1) So, When IS The Right Time For Moral Hazard Lectures About Bailouts?
As most of you know, a moral hazard happens when a government policy encourages and rewards behavior it wants to prevent.
Bailing out banks, shareholders, or depositors moves them off the hook for failing to do their due diligence and makes failure like SBV more probable in the future.
And when Biden tries to assure us that “taxpayers won’t pay for this,” of course, they will. Who else is there to pay for this? The man on the moon?
2) Under The Biden Budget, Capital Gains Tax Can Rise Above 100%!!
What‘s the right and fair tax to levy on investments? 10%? 20%? 40%? How about over 100%? Should the government take it all and then some?
This chart from Laffer Associates shows that Biden’s plan to raise the capital gains tax rate to 44.6% would mean that investors could pay an effective tax rate of 86% on the after-inflation profits from owning an investment – and that's assuming inflation returns to its 2% Fed target. If the inflation rate stays on its current path of 6.7% the real cap gains tax could reach above 110%.
Our CTUP co-founder Arthur Laffer tells us that because "the nominal rate of return on some investments are below the rate of inflation, the capital gains tax under Biden can reach infinity.”
For example, if you buy a stock for $100 a share and then it rises to $120 per share five years later, but the accumulated inflation rate over that period was, say, 24%, then you lost money owning the stock after adjusting for inflation. But, you would still owe Uncle Sam a 40% tax on the phantom “gain” of $20 per share. This is sheer idiocy.
Governor Gretchen Whitmer confirmed Monday that she plans to sign a repeal of Michigan's right-to-work law.
Even worse is the policy will be difficult to ever repeal. As a gimmick, the Majority House Democrats added an appropriation of $1 million to the repeal legislation making the policy referendum-proof. The state Constitution bars referendum campaigns against laws that include financial expenditures. (Whitmer is breaking her campaign promise never to sign a bill that uses this gimmick.)
Now it will require a constitutional amendment to change the mandatory union rule.
What was sinister about this legislation is that Dems portrayed the law as protecting a worker’s right to join a union. That right already exists. The law does just the opposite: it forces Michigan workers to join a union. Are Whitman and her big labor bosses intentionally trying to drive workers and businesses out of the state?
4) Quote of the Day – An Admission That WE Were Right And THEY Were Wrong
This apology letter from a liberal icon, Naomi Wolf, former adviser to Vice President Al Gore, is a must-read. It’s a long letter so we excerpt from it:
There is no way to avoid this moment. The formal letter of apology. From me. To Conservatives and to those who “put America first” everywhere….
I believed a farrago of lies. And, as a result of these lies, and my credulity — and the credulity of people similarly situated to me - many conservatives’ reputations are being tarnished, on false bases.
Congress convened the January 6 Committee and used millions of dollars in taxpayer money to turn that horrible day, and that tragic event, into a message point that would be used to tar a former President as a would-be terrorist, and to smear all Republicans, by association, as “insurrectionists” or as insurrectionists’ sympathizers.
There is no way for anyone thoughtful, even if he or she is a lifelong Democrat, not to notice that Sen Chuck Schumer did not say to the world that the footage that Tucker Carlson aired was not real. Rather, he warned that it was “shameful” for Fox to allow us to see it…Isn’t the press supposed to want full transparency for all public interest events? [https://www.theguardian.com/us-news/live/2023/mar/07/biden-medicare-taxes-desantis-trump-2024-live-updates] How can you “over-use” real footage of events of national relevance?...
Peaceful Republicans and conservatives as a whole have been demonized by the story told by Democrats in leadership of what happened that day.
So half of the country has been tarred by association, and is now in many quarters presumed to consist of chaotic berserkers, anti-democratic rabble, and violent upstarts, whose sole goal is the murder of our democracy.
I also believed wholesale so much else that has since turned out not to be as I was told it was by NPR, MSNBC and The New York Times.
Because of lies such as these in legacy media — lies which I and millions of others believed — half of our nation’s electorate was smeared and delegitimized, and I myself was misled.
5) Former Super Regulator Barney Frank Defends His Bank
My oh my. This tiger sure has changed his stripes. Does everyone in Washington eventually sell out?
It was a seemingly unthinkable scene: Barney Frank, co-author of the Dodd-Frank Act, the radical overhaul of the banking system after the 2008 global financial crisis, was having his very own Dick Fuld moment.
There was none of the Fuld-style shouting and ranting, but Frank, just like the former Lehman Brothers top executive had famously done, was taking to the phones to lament how authorities had unnecessarily shuttered the bank he helped oversee. Frank, to the surprise of some, landed on the board of Signature Bank, a New York-based lender that boomed during the pandemic. It was seized by regulators Sunday, making it the third US bank to collapse in just five days.
“I think that if we’d been allowed to open tomorrow, that we could’ve continued — we have a solid loan book, we’re the biggest lender in New York City under the low-income housing tax credit,” Frank said in an interview late Sunday night. “I think the bank could’ve been a going concern.”
