Wednesday, June 24, 2009

Obama moving country not towards socialism, but fascism!

How many US Citizens actually understand what is going on?

Since Obama became President we have seen the introduction of Czars. In fact we now have sixteen Czars with more planned. But why do we have Czars by definition they are dictators, so if we are a Republic why do we have dictators ruling our lives.

The reason is that we have moved away from being the Republic that the Constitution created and have moved not to Socialism but to Fascism. The definition of Fascism is “a governmental system led by a dictator having complete power, forcibly suppressing opposition and criticism, regimenting all industry, commerce, etc., and emphasizing an aggressive nationalism and often racism.”

Czars provide the opportunity to expand the Executive Branch by reducing the impact of Congress. In affect taking away responsibilities given to the Congress in the following ways:

1. They derive their authority directly from the President.

2. They are accountable only to the President.

3. Congress cannot subpoena Czars to testify before their committees because they are considered Presidential staff.

4. Cabinet Members who are approved by Congress and must report to Congress are subservient to the Czars under Presidential Mandate and must implement policies and actions requested by the Czar.

5. Czars control how TARP and Omnibus money is spent in a department over the objections of the Cabinet Members who are responsible to Congress for spending within their department.

6. Absolutely no over site by Congress or any other branch of the government on their actions, the policies they implement, the results of their efforts or spending.

Czars as a result provide tremendous amount of new powers to the Executive Office specifically denied in the Constitution. President Obama also has canceled and created more Presidential Executive Orders than any other President in history and he has not been in office six months. He is in fact becoming a dictator by side stepping the Congress and the Constitution. Just imagine the reaction of the Media if President Bush had done this.

In the Constitution the control of the purse strings is limited to the Congress. Both the Omnibus Bill and TARP Bill have moved those responsibilities to the Executive Branch. It is the Czars that control how that money will be spent, not the Congress. Not only have they lost control of the money but also the intent of both spending bills. TARP was originally intended to purchase troubled assets from financial institutions to protect the banking system. Instead TARP has purchased Citibank, General Motors, Fannie Mae, Freddie Mac, Chrysler and AIG. By controlling the largest vendor in an industry helps provide one more trait of Fascism “regimenting all industry and commerce”. As financial institutions return parts of the TARP money Treasury is using it to finance other projects thus making it a slush fund for the Administration. Congress never gave the authority to purchase a controlling interest in any of these companies or industries and it certainly did not expect that it would create a slush fund controlled by the Executive Branch via the Treasury.

These companies control industries that represent 50% of the economy and now the Obama Administration is taking on health care. Health care alone makes up 19% of the economy. If government is able to control health care it will give them 70% control over the nation’s economy.

In the Omnibus Bill a little known authority was created called the “Medical Advisory Council”. This council has the responsibility to address what treatments, medications and procedures may be offered to a patient by a doctor. These restrictions may vary based on age and general physical health. Once the policies have been agreed to within the Council then Congress is given an all or nothing vote on their findings. Congress cannot alter a single or group of items suggested by the Council. Once approved by Congress, the findings become law. You have to ask why the News Media is not talking about this Council!

ABC News has authorized the Obama Administration to use their network to discuss the new healthcare program from the Blue Room of the White House. The government will provide all of the programming and will not allow an alternative view point to be discussed or offered by the Republican Party or by the AMA. This is simply government control over our news media with government controlled censorship of the news. “Forcibly suppressing opposition and criticism;” another feature of Fascism.

Yes we have moved not from a Republic to Socialism but to Fascism. When asked when leaving the Constitutional Congress Benjamin Franklin was asked, “What have you wrought”? Franklin replied, “A Republic…If you can keep it.”

US Economics Today!

New economics

It is a slow day in the East Texas town of Madisonville . It is raining, and the little town looks totally deserted. Times are tough, everybody is in debt and everybody lives on credit. On this particular day a rich tourist from the East is driving through town. He enters the only hotel in the sleepy town and lays a hundred dollar bill on the desk stating he wants to inspect the rooms upstairs in order to pick one to spend the night. As soon as the man walks up the stairs, the hotel proprietor takes the hundred dollar bill and runs next door to pay his debt to the butcher. The butcher takes the $100 and runs down the street to pay his debt to the pig farmer. The pig farmer then takes the $100 and heads off to pay his debt to the supplier of feed and fuel. The guy at the Farmer's Co-op takes the $100 and runs to pay his debt to the local prostitute who has also been facing hard times and has lately had to offer her "services" on credit. The hooker runs to the hotel and pays off her debt with the $100 to the hotel proprietor paying for the rooms that she had rented when she brought clients to that establishment. The hotel proprietor then lays the $100 bill back on the counter so the rich traveler will not suspect anything. At that moment the traveler from the East walks back down the stairs after inspecting the rooms. He picks up the $100 bill and states that the rooms are not satisfactory. Pockets the money and walks out the door and leaves town.

No one earned anything. However the whole town is now out of debt, and looks to the future with a lot of optimism. That ladies and gentlemen is how the United States Government is conducting business today.

Saturday, June 20, 2009

'45 Million Americans' -- Who Are These Uninsured Guys?

By Larry Elder · Thursday, 18 June 2009

About 45 million Americans lack health care insurance. Or do they?

A pro-"universal health care" television host recently cited this widely accepted "fact." The number is bogus.

Here's the skinny.

Start with the math. We have 300 million Americans. Subtract the 45 million -- 15 percent of us -- with no health insurance. That leaves 255 million Americans, or 85 percent, with it.

And the insurance is lousy, right? Not according to a 2006 ABC News/Kaiser Family Foundation/USA Today survey. It found that 89 percent of Americans were satisfied with the quality of their own health care.

Nearly half of the 45 million fall in the category of my 26-year-old nephew. He smokes cigarettes, dates, eats out, goes to movies and, like all young people, lives through his cell phone. With a slight change in priorities, he could afford health insurance, the cost of which at his age and health starts at about $100 a month. Take a look at a Reason Foundation video of interviews with a bunch of non-health-insured 20-somethings.

These Gen Xers copped to dropping money on clothes, booze, nightlife, the latest tech gizmos and other things of interest to them. With a change in priorities, these young folks -- far more representative of those without insurance than the forlorn husband and wife sitting on a porch swing -- could both afford and qualify for health insurance. They simply consider it a low priority.

Millions more can access health care -- through SCHIP (State Children's Health Insurance Program), Medicaid or other government programs. But for whatever reason, 11 million people simply refuse to take advantage of them.

Several million other Americans who want insurance do, indeed, go without it -- for a time. Many are, however, between jobs, and most -- at some point -- will find employment that either offers health insurance or pays enough so that they can buy it. Millions more work at companies that offer health insurance, and for a few dollars out of every paycheck, they could add family members. They choose not to.

What about criminals without insurance? More than 2 million Americans -- with access to health care, by the way -- use jail, prison or penitentiary mailing addresses. And for every one behind bars, how many live among us who survive by theft, drug dealing, prostitution or some similar career path? Taxpayer health insurance for them, too?

So now we're down to the Americans without health insurance on a persistent, long-term basis. This is approximately 10-15 million, a big number to be sure. But does this warrant a government takeover of the entire health care system?

Lacking health care insurance is not the same as lacking health care. By law, most emergency rooms must provide health care -- to both legals and illegals. Yes, they stand in line, but no health insurance does not equal no health care.

Government (aka taxpayers) already pays half of our health care dollar, with programs such as Medicare, Medicaid, SCHIP and other federal and state plans. The stated goals are accessibility and affordability. Congress passed Medicare in 1965. In the 20 years before the program's inception, the cost of a day in a hospital increased threefold. In the 20 years following Medicare, a day in a hospital increased eightfold -- substantially higher than inflation over that period. Because of cost controls on government plans, providers increased the cost on everybody else.

So here's the question.

Do we allow a complete government takeover of the section of health care it doesn't already run, for 10-15 million or so without health insurance on a persistent basis? Again, 255 million Americans already have it. Many millions more could get it if they wanted to. And 89 percent of Americans are satisfied with the care they now receive.

What to do? Unleash the free market. Allow greater competition among health care providers. Decrease costly regulations that increase the price tag. Enable consumers to purchase insurance plans across state lines. Allow non-government-licensed paraprofessionals and others -- currently prevented by law from offering any medical services -- to provide low-cost care.

What about poor care and negligence? We have laws against force and fraud, as well as a common-law duty of care. That's why God created lawyers. (Just give us "loser pays.")

What about those who cannot afford it? What about those with pre-existing illnesses whose insurance applications carriers turned down? What's wrong with charity -- people helping people? America remains the most generous nation on the face of the earth. We donate more of our time and money than countries like England, Germany and Japan. During the Great Depression, before the New Deal, charitable giving skyrocketed. After the New Deal, charitable giving continued, but not at nearly the same rate. People expected government to address the problem, and taxpayers felt they gave at the office.

We can provide such "universal" coverage at a "low cost" -- through rationing. That means long lines, lower quality and less innovation for services that Americans currently take for granted.

Economists call it T.A.N.S.T.A.A.F.L. There ain't no such thing as a free lunch.

CREATORS SYNDICATE COPYRIGHT 2009 LAURENCE A. ELDER

Compare genuine 'long-form' Hawaiian birth certificate with Obama's online form

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=101483

BORN IN THE USA?
What's the difference?
Compare genuine 'long-form' Hawaiian birth certificate with Obama's online form
--------------------------------------------------------------------------------
Posted: June 18, 2009 9:48 pm Eastern
WorldNetDaily

Here is an actual Hawaiian birth certificate from 1963 (the same era as Obama's birth), which while redacted includes detailed information documenting a birth, including the name of the birth hospital and the attending physician. Beneath it is the short-form "Certification of Live Birth" offered by President Obama as proof of his Hawaiian birth. It is possible to have been born outside of Hawaii and still obtain the latter form, but not the former:






















Long-form birth certificate from state of Hawaii (Image courtesy Philip Berg)


Here is the "Certification of Live Birth" presented by Obama: Short-form "Certification of Live Birth"








Monday, June 15, 2009

Obama fast-tracking the nanny state

http://www.onenewsnow.com/Perspectives/Default.aspx?id=567552

President Obama wants healthcare reform this year.

He said at a town hall meeting the other day that he won't tolerate "endless delay" and that we probably won't reform healthcare if we don't do it this year.

Now why is that Mr. President? Will Congress be on vacation for the remaining three years of your term?

Consider that it's not unusual to take a full session of Congress -- two years -- to pass legislation a fraction of the size and consequence of healthcare reform. Yet our president is demanding that a bill to overhaul a $2.5 trillion sector of our economy -- one sixth of it -- be considered and passed in a few short weeks.





It ought to be clear that this is not about taking an honest and sincere look at how to make this a better country and how to do a better job at delivering healthcare to Americans. It's impossible to look at something this massive and deal with it in such a short time frame.

This is about raw politics. When Mr. Obama says that if we don't get "it" done this year we probably won't get "it" done, he doesn't mean reforming healthcare. He means reforming it the way he and Ted Kennedy want to do it. Government-run, nanny state healthcare.

To pull it off, they have to move fast.

First, the White House knows that Mr. Obama's honeymoon won't last forever. While his personal approval ratings remain high at 60 percent, his disapproval rating now at 33 percent is almost twice where is stood last February. And, in latest Gallup polling, the majority now disapprove of how Obama is handling government spending. So the White House wants action now on healthcare while their man is still popular.

Second, the White House knows that next year is an election year. It will be far more difficult to get senators and congressmen to play ball.

Third, they know that the big reason that Hillary Care failed in 1993 was that the American people were given an opportunity to look at it and consider it. They don't want to make the same mistake of giving voters a chance to actually understand what is about to happen to them. They know that the more Americans have an opportunity to take a look at the bureaucrat-run, nanny state healthcare freight train, the more likely they will jump of the track.

Breathlessness is a great political technique. Telling voters that the world will end if we don't get X passed now.

This is how the $800 billion dollar "stimulus" bill got passed earlier this year. We were flashed images of the Great Depression of the 1930s and told our only hope is the stimulus bill.

Now, three months later, it's clear that our current economy bears no resemblance to the 1930s, that signs of recovery are emerging, and thus far only six percent of the $800 billion "stimulus" pot of political lard has been spent.

The trillions in new debt have been piled up at such a dizzying pace in the last few months Americans are numb. The federal government take from our economy has jumped from one-fifth of it to one-fourth.

Now, Mr. Obama and his Democrat colleagues want to layer on a new government healthcare plan to "compete" with private plans. "Compete" means raising taxes a few trillion dollars to provide subsidized insurance, and in some cases, free insurance, through a government plan in which all Americans will eventually wind up -- and putting federal bureaucrats in charge of approving what healthcare procedures we are permitted.

The healthcare nanny state freight train is moving. Will we wake up before it's too late?

Obama Appoints 2 Devout Muslims to Homeland Security Posts

http://tinyurl.com/mfdnpx
http://www.theodoresworld.net/archives/2009/06/obama_appoints_devout_muslim_t.html

Obama Appoints 2 Devout Muslims to Homeland Security Posts

Obama and Janet Nappy Appoint Devout Muslim to Homeland Security Post
Arif Alikhan as Assistant Secretary for Policy Development
Source for announcement:
Homeland Security Press Room

"Today, I am proud to make two key personnel announcements for the U.S.
Department of Homeland Security (DHS)—President Obama’s intent to nominate
David Heyman as Assistant Secretary for Policy and my appointment of Arif
Alikhan as Assistant Secretary for Policy Development. Arif comes from Los
Angeles Mayor Antonio R. Villaraigosa’s office, where he served as Deputy
Mayor for Homeland Security and Public Safety. As a key adviser to the Mayor,
he has led the City’s efforts to develop homeland security, emergency
management and law enforcement initiatives, including operational oversight
of Los Angeles Police, Fire and Emergency Management departments." said
Secretary Janet Napolitano

The Islamic loving Obama has appointed Arif Alikhan a devout Sunni Muslim to
assistant secretary for the Office of Policy Department of Homeland Security.
Mr. Alikhan was instrumental in taking down the LA Police Department's plan
to monitor it's Muslim community.

Alikhan is affiliated with MPAC, the "Muslim Public Affairs Council".

"Founded in 1988, the Muslim Public Affairs Council (MPAC) describes itself as
"a public service agency working for the civil rights of American Muslims,
for the integration of Islam into American pluralism, and for a positive,
constructive relationship between American Muslims and their
representatives." The organization consists of eight chapters in California ,
and one each in Texas , Kansas , Nevada , and Iowa ."

From its inception, MPAC presented itself as more inclusive, and more open to
peaceful coexistence with Jews and Chris tians, than other Arab and Muslim
groups, and sought to make Americans comfortable with Islam by showing how
much the religion embraced core American values.

However, looking deeper into this group:

MPAC's Senior Advisor, Maher Hathout, who has close ties to the Muslim
Brotherhood and espouses the radical brand of Islam known as Wahhabism, was
invited to address the Democratic Convention in Los Angeles in 2000.
MPAC's centrist public image unraveled after the September 2000 launching of
the Second Palestinian Intifada, when the Council severed its ties to the
Jewish community and issued one-sided condemnations of Israel's response to
the Arab violence.

This group actively opposed Bush's military incursions into Afghanistan and
Iraq, as well as his "excesses" in the war on terror. In February 2003, MPAC
joined the Council on American-Islamic Relations, the American Muslim
Council, and the American Muslim Alliance in forming a coalition to repeal
and amend the Patriot Act, which these organizations depicted as an assault
on the civil liberties of Americans, particularly Muslims.

MPAC claims that Islam is a religion of peace and moderation, and contends
that Muslim extremists are no more numerous or dangerous than fundamentalists
in any other faith.

Holding Israel entirely responsible for the "pattern of violence" in the
Middle East, MPAC asserts that Hezbollah "could be called a liberation
movement." The Council likens Hezbollah members to American "freedom fighters
hundreds of years ago whom the British regarded as terrorists."

In a 1999 position paper, MPAC justified Hezbollah's deadly 1983 bombing of
the American Marine barracks in Lebanon as a "military operation" rather than
a terrorist attack. 1983 Beirut barracks bombing, which killed 299
servicemen, including 220 U.S. Marines. As Maher Hathout puts it: "Hezbollah
is fighting for freedom, an organized army, limiting its operations against
military people, this is a legitimate target against occupation. … this is
legitimate, this is an American value -- freedom and liberty."

Saturday, June 13, 2009

Obama to Sell B-2 Bomber Blueprints to China to Pay Off Debt

http://jumpinginpools.blogspot.com/2009/06/obama-to-sell-b-2-bomber-blueprints-to.html

B-2 Plans for Sale?
Richard Hogarty
Boston Reviewer
June 1, 2009

Record deficits and a crashing economy appear to be taking a toll on the young Barack Obama Administration. The Administration has been talking about hiking income taxes and perhaps instituting a VAT tax.

China is also concerned with the mounting deficits in the United States budget. China is the single biggest holder of US Treasury Bonds and is one of Washington's biggest trading partners. The People's Republic has had a burgeoning economy, but is increasingly wary of the falling US dollar.

While the exact amount of Chinese ownership of US treasuries is unknown, it is estimated to add up to over a trillion dollars. If China were to call in US guarantees on these bonds, economists fear it could lead to an economic collapse larger than the Great Depression.

China has recently expanded its defense budget, ostensibly to keep up with its economic growth. China is reportedly working on its own version of a stealth bomber (the US has the only functioning model) but is lagged by technological defects.

On April 1st, President Obama spoke to Chinese Premier Hu Jintao during the G20 Summit. During this meeting, Mr. Hu expressed interest in writing off some of the US debt in exchange for military technology. The President has since referred the matter to Defense Secretary Robert Gates.

The Defense Department is reportedly furious with the President's proposal to sell blueprints of the B-2 Spirit stealth bomber to the People's Republic. Gates has flatly rejected the President's plan, but has since been asked to step down if he will not facilitate the process.

According to the deal, the United States would sell the plans for the B-2, along with radar-absorbing paints and metals in exchange for $50 billion in debt relief. The B-2 cost the US government $23 billion to develop the bomber in the 1980s.

According to the Administration, this proposal will help the United States resolve its debt issues. They point out their belief that the B-2 bomber is "strategically obsolete", according to a source in the White House Press Office. In addition, the source claims that the Chinese would be unable to create their own functioning stealth bomber fleet for "at least eight years."

American allies Taiwan, Japan, and South Korea are very wary of the proposal. Koo Syi, a geopolitical analyst from South Korea, points out that this technology could be passed to China's allies. This was the case when Chinese nuclear technology was transferred to Pakistan and North Korea. According to Koo, Obama has rendered US allies' opinions as "irrelevant."

While this proposal is controversial, it is not being presented to Congress, where it could meet with stern opposition. Instead, the State Department has been informed to assist the Defense Department with the transfer of materials.

Tuesday, June 09, 2009

Europe Swings To The Right - U.S. Fails To Learn Lesson From Europe

http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2009/06/08/europe_swings_right_as_depression_deepens

The establisment Left had been crushed across most of Europe, just as it was in the early 1930s.

We have seen the ultimate crisis of capitalism -- what Marxist-historian Eric Hobsbawm calls the "dramatic equivalent of the collapse of the Soviet Union" -- yet socialists have completely failed to reap any gain from the seeming vindication of their views.

It is not clear why a chunk of the blue-collar working base has swung almost overnight from Left to Right, but clearly we are seeing the delayed detonation of two political time-bombs: rising unemployment and the growth of immigrant enclaves that resist assimilation. (sounds like the US to me?)

Note that Right-wing incumbents in France (Sarkozy) and Italy (Berlusconi), survived the European elections unscathed.

Left-wing incumbents in Germany, Austria, the Netherlands, Spain, Portugal, Hungary, Poland, Denmark, and of course Britain were either slaughtered, or badly mauled.


The Dutch Labour party that has dominated national politics for the last half century fell behind the anti-immigrant movement of Geert Wilders (banned from entering Britain). It serves them right for the staggeringly stupid decision to force through the European Constitution (renamed Lisbon) after it had already been rejected by their own voters by a fat margin in the 2005 referendum.

The Portuguese Socialists face Siberian exile after seeing a 18pc drop in their vote. The slow drip-drip of debt-deflation for a boom-bust Club Med state, trapped in the eurozone with an overvalued exchange rate (viz core Europe, and the world), has suddenly turned into a torrent. The country is already in deflation (-0.6pc in April). It has been suffering its own version of Japanese perma-slump for half a decade.

Portugal's opposition is calling for an immediate vote of no censure, while the Government clings to constitutional fig-leaves to hide its naked legitimacy. "O Governo está na sua plenitude de funções," said the chief spokesman. You can guess what that means. Not long for this world, surely.

In Germany and Austria, the Social Democrats suffered their worst defeats since World War Two. I don't say that with pleasure. A vibrant labour-SPD movement is vital for German political stability. It was the peeling away of Socialist support during the Bruning deflation of the Depression years -- so like today's Weber-Trichet deflation -- that led to the catastrophic election of July 1932, when the Nazis and Communists took half the Reichstag seats.

This will not happen again, thankfully, because there is no Bolshevik threat luring business into a Faustian pact with Fascists. But the picture is not benign either. Unemployment in Germany may reach 5m by the end of 2010, according to the five 'wise men' , even if recovery comes on schedule.

But as readers know, I still fear that this depression is quietly deepening. The savings rate is rocketing in the deficit states of the US, UK, Spain, et al, as the "sinners" belatedly tighten their belts, but their fall in consumption is not being matched by an offsetting rise among the surplus "saints" states, China, Japan, Germany-Netherlands, which all points to an implosion in world demand. Yes, the West is printing money.

But that is a harder to trick to pull off than Friedman and Bernanke ever realized. And core Europe is not really printing anyway beyond its chump-change dallying in the covered bond market.

In Ireland -- now crucifixion laboratory for the EMU, and downgraded again today to AA by S&P -- the ruling Fianna Fail was reduced to three seats in the European Parliament. It is the party's worst defeat since the creation of the Republic. Premier Brian Cowen cannot be long for this world either.

As for Gordon Brown, I can only say that having derided UKIP as fringe losers, his attempt to cling top office after UKIP trounced him is quite astonishing.

I find it odd that the press continue to talk about a leadership change as if Labour could possible keep going for another year, with yet another unelected prime minister, and with its authority reduced to tatters. This Parliament ought to be dissolved immediately. An election ought to be called this week.

It is shocking that Westminster's inbred family still cannot see the writing on the wall. If this sorry saga goes on much longer, we may have to conjure up some sort of medieval impeachment process. (My colleague Phil Johnston says no such mechanism exists. Pity)

So, we may lose three or four governments in Europe in coming days or weeks -- or even worse, they may survive. The drama is unfolding as I feared. Half way through the depression, we are facing the exactly the sort of political disintegration that occurs in times of profound economic rupture.

Remember, the dangerous phase in the Great Depression was Stage II, after the collapse of Austria's Credit-Anstalt in mid-1931 set off a disastrous chain-reaction that Autumn (until then, most people thought they faced no more than a bad recession, like today).

Don't count on the political fabric of Europe holding together if our green shoots shrivel and die in the credit drought of the long hot rainless summer that lies ahead.

Obama Tells American Businesses to Drop Dead

http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aaaBdVMkjPnU

Commentary by Kevin Hassett

June 8 (Bloomberg) -- I’ve finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing “failed” firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout.

Once that happens, their new pay czar Kenneth Feinberg can set the wage for everybody and Rahm Emanuel can stack the boards of all of our companies with his political cronies.

I know, it sounds like an exaggeration. But look at it this way. If there were a power ranking of U.S. companies, like the ones compiled by football writers for National Football League teams, Microsoft would surely be first or second to Google. But last week, Microsoft Chief Executive Officer Steve Ballmer came to Washington to announce what Microsoft would do if Obama’s multinational tax policy is enacted.

“It makes U.S. jobs more expensive,” Ballmer said, “We’re better off taking lots of people and moving them out of the U.S.” If Microsoft, perhaps our most competitive company, has to abandon the U.S. in order to continue to thrive, who exactly is going to stay?

At issue is Obama’s policy to end the deferral of multinational taxation.

The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate.

Tax Burden

U.S. firms have nonetheless prospered because our tax code allows a business to set up a subsidiary in a low-tax country. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home.

The economically illiterate partisan Democratic view is that this practice is unpatriotic and bleeds jobs from the U.S. The economic reality is that American companies use this approach to acquire market share overseas. The alternative is losing the business to foreign competitors.

Don’t just take my word for it. A recent paper by Harvard economists Mihir Desai and C. Fritz Foley and Berkeley economist James Hines and published in the distinguished American Economic Review, gathered data on American multinationals to explore the impact of foreign investments on domestic U.S. activity.

Encourage Overseas Sales

Their conclusion was striking. The authors found that “10 percent greater foreign capital investment is associated with 2.2 percent greater domestic investment, and that 10 percent greater foreign employee compensation is associated with 4 percent greater domestic employee compensation. Changes in foreign and domestic sales, assets, and numbers of employees are likewise positively associated; the evidence also indicates that greater foreign investment is associated with additional domestic exports and R&D spending.”

So when firms expand their operations abroad, taking advantage of the lower foreign tax rates, it helps their workers in the U.S. Higher sales abroad (surprise, surprise) are good for domestic workers.

It is worth noting that this study, which is confirmed by a boatload of evidence elsewhere, was coauthored by the same James Hines who recently wrote a sweeping review of international tax policy with Obama’s top economist, Larry Summers. Summers has to know what the literature says.

Inexplicable Stance

So the question is, why does Obama advocate a policy that so flies in the face of everything that economists have learned? How could Obama possibly say, as he did last month, that he wants “to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens?” Further, how could Treasury Secretary Tim Geithner call a practice that top scholarship has shown increases wages and employment in the U.S. “indefensible?”

I have to admit I am at a loss. Maybe it is good politics to bash American corporations, and Obama isn’t really serious about making this change happen. But if the change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations.

If that occurs, the firms that stay in the U.S. will be at such a huge tax disadvantage that they will absolutely need a “rescue.”

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

To contact the writer of this column: Kevin Hassett at khassett@bloomberg.net

Last Updated: June 8, 2009 00:01 EDT