Warren Buffett is once more calling for higher tax rates, in advising the Congress to revoke the Bush-era tax rates and apparently to return to those of the Clinton administration — reminiscent of the elder Gates touring the country stumping for a reinstatement of a substantial inheritance tax. Aside from the fact that the deficit is not due to falling revenues, but almost entirely a result of astronomical federal spending increases since 2000, this bromide is quite pathological, this peddling of elixirs that the sellers do not drink.
a) Buffett, a nice enough and civic-minded philanthropist, in the past has lamented that he paid taxes on his profits at the capital gains rate rather than the income tax rate, and so paid less, percentage wise, of his real income in actual annual taxes than did the working classes. But he was never under any obligation to do so. So why did he?
Why not, given his enormous prestige and influence, start a national campaign for fellow hyper-rich, in the spirit of public service, to subject their profits to income tax rates, not capital gains rates on their multi-million dollar trading income? That seems a far more noble cause than advocating higher income taxes on the food market owner or general contractor, with twenty employees, who manages to make $280,000, much of which he will plough back into his business — if he can.
b) If Buffett is worried about the deficits and has confidence in government to use our money wisely (hence his desire for greater tax revenue), then why in heaven did he pledge so much of his money to the Gates Foundation and other tax-exempt private philanthropies? The world’s two richest men have in essence taken billions of dollars in future revenue away from the United States Treasury, inasmuch as such private foundations will allow the Buffett/Gates fortunes to be exempt from substantial inheritance taxes on their estates. This is the message: “all of you lesser folk pay higher taxes to a wise government that knows how to spend it. But me? I trust my favorite private foundations to do a better job and so will divert my taxes to them.” And when a Bill Gates Sr. speaks on the wisdom of greater inheritance taxes — given his billionaire son’s financial status, and the multibillion dollars in inheritance taxes that won’t be paid on the future transference of the family’s fortunes — should we laugh or cry?
c) Why did Buffett not become an advocate of higher taxes on those who make over $250,000 when he was in his twenties and thirties and desperately trying to pile up his first five or so million? Did he really pay astronomical income taxes at those astronomical tax rates in the 1950s and 1960s or seek to avoid them through capital gains lower taxes and write-offs? Why do so many of these zillionaires chase the dollar almost to the exclusion of all else, and then only when wildly successful in a manner that the other 99% were not, suddenly in the twilight years want to make it tougher on others? Is that the price of penance?
Korea as the Proverbial Deranged Neighbor
I’ve mentioned that I once had a deranged neighbor in the general vicinity out here in rural California. His pit bulls threatened us when we irrigated near the property line. His compound of various itinerant crashed trailers was an eyesore. His kids were near criminals. His message: “I am crazy with nothing left to lose; pay me obeisance or watch havoc ensue” (e.g., your good life will not be too good if you screw with me and my perennially bad life). This was the logic of a frenzied Hitler circa 1936-9: “You smug and now prosperous law-abiding Britain and France shudder at the memory of Verdun and the Somme; well, I claim that I welcome them again. So keep silent, or I will bring you down to my rung of the Inferno.” I imagine that every once in a while the professional upscale suburbanite at a stop light gets the middle finger from the punk, as if to say, “I doubt you’ll ram me with that Lexus and MBA, so screw you.” And he’s North-Korean right most of the time.
North Korea preens because it has two thuggish former or present patrons nearby, and a number of success stories — Japan, South Korea, Taiwan — in missile range. That’s not a bad formula for perpetual shake-downs.
The age-old antidote for a North Korea is too unimaginable for most of us: we who have most to lose should appear crazier and far more likely to inflict harm than those who have nothing to lose to ensure deterrence. But that tact could not guarantee calm, and so we logically opt for the higher percentage diplomatic route of paying the mordida.
Insanity is a force-multiplier in nuclear poker. North Korea is playing the Huns of the 5th-century AD to us, the tottering late Romans, who paid to avoid for a while the misery that was second nature to the barbarians. We are lectured, quite rightly, that Korea is grandstanding at a time of succession, that it is broke and wants a crisis to bring in some more bribe money (as if being unhinged were as good an asset as oil exports), that it shows off a new nuclear plant to garner more cash, and that it is close to implosion and has few choices. I hope so, but I am afraid also that 2011 will be our 1979, inasmuch as 2009-2010 bowing, apologizing, and treating enemies as friends and friends as neutrals is all so reminiscent of 1977-8. In short, North Korea may think 20011-12 is about the last chance it is going to get with a Carteresque president, and it wants to make the most of it, pronto.
I flew ten or so times in November and was patted down frequently and full-body scanned. I was not bothered personally by the mostly inane procedure, but outraged by the symbolism of it all. (The sheer number of TSA employees standing idly about the scanners and pat-down area was far more disturbing).
Let me elaborate. The federal government the last few years has all but apologized for Guantanamo, fretted that a false rumor of a flushed Koran offended Muslims worldwide, torn the country apart over the stupid move to build — in St. Stephen/al-Aqsa/Hagia Sophia style — a mosque at Ground Zero, chest-thumped about trying KSM in federal court with all the accompanying legal gymnastics, worried (via the voice of Gen. Casey) that diversity programs might be imperiled after Maj. Hasan murdered fellow soldiers, was careful to Mirandize the wannabe mass murder Mutallab (and to insist at first that he “allegedly” tried to blow up his fellow passengers) — and on and on.
In other words, one gets the message already: our own government cares a lot more about not offending 20-40 year-old foreign born Muslim males, both citizens and not, who in theory fit the profile of global terrorists between 2001-2010 than it does about bothering an 80-year-old American citizen in a wheel chair — all by refusing to ask pertinent, logical questions of would-be flyers. (e.g., “So you’ve been to Yemen the last two years; explain the purpose of your trip”; “Explain when and why you got this green card at the Pakistani consulate.”)
Reader, remember: all this is merely symptomatic of the indulgence and luxury of peace. Had Mr. Mutallab succeeded or the Time Square would-be bombers incinerated 1,000 shoppers, then all this nonsense would vanish for a year or two. Suffer another 9/11, and John Kerry and Harry Reid will be railing about the need to expand Guantanamo — albeit screaming, “Bush did it!”
A Funny Sort of Morality
Most who come illegally from Mexico are desperate to leave a failed state — though reticent to explain why they think Mexico is failing. They want work and often work here terribly hard. But that plight does not mean that there are not moral problems in coming here illegally. The guest can break the immigration law of the host on grounds he is poor, but the U.S. poor then cannot pick and choose whether to file a 1040 or not? Federal laws sorta, kinda matter sometimes? Cut in front of the immigration line, in a way that others from India or Korea do not? Is the Chiapan who files for legal status and goes through the labyrinth of obtaining citizenship a fool? In the aggregate, the illegal community can send tens of billions of dollars in remittances back to Latin America, while tapping into entitlement support from their hosts, but cannot afford catastrophic health insurance? (Could we not bar anyone on public assistance from sending money out of the country without substantial taxes?)
We have created a situation that simply could never be emulated without social chaos (e.g., on what grounds do we say that a million Greeks or five million Sudanese could not in theory come en masse to the United States — that it would be wrong, illegal, impractical?). Would the Latino community accept a million from Mozambique arriving in the American Southwest every year — without diplomas, without English, and without legality? We know illegal immigration is supposed to be unlawful, expensive, and contradictory — but is it not also abjectly one of the most unethical and amoral phenomena of our times?
The Cuts to Come
I liked the recommendations of the deficit commission, except the despair that the budget won’t be balanced for decades, long after I’m dead. I cannot accept that. We forget that balancing a budget is not just a matter of fiscal health, but one of psychology as well. Collectively the nation will regain its self-respect only when it sheds the self-image of a debtor, spendthrift, softie, taker, or splurger. Our problem, even in recession, is not austerity, but surfeit. I would quadruple the proposed cuts until video games sales crash, a family shares an iPhone, and the huge plastic Christmas Santa Clauses at Wal-Mart go unsold. Today I was driving in Fresno in a so-so area, the radio was blaring about RECESSION!, and at the stop light were four new cars — two Lexuses, a Volvo, and a top-of-the-line Camry.
The public is starting to sense that the progressive dream for us is an abject nightmare, castor oil far worse than the illness. And there is no reason to believe that the losses of 2010 are over with yet — if Pelosi, Reid, and Obama stay in denial and think they only need to communicate more effectively their EU-plans of redistributive change.
Have a Happy Thanksgiving.