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Biden and Kaine, Romney and Pawlenty
Tweet Share on Facebook August 20, 2008 Comment (2)Just checked the Intrade numbers on the veepstakes. For Barack Obama, it's Joe Biden 40 percent and Tim Kaine 21 percent. Biden has retraced some of the upward momentum from yesterday (-10 percent), while Kaine has gained ground (+9 percent.). For John McCain, Mitt Romney and Tim Pawlenty are tied at 30 percent, with Tom Ridge hanging around at 20 percent. Joe Lieberman has the momentum today, though. He is +7 to 12 percent.
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Tom Ridge Ruse: CEO Meg Whitman as Veep?
Tweet Share on Facebook August 19, 2008 Comment (21)A conversation with a McCain adviser confirms my belief that the Tom Ridge boomlet is a clever bit of misdirection. I think John McCain is having Ridge "run a pick" for the real pick. First, look at this collection of factoids:
1) My pal Rich Lowry over at The Corner reports that Team McCain has been "calling key state GOP officials around the country the last couple of days and sounding them out about the consequences of a pro-choice VP pick." Ridge is pro-choice.
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Jimmy P. on Bloggingheads.TV
Tweet Share on Facebook August 19, 2008 Comment (1)My pal John Tamny , editor of RealClearMarkets, and I did a Bloggingheads.tv segment. Not only is it fun, but watching it earns you college credits. (OK, I'm not 100 percent sure about that last part.). Check it out.
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McCain’s (Almost) August Surprise
Tweet Share on Facebook August 19, 2008 Comment (6)Call it The Game Changing Moment That Wasn't. For just a wee bit, it seemed like John McCain was going to blow away Barack Obama's piddly (by comparison) $1,000 tax cut for dual-income families. Here is McCain at the Saddleback forum on Saturday: "Let's have—keep taxes low. Let's give every family in America a $7,000 tax credit for every child they have."
Well, that's one way to deal with the "tax cuts for the rich" slam against McCainomics. Previously, McCain had proposed doubling the dependent exemption to $7,000. (About an $800 tax cut for a family of four.) But considering that the current kiddie credit is $1,000, the new plan—particularly if it was a refundable tax credit—would be quite an upgrade, and just what many social conservatives have been pushing for. (But supply-siders? Not so much. In today's WSJ, Peter Ferrara calls such refundable tax credits "tax welfare.")
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Taxes: You Pay More Than You Know
Tweet Share on Facebook August 19, 2008 Comment (3)The U.S. corporate tax, the second highest on the planet, is a hidden tax where workers end up paying 70 percent of it. It's also a tax with no economic justification on efficiency grounds. So, why are some left-of-center folks so enamored with it? Simple: It's a nearly $400 billion a year tax that most folks are unaware of. So, what if we killed the corporate tax for competitiveness reasons and just raised income and investment taxes, essentially getting rid of the double taxation issue? (Profits are taxed at the corporate level and again as dividends.) Look at this bit of static analysis (it assumes no impact of taxes on economic growth) from the folks at the Tax Policy Center:
It turns out that if you want to finance complete repeal of the corporate tax, you'd need to boost the top three individual rates to an eye-popping 50.1 percent, 59.1 percent, and 62.7 percent, and raise the tax on capital gains and dividends to about 27 percent. If you leave the rates on gains and dividends untouched, taxes on ordinary income would have to double to 56 percent, 66 percent and 70 percent.
But in a way, taxes are already at those confiscatory levels because of the way the tax is passed along to workers and shareholders. We just don't quite perceive it as such.
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Pelosi Democrats and Political Peak Oil
Tweet Share on Facebook August 19, 2008 Comment (3)Today's New York Times story on the oil industry is full of juicy factoids and observations:
1) Western corporations now control just 13 percent of the world's oil production.
2) In the latest quarter, the five biggest publicly traded oil companies said their oil output had declined by a total of 614,000 barrels a day, the steepest of five consecutive quarters of declines.
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Obama’s Curious Capital Gains Tax Epiphany
Tweet Share on Facebook August 18, 2008 Comment (22)Here's the question: Why did Barack Obama finally go with a smaller-than-expected suggested increase in the capital gains tax rate? Let me present what is, I think, a plausible answer in 10 easy steps (see "Did Obama Blink on Capital Gains Taxes?" for more details):
1) In September 2007, Obama (the primary election version) suggests a possible near doubling of the maximum capital gains tax to 28 percent on the grounds of fairness (big with Dem primary voters) and a need to raise revenue. (Why 28 percent? Because that was the top Bill Clinton cap gains rate inherited from Ronald Reagan.) But Obama leaves himself plenty of wiggle room, providing a range of between 28 percent and 20 percent, the latter being the rate that resulted from the 1997 Clinton-Gingrich reduction and was followed by an economic and stock market boom.
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Why Inflation Is Headed Lower
Tweet Share on Facebook August 18, 2008 CommentGovernment inflation numbers are backward-looking. This summer's big jump in inflation between May and July was the result of an oil spike that has already reversed. So, what if we assume energy prices had held firm instead of surging? Jim Hamilton over at Econbrowser does the math so I don't have to:
...if energy prices had held constant between May and July but all other price increases had been the same, the year-over-year CPI number would have been more like 4-1/2% rather than 5-1/2%. But does it make any sense to ask, What if energy prices hadn't gone up between May and July? There are certainly good reasons why the Fed should not be taking as much comfort in "core inflation" as it has in recent years. But in this case, there is a clear need to net out the May-to-July energy price increase—it's already been reversed. The US national average gas price is back to $3.78/gallon, right where it was in mid-May. Thus, even without any further drop in the price of gasoline—and personally, I do expect further drops—the 4-1/2% number is a better summary of where we stand right at the moment than 5-1/2%. So no, I don't think that yesterday's CPI numbers will cause the Fed to panic. Because yesterday's news is already way of out of date.
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The Return of the Misery Index
Tweet Share on Facebook August 18, 2008 Comment (1)The Wonk Room blog from the liberal Center for American Progress happily tosses out this little factoid:
By one measure—the "Misery Index" made famous by Jimmy Carter—the economy is in its worst shape since mid-1991. The Misery Index is simply the combination of the unemployment rate and the inflation rate. It reached 11.3 percent in July. While still well below its heights in the 1970s and early 1980s, the Misery Index is now at its highest level since the first George Bush was president according to data from www.miseryindex.us.
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Did Obama Blink on Capital Gains Taxes?
Tweet Share on Facebook August 18, 2008 Comment (6)Team Obama gave me some pushback—or at least a firm-but-friendly nudge—regarding my post from last week, "With Polls Close, Obama Blinks on Taxes." I was personally sent an E-mail from a top Barack Obama adviser containing a transcript of Senator Obama's interview last March with CNBC's Maria Bartiromo. This portion was highlighted:
BARTIROMO: "How do you plan to change the tax code when it comes to capital gains? How high will that 15 percent rate go?"
Sen. OBAMA: "Well, you know, I haven't given a firm number. Here's my belief, that we can't go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent. I would—and my guess would be it would be significantly lower than that.
