Mountain Views News          Saturday, October 8, 2011

11

LEFT TURN/RIGHT TURN

 Mountain Views News Saturday, October 8, 2011 

HOWARD Hays As I See It

GREG Welborn

STIMULUS AND OTHER FAIRY TALES


“We’re going to close the 
unproductive tax loopholes 
that allow some of the truly 
wealthy to avoid paying 
their fair share . . . they 
sometimes made it possible 
for millionaires to pay 
nothing, while a bus driver 
was paying ten percent of his 
salary, and that’s crazy. It’s 
time we stopped it. . . Do you 
think the millionaire ought to pay more in taxes 
than the bus driver, or less?” 

- Ronald Reagan

Last week, Greg Welborn wrote he considered 
President Obama’s statement that “middle-
class families shouldn’t pay higher taxes than 
millionaires and billionaires” to be “anything but 
straightforward”, and promised to “demonstrate 
its falsehood”. I read his column, and failed 
to learn whether he agreed with the premise, 
shared by both Presidents Reagan and Obama, 
that one’s tax liability shouldn’t depend on the 
wherewithal to afford armies of tax attorneys 
and lobbyists to skew the tax code in one’s favor.

President Reagan clearly understood the 
inequity, and in fact took steps to address it 
shortly into his second term, with the Tax 
Reform Act of 1986. Greg accuses President 
Obama of having “manipulated the facts” in 
referring to Warren Buffet’s assertion he pays 
taxes at a higher rate than his secretary. Reagan 
told a luncheon crowd in Chicago Heights about 
“ . . . a letter from a man out here in the country . . 
.a He wrote me in support of the tax plan because 
he said, ‘I am legally able to take advantage of the 
present tax code . . . paying a smaller tax than 
my secretary pays.’” (Reagan described him 
as “an executive who’s earning . . . well above 
$100,000 a year.” This was 1985.) Reagan moved 
to equalize the rates between capital gains and 
ordinary wages and salaries, between rates paid 
by wealthy investors and middle-class families.

All this changed under President George W. 
Bush with his second round of tax cuts in 2003. 
The rate on capital gains was dropped to 15%, less 
than half what it was under Reagan. Dividend 
income, which was taxed as ordinary income 
throughout the Reagan years, was dropped to 
the 15% rate as well. What Greg refers to as 
Obama’s “pandering” and “absurdities” are, in 
fact, suggestions we return to rates not nearly as 
high as they were under Reagan.

Averaging tax rates of certain groups, as Greg 
does, can be useful, but doesn’t always reflect 
reality. (Bill Gates and I have an average net worth 
in the billions of dollars.) There’s the “carried-
interest loophole”, for instance, which allows 
investment managers to treat income from their 
services as capital gains. It’s been calculated that 
closing this loophole for the top 25 hedge-fund 
managers, who collectively took in $22 billion 
last year, would increase revenue by $4 billion a 
year - if only they were taxed at the same rate as 
a teacher, firefighter or factory worker. (It would 
take 440,000 middle-class families to match the 
income of those 25 individuals.)

 Another distortion is to focus on income 
tax rates. For 80% of taxpayers, the income tax 
constitutes less than half of all federal taxes paid. 
It’s a distortion to characterize, as Greg does, our 
35% corporate tax rate as the “second highest in 
the industrialized world”. While other countries 
have moved to close corporate loopholes, we’ve 
expanded them - resulting in our effective 
corporate tax rate being one of the world’s 
lowest. Among 26 industrialized countries, in 
corporate taxes as a percentage of GDP, we rank 
second from the bottom (right above Iceland).

The biggest distortion, though, is suggesting 
easing the tax burden for most Americans is a 
concern of those opposing President Obama. 
Last fall, the Republican minority in the Senate 
threatened to hike taxes for 98% of American 
families, those with incomes under $250,000 a 
year, and cut off unemployment insurance for 
those really struggling, unless the top marginal 
rate of the wealthiest 2% was kept at 36% instead 
of being allowed to return to the 39% it was 
under President Clinton. (According to the Tax 
Policy Center, that cut in the top marginal rate 
alone has cost the Treasury $2.3 trillion since it 
was enacted.)

 Greg refers to “Every study” showing “When 
you reduce taxes . . . tax receipts go up.” I’m not 
sure what “study” he’s referring to, but the facts 
are easily accessible. President Bush reduced 
taxes, and receipts, comparing his first year in 
office with his last, went up 27%. Clinton raised 
taxes, and receipts went up 75%. He also left a 
histoary of unprecedented economic expansion 
and a budget surplus of $236 billion, allowing us 
to begin paying down our national debt. It will 
take a generation to recover from the history left 
by the Bush Administration.

 Arguments being made today for lowering 
taxes on the wealthiest at the expense of the rest 
of us are the same ones used in recent history. 
They’re no more valid now than they were 
then. The advantage we have today is we can 
go back and recall the consequences when those 
arguments prevailed.

Going further back, there was an evocation 
of the history of feudalism in the accompanying 
column by Susan Stamper Brown. In her 
advocacy of a continued redistribution of wealth 
from those who merely work for a living to 
those who once were referred to as “our betters”, 
she warns that unless we acquiesce to this 
concentration of wealth into the hands of the 
oligarchs, they may not deem us worthy of their 
charity.

It’s not a history I want to be a part of. It’s not 
a history those who founded and built our nation 
wanted to be a part of, either. 

Here’s a trick question for you – trick because 
the title of this article gives a pretty good clue 
as to the right answer. When was the last time 
a targeted, temporary stimulus package from 
Washington increased employment and boosted 
the economy? Answer: never! I realize a lot 
of the President’s supporters and base would 
like another answer, but history is absolutely 
consistent in showing that such policies have 
never worked.

Let’s start with good old Gerald Ford. A truly 
remarkable, hard working and honest president, 
but one who received very bad advice. When he 
took office, we were in the midst of a recession. 
He proposed a temporary tax rebate, a temporary 
increase in social security benefits and a tax 
credit for home buyers. Sounds a bit familiar 
doesn’t it? The results were unimpressive to say 
the least. Economic growth rose at the outset and 
then within months slipped right back to where 
it was (abysmal), and unemployment got worse.

Jimmy Carter took advantage of these 
economic doldrums and landed the job on the 
basis of fixing what ailed us. His plan was a 
one-time tax rebate, social security bonuses, 
temporary grants and one-time aid payments 
to the states to get things going at the local level. 
Sounds a bit familiar doesn’t it? So were the 
results.

There was a temporary increase in activity, 
some mildly good readings in the national 
economic data, and then the downward pace 
accelerated. Carter’s own internal economic 
gurus started noticing what the rest of the 
nation felt. The economy went into a deep 
recession. Carter did manage to add something 
new: massive, widespread inflation along with 
recession. We commonly refer back to those 
terrible days as “the Carter years”.

George W. Bush took a sip of this cool-aid as 
well. In his first term, there were some signs of 
economic deterioration. This frightened the new 
president a bit, and so he scaled back his promise 
for permanent tax relief and went with a program 
of temporary reductions in taxes and some nice 
rebates. Sounds a bit familiar doesn’t it? It 
didn’t work. We remember the 2001 economy as 
recessionary, and then we got 9-11 thrown in the 
mix.

We need to fast forward here to the end of Bush’s 
second term. The financial crisis prompted 
another frightened response from the president’s 
team. President Bush implemented temporary 
tax rebates in 2008. By their own reckoning, 
White House economists concluded that the 
stimulus had no positive affect. Bush, of course, 
left office, and Barak Obama stepped in. Despite 
have made great political hay about doing things 
differently than “the previous administration”, 
Obama’s approach was –sounding familiar 
again, isn’t it? – temporary, targeted stimulus 
with tax rebates, grants to the states and local 
governments and the now well known $800 
billion of new spending President Obama 
followed it with even more spending and deficits, 
and the affect has been 
pretty much what we 
should have expected.

Despite the promise 
that all this spending, 
granting and rebating 
would save some 
number of millions of 
jobs, unemployment 
grew to 10%. That 
number itself is a little 
fuzzy. If we include 
people who have just 
given up trying to find a job, credible estimates 
of total unemployment top 15%. 

The point here is that our current situation 
should feel familiar because it is. We have been 
down this path many times before – always 
with the same result. The reason is that most 
politicians – almost by definition – are reluctant 
to give up power. Most seek more power, and 
exercising “control” over the economy, even if it 
is an illusion, gives them a sense of significance 
in their own mind and certainly stature within 
the Washington beltway. 

The solution to our problem should also be 
familiar, because we have gone down that path 
before. Every once in awhile, we get a president 
who understands that allowing people the 
freedom to exercise their own industriousness 
will generate lots of economic activity. People 
are for the most part rational beings. We take 
steps to achieve our goals. They react to various 
stimuli in very logical ways. If you give them 
a “temporary” tax break, with the implicit or 
explicit intention of raising the tax later, we 
shouldn’t be surprised if they don’t invest or act 
for the long term. Most business owners will 
reduce economic activity because of the threat of 
higher taxes. 

The familiar solution to our problem was 
most recently implemented by Ronald Reagan. 
Inheriting a much worse crisis than Obama, he 
responded with permanent reductions in tax 
rates and regulatory burdens. People reacted 
rationally to this stimulus. The recession ended 
quickly, and people went back to work. George 
W. Bush, in the middle years of his presidency, 
also followed the Reagan way with similar 
positive results. The way forward is familiar. 
We just need to choose that path. Sadly, Obama 
seems allergic to even considering it, so we may 
just have to wait 2012 for a turning point.

About the author: Gregory J. Welborn is a 
freelance writer and has spoken to several civic 
and religious organizations on cultural and moral 
issues. He lives in Arcadia with his wife and 3 
children and is active in the community. He can 
be reached at gregwelborn@earthlink.net.


'OCCUPY WALL STREET' DEMONSTRATIONS COULD SPREAD - 
AND SPARK BACKLASH An Independent's Eye by Joe Gandelman 


Was that a long ago-echo in my 
ears? The other day I caught 
video of a big protest with demonstrators 
shouting, "The whole 
world is watching!" as police 
approached. 

Wasn't that chant from 1968 
when Chicago Mayor Richard 
Daley unleashed his police on 
anti-war demonstrators at the 
ill-fated Democratic convention? 
In the same video, some 
chanted "Un pueblo unido jamas 
sera vencido!" a worldwide 
protesters' phrase stemming 
from a slogan used by the 
equally ill-fated leftist Chilean 
leader Salvador Allende in 1970 
and popularized worldwide in 
a 1972 recorded song. Wasn't 
that the chant I heard covering 
a demonstration in Franco's 
Spain?

Then I heard a young woman 
explain that wealth is bad. She 
used more 60s style clichés 
in a defining moment at the end 
of the day. But those weren't 
echoes. They were from demonstrations 
by the anti-corporate, 
pro-fairness Occupy Wall 
Street protests, which snarled 
traffic on the Brooklyn Bridge 
and ended in some 700 arrests. 
The protests sparked copycat 
demonstrations in cities such 
as Los Angeles, Denver Chicago 
and Boston with future protests 
being planned in Washington 
D.C. and elsewhere.

Just as the summer of 2010's 
conservative Tea Party protesters 
screeched "We want our 
country back!" from the forces 
that propelled Barack Obama 
into the White House, Occupy 
Wall Street protesters are 
saying "We want our country 
back!" from corporations, banks 
and the campaign-donation-
greased politicians who kowtow 
to them.

Many leftists and some centrists 
yearn for a movement to counterbalance 
the Tea Partiers who 
check mated chunks of Barack 
Obama's agenda. Progressives 
are now trying to organize 
groups to offer better pushback 
and advocacy. Enter Occupy 
Wall Street demonstrations 
which reportedly attract college 
kids and aging hippies united 
in their outrage over the kind 
of country and dreams they 
see being lost and the political 
and financial forces that did big 
damage getting away consequence 
free.

Protests have often impacted 
on their times, changed history 
or sparked backlash. Mahatma 
Gandhi's non-violent civil 
disobedience demonstrations 
helped free India from the British. 
Martin Luther King Jr. took 
a page from his book, successfully 
using the same tactics in 
the civil rights battle. The 1960s 
anti-Vietnam war protests 
changed public perceptions of 
the war but also triggered polarization, 
angry "silent majority" 
backlash and helped elect 
Richard Nixon — the first step 
in undercutting the New Deal, 
Great Society and Democratic 
Party dominance of the courts 
and bureaucracy.

Opposition demonstrations I 
covered in India in 1974 inspired 
then-Prime Minister 
Indira Gandhi to temporarily 
suspend Indian democracy. 
Demonstrations I witnessed in 
post-Franco Spain gave then-
young King Juan Carlos the 
support he needed to help quietly 
steer Spain into a democratic 
era. Deep spending cuts by 
the United Kingdom's coalition 
government led to widespread 
austerity protests in early 2011.

And then there's the "Arab 
Spring," which made Twitter 
and civil disobedience potent 
political tools in fomenting 
revolution in Egypt and Tunisia 
and inspiring protests in Northern 
Africa and Middle East 
Arab majority states aimed at 
changing or toppling the existing 
order. 

Many commentators on the left 
now suggest that Occupy Wall 
Street demonstrations could 
be the catalyst for a new "Arab 
Spring" in the United States. 
Filmmaker Michael Moore predicts 
it will soon involve thousands 
-- although with Moore's 
political prediction accuracy 
record perhaps he's referring to 
an Arab spring mattress, while 
the reality is that it will take 
more than some noisy demonstrations 
to get Wall Street's 
attention.

But there are dangers. If demonstrations 
grow, a divide will 
grow over the protester's points, 
tactics, and society's right to respond 
and crack down on protesters 
disruptions. There could 
be counter demonstrations by 
those who don't like the protesters 
tactics, plus pressure 
on local and national politicos 
to either denounce or express 
solidarity with the protesters. It 
could impact some 2012 votes.

Those who want demonstrations 
say that's the idea but 
they seem to forget: The 1968 
American anti-war version of 
the "Arab spring" led to the 
1969-1974 Republican winter 
of Richard Nixon and a long 
period of Republican presidencies 
bookmarked by occasional 
Democrats.

When the whole world is watching 
that also includes the country's 
disorder-hating center.

Copyright 2011 Joe Gandelman, 
distributed exclusively by Cagle 
Cartoons newspaper syndicate. 

Joe Gandelman is a veteran journalist 
who wrote for newspapers 
overseas and in the United 
States. He has appeared on cable 
news show political panels and 
is Editor-in-Chief of The Moderate 
Voice, an Internet hub 
for independents, centrists and 
moderates. CNN's John Avlon 
named him as one of the top 25 
Centrists Columnists and Commentators. 
He can be reached at 
jgandelman@themoderatevoice.
com and can be booked to speak 
at your event at www.mavenproductions.
com.


BUSINESS TODAY

The latest on Business News, Trends and Techniques

MARKETING ANGLES FOR SMALL BUSINESS

by La Quetta M. Shamblee, 

 It just takes a little time and 
a dose of ingenuity to come 
up with low-cost marketing 
ideas to promote your business. 
Sole entrepreneurs and small 
businesses can benefit from 
two activities employed by large 
corporations: 1) Collaborating 
and 2) Donating.

 The definition of collaborating 
has historically been tied to 
literary works, or cooperating 
with any enemy nation as 
demonstrated by the Merriam 
Webster definition for 
“collaborate” – to work jointly 
with other or together especially 
in an intellectual endeavor, and 
to cooperate, usually willingly 
with an enemy nation, especially 
with an enemy occupying one’s 
country.

 Fortunately for business use, 
the contemporary notion of 
collaborations has expanded to 
include projects and activities 
that involve one or more 
parties cooperating for mutual 
benefit. The nonprofit sector 
uses both formal and informal 
collaborations extensively.

 An example is Foothill 
Unity Center, a nonprofit 
headquartered in Monrovia. 
One of their many 
collaborations is with Santa 
Anita Race Track each year 
to host a regional Back-To-
School event that provides 
school supplies, hair cuts and 
other items for children of low-
income families. The families 
receive items they can’t afford 
to purchase, and Santa Anita 
Park and the companies that 
donate goods and services are 
acknowledged in press releases 
and other announcements 
about the event. Businesses can 
also can use the venue for photo 
opportunities to incorporate 
into their marketing materials 
and they can place their 
banners and distribute other 
information during the event. 
It’s an ideal model for “grass 
roots” promotion.

 Collaborating can increase 
your revenue if you do it right. 
There’s much to be said for the 
tradition of local businesses that 
have historically supported little 
league teams and school events 
in their neighborhoods across 
the county with cash donations. 
In this instance, the community-
based organizations and schools 
get much needed cash to support 
their activities. The businesses 
that donate can increase their 
visibility and gain exposure to 
potential customers. This is a 
good example of a traditional 
model of marketing a business 
through community activities. 

 A donation is defined as “an 
act or instance of presenting 
something as a gift, grant or 
contribution, however, when 
it comes to making donations 
on behalf of your business, it’s 
important to be strategic with 
your generosity. Another 
example is Corfu Restaurant 
in Sierra Madre offering a 
discount to customers who 
present a ticket stub from 
an event at Sierra Madre 
Playhouse. Owners Vic and 
Amy were also receptive to 
posting promotional materials 
in their establishment. As a 
result, the Instrumental Women 
Project has collaborated with 
them throughout a series of 
jazz theatre productions at 
the Playhouse this year. In 
addition to paying Corfu to 
provide lunch for the artists and 
production crew, the restaurant 
has received a full page ad in 
each of the program books, and 
on two occasions the producer 
hosted the after-show for the 
band there as well.

 Instrumental Women sent out 
e-announcements to promote 
the shows that informed 
patrons of the great food and 
discount offered at Corfu, along 
with encouraging people to 
come early to stroll and dine 
throughout Sierra Madre.

 This model of collaboration 
has great marketing and 
revenue potential for businesses 
both individually and working 
in groups. It is the strategy that 
leads to the development of 
travel and tourism associations 
to promote small cities, large 
regions, states and even entire 
countries. Think of these 
activities as an alternative means 
of advertising your business on 
a shoestring budget.