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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!

Thursday, December 20, 2007

THE LAST WORD   It's been a good week for my DC-insider friend "Mick Danger," and for his political allies who averted a political train wreck and ended up with lower taxes and lower spending. We'll give Mick's pal John Boehner the last word, from Congressional Daily:
“A train wreck assumes the trains were on the track at one point before the accident.”

-- House Minority Leader Boehner, taking exception Wednesday with Republican Conference Chairman Putnam’s description of the end of the session as a “train wreck.”

Posted by Donald L. Luskin at 7:34 PM | link  

KRUGMAN'S TEFLON WEARS THIN   Now that the GOP doesn't control all three branches of government, liberals are free to argue among themselves -- which means that honest commentators can take exception with Paul Krugman's lies and distortions. Here's Jonathan Alter for Newsweek, blasting Krugman's attack on Barack Obama. My DC-insider pal "Mick Danger" says,
Krugman’s contention that FDR’s success arose from “bitter confrontation” is challenged by someone who studied FDR closely.

Jonathan Alter opens with some unconvincing compliments – that Krugman is “brilliant”, “ahead of the pack” and “without peer” – just before he pounds him as wrong, wrong, wrong.

Posted by Donald L. Luskin at 12:39 PM | link  

TIMES QUOTES OF THE YEAR   It's so hard to pick just one... a single best example of the socialist, whining, self-serving, self-righteous and hypocritical style and content of the New York Times. But here's my favorite -- along with all the equally worthy nominees. And the envelope please...

Posted by Donald L. Luskin at 8:57 AM | link  

Wednesday, December 19, 2007

NOW THIS IS DOWNRIGHT PECULIAR   Merle Haggard and Arthur Laffer together again for the first time.

Update... I stand corrected. Reader Dave Duval points out that it's Merle Hazard, not Haggard.

Posted by Donald L. Luskin at 1:50 PM | link  

THE NEXT WAR   My prescient DC-insider friend "Mick Danger," who called it perfectly turn by turn on the battle for the budget and the AMT "patch," predicts the next line of scrimmage:
Having failed to win the fight congressional Democrats picked this year with Bush on taxes, spending, trade and Iraq, some congressional Democrats are planning their assault for next year, rattling a sword at global finance.

Like it or not (and who can?), China and Middle Eastern sovereign wealth is busy bailing out Wall Street by trading some of their tall stacks of declining dollars for equity in firms such as Citi and Morgan Stanley.

First target on Levin’s List: China and its currency.

What must elude the Senator from Michigan is that kicking China will inflict pain here. His UAW workers will not win. What if China retaliates against an American company, say GM whose Buick sells like crack in China? (Levin does have protectionist Republican allies such as Duncan Hunter but few others.)

China-bashers contend they are stopping currency manipulation over there, not engaging in it here. Well, no. They aren’t going to hit their own target because their proposed legislation is certain to be either filibustered or vetoed. In practical terms, Levin is playing to his UAW union halls back home. If he’d look up from is script, he’d see that the halls are two-thirds empty. Hell, his whole state is a short.

Back to politics, Levin and his fellow travelers bet America’s voters won’t follow a complicated economic argument. True that. What they may do is raise this dangerously delinquent game to the presidential election stage

Voters clued into the White House contest will follow a simple political argument: who wants to start an economic war with China?

Tens of millions of Americans have seen The Princess Bride in which this topic is discussed, in an offbeat way. Just before the evil character Vizzini (played by Wallace Shawn) falls dead, he explains that the most famous of all blunders is getting “involved in a land war in Asia.”

Posted by Donald L. Luskin at 1:18 PM | link  

BEWARE OF LIBERALS BEARING TAX CUTS   Larry Summers says to cut taxes to avert a recession that he sees as all but inevitable. But don't get excited. We're talking about a liberal's idea of a tax cut:
The government, he said, should counter the downturn through targeted, temporary spending, including a pre-emptive extension in unemployment benefits, an increase in food stamps and a universal tax rebate. Taxpayers shouldn't have to pay income taxes on the value of any mortgage reduction that lenders grant them amid the current crisis, he said.
Where are the incentive effects here? There are none. This is all just welfare, making people more dependent on government and guaranteeing the need for higher taxes later to pay for it all. Thanks to Dave Duval for the link.

Posted by Donald L. Luskin at 1:07 PM | link  

KUDLOW REPLAY   Here's the YouTube video. I was scheduled to talk about John McCain, but for some reason that didn't happen. In case anyone wonders what I think, just read this write-up from the Club for Growth. Some choice words from their report -- "profoundly disturbing" and "odious."

Posted by Donald L. Luskin at 12:53 PM | link  

Tuesday, December 18, 2007

SWEET VICTORY   It's almsot over, and it looks like the good guys are going to win. The Wall Street Journal reports:
...on a 48-46 roll call Tuesday night, Senate Democrats fell 12 votes short of the 60 needed to resurrect House attempts to fill this gap by raising other taxes or closing loopholes.

Speaker Nancy Pelosi (D. Calif.), under pressure from her caucus, had insisted that Senate Majority Leader Harry Reid (D., Nev.) make this last attempt. But given the outcome and crush of time, Mr. Hoyer's statement signals the House is prepared to throw in the towel and send Mr. Bush a Senate-passed version of the AMT fix -- without offsets.

Wait... there's more!
Filling over 1400 pages, the underlying spending bill is the product of its own larger budget battle that began last spring when the new Democratic Congress proposed to add about $21.2 billion to Mr. Bush's 2008 budget.

Following repeated veto threats, the compromise now -- approved 76-17 by the Senate -- cuts $17.5 billion from prior House-passed bills or about 80% of what Democrats once hoped to add to the president's top line.

And how's this for frosting on the cake:
The Democrats’ yearlong fight to boost federal spending on children’s health insurance ended with a whimper Tuesday.

After coming up short in their efforts to enact a $35 billion expansion of the State Children’s Health Insurance Program (SCHIP) — enduring two presidential vetoes along the way — congressional Democrats signed off on Republican demands to extend the program until 2009.

Thanks to GOP heroes like John Boehner and Trent Lott -- and my DC-insider pal "Mick Danger" -- who've spent all year in the trenches fighting for this outcome. Mick says,
Congressional sessions have become like election campaigns. The victor is the one smiling at the end.

Pelosi and Reid had their moments this year and will have more. There is no doubt that Bush won the end-game this year largely because his congressional allies and he developed a plan to combine their forces -- a 60 vote requirement in the Senate, the House Republicans ability to sustain vetoes (and make threats of vetoes credible) and Bush learning to take advice (finally) from folks like Lott and Boehner.

Posted by Donald L. Luskin at 11:59 PM | link  

PAUL CALLS HUCKABEE A FASCIST   Hey... he's got a point.

Posted by Donald L. Luskin at 1:44 PM | link  

THE BALONEY REJECTS THE GRINDER   Oh, sure, Paul Krugman will show up on any liberal gab-fest that promises to make him look good, and be interviewed by hosts who throw him softballs. But how about when he's invited on a conservative talk radio show? Dennis Prager says:
Paul Krugman...has refused to discuss his new book on liberalism with me...

Posted by Donald L. Luskin at 12:43 PM | link  

NEW TAX, NEW TAXER   Now the UN wants to become a taxing authority, imposing global taxes on whoever can afford to pay -- and that means us, of course:
...the U.N.'s Intergovernmental Panel on Climate Change...conference titled "A Global CO2 Tax" took a step that will have a more lasting impact than an empty agreement. It urged the U.N. to adopt taxes on carbon dioxide emissions that would be "legally binding to all nations."

And guess who would be hit the hardest? That's right, the tax, if levied, would put an especially high burden on the U.S.

"Finally, someone will pay for these costs" related to global warming, Othmar Schwank, a global warming busybody from Switzerland, told Sen. James Inhofe's office. We imagine Schwank, a panel participant, took great glee in saying the U.S. and other developed nations should "contribute significantly more to this global fund."

Schwank estimates the CO2 tax would generate "at least" $10 billion to $40 billion a year in revenues; but anyone who believes that has not paid attention. Even in nations that have a legitimate and more-or-less-limited government, such as ours, bureaucratic programs and taxes always grow bigger than first expected.

Thanks to reader Paul Mathieu for the link.

Posted by Donald L. Luskin at 10:13 AM | link  

THIS IS AN ABOMINATION   Now I've heard everything. Here's Vernon Smith, Nobel Prize winning economist and supposedly a free market guy, blaming the housing bubble on low capital gains rates (and bitching that we aren't helping the poor). Since when does the elimination of a dead-weight loss through taxation ipso facto produce a speculative bubble? What kind of make-it-up-as-you-go-along theorizing is that?
Besides being fueled by housing purchases and repackaged loans, each with inadequate equity -- doubling down with other people's money -- at the end of the capital-gains rainbow was the right to take up to $500,000 of profit, tax free.

Thank you President Bill Clinton for your 1997 action, applauded by the banks, the realtors and all citizens in search of half-millionaire status from an investment they could understand and self deceptively believe to be low risk; thank you for fueling the mother of all housing bubbles; thank you for enabling so many of us who bought second or third homes, and homes before construction began, which we then sold to someone else who dreamed of riches from owning homes long enough to sell to another fool.

Once again, try as we might and in spite of our political rhetoric, we have failed to help the poor in applauding government action intended to help ourselves.

Posted by Donald L. Luskin at 9:35 AM | link  

CLASS STRUGGLE EXPLAINS EVERYTHING   A new UN report claims there's a "food shortage." Why? Class struggle, of course -- the Left's always available explanation for anything, and one that can never be proven or disproven (but by merely adducing it one lends credence to Marxist tenets). And for good measure, let's throw in a little global warming (one fabricated crisis used as the explanation for another one):
Jacques Diouf, head of the UN Food and Agriculture Organization... blamed a confluence of recent supply and demand factors for the crisis, and he predicted that those factors were here to stay. On the supply side, these include the early effects of global warming, which has decreased crop yields in some crucial places, and a shift away from farming for human consumption toward crops for biofuels and cattle feed. Demand for grain is increasing with the world population, and more is diverted to feed cattle as the population of upwardly mobile meat-eaters grows.
Thanks to reader Mike Mitchell for the link.

Posted by Donald L. Luskin at 9:21 AM | link  

BOB MCTEER BLOGS!   The former Dallas Fed chief is blogging. Is that a first? I think so. Some good stuff, this one found by our monetary affairs correspondent "Irrational Exuberance.""
The FOMC's mistake, in my opinion, was extending the forecast horizon out to three years. Given each member forecaster's assumption of "appropriate monetary policy," however they define it, three years is long enough for policy to do all that policy can do. It's long enough for initial adverse conditions to be overcome. What's left in that third year forecast is the FOMC's implicit view of the best it can do, or the limits of the economy — it's capacity to produce without causing inflation to accelerate. I call that a mistake in part because their view, revealed by their latest forecast, is so dismal. I can't find a Goldilocks economy anywhere on their horizon(...)These numbers mean we're already over the speed limit for monetary policy. If they try to enforce such a low speed limit, they could create a self-fulfilling prophecy. That possibility, to me, calls into question of public forecasts by policymakers. The path they've outlined is one of managing slack in the economy to hold down inflation. I'd rather see them control inflation through growth — disinflationary growth.

Posted by Donald L. Luskin at 9:17 AM | link  

Monday, December 17, 2007

The so-called death tax is scheduled to rise to 55 percent in four years - when the exemption will drop to $1 million from $2 million - and up to now the national dialogue on its fate has been pretty much one-sided.

Billionaire investor Warren Buffet, the country's second-richest person, has been the poster child for the tax's legitimacy and the loudest voice pushing for the tax to stay in place.

...Earlier this month, the debate turned into a celebrity smack down after actor and TV personality Whoopi Goldberg ranted on national network TV about the death tax's inherent unfairness.

"If I give something to my kid and I already paid the tax, why do I have to pay it again because I died?" Goldberg asked on ABC-TV's "The View," where she serves as a co-host.

Why is Buffett a "poster child" for advocating higher taxes (which, the story does not mention, Buffett does not pay thanks to a charity loophole) -- and Goldberg's advocacy for lower taxes a "rant"?

Posted by Donald L. Luskin at 1:43 PM | link  

THE THIN-SKINNED WHINER IS AT IT AGAIN   Paul Krugman is in a snit because, he claims, the Barack Obama campaign has responded to his criticisms of the candidate's health care plan with what he claims is "a personal attack, lifting quotes out of context." Don't flatter yourself Paul. All the Obama campaign has done is post a link and some quotes from something called First Read. Besides, isn't it a little late for Krugman to complain about personal attacks, or about taking quotes out of context? If Obama did that, he learned from a master.

Posted by Donald L. Luskin at 9:40 AM | link  

HOW MUCH MORE DOES THE LEFT WANT?   From the Wall Street Journal this morning:
Last week the Congressional Budget Office joined the IRS in releasing tax numbers for 2005, and part of the news is that the richest 1% paid about 39% of all income taxes that year. The richest 5% paid a tad less than 60%, and the richest 10% paid 70%. These tax shares are all up substantially since 1990, and even somewhat since 2000. Meanwhile, Americans with an income below the median -- half of all households -- paid a mere 3% of all income taxes in 2005. The richest 1.3 million tax-filers -- those Americans with adjusted gross incomes of more than $365,000 in 2005 -- paid more income tax than all of the 66 million American tax filers below the median in income. Ten times more.

For the political left and most of the media, this means only that the rich are getting richer, so of course they're paying more taxes. And it is true that the top earners have increased their share of total income. Yet...the rich showed more rapid gains in reported income shares in the 1990s than in the first half of this decade. The share of the richest 1% jumped to 20.8% of total income in 2000, from 14% in 1990, but increased only slightly to 21.2% in 2005. This makes it hard to pin their claim of "rising inequality" on the Bush tax cuts, though the income redistributionists are trying. By this measure, the Clinton years were far worse for "inequality."

Posted by Donald L. Luskin at 8:37 AM | link  

Sunday, December 16, 2007

BUT NOT ALL THE TAX NEWS IS SO BLEAK   Sunday morning, reader Greg Statham alerts us:
Ron Paul has raised almost $2 million dollars so far today and its only 9:30 am. I see some predictions of $6-$7 million will be raised for him today on the anniversary of the Boston Tea Party. Truly incredible, and very uplifting.
Update... Greg writes,
$3 million by 2 eastern time. $6-$7 million is certainly possible today. I don't know how a mention of this isn't even on the damn Drudge Report today being that this record breaking fundraising is happening to an anti-Iraq-war, Republican, hard money, zero income tax candidate. Instead we have trivial Elizabeth Edwards quote as a top headline.
Update 2... Greg now reports,
Good teamwork! Ron Paul is on the top of the Drudge Report, where the story belongs. That is real news.
Update 3... Greg tells me,
Dr. Paul has broken the one day online fundraising record, a record which was held by....Dr. Paul. Its now 7:15 pm and he has raised roughly 4.5 million dollars. Hard to ignore, but I wouldn't underestimate the MSM.
Udpate [12/17/2008]... Greg finishes up the day:
Well, to wrap it up.. 24 hours, $6.1 million raised, a record broken, and lots of pundits definitely scratching their heads. Oh, and once again, true patriots demonstrating their disgust with oppressive taxation.

Cheers to our courageous founders on this anniversary of the Boston Tea Party.

Posted by Donald L. Luskin at 1:12 PM | link  

TAX THIS POEM   Some taxing thoughts from our loyal reader "Z":
The next time you hear a politician use the word "billion" in a casual manner, think about whether you want the "politicians" spending YOUR tax money.

A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of its releases.

A. A billion seconds ago it was 1959.

B. A billion minutes ago Jesus was alive.

C. A billion hours ago our ancestors were living in the Stone Age.

D. A billion days ago no-one walked on the earth on two feet.

E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

While this thought is still fresh in our brain, let's take a look at New Orleans It's amazing what you can learn with some simple division. Louisiana Senator, Mary Landrieu (D), is presently asking the Congress for $250 BILLION to rebuild New Orleans. Interesting number, what does it mean?

A. Well, if you are one of 484,674 residents of New Orleans (every man, woman, child), you each get $516,528.

B. Or, if you have one of the 188,251 homes in New Orleans , your home gets $1,329,787.

C. Or, if you are a family of four, your family gets $2,066,012.

Washington , D.C .. HELLO!!! Are all your calculators broken??

Tax his land,
Tax his wage,
Tax his bed in which he lays.

Tax his tractor,
Tax his mule,
Teach him taxes is the rule.

Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.

Tax his ties,
Tax his shirts,
Tax his work,
Tax his dirt.

Tax his tobacco,
Tax his drink,
Tax him if he tries to think.

Tax his booze,
Tax his beers,
If he cries,
Tax his tears.

Tax his bills,
Tax his gas,
Tax his notes,
Tax his cash.

Tax him good and let him know
That after taxes, he has no dough.
If he hollers,
Tax him more,
Tax him until he's good and sore.

Tax his coffin,
Tax his grave,
Tax the sod in which he lays.

Put these words upon his tomb,
"Taxes drove me to my doom!"

And when he's gone,
We won't relax,
We'll still be after the inheritance TAX!!
Accounts Receivable Tax
Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Service charge taxes
Social Security Tax
Road Usage Tax
Sales Taxes
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax


Hardly any of those taxes existed 100 years ago, and our nation was the most prosperous in the world. We had no national debt, had the largest middle class in the world, and Mom could afford to stay home to raise the kids.

What happened? Can you spell "politicians"?

And I still have to "press 1" for English.

What the heck happened?????
Update... Reader Bret Wallach says,
A billion seconds is 31.71 years, so no, it was NOT 1959 a billion seconds ago. I stopped reading there since the very first "fact" was wrong.

Posted by Donald L. Luskin at 1:04 PM | link