Joe the plumber sure put a face on the problem with taxing small businessmen and giving it to workers paying little or no Federal income tax at all.

Now we learn that Joe isn't Joe, he isn't a licensed plumber*, and in actuality, is not in such a high tax bracket**.

This Joe's real name is Samuel Joseph Wurzelbacher. But whether he goes by Sam or Joe, there are plenty of small businessmen in the same very real tax situation that Joe asked Obama about.

Joe may not exactly be the "Joe the Plumber" we thought he was, but Barack Obama's tax give away answer is very real and sincerely believes in the ideology of spreading the wealth around.

If it were not for "Joe" would Americans have heard from Obama's own lips that, (My emphasis)

"It's not that I want to punish your success. I just want to make sure that everybody that is behind you, that they have a chance for success, too. I think that when you spread the wealth around, it's good for everybody."

There isn't anything really new about Obama's "spread the wealth around" message. It just never got much national coverage. Real Clear Markets spelled it out well back in February:

The Obama spend-o-meter is now up around $800 billion. And tax hikes on the rich won't pay for it. It's the middle class that will ultimately shoulder this fiscal burden in terms of higher taxes and lower growth....

Obama would like voters to believe that he's the second coming of JFK. But with his unbelievable spending and new-government-agency proposals, he's looking more like Jimmy Carter. His is a "Grow the Government Bureaucracy Plan," and it's totally at odds with investment and business.

Obama says he wants U.S. corporations to stop "shipping jobs overseas" and bring their cash back home. But if he really wanted U.S. companies to keep more of their profits in the states, he'd be calling for a reduction in the corporate tax rate. Why isn't he demanding an end to the double-taxation of corporate earnings? It's simple: He wants higher taxes, too.

The Wall Street Journal's Steve Moore has done the math on Obama's tax plan. He says it will add up to a 39.6% personal income tax, a 52.2% combined income and payroll tax, a 28% capital-gains tax, a 39.6% dividends tax and a 55% estate tax.

Not only is Obama the big-spending candidate, he's also the very-high-tax candidate. And what he wants to tax is capital.

...

Obama believes he can use government, and not free markets, to drive the economy. But on taxes, trade and regulation, Obama's program is anti-growth. A President Obama would steer us in the social-market direction of Western Europe, which has produced only stagnant economies down through the years.

Joe certainly got his minutes of fame. He was on the Mike Huckabee show and greeted like a hero.  It took Joe the Plumber to put a face on the problem and bring it to the forefront. Why haven't we been talking more about this before?

Thank you, Joe. Sorry your life has become an open book.

*Many people in the trades do not have an actual license themselves but work under the license of an owner or boss.

** " Wurzelbacher never claimed to be making $250,000 a year. He told Obama that he might be 'getting ready to buy a company that makes about $250,000, $270,000' a year. His simple point was that Obama's punitive tax proposals would make it more difficult to realize his dream."

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I heard both Congressmen Paul Ryan and Jim Sensenbrenner interviewed on Jay Weber's radio show this morning. (Hour 4 Part 2). Since I trust the opinion of both of these men, I was curious as to why Ryan voted YES and Sensenbrenner NO on the latest bailout bill. 

First Congressman Ryan, who does have a degree in economics. The following are some notes I took from the interview--they are not direct quotes. Listen to the podcast if you can.

Ryan said the bill yesterday was the Paulson plan with quite a bit of tweaks.

The original Paulson bill was 3 pages: Give me a blank checkbook with $700billion.

We wrote a [Republican] alternative. Ours said, Let's make the firms buy insurance.

We rewrote the bill, added stock options--warrants to taxpayers, so the taxpayer is first in line to get money back (if there are profits--that means ACORN would not be getting funding as the orig. Paulson bill stated.) Executives won't get a Golden Parachute.

This bill was $350 billion: $250b immediately and $100b later. An additional $350b would need to be voted on in the future.  

Over the weekend, credit markets went crazy. The problem is not just on Wall Street. Credit markets are shutting down. [That means cash flow for payrolls is unavailable.] There is a fear of recession.

"I'm now sincerely worried this could lead to recession."

Jay Weber: Can we move slowly or do we need to move quickly?

Ryan: Tax money goes out the door either way, this way (bailout) or from FDIC (if banks fail.) Paulson mishandled this so badly.  We added 107 pages to his bill. 

I have never seen things like this [credit freezing up]--ever. Businesses won't be able to cash flow payrolls.

Weber: There is a deep distrust of Congress.

Ryan: 2,300 calls [to my office] almost all against the bailout. [That is changing a little now.] We have to corral Wall Street so it doesn't spill to Main Street.

Weber: Why aren't Republicans hammering this?

Ryan: I am. Since 2002 I have voted against Freddie and Fannie every time.

I think Paul Ryan voted for this measure because he is genuinely worried about our economy shutting down. He knows that if businesses cannot get credit to meet their payrolls, that means workers do not get paid. With many Americans just a paycheck away from being broke, we cannot afford to let that happen. Businesses also use credit to purchase supplies and equipment for future production.

Then it was Congressman Jim Sensenbrenner's turn:

Paulson [Barney Frank] plan fatally flawed from the beginning. That money all came from taxpayers.

The word was, $700billion would not be enough.

America can't afford this. We are wealthy, but there is a limit. 

All of this is inflationary. Interest rates will shoot up. [Remember] 20% prime rates during Carter? 

We should go back to the regular order [of crafting legislation] with committee meetings, rather than Paulson saying we have to do this.

Weber: We're racing against the clock.

Sensenbrenner: When markets opened [today] they were up 200, so hopefully the markets have calmed down.

Paulson is pushing for now. It bailed out the people who caused the problem.

I'm prepared to go back when Pelosi calls us back.

This is a case of Congress serving the people. 

Weber: What angers people is Frank and Dodd in charge of the fix. Is there any mechanism to say when you failed the people, get off the committee!

Sensenbrenner: The Community Reinvestment Act was a significant factor [to what is going on.] 

The process worked yesterday. The speeches like from Pelosi need to stop. She also knew there were not the votes to pass. Why did she bring the bill to the floor? [To fix blame on the Republicans]

Weber: Would you change the Community Reinvestment Act?

Sensenbrenner: Repeal of that law should be in the new package now.

The Security and Exchange Commission dropped the ball--enforcement was not vigorous. 

The Justice Department should investigate if any fraud was committed. [Imprisonment would serve as a deterrent.]

So there you have the Yea and the Nay. Where is Solomon when you need him? 

Conservatives would hope the next version of the bailout bill would be better for taxpayers, that it keeps money from ACORN and repeals the Community Reinvestment Act. With this crew I don't have much hope.

My fear is that the next version will included ACORN funding again or worse. The Democrats will vote for it, and President Bush, who is really over a barrel here, will have to sign it.

Calls from Americans running 500 against, to 1 in favor, of the bailout might be the only thing that saving us from an UGLY pig of a bill.

Post Script: Along the lines of Sensenbrenner's request that they craft this bill carefully, 165 Economists rip bailout plan:

The economists say they are well aware of the current financial situation and agree there's a need for bold action but ask Congress "not to rush."

They urge lawmakers to hold appropriate hearings and "to carefully consider the right course of action." 

Right now the market is up 307 points from yesterday's close. You can check anytime on USAToday. (If you leave it open, it automatically refreshes.) 

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Our present market woes and the Freddie/Fannie mess did not come out of nowhere. They are not George Bush's fault. They started a  l-o-n-g  time before either Bush.  Watching the house burn down: What caused our economic crisis? gives a good run down of the chain of events leading up to this crisis.

First thing this morning, I checked to see if Rep. Paul Ryan and Jim Sensenbrenner were on board with the bailout bill. If so, then I felt it might shore up the market with the least harm. Thankfully, ACORN funding has been removed from the present version.

Rep. Paul Ryan doesn't like the bail out but agrees we are painted into a corner and must do something. Jim Sensenbrenner it seems will not support it at all. GOPUSA says it is still a Train Wreck.

The House Bailout failed to pass 228-205. Seems Pelosi gave a pre-vote speech that did not warm the hearts of Republicans by blaming Bush for all of this. Democrats were not enthusiastic either. Democrats against: 95, Republican NOs: 133. Wisconsin Representatives voting NO: Jim Sensenbrenner - R, Tom Petri - R, and Steve Kagen - D.

Roughly 4/5ths of Americans do not favor a bailout, which is why democrats were hesitant to sign on. Some want the free market work as in Citibank buying Wachovia today.

The market closed at 777 points down today. The price of oil went down to $96/barrel, gold closed up about $8 at $898/oz. One thing saving our bacon is that world wide markets are jittery too. If you are a foreign investor, who do you trust with your money? Don't know how long foreign investors will stay with us though.

I have no idea what is the right thing to do regarding the bailout bill. I think Ryan voted for because he knows this could go way south.

At the very least, it is time to put an end to no money down and little money down mortgages!

Vicki McKenna talked today on her radio show about how she* is in the process of buying a home. When she first started looking months ago, she was told she needed 20% down. This is consistent with what a Realtor friend told me--that people were getting mortgages if they had 21% to put down. But now Vicki was told she could get a mortgage for 3% down, if she did it before the end of the year!

I believe the little or no money down policy of the Community Reinvestment Act started us down this fiscally irresponsible path. Without the cushion of 20% down, for those times when home values falter, these no/little money down loans became upside down.

So the American taxpayer is asked to bailout out the lenders, and Congress is drilling more holes in the boat by not reforming down payment requirements? Pretty typical.

PS Did you see that the House passed a $25 billion bailout for automakers?

*CORRECTION: It was not Vicki herself, but someone in her building. The point remains the same regardless who got the loan. 

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The Democrats present the Trojan Drilling Bill, the stock market is in major jitters, investors look for safe places to put their money. Hence oil, gold/silver/precious metals go up. Pretty simple.

With the Democrat's no-drill oil bill, prohibiting drilling in most areas, there will be little change in our domestic oil supply. If we don't get a real Drill Here bill, we will be dependent on foreign oil for years and paying higher prices. It is supply and demand...the price will go up.

Anyone wondering if the Democrats are trying to create such an oil price crisis that the government must come in and take that industry over too? I am hard pressed to explain the Democrat's stance any other way.

The other factor involved in precious metal and oil price increases is the fall of the dollar. It had been improving since about July. But the Freddie and Fannie / financials bail outs cause the United States to expand the money supply. That is inflationary, resulting in the value of the individual dollar to fall. Again, it is supply and demand.

From the Financial Times: The Short View: Oil and the Dollar: 

By late morning in New York on Monday, the price of oil had climbed by 20 per cent in barely five days and scarcely anyone had noticed. Then it went into overdrive, hitting $130 at one point before settling at $120.92. Last Tuesday, it traded at $90.51 – a swing of 44 per cent from bottom to top.

This had little to do with the supply of and demand for oil and everything to do with the fallout from the “Paulson plan” – the proposal to risk $700bn of US public money in a bail-out of toxic securities held by banks.

Oil rose as doubts surfaced about the plan.

When people are nervous, they look for tangible products to invest in. 

A key variable is the dollar. So far, it has fallen in response to the possible huge rise in the US deficit. The markets seem to have gone a step further and assumed that this step will be be inflationary and cause financial assets to lose value.

In that situation, the thing to do was to head for real assets, led by oil, although other commodities, led by silver, also had a strong day. Unfortunately for the Paulson plan, the inverse relationship between oil and the dollar is one of the few financial constants to have survived the past few days.

I heard this morning that oil settled down to about $108/barrel in Asia. People are nervous worldwide. The US money supply is expanded beyond thin.

The last thing we need is another check writing spree by the government in the form of a Democrat 2nd $50billion stimulus package or a $1,000 energy rebate based on a windfall profit tax to oil companies as Obama is touting. (That tax would be passed onto consumers, making oil prices higher.)

Even the Federal Government can only print so much money if it is to be worth more than the paper it is printed on! 

Brookfield District 7 Info meeting, Wed., Sept. 24, 2-3pm or 6:30-7:30pm City Clerk Kris Schmidt will be in attendance to answer questions or concerns regarding recent news about the Van Hollen lawsuit against the state elections authority.

Please, comment content should relate to the subject of the post. Although I try to respond to many, do not interpret my lack of a response as agreement.

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