von Kleinschmidt

Get it done! - PK

The debt-limit debate is heading toward a culmination, with President Obama reduced to pleading for the public to support a tax increase and Speaker John Boehner and Senate Majority Leader Harry Reid releasing competing plans that are the next-to-last realistic options. The question now is whether House Republicans are going to help Mr. Boehner achieve significant progress, or, in the name of the unachievable, hand Mr. Obama a victory.

Mr. Obama recognizes these stakes, threatening yesterday to veto the Boehner plan in a tactical move to block any Democratic support. The White House is afraid that it will pass the House and then become the only debt-ceiling vehicle if Mr. Reid can’t get 60 votes for his own proposal in the Senate. This would short-circuit Mr. Obama’s plan to blame the GOP for a U.S. credit downgrade, any market turmoil, a possible default, and the lousy economy too.

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Under the two-phase Boehner plan, Congress would authorize $1 trillion in new debt in return for $1.2 trillion in budget cuts over the next decade. Most of that will come from caps on domestic discretionary spending over 10 years—the Pentagon and homeland security are exempt—with automatic spending cuts if the caps are breached. While one Congress cannot bind another, the proposal would at least guarantee real reductions in fiscal years 2012 and 2013.

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Steve Moore gives an update on the debt ceiling negotiations and refutes Democrats’ charge that Ronald Reagan was a tax hiker.

In the second stage, the House and Senate would convene a 12-member joint select committee with a deficit reduction goal of $1.8 trillion by November. The majority and minority of both chambers would each make three assignments, and any plan that secured seven votes or more would get an up-or-down vote in both chambers with no amendments.

The danger for the GOP is that the committee could end up proposing tax increases, since the committee’s only remit is the deficit, not the larger fiscal landscape or the size of government. A poorly chosen Republican nominee could defect, and any structural change to entitlements almost certainly can’t pass the Senate.

Then again, unless the plan passed, Mr. Obama couldn’t request the additional $1.6 trillion debt ceiling increase that he would soon need. The political incentive is for a reasonable package, and many Senate Democrats also don’t want to vote for tax increases before 2012.

Strangely, some Republicans and conservative activists are condemning this as a fiscal sellout. Senator Jim DeMint put out a statement raking the Speaker for seeking “a better political debt deal, instead of a debt solution” (emphasis, needless to say, his). The usually sensible Club for Growth and Heritage Action, the political arm of the Heritage Foundation, are scoring a vote for the Boehner plan as negative on similar grounds.

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If the Boehner plan fails in the House, the advantage shifts to Harry Reid’s Senate plan.

But what none of these critics have is an alternative strategy for achieving anything nearly as fiscally or politically beneficial as Mr. Boehner’s plan. The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against … Barack Obama. The Republican House that failed to raise the debt ceiling would somehow escape all blame. Then Democrats would have no choice but to pass a balanced-budget amendment and reform entitlements, and the tea-party Hobbits could return to Middle Earth having defeated Mordor.

This is the kind of crack political thinking that turned Sharron Angle and Christine O’Donnell into GOP Senate nominees. The reality is that the debt limit will be raised one way or another, and the only issue now is with how much fiscal reform and what political fallout.

If the Boehner plan fails in the House, the advantage shifts to Mr. Reid’s Senate plan, which would raise the debt ceiling by $2.4 trillion in one swoop through 2012. That would come without a tax increase but also $2.7 trillion in mostly fake spending cuts like less government “waste, fraud and abuse” and a $1 trillion savings from troop drawdowns in Iraq and Afghanistan that are already built into the baseline. As fiscal reform, this is worse than Mr. Boehner’s plan.

If the Reid plan passes the Senate after Mr. Boehner’s plan failed in the House, Mr. Boehner would be forced to beseech Nancy Pelosi and the White House to deliver Democratic votes to raise the debt limit. Mr. Obama’s price could be the tax increases that the GOP has so far rejected. But who knows what else Mr. Obama would demand, and Congress might rush through, amid a political panic and financial market turmoil as the Treasury closed down government services to meet its debt obligations.

It’s true that the Boehner plan doesn’t solve the long-term debt problem, but Mr. Obama won’t agree to anything that does. The GOP plan also may not prevent a U.S. national credit downgrade, but it has a better chance of doing so than Mr. Reid’s. The Boehner plan is the most credible proposal with a chance of becoming law before the 2012 election.

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The Speaker has made mistakes in his debt negotiations, not least in trusting that Mr. Obama wants serious fiscal reforms. But thanks to the President’s overreaching on taxes, Mr. Boehner now has the GOP positioned in sight of a political and policy victory. If his plan or something close to it becomes law, Democrats will have conceded more spending cuts than they thought possible, and without getting the GOP to raise taxes and without being able to blame Republicans for a debt-limit crackup or economic damage.

If conservatives defeat the Boehner plan, they’ll not only undermine their House majority. They’ll go far to re-electing Mr. Obama and making the entitlement state that much harder to reform.

The Employee Meeting: I would like to start by thanking you for attending this meeting, though it’s not like you had much of a choice. After all, attendance was mandatory. I’m also glad many of you accepted my invitation to your family members to be here as well. I have a few remarks to make to all of you, and then we’ll retire to the ballroom for a great lunch and some employee awards.

I felt that this meeting was important enough to close all 12 of our tire and automotive shops today so that you could be here. To reassure you, everybody is being paid for the day —- except me. Since our stores are closed we’re making no money. That economic loss is mine to sustain. Carrington Automotive has 157 full time employees and around 30 additional part-timers. All of you are here. I thank you for that. 

When you walked into this auditorium you were handed a rather thick 78-page document. Many of you have already taken a peek. You were probably surprised to see that it’s my personal tax return for 2008. Those of you who are adept at reading these tax returns will see that last year my taxable income was $534,000.00. Now I’m sure this seems rather high to many of you. So … let’s talk about this tax return. 

Carrington Automotive Enterprises is what we call a Sub-S - a Subchapter S corporation. The name comes from a particular part of our tax code. Sub-S status means that the income from all 12 of our stores is reported on my personal tax return. Businesses that report their income on the owner’s personal tax return are referred to as “small businesses.” So, you see now that this $534,000 is really the total taxable income - the total combined profit from all 12 of our stores. That works out to an average of a bit over $44,000 per store. 

Why did I feel it important for you to see my actual 2008 tax return? Well, there’s a lot of rhetoric being thrown around today about taxes, small businesses and rich people. To the people in charge in Washington right now I’m a wealthy American making over a half-million dollars a year. Most Americans would agree: I’m just another rich guy; after all … I had over a half-million in income last year, right? In this room we know that the reality is that I’m a small business owner who runs 12 retail establishments and employs 187 people. Now here’s something that shouldn’t surprise you, but it will: Just under 100 percent … make that 99.7 percent of all employers in this country are small businesses, just like ours.

 

Every one of these businesses reports their income on a personal income tax return. You need to understand that small businesses like ours are responsible for about 80 percent of all private sector jobs in this country, and about 70 percent of all jobs that have been created over the past year. You also need to know that when you hear some politician talking about rich people who earn over $200,000 or $500,000 a year, they’re talking about the people who create the jobs. 

The people who are now running the show in Washington have been talking for months about raising taxes on wealthy Americans. I already know that in two years my federal income taxes are going to go up by about 4.5 percent. That happens when Obama and the Democrats allow the Bush tax cuts to expire. When my taxes climb by 4.5 percent the Democrats will be on television saying that this really isn’t a tax increase. They’ll explain that the Bush tax cuts have expired .. Nothing more. Here at Carrington we’ll know that almost 5% has been taken right off of our bottom line. And that means it will be coming off your bottom line. 

Numbers are boring, I know … but let’s talk a bit more about that $534,000. That’s the money that was left last year from company revenues after I paid all of the salaries and expenses of running this business. Now I could have kept every penny of that for myself, but that would have left us with nothing to grow our business, to attract new customers and to hire new employees. You’re aware that we’ve been talking about opening new stores in Virginia Beach and Newport News . To do that I will have to buy or lease property, construct a building and purchase inventory. I also have to hire additional people to work in those stores. These people wouldn’t immediately be earning their pay. So, where do you think the money for all of this comes from? Right out of our profits .. Right out of that $534,000. I need to advertise to bring customers in, especially in these tough times. Where do you think that money comes from? Oh sure, I can count it as an expense when I file my next income tax return .. But for right now that comes from either current revenues or last year’s profits. Revenues right now aren’t all that hot … so do the math. A good effective advertising campaign might cost us more than $300,000. 

Is this all starting to come together for you now? 

Right now the Democrats are pushing a nationalized health care plan that, depending on who’s doing the talking, will add anywhere from another two percent to an additional 4.6 percent to my taxes. If I add a few more stores, which I would like to do, and if the economy improves, my taxable income … our business income … could go over one million dollars! If that happens the Democrats have yet another tax waiting, another five percent plus! I’ve really lost track of all of the new government programs the Democrats and President Obama are proposing that they claim they will be able to finance with new taxes on what they call “wealthy Americans.” 

And while we’re talking about health care, let me explain something else to you. I understand that possibly your biggest complaint with our company is that we don’t provide you with health insurance. That is because as your employer I believe that it is my responsibility to provide you with a safe workplace and a fair wage and to do all that I can to preserve and grow this company that provides us all with income. I no more have a responsibility to provide you with health insurance than I do with life, auto or homeowner’s insurance. As you know, I have periodically invited agents for health insurance companies here to provide you with information on private health insurance plans.

The Democrats are proposing to levy yet another tax against Carrington in the amount of 8 percent of my payroll as a penalty for not providing you with health insurance. You should know that if they do this I will be reducing every person’s salary or hourly wage by that same 8 percent. This will not be done to put any more money in my pocket. It will be done to make sure that I don’t suffer financially from the Democrat’s efforts to place our healthcare under the control of the federal government. It is your health, not mine. It is your healthcare, not mine. These are your expenses, not mine. If you think I’m wrong about all this, I would sure love to hear your reasoning. 

Try to understand what I’m telling you here. Those people that Obama and the Democrats call “wealthy Americans” are, in very large part, America ‘s small business owners. I’m one of them. You have the evidence, and surely you don’t think that the owner of a bunch of tire stores is anything special. That $534,000 figure on my income tax return puts me squarely in Democrat crosshairs when it comes to tax increases.

Let’s be clear about this … crystal clear. Any federal tax increase on me is going to cost you money, not me. Any new taxes on Carrington Automotive will be new taxes that you, or the people I don’t hire to staff the new stores I won’t be building, will be paying. Do you understand what I’m telling you? You’ve heard about things rolling downhill, right? Fine … then you need to know that taxes, like that other stuff, roll downhill. Now you and I may understand that you are not among those that the Democrats call “wealthy Americans,” but when this “tax the rich” thing comes down you are going to be standing at the bottom of the mud slide, if you get my drift. That’s life in the big city, my friends … where elections have consequences. 

You know our economy is very weak right now. I’ve pledged to get us through this without layoffs or cuts in your wages and benefits. It’s too bad the politicians can’t get us through this without attacking our profits. To insure our survival I have to take a substantial portion of that $534,000 and set it aside for unexpected expenses and a worsening economy. Trouble is, the government is eyeing that money too … and they have the guns. If they want it, they can take it. 

I don’t want to make this too long. There’s a great lunch waiting for us all. But you need to understand what’s happening here. I’ve worked hard for 23 years to create this business. There were many years where I couldn’t take a penny in income because every dollar was being dedicated to expanding the business. There were tough times when it took every dollar of revenues to replenish our inventory and cover your paychecks. During those times I earned nothing. If you want to see those tax returns, just let me know. 

OK … I know I’m repeating myself here. I don’t hire stupid people, and you are probably getting it now. So let me just ramble for a few more minutes.Most Americans don’t realize that when the Democrats talk about raising taxes on people making more than $250 thousand a year, they’re talking about raising taxes on small businesses. The U.S. Treasury Department says that six out of every ten individuals in this country with incomes of more than $280,000 are actually small business owners. About one-half of the income in this country that would be subject to these increased taxes is from small businesses like ours. Depending on how many of these wonderful new taxes the Democrats manage to pass, this company could see its tax burden increase by as much as $60,000. Perhaps more. 

I know a lot of you voted for President Obama. A lot of you voted for Democrats across the board. Whether you voted out of support for some specific policies, or because you liked his slogans, you need to learn one very valuable lesson from this election. Elections have consequences. You might have thought it would be cool to have a president who looks like you; or a president who is young, has a buff body, and speaks eloquently when there’s a teleprompter in the neighborhood. Maybe you liked his promises to tax the rich. Maybe you believed his promise not to raise taxes on people earning less than a certain amount. Maybe you actually bought into his promise to cut taxes on millions of Americans who actually don’t pay income taxes in the first place. Whatever the reason .. Your vote had consequences; and here they are. 

Bottom line? I’m not taking this hit alone. As soon as the Democrats manage to get their tax increases on the books, I’m going to take steps to make sure that my family isn’t affected. When you own the business, that is what you’re allowed to do. I built this business over a period of 23 years, and I’m not going to see my family suffer because we have a president and a congress who think that wealth is distributed rather than earned. Any additional taxes, of whatever description, that President Obama and the Democrats inflict on this business will come straight out of any funds I have set aside for expansion or pay and benefit increases. Any plans I might have had to hire additional employees for new stores will be put aside. Any plans for raises for the people I now have working for me will be shelved. Year-end bonuses might well be eliminated. That may sound rough, but that’s the reality. 

You’re going to continue to hear a lot of anti-wealth rhetoric out there from the media and from the left. You can chose to believe what you wish .. .But when it comes to Carrington Automotive you will know the truth. The books are open to any of you at any time. I have nothing to hide. I would hope that other small business owners out there would hold meetings like this one, but I know it won’t happen that often. One of the lessons to be learned here is that taxes … all taxes … and all regulatory costs that are placed on businesses anywhere in this country, will eventually be passed right on down to individuals; individuals such as yourself. This hasn’t been about admonishing anyone and it hasn’t been about issuing threats. This is part of the education you should have received in the government schools, but didn’t. Class is now dismissed.

 

Don Meyers 

Vital Signs USA, Inc. 

791 Industrial Drive, 

Elmhurst, IL 60126 

630-832-9600 (Main) 

630-890-5485 (Cell) 

630-832-9669(Fax) 

Is it Usama or Osama?  The fact that even now, none of the news outlets can decide is what really bugs me most.  Kidding aside, what appears to be dividing the people I know is the actions of American citizens following the news of Bin Laden’s death. So let us discuss it (and by ‘us’ I mean ‘me’) 

At this juncture, martyrdom was really Osama’s only remaining career move. However, his death hasn’t ignited the ‘Arab street,’ so he failed in this regard. That’s largely because Bin Laden “is so yesterday.” In that way, his anti–climatic death is fitting. Still, while it may have been a ‘kill or capture’ mission, OBL wasn’t going to be taken alive for due process in the states. There was never going to be a dignified prosecution. 

Meanwhile, the practical implications of Osama’s death are severely limited.  In the wake of the US response to September 11^th, AQ was forced to transition from an operationally focused group to a propaganda focused one, meant to inspire decentralized jihad (because that is all it really could do).  Similarly, the insurgents we face today are not funded or backed by AQ or the Taliban, but sovereign governments instead. They can fight what is known as the ‘near war’ in neighboring, destabilized countries, but they can’t be linked to a terrorist attack in the states (do you think Iran wants to take us on in conventional war?) The ability of loosely defined terrorist organizations to launch a coordinated strike on our soil in response to this development, though not impossible, is GREATLY diminished. 

So what thoughtful people are genuinely perturbed by is the current imagery; what it makes us think of ourselves and what it says to the world about who we are.  

As a friend pointed out, a little triumphalism is understandable if it is a spontaneous act and doesn’t last too long, but for some, particularly the very young, it seems like they were acting like the munchkins after the Wicked Witch of the West had been killed. Is that who we are? 

Tom Brokaw has written ad nauseam about ‘The Greatest Generation’ and it seems likely that the people who lived through the great depression and World War II had a firmer grasp on humility, even as our economic and geopolitical situation improved. But there were plenty of dimwits around then too (some of them even became Presidents.)

No, it is more a function of the technology and distribution methods available to us. Factors like US hegemony, the rapid acceleration and penetration of television, digital (and increasingly) social media mean that widespread, instant reactions to any ‘seismic’ event are inherently more possible than they ever were before.

A few thousand people doing something here and there (ground zero/white house jubilation, occasional war protests and the like) and a press all too happy to regurgitate it don’t paint a full picture, but it does result in a much bigger picture for everyone to see. We have become great at magnifying the absurd slivers of our culture and beaming it out for all to see. Widely broadcasted spectacles like The OJ trial, Michael Jackson’s death/funeral etc. have become our specialty and legacy. 

In the end, the American empire may well be remembered for hype; the circus empire. Yesterday was simply what the face of American revenge looks like at the dawn of the 21^st century. A nasty bit of business to be sure, but not the whole story.

There are plenty who recognize that this moment shouldn’t have been one solely of garish celebration, but an opportunity for reflection and remembrance. A chance to display the better angels of our nature. Unfortunately, that doesn’t make for good TV or a smarmy tweet. 

PK

“The budget should be balanced, the Treasury should be refilled,
public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.” Cicero - 55 BC

By AYAAN HIRSI ALI

What do the controversies around the proposed mosque near Ground Zero, the eviction of American missionaries from Morocco earlier this year, the minaret ban in Switzerland last year, and the recent burka ban in France have in common? All four are framed in the Western media as issues of religious tolerance. But that is not their essence. Fundamentally, they are all symptoms of what the late Harvard political scientist Samuel Huntington called the “Clash of Civilizations,” particularly the clash between Islam and the West.

Huntington’s argument is worth summarizing briefly for those who now only remember his striking title. The essential building block of the post-Cold War world, he wrote, are seven or eight historical civilizations of which the Western, the Muslim and the Confucian are the most important.

The balance of power among these civilizations, he argued, is shifting. The West is declining in relative power, Islam is exploding demographically, and Asian civilizations—especially China—are economically ascendant. Huntington also said that a civilization-based world order is emerging in which states that share cultural affinities will cooperate with each other and group themselves around the leading states of their civilization.

The West’s universalist pretensions are increasingly bringing it into conflict with the other civilizations, most seriously with Islam and China. Thus the survival of the West depends on Americans, Europeans and other Westerners reaffirming their shared civilization as unique—and uniting to defend it against challenges from non-Western civilizations.

Huntington’s model, especially after the fall of Communism, was not popular. The fashionable idea was put forward in Francis Fukuyama’s 1989 essay “The End of History,” in which he wrote that all states would converge on a single institutional standard of liberal capitalist democracy and never go to war with each other. The equivalent neoconservative rosy scenario was a “unipolar” world of unrivalled American hegemony. Either way, we were headed for One World.

President Obama, in his own way, is a One Worlder. In his 2009 Cairo speech, he called for a new era of understanding between America and the Muslim world. It would be a world based on “mutual respect, and … upon the truth that America and Islam are not exclusive and need not be in competition. Instead, they overlap, and share common principles.”

The president’s hope was that moderate Muslims would eagerly accept this invitation to be friends. The extremist minority—nonstate actors like al Qaeda—could then be picked off with drones.

Of course, this hasn’t gone according to plan. And a perfect illustration of the futility of this approach, and the superiority of the Huntingtonian model, is the recent behavior of Turkey.

According to the One World view, Turkey is an island of Muslim moderation in a sea of extremism. Successive American presidents have urged the EU to accept Turkey as a member on this assumption. But the illusion of Turkey as the West’s moderate friend in the Muslim world has been shattered.

A year ago Turkey’s President Recep Erdogan congratulated Iran’s Mahmoud Ahmadinejad on his re-election after he blatantly stole the presidency. Then Turkey joined forces with Brazil to try to dilute the American-led effort to tighten U.N. sanctions aimed at stopping Iran’s nuclear arms program. Most recently, Turkey sponsored the “aid flotilla” designed to break Israel’s blockade of Gaza and to hand Hamas a public relations victory.

True, there remain secularists in Istanbul who revere the legacy of Mustafa Kemal Ataturk, founder of the Republic of Turkey. But they have no hold over the key government ministries, and their grip over the army is slipping. Today the talk in Istanbul is quite openly about an “Ottoman alternative,” which harks back to the days when the Sultan ruled over an empire that stretched from North Africa to the Caucasus.

If Turkey can no longer be relied on to move towards the West, who in the Muslim world can be? All the Arab countries except Iraq—a precarious democracy created by the United States—are ruled by despots of various stripes. And all the opposition groups that have any meaningful support among the local populations are run by Islamist outfits like the Egyptian Muslim Brotherhood.

In Indonesia and Malaysia, Islamist movements are demanding the expansion of Shariah law. In Egypt, Hosni Mubarak’s time is running out. Should the U.S. support the installation of his son? If so, the rest of the Muslim world will soon be accusing the Obama administration of double standards—if elections for Iraq, why not for Egypt? Analysts have observed that in free and fair elections, a Muslim Brotherhood victory cannot be ruled out.

Algeria? Somalia? Sudan? It is hard to think of a single predominantly Muslim country that is behaving according to the One World script.

The greatest advantage of Huntington’s civilizational model of international relations is that it reflects the world as it is—not as we wish it to be. It allows us to distinguish friends from enemies. And it helps us to identify the internal conflicts within civilizations, particularly the historic rivalries between Arabs, Turks and Persians for leadership of the Islamic world.

But divide and rule cannot be our only policy. We need to recognize the extent to which the advance of radical Islam is the result of an active propaganda campaign. According to a CIA report written in 2003, the Saudis invested at least $2 billion a year over a 30-year period to spread their brand of fundamentalist Islam. The Western response in promoting our own civilization was negligible.

Our civilization is not indestructible: It needs to be actively defended. This was perhaps Huntington’s most important insight. The first step towards winning this clash of civilizations is to understand how the other side is waging it—and to rid ourselves of the One World illusion.