Nancy Pelosi is now okay with Medicare for All, quelle surprise

I argued in a couple earlier posts that Democrats are most likely to nominate a progressive candidate this election cycle, which is the opposite of what they need to take on Trump. This has nothing to do with their arguments and everything to do with math. If you tally up the support in polls for progressive candidates and “moderate” candidates, hard-left ideologues have well over half the vote. If you assume that their support will consolidate under some like-minded candidate as the primaries go on, that will be a progressive. It doesn’t help that their top “moderate” candidate is calling his campaign the “no malarkey” tour and showing early signs of senility.

Of course, Democrats don’t really have a moderate campaigning this cycle. Even Biden, who has been in Washington DC longer than I have been alive (and I am not exactly young myself) changed his position on abortion to please millennials, a fact that led to a priest in South Carolina very publicly denying him the Eucharist. Some might call Nanny Bloomberg a moderate, but he’s running on gun control. He’s also sort of beyond classification. He loves the free market, but he also loves taking money from Communist China and regulating Big Gulps. And don’t get Bloomberg started on talking about how the poor are incapable of thinking clearly about what’s best for them. He thinks you need to tax the poor into making good decisions. Both Biden and Bloomberg are opposition research goldmines.

Nancy Pelosi (incidentally, another person who is Catholic in name only) has spent most of her tenure since midterms trying to rein in the far-left wing of her party. But there’s every indication that she has accepted that they are the Democratic Party now and she’s giving up fighting them altogether.

She gave up fighting them on impeachment. She gave up trying to persuade them that the president should only be impeached with bipartisan support. She gave up trying to persuade them to come up with something more than “President Trump is a big meanie” to go with.

Well, she’s given up another fortress now too, which was trying to talk her party out of Medicare for All. You will remember when Obamacare was enacted, Democrats swore up and down and side to side that Obamacare was not designed to destroy private insurance and that fully socialized medicine was not ultimately Democrats’ goal. Well, that is so yesterday. Now Pelosi supports not saying anything that will undermine their future nominee’s platform, no matter how financially bonkers that platform is going to be. The nominee is going to be insane, so let’s all agree to be insane.

From The Hill:

House Speaker Nancy Pelosi (D-Calif.) on Thursday said that the Affordable Care Act could “be a path to Medicare for All” after previously expressing dislike of the health care proposal favored by progressives.

Asked her opinion during an appearance in a CNN town hall on presidential candidates who support replacing former President Obama’s signature legislation with Medicare for All, Pelosi said, “I’m not for doing away with ObamaCare.”

She did say, however, that the 2010 bill could be improved upon.

“There are improvements that can be made once you see the implementation of legislation, so I would rather call for health care for all Americans,” she said. “As we improve the Affordable Care Act, it may lead to Medicare for All.”

The top House Democrat proposed comparing proposals to see which is the best way to go.

“Put it all on the table, see what the benefits are to the consumer, to the patient, and when you do so, then compare it to what other options are,” she said. “I think the Affordable Care Act can be a path.”

“But whatever you want to eventually have, I don’t think you should do away with the Affordable Care Act to get there,” she added.

This is a reversal from the position she took only a month ago, which was that Medicare For All was not feasible or desirable. (The cheapest estimate of the cost of Medicare for All is $32 trillion, which is multiples of the United States gross domestic product. Meh, details.)

I find these new developments fascinating. The Democratic Party went all-in on identity politics trying to defeat Donald Trump in the 2016 election. They drove their own people insane, such that they kept moving incrementally further and further to the left. And Trump egged them on in this the entire way. The Democratic Party became the party that was against whatever Trump was for, and he exploited that. They couldn’t stop jumping in the water to fight Aquaman.

I have said many times that the biggest problem Democrats have is not acknowledging that Trump is, in fact, a moderate Republican. He’s not some totalitarian nightmare. He’s not Hitler. He’s a normal industrialist with sane beliefs on the economy and trade that have been highly rewarded. But the party cannot move beyond its own caricatures and, really, they can’t move beyond the behavior of manufacturing caricatures to fight with. They truly are the party that exists only on social media, where everyone they encounter is an avatar with fake social capital to spend or destroy.

Now the party cannot produce a single moderate candidate, because any moderate candidate will be destroyed by the left’s social media mobs. So what are establishment party leaders doing? Changing their own positions to be even more extreme. It’s quite the downward spiral. And it was so avoidable too. In some alternate universe, Democrats decided to work with a moderate Republican instead of build The Resistance At All Costs mob, and they are going into this election with a normal, coherent platform that people across regions can relate to some aspect of.

People are ditching New York for lower-cost states, so New York lawmakers want to raise taxes even higher

New York currently faces a massive structural budget gap. The state is not bringing in enough revenues to fund its programmatic spending binges. And on top of that, the state is losing population to low-tax states like Florida. This exodus includes some of the state’s highest earners, corporations, and investment managers. Data suggest that the majority of households leaving New York for Florida have incomes over $150,000.

The state’s budget gap for the current budget period is $6.1 billion. Of that amount, $4 billion comes from the state’s Medicaid program, which provides health care for low-income households.

New York’s political climate ensures that the state keeps expanding the benefits provided through the program with no real concern for how to pay for them. The state’s Medicaid program already costs more per capita than any state in the country.

New York’s fiscal crisis is also distinguished by the fact that it is occurring during a robust economy. Usually programs like Medicaid encounter problems during recessions, when enrollment balloons and revenues decrease. Right now, enrollment in New York’s program is stable and they still can’t afford it. “Can’t afford it” is something of an understatement, in fact. This suggests that New York will be in major trouble during an economic decline.

Now, what do think New York is looking at doing in this situation? They have droves of high earners (i.e. their tax base) leaving the state for lower-cost destinations. They are watching the cost of their programs climb. Do you think they are going to cut back on spending?

Nope. The speaker of the state’s assembly says the legislature wants to raise taxes in New York even higher:

Democratic State Assembly Speaker Carl Heastie (D-Bronx) said Tuesday the only way to combat the mammoth $6.1 billion budget deficit is to raise taxes.

“This is gonna be a tough budget year … unless money’s gonna fall from the sky,” Heastie told reporters in Albany.

“For us in the Assembly, we always believe in raising revenue.”

We always believe in raising revenue. Can’t you just picture the economic development bureaucrats in Florida laughing their asses off at this? From the golf course, naturally.

Google Trends shows how little interest there is in the impeachment clown show

Morning Consult has an article today saying their polling shows impeachment is not making Trump any less popular. His approval rating has remained statistically unchanged in 37 states, including most battleground states in the presidential election. Right now, Trump is on par with past presidents who have been easily re-elected in terms of support. If previous experiences with polling matter, these polls are probably underestimating Trump’s popularity, if anything.

This is pretty much what any rational person would think would happen with such a partisan clown show. The notion, after 3 years of Democrats lighting their hair fire every hour of every day, even over jokes and satire, calling every stupid thing a “constitutional crisis,” that there is a single person in the country that is undecided in how they feel about Trump is hilarious. If anything, Democrats have ensured that Republican voters and conservative-leaning Independents will walk through fire to re-elect the man. Trump’s campaign manager, who uses electronic data to track who shows up at rallies, routinely brags about how many registered Democrats are showing up at Trump rallies. Given that you generally have to camp out to make it, they likely aren’t there to rubberneck.

I fear for the mental health of Democrats on most days, but I really fear for their mental health if they vote to impeach Trump, he’s acquitted in the Senate because duh, and then he gets re-elected.

What I find incredible, however, is how little interest there is in the impeachment hearings overall. I mean, I guess I shouldn’t, because they are boring as hell even to policy wonks. Here’s 8 hours of Democrats passionately shouting the word bribery – because they finally settled on that after quid-pro-quo and blackmail – and trying to explain mechanically how you can “bribe” someone with something they were going to get already. (Now every politician who has slow-walked a line-item appropriation in a budget for whatever reason is committing an impeachable offense. Yay! We are so smart! We can law!) They’ve lived in their social media echo chamber for so long that they think if they say it a million times you will think they are onto something and not epic fucking lunatics who have been such pathetic losers for so long that it’s already election season again.

As it turns out, most Americans have something better to do with their day. And the bar for what counts as “better” is really, really low.

The chart below shows Google interest in “Disney” (red line) and “impeachment” (blue line). This captures anyone who went looking for news or commentary on impeachment proceedings, the impeachment schedule, impeachment testimony, and so on, over the past 12 months. Watergate this is not. In fact, interest of people of all persuasions has fallen off a cliff as the process has carried on. And Nancy Pelosi thinks they are going to milk impeachment into next year. (They’ve already been at this for over 100 days.) You go girl! Keep it coming! This is so much smarter than ratifying a trade deal with Mexico and China. You are going to sweep the Heartland like a wildfire!

In fact, it’s not hard to find anything that shows higher interest than impeachment. More people searched for Peloton this week than impeachment. More people searched for Tesla truck during Schiff’s hearings. Folks just don’t care. They’d rather watch “sexist” advertisements for an overpriced stationary bike or Elon Musk destroy his own product for giggles. Even worse for Democrats, engagement on social media for the entire 2020 field of candidates is low. Much like impeachment, people don’t care about them either.

So apparently there are many people on the left who are simultaneously (1) not interested in the details of impeachment, but (2) will tell a pollster that they absolutely want Trump removed from office during an election year. I think it says a lot about their understanding of civics and anti-democratic sentiment / goodwill toward the country in general. They genuinely do think “I want someone removed from office because he gives me bad feelings and I don’t like him” is a good operating principle for the government. These are not people who are going to persuade their friends to vote in another direction or win any converts going door-to-door for a campaign. (In fact, they’ve probably been unfriended a lot, or in the South, had their hearts blessed behind their backs.) But Pelosi depends on getting these exact same people to rock the vote.

How the AARP scams seniors on health insurance

I feel like I am a fairly cynical person when it comes to government and finance. I enjoy the whodunit aspect of corruption – i.e. the wonky mechanics of some scheme that participants never imagined someone would pay attention to. But corruption itself rarely surprises me anymore. It’s ubiquitous in Washington DC.

Before today, I was passively confused by the political positions of the American Association of Retired Persons (what everyone knows as the AARP). Now that I understand the appalling, anti-social business model behind their politics, I think this organization should not be allowed to exist. Literally all the AARP does is screw old people out of money with their bogus charity.

Most people think of the AARP as a nonprofit organization that lobbies federal policymakers on behalf of seniors. That’s because that’s how the AARP markets itself. When someone mentions the AARP, the first thing that comes to mind is snail mail spam. Apart from the World Wildlife Federation offering you a stuffed tiger from some sweatshop in Asia and a lifetime supply of address stickers with the name of the person who lived in your house 15 years ago in exchange for a $25 donation, seemingly no nonprofit generates as much physical waste as the AARP. I think I started getting junk mailers from the AARP after my 30th birthday. Lavender hair, here I come!

But member donations actually make up a very small fraction of the AARP’s revenues. The AARP cash cow is financial services – specifically insurance services.

The AARP is not benevolently helping seniors manage their financial risks, however. The AARP is using its political connections to create financial risk that seniors have to pay the AARP to manage.

I happened to start looking at the AARP after a conversation I had with a family member about insurance coverage for our parents. An AARP-affiliated plan was one of the options. Said family member remarked that the AARP had turned into a “liberal lobbyist group” and carried on for a while about how the AARP now routinely backs legislation that most seniors in the country vehemently oppose.

He cited the AARP’s support for Obamacare and Nancy Pelosi’s new prescription drug legislation. (Pelosi’s legislation aims to establish federal price controls for prescription drugs – something that any economist will tell you never works out well. Arguably, the countries elsewhere in the world that have imposed price controls have merely been free-riding off of Americans who will pay higher prices for medication and for health insurance to fund research and development enterprises that humanity in general benefits from. They have lower drug costs only because they have passed the costs on to our marketplace. It’s really not all that different than people in high-tax states passing their state and local tax bills on to federal taxpayers prior to tax reform, if you think about it. When everyone has imposed price controls, you will see significantly less R&D and fewer cures for important diseases. But I digress.) I was as puzzled by these policy stances as he was. There are not a lot of cheerleaders for socialized medicine and tax increases in retirement communities. You are talking about people who are living on a fixed income. There’s a reason Alexandria Ocasio-Cortez lives in New York and her retired mother lives in Florida.

Being something of a public policy geek, I wondered why an entity that purportedly lobbied on behalf of seniors would support legislation that hurt seniors financially. Legislation that destabilized Medicare and raised taxes. AARP lawyers obviously aren’t stupid, so they had to have some motivation.

To understand why the AARP takes political positions against its own constituency, you first have to understand what Obamacare does. And I do mean what Obamacare does, in reality, not how it was sold to Americans politically.

From a policy perspective, Obamacare was essentially a giant Medicaid expansion. (For the uninitiated, Medicaid provides health care benefits for low-income households. Medicare provides health care benefits for seniors.) Most Americans probably don’t realize that because politicians on the left talk incessantly about the health care exchanges, which turned out to be epic failures, with major insurers exiting some marketplaces entirely. Obamacare drove rapid consolidation in the health care industry and the creation of geographical health care monopolies. The only real legacy of Obamacare is that there are a lot more people eligible for Medicaid and everyone else’s premiums increased fourfold because that’s what happens to captive consumers. Of course, if universal health care at any cost is your ultimate goal, that’s a feature not a bug.

The Medicaid expansion reduced the number of “uninsured” people in the country by changing the income thresholds at which someone would qualify for entitlement status, among other things.

A Medicaid expansion and all the other mandates the legislation involved were not cheap for federal taxpayers. The Obama administration had to find some way to offset massive new spending in the federal budget, and they accomplished that by raising taxes on various demographics and by cutting funds to Medicare. So the AARP was backing a piece of legislation that adversely impacted their constituents’ financial interests in several ways.

If you are lobbying on behalf of seniors, wouldn’t preserving Medicare be a major concern of yours? Did they get something that otherwise helps seniors in return? Likewise with the concept of imposing federal price controls on prescription drugs. The loss of funding for research and development would have the largest impact on the aging population. Young whippersnappers don’t care about cancer research and less destructive heart medications. Seniors do.

And as the actual execution of Obamacare eventually revealed, young whippersnappers were quite willing to take the financial hit and opt out of the whole Obamacare system altogether, because you can do that when you do not have any immediate ailments. A little over a third of the folks who paid a tax penalty for being uninsured had incomes under $25,000. Almost 80% of the folks taking the penalty had incomes under $50,000 (link takes you to Internal Revenue Service data). It was an unequivocal slap in the face for the working class and younger generations – or, if you prefer, Obamacare is how you got Trump.

So why does the AARP take these positions? The answer is that like most organizations peddling influence in Washington DC, the AARP does not make money the way you probably think they do. Because you associate a charity with donations.

The AARP has a partnership with UnitedHealth such that the AARP receives a kickback for selling Medigap insurance policies to seniors, which supplement the health benefits provided by the underfunded Medicare program. UnitedHealth, which is based in Minnesota, is the largest health insurance company in the world, with annual revenues of over a quarter-trillion dollars. When the AARP threw its support behind Obamacare as it was drafted, they were in fact actively lobbying to prevent Medigap reform. They were making sure seniors had to seek additional coverage over the program they had paid their entire working lives to fund. Your Medigap policy is a paycheck to the folks at the AARP, so there better be a funding gap. And Obamacare made one.

In its financial statements, the AARP likes to call these kickbacks “royalties,” as if receiving a kickback is a form of intellectual property. I imagine that is no accident, either. I am sure they are counting on the semantics to make what they are doing seem legal-ish.

The Obamacare legislation included language providing a specific carve-out for the UnitedHealth / AARP arrangement. It also exempted the AARP arrangement from other provisions that made competing health plans less competitive, like not rejecting someone for pre-existing conditions. In fact, Obamacare had harsh implications for a specific population of seniors – disabled seniors who were over the age of 65, who qualified for Medicare because of their disability, but the disability would have counted as a pre-existing condition, which would not be covered by gap insurance.

Yet you never hear Elizabeth Warren, Bernie Sanders, or Nancy Pelosi bitching about the AARP though, because the AARP supports liberal policy ideas while engaging in blatant rent-seeking behavior. (In economics, rent-seeking behavior refers to manipulating public policy in order to profit from artificial circumstances.) In fact, Senate Democrats have routinely tried to shut down inexpensive short-term insurance plans which would compete with the AARP’s kickback scheme. Because they care so deeply about your access to health care.

The AARP’s kickback scheme is nothing to shrug at either. Since Obamacare was enacted, the AARP has collected over $4.5 billion in “royalties” from UnitedHealth. In case you didn’t make the connection there, that’s $4.5 billion that the AARP has taken from the savings of seniors. Did I mention that the umbrella entity here is a tax-exempt organization? Oh, and they get investment income from those payments. I’m sure the 25% return on the S&P 500 has been gooooood to the AARP.

It turns out, member donations account for only around a fifth of the AARP’s funding. The lion’s share comes from this insurance kickback scheme.

When people ask me why I oppose socialized medicine, I can name a lot of reasons. I have had three medical emergencies in my family, and I cannot conceive of how those events would have proceeded if the government was in 100% control of my loved one’s fates, applying some fucked up cost-benefit analysis to every line of treatment they were receiving along the way. Beyond that, as someone who has worked in finance and economics my entire life, these programs are not the kind of thing any economically literate person should support.

But the best argument against letting politicians run the health care industry is that they simply do not have your best interests in mind. They care a million times more about some trampy female lobbyist covering their steak dinner than they ever will about your kid who was just in a car accident. Most people could not invent the elaborate schemes DC folks come up with to steal money from ordinary people if they tried. They do this over and over and over again, and then they go on television in committee hearings and on debate stages, and they cry crocodile tears and they speak with dramatic pauses and they wag their finger at The Man. And some people will be dumb enough not to realize that they are looking at The Man. And the charlatans can park their asses in DC for four decades and send their kids to the very best schools so their kids can then do the same thing to another generation. All on your dime.

Probably the easiest reform that would revolutionize how our country operates is fixing how the federal tax code defines a charitable organization. Right now, we have shit like local authorities that operate sports stadiums for highly profitable teams being classified as a charity. We have “charities” dropping hundreds of millions of dollars in elections. Special interest groups have produced more fake news than the most aspiring Russian troll farm ever will. But it will never happen. Because influence has created both a wage bubble and a real estate bubble in Washington DC, Maryland, and Virginia. They’ll never let the music stop.

The amount of money leaving New York for Florida is unreal

From the Miami Herald:

From the days of Henry Flagler through decades of retirees, northerners have found their way to South Florida. But this time, local development officials say, is different.

No longer are they seeking second-home sanctuaries. Many are now bringing their businesses…

The DDA’s numbers tell the story. The number of SEC-registered investment advisors in downtown Miami has nearly doubled since 2014, from 42 to 82

Among Empire Staters moving to the Sunshine State, more than 40 percent now have incomes of $150,000 or above. That’s up from 31 percent in 2015.

Longtime South Florida developer Armando Codina anticipated what the change in tax deductions would do — and he sensed an opportunity. As the well of South American buyers began to dry up for his Doral properties, he says, here was a new group of not just investors, but potential residents, who he could recruit to come to live in the Miami suburb.

So he created a campaign, Unhappy New Yorkers, to entice that very group to come down. The accompanying website,, has received more than 22,000 visitors since going live earlier this year. Codina says he has two more planned in January: and

“These are places that are either going to have to tax more, or reduce spending,” he says of those states’ fiscal problems. “You can’t put that back in the bottle.”

Codina’s site has a simple calculator to show New Yorkers considering moving to Miami-Dade how much they would be saving.

A New York household with an income of $100,000 a year would save $24,649 by relocating to Florida. For an income of $200,000, the savings is $49,509. For an income of $500,000, the savings is $119,922. For an income of $1 million, the savings is $235,197. For an income of $5 million, the savings would be $1,238,286. These are annual savings.

Codina is right about the impact this money moving to Florida is going to have on New York City and New York State’s fiscal picture. You have an increasingly far-left electorate in the Northeast who wants substantially all of the burden of government services to fall on the wealthy. And the state is losing residents, net-net, wealthy and otherwise. So a smaller pool of wealthy residents will be paying ever more in taxes at the state and local level, and potentially at the federal level, depending on what happens in 2020. This means the financial incentive to leave will only increase as time marches on. You are likely watching the beginning stages of a downward spiral. (The downward spiral is very much underway in Illinois.)

I’d hate to be someone with a New York, New Jersey, Connecticut, or Illinois government pension, that’s all I can say. You are ultimately counting on broke millennial socialists to pay for your employment benefits. And eventually you will become the target of their ire.

New York is also actively driving its high earners’ businesses away with aggressive auditing tactics. It used to be that people would become residents-on-paper in Florida for the purpose of saving on income taxes, but increasingly desperate municipal tax collectors are making sure they pack up the whole caboodle:

Permanently changing a residence can be complex, especially for high earners. The old axiom of six-months-and-a-day is no longer enough, according to attorney Mark Klein, chairman of New York-based firm Hodgson Russ LLP, as auditors from up North now scrutinize oft-overlooked details in their residency investigations.

Klein gives the example of a client who spent 150 days of the year in New York. That’s less than the 184 days that would establish residency. Problem was, the client only spent 90 of those days in Florida, and the rest of the time traveling. Response from an auditor: You’re still a New Yorker.

Today, Klein says, auditors use a “near and dear” test. Attorney Barry Horowitz, partner at New York-based law firm Withum, often advises clients to ensure their kids’ photos are on the refrigerator of their Florida residence. Pets, too, need to be in the Sunshine State, he says.

The total cost of relocating can add up to as much as $500,000. But the savings end up being enormous.

“You make it up even independent of tax savings,” De Yurre said. “You make it up on what they’re buying here — there’s just no way it’s going to be as expensive as it is in New York.

According to data from Knight Frank Research, Douglas Elliman/Miller Samuel, and Ken Corp., $1 million now buys you 346 square feet in New York City, compared with 972 square feet in Miami.

In South Florida, luxury real estate used to be the province of folks relocating from South America. (If you visit Miami and Ft Lauderdale, entire swaths of town are folks from South America. You are far more likely to hear Spanish than English in any business.) Now it’s people relocating from the Northeast.

The Cochran Group, one of the top luxury real estate brokers in the world and located in Palm Beach, set up a Miami office. They are now doing hundreds of millions of dollars a year in financial transactions helping tax refugees relocate.

They’ve helped build “hedge fund row” in Miami:

For years, wealthy Miamians have clustered in a few high-profile communities. Among the lowest-profile, but highest-wattage, was North Bay Road in Miami Beach, home to the likes of Jennifer Lopez and Matt Damon.

Now, the lower portion of North Bay Road has become what Corcoran Group’s Johnston calls “Hedge Fund Row.” Its principal tenants include Starwood Capital’s Barry Sternlicht and Owl Creek Asset Management’s Jeff Altman.

That’s not the only Miami Beach boomlet: Locals say South of Fifth on Miami Beach is also attracting a coterie that includes Clifford Asness, founder of hedge fund AQR Capital Management, and tech entrepreneur John D. Marshall. Marshall has seen enough of his cohort move in that he is building a school, according to his attorney, Michael Larkin.

“He’s emblematic of a lot of South of Fifth residents,” Larkin said of Marshall. “It’s wealthy folks who have moved down all other parts in the north. It’s our little Aspen here.“

Conveniently investor Jordan Levy, the Softbank executive, purchased South Pointe Tavern earlier this decade. He now holds court at what he refers to as his “office” there.

I feel like it’s a pretty much a matter of time until Silicon Valley folks start to trickle in. They do tend to follow the money.

Miami is attracting high-earning younger professionals from places like New York and Los Angeles. The outliers among Generation X and Millennials:

Real estate agent and lawyers say a relatively younger crowd, though one with plenty of disposable means, is now being drawn to the Miami area’s lifestyle amenities, ones not found in the Palm Beach area.

As Wendy Holman put it: “[We moved here] because it’s awesome,” she said. Holman, her husband and four young children made the move to Coconut Grove so she could run an orphan drug investment firm. She said her company is beginning to hire locally.

Or take Dipanshu “D” and Julie Sharma, two young entrepreneurs who moved to Bay Harbor Islands after D sold his business.

“We tried L.A. — and we hated it,” D said.

Meanwhile, Florida governments are in a wildly different position than their peers up north. While governments up north haggle over new revenue measures to pay for legacy personnel costs like pensions, Florida’s Republican governor just introduced a new budget with a billion dollars in new education spending, including pay raises for 101,000 public school teachers. In Chicago, teachers have to strike for two weeks to see a fraction of that, because their government is basically a Ponzi scheme at this point.

How idiotic is Elizabeth Warren’s tax plan? This idiotic.

Remember how I suggested progressive candidates’ spending plans would contribute to a major sell-off in financial markets and lots of people losing their jobs?

From the Wall Street Journal, Elizabeth Warren’s Tax Plan Would Bring Rates Over 100% For Some:

Democratic presidential candidate Elizabeth Warren has unveiled sweeping tax proposals that would push federal tax rates on some billionaires and multimillionaires above 100%.

That prospect raises questions for taxpayers and the broader economy that experts are starting to ponder: Under which circumstances would taxpayers have to pay those rates? How might that change their behavior? And would investment and economic growth suffer?

Potential tax rates over 100% could result from the combination of tax increases the Massachusetts senator proposes for the very top tier of investors. She wants to return the top income-tax rate to 39.6% from 37%, impose a new 14.8% tax for Social Security, add an annual tax of up to 6% on accumulated wealth and require rich investors to pay capital-gains taxes at the same rates as other income even if they don’t sell their assets.

Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.

Source: The Wall Street Journal

Of course, this image does not quite capture the impact of the legislation on investment choices because it is only taking into account proposed changes to federal tax law. If you live in a high-tax municipality and/or high-tax state, you are even deeper in the hole. (In places like Chicago, you’d be deeper in the hole to several independent but overlapping taxing districts on top of this.) So you could see these proposals as adding to the factors that would drive the exodus out of high-tax jurisdictions, but that’s already inevitable under current tax laws.

Why does this matter? If you are a Millennial, you probably could care less about how much a multi-millionaire or billionaire has after tax as long as your progressive political pied piper is promising the federal government is going to forgive your student loans and provide you with “free” health care, supposedly on someone else’s dime, someone you are being told you should resent with all your heart.

Tax rates over 100% mean that no matter what a wealthy individual does with their money they will be seeing their wealth confiscated from the government. This removes literally every incentive that person has to put their money to work in the United States. They have zero incentive to invest in companies. They have zero incentive to invest in infrastructure. (The WSJ doesn’t seem to grasp the latter, but a wealth tax would remove the incentive to invest in municipal bonds, unless municipal bonds are specifically removed from the tax. I am not sure they will be, either. Ironically, progressives have historically been some of the biggest proponents of removing tax advantages for public projects because of their economic resentment of the people who can afford to buy them. Yes, they care more about sticking it to the “rich” than they do about whether your kid is spending the day in a school building that was built after we put a man on the Moon.)

These involve putting their money at financial risk, now with no possibility of reward. No rational economic actor ever chooses to do that.

This means they have zero incentive to invest in any activity that ends in workers receiving wages. Even worse, they would have to liquidate current investments to pay for these taxes.

This right here is why socialism always fails. You have people making decisions about how tax policy makes them feel, not what tax policy actually does.

I’m sure if you ask Warren or Sanders about these consequences, they will tell you that having rates over 100% is a feature of their plans, not a bug. As the WSJ article notes, they are running on the idea that concentrated wealth should be broken up and redistributed. They just don’t quite understand that the opportunity cost extends to all the things happening in our economy that come from that wealth being productively invested. These folks are, after all, the products of education institutions that call Karl Marx an economist and not a bad philosopher. They can’t think clearly about economics and it shows in every word they utter.

The ultra-wealthy are not the only people who will be hit by this system, either. Anyone who has done what they were told and built up a serious nest egg to carry them through their golden years will get hit. Progressive politicians love to refer to them as “the 1%,” but really they are capturing anyone who habitually saves and small business owners, where their livelihood is their major asset, most of whom have worked their asses off for their entire goddamn life and are not debutantes trying to figure out what whether she wants diamonds or rubies on her chihuahua’s collar. Progressives live in a world of caricatures, not the real world.

Beyond the estimated 75,000 households that would be hit by the wealth tax, Ms. Warren’s capital-gains plan would transform investing rules for the top 1%—about 1.5 million households.

Under Ms. Warren’s plan, their unrealized capital gains outside retirement accounts would be taxed at 39.6%, just like ordinary income, plus an existing 3.8% investment-income tax. Add to that her new 14.8% investment-income tax to bolster Social Security, and state taxes, and combined tax rates could reach 70% in California and New York City.

The effective tax on business investment could actually be higher because these personal taxes would come after a company has already paid a corporate tax rate, under Ms. Warren’s plan, of 42%, up from 21% now.

I think one serious unconsidered consequence of this is also that investment in US companies may not grind to a stop, but instead is replaced with inflows of foreign money. That is to say, places like China will see progressives’ tax code as an opportunity to purchase the United States’ economic engine at a steep discount.

It never gets less hilarious that these are the people the Democratic Party is offering up for president. It’s like it is a competition to see who can horrify the electorate the most.

Of course a plan like this would likely not be enacted if Warren were implausibly to win the election. She’d spend the entire election trying to convince Americans that she can finance a sliver of the spending she has proposed by only impacting high net worth households and businesses. Then a consensus would emerge that it would be disastrous, so they would end up implementing the kinds of policies their pseudo-socialist darlings in Europe have – steep retail taxes and others that impact the middle class directly. Hahaha, jokes on you, you elected this batshit bullshit artist.

And the middle class can get used to the fact that they are poorer than they used to be and that they live in a society with no serious possibility of upward mobility, because their money is going to pay for a massive bureaucracy instead of savings.

Interesting (and tedious) tidbits from Nikki Haley’s new book

So I read Nikki Haley’s new book, With All Due Respect: Defending America with Grit and Grace last night. I am mostly ambivalent about it.

I like Haley personally and always imagined she’d end up being the first female president. And I love everything associated with South Carolina. To be honest, however, I wasn’t very impressed by her book.

I suppose part of my reaction is that I do not usually read vanity books by politicians, and that is certainly what this turned out to be. If I am going to read a book about public policy, it’s going to be about public policy and not someone’s feelings about public policy.

Her book reads like it was written by a chick, sorry not sorry. The whole thing is about how she feels about this or that. It’s like she was aiming for the Republican version of Michelle Obama’s Becoming. Her audience is more book club than professional analyst. And that’s fine. She clearly wants to position herself as President Trump’s heir apparent, and that means speaking to the least common denominator. Except I think the least common denominator is a heck of a lot smarter than she thinks it is.

At any rate, here were my main takeaways from the book:

The slacktivists who try to capitalize on mass murders are beyond awful.

Haley was Governor of South Carolina during the shooting at Emanuel African Methodist Episcopal Church (“Mother Emanuel”) in Charleston, the oldest African-American church in the United States. She refuses to use the shooter’s name, which I think is a good idea, and provides short biographies of everyone who was murdered that day, which I think is great. That chapter will absolutely break your heart. I learned a lot details about the folks who perished that I did not know before. I learned that the shooter had visited the church before carrying out the massacre and was treated with such kindness that he briefly reconsidered his evil intentions. Even during the massacre, members of the church were trying to reason with him, saying “you don’t have to do this.” One mother shielded her daughter and told her to play dead, even though her son (who had tried unsuccessfully to shield his aunt) lay dying next to her.

Haley explains that this shooting occurred in the aftermath of Ferguson (an event, incidentally, that was exploited by Russian propagandists trying to wreck havoc on our election process) and she did her best to prevent her state from exploding with racial animosity and potentially more people being hurt or killed. She goes into long digressions on the “New South,” which has mostly put its racist past behind it. She sees her own political career as evidence of that.

She blames others – whom she notes are not from the South, and thus rely on caricatures of the South instead of understanding the tremendous progress that has been made – for trying to inflame instead of extinguishing destructive passions.

Her primary target is former President Obama. She said that when Obama called her after the event, he was cold and inauthentic in offering her sympathies. He used the event as an opportunity to speechify about identity politics. She thought his behavior was a distraction from honoring the victims and that he was inflaming the people she was trying to calm. He was an instigator among instigators in her mind.

She says the same thing about Al Sharpton. Haley attended the funerals of every victim of the massacre, including a Democratic state senator whom she knew very well personally and considered a good friend. She called him immediately upon learning about the event, without knowing that he was one of the people who had been killed. She says she is haunted by the thought that his phone was ringing in his pocket as he was laying there, dead, in the church.

Sharpton showed up for the first funeral and inserted himself into the program. Instead of speaking about the deceased, whom he did not know, he immediately got political… at a stranger’s funeral. He attacked Haley from his “stage,” and was called out for his terrible behavior. He went back home after that and left the families of the other victims alone.

These folks were among mobs of people who had nothing to do with Charleston or the deceased who swarmed the city after the event trying to sow chaos. Here were families dealing with the most impossible grief, with opportunists trying to disrupt their world further for the Twitter glory.

She says she took the programs home from the funerals and spent time each night trying to introduce her children to the people who had died. She would sit her family down and repeat to them everything she had learned about them. This reminded me of something we like to say in my family when someone passes away: “I will remember you to everyone.” I was also touched by the motto of one of the deceased – someone who just sounds like a good church lady you would love and come to depend upon – always “be kinder than necessary.”

She has a whole chapter devoted to this history of taking down the Confederate flag at the capitol, which frankly I thought was idiotic and I wish she had not included. That whole chapter is an opposition researcher’s dream.

She does not share Michelle Obama’s perspective on “white flight.”

Haley shares a litany of experiences that all boil down to her being rejected because of her race or gender. She spends a lot of time talking about identity politics only to dismiss it.

Haley was an Indian-American, the child of immigrants, who spent most of her early life in rural South Carolina (a town with less than 3,000 people). Her mother put Haley and her sister in a local beauty pageant when she was very young. The town selected both a black and a white beauty queen each year. The judges were confused by the girls, who fit neither category. They disqualified them and gave them a beach ball as a consolation prize.

She also talks about a black Democratic colleague who told her that she was not a “real” minority because she was from India. He called her “a conservative with a tan.”

Haley’s argument is that the fact that she experienced these things but still managed to become governor of a Southern state is evidence of how much progress the South has made to overcome racial bias. She does not like people like the Obamas, for whom race looms large in every aspect of their lives, even after becoming leader of the free world.

I just don’t even know what to say about things like that. I grew up in Los Angeles during the 1990s, which was full of racial animosity, and working in education policy for a spell convinced me that there is still a lot of quiet racial animosity even in polite places. Contrary to the way the mainstream media paints rural America, rural America is more of a functional, tolerant melting pot than urban America. That comes from necessity. People have to get along to survive. People in rural areas tend to get along easily across ethnic groups, religions, and economic classes.

I share her exasperation with the media who like to paint flyover country as a bunch of racist, sexist, homophobic hicks. There have been more openly gay mayors in the South and Midwest than there are in New England or California. Many of the same Appalachian counties who voted for Trump also voted for Obama. Places that pride themselves on being polite and hospitable are usually polite and hospitable.

But it is possible for Obama and Haley to both have factually true narratives, neither of which lend themselves to generalizations about what “America” as a whole is like. Obama can experience white flight in Chicago’s suburbs without suggesting that all of America is racist. Haley can experience thousands of acts of colorblindness without dismissing that racism continues to be a significant experience for some people. But I would submit to you that none of this is good politics. The majority of Americans are over identity politics, and are tired of arguments both for and against it. They just want you to shut up about it already.

James Comey backed Haley up on her decision for South Carolina not to accept refugees from war-torn countries.

Not going to lie, I physically rolled my eyes when she invoked him as an authority. Does she not have an editor?

Haley says she refused to accept refugees because she did not want even a single potential terrorist relocating to her state. She says she did not come to this opinion straightaway, but spoke with then-Director of the FBI James Comey about background checks on refugees. Comey told her the United States has no meaningful information about any of the refugees that were being brought in. He said he could offer no serious analysis of the threats they may or may not pose. After the Paris concert shooting, which left 130 dead and over 400 people injured, she decided to balk on the refugee issue.

She tells a story about how complicated thinking about refugees is. Her husband, Michael, who served in Afghanistan, worked to bring his team’s interpreters to the United States. The military’s Afghan interpreters served an intelligence function and translated threats to their units, making them prime targets. The Haleys used their connections to Senator Lindsey Graham to make sure the interpreters could seek asylum in the US and become citizens. She says the Lutheran Church was helpful in getting them temporary housing and teaching them English. (I used to volunteer for a refugee ESL program – for refugees from the Congo – through the Roman Catholic Church, so I know exactly the programs she is talking about. But I don’t understand why their interpreters needed to learn English. How were they interpreters? But whatever.)

Tillerson was insufferable and he hated Haley because Trump offered her his gig first, which she turned down.

It’s a good thing that Haley does not spend much time in “tell-all” mode, because everything she has to say about internal politics is not as flattering to her as she thinks it is.

It really does not require much imagination to believe Rex Tillerson is a colossal prick who thinks he’s the smartest person in every room and gets along with approximately no one. But in Haley’s own account of events, you almost can’t blame him for thinking she’s an unqualified brat. No one is going to read this book and hold her in the same esteem as, say, Condoleezza Rice.

She says Trump summoned her initially to serve as his Secretary of State, a position she turned down…. Well, she does not say why, exactly, but you are left with the impression that she thought it was too much effort.

So Reince Priebus then suggests that she consider being ambassador to the United Nations. Her reply – in front of Trump – was “I don’t even know what the United Nations does! All I know is that everybody hates it!”

I seriously almost closed the book at this point. Does she think this is adorable? It’s not adorable. How stupid do you have to be to put something like that into the book that you are presumably using to introduce yourself to the electorate? *head explodes*

She then laments that Tillerson insisted on interviewing all her hires himself to make sure she was not screwing up US diplomatic efforts by importing a bunch of her staff from South Carolina to the United Nations. You are left thinking, you know, maybe the folks who worked on your campaign back in Columbia, South Carolina, aren’t experts on Syria? Maybe his concern was… reasonable?

The part most discussed in the media revolves around a few pages where she alleges that Tillerson and John Kelly were plotting to sabotage Trump. This no doubt will get a lot of nods from anyone who cares about the Deep State, but it is so painfully stupid and unprofessional within actual context that I had to re-read it to make sure she really said it.

In her telling, Tillerson and Kelly corner her in an office where they proceed to tell her that she’s not qualified to do her job and how Trump made an epic mistake turning the UN ambassador into a cabinet-level position (which she said was a criterion for her accepting the position; in previous administrations, she would be answering to Tillerson). In a split second, they go from being sexist dicks telling her how worthless she is to trying to “recruit” her into their nefarious Deep State plot, which seems to consist merely of doing whatever they want. I mean, come on. Either they think you are useful or you are not.

The only thing you are left with here is the observation that none of these people currently work for Trump and that’s probably not a bad thing for the American people.

UN Security Council Resolution 2334, which condemned Israeli settlements on the West Bank, was timed not to interfere with Hillary Clinton’s presidential bid.

The Obama administration abstained on the vote, allowing the controversial resolution to pass, the first time the Security Council had adopted a measure like this. But they waited until December 2016 to do it, so Hillary’s many Jewish supporters would not sit out the election. Let the cynicism that involves wash over you for a moment.

China forcibly sends North Koreans who escape the country back.

We brought in two North Korean women who had successfully escaped after having been caught by the Chinese and forcibly sent back to North Korea. The stories they told were blood-curdling. One woman was sent back to North Korea by the Chinese three times before she finally escaped. The punishment reserved for these escapees, who were mostly women, is severe. The woman told of being forced to abort without anesthesia the child she conceived in China. At one prison camp, the bodies of the inmates who had starved to death were fed to the guard dogs. Both women told of being raped, starved and forced into hard labor.

United Nations refugee statistics are bogus.

I’ve always had this impression, but it was somewhat interesting to learn the mechanics of how the United Nations manipulates data to inflate the financial obligations of member countries.

If you go to the United Nations website, they say there are currently over 70 million forcibly displaced people in the world. For the sake of comparison, there are 327 million people living in the United States. They say 26 million of those are refugees and 3.5 million are asylum seekers. (We have more asylum seekers than that currently living illegally in the United States, but I digress. Their numbers suck in many ways.)

How do they get such high numbers for displaced people? The answer – which is absolutely insane – is that they see being displaced as genetic, not a physical situation. If you are a descendant, for example, of the original Palestinian refugees – even if you have successfully relocated to another country and been granted citizenship there – you are considered a refugee. You may have never known anything besides a comfortable suburban existence in your entire life, but according to the United Nations, you are a refugee and entitled to international financial aid. Thus you have the United Nations turning into an inter-generational income stream. This is your tax dollars at work, because the United States is footing most of the bill for this.

The United Nations Relief and Works Agency has other bizarre problems too, according to Haley. They use member funds to pay for schools and health care for Palestinians, and this includes schools where the textbooks preach about violence to Jews and where the schools themselves are way stations for tunnels beneath the border (meaning the schools are effectively UN-funded terrorist installations). It’s really kind of ironic that American taxpayers are paying for stuff like this when the school districts of major US cities are in acute financial distress and US politicians are complaining about medical bankruptcies.

It is beyond dispute that Iran continued to work on its nuclear weapons program under the Obama administration and early Trump administration (i.e. when Tillerson was persuading Trump to roll over the Iran deal while they debated strategy internally).

A lot of people go around talking about how they hate the Iran deal because blah blah blah pallets of cash. Not to suggest that freeing up as much as $100 billion for the largest state sponsor of terrorism is a good idea.

But the most bonkers thing about the Iran deal is that it was deliberately drafted to allow Iran to proceed with building nukes. Which they of course did.

Obama said the deal provided for “anytime, anywhere” inspections of Iran’s facilities, which is almost true. The inspections apply only to *declared* nuclear sites: “for any other locations that were suspected of harboring nuclear activity, the Iranians could deny access to inspectors for up to 24 days.” And there were many such sites. So the bureaucrats at the UN would dutifully inspect the sites Iran told them to inspect. If intelligence picked up another site and the administration decided to make a big deal of it, they would ask to inspect that site. And Iran had nearly a month to relocate equipment to another undeclared site or tell inspectors to pound sand. Yeah, there was no way that the people negotiating the agreement did not understand they were creating a loophole.

Try to process for a second how insane someone would have to be to think a nuclear Iran was a meh idea. And then you’d have John Kerry.

But you would also have a lot of people in Trump’s cabinet too. The man who set out campaigning to end the Deep State ended up hiring a lot of Deep State folks, according to Haley:

Supporters of the [Iran] deal argue that the Trump administration set out to destroy the Iran deal out of a desire to undo President Obama’s singular foreign policy initiative. The truth is, there was so much support for the deal in President Trump’s cabinet – not to mention virtually unanimous support among the foreign-policy establishment – that the easy thing to do would have been to stay in the deal.

Trump’s biggest problems have always been personnel problems. He has hired some terrible people (he can’t blame anyone but himself for that) and he and his proxies have failed to fire many, many more terrible people. It’s a difficult thing for outsiders to sort out all the rubbish within government ranks, but that should not be an argument for only electing people who have been in DC forever. Your choices are essentially deal with a lot of unnecessary drama or continue to send ever more of your paycheck to pay economic rent to corrupt losers. Change is not easy.

Haley thinks Assad is bossing Putin around, not the reverse

She says this many times throughout the book with absolutely no logic behind it. I’m kind of curious what she thinks this means. Russia is not exactly the superpower that it once was, but I can’t imagine that its leader is the lapdog of a small country savaged by a civil war. Perhaps I am wrong about that, but I’d like to better understand the dynamics there if I am.

Haley hates being called “ambitious,” a pet peeve she brings up about thirty times in the book. (Kidding, I didn’t count, but it’s enough that you get tired of it.) She clearly saw utility in being UN ambassador because it could give her the foreign policy bona fides to run for president later. And that’s hardly a stupid strategy – you see daily through candidates like Elizabeth Warren how much of a shortcoming having zero foreign policy experience can be in a campaign.

But Haley’s folksy way of talking about foreign policy is not much of an asset, at least not the way she talks now. She does well when she acts like a ball-buster, not someone who whines about ex-CEOs who really act like Mean Girls. Despite the title, this book was not written by the ball-buster version of Haley.