Cato on the fiscal cliff sidestep

Here's a cut and paste from Cato. Quick and easy read:

Grading the Fiscal Cliff Deal: Terrible, but Could Be Worse

By

Daniel J. Mitchell

 

 

The faux drama in Washington is finally over. The misfits in Washington reached a deal on the fiscal cliff.
Republicans and Democrats managed to come together and decide that they should get a bigger slice of what the American people earn. Gee, what a surprise.
First, the good news:
…
…
Oh, wait, there isn’t any.
Now for the bad news.

• The top tax rate will increase to 39.6 percent for entrepreneurs, investors, small business owners, and other “rich” taxpayers making more than $400,000 ($450,000 for married couples). This is Obama’s big victory. He gets his class-warfare trophy.
• The double tax on dividends and capital gains climbs from 15 percent to 20 percent (23.8 percent if you include the Obamacare tax on investment income).
• The death tax rate is boosted from 35 percent to 40 percent (which doesn’t sound like a big step in the wrong direction until you remember it was 0 percent in 2010).
• The alternative minimum tax will still exist, though it will be “patched” to protect as many as 30 million households from being swept into this surreal parallel tax system that requires people to use a second method of calculating their taxes – with the government getting the greatest possible amount.
• Unemployment benefits are extended, ensnaring more Americans in joblessness.
• Medicare spending is increased as part of a “doc fix” to increase reimbursement payments for providers.

This is sort of like a late Christmas present, but we must have been naughty all year long and taxpayers are getting lumps of coal.
That being said, I was expecting the final outcome to be even worse, so this deal almost seems like a relief.
Sort of like knowing that you were going to have your arm amputated, but then finding out that at least you’ll get some anesthetic. You’re not happy about the outcome, but you’re relieved that it won’t be as bad as you thought it would be.
But let’s not delude ourselves. This deal is not good for the economy. It doesn’t do anything to cap the burden of government spending. It doesn’t reform entitlement programs.
And we may even lose the sequester, the provision that was included in the 2011 debt limit that would have slightly reduced the growth of government over the next 10 years.
What a dismal start to 2013.

Why did John Key change his mind?

 What will be happening with welfare in 2013?

The major event that springs to mind is changes to the names  of all main benefits. I still consider this a major waste of time and resources. And in August 2008, before John Key became Prime Minister, so did he:

Labour's pursuit of a "single core benefit" has ended in a complete farce. The different benefit types will still exist, and will be different from each other, but will all be simply called "income support". The Labour Government is going to issue a directive telling case managers and government officials that they are forbidden from using use terms such as "DPB" and "invalids benefit".
Ruth Dyson has one opinion about this. She says this will "remove the stereotyped language and bureaucracy of a bygone era [and] will ensure that Work and Income responds to people as individuals rather than as categories".
I have another opinion. I say that is a load of politically correct rubbish, it will waste money in rewriting everything, and it will not help beneficiaries in a single way. National will not be making those changes.

Well actually in July 2013 National will be making those changes:

Three new benefit types will replace the seven current benefit categories, in addition to the new Youth Payment and Young Parent Payment introduced in August. The new categories included in this Bill are:
• Jobseeker Support for those actively seeking and available for work
• Sole Parent Support for sole parents with children under 14 years
• Supported Living Payment for people significantly restricted by sickness, injury or disability.

Just for a moment reflect on the ongoing problems that the government has had with their IT data systems  - ACC, Education, Work and Income and Corrections. 300,000 plus people will have to be recategorised and  transferred from one benefit to another. The data recording systems all change; the continuity of data will be lost. There's a Census running this year. Information about income sources will be collected in February which by July will be meaningless. There will be confusion, challenges from people unhappy with their new categorisation, and given the teacher salary debacle, it wouldn't surprise if benefits go under/over or un-paid.

It's all going to distract from what WINZ should be concentrating on. Getting people into jobs.

Ashley Mundee - a life worth living

By coincidence I had backed the horse Ashley Mundee was riding on December 30 so was watching the race. Elleaye was around mid-field when he suddenly went down. I thought he'd broken down but later learned he'd clipped heels with another horse. It was a horrible spectacle watching the jockey go under the hooves of those following and a further jockey fall from her mount. I drew a very sharp intake and must have made some sort of sound because the dog start barking.

When I heard she had later died I shed tears for the sheer misery it will cause her family and friends for the rest of their lives. What I can't get out of my head is whether, as her mother, I would want to watch the footage of Ashley before the race. Milling around behind the gates, happy and chatting with the other jockeys and handlers as the horses loaded. Because that's what I would want imprinted in my mind. The pleasure and pride she would have taken in her abilities; the sheer exhilaration of riding along on the back of an animal reaching speeds of 50 mph; the wonder of getting paid for what you love doing most.

Her life was cut short but what a life it was.

Hauraki became crap

New breakfast host Martin Devlin says Radio Hauraki is "crap".

It's been crap since they dumped Nick, Deano and Mel from the morning slot. They were genuinely funny and ran some great competitions like 'Scar Wars Wednesday' which asked listeners to ring in and describe how they got their worst scar. That resulted in outrageous tales like testes being caught in girls' bicycle chain as a  child and a whole host of strange down on the farm antics often related by not very bright people. Driving the kids to Uni and high school we'd often laugh till we cried. The music was what you'd expect on Hauraki but the in-between stuff was better. Then sometime during the middle of the year the threesome vanished.

So what to listen to? In Wellington The Breeze is so PC and safe, even though Sam and I can tolerate their play list, we can't stomach the simpering DJs. Think Wiggles. One morning we were behind a bus advertising The Sound. So we switched and are  permanently parked there. The music is brilliant and they promote themselves as "no silly BS chatter" although Geoff Bryant's news-reading interjections are often very wry. So, no, I won't be tuning in to Hauraki even out of curiosity.

(Though it has to be said, if I'm by myself of a morning, walking the dogs, I might have Mike Hosking in my ear.)

Devlin says, "It's bitterly competitive, and there's a lot of money at stake, and there's a lot of pride and ego at stake."

Somehow trying not to lose money and not to lose face don't seem like very good starting point to me. So a New Year's prediction. Devlin won't save Hauraki.

John Key finished?

That's what Matt McCarten says in his Herald column today:

This year has finished him. His evasiveness over Kim Dotcom, his shonkiness over the SkyCity casino deal to give more pokies for a convention centre, his weakness managing his ministers and his forgetfulness on details of his job is starting to form real doubts that he's on top of his job. We like nice guys but we expect them to know what they're doing. This is the year he became a two-term prime minister.

All this prediction  reveals is McCarten's  left bias and according wishfulness. Let's try and analyse Key's chances objectively.

1/ Who else? 

Like it or not most New Zealanders are middle-of-the-road moderates. When it comes to matters political, they think at a superficial level employing emotion over reason. But occasionally the 'wisdom of the masses' asserts itself as when Green co-leader Russell Norman suggested printing money. Without understanding economics too deeply people just instinctively knew this was a stupid idea. Sometimes good ideas are the most simple ones - but not in this case. And people aren't going to accept a leader with radical ideas, even sound ones. That's why Key doesn't do radical.

Neither will people accept a leader with NO ideas. Well, to be fair, no new ideas. And anyway, Labour is too ramshackle at present to give swing-voters any confidence that they can govern.

2/ Better the devil you know. Key is still in this ballpark. When Clark went, she'd stepped outside it. People were saying any devil is better than her. National has upset large  groups of people. Teachers for example. But mainly they have upset the leftists which is their job.

They have pissed off people like me in many ways BUT not enough that I would vote for more redistribution of wealth from the productive to the non-productive; more punishment of effort and reward for fecklessness; more economic regulation and welfare reform reversal.

3/ Key appeals to both males and females. That sort of appeal is reasonably rare.

4/ Key is still looking like a solid family man. Also reasonably rare and something we admire I think.

5/ Key has a winning leadership style. While McCarten says Key is weak at managing his ministers, the other side is, he doesn't over-manage.  My preference is for the second style. Most of us want a boss who gives us space and respect.

So barring startling developments - Labour recruiting Richie McCaw as a potential future leader - voters are going to go into the 2014 election prepared to accept the status quo. The reality is most people's lives are ticking over satisfactorily despite the recession and they will entrust another three years of management to National.