rights, about how regulations should default toward supporting the property owner, how the rule was excessively restrictive despite Mr. Billingsley's claim that it was permissive, and that it would simply give ammunition to the same sorts of busy-bodies who caused the trouble in my neighborhood to begin with, complaining about an event that did not disturb any sane people.

Others followed, including a woman who said she "felt her American spirit refill hearing people talk about our 'free country' and property rights." She ended her comments with "Think what it feels like to be free."

Commenters mentioned the likely constitutional challenges on 1st and 14th Amendment grounds which Boulder would probably face...and lose...when the proposed rule gets challenged. One interesting point was this: "If a wealthy person can do it with impunity, why penalize a group of less wealthy people who pool their resources to do the same thing?"

And someone who has lived in the mountains for a long time noted a century-or-more long history of entertainers coming up into the mountains to entertain the people who lived there.

Following the public comment, the panel went to work. Watching it was an incredible combination of fascinating and aggravating, with the committee chairwoman asking pointless questions, being excessively strict on "rules", losing track of where in the voting process they were, etc. The panel members at first seemed like they were going to simply table the proposed rules and ask Mr. Billingsley to redraft rules to deal with "real impacts". But as the process went forward, one committee member seemed to sway less experienced members toward accepting the rules with minor changes.

The key parts of the proposed rule included limiting "Home Events" to 1) no more than 60 people, 2) indoors, and 3) six times a year. There were other silly things, such as a prohibition against storing items for an event outdoors for more than 24 hours before the event.

But a couple of panel members stuck to their guns, and as someone interested in politics, this part was fun to watch: When a member made a motion to support the rule with very minor changes, such as increasing the number from 60 to 65 people, two other members started amending the motion, including removing the first two restrictions mentioned above and raising the frequency to twelve times per year.

A woman who seemed to be the least experienced member of the panel tried to add an amendment to prohibit amplification at any outdoor home event...a suggestion I admit might have come from an answer I gave her earlier in the evening, but that motion failed.

In the end, the rule was moved with no limits on the number of people, no restriction to inside the homes, and up to 12 times per year...forcing the panel member who originally moved to pass the rule to vote against it, but being passed by a 6-2 vote.

Given that we were probably not going to get out of this nanny state situation without regulation, this is as good as could have been hoped for.

It was interesting to me that the member who basically mastered forcing the motion-maker into voting no told me that he supported the much-less-restrictive regulation because he supported "community" and "not because (he) cared about the property rights arguments". I suppose I shouldn't complain, given the relatively favorable outcome.

But still, it disturbs me greatly how people in positions of regulatory authority can with such regularity make decisions based on their whim of the day rather than with any fundamental basis in property rights, the constitution, or even common sense.

I can't generalize about the panel members. Sensible and senseless came from men and women, from older and younger, from more experienced and less experienced. The one thing that they had in common was an apparent utter insensitivity to first principles as they get so caught up in their own authority.

It also bears noting that we would never have gotten to this ultimate nanny state scene without the truly silly initial "interpretation" by Mr. Billingsley that voluntary contributions to help offset the cost of hiring musicians for a house party constituted "commercial activity". As if that weren't silly enough, Billinglsey tried to justify his interpretation by arguing at the hearing that even if it were not a commercial activity or a for-profit activity for the property owner, it was a profit-seeking activity for the musician and therefore not allowed. If I have ever seen an example of someone being in government for too long, it's Graham Billingsley. After the event, I asked him if he had a hard time coming to that conclusion (suggesting that I hoped he did since he was so wrong), but he said it was actually easy for him. Someone who could rule that way easily needs to get a new job.

In any case, Mr. Billingsley and the forces of nannyism lost one to the reluctant enforcers of common sense, property rights, and our constitutional protections of freedom to assemble and equal protection.

[A shorter letter to the editor (by me) was published in the Boulder Daily Camera on 1/17/08]

I have discussed a couple of times in the past the ridiculous ruling by the People's Republic of Boulder that house concerts, where guests were asked for voluntary donations to help offset the host's cost of hiring the bands, represented commercial activity.

Today there is a hearing during which Boulder County government will be discussing rules proposed by the boneheaded bureaucrat who made the first outrageous ruling.

If you're interested in learning more about the issue, here are some resources:
The Land Use Department's running history of the code about house concerts

A draft of the discussion material for the January 16th County Commissioners meeting

And, the final draft of the proposed rules for the Commissioners to think about

Here is the letter I sent to the County Commissioners in response to this sadly-typical nanny state trampling of property rights, equal protection, and common sense:

To: Boulder County Planning Commission
Re: “House Concerts” agenda item for 1/16/08 meeting
Date: January 15, 2008

Dear Commissioners,

Your upcoming discussion on regulations for “house concerts” is informed by suggestions which are rife with problems, inconsistency, and attacks on property rights. While I am not surprised that someone as devoid of common sense or appreciation for the rule of law as Mr. Billingsley would come up with such a bad regulation, the Commission should recognize the advice and proposal for what it is: An attempt by a man who expresses outright derision for property rights (at least for anyone who can afford a house bigger than a postage stamp) to paper over his bone-headed and widely unpopular decision to classify house concerts as commercial activity in the first place. Mr. Billingsley is currently a source of humor and embarrassment for me, as a Boulder County resident. Indeed, I frequently use him as an example of Boulder’s living up to its reputation as a socialist haven free, temporarily, from reality. But the fact remains that neither he nor this proposed regulation is harmless and that neither respects our constitution.

As for the specific items in the proposal, there are many problems:

First, the 60-person limitation is not a smart way to deal with what is really primarily a parking and road-use issue. It is also an unjustifiable attempt to limit what people can do, especially temporarily, in or at their own homes. If you believe you have the authority to impose any limits, they should be based on the number of vehicles, not on the number of people, and therefore I would suggest 50 vehicles rather than 60 people. For the record, I could definitely get 60 cars on to my property if I wanted to…and they wouldn’t be visible from the road. That said, the roads are public and there should be no restriction on how many people can park in legal parking areas for occasional events.

Second, the restriction on frequency of events is far too restrictive. Some people are members of organizations, including charitable organizations, which might have reasons of their own to meet more frequently than once every other month. Interfering with peoples’ constitutional right peaceably to assemble is something that even the People’s Republic of Boulder should not do.

Third, I have addressed the parking issue before, but I note that staff “prefers a ratio approach” of attendees to cars. What this means is “we want to micromanage everything and make sure we can cause you trouble one way or another.” The “ratio approach” should be abandoned entirely. The issue is one of parking and to a lesser degree of road use. You have no business enforcing any rules about people congregating temporarily on private property.

Fourth, the restriction to outdoor use is also outrageous. I have 40 acres of land which has clearings in the center and is forested around 80% or more of the boundary. I could have a huge outdoor party or a concert and there would be less noise transmission to neighbors than they might get from vehicles driving down Magnolia Road. And again, I own that land, not just the house in the middle of the land, and I object to your attempts to limit whom I can invite to share it with me for some hours.

Fifth, your restriction on the duration of events, i.e. not before 9 AM, not after 11 PM, and not for more than 6 hours, also represents the worst nanny-state tendencies of Boulder Government. Just because Mr. Billingsley doesn’t have many friends or many people who’d want to attend an event of his for more than 6 hours doesn’t give him the right or legitimate reason to interfere with the private lives of the rest of us. If you must have restrictions on hours of operation, it should be more like 6 AM to start and 2 AM to end, but any such time restrictions are simply micro-management rules whose primary use will be tools for busy-bodies who want to harass their neighbors who happen to have friends. Indeed, that’s exactly what caused this mess to begin with: Two neighbors of Greg Ching who opposed his “house concerts” even though there was no effect on them and with one of the complainers actually having attended more than one concert. When an area has so many “I’m gonna tell mommy” residents…and when “mommy” is government, the government should go out of its way to limit the ability of those people to make such complaints and to allow those complaints to interfere in the lives of normal people.

Sixth, although a smaller point, the suggestion to prohibit outdoor storage of items for an event is outrageous. What if I rent chairs and tables for an event and the rental company only has a delivery date available three days before the event? I can keep the items covered in my driveway so they don’t take up room in my house, and those piles wouldn’t inconvenience (or even be visible to) anybody else. This suggestion represents the worst sort of micro-management. Unfortunately it is exactly the sort of muddled thinking I would expect from a man who believes that government has ultimate jurisdiction over our property rights.

I suspect that you will use the “indoor” provision of the proposed rules to exempt other types of larger get-togethers, such as equestrian events. Our constitution and a basic sense of justice demand equal protection under the law. It is both unreasonable and unconstitutional to create substantially different rules for substantially similar events. What’s the difference between my wanting to use my horse fields (of which I have three, but no horses) for an outdoor volleyball tournament instead of a polo tournament? Or a fund-raising-for-charity event where I put on three separate (not very loud) concerts in each field, so that people could walk between them and enjoy varied entertainment?

In summary, your proposed regulations are far too restrictive and sadly representative of Graham Billingsley’s antipathy toward property rights…typical of the “we know best” attitude of Boulder government. Whether government likes it or not, we have property rights which must be respected. The default position of regulation must be to protect those rights. Where property rights conflict with a hyper-sensitive nanny-stater being “offended”, government must always support property rights. There is no right never to be slightly inconvenienced or offended, especially if you’re the sort of person who makes hundreds of complaints to Denver International Airport about noise while living in the Front Range mountains. A person like that was the primary source of this conflict to begin with. By attacking the property rights and enjoyment of life of normal people doing normal things, Billingsley sided with a neurotic busybody. And while that may be because Billingsley feels that he has a lot in common with a neurotic busybody, making rules based on such people (or proposed by such people) is destructive of our most fundamental rights and puts the government in a very tenuous legal position, in my view likely to lose court challenges to such rules, thus wasting as much taxpayer money fighting to protect these outrageous rules as you’ve wasted in drafting and proposing them.

I urge the planning commission to simply define house concerts as non-commercial and leave it at that. To the extent that you want to ensure the non-commercial nature, offer only sane limitations. To get sane limitations, you will probably need to get most of your input from normal citizens rather than from nanny-state-brained career bureaucrats and their socialist friends who believe that if they don’t have nice houses or many friends, then nobody should be able to have them.

Most of the political news of the last two days has been about the battle between John McCain and Mitt Romney to win the Michigan Republican primary. A typical example is this Fox News story:
"Rival Economic Policies, Personal Outlooks Distinguish GOP Michigan Race", FoxNews.com, 1/14/08
http://youdecide08.foxnews.com/2008/01/14/romney-pledges-to-help-michiganders-survive-one-state-recession/

While I realize I'm somewhat biased, being a Giuliani supporter, I'm really a supporter of good government, of classical liberal free-market principles, and of liberty (including keeping religion and government quite separate). I'm also an ardent opponent of junk science (especially when it is used as a tool to extract higher taxes from us) and of government "investment" in science, particularly the types of science that can be done well by private enterprise and would be done privately even without the government redistribution from taxpayers to those companies.

So, Michigan is a tale of two fairly bad candidates for me. (Or three if you include Huckabee who I believe was fairly accurately described by Richard Viguerie as a "Christian socialist".)

John McCain was recently asked how he would get more evangelicals to support him and he answered that evangelicals were coming around to his view on the imminent danger posed by global warming and their religious duty to protect the planet.

In this answer, McCain violates my problems with mixing government and religion as well as using junk science to pander for votes and eventually for our money...meanwhile, we're probably closer to going into the next ice age than having the planet seriously damaged by warmth.

I already have put McCain in the "unforgivable" category for the McCain-Feingold Incumbent Protection Act or, as Newt Gingrich calls it, the Citizenship Suppression Act.

And although I don't think McCain will get the nomination, he's not nearly as dead as I (and everyone else) had thought a couple of months ago. This leaves me wondering whom I would vote for if the election were between McCain and Clinton (or any Democrat, since I find the current crop all about equally repellent.) While I'd like to think I'd vote against Clinton, I truly don't think I could in good conscience vote for McCain.

And other than his impressive steadfast views on cutting spending and on the "surge" in Iraq, his answers aren't getting any better. Indeed, I asked him about McCain-Feingold in person several weeks ago and he was absolutely unapologetic; he simply believes there should be further restrictions put in place to plug the law's unintended consequences (such as 527s).

I've approved somewhat more of Mitt Romney since his entrance into the race, although I didn't think he was as likely to get the nomination as many of my friends thought. But as time goes on, I like him less and less as well.

He seems increasingly slick, packaged, willing and able to say just about anything, including the boneheaded claim to have seen his father march with Martin Luther King Jr.

But beyond that, I don't believe he has a real fundamental grounding in and understanding of classical liberal principles. I'm a fan of business...big or small...and of anybody who can become very successful without cheating. But business, especially Romney's sort of business, is substantially about playing the game of politics, manipulating systems, etc. And I don't blame them for doing what they can. But it doesn't mean he necessarily bleeds laissez-faire.

In almost every debate, he's talked about "tax relief for the middle class". This is language fit for a Democrat, not a fiscal conservative. What exactly is the middle class? Who draws the line? And does Romney have any idea what a small percentage of tax revenue is paid by the people that most of us consider to be "middle class"? Instead of using subtle class envy language, Romney and any other candidate who claims to be a fiscal conservative should be emphasizing that every cut in marginal income tax rates has resulted in a more progressive tax system. To be very clear, I hate the word "progressive" as penalizing success doesn't really seem like progress to me.

As mentioned the article I noted above, Romney also called for "increasing funding five-fold — from $4 billion dollars to $20 billion dollars — in national investment in energy research, fuel technology, materials science, and automotive technology." With the massive boom in the price of alternative energy stocks, including some that are not yet profitable and may never be, why would taxpayer money be spent on such things when clearly there are billions of private dollars willing and able to fund energy research? Don't forget, today's $20 billion "investment" will inevitably mean a $200 billion commitment a decade later.

In another politically popular bit of pandering, Romney calls for higher pay for teachers...as if teacher pay is a real factor in our country's educational problems. No, we have a more than adequate supply of teachers. The problems come from not being able to fire bad teachers and from (mostly minority urban) parents not taking enough interest in their children's educations or not having enough education themselves to be able to help.

I'm all for merit pay for teachers...supported by most Republicans and opposed by most Democrats because it would tend to slightly reduce the wealth of teachers' unions. But simply saying teachers don't make enough belies basic market economics. If teachers didn't make enough, we wouldn't have enough of them, yet we do have enough. If you dig further into the issue, you must keep in mind how many weeks or months a year teachers have off as well as the big benefits, pensions, and job security. If you include total compensation as well as assigning some value to intangibles, teachers are highly paid indeed.

So, Michigan comes down to a race between candidates who are very shaky on what should be fundamental principles of government and economics.

This is part of the reason I think, and I hope, that Rudy's campaign strategy will in two weeks end up looking much smarter than many currently believe, especially with recent news reports of the campaign being short on cash despite having spent relatively little on early primaries. While I have concern about the "baggage" from Rudy's personal life, I get more convinced with each passing week that the only candidates who have a sound philosophical basis for most of their positions are Rudy Giuliani and Fred Thompson. As someone with strong libertarian leanings, I'd prefer Rudy. Also, I believe he's more electable and could put some blue states in play...very important in the next election. Still, if Thompson could someone gain a burst of speed much as McCain did, and eventually win the nomination, that would be fine with me.

If Huckabee became the GOP nominee, I'd vote for the Democrat. If McCain is the nominee, I'll probably vote Libertarian. I'll vote for any of the other Republicans, including Romney, but I hope the GOP doesn't give me a candidate I have to hold my nose to support.

For those of you who read these pages regularly but who don't talk to me frequently, you've heard a bit about my having some recent medical turmoil. I thought I'd just get the whole story on (virtual) paper since it's slightly interesting in its own right...at least to me.

So....

Just before xmas, my wife was admitted to the hospital for what turned out to be nothing important, but the doctors making sure she wasn't about to go into early labor. While I was visiting her, I was hit with the worst part of the pain from a kidney stone I was suffering through and was sent to the Emergency Room where they did a CT scan to look at the stone.

In addition to finding a small but terribly painful kidney stone, the scan found a mass/tumor in or near my small intestine which was "suspicious for carcinoid" given its size and location. A carcinoid is a type of neuro-endocrine tumor which produces high levels of serotonin. They tend to be slow-growing but often aren't found until they have metastasized (spread to other parts of the body) and pose a serious threat to one's life.

The good news in the original CT scan, although it was done "without contrast", was that it did not see any "mets" in my liver or anywhere else, so it seemed there was a good chance that the problem was isolated in one spot.

I met with a surgeon and scheduled surgery for as soon as possible, which happened to be on January 4th.

In the intervening period, I had several other tests including, in order of sophistication, a chest x-ray, a blood test for Chromogranin-A (a marker for serotonin breakdown, and therefore a decent but not flawless test for carcinoid), a PET scan (nuclear medicine test which looks for increased metabolic activity such as found within many types of malignant tumors), and an Octreoscan (another nuclear medicine scan which is very specific for carcinoid).

The chest x-ray, blood test, and PET scan were all normal/negative.

The Octreoscan is a two-day test and the results of the first day seemed to show the mass as positive for carcinoid. But the second day's scan came back negative! I got the first day's results in 24 hours, but it took several days to get the second day's results, so I was laboring for days believing the mass was indeed carcinoid.

In any case, we went into the surgery as confused as when we first learned of the mass in my abdomen except that we had the modest comfort of a negative PET scan, implying that if the thing weren't carcinoid then it was probably not worse than carcinoid.

In the pre-op room, they started an IV in the top of my left hand, to be used in the operating room for sedative and later in recovery for fluids during the time when I would be unable to eat.

An operating room nurse came in and asked me if I am allergic to anything. I said "I'm slightly allergic to socialists." Another nurse in the room said "You should be careful...she might be a socialist." I said "You're right...I take it back. I'm VERY allergic to socialists." That was my favorite moment of the day.

I was rolled into the operating room, and I moved from the gurney on to the OR table. The anesthesiologist gave me some Versed (a relaxant like Valium) by IV, and that's the last thing I remember until waking up. My surgeon told me that I was awake for quite a long time after that, including telling them how little respect I had for Jimmy Carter. When he told me that I said "OK, you were definitely operating on the right guy."

Here's how the surgeon described the procedure to me:

They found the mass which looked something like an oblong golf ball attached to my small intestine by a stem, almost like a big white cherry. He cut a small "V", with the tops of the V just on either side of the stem and the point down in the small intestine. They sent the mass to pathology while I was on the table for a quick guess as to what the thing was.

It came back as possibly being an unusual type of tumor called a GIST. So, in order to minimize the chances of leaving any nasty cells in me, the surgeon cut another much bigger "V", about two inches on either side of the stem, going through the small intestine, into the mesentery (the wall between the small intestine and the back).

Also, since many tumors metastasize into the appendix (and since an appendix is generally not useful and can cause trouble), the surgeon removed my appendix. He also repaired a small umbilical hernia I had. I suppose, in typical Ross style, I got a bargain...three procedures for the price of one.

I was brought up to my hospital room where I stayed for three days. I ate nothing the first day, had some juice and a little oatmeal the second day, and started eating small amounts of solid food (french toast for breakfast, a little pasta for lunch) on the third day. Starting on the second day, I did occasional walki