441 comments. Now 442.
Should we close this one, guys?
When I posted these comments originally, about a week ago, it seemed that nobody commented on them, so I am going to post them again for everyone’s edification:
In the June 4, 2012 issue, Business Week magazine had a small article titled, “An Empty Chair Would’ve Spent As Much”. It states, “The GOP blames President Obama for the $4 Trillion rise in the nation’s debt to $15 Trillion. Yet, the numbers show yearly deficits would have exploded no matter who occupied the White House during the slow recovery from 2009 to 2011.”
In support of that statement, they listed the following realities:
Tax receipts dropped by $1 Trillion
Mandatory spending increases on services for the poor and the elderly accounted for 77% of the increase in the deficit.
Higher spending on defense & veterans accounted for 11% of the increase in the deficit
Other gov’t programs accounted for 12% of the increase in the deficit
…and…from Forbes magazine:
The “common knowledge” that Mr. Obama is spending like a drunken sailor is just…not accurate.
Between spending that was mandated before he came into office (by Congress and the previous administration), and the fact that he has actually increased spending less than any president since Ike, he is being tarred by a brush that is being wielded as a purely partisan weapon, rather than as an exercise in truth.
+1 @VDCdriver - the cliff we’re facing is not short term, it’s the long term cliff of our own making, with ever-increasing % of GNP going to mandated programs that are well-intentioned, but unaffordable, regardless of tax structure.
@Same
We know how succesful businesses grow when times are bad. They borrow and invest in people and things that promote their well being. Once ignited, the economy grows into prosperity. Herbert Hoover administration hunkered down and the depression grew worse. Jobs bills and social programs were the only things that expanded the working class and worked with the Roosevelt administration prior to the war.
If the middleclass cannot work and buy, the economy will tank. When you reduce healthcare costs, encourage reinvest ment by raising taxes on the wealthy, promote jobs bills and pay for education and training ( GI bill) you put money into the middle class pockets…the economy grows. Only the govt. can spend in tough times and history is replete with examples. Conservatives never think the govt. can do anything right unless they are ones getting the checks…fortunately, all are deserving. Invest in all people…including embracing our immagrants, the backbone of our prosperity throughout history.
@VDC. Good points !
If you contend that raising taxes on the wealthy promotes investment, I disagree.
Reducing healthcare costs is a great idea. Unfortunately, Obamacare will have the exact opposite effect…for businesses as well as individuals. It’s already happening.
“Jobs bills” don’t create jobs. Prosperity creates jobs. Jobs bills do not vreate prosperity. They draw money from the public coffers to be transfered to speciial interests, with some regulatory agency taking a large chunk of the money before it gets there.
Taking more money out of the economy than the economy can support produces deficits. Increasing spending of tax dollars even more increases deficits. Deficits create inbterest payments, which devalues the dollar. A dollar borrowed at 10% means we’re getting a dollar’s value for $1.10.
Jobs bills and social programs do not expand the middle class. Greece learned that the hard way.
Sorry, Dag, but we’ll likely go to our graves with diametrically opposed conclusions about what needs to be done.
So SAM do you think lowering taxes on the wealthy promotes investment? Maybe for a villa in Tuscanny. It sure won’t go to a benevolent raise for the workers.
If it’s done as a matter of capital gains and/or business profits tax reduction, yes. Countries that have high capital gains taxes and business profits taxes are suffering. Countries that have low (or no) capital gains taxes and low business taxes are where all the money is being moved to…and invested in.
If you had $100M and your choice was to let it sit and receive only a paltry interest…paying few taxes…or not pay at all…or to invest it and pay a much higher tax on the capital gains (if you actually realized capital gains and not losses), would you sit on it or invest it? It’s a no-brainer, you’d be better to sit on it.
If you did NOt run the risk of paying a high cap gains or business profits tax on it, and you had the potential to make much more of it by investing or growing your business, you’d invest it or use it to grow your business.
That’s the way business works. Money to a businessman is a tool. It’s not perceived as something to buy things with. Once the basic needs are met, then the real potential begins.
@same
Am glad you 're complaining about the president now in office that I voted for then the other way around. I whined in vain for 8 years. You just have 4 more years left to catch up.
At least while you are complaining , your stocks will be doing better then mine while I was.
Showvme your statistics on “Countries that have high capital gains taxes and business profits taxes are suffering.” please.
Everyone’s mind is made up. Each person has decided that they are among the hard working and responsible tax payers who are the back bone of the country…
But half of those hard working people think their taxes are being wasted on lazy irresponsible derelicts- and half think that the rules have been changed to benefit the wealthy and cause more and more people to find themselves at the bottom with no way up. It is easy to see that each half can state their opinion and back it up with facts and figures but what solution is being offered by the ideologues who stir the emotions of the right and left. They all seem to be at 0.0 mbar there.
I can show examples of the Super rich paying outrageously low taxes…I can also show people who are on welfare who are just too lazy to get a job. Yea…both sides can give example after example. And that’s where the problem is.
Does the country need Tax Reform - YES…Does this country need welfare reform - YES. Do we have to curb WASTEFUL spending - YES. Can we cut military spending and still have a STRONG military - YES.
Neither side wants to give ONE INCH either way. We’ll NEVER have a meaningful debate on any of these until both sides grow up.
I personally think the super rich pay a lot less tax then they should. I also believe our government is bloated and needs to spend a lot less. We need to lower the deficit. We need to trim government waste.
It’s like gun control. One group (the NRA) wants complete access to all guns by anyone who has the money to buy them…Then there are the extreme liberals who want to eliminate ALL guns from private citizens. The answer is somewhere in the middle. But we’ll NEVER get there when neither side is willing to at least talk.
Gridlock is mode de jour for government Mike. Politicians must LEAD, FOLLOW or GET OUT OF THE WAY for government to work. In recent years they have found that their positions were safest if they brayed and paraded about carrying flags for the single issue mobs whose votes they could depend on.
"If the stock market goes up, EVERYBODY owning stocks makes money."
So if I buy stock, and that stock goes up, I make money.
Both statements are not true. I wish they were because if they were true, I’d have a lot more money right now Anyone who does not understand why both of those statements are not true, does not understand economics or the stock market.
The stock market today is at an artificial high. In fact, when it dropped in 2000 and again in 2008, it was still way above what it is really worth. What has driven the market to these artificial highs are the IRA’s and 401k’s.
In the past, most investors bought stocks and made money off the dividends. A stock was valued on its p/e ratio (price/earnings). Generally a stock whose p/e ratio was greater than 15 was considered over valued. A risk taker might buy a stock with a high p/e ratio if he felt that the stock would go up in value because he expected that a new product the company had just introduced would increase their earnings enough to lower the p/e ratio. If he bet right and the new product was a hit, earnings would go up, the p/e would drop, there would be more demand for the stock, the price would go up and the savvy investor made money two ways, dividends and capital gains. But he only makes capital gains money if he sells.
On any given day, the market has a finite number of shares available. Before 401k"s and IRA’s, there was a limited number of investors with a finite amount of money. The rest of us put our money in the bank. The market grew slowly but steadily as new products and new companies with new products emerged. The stock market grew in pace with the consumer markets.
Now someone in the stock market comes up with an idea and convinces someone in congress that it is a good idea. The IRA is born. at first, there are a lot of restrictions and individuals are limited to a small amount of money allowed to invest every year. But that amounted up to a lot of money for the market. This money goes into the market and it has to buy stock from this finite supply. Naturally, some stocks go up more than others, but the general trend is that the average price of stock goes up. Earnings do not go up any faster than they would have anyway, they are still following the natural growth curve, but the price of the stocks is rising faster than the natural growth curve.
A new equilibrium is established with higher p/e ratios becoming the norm. Everyone accepts this because the capital gains are so good. That worked so good, the 401k was implemented, that poured even more money into the market. When more money was needed, the rules were progressively loosened so that even more money got poured in. That fueled a lot of IPO’s because this money almost guaranteed that the price of new stocks would go up, even if they didn’t pay any dividends. Capital gains became the king of the market.
Why has the market not gone up significantly since 2000? You can blame it on a lot of things, but people who started putting into the market 40 years ago started retiring in 2000. Actually they started retiring sooner, but not as many retiring as new, young investors getting in. But around 2000, a couple of factors came about that caused the incoming money to match the outgoing money.
Now if I buy a stock and it goes up, have I made money. No. As long as I hold that stock, I have not made any money. If I sell it when it is up, I make money. Lets say that I bought a stock. Now someone else wants that stock as well but there are no stockholders willing to sell their shares at the price that I bought mine for. Lets say I got mine for $10/share. Lets say that there are 1,000,000 shares total on the market. When I found a willing seller to sell those shares at a price I was willing to buy them at, $10/share, that made the market value of those shares $10.000,000. Now a new investor wants to buy some shares, but the cheapest that anyone will sell theirs for is $12/share, then my shares are now worth $12. This cycle repeats until the stock is worth $20/share.
Now something happens and the company has not performed any better than it had when it was worth $10/share so a couple of the investors decide to sell out. But since the company isn’t doing as well as expected, there are no buyers. Finally someone offers to buy some stock from one investor for $15/share. That panics the rest of the investors and they try to dump their shares before it is too late, but it is already too late and the highest bid is $8/share. It really only takes the movement of a few shares to affect the value of all the shares.
If the companies earnings had increased and one investor wanted out, there would have been other investors ready to buy, but since the p/e ratio had doubled, the stock became more volatile. So the stock market itself has become very volatile because the focus is on capital gains and not on dividends.
Last year, the government even loosened the rules up to the point that you can now contribute to BOTH a 401k and an IRA in the same calender year. I retired last year and because of that, I had multiple incomes, my salary before retirement, a pension, and social security. None of them withheld enough so when I figured my taxes, I found myself in the penalty box. I don’t mind paying my taxes, but I don’t like being in the penalty box when it wasn’t my fault. I needed to put some money into an IRa in order to reduce my taxes enough to avoid the penalty, but I had made some contributions to my 401k before my retirement date.
Every tax advisor I asked told me that I could not make a tax deductible contribution, but I called the IRS and they told me that I could and even sent me a publication with an example of someone in my exact situation and how to do the contributions. Needless to say, I transfered enough savings into an IRA to get out of the penalty box. I put it into government bonds instead of the stock market. We are not talking a lot of money here, its just the principle, I think the penalty would have been around $60.
BTW, it was Obama’s fault that I got into the penalty box in the first place. How you ask, he, by presidential decree, changed the date for retiree pay (US Navy) that falls on a holiday to be paid before the holiday instead of after. That meant the Jan 1 pay was paid in December, making 13 paydays in 2011 instead of 12 and that was the tipping point. It was just enough to make my social security also taxable and that was what I had not planned on.
Fair enough, Barkydog. Here’s the data.
I wanted to publish the actual data, but was unable to get it to copy in a usable format.
There’s lots of research you too can do. You’ll find that in general the countries that are suffering the most are those with the highest business tax rates and cap gains. Those doing the best have the lowest. There are, of course, exceptions. There are no “absolutes”.
Complain, complain, complain. What is one gonna do?
I complain some more, releases some bile and I get to put some one’s chain.
Twas a mistake that you and I made in IRA/Roths. When you are very close to retirement and with current dividend and capital gains rates, you;d be better off not to do a qualified retirement plan. JMO. BUt you can reason it out and come to the same conclusion.
Longprime, I think it’s time more people became concerned and even upset about the government doing things that we believe to be wrong, bad decisions, or unconstitutional. We should complain. But we should complain about the policies and/or the expendatures, not about the individual.
And it does no good to blame someone from the past. But we should hold those in power right now responsible for the decisions thay’re making in the present.
Whether you’re left, right, or in between, complacency is the tool of the unscrupulous.
They’re supposed to be our representatives. We have a right to complain. Our founders made sure to include that right in the Bill Of Rights.
@the same mountainbike
Sometimes, one has little choice in the future because the past has already dictated it. For instance,
ex 1: I complain that our current situation is due to W and the R Congress actions, which resulted in a borrowing binge for hard assets. Then as the balloon burst, PBO had no choice but to replace the GDP loss with Government spending and unemployment insurance.
Ex 2: So now we have people complaining about the Debt crisis, forecasting the future based on past.
BTW, I am moving from my hybrid bicycle to a touring bike. The shocks take up too much inertia.
@same old mountain bike
Congressional Research Service Report On Tax Cuts For Wealthy Suppressed By GOP (UPDATE)
The CRS report, by researcher Thomas Hungerford, concluded:
The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.
However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.
repeat
“Lower top tax rates may be associated with greater income disparities.”
Your turn
TSM,these people for the most part represent themselves and thier special interests,guess when you are a member of the gang you forget about the little people who pay taxes-Kevin
Here’s beautiful scenic Lake Optima here in the Oklahoma Panhandle, constructed with Federal (a.k.a. taxpayer) dollars several decades ago and which is still being maintained by even more dollars from the so-called stimulus package. It’s been like this for years and not shown is the boat ramp… 
Until the pressure got too bad, the Corps had even planned to add more guardrails to keep the masses on track but at this point the only visitors are snakes and the uninformed people who make the mistake of turning off the highway to see it.
