A new front has opened in class warfare

The Biden Administration is very busy. It’s hard to keep up. Once upon a time – in previous presidencies – there was an outrage of the month. The pace quickened and it was an outrage of the week, then the day. Now it is the outrage of the hour.

Sometimes it’s difficult to focus on one particular egregious policy or action, there are so many from which to choose. But two recent reports stand out. One threatens to upend the dynamic that drives American economic progress. The second stands out as a slap in the face to all who pay taxes and want to have faith in the judicial system. (I will deal with that in the next post.)

President Biden has “expressed support” for an annual tax on the unrealized capital gains of “the wealthy.” That probably sounds swell to a lot of people who have been taught to despise the wealthy (but not the wealth).  But there’s a huge problem here, as Elizabeth Dellinger of Fisher Investments explains:

… economists from the Office for Management and Budget (OMB) see it differently, apparently. Their report redefined income as the increase in wealth from one year to the next—a bizarre methodology that introduces a lot of oddities, in my view. This would be a mere academic curiosity if Congressional Democrats weren’t jawboning about taxing wealthy individuals’ unrealized capital gains as they scramble to rewrite the reconciliation budget bill.

And:

Much of the current push stems from the notion that wealthy people aren’t paying their “fair share,” which the OMB’s analysis aimed to demonstrate. It estimated “the average Federal individual income tax rate paid by America’s 400 wealthiest families, using a relatively comprehensive measure of their income that includes income from unsold stock.” (Italics mine.)

Thing is, these families are not sitting on mountains of gold coins like Scrooge McDuck. Their wealth is predominantly assets—illiquid (businesses, art) and liquid (stocks, bonds). Increases to that wealth exist on paper only. The current proposal to tax unrealized gains would include real estate, which is also quite illiquid—you can’t sell it in a minute and expect to get fair value. Nor is there a way of tracking its market value day by day. Like all illiquid assets, rising property values are one step away from imaginary.

What happens if this new tax becomes law?

First, lawsuits. Not all billionaires have under-the-table sweetheart deals with the administration, and they aren’t going to take a full-frontal assault on their wealth without fighting back. Nor should they. Leftist hopes to destroy American capitalism could be dashed against the rocks of the Constitution, but the damage to the economy would linger.

Second, changes in behavior. The uber-wealthy are smart and they employ smart people to help them cope with such insanity. They may expatriate to less greedy countries, taking their wealth – not to mention their initiative and the jobs their wealth provides – to greener pastures. The loser in this will be America. Very few jobs are created by people on food stamps. Unemployment will rise; businesses and factories will close. Few will want to invest in a market that could bring upon you catastrophic taxes.

Third, at first the law would be for the billionaire class. It would not stay that way, especially if revenues fall below expectations. Those who would grow government will not be satisfied until these taxes on “paper wealth” are extended downward. Remember your history: the original federal income tax was capped at 7 percent for those considered uber wealthy in 1913. Oh, those were the days!

Ms. Dellinger explains that

… there are two simple reasons capital gains taxes have preferred rates. One is incentivizing long-term investment, which drives job creation. The other is to account for inflation, which can offset a large chunk of long-term returns.

Inflation, which is rocketing now, is the best friend of the socialist mastermind. It provides a never-ending opportunity to “do something,” whether it is instituting new, expensive programs that dictate what people can and cannot do, or increases in taxation when “paper wealth” rises because of inflation.

You see, inflation is not a defect in the current economic situation, it is a feature. But only if you want bigger government and don’t give a damn about capital markets, free enterprise or freedom itself.

There is already too much money (much of it created digitally) chasing too few goods (some of it waiting offshore to be unloaded) which means prices rise. I expect soon to hear calls for wage and price controls, which will solve nothing.

When markets take a downturn, as they will, and the unrealized gains turn into unrealized losses, will the government offer tax credits or rebates? Hell, no! The flow from the private sector to the government is one-way only.

Understand, punishment for the rich will only punish everyone. Whether there are enough intelligent people left to comprehend this, who knows? Whether there are enough men and women in Congress with the common sense and courage to say no, we shall soon see.

I will stay a little more on the lighter side today, but not much. This is my Autumn 2021 list of pet peeves that challenge my desire to promote peace and harmony in the world. To paraphrase Michael Stipe, “That’s me in the Tundra, losing my religion.”

Much of what is wrong with present-day America could be repaired with a bit more compassion, enhanced concern for our neighbors, and a return to basic rules of etiquette and manners. Not everything is left or right; some of it is consideration, or the lack of it. Here are five topics which, if corrected, would be a good start:

Roadside Litter.  Actually, any litter but especially the garbage thrown by thoughtless motorists.  I thought we had sufficiently educated ourselves “back in the day” but apparently not.  There is a geographical component to this unsightliness. Drive through most of Kansas and Missouri and you rarely see anything except clean highways, streets and yards. Not so much Oklahoma and Arkansas. People often chide me for trash in my back seat, where it awaits proper disposal. I don’t care. We need to have pride in our cities, towns and states.

Left Lane Lurkers.  These are drivers who either didn’t pay attention in Driver’s Ed, or they have their left and right confused. Despite frequent signs in many places that advise slower traffic to keep to the right (“keep right except to pass” is an alternative), they just don’t get it. Until, that is, you pass them on the right. Then that’s when they want to move over to your lane.

The Turn-Signal Challenged.  I was taught that you signal a turn every time you prepare to turn or change lanes. Do it often enough, it becomes second nature, you don’t have to think about it.  Every day I encounter people who apparently refuse to use their turn signals. It comes off as inconsiderate, and it’s often dangerous. Definitely not cool. If you’re too lazy to engage signals, then heaven help you if you have to stop suddenly and need your brakes. That takes real effort.

The Supermarket Conversationalists.  Pushing carts, they meet in an aisle, engage in conversation, and callously ignore all others who are trying to get through from either wide. They often glare at you if you attempt to get their attention. I’m all for face-to-face communication, but there are proper times and places. Take your talk elsewhere, people!

Drive-Through Dysfunctionality. People use drive-through lanes at restaurants to save time, or at least they used to.  Nowadays, I see people chatting on their phones, texting or social media-cavorting, paying little attention to the vehicle ahead of them, or showing any concern for those still waiting to order. There may be fifteen cars behind them, but they will not move until they are finished. This has to be frustrating to the food-service people who are trying to keep the lines moving. It sure is for those waiting behind them. For the love of all that is holy, develop some situational awareness!

When you can’t defend your position, silence the opposition with threats

The federal government is weaponizing the Patriot Act against public school parents. Not all parents, just the ones who are conservative and raise their voices at school board meetings against “progressive” – read that way left of center – studies that are seen as introducing problematic topics to young people.

Topics like Critical Race Theory, which holds that America’s founding was racist since 1619, how the United States has always been racist, is still racist, and how racism can only be overcome with extreme reverse racism. If you are white, the students are taught, you should be ashamed of your skin color and denounce your own kind.  A lot of parents are upset because they do not believe the U.S. is racist and they don’t want their children taught to hate themselves.

There are other controversial topics: transgender policies, graphic sexual content, and the ongoing debate over whether students should attend classes without wearing masks (if they should attend in-person classes at all.)

Last week the National School Boards Association sent a plea to Attorney General Merrick Garland, demanding that he employ the Patriot Act against unruly parents who are, they contend, domestic terrorists. Garland, who once hoped to serve on the U.S. Supreme Court, seems happy to go along. He issued a sweeping memorandum calling for the FBI to coordinate with federal, state, local, territorial and tribal authorities in each [school] district to develop strategies against the threats.

Aren’t you glad Garland was denied a vote on elevation to the Court?

I reported on school board meetings for years. Most were boring as hell, but occasionally there were raised voices. One thing I know to be true, school boards are not fond of hearing from the people who send their children to be educated, or their tax dollars to pay for it. Most school board members across the country are good people who ran because they thought they could do some good. Generally, they serve for a term or two, get tired of the late night phone calls, and retire.

I doubt if the National School Boards Association truly represents the concerns of most school board members, judging by this portion of its letter to Garland:

“As these acts of malice, violence, and threats against public school officials have increased, the classification of these heinous actions could be the equivalent to a form of domestic terrorism and hate crimes,” the letter read. “Additionally, NSBA requests that such review examine appropriate enforceable actions against these crimes and acts of violence under the Gun-Free School Zones Act, the PATRIOT Act in regards to domestic terrorism, the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, the Violent Interference with Federally Protected Rights statute, the Conspiracy Against Rights statute, an Executive Order to enforce all applicable federal laws for the protection of students and public school district personnel, and any related measure.”

Boy, howdy! That’s a mouthful of potential statutes to lob at perturbed parents.

It’s also wrong. Unconstitutional at best and certain to worsen the dialogue between elected officials and their constituents. How long will it be before city councils and county commissions ask for federal protection? Will we see the deployment of national guard against regular citizens who are exercising their First Amendment rights?

You have to wonder whether there is any action that is out of bounds for this current administration.

The US Patriot Act was enacted so that the federal government could combine intelligence and go after foreign threats more effectively. When “home-grown” terrorism reared its ugly head (in connection with foreign threats) the Patriot Act was beefed up to deal with it.

No one can pretend that the parents who are upset with Critical Race Theory are enemies of America. Hell, they are trying to preserve a traditional love and understanding of America. But they are banging heads against the prevailing zeitgeist in Washington, D.C.

As far as I can tell, there have been no acts of violence against any school board member. Threats? Oh, possibly. Lots of things are said in the heat of the moment when people are denied their right to address their elected officials. We used to realize that tempers cool, and that these are our neighbors.

The Constitution gave the federal government ZERO authority to run our public or private schools. And yet we have the federal Department of Education which parcels out billions of dollars to effectively tell local educators (and school boards) what is and isn’t important.

The Constitution did grant citizens the rights of free speech and assembly, to petition and seek the redress of grievances. Merrick Garland and, by extension, President Joe Biden, don’t mind throwing a little chill into the hearts of ordinary citizens. This is the kind of “we know better than you” garbage that the elites and the left embrace. They should be ashamed, but they are not.

Once upon a time, and not that long ago, new concepts had to prove themselves in the marketplace of ideas. If you had a controversial subject you wanted to teach, you had to back it up with facts, in an open setting.

The left can’t defend what they are pushing, because it is detrimental to the comity of our politics and the stability of our country.  So, they now resort to the threat of force and the denial of basic rights to those whom they disagree.

When I travel, if there is time, I avoid the interstates. America is so much more interesting on the smaller highways, the ones once described as “Blue Highways” by author William Least Heat Moon. Interstates are too often crowded by long-haul trucks and their 53-foot trailers (some doubles as well), so much so that one must concentrate on navigating around the traffic, the scenery if such there is, is missed.

This last trip was notable in that on both types of roadways there was a decided lack of big rig traffic. Some, to be sure, but not what I expected. At first I thought it was only my perception, or a slow day, but after 10 days of travel it became apparent that truck traffic was down. This led to research upon my return.

Another thing: I did not pick up on this at first, but after several days of eye-balling license plates it struck me that there were no Canadian vehicles.  In September, in the Mountain West, there are always Canadians.  And then I remembered that our government is blocking non-essential travel from the Great White North. To stop the spread of Covid, of course. Those hosers are well-known as super spreaders, eh?

There were plenty of Wisconsin, Minnesota, Illinois and Michigan tagged vehicles. California, Florida and Texas, naturally. We all visit the West to see the same great sites and scenery, but for different reasons. Northerners have completed their summer duties and want to catch a few more golden rays of sun before the cold arrives. Southerners head north because we are anxious for a taste of cooler weather, escaping the summer temps and humidity that linger on no matter what the calendar says.

Americans are more or less free to move about the country with few restrictions (don’t get me started on the ridiculous rules at national park buildings), but Canadians are not welcome.  Yet, on our southern border, we permit thousands of undocumented “migrants” to cross the border with little more than cursory medical evaluations (if that), then spend taxpayer funds to bus and fly these people to points unknown throughout the country where they likely will not show up for immigration court hearings. The logic escapes me, as it does most people.

Our “uninvited” guests will require social services of various kinds. Their children will need medical care and schooling. The adults will need stopgap food assistance, maybe even rent money. Yet the Canadians who cannot vacation here were ready to bring their cash, credit and debit cards and buy meals and merchandise.  How much of an economic loss this poses I cannot begin to fathom, but it is considerable.  Again, the logic is undetectable.

The lack of truck traffic is even more worrisome in that it is indicative of weakness in the supply chain. Just this week new warnings were issued from a coalition of truck drivers, airline workers and seafarers – not only for the U.S. but for other developed nations – that the transportation industry needs to be freed from Covid-related restrictions or we could face a “system collapse.” Two years of supply chain pressure are causing “buckles.” A large number of older, experienced truckers took retirement in order to ride out the pandemic shutdown. Replacements were (and are) not immediately available. Two years ago, going into the pandemic, there already existed a shortage of 60,000 drivers, according to the American Trucking Association. The number is expected to grow to 100,000 by 2023.

While trains do a lot of long-hauling, trucks are necessary for virtually all of the shorter-range deliveries. The cost of hauling goods will go up, and some commodities will be delivered to the highest bidder, because that’s how market economics works. (This too works against small business, as the big corporate giants either have their own trucking or they have the ability to outbid the competition). The cost of almost everything is rising, as anyone knows who shops. Which brings to mind the ignorant ramblings of the lead White House press secretary on Monday, who claims that businesses won’t raise prices of their taxes are increased:

White House press secretary Jen Psaki on Monday defended House Democrats’ tax plan in the face of criticism that the legislation would see taxes and consumer prices rise for many Americans. Psaki insisted President Joe Biden is committed to keeping taxes the same for anyone making less than $400,000 a year, and she called it “absurd” that companies would raise consumer prices in response to higher taxes.

“There are some … who argue that, in the past, companies have passed on these costs to consumers,” Psaki said. “We feel that that’s unfair and absurd, and the American people would not stand for that.”

Not sure (and don’t really care, or I’d look it up) where Jen Psaki received her education, but she should know that even socialists have to eventually bow to supply and demand, the inexorable market laws that cannot be regulated or legislated, and ignored at peril.

Meanwhile, if you were watching carefully and quickly, there were photos of scores of container ships parked off the eleven main ports of California, awaiting unloading. Some have been there for weeks. Over 500 containers yet to be off-loaded at Los Angeles alone. Contributing factors include shortages of dock workers, shortages of trucks to load, container ships that are several times larger than before and take extra time to unload, thus clogging the ports. It’s already a cluster and getting worse.

What are we to think? More importantly, what are we to do?

What won’t help is panic purchasing or hoarding. Better advice is figure out you’re your potential needs might be and begin small purchases of those things, having at least a month or so in reserve of those things that will keep you alive.  Any period of shortage will be met with panic buying, and that will only extend the period of shortage. (Remember the toilet paper crunch of 2020!)

Worse, however, is that this administration will likely leap into action to begin rationing or price controls, or both. In its hubris and conceit, believing that its planners actually understand markets, will screw up the marketplace. They probably will not hesitate to impose draconian restrictions on interstate commerce.

This is potentially nasty business. I would like to think that the American people are smart enough to reject command-and-control economics.  The reality is that I am less certain enough people remember that central planning has never worked very well.  Lord help us all if central planning is done on the basis of economic or racial or gender equity.

The real solution is freedom. Let the markets work and restore themselves. There will be a period of imbalance, but it will be resolved. Nothing screws up markets more than government interference. Americans should not stand for it. It is not enough to shout “F— Joe Biden” at NASCAR races and football games, as amusing (and as American) as that is. It is time for quiet, discerning talk among people of all political stripes to discover those principles and values we have in common, making plans to help one another over the hard times.

And voting overwhelmingly in 2022 to toss out the political support for the left.