More impudent thoughts on health care

• Pres. Obama is claiming to anyone who'll listen that the Democrat's health plan will squeeze hundreds of millions of dollars of waste and inefficiency out of the Medicare & Medicaid systems ("I've also proposed saving another $313 billion in Medicare and Medicaid spending in several other ways."). How about you start with that. Make those changes and only those changes. Once you've saved $300B (materially, not just as an accounting trick) maybe we can talk. Don't promise me you'll save that money *after* you spend it on something else -- that's just a great way for you to screw me twice.
• I need to do some research and some math, but everyone on the other side loves tossing numbers around that are refutable. Like 50M uninsured, and U.K has better health care because they have longer life expectancies. 20M of the 50M are illegal immigrants, let's start with that. Life expectencies are very close, about 1 year difference. Are homicides and car accidents health care failures? In the USA, we drive much farther on average than they do in the UK, you can get statistics on vehicle deaths per 1000 miles driven, and you can work out how many additional deaths per year are due simply to more fatal car accidents per capita due to more miles per capita. Similar math for homicides.
  

Impudent thoughts on health care

• Why not simply expand Medicaid to cover more of these "poor" people who can't afford health insurance?

• Why not build some hospitals, hire some doctors & nurses, then open the doors to anyone who wants "free" health care?
• Why are so many of the same people who are crying about our carbon footprints and how humans are killing the earth also trying to get health care for everyone? Wouldn't it be better if fewer people survived to continue to rape the planet?
  
• If health care is a basic human right, where was my right to an MRI fifty years ago?
• There's a name for forcing other people to provide for your wants and (so-called) needs...starts with an 's'...
• Why is there a plan to tax soda and other junk food, ostensibly to fight obesity and reduce health care costs when it's made with corn syrup, which we subsidize farmers to grow?
• Health care as we know it is a recent invention (see MRI above) and heavily dependent on technology. If a "fundamental human right" can attach to something that was invented last decade that we've decided is simply too important to live without, what's next? Public option iPhone?
• If it is a "fundamental human right" don't we have a duty, responsibility, obligation to render this to all humans? There's more than 6B people outside the US that we owe this to, too?
• If I can force others to provide me with health care, as is my "right", can I force others to pay for my arms--as in right to keep and bear? Please deliver my taxpayer funded M-16 and supply of ammunition.
• Everyone dies. It's folly to expend resources in a sky's-the-limit attempt to get each and every person a few more minutes, hours, days, months or even years.
• Presumably, a "fundamental human right" comes without limits, so my "free" health care will be all-I-can-eat. So maybe I'll be able to eat all-I-can-eat and smoke and drink all I can too, after all, the financial consequences of doing so will not be mine to bear. Once you admit to some limits, we're just arguing over degrees*.
  
• If technology someday soon provides a pill that will provide 100% cure for and prevatative against contracting cancer, HIV, hep, and a slew of other diseases but costs $500,000 each dose (say it's made from comet dust, just that it costs that much even with the manufacturer making zero profit), will it be covered? For everyone? What if the pill is only good for one year, and you need a booster every year at another $500k per?
• The phrase is "life, liberty, and the pursuit of happiness"...
• If a) Congress's new plan will not force me to buy insurance and b) will forbid any insurance company from denying me coverage for a preexisting condition, why shouldn't I wait until I got sick or hurt before signing up and paying premiums?

* There's an old joke:
He: "Would have sex with me for $1 million?"
She: "Yes."
He: "Would have sex with me for $10?"
She: "No way! What do you think I am?"
He: "Oh, we've already established what you are, now we're just haggling over the price."

Democrat predictions were correct!

A post I am copying from a WSJ blog, with the original "author unknown" attribution:

(posted to an SKF board, author unknown)

Much as it pains me to say this, I have to admit it - my Democrat friends were right.

They told me if I voted for McCain, the nation's hope would deteriorate, and sure enough there has been a 20 point drop in the Consumer Confidence Index since the election, reaching a lower point than any time during the Bush administration.

They told me if I voted for McCain, the US would become more deeply embroiled in the Middle East, and now, tens of thousands of additional troops are scheduled to be deployed into Afghanistan .

My Democrat Party friends told me if I voted for McCain, that the economy would get worse and sure enough unemployment is approaching double digits and the new stimulus packages implemented recently have sent the stock market lower than at any time since the Islamic Terrorists attacks of 9-11.

They told me if I voted for McCain, we would see more "crooks" in high ranking positions in Federal government and sure enough, several recent cabinet nominees and Senate appointments revealed resumes of scandal, bribery and tax fraud.

They told me if I voted for McCain, we would see more "Pork at the trough" in Federal government and sure enough, 17,500 "Pork Bills" showed up in Congress since January 2009...

I was also told by my Democrat friends that if I voted for McCain, we would see more deficit spending in Washington D.C. , and sure enough, Obama has spent more in just 30 days than all other Presidents together - in the entire history of the good ole USA ...

Well I voted for McCain in November and my Democrat friends were right... all of their predictions have come true!

Please Join this Group to participate in Discussion.

Government health care, public housing?

If you ask someone if they want "free health care", they're likely to say yes.

Just like if you ask someone if they want a free home, they'll say yes. But not many people want to live in public housing.

Taxes:politicians as ?:?

Taxes are to politicians what crack is to an addict; they never can stop and too much is just right.

Joe Boccuzzi

link

Social Security vs 401k

This article is rife with questionable assumptions. The basic premise is that "Hah! Aren't you glad we didn't let Bush privatize your Social Security?" True, people heavily invested in securities had seen their investments decrease by one-third to 40%. But unless you were retiring in the next year or so, then you are still likely to be ahead of the game in your 401k vs. Social Sceurity.

First, the money in your 401k is yours. Unlike SS, which is nothing short of a Ponzi scheme, a 401k or IRA is always your own money (barring some sort of malfeasance on the part of your administrator). You have control over it, and you have resposibility to manage it. Social Security pays out by taking monies from current workers. The SS "trust fund" doesn't exist--rather, it is a pile of IOUs that the Government wrote to itself.

Second, under the Bush plan, only a very small part of your SS "contributions" would have been eligible for self-management. And one of the options for that sliver of money would have been US Treasuries, the only investment that SSA can "invest" their IOUs in--so you could have had the same return as SS, but would have owned the money rather than have it go to pay benifits to current SSA recipients.

Third, and finally, when SSA starts having to pay out more than they take in, they can simply invoke the power of the US Government to extract additional "returns" from taxpayers. So the so-called fragility of the market returns relative to SSA returns are apples and oranges, or rather honest men vs con artists. The 30 year ROI in the market is more than 11%. SSA's rate-of-return is a mere 1.23% by some measures, for the lowest income contributions. Higher-income contributors are less favored, since they pay in much higher contributions relative to what they can legally received. And minorty contributors are pretty much screwed with negative ROI, since they have life expectency that means their SS payout is far less than they were forced to pay into the system.

Socialism for class grades

Snopes.com says that the attributions in some versions of this viral email are wrong and there is no legitimate recorded instance of this actually happening. Nevertheless, this tale seems apropos:

An economics professor at a university said he had never failed a single student, but had once failed an entire class.

The students insisted that socialism worked since no one would be poor and no one would be rich, a great equalizer. The professor then said, "OK, we will have an experiment in this class on socialism."

"All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A."

After the first test the grades were averaged and everyone got a B. The students who had studied hard were upset while the students who had studied very little were happy.

But, as the second test rolled around, the students who had studied little studied even less and the ones who had studied hard decided that since they couldn't make an A, they also studied less. The second Test average was a D.

No one was happy. When the 3rd test rolled around the average grade was an F.

The scores never increased as bickering, blame, name calling, all resulted in hard feelings and no one would study for anyone else.

To their great surprise all failed. The professor told them that socialism would ultimately fail because the harder people try to succeed the greater their reward (capitalism) but when a government takes all the reward away (socialism) no one will try or succeed.

You probably missed this in Saturday's paper

Even if you noticed the headline, what the article is *actually* about is nothing short of a reason to go to DC and hunt down Pelosi and Reid. I certainly have not seen or heard anything on CNN, NBC, etc.

http://www.ajc.com/metro/content/printedition/2009/04/25/budget0425.html

Headline:

Democrats close in on budget pact

Subhead is much more accurate:

Agreement would move Obama plan to overhaul health care system forward without threat of Republican filibuster

What Dems are doing here is using a procedural rule that allows budget bill to not face filibuster. Since Obama's health-care bill would *never* pass on it's own merit at this point Reid & Pelosi are tacking the health-care bill onto a budget bill.

So...something as important and that will change the countries economy (esp. taxation and governance) will be subject to a maximum of 20 hours of debate and will require only a simple majority in the Senate:

Under typical Senate rules, 60 votes are needed to advance a bill, but passage of the budget plan would allow for a so-called reconciliation bill that can pass with just a simple majority and only 20 hours of debate.

And this statement is laughable:

Democrats, including Obama, say they genuinely want a bipartisan health care bill and that the filibuster-proof process would be used only if the GOP obstructs.

So, if you disagree with us, we'll do a procedural end-run because then you're simply be "obstructionist".

Combine the above with what follows. Under government health-care, the state, not your doctor determines how you will be treated. And rationing of health-care is predicted as an inevitability. I hate to say "I told you so" but...

http://www.ajc.com/printedition/content/printedition/2009/04/25/medicaid0425.html

A federal appeals court in Atlanta says Medicaid providers and state health officials should have a say along with physicians in determining how to treat patients.

Florida, Georgia and Alabama argued that their Medicaid officials should make the final decision in treating Anna Moore, a 14-year-old Georgia girl who suffers from almost daily seizures. The state is trying to reduce the number of hours she is treated by a home nurse, despite the recommendations of her doctor.

And for comic relief, we have Homeland Security Secretary Napolitano sticking both feet full into her mouth recently. First, she releases a report that lumps veterans, pro-life advocates, anti-illegal immigration groups, and tea-partiers in with skinhead and neo-Nazis as "right-wing extremists" who might be using the economic downturn to recruit for home-grown terror cells.

http://www.thelibertypapers.org/2009/04/12/homeland-security-document-targets-most-conservatives-and-libertarians-in-the-country/

Rightwing extremism in the United States can be broadly divided into those groups, movements, and adherents that are primarily hate-oriented (based on hatred of particular religious, racial or ethnic groups), and those that are mainly antigovernment, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely. It may include groups and individuals that are dedicated to a single issue, such as opposition to abortion or immigration.

Then this week she goes on to say that entering the country illegally is not even a crime..."Crossing the border is not a crime per se. It is civil.”

So the Secretary for Homeland Security thinks veterans are likely to become terrorists (after all Tim McVeigh...) and doesn't even know the law regarding simple border security. She needs to read the US Code, Title 8 Section 1325...if the penalty includes imprisonment, it's criminal not civil...

§ 1325. Improper entry by alien

(a) Improper time or place; avoidance of examination or inspection; misrepresentation and concealment of facts
Any alien who
(1) enters or attempts to enter the United States at any time or place other than as designated by immigration officers, or
(2) eludes examination or inspection by immigration officers, or
(3) attempts to enter or obtains entry to the United States by a willfully false or misleading representation or the willful concealment of a material fact, shall, for the first commission of any such offense, be fined under title 18 or imprisoned not more than 6 months, or both, and, for a subsequent commission of any such offense, be fined under title 18, or imprisoned not more than 2 years, or both.

On the former screwup, she threw her office under the bus...

Napolitano blamed one of her agency’s analysts for prematurely sending out the intelligence assessment to law enforcement...

And on the latter:

Napolitano spokesman Sean Smith said: “Americans can rest assured that she understands what the law is along the border,” he said.

I don't think she does.

Joining Ms. Napolitano in the political doublespeak category, although perhaps saying what he really feels, is AG Holder regarding gun control (specifically, having the US bend to Mexico's demands):

"I don't think our Second Amendment will stand in the way of efforts we have begun and will expand upon."

So now the Constitution is just something that might "stand in the way" of the Administration's desire to control yet another aspect of our lives.

Interesting Tax Figures

For what they're worth (all numbers are for federal income taxes only).

The data below comes from tables at this link, which also has some reminders (emphasis mine):

Some important facts to keep in mind about the information provided on this page.

(1) All tax returns that have a positive AGI are included, even those that do not have a positive income tax liability.

(2) Income tax after credits (the tax measure above) does not account for the refundable portion of EITC. If it were included (as is often the case with other organizations), the tax share of the top income groups would be higher. The refundable portion is legally classified as a spending program by the Office of Management and Budget and therefore is not included by the IRS in these figures.

In 1980:

• the top 1% consisted of 932 thousand taxpayers who had AGI greater than $80,580
• they had a total of $138B in AGI, which comprised 8.4% of overall AGI
• they paid a total of $47B in taxes, which comprised 19.05% of the overall taxes
• their average effective tax rate was 34.47%
• per taxpayer, average revenue was $50,429

In 2006:

• the top 1% consisted of 1,357,192 taxpayers who had AGI greater than $388,806
  
• they had a total of $1,792B in AGI, which comprised 22.06% of overall AGI
• they paid a total of $408B in taxes, which comprised 39.89% of overall taxes
• their average effective tax rate was 22.79%
• per taxpayer, average revenue was $300,663

Even though the effective rate went down markedly, the amount of tax collected per taxpayer went up even more markedly, rising by a factor nearly six. And the share of taxes collected from this group more than doubled, although their share of income also went up 2.5x.

In 1980:

• the bottom 50% consisted of 46,619 thousand taxpayers who had positive AGI less than $12,936
• they had a total of $288B in AGI, which comprised 17.68% of overall AGI
• they paid a total of $18B in taxes, which comprised 7.05% of the overall taxes
• their average effective tax rate was 6.10%
• per taxpayer, average revenue was $386

In 2006:

• the bottom 50% consisted of 67,859,580 taxpayers who had postive AGI less than $31,987
• they had a total of $1,016B in AGI, which comprised 12.51% of overall AGI
• they paid a total of $31B in taxes, which comprised 2.99% of overall taxes
• their average effective tax rate was 3.01%
• per taxpayer, average revenue was $456

So their effective tax rate was cut in half, while their income went up 2.4x. Even though the effective rate went down markedly, the amount of tax collected per taxpayer not surprisingly did go up a bit (1.2x). However, the share of taxes collected from this group dropped quite a bit.

It is worth noting that the income figure for the lower 50% is the upper limit, while the figure for the top 1% is a lower limit. So comparisons of those numbers should keep that in mind. However, this fact must also be balanced with the recognition that a very large number of the bottom 50% actually had zero or even negative tax liability.

Following this link, we can see that in 2004, there were a total of 131,113,969 tax returns filed. Of those, 42,545,501 (32.4%) had $0 tax liability, or even had negative tax liability and actually received money from the IRS. An estimated 15 million more people earned some income but did not file a return. When these non-filers are added to the non-payers, they add up to 57.5 million income-earning people who will be paying no income taxes. Even 57.5 million is not the actual number of people because one tax return often represents several people. When all of the dependents of these income-producing people are counted, roughly 120 million Americans – 40 percent of the U.S. population – are outside of the federal income tax system.

We can also learn from that same link that

Despite the charges of critics that the tax cuts enacted in 2001, 2003 and 2004 favored the “rich,” these cuts actually reduced the tax burden of low- and middle-income taxpayers and shifted the tax burden onto wealthier taxpayers.

Tea Party

My extended family here in ATL went to the "Tea Party" last night. Accounts vary, but I would certainly believe 15,000 people were there.

Of course, the media mostly got it wrong. We weren't there protesting taxes or even Obama, per se, but run-away government as a whole. CNN reporters I saw on TV later tried to portray protesters as stupid "Don't you realize Pres. Obama has cut taxes for 95% of Americans and that you might be eligible for a $400 credit?". CNN's website to day barely mentions the event, but does have an iReport from someone who claims that he and his wife are both unemployed, but are happy to be paying their taxes and what are these people crying about.

Given how Obama carried something like 95% of black voters, admittedly, I had expected the crowd to be mostly angry white men like myself and also mostly Republicans. I was a bit surprised on the way dowtown on MARTA to be standing next to an older black gentleman who was asking me directions to get to the rally and we chatted a bit about how many people were goign to be there, that sort of thing. As we approached our stop, he said "Let's hope this is enough to get someting really started". Arriving on the scene, I was further surprised by the mixture of people there--especially the number of 20-somethings and the number of black and Hispanic folks. And there were plenty of signs along the lines of "I'm a Democrat and I didn't vote for this!"

Perhaps the most interesting twist was the number of people who left shortly after 9:00, which is when Sean Hannity came on stage. We did. Getting back on MARTA we were commenting on it, wondering if it was mostly people with kids (it was a schoolnight), and a 20-something turned around and said "It's the Hannity factor." Yep, I can agree with that.

The AJC had this to say:

The Atlanta rally was one of 20 around the state and more than 300 across the country. Billed as grassroots protests, the gatherings were attacked by critics as frauds created by Republican advocacy groups with the backing of deep-pocketed lobbyists and Fox News Channel, which reported prominently on the movement.

To which I can only respond with a statement and a question. My family are not Republicans, were not paid to be there, and rarely watch Fox News (esp. Hannity, O'Reilly, or that godawful morning show--I do like that Megan Kelly though!). For the question: when Obama campaign rallies around the country were funded by Mr. Soros and the DNC, and the supporters were flogged into a frenzy by the DailyKos and MoveOn.org, those were proclaimed to be grassroots events representing an uprising force for "change"? Oh, one more thing too, for the record, every speaker I heard was quick to criticize spending by both parties, and usually pointed out that this is nothing new but is something that has reached a limit with the "stimulus" bill and the pork-laden budget with $1T+ deficit passed are just the back-breaking straws for us camels.

President's virtual Town Hall meeting: sham

The virtual town hall meeting was on TV the other night. Here's a summary of it.

The phrase use in this article

"In a first for the White House, the president braved a public grilling from a pool of around 100,000 people who had submitted questions via the internet."

is, quite simply, false. The questions were not an ad hoc "grilling" but a carefully culled selection of questions, pre-prepared answers to which the President was able to read from his teleprompter.

I, in fact, submitted a question that I knew stood little chance of getting answered:

Would you eliminate corporate income taxes? This would provide more than $500B of stimulus and make the US the most favorable nation for doing business. You could offset $370B lost
revenue by collecting $300B in annual unpaid personal income taxes.

[Questions were limited to 250 characters. Otherwise my question would have been more detailed, along the lines of my previous blog entry.

Not only were the questions not only carefully selected to enable maximal proselytizing by Mr. Obama, even the people asking the "live" questions were actually all former Obama staffers.


BTW, the #1 submitted question, which they figured they *had* to address even if it was off-topic simply because it was by far the most asked question, was a variation on a theme: "Will you legalize marijuana?"

The answer to that was a simple no, then they moved on the the real show.

Vent and an answer

From today's AJC Vent column:

The U.S. Postal Service has to cut services and jobs because it is losing money, but can you tell me a single U.S. agency that makes money?

How about the U.S. Mint?

Recession hitting latinos, blacks harder

There's this article that says so.

But I'd like to mention the racism exhibited by one of the people interviewed in the article:

Salter's mother worked as a housekeeper, and his father was a custodian. Before his divorce, Salter's stepdaughter and her four children lived with him for many years. Professional blacks "don't usually start out with an inheritance," he said. "On top of that, quite often things happen in our families to cause us stress. An unexpected child or grandchild, drug problems. When you try to set aside money to put your kids through college, all of a sudden you have to say, 'I can't let this family member fall and become homeless.'

"I would say eight out of 10 people I know have a similar situation."

The main implication I get from that is that white people usually start out with an inheritance, and it's that reason why they succeed where so many black people may fail.

For the record, when my father died, he left each of my two brothers $10,000. He left me nothing, except the non-binding suggestion to his wife (my stepmother) that she sell me his share of the family place on Lake Ontario for the price of $1. On which I immediately began paying taxes. I was 31, hardly "starting out with an inheritance." It's unlikely we would have gotten anything had he lived beyond the age of 55.

Having said that, inheritance is hardly a fact of life for anyone. According to a study conducted by Jagadeesh Gokhale and Laurence Kotlikoff for the Federal Reserve Board, 92% of Americans will receive inheritances of $0, while slightly more than 4% will receive a modest sum (less than $25k).

Nearly 92 percent of the population will receive nothing at all, the study concluded.

Of the 8 percent who stand to inherit something, half will inherit less than $25,000, while just 1.7 percent of the population can expect to inherit more than $50,000.

The study was initially published in 2000, but the authors say if anything, the picture has worsened.

That means that for most Americans, any inheritance will not be a “life-changing event.”

Clearly it is the case that the very rich will accumulate wealth that is passed down. And further I will submit that the top 1% are very probably white. But it is disingenuous, if not outright racially offensive, to portray that tiny slice of the uber-rich as being representative of the experience of all white people.

For those who do inherit, the primary source of that inheritance is value of the parent's home, and we know where that all just went.

Certainly there is less inherited wealth among blacks because of previous institutional racism. Segregation prevented eariler generations from accumulating wealth. And the numbers now continue to paint a bleak picture, but again, it is not fair to point at white people and say they succeed because they inherited wealth--because it just doesn't happen in any substantial way for 95% of people of any race. Further, this book, says that only 10-20% of the black-white difference in wealth is attributable to inheritance.

According to this book, there's some not-so-shocking nor racist tidbits:

• 62% of households headed by single parents have no savings or other financial assets
• 40% of households with only high-school educations have no nest egg
• nearly 1/3 of all households are without financial resources
  

The same book goes on to demonstrate that when occupation, education, and income are factored out (i.e., given similar levels of each) black households still end up with $25k less in savings than their white counterparts. Middle-class blacks earn 70-cents for every dollar their white counterparts make, but only accumulate 15 cents of wealth for every dollar of wealth accumulated by their white counterparts.

Racism may be a factor, but it ain't the only factor. I think most people would agree that institutional racism has decreased steadily since the '60s. Yet the disparity in wealth between whites and blacks and hispanics has hardly changed at all in the last 20 years. One reason explored in this paper is that blacks may have lower risk-tolerance than whites, and therefore when they do have similar income, education, etc. they simply choose less-risky--and therefore often less lucrative-- investments. On the other hand, stock ownership rates among blacks "grew much more rapidly" than whites between 1996 and 2001, but then the trend reversed between 2001 and 2004.

Based on a logistic regression model, Black households had the same predicted stock ownership rates in 1998 and 2001 as White households that were otherwise similar in terms of income, net worth, risk tolerance, and other characteristics, but in 2004 Black households had significantly lower predicted stock ownership rates than White households.

All researchers have found that Black and Hispanic households are less likely than White households to own risky assets than White households. Previous research has also found that Black and Hispanic respondents are less willing to take investment risk than White respondents. The level of investment risk a household is willing to take has implications for the household’s financial behavior and future well being. Owning high return investments is necessary for households to be able to reach long term goals such as having a comfortable retirement.

While doing some reading on this topic, I found some gems:

• "Wealth has never been democratically distributed in U.S. society."
• While the stated intention of most asset building policies is to benefit working and poor families, a deeper look shows that they have failed to benefit low-income families; in large part owing to the predominance of asset building policies that operate through the tax code. Currently, almost $300 billion per year in federal tax expenditures goes to support asset building among individuals in the form of tax credits, deferments, or exemptions for investments, homeownership, and retirement accounts. These policies are of little benefit to many low-income individuals who do not have tax liabilities.
• "Lack of wealth is both a cause and an effect of low income and poverty, and the two are highly correlated."

AIG bonuses returned--tax implications?

Just a quick thought, since I am again too busy to really put in the effort here today.

As I understand it, you owe taxes on money you have been paid. In particular, you are responsible for taxes in the year in which you take constructive receipt. So those AIG folks who were paid bonuses took constructive receipt of that money. At that moment, it became income which they must report and pay taxes on. What they do with it after that is up to them.

Now, many of them have returned the money. They have given AIG a gift. They did not return money paid to them by mistake, as if their paycheck accidentally got an extra zero. They did not refuse to money when it was offered (an act which would negate constructive receipt). They just dipped into their cash-on-hand and wrote a check to AIG. Anytime you render a gift to anyone other than an IRS recognized charity in excess of $13,000 ($26,000 per couple) you will be required to pay a gift tax.

On top of all that, Congress is moving to tax the money at 90%. I don't expect Congress to so carefully craft such a law so as to exempt from normal income or gift taxes money that gets returned. They might not even think to exempt returned money from the 90% threat!

So the people who have returned their bonuses face normal income taxes, plus gift taxes, on money they have returned! And they may owe 90% taxes on top of that!

So a guy who was given a bonus of $1M in January, returns the money in February. He took constructive receipt. He owes 35% income tax on the $1M, ignoring deductions etc. That's $350k. He "returned" his $1M bonus, by giving AIG a gift. He's now out the $1M, but still owes $350k in income tax (maybe $900k!!). Adding insult to the injury, he may face up to 45% gift taxes. So returning his $1M bonus has may now cost him $1.7M.

"Shoot it, whitey!"

I was at the Georgia Dome yesterday for the ACC Basketball tournament, disappointed at watching my Clemson Tigers lose their opening game.

A game during which, a loud fan yelled the above. See, Clemson has a wing player (shooting guard) who happens to be a white kid. He normally is a very effective 3-point shooter but was off his game yesterday, so I can only imagine that this fan (who happened to be black and who happened to be wearing the other team's colors) wanted to see him to continue to miss.

But I was left thinking about what would have happened had the racial situation and epithets been reversed?

Supreme blunder?

[Update: The WSJ has an opinion piece on this topic]

http://blogs.usatoday.com/oped/2009/03/opposing-view-t.html#more

An unfortunate error cost a woman her arm. She had been given a drug, administered in a manner that was strongly warned against in the drug's documentation, that caused gangrene. But now the Supreme Court has ruled that warning labels are simply not enough, even though the FDA strictly advises on how labels are written and what they must contain.

This drug has been approved and used since 1955 with very few unfavorable results "It had been used beneficially and with very rare incidents more than 200 million times since 1955 under FDA-approved labeling." One botched injection in violation of the warning on the label and poof, expect this mfr to lose lots of money. And the inevitable negative impact is that drug prices will increase to cover potential losses across the board--I mean even more so than already.

Of course USA Today's editorial board feels differently. And the initial jury found Wyeth liable for $7.4M.

USA Today and the Surpreme Court seem to think that a warning label written for medical professionals under federal guidelines is not enough. "The drug label's warnings had been approved by the U.S. Food and Drug Administration, but a Vermont jury found that Wyeth could have — and should have — made those warnings stronger." And according to one article I read "Wyeth has never been remiss in reporting incidents of gangrene from Phenergan via IV push, this is not the kind of Merck/Vioxx-type case in which a drug company deliberately withheld risks from the FDA."

I can tell you one way that Wyeth could have avoided "acting negligently". They could have decided that this exceedingly small risk (by my short googling research, about 50 incidents...math follows: 50 / 200e6 = 0.000025%) meant that they ought not to sell this drug.

Thirty seconds of googling show many journal articles discussion the danger, although they certainly can be related to this case. I'd love to cut&paste the actual warning as printed, but the PDF document does not allow text extraction. So follow this link and read along. On page 2, it says "Under no circumstances should PHENERGAN Injection be given by intra-arterial injection due to the likelihood of severe arteriospasm and the possibility of resultant gangrene (see WARNINGS-Injection Site Reactions)." [bold face and capitalization as in the document]. Now scroll down to middle of page 4 "Injection Site Reactions" and the two paragraphs describing the results of Inadvertent Intra-Arterial Injection. Gangrene and amputation are listed at least twice!

Does this look like a "mild warning" per this article?

The FDA has ostensibly known about the drug’s gangrene risks for many years, and despite the over 50 amputations that have resulted from the IV push method of administration, has continued to approve the drug for IV push use, including only a mild warning on the label to advise doctors of the risk.

I just can't see how anyone could rightly think Wyeth is at fault here.

Who owns banks now?

On CNN this morning, some asshat was talking about how it will be good to partially nationalize banks by forcing them to sell preferred convertible shares to the Government to the tune of about 40% in the big banks. He goes on say something like "by investing in these bank and making taxpayers their owners..."

At that point I lost conscious thought about what he had to say after that due to the rage implosion going on in my brain.

Who does this clown think owns the banks right now? Shareholders. Even though a huge number of Americans have zero or negative tax liability, I would guess that by and large that owners of bank shares are among the 50% American that actually pay taxes.

Read the stimulus bill

Our good friend sent us this link (Read the Stimulus).

At least two promises are being broken. Congress passed a resolution last week that they would not vote on the bill until the full final text had been available for 48 hours--they voted less than 24 hours after the bill cleared committee. Coming up one vote short in the Senate, President Obama sent a plane to retrieve an Ohio senator who had rushed home because his mother died. If they had waited the 48 hours they set for themselves, this would not have been necessary (and how much did that cost?).

Also being broken (again): BO promised that he would not sign any legislation without providing it on the White House web site for 5 days. He already broke that promise with the Ledbetter Fair Pay Act, signing it hours after it passed Congress. He will be signing the stimulus bill only 3.5 days after it squeeked through Congress late Friday night.

What really pisses me off, though, on top of everything, is that every single MOC who voted for this bill has not read it. They could not possibly have read the final bill before they voted on it. It should be a basic responsibility of every MOC to at least read a bill before they vote on it.

Declining home prices not the end of the world

The AJC had an AP article headlined with

Foreclosures sank home prices in most cities

Home prices fell in nearly nine out of every 10 U.S. cities in the fourth quarter of last year as low-cost foreclosures flooded the market and the housing market’s decline spread nationwide.

But is this necessarily a bad thing? Sure, it hurts when you have to sell you house in such a market--your gains on the house now are not what they could have been 2 years ago, or you might even be loosing money. And it hurts if you cannot make your ARM payment and cannot refinance because you're underwater.

Home prices in Ft. Meyers Florida are down 50%. Down 12% nationally. But lower house prices are *good* for lots of people--people who are trying to buy homes! Many people in the worst hit areas can now afford housing that they were priced out of a short time ago because of artificially inflated prices (housing bubble).

The states in which sales rose —- Nevada, California, Arizona, Florida, Minnesota and Virginia —- are places where buyers have been able to snap up foreclosed homes at a bargain. Sales more than doubled in Nevada, rose 85 percent in California, and nearly 43 percent in Arizona.

“We see a pattern of strong sales gains, particularly in lower-price homes, in areas with price declines resulting from foreclosures,” Lawrence Yun, the trade group’s chief economist, said in a prepared statement.

In California and Florida, sales of distressed properties accounted for about two-thirds of all sales, compared with about 45 percent nationally.

Gregg is out

According to the WSJ today Sen. Gregg withdrew his name from consideration. He stated that his views on the stimulus package and the Census were irreconcilable with the President's. I guess that at least keeps a Republican in the Senate.

Racial profiling

I'm late to this story, but I found it very interesting. I had to piece together quotes from other sources, because the original article has been moved into the paper's pay-per-view archive. Here's the original lead though "Some in Danville cry foul over high school basketball cuts" and the teaser "Some black community members have accused the Danville High School boys basketball head coach of racial profiling for cutting at least eight black players from [the] team. Now they're planning to organize a protest in an attempt to get Coach Gary Tidwell, who is white, removed."

Here's some other quotes:

"We have racial profiling going on," said Frank McCullough, pastor of Mount Olive Christian Church, adding that's the only explanation in his mind. "He took a look at the way the young men wore their hair, and made comments about that and whether he thought they should be hanging out with certain people."

Senior Omar Kelly said he felt coach Gary Tidwell discriminated against him and senior Ayron Worthington because they wore braids.

Debra Gouard, a local minister and Bryant's mother, was incensed when Tidwell told her and other mothers that he chose the best players for the team, but that he didn't have his selection criteria in writing. She said the mothers are starting a petition to get the students reinstated and Tidwell removed.

Here's the kickers though:

1. All the remaining players are also black. The original sentence above ended "cutting at least eight black players from an all-black team." Also "The entire team is African-American."
2. Two of the remaining players have the same hairstyle as the whiners: "But he acknowledged that two other players who were not cut also wear them."
3. What mommy dearest (Gouard) was so mad about was that she was basically told that her son was not one of the 8 best players to base his team on based on his criteria: Tidwell "said there were five factors he looked at – whether they were coachable, academics, commitment level, behavior and athletic skill"
4. At least the principle is standing behind him: "The coach chose the student athletes that he thought were the very best players and would help the team be successful this year," Principal Mark Neil said. "That was the basis of the choice.

This sounds to me much like one of a brouhaha over nothing more than a coach making normal coaching decisions. It also seems to me that when you are hypersensitive to the point that you are imagining racial slights, then perhaps it it you who is the racist.

Oh, I found a full link.

Math problems in Congress?

Boortz says this about an amendment in the Recovery and Reinvestment Act (argh, so-called stimulus bill) [may or may not be present in final bill]:

The amendment included in the bill would penalize companies that paid bonuses of more than $100,000 to executives after the company received bailout funds last year. The companies would be required to repay any portion of that bonus over $100,000 within four months or be hit with an excise tax of 35% on the portion above $100,000.

Now, if I was running a company that was in this situation, do I just wonder who these idiots are in Congress that can't do math? Say my company gave a guy $500k bonus. That's $400k over the limit. This amendment says "pay back the $400k or pay 35% tax penalty on the $400k". Guess what I'm gonna do? Pay back $400k or pay a "fine" of $140k? Seems simple enough to me.

Working families

"Working" is not a synonym for "low-income". This terminology is repeated and repeated, seemingly in a conspiratorial effort to make it seem that anyone who is not low-income doesn't work. I earn a good salary, but I certainly am working for it!

Tragedy?

A 93-year-old WWi veteran was found frozen to death in his Michigan home in January. His electricity had been reduced, and then shut off by a device called a limiter, because he owed more than $1000 on his electric bill.

A neighbor who lives down the street called Schur's death "unforgivable."

"This can't be allowed to happen in this country," said Jerome Anderson.

Walworth said he believes his uncle's death was "preventable."

Certainly we all would have sympathy for a poor old man who was preyed upon by the evil electric company. But lost in the outrage would be questions:

• Why, when the power went out, did he not bother to call the electric company? The limiter device can be reset by the occupant in the event a shut-off is triggered.
• Why didn't he call 911 or anyone else, for that matter, once he started to get cold?
• Why was this 93-year-old man living alone? Where was the nephew and neighbors? If he couldn't figure out to call the power company or 911, then he should never have been left alone by his family, friends, and neighbors. Shame should fall on those people, too.
  

and most importantly

• Why didn't he just pay his power bill? After all, he apparently had $600,000 in savings--money that was left to a local hospital.

Seen in this light, the situation changes somewhat. It's still sad that he died, but it was indeed entirely preventable. By him.

In a similar vein, we have the case of a Georgia woman whose house burned down. As was covered by the national press and, she claimed it was racially motivated and was specifically because she was an Obama supporter--her house was targeted because she had an Obama sign in her yeard and a sticker on her car. Her case became cause celebre in the Democrat digital realm.

A single Mother of three, who supported Obama's election bid and had traveled to Washington for the inaugeration, returned home to Georgia to find her home burned to the ground and graffiti indicating a threat to the President left behind.

Turns out now that the arson investigators have done their job, that she herself is the primary suspect, and is hardly a portrait of virtue, currently in jail on unrelated drug charges.

A Forsyth County woman who claimed her house was burned down because she supported President Barack Obama is now suspected of setting the fire herself, authorities said Wednesday.

The homeowner, Pamela Graf, 47, had not been charged late Wednesday in connection with the fire, which occurred the weekend before the presidential inauguration.

But she was in jail on unrelated drug charges, said Capt. Jason Shivers, spokesman for the Forsyth County Fire Department.

Shivers confirmed Wednesday that Graf and her boyfriend, Steve Strobel, 46, of Winder are “both officially labeled as a suspect” in the Jan. 18 fire at Graf’s five-bedroom, 2,900-square-foot house north of Cumming.

Fire officials said Graf told them she was in Washington to attend the inaugural when the fire broke out, but rushed home when she heard what happened.

Racially charged graffiti was spray-painted on a fence near the property, and investigators said Graf told them she had received a threatening note after she put an Obama campaign sign in her yard.

Graf and Strobel were arrested late Tuesday night when Forsyth County fire investigators executed search warrants at a motel in Cumming where Graf has been staying and at a place in Barrow County where Strobel has been residing, Shivers said.

“We were in search of fruits of the crime of arson,” said Steve Anderson, the Fire Department’s chief of investigations.

Graf was charged with three felonies and one misdemeanor for possession of cocaine and marijuana, Shivers said. Strobel was charged with obstruction of justice and with making false statements to investigators about the fire, the spokesman said.

Shivers and Anderson said investigators are continuing to run down leads in the case and could be filing additional charges in the next few days.

Now, she must still be presumed innocent of these charges, but again, the picture presented by the press changes once additional facts become known.

The emperor's missing clothes?

Charles Krauthammer says Obama's honeymoon is over already--he blew it.

“A failure to act, and act now, will turn crisis into a catastrophe.”

—- President Obama, Feb. 4

Washington —- Catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared “we have chosen hope over fear.” Until, that is, you need fear to pass a bill.

JK Harris and tax cheats for Cobinet positions

Every time I see those ads on TV for JK Harris, where they promise to help you get out of trouble with the IRS, I cringe. Certainly our tax code is complicated enough that an honest person trying to do the right thing can make a mistake, but it seems to me that if the IRS is after you the way they depict in the ads, then you've probably done more than made a simple mistake. Math errors, number transpositions, and the like are usually handled by a notice from the IRS and a Form 9465 (Installment Agreement Request). Also, according to the IRS "If you are experiencing a financial hardship and are unable to pay anything, we may temporarily suspend collection action."

All of which leads me to think that the many people seeking JK Harris's services are nothing more than tax cheats or people who didn't even bother to file & pay their taxes (lesser evil than actively cheating, it feels like to me). So I have little sympathy.

On the other hand, it seems that JK Harris itself is a shady operation (google "jk harris scam").

Meanwhile, tax cheats continue to pile up in the Obama administration. Along with Geithner (confirmed) and Daschle (withdrawn), and chief performance officer nominee Nancy Killefer (withdrawn), we now have USA Today saying "The confirmation of another Cabinet member stalled Thursday because of unpaid taxes after USA TODAY disclosed that the husband of Labor secretary nominee Hilda Solis paid about $6,400 this week to settle numerous tax liens against his business dating to 1993."

"Stimulus" package by analogy

Heard several analogies, but this one may be the best: "It's like taking buckets of water from the deep end of the pool and pouring them into the shallow end and hoping to make the pool bigger."

Tax relief?

Since those charged with creating the mess that is our tax code should be expected to abide by it (ahem, Mssrs. Geithner & Daschle), here's some ideas on ideas for fixing the tax code. Not, mind you, really fixing it a la FairTax, but just to get it cleaned up a little.

For all members of Congress and the White House (cabinet members and President) and including high-level congressional staffers (chiefs-of-staff, deputies, etc.) who regularly rub elbows with lobbyists.

• Require all of the above to do their own taxes. I could be cruel and say "by hand" but I'll allow TurboTax or other software, but I will require an affidavit (threat of perjury!) swearing the return was self-prepared.
  
• Require an annual IRS audit for all of the above.
  

With all due respect

Just passing along this word:

http://www.cato.org/special/stimulus09/

McD's figures it out

For some time now, McD's had a dollar menu, which for breakfast included an egg-and-cheese biscuit and a sausage biscuit. Since I occasionally do manage to go to work early enough to think breakfast is necessary, I had been getting one of each. Having spent my $2, I would remove the sausage patty into to egg&cheese biscuit, produce a sausage&egg&cheese biscuit, plus a plain biscuit (albeit with a little sausage flavoring) that I could slop some strawberry jelly on. See, the normal price of a sausage&egg&cheese was $2.69, so I was coming out ahead.

This morning, I stopped in for the first time in several weeks, and only after my order was rung up did I notice that the egg&cheese biscuit was not on the $1 menu anymore. Actually, I couldn't see since the menu board at McD's is generally the most stupid layout and hadn't been changed for breakfast yet. Anyway my order was now $2.69. Dammit.

This is the 2nd time this has happened. Double-cheesburgers used to be on the $1 menu, but got dropped. Expecting a $2+tax and getting $5 bill was a shock. McD's had enticed me into their store with $1 menu and by being the only thing open on my way home at 10PM. Wendy's 99-cent menu is stripped bare, and Taco Bell's is similarly down-graded.

Maybe I'll just go home and make myself a chicken-salad sandwich.

[Edit: McDouble has replaced double-cheeseburger. Same sandwich but with 1 slice of cheese instead of two. Apparently dairy (cheese) costs are skyrocketing. Hmm, maybe egg-biscuit is still $1? And Taco Bell's new double-cheesy beef burrito for 89-cents is a great deal as far as I'm concerned.]

Forgive my cynicism

I heartily doubt that President Obama's purported nominee for Commerce, Senator Judd Gregg (Republican of New Hampshire) is being named out of respect for his abilities. I suspect that he is being listed as a cover, since New Hampshire has a Democrat governor. If Gregg is named and accepts (and is confirmed), then the Democrats will likely have a filibuster-proof Senate, since a Democrat will be named to replace the Senator as he vacates his office.

[Edit: Sen. Gregg has stated that he would not consider the nomination if it might tip the balance of power in the Senate.]

More "do as I say, not as I do" from the Dems

With the anticipated tax increases just around the corner now that Democrats control Congress and the White House, it should baffle me that two Cabinet-nominee Democrats have not bothered to pay nearly $150k in taxes between them. And Caroline Kennedy, Hillary's one-time replacement in the Senate, had to withdraw her name, reportedly due to tax issues. I *should* be baffled, but I'm not. The rules don't apply to the Democratic privileged class in a classic double-standard. Can you imagine the outrage if W. had nominated a Republican who owed $100k in back taxes because he didn't claim the lobbyist-provided limo and driver on his taxes?

More irony

The pundits on the Hill and at 1600 Pennsylvania Avenue would not be able to cry foul over the bonuses of Wall Street executives had their companies been allowed to fail. Instead, they were propped up with taxpayer's money, against the express desires of many citizens. Propping up a failed business, then expecting different behavior? I've heard a similar definition for insanity.

There were alternatives, but in the rush to *do something* billions and billions of dollars have gone into this black hole, with no accountability, and certianly no idea as to whether the expenditure has provided *any* positive results.

They fail to see the irony

In the AJC today there's an article about car dealerships "left out of Detroit bailouts".

Here's an excerpt:

Executives with the nation’s Big Three automakers say they love you. They sympathize with you. But they think there are too many of you out there, and they’re not about to come to your rescue if you’re hanging on by a thread.

When pressed about the plight of dealerships during media sessions before the show opened to the public, executives from the Big Three were resolute about what they saw as the need to reduce the number of dealerships as the recession grinds on.

The restructuring plans of all three companies include reducing the number of dealers in communities across the country. But rather than forcing the reduction through corporate strong-arming, which could lead to costly lawsuits or buyouts, executives this week suggested it would be achieved through natural selection: The weakest would go; the strongest would survive.

“When you take a third of the market out, a third of the dealers don’t really have a business to go forward with,” Jim Press, vice chairman and president of Chrysler LLC, said Jan. 11, referring to how the Big Three have lost sales to foreign competition.

How bitter is the irony? Here I was thinking that if you take away a third of the market, then it seems reasonable that one of the Big 3 is likely to go out of business. Instead, they show up in front of Congress with their hands out, ready to suck off the taxpayer tit. But their dealers, of let's let some of them fail, it's only natural.

In this case, my thoughts are that what's good for the goose (dealers) ought to be good for the gander (Big 3).

Geithner had to know

It seems to me that if he was audited for '03 and '04 and had to pay back taxes, interest, and penalties that he should have been smart enough to realize that he had done exactly the same things in '01 and '02. At that point, he could have done the right thing and paid those off too. Instead it seems he decided to keep his mouth shut so as to "get away with it"

If this guy is the best we can do for Treasury, then we've got big problems. He might be the smartest, most qualified re education and experience, but if he's dishonest enough to knowingly cheat on his taxes to the tune of tens of thousands of dollars then he should be dismissed from consideration.

After all, Michael Vick was a great quarterback, but his cruelty and dishonesty off the field means he will probably never play football again. Even after he gets out of prison.

Geithner again: now I'm pissed

In fairness, I must note that the man was once-upon-a-time a Republican, who re-registered as an independent some time ago; he later served in varying roles in Treasury in the Clinton administration. So my "Dems:..." post below, while still "truish", might not be factual--I have no idea whether he now considers himself a Democrat.

More information keeps coming out. Again, not a national tragedy, but it does fall under the "do as I say not as I do" flag and presents a conflict of interest question if nothing else. I've got a few postings below that explain some of the problem (that Obama's appointment for Treasury--who would be in charge of the IRS--didn't pay some of his taxes in 2001,02,03,and 04).

Documents released by the Senate Finance Committee strongly suggest that Geithner knew, or should have known, what he was doing when he did not pay self-employment taxes in 2001, 2002, 2003, and 2004. After his failure to pay was discovered, first by the IRS and later during the vetting process, Geithner paid the federal government a total of $42,702 in taxes and interest.

The IMF did not withhold state and federal income taxes or self-employment taxes — Social Security and Medicare — from its employees’ paychecks. But the IMF took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. First, each employee was given the IMF Employee Tax Manual. Then, employees were given quarterly wage statements for the specific purpose of calculating taxes. Then, they were given year-end wage statements. And then, each IMF employee was required to file what was known as an Annual Tax Allowance Request. Geithner received all those documents.

The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.

At the end of the tax allowance form were the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.” Geithner signed the form. He accepted the allowance payment. He didn’t pay the tax. For several years in a row.

So now it seems that he was meaningfully informed by his employer about his tax responsibilities, quarterly even! And yet this "mistake" continued for four years. Combined with some of the other ways he cheated on his taxes, I'm not sure he's someone who should be running the IRS.

On the other hand, what did I expect from a politician?

Perhaps I was too easy on Geithner

According to the WSJ, President-elect Obama's Treasury nominee Timothy Geithner made "mistakes" on his taxes for several years. I had initially read that he simply didn't pay his FICA taxes, because his employment with the IMF was as a 1099 employee. Ok.

I said it was stupid, especially since it went on for several years. I expected TurboTax, etc. or his accountant to do a better job than that and to have caught the error in the first year.

Now it seems that this was not his only "mistake". The WSJ says

Other tax issues also surfaced during the vetting, including the fact Mr. Geithner used his child's time at overnight camps in 2001, 2004 and 2005 to calculate dependent-care tax deductions. Sleepaway camps don't qualify.

Amended tax returns that Mr. Geithner filed recently include $4,334 in additional taxes, and $1,232 in interest for infractions, such as an early-withdrawal penalty from a retirement plan, an improper small-business deduction, a charitable-contribution deduction for ineligible items, and the expensing of utility costs that went for personal use.

I love the WSJ's remarks: "We're tempted to say America needs a Treasury secretary who is smart enough to figure out his own taxes. But such a cheap shot would be beneath us. Instead, we are going to make a serious point: America needs a tax code simple enough for the Treasury secretary to figure out." Pretty much what I said yesterday.

Dems: Do as I say not as I do?

http://www.ajc.com/metro/content/printedition/2009/01/14/geithner.html

Timothy Geithner, the man tapped to lead the nation out of the greatest economic crisis in decades —- and who would oversee the Internal Revenue Service —- trekked to Capitol Hill on Tuesday to explain to senators how he made $42,702 worth of mistakes on his own tax returns.

As treasury secretary, Geithner’s job would be directing a mammoth rescue of the nation’s economy. President-elect Barack Obama selected him for the post late last year, citing his “unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency.”

Now, to be fair, it does seem to have been a minor snafu and not some sort of intentional tax evasion. He thought his employer was withholding FICA. But they were not, because they (the IMF) hires so many foreigners they do not automatically do that and require employees who must pay those taxes to manage their own affairs. He has apparently already paid the back taxes, penalties and interest.

On the other hand, if he plugs the numbers into TaxCut or TurboTax he'd find that they didn't come out right and should have known right away (i.e. in the first year) and should not have gone on for more than 3 years. If he had tax accountant, that's even worse.

What it does highlight is the absurd complexity of our tax code.

Why am I not surprised?

Multiple sources, but this one is pretty concise.

It turns out that the best time to make money on Wall Street is when Congress is out of session. In fact, according to Wall Street analyst Eric Singer, stocks do ten times better when Congress leaves town. (Good news! The House has gone on recess, and the Senate set to leave any day, and they won't be back until September!)

Whether you're a Republican or Democrat, this is a real eye-opener. We all hate to see our hard-earned taxpayer money wasted, or our business over-regulated. Now the evidence is in: Politicians are bad for Wall Street, and your pocketbook!

Singer revealed his shocking study at this year's FreedomFest in Las Vegas (www.freedomfestcom). He went back to 1963, "When we went off the silver standard" (as he puts it). He found that the S&P 500 Index has gone up only 1.6% a year during the time when Congress is in session... and a whopping 17.6% annually when Congress is in recess.

Economists Michael Ferguson, of the University of Cincinnati, and Hugh Douglas Witte, of the University of Missouri at Columbia, confirmed Singer's proposition.

They found that since 1897, 90% of the gains in the Dow Jones Industrial Average came on days when Congress was out of session. A dollar invested in 1897 with the strategy of going back to cash every time Congress met was worth $216 by 2000.

But an 1897-dollar invested on the reverse strategy was worth only $2. The correlation got worse after World War I, when Washington started playing a more activist role in taxing, regulating and inflating.

Another look at the same topic (and same research) comes from the woman who wrote "The Forgotten Man" (see my blog entry on same).

How to profit from the effect? To ensure your money is in stocks during all Congressional holidays and all in cash when Congress is in Washington, you'd have to go in or out of the market 15 or 20 times each year. Singer doesn't say how he's addressing such challenges, or share his results.

Still, the facts are there: If you applied his thesis from the end of 2000 through 2005, and stayed out of the S&P 500 while Congress was working, you earned close to 7 percent a year. If you stayed in the S&P 500 the whole time, the annual total return (including dividends) was less than 1 percent. There may be money in ideology, after all.

This satisfies my notion that the best federal Government is one where Congress and the President are from different parties and are largely antagonistic. This leads to "gridlock" in Government, which as far as I can tell is a good thing.

Obama the "Ice Cream Man"

This is a comment on the Town Hall article by Neal Boortz:

I have copied the entry here because it is too classic to be left alone.

Posted by Dave:

Obama the "Ice Cream Man"
CIVICS 101 3rd GRADE
From a teacher in the Nashville area

We are worried about "the cow" when it is all about the "Ice Cream"

The most eye-opening civics lesson I ever had was while teaching third grade this year. The presidential election was heating up and some of the children showed an interest. I decided we would have an election for a class president.

We would choose our nominees. They would make a campaign speech and the class would vote.

To simplify the process, candidates were nominated by other class members. We discussed what kinds of characteristics these students should have. We got many nominations and from those, Jamie and Olivia were picked to run for the top spot.

The class had done a great job in their selections. Both candidates were good kids. I thought Jamie might have an advantage because he got lots of parental support. I had never seen Olivia's mother.

The day arrived when they were to make their speeches Jamie went first. He had specific ideas about how to make our class a better place. He ended by promising to do his very best. Every one applauded. He sat down and Olivia came to the podium.

Her speech was concise. She said, "If you will vote for me, I will give you ice cream." She sat down. The class went wild. "Yes! Yes! We want ice cream."

She surely would say more. She did not have to. A discussion followed. How did she plan to pay for the ice cream? She wasn't sure. Would her parents buy it or would the class pay for it. She didn't know. The class really didn't care. All they were thinking about was ice cream.

Jamie was forgotten. Olivia won by a land slide.

Every time Barack Obama opens his mouth he offers ice cream, fifty percent of the people react like nine year olds. They want ice cream. The other fifty percent know they're going to have to feed the cow and clean up the mess.

My stimulus plan

Instead of printing up $1T or thereabouts and letting Government bureaucrats decide which companies live or die, I propose the following.

First item: Let's acknowledge that corporate taxes are a fraud. Corporations do not pay taxes. Rather, they remit so-called taxes that have been passed on, ultimately to consumers. Any tax the Government may levy on corporations will almost always be passed along to the consumer in one way or another. The corporation may simply directly pass along the cost by increasing prices and assuming taxes similarly affect all their competitors then this will be the easiest to accomplish. They may cut back on workers wages and benefits to offset the taxes. They may cut or eliminate dividends to shareholders. Most likely some combination of the three. And they may even pretend to eat some of the tax by paying for it by reducing profits (but I contend this is equivalent to cutting dividends).

Second item: business regularly seek to manipulate their operations to minimize taxes. They hire tax accountants and make business decisions based not on the soundness of the decision vis-a-vis how it benefits the business but on how the tax bottom line is impacted. On top of the actual corporate taxes paid, which were about $370B in 2007, corporations spend an additional $200B or more simply to comply with the tax code.

Third item: businesses regularly lobby for special exemptions and loopholes in the tax code. This leads to an overly complex tax code (and increased compliance costs) as well as the potential (and actuality!) for corruption in Government.

Fourth item: our federal corporate tax rate is one of the highest and most punative in the world, and is cited as a major reason for our multi-national corporations to move their headquarters overseas.

By now, my proposal should be obvious: eliminate corporate taxes.

The compliance costs go away...$200B+ freed up for more productive things.
$350B (+$200B compliance costs) or so goes right to the bottom line, which will lead to cheaper goods for consumers and/or higher wages or dividends to employees and shareholders--what'll that do for the economy?
Business decisions now will be based on sound busniess principles instead of tax impact.
Loopholes, etc. go away...all businesses now on level playing field.
"Corporate welfare", which almost always takes the form of tax credits, goes away.

But best of all, consumers will make the decisions, not bureaucrats.

Addendum: current estimates of uncollected taxes are estimated at $250B to $300B each year. So put the IRS people who would have been overseeing corporate tax collections to work recovering these revenues and the corporate taxes not collected are basically offset!

What Roland Burris should have said

Once Governor-under-indictment Rod Blagojevich appointed him, Roland Burris has greedily lapped up the spotlight and proclaimed himself to anyone with a microphone to be "the junior Senator from Illinois". His words and actions, not to mention his appointment by Blogojevich, makes me wonder whether he doth protest too much. That is to say, I'll always wonder whether he (Burris) did have some hand in the pay-for-play appointment to get the title he seems so desperately to want.

He could have really taken the high road with something like this:

Ladies & gentlemen,

I am honored by the consideration our Governor has bestowed upon me when he named me as his choice to fill President-elect Barak Obama's former Senate seat. However, given the current scandal surrounding the Governor and this same Senate seat, I must respectfully decline the appointment.

I further implore my fellow citizens, especially those who have served and are currently serving the people of the State of Illinois, to likewise refuse any appointment that might be made by Governor Blogojevich. Leaving the Senate seat unfilled for a short period of time is better for Illinois than carrying a cloud of suspicion to Washington, D.C.

I would be proud to serve the state of Illinois in the US Senate in the future, should the situation be resolved and the appointment was offered again under better circumstances.

AJC swipes at Bush again

They just keep beating this lame duck.

Bush’s tax cuts helped eliminate the surpluses of the Clinton years and drive the annual budget deficit to a record $413 billion in 2004. The deficit later plummeted to $162 billion in 2007 but soared to $455 billion in the fiscal year that ended in September.

It wasn't Bush tax cuts that did this. While tax revenues did dip in 2002 and 2003, due to the recession at that time, they quickly rebounded and are at an all-time high by 2007. Here's personal income taxes and total tax revenue (all sources, in millions of dollars) for a few years:

1995 590,244 1,351,932
1996 656,417 1,453,177
1997 737,466 1,579,423
1998 828,586 1,721,955
1999 879,480 1,827,645
2000 1,004,462 2,025,457
2001 994,339 1,991,426
2002 858,345 1,853,395
2003 793,699 1,782,532
2004 808,959 1,880,279
2005 977,222 2,153,859
2006 1,043,908 2,407,254
2007 1,163,472 2,568,239
2008* 1,219,661 2,521,175 (*estimated, source tax policy center)

The problem was not the Government's income, but rather its outlay:

FY 2000 1,813,718
FY 2001 2,026,886
FY 2002 2,280,841
FY 2003 2,518,447
FY 2004 2,518,626
FY 2005 2,604,577
FY 2006 2,873,261

Note: numbers may not be in same adjusted dollars, I could not find that notation in either source used.
Note: not sure if first set of numbers is FY or calendar.

Spending increased about 30% in the administration, which is the real problem, which annual government spending per household rising to $23,494 in 2007 (up from $20,451 in 2000), up 14.8% over the period.

Let's face it, the Government has run a deficit almost every year since 1965. The one noticeable (very noticeable) change comes under Clinton, but not until Newt's Congress takes over.

Reading "The Forgotten Man"

This book is about the Great Depression, in particular how Government actions actually prolonged the Depression. Ironically, a good friend is reading the same book (not too strange, since we were both given the book for Christmas by the same person) and, based on a brief discussion, I think he thinks the book is actually about how the New Deal was a great thing. But here's some notes from the inside flaps:

The author also traces the mounting agony of the New Dealers themselves as they discovered their errors. She shows how both Presidents Hoover and Roosevelt failed to understand the prosperity of the 1920s and heaped massive burdens on the country that more than offset the benefit of New Deal programs. She argues that the real question about the Depression is not whether Roosevelt ended it with World War II, but why the Depression lasted so long. From 1929 to 1940, from Hoover to Roosevelt, government intervention helped to make the Depression Great.

The title comes from an essay by Yale professor William Graham Sumner, which I found a copy of here.

The type and formula of most schemes of philanthropy or humanitarianism is this: A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C's interests, are entirely overlooked. I call C the Forgotten Man.

The fallacy of all prohibitory, sumptuary, and moral legislation is the same. A and B determine to be teetotalers, which is often a wise determination, and sometimes a necessary one. If A and B are moved by considerations which seem to them good, that is enough. But A and B put their heads together to get a law passed which shall force C to be a teetotaler for the sake of D, who is in danger of drinking too much. There is no pressure on A and B. They are having their own way, and they like it. There is rarely any pressure on D. He does not like it, and evades it. The pressure all comes on C.

The question then arises, Who is C? He is the man who wants alcoholic liquors for any honest purpose whatsoever, who would use his liberty without abusing it, who would occasion no public question, and trouble nobody at all. He is the Forgotten Man again.

This essay is chock full of great tidbits:

Now, we never can annihilate a penalty. We can only divert it from the head of the man who has incurred it to the heads of others who have not incurred it. A vast amount of "social reform" consists in just this operation. The consequence is that those who have gone astray, being relieved from Nature's fierce discipline, go on to worse, and that there is a constantly heavier burden for the others to bear.

And:

They are always under the dominion of the superstition of government, and, forgetting that a government produces nothing at all, they leave out of sight the first fact to be remembered in all social discussion - that the State cannot get a cent for any man without taking it from some other man, and this latter must be a man who has produced and saved it.