Hooray for Helen Thomas and CBS News for (are you sitting down?) asking a tough question to the Obama Administration.
I suspect because they dare challenge the way the new Messiah controls things, they will no longer share in the cream puffs.
Agoracom Blog
I Never Thought I Say This
Posted by
at 9:05 PM on Wednesday, July 1st, 2009
The Obama veneer wears thinner every day.
Gotta give a big “Huzzah” to Helen Thomas, virtually the ONLY actual reporter around today. Just when we are awash in a sea of “press stenographers” like David Gregory and others, Helen stands out as the REAL reporter, asking the REAL questions….and demanding REAL answers!
Admittedly, I’m overly occupied with the topic of government policies, but allow this further commentary at the risk of becoming a bore.
Dick Morris is an especially knowledgeable political strategist, surprisingly well schooled in modern economic history from a vantage point utilizing Austrian economics. Some of the information is familiar to me as appearing in the editorial section of I.B.D.
The first chapter ‘Obama’s War On Prosperity’ is very distressing to a parent of two children who are in the top income brackets. While I’ll show you Dick Morris’ calculations in a moment, let’s first talk about health care and who’s going to pay the bill. It’s got to include subsidies, and there’s going to be a lot of subsidizing.
This is a seperate subject to itself, but Healthcare is 17% of the U.S. economy right now, and maybe it can be whittled down to 15%. Try to hide the cost in a value Added Tax, but somewhere along the line it will come back to us probably as another tax, split 50%/50% between employer & employee.
So here’s Dick Morris’ calculations after the current tax law expires. He also believes that the cap on Social Security tax will be eliminated. We’ll assume that this pathetic example lives in a high tax state.
SALARIED EMPLOYEE
Top Tax Rate 49% (Dick Morris’ opinion); State Income Tax 11%; Social Security 6.5%; Medical Insurance 7.5% —- Total 74%.
SELF EMPLOYEED
Top Tax rate 49%; State Income Tax 11%; Social Security 12.5%; Medical Insurance 15% —- Total 87.5%.
Decades ago, the top tax rate was 90%, but there were income shelters that were all eliminated with the tax law changes under Ronald Reagan.
We’re going back to that but now the shelters are gone and there could be elimination or limitation of remaining deductions including deduction of mortgage interest.
A lot of highly compensated executives will literally be put out on the street, especially the younger ones, that haven’t had the advantage of decades to save. They’ll be put into a position of dissaving.
What do you do if you’re a businessman earning $500 M or more? Maybe you work from sunup to sundown, never see your kids put to bed, cope with multiple locations, a stressful habitat and now you’re taking home $50,000 ?!
Still perceived to be ‘Rich’, they’ll continue to be denigrated by Obama, spat upon and blamed for the nation’s difficulty as a distraction from failed economic policies.
No No, you don’t do that anymore. You close operations, downsize, let the people go and keep the easy parts of the business. What’s the sense of continuing? Make $75,000 gross and you’ll come home with the same net income without the wear and tear.
It’s a story that will be repeated thousands upon thousands fold throughout America and the engines will stop.
Anytime you get thoughts of a bull market in stocks or economic prosperity returning, pick up a copy of Dick Morris’ book ‘Catastrophie’ which is a convincing insight to America’s requiem. I’ve always said that “Obama Will Destroy Everything”, and Dick Morris proves it.
But the middle class can’t escape this either because there’s not that many wealthy people to milk and they’ll disappear soon enough. Federal Government revenues have imploded 35% and in some states more than 50%. They’ll be lucky if it stabilizes.
Then they’re still adding big ticket items to the shopping cart thinking it can all be paid or charged. They have no solid figures of how much it will all cost including these crazy things that they’re planning to do. So it’s unlikely the middle class will escape. The lower income classes have no income to tax, and their ranks will be swelling.
When the charge card comes up DECLINED, which is just starting to happen, that’s when reality sets in – higher interest rates, in turn declining business activity and bigger government outlays. If we’re lucky it will turn into hyperinflation, the government gets destroyed, the poor get trampled and it was all for naught. Maybe it will turn out to be a lesson well learned. Just some more patience and there could be a happy ending to it all.
MY QUESTION TO THE WHITE HOUSE VIA ‘E-MAIL’
How many hits of Crack Cocaine and Marijuanna does it take before you stammer and stutter requiring a teleprompter?
http://serendip.brynmawr.edu/exchange/node/1739
Writing your Congress – easy way to do so: For those of you who decide to write your Congress as SG Group suggested we do so, below is information that should make it easy to do. Hope this information is helpful. susan Ps….I am going to post this on a few other of our blogs to make sure this info gets out
To use Congress.org – after you’ve logged on go to Find Your Officials (top right)-click then go to Write Your Officials (Center) and directly underneath is a small Federal and State. Click on each, type your message and send. There is also a section where you can have a hard copy hand delivered for a price. This is the easiest way to send to all of them and you’ll get a confirming email back that it was received.
China comment today has caused a stir per a guest on CNBC (don’t laugh at me….I don’t get Bloomberg so have no choice). Anyhow he mentioned that this comment from China is even bigger than the jobs report today and should be focused on as it shows China is serious. Below is an excerpt from a Reuter’s report. Maybe Peter will rethink our shorting the dollar again soon.
G8 sources told Reuters on Wednesday that Beijing had asked for a debate on proposals for a new global reserve currency at the G8 summit and the issue could be referred to briefly in the summit statement.
The news pushed down the dollar [$$EURUSD 1.4058 -0.0082 (-0.58%) ], which is particularly sensitive to comments from China because bankers estimate the country holds perhaps 70 percent of its $1.95 trillion in official currency reserves in the U.S. currency.
Forgive me fellow bloggers for posting once again but I have been thinking about something and wondering where my logic is wrong so if you could enlighten me, I would appreciate it. My logic or possibly “mis logic” is as follows and deals with DEBT:
Given our current tax programs and the assurance that we in the US will be taxed more not less, one of the only tax breaks we get now is in our mortgage. So what is wrong with having a mortgage and even taking out a line of credit which has a tax benefit up to $100,000, IF you can if necessary pay it off. In otherwords, why wouldn’t you just hold the cash (and hopefully find safe places to invest it), and leave your debt run and use the interest you pay to offset your taxes? If you pay off your mortgage/line of credit you do not get the tax break and I for one must tell you I DO NOT enjoy paying those taxes.
OK OK, one more post. The following from the Aden Sisters last night re: Dollar
Today the U.S. dollar index broke below its 65 week moving average. If it now stays below 80, it’ll be a strong sign that a major, renewed dollar decline is indeed getting started. This will be further reinforced once the dollar index declines and stays below its June 2 low at .7840. For now, the dollar could still temporarily rebound upward, but this renewed weakness indicates that it may not amount to much. The currencies are looking better and the euro appears to be leading the way. It’s at a four week high today and if it now stays above 1.4140, it’ll be super strong. The same is true of the Australian dollar and Swiss franc above .7700 and .9050, respectively. Keep your positions.
Also would appreciate it if one of you chart reader guru’s would go to the aden site, http://www.adenforecast.com/ and click on their comment where they say “A Picture is Worth a Thousand Words” and share with us your take on what these charts tell us going forward. Thanks much for anyone that takes the time to do so!
SGGroup,
Your post is excellent, though I think your final calc of $50,000 net of $500,000 is a little low – the tax brackets do “ramp” up and there are some deductions and exemptions (though many are conveniently phased out when you make more).
What you then describe with a person scaling back is known to Ayn Rand’s readers as “going John Galt”.
I’m doing some of that myself.
Roger.
Agreed Roger… My Federal tax calculations do not show benefit of coming through the lower tax layers. Then there’s the deductions for State Income Taxes, interest etc. so actual Federal tax on $500,000 income would be less. Then again, the Alternative Minimum Tax knocks out these deductions.
I could run it thru Turbo Tax to see what it would actually be, make adjustments, but there are other matters right now, although I intend to do so for planning purposes later.
HOWEVER, the assumed taxes for Social Security (If & When The Caps Are Erased) would be actual as well as assumed healthcare taxes. In the highest income taxe state, they’re proposing a 11% income tax and the only allowed deduction is $1,000 per person. The gross Income is taxed.
So maybe with benefit of the layers of lower Federal Income tax and allowance to deduct 1/2 of Social Security & Health Care taxes, a person earning $500,000 per year will take home $100,000, but not likely more.
After everything, we’re on the path to come home with 20 cents on the Dollar. It’s simply unsustainable.
SGGroup,
You know, that’s what I always said about Reagan’s tax overhaul (I liked Reagan otherwise) is that now that the shelters are gone, they’re gonna ramp the rates back up. Took longer than I expected though.
I was in the brokerage business back then and it absolutely destroyed some portfolios counting on the promised tax breaks.
Why the games? Eastern European countries show a lot of promise with flat taxes. (Lithuania 15% personal, 20% corporate – entire tax code: 53 pages!)
Roger.
Susan,
Some people do, or have done, what you mentioned, i.e., take out a mortgage or a home equity loan in order to get the tax deduction, but put the money into something else. The IRS considers this fraud, so if you ever get audited you’ll have some explaining to do and you won’t win. In Canada, interest on mortgages is NOT tax deductible. That is just one of many reasons that Canada is in a more stable real estate market that we are. These sorts of money games that the government plays encourages the average person, who barely knows how to balance their own checkbook, to engage in leverage. Small wonder we are in the mess we are in.