Tuesday, December 18, 2012
A Final Post To My Remaining Loyal Readers
Ever since the election, the number of hits this blog has been getting has substantially dropped off; down from nearly 900 hits per week to just under 100. What's worse, the number of return readers is down to just a handful. In fact, some days have only seen one or two returning visitors. For this reason, I've decided to end this blog and I thank all those who have stuck with both my opinions and rants over the last five years. Please enjoy the holidays.
Want Stimulus? Repatriate Foreign Profits.
Currently, American corporations have more than $1.5 trillion in profits sitting in foreign accounts. That money is being left there because it would be taxed at a rate of 35% if it were to be repatriated to this country. But, also understand that those profits have already been taxed once by the country of origin. Further, the United States is the only country, in the industrialized world, that still double taxes foreign profits; making U.S. companies less competitive in the world marketplace.
The Democrats have refused to budge on either lowering or eliminating the taxation of this money. This is just plain stupid. As a result, we get nothing in return. We get no taxes and that money is never put to work in helping our economy grow. In fact, that money is very likely being used to help other country's economies.
What the Democrats are afraid of is that, if this money were to be returned to the U.S., untaxed, companies would redistribute these funds in the form of dividends; thus lining the pockets of -- once again -- the very rich 2% of us. But, this is a lie. In fact, under normal economic circumstances, more than 60% of Americans are usually invested in the stock market (see Gallup data referenced below). Further, even if that money were only to be distributed as dividends, it would be taxed at the current dividend tax rate of 15%; and, that is 15% more than we're getting with that money sitting overseas. Make no mistake about it, that 15% dividend taxation means we could reduce our federal debt by $300 billion dollars. That's twice the amount of revenues that Obama is proposing with his tax increases on the rich.
More importantly, this money would represent a cash infusion of at least a trillion dollars into the economy without having to borrow a single cent from China. This truly would be stimulus without debt. But, the Democrats would prefer to use government funding so they can pick and choose who gets the money. Usually, their politically-connected buddies.
I really think that the repatriation of foreign profits should be on the table as part of the fiscal cliff negotiations. Maybe as a bargaining chip in allowing some tax increases on the rich.
--- The Big Picture: The Top 10 Companies (out of the S&P 500) With Untaxed Foreign Profits (representing $408 billion that is left sitting in foreign countries): http://www.ritholtz.com/blog/2011/04/what-us-companies-have-the-most-untaxed-foreign-income/
--- Gallup: Americans Invested In The Stock Market: http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx
The Democrats have refused to budge on either lowering or eliminating the taxation of this money. This is just plain stupid. As a result, we get nothing in return. We get no taxes and that money is never put to work in helping our economy grow. In fact, that money is very likely being used to help other country's economies.
What the Democrats are afraid of is that, if this money were to be returned to the U.S., untaxed, companies would redistribute these funds in the form of dividends; thus lining the pockets of -- once again -- the very rich 2% of us. But, this is a lie. In fact, under normal economic circumstances, more than 60% of Americans are usually invested in the stock market (see Gallup data referenced below). Further, even if that money were only to be distributed as dividends, it would be taxed at the current dividend tax rate of 15%; and, that is 15% more than we're getting with that money sitting overseas. Make no mistake about it, that 15% dividend taxation means we could reduce our federal debt by $300 billion dollars. That's twice the amount of revenues that Obama is proposing with his tax increases on the rich.
More importantly, this money would represent a cash infusion of at least a trillion dollars into the economy without having to borrow a single cent from China. This truly would be stimulus without debt. But, the Democrats would prefer to use government funding so they can pick and choose who gets the money. Usually, their politically-connected buddies.
I really think that the repatriation of foreign profits should be on the table as part of the fiscal cliff negotiations. Maybe as a bargaining chip in allowing some tax increases on the rich.
--- The Big Picture: The Top 10 Companies (out of the S&P 500) With Untaxed Foreign Profits (representing $408 billion that is left sitting in foreign countries): http://www.ritholtz.com/blog/2011/04/what-us-companies-have-the-most-untaxed-foreign-income/
--- Gallup: Americans Invested In The Stock Market: http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx
Monday, December 17, 2012
GE's CEO, Jeffery Immelt, Thinks State-Run Communism Works
In an interview with Charlie Rose, Jeffery Immelt, a member of the President's Jobs Council and CEO of General Electric (GE), basically said that the Chinese system of communism as a form of government "works". But, for whom does it work? Obviously, with masses of cheap labor available, American companies, like GE, think it works. That's why Immelt has spent his years as the head of GE in outsourcing one manufacturing operation after another to China.
But, this opinion by Mr. Immelt just ignores reality.
First of all, the only reason that China has become the economic powerhouse that it is today is because, beginning in 1979, China introduced economic reforms that allowed "capitalist" concepts of entrepreneurship and private enterprise to exist. Today, because of those reforms, more than 70% of China's GDP is from free-market, private enterprise. It wasn't communism that allowed China to grew economically, it was creeping capitalism.
Secondly, it appears that Mr. Immelt is completely ignorant of how poor China really is. In a country of 1.3 billion people, almost 1/2 billion of those live on less than $2/day. That's for food, clothing, and housing. And, for nearly two-thirds of the population, electricity is only a dream. This, in a country, that considers people to be in poverty if they make less than $94 (U.S.) per year. Immelt should think about that whenever he's slugging down a $4 Frappuccino from his local Starbucks (probably one of two or three for the day).
The problem with Americans like Immelt is that, when they visit China, they only do so as guests of the government. Then, that government only shows those "guests" what they want them to see. Instead of seeing underage people working in sweatshop conditions, or horrendous living and working conditions, they only see the best of all conditions in that country.
With someone like Immelt on the President's Jobs Council, it's no wonder that unemployment has remained so high under Obama.
References:
--- Washington Free Beacon: Immelt: State Run Communism in China Works: http://freebeacon.com/immelt-state-run-communism-in-china-works/
--- Banking To Lift Poverty In China: http://laowaiblog.com/banking-for-the-poor-2/
--- Wikipedia: Chinese Economic Reform: http://en.wikipedia.org/wiki/Chinese_economic_reform
--- Wikipedia: China: Suicide in the People's Republic of China: Working Conditions And Suicide: http://en.wikipedia.org/wiki/Suicide_in_the_People%27s_Republic_of_China
But, this opinion by Mr. Immelt just ignores reality.
First of all, the only reason that China has become the economic powerhouse that it is today is because, beginning in 1979, China introduced economic reforms that allowed "capitalist" concepts of entrepreneurship and private enterprise to exist. Today, because of those reforms, more than 70% of China's GDP is from free-market, private enterprise. It wasn't communism that allowed China to grew economically, it was creeping capitalism.
Secondly, it appears that Mr. Immelt is completely ignorant of how poor China really is. In a country of 1.3 billion people, almost 1/2 billion of those live on less than $2/day. That's for food, clothing, and housing. And, for nearly two-thirds of the population, electricity is only a dream. This, in a country, that considers people to be in poverty if they make less than $94 (U.S.) per year. Immelt should think about that whenever he's slugging down a $4 Frappuccino from his local Starbucks (probably one of two or three for the day).
The problem with Americans like Immelt is that, when they visit China, they only do so as guests of the government. Then, that government only shows those "guests" what they want them to see. Instead of seeing underage people working in sweatshop conditions, or horrendous living and working conditions, they only see the best of all conditions in that country.
With someone like Immelt on the President's Jobs Council, it's no wonder that unemployment has remained so high under Obama.
References:
--- Washington Free Beacon: Immelt: State Run Communism in China Works: http://freebeacon.com/immelt-state-run-communism-in-china-works/
--- Banking To Lift Poverty In China: http://laowaiblog.com/banking-for-the-poor-2/
--- Wikipedia: Chinese Economic Reform: http://en.wikipedia.org/wiki/Chinese_economic_reform
--- Wikipedia: China: Suicide in the People's Republic of China: Working Conditions And Suicide: http://en.wikipedia.org/wiki/Suicide_in_the_People%27s_Republic_of_China
Saturday, December 15, 2012
The Left's Latest Distortion: Average Salaries Are Higher In Non-Right-To-Work States
Ever since Michigan's legislature voted to make that state a right-to-work state, the political left has gone into full battle mode to prove that Michigan will actually be hurt by that decision. In one such attempt, a liberal economics group, The Economic Policy Institute (EPI), has released a position paper -- ‘Right to work’ The wrong answer for Michigan’s economy -- that explains just how bad that decision was. One of the key elements of that opinion is the fact that average incomes in the right-to-work states were lower by $1500 a year; even after taking into consideration the differences in the costs of living. And, for sure, that fact is being repeated by every Democratic politician and commentator who has appeared on TV or radio to discuss the Michigan decision.
In coming to that conclusion, the EPI ignores the fact that many of those right-to-work states have large rural populations that pay lower wages. As I have always said, you can manipulate statistics to prove any point, and that's exactly the case here. So, to be "fairer", I would prefer to look at two of our largest states -- California and Texas. California is definitely "not" a right-to-work state with a union workforce participation rate at 17.1%. Texas, on the other hand, is a right-to-work state with the union workforce population at about 5.2%.
Now, if you just superficially look at average incomes, California wins hands down. The average Californian's salary is about $61,632 and the average Texan only makes about $50,920 a year, but, even though Californians make 21% more than their Texas counterparts, Californians are actually a lot poorer. That's because the cost of things is almost 52% higher when you consider the cost of living index in California is at 135 and only 89 for Texas. So, when adjusted for these differentials, Texans are actually making the California equivalent salary of $77,938. Couple this fact with the fact that the unemployment rate in California is 10.1% and only 6.6% and you can understand why so many Californians are moving out of California to go to Texas.
One last thing. One of the primary drivers that makes California's cost of living so high is its high rates of taxation. Interestingly, those high taxes are primarily due to the state's higher-than-normal costs of paying its unionized state workers and their ever-growing pension and health benefits. Obviously, state workers are living high off the backs of the private sector workers. Certainly something that the left intentionally leaves out when comparing right-to-work states with pro-union states.
Additional References:
--- Bureau of Labor Statistics: Unemployment Rate By State: http://www.bls.gov/web/laus/laumstrk.htm
--- NBC Los Angeles: California's Population Is Moving Out, Census Report Shows: http://www.nbclosangeles.com/news/local/Californias-Population-Moving-Out-182914961.html
In coming to that conclusion, the EPI ignores the fact that many of those right-to-work states have large rural populations that pay lower wages. As I have always said, you can manipulate statistics to prove any point, and that's exactly the case here. So, to be "fairer", I would prefer to look at two of our largest states -- California and Texas. California is definitely "not" a right-to-work state with a union workforce participation rate at 17.1%. Texas, on the other hand, is a right-to-work state with the union workforce population at about 5.2%.
Now, if you just superficially look at average incomes, California wins hands down. The average Californian's salary is about $61,632 and the average Texan only makes about $50,920 a year, but, even though Californians make 21% more than their Texas counterparts, Californians are actually a lot poorer. That's because the cost of things is almost 52% higher when you consider the cost of living index in California is at 135 and only 89 for Texas. So, when adjusted for these differentials, Texans are actually making the California equivalent salary of $77,938. Couple this fact with the fact that the unemployment rate in California is 10.1% and only 6.6% and you can understand why so many Californians are moving out of California to go to Texas.
One last thing. One of the primary drivers that makes California's cost of living so high is its high rates of taxation. Interestingly, those high taxes are primarily due to the state's higher-than-normal costs of paying its unionized state workers and their ever-growing pension and health benefits. Obviously, state workers are living high off the backs of the private sector workers. Certainly something that the left intentionally leaves out when comparing right-to-work states with pro-union states.
Additional References:
--- Bureau of Labor Statistics: Unemployment Rate By State: http://www.bls.gov/web/laus/laumstrk.htm
--- NBC Los Angeles: California's Population Is Moving Out, Census Report Shows: http://www.nbclosangeles.com/news/local/Californias-Population-Moving-Out-182914961.html
Friday, December 14, 2012
Poverty Pays
Every year, the federal government establishes the income thresholds to determine whether or not someone is in poverty. Currently, if you are unmarried and without children and making less than $11,139 a year, the government then says that you are in poverty and eligible for some or all of the 80 different federal welfare programs and hundreds of state programs that are designed to be so-called safety nets for our nation's poor. Similarly, if you are an unmarried parent with 2 children under 18 and making less than $17,374, you are also in poverty.
Once in poverty, you then have access to free health care through Medicaid; free food under the food stamp program; free telephone and cell phone services; free child care; and the list goes on and on. None of which is ever considered to be income or taxed. In fact, if you are in poverty and do file a tax return, you will not only receive a refund for any taxes that you might have paid, but, under the Earned Income Tax Credit laws, you are probably eligible to get even more money back from the government.
But all these "free" programs have a value. For example, being on Medicaid with two children is probably worth about $12,000 to $13,000 year because that would be the cost if that Medicaid recipient had to pay for that insurance themselves. Knowing this, Senator Jeff Sessions and his staff set out to convert all these programs into cash equivalents so he could determine how poor the people in poverty really are in this country; and the results are shown in this chart:
Clearly, the chart shows that you are better off being a household in poverty than being an average middle class household; and, by a factor of 20%. Obviously, someone who knows how to work the system can do quite well for themselves. This is why studies have shown that the poor in this country typically have a car, at least one big screen TV and, air conditioning.
Something is seriously wrong with a system where you are better off being poor than working. Maybe that's why so many millions have given up looking for work or are satisfied to be in low paying jobs. As noted before, our workforce is literally being destroyed; while, at the same time, we are creating a society that is increasingly dependent on government. If you don't think that's a bad thing, just look at Greece today.
References:
--- Federal Poverty Table: http://images.flatworldknowledge.com/rittenmicro_2.0/rittenmicro_2.0-fig19_004.jpg
--- The Blaze.com: Source of Chart above: http://www.theblaze.com/stories/the-welfare-spending-chart-you-wont-want-to-see/
--- Heritage Foundation: Understanding Poverty in the United States: Surprising Facts About America's Poor: http://www.heritage.org/research/reports/2011/09/understanding-poverty-in-the-united-states-surprising-facts-about-americas-poor
Once in poverty, you then have access to free health care through Medicaid; free food under the food stamp program; free telephone and cell phone services; free child care; and the list goes on and on. None of which is ever considered to be income or taxed. In fact, if you are in poverty and do file a tax return, you will not only receive a refund for any taxes that you might have paid, but, under the Earned Income Tax Credit laws, you are probably eligible to get even more money back from the government.
But all these "free" programs have a value. For example, being on Medicaid with two children is probably worth about $12,000 to $13,000 year because that would be the cost if that Medicaid recipient had to pay for that insurance themselves. Knowing this, Senator Jeff Sessions and his staff set out to convert all these programs into cash equivalents so he could determine how poor the people in poverty really are in this country; and the results are shown in this chart:
Clearly, the chart shows that you are better off being a household in poverty than being an average middle class household; and, by a factor of 20%. Obviously, someone who knows how to work the system can do quite well for themselves. This is why studies have shown that the poor in this country typically have a car, at least one big screen TV and, air conditioning.
Something is seriously wrong with a system where you are better off being poor than working. Maybe that's why so many millions have given up looking for work or are satisfied to be in low paying jobs. As noted before, our workforce is literally being destroyed; while, at the same time, we are creating a society that is increasingly dependent on government. If you don't think that's a bad thing, just look at Greece today.
References:
--- Federal Poverty Table: http://images.flatworldknowledge.com/rittenmicro_2.0/rittenmicro_2.0-fig19_004.jpg
--- The Blaze.com: Source of Chart above: http://www.theblaze.com/stories/the-welfare-spending-chart-you-wont-want-to-see/
--- Heritage Foundation: Understanding Poverty in the United States: Surprising Facts About America's Poor: http://www.heritage.org/research/reports/2011/09/understanding-poverty-in-the-united-states-surprising-facts-about-americas-poor
Thursday, December 13, 2012
Why Obama Rejected Boehner's Tax On The Rich Proposal
When the Speaker of the House, John Boehner, offered a proposal to raise as much revenues on the rich by closing loopholes and by eliminating and capping certain tax deductions as would have been achieved by raising the tax rate, Obama flat out rejected it. Certainly, any logical person would conclude that it doesn't matter how we get the increased revenues from the rich as long as those revenues are equal to or greater than the targeted amount. But, Obama isn't thinking that way.
You see, the President's insistence on raising the "tax rates" on the rich is more about politics than any amount of money being collected. He wants to be able to easily campaign on the fact that the rich are paying higher taxes by simply pointing to this or that rate being increased. Boehner's salad bowl mix of tax increases is just too complex and too difficult to explain and prove and not conducive to Obama's continual need to give campaign speeches touting his achievements. Simply, Obama's political left supporters would just find Boehner's tax increases too hard to understand.
You see, the President's insistence on raising the "tax rates" on the rich is more about politics than any amount of money being collected. He wants to be able to easily campaign on the fact that the rich are paying higher taxes by simply pointing to this or that rate being increased. Boehner's salad bowl mix of tax increases is just too complex and too difficult to explain and prove and not conducive to Obama's continual need to give campaign speeches touting his achievements. Simply, Obama's political left supporters would just find Boehner's tax increases too hard to understand.
Wednesday, December 12, 2012
Obama's Jabberwocky-Speak On Debt Reduction
According to Barack Obama, we need $1.6 trillion in tax hikes on the rich in order to reduce our deficits and debt. The trouble with that $1.6 trillion number is that it is over a 10-year period. When broken down, he's only talking about $160 billion in new revenues. At the very same time, he also said that we need at least $255 billion in new spending to stimulate the economy and the housing market. On top of that, the first month of the current fiscal year, October, saw federal spending up by 16% or a total of $42 billion. If that trend continues, we could see increases up by another 1/2 billion dollars.
Simply, all this talk by the President is Jabberwocky-speak. He speaks complete nonsense on the fiscal state of our federal government. Those new taxes will do nothing to stem the tide of massive new spending. At same time, he is totally unwilling to put any real spending cuts on the table.
--- Reuters News: Budget deficit rises to $120 billion in October: http://ca.news.yahoo.com/budget-deficit-rises-120-billion-october-190237736--business.html
--- Yahoo News: President Obama's opening offer in 'fiscal cliff' talks includes $255 billion in stimulus spending: http://news.yahoo.com/why-obama-pushing-stimulus-fiscal-cliff-deal-video-033547060.html
Simply, all this talk by the President is Jabberwocky-speak. He speaks complete nonsense on the fiscal state of our federal government. Those new taxes will do nothing to stem the tide of massive new spending. At same time, he is totally unwilling to put any real spending cuts on the table.
--- Reuters News: Budget deficit rises to $120 billion in October: http://ca.news.yahoo.com/budget-deficit-rises-120-billion-october-190237736--business.html
--- Yahoo News: President Obama's opening offer in 'fiscal cliff' talks includes $255 billion in stimulus spending: http://news.yahoo.com/why-obama-pushing-stimulus-fiscal-cliff-deal-video-033547060.html
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