This weekend our politicians were working hard to give several more billion of our tax dollars away to private industry. Last fall, they gave hundreds of billions of dollars to banks and financial institutions to keep them afloat. This time, the U.S. auto industry has been shamelessly begging for tens of billions more for themselves. And who can blame them? Everyone wants a piece of the pie. I mean, when someone’s giving money away, only an idiot wouldn’t want some of it, right?

Now look: I supported the bank bailout in its original form – through the original idea to purchase banks’ toxic securities. I even wrote a lengthy blog entry about it. I was not, however, a fan of how they actually ended up spending the $700 billion or how our politicians changed the bill from three pages to several hundred. While I could swallow the idea of the government using taxpayer dollars to buy undervalued debt, I have fundamental issues with the idea of our government being shareholders in private industry.

But I’m not here to talk about banks right now. Despite the fact that I disagree with the government’s methods for bailing out the banks, I do understand that there is a need to make sure that few banks fail, because our financial system can go into pure chaos if many major banks fail. But what about the auto industry?

If we let the auto industry fail, what is the effect on our overall economy? Well, it isn’t going to help. Clearly it would cause unemployment to go even higher. Certain towns, especially Detroit, will be hit extremely hard if they have auto factories or offices.

And all of that is bad – no question about it. But does it really affect other industries? Certainly not in the way that banks failing would affect things. If banks fail, people and business can’t get loans, some lose their savings, and the credit crunch would get much, much worse. But the auto industry isn’t nearly as intertwined in our lives. Unless you’re employed by a U.S. auto company or one of their suppliers, or live in Detroit, then you probably won’t notice at all, except that you have to buy a foreign car next time.

While the negative aspects mentioned earlier are bad, they are relatively contained to just the auto industry and its suppliers. Once the dust settles, and the economy improves, these people will find new jobs doing other things and life will go on – just without U.S. auto companies.

Is that bad – does the U.S. really need auto companies? Let’s face it: We can’t compete with less developed countries when it comes to manufacturing. But that makes sense. Anyone who has learned anything about development cycles in international trade theory knows that as nations evolve and become more developed, certain industries cannot be sustained in the most advanced nations.

For several decades, the auto industry has been doing incredibly badly, always on the brink of disaster. I think that we’re finally at the end of their life cycle. And that’s fine – we can get our autos elsewhere through trade. For quite some time now, other countries have done a better job at producing better cars, at lower cost.

I just don’t see how it makes sense to save an industry that is doomed to failure anyway. Again, with banks, this was a unique situation. Banks have not been having trouble staying in business for decades like the auto companies. If you bail them out, they will be able to sustain their business in the future once things recover. The same can’t really be said of auto companies. They were doing badly before the recent economic slowdown, and smart money says that they will continue to do badly in the future.

I have my own theory about why U.S. auto companies have done so badly, but I’ll save that that for another time. If you want to hear it, let me know. But it’s pretty clear that auto companies have had serious problems for a very long time. Throwing tens of billions of dollars at them, or nationalizing them, will just help them to do business badly for another five to ten years, until they run out of that money too and need another bail out.

Unfortunately, it’s not up to you or me. Our politicians are already in the process of passing an initial bail out – a modest one of $15 billion or so to get the auto companies through the year. Then, once Obama takes office, they’ll probably pass another bill giving them another $20 billion or so. For a variety of reasons, it’s in the best interest of the politicians who will hold power for the next four years to prevent the auto companies from failing, even though bailing them out isn’t in the best interest of the vast majority of U.S. citizens.

And I don’t know about you, but my next car won’t be American. I’m as patriotic as they come, but I can’t see making a major purchase like an automobile from a company whose survival seems dubious at best. Besides, most of the cars I find appealing are from foreign auto companies anyway. I’ll probably buy a Nissan or a Toyota. I have a funny feeling that I’m not alone.

These days, abortion is beginning to feel neglected: gay marriage has replaced it as the issue de jour. Ever since California somehow voted to ban gay marriage (despite deciding on the same ballot that parental notification – not requiring permission – wasn’t important for minors getting abortions), things escalated to a level that this issue has never seen. There have been protests, marches, walk-outs, etc. We need a solution to get things back to normal and eliminate the hostility.

But the problem of gay marriage is not an easy one, because it boils down to a problem similar to that which abortion has – it depends, not on reason or logic, but on basic definitions that one holds. For example, in the abortion argument, if you believe that a fetus is a person, then you probably don’t like abortion; if you believe that a fetus is not a person, then you probably don’t have a problem with it. Similarly, if you believe that marriage is defined as the joining of a man and a woman, then you probably think gay marriage should remain illegal; if you believe that the definition of marriage should be expanded to be between two men or two women, then you probably think gay marriage should be legalized.

Because the problem here is based on definitions, neither side is likely to change the other’s mind very easily. When someone believes that something is fundamentally defined in a certain way, a good argument from either side falls flat, because the two conflicting parties are essentially comparing apples and oranges. As a result, we need another way to solve the problem beyond a clever argument from either side.

I think I have a simple solution: the government should refrain from defining what marriage is – for anyone. In particular, I do not believe that the government should be in the business of defining marriage for its citizens, straight or gay.

Let me explain where this idea comes from. Marriage, as defined by many people, especially those who have a problem with gay marriage, has its roots in religion. While there are certainly non-religious people that get married, those who consider the institution too “sacred” to allow gay marriage to be legalized are almost exclusively the ones who believe marriage to be a religious ceremony.

The kicker, of course, is that the constitution is very clear that everyone has freedom of religion. As a result, if one group of people practices a religion that condemns gay marriage, then that’s their right. Of course, on the flip side, if another group of people practices a religion that allows gay marriage, then that’s their right too.

But this point is revealing: if marriage is so closely tied to religion for so many, and the government is supposed to be staying out of religious stuff according to the Constitution, then why does the government regulate marriage at all? I find this a curious question, and I think it is the root of the entire problem with the gay marriage issue. The government has no business regulating marriage for anyone.

So the solution is simple. The government needs to revise its laws to do away with any mention of marriage. Then, whether gay or straight, you can define marriage however you like, and the government could care less. And no one on either side could object either, because personal religious freedom can be exercised freely in this country.

The obvious objection to this solution is logistics. How do people file taxes, for example, if the government does not recognize marriage? The answer here isn’t as complicated as you might think – just have everyone file as individuals, even if they are “married” according to their spiritual leaders of choice. Many other issues can be revised through the use of wills and other legal documentation, where you could include your spouse in whatever aspects of your life the government used to regulate through defining marriage. I really don’t think it would be too difficult to make all this work out.

And that’s it. Suddenly, the issue of gay marriage is put to sleep. Like so many other political issues, by the government getting out of its own way, it can eliminate this divisive issue for its people. Surprisingly enough, the basis for doing so is already in the Constitution through our freedom of religion. Ironically, all this time, the government defining marriage in the first place has been unconstitutional.

In the days after the election, reports began to surface about the executive orders that president-elect Obama is likely to enact. Many of these potential executive orders consist of negating executive orders imposed by Bush. There is little doubt, however, that he will create some new ones of his own as well. All Presidents do.

Executive orders are not a new concept. They have been around since 1789. They are also not exclusive to one party or the other. All presidents seem to enjoy exercising their authority in creating them. Their originally conceived purpose was to help the Executive (the President) to direct his officers and branches of the Executive. They are also especially important in times of war, when Congressional legislation might be too slow or cumbersome a process for a Commander-in-Chief to have to deal with.

But since the early 1900s, it seems that things are getting a little out of hand. These more recent executive orders have taken a different direction than was their original intent. It seems that Presidents are using them to legislate far beyond simply directing their Executive branches. In fact, the Constitution never explicitly says that the President has the power to directly legislate without a check from Congress.

As mentioned, I am not here to blame one party for taking too much liberty in their Executives dispensing these orders. They both do it. Though, through federal government website, I did some calculations just for fun. Since Truman, Republican Presidents have averaged 51 executive orders per year, while Democratic Presidents have averaged 80 per year. It might be interesting to note that the lowest per-year number of executive orders came from George W. Bush, at a mere 33.5 per year, with his father second lowest at 41.5, and Clinton third lowest at 45.5.

To see an Executive using a truly inordinate amount of power through executive orders, one should look back to FDR, who averaged 311 per year. While some of these were, no doubt, in response to World War II, at least half of them were in response to the Great Depression. He used our economic troubles at the time to declare a state of emergency and justify the use of extensive executive orders, doing all kinds of wacky things like seizing the gold of U.S. citizens.

Many executive orders have been struck down by the Supreme Court over the years. Indeed, I would argue that many should be struck down — any attempt of a President to legislate beyond an order that truly just regulates his branch seems well beyond what the Constitution permits. I have no idea why, if a law ought to be enacted, it shouldn’t be done so through the proper channels, those channels being the Houses of Congress.

Because of this, I would love to see some reform come into play for executive orders. I have no idea why they haven’t been questioned more over the years. It seems obvious to me that many of these orders should not be permitted as a part of the Executive’s power. Yet, nobody really seems to notice or care. As a result, I’m sure my hope will not be realized anytime soon. I just worry that one day things could go back to the way they were under FDR where a president becomes impatient with Congress and decides to legislate for them. That is not what our Constitution intended, and giving an Executive that much power seems like a very troublesome precedent.

There’s a new craze sweeping the masses this election season year: early voting. From what I can gather, some states (or is it all states?) have decided it might be a good idea to open the ballots early, days or weeks before actual Election Day, to allow people to cast their votes early. Can someone please explain the point of this to me?

The only remotely plausible reason I can think of for instituting such a thing would be if, in the past, it had been a general problem getting all the votes in on one day. For past elections, were people waiting in line to vote on the evening of the election, but were turned away because the center they were registered to vote at was set to close and was forced to do so? If people were disenfranchised, despite being on line to cast their votes, then such a policy could be argued to make sense.

But I don’t ever recall reading that this had happened. I know there are plenty of (mostly dubious) cries of disenfranchisement across the country during election day, but I cannot recall a resounding cry coming from people who had arrived to a voting facility before the time it was set to close, but were not allowed to cast a vote because the line was too long to accommodate everyone by the prescribed closing time. Again, perhaps I missed it, but I find that doubtful, as for this to be a problem warranting such a drastic policy change, I think I would have heard about it at least once.

Why do I care? I fear that by media outlets reporting early voting results, this could skew people’s perceptions of how the race would turn out, if it happens that one candidate’s supporters come out in disproportionate numbers. This is a serious problem because it could prevent people from voting on the actual Election Day, because they could figure that there’s no point if the media acts like the election is over before then. Actual votes are far more meaningful than arbitrary polls. And this isn’t the only problem.

I actually find early voting to be a disservice to the democratic process. People should not be voting while a dialogue is still going on about which candidate is better. The election ends on Election Day, but for anyone voting early, it ends days or weeks earlier, whenever s/he decides to cast that vote. Because the campaigns are still in full swing during this time, new facts or arguments could still be brought to light. Such information could have changed a voter’s mind between the time s/he voted early and Election Day. Rather than “early voting,” it could more aptly be referred to as “prematurely voting.” The race isn’t over.

Let me give you a hypothetical example. Let’s say that one of the candidates claims to be a huge proponent for keeping Israel safe, but unfortunately, his record is too short to really prove him claim through his past actions. Imagine if some Jewish voters believe his claims of support and vote for him on October 24th. Then, on October 26th, a video surfaces, released by a prominent Southern California newspaper, showing that same candidate laughing at some truly vile “jokes” making light of the Holocaust at a dinner function for a spokesman for an Islamic terrorist organization. Don’t you imagine that this would change the minds of these voters? But it’s too late: they’ve already voted.

Now I can easily see a few responses that any early voting advocates reading this are no doubt thinking. First, they might argue that such information could come to light after the election, but the votes had already been cast in that situation too. While I can see where you’re coming from with that argument, the fact is that the election is still “up for grabs” and the campaigns are still working hard to expose all of the facts about both candidates until Election Day. It’s kind of the point of having a set election day – it gives the candidates an ending point for when the race is over.

I agree that if this information had surfaced after Election Day, then it clearly would have been too late. The point is that it surfaced beforehand, so should be taken into account in all voters’ minds. The fear I have is that people in a situation like the one I describe would surely be outraged, and many would want to change their vote. In theory, they should be able to, because the election is not over until Election Day. The American people are supposed to have until that day to decide which candidate to vote for. Of course, the possibility that they would actually be able to change their vote is a logistic nightmare, and pretty impossible.

Next, you might say: Well what if this information came to light at 1pm on Election Day, and they voted at 10:00am. First of all, I find that pretty unlikely, if for no reason other than I have never heard of any valuable information ever surfacing on Election Day that candidates should take into account. That day usually just consists of last-ditch efforts by candidates to get people riled up to vote with pep rallies, and news coverage about exit polls. And even if such information were to come to light in this fashion, I would argue that the day prior should technically be seen as the last day for both candidates to campaign. Election day is when people vote, not when you bring new information to the surface that could change people’s minds.

Another response those who disagree with me might have is that most voters’ minds are made up well before Election Day, so there’s no point in putting it off. That may be true, but I point to the example above of how things can change. And even if they don’t change, why does it matter when one’s mind is made up – in that case s/he could have just as easily voted on the actual Election Day as well. Nothing is gained by voting early. Is it just impatience?

Let’s say that getting the votes in by the election center’s closing time really is a problem, even though I kind of doubt it. I still think that there are less problematic alternatives available. Let me suggest a few options.

First, what if the polls were opened from 12:01am through 11:59 pm on the day of the election? I don’t care what hours you work, you would have no excuse for not finding the time to vote before or after work in this scenario. 24 hours is plenty of time to get these votes in.

Second, what if polls stayed open until everyone in line before closing time voted? This seems perfectly fair to me. As long as you arrived to the center before it was set to close, you get your vote in.

Third, what if they increased the number of election centers on Election Day? What if every election center only served, say 1/4 the number of people they are currently serving. In other words, let’s say you increase the number of election centers by four times. This should solve the problem by vastly decreasing the number of voters at each site and ensuring that they all get their votes in, as lines would be much shorter.

Or even take a combination of the ideas above – you could use all three concurrently. The point is there are other alternatives that solve the only plausible problem that would lead to people calling for early voting. And these alternatives all avoid the pitfalls I talk about above, which damage the democratic process. Early voting has already been open for a while, well before last night’s Obama special on prime time television. What if someone had voted for McCain, but then felt like Obama was a better candidate after watching his special? What if a candidate claims to be staunchly anti-abortion, and you find that a very important issue and voted for the candidate a week early as a result. But then a few days before the election, it comes out that she had an abortion five years ago because she wanted to start a political career and did not want to deal with having another child?

In situations such as these, it’s too late – these people have voted prematurely. As long as early voting exists, such problems will as well. I fully intend to vote this year, but I see no reason I can’t wait until November 4th. Why so many people are taking advantage of voting early, I really cannot comprehend. I would imagine it might just amount to impatience. But some things are worth waiting for.

Recently disgraced former congressman John Edwards coined the phrase “Two Americas” several years ago. He explained this term to refer to the “privileged and wealthy” as one America, and those who live paycheck to paycheck, having trouble making ends meet as the other. This is a silly idea, given that probably only two or three percent of Americans fit into his first version of America, as very few are born with a silver spoon in their mouth. I find it a bit extreme. He also ignores the middle class, who are by definition making enough money to save a little here and there for retirement, but certainly neither privileged nor wealthy. As a result, I feel his explanation of “Two Americas” doesn’t really work.

I do not wish to expand upon his odd definition of “Two Americas,” but instead to distinguish it from a version that I would like to explain, so that there is no confusion. I do believe that there are two Americas.

One America is the conservative America. This consists mostly of small towns and communities, especially in places like the Midwest and south. This America is predominately middle class. They are educated, but generally did not go to expensive private universities, instead relying mostly on state and community colleges. They hold a wide spectrum of jobs, but are not generally at either extreme — running multinational corporations or collecting welfare checks. They might be small business owners, accountants, factory workers or engineers. They are often active Christians.

The other America is the liberal America. This consists of mostly big cities, especially in the northeast and west. This America is non-middle class. In other words, at one end of this America, you have the rich; at the other end, you have the poor. The rich have gone to the finest private universities. We’re talking your Ivys, small liberal arts colleges, and other bastions of “intellectual” thought. The poor, obviously, are less educated. Most did not go to college, and some had to work from a young age, so were unable to even finish high school. Most of the rich in this version of America were born that way, or privileged on some level. They might be CEOs of major corporations, corporate lawyers, investment bankers or in media/entertainment. Most of the poor are stuck in the cycle of poverty. Those who are not on welfare are working bottom-of-the-bucket, unskilled, minimum wage jobs, like janitors, fast food workers or construction workers. Within this group, the rich are generally not religious, or not actively religious, while the poor are a mixture of religious and not religious.

Obviously, there is some overlap between these two groups. There are some ultra-rich conservatives (though, in my experience they are a small minority, and are probably not based in the northeast or west), and there are some poor conservatives (especially some immigrant population such as the Cubans in Miami). There are also some middle class liberals, though again, most probably do not reside in the Midwest or south. But I think that these groups are generally well defined, and the voting demographics in past and present elections show this pretty well.

I could probably write an entire book at how fascinating I find the dichotomy between these two Americas. The latter, liberal, America is especially fascinating, because it blends two polar opposite groups — the wealthy and overeducated with the poor and undereducated. Yet, they see eye to eye politically. While the other, conservative, America has an almost completely different set of beliefs and values.

I think what we’re seeing today is the gap in ideologies between these two groups of people moving farther and farther apart. Both sides are becoming more focused on their beliefs being not only right, but vital to the future success or even very existence of the country. For example, the liberals believe that in a global setting the U.S. cannot continue to act how it has over the past eight years, while the conservatives believe that under liberal economic policies America will lose its edge provided by its capitalist free market. Their passions go beyond these few issues into many others like free speech, abortion rights, gun control, etc. But it seems like groups are more extreme than ever in not seeing any middle ground on which to compromise regarding these very divisive issues.

Things are getting ugly. In a recent speech, Governor Palin made a comment that made liberal America very angry. She said that conservative America is “pro-America.” The clear insinuation is that liberal American is anti-America. In a recent speech to a college audience in Boston, comedian and pseudo-journalist Jon Stewart responded, “You know, I just want to say to her, just very quickly: fuck you!” The liberal crowd burst into applause.

I think that Governor Palin is wrong to say that liberal America is not pro-America. They are pro-America, but they are for a different America than the America envisioned by her conservative audience. So it could be more accurately stated that liberal America is indeed anti-conservative America, while conservative America is clearly pro-conservative America. The contrary is true too. But our sort of polarity in only seeing our views as being correct, and in fact vital to the survival of our nation, has led us to really believe that those residing in the other America are a threat to our very way of life. As a result, painting those who oppose your view in a very negative light becomes a kind of obvious action to take. It’s almost a defense mechanism. And clearly, both Palin and Stewart are guilty of taking things too far here.

What I worry about is exactly what is beginning to happen — for things to spiral out of control. When we have conservatives claiming that liberals hate America and when we have liberals cursing out conservatives, something is wrong. Both of these actions ignore an intellectual and collected discourse in resolving our differences and coming to a sort of compromise. Despite the fact that there may be “two Americas,” we all live in one America. As long as that’s the case we need to find a way to get along and not resort to disgusting divisiveness. Otherwise we will have a culture war on our hands. Agitation could eventually escalate to violence. I fear that this might be next. This potential consequence is a much more dangerous possibility for our nation than if either political party gets their way.

I have recently become aware of something that hadn’t really been utilized during the coherent portion of my life: The Fairness Doctrine (“TFD”). According to wikipedia, this was a policy “that required the holders of broadcast licenses both to present controversial issues of public importance and to do so in a manner that was (in the FCC’s view) honest, equitable, and balanced.” However, one would expect that their view of “equitable and balanced” was a bit different than Fox News’ view of it.

TFD was essentially eliminated in 1985. At that time, the FCC decided it was no longer necessary. The spirit of TFD was to provide radio/TV audiences in areas with limited broadcast capabilities an opportunity to hear both sides of an issue. The idea was that if there were very limited media outlets in an area (say, two or three radio stations), then these people may not otherwise have the opportunity to hear both sides of an argument.

Since the cable and satellite television, radio and the internet have exploded over the past few decades, TFD has become a kind of antiquated idea. At this point, is doesn’t seem plausible to say that alternate viewpoints are unavailable to pretty much anyone in America. All you need is a radio with an AM dial and you can easily tune into conservative or liberal radio shows. And it would be impossible to argue that those with each of these alternative viewpoints would not have access to broadcast their views on a multitude of radio stations, provided there is an audience interested in hearing what they have to say.

Yet, since the FCC abandoned TFD in 1985, many liberals have attempted to resurrect it. Democrats in Congress have twice tried to pass legislation to bring it back, in 1987 (vetoed by Reagan) and in 1991 (never passed, veto threatened by Bush sr.). But now, with an Obama administration seeming all but inevitable, and the Democrats likely acquiring a filibuster-proof Senate, the talk has already begun regarding its resurrection.

On a very naive level, one might think: “Gee, that seems crazy. Why would the Democrats want to give equal time to the Republicans? They control the vast majority of the mainstream media. Sure, there’s Fox News, but they control ABC, CBS, NBC, CNN, MSNBC, The New York Times, etc.” Quite right. But what has really hurt the Democrats over the past 20 or so years have been the conservative radio and TV shows run by figures like Rush Limbaugh and Sean Hannity, along with those on outlets like Fox News. One could argue, and probably be right, in claiming that Bush Jr. would likely have lost both elections without the support of such shows and media outlets.

Moreover, it remains doubtful that most shows on channels like CNN and CBS would require an “equal response” by Republicans. Despite the fact that these channels might skew their reporting to the liberal slant, much like Fox News skews their reporting to the conservative slant, their news programs are not generally overtly liberal. As a result, bringing back TFD really only hurts the vastly popular conservative shows like Limbaugh in the radio space and O’Reilly in the television space.

Obviously, the idea that you could limit the effectiveness of these figures seems very attractive to Democrats, as most of these guys’ shtick is to berate liberal policies for the entire time they are on the air. Moreover, they really have no liberal counterparts. For whatever reason, conservatives love listening to these pundants, while liberals tend not to feel the need to be preached to about liberal values for hours on end each day. And since, today, all media outlets are also profit-driven corporations, without the liberal audience being interested enough to justify such shows, they remain largely in the conservative sphere of thought.

TFD would change all that. If Rush Limbaugh got 4 hours per day, then the station would be REQUIRED to have a liberal pundant on for an equal response each day. Other than being impractical, it is a ratings nightmare. They would probably sell very little, if any, advertising for the second show, as Rush’s audience would turn the radio off after his program, and liberals wouldn’t be that interested, as the current radio market shows us. So the radio station would probably be forced to shorten the length of Rush’s show or take a drastic reduction in profit from advertising resulting from the second newly required show.

Ironically, The Fairness Doctrine doesn’t seem too fair to me. Is it fair to disallow a radio station to have a show with whoever they believe their audience will respond to, and disregard whoever they don’t? Is it fair to, essentially, limit the free speech of one person to give equal time to another person?

Moreover, how about the logistical difficulties? What exactly is a “controversial issue of public importance”? I mean, which issues aren’t controversial or of public importance? If a celebrity talks out against a war in an Oscar speech, does a war-supporter get to chime in before the music starts to disagree? When David Letterman makes fun of a Republican in a joke, do they get a response? Does this also affect shows like “The Colbert Report”? Is a Christian radio show okay, or does it have to be followed by a Jewish show, Muslim show, Buddhist show, Atheist show, etc.? While there might be a handful of circumstances would obviously qualify for a required response, it’s hard to delineate which would not.

And isn’t this another kind of stab at our free market? You’re forcing profit-driven, private media outlets to feature opposing viewpoints to their shows. How would they structure this? Won’t this hurt their ratings, and consequently their profits? While it might be desirable for journalism to be a bit less profit-centric, doesn’t this go too far insisting that profit be essentially disregarded and media outlets be forced to focus on fairness alone, rather than consumer demand?

The Supreme Court seems to agree. In a handful of verdicts over the years, they seem to imply that, while TFD makes sense for its original intended purpose (to provide both viewpoints to those with a limited broadcast bandwidth), if people have access to a variety of outlets, then there’s no reason to impose this on them. People should have a choice in what they want to hear. Why should they be forced to listen to something they do not agree with? Luckily, with our current Supreme Court, it is likely that they would uphold their previous decisions and in our current technologically advanced environment, find ample reason to side with free speech and knock down new legislation reinstituting TFD. It would probably be at worst a 5-4 decision, with Scalia, Kennedy, Thomas, Roberts, and Alito would on the majority side; it could even be 6-4 if Stevens joins.

So we’ll probably see this ping-pong match continue. I would imagine within the first year of his administration Obama will sign legislation bringing back TFD. And then, I imagine, it will get challenged and eventually heard by the Supreme Court. Then they’ll knock it down. Fortunately, the Democrats won’t have a supermajority to make this a constitutional amendment, so the issue will die again for a while. And unless Scalia, Kennedy, Thomas, Roberts, or Alito retire during an Obama administration, which seems unlikely, the Democrats will not be able to do much about it. But they probably figure it’s worth a shot. And if they succeed, I just hope I can be that guy that talks after George Clooney’s next Oscar speech.

(I apologize for the length of this essay. I had a lot to cover. I hope its complex subject matter and thoroughness warrant its size. I think it’s worth reading.)

Last night, an event occurred that I never thought I would see: the President of the United States explained how a mortgage-backed security worked in an address to the nation. When I began working in the mortgage and asset-backed securities industry after college, absolutely nobody knew what these securities were, despite the fact that it was a trillion dollar market that had been around for decades. In fact, in 2004 and 2005, mortgage and asset-backed securities issuance even exceed that of unsecured corporate debt.

Through my background, I have a pretty strong understand of exactly what is going on in our economy right now. As a result, I also understand Paulson and Bernanke’s proposal that they have been attempting to explain to Congress over the past few days. Unfortunately, sometimes the greatest minds do not make the greatest teachers. As a result, I feel that Paulson/Bernanke could be doing better to explain why their plan makes sense while other options do not.

Let me take a brief step back: Under normal circumstances, I strongly oppose government interference in the markets. I tend to be a neoclassical economist, and something of a disciple of Milton Friedman. That means I hold the political and economic philosophy of a classically liberal or libertarian point of view. Don’t confuse “classically liberal” with what liberal means these days. It is kind of the opposite.

Despite my dislike of the government meddling with the market, in these circumstances, I understand the gravity of the situation, and after giving it a great deal of thought, I cannot think of a better way out of this mess. Moreover, I have given much thought to other forms of a government bailout other than that recommended by Paulson/Bernanke. I also fail to see a better alternative there. What I hope to do here is explain why the Paulson/Bernanke plan is absolutely necessary, and then strike down some potential objections and alternatives.

I explained the problem with the market in a recent blog entry. It boils down to investors not understanding how these mortgage-backed securities work. As a result, they want no part of them. That has caused the price to be driven down substantially (through far less demand) to the point that they cannot even be sold to anyone, causing the securities to be virtually illiquid.

I also need to explain that there are two values of these securities to consider. There is the market value, which I have already spoken of, and there is the intrinsic value. Each of these securities has an intrinsic value, beyond whatever the market might perceive its value to be right now. That intrinsic value is based on the mortgage payments that come in each month to pay the interest and principal on the bonds. That intrinsic value is mostly dependent upon the losses that the bonds incur due to foreclosures. Clearly the intrinsic value of these securities has taken a hit, as foreclosures have increased dramatically over the past 18 months. But the intrinsic value has not gone down nearly as much as the market value.

Financial institutions can’t sell these securities. Instead, they just have to hold onto them. This wouldn’t be that big of a problem if they did not have to “mark to market” these securities. Marking to market means that you have to re-value assets when their market value changes. That means when these assets’ value declines, they have to show that in their books. They then need to balance things out by putting up more cash to balance out the losses resulting from the price declines. To add insult to injury, the clients of these banks are worried that they hold more of these securities than they are saying, or that they aren’t marking the prices down far enough. As a result, many are refusing to do business with such banks for fear that they could be on the brink of collapse.

Some people ignorantly think that this only really affects Wall Street. What they don’t realize is that virtually everything that occurs on Wall Street either directly or indirectly affects Main Street. If the financial markets collapse, so does your 401k, your ability to get a car loan or mortgage, and more other consequences than I have time to mention.

The Paulson/Bernanke plan would eliminate this problem. They propose having the government purchase all of these securities at, or possibly slightly above, the market value. This would eliminate the uncertainty that investors are feeling towards these banks, because they can get rid of all these problematic assets. That would open the markets back up, and things should return close to what is normal.

There is little doubt that the Paulson/Bernanke plan would work. But there are two important questions. First, how much would it cost taxpayers? Second, is there a better plan?

Believe it or not, in my professional opinion, I think taxpayers will actually end up profiting from the Paulson/Bernanke plan. Irrational fear has driven the value of these securities down below what even those with the most pessimistic of the mortgage market would believe. As a result, assuming they are purchased at or near the market price, the intrinsic value will exceed this price. When things return completely back to normal in 5 or so years from now, the government can then sell these securities for what I believe will be a profit.

In other words, you should view this bailout as a loan to the government to purchase securities. I believe that loan will not only be paid back in full, but will actually result in a significant profit for taxpayers.

So if this plan will turn out so well, why are so many angry about it? Mostly ignorance. In watching the Paulson and Bernanke testimony in Congress over the past few days, I have come to see just how utterly our politicians fail to grasp the situation and the solution that Paulson and Bernanke have presented. Let’s consider some of their complaints/alterative suggestions.

One suggestion was to rescue the homeowners instead by buying up their mortgages. This is a logistical nightmare. First, how would you implement such a plan? The Paulson/Bernanke plan works well because it is quite easy to purchase securities, but how would the government go about buying a bunch of mortgages? Second, what would the government do with these mortgages? Again, securities are easy to sell back to investors once the market turns around and these securities go back up to their intrinsic value. But if you are holding a bunch of mortgages, how do you sell those houses once the housing market gets better?

There is also one final problem to this plan of buying mortgages: the cost to tax payers. It would likely be much more expensive. One of the kind of wonderful aspects of the Paulson/Bernanke plan is that they are buying these securities for less than they are actually worth (since the market value is less than the intrinsic value). That means the losses from these mortgages would be taken by the financial institutions that originally purchased them — as it should be. In the buying mortgages alternative, the government takes these losses instead, as it would likely be 10-15 years before some of these houses achieve the value that they had at the height of the housing bubble. The government would probably not wait around, leaving these houses empty, until they appreciated back to that pricing level so that they could get back their investment.

An odd variation on this buying mortgages alternative would be to allow the homeowners to remain in those houses after foreclosure, but pay a rent to the government. Wow. First of all, how do you set that rent price? Second, can you think of a worse landlord than the federal government? Third, how long can they rent these houses? Indefinitely? At what point does the government kick these people out anyway, so they can sell the house and get their initial investment back? This idea is just foolishness.

Some suggest giving Paulson/Bernanke less than the $700 billion requested. I’m not sure I see the point in this. First of all, Paulson and Bernanke are our greatest economic minds. If that’s the amount they believe they need to make this work, then why question it? They certainly know more than any of us, or any of our bureaucrats in Washington. And remember, it will most likely all (or at the very least the vast, vast majority) be paid back anyway in several years, once the market turns around.

Others are angry because they see this as a bailout of Wall Street. It isn’t. Under this plan, Wall Street is still being forced to take the losses on these securities. All the government is doing is allowing them to take those losses immediately and get rid of these securities so that the uncertainty in the market is eliminated and they can get back to doing business.

Another kind of bizarre idea being suggested by some in Congress is to have the government take an equity stake in financial institutions that sell securities to the government. This idea is ridiculous for two reasons. First, the idea of the government owning an equity stake in any private company is frightening in any free-market. This sounds like something that Hugo Chavez would suggest. Second, what is the precedent for getting an equity stake in a company that you buy bonds from? If I buy bonds from Honda, I don’t also get some of their stock. That doesn’t make any sense. The government is buying bonds — why in the world would they expect some stock as part of the deal? As I already mentioned, they will be making a profit on these bonds already. These financial institutions would not want to have to sell these bonds at these prices if they did not absolutely have to in order to insure their survival by bringing liquidity back to the markets.

Finally, there is the favorite topic of many in Congress: executive compensation. Some are enraged that executives are making too much money. No matter where you stand on this issue, it is irrelevant to the project at hand. Executive compensation limits will not do anything to help the financial market’s current situation, and if in place beforehand, they would not have prevented it either. All of the executive compensation paid over the past few years to the banks we’re talking about helping probably amounted to only several billion dollars. The bail out requests $700 billion, clearly the compensation we’re taking about is a drop in the bucket compared to what is needed to solve the problem. Executive compensation limits may be an important question for its own sake, and that’s fine. But let’s not muck up a bailout plan by bringing this issue into play. Remember, the financial institutions who would utilize the Paulson/Bernanke program would still be incurring great losses, and those losses would be reflected in the compensation of its executives as a result. Believe me: this won’t be a great year to receive a Wall Street bonus, even if the government takes no action on compensation limits.

I think this addresses everything I had hoped: I have reiterated the situation that we are in; I have explained why the Paulson/Bernanke plan really is the most sensible and feasible alternative; and I have explained why taxpayers are better off with this plan than any other that has been cooked up thus far by bureaucrats. Yesterday, I heard Warren Buffet in an interview on CSPAN. Warren Buffet is considered to be the most brilliant investor in the world. In the interview, he proclaimed that the U.S. could not be in better hands than that of Hank Paulson. Clearly Paulson and Bernanke, an esteemed professor from the Princeton Economics Department, know what they’re doing. The way Congress is treating them is insulting. If they could only understand how economics and the markets function, then the brilliance of their plan would have been easily recognized, and it would already be in effect.

In a recent entry, I wrote about Taxes and “the Rich”. In that entry I attempted to explain why taxing high wage earners at significantly higher rates is unfair. I thought it was a pretty strong essay, but a reader took issue with it. So I wanted to take this opportunity to better explain what I meant, and better state my position in a reprise. (You may want to read or re-read that entry before proceeding.)

First, I want to thank that reader for the comment. I want to respond to your points, so that there is no misunderstanding. Here is what you said:

You’ve got some very flawed arguments here. First, I can’t believe you’re comparing raising taxes with slavery. If you don’t see how ludicrous that is, I’m not even going to touch that.

Also, your argument about how raising taxes is “morally repugnant” starts with an incorrect premise. You start with the assumption that those who make less money do so because they choose a more “cushy job” that doesn’t pay as well. This is not a correct assumption. The person making minimum wage by cleaning toilets at McDonalds didn’t choose that job because it’s “cushy”, they chose it because it was the only job available to them. People generally try to make as much money as they can, [sic] they are generally limited in how much money they can make by lack of education and opportunity. You are positing that if those people were just willing to work an extra 10 hours a week, they could double their income, but they refuse to do that. This is an incorrect assumption. If you take away that premise, there’s not much left to your argument.

The only valid argument I see here is the idea of normalizing taxes based on the cost of living of a geographic location. That’s a good point, although I think it would be difficult to implement.

For starters, in what way, shape, or form did you understand me to be comparing slavery to taxes? The point I attempted, and I thought succeeded, at making was that it is the government’s job to protect minority groups who are being discriminated against. In the 1800s, this was African Americans, who were a minority group that was being forced into slavery. They eventually outlawed this practice, despite the fact that a majority of people in the southern states probably supported it. My point in bringing up slavery is that I believe it is a prime example of where government sought fairness over what the majority of people in a particular place may have wanted, because the majority was blinded by their own immoral whims and ignored fairness. I simply wished to draw a parallel in saying that the government needs to protect all minority groups when fairness is in jeopardy, even if that means “the rich”. Feel free to scoff at this point, but just because someone is considered “rich” by some, doesn’t mean that it is okay for the majority to take advantage of them as a result. And that’s exactly what our tax code does.

And in general, I don’t really believe that there’s any significant comparison to make between slavery and taxes, as that was not what I was doing. However, it is an interesting point you bring up. I could kind of see someone saying that if your overall tax rate is, say, 50%, then that means that 50% of the work you could do, you do not really benefit from, since that money goes to the government. So essentially, half of your working hours are spent unpaid. Obviously, you would prefer it if your tax rate was much less, so essentially it’s against your will. And isn’t it kind of the definition of slavery to do work for no pay against your will? A person who pays 50% taxes surely does not benefit from this entire (and frankly probably very little of the) amount that he pays to the government in the services that the government provides. Again, I am not claiming taxes = slavery, but I could an argument being made there, or at the very least maybe it’s not so “ludicrous” as you think.

Now let me get to your second argument so I can explain my logic better. I never meant for it to be a premise that people who earn higher wages necessarily work harder than those who earn lower wages. That was an unfortunate result of the analogy I created. So I apologize for being careless in its creation. I should work on making my examples more rigorous, and that’s what I’ll do in the re-created versions I explain here:

You’ve still got two twins, but let’s start their story a little earlier in middle school. In 6th grade, their parents begin giving them an allowance of $20 per week. (I know, not bad!) Kid #1 decides to take that $20 and use it for weekly trumpet lessons. Kid #2 uses it for things like going to the movies or video games. As a result, Kid #1 becomes a very good trumpet player by the time he reaches high school, because he has been taking lessons and practicing very hard while his brother is at the movies or playing video games. Their sophomore year of high school, they both decide to get jobs. Kid #1 uses the skills he’s learned at trumpet, and begins giving trumpet lessons to middle school kids, making $20 per hour. Kid #2 mows lawns, very hard, grueling work, but only learns $10 per hour. Their Marxist parents, however, don’t think that this is fair. So every week, they take $5 of Kid #1′s hourly wage and give it to Kid #2, so that they have equal wages. Welcome to socialism.

Does your intuition tell you that this situation is fair? If it does, then you’ve got a different intuition than I do. Now what you’ll probably first try to respond with is something like, “Yeah, but low wage earners don’t squander their time playing video games and going to movies, resulting in their low wage jobs.” And I think that’s sometimes true, but is it generally the case? I mean, is it really that difficult to end up with a job that places you with a livable income? Public school is free. I went to public school. Then, yes, I went to an expensive private college. But it is because I worked hard in high school that I got financial aid that helped me. I also took on a great number of student loans to get me through. I’m not saying that my parents didn’t help me at times along the way, but I’m not sure that it would have mattered. Even without their help, I could have gone to a less expensive college, and still ended up doing pretty well in life. And I would further argue that if you’re the kind of person that comes into the world with fewer advantages, you still have the opportunities you need to be successful in life. Again, your education is free through high school. Then if you come from a low income, or minority household, there are copious scholarships and financial aid available for you to utilize. Few colleges (even expensive ones) don’t offer need-based financial aid these days, and there are other programs in place, such as affirmative action, which give the less advantaged even greater opportunity.

Think about the people you went to high school with who are in the lower income jobs, wouldn’t you agree that many of them just didn’t do what they needed to in order for them to be elsewhere? They didn’t work hard in high school, they glided by. And that’s fine — there’s nothing wrong with that, it’s a personal choice. But for those who put in the hard work, got into the top 10% of their class and went to good colleges, how does it make sense to redistribute their income to those who did not? Again, I’m not saying that they aren’t working hard now, but what I am saying is that the majority of people who are in high wage jobs have worked very hard to get where they are too, so why is it okay to redistribute their income, especially so substantially?

Now let me re-create the example to make it even more convincing. And I’ll be totally amazed if this one doesn’t seem morally repugnant to you. Let’s return to our twins. In middle school they both squandered their allowances, so they both end up with the $10 per hour jobs in high school. In fact, they both mow lawns. But Kid #1 decides to work 20 per week, because he wants more income because he wants to go to a private college, and is trying to save to get there. Kid #2, however, wants to go to state college, which with his grades, he can go to essentially for free; thus, he only works 10 hours per week. As a result, Kid #1′s income is $200 per week, while Kid #2 makes only $100. Again, their egalitarian parents intervene and decide to take $50 of what Kid #1 makes and give it to Kid #2, making their incomes equal. Is this okay?

I kind of love this example, because it shows just how ludicrous it is to have a tax code based on income. Imagine you have someone with a “lower income” wage rate who works 80 hours per week to provide for his family. He works 40 hours at one job and another 40 at another. He wants his kids to go to college, because he never had the chance to. So instead of $25,000 per year, he makes $50,000. Yet, one of his peers, at a similar job just works the usual 40, because he doesn’t see the need for extra income, and just makes $25,000. And to make this a bit more real, let’s say they each have wives that work 40 hours per week, and make $25,000 per year. So couple #1 has a total income of $75,000 per year, while couple #2 has an income of $50,000. According to the 2008 federal tax brackets, couple #1 has to pay at a rate of 25%, while couple #2 has to pay at a rate of 15%. Please, explain to me how this is right, because I don’t understand it.

The bottom line is that our tax code is completely absurd. That the U.S. manages to call itself a capitalistic nation is almost laughable, and will become far more laughable if Barack Obama becomes president. A fascinating recent article in the Wall Street Journal really broke this down (thanks for posting it Lowell). As this article shows, right now the top 1% of taxpayers pays 40% of all income taxes, and the top 10% of tax payers (those who earn more than $108,904) pay 71%. And remember, that’s before Barack Obama gets his hands on the tax code. The bottom 50% of tax payers pays only 3% of income taxes. And yet, Obama and others like you would probably have them pay less and “the rich” pay more. What this article also points out is that income share has little to do with tax share either. As the bottom 50% have an income share of 12% and still only pay 3% of the taxes, while the top 25% have 68% of income share but pay 86% of taxes. I don’t want to get into a capitalism vs socialism argument here, because that’s a much longer, and different, discussion. And I’ll leave that to others like Ayn Rand anyway — just pick up a copy of “Atlas Shrugged”. But what we’ve got here, in the U.S. is a society with a tax code that, without question, borders on socialism, and if Barack Obama has his way, it will be hard to call it anything else.

But I digress, kind of. So let’s get back to my previous entry. I appreciate that you at least saw merit in my “cost of living” based on location argument. You say that it would be difficult to implement, but I’m not so sure. I mean our tax code is already endlessly complicated, so why would it be difficult to create brackets based on zip code? Obviously there are cost of living statistics based on zip code, so all you’d need is a very simple formula to move all tax brackets per zip code in sync based on that. I noticed, however, that you didn’t touch my penultimate paragraph, which provided a “government cost” based argument of why it’s unfair for the rich to pay greater taxes. But I don’t blame you, because I’m not sure it’s possible to argue that one.

In any case, I hope that this reprise is helpful. Again, I was seeking to merely appeal to the principle of fairness and try to ask how it could be fair to discriminate against higher wage earners, who are a minority group, mind you, just because people believe “they can afford it”. And I do apologize for the example in my prior entry if it was misleading in doing so. I do not mean to say that low wage earners necessarily work less hard to earn their money. Though, I would argue that high wage earners also have had to very work harder over the years to get where they are. After all, you had to endure at least 4-6 years of post-secondary education and work relentlessly to become a CEO of a major corporation. And while being a CEO pays well, if anything goes wrong at your corporation, you’re on the hook. If you’re flipping burgers at McDonalds, you hardly have the same job-related stress in your life, and certainly an easier path to get there. And that’s why a capitalist economy pays a CEO more than a burger flipper at McDonald’s. I suppose this is what I was attempting (admittedly poorly) trying to get at with my original example, though I think the two new examples I created in this reprise show my point even better. In any case, thanks again — I always enjoy challenges to my writing.

If you have read much / any of my politically driven essays, it doesn’t take Sherlock Holmes to figure out that I am probably not voting for Barack Obama in the next presidential election. I disagree with Obama on virtually every issue, so it isn’t even worth explaining any specifics on why I don’t like him. So even if he did have enough experience to be president, his views would clearly steer me away. As a result, I am looking for a good alternative.

The obvious choice for someone with my beliefs might be John McCain. After all, he’s the only other candidate that has any actual shot at winning. Yet, I have never been much of a John McCain fan. Frankly, he’s far too liberal for my liking, and is entirely too interested in trying to compromise with the Democrats to ensure that any decent legislation is actually passed. His history in the Senate shows this pretty clearly. He is actually extremely different from President Bush on this aspect, as I can’t remember Bush ever trying to compromise, or have a discussion with those on the other side of the aisle to come up with a mutually acceptable outcome.

Now don’t get me wrong: I’m not a big Bush fan either. There are some things he has done relatively well (such as the Supreme Court appointments) and some things which he has failed miserably at (such as speaking publicly without sounding retarded), and overall I would have definitely liked to see someone a little more competent, more intelligent, and stronger of a leader in that position. Yet, the few areas in which I actually liked Bush’s policies, I tend to dislike McCain’s beliefs. And there are precious few where McCain differentiates himself from Bush’s bad policies that I find his any better. The possibly slim exception to this has to do with McCain’s history of trying (mostly unsuccessfully, obviously) to cut congressional spending. Unfortunately, I doubt he’d have much more success at this as president either. I have a feeling that getting politicians to cut spending is kind of like trying to get Harvard Alumni to stop wearing argyle: it’s part of their very essence, so it’ll never happen.

So I had been really looking forward to seeing who McCain would choose as his running mate. Although historically most Vice Presidents have been relatively irrelevant to their respective administration (read: Al Gore), recent history has proven that they could actually be quite influential (read: Dick Cheney). Not to mention the fact that McCain is no spring chicken, and if anything were to happen to him, whoever he chooses could actually end up president. So upon hearing that Mitt Romney may be the front runner, I was very disturbed.

Let me be clear: Mitt Romney is probably my least favorite politician who calls himself a Republican, I mean anywhere at any level. He is slimy, untrustworthy, and at the heart of it, not a Republican at all. If the McCain camp wants to ensure their swift and monumental defeat, then they should pick Mitt Romney. If they want to win, then they should pick virtually anyone else. Heck, I’d rather them pick Joe Lieberman, who is basically a moderate Democrat, than see them pick Romney. Let me explain a few reasons why.

First, as I’ve already alluded to, Romney is not conservative. In order to win this election, Republicans have the thankless task of trying to get their constituents excited enough to come out and vote. If the Obama camp is good at anything, it’s riling up its troops. Liberals are very excited about Obama. And they should be — there hasn’t been a candidate so liberal with a real chance to win the presidency probably since Ted Kennedy attempted to capture the nomination in 1980. And while McCain might have multiple times the experience of Obama, Obama has multiple times the charisma of McCain. Romney, however, is not going to get anyone excited either. He’s the most lukewarm, plastic, uncharismatic candidate out there. He’s far too liberal to get conservatives excited, and he’s not interesting enough to get any moderates excited. He does nothing to invigorate McCain’s somewhat anemic campaign. In order to bring some life to his campaign, McCain must select a running mate who satisfies conservatives who are already wary of him, and also has the charisma and personal charm to lure some moderates over to their side. No one in their right mind could think that Romney is that guy.

Second, and I really hate to have to make this point, Romeny is a Mormon. Now listen: few people are more for religious tolerance than I am. But in terms of getting elected, McCain cannot want a Mormon on his ticket. This will alienate him from his voting base, namely Christians. Again, having a Mormon on the ticket is certainly not going to get any of them excited. And what’s worse is that it could hurt him in South Florida. There has been some fascinating press recently concerning the Jewish voters in South Florida shying away from Obama, despite the fact that they’ve been traditionally Democratic voters. They don’t trust Obama on security or protecting Israel. Clearly, having a Mormon on the ticket will just push them back into the Democrat’s camp. Obviously the two most important states in this election, as in the elections over the past 12 years or so, are Florida and Ohio. Between the Jewish voters in Florida and the Christian voters in Ohio, McCain can’t afford to alienate either group by having a Mormon on the ticket. Do I think that he being a Mormon would affect his ability to competently serve as vice president? Of course not, but we’re not talking about what I think right now — many people have a problem with the Mormon church, and whether that’s right or wrong is irrelevant.

Next, Romeny is just slimy. He reminds me of a typical politician with no real core beliefs that is willing to conform to whatever the people he is talking to seem to want at the time. This was abundantly apparent in the primaries. His views on abortion, taxes, and many other issues were all in question. What he claimed to stand for generally conflicted with his actual track record as governor of Massachusetts. But he says he’s changed? Please forgive me if I am unconvinced. Voters like candidates who clearly stand for something and have maintained that consistency. It’s a major positive for their character. That very quality is probably what got Bush elected in 2004, for better or for worse.

Lastly, and possibly most importantly, Romney is not going to get the southern voters excited. A while back I wrote an essay explaining who the Democrats should choose as their candidate if they wanted to ensure a win. It wasn’t Obama. I stand by that entry, but now I could apply this point to their campaign as well, in terms of their search for a running mate: They should pick someone who the South can identify with. Even if Romney were a great candidate, he’s a Yankee. He’s not going to get voters excited in the Southern states. Through this reasoning, I recommended John Edwards as the best Democratic nominee to win, because whoever wins needs the South. I would now recommend him for Obama’s running mate, and if he is smart, that’s who he’ll pick. If he’s not smart, he’ll pick Hilary, which will do him absolutely no good, because (despite the silliness of their supposed differences during the primary process) they are virtually identical on virtually every issue and geographically both Yankees from big cities (Chicago/New York). On this same line of reasoning, the Republicans should pick someone like Fred Thompson or even Charlie Crist from Florida. The South isn’t going to want to vote for a Mormon from Massachusetts.

What it all boils down to is that the candidate who wins needs to get people excited about his campaign. And one way to do that is through who he picks as a running mate. Not only is the running mate a key tool in the campaigning process itself, but his selection also shows the kind of person that the presidential nominee would associate himself with throughout his other appointments (such as his cabinet) if elected. So it’s an important signal to voters. Is Romney really the signal that McCain wants to send out to people? I certainly hope not, because I can’t think of a better way to ensure an Obama win. After all, not even I will bother voting for McCain if Romney is his running mate.

With the presidential election in full swing, and the candidates finally whittled down to approximately two, the campaign promises/lies have begun to flow out of the candidates mouths like water from a fire hydrant. While the candidates from each party will promise a number of things, there is really only one thing that we can know for certain: Obama will raise taxes for the “rich.”

He may raise them for the middle class too (though he claims he won’t). McCain may raise taxes on the “rich” too. It’s hard to tell how they’ll really select Supreme Court judges, handle the troops in Iraq, or handle homeland security. But at least we can feel comfort in knowing that, no matter what other promises are fulfilled or ignored, if Obama wins, he will raise taxes on the “rich”.

Of course that isn’t much comfort for many of us. After all, Obama’s definition of “rich” is rather broad. He defines “rich” as earning more than $200,000 per year. I would tend to scoff at this definition, as someone making $200,000 is hardly partying during the summer at his 2nd home in the Hamptons where he goes each weekend by his private jet. Indeed, while this income might seem somewhat “rich” if living in rural Iowa, for someone living in a major metropolitan area such as San Francisco or New York City, this is barely above the minimum the cost of living. But I’ll get to this objection more later.

Obama claims that the tax will only effect the top 1% of wage earners, and while I don’t know much about income demographics, I find that somewhat surprising, given how many people are living in major metropolitan areas and are making at least this amount. But he believes that by raising taxes on this small number of people, he will be able to decrease taxes for people who make less than $50,000 per year.

Exactly how much Obama intends to raise taxes is complicated, because there are a number of different taxes he wants to increase. He wants a drastic increase in the capital gains and dividend taxes. He is also for increasing the amount of income social security tax is paid on (i.e. more than just your first $93k of income). And then there’s the overall federal income tax rate, which he also wants to increase for the “rich”. In essence, he intends to raise taxes on the “rich” any way he can.

And of course, this won’t hurt his votes very much. A large number, and probably a majority, of the “rich”, particularly those who earned their money through their own hard work, and thus, do not feel shameful for the money they have, are republicans. He’s not getting those votes anyway. Most of the remainder are the liberal rich, who apparently don’t care to give to charity themselves and would rather the government do it for them through taxes. And for any others, this is just some small fraction of 1% (according to his statistics). Surely he can afford to lose those voters while pleasing the other 99%, who he can claim will pay the same or less taxes. Isn’t politics great?

But surely politicians shouldn’t just take action because it only adversely effects a small percentage of people. After all, if that was an okay way to govern, then slavery would still be legal. Yet, this seems to be exactly what Obama is doing: he is alienating a very small minority of Americans – in this case those who he considers “rich,” instead of those who were black, like with slavery. Imagine if he said the same about some other minority group – imagine if he were to say, “Well, there aren’t that many Mormons in the nation. Let’s just raise their taxes and lower it for everyone else.” Clearly people would be outraged. But since it’s the “rich,” very few Americans, particularly very few liberals, really care.

Let me try to explain why the suggestion of his to raise taxes on the “rich” and lower those of the poor is so morally repugnant. Imagine an analogy, if you will, and see if your intuition provides the same conclusion. There are two twins. They are teenagers. One chooses to fold t-shirts at the Gap for 10 hours per week after school and earns $5 per hour. Another chooses to work a bit harder and mow lawns after school and earns $10 per hour for his 10 hours. Since working at the Gap is a pretty cushy job where you hang out in the mall all day with air conditioning and get an employee discount, it pays less than mowing lawns, which none of the kids want to do, because it involves manual labor. Thus, the second twin earns twice as much money each week as the first. Now imagine that their mother tells that second twin that he must give the first twin a portion of that money, because he earns more, and it is only fair. How would you feel about that if you were working hard, mowing lawns earning your money?

To make the example even more drastic, imagine that they both earned the same hourly wage, but that the second son worked 20 hours per week, while the first son only worked 10. And then imagine that the mother said that the second son still had to give the first son additional money in order to make things more equal, since his total wage is far more than his brother’s. Now imagine Obama as the parent, the second son as someone with an intense job that pays very well because of its intense 60-hour work weeks, and the first son a regular minimum-wage worker as a 40-hour per week waiter in a restaurant.

The analogy holds exactly as to Obama’s reality. Because the guy with the higher paying job (assuming he makes more than $200k) is going to end up paying far more taxes than the minimum wage worker, despite the fact that he worked more hours to get it. And let’s not even get into the argument of the fact that he might have gone to an expensive college to allow him to get a degree that got him the intense job, and he’s still paying back tens of thousands of dollars of college loans, while the waiter didn’t go to college at all and has no debt to pay off.

It really isn’t fair to discriminate against someone just because they make more money. Now if someone got money in an unfair manner, like stealing or cheating, then by all means, take that money away. But if you have a hard working person who takes his/her career very seriously and got to a level where s/he is considered a “high wage earner” by Mr. Obama, why is s/he being penalized?

Clearly Mr. Obama believes it okay because the higher wager earners “can afford it”. But does that really make it okay? Isn’t that a little like telling a woman who has 5 kids that she has to give one of her kids to a couple that can’t conceive because she already has plenty of kids and can afford to lose one?

But what makes this idea more ludicrous is that it doesn’t differentiate for different costs of living. If you’ve got someone living in San Francisco making $200,000 having their taxes raised so someone living in rural South Dakota making $50,000 can have his taxes lowered, that seems bizarre. The person with the $50,000 salary in South Dakota probably has approximately the same, or even a higher standard of living, because the costs are so much lower there than in San Francisco. If Obama really wants to raise taxes on high wage earners, he should at least normalize salaries based on cost of living. Otherwise, you can end up with these kinds of bizarre disparities.

Finally, is there any theoretical reason why a higher wage earner should be taxed at a higher rate than a lower wage earner? If you have two guys, one of whom makes $200k per year, and another who makes $40k per year, does it make any sense that the first would “owe” more money to the government each year than the other? Of course not. They are both individual U.S. citizens, so each theoretically “cost” the government the same amount for the services it provides such as making roads, providing for national defense, etc. Yet, not only does the higher wage earner pay a greater nominal amount if the tax rates are based on a percentage, but the bracket system makes even that percentage higher as well!

While I object to how Mr. Obama defines the category of “rich” to begin with, I have far greater an objection to the idea of raising the taxes of higher wage earners to lower the taxes of lower wage earners. It is a bizarre suggestion, with a multitude of objections that are hard to ignore. Yet, a frighteningly large proportion of people out there actually love the idea. It’s kind of scary, not only from the standpoint of a higher wage earner, but from someone who understands economics and how such a thoroughly terrible idea can cause even greater havoc to our already fragile economy’s current state.