Posts Tagged ‘US election’
Some interesting developments on the campaign trail indeed: in the Georgia GOP straw poll of Presidential hopfefuls, some media-annointed heavyweights fared very poorly, while the candidate the media loves to ignore, Ron Paul, again finished within a percentage point of winning the poll, narrowly losing to straw poll winner Herman Cain, who captured 26% of votes against 25.7% for Dr Paul (see our article, “Is Ron Paul Getting a Fair Shake From the Media? Watching the Watchers…” for our analysis of media coverage granted Mr Paul relative to the other candidates and also relative to his showing in the Iowa straw poll). Notably, Herman Cain is a native of Georgia, giving him the home town advantage (Mr Cain received 8% of the vote in the Iowa straw poll, against 27% for Ron Paul).
Candidate Mitt Romney, the former Governor of Massachusetts, who is widely considered to be the eventual GOP Presidential candidate (even among Obama’s staff), finished with just 6% of the straw poll votes. Michele Bachmann, whom Fox News described as having “cemented her top-tier position” after the Iowa straw poll, finished with just 3%. Rick Perry, the former Texas Governor who officially announced his candidacy the day of the Iowa straw poll, finished 5.7 percentage points (or over 22%) behind Dr Paul.
It will be interesting to see the reaction from media outlets to Ron Paul’s latest strong showing (notably, he also polls neck-and-neck with Obama). We’ll be tracking media coverage of this result as part of our ongoing series monitoring the even-handedness of US political coverage.
Further to our article examining the media’s treatment of Ron Paul, there’s an amusing article in US News & World Report today: a person who they identify as a Ron Paul “supporter” has “announced” he will be placing an ad asking people (“Are you a stripper, an escort or just a ‘young hottie'”) to come forward who have had sex with Texas Governor and Presidential hopeful Rick Perry. The article is titled “Sex Ad Hurts Ron Paul More Than Rick Perry” and is written by Peter Roff.
Let’s examine this a bit further:
- No ad has yet been placed – the person has simply “announced” the intention to place such an ad. I am announcing that I am twenty-three feet tall and excel at badminton (neither statements is true, but I am “announcing” them nonetheless);
- The person (Robert Morrow) is described as a Ron Paul “supporter”. Note that this differs significantly and materially from a Ron Paul “representative” or “agent”. Are there people who voted for Obama (ie “supporters”) who have subsequently raped children? I suppose there could well be; that does not make such a person a “spokesman” for, or a “representative” of, Obama. Same applies here;
- The article goes on to state: “The Paul supporters are known to be a dedicated bunch—some might even call them fanatics”. US News and World Report is known to be a fringe media source. Some might even call them flat out paid shills. See what we did there?
- Have a look at the title of the article: “Sex Ad Hurts Ron Paul More Than Rick Perry”. There is no sex ad, Ron Paul’s campaign has nothing to do with the supposed ad, and even if the ad existed, we do not know if it would hurt Mr Paul more than Mr Perry, or Mr Perry more than Mr Paul, or both equally or not at all.
The article is, in short, a public relations piece – in this case, an anti-Ron Paul bit of PR.
By way of background, US News & World Report is a declining media property (they reduced their print publications repeatedly, before abandoning regular print runs entirely as of December 2010), whose Editor-In-Chief, Mortimer B. Zuckerman (real estate tycoon worth an estimate $2.1bn USD and noted supporter of Jewish causes), is a significant contributor to Democrats (of a reported $63,000 in campaign contributions, Mr Zuckerman gave $42,700 to Democrats and most of the balance to independents. He also contributed to Senator Al Franken’s (D – Minnesota) recount fund, Gary Hart’s (D) Presidential campaign and contributed at least once to Senator Edward Kennedy’s (D) Presidential run (as well as at least three other contributions to Senator Kennedy’s runs for the Senate)). Mr Zuckerman once claimed to have helped write an Obama speech, before backtracking. Some might say he is a mouthpiece of the Democratic Party.
Since the day Barack Obama was elected President of the United States, the Dow Jones Industrial Average (DJIA) has been on a deep slide. The Dow closed election day at 9,625.28, then began a nearly daily descent, until it reached 7,552.29 at the closing bell on November 20. That’s a decline of 21.54% in just twelve days, and represents trillions of dollars taken out of the capital markets.
No big surprise there, given that President-elect Obama has promised to increase the Capital Gains tax by 33% (that’s just to start; his stated ultimate goal is a roughly 87% increase in the tax on your investment gains), move the US to a protectionist trade policy and increase regulation.
The markets, however, appear to be starting to shake off the “Obama Effect”: beginning November 21 and continuing for the next five consecutive days, the DJIA has been making up ground, closing November 28 at 8,829.04. That’s more than halfway back to pre-Obama levels.
Could President-elect Obama’s recent comments that he is reconsidering his tax hikes and even contemplating allowing the Bush tax cuts to continue be responsible for some capital returning to the market?
The Dow Jones Industrial Average closed at 9,625 on Tuesday, November 4, 2008, the day Americans headed to the polls to select their next President, capping a six day rally that had traders thinking the slow path to recovery (or at least relative stability) had begun.
By late Tuesday, it was obvious Senator Barack Obama had won the US Presidential election. Additionally, Democrats took several House and Senate seats, making for a strong (but not quite fillibuster-proof) majority.
The Dow Jones Industrial Average has reacted swiftly and strongly: as of this writing, the DJIA is down to 8,766. That’s a decline of nearly 9% since Mr Obama won the election, and reverses all the gains made during the previous six day rally. That represents over a trillion dollars in capital which has left the market since Mr Obama’s election.
President-elect Obama’s victory is certainly troubling for an economy already on the ropes: he came out in favor of increased protectionism, easier labor union organizing, tax increases on the most productive tax payers, big spending plans on health care, a special tax for successful oil producers and more and bigger government at a time when there isn’t much money to go around and the government has already put taxpayers in the hole for an additional $7,546 each by way of the “bailout” of the financial sector. Additionally, capital is more likely to sit on the sidelines in light of Mr Obama’s proposed 33% increase in the Capital Gains tax (he’s proposed ultimately raising the rate by 87%).
What’s more, Obama and his fellow Democrats will meet very little resistance in imposing their agenda: with the House, the Senate and the Presidency all in Democratic hands (and by wide margins), there’s very little opponents can do to stop wrong-headed policies.
For all the talk of an historic election, recovery for the US economy just got set back considerably: we expect less than 1% growth through 2011, and a contracting economy through all of 2009.
Senator Barack Obama, Nancy Pelosi and other Democrats often talk of making the US tax system more “fair” by imposing additional taxes on higher earners. They argue this segment of the population should be carrying a disproportionally heavier load than the rest of the populace. It’s a very calculated and clever argument: it appeals to envy and social divisions while at the same time jeopardizing only a small segment of voters. But does it have any basis in reality?
When it comes to the US tax system, the wealthy already pay an astonishingly disproportionate share of all tax revenues. Take, for example, the top two percent of all earners: this group pays an incredible 43.6% ¹ of all personal federal income taxes. Yes, you read that right: two percent carry nearly half the load.
Well, you might argue, if they make 43.6% of all income, then that seems reasonable. Not even close: the top two percent of all earners take in 24.1% of all income.
The bottom 50% of all earners contributes a mere 3.3% of all federal income taxes (while earning 13.4% of all income).
Let’s drill down a little further and look at the top five percent: Senator Obama has called on increasing the taxes on this group, and he has defined them as earning $250,000 or more per annum (since then, he’s adjusted that to $200,000 in a television ad; his running mate, Senator Joe Biden, uses $150,000). What do the numbers say about this group?
Well, Senator Biden is closer to the truth than Senator Obama: the top five percent of all earners make $137,056 a year. They currently contribute, wait for it, 57.1% of all federal income taxes. Can it truthfully be said they are not carrying their fair share?
Britain experimented with similar wealth-redistribution schemes in the ’70s: the top earners were subjected to a 90% (yes, ninety-percent!) tax rate. What happened as a result? They left.
You spoke today about your plan to increase capital gains taxes from 15% to 20%. You referred to it as a “modest increase”.
Sir: most people, even most Democrats, do not consider a 33% increase in taxes “modest”.
You’ve also spoken about your intent not to raise taxes on the so-called “middle-class”.
These two statements are incompatible: over 100,000,000 Americans will be affected by your 33% tax increase (which you’ve previously said you’d ultimately raise to 28%, which would be a total tax increase of 87%). People who are relying on their retirement investments will be affected. People invested in mutual funds will be impacted. Hard working people who rely on their union-negotiated pension will be affected, since those same pensions invest in the markets.
Further, at a time when capital has retreated on a wholesale basis from the markets, threatening the entire economy and making investments by companies in job-creating growth virtually impossible, do you truly believe new barriers to capital are prudent economics?
Senator Obama, please, please reconsider this course of action. Neither the American people nor the economy can reasonably be expected to sustain a 33% tax hike, and while ideology is a fine thing in extremely small doses, now isn’t the time to impose it, regardless of how tempting control of all arms of the Legislative and Executive branches of government may make it.
While trillions of dollars in capital has disappeared from the markets, adding a dis-incentive for investors to return to the markets is a sure-fire strategy for lengthening the current downturn. And when companies cannot readily access capital, they can’t build new plants, take on R&D expenditures or do all those other things that lead to the people on “Main Street” gaining access to new jobs.
What’s worse is that Mr Obama does not seem to understand the fundamental difference between a tax rate and tax revenue: changes in tax rates lead to changes in the way people behave. For example, Presidents Ronald Reagan, Bill Clinton and George W. Bush all cut the Capital Gains Tax. Under Clinton, it was 28%. Under George W. Bush it sits at 15%. After each of these tax cuts, tax REVENUE actually increased.
The kind of increase Mr Obama proposes therefore has a dual negative effective with no discernible upside: investment capital stays out of the market and government revenues from the Capital Gains Tax shrink.
So why would Senator Obama consider such an ill-fated move? He thinks it’s “fair”.
You can see Mr Obama’s explanation in the video below – note Jim Lehrer, the moderator, attempt three times to explain to Senator Obama that tax revenue decreases as the Capital Gains Tax increases.