Power And Dollar

Lay Taxes To Those Not Buying Guns? NRA Must Be Grinning

John Roberts acknowledges that the Obamacare is unconstitutional in the commerce clause.  However, Roberts upholds the Obamacare because it is constitutional to lay taxes to those who do not buy health insurance.  So, using John Roberts formula, can the federal government lay taxes on those not buying guns? 

It seems like John Roberts’ formula is: if it is unconstitutional to X and it is constitutional to lay taxes to X, then it is constitutional.  Better yet, can the federal government impose taxes to finance the rendition program? Or lay taxes to finance the eaves dropping?  To impose taxes if you do not perform birth control?  To impose taxes if you do not perform abortion?  To impose taxes if you do not send your children to public school (this is already in practice)?  To impose taxes if you do not send your children to home school (this is not in practice)?

If John Roberts’ formula has to be supplemented by the general welfare clause, then not much difference it would make, as Richard A. Epstein (professor of law at New York University and a senior fellow at the Hoover Institution) suggests in NYTimes on 2012.06.29: Congress has the power to “lay and collect Taxes” only in order “to pay the Debts and provide for the common Defence and general Welfare of the United States.” The congress still can impose taxes if you do not buy guns since gun ownership contributes to the general welfare, if you agree that more guns around means we will have less criminals around.  The newer formula can still apply to anything the Congress sees fit. 

Isn’t the case that whenever something is unconstitutional to anyone element of the Constitution, then it is constitutional?  Benjamin Franklin said: “They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”  John Roberts reversed (or the converse) the reasoning and we get a wonderful universal health care.  At what costs?


June 29, 2012 Posted by | activism, advocacy, america politics, Current Events, Democrats, opinion, politics, Regulation, Republican, Thoughts | , , | Leave a comment

Obamacare Makes Labor Market More Favorable To Small Businesses


Republicans champion capitalism, especially “the pursuit of happiness”.  For that, Republicans consider businessmen to be their safe constituents.  Is enabling small businesses to compete more effectively against the mega corporations something Republican look forward to?  Interestingly enough, Democrats are doing that this time instead of Republicans.  And that is through this Obamacare.

Extending health care to all is the idea of Obamacare.  Having this barrier to health care obviously gives an edge to someone.  In terms of politics (or policy), the question is always about who gets the advantage (or the disadvantage).  Prior the Obamacare days, the advantage is to the employers who can afford the administrative cost of providing a health care insurance to its employees, thus giving them an overwhelming advantage in recruiting and retaining the human resources they need.  This disadvantage suffocates small businesses and self employed.  Ultimately, innovation is sacrificed. 

Plenty of employees make employment decisions based on the health care package.  Many people give up their business dreams and stay as an employee because of the fear of not having health care for their families.  Almost everyone will be covered when Obamacare becomes effective.  Yes, the operating cost is higher for small business owners, however, this increase cost will draw the small business owners much closer to the advantage enjoyed by the mega corporations than if they acquire the health package alone.  In fact, only 38% offer health insurance to employees among the small business owners in 2009 versus 61% in 1993 (read here). 

If America’s small business owners’ talents for success are not willing to move to them and continue to stay in General Motors, ATT and like, then where is the next Google?

March 23, 2010 Posted by | activism, advocacy, america politics, Current Events, 美國, Democrats, economics, Election 2010, health care reform, nonprofits, obama, opinion, politics, Thoughts, US politics, wordpress-political-blogs | 1 Comment

Did Obama Plagiarize Glass And Stegall?

Did Obama’s Volcker’s Rule announcement contribute to the drop of DJ?  Did Obama plagiarize Glass and Stegall?  Pundits all over the place say that is the result of the Volcker’s Rule.  One, Volcker’s Rule alone did not necessitate the fall.  Two, who among these pundits actually read what the White House press release, and not the Bloomberg announcement, is about?  Three, Volcker’s Rule is not “new”.  Volcker’s Rule is actually a re-tro.  Four and finally, what is the implication/impact (theoretical or academic) of Volcker’s Rule?  What can we learn from Geithner’s opposition to this Volcker’s Rule?

Yahoo (of all places) actually hit it right: there are plenty of reasons for DJ to fall.  Realizing the profits from Massachusetts Senator election is quite a good reason already.  In fact, the rise of DJ on Tuesday contradicts the fall of DJ on Thursday: DJ rose because the market expected that having 1 more Republican in the Senate would derail the agenda of Obama.  If investors believed in that, then the investors could not have believed Obama’s Volcker’s Rule would become law.  So, Volcker’s Rule alone did not create the fall.

The White House press release regarding Volcker’s Rule actually gives very little information.  And luck would have it that everything covered by Obama’s 01.21 announcement is already covered by H.R.4173 – Wall Street Reform and Consumer Protection Act of 2009.  Quite possibly, nothing is new. 

Worse, nothing is new: Glass-Steagall Act probably covered everything Volcker’s Rule is about.  Since Volcker’s Rule is not in the legislation form, no comparison can be done.  In fact even Volcker calls it “in the spirit” of Glass-Steagall Act.  It further proves that Obama named it Volcker’s Rule for political purposes: to show he is doing something to punish the bad guys (banks) for the rest of us. 

Preventing banks from having private equity funds, hedge funds et etc do decrease profits of the banks.  However, these funds make up 5% of revenues of Bank of America (NYSE: BAC), Citi (NYSE: C) and the like.  Yes, it does strengthen the point that this rule is for show, especially after the Massachusetts’ loss.  However, Volcker’s insistence on this issue has a point: it takes 5% of their revenue.  However, these banks are using depositors’ money to play these large bets, using FDIC’s insurance to back themselves up, and twisting their risk adjusted return on capital (RAROC).  Here is an example:  How much can $1000 bet if you were to trade on currencies?  Answer: with $1k, you can trade the equivalent of $100k of Japanese yen, British pound, Euro and so on.  If the currency fluctates 1%, the $1k is already gone.  If the market swings more than 1%, the bank has to lose all of its money (the $1k depositors’ money) and more.  So, these banks are misappropriating depositors’ money (which would be illegal in insurance laws), making taxpayers pay for their risk, and presenting themselves before the eyes of investors. 

What it really does is to draw out a lot of hot money from the market: less money will change hands on a daily basis.  That affects all industries.  Investors (institutional espeically) will have to play with real money, if this works.  Retail investors will make up a greater proportion of money in the market than before.  Market will be more difficult to be manipulated than before by a few players.  Will that shrink the whole market? Probably.  However (or hopefully), it will mean everyone will be trading with a saner head since no one will be playing with free money.

January 25, 2010 Posted by | banking, Current Events, Investment, legislation, market, Money, obama, opinion, Palin, politics, Thoughts, trading, US politics, wordpress-political-blogs | 3 Comments

What Are Obama’s Social Security No-Gimmick Options?

Energy is increasingly becoming an important topic since it touches security (energy independence), pocket book (gasoline prices) and environment (egg head issue).  Of all, social security will have the greatest impact on the biggest voting block: seniors.  WSJ is having an article today about Obama’s social security plan.  The options for social security are very limited if America has no intent to privatize social security.  Obama is taking the least electorally costly option to him. In Obama’s vocab, that is “gimmick”.  Those options are listed here:




There are very few options available to Presidential candidates.  There are options outside of the social security program he can consider:

1)      Make retirement age more flexible.  In particular, make the age of social security flexible.  

2)      Tightening the control on the border to prevent illegal immigrants.  This will of course have some impact on inflation.  However, it could help the people who make minimum wage, i.e. higher social security payments.

3)      Modify the poll of immigrants.  Obama need not change the amount of immigrants.  Obama can simply modify the quota pool to attract the immigrants with higher productivity.  This could only work if there is enough buyer in the country.  So the fundamental philosophy of the American H visa system remains unchanged.

4)      Attract more investment immigrants.  The point is not only about taxing them, but also having them create more jobs here.


Lift up aggregate domestic demand without increasing fiscal expenditure.      

6)      Increase the amount in personal exemption and increase taxes on pollution to create more incentives for the next industrial upgrade.


The last point is the most difficult one.  How can Obama lower its fiscal expenditure when the military spending is so high? 

June 25, 2008 Posted by | business, Current Events, Democrats, economics, election, Election 2008, John McCain, mccain, obama, opinion, politics, Thoughts, wordpress-political-blogs | 1 Comment

Energy has so many spins this year!

McCain announced his $300 million prize for a next generation of cars.  This election is increasingly turning to an election about environment due to the high gasoline prices.  While money is still favoring Obama, McCain is finally trying to close the gap on ideas.  If McCain can get more media exposure on his issues and ideas, McCain can sharpen Obama presidency.


McCain still needs to catch up with Obama on ideas.  So far, McCain is still reacting to Obama’s idea.  McCain’s $300 million prize is a good example.  McCain needs to be ahead of Obama. 


In addition, McCain can use security issue to frame the debate on energy, such as energy independence of Middle East.  McCain can also use religion to frame the debate on energy: save all God’s creatures on earth, not just fetus. 


Obama is actively courting the religious votes.  And he is very comfortable with his religion before the TV, comparable to Bush 2.  In a way, Obama can split the religious vote.  For Republicans to protect and expand the religious vote, abortion may fail in this year.  However, religious environmentalism may work. 


McCain’s move can also help revitalize the auto industry in America and compete against foreign car makers.  His idea is actually more cost effective since this program’s overhead costs is a lot smaller in dollar amount as well as a percentage of the funds than Obama’s venture capital fund.

An oil independent America is not only about disengaging itself from the Middle East, but also about compteting against China and India for resources.  The supply line between America and Middle East is simply too long.  Being oil independent is about production cost.  And it will be too late for America if India or China can beat this against the States too.



McCain’s team needs to be more flexible and recycle the same issue to different audiences.


Although the environmental issues are getting into the debate, the Green Party cannot benefit any of it in the United States.

June 23, 2008 Posted by | activism, Barack Obama, Current Events, Democrats, economics, election, Election 2008, environment, John McCain, mccain, obama, opinion, politics, Republican, Thoughts, wordpress-political-blogs | 1 Comment

Why Do I Care If Obama Opting Out Public Financing?

Obama changed his mind: he will not use public funding now.  Obama’s decision also reflects his comfort level of this campaign.  McCain says he will consider opting out as well.  The truth is McCain cannot afford not to.  McCain’s funding is so low that he can barely run a competitive campaign against Obama.  With Republican side running low on campaign personnels due to removals of lobbyists from the presidential campaign, low morale of loyalists and casualties’ from Bush years, McCain will have such a disadvantage that Obama may have a easy ride.  


For it not because Obama is a populist and a challenger with a very unpopular incumbent, his decision of using private donation would draw some fire.  America, because of Obama’s decision, now missed a great opportunity to debate what kind reform the US election laws should take, especially election financing.  


America champions itself as the model of democracy.  However, America has not spent much time formulating what kind of election financing system works best.  Obama’s decision actually buries this important question for at least another decade.  


No one likes politicians.  And using tax money to help politicians is unlikely popular.  


Why is this question important?  And isn’t his micro-donor system good enough?


Money is the mother’s mile of politics.  There are a few other big items we will not have a chance to reflect on the great intellectual capacities both McCain and Obama can provide us before the TV box:


1)       What shall we do with campaign surplus? 

2)       Who can lend money to a campaign?  And what to do when a candidate cannot pay off the debt?

3)       Who can be a donor?  Certainly only citizens.  What about companies?  Unions?  Non-profits? 

4)       Who can accept political donations?  Are political parties and candidates the only entities who can accept donations?

5)       What about third party campaigns during election times?  Say WWF or NRA running ads during election times without any references to candidates?

6)       What is the definition of a volunteer?  Some people may have very strong interests in being a volunteer full time.


These items may be mundane and uninteresting when compared to jobs, health care and foreign policy.  However, they decide who will have more face time with any aspiring candidates, running candidates and incumbents.  These items are no different than defining what an “eligible voter” is or what a valid ID is at the voting precinct.  



June 19, 2008 Posted by | activism, advocacy, Barack Obama, Current Events, Democrats, election, Election 2008, Electioneering, fundraising, John McCain, mccain, nonprofits, obama, opinion, politics, Republican, Thoughts, wordpress-political-blogs | 1 Comment

The Spending and Energy Program of Obama

Gore finally made the endorsement to obama.  At about the same time, obama WSJ published their interview with obama regarding the other half of the fiscal policy, the spending side.  WSJ’s article does not capture everything Obama has in his website.  But then, WSJ’s responsibility is to synthesize the information, not to copy and paste.


WSJ highlights Obama’s $150B spending.  The source of the funding comes from the cap and trade energy auction.  The price of energy of course will go up.  No one has produced figures on how much the gas, heating gas and electricity will cost with this tax revenue source.  However, the tax revenue is expected to rebate back to the consumers’ utility bills.  If we assume the 300 million Americans are all eligible for this rebate, then each gets $500 back.  If we assume only the 100 million American tax filers are eligible, then it is $1,500 each.  


This has not figured in the program admin cost.  My usual figure is 1/6 of the total amount is program admin cost, i.e. $25B of the $150B.


Obama can achieve the same goal without incurring new program admin cost.  Instead of incurring new program admin cost, Obama can increase the personal exempt.  $1,500 in utility bill rebate is equivalent to $15,000 increase in tax exemption.  And this is not only about taxes, but also about strengthening his cause for energy independence.  Here is why.


When there is a rebate to the utility bill, the consumer needs to consume a certain amount of utilities, be it gas, heating gas or electricity.  Therefore, the incentive to modify energy usage is at best unchanged.  Consumers will be less mindful of usage simply because they may think they will get some money back.  The price after rebate maybe unchanged and if that were the case, then it is simply a job creation program for more civil servants.  All these unintended consequences are defeating the purpose of minimizing energy consumption and energy reliance on fossil fuel, foreign dependence and minimizing trade deficit.  


However, if the cap and trade revenue is refunded through income tax exemption, then the incentive to save energy consumption is stronger.  The tax refund can now be recycled into the discretionary income.  One may pay down his mortgage debt or buy another bicycle.  But having a rebate on the utility bill requires a consumer to consume a certain amount of energy.  Obama already refuses to cut corporate tax and chooses to cut personal income tax exactly because his platform is focusing (knowingly or not) on lifting domestic aggregate demand. 


Fiscal expansion policy does lift domestic aggregate demand.  However, an increase in aggregate demand by a single decision maker is not as effective as having the increase decided by the consumers themselves.  There is an efficiency issue.  And it is also a democratic issue.  Who is to say what is wanted by whom?  

June 17, 2008 Posted by | activism, Barack Obama, Current Events, Democrats, economics, election, Election 2008, environment, John McCain, mccain, obama, opinion, politics, Republican, Thoughts, wordpress-political-blogs | 1 Comment

Ireland: Florida 2000 to EU

The Irish vote against the Lisbon treaty becomes the Florida 2000 to EU.  3 million Irish blocked 490 million of Europeans.  Is this comparison fair?  What did they prevent?  What does it matter?  Who gets the most out of it?  What can we learn from it?


Ireland closed its referendum polls for the EU treaty called Lisbon Treaty.  CNN reports it is the only country that has a referendum because the treaty affects the Irish constitution while all the other countries make their parliaments ratify the treaty.  This is a close vote because the Lisbon Treaty means a lot.  Well, it meant so much that France and Netherland rejected the almost the same text back in 2005.   

Most quoted difference this treaty produce is all countries will cede their veto rights.  New rules will become effective when the committees pass the rules.  


This gives less accountability to the new EU body.  Voters of all countries will not vote on anything that EU does or the officers in the body.  In the post SOX era, governance or accountability becomes more and more important.  However the governance structure (accountability) in the new Europe is slipping away.  Power without accountability is a bad omen.  In America, governance requirement has evolved from publicly traded companies to charities now.  Europe is stepping back in this regard. 


All EU countries will cede some powers to EU and create a president and an EU foreign minister to be called “High Representative for the Common Foreign and Security Policy”.  


EU has been having a chair for European Commission.  However, that position is half a year long currently and without a budget.  The newly created position of president will have tenure of 2.5 years, renewable once and with a budget.  High Representative will also have a budget.  Once these two offices get their own budget, they will get their own legs to all sorts of places that voters cannot possibly dream of.  


Multi-National Corporations (MNC) will get the most of it.  MNC have access to Brussels.  EU has no accountability.  The already hierarchical society/economy in Europe will be even more restrictive.  Regulations will be more difficult.  Market entry barrier will be higher to starve off competitions from young companies.  A market environment like this will lead more mega mergers once these institutions matured.   


The Secretary of State of America will immediately see a big difference.  No longer will America be the representative of the West, of the democratic world.  There will be a strong voice about what “democracy” means.  And Europe may put an emphasis that America did not think of: peace.  Europe will give diversity to the interpretation and approach to the promotion of democracy.  However, Europe may not want to compete in that keyword.  Europe may find its own voice with the concept of peace.  With that, Europe may find itself more popular in the international arena than America.  


The lack of referendum in so many countries shows politicians want to keep the voters out of the decision process because politicians want to be brokers.  Letting voters have a direct say is making the outcome unpredictable (let’s assume this is not about their jobs and grease).  However, who else is a better jury for an important decision?  Should we not have a jury? 

June 13, 2008 Posted by | activism, advocacy, Current Events, opinion, politics, Thoughts, wordpress-political-blogs | 2 Comments

How a Presidential Candidate Promise Puts Country at Corner

Mainland China and Taiwan started their first negotiation in a decade.  A big topic of this negotiation is the direct flight between two sides.  This negotiation serves as an example to America how election campaign promises should be carefully drafted since the presidential election is under way, for instance the date of Iraqi withdrawal, whether to negotiate with Iran, North Korea, Cuba and the like.


This negotiation is the first priority for President Ma of Taiwan since one of his campaign promises is direct flight starting on July 1 of 2008.  


This campaign promise possibly led the negotiation team to have a very short time frame to draft their agenda and options during the negotiation and subsequently affect the negotiation result.  


Passenger flights are of top priority since the photo op of passengers getting off the plane is too valuable.  Therefore, the goods transportation is likely to be off the table.  However, that can be of higher importance to Taiwan.


Furthermore, Taiwan possibly left other aviation priorities off the tables.  Here are a few:


1)      Can flights fly to a second destination within the territory?  Example:  can a flight from Taiwan to Shanghai fly to Beijing afterwards?

2)      Can flights fly to another country afterwards?  Example:  can a flight from Taiwan to Shanghai fly to Japan afterwards?

3)      Can airlines establish maintenance hubs in the other’s territory?  


All these questions actually benefit more for the Taiwan side than the mainland side.  However, once a negotiation is over, another aviation negotiation probably will take another few years while the governments tackle other big political items, such as sea ports.  Thus, the next aviation negotiation probably will begin with another president term at best.


Now why are they important?


For the first question, Taiwan is a much smaller space. It has a lot fewer air traffic nodes.  The gain for Mainland airlines is actually small, especially the number of flights and airlines are supposed to be reciprocal in aviation negotiations.  However, Mainland China has another 100 cities each with a population of 1 million.  The gain for Taiwan aviation industry will take years to realize financially.  


For the second question, President Ma of Taiwan’s business plan is to be the bridge to China for the West, analogous to UK to continental Europe for America.  For that to realize, the first item to tackle is for Taiwan to become a transportation hub.  The second question becomes vital.


The negotiation is about flight between 2 sides and not about domestic aviation market.  However, having a hub in the other side is beachhead to fight the domestic market.  Since the mainland China’s domestic aviation is the ultimate price for Taiwan aviation industry, if economic integration is to follow through, eliminating this big hurdle is important.  The scale of a hub is of course negligible at this stage.  However, this will be an expensive item to negotiation in the future.  While the goodwill is overloaded, this should be item to cash in right now, right here.  


Aviation business has a long investment cycle.  Aviation manufacturing has defense implication.  Taiwan needs to muster every advantage at every step to prevent a big swallow by Mainland China in the future.  Therefore, this third question will add a lot of points to Taiwan.  If ignored, Taiwan will give up a great asset for a future show down of unification negotiation.


Because of a promise on a date of direct flight, Taiwan probably forgot a basket of items.  American voters have to see if the candidates are giving promises that will put the future presidency at an inflexible corner.

June 12, 2008 Posted by | Barack Obama, China, Current Events, economics, election, Election 2008, John McCain, mccain, obama, opinion, politics, Thoughts, wordpress-political-blogs, 台灣, 中國 | Leave a comment

Obama vs McCain Platform

This is written on 2008.06.11,  Obama made his tax plan announcement on 2008.08.12.  Please consult this link for taxes, especially personal income tax:



For foreign policy:


Below is the original on 2008.06.11:



CNN is giving out a good introduction of the Obama vs. McCain platform contrast.  



I figure this is the right time for me start as well.  Obama has deep roots not only in the city of Chicago, but also the Chicago School of economics since he has been a faculty in the law school there.  Click here to read a contrast by Tax Policy Center.  



One central theme across the revenue side of the Obama’s fiscal policy is he is concentrating his effort on invigorating domestic demand:  he is trying to lift up aggregate demand.  All tax cuts are focused on low income groups.  A typical Democrat policy is to tax the rich and create programs for the poor.  This Democrat is minimizing the tax burden on the poor. 


Taxing a low income filer and then distribute welfare check to him is make work for the bureaucrats.  The real gain is among the civil servants.  The first relief to the poor is not the welfare checks but to make sure they do not even qualify to pay taxes.  There are too many of these points Obama raised that would any economics professor happy.  This, Obama is heading toward. 


And there are too many of those points to get listed here.  Please consult the Tax Policy Center website. 


A contentious point to-be for McCain is the corporate tax reduction from 35% to 25%.  If we consider the fiscal revenue since 1945, anyone can see that the tax burden of corporates reduce from 35% to 14% in 2007, while personal income tax continues to hover around 45% for the same period.  


McCain makes (or will make) the argument that employers need to be able to create jobs.  Most of the jobs are created by small businesses.  For that, Obama has a tax credit of 20 percent on up to $50,000 of investment in small owner-operated businesses; Eliminate capital gains taxation of start-up businesses; Provide capital gains tax break for landowners selling to beginning family farmers.  


What is really indefensible of Obama’s platform is capital gain.  Obama will increase capital gain tax.  What does it matter, you may ask, since capital gain is a rich man’s business.  It may not exactly be there.  It can affect your mutual funds, pension funds and alike.  Given social security is shaky, capital gain tax can have unintended consequences.  This will require a closer look at the proposal, compare it against the tax code and check the statistics.  


Obama is also encouraging saving through mandating 401(k) and IRA accounts.  It of course increases administration cost on the employer side.  However, a detailed look at the proposal is important for this one since this requirement can elevate some of the pains on Social Security.  The trade may be worth it. 


A real electioneering tax gimmick is the elimination of taxes for seniors with income below $50k.  this is on the platform because seniors are vote rich.  Increasing the personal exemption from $4k to, say, $8k is more effective in lifting aggregate domestic demand than concentrating on the seniors.  


Fiscal policy is a good place to address the environment agenda.  However, that is missing from both candidates.  Both advocate to close oil and gas loopholes.  Obama specifically want to make the R&D for renewable energy production permanent.  However, this is supply side economics.  Obama could levy taxes on this area and reduce more income tax.  


A simple glance at the fiscal revenue policy can tell that Obama team has put more effort into fiscal revenue policy than McCain team, although McCain is the Republican candidate. 


Is McCain having a retirement party?

June 11, 2008 Posted by | Barack Obama, Current Events, economics, election, Election 2008, John McCain, mccain, obama, opinion, politics, Thoughts, wordpress-political-blogs | 8 Comments