Mullings An American Cyber Column By Rich Galen

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Bailouts & Taxes

Monday November 10, 2008

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First of all, let me thank everyone who subscribed during the tedious, but necessary, annual MULLINGS subscription drive. It was, as an economist might say - even seasonally adjusted for election losses and economic meltdowns - very successful.

The big question among Republicans over the past five days has been "How high will the All-Democrat-All-The-Time-Administration-and-Congress raise our (read my) taxes?"

This is the good-news-bad-news joke about House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid publically stating they want to bail out the Big Two-and-a-half domestic car manufacturers.

I'll come back to that in a minute, but follow me on the tax issue.

A tax bill has to originate in the U.S. House. Why? Because Article I, Section 7 of the Constitution says so: "All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills."

As we all know, all 435 voting Members of the U.S. House who choose to remain in office have to run every two years. That means they will all have to run again in 2010.

We also know that, as a general rule, the party in power tends to lose seats in off-year (non-Presidential) elections, so Democrats in Republican Congressional districts will be very careful on things like taxes.

There has been an agreement - maybe even a rule - in the Congress which calls for "pay-as-you-go" spending. That means every dollar in new spending is supposed to be offset by a cut somewhere else, or with additional revenue to make up the difference. This had been shortened to "Pay-Go."

Given the recent fondness of the Congress and the Bush Administration to bail out anyone who has ever made a bad business decision (to include building or buying a house which is likely to be in the direct path of a hurricane EVERY SINGLE YEAR!) we should call this policy: "No-Go."

You will note that that Pay-Go business didn't come up in the course of conversation during the bailout votes before the House and Senate skedaddled out of town to run for re-election. At least I didn't notice that many $700 billion federal projects being zeroed out to pay for keeping the investment bankers in their jobs.

The economy is going to get worse and more bailout spending is going to sail through Congress including at least $25 billion to GM, Ford and Chrysler so they can continue building cars no one wants to buy.

Hey! Here's a GREAT idea: Any executive of any company which has received any kind of federal support MUST purchase and drive an American-made car and donate their BMW, Mercedes, Lexus or whatever to the Salvation Army.

There's an 8th Amendment violation if I ever heard one!

SIDEBAR

I got an e-mail from a lawyer friend of mine in the Detroit area the other day after my last diatribe against giving money to GM, Ford and Chrysler.
I pointed out that since the 1950's Japanese automakers have been concentrating on the quality of their products, having bought into the theories of MIT professor Dr. Edward Demmings.
And that the Germans had pretty much cornered the market on excellence in engineering.
All that US manufacturers have excelled in is marketing gimmicks and it has finally caught up with them.
The Germans and the Japanese (and the Koreans) have been building cars consumers want to buy. US manufacturers have been building cars that the companies want to sell.
Once again the federal government will reward bad behavior.

END SIDEBAR

The Congress is going to have a very difficult time raising our (read my) in the teeth of a collapsing economy. Even if the Congress did want to raise taxes, it would have to do it in the odd-numbered year (2009) because no Member wants to go into the election year (2010) being tagged as a "TAX-AND-SPEND 'L' word."

In the odd, ironic world in which we find ourselves, the need for Pelosi and Reid to pay off the AFL-CIO generally and the UAW in particular is likely to make it impossible for them - for purely political reasons - to get a tax increase through the House and Senate anytime in the near future.

So you can stop looking for that beachfront property in New Zealand.

On the Secret Decoder Ring page today: A link to the Pelosi-Reid pronouncement about the car companies, an explanation of that "8th Amendment" crack, a Mullfoto proving that the final song in the "I'll Wait �" series came true, and a Catchy Caption of the Day.

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