Given my 25 years in the car dealership business, of which most of you are aware, I can't let this week go by without commenting on last week's Chapter 11 bankruptcy filing by Chrysler Corporation. What the Obama Administration is doing with the American car industry saddens me. No, it actually angers me. In fact, I am fired up big time. It has become abundantly clear that the only objective of the Obama task force is to put control of GM and Chrysler in the hands of the UAW union and wipe out anyone who had invested any capital in either of these companies. What’s more, he is using taxpayer money to subsidize the union's takeover of these companies. Here are some of my observations on what it going on:

Under the Obama plan; the government, UAW, and government-controlled banks will own 95% of GM. They will own 80% of Chrysler. The existing stockholders get 1% of GM and 0% of Chrysler. The bondholders (who are not government controlled banks) get 4% of GM and 0% of Chrysler. The remaining 20% of Chrysler will be owned by Fiat, more on this topic tommorrow...

You probably weren’t aware, but Friday was a big day on Capitol Hill, even though Members rushed out of town on the eve of the April recess.  But the filing deadline for Member earmark requests was upon them, or so they thought.  Last year the Appropriations Committee extended the deadline (A Quiet Recess? 3/20/2008) because of an overload of requests, and this year didn’t disappoint.  On Friday evening, Anne Schroeder Mullins from Politico posted a blog titled “There are so many earmarks in the House that…”
 
Here is an excerpt:

“Who says Members are opposed to earmarks? We hear that the earmark computer in the Appropriations Committee - the earmark database member request system, to be exact -- broke down today. Again. This after it was revamped after last year's overwhelming earmarking.”
 

That’s right, there were so many earmark requests that the computer that stores all of the information broke down…AGAIN!  So the Appropriations Committee, for the second year in a row, extended the filing deadline.
 
Earmarks are a corrupting and abusive practice in Congress. You’d think that the ear markers would get the message, it’s not just the American people protesting the pork, it’s their office equipment now too!

Today, President Obama’s first tax hike took effect.  Yes, that’s right on April Fool’s day, but it’s no joke.

When President Obama first took office, he pushed through Congress, and signed a bill increasing taxes on tobacco.  This increase amounts to 62 cents per pack of cigarettes, and 40 cents per individual cigar. 

This came as part of the so-called State Children’s Health Insurance Program (SCHIP), unfortunately, it is not nearly as strong a program as its title implies.  It is nothing more than the first step in the short march towards socialized healthcare. 

President Obama pledged that he wouldn’t raise taxes on Americans making less than $250,000/year, but this tax will fall most heavily on those making significantly less than that. 

Just exactly what are the President and Congressional Democrats trying to accomplish here?

In my opinion, the best and most articulate Member of Congress, present company included, is Paul Ryan (R-WI). He is the Ranking Member of the Budget Committee, and a guest blogger here at the Greeneyeshade. Here is a 4 minute clip of his very powerful closing argument in last Wednesday’s debate.  Right below the video, I have included a link to his Op-Ed in today's edition of the Wall Street Journal.

President Obama's Budget passed through the House Committee on the Budget, of which I am a member, late Wednesday night on a party line vote. It will come to the House floor late next week, and I expect it to pass. Like the ‘non-stimulus package,’ I expect that not a single Republican will vote for it, and a few moderate Democrats will also likely oppose it. This budget quickly moves America to the sort of place that Pastor Rogers described in yesterday's quote.

I usually give you lots to read, but today I'll give you a few things to watch. Here is my opening statement on the budget debate.  It explains some of the reasons why I oppose this budget with such vigor. It is 3 minutes long.

If you want to see what a 30% tax increase looks like, take your paycheck and multiply the total taxes deducted by 1.3.  Then, subtract that from your gross income and that will be close to your new net income. So, if you made $3,000 gross and $2,000 net, you will now only net $1,700. Oh, and that won't include the cuts your employer has to make in order to pay for their tax increases. By the way, this budget includes all kinds of things that are minor in the grand scheme of things, but big to certain people. For instance, it would repeal the use of the ‘Last In, First Out’ (LIFO) inventory accounting method.  This will dramatically raise taxes on all retail businesses who carry inventory.

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does not good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

- Adrian Rogers - American pastor (1931-2005)

"…We're very serious about working on a bipartisan basis to reduce those deficits or reduce those costs.” – 3/24/2009:

Frankly, had the stimulus bill been anything remotely close to something Republicans could support, we would have had met the President way farther than half way, due to the severity of the current economic situation and his popularity at the time (which is now falling quickly). But he didn't. The stimulus was so far to the left that not one Republican voted for it, and some of the more centrist Democrats voted against it too. But he hasn't stopped there. He has since declared that his "cap and trade" energy proposal (which will double the cost of electric and heating bills nationwide) is "non-negotiable." Yeah, way to gain consensus. Now, he is proposing to use a "nuclear option" in the Senate for “cap and trade,” and socialized medicine plans so that he will not need any Republican votes, and can afford to lose some centrist Democrats as well. His agenda is left of center of the Democratic Party, not to mention the nation.

"…we invest in reform that will bring down the cost of health care for families, businesses, and government... And in this budget, we have ..." 3/24/2009

He included an extra $600 billion in his budget to cover the extra costs of his healthcare plan. How is that bringing down costs?

"We are in the worst financial crisis since the Great Depression…" 10/07/2008

"We are beginning to see signs of recovery." -  3/24/2009: 

When he wants to spend money, he overstates the state of the crisis. Then, if people start to lose confidence, he understates it.

"I will make a firm pledge: I pledge under my plan, no one making less than $250,000 a year will see any type of tax increase, not income tax, not capital gains taxes, not any kind of taxes," - 11/12/2008: 

First of all, this is completely inaccurate on its face. The president's budget straight up limits tax deductions for incomes over $208,000 joint and $104,000 single.  Furthermore, it imposes an energy tax (cap and trade) which is expected to double utility rates for everyone regardless of income.  Additionally, the president is guilty by omission.  There is no way he can spend the money he wants to without raising taxes on everyone at some point. You can confiscate all income over $250,000 (a more plausible idea after the bonus vote last week) and you would not balance the Democrat budget over the next 10 years. It would require a 30% increase in EVERY federal tax on EVERBODY, at EVERY level, in order to pay for the spending they want.  That's 30% more social security tax, Medicare tax, income tax, corporate tax, capital gains tax, alternative minimum tax, etc. That's the real message in his budget.

President Obama likes to speak. He likes to speak a lot. At one point while I was recovering from my surgery, I remember seeing him give 3 separate televised speeches on the same day!  Whether it's Leno or a prime time press conference, he's on TV saying something pretty much every day.

But is he doing what he is saying? A couple of weeks ago an editorial appeared in none other than the Washington Post (not exactly a conservative publication) suggesting that he is saying one thing and doing another. I agree. Here are some specific examples:

"…I've pledged to slash earmarks by more than half when I am President" Candidate Obama - 11/22/08: 

But one of his very first acts was to sign a massive spending bill with nearly 9,000 earmarks costing over $7.7 billion. Heck, he didn't even ask, or try to ask, that the earmarks be removed.  He appears to have no intention of following through on this popular campaign pledge.

"…I pledged to cut the deficit in half by the end of my first term in office" Address to Joint Session of Congress - 2/24/09:

This statement is so far from the truth that I hardly know where to start. The budget, as computed by the non-partisan Congressional Budget Office, does cut the budget in half in 5 years, but only because the first year deficit has been enlarged so much (to $1.8 trillion) by the stimulus package and omnibus spending bill.  It's like pledging to lose 10 pounds, but then gaining 20 pounds first. Secondly, after the 5th year, it rises again dramatically every year thereafter, even under his own numbers!  His 5 year number is only a brief moment in time. His budget averages over $1 trillion in deficit a year for as far as the eye can see. He will add more debt in 6 years than was accumulated by every president from George Washington to George W Bush. But, more on the budget tomorrow.

"So if you look at our budget, what you have is a very disciplined, fiscally responsible budget…” - 3/06/2009: 

Give me a break. This is clearly the least responsible budget ever proposed, for the reasons I have laid out above.

Below is my statement at today's Budget Hearing:

 

I firmly opposed and voted “no” on HR 1586. Let’s first understand exactly what the bill does. It imposes a 90% federal income tax on any bonus paid to any employee of any company that has received over $5 Billion in federal rescue funds. Such companies include, Bank of America, Wells Fargo Bank, Chase Bank, JP Morgan, CitiBank, Morgan Stanley, Merrill Lynch, Wachovia, Washington Mutual, Countrywide, Goldman Sachs, AIG, Fannie Mae, Freddie Mac amongst others. The tax would only apply to people with total joint incomes over $250,000 or single individuals with income of over $125,000. When combined with California Income taxes which now top out at 10.55%, this can be a tax just short of 101% of the income.

Under this law, a bank teller at Wells Fargo could receive a bonus of $1,000 for doing a great job. If that bank teller was married to a physician who made $175,000 and they had some additional investment income, that bank teller would pay a tax of $1,055 on the bonus of $1,000 that they received for doing a good job. This is horrible!

This is not raising revenues, this is punishment. It is a terrible precedent to use the tax laws for punishment. If we go down this road, the government can impose a 100% tax on anyone they don’t like, or anyone they believe is paid too much. Employees of other companies, doing the same thing for the same bonus, will not receive this tax. That probably makes it unconstitutional and I hope it does.

I understand the public outrage over these bonuses and I share much of it. But this is not the way to fix it. Sue them to get the money back. But don’t do this.

You may or may not realize it, but embezzlement income is taxable today, but at normal rates. So if you steal money, you will not have a tax higher than normal. You may be forced to give the money back because you stole it, but it will not be taxed away from you. This bill makes a bonus from Bank of America a more egregious offense under the tax laws than bank robbery.

All of this was caused because we nationalized companies that are created to make a profit. Throughout time, governments have shown themselves to be particularly inept at such an enterprise. This is another example of why.

Yesterday I appeared on CNBC's Closing Bell to unveil legislation that I will be introducing which will repeal the Capital Gains Tax to spur economic activity in 2009. 

My interview is featured below.

Stimulus Factoid: States, cities, and private companies from around the country are applying to get some of the $850 billion ‘non-stimulus package’ signed by the President last month. Many of the applications are unbelievable. West Virginia is applying for $380,350 to contact 160 landowners and encourage them to grow shiitake mushrooms and ginseng. By the way, that’s $2,377 per call to each landowner.

Omnibus Factoid: There’s $1.8 million to study and manage the odor from “swine manure” in Iowa. Look, I could never think of stuff like this to make it up. This is proof that sometimes, fact is stranger than fiction.

Last week’s witness in this committee was Treasury Secretary Timothy Geithner talking about the President’s budget. He vigorously defended the budget, which I would expect from any member of the President’s cabinet. But I was disappointed that he did not acknowledge any of the highly questionable projections and assumptions that were made in order to make the deficit appear to not increase so drastically.

The budget predicts economic growth of 3.2% next year, increasing to an astounding 4.6% by 2012 with inflation levels staying at or below 2.0% during that time. If growth turns out to be that strong, we will indeed have inflation because of the monetary policies that have been pursued during this crisis. If inflation is that low then there won’t be growth. But budget numbers look better if there’s tax revenue from growth and low interest rates on the expanding national debt.

Geithner also made it clear that virtually all of the first $700 billion of TARP funds has been committed. The President’s budget calls for another $750 billion of TARP money but it does not say when it will be requested, or for what it may be used.

Here is my exchange with Geithner on these issues.

I have been telling you for some time now, a number of things that I think we should be doing to make this recession shorter and shallower while minimizing damage to the eventual recovery. You all know that I think the actions of Congress and the President thus far, have been counterproductive. Certainly the markets agree with me at this point.

Well, here is an idea that was sent to me by a concerned citizen. And it’s one of the best ideas I’ve heard yet. So good in fact, that I will be introducing it as a bill this week and talking a lot about it.

The bill would eliminate all Capital Gains taxes for any assets purchased in 2009, regardless of when the asset is sold. So, people would be encouraged to purchase homes, property, stocks bonds and businesses in 2009. This incentive would alter the risk/return ratio and likely spur a great deal of economic activity that is currently paralyzed by fear and uncertainty. And from the federal government standpoint, there might be an increase in revenue to the federal government now as the sellers report capital gains. The “loss” of revenue on the sale would not occur until some years later when the asset is sold and hopefully the government is also on better footing.

This would stimulate lots of job-creating economic activity NOW, with no cost to the taxpayer and no reduction in federal revenues until later.

I’ll keep you posted on how much traction this idea gets.

Last week, I spoke to Dave Weigel from the Washington Independent about the applicability of the fabled Ayn Rand novel, Atlas Shrugged, and it has generated some considerable buzz among liberal and conservative blogs and activists alike.

If you are unfamiliar with the book, this is the synopsis the Washington Independent provided:

Creative people (the “Atlases” of the title) are hounded and punished for their labor by an oppressive, socialistic state. In response, they retreat from society to a hidden enclave where they watch civilization’s slow collapse.

I spent the last few weeks recovering from surgery, and I’ve had a lot of time to talk with business owners in my district, and to be perfectly blunt, I am hearing more and more of those owners thinking of “Going Galt” in response to President Obama’s spending spree. After all, someone is going to have to pay for this massive expansion of government.

This is troubling because small business supplies a substantial number of jobs in America, and now they are beginning to see that they are being force-fed a de facto punishment for their ambitions and success. 

Don’t worry, I am not predicting a mass revolt by world economic leaders; we are a ways off from that. But what I am seeing, is a sort of protest, on the micro level from people that create jobs and those who create all the things the rest of us benefit from.

Let’s hope I am wrong, and let’s hope President Obama has a change of heart.