Thursday, November 15, 2012

Electoral College

Ever since the beginning of the United States of America, we've used what's known as the "Electoral College" for Presidential elections. While some states (like Nebraska & Maine) complicate it slightly, the Electoral College is very simple and straightforward. The candidate who wins the popular vote in a state receives the electoral votes that state is worth. For example, Florida is worth 29 electoral votes. Whichever candidate wins the state of Florida receives 29 electoral votes. The candidate to receive 270 electoral votes wins the election. In every state (except Nebraska & Maine), the candidate that receives the majority of the popular vote receives all electoral votes for that state, regardless of their margin of victory. In Florida, for example, a candidate can win by 1,000 votes, or by 2,000,000 votes, and receive all 29 electoral votes - the margin of victory is irrelevant.

This has led to some controversy over whether or not this is "fair," or even democratic. The electoral college system gives swing states a disproportionate ability to influence the election. It's even possible for one candidate to receive more votes, but still lose the election if those votes aren't in the "right states." This has happened four times in history, most recently in 2000, when Al Gore received half a million more votes than George W. Bush, but still lost the election because Bush had more electoral votes.

In the 2012 election, Obama received approximately 61 million votes, compared to Romney's 58 million - which, by the way, is very close. I would argue that it's so close that it's not entirely fair for Obama to claim this as evidence the American people agree with his plan of raising taxes. But, that's a different topic for a different day.

For the last couple of weeks, I have been perusing the web reading about this topic trying to get a feel for what people think. It seems that a lot of people felt that if Romney lost the election but won the popular vote, that would have been the end of the electoral college as we know it. But, now that we know Obama won both the E.C. and the popular vote, it will be interesting to see what happens to this peculiar system of election.

While reading about this topic, I found one individual who calls the electoral college "a form of taxation without representation" - arguing that if you live in a state which is majorly one side or the other (democrat or republican), but you differ from the norm, your vote is meaningless. For example, if you are a liberal living in the state of Texas, your vote in the presidential election counts for nothing, because your state's electoral votes will most certainly go to the republican candidate, and you have accomplished nothing by voting for your democrat-candidate. Likewise, if you are a conservative living in the state of California, your vote counts for nothing, because your state's electoral votes will most certainly go to the democrat candidate. Therefore, a lot of people in these types of states choose not to vote, knowing their vote will not sway the masses, or earn any electoral votes for their candidate of choice.

If the conservative from California, or the liberal from Texas, were to move to a state like Florida, or even Ohio, suddenly their vote is HUGELY important, and a great asset to either side. If we were to abolish the electoral college completely, and have the presidential election be based on popular vote only (like every other election nation-wide), everybody's vote would be an equal vote, and everyone would have an equal say. Wouldn't that be the way to do it in a democracy? I would say, without hesitation, "absolutely."

Interestingly enough, I stumbled across a bill in the House of Representatives that offers an amusing solution. H.J.Res.121 was introduced in October by Rep. Steve Israel (D-NY) does not abolish the electoral college, but it does award the winner of the national popular vote an additional 29 electoral votes - a huge bonus to the candidate that wins the popular vote. In 2000, Gore received half a million more votes than Bush, but lost the election by 5 electoral votes. The additional 29 electoral votes for popular vote would have led to a Gore victory in 2000.

It's an interesting concept, though I do not believe this will lead to the Constitutional amendment that Rep. Israel is seeking. It's been sitting in committee for nearly a month, still with no co-sponsors. I would suggest that we should just do away with the electoral college completely, and have the presidential election be determined entirely by popular vote.

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Monday, November 12, 2012

Fiscal Cliff Standoff: Who's at Fault?

For the better part of 2012, everyone has been discussing this "Fiscal Cliff" which has a fast-approaching deadline.

In 2001 and 2003, two separate laws were passed that have earned the name "Bush-era Tax Cuts," and it is basically a two-part package of across-the-board tax cuts. The tax cuts were created to spark economic growth.

Those tax cuts are set to expire at the end of the year, and if nothing is done to renew them, taxes on every American citizen and small business will increase in 2013. Being that our economy is still inching along at the pace of a snail, tax increases are not going to be good for anyone. The health of the economy, which is largely determined by the amount of consumer spending, would suffer if individual tax rates increased.

When taxes increase, people have less money to spend on products and services, whether they are necessary or not. If my federal income tax increases by, say, $1,000, that makes my daily coffee run to Starbucks no longer affordable. If Starbucks all of the sudden had a hit like that, with a lot of daily "regular" customers starting to make their own coffee, think of how many people might get laid off. Maybe Starbucks would have to reduce their hours of operation, meaning less employment. That would also hurt Starbucks' suppliers. Whoever they buy the coffee beans from would lose business. A catastrophic chain of events always follows any increase in tax rates. If the government takes more money out of my pocket, that equals less money for me to spend and support somebody's job, a local business, etc. My analogy with Starbucks is assuming my taxes would increase by about $1,000 - if the fiscal cliff is not avoided, the average household would face an increase of $3,500 per year in taxes. Three THOUSAND dollars per year. Since the government and Congressional Budget Office always put things in terms of a decade, that's $35,000 over the next 10 years that an average family would lose in added taxes. Think of what else that family could do with $35,000.
  • A brand new car, with money left over for gas
  • An annual vacation (average family vacation is between $3-4,000)
  • 20% down payment on a house
  • College education
When you add $35,000 to a family's 10-year tax burden, they might decide not to buy that new car, or not to take that annual family vacation. They might be stuck in an apartment, because they can't afford the 20% down payment on a home. They might have to put college off, because they can no longer afford it. These are all negative effects on our economy, as well as individuals' quality of life.

So how do we avoid it? Or what's the solution?

Congress and the President have until Dec. 31 to decide how to handle it. Now that the election is passed, and "America has spoken," it's time to get to work on addressing this matter.

The issue is with a disagreement between the Republican-controlled House of Representatives and Democrat-controlled Senate. The Republicans want to extend all Bush-era tax cuts, while the Democrats want to extend them for middle class only, allowing the tax cuts on wealthy Americans (over $250,000/yr) to expire.

So it looks like one of three possible things will happen.
  1. The Republicans will win, and all tax cuts will be renewed. 
  2. The Democrats/President will win, and middle class will keep their tax cuts, while wealthiest Americans will see a tax increase. 
  3. Neither side will throw in the towel, causing everybody's taxes to go up.
Remember, both the GOP-House & Democrat-Senate have to agree on the same solution, and the President has to sign off on it. If all three bodies can't come together on a bi-partisan solution, option #3 will happen, and we all get screwed with higher tax rates, starting in January. I don't know about you, but I'm pretty worried, because if there's one thing we've learned over the last 4 years, it's that both sides are stubborn, and few politicians are willing to work together on a "bipartisan solution." Looks like we should prepare for higher taxes beginning in January.

President Obama had something to say about it last week (read the transcript here).

Obama: "At a time when our economy is still recovering from the Great Recession, our top priority has to be jobs and growth." Excuse me, Mr. President, but how does increasing taxes on our wealthy job-creators encourage job growth? If I was a wealthy job-creator (which I am not, so no need to accuse me of protecting my own money out of greed), if my taxes went up, I'd have less money to hire employees and expand my company. Our economy would be healthier if I, as the job-creator, had more money in my pocket to invest, expand, and create jobs.

Obama: "I worked with Democrats and Republicans to cut a trillion dollars’ worth of spending that we just couldn’t afford." Mr. President, this is just a numbers game to make your politics seem better than it really is. Let's be honest, and look at the nation's history of recent budget deficits.
  • 2009 (Bush's last budget): $1.51 trillion
  • 2010 (Obama's first budget): $1.36 trillion
  • 2011: $1.32 trillion
  • 2012: $1.10 trillion
  • 2013: $0.88 trillion
However, realize that here in November of 2012, the real-time annual deficit is still about $1.12 trillion (according to usdebtclock.org).

So in 4 years of budgets, Obama has reduced the deficit from $1.36 trillion to roughly $1 trillion; hardly the 50% decrease he promised to complete during his first term.

Obama: "In fact, the Senate has already passed a bill doing exactly this [extending tax cuts for middle class], so all we need is action from the House." If there's one thing Obama has always done consistently, it's pointing the finger of blame towards the GOP; in this case, he's accusing the House of inaction, while he's waiting to sign a bill the Democrat-Senate has already passed. Mr. President, are you aware that the House is not "dragging its feet" as you imply...

The Senate's bill to extend middle class tax cuts (S.3412) cleared the Senate in July on party lines. Every Republican voted against it, because it did not extend existing cuts for wealthier Americans. In fact, even Sen. Jim Webb, a democrat who historically votes with his party 9 out of 10 times, voted against this plan. The Senate's plan is by no means a bi-partisan plan, let alone anything that will ever clear the House of Representatives.

But, don't be fooled into thinking what the president wants you to think. It's not that the House is ignoring this completely. Obama didn't mention this in his speech last week, but are you aware that the House passed its plan for this fiscal cliff several months ago (H.R.8). The only real difference is that the Republican plan extends all existing tax cuts - it's not even trying to cut taxes further, just maintaining the current levels. The Republican plan has been sitting and waiting for the Senate to act on it since early September. So, Mr. President, if you're ready to sign something, why don't you encourage the Senate to act on what the House passed? Instead, he would rather try to intimidate the House into agreeing to HIS plan. So much for bi-partisanship...

As I said, the Senate bill received no bi-partisan support. But, the House bill actually was slightly bi-partisan, receiving support from 19 House Democrats. Now, I'm not suggesting that makes this bill "bi-partisan," but consider that against the Senate version, which has ZERO bi-partisan support. I would suggest that if the President is ready to sign something, maybe he should encourage the Democrats in the Senate to consider the House plan, or something that's actually something of a compromise. If you have a bill with no Republican support, and another bill with an element of bi-partisanship, wouldn't it make more sense to start with the somewhat bi-partsan bill? After all, you do need to work with both parties to get something passed. But, it looks like the President would rather intimidate the House into doing it his way, which will never lead to success. Way to go, America... last week you selected yet another 4 years of this partisan politics which simply does not work.

My prediction is clear: This fiscal cliff will not be avoided, and taxes will increase on 100% of Americans in 2013, and I blame the democratic party for not willing to play nice with the Republicans.

Please share your thoughts in the comments..

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