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Chronicle of the Conspiracy
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!

Saturday, January 27, 2007

KUDLOW REPLAY   Here is the YouTube version of Friday's appearance, in which I get to trash the curvaceous Mr. Phillips.


Posted by Donald L. Luskin at 4:06 PM | link  

SHOULD I BE FLATTERED?   An anonymous blogger who calls himself "Calculated Risk" -- evidently a left-leaning doom-and-gloom economist -- posts a reminiscence about his blogging experiences, including this mysterious sentence:
One of the highlights for me was Don Luskin complaining I was "too polite"!
I have no idea what he's talking about...

Posted by Donald L. Luskin at 4:01 PM | link  

CUTE AND DEADLY   Our friend Irwin Chusid proudly announces the new Jim Flora website, exploring the life and work of the pathbreaking commercial artist of the 1940s and 1950s. Flora's commercial art is anything but commercial, though his best known work is for record album covers. It has a demonic energy, infused with the threat of violence, looking like it was created at the edge of madness -- "cute and deadly," Chusid calls it. Explore the site -- and don't forget to pre-order Chusid's new Flora book, The Curiously Sinister Art of Jim Flora.


Posted by Donald L. Luskin at 3:50 PM | link  


Friday, January 26, 2007

RUDY! RUDY! RUDY!   If you want to get your hopes for 2008 up a bit, read this spectacular appraisal of Rudy Giuliani's years as New York City mayor in the City Journal. Inspiring story of how he collapsed rampant crime in the city -- and how he solved the city's budget problems with spending and tax cuts.
After years of tax hikes under Dinkins, Giuliani proposed making up the city’s still-huge budget deficit entirely through spending cuts and savings. Even more audaciously, he proposed a modest tax cut to signal the business community that New York was open for business, promising more tax cuts later. “I felt it was really important the first year I was mayor to cut a tax,” Giuliani later explained. “Nobody ever cut a tax before in New York City, and that was one of the reasons I wanted to set a new precedent.”

...Although Giuliani was no tax or economic expert when he took office, he became a tax-cut true believer when he saw how the city’s economy and targeted industries perked up at his first reductions. One of his initial budgetary moves was to cut the city’s hotel tax, which during the Dinkins administration had been the highest of any major world city. When tourism rebounded, Giuliani pointed out that the city was collecting more in taxes from a lower rate. “No one ever considered tax reductions a reasonable option,” Giuliani explained. But, he added in a speech at the Ronald Reagan Library, “targeted tax reductions spur growth. That’s why we have made obtaining targeted tax reductions a priority of every budget.” In his eight years in office, Giuliani reduced or eliminated 23 taxes, including the sales tax on some clothing purchases, the tax on commercial rents everywhere outside of Manhattan’s major business districts, and various taxes on small businesses and self-employed New Yorkers.

I still resent Giuliani for his years as a US Attorney victimizing Wall Street figures like some proto-Spitzer -- but I have to admit, he was a very effective mayor, and he may be the best hope for the GOP in 2008. Thanks to my DC lawyer/lobbyist friend for the link.

Posted by Donald L. Luskin at 8:06 PM | link  

SELF-REBUTTAL?   Several readers yesterday pointed out Alex Tabarrok's devestating "picture is worth a thousand words" rebuttal to Paul Krugman:
Paul Krugman:
The tax code, [Bush] said, “unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need.”

Again, wow. No economic analysis I’m aware of says that when Peter chooses a good health plan, he raises Paul’s premiums.

Rebuttal:

But it seems that someone else beat Alex to it. The very same picture appears in Paul Krugman's own textbook Microeconomics:

Update [1/26/2007]... Economist John Seater writes,

Today's post on the Krugman's self-rebuttal is probably the best post I ever have seen on your blog. That judgment may merely reflect my particular interests, but in any case that's the way I see it. Some people seriously mentioned Krugman for a Nobel this last time around - a guy who can't bring himself to recall the basics (demand curves slope down, supply curves slope up, ...) when applying economics to the world around him. What an inspiring Nobel laureate he would be.

Posted by Donald L. Luskin at 10:09 AM | link  


Wednesday, January 24, 2007

THE NUMBERS ARE IN -- AND THEY ARE TERRIFIC   Dan Clifton at the American Shareholders Association is all over it:
The debate about the capital gains tax cut is over. When Congress passed the 15 percent reduction on capital gains all we heard from the naysayers is this will produce massive deficits. When Congress extended the 15 percent rate in 2006 we heard the same tired rhetoric - only louder. Now the new leadership want to repeal this tax cut to generate revenue to the federal government. Based on the new data they may want to reconsider whether repealing this tax cut will generate any revenue to the federal government.

Today's CBO report puts the debate to bed. We were told by the Joint Committee on Taxation (JCT) the capital gains tax cut would "cost" the Federal Treasury $5.4 billion in fiscal years 2003-2006. Thus, the initial CBO forecast (January 2004) forecasted capital gains revenue to be $42 billion in 2003, $46 billion in 2004, $52 billion in 2005, and $57 billion in 2006.

Well in what could now be considered the worst forecast in modern times we find out today capital gains tax collections were actually $51 billion in 2003, $72 billion in 2004, $97 billion in 2005, and $110 billion in 2006. For 2005 and 2006 collections nearly doubled the initial forecast.


Posted by Donald L. Luskin at 11:02 AM | link  

JOKE OF THE DAY  

Posted by Donald L. Luskin at 10:53 AM | link  


Tuesday, January 23, 2007

JUST CRAZY ENOUGH SO THAT EVEN I COULD VOTE FOR HIM!   Does the thought of John McCain -- a man who voted against the 2003 tax cuts -- as the 2008 GOP presidential nominee make you as sick as it does me? Does Mitt Romney make you worry about there being three 14-year old slave brides in the White House? Still can't forgive Rudolph Giuliani for what he did to Mike Milken? The our correspondent "Irrational Exuburance" has some great news for you!

Posted by Donald L. Luskin at 11:17 PM | link  

WRONG AGAIN?   Our friend Dan Clifton of the American Shareholders Association reminds us that tomorrow the Congressional Budget Office comes out with its 2007 Budget and Economic Outlook. Sadly, the Congressional Budget Office is about as competent at economic forecasting as most congressional offices are in their respective functions -- which is to say, not very.
...this report becomes the numbers used all year by the press and politicians. So American Shareholders Association did an analysis of their accuracy in one year forecasting and since the 2003 tax cut. The January CBO forecast underestimated total tax collections in a fiscal year by an average of $85 billion per year in the past three years (largely the result of non wage income and corporate tax collections). Further, we found the baseline is now $200 billion higher since initially forecasted four months after the 2003 tax cut. Simply put the numbers tomorrow will be an underestimation of what the revenue picture will look like at the end of this fiscal year...

Also of note the report will document updated capital gains tax collection numbers. Last year showed CBO wildly underestimated cap gains collections and the numbers showed the capital gains tax cut paid for itself 16 times over. Based on non-wage income tax collections we are expecting

a blowout number tomorrow which will be even higher than last years numbers.

Posted by Donald L. Luskin at 11:12 PM | link  


Monday, January 22, 2007

IF YOU TAKE AWAY OPTIONS, HOW CAN YOU LOOK AT "ALL OPTIONS"?   Does the New York Times realize how ridiculous Democrat senator Max Baucus sounds in this story on Social Security reform?
Senator Max Baucus of Montana, the chairman of the Finance Committee, a critical venue for any Social Security plan, said he too believed the president must give up his private accounts before serious talks could occur. If so, he added, “I’m more than open, if the president is truly willing to look at all options.”

Posted by Donald L. Luskin at 9:47 AM | link  

HEY, IT AIN'T SO BAD!   A friend of a friend responds to our Joke of the Day:
You are also from California if...

1. You roll your bike out of the garage and are riding down the coast within 10 minutes

2. You wake up every day of your life in a place tourists will pay thousands to visit for a week.

3. Bundling up for the winter means closed-toed shoes and a sweatshirt.

4. That house you could barely afford is worth twice that much 5 years later, and will put your kids through college.

5. You can snowboard a world-class mountain, surf world-class breaks, and mountain bike world-class trails....all this weekend.

I'll take California.

Update... Reader Mike Hertzberg (a New Yorker) responds,
1. You may be riding down the coast in your bike in 10 minutes if you live in Laguna Beach or Malibu, but 99% of Californians roll their cars out of their garages and are creeping down the road rage freeways for hours on the way to work.

2. Tourists will pay thousands of dollars to visit New Orleans for a week. Wanna live there?

3. Bundling up for the winter means closed toed shoes and a sweatshirt in Yutzville, Mississippi, too, but who wants to live there?

4. Sure, you can send your kids to college if your house doubles in value, as long as you sell it to pay the tuition and move into a 1 bedroom apartment in Compton.

5. Can't argue with this one.


Posted by Donald L. Luskin at 9:22 AM | link  

SHOOT THE MESSENGER   Jonathan Chait does a hatchet-job for The New Republic on Alan Reynolds and his stinging dissent against the conventional wisdom about income inequality. A mere columnist who is incapable of understanding the economic methodological issues involved, Chait offers no argument of substance to refute Reynolds -- other than that Reynolds is a mere columnist who is incapable of understanding the economic methodological issues involved. Thus, this passage from early in Chait's column:
A manager at J.C. Penney who attended graduate school at night, Reynolds was plucked from obscurity by William F. Buckley in the 1960s after writing a few pieces for The National Review. (He's still "a couple of classes" short of his masters degree in economics.) He later went to the conservative Hudson Institute and from there made his way to the Cato Institute, where he is now a senior fellow.
I'm sure in Chait's mind, the fact that Reynolds worked at a downscale retailer J.C. Penney indicts him as a hopeless lumpenprole (I wonder if Chait would have mentioned it if Reynolds had worked where someone like Chait shops -- say, Polo/Ralph Lauren). To my ears it's an Horatio Alger story, and if it matters at all to judging Reynolds' work, it makes it all the more impressive. Indeed, it is evidence that in a dynamic American economy one can battle income inequality personally -- or, rather, make it happen to one's self, in a good way -- by hard work. Now check out Chait's biography. Apparently he, who arrogates unto himself the responsibility of writing "about the policy and politics of taxes, health care reform, the federal budget, and many other issues" has never held a real-world job in his life. Straight from the University of Michigan in 1994 -- falling a few masters degrees short of a masters degree -- to The American Prospect, his first of several jobs in the liberal opinion media in 1995.

Thanks to Jameson Campaigne for the link.

Posted by Donald L. Luskin at 8:47 AM | link