Special Blog Post: The Semi-Annual Fund-Raiser Sale

It is, indeed, time to recoup some costs of running the blog and the message board. Donations are never accepted, of course; instead, you have the opportunity to purchase customized merchandise at inflated prices. Aside from the always highly desirable coffee mug and apparel with The Dark Wraith Forums logo, this time you also have the opportunity to purchase bumper stickers. Every Friday, starting today, a new design will be offered for four days only; on the Tuesday after the design is made available, that bumper sticker will be pulled, and a new design will become available on the Friday following. At left are low-resolution thumbnails of the bumper stickers. The first one is DRAFT REPUBLICANS, and it is available from now through Tuesday, August 2. The second one is HE LIED TO START A WAR, IMPEACH HIM, and that one will be available from Friday, August 5 through Tuesday, August 9. The third one is JUST SAY NO TO MEN WHO AREN'T PRO-CHOICE, and that one will be available from Friday, August 12 through Tuesday, August 16. The fourth and last one is IF YOU VOTED FOR GEORGE BUSH, THANKS, YOU ASSHOLE, and that one will be available from Friday, August 19 through Tuesday, August 23. Depending upon their popularity, some or all of these bumper stickers may be offered again during the next semi-annual fundraiser near the end of the year. And don't forget to check out the other high-quality merchandise available only at The Dark Wraith Forums e-store.


The Dark Wraith thanks you for your support.

The Written Peace: Open Forum of July 26, 2005

It's time to get The Dark Wraith Forums back up to speed. The hiatus has gone on long enough, here.

Several Analysis types of posts have bogged me down terribly as I try to figure out how to break them up from mini-books into pieces that are readable in one sitting. The problem is that, as I work on one for too long, something else happens that garners my attention, and I must at least begin something on that issue, too.

Right now, as far as economic matters are concerned, it might seem that China's recent and much ballyhooed move from a fixed exchange rate to a "managed flexible" regime for the yuan is important. Actually, it's not. Moving from 8.28 yuan per dollar to 8.11 yuan per dollar is a complete yawner—or, perhaps more appropriately, a real yuaner. (Sorry.) It shows that the Chinese are still in the mode of dealing with their own, slowly building, internal currency overhang crisis by making superficial gestures to derail protectionist sentiments stirring up in the United States Congress. There is no doubt that the decoupling—attended as it was by less than skeptical reporting in the U.S. news media—will slow down the slap-them-tarriffs-on-imports train gathering steam on Capitol Hill; but the Chinese move doesn't get China out of the mess it's in from years of printing yuan and using them to buy American dollars to hold the exchange rate right on the peg.

It also doesn't help when the mainstream news media keeps up the harp about the robust growth of the Chinese economy. Yes, the Chinese economy is growing at a rather stunning pace. That's what happens as the fever of too much currency pumps through an economy. The Keynesians called it an "inflationary gap." The only way to stop it is for a country to clamp down on its money supply; but the longer that painful policy is put into place, the more painful it is when it's finally brought to bear.

Funny how that works.

But then again, the U.S. shouldn't be grinning too much. Recent trends in temporary and permanent open market operations results seem to indicate that our very own Federal Reserve—that bulward of inflation-fighting hawks—has gone back to printing money to cover the Bush Administration's and Congress's fiscal irresponsibilities. The operative word for now is "seems": there is no question that the Fed started the pumps at the end of June, and it kept them going through the first week of July. It also allowed the federal funds rate (the rate at which banks lend money to one another) to drift noticeably below its target during that same period. Whether or not the Fed has brought its actual open market operations back into resonance with its publicly declared desire to maintain a contractionary policy is a matter on which I am collecting data right now. If the Fed has, indeed, opened the money supply spiggots, as it was doing for the first four years of the Bush Administration, there is no doubt that the economy is going to look pretty darned healthy for a while, despite rising energy costs and an anemic job market.

The piper will, of course, be paid; but that's down the road. If the Fed can keep the expansionary monetary policy in place while the Bureau of Labor Statistics continues to report that there is no inflation in the economy, this era of wealth, prosperity, and generally joyous times could go on long enough to get Mr. Bush through his second term looking like an economics genius.

Maybe; maybe not.



Say what you have to say. This is an open thread, and anything is fair game here at the hotel this evening. We have plenty of snacks, and I just installed a snow-cone machine by the expresso maker for folks who need a cool-down from this heat wave we've been having. The dance floor is freshly waxed if anyone cares to try some break-dancing moves tonight, perhaps with an eye to re-enacting the slippery moves being done at the White House as the nooses of Plame scandal, the Roberts nomination fiasco-in-waiting, and a couple more barking dogs start to get more than just annoying.


The Dark Wraith will close the windows so the noisy mutts don't upset the cats at the piano bar.

Special Analysis Report: The Valerie Plame Scandal, Part Three

This is the final installment in a series on the circumstances surrounding and following the disclosure of the identity of Valerie Plame, an intelligence operative whose husband, Joseph Wilson, wrote an op-ed column that appeared in the July 6, 2003, edition of The New York Times critical of claims by President Bush and other Administration officials that Saddam Hussein had sought to purchase the precursor to nuclear weapons-grade uranium in Niger. Mr. Wilson based his editorial upon a trip he took to that country at the behest of certain parties within the CIA who were interested in verifying or finding fraudulent a document evidencing pursuit of a transaction for the purchase of yellowcake by the Iraqi regime of Saddam Hussein. Mr. Wilson's op-ed piece was followed on July 14, 2003, by an article written by Right-wing columnist Robert Novak disclosing that Joseph Wilson's wife was a non-official cover (NOC) operative for the Central Intelligence Agency posing as an energy analyst in a front company called Brewster-Jennings. Mr. Novak's article set off a firestorm of criticism from Mr. Wilson and demands by Democrats in Congress that an investigation be launched by the Justice Department into how information concerning what they represented to be a spy came to be in the hands of a journalist acting on behalf of, and in concert with, the Bush Administration to discredit Mr. Wilson. On December 30, 2003, then-Attorney General John Ashcroft announced the appointment of Assistant Attorney General James Comey to oversee the investigation. In that same news conference, Mr. Ashcroft recused himself from further involvement in the matter, and Mr. Comey announced the appointment of federal prosecutor Patrick Fitzgerald to pursue the investigation. Because the law allowing Congress to use the services of independent counsels had expired by this time, no separate investigation, absent the involvement of the Justice Department, could be launched. Mr. Ashcroft's successor as Attorney General, former White House chief counsel Alberto Gonzales, followed Mr. Ashcroft's example in recusing himself from the investigation; however, the three White House attorneys—Ted Ullyot, D. Kyle Sampson, and Raul Yanes—he brought with him from his previous position, wherein he had advised the President on the case of Ms. Plame's outing, did not specifically provide evidence of elective or required self-recusal.

Seven hundred thirty-five days have now passed since Mr. Novak published the status of Valerie Plame as an NOC operative.

Five hundred fifty-six days have now passed since Mr. Comey appointed Mr. Fitzgerald to investigate potential criminal wrongdoing in the matter.

To date, only Judith Miller—a pro-Bush Administration journalist who did not publish information, but who was provided information by others that she then conveyed to journalists and White House staff—has been jailed. Other journalists have been threatened with jail for similarly resisting compulsion to testify before the federal grand jury convened at Mr. Fitzgerald's behest.

Mr. Novak has not been pressured in the same public and aggressive manner, possibly because he elected early on to provide the grand jury with everything he knew.

President George W. Bush and Vice President Richard Cheney were not compelled to testify under oath before the grand jury; instead, Mr. Fitzgerald informally interviewed them, with Mr. Bush being allowed, according to the account in the Washington Post, to have his personal attorney, James E. Sharp, present during the entire session. This has the practical consequence of removing all possibility that either of these men could be charged with perjury.

In recent days, Matt Cooper, who had been provided information about Ms. Plame's status an an NOC operative, finally testified before the grand jury concerning whom he had contacted within the Administration as he sought verification and background on the information in his possession about Ms. Plame. He named both White House Deputy Chief of Staff, Karl Rove, and the Vice President's Chief of Staff, I. Lewis Libby; but in both cases, he reports that they only confirmed to a greater or lesser degree what he recounted to them as his facts under journalistic investigation. This does not mean that they were not already far more versed than he in the entire matter, but what Mr. Cooper claims he told the grand jury does not portray them as the original sources of the disclosures about Valerie Plame.

The mainstream media and the Blogosphere are now, and once again, talking roundly about indictments that may soon be forthcoming based upon the recent testimony by Mr. Cooper, as well as upon other recent revelations. This current excitement is reminiscent of a flurry of journalistic speculation that occurred late in the Summer last year, when articles appeared in The Washington Post and elsewhere speculating that the investigation had reached some kind of "critical stage," and indictments were imminent. As it turned out, no indictments occurred, and there was no critical stage that set the world inside the Beltway on its ear about the whole scandal. This makes the current round of speculation appear to be one more instance either of the journalistic community whipping itself into a speculative frenzy or of interests aligned with the federal prosecutor crafting yet another watershed of speculation that will prove unwarranted. In support of this latter possibility are surprising leaks coming from attorneys and others close to the grand jury and witnesses: Mr. Fitzgerald has demonstrated that, when he wants to, he can maintain an iron curtain around his investigations, so any information now trickling out is most likely arriving in the public domain, if not by his direct efforts, at least with his tacit permission.

Below are the principal parties involved in the investigation, along with an analysis, in part factual and in part forensic, of the role of each.

Patrick Fitzgerald
Named to investigate the outing of Valerie Plame by a political appointee of the Bush Administration, Mr. Fitzgerald operates without direct oversight by the Congress or by any other independent authority. Expenditures on the investigation are drawn from the pool of funds of the Justice Department, headed as it is by another political appointee. There exists no separate, clear, readily auditable trail of expenditures by Mr. Fitzgerald pursuant to the investigation, and he reports to no one outside the Justice Department. No means exist even to determine how much money Mr. Fitzgerald has spent to the end of having judicial imprimatur on the termination of what remained of journalistic source confidentiality.

Regardless, then, of any indictments or other actions that might or might not please opponents of the Bush Administration, results of the special counsel's investigation are prima facie fruits of a poison tree. No amount of prosecutorial gravity and assurances of integrity and trustworthiness overcomes the closed and interlocked relationship this prosecutor has to the Bush Administration, whether or not, in the end, he successfully obtains indictments against one or more unelected members of Mr. Bush's group.

Judith Miller
Although the news media in general, and The New York Times reporter Judith Miller in particular, have successfully framed her resistance to disclosing her sources as a First Amendment press freedom issue, revelations this week point clearly to Ms. Miller, herself, being a substantive source of the information about Ms. Plame's identity. Whether or not Mr. Rove, Mr. Libby, and others knew all about Valerie Plame before being contacted by journalists, it was Judith Miller who seems to have had all the information any journalist—Mr. Cooper included—would need to confuse the situation of where the ball actually began to roll. This is eerily similar to a disinformation tactic used in the run-up to the war in Iraq, when Ms. Miller reported bogus information fed to her by exiled Iraqis, who then used her articles to "prove" to Congress that their claims were being independently verified by American investigative journalists.

Judith Miller, whom Norman Solomon accuses of seeking to vault her flagging career with her minimum security prison stay, is instrumentalizing the First Amendment to the United States Constitution as a foil for what is actually a Fifth Amendment issue. She had come into possession of potentially classified information, and she passed that information to others. Her refusal to testify before the grand jury, and to thereby expose herself to questions regarding not only from whom she obtained the information, but also her motives and justifications for conveying the information, is an exercise in the Fifth Amendment right against self-incrimination. By testifying fully and truthfully, Ms. Miller could very well have described to an indictable level acts on her part in violation of relevant federal laws.

Matt Cooper
After testifying before the grand jury last week, Mr. Cooper hit the talk show circuit to reveal what he had said behind the jury's closed doors. This in itself is stunning because of the prosecutor's previous, nearly absolute lock-down on the grand jury proceedings; it gives further evidence, as suggested above, that the current spate of information coming out about the investigation is being at least permitted and perhaps orchestrated by or on behalf of Mr. Fitzgerald, himself. Mr. Cooper's Time magazine article describing what he told the grand jury and his interviews on Sunday television news shows could have been unwitting aid to a prosecutor seeking to rattle investigative targets or, less charitably to Mr. Fitzgerald, a sack of red meat he wanted to toss to journalists to keep Congressional Democrats and other liberal interests worked up while he lets the grand jury run out its clock.

One way or the other, strikingly absent from all of Mr. Cooper's post-testimony statements was a long-winded, unambiguous, and forthright disclosure of exactly where, how, and when he got his information. His detailed memories of whom he used within the Administration to confirm what he had obtained were on explicit display; his detailed memories of what story he abandoned so that he could pursue the leads about Valerie Plame were pounded out; the precision of his recollection that neither Mr. Rove nor Mr. Libby told him Valerie Plame's name was remarkably sharp.

But at least in his post-testimony article and interviews, he was oblique or silent on the details of his original source. This does not mean he didn't disclose it to the grand jury: Mr. Cooper did not leave the grand jury room bound for jail, and that could mean Mr. Fitzgerald got what he wanted but is not allowing the public to be privy to material facts and allegations revealed in Mr. Cooper's testimony.

Karl Rove
Despite the burning desire of liberals to see Mr. Rove imprisoned for the better part of Eternity, his role in the Valerie Plame scandal will earn him far less punishment. In Part One of this series, the case was made that the disclosure of Valerie Plame as an NOC operative did not rise to a violation of the Intelligence Identities Protection Act. Although conservative and Right-wing pundits have made this claim all along, it has been echoed even from progressive quarters. Long-time Bush Administration critic John Dean agreed, re-iterating in a Findlaw article published Friday that, "There is no solid information that Rove, or anyone else, violated this law..." Mr. Dean goes on to make the case that, despite Mr. Rove's relatively clear escape from prosecution under the Intelligence Identities Protection Act, his actions might be the subject of indictments pursuant to other statutes, not the least of which would be those relating to interference with or frustration of on-going intelligence activities. Unfortunately, Mr. Cooper's testimony apparently offers independent verification that Mr. Rove seemingly made his answers to Mr. Cooper's inquiries without mens rea, anyway. That Mr. Rove would claim he acted without criminal mind might very well serve to send into transcendent apoplexy those on the Left who assign him only slightly lesser status than Satan; but seeking and possibly even seeing the wrong charges brought against Mr. Rove will not only result in his exoneration, but also turn him into a far more politically powerful and dangerous man than he already is. Should Mr. Fitzgerald actually obtain an indictment against Mr. Rove for violating the Intelligence Identities Protection Act, the prosecutor will have revealed far more about his own desire to see Mr. Rove exonerated than he will have offered a federal district court in cause for a finding of guilt.

Richard Cheney
Leaks from the investigation reported last week by The New York Times and other papers describe high-level interest in the Administration about Mr. Wilson and his wife possibly as much as several months before Mr. Wilson wrote his op-ed piece refuting Mr. Bush's and others' statements about Saddam Hussein trying to buy yellowcake in Africa. Apparently, Colin Powell or another senior Administration official had ordered a report on Mr. Wilson, and that report was shared among the members of President Bush's inner circle. It is now claimed that Mr. Powell, himself, was hand-carrying a copy of it while in the company of other top Administration officials while they were on a trip in Africa several days after Mr. Wilson had gone public with his charges against Mr. Bush's representations. The order for the report coming before Mr. Wilson went public runs unquestionably counter to the claim by some that the entire scandal arose from an act of revenge by the Bush Administration against a critic. Even though outing his wife had the effect of revenge, the initial interest in Mr. Wilson by the Vice President and the Secretary of State has a far more troubling implication, one having to do with a seemingly unrelated cause of concern about the Bush Administration.

The Downing Street Memo is the name given in the press to what has actually come to be a series of documents from the British government during the run-up to the Iraqi War: these documents summarize remarks made by officials of the Blair government as they openly and rather glibly discussed the Bush Administration's "fixing" of intelligence to fit its claim that war against Saddam Hussein was necessary. This comports tightly with claims made within the United States, itself, notably those of now-retired Lt. Col. Karen Kwiatkowski concerning systematic activities at the Department of Defense to shape and distort information to be issued to public officials and the press. Similar claims have been made about how Vice President Richard Cheney personally oversaw and possibly bullied Central Intelligence Agency analysts to come up with results that fit the Bush Administration's desire to go to war against Saddam Hussein's Iraq.

Should Mr. Cheney, having himself already publicly invoked images of "mushroom clouds," have learned of a group within the Central Intelligence Agency that was sending out non-CIA personnel to investigate what the Administration had featured—most starkly in Mr. Bush's 2003 State of the Union address—as clear and compelling cause for military action, then the Vice President would have had keen and highly prejudicial interest in finding out more, not just about Mr. Wilson, but also about the group within the Agency that had tasked Mr. Wilson to Africa in what was obviously a role not blindly seeking to prove everything the Administration was representing to the American public. It would be highly unlikely that Vice President Cheney, himself, would have passed information to outside sources; it would not be as unlikely for him to explicitly or indirectly do so through his chief of staff.

I. Lewis Libby
Named by Mr. Cooper this week as one of the individuals he contacted to confirm his information about Valerie Plame, Vice President Richard Cheney's Chief of Staff, I. Lewis Libby, is now directly in the finger-pointing sights of those seeking indictments against Bush Administration officials. Again, however, as is the case with Karl Rove, Mr. Cooper clearly states that he told the grand jury that Mr. Libby did nothing more than confirm elements of Mr. Cooper's information. And again, whether or not these men were involved in the original dissemination of that information to outside parties, Mr. Cooper's representations do nothing to confirm that. Mr. Libby, therefore, at worst will not be indicted on high charges arising from violation of the Intelligence Identities Protection Act. But even if he were to be so charged, the question remains one of who within the Bush Administration put the information into Judith Miller's hands in the first place.

Other Suspects
Although Bush Administration neo-conservatives like Douglas Feith and Paul Wolfowitz have been suggested from time to time, a somewhat more pointed focus, at least in the Blogosphere, has turned to an individual largely unknown outside Washington circles: David Wurmser, who is described by writer Mark Perelman as a neo-conservative scholar with deep ties to Right-wing political interests in Israel. During the period in which the information about Mr. Wilson and his wife was passed to outsiders, Mr. Wurmser was the senior advisor to the Undersecretary of State for Arms Control and International Security, an office held at the time by none other than John Bolton, now the controversial and stalled nominee for United States Ambassador to the United Nations. Should Mr. Wurmser turn out to be the original leaker, Democratic opposition to Mr. Bolton's proposed appointment to the U.N. would become virtually insurmountable. Perhaps less obvious would be the damage done to certain Israeli interests, which have been among the Bush Administration's staunchest allies, were one of their policy conduits to be convicted of charges involving national security breaches. But the greatest fallout could come because of the choice appointment Mr. Wurmser was awarded subsequent to his work for John Bolton. In September of 2003, having burnished his credentials as a neo-conservative war hawk and advocate of destabilizing the existing regime in Syria, Mr. Wurmser was tapped by Dick Cheney to serve on the Vice President's national security advisory council, headed by none other than I. Lewis Libby. The stench of a political reward for a dirty deed well done is palpable.

This would not, of course, be the first time that a little-known and therefore little-noticed underling had carried water for better known and more visible government officials; and it is not difficult to imagine that nailing the heaviest indictment on Mr. Wurmser's hide would, in the long run, be a relief to the Bush Administration, provided it could spin Mr. Wurmser to look like an unsanctioned rogue who violated sacred trust vested in him by well-meaning Administration officials.

It would, however, put Judith Miller in a very difficult position: having had her original sources outed, she would find it quite difficult to retain her status as a martyr for First Amendment freedom of the press. As a result, she would have to scurry from the noble cover of suffering for the public good to the wholly selfish, but equally useful, cover of her own, personal right against self-incrimination. That, however, wouldn't be much of a deterrent to a dedicated prosecutor: even though she has shown her will not to incriminate herself, plenty of people within the Bush Administration would be more than happy to hang her out to dry right along with Mr. Wurmser.

And special prosecutor Patrick Fitzgerald would have quite a bit of incentive to wrap up his investigation with successful indictments and convictions of a minor Administration player and a pro-Administration journalist, both of whom had done their duty and thereby had outlived their usefulness.



The Dark Wraith has spoken.

---

Go to
Part One     Part Two
of this series.

Government Claims Retail and Wholesale Inflation Dead, Economy Rolling

The Bureau of Labor Statistics late this week released data for inflation at both the producer and consumer levels indicating that inflation is not only under control, but non-existent. On Thursday, the BLS released the Consumer Price Index for June, showing that seasonally adjusted inflation at the retail level was zero. On Friday, the BLS released the Producer Price Index for June, showing that inflation at the wholesale level was zero. Excluding food and energy, consumer prices rose a modest one tenth of a percent for June, and producer prices actually fell by a tenth of a percent during the month.

These results surprised some economists and other outside observers who had seen anecdotal evidence of continuing upward momentum in prices at least at the retail level. The mystery was further deepened because the BLS report showed that the core inflation rate for consumers was only neglibly different from the rate that includes price changes for energy and food. That would mean the Bureau had found no inflationary pressures pushing up the costs of products ranging from meat and produce to gasoline and deisel fuel, even though it appeared to consumers as if such prices were marching ever higher as the Summer began. The Bureau had previously reported that prices in May had actually fallen by six-tenths of a percent; as such, the government's data points to a two-month period in which the economy was experience deflation, a situation entirely at odds with the Federal Reserve Board's continuing pursuit—at least in its stated policy—of combatting persistent, underlying inflationary pressures in the U.S. economy.

In other news, the Federal Reserve reported on Friday, in its monthly Industrial Production and Capacity Utilization Release, that industrial production roared upward in June by nine-tenths of a percent, led by increased output by utility companies due to warmer-than-usual weather. However, even excluding this somewhat anomalous push, overall production jumped by a surprisingly healthy four-tenths of a percent. The capacity utilizing rate reached exactly 80 percent, beating the concensus projection that the nation's factories would use 79.6 percent of capacity for the month.

Dark Wraith CyberGloss

Excess money can, in the short run, cause an economy to increase real output, but in the long run, output reverts to previous levels while prices rise to reflect the lesser value of the larger money supply in circulation.

  The Bureau of Labor Statistics' claims that inflation was non-existent in June notwithstanding, the unanticipatedly strong pace of industrial activity has some economists worried that the underlying cause can be traced back to a return to expansionary monetary policy by the Federal Reserve inducing short-term real output increases that will later wither into a burst of inflation. Even though the Federal Reserve had previously declared that it had abandoned the "accommodative" monetary policy that had allowed the Bush Administration and its Congressional allies to cut taxes while prosecuting two wars, recent evidence from data and the Fed's own statements seem to indicate that,

Dark Wraith CyberGloss

The Federal Reserve periodically declares its target for the federal funds rate; but in practical terms, it allows the rate to vary from this declared target.

  despite a record string of declared increases in the discount rate, the central bank is nevertheless expanding the money supply in a manner that could be interpreted as propping up an economy that would otherwise be showing signs of recessionary pressures. In its June 30 Press Release, the Federal Open Market Committee, while announcing another quarter-point bump upward in the federal funds rate, also stated, "[T]he stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity." The question on some economists' minds is whether this return to expansionary monetary policy is supporting the 'robust' growth of the economy, or in fact creating it.

Data released over the past couple of weeks, together with stong performances by the stock markets, definitely indicate that the economy is picking up steam going into the deep part of Summer. With oil prices now well entrenched in the $60 per barrel range, the problem for economists boils down to one of how an economy that, just months ago, was showing weaknesses in employment, stocks, and retail sales, could have managed such a dramatic turnaround. While some would argue that the true viability of neo-conservative economic policies is at the heart of this near-miracle, a few outside observers are wondering how much of this is the genius of Bush Administration politics and economics versus how much is an old-fashioned magic show of creative government data management coupled with greenback printing presses working overtime.

Special Blog Post: The Dark Wraith Forums Message Board

In a continuing effort to provide online services to the progressive people of the world, The Dark Wraith Forums proudly announces the grand opening of The Dark Wraith Forums Message Board, a community bulletin board service available to everyone.

Registering to become a member is as simple as setting up a username and password. Once you've done that, you are free to respond to messages already posted or create your own, new threads. You can write articles as long as 50,000 characters, so this is a place where non-bloggers can participate in the Blogosphere without the hassles of managing an actual Weblog. You can put inline pictures in your messages, and you can even attach files. If you're a blogger, this is one convenient place to promote articles from your own blog. The comment windows also have smiley icons, as well as all kinds of bells and whistles to make writing posts fun. The engine I chose for this service is by Simple Machines Forum; and in many ways, it just can't be beat. The customization and flexibility are amazing to me; but you might want to take that praise with a grain of salt, considering that I used to set up electronic bulletin board services back in the ancient days of DOS. I'll tell you right now, this message board is way sweeter than anything I did back in the days of the black monitor screens and the blinking underscore cursors.

Think of this new electronic bulletin board service as a user-customizable system of permanent open and topical threads available all the time. You are herewith invited to join... as long as going there doesn't mean you stop coming here. (Gee, I hope that doesn't get to be a big problem: I'd hate having to move this whole blog over to that message board just so I could be where all the action is.)

Anyway, the board is open, now.


The Dark Wraith has provided.

Stocks Rise Sharply on Weak Jobs and Wages Numbers

The Bureau of Labor Statistics Friday morning reported that the U.S. economy created 146,000 new jobs in June, far below the consensus forecast by analysts that 195,000 new jobs would be reported. The unemployment rate also fell, reaching 5.0 percent for the first time since the September, 2001, attacks on the U.S.; but it still stood for June well above the long period of month-after-month, far lower unemployment rates seen during the latter half of the 1990s, when rates below four percent were typical. The disappointing number of new jobs formed in June followed on the heels of the miserable showing for May, when a revised 104,000 new jobs showed up. Adding even more fuel to concerns about the labor market, the Department of Labor reported on Friday that new claims for state unemployment benefits jumped to 319,000 for the latest reporting week, after falling to 312,000 in the week previous.

Rising stock markets took some analysts by surprise, especially after the Thursday terrorist attacks in the capitol of Great Britain. By the afternoon on Thursday, stocks in the United States had shrugged off the troubles on the other side of the Atlantic, with the major stock indices closing up modestly. Friday's surge of 146 points in the Dow Jones Industrial Average reinforced the view among seasoned investors that, if anything, the terrorist attacks in London would be good for business. For defense and related industries, which will likely reap further government contracts as opposition to massive war and anti-terror spending becomes more muted and decidedly less effective, rising government expenditures by the Bush Administration and a Republican-controlled Congress should translate into better earnings performance.

The weak labor market was good news for investors who have been hoping that the Federal Reserve will soon end its string of rate hikes to ward off inflation. With the economy showing signs of slowing down as it moves into the third quarter, some on Wall Street believe that the Fed might want to give the economy a respite from the record string of rate hikes the U.S. central bank has imposed over the past year.

Dark Wraith CyberGloss

Provided businesses can keep operating costs below the rate of inflation, but keep revenues rising at or closer to the inflation rate, company profits should increase.

  This hope was given a bit more life because the Bureau of Labor Statistics' Employment Report also showed that hourly wages rose a modest two-tenths of a percent last month, meaning that inflation is still running ahead of many households' gains in income, since the Report also indicated that the average workweek for an American laborer held constant from the month previous at 33.7 hours.

With respect to interest rates, concern had been mounting in recent months about the way long-term interest rates have not risen as fast as short-term rates, a situation that could ultimately end up in an "inverted yield curve," where long-term yields on government bonds are actually lower than yields on short-term government debt instruments. In the past, inverted yield curves have been a very reliable leading indicator of looming recession or less severe, but still significant, economic slowdown.

Dark Wraith CyberGloss

One basis point is one one-hundredth of a percent; thus a rise of nine basis points on a mortgage rate of 5.53% would mean the rate had climbed to 5.62%.

  Some analysts have been cheered by the how long-term yields have actually begun to rise modestly; but a closer look shows that they are not rising as fast as short-term yields, meaning that the entire yield curve has been slipping upward and continuing to flatten, possibly as the precursor to a full inversion later in the Summer or in the Autumn. Perhaps more important to average households is the fact that the recent rise in long-term yields on government debt have begun to show up in mortgage interest rates: mortgage reseller Freddie Mac reported on Thursday that the average rate on the benchmark 30-year, fixed-rate mortgage moved up to 5.62 percent this week, a rise of nine basis points from the week previous. This is the highest rate since the June 16 survey and slightly renews worries among some housing analysts that rates could be headed back above the six percent level that was seen only very briefly in the Spring of this year.

In other news, after weeks of flirting with $60 per barrel, several times touching the mark in intra-day trading, U.S. crude on the New York Merc dispensed with all pretentions of courtship and penetrated deep into new territory, opening Friday at $61.30 per barrel before backing down by day's end to $59.63. The breakout through the sixty buck neckline sent prices at the gas pumps to record levels in some parts of the country just in time for the typical weekend uptick in demand. By Saturday afternoon, gasoline prices had slipped at many stations, but still remained in territory many American drivers have never seen. But as bad as the steep gasoline prices are, right now, analysts are perhaps just as concerned about the out-month futures contracts for petroleum distillates, which are currently priced at levels that indicate a very difficult Winter ahead for U.S. households that use home heating oil.

Dark Wraith CyberGloss

A futures contract for a given month is an agreement to deliver a specific amount of a commodity at a specific price on a specific date. A rising current price on a given futures contract indicates investors' expectations of a higher price of the commodity on the delivery date.

  Unlike gasoline, for which—at least to some extent and over a period of months—consumers can reduce their amount demanded, usage rates of heating oil cannot be lowered much at all without significant hardship and discomfort. This means consumers of home heating oil will simply have to eat what could possibly be substantially higher heating costs this Winter, leaving less money for other necessities. Compounding the situation, moderately severe drought conditions in parts of the Midwest have already adversely affected expected supplies of certain grains, and this will, without question, result in higher food prices in the coming months. For many consumers whose hourly wages are already lagging inflation, the outlook through the remainder of 2005 and into next year is not full of cheer; and this might very well translate into serious difficulties for politicians in Washington who stand too close to the President and the party that could end up being blamed for the economic bad times that people will be experiencing.

Analysis: A Bad Idea Made Better for Tax Reform

This is the second installment in a series on tax reform. As noted last week in the first installment, "A Bad Idea for Tax Reform," President Bush in January created a commission to study and make recommendations for overhauling the U.S. tax system. Many progressive economists see recommendations by a commission comprising primarily those sympathetic to broader neo-conservative economic goals as a means by which the Bush Administration can gain cover for radical overhaul of taxes that will favor the wealthy and military/industrial interests at the expense of those not favored in their agenda as that plan has been laid out in documents produced by groups such as the Project for the New American Century.

Although most people are aware of the "tax cuts" enacted by the Republican Congress at the behest of the Bush Administration, perhaps not as many understand that these obvious changes in the tax code were only part of a systematic and subtle re-alignment of that tax code to shift the burden of taxes toward income generated by labor and away from income generated by capital. The degradation of estate taxes enacted in the last Congress is an example: while publicly using anecdotal evidence of people of modest means suffering heavy taxation on the modest estates of their deceased benefactors, little was said about the overwhelming benefit of eliminating estate taxes accruing to the massive estates of the very wealthy in intergenerational transfer.

Another example of the shift of the tax burden to labor can be found in the elimination of the so-called "double tax" on dividends. Those in favor of this "reform" pointed to the obvious unfairness of taxing income at the corporate level and then taxing as ordinary income upon stockholders any part of those corporate earnings that were received as by individuals as dividends. Virtually no mention was ever given in the run-up to that vote the fact that dividends accruing to corporations that hold stock in other corporations were already partially exempt from taxation. Moreover, despite the claim that some substantial amount of all dividend distributions accrue to "ordinary" people investing in the stock market, a number of financial instruments already exist that cause dividends to roll back into investments and thereby avoid taxation. Effectively, the vast majority of the benefit from elimination of the double taxation of dividends was realized by those who are large-scale shareholders and/or insiders in corporations, along with those corporations that hold subsidiaries from which they want to drain cash flow through dividends issued by the subsidiaries.

From Here to There
The current tax system in the United States is based upon progressivity of the marginal tax rate for both individuals and corporations: as taxable income rises, the last dollar of that income is subject to a higher and higher tax rate. As pointed out last week, this does not mean that all income gets taxed at a higher and higher rate as income rises: it means only that higher and higher tiers ("brackets") of income get so taxed.

That progressivity has as one of its consequences the taxation of capital in a focused way: individuals who make more money are more likely to have a larger percentage of that income generated by investments rather than by the sweat of their brow. Anecdotally, the wealthy entrepreneur George Soros, whose financial portfolio is estimated in the billions, declared that the elimination of the double taxation on dividends alone was a boon in the tens of millions dollars to him, indicating that an extraordinary amount of his annual income is generated by capital investments he has made, primarily, it must be presumed, by acquiring ownership positions in corporations.

It must, therefore, be an important feature of tax reform for the neo-conservatives that progressivity be drained from the tax structure. That has already been in the works for years. The number of tiers of income subject to higher and higher marginal tax rates in the United States was in overall decline at the point where the Reagan Administration and a compliant Congress reduced to three the number of tax brackets. Furthermore, the highest marginal tax rate has been falling, as well.

Even though the number of tax brackets is now higher than it was during the Reagan Administration—thanks in no small part to none other than President George Herbert Walker Bush—the desire to level out the tiers is just as strong as ever, but there is just not enough political will to do away entirely with tiers of progressively higher marginal tax rates, and that indicates something quite important about how the neo-conservatives must proceed if they are to switch the U.S. tax system from one that is progressive to one that is not. This article will conclude with a means by which that neo-conservative fear of openly attacking progressive taxation can be used against them as they attempt to furtively do away with it via a national sales tax.

As the dynamics are now moving, though, the tax structure is slipping decidedly toward something closer and closer to a straight, proportional income tax, while at the same time easing down the tax rates on the upper tiers of income, where it is more likely to be the result of investments rather than labor. It could be argued, then, that a proportional income tax structure, rather than a progressive one, is just a matter of time. It would, therefore, seem to be in the interest of those who want this kind of a tax system to merely bide their time: simply get sympathetic politicians to continually press for more "tax cuts" and "tax relief" as a pretext for eventually, quietly, and without undue notice, achieving the final goal of a perfectly proportional tax structure that assesses the same percentage tax rate on all income, no matter how large it might be.

The problem is that this would be like trying to move a large pig sty into the living room of the American House of Tax Code. It might work to put some of the walls in, convincing everybody that it's merely redecoration for functionality. It might even work to put the slop troughs in, convincing everybody that it's a dining room for unwanted relatives; but sooner or later, the pigs have to be brought in, and everybody's going to notice them, even when folks are assured that the pigs are nothing but house maids hired to make life easier. Pigs are not people, and just about everybody can tell that: a proportional tax is not a progressive tax, and just about everybody can tell that, too. Sooner or later, the American Electorate—fully and for almost a century living in a country that taxes the rich more than the poor—is going to see that the system has fundamentally changed to the favor of the rich. Eventually, those good voters might also figure out, were the tax rate the same for everybody, that people who make a lot of money without lifting a finger to do a day's real work get to pay the same tax rate as those who bust their hump and have barely enough to cover their bills. And perhaps just as importantly, this favor is accruing to a tiny, powerful class of folks, while the vast majority of tax revenues the government is pulling in come from a staggering majority of people in the United States, taxpayers who make less than a tenth of what the small, American aristocracy makes, as evidenced by the income distribution graphic at left.

Plastic Surgery for Pigs
Enter the national sales tax. In last week's installment in this series, the story of two brothers, Byron and Barton Binkwater, was told. These brothers made significantly different incomes; but under a national sales tax, the wealthier of the two actually paid a lower tax rate on income, simply because poorer people use far more of their total income on consumption, which would be what is taxed under a national sales tax. This example went to the heart of the old saying in macroeconomics that a proportional tax on sales is a regressive tax on income.

In this way, a national sales tax is more than a dream-come-true for wealthy people: it's not even a proportional income tax; it's a regressive income tax. That means, the richer a person is, the smaller the percentage of his total income that gets paid in federal taxes: this would be a tax structure that actually rewards the rich for their propensity to save at higher rates, which by no small coincidence means rewarding future income generated from capital rather than from actual work. This, then, is a prescription for the rich to get richer, year over year and generation over generation. Better still, in its relatively purer forms, a national sales tax could be sold as an enormous tax simplification since a check-out register tax wouldn't require people to go through the yearly nightmare of filing federal income tax forms that sometimes vex even tax professionals. And for one more thing, a national sales tax would promote that old-fashioned notion that saving is better than consuming. A national sales tax has so many promotable features that lower income folks might not notice that it's a regressive tax on income.

The Smell Comes Through
Under a national sales tax, purchases would be socked with some added percentage of the retail price, but income put into long-term savings would not be taxed. This would give people at least some incentive to put more money into savings. People who don't make much would have more of a problem with this than people who make a lot, since every dollar saved would be a larger percentage of disposable income, and few would be so bold as to argue that saving money is a good substitute for consumption. More importantly, even though that money in the savings accounts could be used later for consumption, "later" is not a good substitute for "now." It just isn't. Whereas a well-to-do person is going to have plenty of money both now and in the future, the poorer person isn't going to have both at the same time. Creating a tax incentive for future consumption constitutes a coëercion to accept more of a less desirable good and less of a more desirable one.

But businesses and individuals who are capital investors by virtue of their greater disposable income are going to have a field day. As the amount of savings rises, banks and other lending institutions will have a greater supply of lendable funds; and with greater supply will comes lower interest rates. That means businesses will have a lower cost of capital, and individuals with the means to invest will be able to use more leverage in their long-term investments, which will enhance the so-called "gains to leverage" they realize by using more debt in their total investment money. It will also serve to give businesses more of the same incentive: rather than issuing equity to grow, they will be able to use more debt because it is becoming cheaper.

Ah, but this same lower interest rate environment should help the less well-off, too, since lower interest rates mean mortgage-backed loans should be cheaper. Well, that would depend upon whether or not houses are subjected to the national sales tax. If they are, they become just another consumption item whose purchase gets deterred by that tax. If they aren't, a whole world of complications arise. New homes would start to be sold as packages including all manner of big-ticket consumption items that would otherwise be exposed to the national sales tax; money borrowed to "improve" a home could be the subject of redirection as exempt expenditures having nothing to do with the house and land, themselves; and the wealthy would howl that they need exemption from tax on two, three, or maybe more properties they want to own. Yes, purchases of homes would probably end up being exempted, but that will turn into a way by which the wealthy can turn the national sales tax to their advantage, making it even more regressive than by its nature it already is.

In Defense of Pigs: The Classical Economists and Economic Growth
Before the world of Keynesian economists, who held that government had a duty to help the poor and to stabilize the economy, Classical economists ruled the world of economics. They believed first and foremost that long-run growth was all that mattered. Regardless of whether or not there were short-term business cycles, as long as the economy was on a long-run growth path, the situation was just fine. This meant that they were unconcerned about the misery and poverty of the working class; and structural shifts in the economy that left millions of people starving were irrelevant because, in the long run, the labor supply would adapt to the new technologies and become complementary to them. Technological change that displaced workers, families, households, even entire classes of people were merely the necessary way of an economy as it grew. The government had no business interfering with business by burdening it with regulations and laws, in general, and consumer protection and labor considerations in particular.

The labor supply would adjust, even if it required time measured in generations and wrecked lives measured in the tens or hundreds of millions.

To this end, then, any structure of taxation that attends to differentially taking capital from the rich is certainly bad because it is the wealthy who finance the engine of entrepreneurial innovation, business formation, and enterprise growth. Without those who can afford to invest, there will be no jobs for those who choose a lesser life.

And yes, the Classical economists firmly believed that unemployment—and that means all unemployment—is voluntary. This point is pressed home in most principles of macroeconomics textbooks; for example, in Chapter 6 ("Economic Growth, Business Cycles, Unemployment, and Inflation") of the popular undergraduate textbook, Economics, 5th Ed. (2003), McGraw Hill/Irwin, author David Colander—by no means a "liberal" economist—the point is pounded in with eerily parsimonious objectivity.

More to the point of the Classical economists' philosophy was a "law" of economics that years ago, under the onslaught of the progressive, demand-side Keynesians, fell into much-deserved disrepute but has now managed to become unassailably doctrinal to their neo-conservative progeny. It's called "Say's Law": Supply creates its own demand; and on the face of it, the logic is deceptively reasonable.

When investment is made by those capable of such endeavors, factory capacity expands; and in so growing, the need for labor is increased. As more workers are employed, their households have more income with which to demand the very goods and services that are being produced by the factories that gave them jobs in the first place. As they want and can afford more goods and services, those in a position to invest can add capacity, which will create even more jobs, which will increase demand even more.

Supply creates its own demand.

Nice proposition, but it doesn't work. First, providing the wealthy with the means to invest in enterprises that will create jobs doesn't mean they will actually do that; and even if they do invest, there is no assurance at all that they will invest in technologies that are labor intensive. In fact, they would be crazy to invest in technologies that require large numbers of workers when they can invest in machinery that will actually replace workers. Moreover, even if those wealthy, entrepreneurial sorts actually do invest in technologies that need lots of workers, they're going to put those factories where they can draw from a labor supply curve that provides the lowest prevailing wage rates possible consistent with the skills needed. That means factories and other hotbeds of employment will be built where labor is cheap.

And guess where labor is not cheap. That's right: here in the United States.

So if wealthy people invest, they're going to invest in the substitutes for labor like machinery, computers, and robotics. If they must invest in industries that are labor intensive, they're going to do so in other countries where they can exploit workers who have not a clue that they could have better lives if they organized and resisted the temptation of subsistence wages.

This is, of course, fine to the current breed of Republicans. Although they'll pander for votes to the working class, they draw their inspiration from those who saw individuals and households of workers as distractions worthy of the academic considerations only of the socially conscious who didn't understand that the process is what matters, not the state of the economy and the difficulties of its laborers at any given moment or in any given generation.

Moving the Pigs into the Living Room
Given the utter resolution with which historical taxation trends seem to be moving toward some kind of regressive tax on income masquerading as a proportional tax on sales, it would be a favor to the neo-conservatives and their Republican political enablers to perhaps allow the national sales tax to become the system for the United States. This might seem at first wrong to simply surrender one of the most basic parts of the whole economic world of the 20th Century; but a relatively modest twist might make it not only fair in some national sense, but also preserve the core value the neo-cons were claiming to promote.

To show how this would be done, the continuing saga of the brothers Byron and Barton Binkwater must be revived. Recall that Byron makes $20,000 a year, and Barton makes $80,000 a year. Both of them need to spend $8,000 just to keep going, and any expenditures over and above this fulfill consumptive wants, not actual needs. As demonstrated in the last installment in this series, in a world where a 15% national sales tax was applied to their consumption, and both Byron and Barton saved every penny they didn't simply have to spend to keep body and soul together, the numbers worked out as follows:

Byron spends his $8,000, on which is assessed a 15% tax; so his national sales tax bill is
    15%×$8,000 = $1,200,
so this means Byron pays an income tax rate of
    $1,200÷$20,000 = 6%.

Barton spends his $8,000, on which the same 15% tax is assessed; so his national sales tax bill is the same
    15%×$8,000 = $1,200,
so this means Barton pays an income tax rate of
    $1,200÷$80,000 = 1.5%.

This demonstrates that, by any measure one would choose for a definition of "fairness," this national sales tax is beating up poor Byron quite a bit more than it's bothering his brother Barton.

It will serve the purposes of what is about to be proposed if we now introduce the Binkwater brothers' old friend, Mary Ann Mirthmutton, a wealthy entrepreneur who earns $240,000 per year. Now, Mary Ann has a darned good argument that she deserves every penny of what she makes, considering that she grew her business from the ground up, working long days and nights to the end of ensuring that her business flourished and she was able to employ a number of people, one of whom is Byron, whom readers might recall works at the EZ-Lube on the south-east side of town, a franchise that Mary Ann just happens to own. As coincidence would have it, even Barton owes his job to Mary Ann, considering that she's a significant shareholder in Purcell's Parts, where Barton is a junior executive primarily because Mary Ann saw to it that he was given a shot at the executive ranks.

If Mary Ann is an extraordinarily frugal woman who spends only that which is absolutely necessary, she—just like Byron and Barton—will spend $8,000 and thereby be exposed to the 15% national sales tax only on that part of her earnings. Doing the numbers for Mary Ann returns the following:

She spends her $8,000, on which is assessed a 15% tax; so her national sales tax bill is
    15%×$8,000 = $1,200.
This means she pays an income tax rate of
    $1,200÷$240,000 = 0.5%.

That's right: under a consumption tax designed as a 15% national sales tax, Mary Ann's income tax rate is just half-a-percent.

Of course, this means Mary Ann is going to have incentive to save quite a bit of the $232,000 she doesn't absolutely need to spend, thereby contributing to the pool of lendable funds that can be borrowed by other businesses to grow. But even the most stalwart of the New Right Republicans are not going to want their low-income constituents to hear about this kind of nonsense.

Recall that Barton Binkwater would have to have used $32,000 in consumption spending before he would have hit Byron's 6% income tax rate; and the problem is magnified in Mary Ann's situation: she could spend a whopping $96,000 before she'd be paying the same 6% tax rate on income that Byron pays just by purchasing his necessities of life. (Mary Ann spending $96,000 and paying 15% sales tax would pay a total of $14,400 in sales tax, which is 6% of her $240,000 income.)

Any politician worth his or her most earnest and righteous bluster could hammer the point of this unfairness like a wood stake through the heart of a Republican standing up for such an obviously, egregiously anti-working class tax outrage. But a compromise is available, one that would accept a national sales tax, encourage savings, discourage consumption, and yet still retain at least some hint of the old gospel of progressive income taxes that the neo-conservatives fear killing off in broad daylight.

Let the Pork Barbeque Begin
First, regardless of how a consumption tax would actually work, there would have to be a sound definition of what constituted "savings": throwing money into a checking account for 29 days isn't savings. Neither is putting money into the stock market for six months.

Buying something like a house is controversial because the primary purpose of a home is to consume the flow of amenities arising from living there. The capital gain realized through sale is not the primary reason for purchasing shelter, or at least it shouldn't be. That having been noted, the gain is, in retrospect, the product of a long-term capital investment decision, even though in most cases a considerable amount of the money used for the capital investment came from a lender, with actual income of the homeowner only slowly replacing that huge punch of someone else's money that was used up front to make the buy.

One way or the other—and there would be a whole lot of wrangling on what asset purchases were true savings rather than consumption—solutions would be found that were palatable to disagreeing tax writers and politicians, and a list of what were actually uses of income for "savings" would be brought forth.

Now, here's the radical part. The Internal Revenue Service would no longer have as its best-known role the bullying tax collector of the federal government. Instead, it would be the tax rebater. To see how this would work, first note that the IRS would have no idea how much a given taxpayer had spent on consumption, and therefore, it would have no idea how many dollars any given taxpayer had paid in national sales tax over the course of a given year. However, because every last taxpayer could demonstrate net additions to or depletions of savings through statements from their financial institutions, the IRS could be shown how much each taxpayer spent on consumption: it would be total income minus net additions to or depletions of qualifying savings. That means the IRS would be able to determine—pretty closely, anyway—how much a taxpayer had paid in consumption taxes in a given year.

Now comes the new role of the IRS as rebater.

Establish income brackets that reflect greater and greater ability to cover basic necessities of life without beating up total income. For a fellow like Byron, since he blew $8,000 of his lousy $20,000 total income, he ended up paying $1,200 in national sales tax. The New Tax Code would rebate this entire amount to him. In fact, just to bend over backwards, give Byron the benefit of the doubt about how much he simply must spend to keep going and say it's $16,000 instead of $8,000. The IRS would send Byron a check for $16,000×15%, or $2,400.

Notice that Byron has a huge incentive not to spend nearly $16,000 in consumption of goods and services, since for every dollar less than $16,000 that he saves instead of using for purchases, he's getting money back from the government that he didn't even pay in national sales tax.

Let's go on to Barton. No slack for this boy, but nothing adverse, either. Out of absolute necessity, he spent $8,000, so the IRS rebates to him $8,000×15%, or $1,200.

Now, what to do about Mary Ann. The answer is simple: nothing. The woman's making $240,000 a year, for cryin' out loud. Even if she got the same $1,200 that Barton received, she'd probably put it in her Chump Change Purse. But that's not the real reason she doesn't qualify for a rebate: the real reason she doesn't get money back in recognition of some of the national sales tax she paid during the year is because she is wealthy, and it's the neo-conservatives and the ghosts of the Classical economists who possess them who keep howling about how we should recognize that it's the well-off people who are the big investors in future productivity. Why on Earth would the New Tax Code give them any reason at all not to fulfill their destiny as the great providers of capital investment? Rebating national sales tax to Mary Ann is nonsense: she's a saver by virtue of her economic standing. It would be illogical for the government that wants each and every citizen to save at the maximum of his or her ability and nature to give a certain class of people any incentive at all not to do what it wants them to do and what they would do by the socio-economic nature.

The lobbyists and the political apologists for people of wealth would bawl at the top of their lungs about the "unfairness" of this. Shutting their pie holes would be a matter of demonstrating that, if the system doesn't work this way, the entire tax structure becomes exactly the regressive income tax that neo-conservatives for decades have hoped for but cowered at the prospect of forcing into open, public debate.

Cleaning Up the Mess the Pigs Left
A massive, fundamental tax overhaul that strips the Internal Revenue Service of its most well-known role as muscleman tax collector, scaring the wits out of taxpayers, would be hugely popular in and of itself. Effectively, the IRS's role in collecting taxes would be reduced to a mechanized organ of overseeing retail operations that would be charged with collecting a national sales tax of 15% on every non-exempt purchase. This is precisely what state and local government tax agencies do all the time. And retailers understand quite well how to manage sales taxes. And the IRS would learn quickly enough how to act like a state sales tax collection operation to do the same thing that states and municipalities have been doing for decades. In its role as a rebater, the IRS would find that its entire reason for interacting with the public would change fundamentally.

As far as the details of such a New Tax Code would be concerned, there would have to be ramp-ups in rebatable income in recognition of dependents. Life-saving and life-preserving medical care and prescriptions would have to be exempt, although a well thought-out national sales tax could be an effective disincentive to people spending on wholly elective surgeries and certain types of medications that neither save nor preserve life. Lobbies for other industries would line up for their exemptions, too; it would require a will of iron to resist every petition for exemption from the national sales tax, and that means a whole lot of unnecessary exemptions would be granted.

Beyond the national sales tax on private consumption would be the need for something equivalent in the corporate world. This would be partially addressed just because businesses would be paying the tax on their purchases in the same way that individuals would. The difficulty would lie in dealing with corporations that purchase through "wholesale" and foreign channels that could slip through the net of a poorly designed sales tax.

A national sales tax would be difficult to construct, of that there is no doubt. But everyone should recognize that it's something the neo-conservatives want, and it's something the President's commission on tax reform might very well recommend; as such, refusing to consider its merits, as modified in outline in this article, not only defeats the hopes of the luminaries of neo-conservatism, but also defies the earnest desires of the President of the United States, himself.

It is, then, worth considering a national sales tax to replace the current income tax system in this country, if for no other reason than that such a national sales tax could end up being a much worse deal for the rich than they ever imagined as they were sending in their campaign contributions to the Republican radicals in Congress and to their inspirational leader, President George W. Bush.



The Dark Wraith has spoken.

The Written Peace: Open Forum of June 30, 2005

The Dark Wraith Forums desperately needs an open thread. The last article has now garnered close to 80 comments, many of which were, in and of themselves, substantial in size. That thread is, without a doubt, truly amazing. The span and depth of thought and intelligence put on display there is beyond anything I've seen in the Blogosphere. That thread will, of course, become part of the permanent archive of The Dark Wraith Forums; but it might become more, too. Time will tell.

A formal welcome goes out to our newest commentator, Chris Meyers. Perhaps some of you didn't notice, but we had another new commentator, GT, post on a thread further down. This gentleman runs the blog GT's Market Rant, a veritable pig heaven for those of us who devour financial data.

And on the subject of blogs, several of our regular and worthy commentators here now have blogs of their own. SB Gypsy now blogs at The Gypsy's Caravan, while DuWayne Brayton—the blogger formerly known around these parts as Treban L—has emerged with the blog Traumatized by Truth. Both of these blogs are worth visiting on a regular basis, so they are now listed in the Dark Wraith BlogRing in the sidebar.

As long as the subject of good blogs is on deck, that massive thread below reminded me to take note of another blog I might have mentioned before, but which I should mention again. If you haven't been to zencomix lately, go there to see a political cartoonist whose work is becoming mainstream publication quality.

Finally from that last thread, if I haven't recently given thanks lately to OddJob, My Pet Goat, Peter of Lone Tree from BlondeSense, Auntie Roo, Lenin's Ghost, LindiBee, Dread Pirate Roberts of Dharma Bums, and Old White Lady of It's Morning Somewhere, consider it given now.

Enough with the schmaltz. That thread nearly put the Dark Wraith in his grave... which, when you think about it, is where a ghost is supposed to be, I suppose.

On to other matters.

Providing a bit of coding advice to Old White Lady a few days ago gave me an inspiration. Starting next week, I'll be publishing occasional articles in a series called "Coding for Bloggers," where I'll be offering tricks and tips on HTML, cascading style sheets, and javascripts. None of the coding advice will be particularly intense or complicated; and pretty much everything will be for blog types of environments. The intention of this series is to offer some of the old, backroom material that I've learned over the years (usually the hard way) to make things easier to do, better looking in final mark-up display, or more interesting to end users.

And as I noted perhaps cryptically in a previous thread, several new features are in the offing for The Dark Wraith Forums. Whether or not they'll be wildly appreciated, I don't know. We shall see.


Say something here on this open thread. Make it intellectual, funny, strange, or downright unacceptable in mixed company (that's normal people with neo-cons in the crowd); but I must ask that rowdiness be kept to a minimum. That last thread was so huge that some of the floorboards over by the jukebox are creaking. If that thing drops into the basement, we'll have no entertainment at all except for the cat dancing again; and the last time, that got out of hand when that alley cat crashed the party and started doing Blues Brothers impersonations after getting sloshed on catnip cappuccinos. That whole scene just wasn't natural. This place could have ended up getting shut down by the Blog Decorum Police.





The Dark Wraith turns on the dance floor lights.