'Senator Government'(McCain's Freudian Slip)

Whether or not last night's much-improved debate performance helps John McCain rally in the polls, at least voters finally got a clearer sense of the policy differences. For our money, the best line of the night was Mr. McCain's Freudian slip of referring to Barack Obama as "Senator Government." Neither candidate is offering policies that meet the serious economic moment. But Mr. McCain would let Americans keep more of their own income to ride out the downturn, while Mr. Obama is revealing that his default agenda is to spend money and expand the government.

Cribbing from Hillary Clinton's playbook, Mr. Obama called this week for a "90 day foreclosure moratorium for homeowners that are acting in good faith," whatever that last phrase means. When Mrs. Clinton proposed a foreclosure moratorium during the Democratic primaries, Mr. Obama had said it would lead to more expensive mortgages going forward. He was right then.

The Treasury's Hope Now program and the Federal Housing Administration are already helping to refinance homes for millions of homeowners. Anyone who isn't able to qualify for one of those voluntary programs and who still can't afford to pay a mortgage isn't likely to be any better fixed in a mere 90 days. Mr. Obama also overlooks that the banks that service the mortgages don't typically own them. They're owned by far-flung investors via a mortgage-backed security.

Mr. Obama apparently wants the feds to unilaterally rewrite contracts based on something as undefinable as "good faith." At the same time, he is repeating his proposal to change the bankruptcy code so judges can unilaterally rewrite mortgage contracts as well. All of this would make credit less available to working families in the future.

Another Obama idea is to give a $3,000 tax credit to companies that create new jobs in the U.S. over the next two years. We don't know many employers who would hire people merely because of a tax credit that barely covers administrative costs, especially if that tax credit vanishes after two years. And especially if Mr. Obama is going to hit that same business with a whopping tax increase. As he told skeptical "Joe the Plumber" -- actually Joe Wurzelbacher of Toledo -- in his own Freudian slip this week, "When you spread the wealth around, it's good for everybody." But there won't be any wealth to spread if no one creates it.

Mr. Obama is also proposing more "stimulus," by which he means more federal spending. He wants $25 billion in federal aid to states, which would merely subsidize the most profligate state politicians. He wants $25 billion more for a "jobs and growth fund" for schools, roads and other union-driven public works. And he wants $25 billion more in loan guarantees for the Detroit automakers, on top of the $25 billion they've already received.

These ideas reveal that Mr. Obama thinks economic growth derives mainly from growing the government. They merely redistribute money taxed or borrowed from the private sector to favored political constituencies. At least Bill Clinton sold his tax cut in 1993 as a way to reduce the deficit; Mr. Obama is proposing to take federal spending to heights not seen since the early 1980s. If this is his agenda to spur recovery, no wonder the stock market is tanking.

As for Mr. McCain, he is proposing to cut the capital gains tax rate to 7.5% from 15%. Mr. Obama responded by sneering that no one now has capital gains to tax, but Mr. McCain is right that lowering the after-tax return on capital could help even in a down market. He also wants to increase deductible capital losses to $15,000 from $3,000 for 2008 and 2009, another way to help the investor class ride out the bear market. While capital gains are taxed whether they are inflated or not, the $3,000 loss writeoff limit against regular income hasn't changed in 30 years.

Mr. McCain is also usefully calling for a permanent reduction in taxes on withdrawals from tax-preferred retirement accounts, which he'd tax at 10%. In addition, he'd suspend the current rules mandating that investors begin selling off their IRAs and 401(k)s when they reach age 70 -- an idea Mr. Obama also says he likes.

As the front-runner in the polls, Mr. Obama probably figures he can afford to play this kind of small ball and coast into the White House. He merely needs to disguise and downplay the magnitude of his tax and spending plans. As for Mr. McCain, we've argued for months that he's needed a larger, more compelling economic narrative -- and the financial panic gave him an opening to argue for a far more substantial tax cut to spur growth and avoid a deep recession. He's preferred to play small ball instead. Mr. McCain's best hope now is that millions of Americans share the basic economic common sense of Joe the Plumber.

The more interesting Freudian slip was when Sen. Obama was asked about religious fundamentalism attacks in the campaign and he said...”my Muslim faith” which the interviewer immediately helped him correct to “you mean your Christian faith.”

I was watching and heard this with my own ears.

It isn’t the faith, (if he doesn’t espouse the radical version), it’s the coverup and lies that go to the heart of the distrust I have of this man.

And my belief that he is actually neither Muslim nor Christian, but Marxist...an Alinsky Marxist, which advocates the mole approach to having Marxist triumph in overthrowing American ideals by sneaking into the seats of power through a campaign of coverup and lies about your real beliefs.

When commentators make the point that McCain would let Americans keep more of their money, the rest of the story (ala Paul Harvey) is never told...except perhaps by our side.

When taxes are lower, Americans feel more free to spend money on what they feel is necessary, and/or to give to the causes that they feel are beneficial. It works the same way as sales in supermarkets and department stores, but on a different scale.

I have $100 that I have budgeted, or determined, to spend. I see a printer on sale that costs $100 ($108.25 after tax). I am set in my mind that I will get what I want for the money that I have.

When I get to the store, I notice that the $100 printer has been knocked down by half ($50 for those in Rio Linda). I now have an extra $50 in my pocket, which I can either save, or - more likely - spend on something else, that is taxed, that I wanted to get, but didn’t think that I could, because I was convinced that I was going to spend the whole $100 on one item.

So let’s say that I bought a video and a ream of paper for a total cost of $20 more. I now have spent $70.00..and since all three items are subject to sales tax, I spent around $76.00.

From my perspective, I am sitting pretty. My expectation was to spend $100 on one item. I now have spent $76, after taxes, and have three items.

From the store’s perspective, THEY are sitting pretty. They thought they were going to remove one item from their stock, and ended up moving three. In addition, they moved the product and left money in my pocket, which (they might rightly assume) could be spent in their store later, because they were “nice enough” to give the customer a price break.

The secret? “Nice” has nothing to do with it. Not a bloody thing. If the store really wants cash flow, they are not going to raise prices. They will appeal to the satisfaction desire (or “packrat” mentality) of the human being. They will sacrifice product to get cash. The consumer will sacrifice cash to get product.

In this example, from my perspective, I spent 76% of my allotment, and got 66% more than I expected...and had money left over. The store, not knowing that I intended to spend $100, would have received only $50 and moved one item. They received $76, and moved three.

So I got product, paid taxes, and saved money. They moved product, paid taxes, and got money. Everyone is happy...theoretically.

Multiply that by millions, and you see how lowering prices ends up benefiting both sides.

Amazing that the same people who agree with “sales” on the small scale, vote for people who want to take money from them, and from the people who HIRE them, with no quid pro quo. I don’t get it. Or - regrettably, as a political junkie - maybe I do.

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