Gay Marriage Update Before the 2012 Election and the Second Presidential Debate

This is going to be another one of those posts where I do multiple things.  First, we will look at key gay marriage votes this season.  Second, we will have a look at the second debate between Barack Obama and Mitt Romney.

We have four key votes on gay marriage this season.  There are votes to legalize gay marriage in Maryland, Maine, and Washington states and there will be a vote to ban gay marriage in Minnesota.  As I’ve previously detailed, the gay marriage movement is 0 for 32 in votes about the issue in the past 15 years.  I think that zero is going to go away this time around, which would be a monumental victory because, to this point, it has only been through the courts and legislative process that gay marriage supporters have managed to achieve victories. 

Given the 0-32 record, it’s easy to argue that this time will be no different and history will repeat itself, but I disagree.  All the supporters need is one victory to erase the zero.  Anything beyond that would be a bonus.  A clean sweep for either supporters or opponents is possible, but highly unlikely, in my view.  My prediction is 2-2, with Washington and Maryland going decisively to the supporters, but Minnesota and Maine going narrowly to the opponents.  Let’s see how right or wrong those predictions turn out to be. 

And we are onto the second Obama-Romney debate.  I found this to be a very difficult debate to watch and score for several reasons.  The main reason involves the moderator, Candy Crowley.  Simply put, I’ve never seen such a poor job moderating a debate.  Why was her performance so terrible? 

First, the role of a moderator in a town hall debate is little more than that of a timekeeper and announcer of the name of the person asking the next question.  It is not the moderator’s role in a town hall debate to ask questions of the candidates.  That is the role of the person the moderator announces and only that person at that moment.  Crowley violated this repeatedly. 

Even more inappropriate than that was Crowley’s actions during the Libya question in which she failed to act as an impartial moderator.  She involved herself in the debate by explicitly stating that Obama was correct and Romney was wrong on the Rose Garden speech.  It was literally a real-time fact check and this is absolutely unacceptable conduct by a moderator during a debate.  The intervention was bad enough, but number two is that she was factually incorrect.  Additionally, though I’ll admit I did not keep track of time on each question, I will say that the Libya question felt very rushed and was clearly something that Obama wanted to avoid like the plague.  With Crowley’s intervention, he was largely able to do so as she managed to create a distraction and take up time.  This was truly deplorable conduct on her part and I truly hope she is never allowed to moderate a debate ever again due to this miscarriage of justice.

I think Crowley’s antics, both on the Libya question and her repeated follow-up questions, clearly stacked the deck against Romney to such a degree that objective scoring of this debate is extremely difficult to do.  I’m still going to try, though. 

Regardless of the moderator, Obama had a much stronger and aggressive performance this time around than last time.  He was also clearly the beneficiary of lowered expectations given the previous debate.  Romney’s performance was not as strong as the first outing, but was not terrible by any means.  He got visibly flustered toward the end, but his final answer was very solid and he managed to use that to regain composure.  I must say I was impressed by the ability of both candidates to pivot the assault rifle question into discussions of culture.  This was masterfully done by both candidates and makes perfect sense, seeing as how Romney’s gun record isn’t strong enough for the GOP base and Obama’s anti-gun record isn’t strong enough for the Democrat base.

Given Obama’s lowered expectations, Romney’s elevated expectations and momentum surge, plus the deck being stacked so heavily against Romney by the moderator, I can absolutely see why the initial reaction and consensus were that Obama won.  It is noteworthy that such a significant portion of the viewer base still believes Romney won in spite of it all.  I can’t fault people for thinking that because, given the tailwinds Obama had going for him, Obama should have decisively won that debate.  Realistically, I can’t fault anyone for saying Obama won this debate, either.

However, I reject that conclusion that Obama won.  My view is this debate is a pyrrhic victory for Obama, which I suppose means I ultimately see it as a victory for Romney.  What this debate did is it provided powerful and high-profile evidence to bolster the (compelling) case that the liberal media is pulling out all the stops to help Obama win.  This is important because the criticism that the liberal media (correctly) levies against the conservative media for bias is effectively nullified.

This controversial second debate definitely sets the stage for an interesting third debate on Monday.  I'll actually watch that one live, but refrain from live commentary.  I find it too hard to focus. 

A Vice Presidential and Senate Debate

I want to look at two things in this post.  One is the debate between Vice Presidential candidates Joe Biden and Paul Ryan (no Libertarian candidate…imagine my surprise).  The other is the debate for the Connecticut senate seat between Linda McMahon and Chris Murphy.

I didn’t watch either debate live and thus wasn’t on Twitter.  Instead, I watched football, as the Steelers lost on a last-second field goal to the Titans.  To be perfectly honest, the football game was better even though my team lost. 

Biden-Ryan was still an interesting debate.  In the first debate between Barack Obama and Mitt Romney, the general consensus was that Romney clearly won (maybe or maybe not decisively depending on who you ask, but Romney was generally the clear consensus winner).  Romney was clearly the more energized and aggressive in that debate.  Obama was too passive, plain and simple.

When we fast forward to this debate, you see Biden was the one who came out energized and aggressive while Ryan was more passive.  The moderator had even less control in this debate than last time.  The Democrats were clearly demanding energy from their guy and Biden did deliver that.  Biden spent a bit too much time laughing, snickering, and grinning like a Cheshire cat for my taste.  The GOP was simply looking to maintain the momentum. 

So, who won?  Really, I think it was a draw in that both candidates did what they had to do.  However, if I had to pick a winner, I would say Ryan won overall because my vibe was that he was handling Biden’s energy better than Obama handled Romney’s.  Obama seemed to wilt during the first debate, but Ryan didn’t really wilt for the most part.  I also don’t think expectations were set very high for Ryan (nor were they very high for Romney), so he exceeded expectations in my opinion.  The GOP appears to have maintained their momentum, as well. 

That said, Biden put in a much stronger performance than Obama did in his first debate and I think he succeeded in igniting a spark within the Democrats’ base.  He didn’t lose clearly (and/or decisively depending on who you ask) like Obama did.  I think Biden may even have exceeded expectations.  My call of a draw looks reasonable given the divide about who actually won.  I don’t see people from the left saying their guy lost like I did after the first debate, and I don’t see people from the right saying their guy lost, either. 

I’m seeing more states shifting toward Romney in polls than toward Obama.  Some states that were leaning for Obama are becoming toss-ups and some that were toss-ups are now leaning toward Romney.  I don’t see much movement in the other direction in the swing states.  I still see Obama having the inside track for the win, but Romney is closing the gap considerably and quickly.  This is shaping up to be another close one like 2000 or 2004 rather than the decisive win Obama had in 2008. 

And we’ll move onto the McMahon-Murphy debate.  This was their second debate.  I missed the first one, probably also because of football.  I’m an American guy and I have my priorities. :-p To me, this was a nasty debate to watch.  Both candidates went negative early and stayed negative throughout most of the debate.  Neither candidate really went into much substantive policy discussion, so if you were looking to learn about their actual positions, you were probably very disappointed.  They were also very repetitive in their attacks on each other.  If the first was anything like the second, I didn’t miss anything of value.  If the third is anything like the second, I’ll probably skip it.  There was just no value in watching it.  I’ve never seen a worse debate, to be honest.  I’m glad it was only an hour.

Next up is the second Obama-Romney debate, which is Tuesday.  I’ll watch it live, but will refrain from tweeting and such during the debate.  I find it too difficult to focus on the debate when I do.

A Libertarian Argument for Voting for Romney and the First Presidential Debate

I’d like to do two things with this post.  First, I’ll present one of the better arguments I’ve seen for why Libertarians should vote for Mitt Romney over Barack Obama.  Second, I’ll look briefly at the debate earlier this week.

The argument for why Libertarians should vote for Romney can be found here.  It’s a very short, but very insightful read.  The basic premise of Ted Frank’s argument is that, if Obama is reelected, he will be able to appoint a successor to Kennedy and/or Scalia on the Supreme Court, who are both in their late 70’s and likeliest to leave the court.  The author argues that if that happens, then it is game over the for the Libertarian movement because of the present composition of the court.  Per Frank:

·         “There are four justices on the Supreme Court ready to hold that the First Amendment does not bar Congress from regulating political speech against incumbents.

·         There are four justices on the Supreme Court ready to hold that the Second Amendment does not create any individual rights against the government.

·         There are four justices on the Supreme Court ready to hold that the Commerce Clause creates no constraint on Congress's regulatory powers.

·         There are likely at least four justices on the Supreme Court ready to hold that the government can choose to discriminate on the basis of race if "diversity" is at issue.”

I view these as very legitimate concerns, as we’ve already seen these come to fruition with opinions held by Obama’s two appointees, who are among the justices mentioned above.  The 5-4 rulings that are upholding personal rights would consistently morph into 5-4 (or worse) rulings cutting those rights down.  Remember, these are lifetime appointments.

One natural counter to this argument is that Romney has already held up Bork and Roberts as examples of the kinds of justices he would nominate.  Frank is not concerned about this, but I see it as an important counterpoint.  The problem here is that Bork, and Roberts to a degree at times, are advocates of Supreme Court deference to the will of the elected majority.  Here’s the thing, though.  The Supreme Court was designed to uphold the Constitution and as a check against the tyranny of the majority over the minority.  In other words, it has to be able to make unpopular rulings to honor the principles of the Constitution that defend the rights of the people against the power of the government. 

While another Roberts could not be counted on as a reliable vote as Scalia or Thomas at checking government power, one of them would be more reliable at doing so than another Obama appointee based on everyone’s rulings to this point.  Kennedy is a wild-card on a lot of rulings and Scalia consistently limits government power.  Roberts still generally limits government power, but is much more of a wild-card in the wake of his Obamacare ruling.  The Obama appointees consistently uphold government power over the people.  There is no reason for us to expect Obama to change his philosophy in future appointees. 

So, here’s the bottom line on Frank’s argument.  I think it’s a very compelling case that Libertarian-minded voters should seriously consider in swing states (I’ll explore why I single out swing state voters in a future post).  The importance of the Supreme Court is highly underappreciated.  I understand that a vote for the lesser of two evils is still a vote for evil, but I also think Obama appointees replacing Kennedy and/or Scalia on the Supreme Court would present an existential threat to the Libertarian movement.  Conceding the battle against the two-party monopoly in 2012 in the swing states to allow the war continues into the future may indeed be the best course of action here.  I don’t like the idea, but life is full of choices, some without appeal. 

I don’t want to spend too much time talking about the debate because you’ve no doubt heard a lot about it already and I’ve already gone on for a while, but here are my impressions.  Expectations for Romney were set very low by just about everyone, myself included.  Romney was overall the clear winner and surprised a lot of people.  He stormed out the gate and caught Obama off-guard, putting Obama into a hole that he was never quite able to get out of.  Obama managed to prevent the debate from turning into a total landslide, but he clearly lost.  On an absolute basis, Romney performed very well, but his performance looks even better when viewed in a relative context to both expectations and Obama’s performance. 

All that said, the impact of Romney’s debate victory has been dampened considerably with the news of a drop in U3 unemployment under 8%.  Note that U6 did not change, but that’s not what’s getting headlines.  I will be very interested to see how the future revisions come in, as I expect large and negative revisions…after the election.  We also saw an increase in food stamp recipients after the market close on Friday (when nobody was paying attention), which was decidedly less friendly to the Obama case.  The Obama camp did a masterful job of using the press as a tool and highlighting the good while downplaying the bad.  This should be no surprise.

There’s still a month to go to the election with two more presidential debates, a vice-presidential debate, numerous economic data releases, and a lot of global tension.  The race is tight and it should be a wild one. 

Links:

http://www.pointoflaw.com/archives/2012/10/the-libertarian-case-for-romney.php

The Looming Fiscal Cliff, 2012 Edition Part 2

In Part 1, we explored what the fiscal cliff is.  In a nutshell, it’s a bunch of tax increases and spending cuts that could have a very sharp impact on people, businesses, and the economy as a whole.  If the government fails to take action, the fiscal cliff will hit.  It is an entirely self-inflicted wound because all of this was put in place by the government.

Here is a brief update and a look at how I think it will play out.

To the surprise of very few, none of the presidential candidates are really talking about this.  None of the politicians are and neither is the media (aside from the business/economic/market media), even though people and businesses are starting to freak out about it.  In essence, there really isn’t much of an update from before.  The only thing worth noting is that we got some weak economic numbers over the past couple weeks and the Federal Reserve engaged in a bigger (but likely equally ineffective) round of Quantitative Easing. 

I’m hoping the candidates will be forced to address this at one of the debates.  We have a debate coming this week, so I have hope.  I doubt they’ll give much in the way of useful answers, but I think they will at least address it.  The reality is this is starting to show up in the economy.  People and businesses are starting to plan their budgets for next year.  This is a tremendous source of uncertainty, much more so than usual. 

On a side note, to those who say that uncertainty is part of the normal business environment, I agree.  However, stop saying that this degree of uncertainty is somehow normal and/or acceptable.  It’s a flawed line of thinking I hear far too often and, frankly, I’m tired of hearing it.  The Federal Reserve Bank of San Francisco recently put out a paper estimating that uncertainty has increased unemployment by 1-2%, so what we have now as 8-9% would be 6-7% with a more stable tax and regulatory landscape.  I think their method here is sound.  It’s better than anything I’ve come up with so far to quantify economic uncertainty.  I think it’s hard to say uncertainty is a moot point after reading this five-page paper.       

Back to the fiscal cliff.  When looking at how this could play out, we need to focus on the results of the election because we know the government’s putting off everything they possibly can until after the election.  We also need to focus on how the economy does in the next couple months because it is clearly weakening lately.  Lastly, we have to consider where the debt ceiling situation is at and whether the government has been able to handle it, either by keeping us under it or raising it. 

In the shorter term, regardless the election and economy, I expect a brief, temporary extension of everything.  I’m thinking three months or so here, similar to what they did with the Social Security tax to end 2011 and start 2012.  It could be as high as six months, in my opinion.  This would set a deadline for the end of March (or as late as June) to come up with something.  This is my way of saying that we shouldn’t expect this to be truly resolved this year and we’ll be dealing with this well into 2013.  I simply cannot envision them voting to dodge the entire fiscal cliff this year by abolishing the law and extending all tax rates.  The uncertainty grows and drags on. 

After the extension is when things will really get interesting and this is when it will matter who wins in November.  What will also matter is whether the economy continues to slow down as it has in recent months.  I don’t see any value in exploring potential scenarios beyond an extension until we see how the economy handles the last quarter of 2012, we see how the election pans out, and we see how effectively the government handles the debt ceiling (or not).  There are just too many moving parts right now.  As I said before, we’ll be revisiting this.

Links:

Federal Reserve Uncertainty Paper: http://www.frbsf.org/publications/economics/letter/2012/el2012-28.html

Fiscal Cliff Part 1: http://timsopinionblog.blogspot.com/2012/09/the-looming-fiscal-cliff-2012-edition.html

The Looming Fiscal Cliff, 2012 Edition Part 1

Lost in the shuffle of the election and the recent escalation of violence (in Libya, Egypt, Yemen, Tunisia, etc.) is the looming fiscal cliff.  There are a lot of bad economic policies that are slated to take place at the end of 2012 without government action.  In Part 1, I’ll detail the changes and the impacts.  This is a long one because it has lots of tables and graphs.  In Part 2, I’ll lay out what I think is going to happen. 

First and foremost, the 2001 and 2003 tax cuts (most often referred to as the Bush tax cuts, but I call them the current tax rates) are in danger.  The current federal income rates are shown below in real 2011 dollars. 

	Married Filing Jointly
Marginal	Tax Brackets
Tax Rate	Over	But Not Over
10.0%	$0	$17,000
15.0%	$17,000	$69,000
25.0%	$69,000	$139,350
28.0%	$139,350	$212,300
33.0%	$212,300	$379,150
35.0%	$379,150	-

	Married Filing Separately
Marginal	Tax Brackets
Tax Rate	Over	But Not Over
10.0%	$0	$8,500
15.0%	$8,500	$34,500
25.0%	$34,500	$69,675
28.0%	$69,675	$106,150
33.0%	$106,150	$189,575
35.0%	$189,575	-

	Single
Marginal	Tax Brackets
Tax Rate	Over	But Not Over
10.0%	$0	$8,500
15.0%	$8,500	$34,500
25.0%	$34,500	$83,600
28.0%	$83,600	$174,400
33.0%	$174,400	$379,150
35.0%	$379,150	-

	Head of Household
Marginal	Tax Brackets
Tax Rate	Over	But Not Over
10.0%	$0	$12,150
15.0%	$12,150	$46,250
25.0%	$46,250	$119,400
28.0%	$119,400	$193,350
33.0%	$193,350	$379,150
35.0%	$379,150	-

These are the 2000 tax rates adjusted into real 2011 dollars via the CPI, which is roughly what we would revert to.

	Married Filing Jointly
Marginal	Tax Brackets
Tax Rate	Over	But Not Over
15.0%	$0	$57,137
28.0%	$57,137	$138,055
31.0%	$138,055	$210,372
36.0%	$210,372	$375,725
39.6%	$375,725	-

			Married Filing Separately
Marginal			Tax Brackets
Tax Rate			Over			But Not Over
15.0%			$0			$28,569
28.0%			$28,569			$69,027
31.0%			$69,027			$105,186
36.0%			$105,186			$187,863
39.6%			$187,863			-
			Single
Marginal		Tax Brackets
Tax Rate		Over			But Not Over
15.0%		$0			$34,204
28.0%		$34,204			$82,807
31.0%		$82,807			$172,780
36.0%		$172,780			$375,725
39.6%		$375,725			-
		Head of Household
Marginal	Tax Brackets
Tax Rate	Over			But Not Over
15.0%	$0			$45,801
28.0%	$45,801			$118,314
31.0%	$118,314			$191,609
36.0%	$191,609			$375,725
39.6%	$375,725			-

In addition, capital gains and dividend taxes would rise.  The current and potential changes are shown below.

Capital Gains Taxation in the United States from 2003 forward[1]
2003–2012					2013–
	2003–2007		2008–2012		2013–
Ordinary Income Tax Rate	Short-term Capital Gains Tax Rate	Long-term Capital Gains Tax Rate	Short-term Capital Gains Tax Rate	Long-term Capital Gains Tax Rate	Ordinary Income Tax Rate	Short-term Capital Gains Tax Rate	Long-term Capital Gains Tax Rate	5-year Capital Gains Tax Rate
10%	10%	5%	10%	0%	15%	15%	10%	8%
15%	15%	5%	15%	0%
25%	25%	15%	25%	15%	28%	28%	20%	18%
28%	28%	15%	28%	15%	31%	31%	20%	18%
33%	33%	15%	33%	15%	36%	36%	20%	18%
35%	35%	15%	35%	15%	39.6%	39.6%	20%	18%

And dividends are detailed here.

Dividend Taxation in the United States: 2003 - [3]
2003–2012					2013 -
	2003–2007		2008–2012		2013 -
Ordinary Income Tax Rate	Ordinary Dividend Tax Rate	Qualified Dividend Tax Rate	Ordinary Dividend Tax Rate	Qualified Dividend Tax Rate	Ordinary Income Tax Rate	Ordinary Dividend Tax Rate	Qualified Dividend Tax Rate
10%	10%	5%	10%	0%	15%	15%	15%
15%	15%	5%	15%	0%	28%	28%	28%
25%	25%	15%	25%	15%	31%	31%	31%
28%	28%	15%	28%	15%	36%	36%	36%
33%	33%	15%	33%	15%	39.6%	39.6%	39.6%
35%	35%	15%	35%	15%

These are massive tax increases.  But, wait, there’s more. 

The Alternative Minimum Tax (AMT) is going to become an issue again.  The AMT was designed to force wealthy people to “pay their fair share” (however you define ‘fair’, I guess), but it was poorly designed, as it was never indexed for inflation, so more and more people are getting snared by it.  It gets patched repeatedly, but never truly fixed. 

I’m not done yet on the tax side, either.  The 2% reduction in personal Social Security taxes that has been in effect for the past two years will expire, too. 

Do the math for yourself and you can see what kind of impact this could have on you.  For me personally, Social Security goes up 2% and federal income goes up 3%.  The AMT doesn’t apply to me, nor do the dividend and capital gain taxes because all my stock activity takes place in my IRA and 401k.  My concerns about the current tax-exempt and safe status of these accounts are another story for another day.

On top of all of that, there is the dreaded sequestration plan, which would mandate spending cuts.  I’ve written previously about this.  Defense and social programs would both be cut aggressively.  But, wait, there’s more.  At least on the defense side, there’s another problem.  The law was written such that it effectively prevents the Pentagon from actually eliminating programs and instead forces them to cut more or less equally across the board from all programs.  So, if the Pentagon had 10 programs of equal size and had to cut the equivalent of one full program, it has to cut 10% from each of the 10 programs rather than fully eliminating one full program.  I suspect this was put in place to blunt the economic impact on the districts of individual members of Congress and I suspect this is also in place for the social spending cuts. Ask yourself how these spending cuts affect you.  The targeted industries are terrified of these impacts. 

Last, but not least, note the lack of impact to Medicare and Social Security (outside of the 2% tax increase).  If we really want to get government spending under control, everything has to be on the table.  Social Security and especially Medicare cannot be exempt because they are the real problems. 

All told, this is a big deal.  This chart from Goldman Sachs tells the story and lays out a couple scenarios.  This could push the US back into recession or deeper into it, depending on whether you believe we ever exited the collapse.

This story is, in my opinion, underreported in the media because they are so focused on…well…everything else like the election, global violence, sports, etc.  It’s not on their minds, but it is on the minds of people and companies as they try to plan for next year.  Anybody who tries to tell you this isn’t a big deal doesn’t understand how households and businesses plan and doesn’t understand how Washington DC works.

Links:

Complete Guide: http://www.zerohedge.com/print/453134

Capital Gains: http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

Dividends: http://en.wikipedia.org/wiki/Qualified_dividend  

On Defense Spending: http://timsopinionblog.blogspot.com/2011/08/debt-ceiling-deal-and-downgrade-that.html