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Americans may have voted for change in November, but for now it is business as usual in Washington. Just take a look at the messy tax legislation that is working its way through Congress under the euphemism of a 'tax-extenders' bill.

This legislation is a stew of unrelated credits and tax breaks thrown together in one pot with no consistent philosophical underpinning. Members of Congress and the special interests who command their attention will marinate bits and pieces together with a few items of importance, most especially the yearly adjustment to the Alternative Minimum Tax, to garner wide support. That will help ensure that relatively few members of Congress will stand up and simply say 'no' to the whole mess. In the process, no one will make a serious effort to determine what this batch of credits will cost the national treasury, let alone examine the economic consequences of many of these items.

Last month, more than 1,300 otherwise unrelated businesses, trade groups, nonprofits and advocacy groups sent a letter to Congress urging passage of the tax extenders bill, pushing Congress to renew more than 130 tax credits that are expiring, or that expired last year and need retroactive renewal so that Americans can claim them on this year's tax filing.

These diverse and unconnected tax expenditures include the Low Income Housing and New Markets Tax Credits touted by nonprofit housing groups, four different tax subsidies for biofuels, a tax deduction for teachers who use their own money to buy educational materials, a continued federal subsidy for state and city borrowing via the Build America Bond program, a credit for those who build energy efficient homes, an enhanced charitable deduction for those who donate food, and adjustments in the deductibility of the interest on student loans. And that's just the tip of the iceberg.

One thing that advocates of these and other credits do not want is anything so controversial that it might actually derail the bill. That's why the far more important debate about what to do with the Bush tax cuts is proceeding on an entirely separate track. With or without the Bush tax cuts, Washington will pass the tax extenders bill.

By throwing the rest of these credits into a gigantic brew Congress pretty much guarantees that opposition to individual proposals will melt away. For instance, powerful Iowa Congressman Chuck Grassley has been a prominent critic of the Build America Bond program, worrying about the steep fees Wall Street charges and how the bonds are priced. But Grassley recently admitted in the Wall Street Journal that the BABs program was likely to wind up in a tax extenders bill because, "It's hard to argue if we want to quickly get a [tax] bill passed to say 'everything except BABs.'"

Of course, if you load tax legislation up with enough credits, you're likely to get the same lack of opposition from nearly every senator or representative. Grassley, for instance, comes from an agricultural state and has been campaigning for renewal of ethanol and biodiesel credits, so it's not surprising that his opposition to BABs might disappear in exchange for items he wants passed.

The very fact that the ethanol credits exist in the first place is testament to how Washington works. Al Gore, who as vice president cast the deciding vote in 1994 to establish the credits, now admits that bio-fuels aren't a good idea. And in a rare bit of candor he says one reason he voted for them back then was because farmers in Iowa, a key state in the parties' presidential nominating process, favored them.

The 130 or so tax credits up for renewal in this year's legislation represent the worst of our tax system. For one thing, they are not really tax breaks. They are expenditures that Washington is making to encourage certain activities, from investment by farmers in new machinery to charitable donations of computers by businesses to schools. But by calling them tax credits Washington makes these spending items sound like something more benign.

Few voters are fooled anymore. The National Commission on Fiscal Responsibility and Reform chaired by Erskine Bowles and Alan Simpson recently recommended eliminating more than $1 trillion in tax expenditures to help cut the federal deficit. That gives you an idea of just how much money we're spending through our plethora of tax breaks and credits.

The real question is whether the next Congress, with so many members elected as reformers, will act any differently. When these new members start challenging special interest tax breaks, they'll be taken aside by the Washington-as-usual crowd and told that if they oppose too many items they might not get tax breaks that constituents in their home state or district want. The would-be reformers will be lobbied by advocacy groups representing powerful constituencies, from senior citizens organizations to public employee unions to trade groups representing industries in their home districts. If our congressional reformers are too insistent on real change, they'll be denounced by these groups in their hometown newspapers as uncaring or out-of-touch with local concerns.

What the new Congress will learn is that you can't break the hold that special interest groups have on our tax code by individually attacking each expenditure. You'll be bled to death by a thousand small cuts. The only hope for reform is comprehensive tax legislation that simplifies our tax code by eliminating most, if not all, tax expenditures in exchange for lower rates for everyone. Until Congress has something like that before it, we'll continue to get the kind of ugly tax legislation making its way through Congress right now.

This article first appeared on RealClearMarkets.

Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute

Government set-aside programs actually require ineffiency in infrastructure projects by demanding that the least competitive contractors be hired to work on them. Success in a contracting business disqualifies a contractor from being designated as a "minority business enterprise." Only contractors with a net worth below $750,000 and a relatively low annual income may participate.

But the bureaucracy required to oversee these programs is reason enough to cut them out, even if they did not guarantee waste in the actual operation of a project. Federal, state, and local governments all have employees on their payroll whose only job is to certify "disadvantaged" companies for quota reception and to oversee the quota programs. And the costs to contractors of complying with the set-aside paperwork and mandates inflate the price tag of government projects.

Bias is not preventing minorities and women from entering the contracting field and prospering within it. Banks are under mandate to loan to minorities and women. To be sure, family connections undoubtedly create a barrier to outsiders in some sub-specialties. But the real problem underlying minority underrepresentation in the construction business is inadequate skills. Running a contracting business requires reading, math, and management capacity. Black males lag far behind whites on at least the first two requirements. In eighth grade, only 8 percent of black males living in large cities performed at or above the proficient level in reading, compared with 33 percent of white males nationwide, according to a report published in October by the Council of Great City Schools. Eighth-grade math scores are similarly skewed. Black males' SAT reading scores are over 100 points lower than white males'. With such disparities, every profession with any cognitive content is going to have fewer black participants than whites.

As for women, their continuing appetite for quotas is nauseating. Females outnumber males in the nation's colleges; every graduate program in the country recruits them as assiduously as they do blacks. They can write their ticket anywhere. If they are not proportionally represented in the building trades, it's because they are going to law and medical school instead.

Construction quotas are just one layer in the mother lode of affirmative-action waste that deficit hawks should be attacking. Municipal-bond issuers have to pay a toll to firms that exist solely because of minority-underwriting requirements. And then there's the humongous "Equal Employment Opportunity" infrastructure within each government agency, made up of hacks whose only job is to count the number of minority and female employees in that agency -- something a computer could do -- and pretend eternal vigilance against the alleged menace of bias that threatens at every moment to break out among white-collar government employees, many of whom are minorities themselves. Perhaps as a temporary emergency-deficit-reduction measure, governments could dismantle their EEO empires on a five-year experimental basis, and see if a vast eruption of discrimination occurs. My guess is that the only change would be a significant decrease in paperwork and an increase in efficiency.

This article first appeared in National Review Online.

The UN's Convention on the Elimination of All Forms of Discrimination Against Women was the subject of hearings on September 18 before a Senate Judiciary Subcommittee. Melanne Verveer, U.S. Ambassador-at-Large for Global Women's Issues at the State Department, testified before the panel, representing Secretary Clinton, in favor of ratification. Samuel Bagenstos, Principal Deputy Assistant Attorney General in the Civil Rights Division in the Justice Department, represented Attorney General Eric Holder.

Why is there suddenly interest in a treaty that has been moribund for a generation-and this in a lame-duck session of Congress at which the Administration's higher priority is to win approval of the START treaty to limit nuclear weapons?

Earlier this month, the Senate wisely refused to pass the Paycheck Fairness Act. That Act, as pernicious as the Convention, was anything but "fair" because it would have subjected the pay of every woman in America to new forms of litigation and the American economy to untold harm. It would have not been good for women, or anyone, but trial lawyers.

But proponents of bad laws, especially ideologically motivated lobbyists, rarely quit. The Convention, long dormant, is still an attractive goal to professional feminists. It has been ratified by 186 U.N. member countries. The United States is the only country in the Western Hemisphere and the only democracy not to have done so. How come, the reader wonders? Other countries that have not signed the treaty are Sudan, Somalia and, Iran .

In a meeting with feminist leaders at the White House on November 17, the day the Paycheck Fairness Act went down, the president said, "I don't want you guys to lose heart at this point because we're just going to keep on moving until we get it done...We're going to keep on working on it."

And here is the motive for the testimony and the subcommittee hearing: Obama seeks to demonstrate solidarity with feminist leaders and lobbyists. Plus, the Senate and Administration want to embarrass Republicans by tagging them as anti-women. The hearing shows that Democrats are still willing to pass a treaty that would wreck the American economy by imposing draconian measures on employers.

The anti-discrimination Convention goes beyond basic protections for women, such as the right to vote and protection from violent spouses, and mandates equality of outcomes-not opportunity but outcomes-in education, occupation, and earnings.

Although the Convention sounds harmless-who could be against eliminating discrimination, after all?-it would require the United States to go beyond the provisions of the failed Paycheck Fairness Act in expanding the reach of federal law.

Consider Article 11 1(d), which calls for "The right to equal remuneration, including benefits, and to equal treatment in respect of work of equal value..." American women are entitled to equal pay for equal work now under the Equal Pay Act and Title VII of the Civil Rights Act, but defining work of equal value, known as comparable worth, would keep UN and American bureaucrats busy for years-nay, forever.

The American Bar Association has issued a document, a so-called Assessment Tool, that describes how to comply with the Convention.

The ABA notes that "Recommendation No. 13 also provides that States Parties should develop job evaluation systems based on gender-neutral criteria, which would facilitate a comparison of work and value of jobs predominated by men and by women."

Compensation in America does not go by "value," a term that lacks unambiguous meaning. In our marketplace economy, value is what a willing buyer will pay-for example, at an auction. In other words, value is determined by supply and demand.

While some social reformers may deem childcare to be as valuable as what oil drillers do, companies have to pay people more to work on drilling rigs because the work is dangerous and dirty and workers have to be away from families for long periods of time.

Similarly, violinist Anna-Sophie Mutter's playing might be deemed by some to be of equal "value" to Madonna's, but more people will pay higher prices to see Madonna's concerts, so she earns more.

Article 11 2(c) calls for States to promote "the establishment and development of a network of childcare facilities" in order to "enable parents to combine family obligations with work responsibilities." This is another perennial feminist demand that would increase government expenditures and the deficit still further, putting more upward pressure on taxes.

This 30-year old Convention is a latter-day Trojan Horse with the Paycheck Fairness Act inside. If the Senate did not want the Paycheck Fairness Act, it certainly will not want this convention. In addition to all of the problems that the Paycheck Fairness Act would have created, the Convention would be enforceable by U.N. bureaucrats. This is not what we need to get the American economy growing again.

This article first appeared in RealClearMarkets.

Diana Furchtgott-Roth is a contributing editor of RealClearMarkets, an adjunct fellow at the Manhattan Institute, and a columnist for the Examiner.

Build America Bonds were created to re-energize the municipal bond market, which contracted sharply in late 2008. Investors had become wary that the credit crunch would spread to municipals, as insurers who back state and local bonds got hurt in other markets and stopped insuring public debt. Facing declining tax revenue and growing deficits, some local governments suddenly couldn't borrow.

The Obama administration responded with a new kind of taxable bond that offered a 35% federal subsidy on the interest rate. Washington designed the subsidy to appeal to investors such as pension funds and overseas buyers who don't buy traditional municipal bonds because they can't take advantage of their tax-free status. The federal subsidy allowed states and cities to offer these investors an attractive return. The catch: Congress authorized the program only through 2010, to allay concerns that BABs would become a permanent bailout.

States and cities jumped deeply into this new market. California alone has issued some $21 billion in BABs, mostly as a substitute for its general obligation debt to support everything from school construction to sewer projects. New Jersey has used up to $500 million to recapitalize its depleted transportation trust fund. Columbus, Ohio, issued $131 million in BABs to start construction of a downtown convention hotel. And in Dallas, Texas, when no private operator would finance a new convention hotel, the city went ahead with a government-subsidized hotel, courtesy of $388 million in BABs.

Now dozens of governments and other municipal issuers (like New York's Metropolitan Transportation Authority and the University of California) have hired lobbyists to push Congress to extend BABs beyond this year. And in its 2011 budget, the Obama administration proposed making Build America Bonds permanent, with an interest-rate subsidy of 28%.

But the BAB program hasn't been the unqualified success its advocates claim. While the original municipal bond crisis in late 2008 was attributed to the meltdown of other credit markets, it has since become clear that investors retreated from municipal debt as much because of the poor fiscal practices of many local governments. BABs have only contributed to the problem, increasing state and local debt even when the market has signaled that it considered some municipal borrowers overextended.

One sure signal has been the sharp rise in the cost for investors to insure against default. In June, the price of a contract protecting an investor from a default by Illinois on its bonds rose to a record high of $309,100 on $10 million of debt over five years, according to CMA Datavision. The national average for states is $190,000 per $10 million in debt. At that point, Illinois surpassed California as the worst credit risk among U.S. states.

A more telling signal was that, based on the cost of insurance contracts, CMA Datavision listed both states in June among the 10 biggest government default risks in the world. Illinois was at greater risk of default than Iraq. Yet thanks to the BAB subsidy, Illinois was still able to borrow some $300 million in bonds by offering a 7.1% interest rate.

Meanwhile, investors are realizing that states and localities face long-term costs in addition to their muni debt, especially retirement obligations. Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester assess the 50 states' unfunded pension bill at $3 trillion, and they say that the municipal tab for pensions could reach $500 billion. That is on top of some $2.8 trillion in outstanding state and local borrowing, according to the Federal Reserve.

The Securities and Exchange Commission drew an explicit link between pension liabilities and municipal debt in August, when it charged New Jersey with fraud in its municipal bond offerings. The SEC cited the state for not revealing the true extent of its pension woes in its bond offerings--a clear indication the agency thinks growing pension debt may impede the ability of some states to meet other obligations.

The governments that have made the most use of BABs have been those with the greatest fiscal problems. The biggest issuer of BABs, California, has relied on an unprecedented number of gimmicks to balance its books in the last two years--such as temporarily increasing tax withholding rates and issuing IOUs to vendors.

New Jersey used a big chunk of its BAB funding to relieve the burden from past budget tricks. Over the years its legislature has diverted gas-tax money from its transportation trust fund, which is supposedly dedicated to public works, to paper over previous general account budget deficits. Now the state is borrowing with BABs to restock the trust fund, though servicing the interest on those bonds will haunt future budgets.

The Obama administration believes the BABs' direct federal subsidy is a more efficient way to raise money than traditional tax-free municipals. But when money that would otherwise go to private business flows into subsidized government activities, resources are misallocated.

This is no idle speculation: The financial press is full of stories of investment managers recommending BABs over corporate bonds with similar ratings, thanks to the advantage of federal subsidy. There is also a future bailout risk, given that the federal government might not allow a state or local government to default on a Build America Bond. None of this is what voters signed up for on Nov. 2.

This article first appeared in The Wall Street Journal.

Mr. Malanga is a senior fellow at the Manhattan Institute and the author of the recently published "Shakedown: The Continuing Conspiracy Against the American Taxpayer" (Ivan R. Dee).

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At Tea Party rallies and at other get-togethers over the last two years, one could often see placards reading: "End the Fed." That also happens to be the title of a worthy book by Rep. Ron Paul. If one Googles those three words within quotation marks, one should get nigh on a million hits. One might conclude that there's a movement afoot in America to abolish our central bank, the Federal Reserve.

Why are folks getting so exercised about this secretive quasi-governmental agency?

One reason folks are riled at the Fed is that the Fed sets interest rates, and rates have been at historic lows for much of the last decade. This has really hurt savers. As we write, the highest rate nationwide for a 1-year certificate of deposit is 1.35%. Such a rate would require a goodly chunk of change and yet it doesn't even keep pace with the Fed's target inflation rate of 2%. The Fed's low interest rates are partly to blame for the real estate boom, which led to inflated home prices, which led to the real estate bust, which led to the financial crisis of 2008. So the Fed is at least partly responsible for the flood of foreclosures as well as the collapse of home valuations. In Las Vegas, 80 percent of homeowners are underwater on their mortgages. Thank the Fed, Nevada.

But the reason folks are truly frightened by the Fed is because the Fed has been busy "printing money." Since the 2008 financial crisis, the Fed has created $1.7 trillion of new money (that we know about). Also, the Fed has just embarked on yet another round of "quantitative easing," or QE2 -- weasel words for money printing. So in addition to "end the Fed," we now hear "sink the QE2." QE2 is the Fed's Hail Mary pass, according to analyst Peter Schiff.

The creation of so many new dollars would tend to depress the value of old dollars. But the Fed says inflation isn't a problem right now. Instead, deflation is the problem. But the gurus are only talking about "price inflation," as measured by consumer price index. The CPI is unreliable, however, as it no longer measures the most important (and volatile) consumables, food and energy, and those prices are up.

The economist Milton Friedman thought the Fed could be replaced with a computer. But the Fed already resembles a computer: HAL in the sci-fi flick 2001: A Space Odyssey. If you'll recall, HAL was given conflicting programming and ended up killing the crew to save the mission.

Likewise, Congress gave the Fed conflicting missions. The Fed's primary duty is to preserve the value of the U.S. dollar. But in 1978 with Humphrey-Hawkins (the Full Employment and Balanced Growth Act), Congress gave the Fed an additional mission. In "Blame Congress for Inflation," which appeared in the Wall Street Journal on May 1, 2008, Rep. Paul D. Ryan writes:

Humphrey-Hawkins changed the Fed's mandate, directing it to focus on long-term price stability and short-term economic growth. Unfortunately, in its efforts to accomplish both, the Fed could end up satisfying neither.

So Ryan introduced the Price Stability Act of 2008 to return the Fed to a single mandate. The Cato Institute endorsed it. But in Pelosi's Congress, Ryan's bill went nowhere. Now that QE2 is alarming folks, there are renewed cries for putting the Fed on a leash. Rep. Mike Pence just introduced a new bill to end the Fed's "dual mandate."

If the dollar were to collapse, there's wouldn't be "economic growth" anyway, as there wouldn't be an economy -- at least an economy based on the dollar. So the overriding business of the Fed should be, always and everywhere, the soundness of the dollar. The dollar is too important to leave to the Fed alone. Congress needs to shrink the Fed so that it can override such things as QE2...and QE3 and QE4 and whatever else the Fed thinks up. The Fed's much-ballyhooed "independence" needs to be reexamined.

There's a tendency in America to want to lay blame for everything on a single factor. Some folks blame the unraveling of the economy on George W. Bush or on greedy Wall Street bankers or even on capitalism itself. Others now blame the Fed or Ben Bernanke. The Fed certainly deserves much of the blame. But the Fed was created by, and continues to exist at the pleasure of, Congress. The Fed's printing of fiat money makes Congress's unholy spending possible. The taxpayer certainly wouldn't underwrite Congress's spending. Without the Fed, Congress wouldn't have the money for the pork projects that get incumbents reelected.

Imagine that the Fed refused to float new bonds and/or print new money to accommodate Congress's new spending. Then we'd have a truly independent Fed. But then Congress might move to impeach Bernanke and his lieutenants.

What if the dollar were crashing and burning before our very eyes? If the dollar went to zero, foreigners wouldn't be of a mood to buy any more of our bonds. In such a scenario, printing more dollars would be futile. And it'd be too late to balance the budget. With a destroyed currency, America would have to start over.

For now, ending the Fed may be a bridge too far. And we may actually need the Fed for years to come just to undo all the harm that the Fed has done over the last century. But first we need to spay the Fed, put it on a leash and take it to obedience school. We can't just allow the Fed to print money like it knew what it was doing.

The Fed is playing with our money. It may be fiat money, but it's our money.

This article first appeared at the American Thinker.

Jon N. Hall is a programmer/analyst from Kansas City.

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The political attack on Ben Bernanke's QE2 continues. House leader Mike Pence and Sen. Bob Corker submitted legislation to end the Fed's dual mandate of balancing employment and inflation. Instead, they want to rewrite the late-'70s Humphrey-Hawkins act to mandate an inflation target for the Fed, dropping the employment part.

This new inflation target is aimed at QE2, and the Fed's attempt to lower the unemployment rate by inflating the money supply and the price level. It's a good idea, though I would prefer going straight to a King Dollar stabilization approach referenced to gold in order to capture inflationary expectations, and thereby guide the Fed's interest-rate and money-supply operations.

But an inflation target does clarify the central bank's role as a guardian of price stability, and moves it away from the all-powerful central-planning disease.

Meanwhile, in the short term, the threat of dollar decline has been temporarily mitigated by the Irish and European debt-contagion flare-up, which has caused a run into dollars and out of euros. Dollar-gold has fallen accordingly.

However, in the QE2 cease-and-desist category, there is no deflation for the manufacturing sector. Factory output increased 0.5 percent in October and is running 6.1 percent ahead of last year. Along with a strong retail sales number, it looks like the economy's growth rate is getting a bit better, and certainly not worse.

The producer price report for business wholesale prices shows no deflation. In October it increased 0.4 percent, and is running 4.3 percent above year-ago. Intermediate and crude prices also are strong.

Today's CPI report showed a two-tenths of 1 percent increase in October, and a 2.4 percent annual gain over the past three months. The Fed will undoubtedly point to the scant 1.2 percent year-on-year gain, but that's not deflation. The CRB futures index is still 7 percent above year-ago. Gold is 17 percent ahead of last year.

And Treasury bonds in the 10-to-30-year zone are actually higher in yield than they were late last summer when Bernanke first mentioned QE2. Not surprisingly, if the goal of the central bank is to inflate, long-term bond rates also will inflate.

A political uproar over Fed pump-priming has moved Bernanke to meet with Senate Banking Committee folks in order to re-sell the policies that were so sorely unsold in the first place. So far we don't know what transpired in that closed-door meeting. But it looks to me like the Democrats are the easy-money party and the Republicans are the harder-money partisans.

This article first appeared on Kudlow's Money Politic$ Blog.

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As the Done-Nothing 111th Congress waddles back to Washington for its "lame-duck" session, its most pressing issue is taxes. Will Congress allow income, capital, and estate taxes to rise on January 1 as the law now contemplates, hurting the already-fragile economic recovery? Or will it pass full or partial extensions of current tax rates?

This Congress has not even passed a budget for this fiscal year, but has spent much time on health care and financial reform. The former raised the prospective cost of hiring and impeded job growth, and the latter likely has made borrowing more difficult by raising capital requirements. Congress could have created tax certainty for 2010 and the years ahead, but it has failed to do so, so far.

On Wednesday the Bipartisan Policy Center Debt Reduction Task Force proposed a year-long payroll tax holiday, spending cuts, and tax reform. Chaired by Alice Rivlin (Democrat) and Pete Domenici (Republican), it proposes a new 6% sales tax, lower income tax rates, and limits on deductions, resulting in about $2.5 trillion in tax increases over the next decade.

The chairs of President Obama's deficit reduction commission, Republican Alan Simpson and Democrat Erskine Bowles, last week proposed to raise taxes by "only" a trillion dollars over the next decade. Like Rivlin-Domenici, they would lower rates and modify or eliminate deductions for home mortgage interest, charitable contributions, and state and local income and property taxes. They would raise the federal gas tax, now 18.4 cents a gallon, by 15 cents a gallon.

Congress does not seem inclined to act on either package of recommendations during the lame-duck session.  This is fortunate, because mature, unhurried deliberation is warranted. The 111th will either extend current rates, or not, leaving major tax reform decisions to the new 112th Congress.

Time is running short. By mid-November, the Internal Revenue Service has usually given employers tax withholding tables for the next year. This year, the IRS - and employers - are in the dark, and workers don't know if they'll face smaller paychecks.

Congress in the next few weeks needs to address individual income tax rates, taxes on investment, estate taxes, the alternative minimum tax, and tax extenders. If it does nothing, all will go up.

Income tax rates. Individual income tax rates have received the most attention because they affect the largest number of people. Rates are scheduled to rise from 10% to 15% at the bottom of the income scale, and from 35% to 39.6% at the top. Because certain deductions would be disallowed for top earners, the effective top rate could be closer to 43%.

Taxes on investment. Taxes on long-term capital gains would rise from 15% to 20%, and taxes on dividends from 15% to the taxpayer's ordinary income rate. Taxpayers paying 28% on additional salary income would also pay 28% on "qualified" common stock dividends, reinstating double taxation of dividends, where income is taxed once as corporate earnings and a second time when distributed as dividends.

Estate taxes. The biggest jump in taxes in 2011 if Congress did nothing would be the estate tax, which some call the death tax. It was repealed for 2010, but it would come back in 2011 at 55% for some estates above $1 million, creating a business windfall for estate planners. Many combinations of homes and retirement accounts exceed the $1 million threshold. Some suggest reinstating the 2009 rate of 45% above an exemption of $3.5 million.

Alternative Minimum Tax. Far less well-known is the alternative minimum tax, a parallel levy adopted in 1969 because 155 high income earners were found to have paid no federal income tax. Over the past 15 years, however, the AMT - because it is not indexed for inflation, and because the nature of deductions has changed - has come to affect primarily families with large numbers of children in states with high income tax rates.

Every year since 2001 Congress has adjusted the AMT. Without an adjustment for 2010, 27 million taxpayers (about 16%), would owe additional payments averaging $3,900, according to the Congressional Budget Office. Most taxpayers earning between $100,000 and $500,000 would be affected.

Tax extenders. Most people are unaware of the vast array of small tax credits that Congress renews annually. They have not yet been renewed for 2010, let alone for 2011, and many firms were relying on being able to claim these credits this year. They include credits for research and experimentation, biodiesel and biomass fuel, clean coal; low-income housing; and exclusion of unemployment benefits from gross income.

Uncertainty about what the tax code will be for this year and next has never been so great, and is contributing to the high unemployment rate. The current Congress has abdicated its responsibility, and is truly a Done-Nothing Congress.

In its last few precious weeks, Congress should focus on making clear to the American public what tax rules and rates will be for 2010 and 2011, if not longer, so as to encourage economic activity and create jobs.

The simplest and most obvious remedy would be to extend the 2010 taxes, the "patch" for the alternative minimum tax, and the other tax extenders for two years, with the possibility of reverting back to 2009 estate tax rules at a cost of $476 billion, according to the Treasury Department.

Either this Congress or the 112th should pay for the tax extensions with spending cuts, aiming for 2008 levels, as has been proposed by House Speaker-Elect John Boehner.

Standing in the way of sensible tax reform are the budget gimmicks that Congress uses to pass tax cuts for short periods of time so as to make the longer-term cost seem lower. The first responsibility of the 112th Congress will be to put in place a better process, one conducive to transparency and timely decisions for taxes and spending cuts. Then it could be a Done-Something Congress.

This article first appeared on RealClearMarkets.

Diana Furchtgott-Roth is a contributing editor of RealClearMarkets, an adjunct fellow at the Manhattan Institute, and a columnist for the Examiner.

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The headline story in this morning's Wall Street Journal is a beauty. Republican economists, hedge fund managers, and even some presidential candidates are blasting the Fed for its $600 billion QE2 pump-priming operation. Quite sensibly, the group that signed an open letter to Ben Bernanke argues against dollar devaluation and inflation. At least a couple of the signees are Democrats. And following Sarah Palin's Bernanke broadside, potential presidential candidate Mike Pence is on the hustings attacking the central bank.

All this is good. King Dollar politics.

During the 19th century, many presidential campaigns were fought on the issue of the dollar and its gold or silver backing. So history may repeat itself. Will we have Keynesian fine-tuning, or stable money backed by commodities including gold?

But here's another reason why the Fed should cease and desist: There's more evidence that the economy looks to be picking up. Today's retail sales report showed a 1.2 percent rise for October, printing to an 11.8 percent annual increase over the last three months. Core retail sales that feed into GDP increased 6.3 percent annually over the past three months.

This won't calculate into the 6 or 8 percent recovery growth that the country really needs. But it does look like business and consumer confidence improved in the run-up to the GOP election sweep.

And it's worth noting that incomes are rising a bit faster, with hours worked combining with wage increases to produce some spending power. And of course, cash-rich companies remain highly profitable.

Meanwhile, on the inflation front, the CRB futures index is up 11.5 percent over the past twelve months. So does the Fed really want to ease into an improving economy, backed by an ominous commodity increase?

Final point: With better economic stats, the U.S. dollar is rising, not falling. And long-term bond rates are rising, not falling. Along with a better economy, the consensus has it wrong, at least for the moment. Go figure.

This article first appeared on Kudlow's Money Politic$ Blog.

The context is this. Since taking over the AHA in 1994, Ms. Glover has transformed the authority, whose nearly 50,000 tenants are more than 98 percent black. To remain a public-housing tenant - either in a new mixed-income development or in a private apartment paid for by a housing voucher - one must agree to a work requirement. It is in helping tenants fulfill that requirement that the story of human transformation has unfolded.

The troops in this war on dependency are employees of the Integral Youth and Family Project, a for-profit subsidiary of the leading private developer of complexes to replace Atlanta's projects. The employees of this sort of Peace Corps for the underclass are called "family support coordinators" (FSCs) and they are virtually all blacks in their 20s and early 30s. Some have made the journey out of public housing themselves. Kenya Tyson went from Atlanta's Harris Homes to Morehouse College and counsels families who lived in the now-demolished Harris. Teaera Raines was raised by her grandparents in Macon, Ga., after her parents succumbed to drug abuse; she went on to get a master's degree in management from Troy University.

One senses in the group the same spirit of pragmatic idealism that characterizes Teach for America and the KIPP Schools: the belief that people whom others have written off can be reached. Every day, the FSCs fan out in their own cars to visit three or four households relocated from the demolished projects. They give their cell-phone numbers to their "clients" and understand themselves to be on call at all times - including when the call concerns an angry boyfriend, domestic violence or where to find shelter with the kids at midnight.

The FSCs are unblinking in describing the situations they see. There are horror stories, such as that of the 7-year-old who was sexually abused on a regular basis by his mother's live-in boyfriend, threatened suicide and sprayed the household's food with Raid in an effort to kill his family. More common are the frustratingly casual attitudes the FSCs encounter. Many households, the group tells me, have never paid bills for themselves: Utilities came with public housing, food stamps helped with groceries and everything else was paid for in cash. Not surprisingly, the priority was to keep receiving benefits and, if possible, increase them. That meant keeping live-in boyfriends - even if one was the father of a child in the household - off the lease lest the man's income lead to a rent increase. It also meant suggesting to school authorities that a child might have a learning disability - such a designation could bestow nearly $300 a month in Supplemental Security Income (SSI) on the household. (School officials reportedly are often eager to comply because excluding hard-to-teach students could boost schoolwide test results.)

Hope Boldon, executive director of the Integral Youth and Family Project, says it was common for four generations of female-headed households to live this way in the projects, combining housing, Medicaid, SSI and food stamps to "get over." That originally was a church expression for overcoming obstacles, one derived from the biblical account of crossing the river Jordan and immortalized in the old Mahalia Jackson hymn that says: "You know my soul look back in wonder / How did I make it over?" In its new, cynical usage, the phrase has become synonymous with successful hustles.

But as adept as those in the public-housing world have grown at maximizing government benefits, they're usually utterly unprepared to make their own way in life. As Ms. Raines puts it, "They basically say to us, 'You're trying to tell me to live a life I don't know anything about.' "

Take a woman we'll call Darlene - a single mother of two teenage boys whom Pamela Elder, another FSC, began to visit six months before tenants left the soon-to-be-demolished Bankhead Courts. Darlene, a longtime employee of the Checkers fast-food chain, had been fired recently because of attitude problems. She wasn't an irresponsible mother; she insisted that her boys stay inside their apartment to avoid gang life. But neither was she ambitious for them. Asked what future she envisioned for the boys, Darlene said that they would "work at McDonald's or someplace like that" and then added, tellingly, "That's what we do."

Two years after Ms. Elder first visited Darlene, that defeatism has vanished. Once she moved from public housing into a subsidized private apartment - and faced the requirement to work - Darlene did, indeed, start working again. In fact, she has a far better job than she ever had before: cleaning airplanes at Atlanta's Hartsfield-Jackson International Airport. ("I'd never even been on an airplane before," Darlene told Ms. Elder.) With her own circumstances and living situation improved, she has encouraged her sons, whom Ms. Elder describes as "smart" and "athletic," to stay in school, and the elder of the two has been nominated for a selective Atlanta program for public school students displaying leadership qualities and academic promise.

Most instructive about Darlene's story are the many steps over many months that helped it come to pass. Ms. Elder insisted that Darlene attend a job fair, then helped her prepare for it by taking her to a local discount store, Value Village, to buy an outfit to wear because Darlene had always worn either sweatpants or her fast-food uniform. Darlene had to give up her marijuana habit to pass her new employer's drug test and get the airport security badge that she now sports with pride. Ms. Elder taught her how to apply makeup and lip gloss, how to prepare for a job interview and how to put together a resume. Darlene, like all the clients, had to write down a "family wealth plan" - a list of goals (educational, employment, family development, financial, health and personal development) and "steps needed to achieve goals."

Such questions about goals and plans - which get at the essence of how to escape the underclass - didn't fall on immediately receptive ears. Urged to think about her future, Darlene erupted, "All that's easy for you to say - you're white!" The outburst stunned Ms. Elder, who not only is darker-skinned than her client but was a teenage mother in Atlanta before earning a counseling degree from Georgia State. "Just because I'm married and drive a Honda Civic, now I'm white," she says. Her colleagues join her bemused laughter.

I ask them whether, from the perspective of the projects, Barack and Michelle Obama are white. "Definitely," one says. "Success is white," says another, "except for athletes and rap stars." The FSCs' challenge is to make clear that in America, success isn't simply the result of privilege. Ms. Raines uses herself as an example: She tells her clients that "they can achieve, just as I did."

The stories don't always have happy endings, of course. Kenya Tyson describes one that "will stick with me for the rest of my life" involving a mother and her six children, formerly of the Hollywood Homes project. State officials took the children away from their mother because of her drug abuse. Once the household was reunited, the father of the youngest four raped one of the older two, an act that the mother denies, despite the daughter's pregnancy. The rape victim is now "making suicidal comments," says Ms. Tyson. "I am currently seeking an in-home certified and clinical counseling agency for the family to deal with these issues. I am also working diligently trying to get the daughter enrolled into an adult literacy class because she is 18 and can't read and write."

The cost of the Integral Youth and Family Project is substantial. From 2002 to 2009, the AHA has paid it $26.7 million to work with 14,281 people. But that's a substantial percentage of metropolitan Atlanta's 81,000 black poor, meaning that the program has the potential not only to help individuals but to change broader social norms.

The statistical results are impressive, although it's impossible to determine which part of Ms. Glover's plan - the work requirement or the counseling - deserves more credit. The most recent figures show that 62 percent of AHA-supported household heads in Atlanta are employed. Before the recession, the figure had reached 70 percent. When Ms. Glover took over, it stood at 18.5 percent. This is what reducing black poverty actually looks like - turning the underclass into the working class. From there, middle-class status and higher education can follow. Ms. Glover, herself the daughter of Jim Crow-era northern Florida, thinks the combination of black self-help and government effort she is providing is welcome. As she puts it, "On so many occasions, people have said, 'Thank you for believing in us.' We were into a completely different planning process because we were not planning for poor people who were incapable, who could not be responsible. We were in the process of planning for God's children."

For more than a generation, we've operated on the assumption that changes in the overall political and economic system were essential to uplifting the underclass. As Renee Glover's efforts show, it may turn out that this goal can only be achieved the old-fashioned way: by helping individuals learn to help themselves.

This article first appeared in the Washington Times.

Howard Husock, a contributing editor of City Journal, is the Manhattan Institute's vice president for policy research and the director of its Social Entrepreneurship Initiative. This article is adapted from the forthcoming 20th-anniversary issue of City Journal.

This bill would thrust the government deep into compensation decisions of employers. Its declared purpose is to close the alleged "pay gap" between men and women. That gap is mostly a statistical artifact, a false conclusion-and a rallying cry for feminist lobbyists who are well paid to advocate bills like this one.

Passed by the House of Representatives in January 2009, if the Senate concurs the bill is certain to be signed by President Obama. If it is not passed by the Senate, then, as the frantic feminists warn, there would be no chance of its being enacted next year because the House will have a Republican majority.

The complaint that the feminist organizations love to bandy about is, as the National Women's Law Center asserts on its Web site, www.nwlc.org, "Today, women make just 77 cents for every dollar a man makes..."

That is a spurious conclusion. It omits weekly hours of work, overtime, which is more typically earned by men, education, experience on the job, and time in the workforce. When all of these factors are accounted for, the difference is about five cents on the dollar. And, yes, discrimination against women may-or may not-explain some of that nickel, but the "gap" is far smaller than is alleged and does not merit Congress's imposing a new, cumbersome and costly layer of record-keeping on employers, and inviting more litigation.

The bill would require all employers with more than two employees and $500,000 of gross revenues-no small business exception here-to submit data on sex, race, national origin, and earnings of employees to the Equal Employment Opportunity Commission, even if no complaint has been filed. The threat of litigation about pay differences between men and women would raise the potential cost of employment, discouraging hiring.

At a Hudson Institute conference on Wednesday, Jerry Savitz, owner of Darby's Restaurant in Belfast, Maine, said, "No one in Belfast has heard of this bill, and when I told them, they were appalled. To hire a lawyer and comply with these regulations would drive me out of business."

Employers would face administrative costs that would silently discourage the hiring of those women who might catch the attention of EEOC investigators. This would particularly affect unskilled, inexperienced women who would start at lower rates of pay, and women who might be expected to take time out of the workforce for children, reducing their future productivity compared with men.

The bill would impose litigation costs on employers even as employees are represented with no out-of-pocket expenses by trial lawyers hopeful for a big slice of a big settlement. The result would be, as former Labor Secretary Elaine L. Chao described it at the Hudson conference, "a tsunami of lawsuits and tremendous uncertainty," adding to the estimated $300 billion a year America now spends on litigation.

First, women would be included in class-action suits against employers unless they specifically opt out, raising the costs of litigation whether or not the EEOC finds for the complaining employees.

Second, courts could levy heavier penalties on employers. Under the law now, employers found guilty of discrimination owe workers back pay. Under the pending bill, they would have to pay uncapped punitive damages, with a quarter or a third going to plaintiffs' lawyers. Even innocent employers would be under pressure to settle rather than fight, raising costs of business.

In fact, most employers are innocent of gender discrimination. Of the 942 pay-discrimination complaints filed with the EEOC in 2009, only 4.6% were found to have "reasonable cause," meaning that they merited full-blown investigation.

Third, the bill would allow employers to defend differences in pay between men and women only on the grounds of education, training, and experience-- if these factors were also justified on the grounds of "business necessity." This standard could prohibit male managers with college degrees from being paid more than female cashiers with high school diplomas, if college degrees were not consistent with "business necessity."

Fourth, the bill would put all places of business of an employer in a county, say a local grocery chain, under the same pay standard, even if no complaints were received.

Now, employees who do the same work in one location have to be paid equally. Including all locations would mean that employees in high cost, or unpleasant areas, where the employer has to pay more to attract workers, have to be paid the same as those in low-cost, more pleasant areas. Identifying the same work is hard to do for different jobs in different locations. The intent may be to raise wages of employees at the lower end, but the practical effect is likely to drive up employment costs and encourage layoffs.

One way for some employers to avoid the penalties in the Paycheck Fairness Act would be to move jobs offshore, especially if there is an offshore plant that can be expanded. If the bill were signed into law, the United States would be the only industrial country with this type of legislation.

America leads the world in opportunities for women, and 60% of adult women are in the labor force. The latest unemployment rate for adult women, at 8.1%, is lower than that for men, at 9.7%. Women are closing the pay gap because their education is increasing; they earn well over half of all B.A.s and M.A.s awarded, half of Ph.D.s, and half of professional degrees in law and medicine.

The Paycheck Fairness Act would narrow opportunities for advancement as employers reduce employment. With jobs and the economy now topping Americans' worries, Congress needs to think about how to make America a more welcoming place to create jobs, rather than how best to drive jobs away.

This article first appeared on RealClearMarkets.

Diana Furchtgott-Roth is a contributing editor of RealClearMarkets, an adjunct fellow at the Manhattan Institute, and a columnist for the Examiner.

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As they exult in their smashing victory in last week's midterm elections, conservatives must resist the temptation of assuming that President Obama's health-care reform law is on the road to repeal. Nothing could be further from the truth.

Although Republicans took the House of Representatives handily, Democrats still control the Senate, and the president will veto any bill that does more than tinker with his signature legislative achievement. At the same time, the president controls the media bully pulpit; his liberal allies, from labor groups to Moveon.org, will flood the airwaves to stave off any GOP push for repeal.

Instead of making a dramatic but doomed effort to overturn the health-care law with one stroke, critics of Obamacare should take a more measured, strategic approach--one that forces the president to defend the massively expensive and bureaucratic bill that he's inflicted on the country. At the same time, Republicans must present a coherent, bipartisan alternative that offers a menu of patient-friendly health-care reforms that expands coverage gradually without busting the federal budget.

Opponents of Obamacare should stay focused on two tracks: first, show why Obamacare fails to address the fundamental health-care problems afflicting the nation while spending trillions on a new health-care entitlement; second, make moderate voters comfortable with their own health-care reform agenda. Here's how they can do it.

Earlier this year, Speaker of the House Nancy Pelosi, D-Calif., committed an infamous gaffe when she said: "We have to pass the bill so that you can find out what is in it." House Republicans should help this process along and hold hearings to examine all the unintended consequences that have resulted (and will result) from Obamacare: Companies like McDonald's and other employers threatening to drop coverage; rate increases for private insurers due to new insurance regulations; and hundreds of billions of dollars in uncounted implementation costs for the legislation. Worst of all, 16 million Americans will be forced into the broken Medicaid program - and then struggle to find doctors and specialists who accept the program's low payments and cumbersome bureaucracy.

Republicans should also highlight how Obamacare is unaffordable. The president promised that health-care reform would "bend the curve" of health-care costs, but independent observers, from the Medicare Actuary to the Lewin Group, estimate that it will increase U.S. health-care spending by hundreds of billions of dollars over the next decade.

Rather than reducing federal health-care spending, Obamacare will create new entitlements that we can't afford while sapping hundreds of billions of dollars in taxes and fees from the private sector to pay for it.

Republicans should bring a parade of governors to testify to Congress. States led successful welfare-reform efforts in the 1990s, and states should take the lead in health-care reform now.

Instead, Obamacare dictates health-care reform from the top down and inflicts new costs on state governments--from expanding Medicaid eligibility to the start-up costs associated with running new state insurance exchanges. Republicans should give governors a platform to voice their concerns and highlight the efforts of state leaders like Gov. Mitch Daniels, R-Ind., to create more affordable health-care options for low-income Americans.

Finally, Republicans should push legislation that will attract bipartisan support and dare the president to veto it. Proposals could include using targeted defunding efforts to kill unpopular parts of the legislation--like the Independent Payment Advisory Board for Medicare; creating a national, interstate market for health insurance; enacting tort reform to rein in junk lawsuits against doctors; and killing the 1099 IRS reporting requirement for suppliers that will drown small businesses in paperwork.

By fighting smarter now, Obamacare's critics can improve the situation in the short term--and perhaps even lay the groundwork for repeal in 2012, when the president will have to defend his choices directly to the American people.

This article first appeared in the Washington Examiner.

Paul Howard is a senior fellow at the Manhattan Institute and the director of its Center for Medical Progress.