You got a 20% debasement (roughly) in the currency, a 20% increase in the stock market (net zero) but look at what went for a rocket ride.... just all the things you need to buy....
QE2 and Bernanke: FAIL
Tuesday, May 31, 2011
Monday, May 16, 2011
Deconstructing the Left's Argument for Increasing Tax Rates on the Rich
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By Jim Stuart
In response to the deficit and to the debt crisis, the left repeatedly and forcefully argues for higher taxes on the "rich." Aside from the fact that the entire income of the rich -- beyond what they already pay -- is insufficient to eliminate the deficit, conservatives argue that the top earners already pay a disproportionate share of federal income taxes. In addition, conservatives argue that raising taxes on the rich, and particularly on small business owners, would suppress job creation, making the already serious unemployment problem worse at a time when we can least afford it. The left responds that the rich should pay the lion's share of taxes because they earn the lion's share of income, arguing that since Reagan, almost all growth in income has gone to the rich. The top 1% (the rich) earned 20% of all personal income in 2008 versus 8.51% in 1980 (See Figure 2 at the end). Meanwhile, the bottom 50% of earners (the poor) earned 12.75% of the total income in 2008 versus 17.68% in 1980 (Figure 2). Given that the income share for the rich went up while the income share for the poor went down, the left argues that it is unfair to pursue policies that will continue to disproportionately benefit the rich.
Let's examine the numbers a little more closely, looking at the tax share relative to income share for the two groups between 1980 and 2008. The share of income tax paid by the rich in proportion to the share of their total income went from 2.25 to 1.9 between 1980 and 2008, while the same ratio for the poor went from .40 to .21 (Figure 2). The effective tax burden (tax share in relation to income share) was 5.62 times higher for the rich than for the poor in 1980 and 9.0 times higher in 2008. Thus, the relative tax burden on the rich -- relative to income -- compared to the poor nearly doubled from 1980 to 2008 -- from 5.62 to 9.0 (Figure 3). Nevertheless, and despite the heavier and increasing tax burden on the rich, the fact that the income share for the rich increased while the income share for the poor decreased creates a seemingly irrefutable talking point for the left in the current budget debate.
Figure 2: Federal Income Tax Burden, 1980 and 2008
Bottom 50%
Figure 3: Ratio of Tax Burden Top 1% to Bottom 50%, 1980 and 2008
Let's examine the numbers a little more closely, looking at the tax share relative to income share for the two groups between 1980 and 2008. The share of income tax paid by the rich in proportion to the share of their total income went from 2.25 to 1.9 between 1980 and 2008, while the same ratio for the poor went from .40 to .21 (Figure 2). The effective tax burden (tax share in relation to income share) was 5.62 times higher for the rich than for the poor in 1980 and 9.0 times higher in 2008. Thus, the relative tax burden on the rich -- relative to income -- compared to the poor nearly doubled from 1980 to 2008 -- from 5.62 to 9.0 (Figure 3). Nevertheless, and despite the heavier and increasing tax burden on the rich, the fact that the income share for the rich increased while the income share for the poor decreased creates a seemingly irrefutable talking point for the left in the current budget debate.
Like many seemingly straightforward arguments, however, the claim that income growth has primarily benefited the rich does not in fact signify inequity, as it would appear.
The key is that the individuals paying taxes in the top 1% or bottom 50% in 1980 are not the same individuals as the taxpayers in the top or bottom segments thirty years later. Over a period of many years, people move up and down the income ladder, depending on their ability, ambition, and experience and other factors. The income categories more appropriately refer to classes of jobs or positions, not classes of people, and most individuals change jobs over their lifetime. Arguably, it would be unfair for John, CEO, to have benefited from tax policy over the last thirty years, while Frank, dishwasher, did not. It makes no sense, however, to argue that it is unfair to Frank that CEO salaries in general have gone up relatively more than dishwashers', particularly when John, 50, started out his career thirty years ago as a dishwasher and rose to become CEO through hard work, and Frank, 19, dishwasher, is in his first job and aspires to be CEO some day in the future. It is not at all obvious that Frank is harmed rather than benefited by the fact that opportunities for him at the upper end of the income spectrum are improving over time, and if he is able to prepare himself, work hard, and advance, his prospects of earning an excellent living will get better as time goes by.
It is interesting to speculate about the reasons why higher-level positions have appreciated more than lower-level positions. The compensation of nonunion workers, whether dishwashers, engineers, CEOs, or media celebrities, is determined by supply and demand in the free market. The salaries of surgeons and engineers may be high because too few are willing to undergo the rigors of science and mathematics curricula and could perhaps be pushed downward by policies encouraging the education of more doctors and engineers, as well as policies facilitating entrepreneurship. The salaries of dishwashers could perhaps be pushed upward by policies that reduce the competition from unskilled illegal aliens or reduce the number of high school dropouts and instead prepare them for better jobs. Factors such as the increasing pervasiveness of computers may put added emphasis on knowledge and information-processing skills and concentrate more and more economic value in top positions and high-tech, fast-growing companies. In any case, railing against the fact that economic compensation for unskilled positions isn't increasing faster than GDP makes no more sense than railing against the prices of food, energy, or raw materials, whose markets are increasingly global in scope and are largely unrelated to tax policy.
A ladder of opportunity will always exist that starts at the bottom with minimum wage jobs for new and unskilled workers and rises to the most competitive and demanding positions at the upper end of the scale. How rich a person becomes depends on how far he or she is able to advance up the ladder and not on how much any particular position at any particular level at any particular moment in time is worth.
Whatever the explanation for pricing trends for high-paying versus low-paying work categories, the tax code should not be used in a misguided attempt to level after-tax income, when the result will be to discourage ambitious workers from preparing and competing for much-needed but demanding high-value positions.
A further reason for not increasing the relative federal income tax burden on the rich is that since the bottom half pay only 2.7% of the total federal income taxes and since nearly half of taxpayers pay no income federal income taxes at all, an incentive exists for a majority constituency to vote to accelerate the growth and spending of the federal government and to increase income taxes that they themselves do not pay. Perhaps the solution would be "no representation without taxation."
Finally, as can be seen in Figure 1, showing adjustable gross incomes in 1980, 2007, and 2008, the income of the rich is much more volatile than that of the poor. The income of the rich decreased by 16% between 2007 and 2008 as a result of the recession; compare that with less than 1% for the poor. Overdependence of federal revenue on the rich thus exacerbates the problem for the federal government of falling tax revenue and resulting deficits during recessions.
In summary, there is a high and increasing progressivity in our tax code, which results in the rich currently paying nine times as much as the poor after taking income into account, and this progressivity has increased dramatically since 1980. Both for maintaining individual economic independence and federal income stability, a broader tax base is desirable. Finally, when we look at how the benefits of growth are distributed from the perspective of individuals rather than income groupings, we realize that income is not static and that workers realize their hopes and dreams through preparation, advancement, and promotion or entrepreneurship, not through magically gaining higher wages for the same, static position. What conservatives seek to offer are conditions of full employment in a dynamic, prosperous economy that permits new entrants in the labor market to readily find jobs at the start of their working lives and that at the same time, provides an abundance of higher-paying jobs that workers at all stages of their work life can aspire to.
Figure 1: Adjusted Gross Income between 1980 and 2008 ($ Billions)
| Year | Adjusted Gross Income Top 1% | Adjusted Gross Income Bottom 50% |
| 1980 | 138 | 288 |
| 2007 | 2008 | 1078 |
| 2008 | 1685 | 1075 |
Figure 2: Federal Income Tax Burden, 1980 and 2008
| Year | Share of Tax % | Share of Income % | Tax Share/Income Share Ratio |
| 1980 | 19.05 | 8.46 | 2.25 |
| 2008 | 38 | 20 | 1.9 |
Top 1%
| 1980 | 7.05 | 17.68 | .4 |
| 2008 | 2.7 | 12.75 | .212 |
Bottom 50%
Figure 3: Ratio of Tax Burden Top 1% to Bottom 50%, 1980 and 2008
| Year | Tax Burden Ratio -- Top 1% Relative to Bottom 50% |
| 1980 | 5.62 |
| 2008 | 9.0 |
Page Printed from: http://www.americanthinker.com/2011/05/deconstructing_the_lefts_argum.html at May 16, 2011 - 10:37:45 AM CDT
Friday, May 13, 2011
The Health Care Number You Didn't Hear
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February 26, 2010
By David Gratzer
On Thursday, the President gathered with Congressional members to discuss health reform. The President and Democratic leaders spoke of many numbers in their attempt to rebuild support for their proposals.
They mentioned 30 million (the number of uninsured Americans, according to the White House), 17 (the percentage of GDP spent on health care), and 1912 (the year when Teddy Roosevelt first called for universal coverage). But here's the number that no one mentioned: 12. And while all the other numbers are important, the key to reforming American health care rests with that one number, unmentioned.
American health care is expensive. If we spent what Switzerland does, we could cut income tax rates by 80%. And American health care is getting more expensive. Federal government figures indicate that health costs rose by 3.4% last year, roughly double the rate of inflation. It's not surprising, then, that the Obama White House has advocated "bending the curve" of health costs since Inauguration.
And, for the past year, the Administration has attempted to explain to Americans why health costs keep rising. The President spoke in July of Americans being offered two pills - "a red pill and a blue pill" - that are equally good, but one is half the price. Translation: drug companies are greedy. The President toured the Mayo Clinic, one of the best hospital complexes in the world and noted that Mayo physicians are on salary. Translation: your fee-for-service doc is greedy. The President used his September address to a joint session of Congress to bemoan the dearth of competition in the health insurance industry. Translation: insurance companies are greedy (and running a cartel).
If greed is the trouble, the White House seeks to address these woes with a raft of new regulations and rules. Obamacare will cut the profitability of pharmaceutical companies; it will create a committee to pay doctors for what the committee views as quality medicine; it will introduce a new Medicare-style public insurance to compete with private providers. Washington, in other words, will grow. The House version of the White House's proposal would create more than 100 new federal agencies and bodies.
But the problem with American health care isn't greed, its structural. After all, food and clothing are all organized with the profit motive - and the President isn't giving speeches that your butcher is too greedy or that Macy's is overly concerned with the bottom line.
The problem, ultimately, is 12.
A bit of background: American health care is an accidental system. Private coverage - the type most Americans have - has its origins in the wage controls of the Second World War as employers offered rich health-insurance benefits in pre-tax dollars. Public coverage like Medicaid and Medicare, on the other hand, takes its inspiration from the Beveridge report in Britain, drafted in the early 1940s; Lord William Beveridge believed in zero-dollar health care - that people ought to pay nothing at the point of use. Today's American health care fuses these two systems, but with a common economic flaw: people are overinsured, paying pennies directly on every dollar of health service they receive.
The end result: for every dollar spent on health care in the United States, just 12 cents comes out of the individuals' pockets. Imagine what food costs might be if your employer paid 88% of your grocery bill or what a trip to Saks might be like if your company covered the vast majority of the costs of the shopping spree.
Far from addressing the 12 cent problem, Obamacare would exacerbate it. With its rich subsidies, expansion of government programs, insistence that all insurance cover specific services (and some with no copayments at all), Obamacare would pour fuel on the fire of health inflation. It's one reason that even the chief actuary of the Centers for Medicare and Medicaid Services - a federal employee - predicts cost rises under the President's plan.
The White House has been sharp with its critics, demanding that they outline an alternative vision. Here's one: that Washington move decisions away from bureaucrats (be they corporate or government) and empower individuals and families. In other words, American health care should be more like the other five-sixths of the economy where consumers spend more of their own money - certainly much more than 12 cents on the dollar - and get more value for it.
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Dr. David Gratzer, a physician, is a senior fellow at the Manhattan Institute. He is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster (Encounter Books, 2009).
Page Printed from: http://www.realclearmarkets.com/articles/2010/02/26/the_health_care_number_you_didnt_hear_98362.html at May 13, 2011 - 07:30:01 AM CDT
Tuesday, April 19, 2011
Obamacare Explained By Maxine!
Obamacare Explained By Maxine!
4/19/11 | ?????
Posted on Tuesday, April 19, 2011 12:27:27 PM by Freepmanchew
Let me get this straight . . . .
We're going to be "gifted" with a health care
plan we are forced to purchase and
fined if we don't,
Which purportedly covers at least
thirty million more people,
without adding a single new doctor,
but provides for 16,000 new IRS agents,
written by a committee whose chairman
says he doesn't understand it,
passed by a Congress that didn't read it but
exempted themselves from it,
and signed by a President who smokes,
with funding administered by a treasury chief who
didn't pay his taxes,
for which we'll be taxed for four years before any
benefits take effect,
by a government which has
already bankrupted Social Security and Medicare,
all to be overseen by a surgeon general
who is obese,
and financed by a country that's broke!!!!!
'What could
possibly go wrong?'
The Incomparable Mark Steyn!
DOWNHILL ONLY ... Mark Steyn
Steyn Online ^ | 19 Apr 2011 | Mark Steyn
Posted on Tuesday, April 19, 2011 7:00:26 AM by Rummyfan
Wandering round this great republic predicting the apocalypse, I’m often asked by audience members why it is I’m being quite so overwrought if not an hysterical old queen about the whole business. After all, President Obama’s now-forgotten “Deficit Commission” produced a report melodramatically emblazoned “The Moment of Truth” and proposing such convulsive course corrections as raising the age of Social Security eligibility to 69.
By the year 2075.
With wake-up calls like that, we can all roll over and sleep in for another half century, right?
But some of us have been here before. We know the smell of decay, and we recognize it in America today. Last year, Niall Ferguson, professor at Oxford, at Harvard, and on highbrow telly documentaries, joined Barbra Streisand, James Brolin, and other eminent thinkers at the Aspen Ideas Festival. “Having grown up in a declining empire, I do not recommend it,” he told them. “It’s just not a lot of fun actually, decline.”
Amen, brother. It’s the small things you remember. The public clocks that stop and are never restarted. “Stands the church clock at ten to three? / And is there honey still for tea?” wrote Rupert Brooke, aching from abroad for an eternal England. If the town-hall clock stopped at ten to three, it stands there still, and the one above the splendid Victorian railway station stands at twelve past four, and the one on the Gothic Revival opera house at 7:23: You are literally in a land that time forgot. Likewise, the escalators. In “developing nations,” they’re a symbol of progress. In decaying nations, they’re an emblem of decline. In pre-Thatcher Britain, the escalators seized up, and stayed unrepaired for months on end. Eventually, someone would start them up again, only for them to break down 48 hours later and be out of service for another 18 months. It was always the up escalators. You were in a country that could only go downhill: All chutes, no ladders.
If you live in certain of our more obviously insolvent states, you may already recognize the phenomenon. A waggish reader wrote to me from the nation’s capital a few weeks ago hailing what he called Union Station’s cutting-edge bidirectional escalator technology. The conventional escalator on the left had been out of order for a month and “requires two full-time maintenance workers to stare at it for hours at a time while discussing football and women.” But during the same period the equally non-moving escalator on the right had been used every rush hour to accommodate thousands of both upward and downward commuters simultaneously. All the advanced technology of a staircase — now in an escalator! The bright new future of mass transit: no-speed escalators to high-speed trains.
Incremental decline is easy to get used to. I’m sure a few of my correspondent’s fellow commuters are equally droll about it and a few more get angry, but untold thousands more just shuffle uncomplainingly up and down, scuffing shoes and bumping backpacks. That’s the trick with decline: persuading people to accept it. The Transportation Security Administration, which in a decade of existence has never caught a single terrorist, has managed to persuade freeborn citizens to accept that minor state bureaucrats have the right to fondle your scrotum without probable cause. The TSA is now unionizing, which means that this hideous embodiment of bureaucratized sclerosis will now have its fingers in your gusset until the end of time.
What was it they used to say? If we give up our freedoms, the terrorists will have won! Whether or not the terrorists have won, the bureaucrats have. And they’re a more profound existential threat to America than the terrorists will ever be. My accountant was trying to explain to me the new 1099 requirements of Obamacare, but who cares? In the Republic of Paperwork, there’ll be a new set of new requirements along any minute. I’m ashamed of myself for even knowing what a 1099 is. But that’s the issue: Once you accept the principle that one citizen cannot contract with another without filing paperwork with the state, imposing ever more onerous conditions is merely a difference of degree.
In such a world it becomes more difficult to innovate, and frankly not a priority. When I deposit a New Zealand check at my bank in Montreal, the funds are available to me within two seconds. The last time I deposited a New Zealand check at my bank in the U.S., they sent it for “collection” (an entirely artificial concept in the computer age) to Australia, and by the time it came back it had expired. They couldn’t understand why I was annoyed — c’mon, man, we were in the ballpark! To resolve the issue, I had to go to the bank president, who, on being informed of my Canadian comparison, said, “Well, you must understand smaller countries by their nature have to get used to dealing with the rest of the world. It’s different for America.”
This might have been reasonable enough in 1950, when America was last man standing on a Western world otherwise reduced to rubble. But it seems an odd attitude for a country whose households are entirely filled by products made elsewhere and whose future is mortgaged to foreigners. And it made me wonder if perhaps Ferguson and I are being insufficiently apocalyptic. A gargantuan bureaucratized parochialism leavened by litigiousness and political correctness is a scale of decline no developed nation has yet attempted.
It doesn’t have to go like that. Abolish the 1099. Get the feds out of your underwear. Restart the escalator. But the clock is running down, fast.
from National Review
Friday, April 15, 2011
Political Thoughts For A Friday (Karl Denninger)
Posted 2011-04-15 09:54
by Karl Denninger
in Politics
Political Thoughts For A Friday
Reflecting some more on the speech that Obama gave on the 13th, I'd like to focus in on a couple of specific sections:
We believe, in the words of our first Republican president, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves. And so we’ve built a strong military to keep us secure, and public schools and universities to educate our citizens.
The former is an enumerated power of the Federal Government in the Constitution. The latter is not. The latter, such as it exists, is in State Constitutions.
This is rather important, because there is no broad agreement on what the public's "burden" is for such a thing. Bearing children is an individual choice. Some people choose to have many, some few, some none.
The common defense of the nation is a benefit that falls on all. But the education of children is a duty occasioned by individual and consensual adult acts of intercourse. The two are entirely-disjoint.
Thus the State (not Federal) focus on education. This provides choice. Those who believe that the proper allocation of cost should go to the person can choose a state to live in where that is respected. Those who believe that the proper allocation of cost should be common can choose a state where that is required. The Federal Government lacks the authority, as a matter of Constitutional Law, to force this issue. (Not that The Federal Government has given a damn about Constitutional anything for the last hundred years or so.)
Part of this American belief that we are all connected also expresses itself in a conviction that each one of us deserves some basic measure of security. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us. “There but for the grace of God go I,” we say to ourselves, and so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, and those with disabilities. We are a better country because of these commitments. I’ll go further – we would not be a great country without those commitments.
Really?
I couldn't disagree more.
Let's make this personal, because in fact it is. See, Obama would argue that there is this nebulous "whole" that covers such expense. But he knows this is a lie, because there is nothing "paid in" and "retained" for either Social Security or Medicare.
So let's look at the facts and make it personal, Barack.
Do you, Barack Obama, have the right to demand that your daughters pay for your triple bypass when you are an old man should you be such a pig that you have not provided for such a possibility yourself via personally stashing either money or purchasing insurance against said risk?
I'll ask question personally as well: Do I, having a daughter, have the right to force her to pay for my triple bypass (or two new hips) should I be so much of a pig that I have failed, for whatever reason, to put aside the necessary provisions to be able to pay for such myself in my old age?
We must make this question personal and turn the debate toward the personal form of this question because in each and every case it is.
This nebulous "society" argument is one that those on both the left and right continually use as a means of intentional deception and fraud upon the public. There is no such thing. All taxes are paid by people, and when it comes to social insurance costs, most of them are ladled upon those without the ability to vote.
When my daughter was a young child, barely in grade school, Medicare Part "D" was under debate. I had a monstrous blow-up with my family over this very issue. While she was blithely playing in their living room, my father proceeded to tell me that he believed he was entitled to that drug benefit.
This, despite the fact that the cost of such a benefit would fall most-directly on a young girl who had no right to protest or vote for or against it herself.
Medicare Part D, like all such social insurance programs, is an intentional fraud upon our children and grandchildren. This is particularly true for medical "insurance" for the elderly, as our medical capacity has risen in both ability and cost at several times the direct inflation and thus "contribution" rate. As a result of this fact all such arguments are in fact a claim that you have the right to hold up, at gunpoint, your children and grandchildren to pay for that which you are unable to personally whether as a result of your decision to spend those funds earlier in your life or through misfortune.
That's the essence of the debate about "social insurance" as it applies to the elderly. It is not about a nebulous "societal" obligation, it is about your arrogation to yourself as you age of a right to literally steal, using the force of government, from your own children and grandchildren.
The argument is one for pigheadedness of epic proportion. Through 5,000 years of recorded history intergenerational care has been provided as a matter of honor and choice by both the older and younger generations. This bond was formed through the love of both groups for one another from the point of birth and largely constrained what could otherwise be unconscionable acts. As parents we have the ability to be monsters, just as children do as well. Historically the act of either party being a monster came with a sanction of not only being cast out, but the punishment later in life of being unable to access the love and care of your progeny and parents. Both consequences were quite serious.
We have made a serious social mistake in our failure to deal with this problem honestly. Steve Southerland and other so-called "Conservatives" have often bleated about how the degeneration of family lies at the root of many of the problems we have as a nation. This may well be true, but the provision of these social programs, which provide a substitute that amounts to the forcible financial rape of one's progeny, means that parents no longer have an affirmative obligation to raise their children well and transition from an absolute power relationship at birth to one of mutual respect before adulthood, lest they die alone, hungry and wanting for care.
You want to know what has been largely responsible for the destruction of the American family? The provision of a viable alternative, enforced at gunpoint against the next generation by government, for the support functions that family used to provide.
I declare as a matter of principle, morals, ethics and fact that I have no right to demand that my daughter provide one dime of funds of any sort for my care as I age, whether my failure to be able to do so myself is a consequence of my hubris, pigheadedness, profligacy and consumerism or simply bad luck.
Any such care, direct or indirect, that she chooses to provide is only mine to enjoy through a fully-free election of choice made by her, without the compulsion of government.
It is also my considered position that if you believe otherwise in any form, under any set of circumstances, you're an inhuman monster.
Wednesday, April 13, 2011
The President's Budget Address and the Reality of Taxing the 'Rich' (American Thinker)
By Steve McCann
The President is going to address the nation yet again. He apparently intends to unveil another revised plan to fool the American people into believing he is sincere about reducing the deficit and reign in spending after the unserious budget he presented in February was soundly rejected by the country. While his hand has been forced by the twin factors of the Republicans in the House (buoyed the effectiveness of the Tea Party movement) and the upcoming Presidential election, he will nonetheless bring up increasing taxes on the so-called wealthy and corporations as one of the primary means of solving the debt and deficit problem.
Unfortunately this approach plays well among the less enlightened and Obama's left-wing base who are in the thrall of class warfare and the capability of that argument to enflame passions and potential violence. This argument is solely being utilized to keep the Democrats and their allies in power. The reality is raising taxes and demonizing the wealthy will not solve but will instead exacerbate the current economic woes the country is experiencing.
There are stubborn things called facts that refuse to go away. Normally the left and the media dismiss any argument coming from those on the conservative side of the spectrum as being unreliable and subject to right-wing bias. One of the favored agencies of the liberals is the IRS (except when they are being audited), so let us focus entirely on the statistics they have published.
The wealth of Americans is an obsession with the left. The last time the IRS published any statistics on that matter was in 2004, when the economy was doing far better than it is today. At that time there were 2.7 million adults in the United States with a net worth (total value of all assets less debts and liabilities) in excess of $1.5 million for a total of $10.2 Trillion. The IRS reference can be found here; Data Table: All top wealth holders by size of net worth.
If the government were to decide that no one should have a net worth above $1.5 million and would confiscate all wealth above that level, then there would be a one-time windfall of $6.1 Trillion to the Treasury. As the total national debt is nearly $14.5 Trillion, this action would result in the reduction of the debt to $8.4Trillion.
However this tactic presents a major problem; how is the government going to realize the value of the seized assets? For example within the net worth of the now confiscated assets are upwards of $2+ Trillion in real estate, but who is going to buy that at market value as no one will have the leverage or cash to do so? Or who will buy the stocks, both publicly traded and closely held, where there are nearly $3 Trillion in present value, without collapsing the markets entirely? The same is true of state and local bond issues or corporate bonds, US Treasury Bonds, mutual funds etc. etc. The government, if it could at all, might realize a quarter of the value of the seized assets (if China were really interested) which had been previously used to underwrite the national economy.
The long term devastation to the economy would be unfathomable, as who would create jobs and wealth if they knew their assets would be seized above a certain point?
If the left were to be convinced that this tactic would be counterproductive, then their argument turns to having the wealthy pay more income taxes every year as a major means of reducing the annual deficit and minimizing the amount of spending cuts necessary to balance the budget.
As a starting point lets us stipulate that the projected budget deficit for the current fiscal year is $1,665.0 Billion. Per the Obama Budget it will be $1,100.0 Billion next year. The IRS data for the following exercise is found as follows: Section: Tax Generated; subsection, Tax and size of Adjusted Gross Income (2008): Table 3.5
The tax year of 2008 was the last to date that the IRS has done this kind of analysis. In 2008 the highest marginal tax rate of 35% was applied to all AGI above $357,700.00. In that year the total amount of AGI subject to the highest rate was $662.8 Billion. The government collected in taxes $218.0 Billion (35%).
Assuming no change in behavior and a general eagerness to pay more, and if Obama and the left convince the Congress to raise taxes on the so-called rich, then the potential increase in revenue would be as follows. If the highest rate of 35% were raised by a factor of 29% to 42%, the additional revenue would be $43.5 Billion, not much of a dent in the $1,665 Billion deficit. If the rate was raised by a factor of 50% to 52.5%, the additional revenue would be $108.9 Billion. Still nowhere near enough, so let's just tax it at a rate of 100% thus bringing in an additional $404.8 Billion. Unfortunately the country is still $1,260.0 Billion in the hole for the year.
The top 1% of all income earners now pay nearly 40% of all income taxes collected by the Government. There is a point at which the so-called rich would cease to have any incentive to earn above the highest tax threshold, particularly as the above exercise does not take into account state and local income taxes, Medicare, as well as a myriad of other "revenue enhancers."
From 1958 to 2008 the total tax revenue to the Federal Government has averaged between 16% and 20% of GDP. (The highest level in history was in 1944 when it hit 20.9 %.) This despite the fact that the top marginal rate has varied between 90 and 35% over that period. The historical lesson: there is simply no way the Government will change the way the people, particularly the wealthy, pay their taxes short of outright confiscation and permanent damage to the economy.
The left will argue that the wealthy should pay more even if it only makes a slight impact on the deficit. Why, other than out of spite? The only way to increase revenues to the Treasury, as has been proven by history, is to grow the economy, and to do that, the government cannot destroy the incentive of the producer class to do so. That requires dramatically reducing spending, regulations and the size of government at all levels.
When Obama and the Democrats, in league with the Unions and the radical left, continue their mantra of the need to tax the rich and berating the so-called wealthy, it is not because their diatribes offer a viable solution to the country's fiscal woes or that they genuinely care about the citizenry, but because it serves their purpose to divide the people against each other and maintain their power base, as does their refusal to cut spending in order to buy votes.
Page Printed from: http://www.americanthinker.com/2011/04/the_presidents_budget_address.html at April 13, 2011 - 07:19:15 AM CDT
Thursday, March 31, 2011
The Hypocrisy of the NDP Healthcare ad is Astonishing!
Jack Layton blames Steven Harper personally for all the failings of Canadian healthcare. The only problem (the press will never mention) is that the federal government is nothing more than the banker. All health care management is PROVINCIAL. The Prime Minister and the Canadian Government have nothing to do with operational control!
Tuesday, March 29, 2011
Sunday, March 13, 2011
Why I am not worried about Japan’s nuclear reactors (FreeRepublic.com)
Why I am not worried about Japan’s nuclear reactors
Morgsatlarge ^ | 3/13/2011 | Dr. Josef Oehmen (M.I.T.)
Posted on Sunday, March 13, 2011 12:24:12 PM by Qbert
I know this is a fairly full on statement from someone posting his very first blog. It will also be far and away the most well written, intelligent post I ever make (I hope!) It also means I am not responsible for its content.
This post is by Dr Josef Oehmen, a research scientist at MIT, in Boston.
He is a PhD Scientist, whose father has extensive experience in Germany’s nuclear industry. I asked him to write this information to my family in Australia, who were being made sick with worry by the media reports coming from Japan. I am republishing it with his permission.
It is a few hours old, so if any information is out of date, blame me for the delay in getting it published.
This is his text in full and unedited. It is very long, so get comfy.
I am writing this text (Mar 12) to give you some peace of mind regarding some of the troubles in Japan, that is the safety of Japan’s nuclear reactors. Up front, the situation is serious, but under control. And this text is long! But you will know more about nuclear power plants after reading it than all journalists on this planet put together.
There was and will *not* be any significant release of radioactivity.
By “significant” I mean a level of radiation of more than what you would receive on – say – a long distance flight, or drinking a glass of beer that comes from certain areas with high levels of natural background radiation.
I have been reading every news release on the incident since the earthquake. There has not been one single (!) report that was accurate and free of errors (and part of that problem is also a weakness in the Japanese crisis communication). By “not free of errors” I do not refer to tendentious anti-nuclear journalism – that is quite normal these days. By “not free of errors” I mean blatant errors regarding physics and natural law, as well as gross misinterpretation of facts, due to an obvious lack of fundamental and basic understanding of the way nuclear reactors are build and operated. I have read a 3 page report on CNN where every single paragraph contained an error.
We will have to cover some fundamentals, before we get into what is going on.
Construction of the Fukushima nuclear power plants
The plants at Fukushima are so called Boiling Water Reactors, or BWR for short. Boiling Water Reactors are similar to a pressure cooker. The nuclear fuel heats water, the water boils and creates steam, the steam then drives turbines that create the electricity, and the steam is then cooled and condensed back to water, and the water send back to be heated by the nuclear fuel. The pressure cooker operates at about 250 °C.
The nuclear fuel is uranium oxide. Uranium oxide is a ceramic with a very high melting point of about 3000 °C. The fuel is manufactured in pellets (think little cylinders the size of Lego bricks). Those pieces are then put into a long tube made of Zircaloy with a melting point of 2200 °C, and sealed tight. The assembly is called a fuel rod. These fuel rods are then put together to form larger packages, and a number of these packages are then put into the reactor. All these packages together are referred to as “the core”.
The Zircaloy casing is the first containment. It separates the radioactive fuel from the rest of the world.
The core is then placed in the “pressure vessels”. That is the pressure cooker we talked about before. The pressure vessels is the second containment. This is one sturdy piece of a pot, designed to safely contain the core for temperatures several hundred °C. That covers the scenarios where cooling can be restored at some point.
The entire “hardware” of the nuclear reactor – the pressure vessel and all pipes, pumps, coolant (water) reserves, are then encased in the third containment. The third containment is a hermetically (air tight) sealed, very thick bubble of the strongest steel. The third containment is designed, built and tested for one single purpose: To contain, indefinitely, a complete core meltdown. For that purpose, a large and thick concrete basin is cast under the pressure vessel (the second containment), which is filled with graphite, all inside the third containment. This is the so-called “core catcher”. If the core melts and the pressure vessel bursts (and eventually melts), it will catch the molten fuel and everything else. It is built in such a way that the nuclear fuel will be spread out, so it can cool down.
This third containment is then surrounded by the reactor building. The reactor building is an outer shell that is supposed to keep the weather out, but nothing in. (this is the part that was damaged in the explosion, but more to that later).
Fundamentals of nuclear reactions
The uranium fuel generates heat by nuclear fission. Big uranium atoms are split into smaller atoms. That generates heat plus neutrons (one of the particles that forms an atom). When the neutron hits another uranium atom, that splits, generating more neutrons and so on. That is called the nuclear chain reaction.
Now, just packing a lot of fuel rods next to each other would quickly lead to overheating and after about 45 minutes to a melting of the fuel rods. It is worth mentioning at this point that the nuclear fuel in a reactor can *never* cause a nuclear explosion the type of a nuclear bomb. Building a nuclear bomb is actually quite difficult (ask Iran). In Chernobyl, the explosion was caused by excessive pressure buildup, hydrogen explosion and rupture of all containments, propelling molten core material into the environment (a “dirty bomb”). Why that did not and will not happen in Japan, further below.
In order to control the nuclear chain reaction, the reactor operators use so-called “moderator rods”. The moderator rods absorb the neutrons and kill the chain reaction instantaneously. A nuclear reactor is built in such a way, that when operating normally, you take out all the moderator rods. The coolant water then takes away the heat (and converts it into steam and electricity) at the same rate as the core produces it. And you have a lot of leeway around the standard operating point of 250°C.
The challenge is that after inserting the rods and stopping the chain reaction, the core still keeps producing heat. The uranium “stopped” the chain reaction. But a number of intermediate radioactive elements are created by the uranium during its fission process, most notably Cesium and Iodine isotopes, i.e. radioactive versions of these elements that will eventually split up into smaller atoms and not be radioactive anymore. Those elements keep decaying and producing heat. Because they are not regenerated any longer from the uranium (the uranium stopped decaying after the moderator rods were put in), they get less and less, and so the core cools down over a matter of days, until those intermediate radioactive elements are used up.
This residual heat is causing the headaches right now.
So the first “type” of radioactive material is the uranium in the fuel rods, plus the intermediate radioactive elements that the uranium splits into, also inside the fuel rod (Cesium and Iodine).
There is a second type of radioactive material created, outside the fuel rods. The big main difference up front: Those radioactive materials have a very short half-life, that means that they decay very fast and split into non-radioactive materials. By fast I mean seconds. So if these radioactive materials are released into the environment, yes, radioactivity was released, but no, it is not dangerous, at all. Why? By the time you spelled “R-A-D-I-O-N-U-C-L-I-D-E”, they will be harmless, because they will have split up into non radioactive elements. Those radioactive elements are N-16, the radioactive isotope (or version) of nitrogen (air). The others are noble gases such as Xenon. But where do they come from? When the uranium splits, it generates a neutron (see above). Most of these neutrons will hit other uranium atoms and keep the nuclear chain reaction going. But some will leave the fuel rod and hit the water molecules, or the air that is in the water. Then, a non-radioactive element can “capture” the neutron. It becomes radioactive. As described above, it will quickly (seconds) get rid again of the neutron to return to its former beautiful self.
This second “type” of radiation is very important when we talk about the radioactivity being released into the environment later on.
What happened at Fukushima
I will try to summarize the main facts. The earthquake that hit Japan was 7 times more powerful than the worst earthquake the nuclear power plant was built for (the Richter scale works logarithmically; the difference between the 8.2 that the plants were built for and the 8.9 that happened is 7 times, not 0.7). So the first hooray for Japanese engineering, everything held up.
When the earthquake hit with 8.9, the nuclear reactors all went into automatic shutdown. Within seconds after the earthquake started, the moderator rods had been inserted into the core and nuclear chain reaction of the uranium stopped. Now, the cooling system has to carry away the residual heat. The residual heat load is about 3% of the heat load under normal operating conditions.
The earthquake destroyed the external power supply of the nuclear reactor. That is one of the most serious accidents for a nuclear power plant, and accordingly, a “plant black out” receives a lot of attention when designing backup systems. The power is needed to keep the coolant pumps working. Since the power plant had been shut down, it cannot produce any electricity by itself any more.
Things were going well for an hour. One set of multiple sets of emergency Diesel power generators kicked in and provided the electricity that was needed. Then the Tsunami came, much bigger than people had expected when building the power plant (see above, factor 7). The tsunami took out all multiple sets of backup Diesel generators.
When designing a nuclear power plant, engineers follow a philosophy called “Defense of Depth”. That means that you first build everything to withstand the worst catastrophe you can imagine, and then design the plant in such a way that it can still handle one system failure (that you thought could never happen) after the other. A tsunami taking out all backup power in one swift strike is such a scenario. The last line of defense is putting everything into the third containment (see above), that will keep everything, whatever the mess, moderator rods in our out, core molten or not, inside the reactor.
When the diesel generators were gone, the reactor operators switched to emergency battery power. The batteries were designed as one of the backups to the backups, to provide power for cooling the core for 8 hours. And they did.
Within the 8 hours, another power source had to be found and connected to the power plant. The power grid was down due to the earthquake. The diesel generators were destroyed by the tsunami. So mobile diesel generators were trucked in.
This is where things started to go seriously wrong. The external power generators could not be connected to the power plant (the plugs did not fit). So after the batteries ran out, the residual heat could not be carried away any more.
At this point the plant operators begin to follow emergency procedures that are in place for a “loss of cooling event”. It is again a step along the “Depth of Defense” lines. The power to the cooling systems should never have failed completely, but it did, so they “retreat” to the next line of defense. All of this, however shocking it seems to us, is part of the day-to-day training you go through as an operator, right through to managing a core meltdown.
It was at this stage that people started to talk about core meltdown. Because at the end of the day, if cooling cannot be restored, the core will eventually melt (after hours or days), and the last line of defense, the core catcher and third containment, would come into play.
But the goal at this stage was to manage the core while it was heating up, and ensure that the first containment (the Zircaloy tubes that contains the nuclear fuel), as well as the second containment (our pressure cooker) remain intact and operational for as long as possible, to give the engineers time to fix the cooling systems.
Because cooling the core is such a big deal, the reactor has a number of cooling systems, each in multiple versions (the reactor water cleanup system, the decay heat removal, the reactor core isolating cooling, the standby liquid cooling system, and the emergency core cooling system). Which one failed when or did not fail is not clear at this point in time.
So imagine our pressure cooker on the stove, heat on low, but on. The operators use whatever cooling system capacity they have to get rid of as much heat as possible, but the pressure starts building up. The priority now is to maintain integrity of the first containment (keep temperature of the fuel rods below 2200°C), as well as the second containment, the pressure cooker. In order to maintain integrity of the pressure cooker (the second containment), the pressure has to be released from time to time. Because the ability to do that in an emergency is so important, the reactor has 11 pressure release valves. The operators now started venting steam from time to time to control the pressure. The temperature at this stage was about 550°C.
This is when the reports about “radiation leakage” starting coming in. I believe I explained above why venting the steam is theoretically the same as releasing radiation into the environment, but why it was and is not dangerous. The radioactive nitrogen as well as the noble gases do not pose a threat to human health.
At some stage during this venting, the explosion occurred. The explosion took place outside of the third containment (our “last line of defense”), and the reactor building. Remember that the reactor building has no function in keeping the radioactivity contained. It is not entirely clear yet what has happened, but this is the likely scenario: The operators decided to vent the steam from the pressure vessel not directly into the environment, but into the space between the third containment and the reactor building (to give the radioactivity in the steam more time to subside). The problem is that at the high temperatures that the core had reached at this stage, water molecules can “disassociate” into oxygen and hydrogen – an explosive mixture. And it did explode, outside the third containment, damaging the reactor building around. It was that sort of explosion, but inside the pressure vessel (because it was badly designed and not managed properly by the operators) that lead to the explosion of Chernobyl. This was never a risk at Fukushima. The problem of hydrogen-oxygen formation is one of the biggies when you design a power plant (if you are not Soviet, that is), so the reactor is build and operated in a way it cannot happen inside the containment. It happened outside, which was not intended but a possible scenario and OK, because it did not pose a risk for the containment.
So the pressure was under control, as steam was vented. Now, if you keep boiling your pot, the problem is that the water level will keep falling and falling. The core is covered by several meters of water in order to allow for some time to pass (hours, days) before it gets exposed. Once the rods start to be exposed at the top, the exposed parts will reach the critical temperature of 2200 °C after about 45 minutes. This is when the first containment, the Zircaloy tube, would fail.
And this started to happen. The cooling could not be restored before there was some (very limited, but still) damage to the casing of some of the fuel. The nuclear material itself was still intact, but the surrounding Zircaloy shell had started melting. What happened now is that some of the byproducts of the uranium decay – radioactive Cesium and Iodine – started to mix with the steam. The big problem, uranium, was still under control, because the uranium oxide rods were good until 3000 °C. It is confirmed that a very small amount of Cesium and Iodine was measured in the steam that was released into the atmosphere.
It seems this was the “go signal” for a major plan B. The small amounts of Cesium that were measured told the operators that the first containment on one of the rods somewhere was about to give. The Plan A had been to restore one of the regular cooling systems to the core. Why that failed is unclear. One plausible explanation is that the tsunami also took away / polluted all the clean water needed for the regular cooling systems.
The water used in the cooling system is very clean, demineralized (like distilled) water. The reason to use pure water is the above mentioned activation by the neutrons from the Uranium: Pure water does not get activated much, so stays practically radioactive-free. Dirt or salt in the water will absorb the neutrons quicker, becoming more radioactive. This has no effect whatsoever on the core – it does not care what it is cooled by. But it makes life more difficult for the operators and mechanics when they have to deal with activated (i.e. slightly radioactive) water.
But Plan A had failed – cooling systems down or additional clean water unavailable – so Plan B came into effect. This is what it looks like happened:
In order to prevent a core meltdown, the operators started to use sea water to cool the core. I am not quite sure if they flooded our pressure cooker with it (the second containment), or if they flooded the third containment, immersing the pressure cooker. But that is not relevant for us.
The point is that the nuclear fuel has now been cooled down. Because the chain reaction has been stopped a long time ago, there is only very little residual heat being produced now. The large amount of cooling water that has been used is sufficient to take up that heat. Because it is a lot of water, the core does not produce sufficient heat any more to produce any significant pressure. Also, boric acid has been added to the seawater. Boric acid is “liquid control rod”. Whatever decay is still going on, the Boron will capture the neutrons and further speed up the cooling down of the core.
The plant came close to a core meltdown. Here is the worst-case scenario that was avoided: If the seawater could not have been used for treatment, the operators would have continued to vent the water steam to avoid pressure buildup. The third containment would then have been completely sealed to allow the core meltdown to happen without releasing radioactive material. After the meltdown, there would have been a waiting period for the intermediate radioactive materials to decay inside the reactor, and all radioactive particles to settle on a surface inside the containment. The cooling system would have been restored eventually, and the molten core cooled to a manageable temperature. The containment would have been cleaned up on the inside. Then a messy job of removing the molten core from the containment would have begun, packing the (now solid again) fuel bit by bit into transportation containers to be shipped to processing plants. Depending on the damage, the block of the plant would then either be repaired or dismantled.
Now, where does that leave us?
The plant is safe now and will stay safe.
Japan is looking at an INES Level 4 Accident: Nuclear accident with local consequences. That is bad for the company that owns the plant, but not for anyone else.
Some radiation was released when the pressure vessel was vented. All radioactive isotopes from the activated steam have gone (decayed). A very small amount of Cesium was released, as well as Iodine. If you were sitting on top of the plants’ chimney when they were venting, you should probably give up smoking to return to your former life expectancy. The Cesium and Iodine isotopes were carried out to the sea and will never be seen again.
There was some limited damage to the first containment. That means that some amounts of radioactive Cesium and Iodine will also be released into the cooling water, but no Uranium or other nasty stuff (the Uranium oxide does not “dissolve” in the water). There are facilities for treating the cooling water inside the third containment. The radioactive Cesium and Iodine will be removed there and eventually stored as radioactive waste in terminal storage.
The seawater used as cooling water will be activated to some degree. Because the control rods are fully inserted, the Uranium chain reaction is not happening. That means the “main” nuclear reaction is not happening, thus not contributing to the activation. The intermediate radioactive materials (Cesium and Iodine) are also almost gone at this stage, because the Uranium decay was stopped a long time ago. This further reduces the activation. The bottom line is that there will be some low level of activation of the seawater, which will also be removed by the treatment facilities.
The seawater will then be replaced over time with the “normal” cooling water
The reactor core will then be dismantled and transported to a processing facility, just like during a regular fuel change. Fuel rods and the entire plant will be checked for potential damage. This will take about 4-5 years.
The safety systems on all Japanese plants will be upgraded to withstand a 9.0 earthquake and tsunami (or worse) I believe the most significant problem will be a prolonged power shortage. About half of Japan’s nuclear reactors will probably have to be inspected, reducing the nation’s power generating capacity by 15%. This will probably be covered by running gas power plants that are usually only used for peak loads to cover some of the base load as well. That will increase your electricity bill, as well as lead to potential power shortages during peak demand, in Japan.
If you want to stay informed, please forget the usual media outlets and consult the following websites:
http://www.world-nuclear-news.org/RS_Battle_to_stabilise_earthquake_reactors_1203111.html
http://bravenewclimate.com/2011/03/12/japan-nuclear-earthquake/
http://ansnuclearcafe.org/2011/03/11/media-updates-on-nuclear-power-stations-in-japan/
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