Saturday, December 18, 2010
Our wonderment over this 'grand compromise' is similar to the one Clara Peller, the great lady who did the Wendy's commercials in the early 1980's, had when she said: 'Where's the 'Beef'?
Our 2010 questions are these:
1) Where's the 'Compromise'?
2) Where's the 'Courage'?
3) Where's the 'Sacrifice'?
It is 'easy' to strike a compromise when every party gets everything they want in the final deal. It is far more difficult to get a deal with 'shared sacrifice for the long-term good of the nation', apparently, once again.
Let's go to the videotape:
Check out the official CBO scoring of this tax extender/jobless benefits extension.
Unless our eyes deceive us, it is pretty clear that the cumulative effect of extending these tax cuts for 2 years, and the unemployment benefits for 13 months and, of course, the usual gang of earmarks and excessive spending to the tune of close to $337 billion by some accounts, is just under $1 trillion.
Or about $892 billion more in debt over 5 years, give-or-take a few billion dollars here and there.
So what is that amongst friends, huh? We'll just borrow close to $1 trillion more from the Chinese or the Saudi Arabian sovereigns at least until they wise up and demand 10-15-20%+ in interest costs to cover the risk of holding our bonds or dollars, both of which could continue to slide in value.
Best of all, we'll just steal it out of our children and grandchildren's piggy banks and they'll never even know we did it! How great is that?
So congratulations, President Obama and the out-going U.S. Congress! You have successfully managed to somehow come up with another $1 trillion in deficit-spending for the next 2 years, over and above the $5 trillion you have already rung up in the last 2 years which the voters supposedly 'rebelled against' in the November elections!
Is there a gas leak under the entire city of Washington, DC?
The official debt estimates have now jumped from a measly $14 trillion as of two days ago to $15 trillion the second President Obama signed this tax cut/job extension package into law yesterday. In the blink of an eye.
Because until yesterday, the 'official' budget scoring did not include the extension of the tax cuts beyond December 31, 2010. Nor did it include the extension of unemployment benefits for 13 more months on top of the 99 weeks already spent. So once President Obama's pen left the paper after signing the bill yesterday, we loaded up close to another $1 trillion in debt obligations on ourselves and especially our children to pay off.
The heck of it is that it could have been avoided. Very easily in some regards and without almost any current 'pain' or 'suffering' by those of us who are working nowadays.
Long-time readers of this blog will know that federal budgeting is completely nuts and contrary to almost every other known system of accounting since the cave men started marking inventories of carcasses and nuts on the walls of their caves with charcoal.
In this case, a very subtle thing could have been added in this bill as a spending offset that would not even take full effect until say, years 6-10 of the 10-year budget window typically used by CBO to score the costs of new legislation.
Something as innocuous as raising the retirement age of SS and/or Medicare by a matter of a few days by the year 2020 would have most likely offset or 'paid' for this entire tax cut/jobless benefits extensions of close to $1 trillion. Seriously.
With such a measly but powerful spending offset in the out-years, this entire bill could have been 'paid for' in budget terms and our national debt would not be going up again in a dramatic fashion. Perhaps the rest of the world would have seen that adult leadership had returned to Washington in the wake of those long-forgotten already 'transformative' elections of 2010 after the budgetary Romper Room atmosphere in Congress and the White House for the entire first decade of the new millennium.
Adult leadership has yet to return, apparently.
Instead of having to reach age 67 for SS benefit eligibility, you might have had to reach age 67 and 30 days or so by 2020. Would that have been so 'painful' to do to keep our nation from financial insanity?
'Where's the Beef?' indeed.
Tuesday, December 14, 2010
We find it amusing when we read that some wag has tagged a politician with a short-hand slap such as 'RINO' (Republican-in-Name-Only) and then slaps himself on the back for being 'so clever and funny'.
Many times, the facts just don't support the insinuations.
'RINOs' are Republicans who apparently stray from the doctrine in place at the time, whatever it may be. The most egregious of all heresies a RINO of 2010 can commit is to vote for any tax increase, or in the case of the current debate over the extension of the Bush 43 tax cuts, allow them to expire under current law as of December 31.
President Ronald Reagan signed laws that raised taxes 11 times: 1982 was the largest hike in history at that time. The 1983 Social Security payroll tax hikes are still with us in the form of the infamous 'SS surplus' which is ephemeral and only took in far higher payroll taxes than were necessary to pay current SS benefits for the past 26 years.
So was one of the most revered iconic figures of the American Conservative movement, President Ronald Wilson Reagan, an idiot; a communist or worse, a 'Progressive'?
Reagan signed these bills as part of his strategy to shrink government size and influence in our lives. Did he succeed or not? That remains for history to decide but he definitely had the overall goal of less government in mind in virtually all that he did while President from 1981-1989.
And now that President Obama has 'given in' and agreed to extend the Bush tax cuts, he is being savaged by the Left and being called, guess what? A 'DINO'--'Democrat in Name Only'.
What is going on here?
There is a difference between 'campaigning' and 'governing' in a pluralistic democratic republic such as ours, the 'worst' form of government ever devised, or so says a luminary such as Winston Churchill.*
We think the problem we have today is the way politicos identify and describe our current political differences. It used to be, going back to the Founders' times, that political parties centered around the basic fundamental differences between those who wanted more centralized power in Washington and those who didn't, namely those who wanted states to reign supreme.
'Big Government Versus Small Government'. That was the marquee billing for most of our nation's history in our political debates and disputes.
But long about 1988 or so, presidential politics started turning more towards issues of 'character' when doubts about Democratic presidential candidate, Governor Michael Dukakis of Massachusetts, were raised concerning his support of a weekend furlough program for a convicted prisoner guilty of murder named Willie Horton who then raped a woman and assaulted her fiance while on furlough.
And since then, we have not really had a rip-roaring debate about any of the major issues facing us such as the budget deficits or reforming Social Security or Medicare, all critical issues that can make-or-break our economic future.
The bottom-line in these arguments would be thusly stated: If Democrats pass legislation that leads to 'bigger government', as in Obamacare, they 'win'. If Republicans would pass comprehensive legislation that leads to smaller government, they 'win'. It would be pretty clear delineation of political philosophies put that way and debated out in the open public.
Instead of defining a person as a 'small government' Republican first and foremost nowadays, here is the litmus test you have to pass in order to be considered true to the cause today in 2010:
2) Anti-Gay Rights
3) Anti-Illegal Immigrants
4) Pro-Gun 2nd Amendment Freedoms
5) Pro-Tax Cuts, any time; anywhere; anyway....
25) Small(er) Government (or at least smaller than the Democrats want)
Priority #10,000,000,000) Balanced Budgets
Priority #10,000,000,001) Elimination of National Debt
And if you don't want to be a 'DINO', you have to adhere to the following set of core values as a Democrat or else you are banished into exile:
2) Pro-Gay Rights
3) Pro-Illegal Immigrant Amnesty
4) Anti-Gun Second Amendment Freedoms
5) Pro-Tax Hikes any time; anywhere; anyway...
25) More Big Government Programs to Fix Whatever Ails This Nation
Priority #10,000,000,000) Balanced Budgets
Priority #10,000,000,001) Elimination of National Debt
We think the reason why we now have such vacuous national and local campaigns is precisely due to the fact that these big issues are so complicated and painful to talk about. Each of the big issues are so fraught with risks of 'offending the senior citizens', all of whom vote in each election, for example, that politicians just default to the more simple issues and use them as proxies to convey to the voters who they are and what their core values are.
And here we are $14 trillion in debt later, soon-to-become $16 trillion when these tax cuts and unemployment benefits extensions pass Congress.
Something had got to change. Let it start to change with the way you define your own political beliefs and how you talk to your friends and political adversaries.
* 'No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.'
--Winston Churchill in a speech in the House of Commons, 11 November 1947
Tuesday, December 7, 2010
We have been intrigued by the on-going debate/tirade/jeremiad (take your pick) by some people and a lot of Tea Party affiliators regarding the role of the Federal Reserve in America.
Don’t pat yourself on the back for thinking you have brought up this issue for the first time. The very issue of a central national bank goes back to Alexander Hamilton himself during the debates in the Constitutional Convention (he won) and through the various iterations of the First National Bank of the US (BUS) in the early 19th century; the 2nd National BUS throughout the early-mid 1800’s and the creation of the Federal Reserve Bank in 1913.
It is perhaps the one political issue that has persisted throughout all of American history which generates disproportionately the highest degree of venom and bile relative to the underlying public comprehension of its complexities….bar none.
And to those of you who want to abolish the Fed tomorrow...who do you want running monetary policy in America in its stead? The Congress of the United States? Can you imagine Charlie Rangel setting interest rates and monetary policy as the head of the House Ways and Means Committee?
It is sorta like the parents of a new player to youth lacrosse…they yell and scream even though they don’t know the rules to the game at all.
‘It is still fun to yell at the refs!’ one new parent to lacrosse told me one day. Same is true in America politics, isn’t it?
Here’s the truth about the Fed: ‘If we had any sort of consistent adult leadership in Washington over the past 30 years or on Wall Street, or Detroit or in the state capitals of debt-ridden California and about 40 other states, NO one would have ever even heard of the Federal Reserve in the United States, ever!'
Here’s ‘proof': Name the Federal Reserve chairmen before Alan Greenspan going back, maybe 5 of them. (and no fair Googling them in the sidebar!) We think that Alex Trebek could have a field day embarrassing his guests with a column in ‘Double Jeopardy’ titled: ‘The US Federal Reserve System’ and ask questions that go back to the ‘glory days’ of the Fed pre-Bernanke and pre-Greenspan. No one would get one question right.
The simple truth of the matter is that the ONLY reason why ANYONE in America today knows that Chairman Bernanke even exists on the face of the earth is because the Fed has been forced to play clean-up after these elephant and donkey parades of debt have been put on by Congress; Wall Street; Detroit; the various state capitals and the American business community in general over the past 30 years.
-Congress had run annual balanced budgets since 1980.
‘There would be no ($14 trillion, soon-to-be $20 trillion) debt below us; above us only sky.
You may say that I'm a dreamer, but I'm not the only one
I hope someday you'll join us, and the world will be as one’
'Without these enormous imbalances in annual deficits we are running; the gargantuan national debt we are building up and the lackadaisical oversight of Congress over Fannie Mae and Freddie Mac and all the mortgage companies that Congress was actually encouraging to over-lend during the 1990’s and 2000’s, the only thing the Fed would have to do is turn on the printing presses for the US dollar to allow for the growth in the population, or about 3% per year….and then go home.'
So if you hate the Fed, and despise Chairman Bernanke, tell your elected reps and senators in Congress to balance the budget and pay off this national debt as soon as possible.
Then you will never have have to know that Paul Volcker, G. William Miller, Arthur Burns and Charles S. Hamlin ever even existed. (all past Fed Chairmen)
picture courtesy of blog.ps119amersfort.com
Friday, December 3, 2010
‘Ok, These Monstrous Budget Deficits Really ARE The Fault of The US Constitution and Those Nutty Founders’
‘It is all the Founders’ fault!’
Those wacky guys James Madison, Alexander Hamilton, George Mason and Ben Franklin….they just plain forgot to put any words relating to balancing annual budgets; insuring that annual spending matched annual revenues or even putting in some archaic 18th-century clause such as ‘protection of the national fisc’ in our US Constitution.
Not a one. Not one single word relating to financial and fiscal sanity. They made clear that Congress would 'lay and collect taxes' and 'pay the debts' but said nary a word about balancing annual budgets which would certainly obviate the need to raise taxes to pay back debt in the first place.
Maybe they were all out drinking every night with the brilliant but oft-inebriated Luther Martin of Maryland. Apparently, they were rendered unable to include any fiscally-sound budget language clauses in the draft language the following mornings.
Surely they must have have presumed that all American 'leaders' (sic) who would follow in their illustrious and esteemed footprints over the next 220 years would never allow our collective national debt to escalate out of control as we have done over the past 10 years. Mr. Jefferson wrote profusely about the dangers of excessive national debt and not incurring any debt that they would not pay off themselves in terms of higher taxes within their living generation, or 20 years roughly.
But since Mr. Jefferson was in France trying to find money to help pay off the America debts from the War and negotiate trade treaties so the economy could recover, he was not in Philadelphia to insure that a balanced budget clause got inserted into the US Constitution. That is too bad.
Surely after their experience of living on the precarious cliff of insolvency to fight their War of Independence and going to the Dutch on bended knee begging for help to alleviate their debt crisis, the Founders must have assumed that no succeeding generation of Americans would ever be so stupid and dense as to follow that dangerous course of action.
Apparently, every one of those highly-educated, learned men in Philadelphia just decided that the US Constitution was not the place to muddy up with lots of entangling language on maintaining balance in annual federal budgets.
Go ahead. Take a look at the sacred document itself, the U.S. Constitution. Read every single word of it and come back and tell us if you found one single word or phrase that mandates that the US federal government ever has to balance their annual budget.
Or restricts spending to below what annual revenues will be. Or calls for the government to be below a certain proportion of GDP or any other metric you can think of.
You can not find it. We have tried. Really, we have tried very hard to find the words. And when we did not find it in the Constitution or the Amendments, we were horrified.
With that in mind, we are not quite sure it is proper to castigate and point fingers at Progressives who all along have been advocating higher spending at the federal level. After all, the United States Constitution says pretty darned clearly in English that Congress shall ‘promote the general welfare’ and take all ‘necessary and proper’ actions to do so, doesn't it?.
On top of that, we have Conservatives advocating tax cuts ‘to stimulate the economy and provide new jobs’ (‘promote the common welfare’ again) and that these actions are ‘necessary and proper’ at this ‘critical point in American history’ (today for example)
And they almost never pair those tax cuts with commensurate spending reductions.
‘Because the US Constitution doesn’t say they have to do it!’
And that has to be changed, in our humble opinion.
Like maybe by passing a Balanced Budget Amendment to the Constitution once and for all?
Amendment 28- ‘Congress shall pass annual federal budgets that are balanced between spending and revenues, except for times of war and economic recessions, in which case they will provide a plan to balance the budget within 10 years of the end of either war or the recession.’
Mr. Jefferson himself might support that one.
The last Amendment passed in 1992. We are about due for another one….and this one would be far more important than whether a Congressman can vote themselves a pay raise (#27) or people can buy liquor or not (#18 Prohibition passed/ repeal of Prohibition #21)
Don’t you think?
Wednesday, December 1, 2010
We think we already have perhaps the greatest economic ‘redistribution’ of wealth system the world has ever known, 'free-market capitalism'.
So why mess it up with a bunch of needless government intervention from Washington?
We are afraid that the advocates for such idealistic change would screw it up and actually get the exact opposite results through the immutable laws of unintended consequences and damage the golden goose of all redistributionist economic systems by passing needless regulations and interference from theorists in ivory towers.
Capitalism allows people to make investments and take risks on their own accord. Some work out for the best and succeed and live long lives and make lots of money. Many, however, perhaps 90% of them, don’t survive as viable businesses for over 5 years.
What happens in the event of any new investment in a business? People get hired, and get paid, by the entrepreneur and the managers of the business, which is the very definition of ‘transferring wealth’ from the wealthier person (the owner with access to the money or investment capital) to the less wealthy person (the worker/employee).
The money to pay those salaries could come from the entrepreneur himself from success in a previous business or, horror of all horrors! from an inheritance from one of his wildly successful ancestors such as the Vanderbilts, the Dukes or the Carnegie-Mellons.
(Ever wonder why so many colleges and universities get named after very successful, very wealthy entrepreneur families? Gee, if these rich people were so ‘terrible’, why did all these people give their money away to start so many fine institutions of higher education, hospitals, libraries or museums? We wouldn’t even have Duke basketball to cheer for or a medical center that can do wondrous things for cancer, heart and leukemia patients among others. All of these represent, yet again, a 'transfer of wealth from the very wealthy to every single person who draws a paycheck from any of these institutions, from the scientist to the doctor to the teacher to Coach K himself' (except for his Nike endorsements, of course))
America is, in its very essence, the ‘Greatest Wealth Transfer Station of All Wealth Transfer Systems in History!’
What is up with business managers anyway? Are they some sort of crazy ‘secret socialists’ who are trying to give all their money away in some sort of humanitarian gesture?
Nope. Far from it. They want to make a product or sell a service for more than it costs to make it, plain and simple. And if they hit the right niche in the market and succeed, they hope to make money and provide a better life for their family, friends and neighbors.
What happens when a business fails? The employee loses his/her job, that is for sure, but the entrepreneur loses his entire cash investment and the bank that loaned him money to grow won’t get paid back. So that is a double-whammy success hit in the eyes of the proletariat against the big, bad business interests…the employees get their salaries and benefits from the rich owner AND 'the dirty, low-down rotten big banks' before they both declare bankruptcy and write off these losses.
One thing you never hear in the news about the disparity between the rich and the not-so-rich: the composition of the top 10% of the wealthy in the U.S. is not static and doesn’t stay the same year after year. Bernie Madoff was once considered a ‘rich’ man in America before he was convicted of outrageous malfeasance and sent to rot in prison for the rest of his natural-born days but he is no longer in the top wealth percentile of Americans. So he will no longer be a component of the 'fabulously wealthy' in America, thankfully.
People sell their farms or small businesses and jump up into a high-income category in one year only to fall back into middle-income status for the next 10 years. So your next-door neighbor might be statistically a modern-day King Croesus in 2010…and then after paying all his bills, college tuitions for his children and fixing his barn, a mere commoner in 2011.
For those of you who vehemently despise wealthy people, have you ever read the biblical account of the rich man trying to get into heaven? ‘Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.’
One word comes to mind: ‘Ouch!’
Maybe being fabulously wealthy is not all that it is cracked up to be.
Still, without enterprising, energetic risk-takers, investors and business-builders, we would have very little to redistribute through the fundamental market mechanisms, philanthropy or through tax policy that funnels money from wealthy people to other people (who are not necessarily even close to being ‘poor’ as we have seen in the case of Medicare and Social Security benefits going to Bill Gates and Warren Buffett….but more on that later)
The private sector is the only place where wealth can be created out of thin air. Let it work to continue its remarkable redistributionist processes that have brought us from the time of feudal monarchies controlling everything to the largest number of pretty well-off citizens the world has ever known.
Wednesday, November 17, 2010
Well, they are…millions of your fellow Americans are. To the tune of close to $1 trillion in saved tax payments per year. Each year. And you keep paying all of your taxes like a great American without even knowing why.
Here’s the answer: ‘Tax Expenditures’.
There is a very technical definition in the federal budget books but the basic idea behind tax expenditures is that they represent the amount of tax revenue that is not sent to Washington each year because someone had a better lobbying or trade association than you do or did.
More precisely, they accomplish essentially the same public policy goals/special favors that spending programs are created to do. Washington could send you a check for the tax-deductible part of your mortgage interest each year, for example, and it would have the 'same' effect on the federal budget as you continuing to take the deduction and not paying taxes on that amount.
And, yes, that number you saw above was correct. Close to $1 trillion more tax revenue would be sent to Washington each year if the tax code was not absolutely machine-gun riddled with special tax treatment and most favored status for hundreds of thousands of different entities, other than you, of course.
To put that $1 trillion in lost revenue into perspective, our annual deficit was ‘only’ $1.4 trillion in FY 2010 that just ended, down from 'only' $1.5 trillion a year earlier so that $1 trillion in tax-hidden revenue sure looks enticing.
Until you realize it means the end of your mortgage interest deduction and employer-paid health insurance deduction, that is.
You are gonna start hearing a lot about tax expenditures in the Bowles-Simpson report coming up so you might as well understand just what the heck they are so you can call or write your congressman and senator and tell them what to do about them when the Commission sends a bill to Congress to vote on.
First off, a disclaimer: We have come to the conclusion that the US tax code is counterproductive, archaic and sclerotic and about as adapted to current times as Hammurabi's Code written in hieroglyphics. We should 'can it' and move to a completely new tax system based on consumption taxes such as excise taxes, VAT taxes or the so-called ‘Fair Tax’…but not as an add-on to the current corrupted individual income and payroll tax system.
We also have advocated the abolition of the entire US corporate income tax code, much for the very same reasons: it is riddled with favors and special treatment for certain industries vis-à-vis other industries and acts as a yoke on the creative genius of the American free enterprise system to grow, innovate and, most importantly, make things here instead of over in China and India and create jobs over there, not here.
We think the size of the federal government is way too expansive now with spending at 25% of GDP and the debate going forward should be over the 'size' of government, not merely over how to 'pay' for an ever-escalating monolith in Washington but more on that in a later post.
So call us the ‘Abolitionists of the US Income Tax System’ if you want. The entire code reads like hieroglyphics, doesn’t work well any more and should be replaced with a tax system that reflects the dynamism of the 21st century.
Getting back to ‘tax expenditures’, take a quick look at this article by Donald Marron. He identifies the crux of the problem when he says:
'The Office of Management and Budget has identified more than 170 such tax expenditures…The deductibility of state and local taxes, for example, runs almost $70 billion each year. Favorable tax treatment for life insurance savings is about $23 billion. Credits for alcohol-based fuels total almost $9 billion. And dozens of rifle-shot provisions benefit narrow interests, such as special tax rules for NASCAR venues.
Living in the heart of NASCAR country might not be the best place to advocate the end to favorable tax treatment of NASCAR venues. However, the good people at Joe Gibbs Racing and Childress Racing gross over $100 million in revenue each year….and the earnings from race winnings are just a small part of that number with the rest being big corporate endorsements and the like.
If you have ever seen ‘Talledega Nights: The Legend of Ricky Bobby’, you know that race car drivers and owners are free enterprisers and true blue Americans to the nth degree. We think people would still flock to see them race and have car crashes going 200 mph if their special tax expenditure line-item was repealed.
A full discussion of how to reduce these amazing budget deficits and this gargantuan national debt, or at least stop adding to it, can not be done without the inclusion of the repeal of many of the special tax break provisions currently residing in the US code.
You pay your full amount of taxes (sans the mortgage interest deduction or the amount your employer deducts for providing you with health insurance) each year, right?
So should everyone else, don’t you agree?
* for a full list of tax expenditures ranked by size, see http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/receipts.pdf and go to page 220-222
picture courtesy of autoblog.com
Sunday, November 14, 2010
Inevitably, almost as if scripted, some foul would be inflicted on said annoying kid (SAK) and he would say it was ‘intentional’ or ‘not fair’ or ‘that really hurt!’ In the aftermath of the ensuing argument, SAK would then threaten to ‘take my basketball and go home!’ and we would let him and then the game would be over and done with for the day.
Aren’t both sides already revving up over the Bowles-Simpson Commission to become the SAK of American politics to the detriment of us all?
And the heck of it is that Mr. Bowles and Mr. Simpson have not even gotten 14 out of the 18 commissioners to produce a final set of recommendations to send to Congress to consider passing one day, we all hope.
Liberal economist Paul Krugman and Nancy Pelosi have already lurched hard to the left and declared that any changes to Social Security are ‘off-limits’ and not touchable. They say this even though SS is technically bankrupt this year, 2010, because it is paying out more than the payroll tax receipts coming in to fund the program.
Grover Norquist, president of Americans for Tax Reform, has lurched hard to the right and declared that any abolition of the mortgage interest deduction is a ‘tax increase’ even though making the tax code ‘simpler’ and devoid of a myriad of deductions has been a goal of the American conservative movement since the income tax was declared constitutional in 1913.
So here's what people like Mr. Krugman and Ms. Pelosi and Mr. Norquist are really saying like SAKs when they dig their heels in on any deficit-reduction package:
'We do not care one whit about the national debt exploding. We don't care that we are adding on at least $2 trillion in debt by the extension of the W tax cuts in 6 weeks. If the debt goes to $20 trillion in the next 2 years, we just plain do not care! And if you don't agree with us 100% on everything my side wants, we are going to take our basketball home and end this game!'
What these so-called 'leaders' don't understand is that they are not writing the rules to this game. And neither did the Founders, as brilliant as they were.
The rules to 'this game' were written long ago in the physics of fundamental economics and the Natural Laws under which economics operates. Rampant inflation, exorbitantly high interest rates and a further debasement of our currency awaits those who adamantly refuse to negotiate any deal on deficit-and-debt reduction that will benefit the entire nation.
So congratulations Mr. Krugman, Ms. Pelosi, Mr. Norquist and the AARP on trying to give us a much larger debt that we can't handle because of your obstinate obstructionism.
For those of you who see the Tea Party as the salvation, here's a pleasant conversation we had with a Tea Party activist right after the election. (S)he said: ‘If we don’t see a budget put out by the Republicans by the end of January, 2011 that balances the budget in several years, we are gonna primary every incumbent in 2012 and go after the Democrat incumbents in primaries as well!’
Which all sounded well and good until the following disclaimer came out of the same mouth: ‘And if any of them touch my Medicare benefits, I am gonna take them all on myself!’
We hate to inform well-meaning people in the Tea Party movement but Medicare is perhaps the largest example of federal government involvement in any industry ever in the history of America and almost defines the word ‘socialism’ in any textbook or dictionary you can find.
In short, everyone wants their programs to be protected from any changes that will balance the budget.
‘And if you don’t like it, I am going to take my ball with me and go home!’
If by that, activists on all sides mean that everyone else has to come to their way of thinking of 100% before an agreement can be struck, all we can offer is this following observation:
‘You have picked the wrong country to be a totalitarian dictator to live in then.’
There is no way on God’s green earth that we are ever going to be able to balance the budget without touching any existing program in SS; Medicare; Medicaid; Defense; Education; Welfare; Environment; Energy; Housing or any other of the hundreds of thousands of federal programs now in existence.
There is no way that a bill is going to get 50%+1 votes on final passage of any deficit-reduction package without eliminating many of the tax deductions and/or raising taxes in some form or fashion now that the House is in GOP control; the Senate is ruled by the Democrats and President Obama still resides in the White House with a trusty veto pen by his side.
Ain’t going to happen in this lifetime or any other. That is one thing you can go to the bank with 100% ontological certitude as the commentator John McLaughlin used to say.
The American Democratic Republic will then be working precisely as the Founders intended: Pass a bill for the common good of the nation using reason and persuasion with a majority of support in Congress while protecting the rights of the minority.
The essence of a functioning democracy is to be able to persuade, cajole and/or reason with enough legislators to get over that 50%+1 goal line. This debt is not going to go away on its own without adult leadership in Congress. If they don’t negotiate a deal to do it early in the session, they'll have to redouble their efforts and get it done by the end of the session.
Real American leaders don't run away with their ball back to mommy and leave the game. You'll see who they are based on their involvement with a deficit-reduction package that has real substance in it.
All the rest are pretenders.
Friday, November 12, 2010
And that is a great thing we all ought to be thankful for on this day after Veterans Day.
Click on this great early Rolling Stones song, ‘You Can’t Always Get What You Want’ and just let these alternative words in the title of this post seep into your consciousness as you read the rest of this and see if it doesn’t make eminent sense to you.
Who knew that a couple of hundred years from now, political archeologists are going to dig up some vinyl 45-rpm record somewhere and declare that Mick Jagger was ‘one of the foremost philosophers of the 20th century just like Aristotle and Socrates centuries before him!’
Anyway, with the Simpson-Bowles Deficit Reduction Commission coming up with their initial thoughts on how to slay this magnificent debt beast we have created all by ourselves (the nasty Rooskies didn’t make us do it and neither did the dirty red Chinese either…and not even Osama Bin Laden and Al Qaeda), let’s take a look at what we should reasonably expect out of the democratic process in the next 6 months or so:
1) President Obama is still in the White House whether you like it or not and he still holds the veto pens in his left hand. (Each time he signs something, a US president now uses like 15 pens to write out each letter of his name separately. Why? So 15 congresspeople can hang it on the wall and say proudly: “I got National Mule Day passed way back when. Now vote for me again!’)
2) Republicans control the House and with some cross-over from the now-emboldened Blue Puppy Dogs (or what is left of them in Congress, that is) since they have been released from under the thumb of their former leader, Nancy Pelosi, The Speaker from the West, perhaps they could cobble together a veto-proof majority of 290 votes from time to time on big important issues.
3) The Senate remains in Democrat control and with the rules over there being what they are, ‘difficult’, it is fair to say that nothing much gets done for the next 2 years to the great advantage of either major political party.
‘Good! No, GREAT!’ our Founders James Madison and Thomas Jefferson might be shouting in their graves. 'We abhor absolute totalitarian tyranny at any level of rule…including Congress!’
As part of our on-going ‘reality-based politics’ series, let’s face the truth of the matter:
Whenever one party has had total control of the 2 main branches of the federal government lately, they have pretty much screwed things up. The GOP had the White House and Congress from 2001-2007 and the Democrats had both from 2009-2010. All we now have to show for it is a humongous $14 trillion national debt bomb and still ticking, up from around $5 trillion at the end of Bill Clinton’s second term.
Maybe a little, no a lot of, gridlock and compromise will help things along this time around.
Whoops! There we went and said a bad word: ‘Compromise’. You think it is written with only 4 letters, wouldn’t you nowadays?
But it is not, most definitely not when our Founders worked on forming the United States in the first place. They ‘compromised’ their brains out in Philadelphia in 1787! You think the big states like Massachusetts, Virginia or South Carolina at the time were ‘wild’ about giving tiny little states such as Rhode Island 2 US Senators to vote on issues that directly affected them? Do you think the anti-slavery forces in the North were ‘wild’ about allowing the ‘peculiar institution’ of slavery to remain intact in the South and, on top of that, include 3/5th of every slave to count for Southern presentational purposes in the House?
Nobody went home after the Constitutional Convention in 1787 completely 100% ‘thrilled’ with the results of the new thing they called the American Constitution. No one. James Madison probably cried himself to sleep every night because his original plan had been gutted and amended by those delegates who were ‘intellectually inferior’ to him such that ‘only’ 60% of what he proposed actually got passed.
In fact, some of the best legislation ever passed by Congress has the following characteristics: No one is completely happy with the results of the legislation and feels somewhat disheartened by it in total. But there is usually also something in the bill that they absolutely love and wanted to get passed somehow, someway so they negotiated it in there and went home at least 50.0000001% happy.
Would we be so fortunate as to have 60% pass of what the Bowles-Simpson Commission is going to recommend for our nation right now! We are in a steadily declining financial situation relative to national debt buildup. Every day we wait to pass something to arrest its accumulation is a day closer we have to some really crazy economic outcomes like rampant inflation, out-of-control interest rates and further debasement of our currency.
Maybe we’ll be lucky like Philosopher-King Mick Jagger says when he sang these prophetic words: ‘But you might find sometimes…you get what you need.’
Like hundreds of billions of dollars of spending reductions that lead to deficit-reductions of a massive scale proposed and passed by some adults in Congress.
Tuesday, November 9, 2010
We have been pretty upfront about our support for the abolition of the US corporate income tax code as a prime way to get our economy rejuvenated and going once again. We think that there are far more reasons to abolish it than to continue trying to 'make it right' which is what all of the polemics and commercials are all about every two years during election season.
Here's a 'rational man argument' for you to consider as you contemplate abolishing federal corporate income taxes: The cost of complying with and/or trying to avoid the bite of corporate taxes is more than the total amount of revenues the federal government collects each year.
And one alternative definition of insanity is this: 'When it costs more than what you get coming in, you just keep doing it because 'that is the way we have always done it!'
As part of our 'reality-based politics' series, let's take a look at the numbers as they are, and not as the talking heads or the politicos in Washington want you to believe in their dream of dreams:
In 2009, corporate tax revenues to the federal government totalled $135 billion. For 2010, they are expected to be only $185 billion.
Both of these represent around 1% of GDP; approximate the amounts collected from national excise taxes; and account for less than 7% of total revenues collected from all sources, including individual, payroll, excise and estate (death) taxes.
Even in the optimistic growth projections put out by CBO and OMB, the $307 billion in corporate taxes they expect to be collected in 2011 and $353 billion in 2012 would represent just under 2% of GDP.
Seriously, is it worth all of the political anger, angst and cost each year to collect less than 2% of GDP for the federal tax revenue coffers? We don't fight over federal tobacco or gasoline excise taxes the same way and they bring in comparable amounts of revenue. (see CBO Budget Projections)
The animus generated by some over the 'failure' of corporations to 'pay their fair share!' is almost laughable given the small percentage those collections actually play in modern American politics. If corporate taxes represented 10%; 20% or 50% of overall US tax revenues, then that would be a fight worth fighting about and spending a lot of money on both sides of the issue.
But less than 7%? Not really that important, is it?
Here are some of the numbers relating to the whole corporate law industry in America today. See if you think all of the expense and Sturm und Drang in the political theater is worth all the effort:
- $4 billion spent on direct lobbying in DC in 2008.
- $128 billion in accounting revenues, the majority of which is spent on filing corporate income taxes.
- $180 billion in legal fee revenues, of which 45% is estimated to be related to corporate law work by outside private firms
- This does not count all of the hundreds of thousands of in-house corporate lawyers at corporations which could amount to a comparable amount to the $180 billion figure above or more
Right there, we are looking at close to $300 billion spent each year on a process that will produce only $185 billion in corporate tax revenues for the federal government in 2011, maybe.
Now some naysayers would say: "What about all the corporate tax lawyers/accountants/specialists and the poor corporate tax lobbyists and PACs in Washington? Wouldn't they be thrown out of work if we abolished the corporate tax code in American tomorrow?'
Isn't that the same argument as a defense subcommittee chairman saying he wants muzzle-loading muskets to be made in his district regardless of whether DOD wants them anymore to fight modern wars?
We think American productivity and economic growth would explode if corporate taxes were repealed tomorrow by the new Congress. We think all of these highly-educated and motivated former corporate tax people would find new work by the truckload in such a positive scenario. They might even start their own new manufacturing business.
Aside from the accounting, legal and lobbying profession having to readjust to the new reality, wouldn't the end result be far more productive for America over the rest of the 21st century than wasting all this time and effort on attacking/protecting certain provisions of the US corporate tax code?
Mr. Boehner and the New GOP in the US House of Representatives....here's your chance to prove the American private sector and capitalism works by abolishing the corporate income tax code.
It will help all of us.
courtesy of blog.craftzine.com
Friday, November 5, 2010
Here's a sure-fire hit that both the Obama Administration and the new GOP House can agree on to create millions of new jobs in America:
-Abolish the US corporate income tax
Now before they send Robert Gibbs out to castigate someone in public for speaking such heresy, hear us out.
-Pay for the loss of corporate tax revenue with the repatriation of foreign profits idea put forth by John Chambers, Chairman of Cisco awhile back.
The economy would correct itself in almost no time flat (relatively); unemployment would plummet; people could buy houses and goods once again...and both President Obama and the Republicans will be praised and fanned with palm fronds down Constitution Avenue come next spring for being able to 'do something to get our economy going again' in a bi-partisan way.
'Happy Days Will Be Truly Here Again!'-- (and at least 7 years sooner than when it took 10 years for our parents and grandparents to get out of the Great Depression)*
Let's look at the numbers:
The slack economy drove the receipts of the corporate income tax down to only $130 billion in 2009. That is less than the amount Washington receives from all various federal excise taxes including gas and cigarette taxes paid directly by the consumer.
Corporate taxes are just another form of 'excise tax paid by the consumer' except in a more indirect way each time you pay for any good or service. There is no corporate tax that is paid solely by the corporation without you, the consumer, paying it first in the form of higher prices. So start to think of a corporate tax repeal as being the same as a 'direct tax cut' for you as an individual consumer.
Corporate tax receipts are expected to only be around $180 billion in 2010. Both of the 2009 and 2010 amounts represent the almost pitifully low level of around 1% of GDP.
That hardly seems worth fighting for nowadays in the land of trillions and gazillions of debt being accumulated. And all the lobbying and legal fees and accounting and PACs and fundraisers that go along with the corporate income tax...honestly, wouldn't the world be a little better off without a few of those types on K Street in Washington, DC?
Corporations would save billions in lobbying, legal and accounting fees alone if the corporate tax was eliminated simply because there would be no tax code to fight or loopholes to find and protect. And probably pass along those savings to you in the form of lower prices because their competitors certainly will.
'But' as Keith Olbermann on MSNBC (who shoulda stayed on ESPN with Dan Patrick) would fulminate and fluster, 'wouldn't that increase the very debt you (crazy, stupid, idiotic, ignorant) conservative Republicans say you want to reduce?'
'Glad you asked that question, Keith! Let me tell you how we would pay for it...if you would quit glaring at me.'
Mr. Chambers' idea of repatriating foreign profits back to the US at, say a 5% tax rate instead of 39%, would yield close to $50 billion in new tax revenue that is not already assumed to be in the federal budget revenue baseline totals. That would pay for at least a third of the 'loss' of corporate tax revenue for 2010 from the existing baseline.
But the repatriation of $1 trillion in new privately held money would lead to an unprecedented boom in capital available to the every companies and people who can and will create new jobs under more favorable circumstances. It is $ONE TRILLION, all available on Day 1, not spread out over 5-10 years like the $787 billion Obama Stimulus that has not proven to be stimulative at all yet.
With no massive bills such as cap-and-trade to worry about and the more onerous parts of the Obamacare legislation already showing signs of being pulled out and eliminated (such as the reporting requirement for every expenditure over $500), 'gridlock' is already working to creating an environment where businesses can once again do what they do best which is to invest, create jobs and make money for shareholders and employees alike.
The ensuing economic boom and job expansion will generate far more than enough revenue to cover the loss of the corporate tax forever and then some. But just to be sure that these two changes can be made to our tax code and be completely and irrefutably 'budget-neutral' and not add to the deficit, we have added specific line-item budget cuts at the end of this posting, any of which or combined in some fashion could total close to $4 trillion in scored budget savings over the next 10 years.**
You don't think many American companies with plants overseas and foreign corporations as well will start flocking to the US if they could see that The United States would soon become a 'corporate tax-free zone'? That strains credulity when you consider that one of the major factors corporations go overseas in the first place is to flee high taxes in the US, aside from lower wages, of course.
And the 'wealth effect'? When stockbrokers start cranking out present values for stocks without a 39% tax rate in them, their computer consoles may melt down with all the bigger numbers. One way to get people spending again and regain confidence is to see their savings and 401(k)s rise again...this will do that in spades overnight.
You wanna get out of the chute right away on January 1, 2011 with a plan to defibrillate this American economy?
Call or write your representatives in Washington and tell them to tell Speaker-to-be John Boehner and the New GOP (we hope and pray!) leaders to pass these two tax bills on January 2, 2011.
And then we will truly be on our way to the 'Happy Days Are Here Again!' scenario our parents and grandparents could only imagine in 1930.
* Lyrics to "Happy Days Are Here Again!' from the movie 'Chasing Rainbows' (appropriately enough) and sung because of the impending repeal of Prohibition and the end of moonshine and out-running the revenooers.
So long sad times. Go long bad times. We are rid of you at last. Howdy gay times. Cloudy gray times. You are now a thing of the past. Happy days are here again. The skies above are clear again. So let's sing a song of cheer again.
Happy days are here again. Altogether shout it now. There's no one; Who can doubt it now. So let's tell the world about it now. Happy days are here again
Your cares and troubles are gone. There'll be no more from now on. From now on ...
Happy days are here again
The skies above are clear again
So, Let's sing a song of cheer again
Are here again!
-Repeal or rescind any and all stimulus money that has not been already spent on 'shovel-ready' projects. Which, according to the President, should mean close to $500 billion of it since he admitted there were no 'shovel-ready' projects
-Allowing the Bush tax cuts to expire would free up close to $4 trillion over 10 years (hey! you either do it for individuals or corporations...which one do you think would generate the most job growth?)
-Scored recommendations from The Committee for the Fiscal Future of the United States = $3 trillion
-Hold overall spending growth to about 2% annually and allow the economy to grow and generate sufficient revenues to balance the budget in 2020 or so, even with the repeal of the corporate income tax code
Wednesday, November 3, 2010
For one thing, it means that the days of passing massive spending bills like the Obama stimulus package and ObamaCare are over. Certain parts of each bill will come under attack and be rescinded by the House, most likely, but the efforts will probably not pass the Democratic-controlled Senate or be signed by President Obama (more in later posts).
Gridlock is back in the United States Capitol and after a decade of spending unrestraint from either party, it didn’t come back a moment too soon. Go ahead...you can admit it that you are glad to see Mr. Gridlock back in our nation's capital once again.
But really, what does this mean for me and you and the people on the street, both currently employed and unemployed?
We are going to engage in a relatively brief, yet informative series, probably for the rest of this year, that we like to call ‘Reality-Based Politics-101’.
In it, we are going to give you the basic truths of the US federal budget/tax policy and health care issues that actually mean something to you and your family’s future. We will bring in some expert opinions and creative ideas for your to consider and ponder. We will not engage in any ‘wishful thinking’ or Santa Clauswitzian dream world where you are ‘given everything by the federal government without any cost to you as a taxpayer!’
Those days of politicians acting like Jon Lovitz as ‘Tommy Flanagan- Pathological Liar’ on SNL (‘Yeah, yeah…that’s the ticket!’), or some loud-mouthed used car salesman promising you 'incredible deals' on television ads, are over.
(We hope and pray.)
So beyond the end of passage of any new massive spending program in Washington, what else can you reasonably expect?
We think this election just about guarantees the passage of the extension of the Bush tax cuts on a double-tiered basis in the lame duck session between now and the end of the year. The middle-class tax cuts will be passed on a permanent basis and the tax cuts for the wealthy will be extended for the next year at least and possibly, two as a way to help get us out of this nasty recession that doesn’t feel like it is over as the economists claim.
Even a lame-duck Congress and a weaker President Obama can see that not extending these tax cuts in such a weak economy would do far more harm than good.
But guess what else the newly-elected Members and Senators have ‘won’ as a result?
Extending or making the tax cuts permanent will increase the federal deficit projections officially on January 1, 2011 by ANOTHER $2 trillion or so the day it is passed.
Remember: Current law has the expiration of the Bush tax cuts baked into them. With the expiration intact this moment, for today at least, ‘official’ deficit projections are about $3 trillion lower over the next 10 years than they would be if all the Bush tax cuts were extended for the next decade.
To put it very bluntly, if you are at all concerned about the burgeoning national debt, we will have increased the amount of debt we will incur at the very same time a whole new crop of ‘fiscal hawks’ will be coming into Washington to ‘reduce those bloody deficits and the national debt’ in the first place!
Talk about a confusing electoral message the voters are ‘sending to Washington’!
So now, instead of digging out of a projected national debt of ‘only’ $14 trillion as of today, this whole new crew of energetic eager beavers will have a Sequoia tree of debt of close to $16 trillion to start gnawing away at right off the bat on January 1, 2011.
Congratulations and welcome to Washington!
That is reality-based politics at its finest, ladies and gentlemen…so you better get used to it. You are going to see a lot of it over the coming weeks. We’ll try to help you understand it all so you can contact your representatives and put pressure on them to ‘do the right thing’, whatever that is nowadays.
If you are ecstatic about last night’s elections, enjoy it as long as you can. Because there is some serious heavy-lifting and decision-making about to come your way.
Friday, October 29, 2010
Such is the case today with the tired old ‘They are going to take away YOUR Social Security, Seniors!’ attack ads hurled against conservative Republicans by staunch Democrat candidates and defenders of the status quo.
And in Florida, these pathetic attack ads are being hurled by not only the Democrat candidate, Congressman Kendrick Meek but by the current sitting governor and former Republican, Charlie Crist, against the ‘new face’ in national politics, Marco Rubio who is going to be the next Senator from The Great State of Florida.
The reason why these Social Security attacks ads won’t work anymore?
Demographics, plain and simple.
Frank Luntz, a national pollster, once did a poll that came back with this startling conclusion: More Americans under the age of 50 at the time believed in space aliens, (not illegal aliens) than they believed they would ever receive their full Social Security benefits in retirement.
Score one for Marvin Martian.
That poll was conducted close to 20 years ago.
That means that those very same people in the younger Boomer age cohort and the following Generation X and Millennial groups of American voters are now 20 years older or close to 50-60 years of age now.
(There is a tremendous, great book called 'Generations' by Neil Howe and William Strauss that you have got to read. They forecasted this inter-generational transition of beliefs way back in the early 1990's, almost 20 years ago)
It also means that the ‘Greatest Generation’ of WWII and Great Depression-era Americans are in their 80’s and 90’s now and diminishing in numbers every day, unfortunately. Many of this cohort of voters want absolutely no change to Social Security and have been misled over the years from the AARP to believe that any changes in the future, such as raising the retirement age, would mean taking money out of their pockets.
Now, how can an 85-year old person be worried about raising the retirement age to 70? They are already 15 years past that age threshold and completely grandfathered and grandmothered into Social Security as it is today!
So when the advisors to Senate Democrat candidate, Congressman Kendrick Meek and Independent candidate Governor Charlie Crist started wringing their hands with glee and ran millions of dollars of ads against Mr. Rubio who says he will vote to raise the retirement age in Social Security once elected, they were just wasting their time and their contributor’s money.
Because they are talking to a majority of voters who believe more in space aliens and have already accepted the fact that they are not going to get their ‘full’ SS benefits anyway!
Hardly anyone now below the age of 60 truly believes they are going to get all these promised benefits, in SS or Medicare. We have seen the debate for 30 years now and nothing has happened in the interim that leads anyone under 60 years of age to believe either SS or Medicare has been ‘fixed’ by anyone in Washington.
So save your money from now on, ‘Mr.-Bash-People-In-The-Head-If-They-Even-Talk-About-SS’ political advisor. Marco Rubio is going to win the Florida Senate seat by a comfortable margin as the first truly ‘generational change’ elected Senator in the US Congress.
And guess what? Did we mention that he is going to be elected from the Great State of Florida, home to millions of senior citizens, despite his support of a higher retirement age?
The times they are a-changin'.
Tuesday, October 26, 2010
As in: 'I refuse to run for any Congress that would have me as a Congressman/Senator!'
This great line from Groucho Marx could apply to hundreds of candidates each and every year it seems.
This year has been particularly distressing, hasn't it? We have all these monstrous problems facing us as a nation and we know more about who is and who is not a witch than who is actually going to reduce these budget deficits, for one glaring example.
Politician-bashing is great fun and great sport and entertainment and has been around the globe throughout recorded history. It has happened since time immemorial back to when the ancient Greeks performed plays on a regular basis ridiculing or lampooning those who were in elective office.
But, seriously, haven’t we taken the noble profession of public service too far into the gutter in the last decade or so? And by that I mean, the cable talk shows; the 'investigative' (sic) journalism; the on-line sniping; the onerous restrictions on income and the financial disclosure rules and regulation.
That is why we get people like Meg Whitman running for Governor in California cause she is one of the very few who will spend $141 million of her own money to pay for ads to fight through all the stuff that confronts a modern-day candidate. But do we really want an oligarchy of extremely wealthy people being the only ones who ever step up to the plate and run for office?
Who in their right minds would ever want to run for any public office nowadays in America? Would this generation’s Jefferson and Madison take one look at the financial disclosure rules or the cable chattering heads and say: ‘You know, on second thought, I think I’d rather stay at home in my nice house and just hope someone else will do it!’?
Abraham Lincoln, of all people, had to suffer the indignity of being called a ‘baboon’ in newsprint and to his face. That might be enough to even get a reprimand out of NPR nowadays based on their heavy-handed firing of Juan Williams recently.
To his credit, ‘Honest Abe’ knew how to turn an insult into a funny quip a la Ronald Reagan 120 years later. When called a ‘baboon’ and ‘two-faced’, Lincoln would reply calmly: ‘If I were two-faced, would I be wearing this one?’
But seriously, do you honestly and cross-your-heart-and-hope-to-die believe we really getting our '#1 draft picks' to run for public office nowadays? Do we really have the 435 smartest and most able people serving in Congress right now, or about to? How about 100 of the smartest and most able people serving as Senators?
Or are they our ‘#14 round draft picks with a player to be named later’?
One thing about our First Constitutional Convention: It can be reasonably surmised that the best and the brightest people in the land actually were in attendance during those 4 hot, smelly, humid months in Philadelphia in 1787. Madison. Franklin. Hamilton...you name them, they were there fighting it out on the only floor of debate that actually matters in a democratic republic, the legislative arena.
Even the ones who drank heavily every night such as Luther Martin of Maryland who was a noted jurist during his sober days…they were all highly educated; could read Greek and Latin; understood history and philosophy and could communicate, negotiate and yes, even compromise to come out with the most amazing document the world has ever known, the U.S. Constitution.
Think about who you are voting for in 7 days now. We need the next Jefferson or Madison to run and serve. Maybe they are not in this crop of candidates. But we have to get them in the political game before it is too late.
Saturday, October 23, 2010
Unless the United States is not careful, the classroom depicted in the new ad from Citizens Against Government Waste, 'Chinese Professor', might become unbearably 'real'.
CAGW, an advocacy group in Washington, DC that has been working for more efficient government since 1980, has unleashed one of the most searing and indelible images on the American public since Ronald Reagan's 'Morning in America' ads in 1984 or his equally effective 'Bear' ads depicting the Soviet threat.
There is no candidate to support or oppose in the ad. There is no talk of political parties or philosophy. Thankfully, there are no ridiculous charges about a candidate's personal integrity, or lack thereof, being cast about like a bullwhip.
It is a stark, clear image in a futuristic pristine university setting. The Chinese professor speaks with a calm firmness in his voice signifying his assurance that his observations are correct.
After recounting the current debt buildup of the United States, he turns to the camera and smiles a wry grin and says, 'Of course, we owned most of their debt...and now they work for us!'.
In Chinese, of course.
And you know in your heart that what he is saying could be true one day, unfortunately.
The Chinese students in the classroom laugh, much like American students in 1960 used to laugh about any comment that Americans would one day drive Japanese cars (wouldn't those students be surprised looking at the cars on the highways today?) American students used to laugh about buying clothes and products from Latin America and Southeast Asia and used the dismissive 'Made in China' as a comment of pure disdain for their low quality.
No one is laughing about either of those 'threats' any longer, are they?
Watch the 'Chinese Professor' ad once and see what you think and how you feel after seeing it this first time. Let it sink in some and then see how you feel about it, whether you think it is corny and completely unbelievable or on-target and a hit to your solar plexus.
And then make some adult decisions about who you are going to vote for in this very important, critical election on November 2, (unless you have already voted already because you know how important this election really is)
Wednesday, October 20, 2010
Except that this time, it would have zero impact on reducing federal tax revenues, increasing deficits and the national debt and it would all be done by the 'private sector', not the public sector.
John Chambers, Chairman and CEO of Cisco and Safra Katz, President of Oracle, are proposing that Congress and President Obama pass a big reduction in corporate income taxes on profits earned overseas by US corporations.
In an article they co-wrote for the Wall Street Journal today entitled 'The Overseas Profits Elephant in the Room', they clearly identify $1 trillion in money that would almost immediately be returned to the United States by American corporations operating overseas if they knew that they would not be exorbitantly taxed relative to other tax rates around the world.
That is $1 trillion that would be available for new investments in plant and equipment; new jobs; research and development; new jobs; expanded benefits; and have I mentioned: "New Jobs!" yet? The funds would be available almost immediately, or just as soon as the corporate accountants and tax lawyers can make sure they comply with the new law.
This proposal by Mr. Chambers and Mr. Katz would be just a small example of the sort of explosive job creation we could generate via lower corporate income taxes to get out of this accursed recession now into its third year regardless of the fact that the economists say it ended 6 months ago.
(What do they know anyway? Maybe only 1 of them, Noriel Roubini of NYU, even came close to predicting the cataclysmic events we have lived through recently.)
If you like the economy as it is today and want to replay the experience of our parents and grandparents who endured almost a decade of depressionary economic conditions in the 1930's, then by all means, please ignore the Chambers/Katz proposal in the linked article. What many people seem to conveniently ignore is that the United States never officially got out of the Great Depression (and in fact, suffered a big 'double-dip' of it in 1937) until December 7, 1941 despite the fact that FDR and Congress passed public works program after public works program for about 120 straight months.
In other words, 10 years of public works-types of public infrastructure programs like the Obama stimulus package passed 2 years ago.
But if you really want to see an explosion of new job creation in America, abolishing the entire corporate income tax code in its entirety would do the trick and then some. Federal tax collection of corporate income taxes accounts for less than 6.8% of all taxes collected by the IRS each year and that percentage has been steadily declining over the past 20 years.
Companies would then make investment and expansion decisions based on the economic fundamentals of the marketplace and not because of some consideration of an obtuse or obscure provision of the US tax code. And since we are the largest economy in the world by a factor of at least 3 over China, there would be plenty of incentive for corporations to move operations back to the United States and, yes, hire more Americans here instead of foreign workers over there.
If the last two years has taught us anything, it is that our elected officials do make a huge difference in the way our economic futures are going to play out. Listening to experienced corporate leaders such as Mr. Chambers and Mr. Katz seems to be a great place to start.
elephant courtesy of www.metafilter.com
Sunday, October 17, 2010
With the elections coming up in 15 days on November 2, it is a good time to evaluate whether anyone you vote for understands anything about solving the humongous problems facing us as a nation.
And no, they do not include witchcraft, calling a female gubernatorial candidate a 'whore' or whether a woman who ran the WWF will 'fit in' the US Senate (looks like 2010 certainly is the 'Year of the Woman', doesn't it?)
Probably the biggest reason why we have not dealt a death-blow to the seemingly intractable and unsolvable problem of burgeoning budget deficits and exploding national debt is our inability to even talk about Medicare and Social Security in any sort of rational way.
GOP Senate hopeful Carly Fiorina who is running in California to unseat Barbara Boxer steadfastly refused to answer Chris Wallace's most basic question on his Sunday morning news show today that was stated thusly:
'Which entitlement program, no matter how tiny, would you cut, Ms. Fiorina?'
She could have been answering a question about Euclidean geometry or Japanese arithmetic for all we could tell based on her response which was essentially: 'Nothing!'
That is no way to be one of only 100 US Senators who are supposed to be solving our problems, not running away from them like scalded dogs.
Anyway, here is the 'truth' about health care for seniors, in case Ms. Fiorina or any other candidate wants to know. (Ms. Fiorina, for a short while, attended the same public high school in Durham, North Carolina as I did, believe it or not)
Once you hit the magic age of 65 for Medicare eligibility, and then a year later, 66 for Social Security, (how is that for a messed-up system?), you basically qualify for ‘free’ health care insurance all paid for by the American taxpayer.
And whatever we can trick the Chinese and other foreign nations into continuing to loan to us and get paid almost-nothing in real interest rates nowadays.
In order to see what we mean, push the ‘reformat’ button in the computer in your brain, or what is left of it after the past 3 years or so, and forget all of the propaganda you have been told over the ages.
Click your heels like Dorothy in the 'Wizard of Oz' and repeat after me: ‘There Is No Trust Fund! There's No Trust Fund!'.
In either SS or Medicare. No matter what politicians or the AARP tries to tell you.
The payroll taxes you have paid in over the years are the same as income, excise, capital gains or estate taxes you paid that went for defense, education or welfare programs. They are spent and long 'gone'.
So forget the entire notion that you have paid into something that is just sitting there so you can take it out when you retire. It just ain't so.
Medicare Part B is the physician fee side of national health insurance. Part A is the hospital side of things.
Part B is ‘paid for’ by 44 million enrollees who pay for 25% of the cost of the program each year. This amounts to about $325/month out-of-pocket expense per senior over the poverty level.
75% of the cost of Part B is paid for out of the general revenue funds of the US budget. This accounts for between $900-$1200/month per senior depending on income status.
Social Security pays around $300/month to each eligible senior.
What many seniors do is automatically apply the $300/month they receive in SS benefits directly to pay the monthly $300+/month Part B premium.
Voila! This amounts to essentially ‘free’ health care insurance coverage for senior citizens.
‘Why?’ you might be asking yourself.
Social Security is not a true ‘trust fund’ in the traditional, fiduciary sense of the word used in the private sector. The money you have paid into it is not actually ‘there’ at all, and never was. Your benefits will not come out of any dedicated trust fund account in a safe location like Fort Knox.
Your benefits will come from the same sources as they do now for retirees: the pockets of your hard-working sons and daughters and grandchildren. Assuming we ever get out of this recession, that is, and they can all find work that is profitable and therefore, 'taxable'.
There are other federal/state programs to help poor seniors get health care in America. We should help them in whatever way possible.
But does every single senior citizen of this nation, regardless of health, income or wealth status 'deserve' free health care insurance merely by making it over the 65/66 years of age retirement threshold?
We are the only nation in the world that tells our senior citizens, in essence, that the older and more decrepit you get as you age, the less expensive your health care insurance will become.
Talk about delusional thinking! Even Dorothy woke up from her dream one day.
Zero progress will be made on the federal budget or health care, despite the results of the November 2 elections, until we admit the falsehoods of such things as ‘trust funds’ and ‘lockboxes’.
They are as 'real' as the 'Glinda the Good Witch'.
Vote for some adults on November 2 for a change we truly can all believe in. And make sure they tell you the truth about such things like Social Security and Medicare and stop acting like they are reading some children's fairy tales to you every day and night.
Glinda courtesy of www.agelessbodytimelessmom.wordpress.com
Friday, October 15, 2010
Let's think about this for a moment.
The actual cost per senior citizen according to actuaries who get paid to do this sort of work is between $12,000 and $15,000 per year depending on age, health and life-styles.
Instead, the average senior today pays around $300/month for their share of the Medicare Part B premium. The taxpayer, you, pay the $900-$1200/month remainder of the bill. For 44 million seniors. Each and every month. Of each and every year.
Why one senior who smokes 10 packs of cigarettes per day; eats junk and fatty food; drinks 2 six-packs at dinner and never gets off the couch except to get more Cheetos gets charged exactly the same as a perfectly healthy responsible senior defies the laws of sanity but that is another issue.
A one-week cost out-of-pocket would be about $300.
That is what most seniors pay per month for Part B coverage today!
But if seniors had to pay the full cost of health care for just one week, the clamor for true health care reform would be deafening.
All of the cost drivers embedded in the current health care system would be tossed out the window like spent cigarette butts.
Tort reform? Done. Malpractice insurance reform? Done. Buying across state lines? Done.
Because senior citizens take the 'citizen' part of their names very seriously. They vote in each and every election! Why do you think over 1/2 of the $3.5 trillion annual budget goes to SS and Medicare today?
If they had any inkling that the ‘real’ cost of their health care was over $12,000 per year, or $1000/month, they would be screaming and yelling and beating legislators over their heads with umbrellas and canes. Legislators would pass comprehensive tort reform; malpractice insurance reform and even raise the retirement ages for future retirees like the Boomers and X-ers to 70 almost overnight.
When the structural upwards cost-drivers such as these are finally pounded out of the health care system in America, then businesses will be able to afford reasonable health care coverage for their employees once again and the federal budget will be balanced in no time flat…perhaps as soon as 2020 just due to the amelioration of health care inflation alone.
Monday, October 11, 2010
That is a stupendous number when you think that at the depths of the Great Depression, nearly 13 million of the adult male workforce (women did not work in large numbers at the time) were unemployed.
It will make a huge difference who you vote into office on November 2 as to which way our nation will take to get people back to work and our economy running on full cylinders once again.
Granted, the 13 million unemployed in the Great Depression represented 25% unemployment among adult males in a smaller national population of around 125 million when compared to 2010’s US population of 310 million. Still, 20 million people looking for substantive sustainable work nowadays is eye-popping.
So how do we get all these people employed again?
We have been advocates for completely eliminating the US corporate income tax code at the federal and state levels for quite some time now. It is an onerous, out-dated, duplicative and mind-bending Byzantine maze of complexities that yields minimal revenues to governments in terms of proportion to the overall amount of money collected by the tax authorities each year (and virtually nothing in a recession like the humdinger we are still dealing with)
The corporate income tax basically tends to enrich smart, clever lobbyists, tax accountants and lawyers who spend all their time devising ways for corporations to avoid sending more tax money to Washington and the state capitols than is absolutely necessary.
We believe abolishing the double-taxation that is inherent in the corporate tax code would open America up to a massive expansion of investment and job creation unlike any we have seen since the internet boom of the 90’s. Or perhaps the industrial boom that followed WWII as the US rebuilt the economies of the entire world in essence. We think industries that are not repelled by excessive regulation of their business will return to set up shop in the US once again to take advantage of what could be close to a 50% gain in retainable profits and earnings. Elimination of the corporate income tax would do a whole heckuva lot to offset lower wages overseas.
When oil prices hit $100/barrel; $200/barrel or perhaps $500/barrel, don’t you think many of these industries will be absolutely dying to get back to American soil and lower their shipping costs once again? In many cases nowadays, the shipping cost to America equals the cost of production overseas. Abolition of the corporate income tax would get them back that much sooner.
Here’s our main question when it comes to long-term ‘real’ job private sector creation in America today: ‘What comes first: people having enough money to ‘create demand’ for a product or service or an entrepreneur or inventor who sees a need in the market for a new product or service and then proceeds to invest to develop it into a usable product and hiring people to help make it and sell it to the public?’
We think it is a blend of both, which makes the free enterprise capitalist system almost as amazing to see in action as the human body is with all of its intricate processes and systems like the eyeball or the brain. (Experts say we use less than 10% of our brains which sure explains the last decade in politics, doesn’t it?)
There can be no ‘demand’ for any product if people don’t have money or the means to pay for it. People would just go to stores or on-line and look at all the wonderful I-Pads and I-Pods (all made in China now, by the way if you are keeping score at home) and marvel at them...and never pay for one.
On the other hand, people did not even know they had the ‘demand’ for a PC in 1979 until Steven Jobs and Steve Wozniak invented the first Apple 'personal computer' in a garage in what was soon-to-become known as the Silicon Valley in California. If you don’t have a laptop or a cell phone today that could probably launch a rocket to Mars with its computer memory, you really are considered ‘destitute’, aren’t you?
We tend to fall perhaps 85% on the side of the Golden Egg of Job Creation as being generated from the minds and efforts of entrepreneurs and risk-takers in America and God bless them for being so! There are millions of businesses that have been created over time in America when brave souls have borrowed money from friends or family or mortgaged their house to the hilt and hired other people to fulfill their mission and dream.
Some, or perhaps many, of them were the ‘C-students’ you sat next to in high school and have gone on to succeed and become billionaires and hired hundreds of thousands of other Americans in the process.
We think there is a completely new bow wave of products and services out there just waiting to be invented like perhaps cures for cancer that come in bubble-gum form (Why the heck not? Polio was ‘cured’ with kids eating sugar cubes!) or cars that fly on hydrogen like in the Jetsons cartoons.
Let’s abolish the corporate income tax; put some responsible adults back in office in Washington and the state capitols; run government in a more responsible manner, get out of the way and let these entrepreneurs do what they are good at….creating products, services and new jobs, all at the same time.
We will all benefit from that, don’t you agree?
Tuesday, October 5, 2010
Anyone who has been in politics for any length of time over the past 30 years will recognize this famous quote from Robert Redford’s great 1972 movie, ‘The Candidate’.
A long-shot candidate is convinced to run against a long-term, entrenched, seemingly unassailable incumbent senator from California by his political operative (sound like a Tea Party candidate?) and with a push from his wealthy father. So he runs on a platform of ‘honesty’ and ‘integrity’ and speaks his mind openly about the issues confronting the voters, good, bad and the ugly (again, Tea Party-like?)
But, without spoiling the ending, (he pulls off a shocking upset win), the Candidate and his political operative are confronted with the most basic of questions for any political candidate at the end of a campaign:
‘What Do We Do Now?’
Indeed. After this upcoming election in about 28 days: ‘What do we do now’ as a nation?
As long as we have vacuous campaigning on both sides of the political spectrum, 'Hope and Change’ on the left and ‘We Are Not As Bad As THEM!’ on the right, (the Democrats ran on that exact some platform in 2006 and 2008 as well), will we ever muster up the political strength to solve the truly massive problems we face today?
Just to remind you of the severity of the issues we face, in case you have not been able to discern what they are through the din and fog of recent campaigning, here's what are the real issues of the day:
-A $14 trillion national debt well on its way to becoming $24 trillion by 2020.
-$1.5 trillion annual budget deficits
-$1 trillion + in debt held by the Chinese and much of the rest held by foreign sovereigns
-A Social Security system that is now technically ‘bankrupt’
-A Medicare system that is 100% simply ‘unsustainable’ in terms of financing and cost
-Installation of a new health care program, ObamaCare, to the tune of at least $1 trillion in cost
-Potential threats of rapidly escalating rates of inflation
-Potential threats of explosive increases in real interest rates as a result
And these are just the basic fundamental nuts-and-bolts types of problems we are facing in terms of dollars and common economic sense. We have not even gotten to the problems of fixing our national public education system; fully protecting our borders through Homeland Security; what to do about Al Qaeda and Afghanistan/Pakistan or protecting the environment.
Have you heard ANYONE say ANYTHING about how they are going to deal with any of these major fiscal problems and get us to a balanced budget before we expire?
We are going to give the Republicans some credit, finally, for stepping up to the plate and saying this in their 'Contract for America' recently: 'Go back to pre-bailout, pre-stimulus FY 2008 spending levels and hold it below the rate of inflation going forward.'
That might be the best anyone can do in this day and age. It also might lead to a federal budget circa 2020 where 100% of the money goes to 4 things: Interest on the national debt, Social Security, Medicare and Medicaid but more on that in a later post.
Here’s something that drives us completely stark-raving mad: Many Republicans are now running ads similar to the following one pointing an accusatory finger at the Democrats for supposedly 'taking $500 billion out of Medicare' to pay for ObamaCare.
The hope is that this ad will help stiffen the spines of senior citizens and get them to vote for the GOP candidate in their district or state against those ‘dirty dastardly Democrats’.
Well, the ‘truth’ of the matter is that the Democrats did gut the Medicare Advantage Part C Programs that the Republicans put in place in the early 2000’s which was designed to help more moderately wealthy seniors buy a better package of benefits and services than under the prior Medigap system.
But it was one of the very few ‘offsets’ they put in the bill to make sure the cost of ObamaCare didn’t top $2 trillion over 10 years, not ‘just’ $1 trillion! The Democrats in Congress just don't like the Medicare Advantage program at all. They love the Medigap program run by their old friends at the AARP.
If we don’t ‘gut’ the Medicare Advantage program to the tune of $500 billion, then what do we do? Raise taxes by $500 billion? Gut Medicare Part A and/or B by $500 billion? Something has to be passed to ‘pay’ for this deficit-reduction loss or else we will do what we always do…pass along $500 billion more in debt to our children to pay.
Here’s another thing that drives us nuts, sometimes in the same ad as the one you just looked at: The Democrats reverting to the same old and tired bromide that ‘Republicans will take away your Social Security checks if you elect those children of Satan to Congress!’
Can there be anything more childish or desperate? There is absolutely not one thing that is ever going to be done to the SS benefits of anyone who has already crossed the finish line and turned age 66 for Social Security. Your benefits are ‘safe’ and will always be there.
Any changes to Social Security will be imposed upon ‘future’ beneficiaries, all who are under the magic age of 66, namely Boomers about to retire and Xers to follow them. Which it should in the form of rapid rises in the eligibility ages for SS and Medicare and to stop paying entitlement benefits to any super-billionaire senior citizen of any sort and at least down to the $5 million in household wealth category.
It is just plain insane to pay ‘entitlement benefits' of $350/month for SS and a subsidy of up to $15,000/year per senior for every Warren Buffett, Bill Gates and their wives.
So ‘What Do We Do Now?’ as voters?
Try voting for the more adult-acting candidate in any race in November. It might be hard to decide but at least they might have a fighting chance to do the right thing when in office....like hold down the rate of growth in spending and not pass a bunch of expensive new programs we don't want to pay for with higher taxes or spending cuts elsewhere.