Is government using "obesity" to justify growing fatter?

In a word, Yes.

See: Hinkle: Drop and give Uncle Sam 20

At a "Harvard Thinks Big" confab earlier this year, evolutionary biologist Daniel Lieberman offered his own bright idea for tackling the nation's obesity epidemic. Merely medicating it won't do, he said, and education is well-meaning but ineffective. His answer? "Coercion. … We should start telling corporations what to do." But not just corporations. He also advocated — "to hearty applause," the Harvard Gazette noted — "requiring people to exercise."
Lieberman's idea sounds radical. For now. But in fact, he is (pardon the term) only slightly ahead of the curve. Yale's Kelly Brownell has long advocated taxes on Twinkies, soda and other high-sugar snacks. That idea has gained support from New York Mayor Michael Bloomberg, along with the mayors of Philadelphia and Baltimore, and state lawmakers in numerous states. The New York Times' Mark Bittman likens foods with added sugar to tobacco, and asks, "How do we regulate the consumption of dangerous foods? … We need the government on our side. It must acknowledge the dangers caused by the most unhealthy aspects of our diet and figure out how to help us cope with them." Bittman's colleague, Frank Bruni, agrees. In a column lamenting America's spreading waistline, he concludes that "we need to rethink and remake our environment much more thoroughly."

It is in the nature of government and government agencies to want to regulate and to control. There is no limit to what a government agency will think it has the right and the duty to control. That is why governments are dangerous and why our founding fathers set up a constitution that specifically limited the powers and scope of our government.

But the constitution itself is not enough. What is even more important than having a constitution that limits the powers and scope of government, is having a people that want to be free.

If the people that make up our nation want a government that controls what they can eat and how much they exercise, then constitutional limitations on the powers and scope of government are reduced to nothing but a string of nice sounding words.

We are sliding into an age where eating a chocolate bar will become a revolutionary act.

Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.
George Washington

Obama’s Tax Obsession

See: Explaining Obama’s tax-hike obsession

But Obama’s tax obsession becomes understandable when you realize the long game he’s playing: Big Taxes to fund Big Government. Decade after decade. See, it’s an almost universal belief among left-of-center journalists, economists, policymakers and politicians that Americans must pay higher taxes in coming years to cover the medical expenses of its aging population – not to mention all sorts of brand new social spending and green “investment.” Dramatically higher taxes. On everybody. And if we have a debt crisis, maybe those tax increases come sooner rather than later.

And why not? Look at how high taxes and high spending have made Greece such an economic giant.

See Also: Why The Democratic Party Is Doomed

This week’s fight over raising the federal debt limit exposes a key weakness in the warfare-welfare state that has bestowed power onto the Democratic Party: Without an ever-growing share of the economy, it dies. Every vital element of the Democrats’ coalition — unions, government workers, government contractors, “entitlement” consumers — requires constant increases in payments, grants and consulting contracts. Without those payments, they don’t sign checks to re-elect Democrats.

Are we having fun yet?

Should Doctors Be Allowed To Refuse Obama-Care Patients?

That is a question that will become a hot topic in our political culture very shortly.

See: U.S. Plans Stealth Survey on Access to Doctors

The administration says the survey will address a “critical public policy problem”: the increasing shortage of primary care doctors, including specialists in internal medicine and family practice. It will also try to discover whether doctors are accepting patients with private insurance while turning away those in government health programs that pay lower reimbursement rates.

Can the government force Doctors to accept Obama-Care patients? (What would or could stop them?)

Should the government force Doctors to accept Obama-Care patients? (Only thugs and thieves would say "Yes.")

The only alternative that the government has in getting Obama-Care patients to be readily accepted by Doctors is to have a payment schedule that is competitive with private insurers. That "jus' ain't a gonnah happen." The costs would be astronomical, just like all of the Obama-Care critics have been saying from day one. Forcing Doctors to accept Obama-Care patients would allow the leftist political class to pretend that their medical care scheme will work, at “cheaper” costs. (But only for a short time.) Of course, finding any doctor after that point will be a whole different problem.

Then the question that will be debated in the political sphere is whether or not government can prevent Doctors from quiting or retiring.

UPDATE [June 28, 2011 - 22:49]

See: Surprise: HHS drops plan to snoop on doctors

See: Program to Use Mystery Shoppers to Probe Doctors Scrapped

See: Kirk asks Obama administration to reconsider 'stealth' doctor survey

The Congressman has some interesting questions for Kathleen Sebelius. Among them:

2) Please provide records of how the National Opinion Research Center (NORC) of Chicago, Illinois, won a federally competitive bid to carry out this work.

It is an interesting question.

Hat Tip to Hot Air for the Update links.

"When regulators strongly suggest . . . "

See: Obama's Food Police in Staggering Crackdown on Market to Kids

How much of our private lives should politicians and bureaucrats be involved in? At what point do we stop being free citizens and become mere wards of the state?

“The most disturbing aspect of this interagency working group is, after it imposes multibillions of dollars in restrictions on the food industry, there is no evidence of any impact on the scourge of childhood obesity,” said Dan Jaffe, executive vice president of the Association of National Advertisers.

The “Interagency Working Group on Food Marketed to Children, Preliminary Proposed Nutrition Principles to Guide Industry Self-Regulation Efforts” says it is voluntary, but industry officials say the intent is clear: Do it, or else.

“When regulators strongly suggest a course of action, it’s treated as a rule, not a suggestion,” said Scott Faber, vice president of federal affairs for the Grocery Manufacturers Association. “Industry tends to heed these suggestions from our regulators, and this administration has made it clear they are willing to regulate if we don’t implement their proposal.”

It is important to keep in mind that the people pushing these “suggestions,” rules and regulations are motivated by “good intentions.” They really do believe that they are working to drive us all down the road to a healthier life.

A road paved with good intentions.

Osama Gives No Bump To Obama

See: Bin Laden Death Will Not Boost Obama: Expert

“The immediate reaction in the US notwithstanding, 'normal business' will soon be resumed in US politics. There will be no change on the fiscal/debt polarization and contrary to some commentators' reaction, definitely no election boost for Obama,” said Newton in an interview with CNBC on Tuesday.

Barbara Walters and many others in the media may think that the killing of Osama will boost Obama's re-election chances. There hopes are only a reflection of their fears. Obama is in so much trouble that they are desperate to grasp at anything.

There will be no lasting boost for Obama*. By election day, Osama will be all but forgotten.

The Democrats own the economy. The voters will be thinking about the lack of work and the rising price of gas and food when they think about Obama from now till election day. Osama will be an afterthought at most.

Obama, it's the economy, stupid.

~~~

* You can watch the Rasmussen Daily Presidential Tracking Poll as the numbers begin to show peoples opinion of the president in the days after the Osama killing. I expect a small bump, but one that is so small and temporary that it could easily be confused with noise. A week from now, Obama's numbers will be as bad as they are today, if not worse.

From the May 3rd Report

Daily updates are based upon nightly telephone interviews and reported on a three-day rolling average basis. As a result, two-thirds of the interviews for today’s update were conducted before news was released about the death of Osama bin Laden. Thursday will be the first update based entirely upon interviews conducted after that event. Results from the single night of data collected on Monday shows a modest improvement in the president’s Approval Index rating. However, there was no improvement in the president’s overall approval rating. Caution should always be used when interpreting a single night sample from a tracking poll.

Democrat Proposes Toilet Paper Tax.

See: Suttle unrolls toilet paper tax

Raising taxes is how Democrats think that their spending problem can be solved.

Suttle has proposed a 10 cent federal tax on every roll of toilet paper.

Mayor Jim Suttle is a Democrat. His Party affiliation is not mentioned in the article about his toilet-paper tax. Funny how that works.

Voting With Their Feet

See: Low-tax states will gain seats, high-tax states will lose them

The state and local tax burden is nearly a third lower in states with growing populations, ATR found. As a result, per capita government spending is also lower: $4,008 for states gaining congressional seats, $5,117 for states losing them.

And, as ATR notes, “in eight of ten losers, workers can be forced to join a union as a condition of employment. In 7 of the 8 gainers, workers are given a choice whether to join or contribute financially to a union.”

Imagine that.

Here in Washington State, William Gates Senior was one of the principle backers of an attempt to introduce an State Income Tax for Washingtonions. The measure was trounced. The Democrats lost on that one big-time.

See: Why Washington’s Tax on the Rich Failed

Passing I-1098 would have created the state’s first income tax. Polls and pundits said the main opposition to the tax was that voters feared the tax would start with the rich, and then quickly work its way down the income ladder.

“Citizens determined I-1098 was simply the first step toward establishing an income tax on all Washingtonians,” said Scott Stanzel, Defeat 1098 campaign manager, in a statement.

When I was asked about this by people that I know, I would in turn ask them if they really believed that the politicians would not extend the income tax to them. I told them that if they were in-favor of "taxing the rich", they also had to decide how much the trusted the politicians that they would be putting in charge of who was going to be taxed.

The Gulf Of Obama Oil Spill Crisis

The Gulf Oil Spill Crisis belongs to Obama and the Democrat Party, not BP.

Politics, nothing else but politics, made the spill much more of a disaster then it needed to be. For that, the blame belongs to Obama and the Democrats, not BP.

BP was blocked from bringing in outside assistance by the Democrat Obama Administration. From that point forward, the responsibility for the disaster belongs to no one but Obama and the Democrat Party.

See: Avertible catastrophe

In sharp contrast to Dutch preparedness before the fact and the Dutch instinct to dive into action once an emergency becomes apparent, witness the American reaction to the Dutch offer of help. The U.S. government responded with "Thanks but no thanks," remarked Visser, despite BP's desire to bring in the Dutch equipment and despite the no-lose nature of the Dutch offer --the Dutch government offered the use of its equipment at no charge. Even after the U.S. refused, the Dutch kept their vessels on standby, hoping the Americans would come round. By May 5, the U.S. had not come round. To the contrary, the U.S. had also turned down offers of help from 12 other governments, most of them with superior expertise and equipment --unlike the U.S., Europe has robust fleets of Oil Spill Response Vessels that sail circles around their make-shift U.S. counterparts.

Why does neither the U.S. government nor U.S. energy companies have on hand the cleanup technology available in Europe? Ironically, the superior European technology runs afoul of U.S. environmental rules. The voracious Dutch vessels, for example, continuously suck up vast quantities of oily water, extract most of the oil and then spit overboard vast quantities of nearly oil-free water. Nearly oil-free isn't good enough for the U.S. regulators, who have a standard of 15 parts per million -- if water isn't at least 99.9985% pure, it may not be returned to the Gulf of Mexico.

(You should read the whole thing. I would have quoted the whole thing, which covers more than I have cited, but the Financial Post deserves the traffic. Give them a visit. It is worthwhile.)

For some people, specifically meaning Obama and the Democrat Party, politics is more important than effectiveness. BP may have been the source of the spill, but they are not the reason it has become a disaster. Obama and the Democrats own this disaster because they prevented BP and other outsiders from helping to mitigate it.

The Obama Administration is the most partisan administration that this nation has seen since Johnson, and the most progressive since Wilson. For them, Politics trumps everything. Obama and the Democrat Party are the reason this spill has become a disaster.

Remember that in November.

Repay Obama and the Democrat Party for their role in turning the Gulf of Mexico into an ecological disaster zone.

Jimmy Obama Carter

Do you remember that grand speech that Obama gave in Germany during his campaign? Left-Europe loved him for it. Obama was the man they would vote to have has America's President.

Enough American voters agreed with them to put Obama in the White-House.

Half way through his first term, those same left leaning Europeans are now comparing Obama, rather unkindly, to Jimmy Carter.

See: Will Obama Be the 'Jimmy Carter of the 21st Century'?

The left-leaning Berliner Zeitung writes:

"If Barack Obama isn't careful, he will become the Jimmy Carter of the 21st century."

"In his speech, Obama tried to make a virtue of an emergency. He said a shift to new energy sources was now a 'national mission.' Just as the nation once mobilized its powers for World War II, now it needs to conquer its devilish dependence on fossil fuels … If Obama wins this debate, and achieves a true shift in energy dependence, then his name will perhaps be mentioned again in the same breath with great American presidents."

"Politically, though, it's fraught with risk. His opponents have already charged Obama with using the Gulf catastrophe to advance his climate agenda in Congress. Republicans rely on the tendency of Americans to prefer cheap fuel and big cars with a certain level of power. Over 30 years ago, after all, another president called for smarter American energy policies in a televised speech from the Oval Office. He wanted to know, 'Why have we not been able to get together as a nation to resolve our serious energy problem?' That president's name was Jimmy Carter."

The bloom is off the rose.

The BP Gulf Oil Spill, Regulatory Capture and Government Failure

As the BP Gulf Oil Spill crisis drags on, the calls and screams to have people criminally prosecuted will become ever more shrill and demanding.

Who and what is ultimately to blame?

Looking at BP's role and lobbying efforts in American politics reveals something very interesting about the nature of political systems and the human condition.

See: Feel the Rage

The liberals' fury at the President is almost as astounding as their outrage over the discovery that oil companies and their regulators might have grown too cozy. In economic literature, this behavior is known as "regulatory capture," and the current political irony is that this is a long-time conservative critique of the regulatory state.

The Nobel economist George Stigler of the University of Chicago was one of the concept's main developers, and it is a seminal plank of the "public choice" school of economics for which James Buchanan won the economics Nobel in 1986. Ronald Reagan warned about this in different words in one of his farewell speeches.

In the better economic textbooks, regulatory capture is described as a "government failure," as opposed to a market failure. It refers to the fact that individuals or companies with the highest interest or stake in a policy outcome will be able to focus their energies on politicians and bureaucracies to get the outcome they prefer.

See: Once a government pet, BP now a capitalist tool

While BP has resisted some government interventions, it has lobbied for tax hikes, greenhouse gas restraints, the stimulus bill, the Wall Street bailout, and subsidies for oil pipelines, solar panels, natural gas and biofuels.

Now that BP’s oil rig has caused the biggest environmental disaster in American history, the Left is pulling the same bogus trick it did with Enron and AIG: Whenever a company earns universal ire, declare it the poster boy for the free market.

Making government more powerful, makes it more corruptible.

Government is corruptible because people are corruptible. There is no getting around or away from that fact.

As government grows and is given more control over the details and minutia of our daily lives, the scope of corruptibility of the government grows with it.

When the government makes a law, a rule or a regulation regarding a behavior, it affects peoples lives. Laws, rules and regulations are created with the specific intent of affecting peoples lives. Since laws, rules and regulations affect peoples lives, they create an incentive for those most affected to be able to influence those that are making the laws, rules and regulations.

There is a give an take to this. Everyone has things that they want. Everything becomes negotiable. Anything can be bought if the price is right and a seller has something that a buyer wants.

The process that this all gets worked out in, where the negotiations are made, the horse trading is done and back room deals are dealt, we call politics.

People's property and lives are at stake. The costs and prices become greater as the scope and power of the laws, rules and regulations increase.

The end results can be disturbing and very predictable.

How is that "Hope and Change" working for you?

It seems it ain't working so well for Obama's "progressive" supporters.

See: Progressives Ask: Is It Obama, Or Is It Us?

Left-wing activists described the year leading up to Barack Obama's election as exhilarating, empowering and exciting.
Now, if you ask progressives gathered for the America's Future Now conference in Washington, D.C., about the first year and a half of his presidency, they say:

"Frustrating."

"Sobering."

"Brutal."

At least, those were the reactions of, respectively, union activist Nick Weiner, University of Minnesota political science professor Dara Strolovitch, and Steve Peha, who heads an education reform consultancy.

"I had hoped for something different," Peha explains. "I had hoped for the president who ran for office, and not so much the one who's in office."

Peha says he's a pragmatist -- he knows that campaigning and governing are different. But "what I wish is that President Obama had worked a little less for his ideal of bipartisanship and a little more for the people who elected him," he says.

This is the prevailing feeling at this week's America's Future Now conference. And no one is hiding it.

There are several things to remark upon here.

One, the Obama administration has easily been the most partisan administration that this country has suffered through since Johnson. His "take it or leave it" strategy for ramming through his health-care scheme is example enough of that. On that charge, the progressives are talking out their ass. They wouldn't know what "bipartisanship" was if it reached across the isle and slugged them.

Two, Obama is the most progressive President this country has had since Woodrow Wilson. Again, his health-care scheme is proof enough of that. We could also talk about his high tax policy and his regulatory policy per Cap and Trade. Then there is that whole financial crises fiasco created by the progressive geniuses Barney Frank and Chris Dodd that Obama managed to make much worse. He even seized control of GM for goodness sake. GM is now a government run enterprise strait out of the Mussolini play book. What do the progressives want! Any more progressive and and this administration would be considering controlling political speech by taxing internet news aggregators or bringing back the "Fairness Doctrine" to radio.

Three, Obama cannot realistically satisfy his hard left supporters. These are the people on the fringe of reality, more inclined to look at working through the constraints of the law and the constitution as backsliding and evidence of a spiritual weakness. These people were going to turn on him no matter what. That doesn't mean that we can't enjoy the schadenfreude while watching his own snakes turn on him.

Heh. . . Here is some "Hope and Change" good and hard you "progressive" dip-shits.

An Economic Collapse in 2011?

Art Laffer discusses the predictable results of raising taxes.

See: Tax Hikes and the 2011 Economic Collapse

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

We are more broke then we know.

Economics is an exercise in dynamic behaviors. People change their spending, investing and working behaviors when the tax code is changed. They will make decisions with the purpose and intent of keeping as much of their money as possible.

Expect people to behave rationally, even if that means working less because they can keep less of what they earn.

Hat tip: LuciusSeptimius @ Correspondence Committee

Public Employees Unions & Bankrupt Governments

We may soon see a wave of city and county governments file for bankruptcy in the near future. Bankruptcy gives the local municipal governments the means to deal with a significant source of their problems with their budgets.

See: Bankruptcy talk spreads among Calif. muni officials

Despite its stigma, bankruptcy has paid an important dividend for Vallejo: It has forced public employee unions to the negotiating table, providing city leaders an opportunity to rein in compensation, which city officials said accounts for more than three-quarters of Vallejo's general fund spending. City Councilwoman Stephanie Gomes said the effort has led to concessions from three of four city unions.

Like Vallejo, Los Angeles is suffering from weak revenue at the same time the cost of its pensions and other retirement benefits are rising. Former Mayor Richard Riordan said those factors put the government of the second largest U.S. city on track to declare bankruptcy between now and 2014.

Riordan sees bankruptcy as a necessary tactic for squeezing concessions from the city's public employee unions. It could also pave the way for 401(k) retirement accounts for new city workers instead of defined pension benefit plans with escalating costs, he said.

"The threat of bankruptcy is really the only way you're going to get them to make major changes," Riordan recently told Reuters.

The public employee's unions are the most powerful lobbies in existence. They own most (particularly the blue) local governments, lock, stock and barrel. They are an organized block of votes and campaign contributions that dominate local elections. They get their people out to vote. They control huge heaping gobs of money that get donated to (almost exclusively Democrat) campaigns. They are the deciding factor in blue districts. They own them.

The end result? The municipalities that have been generous with the compensation packages that they have given to their public employees unions are now broke. There is little or nothing left in the private sector to loot. Their economies are in the toilet, the rich are fleeing the state, and the low end private work force that remains earns next to nothing and pays next to nothing in taxes.

In such circumstances, filing bankruptcy can look like a good idea.

Too bad it won't work.

Dealing the unions a setback only leaves them in place to again manipulate elections so that they can again vote themselves ever larger portions of the public purse. So long as Public Employee Unions are able to influence local politicians, they will own those politicians. Nothing will really ever change.

~

See Also: Soak the Rich, Lose the Rich

We believe there are three unintended consequences from states raising tax rates on the rich. First, some rich residents sell their homes and leave the state; second, those who stay in the state report less taxable income on their tax returns; and third, some rich people choose not to locate in a high-tax state. Since many rich people also tend to be successful business owners, jobs leave with them or they never arrive in the first place. This is why high income-tax states have such a tough time creating net new jobs for low-income residents and college graduates.

See Also: Best and Worst States for Business 2010

How is it that the nation’s most populous state at 37 million, one that is the world’s eighth-largest economy and the country’s richest and most diverse agricultural producer, a state that had the fastest growth rate in the 1950s and 1960s during the tenures of Democratic Governor Pat Brown and Republican Governors Earl Warren and Ronald Reagan, should become the Venezuela of North America?

Californians pay among the highest income and sales taxes in the nation, the former exceeding 10 percent in the top brackets. Unemployment statewide is over 12.2 percent, higher than the national average. State politics seems consumed with how to divide a shrinking pie rather than how to expand it. Against national trend, union density is climbing from 16.1 percent of workers in 1998 to 17.8 percent in 2002. Organized labor has more political influence in California than in most other states. In addition, unfunded pension and health care liabilities for state workers top $500 billion and the annual pension contribution has climbed from $320 million to $7.3 billion in less than a decade. When state employees reach critical mass, they tend to become a permanent lobby for continual growth in government.

Are we having fun yet?

Hillery Clinton Talks About Brazil As A Taxation Model

See: Clinton: 'The rich are not paying their fair share'

"Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what — they're growing like crazy," Clinton said. "And the rich are getting richer, but they're pulling people out of poverty."

Both Clinton and Obama campaigned for president on promises to allow the Bush tax cuts for wealthy Americans expire this year, a plan that is now part of Obama's budget. The move will effectively raise taxes sharply on people earning more than $250,000.

Hillery is clearly suggesting that Brazil's high tax rate is the reason that its economy is growing.

Brazil may have a high tax rate, but it also largely avoided the banking disaster that has put many other western nations on the brink of bankruptcy.

See: Lessons from Brazil: Why Is It Bouncing Back While Other Markets Stumble?

But all of Brazil's banks can be thankful that, to a large extent, they haven't had to deal with the toxic assets that crippled banks in developed countries. Unlike their counterparts elsewhere, Brazilian banks were not as exposed to the property sector and credit derivatives, and financial soundness indicators were robust coming into the crisis, according to Fabio Barbosa, head of Banco Santander Brasil and the Brazilian Federation of Banking Associations (Febraban). He cites the high capitalization requirement as a key reason for the sector's resilience -- the minimum capital adequacy requirement in Brazil is 11%, compared with 8% under the Basel regulations that other banks around the world follow. In December 2008, the average ratio for the sector in Brazil was 20%, and for the country's five largest banks (accounting for 67% of total assets) the ratio was 18.5%. He adds that Brazil also didn't have a shadow financial system, like in the U.S., thanks to tight regulatory and supervisory oversight. All financial institutions (including investment banks) are under the watch of the Central Bank.

One of Brazil's biggest advantages is that it did not have a Barney Frank or a Chris Dodd plundering it's banking system to redistribute wealth.

Comparatively, with the rest of the western world seeing their future play out for them in the street riots of Greece, Brazil is doing pretty good. It could do even better.

High tax rates reduce the private sectors ability to raise money for new projects, new ideas, new services, and new businesses. If Brazil were to reduce its tax rake to a lower level, productivity in their private sector would likely increase, which ironically enough, would also increase the amount of tax revenue that the government would be able to take in. Increasing the opportunity for the private sector to make money also increases the potential amount of taxable revenue that can be collected.

Conversely, if Brazil were to increase its tax rake even more than it is at present, it could expect to see an eventual decline in private sector productivity. Lower profits would reduce the amount of taxable revenue that the government could then skim out the publics pockets.

There is a point at which the tax rates can be raised high enough that the result would be reduced tax revenue to the Government. Right now, Brazil is in a boom period. They are making money. The high tax rate is not the reason that they are making money. It is just a factor that businesses in Brazil have to deal with, a hindrance that they have to overcome, a red-line that they have to pay for in their books.

In time, as their economy matures, that high tax rate of theirs will become more of a problem. Their politicians will either have the wit and the will to lower their tax rates which will increase profits and tax collections, or they will squeeze the public even harder with even higher taxes, which will reduce profits and reduce tax collections.

But to think that Brazil has somehow managed to tax itself into prosperity . . . is nuts.

Raise Taxes Or Cut Spending – Two World-views

Democrats in California have put together a plan to tax California out of their spending problems. They can't afford what they have promised, so they will take more from the productive to finance their shortfall.

See: California Democrats unveil tax-increase package

The plan by state Senate Democrats would raise $4.9 billion by raising California's vehicle registration fee, suspending corporate tax breaks scheduled to begin next year and boosting the state's tax on alcoholic beverages.

Democrats control both chambers of the state's legislature and have said they would seek new revenue to help plug the shortfall.

Republican Governor Arnold Schwarzenegger, by contrast, has ruled out tax increases and is relying largely on deep spending cuts in his plan for balancing the state's books. He has called for $12.4 billion of cuts and would scrap the state's welfare system, a plan Democrats have rejected.

Arnold Schwarzenegger's approach would be to cut spending as the best means to solve the state's spending problem. Arnold may not be the best representative of Republican philosophy, but in this example, he does so well.

For Democrats, raising taxes to solve an over-spending problem is the right thing to do because of the good intentions that drive their want to spend. They really do believe that raising taxes on the productive is a good way to support the poor and the disadvantaged that they want to help.

For Republicans, raising taxes to solve a spending problem is a little bit to much like shooting up with heroin in order to solve a drug problem. Its nuts. It only makes things worse. Reducing the incentive for the productive to produce will not only reduce how many people that the productive can employee, but it will also reduce the amount of profit that they will have that can be taxed. Everybody loses.

The road to hell is paved with . . .

Bitter Resentments And The Death Of The Euro.

All the happy talk in the world from bloviating socialist economist can not stem the tide that is turning against the Euro.

In Germany, the Euro is becoming the butt of bad jokes that are funny only because of the truth that they tell.

See: Berliners dream of return to deutschmark

Cabaret artists have been making jokes about wheelbarrows of notes, or telling the one about the German and the Greek who go out to eat, the German choosing the cheapest item on the menu, the Greek gorging on a range of dishes, before the waiter brings the German the bill at the end. The audience doubles over. But the reality is stomach-churning.

"We are building up an almighty bubble of debt which is going to burst in one great bang," says Hans-Werner Sinn, chief of Ifo, one of the country's leading economic thinktanks.

That means a bitter round of budget cuts, deeper than any seen since 1945. Every area of German life is expected to take a hit, from education to welfare benefits, swimming pools to autobahns. Far-fetched as talk of the return of the mark seems, the more it is talked about, the more it is likely to become popular, despite Merkel's insistence that if the euro fails, so will Europe.

Without Germany, the Euro is nothing. The Germans know it. All of Europe knows it. The resentment in Germany is real. Resentment like this will kill the Euro.

Europe – Retiring On Empty?

See: Crisis Imperils Liberal Benefits Long Expected by Europeans

In Rome, Aldo Cimaglia is 52 and teaches photography, and he is deeply pessimistic about his pension. “It’s going to go belly-up because no one will be around to fill the pension coffers,” he said. “It’s not just me; this country has no future.”

Changes have now become urgent. Europe’s population is aging quickly as birthrates decline. Unemployment has risen as traditional industries have shifted to Asia. And the region lacks competitiveness in world markets.

According to the European Commission, by 2050 the percentage of Europeans older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in the European Union will drop to 1.3 to 1.

1.3 workers to every 1 retiree. That is not workable. The poor workers paying into the system will have to be taxed at over half their gross just to keep the system going. They won't do it. They will quit. Quiting will easily look like the best option. “Better,” the workers will rationalize, “to go on the dole then have to be the sucker that pays for it.”

European politicians knew that this day was coming. They knew that their welfare state was based on Ponzi scheme economics. It was the reason that they opened their borders to immigrants from Muslim nations. They had hoped that these new immigrants would help them maintain a high worker to retiree ratio. They had also hoped that the new immigrants would feel invested in the success of Europe and in the welfare of those that they would be supporting in retirement. (Can we say - Epic Fail!)

What then for Europe?

Can they find a way out of this catastrophe?

It may be too late for them.

But what about for us?

Is our social welfare system really that much better off than the European's? Or are we seeing in Europe, a harbinger of our own doom?

The Next Big Bailouts - State Pension Plans

Hold on to your wallets.

See: Will State Pension Funds Need a $1 Trillion Bailout?

The federal government could face another economic disaster and massive bailouts within a decade if it doesn't force state pension funds to revamp their operations soon, an economist says.

Even if they meet "aggressive" 8 percent growth targets, several states will see the reserves in their pension funds dry up by the end of 2020, with many more running out of cash within another decade, says Joshua Rauh, an economist at Northwestern University's Kellogg School of Management. Broke states are likely to go begging to the federal government, which would probably have to bail them out to the tune of more than $1 trillion, he argues in a new paper.

It is important to keep in mind how big of a deal this is. The beneficiaries of these state pension funds are very powerful politically. These are government employees. They own the government. It is their play-toy. (Government employees are the most powerful lobby in any government.)

You will be told to just shut up and pay.

More debt. More taxes. Are we having fun yet?

See also: State Pensions Face $1 Trillion Shortfall

Is The Medicare System Beginning To Implode? How Will Politicians Respond?

How will politicians respond if the Doctors refuse to participate in the Government medical care schemes?

See: Texas doctors opting out of Medicare at alarming rate

Texas doctors are opting out of Medicare at alarming rates, frustrated by reimbursement cuts they say make participation in government-funded care of seniors unaffordable.

Two years after a survey found nearly half of Texas doctors weren't taking some new Medicare patients, new data shows 100 to 200 a year are now ending all involvement with the program. Before 2007, the number of doctors opting out averaged less than a handful a year.

“This new data shows the Medicare system is beginning to implode,” said Dr. Susan Bailey, president of the Texas Medical Association. “If Congress doesn't fix Medicare soon, there'll be more and more doctors dropping out and Congress' promise to provide medical care to seniors will be broken.”

How long before some Congress Critter proposes forcing Doctors to accept Medicare (think Obama-care) patients at whatever compensation rate the government sets?

Roller Coaster Market Ride - Are We Having Fun Yet?

See: Bank Risk Soars to Record, Default Swaps Overtake Lehman Crisis

May 7 (Bloomberg) -- The cost of insuring against losses on European bank bonds soared to a record, surpassing levels triggered by the collapse of Lehman Brothers Holdings Inc., as the sovereign debt crisis deepened.

Like on an old wooden roller coaster, our economic cars have been pulled slowly to the top again after the first plunge, tickity tickity tickity all the way up.

Now, here we are at the the top of the second rise, at the long breathless moment where the cars just kind of sit there, slipping slowly forward as we get our first look at the deep drop before us. No more tickity tickity. The brakes are now off.

In moments, there will be little that we can do but throw our hands up in the air and scream in the downward plunge.

Are we having fun yet?