Election Day 2012 - Final Thoughts

Today is the final day in an election cycle that has gone on far too long. I began following things back in fall of 2011, when I was curious what the various Republican primary candidates had to say for themselves. I offered an open mind that perhaps they could sway me to vote for them. Now that we're on election day - and I genuinely have no idea who is going to win, with close polls on pretty much all sources - it seems like a good idea to collect my general thoughts on this election.

Here's the thing. I am a fan of Barack Obama's. I've read both of his books and voted for him in 2008. I genuinely like the guy. By and large, I agree with the policies that he's tried to implement, though I continue to be a little concerned about his expanded use of drones and assassinations, but no more concerned than I was about the previous administration's willingness to send troops into harm's way. There's no good way to conduct violent action against the nation's enemies.

The Republican Primaries

Still, just because I like Barack Obama, however, doesn't mean that I necessarily think he's done a bang-up job. He's certainly not the failure that the Republicans have painted him to be, but neither is he a particularly adept leader. He wasted his first two years trying to generate a consensus with Republicans, when it should have been extremely clear that they'd have none of it. There's nothing in his background which shows that he's got any particular skills at financial matters or general organization, and there are ample aspects of the way the government's run over the last four years that can legitimately be called into question.

So I began watching the Republican primary and it quickly became clear that only a couple of those lunatics had any chance of winning against Obama: either Mitt Romney or John Huntsman. Everyone else was just too extreme and would have no real chance of convincing moderates like me to vote for them. In fact, the extremism being displayed even prompted me to start the Vast Middle-Wing Conspiracy page on Facebook.

Romney himself recognized this, in the famous "47%" video that surfaced a while back and which I've discussed previously. In that video, he went on to talk about independents, in a way that demonstrated much more awareness of the realities of the electorate than the 47% part of the talk did:

Those people I told you—the 5 to 6 or 7 percent that we have to bring onto our side—they all voted for Barack Obama four years ago. So, and by the way, when you say to them, "Do you think Barack Obama is a failure?" they overwhelmingly say no. They like him. But when you say, "Are you disappointed that his policies haven't worked?" they say yes. And because they voted for him, they don't want to be told that they were wrong, that he's a bad guy, that he did bad things, that he's corrupt. Those people that we have to get, they want to believe they did the right thing, but he just wasn't up to the task. They love the phrase that he's "over his head." But if we're—but we, but you see, you and I, we spend our day with Republicans. We spend our days with people who agree with us. And these people are people who voted for him and don't agree with us. And so the things that animate us are not the things that animate them. And the best success I have at speaking with those people is saying, you know, the president has been a disappointment. 

So, basically, this tactic worked very early on with me. I conceded that Barack Obama was a bit of a disappointment and allowed the possibility of supporting a different candidate. And, thankfully, the Republicans offered up one of the two sane options from their primary. So now it became a case of asking whether Mitt was a better choice than Obama.

The Case for Either

First, let me get this prediction out of the way: Regardless of who is elected, I believe that the economy will do better in 2013 than it did in 2012. We are on an upswing. If Obama is re-elected, then he'll claim that his policies caused it. If Romney is elected, he'll claim that Obama's policies were a failure and it's his policies that caused the recovery.

In my view, the economy was so bad that it's bound to begin improving. The big question is not who will cause it to improve, but rather which policies are best to be in place when it does improve. Do you want a regulation-free, very corporation-friendly set of Republican policies in place or greater access to healthcare? A somewhat lukewarm relationship with Israel or a U.S. that seems willing to goad Israel into military conflict with Iran, somehow in the interests of "peace?"

On the single most important issue for me - American education policy - Republicans and Democrats are pretty much in lockstep these days, with a heavy emphasis on school choice in both camps.

The Case for Mr. Romney

Though I voted for Obama, I don't agree with many of his supporters that Romney is a rampaging conservative monstrosity that will destroy our country. As Newt Gingrich said during the Republican primaries, Romney is a "Massachusetts moderate" and that's his saving grace. Honestly, Romney is something of a geek. A money geek. A policy geek.

He himself seems to resent, on at least some level, the fact that he hasn't been able to focus on his intellectual policy arguments. In the leaked video from last spring, he said:

Well, I wrote a book that lays out my view for what has to happen in the country, and people who are fascinated by policy will read the book. We have a website that lays out white papers on a whole series of issues that I care about. I have to tell you, I don't think this will have a significant impact on my electability. I wish it did. I think our ads will have a much bigger impact. I think the debates will have a big impact…My dad used to say, "Being right early is not good in politics." And in a setting like this, a highly intellectual subject—discussion on a whole series of important topics typically doesn't win elections.

I didn't actually read Romney's book, but I did read his jobs plan. Though it over-simplifies things and places blame for dwindling jobs squarely on Obama's shoulders without providing the larger context of where the economy was at when Obama stepped in, the plan itself isn't half bad. Nor, frankly, is it that aggressively conservative. Despite the deeply anti-government rhetoric of the Republican primary and subsequent campaign, the jobs plan itself includes such near-socialist gems as:

Government has a role to play in innovation in the energy industry. History shows that the United States has moved forward in astonishing ways thanks to national investment in basic research and advanced technology.

There is a place for government investment when time horizons are too long, risks too high, and rewards too uncertain to attract private capital.

The above quotes make it clear that, at least in this policy statement, Romney understands the critical role government must play in scientific research. The emphasis of his plan is on "long-term" economic recovery, so if this understanding is genuine then we can expect a Romney administration to recognize these funding needs and to back them up with money.

Also, Romney implemented the Massachusetts healthcare plan. When repealing Obamacare, he can't just leave people without a replacement, so he's going to have to move forward on some sort of policies that will help insure people with pre-existing conditions are eligible at somewhat affordable rates. When he outlines the list of points that need to be included in his healthcare plan, it actually sounds remarkably like Obamacare.

In some ways, a moderate Romney has a lot of potential advantages. The Republicans would presumably cooperate with him more than they have with Obama, which means that Congress could return to actually doing something. Democrats don't quite have the backbone to completely hamstring a president for 4 years solid, to throw the entire country under the bus for political advantage, so they'll grouse a bit but will finally cooperate with a Romney administration as well. Honestly, just having a Congress that's able to do anything will be such a change that it might improve the morale of the country..

Of course, this argument is all founded on the idea that Romney is able to govern as a "Massachusetts moderate" ... but that's certainly not how he's campaigned. And that, ultimately, is why I voted against him.

The Case Against Mitt

Since I like Obama, Romney really had to make a pretty strong case to get me to switch support to him. I was still giving him the benefit of the doubt into the debates, although I was not impressed with much of what I'd seen.

For the last four years, I've watched the Republicans steamroll over the President of the United States. The President's biggest leadership failure has been his inability to win over any significant Republican cooperation on any issue. So the big question for me was whether Romney would be able to stand up to his own party.

Unfortunately, absolutely nothing during Romney's campaign showed me that this would happen. He chose Tea Party favorite Paul Ryan as his running mate. Better than Michelle Bachmann, to be sure, but still far too ideologically conservative for my tastes. When Rush Limbaugh called a college girl a "slut," Romney didn't condemn it, he just said he wouldn't have used those words. (Of course not, he's a Mormon!)

Time and time again, Romney has refused to stand up confidently against the extreme elements of his party. I have seen no evidence that a Romney administration would fight for anything that I value in the face of his party's interests.

There may well be a Mitt Romney somewhere in there who will be a great president, one that I will admire. So far, I haven't really seen it. If elected, though, I do hope he shows up to lead the nation.

If Romney is elected, I hope he does such a fine job that in 2016 there is no question about who I'm going to support.

And if Obama is re-elected ... then I really hope the 2016 primary season is a lot shorter than this one was, because I don't think I can deal with this level of crazy from both parties.

• Salt Lake Tribune: Too Many Mitts
• Facebook: The Vast Middle-Wing Conspiracy

Corporations: People, Entities, or a Hybrid of Both?

Many liberals have made a lot out of the Citizens United decision by the Supreme Court, which they describe as saying "corporations are people." However, the Supreme Court ruling doesn't actually use this terminology, even if the spirit of the ruling does imply that .

Still, one of the major elements of the campaign is the degree to which corporations deserve special considerations and what types of considerations those are. While both political sides of the debate tackle this argument with a lot of preconceptions, I think it's possible to really look at the facts behind how corporations are formed to understand the degree to which a corporation, in general, can be viewed as equivalent to an individual.

Mitt Romney's Evolving View of Corporate Personhood

Mitt Romney did use these words on the campaign trail during the Republican primary, when he replied to a critic at an event, "Corporations are people, my friend." He has been very vocal about his strong beliefs regarding the importance of corporate rights. I'm in the process of reading Romney's jobs plan, Believe in America: Mitt Romney's Plan for Jobs and Economic Growth (available on the Kindle). In it, he (or his team, at least) says the following:

The truth is, as Mitt Romney likes to say, "corporations are people." They represent human beings acting cooperatively to be economically productive.

In the e-book, Scott McNealy, the founder and former CEO of Sun Microsystems, writes a piece about tax policy that delves even more deeply into the "corporations are people" narrative.

To the vast majority of Americans who have held real jobs in the real economy, often in corporations, the point made perfect sense. Indeed, it seemed a statement of the obvious. A corporation, after all, is nothing more than people who have joined together to work cooperatively. The word "corporation" itself means "body of people." And in fact, corporations consist of two groups of "people": employees and shareholders. The former work hard to make a profit and earn their salaries and benefits. The latter, now widely dispersed across the economy by means of mutual funds and retirement-plan investment portfolios, provide the capital and can reap the financial benefits while also assuming the financial risk.

However, today I was listening to the radio and heard an intriguing segment about the latest campaign kerfluffle. I've been busy with work (at a corporation) and haven't kept up with the news, so didn't know much about the outsourcing that Obama has been accusing Romney of. Apparently, Bain Capital is accused of outsourcing some jobs, and this seems to be during a nebulous time between 1999 (when Romney stepped aside at Bain to run the Salt Lake City Olympics) and 2002, when he was still listed as CEO, President, and sole owner of Bain Capital, but wasn't actively involved in the day-to-day operations. Apparently, in response, Romney said:

"Well, I was the owner of an entity that is filing that information, but I had no role whatsoever in the management of Bain Capital after February of 1999," he told CNN. "Not that that would have been a problem to have said that I was with the firm beyond that, but I simply wasn't."

Since I had just been reading the jobs plan, the use of the word "entity" struck me as odd. So which is it? Is a corporation a person or some other type of entity?

The Benefits of Incorporating

To really understand this question, we have to consider the reasons why people incorporate their businesses. For example, in addition to my day job, I am self-employed as a freelance writer. I am not incorporated, however, and file taxes on my business as a sole proprietor of a business, The Philosopher's Stone.

As a  sole proprietor, my business is treated as an extension of me as a person. Though I have an Employer Identification Number (EIN) to file payroll taxes (my wife is my salaried employee), I have not been able to us this EIN to gain business credit cards or financing. When I set up my business checking account, I tried to use my EIN and was told that since I wasn't incorporated, I needed to set it up with my Social Security Number. When I fill out W-9 forms, the documentation says that the IRS prefers sole proprietorships to use my Social Security Number instead of my EIN. Since I am not incorporated, the credit cards I use for business expenses are in my own name, not in the name of my business.

When you begin to investigate home-business tax savings, you do find that there are a number of reasons to incorporate.

1. Credit Benefits:The first reason to incorporate, as hinted at above, is that you can now begin establishing lines of credit and bank accounts using your business' EIN instead of your personal Social Security Number. If your personal credit is poor - perhaps due to a failed business or personal bankruptcy in the past - this can be a crucial benefit to gain the necessary financing for your business venture.
   
   
2. Liability Protection:Related to the access to credit, corporations also create a level of liability protection. If a sole proprietorship goes under, all of the debt is in your name, so your creditors are able to come after your individual assets. You could lose not only your business, but also your house, your savings, garnishments against future wages, and so on. When you incorporate, a very powerful legal wall is built between these two entities. This is how people like Donald Trump can have multiple major corporate bankruptcies while maintaining their personal wealth. Even if the corporation is sued for some sort of illegal business activity and loses, the fact that it's a corporation can sometimes still protect the individual from having their personal assets garnished ... or vice versa.
   
   
3. Tax Benefits: And, of course, there are tax benefits to being a corporation. Even as a sole proprietorship, I'm in the advantageous situation where my business income is taxed after expenses, in contrast to my personal income, which is taxed before expenses. Corporations have all sorts of tax loopholes created (we hope) with the genuine desire to enhance the ability of these corporations to grow their business and become economically prosperous, thus generating overall more wealth (and, ultimately, tax revenue).

The exact nature and degree of the benefits change depending upon the type of incorporation, of course, and I'm sure that there are many other benefits beyond these. Still, one glance at these reasons makes it clear that the point of incorporating is to separate the business activity from the individual.

Are Corporations People?

Taking all of this into consideration really calls into question the "corporations are people" narrative, which Romney has chosen to officially embrace on the campaign trail and in his jobs plan. While it is certainly true to say that a corporation involves "human beings acting cooperatively to be economically productive," this description by itself isn't particularly helpful. For example, the mob, street gangs, and a team of bank robbers are all attempting to "act cooperatively to be economically productive" as well! Certainly corporations are something different.

No, saying that a corporation is " nothing more than people who have joined together to work cooperatively" (as Scott McNealy does) is a gross over-simplification. I think of it more like this:

A corporation is a group of people who have jointed together to work cooperatively for economic advantage and have then asked the government for special dispensation to treat their group activity as distinctly (and legally) different from their personal activity.

The whole point of incorporation is that it provides a powerful division between the business and the personal activities. Saying that "corporations are people" requires completely ignoring the legal meaning of a corporation ... and negating the validity of the legal protections that corporation-hood confers.

This is why as soon as Romney was called into question on the activity of his corporation, he fell back on the true definition of a corporation. A corporation was no longer a noble reflection of the people united for economic productivity, but instead just an "entity" that files paperwork. His name happened to be on the line that said he was CEO, but that doesn't mean anything at all.

Independent Thoughts on the Last Republican Debate

Primary debates are very interesting for someone who doesn't care what party someone is, because they're specifically geared to pull at the emotions of those who are already in one regions of the political landscape. The recent Presidential debate had a lot of expected moments, but some unexpected ones, and some which I think can be used as springboards for more genuinely understanding the politics behind this little experiment we call America.

Note: I'm pulling any quotes below from this CNN transcript of the event, and I've read the debate fact-checking on both Politifact and FactCheck.org, as well as from the ever-entertaining and very-right-leaning conversation taking place on Facebook's General Election 2012 group. Also, I've only found one place that contains the whole CNN/Tea Party Express debate, although it's broken up into a lot of smaller videos.

There'll be another debate tonight - Thursday, September 22, at 9:00 pm ET - run by FoxNews/Google. You can view it streaming online live at this link at 9:00 pm ET. This one will feature the libertarian Gary Johnson, governor of New Mexico, who is a social liberal, fiscal conservative, and seems far saner than Ron Paul. We'll see.

Now, on to my thoughts and commentary on the last debate:

1. The HPV Issue

One issue that's gotten a lot of press was the fact that Rick Perry, as governor of Texas, signed an executive order requiring that girls in the state get a vaccine against the Human Paploma Virus (HPV), which is a sexually-transmitted virus that has been linked to certain forms of cervical cancer. There is voluminous scientific evidence that HPV is very wide-spread, occurring as often as in 50% of sexually-active adults. In other words, if you have sex, there's a very good chance that you'll be exposed to HPV.

Now, I have always considered the debate over HPV to be fairly silly, the ramblings of anti-government puritans who fear that children will become sexually active if told their risk of getting cervical cancer in 30 years is diminished ... but Rick Santorum (of all people) framed it in a way that I think actually has some legal, constitutional, and even logical merit:

Why do we inoculate people with vaccines in public schools? Because we're afraid of those diseases being communicable between people at school. And therefore, to protect the rest of the people at school, we have vaccinations to protect those children.  

Unless Texas has a very progressive way of communicating diseases in their school by way of their curriculum, then there is no government purpose served for having little girls inoculated at the force and compulsion of the government. This is big government run amok. It is bad policy, and it should not have been done. 

The legal justification for mandating innoculation is not to protect that one person, but to protect all of the other people who will get sick if they're exposed to that person's illness. As such, a State does not have the right to implement it. Michelle Bachmann echoed this idea:

... to have innocent little 12-year-old girls be forced to have a government injection through an executive order is just flat out wrong. That should never be done. It's a violation of a liberty interest.

Now, the overall trend of these attacks is on the idea that Perry implemented this as an executive order, which means it never came up for debate in the legislature, and was more of a decree than an actual law... however, as the next point point brings up, even legislation can be dictatorial.

2. When States Attack 

In attacking Romney's "Romneycare" plan (the Massachusetts plan which provided the framework for much of Obamacare, implemented when Romney was a governor of Massachusetts), Michelle Bachmann took a hard line against the government's right to mandate that citizens buy health insurance:

... no state has the constitutional right to force a person as a condition of citizenship to buy a product or service against their will. It's unconstitutional...  (APPLAUSE) ... whether it's the state government or whether it's the federal government

So, here we have two things that the state can mandate which Michelle Bachmann seems to believe are fundamentally against individual liberty. Both Romney and Perry have suggested that they are states' rights issues, and were good for their states, but that similar plans on a national level are unconstitutional, because the Tenth Amendment leaves all rights not expressly granted in the Constitution with the states.

Here is my question:

Based on a strict reading, does the Constitution allow the federal government to strike down an unjust state law?

Obviously, the Supreme Court of the United States (SCOTUS) has done this many times - especially in the last century and a half - but this is always a fundamental dividing line between Republicans and Democrats. Democrats feel SCOTUS should have this power, Republicans typically do not. When the court legislates in this manner, the justices are dismissively called "activist judges."

But what if a state implemented an unjust law, then would those who vote it down still be "activist judges?" If SCOTUS overturned Massachusetts' health insurance mandate, would they be violating their Constitutional limitations or defending the liberty of a people who are being oppressed by their state government?

Of course, this question could also be asked about slavery, executions, Jim Crow laws, treatment of women, homosexuals, the mentally handicapped, and other legislation that some states have considered fine and others consider oppressive in some way.

I'd love a Constitutional purist/states' rights advocate to explain what I'm missing on this one and what, if any, role the federal government has to play in such a scenario.

3. Romney & Capital Gains

This was the one aspect of the debate which I found swayed me toward a candidate instead of away from them. Here is Romney's response to a question about a flat tax rate:

The idea of a national sales tax or a consumption tax has a lot to go for it. One, it would make us more competitive globally, as we send products around the world, because under the provisions of the World Trade Organization, you can reimburse that to an exporter. We can't reimburse our taxes right now. It also would level the playing field in the country, making sure everybody is paying some part of their fair share. But the way the fair tax has been structured, it has a real problem and that is it lowers the burden on the very highest income folks and the very lowest and raises it on middle income people. And the people who have been hurt most by the Obama-economy are the middle class.

Back in 2008, I spoke fairly highly of the Fair Tax, which was a flat tax bill that had some enthusiastic support among conservative commentators such as Sean Hannity and Glenn Beck. I liked that the Fair Tax removed all tax burden from the poor, and the notion of taxing consumption rather than income seems just philosophically like a more egalitarian approach.

Until, as Romney points out, you actually run the numbers. What you find really happens is that the tax burden on the poor and the wealthy tend to drop heavily, but the middle class is saddled with a huge tax burden. (I also personally question the validity of many of the economic assumptions behind the Fair Tax, especially in light of the bang-up job economists have done managing the economy over the last decade.)

Romney continues with a proposal that intrigues me:

And so my plan is to take the middle class individuals and dramatically reduce their taxes by the following measure. And that is for middle income Americans, no tax on interest, dividends or capital gains.

If this was handled right, I think this might be a really good tax reform proposal. It depends on how you are dividing "middle income Americans." The benefit is obviously that it will allow low and middle income Americans to keep more money, and this seems like a good way to give a tax break.

However, if Romney extends this exemption too high, then it becomes yet another tax break for the wealthy, and one which they don't need. Capital gains tax rates are not huge. As Warren Buffett said in an interview last month, current capital gains taxes are great for the wealthy.

Well, I think -- what really gives the low rates to the very rich like me is the -- is the low tax on dividends and capital gains.  If you take these rich people what the IRS singles out, from 1992, they’ve almost had a tenfold increase in capital gains.  They’ve had a tenfold increase almost in dividends.  And those -- those are taxed at 15 percent and there’s no payroll tax on it.  Now, the payroll tax accounts for almost as much revenue to the government as the income tax.  It’s close -- $800 billion plus on payroll taxes last year; about $900 billion on income taxes.  That’s where the money comes from in Washington.

The argument in favor of reducing these rates, even among the wealthy, is often that they'll encourage investment, but Buffett sort of refutes that argument based on his experience:

I’ve worked with capital gains rates of 39.9 percent and 36 percent and 25 percent, I have yet to hear one person say to me, "If I call you in the middle of the night Charlie and I say Charlie I’ve got this hot investment idea."  Your reaction is not to say "No matter what the tax rate, forget it, I’m going back to sleep because the capital gains rates are too high."  No, what you’re going to do is you’re going to say, "Tell me the name, quick, Warren, before you change your mind."  And you know, I have never had one person decline to invest with me. 

Okay, I do question that last sentence as perhaps a bit of hyperbole, or maybe he meant "decline to invest with me [because of the capital gains tax]". Still, overall I think this is probably very true. My guess would be that during Mitt Romney's years in the private sector, the capital gains tax was never a cause for someone to avoid investing in one of his businesses, either.

Buffet does a great job of laying out the distinction in how these tax rates get distributed, based on the way your money comes to you:

If you make money with money, you get taxed ... at very low rates; 15 percent dividends in capital gains.  No payroll tax.  If you make money with muscle or hard work or sweat of your brow, you get taxed at rates that move on up.  And most of the people, the middle-class gets taxed at rates of either 15 percent or 25 percent on their income tax, but then they get really hit hard on the payroll tax and that’s what brings the rates in our office up to an average of 36 percent if you leave me out.

Middle income earners, of course, can still "make money with money," in which case they'd get hit with both the payroll tax AND the capital gains tax. If you're talking about someone making a low 3-figure salary, perhaps married, with kids and a mortgage, that could be crippling. So I think reducing the capital gains - in a way that's either got a cap on the amount excluded or has an exemption tied to income - has a lot to go for it.

And, honestly, it strikes me as a common sense plan that could be consistent with both liberal and conservative values, depending on how it were implemented. It's a shame that the government's not going to do anything useful until after the election, or maybe we could get this passed.

4. Herman Cain's Regulatory Reform

I really like Herman Cain. He's a businessman and so says what he thinks. He's the idea guy. And his ideas usually are interesting and make some sense ... until you think about them for 10 seconds.

In the last debate, he said, when responding to how he would handle energy exploration:

I would put together a regulatory reduction commission for every agency starting with the EPA. This regulatory reduction commission -- one of my guiding principles is if you want to solve a problem go to the source closest to the problem. So the people that I would appoint to that commission will be people who have been abused by the EPA. That would be the commission that would straighten out the regulatory burden.

On the surface, this sounds rather sane ... again, until you think about it for five seconds. His "guiding principle" is "if you want to solve a problem go to the source closest to the problem." So, who does he go to in order to solve EPA regulation problems? "People who have been abused by the EPA."

In other words, the group in charge of re-defining EPA regulations would be the people that the EPA has designated as having had the worst track-record of following EPA regulation.

It seems like Cain basically believes that the EPA just shouldn't do it's job, which is fine ... but he's going to use this strategy to "put together a regulatory reduction commission for every agency."

Who is going to be on the regulatory reduction commission for the Pentagon? The people who have been abused by the Pentagon? Does this mean terrorists will be on the commission?

Will criminals be reviewing Justice Department regulations?

Like I said ... his plans sound good, until you take a few seconds to think them through.