election

Natural Born Citizenship: Free and Clear

/ L. M. Walker / 4 Comments

:: Cruz’s Dilemma

– By: Larry Walker, II –

The concept of natural born Citizenship is clear and concise, to anyone with a rational mind. Although some may wish to contort its meaning to fit the presidential candidate of their choice, natural law is incapable of such bias. It takes two parents to produce a child, one male and one female, but you would never know it if your source of information is the lamestream media. By its logic, only one parent is sufficient.

Epigrammatically speaking, if both of your parents were U.S. Citizens at the time of your birth, you are without question a natural born Citizen of the United States. The location of your birth matters little. You could have been born in Kenya, Canada, Panama, or perhaps on the Moon, but as long as both parents were U.S. Citizens, at the time of your birth, you are without question a natural born Citizen.

According to Vattel’s Law of Nations, Chapter 19 § 212: “The natives, or natural-born citizens, are those born in the country, of parents who are citizens. As the society cannot exist and perpetuate itself otherwise than by the children of the citizens, those children naturally follow the condition of their fathers, and succeed to all their rights… The country of the fathers is therefore that of the children; and these become true citizens merely by their tacit consent.”

You can think of natural born citizenship as free and clear citizenship. In other words, the rights of the parents (plural) are passed to their children. Thus, when both parents are U.S. Citizens, their offspring are natural born U.S. Citizens, free and clear. No other country has a claim of right. Comprende?

However, if at the time of your birth, your father was a Citizen of Kenya and your mother of the U.S., this would pose a problem. Oh no! What’s the problem? The problem is duality. Under such circumstances, the child would be a Citizen of Kenya (a British subject pre-1964) by virtue of its father, and equally a Citizen of the United States by virtue of its mother. There’s nothing free and clear in this circumstance. Upon the age of consent, such a child may claim citizenship with one country or the other; however, citizenship does not equal natural born citizenship.

You might not like the result of the above graphic, but that’s simply the way it is. Here are some recent examples.

Is John McCain a natural born Citizen? John McCain’s parents were both U.S. Citizens at the time of his birth, thus he is a natural born Citizen. It matters not that he was born on a military base in Panama. He could have been born in Siberia. No matter where he was born, McCain is a natural born American Citizen by virtue of his parent’s common nationality, at the time of his birth. You got that?

Is Ted Cruz a natural born Citizen? Ted Cruz’s father was a Cuban Citizen and his mother a U.S. Citizen, at the time of his birth. Thus, whether born in the U.S., Cuba, or Canada (where he was actually born) he is not a natural born Citizen of either.

Cruz was born with citizenship rights to Cuba, Canada and the United States. Although he may have chosen U.S. citizenship, at the age of majority, natural born citizenship is not something one chooses. Natural born citizenship is a right passed from one’s parents at birth. As such, Ted Cruz is no more a natural born Citizen than is Barack Obama.

The U.S. is filled with undocumented aliens, birthright Citizens, permanent residents, dual status Citizens, naturalized Citizens, and natural born Citizens. Whether the children of undocumented foreigners, born on U.S. soil, are U.S. Citizens by birthright is questionable. However, without question, such children are not natural born Citizens of the United States.

The main issue is this. According to Article 2, Section 1, Clause 5 of the U.S. Constitution, “No Person except a natural born Citizen shall be eligible to the Office of President.” So where does that leave Ted Cruz? Is he a U.S. Citizen? Sure, if he affirmed. Is he a natural born Citizen? Due to the citizenship status of his parent’s, at the time of his birth, he clearly is not.

Is Ted Cruz eligible to run for the presidency? Technically no, since he is not a natural born Citizen. But since you allowed Barack Obama, who is plain as day not a natural born Citizen, why stop Ted Cruz or anyone else for that matter? If it weren’t for that confounded Constitution, we could nominate whomever we yearned, without conscience. But, since we do have a blessed Constitution, it’s up to us, rather than fainthearted federal judges, to see that it is upheld.

Reference: #NaturalBornCitizen

The GOP’s “Abolish the IRS” Crackpots

/ L. M. Walker / 2 Comments

“In this world nothing can be said to be certain, except death and taxes.” ~ Benjamin Franklin ::

Separating the Wheat from the Chaff

:: By: Larry Walker, II ::

Each 2016 GOP presidential candidate has proposed to reform the tax code. While seven have offered legitimate proposals, five have advanced theories which are basically maniacal. Those proposing to abolish, or end, the Internal Revenue Service (IRS) may further be classified as crackpots, because, let’s face it, that’s never ever going to happen.

With taxes of such fundamental concern, it’s difficult to take anything else these kooks say seriously. Unless such candidates are willing to revise and clarify their ideas, they should drop out of the race immediately, so conservative voters may focus on genuine tax reform proposals.

Just who are these crackpots and why is their reasoning amiss? That should be evident by now, but let’s run through them, one by one.

Rafael Edward “Ted” Cruz

First there’s Senator Ted Cruz, who might have a better shot if he used his real name, and dropped his flawed and incomplete tax proposal. Senator Cruz proposes a 10% flat tax on individuals, a 16% flat tax on businesses, and to abolish the IRS.

His Simple Flat Tax Postcard lumps all income onto one line, rendering it virtually impossible to verify. Apparently wages, interest, dividends, capital gains, rents, pensions, social security benefits, etc. are all one in his mind. He proposes a $10,000 standard deduction per filer, and a $4,000 personal exemption for each dependent. He would maintain the Child Tax Credit, Earned Income Tax Credit and deductions for charitable contributions and mortgage interest, all without the necessity of an IRS.

Cruz would replace the corporate income tax with a Business Flat Tax of 16%. The tax would apply to “gross revenues minus expenses for equipment, computers, and other business investments”. That means no deductions for salaries, rent, utilities, supplies, and other ordinary and necessary business expenses. Although he would eliminate the payroll tax, this is made up for by effectively assessing businesses a 16% tax on the salaries and wages paid (i.e. since they will no longer be deductible).

Although his idea might seem fair and simple to the average working Joe, it’s not practical in the real world. That’s because, according to Senator Cruz, a small business would basically fork over 16% of its gross business income, without regard to its net cash flow. If its net income percentage is 16%, it would hand it all over to the government, and if it has a bad year and loses money, it would still owe a 16 percent tax on its gross revenues. Great! How many small businesses would survive under this scam?

But that’s not the end of it. According to Cruz’s proposal, small business owners would then owe an additional 10% tax on the salaries and dividends received from such businesses, after the standard deduction and allowance for exemptions, or charitable contributions and mortgage interest. In other words, through stealthy double-taxation, a small business owner could wind up owing as much as 26% on his or her compensation. Yeah, good luck getting this passed without mass resistance!

If the scheme were ever to see the light of day, which is highly implausible, then who would we mail the checks to? Since there will no longer be an IRS, not to mention three or four other agencies, would we simply forward more than 160 million checks to the White House? Who will verify whether everyone required actually files a “postcard-sized” tax return? Who would verify whether those that do file actually pay the full amount due? What happens when they can’t pay in full, or at all? Who will verify whether the amount of gross income reported is accurate?

Folks, this is not a well thought out plan, and it certainly won’t abolish the IRS, so as far as I’m concerned, you can strike Senator Cruz off the short list.

Randal Howard “Rand” Paul

Then there’s Senator Rand Paul, whom I admire, other than for his flawed tax proposal. He proposes to “blow up” the tax code and start over. He has advocated “abolishing the IRS, and replacing it with a simplified, revamped tax code”. He proposes a 14.5% flat tax on individuals and businesses.

For individuals he would allow a $15,000 standard deduction (per filer), and a $5,000 per person exemption, while maintaining the Earned Income Tax Credit and Child Tax Credit. How’s that for pandering? You can have your cake and eat it too. He would then eliminate all deductions other than mortgage interest and charitable contributions. Good luck handling all of this without the IRS.

For businesses, he would levy the tax on revenues minus “allowable expenses”, such as the purchase of parts, computers and office equipment. He would allow the immediate expensing of all capital expenditures, ending the notion of depreciation. Great, but that means no deductions for some of the largest expenses most small businesses incur, such as salaries and wages, rent and utilities, health insurance and retirement contributions.

Following Senator Paul’s approach, small businesses would basically fork over 14.5% of their gross business income, since after the first year most won’t have much in the way of “allowable expenses”. Once that’s done, whether or not there’s anything left over, its owners would then fork over another 14.5% of the salaries and dividends received from their businesses, after subtracting the standard deduction, or charitable contributions and mortgage interest (i.e. the only deductions he would allow), personal exemptions, and allowable tax credits.

Although the plan sounds reasonable on its surface, how would it be carried out without the IRS? Who would we send the checks to? Who would ensure basic compliance? Who will dole out the tens of millions of Earned Income Tax Credit refunds and guard against fraud? It doesn’t sound like Senator Paul will be abolishing the IRS anytime soon, so why the facade? This contradiction removes Senator Paul from serious contention.

Benjamin Solomon “Ben” Carson

As for Dr. Ben Carson, had it not been for money raised prior to his candidacy, by a PAC originally established for the purpose of repealing Obamacare, he wouldn’t even be in this race. Dr. Carson proposes that we all pay mandatory tithes to the federal government, as if it’s our new God, or something. Under his theory (which has yet to be set to pen and paper), individuals and businesses would simply hand the federal government a flat 10% of their gross income without the benefit of any deductions, which would put an end to the IRS.

Carson’s design would result in a 72% to 233% effective tax hike for those in the lowest, second, middle and fourth income quintiles, while at the same time granting an effective tax cut of 30% to 49% for those with the highest incomes. It’s a great plan if you make more than $200,000 a year, but for everyone else it will amount to a humongous tax increase.

Under Dr. Carson’s theory, a small business owner would simply fork over 10% of his (or her) gross business income, without the benefit of any deductions for salaries, rent, utilities, mortgage, state taxes, materials, supplies, depreciation, subcontractors, etc. Then contribute another tenth of the gross salary and dividends received from his or her business, again without the benefit of any deductions. This may seem fair to the average working Joe, until he receives the inevitable pay cut or pink slip, whichever comes first. Just do the math.

If Carson was somehow elected, and his plan were to survive public and Congressional scrutiny, once he abolishes the IRS, who would process our tax payments? Who would ensure basic compliance? Without the IRS, or an IRS-like agency, gross income would likely become whatever voluntary compliers chose to report, leading to a huge decline in tax revenues. In fact, without the IRS, his program would have no chance of success. Ben Carson should either go back to the drawing board, or simply get out of the race. His tax reform proposal eliminates him from serious consideration.

Carly Fiorina

Next we have Carly Fiorina. Although she hasn’t specifically advocated for the complete elimination of the IRS, she has proposed reducing the U.S. tax code from its current 73,000 pages (actually it’s only around 5,084 pages) down to just three pages. Just what would be on those three pages is anybody’s guess. What’s so bad about that? Well, here are a couple of examples.

Let’s say you’re halfway through reporting an installment sale on an owner financed property. Under Carly’s theory, I suppose you would just throw that notion out the window and just pay tax on the full amount received each year going forward, including the return of capital. That’s because, in Carly’s world, it would be far too complicated to determine the amount actually gained on the transaction.

If you have a net operating loss carryforward for the next 20 (or so) years, a charitable contributions carryforward for the next five, or a Section 179 carryover, I suppose you would forget about claiming these as well. Why? Because, there’s no way on earth one could cover such concepts within a three-page income tax code. Furthermore, there would no longer be any distinction between Corporations, S-Corporations, Partnerships, or Exempt Organizations, all too arduous to cover in just three pages.

Ms. Fiorina sure knows how to talk the talk, but at the end of the day that’s all it is. She doesn’t really have a tax reform plan, just a quirky notion that complex ideals can be compressed into thrifty one-liners. Her lack of judgment, in this matter, eliminates her from further consideration.

Michael Dale “Mike” Huckabee

Finally, there’s Mike Huckabee, who proposes to abolish the IRS by enacting the FairTax. Under the Fair Tax, businesses and individuals would pay a 23% national consumption tax on new purchases, above the poverty line. Federal taxes would be collected by retail businesses at the state level, so the IRS could be done away with, or at least its collection function.

According to the plan, “you have control over your own money and what your overall tax rate will be”. In other words, if you only buy used goods, or purchase everything under the table, you could wind up not paying any taxes at all. Just like in Greece, eh!

Then there’s that good old “Prebate”, the program’s key to fairness. The Prebate is akin to today’s standard deduction. Its function is to ensure that no American has to pay the FairTax on the basic necessities of life. Under this concept, every head of household in the United States would receive a monthly check from the government. That is, after having been raked for a 23% consumption tax at retail. How would this work?

Well, first every head of household in the United States would file a simple report with the government (each year) reporting the name and Social Security number of everyone living under their roof. Then, if you’re single you would receive a check from the government for around $183 per month. If you have a household of eight, you would receive around $742 per month. If there are 16 people in your household, you would receive around $1,242 every month. That seems simple, right?

Well, it won’t be so simple once the IRS has been abolished. Who’s going to verify that the individuals claimed on 160 million (or so) “annual reports” actually live in the households claimed? Who will ensure that the same dependents aren’t claimed by multiple FairTax patrons? Furthermore, what agency will process the 160 million annual “Prebate” reports, and issue some 1.9 billion monthly Prebate checks (160 million times 12 months) each and every year?

The IRS, as we know it, already has problems verifying dependents, and accurately issuing a much smaller number of annual tax refunds. It’s constantly battling against the issuance of fraudulent refunds on an annual basis. Accelerating the refund cycle from annually to monthly will only exacerbate such problems. So once the IRS has been abolished, which government agency will carry out these tasks?

Simply hoping and believing that people won’t cheat, when there’s no longer an agency to police the system, would be (well) stupid. So that eliminates Huckabee.

Scattering the Chaff

Along with death and taxes, I’m afraid the IRS will be with us, in some form or fashion, for the duration. No matter whose tax policies you favor, a governmental agency will be needed to administer them. Trumpeting the end of the IRS plays well in certain quarters, but generally among anarchists rather than rational minded conservatives.

Lower taxes, tax simplification and tax reform are ideals most of us agree upon. But as for irrational, radical, fundamental transformations haven’t we had enough? When it comes to income tax policy, we must separate the wheat from the chaff. We have thus eliminated Ted Cruz, Rand Paul, Ben Carson, Carly Fiorina, and Mike Huckabee from serious consideration. Please go away!

That leaves Donald Trump, Rick Santorum, Marco Rubio, John Kasich, Lindsey Graham, Chris Christie, and Jeb Bush. It also makes Trump the only viable outsider, not to mention the only one proffering to reduce income tax rates to the lowest levels since the Revenue Act of 1926. The seven offer varyring rates, exemptions and methods, some more appealing than others, but neither advocates the crackpot scheme of abolishing the IRS. It’s up to each of us to determine what’s in our own, and in our country’s best interests. To that end, abolishing the IRS serves no useful purpose.

References:

Matthew 3:12

Trump’s Dynamic Tax Policy

2016 Conservative Tax Plans: Trump vs. Carson

Top GDP Growth Rates in U.S. History

Photo Credit:

More Than A Sunday Faith

Trump’s Dynamic Tax Policy

/ L. M. Walker / 3 Comments

Lower Rates Across The Board

:: By: Larry Walker, II ::

Here’s an excerpt from Donald Trump’s Tax Plan which may be found on his official website www.donaldjtrump.com :

TAX REFORM THAT WILL MAKE AMERICA GREAT AGAIN

The Goals of Donald J. Trump’s Tax Plan

Too few Americans are working, too many jobs have been shipped overseas, and too many middle class families cannot make ends meet. This tax plan directly meets these challenges with four simple goals:

  1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.

  2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.

  3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.

  4. Doesn’t add to our debt and deficit, which are already too large.

The Trump Tax Plan Achieves These Goals

  1. If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.

  2. All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.

  3. No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.

  4. No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.

Again, this is only an excerpt; you may read the rest of Trump’s detailed tax plan on his website: Trump – Make America Great Again!

Under the Trump Plan, those in the lowest quintile, and most in the second and third quintiles (depending on marital status) won’t pay any income taxes at all. This is brilliant, considering that as a whole it’s estimated that those making less than $50,000 currently receive back roughly $37 billion more from the government, each year, than they pay in (see table below). This is due to a series of redundant, and costly tax expenditures. Removing upwards of 75 million households from filing requirements actually amounts to savings of no less than $370 billion, in government speak.

When it comes to simplifying the tax code, eliminating the filing requirements of some 75 million households turns out to be a big money saver. It will directly reduce the processing and subsequent examination, by the Internal Revenue Service, of around half of all tax returns currently filed. Since most individuals under this threshold only file to receive refundable tax credits, or to determine that they don’t owe any taxes at all, and around 37% of all individual returns audited involve the Earned Income Credit, once Trump’s plan is implemented the size of the IRS may be reduced dramatically.

Under Trump’s plan, if you are single, the first $25,000 you earn won’t be taxable, and if you are married, the first $50,000 you earn will be exempt from taxes (see table below). This will amount to a huge tax cut for the many, at the expense of a few. Compared to Dr. Ben Carson’s idea, where the government would get up to $2,500 or $5,000 from the same, Trump’s plan is a huge windfall for the working poor and middle class. Are you for lower taxes? Will this help you?

Trump’s plan lowers the top marginal tax rate to 25%, or to the same level imposed from 1925 to 1931 under the 1924 Mellon Tax Bill. So this is not a shot in the dark, but rather a return to policies the U.S. had in place during the Roaring Twenties, back when the country truly was great. Compared to the present tax code, Trump’s plan will reduce income taxes for a married couple making $85,000 per year from around $8,800 to just $3,500 (assuming 2015 taxable income of $65,000). Does this appeal to you? Is there some part of this plan that you don’t comprehend?

According to Trump, the huge reduction in rates will make many of the current exemptions and deductions unnecessary or redundant. “Those within the 10% bracket will keep all or most of their current deductions. Those within the 20% bracket will keep more than half of their current deductions. Those within the 25% bracket will keep fewer deductions. Charitable giving and mortgage interest deductions will remain unchanged for all taxpayers.”

Trump’s tax plan also reduces corporate taxes from a top rate of 39% to just 15%, making the U.S. one of the most attractive places to do business worldwide. But then he goes a step further, by applying the same 15% cap to income earned by freelancers, sole proprietors, unincorporated small businesses and pass-through entities (i.e. partnerships and S-corporations), which are all taxed at the individual level. According to Trump, these lower rates will provide a tremendous stimulus for the economy, as in significant GDP growth, a huge number of new jobs and an increase in after-tax wages for workers.

Finally, Mr. Trump’s plan eliminates the death tax, reduces or eliminates deductions and loopholes available to the wealthy, phases out the tax exemption on life insurance interest for high-earners, ends the current treatment of carried interest for speculative partnerships, adds a one-time repatriation of corporate cash held overseas at a discounted 10% tax rate, ends the deferral of taxes on corporate income earned abroad, and reduces or eliminates corporate loopholes that cater to special interests.

Coupled with his well aired balanced trade initiative, which seeks to eliminate our ongoing trade deficits with China, Mexico, Japan and other nations, every true Conservative is forced to concede that Donald Trump has a viable, solidly conservative, plan for this economy, and is indeed a serious candidate. Like him or not, when you lay Donald Trump’s tax reduction plan next to any other candidate’s, it’s clear that his plan will have the greatest positive impact on 99% of all Americans. No other plan comes close. It’s time for the mainstream media to stop focusing on the small stuff, and begin taking Trump and his policies seriously.

Related:

2016 Conservative Tax Plans: Trump vs. Carson

Top GDP Growth Rates in U.S. History

30-Year Trade Deficit with Mexico

30-Year Trade Deficit with China

2016 Conservative Tax Plans: Trump vs. Carson

/ L. M. Walker / 3 Comments

Placing Principles before Personalities ::

Every time in this century we’ve lowered the tax rates across the board, on employment, on saving, investment and risk-taking in this economy, revenues went up, not down. ~ Jack Kemp

:: By: Larry Walker, II ::

Dr. Ben Carson doesn’t really have a tax plan at all, yet he’s number 2 in the polls among conservative Republicans. On the other hand, Donald Trump has a very detailed tax reduction plan. In a nutshell, Trump’s plan eliminates taxes on individuals making less than $25,000 and on couples making less than $50,000, lowers the top marginal rate to 25%, just as Calvin Coolidge did under the 1924 Mellon Tax Bill, and lowers the top corporate tax rate to just 15%. It’s time for conservatives to grow up and start focusing on principles rather than personalities. Do that and Trump wins easily.

Dr. Ben Carson’s Tax Theory

Here’s the entirety of Dr. Ben Carson’s Tax Plan which may be found on his official website www.bencarson.com :

The American People Deserve a Better Tax Code

The current tax code now exceeds 74,000 pages in length. That is an abomination.

It is too long, too complex, too burdensome, and too riddled with tax shelters and loopholes that benefit only a few at the direct expense of the many.

We need wholesale tax reform.

And, we won’t get that from career politicians in Washington. They’re too deeply vested in the current system to deliver the kind of bold, fresh, new reforms that the American people are demanding.

We need a fairer, simpler, and more equitable tax system. Our tax form should be able to be completed in less than 15 minutes. This will enable us to end the IRS as we know it.

Yep, that’s it. Thus far, Dr. Carson has been able to skirt by without offering more than a shallow critique of the current tax system. His overly simplistic solution fails to address landlords, freelancers, investors, owners of pass-through entities, owners of multiple entities, corporations, trusts and estates, and the death tax to name a few. A simple tax form that takes 15 minutes might work for someone who receives one or two W-2 Forms, a pension, or Social Security benefits, but it’s not going to cut it for the varied real-life complexities that many Americans face in this day and age.

“It is too long, too complex, too burdensome, and too riddled with tax shelters and loopholes that benefit only a few at the direct expense of the many.” Yeah, yeah, that’s what they all say, but what’s Carson’s alternative? In an interview with FOX Business Network’s Stuart Varney, Dr. Carson elaborated on his tax proposal, stating that it would be based on the Old Testament Biblical principle of tithing. Great, just like the Israelites were commanded to do around the year 1300 B.C.

Dr. Carson stated: “You make $10 billion, you pay a billion. You make $10, you pay one [dollar]. [Of] course I would get rid of all the deductions and all of the loopholes but here’s the key, people, they look at a guy who put in a billion dollars, he’s got $9 billion left, that’s not fair — we need to take more of his money. That’s called socialism. And what made America … a great nation was we had a very different attitude. We would say he just put in a billion dollars, let’s create an environment that’s even better for him so that next year he can make $20 billion and put in $2 billion. That’s how we went from nowhere to the pinnacle of the world in record time. And it’s growth, it’s not taking what’s there and dividing it up and making it smaller.”

According to Dr. Carson’s statement above, “What made America a great nation was we had a very different attitude… That’s how we went from nowhere to the pinnacle of the world in record time,” as if to say that America once had a flat-rate tax structure. But when was that? Perhaps he’s confusing America with pre-Christian Israel, because prior to 1861, and between the years 1873 and 1912, the U.S. government was funded strictly through customs duties and tariffs levied on imported goods.

And, although a 3% flat-rate tax was proposed under the Revenue Act of 1861, as a temporary means of funding the Civil War, no revenue was ever raised under the act, and it was quickly replaced by a progressive rate structure under the Revenue Act of 1862. At no time since the Revenue Act of 1913, and at no time prior, has the U.S. ever been funded by a flat-rate income tax. So where is Dr. Carson coming from?

Okay, so if you make $10, $10,000 or $25,000 under Dr. Carson’s arrangement, you’ll pay $1, $1,000 or $2,500 in taxes. Never mind that depending on the size of your family, after your living expenses have been met, you might not have a penny left wherewith to pay it. Yet this he fathoms as fair. And, according to Dr. Carson, his program is great if you make $10 billion a year, but that’s primarily because you’ll see a 49% reduction in your effective tax rate, from where it is today. But for those less fortunate, including the entire middle class, Carson’s theory will result in a massive tax hike.

Under Dr. Carson’s 10% Deal, individuals within the lowest, second, middle and fourth quintiles, that currently pay average effective individual tax rates of -7.5%, -1.3%, 2.4% and 5.8%, respectively, will see their tax rates rise by at least 72%, and by as much as 233%. Increasing the rate to 15% only compounds the problem. What’s wrong with this picture? Well, for one, the only growth it produces is among the uber-wealthy. In fact, it appears to be just another means of benefiting “only a few at the direct expense of the many” – a direct contradiction to his stated goal.

So let me get this straight. Under Dr. Carson’s tax program, those in the highest quintile, including billionaires, who currently pay an average effective tax rate of 14.2%, will receive a 30% to 49% tax cut, while those in the lower quintiles receive a 72% to 233% tax hike. And how is this supposed to help the economy? More importantly, how does it help you and me? Well, it doesn’t. What Dr. Carson’s strategy actually does is make the rich richer and the poor soul down to his last $10 a dollar poorer.

Carson mentions nothing about corporate tax reform, disincentivizing corporate inversions, balancing trade, growing the economy, or expanding the workforce. He claims his proposal will be revenue neutral, which is at best a farce, but even if it somehow were – why would anyone care? Dr. Carson’s approach ransacks the middle class, plunders the working poor, and only profits the wealthiest among us. It’s a strategy unworthy of consideration by serious-minded conservative voters, as in my opinion is the entire Carson candidacy. Phooey!

Donald Trump’s Tax Plan

Here’s an excerpt from Donald Trump’s Tax Plan which may be found on his official website www.donaldjtrump.com :

TAX REFORM THAT WILL MAKE AMERICA GREAT AGAIN

The Goals of Donald J. Trump’s Tax Plan

Too few Americans are working, too many jobs have been shipped overseas, and too many middle class families cannot make ends meet. This tax plan directly meets these challenges with four simple goals:

  1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.

  2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.

  3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.

  4. Doesn’t add to our debt and deficit, which are already too large.

The Trump Tax Plan Achieves These Goals

  1. If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.

  2. All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.

  3. No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.

  4. No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.

Again, this is only an excerpt; you may read the rest of Trump’s detailed tax plan on his website: Trump – Make America Great Again!

Under the Trump Plan, those in the lowest quintile, and most in the second and third quintiles (depending on marital status) won’t pay any income taxes at all. This is brilliant, considering that as a whole it’s estimated that those making less than $50,000 currently receive back roughly $37 billion more from the government, each year, than they pay in (see table below). This is due to a series of redundant, and costly tax expenditures. Removing upwards of 75 million households from filing requirements actually amounts to savings of no less than $370 billion, in government speak.

When it comes to simplifying the tax code, eliminating the filing requirements of some 75 million households turns out to be a big money saver. It will directly reduce the processing and subsequent examination, by the Internal Revenue Service, of around half of all tax returns currently filed. Since most individuals under this threshold only file to receive refundable tax credits, or to determine that they don’t owe any taxes at all, and around 37% of all individual returns audited involve the Earned Income Credit, once Trump’s plan is implemented the size of the IRS may be reduced dramatically.

Under Trump’s plan, if you are single, the first $25,000 you earn won’t be taxable, and if you are married, the first $50,000 you earn will be exempt from taxes (see table below). This will amount to a huge tax cut for the many, at the expense of a few. Compared to Dr. Carson’s idea, where the government would get up to $2,500 or $5,000 from the same, Trump’s plan is a huge windfall for the working poor and middle class. Are you for lower taxes? Will this help you?

Trump’s plan lowers the top marginal tax rate to 25%, or to the same level imposed from 1925 to 1931 under the 1924 Mellon Tax Bill. So this is not a shot in the dark, but rather a return to policies the U.S. had in place during the Roaring Twenties, back when the country truly was great. Compared to the present tax code, Trump’s plan will reduce income taxes for a married couple making $85,000 per year from around $8,800 to just $1,500 (assuming taxable income of $65,000). Does this appeal to you? Is there some part of this plan that you don’t comprehend?

According to Trump, the huge reduction in rates will make many of the current exemptions and deductions unnecessary or redundant. “Those within the 10% bracket will keep all or most of their current deductions. Those within the 20% bracket will keep more than half of their current deductions. Those within the 25% bracket will keep fewer deductions. Charitable giving and mortgage interest deductions will remain unchanged for all taxpayers.”

Trump’s tax plan also reduces corporate taxes from a top rate of 39% to just 15%, making the U.S. one of the most attractive places to do business worldwide. But then he goes a step further, by applying the same 15% cap to income earned by freelancers, sole proprietors, unincorporated small businesses and pass-through entities (i.e. partnerships and s-corporations), which are all taxed at the individual level. According to Trump, these lower rates will provide a tremendous stimulus for the economy, as in significant GDP growth, a huge number of new jobs and an increase in after-tax wages for workers.

Finally, Mr. Trump’s plan eliminates the death tax, reduces or eliminates deductions and loopholes available to the uber-wealthy, phases out the tax exemption on life insurance interest for high-earners, ends the current treatment of carried interest for speculative partnerships, adds a one-time repatriation of corporate cash held overseas at a discounted 10% tax rate, ends the deferral of taxes on corporate income earned abroad, and reduces or eliminates corporate loopholes that cater to special interests.

Coupled with his well aired balanced trade initiative, which seeks to eliminate our ongoing trade deficits with China, Mexico, Japan and other nations, every true Conservative is forced to concede that Donald Trump has a viable solidly conservative plan for this economy, and is indeed a serious candidate. Like him or not, when you lay Donald Trump’s tax reduction plan next to Ben Carson’s tax the poor philosophy, it’s clear that only one has a workable plan. Dr. Ben Carson may be a nice man, but it’s time to admit that there isn’t any substance behind his shallow rhetoric. It’s time for Conservatives to stop focusing on personalities, and start taking Donald Trump and his policies seriously.

Black Unemployment Jumps 10.9% on Obama

/ L. M. Walker / 2 Comments

Are you better off today than four years ago?

– By: Larry Walker, Jr. –

According to the latest report from the Bureau of Labor Statistics, the official unemployment rate for all Americans rose by 1.3% since Barack Obama took office. But over the same period, the unemployment rate for Black Americans jumped by 10.9%, and the number of unemployed Black Americans climbed by 19.1%. So are we better off than we were four years ago? You might be, but the Black Community as a whole definitely is not. So will 90% of Blacks vote to re-elect Obama anyway? You betcha, because it’s not about tangible results, or even the content of one’s character; shamefully for many it’s about the candidate’s skin color.

Per the first chart above, the Official Unemployment Rate has increased slightly from 7.8% on January 31, 2009, to 7.9% by October 31, 2012, an increase of 1.3% (0.1 / 7.8). So the official unemployment rate isn’t any better than it was when Barack Obama took office, it’s about the same, or slightly worse. What about that?

And according the second chart above, the Unemployment Rate for Black Americans jumped from 12.7% on January 31, 2009, to 14.3% by October 31, 2012, for an increase of 10.9% (1.6 / 12.7). So the unemployment rate for Black Americans has continued to rise at a recessionary pace, in spite of Hope and Change. So what about that?

And according to last chart, the number of unemployed Black Americans has continued to surge at a recessionary pace, climbing from 2,254,000 on January 31, 2009, to 2,684,000 by October 31, 2012, for an increase of 19.1% (430,000 / 2,254,000). So the number of unemployed Black Americans, those who refuse to go on welfare or disability and remain in the labor force, has risen due to the countermanding policies of Barack Obama. What countermanding policies you say?

To name a few:

  1. Threatening to hike tax rates on the people who might have given someone a job instead.

  2. Forcing employers to provide health insurance to current employees, leaving no room for expansion or new hires.

  3. Spending borrowed money to subsidize solar panels, wind turbines, and battery operated vehicles, while the U.S. electrical grid remains vulnerable.

  4. Allowing strict EPA regulations to stifle jobs in the oil and gas, and mining industries.

  5. Increasing deficit-financed expenditures on Welfare, Food Stamps, and Disability as if that’s what Americans are demanding.

  6. Running up $5.3 trillion of debt in 4 years, the largest increase in our history, resulting in the first sovereign credit downgrade in American history.

Well, you can’t have it both ways. You don’t achieve job creation through raising taxes, forcing employer mandates, social engineering, killing current jobs, offering free rides, or destroying the nation’s credibility. So admit it, Obama’s policies didn’t work. They didn’t work for Franklin D. Roosevelt, they have never worked, and they aren’t working today. So what now? More of the same, or will you dare to be different? Common sense dictates that if you want a different result, you must try something different. See you on Tuesday. Be there!

If the unemployment rate don’t fit, vote for Mitt!

Data:

Worksheets on Google Drive

References:

Bureau of Labor Statistics: CPS Data Table A-2

Bureau of Labor Statistics: CPS Data Table A-1

Related:

Black Employment | Back to the 1970s

Has Obama Created More Jobs Than Bush Yet?

U.S. Jobs Deficit Sticks at 11.6 Million in October

/ L. M. Walker / 3 Comments

32 Years from Full-Employment

– By: Larry Walker, Jr. –

In the fairest sense, the U.S. Jobs Deficit has improved by an average of 30,000 jobs per month since January 1, 2011. And although this may be good enough for indifferent Obama loyalists, what it really means is that based on Barack Obama’s very best job creation averages to date, full employment is still another 32 years away. Based on yesterday’s Employment Situation Report, 171,000 nonfarm jobs were added in the month of October. However, since the U.S. needs to add a minimum of 320,850 jobs each and every month for the next 60 months in order to return to full-employment, October’s result fell short of the mark by 149,850.

When the entire Obama record is analyzed, it turns out that U.S. employers have only added a total of 194,000 nonfarm jobs since February 1, 2009 (133,755,000 – 133,561,000). The jobs deficit has increased by 5,521,000 during Barack Obama’s 45-month term, from 6,110,000 on January 31, 2009 to 11,631,000 on October 31, 2012. The average number of nonfarm jobs created on a monthly basis in 2012 is 157,000, which is ironically the same as in 2011. In contrast, the average number of jobs created in 2010 was 86,000, compared to an average loss of (422,000) per month in 2009.

So an average of 157,000 jobs a month, over the past 22 months, is the best that Barack Obama’s policies have been able to accomplish. This may sound great to some folks, but since 127,000 new jobs are required each and every month just to keep pace with population growth, what it really means is that we are clearly locked on a trajectory that chips away at the present 11,631,000 jobs deficit by a mere 30,000 jobs per month. So what does this mean in plain English? In other words, how many jobs must the U.S. create each and every month going forward in order to reach full-employment, and how long will it take?

Updated Jobs Benchmark

Updating Paul Krugman’s original benchmark with the latest figures, we discover that to be meaningful, the number of jobs needed to return to more or less full employment by December of 2014 (the original target date), or within the next 26 months, is now 574,346 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 26 months, or 3,302,000. Add in the need to make up for the jobs deficit and we’re at around 14,933,000 (3,302,000 + 11,631,000) over the next 26 months — or 574,346 jobs a month.

But since that’s never going to happen under the countermanding policies of Barack Obama, we are forced to extend the time frame. However, even when we extend the target date to 5 years from today, which will be more than 8 years from the time the recession ended, the number of jobs needed to return to more or less full employment by October of 2017, or within the next 60 months, is now 320,850 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 60 months, or 7,620,000. Add in the need to make up for the jobs deficit and we’re at around 19,251,000 (7,620,000 + 11,631,000) over the next 60 months — or 320,850 jobs a month.

Did the U.S. add 574,346 jobs last month? No. Did we add 320,850? No. In fact, according to the Bureau of Labor Statistics, the U.S. has only added 194,000 nonfarm jobs since Obama took office (i.e. February 1, 2009) (see related table). So what does that tell you? It tells me that Barack Obama’s economic policies have failed miserably. He’s the one who said, “If I don’t have this done in three years, then there’s going to be a one-term proposition.” So don’t blame conservatives and independents when the earth slides from under his feet on Tuesday.

Fair Enough?

In the fairest sense, when we average the number of jobs created over the last 10 months, we arrive at 157,000 a month. And when we average the number created in 2011 we ironically get 157,000 as well. Do the math. So in other words, there has not been any improvement this year over last year. So we’re not moving forward after all, we’re stuck in neutral. And since we know that it takes a minimum of 127,000 jobs a month just to keep up with population growth, we are only chipping away at the 11,631,000 jobs deficit by 30,000 jobs a month (157,000 – 127,000). Thus, on the current trajectory, full-employment is roughly 388 months — or 32 years away.

[For the mathematically challenged, take the jobs deficit of 11,631,000 and divide it by the twenty-two month average improvement of 30,000, and you get 388 months. Now divide 388 months by 12 and you get 32 years.]

So four more years of Obama’s trickle-down-government approach places us on the track to reach full-employment by around the year 2044. And that’s giving him the benefit of the highest job creation averages achieved during his entire presidency. I’ll be 84 years old by then, and my one year old twin granddaughters will be 33. I’m sorry, but no matter how you spin the numbers, Barack Obama isn’t worthy of a second term.

Until the number of Nonfarm jobs is expanding by a minimum of 320,850 a month for a sustained period of at least five years, anything short is bad news. The Romney-Ryan Team is the only one on the ballot with a plan targeted to come anywhere close to what’s needed. Aside from that, with the national debt already beginning its ascent towards $20 trillion, with 25 million Americans unemployed or underemployed, with the Federal Reserve devaluing our currency by printing money to purchase mortgage-backed debt on an unlimited basis, with our tax and regulatory structure mired in uncertainty, with a foreign policy meltdown, and with the price of gasoline hovering above $3.25 for a record 86 consecutive weeks, there is absolutely, positively, no reason to consider a second Obama term. None!

[Note: Paul Krugman and other left-wing cronies are now trying to push the idea that, since July 2011 only 90,000 jobs have been required to keep up with population growth. “The number used to be higher, but baby boomers are getting old — the same thing that affects the household survey.” However, even if such a radical 30% shift had occurred within the last four years, it would only alter the current jobs deficit by a diminimus amount — 592,000 jobs, from 11,631,000 to 11,039,000, so phooey! There’s no turning back now, we’re sticking with the original benchmark which Mr. Krugman laid out in December of 2009.]

Data:

Worksheet on Google Drive

High Gasoline Prices and the 2012 Recession, Part II

/ L. M. Walker / 2 Comments


Artificial Demand ::

“Real demand is not artificial. We should resist as much as possible the notion of providing things that are not actually demanded by anyone.” ~ American Consensus

– By: Larry Walker, Jr. –

The price of any product or service is normally determined by two variables, supply and demand. In economics, prices rise as demand increases, as supply decreases, or a combination of the two. It’s only when supply keeps pace with demand that the price of gasoline stabilizes or declines.

Since we know that the world’s population is increasing, not decreasing, more gasoline production is constantly required, not less. It doesn’t take a rocket scientist to figure that out. Thus, the only way to reduce gasoline prices, in the face of rising global demand, is through greater production. Yet, U.S. oil production has been on the rise since 2009, while demand has declined. So, why is gasoline stuck above $3.25 a gallon?

Was there suddenly a great demand for solar panels, biofuels, windmills and electric cars in 2009? The answer is no. Do cars and trucks run on solar panels and wind turbines? The answer is no. Yet, the 2009 stimulus set aside $80 billion in deficit financing to subsidize politically preferred green energy projects, which had little or no demand at the time. In fact, there is little demand for such products today. What the world demanded in 2009 is the same thing it demands today, more gasoline. So why is the federal government involved in providing things that are not actually demanded by anyone?

According to the Energy Information Administration, global oil consumption declined slightly in 2008, 2009 and 2010, while global supply has kept pace with demand (see chart above). In 2010, global supply actually exceeded demand, but as of 2011, the latest statistics available, world demand set a new record of 87,421,000 barrels per day, up from 83,412,000 in 2010. Yet global supply has kept pace with demand. So why have U.S. gasoline prices climbed by more than 90% since January 2009? The answer doesn’t involve oil supply and demand, it has to do with the decline of the U.S. dollar.

The purchasing power of the consumer dollar has declined by 24.3% since 2001 (see chart below). The dollar actually strengthened for a brief 5-month period, from September 2008 to January 2009, but then resumed its decline, having fallen by 8.9% since January 2011. What happened to the price of gasoline during the five-month’s that the dollar strengthened? It declined dramatically, from $3.72 a gallon to $1.64 (see Part I). And what happened to the price of gasoline after January 2011? It shot past the $3.25 per gallon breaking point, where it remains today.

What caused the dollar to decline? The U.S. monetary base, the total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank’s reserves, has increased by 324.2% since 2001. The money base grew from $616.7 billion in 2001, to $2.6 trillion as of September 2012. You can see in the chart below, that $256 billion of this increase occurred between January 2001 and September 2008. But from September 2008 to January 2009 the monetary base increased by $858 billion. However, this initial increase actually strengthened the dollar, and was, evidentially, the precise temporary stimulus needed at the time. The only problem with this brilliant strategy was that it wasn’t temporary.

Instead of winding down at the end of January 2009, what had been a well timed temporary stimulus was unfortunately doubled. Since then, the monetary base has been jacked up by another $886 billion. Instead of a temporary stimulus, what we wound up with was a permanent doubling-down of the original amount. Is this what the economy needed? What was the result? This time instead of strengthening, the purchasing power of the dollar plummeted.

Thus, by the time Barack Obama was inaugurated, the economy had already received the temporary stimulus it required. How do we know? The proof is the decline in the price of gasoline, to near its historic inflation adjusted norm of $1.73 a gallon (see Part I). But ever since then, the price of gas has risen from $1.88 to $3.65. That’s the proof. What we have witnessed during the Obama Administration has been reckless and unnecessary deficit-financed spending, which not only added six-months to the Great Recession, but has lead to a prolonged period of stagnation.

The Federal Reserve should have started reducing the monetary base in February 2009, but was unable to, due to the Barack Obama’s unprecedented $832 billion stimulus plan. In addition, as a result of Mr. Obama’s $1 trillion-plus annual budget deficits for the past four consecutive years, instead of being able to control the money base, the Fed has been forced into the unlimited printing of dollars, vis-à-vis QE3.

Based on the current trajectory, what we can expect with another four years of Barack Obama is a continued decline in the purchasing power of the dollar, and higher gasoline prices, in spite of improved U.S. supply and falling demand. The problem with high gasoline prices is they lead to recessions, while lower prices foster economic expansion. The target price for gasoline is the 1992 inflation adjusted price, $1.86 a gallon. The current price is $3.65.

In the midst of the Great Recession, the average price of gasoline only exceeded the breaking point ($3.25 a gallon) for a total of 31 weeks. In contrast, the current price has remained above the breaking point for a total of 86 consecutive weeks, from February 28, 2011 to present. What does that tell you? It leads me to believe that the U.S. is currently in recession. The cause: Inflation due to excessive money printing, necessitated as the result of an $832 billion stimulus, and unprecedented trillion dollar budget deficits due to Barack Obama’s inability to govern. Is there a witness?

One month ago, the Economic Cycle Research Institute (ECRI), the same organization which successfully predicted the last recession, and which over the last 15 years has gotten all of its recession calls right while issuing no false alarms, declared that the U.S. is in recession. In an article entitled, The 2012 Recession: Are We There Yet?, ECRI stated, “Back in December, we went on to specify the time frame for it [the recession] to begin: if not by the first quarter of the year, then by mid-2012. But we also said at the time that the recession would not be evident before the end of the year. In other words, nine months ago we knew that, sitting here today, most people probably would not realize that we are in recession – and we do believe we are in recession.”

The policies of Barack Obama didn’t deliver us from the Great Recession, they prolonged it. The $832 billion stimulus plan merely created an artificial demand for U.S. dollars, and is directly responsible for re-inflating the same imbalances that existed prior to the recession. How can we tell whether or not we’re better off than we were four years ago? Well, here’s what’s different today. We are more than $16 trillion in debt, 25 million Americans are either unemployed or underemployed, instead of reducing the money base the Federal Reserve is printing more money to purchase mortgage-backed debt on an unlimited basis, our tax and regulatory structure is mired in uncertainty, we are suffering from a foreign policy meltdown, and the price of gasoline has remained over $3.25 for a record 86 consecutive weeks.

The Obama Administration has done everything in its power to hide the truth from us, but we’re just not going to take it anymore. Americans can take a lot, but one thing we won’t tolerate is government officials who try to deceive us. The federal government can easily manipulate unemployment statistics, since the numbers are basically made-up anyway, but it cannot so easily engineer the price of gasoline. To do so would entail releasing oil from the Strategic Petroleum Reserve, which is in place to mitigate national emergencies, not sway elections.

Four years of Barack Obama’s policies solved nothing. We are currently teetering somewhere between back where we started from, to worse off than we have ever been. And with a looming fiscal cliff, another four years of Obama will only make things worse. America can’t take another four years of trifling rhetoric, high gasoline prices, or another government-prolonged recession. It’s time to wash our hands of the Obama Administration, and time to turn toward mature, experienced, and responsible leadership. You know what time it is!

“A lie hides the truth. A story tries to find it.” ~ Paula Fox

Reference:

Weekly U.S. All Grades Conventional Retail Gasoline Prices | U.S. Energy Information Administration

The 2012 Recession: Are We There Yet? | Economic Cycle Research Institute

The Malaise of 2012 | Part IV

High Gasoline Prices and the 2012 Recession, Part I

/ L. M. Walker / 1 Comment

Truth is not easily hidden.

– By: Larry Walker, Jr. –

Conventional retail gasoline averaged $3.65 a gallon in the most recent week ended October 22, 2012, yet when Barack Obama was sworn into office the price averaged $1.88. When questioned about the 94.2% increase which occurred on his watch, Mr. Obama remarked that the reason gasoline prices were so low when he entered office was because the U.S.was “in the middle of an economic depression.” However, the question wasn’t why prices were so low when he entered office, but rather why they ballooned by 94.2% on his watch. We’re still awaiting his answer.

In the second presidential debate, Barack Obama stated that, “oil imports are at the lowest levels in 16 years.” But as I pointed out in Debate 2 | Obama’s Oil & Gas Rhetoric, the gasoline I need to fill my tank only cost an average of $1.23 a gallon in 1996, the equivalent of $1.81 today. And later in the same debate, Obama proclaimed that, “oil imports are down to the lowest levels in 20 years.” Well, which is it Mr. President? I pointed out in the same post, that the 1992 price of regular unleaded averaged $1.13 per gallon, the equivalent of $1.86 today. Is the price of gasoline $1.81 to $1.86 today? No. So then what was Obama’s point?

Are we supposed to believe that it took an economic depression to bring gasoline prices down to $1.88 in the week ended January 19, 2009, when that would actually have been higher than the average inflation adjusted price of $1.73 at that time? I don’t know what that tells you, but it tells me that gas prices were in a bubble before the Great Recession, a bubble which finally burst during month 8 of the 19-month downturn. High gasoline prices were actually one of the factors leading to the Great Recession, the subsequent decline merely brought prices in-line with the historic norm.

If this is true, then hasn’t the price of gasoline been in the midst of another bubble since 2011 (see chart below)? And if a bubble currently exists, does that mean the U.S. is either in or near recession? To know the answers, we must venture back in time and analyze what actually took place prior to the Great Recession. The following analysis focuses on all grades of conventional retail gasoline.

Gasoline Prices and the 2001 Recession

Gasoline prices generally rise during the first six months of the year, and fall during the remainder. The 2001 recession began in March and ended in November, as indicated by the first shaded area in the chart above. Going back to January 1, 2001, according to the U.S. Energy Information Administration, we find that conventional grades were selling for an average of $1.42 per gallon. Once the recession commenced prices peaked at $1.70 in May, before the normal seasonal decline. But due to the recession, followed by a post-911 reduction in demand, prices continued to fall reaching a low of $1.08 by the week ending December 18, 2001. This represented a decline from the peak of roughly 36%, over 32 weeks.

Based on the 1992 price per gallon of $1.13, the 2001 equivalent price should have been $1.43 (as represented by the solid blue line). Due to the recession, gasoline prices temporarily declined below the inflation adjusted level, but would eventually regain equilibrium, reaching $1.46 towards the end of 2002. All in all, gasoline prices remained at or near equilibrium between 2001 and 2003. It was in 2004 when prices began to spin hopelessly out of control. The reason for the subsequent price hike was initially blamed on a significant number of refineries being offline, and later by rising crude oil prices.

Prior to the Great Recession, a record high of $3.25 per gallon was set in the week ended May 21, 2007. The chart above contains a green dashed-horizontal line at the breaking point, the pre-Great Recession record of $3.25 a gallon. The solid blue line represents the annual inflation adjusted price of 1992 gasoline. Although gas prices may currently be on the decline, until they dip below $3.25 a recession threat remains. At the same time, any price above $1.86 is not optimal. So where are we today?

Gasoline Prices and the Great Recession

The Great Recession commenced in December of 2007. At the time, gasoline was averaging $3.03 per gallon, but within the first eight months the price would set a new record of $4.10 per gallon in the weeks ending July 7 and July 14, 2008 (see chart above). But then something phenomenal happened. From the peak, prices declined to $3.17, or to below the $3.25 breaking point within just 14 weeks. And prices continued to fall all the way to a low of $1.64 by the week ending December 29, 2008, within another 11 weeks. So from peak to trough, gasoline prices declined by 60% in just 25 weeks, a notable difference from the 36% decline over 32 weeks at the end of the 2001 recession.

After the 2001 recession prices remained relatively stable for two years, but that wasn’t the case with the Great Recession. This time, when prices hit bottom the recession wasn’t over. It probably should have been over at that point, and perhaps it would, had it not been for artificial demand, induced by an unprecedented amount of deficit-financed government intervention. By the time the Great Recession ended, the price of conventional gasoline had risen from a bottom of $1.64 to $2.64. So from an early Great Recession surge to $4.10, prices finally flushed out at $2.64.

To summarize, during the Great Recession, gasoline prices rose by 35% before declining by 36%. By comparison, during the 2001 recession, prices rose by 20% before declining by 36%. That seems fairly harmless on its own, but what’s missing is the fact that gasoline prices doubled, from $1.50 to $3.08, during the previous recovery, between January 2004 and December 2007. That’s the key. There’s the bubble. So what was the cause?

According to information from the U.S. Energy Information Administration, there was a notable rise in U.S. petroleum demand, and a corresponding decline in U.S. supply from 2004 to 2007, as indicated by the shaded area in the chart below. In fact, the phenomenon of rising demand and declining supply actually commenced in 1986.

A quick study of the chart leads to two questions. Is the U.S. currently producing more oil than it did in 1985? The answer is no. Is the U.S. consuming more petroleum than it did in 1985? The answer is yes. Yet in 2009 there was a noticeable decline in demand and a corresponding uptick in supply, the combination of which contributed to lower prices at the pump. And, it appears that U.S. oil supply is continuing to trend upward, while demand has leveled off. So since demand is stable and supply is increasing, gasoline prices should be dropping like a rock, but instead we have witnessed a 94.2% price increase since January 20, 2009.

So was Obama right to blame the 94.2% price hike, on what he refers to as the extraordinarily low prices he inherited as a result of an economic depression? No, because by inauguration day the price of gasoline had settled right about where it should have, on an inflation adjusted basis. Recall that in 1992 the price of regular unleaded gasoline was $1.13 per gallon, which would have been equivalent to $1.73 in 2009; and the national average was $1.64 on December 29, 2008, and $1.88 on January 19, 2009. Thus, at that time, the price of gasoline was barely above its inflation adjusted value (see the first chart).

Going back to the original question, the reason prices have risen on Obama’s watch has nothing to do with supply and demand. The root cause is unprecedented government intervention vis-à-vis his $832 billion stimulus plan (see Part II). The stimulus program merely re-inflated a price bubble that existed prior to the recession, the first caused by lack of supply, and the second by devaluation of the dollar. It was this artificial deficit-financed demand that caused gasoline prices to rise from the $1.88 he inherited to $2.64 by the end of the recession, so that by June of 2009, gasoline was only 19% below its pre-recession record of $3.25.

Gasoline would remain below $3.00 from June 2009, until the week ending December 27, 2010. It was during this period that the economy showed its most promising signs of recovery. But ever since then, the price of gasoline has never fallen below $3.00. Instead, in the week ended February 28, 2011 the price once again accelerated past the $3.25 breaking point, where it has remained for the last 86 consecutive weeks.

With regard to 2010 being the end of the Obama recovery, the proof is that Real Gross Domestic Product (GDP) contracted by -3.1% in the year 2009, as gasoline prices surged from $1.64 to $2.62. Then in 2010, GDP grew by 2.4% as prices stabilized and remained below $3.00. But economic growth again slowed to a rate of 1.8% in 2011, as prices climbed above $3.25. GDP further slowed to a growth rate of just 1.3% through the second-quarter 2012, as gas prices remained above $3.25.

Note: The third-quarter 2012 advance estimate that GDP grew by 2.0% is just that, an estimate. In fact, according to the Bureau of Economic Analysis, “the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the third quarter, based on more complete data, will be released on November 29, 2012.”

Continued: High Gasoline Prices and the 2012 Recession, Part II

Reference:

Weekly U.S. All Grades Conventional Retail Gasoline Prices | U.S. Energy Information Administration

The 2012 Recession: Are We There Yet? | Economic Cycle Research Institute

The Malaise of 2012 | Part IV

Photo Via: Midwest Energy News

Real Effective Tax Rates | Romney’s versus Obama’s

/ L. M. Walker / Leave a comment

Content of Character ::

According to a report released by the Tax Foundation, an effective federal tax rate of 14.0% is higher than what 97 percent of Americans pay.

– By: Larry Walker, Jr. –

And according to The Tax Policy Center, the average effective federal tax rate for all Americans, as a percentage of cash income, was only 9.3% in 2011. Those in the Top 20 Percent (with incomes over $103,465) paid an average of 14.9%, while those in the Bottom 20 Percent (with incomes below $16,812) received back refundable tax credits averaging 5.8% of their incomes.

Within the Top Quintile, the Top 1 Percent paid an average rate of 20.3%, while the Top 0.1 Percent paid an average of 19.8%. It’s important to note that these are averages, which means that within each quintile some pay more than the average and others less. But overall, since the average effective federal tax rate for all of America is 9.3%, this represents a kind of minimum benchmark. What’s your effective federal tax rate?

Under the traditional model, in 2011, Mitt and Ann Romney paid an effective federal tax rate of around 14.0% (see definitions at the end), while Barack and Michelle Obama paid 17.8% (see table below). So does that mean the Obamas are more patriotic? Before you answer that, consider that the Romneys paid a total of $1,912,529 in federal income taxes, versus the Obamas $150,253. So does this give the Romneys the upper hand?

Digging a little deeper, it turns out that the Romneys paid an effective state and local tax rate of 11.3%, compared to the Obamas 7.0%. The Romneys also paid $1,541,905 in state and local taxes, compared to the Obamas $59,804. Shouldn’t state and local taxes be counted as well, since they are, after all, taxes? Yes, of course.

So when all taxes are on the table, the Romneys overall effective tax rate was 25.2%, compared to the Obamas 24.8%. And, the Romneys paid a total of $3,454,434 in federal, state and local taxes, versus the Obamas $209,057. So in light of these facts, is one of the two presidential candidates better suited for the Oval Office than the other? Is one a tax deadbeat and the other a saint? If a presidential candidate’s effective tax rate matters, then this election should be a toss up. But if it doesn’t, then Barack Obama’s entire – fair share monologue – is nothing but rubbish. The question is – what really matters?

Real Effective Tax Rates

Perhaps a more suitable measure of patriotism may be found in one’s real effective tax rate. One way of lowering U.S. tax liabilities is through charitable giving. When gifts are given to charity, the taxpayer no longer controls the assets, and so is granted a deduction against his (or her) taxable income of as much as 50% of adjusted gross income. Depending upon one’s marginal tax bracket, the tax savings may be as high as 35% of the amount given.

What happens to the money once it has been gifted? It gets spent by recipient organizations on salaries and wages, goods and services, real property, or is otherwise invested toward its charitable endeavors. Thus, charity is wealth redistribution, or if you will, a type of voluntary taxation. I would add that charitable giving is a much more efficient means of spreading the wealth than the U.S. government’s wasteful method, which after a certain limit may be summed up as little more than legalized robbery.

In 2011, the Romneys gave away $4,000,000, or about 29.0% of their income, although they only chose to claim a tax deduction of $2,250,772. The Obamas donated $172,130 or about 20.0% of their income. When we add this voluntary taxation to the total amount of taxes paid, we find that the Romneys paid a real effective tax rate of 54.4%, compared to the Obamas 45.1% (see table below).

Just to add some perspective I included data from the Roosevelts and the Carters tax returns (above). It’s interesting to note that in 1937, Franklin and Eleanor Roosevelt donated $3,024, or only about 3.2% of their income, while in 1978, Jimmy and Roselynn Carter gave away $18,637, or about 7.0%. When we add the amount of the couples voluntary taxation through charitable gifts, to the total amount of taxes paid, we find that the Roosevelts paid a real effective tax rate of 33.3%, compared to the Carters 45.6%. So was FDR a slacker? Was Jimmy Carter slightly more patriotic than Obama? And isn’t Mitt Romney a better man than them all?

Note: The Roosevelts income of $93,602 in 1937 is equivalent to $1,504,178 today, while the Carters income of $267,195 in 1978 is equivalent to $948,325. A study of historical Presidential tax returns is interesting, informative, and highly recommended for anyone serious about tax reform, as is a study of historical income tax rates.

Tax Return Analysis: Romneys versus Obamas

Following are some other key statistics from the Romneys and Obamas tax returns:

It’s notable that 94.8% of the Romneys income came from investments – interest, dividends and capital gains, versus -12.8% for the Obamas. The Obamas tax return includes a capital loss carryover of $116,151, a consequence of failed investments from the past. That’s interesting, since Barack Obama is the one always harping on the idea of government investment, yet all the while it turns out that successful investing is a trait beyond the scope of his expertise. Small wonder his taxpayer-funded green energy investments have turned out to be dismal failures.

What’s even more notable is the fact that roughly 62.4% of the Romneys income came from capital gains and qualified dividends which, based on current law, are taxed at a maximum rate of 15.0%. In contrast, around 99.0% of the Obamas income came from wages and net book sales which are taxed at ordinary rates of as high as 35.0%. Thus the Romneys effective tax rate should be considerably lower than the Obamas; but it turns out that both couples effectively paid about the same overall effective tax rate, 25.2% versus 24.8%, as explained earlier. So in spite of favorable capital gains rates, overall effective tax rates tend to balance out. One reason for this phenomenon is that most of the States don’t reciprocate (i.e. there is no favorable capital gains rate at the state level).

Next, we find that the Romneys paid $102,790, or 0.8% of their income, in foreign taxes, while the Obamas paid $5,841, or 0.7%. Thus, on a percentage basis, both families earned about an equal amount of their income from foreign sources. So is either candidate more likely to outsource American jobs than the other? I guess Obama could limit sales of his books to the USA, and cut-off the rest of the world, as if that would make any sense. I’ll let you figure that one out.

Next, we discover that the Obamas claimed a retirement contribution deduction of $49,000, or 5.8% of their income, while the Romneys claimed none. Foul! The question is that since Barack Obama now qualifies for a $191,000 a year presidential pension, why is he continuing to maximize the simplified employee pension account (SEP) deduction? In the private sector, the most anyone can exclude from income for retirement purposes, including employer matching contributions, is $49,000 per year. Yet Barack Obama gets to claim this maximum deduction, while at the same time deferring taxes on the annual contributions the U.S. Treasury makes to his pension account. Does that sound fair to you? Is Obama paying his fair share?

Is a guaranteed $191,000 a year for life, on top of a virtually unlimited presidential expense account, insufficient for Mr. Obama? In stark contrast, Mitt Romney refused to take a salary while he served as Governor of Massachusetts. So has anyone bothered to ask if he would waive his presidential salary? Would he also consider waiving the presidential pension and lush lifetime expense account? Somebody needs to ask that question. By the way, Mitt Romney could have claimed exactly the same SEP-IRA deduction that the Obamas did, based on his net business income, which would have further reduced his tax liability, but chose not to. So what does this say about character?

Next, the Obamas also claimed a $47,564 home mortgage deduction amounting to 5.6% of their income, while the Romneys claimed none. Wow! So since the Obamas claimed both a $47,564 home mortgage deduction, and the $49,000 maximum retirement contribution exclusion, while the Romneys claimed neither, this gave the Obamas an 11.4% handicap. Note: According to the Internal Revenue Service, in tax year 2010, only 25.8% of tax filers claimed the home mortgage deduction, which kind of makes the case for placing limits on this deduction.

Now when it comes to charitable contributions, as stated earlier, the Romneys gave $4,000,000, or around 29.2% of their income, while the Obamas gave $172,130, or 20.4%. But since the Romneys only chose to write-off $2,250,772, their actual deduction amounted to just 16.4% of their income. So once again the Obamas had a slight advantage, yet when their total itemized deductions are compared, we find that the Romneys amounted to 34.2% of their income, while the Obamas amounted to 33.0%, or about the same.

Finally, the Romneys federal taxes included an Alternative Minimum Tax (AMT) of $674,512, representing 4.9% of their income, while the Obamas incurred a liability was $12,491, or 1.5%. The AMT limits certain deductions and tax preferences to ensure that high income earners pay at least a minimum amount of tax. So what will happen when the AMT is eliminated? Will the rich pay less in taxes? Not necessarily, because if the same deductions and tax preferences for high income earners were eliminated from the get go, then the AMT wouldn’t be necessary. Isn’t this the objective of tax reform, to eliminate deductions and preferences, lower tax rates, and thus simplify the tax code? So when tax rates are cut by 20% in the next year or two, and that’s where we’re headed, the first place to look for deductions and preferences to eliminate is within current AMT regulations.

Content of Character

So what’s the point? First of all, we learned that in 2011, the Romneys paid a total of $3,454,434 in federal, state and local taxes, while the Obamas paid $209,057. When state and local taxes were added to the mix, we found that the Romneys paid an overall effective tax rate of 25.2%, versus the Obamas 24.8%. But when charitable contributions were figured in, we discovered that the Romneys paid a real effective tax rate of 54.4% compared to the Carters 45.6%, the Obamas 45.1%, and the Roosevelts 33.3%.

What should be clear is that measuring a person by the size of their effective tax rate reveals nothing about their character. If those who pay the largest share of taxes are the most patriotic among us, then that all but eliminates everyone except for the Top 1 Percent. If effective tax rates are so important, then why not simply convert to a flat tax (i.e. the FairTax)? That way the concept of effective tax rates becomes meaningless. In a perfect world it seems this would be the goal.

Is paying more taxes than absolutely necessary savvy? No, but anyone who voluntarily pays more must really love this country. Mitt and Ann Romney didn’t claim all of the charitable contributions they could have, and thus paid a higher amount in taxes than legally required. When it comes down to it, no one that I know cares anything about increasing their own personal effective tax rate; most are like the Obamas, preoccupied with finding ways to reduce it.

The main point of this post has been to prove that measuring any American by the size of their effective tax rate reveals next to nothing about the content of their character. Thus, Barack Obama’s entire fair share mantra turns out to be nothing but rubbish. The rich already pay more than their fair share sir. It’s time to bring on a business guy, someone who really understands what’s going on in this country. It’s time to lower income tax rates, limit deductions and preferences, broaden the tax base, and reduce the size of government. It’s time to lower the federal deficit and move towards a balanced budget. It’s time to purge Barack Obama’s jaded philosophy of – do as I think, not as I do.

Definitions:

(a) The Traditional Model – Under the traditional model, the effective tax rate is calculated by dividing total income taxes (before tax credits and other taxes), by total income (before exclusions and deductions).

(b) Effective Federal Tax Rate – The effective federal tax rate is determined by dividing total federal income taxes (before tax credits and other taxes), by total income (before exclusions and deductions).

(c) Effective State and Local Tax Rate – The effective state and local tax rate is determined by dividing total state income taxes, real estate taxes, and personal property taxes claimed on federal Schedule A, by total income (before exclusions and deductions).

(d) Overall Effective Tax Rate – The overall effective tax rate is calculated by dividing total federal income taxes (before tax credits and other taxes), plus total state and local taxes as in (c), by total income (before exclusions and deductions).

(e) Real Effective Tax Rate – The real effective tax rate is calculated by dividing total federal income taxes (before tax credits and other taxes), plus state and local taxes as in (c), plus charitable contributions, by total income (before exclusions and deductions).

References:

The Romneys 2011 Tax Return

The Obamas 2011 Tax Return

The Roosevelts 1937 Tax Return

The Carters 1978 Tax Return

Romney’s Taxes: A Window Into Charitable Giving

Even at 14%, Romney Pays a Higher Rate than 97% of His Fellow Americans

Ex-presidents have huge expense accounts

President Obama’s Taxpayer-Backed Green Energy Failures

Debate 2 | Obama’s Oil & Gas Rhetoric

/ L. M. Walker / 1 Comment

Forget Fact Checking: Where’s the Logic?
– By: Larry Walker, Jr. –
In a real town hall meeting, the person asking a question gets to follow up. What we saw Tuesday night wasn’t a town hall meeting at all. The readers appeared to be simply mouthing someone else’s prearranged questions. There wasn’t any passion. But what if the public was allowed to retort? Following are my thoughts on the lecture Barack Obama provided in response to the second question, a rather simple one which he has yet to answer.
QUESTION: Your energy secretary, Steven Chu, has now been on record three times stating it’s not policy of his department to help lower gas prices. Do you agree with Secretary Chu that this is not the job of the Energy Department?

OBAMA: The most important thing we can do is to make sure we control our own energy. So here’s what I’ve done since I’ve been president. We have increased oil production to the highest levels in 16 years.
Natural gas production is the highest it’s been in decades. We have seen increases in coal production and coal employment. But what I’ve also said is we can’t just produce traditional source of energy. We’ve also got to look to the future. That’s why we doubled fuel efficiency standards on cars. That means that in the middle of the next decade, any car you buy, you’re going to end up going twice as far on a gallon of gas. That’s why we doubled clean — clean energy production like wind and solar and biofuels.
So by the middle of the next decade, or around the year 2025, if I’m in the new car buying market at the time, I’ll be able to go twice as far on a gallon of gas. But, since a gallon of gas today costs more than twice what it did four years ago, we’re already at net zero. Mr. President, I was talking about today, right now, not 13 years from now or sometime after I’m dead and gone. And what exactly do coal, wind and solar have to do with the price of gasoline? Retail gasoline prices are sitting at a national average of $3.77 a gallon, just $0.33 off the all time high of $4.10 set in July 2008 (see chart above).
And all these things have contributed to us lowering our oil imports to the lowest levels in 16 years. Now, I want to build on that. And that means, yes, we still continue to open up new areas for drilling. We continue to make it a priority for us to go after natural gas. We’ve got potentially 600,000 jobs and 100 years worth of energy right beneath our feet with natural gas.
Oil imports may be at the lowest levels in 16 years, but the gasoline I need to fill up my tank only cost an average of $1.23 a gallon in 1996, which would be equivalent to around $1.81 today, yet I’m paying around $4.00. Is the reason gasoline cost so much today perhaps the result of fewer imports? And as far as natural gas goes, can I fill up my tank with that tomorrow morning?
And we can do it in an environmentally sound way. But we’ve also got to continue to figure out how we have efficiency energy, because ultimately that’s how we’re going to reduce demand and that’s what’s going to keep gas prices lower.

We can drill for oil in an environmentally sound way? What does that mean? And what do you mean by ultimately reducing demand? How far away is that, longer than four years? Although it’s true that less demand can result in lower prices, it only works if supply remains constant or increases. But if both supply and demand are cut at the same time, then consumers won’t realize any price change at all. And if demand declines too rapidly, then many suppliers may be forced out of business. And then what will we do?
[The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.]
Now, Governor Romney will say he’s got an all-of-the-above plan, but basically his plan is to let the oil companies write the energy policies. So he’s got the oil and gas part, but he doesn’t have the clean energy part. And if we are only thinking about tomorrow or the next day and not thinking about 10 years from now, we’re not going to control our own economic future. Because China, Germany, they’re making these investments. And I’m not going to cede those jobs of the future to those countries. I expect those new energy sources to be built right here in the United States.
Mr. President, I don’t need you to tell me what Governor Romney’s plan is, he can do that himself. The question was: Do you agree with Secretary Chu that it’s not the job of the Energy Department to help lower gas prices? So it seems your answer is that I need to be thinking about 10 years from now, and forget about how I’m going to get to and from work today, tomorrow, next week, or even four years from now. I see. And you’re willing to cede the jobs of the present in hopes that jobs of the future will be based on your present day policies, which for all we know might be considered archaic a month from now.
That’s going to help Jeremy get a job. It’s also going to make sure that you’re not paying as much for gas.
What’s going to help Jeremy get a job, a policy geared to kick in by the middle of the next decade? In the meantime I guess poor Jeremy will have to get by on two or three McJobs, and hope he makes enough to cover the cost of getting to and from work. So is that it? Are you finished?
CROWLEY: Mr. President, let me just see if I can move you to the gist of this question, which is, are we looking at the new normal? I can tell you that tomorrow morning, a lot of people in Hempstead will wake up and fill up and they will find that the price of gas is over $4 a gallon. Is it within the purview of the government to bring those prices down, or are we looking at the new normal?

OBAMA: Candy, there’s no doubt that world demand’s gone up, but our production is going up, and we’re using oil more efficiently. And very little of what Governor Romney just said is true. We’ve opened up public lands. We’re actually drilling more on public lands than in the previous administration and my — the previous president was an oil man.
Wait, so world oil demand and our production are going up? But you just said that our ultimate goal is to reduce demand in order to keep gas prices lower. So if the supply and demand of oil is going up, and you’re drilling more than the last administration, then how is this achieving your goal? And actually very little of what you just said is true. According to the U.S. Energy Information Administration production of finished motor gasoline is trending downward, not up (see chart above). Maybe this is why gasoline prices are hovering near historic highs? After all, we’re not talking about jet fuel and diesel, are we?
And natural gas isn’t just appearing magically. We’re encouraging it and working with the industry.
Can I fill up my car with natural gas tomorrow morning? Because if I could, that would truly be magical.
And when I hear Governor Romney say he’s a big coal guy, I mean, keep in mind, when — Governor, when you were governor of Massachusetts, you stood in front of a coal plant and pointed at it and said, “This plant kills,” and took great pride in shutting it down. And now suddenly you’re a big champion of coal.
Maybe Romney’s a big champion of jobs, unlike you Mr. President. At least he’s got a plan to create 12 million jobs in four years to eliminate the current jobs deficit. Where’s yours?

So what I’ve tried to do is be consistent. With respect to something like coal, we made the largest investment in clean coal technology, to make sure that even as we’re producing more coal, we’re producing it cleaner and smarter. Same thing with oil, same thing with natural gas.
Yeah, consistently wrong. The question wasn’t about coal, clean coal or natural gas, you we’re specifically asked to comment on the Energy Departments role in keeping gasoline prices affordable.
And the proof is our oil imports are down to the lowest levels in 20 years. Oil production is up, natural gas production is up, and, most importantly, we’re also starting to build cars that are more efficient.
So now you’re saying that oil imports are down to the lowest levels in 20 years. A minute ago you said 16 years. Let’s see, so that would be 1992, right? In 1992 the price of regular unleaded gasoline averaged $1.13 per gallon, which would be equivalent to $1.86 today. So if oil production is up, oil imports are down, and they’re building more efficient cars, then why am I still paying close to $4.00 a gallon at the pump?
And that’s creating jobs. That means those cars can be exported, ’cause that’s the demand around the world, and it also means that it’ll save money in your pocketbook.
So by producing more efficient cars, America will someday be able to export them to Libya, Egypt, Iraq, Iran, Greece, Spain and such, and this will create jobs and save money in my pocketbook. Well, that’s interesting, albeit illogical.
First of all, switching over from the production of less efficient to more efficient cars doesn’t add any net jobs, because as new jobs are created, old ones are destroyed. It’s at best a zero sum game, and perhaps even worse looking at the latest green energy failure. The electric-car battery producer, A123 Systems, Inc. filed for bankruptcy just hours ahead of your wishful thought. How many is that? Looks like around 16 so far, see

Obama’s List Of Failed Green Energy Jobs & Companies.

Secondly, as far as saving money in my pocketbook, what’s a pocketbook? It seems that you’re either talking about something way off in the distant future, or the archaic past, but the question pertains to right now, today, within my lifetime.
OBAMA: That’s the strategy you need, an all-of-the-above strategy, and that’s what we’re going to do in the next four years.
No Mr. President, that’s not the strategy I need. What I need is for gasoline prices to drop by at least half of where they are today. So do you agree with Secretary Chu that it’s not the job of the Energy Department to help lower gasoline prices or not? Will gasoline prices be half what they are today if you get reelected, or twice as high? Oh never mind, I’m leaning heavily towards the other guy anyway. I can make sense out of Romney’s policies, but as for yours, the record speaks for itself.
References: