Trumpeting Capitalism

Under the headline, The Speech That Mitt Romney Should Give, Kyle Smith makes a great case for capitalism, profits, the private-equity business, and jobs:

A private-equity shop is a little like a trauma surgeon in the ER. You don’t want to meet us. Chances are, you’re having a near-death experience. You don’t go to the ER with a headache. A lot of the companies we dealt with were falling apart. Close to bankruptcy. We did our best to save them. Sometimes we didn’t succeed. But I’m happy to report that we had more success than not. Other companies we did business with were like newborn babies—weak, and desperately in need of support. We provided startup capital for them.

Surgeons, if they’re good at what they do, are handsomely rewarded. So are private-equity shops, if they know what they’re doing. But I think if you talked to the average surgeon, he or she’d say they’re not in it for the compensation. They’re in it for the challenge. They’re in it because they’re good at solving problems, and they’re willing to go to work in a high-stress environment every day because they think they’re up to some of the most hair-raising challenges imaginable. They do society a lot of good. Ultimately the people whose lives they save go on to have children of their own, and those children go on to have children of their own. Ultimately a lot of people are alive because of what ER doctors do.

The immediate challenge is to restore the patient to life. The patient may go out and get hit by a bus tomorrow, but the doctor’s focus is on the health of the patient today. They restore life and health. In private equity, that life and health we try to restore is called profitability. Profitability has to come first. Ultimately no business can survive if it’s not making a profit. Unless it’s the government, in which case it just raises your taxes or borrows money from China that your grandchildren will have to figure out a way to pay.

Profit is not a dirty word. Profit means the health of American business. And when American business is healthy, that’s when it can get on with growth. With creating jobs. ...

Using Apple (Steve Jobs), Facebook (Mark Zuckerberg) and Staples, Smith illustrates the free-market system's positive ripple effect on society, what he calls the "blessings of American capitalism."  Worth a full read.

Oops, Liberals' Class Warfare Isn't Working

A national poll by The Hill released February 27, 2012, reports that "likely voters prefer lower individual, business tax rates."

The big majority opted for a lower tax bill when asked to choose specific rates; precisely 75 percent said the right level for top earners was 30 percent or below.

The current rate for top earners is 35 percent. Only 4 percent thought it was appropriate to take 40 percent, which is approximately the level that President Obama is seeking from January 2013 onward.

The graphic below shows the breakdown of responses by likely voters (LV), males, females, and younger voters:

The Hill admits "the new data seem to run counter to several polls that have found support for raising taxes on high-income earners."

“If you ask people, ‘Should families with more than $250,000 pay a higher tax rate?’ you would get a lot of yeses on that,” said Clint Stretch, managing principal of tax policy at Deloitte Tax LLP. “And yet … you’ve got 75 percent of the answers are suggesting high-income people should have a lower tax rate, and that’s an astonishing result.”

One possible explanation is voters may not know how much the nation’s top earners are already being taxed. The poll did not ask voters to identify current tax rates before saying what rate they favored.

“It might be that people are underestimating how much the rich pay now,” said Bruce Bartlett, a former Reagan adviser and Treasury official under President George H.W. Bush.

Indeed.

About those Air Bags in Your Car

"There are now millions of older cars on the road with air bags," writes Eric Peters at the American Spectator, and they "are ticking time bombs, financially speaking..." in a couple of ways.

First, if the air bag deploys in a minor fender-bender, a $1500 to $2000 replacement bill to install new air bags will be factored in to repair estimates; and their huge cost could cause the older car to be totaled by the insurance company. "A 2002 NHTSA study," Peters reports, "found that '...nearly all vehicles more than seven years old are scrapped if they are involved in a crash in which their airbag deploys'."

Second, over time airbags can "degrade and develop problems" just like any other part in a car, and no one can know when they may become dysfunctional. With some 15 years of air bag experience behind them, several automakers have begun building in service schedules for airbags — at an undetermined cost to car owners. Writes Peters:

I like to read the owner's manuals of the new vehicles I test drive each week. That's how I discovered the warning that (to cite one example) "SRS system must be serviced" at 10 years. In one case, a major car maker specifically recommends replacing the bags (and related sensors, etc.) at 12 years — and you can imagine what that would cost.

It's something to think about when deciding whether to hold on to an older, payment-free car or buying a newer model.

Afternoon with Author Nonie Darwish

Former Egyptian journalist Nonie Darwish will discuss her new book, The Devil We Don't Know, at an Afternoon with an Author event from 3 to 5 pm tomorrow, February 28, at the Capitol Hill Club in Washington DC. Attendance is free, but registration is required.

HE: Obama's Budget Travesties

Human Events has put together the Top 10 Obama Budget Travesties — a good quick reference guide to have handy for arguments with liberals.

Middle Class Collateral Damage

It isn't bad enough that almost half of Americans are dependent on government already. In his 2013 budget proposal to triple the tax rate on dividents, President Obama takes aim at the 51 percent of adults in the nation who are savers trying to fend for themselves. From the Wall Street Journal:

One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets. Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.

Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.

The truth is that the plan gives new meaning to the term collateral damage, because shareholders of all incomes will share the pain.

According to the Investment Company Institute, about 51% of adults own stock directly or through mutual funds, which is more than 100 million shareholders. Tens of millions more own stocks through pension funds. Why would the White House endorse a policy that will make these households poorer?

Seldom has there been a clearer example of a policy that is supposed to soak the rich but will drench almost all American families.

Gov Sarah Palin Named Institute's 2012 Woman of the Year

Perhaps her award should have been called the Woman of this Generation, for she deserves such. Governor Palin has inspired a generation of young conservative women more than any woman since Margaret Thatcher, despite (or perhaps because of) the avalanche of assaults from the Left.

In a private luncheon in her honor, Governor Palin told the audience of about 300 female college leaders from across the nation that the Left's onslaught only makes us stronger. Governor Palin encouraged these young "constitutional conservatives" and the next generation of "Mama Grizzlies" to focus on enduring priorities of faith, family, freedom and personal responsibility.

"Pay no mind to what the rest of the world says about conservatives," she advised; and "don't look externally for your encouragement, your empowerment or your internal fortification."

"If you are mocked and belittled and ridiculed for having conservative beliefs," she told the audience, "please make sure your spine is stiffened. ... Your good positive efforts to affect the change this country needs will be worth it. At the end of the day, you're going to be able to say that that ridicule, that mocking, is for naught if you know internally what you're right priorities are and where God is leading you. All the other stuff out there on the periphery will just fade away."

She noted that Clare Boothe Luce is an example to the modern conservative woman. "Any one of her careers would have made her remarkable, but taken together, she was really outstanding and astounding."

Clare's work ethic, her drive, her commitment to make things better "is a reminder of what our role as American women must be in this world that needs women like you. She was a defender of her faith ... a stalwart cold warrior and promoter of freedom ... a fiscal conservative ... a wife and mother who once said, 'Women know what man has long forgotten, that the ultimate economic and spiritual unit of any civilization is still the family'. ... She stood on principle, and history has proven her right. She was, in short, an all-American woman—strong, proud, free, courageous."

Governor Palin closed by urging the audience to take an equally strong stand for conservative principles. "If not us," she asked, "then who?"