A Small Step for Dynamic Tax Analysis

President Bush has budgeted “an additional $513,000 for the Treasury Department’s Office of Tax Analysis to create a new division of dynamic analysis,” according to Bruce Bartlett. Ho hum.

Actually, this is a big deal. It goes to the heart of the supply-side theory of marginal tax rates that has been the intellectual foundation of the Reagan and the Bush tax cuts. And let us be clear about this.

The reason that the Reagan tax cuts of 1983 and the Bush tax cuts of 2003 have resulted in gangbuster growth is that both were focused upon broad tax rate cuts.

By contrast, Democrats still believe that the way to jumpstart the economy is with “targeted” tax cuts.

The Reagan tax cuts in 1983 lowered the top income tax rate from 70 percent to 50 percent, and the tax bill of 1986 lowered the top rate from 50 percent to 28 percent. The result? The share of taxes paid by the rich went up.

The Bush tax cuts of 2003 cut the top rate on dividends and capital gains to 15 percent. The result? The economy took off like a rocket.

But guess what? The government’s official estimate of the effects of these tax rate cuts, the so-called “scoring” of tax changes, make no allowance for the idea that people might change their behavior when tax rates are cut.

That’s what the $513,000 is all about. To advance the adoption of “dynamic” economic analysis in forecasting tax revenues.

The first attempt to cut tax rates occurred in 1978 when the Steiger Amendment cut the top capital gains rate to 25 percent.
Writes Bartlett:

After Congress cut the capital-gains tax in 1978, the Treasury Department studied the effect and concluded the tax cut had indeed raised federal revenue. There was also a huge jump in venture capital financing that many economists credit for starting the high-tech revolution of the last 25 years.

Tax experts eventually determined that there was a reflow effect of about 35 percent. That is, if you reduced a tax rate and crudely assumed that the revenue would be reduced by the same amount, you would be wrong. The loss in revenue would be 35 percent less than you estimated. Equally, if you raised taxes, the increased take would be about 35 percent less than you expected.

The new office of dynamic analysis will be tasked with getting more accurate revenue estimates after tax rate changes. That can’t happen soon enough.

Hugh Hewitt Demolishes Jonathan Chait

On Monday, talk show host Hugh Hewitt (perm) did another of his in-depth interviews of an MSM chappie, this time Jonathan Chait, who had run a piece in the LA Times denying that Hillary Clinton was angry. (He’s probably right. She isn’t angry; she just sounds angry.)

But Hewitt did another forensic interview job, as he did with Joel Stein recently. At the end of the interview, Chait sounded like a insufferably pompous MSM liberal. Which is what he is.

Hugh Hewitt is emerging as one of the best interviewers in the United States. And you can see why. He is a lawyer, and when he interviews he sounds just like a lawyer examining an unfriendly witness. First he sets his witness up, and then he sets about exposing him as uncooperative and evasive. Not the sort of witness that a jury of American voters would want to believe.

Hewitt understands, instinctively, that there are certain things that an MSM liberal doesn’t want to admit. Number One is that the news media puts out a biased news product. Number Two is that Democrats are not noble and lofty, but angry and ruthless.

Think about it. The MSM talks a lot about “objective” news reporters. They have to. Given that the MSM folk are overwhelmingly liberal, they have to insist that they can put all that aside and deliver an unbiased product. If they admitted they had a problem, then they would have to do something about it. They might have to hire conservatives.

The rise of the new media has put them in a box. The new media is frankly partisan. Conservative pundits are frankly conservative, and liberal pundits are frankly liberal. But the news product of the MSM is slowly getting unmasked as partisan, especially as the advance of conservative speech in the media and the difficulties of the Democrats makes the liberal MSMers more and more protective of their liberal friends.

Thus when Jonathan Chait comes on Hugh Hewitt’s radio show he is trapped into defending the indefensible. He has to admit that the MSMers are all liberal, but insists that their news product is moderate. Hillary Clinton is not angry, but Bush Haters like himself are angry, well sort of. They are angry, but in a formal, rational way, because they rationally disapprove of the president’s policies.

MSMers have an image of themselves as being superior, rational, above the lower orders. But actually, of course, they are just as committed as any other participant in the political square.

Hugh Hewitt understands all this, and so, with his lawyerly wiles, knows how to examine his liberal interview subjects and mercilessly discredit them in the eyes of the jury.

What Do Muslims Really Think?

President Bush has implemented a policy of bringing democracy to the Middle East. But, even if his policy succeeds in its immediate aim, what will be the outcome? What will the Muslim peoples choose, and who will they choose to lead them?

Two articles bring an interesting answer to this question. Amir Taheri identifies the Islamists as descended from the Salafi movement, which he describes as a faux-religious movement, Neo-Islam, that is not religious but political and totalitarian. It was all started in the 19th century by

the Persian adventurer Jamaleddin Assadabadi, who disguised himself as an Afghan to hide his Shiite origin and set out to build a career in the mostly Sunni land of Egypt. Although a Freemason, Jamal (who dubbed himself Sayyed Gamal) concluded that the only way to win power among Muslims was by appealing to their religious sentiments. So he transformed himself into an Islamic scholar, grew an impressive beard and donned a huge black turban to underline his claim of being a descendant of the Prophet...

[His partner Mirza Malkam Khan] had a slogan of unrivaled cynicism: "Tell the Muslims something is in the Koran, and they will die for you."

Their direct political descendents are the Muslim Brotherhood, the “semi-literate mullah named Ruhallah Khomeini,” and the Afghan Taliban. To Taheri, this movement is first and foremost political, and uses religious imagery purely as a way to get support and grab power.

Suppose President Bush achieves regime change in Iran. What would the Iranian people do? Jason Lee Steorts conducts an interview with Iranian dissident Amir Abbas Fakhravar, author of the “anti-regime book This Place Is Not a Ditch,” to find out. The key question is whether sanctions or military action would strengthen the Iranian regime. Says Fakhravar:

Please don’t ever say that the people of Iran are going to have resentment or anger in their hearts toward America or Western countries for doing this. [On] Saturday [February 4]... the people here found out that Iran was going before the [U.N.] Security Council, and there was celebration all over Tehran. I heard from my own family, the families of my friends, that it was one of the busiest days of the year for the pastry shops — that people were buying pastries and cookies and candies in the streets of Tehran and going to each other to celebrate.

Well, he’s a dissident. He would say that. What about support from the US government?

I cannot mention who, but I’m definitely communicating with some people in the U.S. government and have established contacts with people in the Bush administration.

So the War on Terror, the war against the Islamists, the contest for the future, continues.

A Moderate Muslim Speaks. And How

Have you been waiting for a moderate Muslim to speak out on the Cartoon Wars? Look no further. She has spoken and she is, appropriately, the daughter of a “martyr.”

Writer Nonie Darwish is daughter of a man who was

sent by Egypt’s President, Gamal Abdel Nasser, to head the Egyptian military intelligence in Gaza and the Sinai where he founded the Palestinian Fedayeen, or "armed resistance". They made cross-border attacks into Israel, killing 400 Israelis and wounding more than 900 others.

In the London Daily Telegraph she writes that her father was killed in Fedayeen operations and “was hailed by Nasser as a national hero and was considered a shaheed, or martyr.”

In school in Gaza, I learned hate, vengeance and retaliation. Peace was never an option, as it was considered a sign of defeat and weakness. At school we sang songs with verses calling Jews "dogs" (in Arab culture, dogs are considered unclean)...
Sadly, the way I was raised was not unique. Hundreds of millions of other Muslims also have been raised with the same hatred of the West and Israel as a way to distract from the failings of their leaders. Things have not changed since I was a little girl in the 1950s.

But here is the kicker, the insight that explains the whole Cartoon War kerfuffle.

Indeed, with Denmark set to assume the rotating presidency of the UN Security Council, the flames of the cartoon controversy have been fanned by Iran and Syria. This is critical since the International Atomic Energy Agency is expected to refer Iran to the Security Council and demand sanctions. At the same time, Syria is under scrutiny for its actions in Lebanon. Both Iran and Syria cynically want to embarrass the Danes to achieve their dangerous goals.

No kidding. Thanks, MSM, for the wall-to-wall coverage on this interesting concept.

Go ahead. Read the whole thing.

Can Compassionate Conservatism Win in Britain?

George W. Bush ran for president in 2000 as a “compassionate conservative.” Annoying to conservatives, his campaign was an attempt to tackle the reality that most people do not think of the welfare state as a bureaucratic government monopoly but as society’s compassionate attempt to help the less fortunate.

Now David Cameron, new leader of Britain’s Conservative Party, is trying the same approach. He is dealing with the reality that, however clumsy and bureaucratic and monopolistic Britain’s government health service and government schools may be, people still think of them as “their” schools and “their” National Health Service.

In a speech to the British think tank Demos Cameron has laid out his strategy in broad terms. He calls for the revival of “civil society” between the two extremes of government and the individual. And so he and his colleagues are working out policy

to establish clear borders of responsibility, by working out what is best done by the state, what is best done by civil society and what is best done by the individual.
But, in seeking that balance, we start with an instinctive desire to put more trust in civil society and in the individual, rather than in the bureaucratic apparatus of the state.

So he is clearly attempting to define the Labour Party as the party of clunking and insensitive bureaucratic apparatus.

In the London Spectator Matthew Parris is trying to think forward from Cameron’s speech to the actual battle for the hearts and minds of the British people. What will happen when the Labour Party starts to talk about “Tory cuts” in welfare state provision? Civil society is all very well when there is no alternative. In Ethiopia there is no welfare state. That means that civil society in the form of

family and village are all a needy Ethiopian has to turn to, and family and village know it.

That is why Brownites [supporters of Labour leader Gordon Brown] suspect that a Tory party which argues for a bigger role for civil society may secretly contemplate cutting state welfare. This is what Labour will argue. The Conservatives need an answer.

The answer probably is that conservatives need to make a new argument, an argument they have up to now been afraid to make, that state welfare is not compassionate and kind, but cruel and oppressive. We need to argue, and convince the voters throughout the Anglosphere, that the government welfare state is not a nice cuddly thing, but the proximate cause of all the wrongs of society, from angry young gangbangers to healthy middle-aged people drawing government disability benefits and to senior citizens cruelly dependent upon the state for their welfare in their old age.

Until we can make that argument, and persuade the political center of our argument (and let us be frank here, “political center” means non-political middle-class mothers), then the “cuts” argument will continue to work for the parties of the left.

Maybe David Cameron is the conservative who will figure out how to cut this Gordian Knot.

Low Fat is Out -- Government Study

In the largest study ever conducted into the efficacy of low-fat
dieting the result is finally out. No difference. As Gina Kolata writes in The New York Times:

The largest study ever to ask whether a low-fat diet reduces the risk of getting cancer or heart disease has found that the diet has no effect.

The Washington Post agrees.

Low-fat diets do not protect women against heart attacks, strokes, breast cancer or colon cancer, a major study has found, contradicting what had once been promoted as one of the cornerstones of a healthy lifestyle.

OK. So now what? Do we shut down the whole government enterprise that advises us about our eating? Do we stop the legal assault on fast food?
The biggest question of all is, do women now obsess about something else? For over a generation we have encouraged women to think that they can control their weight (i.e., attractiveness) by fiddling with the foods that they eat. Now we learn that the big deal, the low-fat diet, does not have any effect on health. Not really. Not so it would make a significant difference to a woman’s life.

In fact, the likelihood is that low-fat dieting actually has a negative effect on a woman’s life and her family’s life.

Women obsess about health issues for a very good reason. Health is related to survival and women are interested in anything that improves survival for their loved ones. That is why, if you listen to the conversation of two women friends out for a walk, the chances are that they are talking about health issues.

But if women have been putting energy into low-fat dieting and low-fat dieting has no effect on health then they have been wasting their energy. They have been doing the familial equivalent of leaf raking.

The New York Times is not yet ready to throw in the towel on dieting.

The results, the study investigators agreed, do not justify recommending low-fat diets to the public to reduce their heart disease and cancer risk. Given the lack of benefit found in the study, many medical researchers said that the best dietary advice, for now, was to follow federal guidelines for healthy eating, with less saturated and trans fats, more grains, and more fruits and vegetables.

And the editorialists at the Times agree:

Meanwhile, experts in nutrition and chronic diseases have moved on to a new consensus: it is not the total fat but the kind of fat you eat that is important. Many groups recommend that people cut their intake of "bad" fats, like saturated fats and trans fats, and increase their intake of "good" fats, like those found in vegetable and fish oils.

But before we give such unsubstantiated advice, and encourage women to put enormous energy into feeding their families “less saturated and trans fats, more grains, and more fruits and vegetables,” shouldn’t we do a study?

Could it be that food is food and that, if we just relax and enjoy it, we’ll live just as long as the obsessive dieter next door? As the Times says, by the time any long-term study on “good” and “bad” fats gets done, the “nutrition experts might have moved on to yet another approach.”

Go Ahead Democrats. Insult the President Why Don't You

Here’s how the Washington Post covered the insults to President Bush at the Coretta Scott King funeral.

At one point, the Rev. Joseph E. Lowery, a former head of the Southern Christian Leadership Conference (SCLC), the group Martin Luther King Jr. helped found, made a reference to not finding weapons of mass destruction in Iraq. The well-heeled, mostly black crowd erupted in a standing ovation.

But at the conservative Washington Times things looked a little different. Of President Carter, not mentioned in the Washington Post article, reporter Joseph Curl wrote:

Halfway through the service, former President Jimmy Carter scolded Mr. Bush for his terror-surveillance program... Mr. Carter later said Hurricane Katrina was a clear sign that racism is still alive in America. Several black leaders have blamed the president for what they consider an insufficient federal response.

And about Joseph Lowery, he wrote:

The Rev. Joseph Lowery, co-founder of the Southern Christian Leadership Conference and an outspoken civil rights leader, during his speech about Mrs. King ripped into Mr. Bush... “We know now that there were no weapons of mass destruction over there... [T]here are weapons of misdirection right down here.”

Real nice, isn’t it, to insult the President of the United States right to his face.

And you wonder: Did the Washington Post’s light touch on the insults issue from embarrassment over the graceless behavior of Democratic speakers, or did they not even notice the outrage?

This sort of behavior puts the lie to the gospel of political correctness, the doctrine that we should not use speech that hurts, that we should be sanctioned for using “hate speech.”

If we didn’t already know, we ought to know by now. It’s all a political ploy, a trick to deny conservatives their constitutional right to speech. It is all about licensing left-wing speech, however racist, however sexist, however it plays the class warfare card.

What Democrats don’t seem to understand, living as they do in their liberal bubble, is just how clear a message this sort of thing sends to people who aren’t fully committed liberal blue-state Democrats.

The first rule of politics is: Don’t make unnecessary enemies. Especially don’t make enemies of decent middle-class Americans.