Naturally I disagree with much of the opposition and my well-meaning colleagues on the left in regards to Keynes and his school of economics. Many in this school of thought cannot accept the fact that Keynesian economics has never worked; it did not work in the depression nor has it worked any time since then. The only time stimulus has “worked” is after the economy has already recovered and then becomes overheated by the stimulus. Keynesian economics is an excuse for politicians to buy off special interest and voters with other peoples’ money. Let me address some of the opposition’s specific points:

Stimulus spending creates jobs

False, stimulus spending financed by taxes substitutes relatively inefficient government spending for private spending. In other words, government spending “crowds out” private spending. The opposition may disagree that public spending is less efficient but the recent analysis of the government spending does not support their point of view.

It is not taxation but debt that is financing the government spending

I maintain that government debt crowds out private borrowing and investment. Many of my anti-capitalist colleagues say that government spending is not crowding out private investment because interest rates are low. Therefore there is plenty of money to finance private investment. Unfortunately, in an attempt to protect depositors, and the government guarantee of such deposits, the bank regulators have increased the credit underwriting requirements on banks. Consequently, they are not lending to small and medium sized businesses.

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Michael Barone in The Examiner:

Barack Obama looked and sounded angry in his speech to the joint session of Congress. He bitterly assailed one straw man after another and made reference to a grab bag of proposals which would cost something on the order of $450 billion—assuring us on the one hand that they all had been supported by Republicans as well as Democrats in the past and suggesting that somehow they are going to turn the economy around. He called for further cuts in the payroll tax (which if continued indefinitely would undermine the case of Social Security as something people have earned rather than a form of welfare) and for a further extension of unemployment insurance (perhaps justifiable on humanitarian grounds, but sure to at least marginally raise the unemployment rate over what it would otherwise be).

He called for a tax credit for hiring the long-term unemployed (unfortunately, these things can be gamed). He gave a veiled plug for his pet project of high-speed rail (a real dud) and for infrastructure spending generally (but didn’t he learn that there aren’t really any shovel-ready projects?). He called for a school modernization program (will it result in more jobs than the Seattle weatherization program that cost $22 million and produced 14 jobs?) and for funding more teacher jobs (a political payoff to the teacher unions which together with other unions gave Democrats $400 million in the 2008 campaign cycle). “We’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it would do for the country.”

Yeah, sure. Like the screening process that produced that $535,000,000 loan guarantee to now-bankrupt Solyndra. And Congress should pass the free trade agreements with Panama, Colombia and South Korea. Except that Congress can’t, because Obama hasn’t sent them up there yet in his 961 days as president.

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As the Administration’s push for alternative fuels grows stronger, Congress is set to consider H.R. 1380, which would create very generous tax credits to manufacturers who retrofit existing work vehicles to run on natural gas rather than on that terrifying global menace known as oil, and very generous subsidies to natural gas vehicle consumers: $7500 per car and a whopping $64,000 for heavy-duty trucks and 18-wheelers. It’s common knowledge in DC that Texas hedge-fund operator and natural gas-magnate T. Boone Pickens is the force behind this bi-partisan, pork-laden legislation, possibly because his natural gas empire would greatly profit from the sudden influx of billions of taxpayer dollars in the form of subsidies listed in the bill.

But hidden behind the scenes is another multi-billionaire, one with a much more sinister motive than mere profit. A man who’s vast fortune of nearly $7 billion is being used to subvert nearly every American institution to conform with his dream of a worldwide socialist utopia.

George Soros.

According to the website GuruFocus, which tracks the investment habits and portfolio trends of some of the world’s richest people, George Soros has made some intrigiung investments into alternative fuel companies of late, specifically those at the forefront of natural gas. This would not be so troubling except that, as GuruFocus points out, Soros has accurately predicted both economic bubbles and quickly growing industries. As a result, Soros’s funds have turned out a 30% return on investments since their inception.

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From The Hill:

Sen. Tom Coburn (R-Okla.) said Sunday the federal government can save $1 trillion though tax reform, a proposal that will put him at odds with some GOP colleagues.

Coburn plans to unveil a $9 trillion deficit-reduction package Monday that would give lawmakers a menu of policy options to reduce the deficit.

Coburn has suggested $1 trillion in savings could come from eliminating special tax breaks, such as the tax subsidy for ethanol, which he has fought to end.

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School Choice Week is here, and there are a lot of people trying to spread the good word about the benefits of increasing educational freedom.

But what benefit of choice is best to focus on?

You can make at most a few points in an oped or on talk radio. On TV, and even in print reporting, you’re lucky to get one point across. And with friends and family, and even politicians, you need to keep the focus where it will do the most good.

So, should you focus on how horrible inner-city schools are, how many lives are destroyed in a failing government system? Maybe. Depends on the person, certainly.

But the evidence suggests that the best message overall is one that focuses on the financial benefits of school choice (and this is even before the financial crisis). People think about vouchers and education tax credits differently. And be careful trying to pull at Democratic heart-strings with arguments that choice will increase educational equity for poor kids . . . there’s evidence that it backfires!

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When a bad plumber or electrician comes to your house you might pay a lot of money for an incomplete and potentially dangerous fix of the problem.

But a band aide on a bad pipe just means that a potentially disastrous leak is still very much in your future and that the money you just paid has been wasted. That’s what the debate about the Bush tax cuts sounds like to me.

Of course it’s a bad idea to raise taxes when the economy is still struggling and while almost ten percent of the workforce can’t find a job. Of course it’s a bad idea to further punish our citizens when so many have seen their home values plummet beneath the loan amount.

But underneath this debate is this leaky and destructive pipe: the income tax system is a monstrosity that only continues because Washington insiders make so much money off it and because Congress—both parties—love the power over the citizenry that comes with plum assignments to the tax committees.

There is a huge lucrative culture in Washingtonthat has grown up around the income tax code that turns a blind eye to the destructive effects and almost comical complexity of the 68,000 pages of regulations in the tax code. They love the system and we hate it.

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I have to say, I never thought I’d read a blogger on NRO endorse the notion that all of the money you earn belongs to the state. I certainly never thought that read it twice in a year. But here we are, again . . . and I feel compelled to engage in an excruciating debate with Robert VerBruggen of Phi Beta Con.

Question: Is there any substantive difference between the government cutting you a check and cutting your taxes?

VerBruggen agrees with the Progressives on the Supreme Court I wrote about recently: Nope, all your money is the government’s!

But his odd insistence that government checks and tax cuts are the same began months ago, when he expounded more extensively if not coherently on this same subject.

I attempted to illustrate where he had gone wrong in his thinking by taking his positions to an extreme. To my surprise, VerBruggen agreed with my modest proposal to eliminate all charitable tax deductions and credits and capitulate comprehensively to the welfare state

More specifically: “The feds should eliminate the charitable tax deduction and send out the average (tax-forgiven) amount donated per adult to every citizen in the country to donate as they wish!”

VerBruggen supports a “charity entitlement” over charitable tax deductions. He favors a “social security” model for “kind of a ‘forced charity’” over tax deductions.

I’m not sure if he’s thought his rather radical and odd argument through to the end point.

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Bryan Binkholder has no problem investing money to fix up homes. But when it involves spending more than $381,000 per home to fix up homes that will be worth $80,000 to $110,000 each upon completion, he draws the line.

“Chalk this up to another case of government gone wild, attempting to do something the free market would and will do at a greater efficiency and without tax payer dollars,” said Binkholder, a financial expert, investment adviser, active real estate investor and host of “The Financial Coach Show” on FM News Talk 97.1 in St. Louis. He shared his opinion with me during an online discussion stemming from the Friday publication of an article about the efforts of the nonprofit group, Beyond Housing, in the St. Louis Post-Dispatch.

The article in question used a plethora of facts and figures to highlight efforts to rehab homes in the crime-ridden North St. Louis neighborhoods that populate the Normandy School District. Unfortunately, however, it did not provide a cost-per-house breakout of dollars being spent or provide a glimpse of how many of those dollars were coming directly from taxpayers.

After reading the Post-Dispatch article, I set out to find people whom I hoped could provide just such a breakout.

Among those I talked to Friday were Jim Holtzman, director of the Office of Community Development for St. Louis County Government, and Chris Krehmeyer, president and CEO of Beyond Housing. It was a third person, however, who provided the kind of comprehensive information that caused me to seek Binkholder’s opinion.

Margaret Lineberry, the new Kansas City-based executive director of the Missouri Housing Development Commission, offered the most-detailed answers to my questions during an e-mail exchange that followed a friendly phone call Friday morning. In case you’re not familiar with MHDC, it’s an organization that administers federal and Missouri Low Income Housing Tax Credit programs, federal HOME funds, the U.S. Department of Housing and Urban Development Project Based Section 8 rental assistance contracts, the direct MHDC funding of several housing assistance programs and the Affordable Housing Assistance Program Tax Credit.

Most notable in my exchange with Lineberry was her reply to one of my questions:

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Seeking to bolster the sluggish economy, President Barack Obama is using a Labor Day appearance in Milwaukee to announce he will ask Congress for $50 billion to kick off a new infrastructure plan designed to expand and renew the nation’s roads, railways and runways. …The measures include the “establishment of an Infrastructure Bank to leverage federal dollars and focus on investments of national and regional significance that often fall through the cracks in the current siloed transportation programs,” and “the integration of high-speed rail on an equal footing into the surface transportation program.”

Under mounting pressure to intensify his focus on the economy ahead of the midterm elections, President Obama will call for a $100 billion business tax credit this week… The business proposal – what one aide called a key part of a limited economic package – would increase and permanently extend research and development tax credits for businesses, rewarding companies that develop new technologies domestically and preserve American jobs. It would be paid for by closing other corporate tax loopholes, said the official, speaking on condition of anonymity because the policy has not yet been unveiled.

The Obama Administration wants Americans to believe the economy is beginning to turn around and that President Barack Obama’s efforts are starting to result in more and more “saved and created jobs.” Ask Rick Misch for his assessment of the economy, however, and you’ll find the economic picture he sees daily isn’t as pretty as the one painted by politicians.

“I know there simply isn’t any real ‘job creation’ taking place,” said Misch, president of Ohio-based Phoenix Research Inc., during a recent phone interview. And he should know.

Phoenix Research is a courthouse research company Misch and business partner Bill Brown launched in November 1997. The company provides on-site criminal records checks for some 750 employment screening companies across the United States by way of a network of approximately 1,500 subcontractors working in almost every county in the nation.

A look at his company’s growth is revealing:

• By April-May 1998, Misch said, the company had hit its stride;

• By 2000, the partners had paid off all of the company’s start-up costs and relocated from Cincinnati to Mt. Orab, 60 miles due east in Brown County; and

• By 2001, Phoenix Research employed nine people, including Misch and Brown, and was handling approximately 3,000 individual criminal history searches per day — including 250 to 350 in Los Angeles County alone.

In addition to providing a decent living for its owners and employees, the enterprise provides Misch a great deal of insight about the state of the economy.

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The Cato Institute’s Isabel Santa uses school choice as an example of why competition is better than government-imposed monopolies. The video explains that government schools cost more and deliver less, which is exactly what one might expect when there is an inefficient monopoly structure. The evidence about the school-choice systems in Sweden, Chile, and the Netherlands is particularly impressive. Leftists always argue that we should have government-run health care because it’s what exists in other nations. Yet they are conveniently silent about looking overseas when other nations are choosing market-based policies and getting better results.

There are many other reasons to support school choice, including diversity and innovation. There also is no need for fights over school prayer and sex education when parents can choose schools that reflect their values.

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Politicians in Washington have come up with something far more impressive than turning lead into gold or water into wine. Using self-serving budget rules, they can increase the burden of government spending and say they are cutting taxes instead.

This bit of legerdemain is made possible, thanks to the convolutions of the personal income tax, by adopting or expanding refundable tax credits. But in this case, “refundable” does not mean the government is returning money to taxpayers. Instead, it means that money is being redistributed to people who do not earn enough to be subject to the income tax.

This is hardly a trivial issue. According to the Congressional Budget Office, the amount of income redistribution being laundered through the tax code is now so large that the bottom 40 percent of the population has a negative “effective” income tax rate. In simple terms (though perhaps with profound political implications), the income tax is a revenue generator for a big share of the population.

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Recently, retired military have received e-mail messages notifying them of a withholding tax increase. The email states:

NO ANNUAL COST OF LIVING ADJUSTMENT (COLA) WILL BE ADDED TO MILITARY RETIRED PAY IN 2010.

DUE TO RECENT LEGISLATION YOUR FEDERAL WITHHOLDING TAX HAS CHANGED.

After much investigating and several discussions with the IRS, it appears the Democrats have played a “cash-flow trick” on working Americans and are taking more out of American’s paychecks across the board–all the while touting the Making Work Pay tax credit.

The trick, when looking at the new withholding tax tables for 2010 as compared to post-stimulus 2009, buries an increase in federal withholding taxes–for all income categories–basically giving the government an interest-free loan until current year taxes are filed next year. Some would blame the increase in withholding on the Making Work Pay tax credit being spread out over 12 months as compared to 2009, which was only over 9 months, but this would be impossible as some middle class wage categories carry an increase in the withholding tax of over $200 per pay period.

Unlike the middle class wage earners, who are going to see huge amounts taken out of their paychecks, unless they increase their exemptions on their W4 form, it’s an increase that most wouldn’t even notice–$10 or $20 in some cases. Here are some of the “highlights” of the new 2010 withholding tables:

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