When President Obama is re-elected!!

[manton]

This board is a total liberal echo chamber.

[JimHow]

I guess I should just change my views then manton to make you happy.

[AlexR]

I don't understand:

http://edition.cnn.com/2012/11/09/world ... ?hpt=hp_t1

The US sends a drone in Iranian airspace to spy on that country. This is fired upon (but not shot down, apparently).

Who is the aggressor?

Alex R.

[stefan]

Alex, the U.S. claims that the drone was more than 12 miles off the coast of Iran, which implies that it was not in Iranian airspace.

[manton]

OK, look, I dont' want to address everything because what's the point but there is a lot of BS being flung around. Let's just take Goldwater. The idea that he was some sane Republican compared to today's extremists is a joke. Leave aside that in his own time Goldwater was attacked by the left for being the most extreme Republican ever (and he actually might have been, in terms of a Presidential nominee). Just look at his actual voting record. It is so far to the right than any single sitting US Senator or Congressman, or 2012 presidential candidate, the comparision makes them look like Democrats, or makes him look like he belonged to some party that has no relation to the current Republicans. When he was an old man and out of power he endorsed allowing gays in the military, and to all these libs today that means he must have been liberal all along. Sorry, no. BTW, the reason he didn't talk about "social issues" in 1964 is because no one was talking about them, they were not on the table yet. And most of the country agreed on them anyway.

Beyond that I find it preposterous that an enthusiastic Obama supporter can call himself a "fiscal conservative." Really. That's like a "social liberal" supporting Santorum.

As I said before, I don't belong here.

[JimHow]

I must just be insane, manton, I guess. Me and the tens of millions of others who voted for Obama. We're all insane, I tell you.

[manton]

You may or may not be insane, let's leave that for another day.

Why the insistence on all this retroactive mythmaking and other BS? You are flatly wrong about Goldwater, but what I wonder is, why is it important to you rewrite history like that? Not only is it provably, demonstrably false--it's also irrelevant to the future of anything.

If you really see no dissonance between "fiscal conservatism" and the Obama record, then all I can do is repeat, I have can no longer find any common ground with people on the left. We are on different planets.

BTW, the usual response to that is "But Bush was a big spender too." Honest Republicans, like me, will say "yes, he was, and it's a huge problem that we have to correct." I have yet to hear a single honest Democrat acknowledge that Obama's spending is a problem of similar magnitude (it's actually much bigger, but leave that aside) or even acknowledge that Obama's spending is a problem at all. Mostly what I hear is, "He hasn't spent enough, if the stimulus or whatever were much bigger, we'd be growing at 3% by now."

[tmas]

Tmas,

You really do have the wrong end of the stick regarding the Benghazi incident!
No, I do not “think Obama is near godlike”, therefore I do NOT expect him to be intimately acquainted with the functioning of each and every embassy and consulate around the world!!!
Until you can show that the President was aware of the lack of security in this city no one had ever heard of before, and did not act accordingly, your comments can only be considered to be in bad faith, and not based on facts. You wrote that “Obama didn't shut up Romney on this point during the debate”, but you have me wondering if we watched the same debate!

We definitely part company when you write “I don't see any conflict with American values when it comes to using enhanced interrogation on enemies such as terrorists who deliberately slaughter innocent men, women, and children and have the stated aim of destroying and subjugating those with different religious beliefs and/or cultures”.
Torture is torture. Calling it “enhanced interrogation” is like saying the prisoners in Guantanamo are “detainees” or to speak of “protective reaction strikes” - in other words an unacceptable euphemism. I cannot abide by people advocating this, much less a Vice President. It is well and truly barbaric and shameful.

Archie Bunker: Jim chastised me for this, and if I went past any boundaries, I do apologize.

All the best,
Alex R.

You know AlexR, we just happen to be completely and absolutely diametrically opposed when it comes to our beliefs. The facts, however, are the facts. If you check them regarding my statements relating to the 2nd debate you will find that they are as I noted.

I am more than a little shocked that you refer to Benghazi as " this city no one had ever heard of before" as if that relieves those responsible of their obligations to the Americans stationed there. I doubt the mothers, fathers, wives, children, and relatives of those who died would think they were any less worthy of the support of their government because they were in a "city no one had ever heard of". We will see what happens going forward with the inquiry.

Use the word torture if you'd like, makes no difference to me, I absolutely believe in my statement above when it comes to the murderous barbarians I refer to. You say you dislike "unacceptable euphemisms". I agree they can often be infuriating! For instance, how insane is it to refer to what as happened at Fort Hood as "workplace violence", or acts of terrorism as "man-caused disasters" !

You mention in another post that "The US sends a drone in Iranian airspace to spy on that country", I haven't read anything to that effect. The US government has stated that the drone was 4 miles outside of Iranian air space, but you immediately assume that Iranian airspace was violated. On balance you seem to feel negatively about America, which is your right certainly but makes you very different from me.

[JimHow]

Manton, if you can't express your opinion here without personally insulting people I'm going to ask you to leave.

[Houndsong]

BTW, the reason he didn't talk about "social issues" in 1964 is because no one was talking about them, they were not on the table yet. And most of the country agreed on them anyway.

Brother manton, how old are you and or what planet do you hail from? Have you ever heard of the Civil Rights Act of 1964? That was a pretty devisive social issue across party lines and along the traditional Norhtern/Southern lines. What about Bull Connor, you think he was down with that?

That was and perhaps remains the biggest social issue of the last 50 years. And that issue had been percolating for quite a while, since at least the end of the Second World War and was prominent in the Eisenhower years.

Now, you did get the chip shot right about Goldwater being dead set against it - but he did talk a lot about it. (And apparently he had been a supporter of Civil Rights - ed.). And it hurt his candidacy although he wasn't going to be president anyway under the circumstances.

Well that makes you just 67% full of it in your assertions in this thread. You're ahead of Trump now.

This may sound like a liberal echo chamber to you but we do like to get our facts straight here, and let people draw their own conclusions from them.

[manton]

"Social issues" in common usage today is a proxy for abortion, contraception, gay rights, and so on, not civil rights. So, if that's what was meant, then we are not talking about the same things.

And, anyway, if that's what was meant, it completely destroys the entire contention that Goldwater was some moderate in contradistinction to today's extremists. The majority of Republicans in both houses voted FOR the 1964 Civil Rights Act (at higher rates than Democrats and over a Democratic fillibuster, but that's neither here nor there for the purposes of this discussion). Goldwater was a rare Republican no vote, which put him on the extreme even then, both of public opnion and within his own party.

So, no, you don't have your facts straight if you think Goldwater was a "moderate" compared to Romney or to any modern Republican.

What I don't get it is, why is that myth important?

[Houndsong]

Alex, the US is sending drones into sovereign airspace a lot, and not just for reconnaissance. It's one of the principal means of fighting the "war on terror." While I'm all for getting the bad guys doing it this way is highly problematic from an international law standpoint. Fact is, we do it because Yemen, Pakistan and other countries haven't got the means to resist. We'd be the first to retaliate or complain to the UN if the Iranians flew a drone into this country, or for that matter if the Israelis did and used it to assassinate some terrorist here.

[AlexR]

Manton,

You wrote: I have yet to hear a single honest Democrat acknowledge that Obama's spending is a problem of similar magnitude (it's actually much bigger, but leave that aside).
Agree that it is of similar magnitude, disagree that it is much bigger. Please refer to the graph I posted above.

Tmas,

You wrote: “I doubt the mothers, fathers, wives, children, and relatives of those who died would think they were any less worthy of the support of their government."
Well, the family of the deceased ambassador did express their desire that people like you should not attempt a stab at making some sort of sick capital out of the Ambassador’s demise because of a biased political agenda:
http://www.huffingtonpost.com/2012/10/1 ... 80410.html
I think your attempting to stand up for them in the way you did would rather disgust them.
As would your analysis of the Benghazi incident.

You also wrote: “Use the word torture if you'd like, makes no difference to me, I absolutely believe in my statement above when it comes to the murderous barbarians I refer to”.
Gotcha. They’re murderous barbarians so WE can be murderous barbarians too!!!
Evil + evil = good.
You are a real whiz at ethics!

You finish by writing : “On balance you seem to feel negatively about America, which is your right certainly but makes you very different from me”.
I criticize the negative forces, the parasites, the warmongers, the rapacious capitalists, the homophobes, the old farts…
I love my country, but not for the wrong reasons - the torture you advocate being one of them.

Best regards,
Alex R.

[manton]

Manton, if you can't express your opinion here without personally insulting people I'm going to ask you to leave.

I didn't insult anyone, but I will leave anyway. I wish this thread hadn't existed, the wine chat was fun while it lasted.

[Houndsong]

Manton, he was quite moderate on social issues - for his time and then as an "old man" out of office to use your words. He was pretty much a libertarian - a "Brokeback Mountain" conservative and an environmentalist. He suppoorted civil rights but voted against the CRA as an infringement of "states rights". Reconciling this is not difficult. And yes, compared to today's "conservative" who typically is religiously and morally "conservative", he would be quite liberal.

[stefan]

I stand behind what if said:

>>
Barry Goldwater, the leader of the conservative Republicans in the 1960s, has been rolling around in his grave over the selling out of the movement to the social neanderthals. The Republican party should return to its traditional conservative views if it wants to avoid withering away.
>>

I never said that Goldwater was a moderate. He was on the far right of the Republican party. However, he was a social libertarian even if he was against the 1964 Civil Rights Act because he considered a couple of parts of it unconstitutional. Later he was appalled when the religious right started hijacking the Republican party. He is rolling over in his grave because of what has happened since then.

I was not a Goldwater supporter then or now. I do think that returning to his type of conservatism (fiscal responsibility; social libertarianism; strong military) would help the GOP gain supporters.

manton, do you really think that Democrats are unconcerned about our huge deficit and government over expenditure? These are problems that must be addressed.

[manton]

You are, I believe, conflating the post-retirement Goldwater with Senator and Nominee Goldwater. The latter was further to the right than any modern Republican on just about everything and spoke openly of wanting prayer in schools and warning of moral decay. Even Santorum is not as hard core on school prayer as Goldwater was. After Roe, Goldwater was FOR a Constitutional ban on abortion. Mitt Romney isn't and neither is most of the party.

But after he retired, Goldwater softend on abortion and gay rights and also said a lot critical things about the Christian right. So if you want to say that that's the kind of Republican the party needs now, fine, but let's not confuse that Goldwater with the man who ran for President and who served five terms in the Senate.

[manton]

I think that the dominant strain of thought in the Democratic party goes something like this:

1) The problem with the stimulus was that it was too small. The magnitude of the crisis required something more on the order of $2-3 trillion rather than $1 T. The stimulus "failed" only in not being able to do enough. It did not fail in the sense that it (along with TARP and loose monetary policy) kept us from going into a genuinue depression. Things would have been much worse without it, though much better had it been a great deal larger.

2) Spending is not really a problem because debt is not really a problem. A growing economy can do many salutary things: 1) reduce the share of interest payments out of current revenues; 2) reassure foreign creditors; 3) reduce the need for further debt.

3) Spending can create growth, both by spurring agregate demand (stimulus) and by targeted investments in the technologies and industires of the future (green jobs, etc.).

4) The higher federal baseline (25% or more of GDP) is also good because it stabilizes the economy and insulates most regions from the worst effects of the business cycle.

I think that is the majority opinion in the Democratic Party today. More or less, that the problem will solve itself. There is a minority that thinks more along Erskine Bowles lines. But that minority has no power.

[Houndsong]

Manton, putting aside the "debate" in this thread, I'm having a little trouble with your lament about wishing the thread had never existed. It well predates your joining the board, a cursory review of the opinions expressed in it would have acquainted yourself with any "slant" in opinion, yet you joined it willingly and seem disappointed that your opinions (not to mention your facts) were contested. I think it truly bizarre that within days of commenting in it, you asked it be deleted from the site. Seriously, troll much?

It's fun to stir the pot and all but why are you so glum now that you've done it? You seem to be pretty good at it.

[manton]

Not trolling, I truly do wish it were not here, or that I had not found it. I do think the board would be better off without it. Take that opinion FWIW.

When it comes to responding to things I know are wrong, I am self-indulgent and weak. Though in my defense I did let "Bush knew all about 9/11 in advance!" pass!

[manton]

BTW, at first my comments here were just about the horse race and everyone seemed very civil no matter whose side they are on. Now it's just ideological combat, including a lot of liberals giving Repubilcans "concern troll" advice that would seal their doom. I gather some of you honestly believe what you are saying, but some of you probably also know that it wouldn't work. Or rather, it would "work" because the point is to make the party weaker than it is now.

But I have good news for you. You needn't bother. You've won and the party is not coming back at the national level. If and to the extent that it does, it will be under the rubric of Governator/Bloomberg types who are ideologically indistinguishable from Democrats. To the extent that the Republicans nominate anyone conservative nationally, even as conservative as Romney, which is not that conservative, they will lose.

[Houndsong]

Manton, we are all about self-indulgence. I personally am weak. You fit right in. Keep righting those wrongs.But don't feel like you have to. Your corrections have been logged by Google's bot and a few others. They'll live forever.

[stefan]

Sure, Goldwater's thinking on social issues evolved, a lot while he was in the Senate, and it continued after he retired. He was very critical of the religious right:

http://www.liberalslikechrist.org/about/Goldwater.html

I like what he said even later:

"A lot of so-called conservatives today don't know what the word means," he told the Los Angeles Times in a 1994 interview. "They think I've turned liberal because I believe a woman has a right to an abortion. That's a decision that's up to the pregnant woman, not up to the pope or some do-gooders or the religious right. It's not a conservative issue at all."

During the 1990s, Mr. Goldwater spoke out in favor of allowing gays to serve in the military, and he worked in Phoenix to end job discrimination against gays. In 1994, he became honorary chairman of a drive to pass a federal law preventing job discrimination against gays.

"The big thing is to make this country, along with every other country in the world with a few exceptions, quit discriminating against people just because they're gay," he said. "You don't have to agree with it, but they have a constitutional right to be gay. And that's what brings me into it."

My point was that the Republicans would be better if they listened to their former leader of the conservative movement in the GOP.

[manton]

MY point is, when he actually WAS the leader of the conservative movement of the GOP, Goldwater held none of the views that you are saying Repubilcans should hold now. Maybe the Republicans would be better off'; the math says no however.

In any event, the Barry Goldwater who was a major public figure for three decades was in no way a moderate, social or otherwise.

[stefan]

As for Romney, it rather difficult to know what he really thinks on many issues, but it seems to me that he is somewhat right of center while Obama is somewhat left of center, about like Nixon versus Johnson or Bush II versus Gore or Bush I versus Clinton. I said during the campaign that I would vote for Romney if he would promise to pay the same percentage in federal income taxes on his income as I pay on mine. (He earns 100+ times what I earn but my rate is 50% higher.) He did not and I did not even though I think Obama has done only a so-so job as president.

[Houndsong]

Manton, I am interested in your opinion about this especially since you say the dems have "won" and the Republican party of yore isn't coming back. Should the house repubs stick to their no tax rate increase guns and pursue a scorched earth policy or should they accede to rate increases to get a deal done and make some headway on the matter? This is not a setup to some polemic, I'm simply curious.

[manton]

Well, some to agree with here and much to disagree with.

Romney is ideologically nebulous, to be sure. The best spin I can put on that is that he is just not a "statesman" in the best sense and never has been. But, like a lot of highly succesful men, he is ambitious and once men like that feel they are rich enough and have already proved themselves in business they start looking at electoral politics. That's after a lifetime of not thinking much about the issues at all. So all the sudden he needs a bunch of positions, which as you saw he tailored to whatever office he happened to be running for in the moment. I think there are some core principles in there, but there is not a coherent philsophical core. Really, few policians have one and even fewer Presidential nominees. McCain didn't, that's for sure.

I would put Obama way off to the left, but leave that aside for now.

The problem on the tax issue is serious. Romney pays that rate because his "income" is derived from cap gains, not income proper. Remember, he has already paid income taxes, in the highest possible bracket, on ever dollar he has invested.

Now, it surely is, I don't know, annoying or whatever to see a guy pay an effective rate in the teens on income of $20 million. I, like you, make a fraction of that but my rate is several times that. But my pay is all ordinary income, what money I have invested I am not selling, so I pay no cap gains taxes at all.

The problem here is that the money Romney earns is exactly the same kind as the money that retirees, pensioners and the like earn--people FAR less rich than Romney and who would really be hurt by a cap gains tax increase. Well, OK, fine, you might say, let's just make the tax progressive so that we don't hurt those people. And probably we could do that. But higher cap gains taxes will have a negative impact on markets and investment. If you want to make that trade-off, OK, just do it with eyes wide open. Remember it was Bill Clinton who lowered the cap gains tax to 15%, a move that was totally uncontroversial at the time and that helped lead to a huge equity and investment boom.

Now, where I think common ground could be found is, people working in hedge funds and (to a lesser extent) private equity take all or most of their comp as cap gains. That is, their "day job" income consists totally of cap gains taxed in the teens. This is all legal because of the way they structure the funds and their relationship to those funds. But it certainly seems like contrary to the spirit of the differential between cap gains rates and income rates. Pete Peterson and others would howl over any attempt to change this, and they would argue that any such change would have the same negative impact on investment as a broader change. And no doubt they would be right, though the effect would be far smaller. Anyway, that might be a reasonable price to pay for reducing the power and influence of hedge funds and knocking their status down a peg or two so that in the future they are not (as they are now) the top draw for the most talented workers. Lots of brainpower in there doing not much good for society, if you ask me.

[manton]

Manton, I am interested in your opinion about this especially since you say the dems have "won" and the Republican party of yore isn't coming back. Should the house repubs stick to their no tax rate increase guns and pursue a scorched earth policy or should they accede to rate increases to get a deal done and make some headway on the matter? This is not a setup to some polemic, I'm simply curious.

I don't know what the should do. They are screwed either way, it seems to me. They can cave and piss off their base, or they can stand for their principles and get thumped by the President, the media--everyone but their base.

If Clinton were president, it would be possible to find a deal that both sides could abide. But Obama's speech made clear today that it's his way or the highway.

Probably if I were them (which I'm not) and cynical (which I am becoming), I would say, "Listen, Mr. President, you don't really want to raise taxes. We both know that. Tax hikes make people mad and politicians unpopular. You just want to spend money. Spending money makes people happy. So, fine, we'll let you spend whatever you want. Blank check. But no tax increases. If liberal economic theory is correct, it will all just work itself out anyway. The spending will spur aggregate demand, which will grow the economy, which will increase revenues, which will reduce the debt."

[stefan]

Yes, Romney's "capital gains" through Bain were completely phony, not at all like capital gains that you and I have through appreciation of investments. It is a huge loophole in our tax law that should be eliminated. Romney said that he wanted to cut deductions at the high end but gave no specifics. To gain my vote all he had to do was say, "As a taxpayer I took advantage of this loophole. As president I will close it." I am sure that this would have gained him many other votes and would have killed Obama's popular, "I will ask the wealthy, such as Governor Romney and me, to pay a little more".

As for Clinton--well, he was as business friendly as Reagan even if he had some "liberal" views.

[tmas]

Manton,

You wrote: I have yet to hear a single honest Democrat acknowledge that Obama's spending is a problem of similar magnitude (it's actually much bigger, but leave that aside).
Agree that it is of similar magnitude, disagree that it is much bigger. Please refer to the graph I posted above.

Tmas,

You wrote: “I doubt the mothers, fathers, wives, children, and relatives of those who died would think they were any less worthy of the support of their government."
Well, the family of the deceased ambassador did express their desire that people like you should not attempt a stab at making some sort of sick capital out of the Ambassador’s demise because of a biased political agenda:
http://www.huffingtonpost.com/2012/10/1 ... 80410.html
I think your attempting to stand up for them in the way you did would rather disgust them.
As would your analysis of the Benghazi incident.

You also wrote: “Use the word torture if you'd like, makes no difference to me, I absolutely believe in my statement above when it comes to the murderous barbarians I refer to”.
Gotcha. They’re murderous barbarians so WE can be murderous barbarians too!!!
Evil + evil = good.
You are a real whiz at ethics!

You finish by writing : “On balance you seem to feel negatively about America, which is your right certainly but makes you very different from me”.
I criticize the negative forces, the parasites, the warmongers, the rapacious capitalists, the homophobes, the old farts…
I love my country, but not for the wrong reasons - the torture you advocate being one of them.

Best regards,
Alex R.

"parasites, the warmongers, the rapacious capitalists, the homophobes, the old farts… ", really, you spew a lot of hatred considering the beliefs you claim to espouse.

Seriously AlexR, there's no point in us debating any further. I find you repugnant to be honest. You remind me of the "American" Maoists of the 60's who trashed the US while sucking up it's bounty. Oh, and I remembered who you remind me of...Jane Fonda.

[AlexR]

Tmas,

Apart from your ad hominem bullshit and right wing wet dreams, my tits aren't anywhere near as nice as Jane Fonda's.

I suppose you won't believe *that* either.
(there are some people you just can't talk with...).

Alex R.

[manton]

How were Romney's cap gains "phoney"? As I understand it, he was NOT paying primarily cap gains when he was working at Bain, he was earning income and paying income taxes. He pays cap gains now because he is retired and earns no ordinary income. The paradigm of post people in PE being comped through equity was not so common then. At hedge funds, of course, that's always been the paradigm.

And his income is EXACTLY like the gains you and I make through investments. Just, obviously, he has way more. Look, there are three ways for a guy like that to spend money: he can spend interest income, which is taxed as ordinary income. He can spend principle, which is not taxed at all. Or he can liquidate assets, spend the appreciation, and reinvest the rest. That's taxed as cap gains.

So, I can understand why you want to see people that rich pay higher rates, but it's not a loophole, it's the system we have. Millions of people live that way, most are retired and most are not rich.

Progressivizing the cap gains rate is also not that easy. I mean, how would you do it? Based on total assets? Like a wealth tax? That raises a lot of problems. Based on how much he takes out year to year? Other problems. The point is, it's not easy to devise a system that focuses it's higher rates only on people like Romney (however you want to define them), and that leaves alone MC retirees AND does not have an adverse effect on investment.

[tmas]

Tmas,

Apart from your ad hominem bullshit and right wing wet dreams, my tits aren't anywhere near as nice as Jane Fonda's.

I suppose you won't believe *that* either.
(there are some people you just can't talk with...).

Alex R.

I believe we're getting a glimpse of the real AlexR. Yes, repugnant.

And I agree, there are some people "you just can't talk to", and, some people you just don't want to talk to. For me, you fit both categories perfectly.

[JimHow]

Way to ruin what had been a great thread for a year, manton, tmas, and Alex.... Thanks a lot.

[stefan]

manton, you were describing Romney when you wrote, "people working in hedge funds and (to a lesser extent) private equity take all or most of their comp as cap gains. That is, their "day job" income consists totally of cap gains taxed in the teens." There are of course many other legal tax avoidance measures of which the very rich can take advantage and some of which Romney used. Maybe those are the deductions Romney had in his undisclosed plan.

Why is it so difficult to make capital gains tax progressive? Tax on ordinary income is progressive, why not tax on capital gains?

[tmas]

Way to ruin what had been a great thread for a year, manton, tmas, and Alex.... Thanks a lot.

Sorry Jim, certainly not my intent. I believe I have conducted myself with reasonable decorum considering the charged nature of the thread.

[Houndsong]

I think this is great - even if it's detoured from the original purpose.

I'm not sure who first injected the Benghazi thing here. I guess it was about the possible effect on the outcome of the election. But I would like to go on record as saying that even if just the most innocent mistakes were made and the aftermath of confusing, to say the least, words turns out to be a product of nothing worse than the fog of war, I hold Obama responsible for the deaths of those guys. In addition to his being CiC, State's an executive branch department. It's a stain on his legacy. Similarly I don't beleive any of the nefarious threories about 9/11, but that one's on Bush. Far more than his tax cuts, a poor economic record and two major bear markets/crashes, that and the ensuing wars in Iraq and Afghanistan will be his legacy. That and that turncoat Chief Justice Roberts.

[manton]

well I might be wrong about this but I know that Romney retried from bain in 1999 and I have read that he was mostly paid in regular income in those days, with equity awards of course, in the form of options and such, but not like the hedge fund industry or some PE firms today where people are paid almost 100% in equity. That is, the HF guy of today might make a very small % of comp as cash but most is equity taxed as CG. At most hedge funds, literally 100% of comp is in equity.

Romney, when he was working, OTOH was paid like CEO: salary+bonus+stock. So only the portion of that taxed as CG was the last 3rd, and even then only the appreciation, not the award itself, which was taxed as income. In other words, if you work for me, and I give you $100K and then 100 shares of stock, you have to pay taxes, once, on the value of that stock award as if it were cash. Cap gains comes into play as the award appreciates (assuming that it does) and you sell it.

What we're really talking about here is the whole "carried interest" issue, which I believe has to be changed. That would not affect Romney, though, or any other rich retiree living off investments. The 14% rate that eveyone was howling about was recent, and not when he was working.

it's difficult for a lot of reasons. Like I said, what do you base it on? Total assets to y-2-y withdrawals? Either way, you run into problems which include easy dodges for the rich and/or collateral damage on the middle class.

The carried interest question, though, I believe could be addressed immediately and you could find a bipartisam majority to agree, and that would essentially end forever the issue of working H-F managers taking all their comp as CG rather than salary. I believe, but can't really prove, that the negative impact on investment would not be that great.

[DavidG]

Well, some to agree with here and much to disagree with.

Romney is ideologically nebulous, to be sure. The best spin I can put on that is that he is just not a "statesman" in the best sense and never has been. But, like a lot of highly succesful men, he is ambitious and once men like that feel they are rich enough and have already proved themselves in business they start looking at electoral politics. That's after a lifetime of not thinking much about the issues at all. So all the sudden he needs a bunch of positions, which as you saw he tailored to whatever office he happened to be running for in the moment. I think there are some core principles in there, but there is not a coherent philsophical core. Really, few policians have one and even fewer Presidential nominees. McCain didn't, that's for sure.

I would put Obama way off to the left, but leave that aside for now.

The problem on the tax issue is serious. Romney pays that rate because his "income" is derived from cap gains, not income proper. Remember, he has already paid income taxes, in the highest possible bracket, on ever dollar he has invested.

Now, it surely is, I don't know, annoying or whatever to see a guy pay an effective rate in the teens on income of $20 million. I, like you, make a fraction of that but my rate is several times that. But my pay is all ordinary income, what money I have invested I am not selling, so I pay no cap gains taxes at all.

The problem here is that the money Romney earns is exactly the same kind as the money that retirees, pensioners and the like earn--people FAR less rich than Romney and who would really be hurt by a cap gains tax increase. Well, OK, fine, you might say, let's just make the tax progressive so that we don't hurt those people. And probably we could do that. But higher cap gains taxes will have a negative impact on markets and investment. If you want to make that trade-off, OK, just do it with eyes wide open. Remember it was Bill Clinton who lowered the cap gains tax to 15%, a move that was totally uncontroversial at the time and that helped lead to a huge equity and investment boom.

Now, where I think common ground could be found is, people working in hedge funds and (to a lesser extent) private equity take all or most of their comp as cap gains. That is, their "day job" income consists totally of cap gains taxed in the teens. This is all legal because of the way they structure the funds and their relationship to those funds. But it certainly seems like contrary to the spirit of the differential between cap gains rates and income rates. Pete Peterson and others would howl over any attempt to change this, and they would argue that any such change would have the same negative impact on investment as a broader change. And no doubt they would be right, though the effect would be far smaller. Anyway, that might be a reasonable price to pay for reducing the power and influence of hedge funds and knocking their status down a peg or two so that in the future they are not (as they are now) the top draw for the most talented workers. Lots of brainpower in there doing not much good for society, if you ask me.

Manton, you may be shocked to hear that I agree with most of the above. I do think we needed to spend about a trillion on shoring up the economy (though I don't think we spent it all wisely) and I don't see Obama as far left, but other than that I'm in agreement with you on the economic issues. Cap gains rates should be low because income tax has already been paid on the principal but lets end the screwy definitions that let the hedge fund managers get away with calling their fees capital gains. Lets get rid of the other loopholes like Romney suggested - it wont be enough to fix the deficit but it will help and it will be more fair, at least to me and everyone other than those whose taxes go up as a result.

[manton]

The whole way these funds work now is like this (and this is why it's different than traditional equity compensation, like stock options).

So, you and some buddies are really smart and you want to start a fund. You maybe put up some of your own money and you find some investors. Now you have your pile of cash. All that is already earned somewhere by someone so the taxes have already been paid on it.

Now, you look around for some things to invest in. You find some, maybe some distressed debt here, some real estate there, some other assets over there, and this underperforming company. All those assets are priced for tax purposes at the time you buy them.

Now, the clever thing you do is you set up the fund as and LP, which makes you all owners of the core assets. In other circumstances, ownership share would be to the extent that you ponied up money. But you are no fools and you have also made it a requirement for your investors that, when gains accrue, they pay you some of their share. Legally, the whole thing is an LP that owns appreciating assets. So, genuises that you are, you manage it well and the assets do, in fact, appreciate. As partners, you are all "owners" of the assets. That means you can stratetically liquify this or that to create capital gains.

Well, guess what, those will only be taxed at the CG rate. Now, why would you pay yourself a salary taxed at orindary income when you can simply take from the profit pool (especially from your investors' share)? You'd be a fool, right? Yes you would.

Funny thing, though, most of that capital was not really yours because, with rare exceptions, most of the money put at risk to found the fund was not yours. In effect, you say to your investors, "For the privelege of me managing your money, I will take 20% of your profits/gains" which will then be taxed as CG, not income.

Now, this is pretty stupid, IMO, and could be easily fixed. Why it hasn't been is kind of a mystery.