Baracks self assesment

You guys are starting to dance close to the crux of the problem.. the problem .. the one that uses your money to create the great inequality that is the least American thing that any of our forefathers could have possibly have imagined. Before you guys start calling me a communist, lefty, liberal son of a gun… you should go back to economic basics.

First and foremost most investment in the stock market at this point does nothing to actually create economic activity. Unless it is an initial public offering, or a secondary offering where a company is increasing the amount of shares of that company that are available on the market and using the money generated to invest in business, then the only thing that you are doing when you buy ten shares of stock from a guy who bought them for half the amount ten years ago is making that guy richer. With the advent of tax rule promoted 401ks and Health Savings accounts and proposed private retirement accounts to replace social security the stock market, in particular the stocks carried in the larger indexes become a ponzi scheme. Every two weeks Americans take money and put it in their 401ks. The majority of them do what they are told and invest in a an index fund that consists of the same few hundred companies that everyone else invests in. Mitt Romney is not doing this.. the workers are. Those companies don’t get any bigger each week just because more people put money into them, it is still the same 100 companies and they would have produced the same amount of profit or loss without regard to that money automatically being placed in the market. The net effect is the demand for the stock goes up and the supply stays the same so the cost goes up. There was a time when people bought a share in a company ( a stock) so that when that company made a profit they got a share of that profit equal to what their percentage ownership of the company was (their dividend). Those people also had a vote equal to the amount of ownership percentage they had in that company on who ran the company. That allowed them to ensure that when the company made 50 million in profits that the company paid out a dividend that the share holders could then spend rather than either put it in the bank (which would theoretically increase the value of the company and therefore maybe the stock), or simply spend the 50 million on a new office or large bonus for the management.

Any of you guys ever get a vote on any of that stuff these days?

I didn’t think so … there are reasons for that. First and foremost is your company doesn’t let you buy stock with your 401k money. They let you buy into a managed fund. That fund manager not only gets a percentage of your profits but he also gets your votes, and he uses them to put some of his buddies on the board and they make one of their buddies CEO.   And of course that CEO is on other boards and none of those guys have any interest in making you a profit.. they have interest in making the price of the stock go up.. it doesn’t have to stay up so they don’t need to make any real long term progress or profits. You don’t worry about the dividends you just look at price of the fund… and it goes up most weeks because more working shmucks have to invest in it, because it is one of their ten choices. Of course each transaction bleeds money off the top and makes the wall street guys rich, and the board gets rich, and the CEO gets rich and if they really truly do run a company into the ground… like GM they will get out in plenty of time with the many millions they have already skimmed off the top because they will know before you do that its about to collapse, and if it does and the fund goes down no big deal that was just the risk you took. The really rich guys (not your budget millionaires but the really rich) didn’t lose a dime in the last stock market downturn.. they already had their money out and had sold high to you and me.

Where do really rich people put their money.. private equity funds.   Private equity funds sometimes buy stocks.. but they buy them all and take over the company and run it or sell it off. They do this with longer term investments.. the also create real value in the economy because they do fund start ups and grease the economic wheels. They also beat the stock market indexes every year, year in and year out… where all the managed funds that you have a choice in for your 401k underperform the market year in and year out.

So why don’t you get to put your money into a private equity fund? Cause your not rich that’s why. You bring less than a million to that party and you can’t buy a single share, most private equity funds actually have a buy in significantly larger than that. You also need to commit that investment for 10 years or more.. so it isn’t very liquid. But your managed fund could buy into a private equity fund right? No…

Is there anything wrong with this… no they have money and people with money have an advantage in making money… but do they need the added benefit of paying less taxes on the money that is easier for them to make than the money you make? Should we be using our tax laws to make the financial sector into an atm for those willing to live on wall street and stretch their moral fibers… maybe but don’t call it capitalism.

Someone like you or me takes our say 250k and starts a business, and actually builds stuff and hires people and works our ass off for a living. We end up making a million a year.. we get taxed 30 percent, eventually we continue to work our ass off we make 24 million a year and we get taxed 30 percent. But if we sit on our asses while someone else manages our money (which is the case with Romney.. he is on a blind trust like the other politicians he theoretically doesn’t even have a say in where his money is invested) then we get 15 percent.

It doesn’t encourage investment, it hasn’t saved the world and made the us stronger it is 15 percent because rich guys did the math and figured out it would only cost them a couple percent to buy enough politicians to get 15 percent off their taxes.

Reagan raised the capital gains tax from 20 percent to 28 percent matching the highest marginal income tax rate at the time to in his words "close the unproductive loopholes that allow some of the truly wealthy to avoid paying their fair share."

The tax rate on dividends is also 15 percent these days.. if one wants to argue double taxation that is where you argue it.. not on capital gains.   The lower dividends rate actually makes sense to me because in encourages investing in a company to make a profit which usually means actually producing something as oppossed to the capital gains rate does not require someone to actually make anything but a sale to a sucker to make money.   

But pay me no mind I am just one of them pinko lefty socialists looking to go back to reagan's tax rates... when the country was doing great but running a deficit.. or maybe clintons tax rates when the country was doing great with a balanced budget..

I see your point Joe and the fact that the Rich get to become Richer than I do with their special deals will not change, and should not change in my lifetime. Because if it does, something has really gone bad. Save that for after I am gone.

However, there are those of us that purchased shares of stock with our after tax earnings and currently have those investments that we would like to be taxed at 15%

There are many companies that have had good stock performance since the mid 70s and if you purchased and held a few of those company stocks, you have done well enough to walk away. No one is perfect so you have to take some losses and offset them using some of the gains. At least to the $3000 limited yearly loss deduction. Some good choices have been:(IBM,AOL,AAPL,MSFT,)

To take the stock certificate purchased in 1975 and now tax it at 30% vs the 15% that was expected can have a negative impact on ones plans. Before I would pay 30%, I would sell everything and take the 15% hit and get out.

If all Capital Gains went to 30%, house sales would be impacted even further. Some would not sell and others would sell at a lesser amount to offset the 15% increase in taxes. That does not help market values.
There are some housing markets that are still doing well enough to consider flips. Another 15% tax reduces that interest.   

It is not only the Rich that will be affected.

JoeinNY wrote: You guys are starting to dance close to the crux of the problem.. the problem .. the one that uses your money to create the great inequality that is the least American thing that any of our forefathers could have possibly have imagined. Before you guys start calling me a communist, lefty, liberal son of a gun… you should go back to economic basics. First and foremost most investment in the stock market at this point does nothing to actually create economic activity. ........................ ....................................................

Joe, you did a good job of describing the empty half of the glass, but for each person buying in and idling their money, someone is selling, such as a person who lost their job and needs money to keep up the house payment, or a retiree that draws out an allowance each month, or estates getting distributed (and taxed) The money may be tied up at the individual level but it is constantly circulating at a national level creating constant tax revenue. My Mom lives off the money dad invested. She pays long term care insurance to keep her off state aid if the situation arises, pays her medical and co-pays, she goes out a few time a week and tips generously, she buys stuff for the grand kids, buys a new car every decade, bought a new couch this week, all from money that is "not in use". Just wait till all the baby boomers are doing this at the same time. The availability of stock will probably crash the market.

All of this talk of who pays what is just a distraction from the real problem, government costs as a percent of GDP are rising. Tax collections have not plummeted, but spending has risen beyond the inflation rate each year. When I worked as a paramedic and a patient had massive hemorrhaging from an artery, I did not start looking for blood donors, (I certainly didn't go after the biggest guy with the most blood and tell him to give his fair share). I put direct pressure on the wound to stop the flow, in most cases that was all the treatment that was needed. Is it to much to ask for a little common sense and restraint from our leaders, and for our citizens to focus on the real problem?

Dave when you gonna get it, water takes its easiest path, all the extra revenue was being funneled to Iraq, Iraq too is considered spending...no Iraq, no spending...
just like at home if your car blows a tranny, expenditure, you have to starve a couple months to pay for the repair, the spending is normal and the economy flows with spending....its when you throw in that little extra expense that creates deficit in the checkbook....
im not gonna hear that there never was a war am I? like someone didnt walk on the moon?

The wars cost us combined 1.5 trillion(highest estimate I could find including ancillaries that will be paid to vets far in the future) that expense happened over 11 years, only three of which were Obamas so he should get about 30% of the costs on his watch. for the sake of argument lets give him 100% of the cost in his three years. his deficit is 6 trillion minus the 1.5 trillion dollar war leaves 4.5 trillion or 75% of the deficit from other causes (of course it is much higher than that because I gave you everything in the calculation). We are addressing the military spending, cutting it to the bone and withdrawing from the wars. Could you please remove your democrat goggles and look at where the problem lies. The military has historically floated around 8% of our national spending. that has not changed much. but Entitlements have gone from virtually nothing 100 years ago to 65 percent of our budget and rising. Have we cut them to the bone? have we cut them at all? or have we increased them?

Dave your numbers are wrong, and the so called “entitlements” that you refer to are primarily social security and medicare. Which are not funded by any of these taxes, but rather are funded through separate regressive taxes. They are remarkable successful and efficient programs that allow the market to function better, by allowing people to take risks in their youth both with their employment and their spending and investments while knowing that there will be a minimum level of security to keep them from being beggars in the street during their old age. When addressed as the separate and distinct programs that they are they are overwhelmingly considered by society to be worth their costs. The current “conservative” and I say that very tongue in cheek interests will not address them as individual units because they like to leverage them to muddy the waters and use the clowds keep the conversation at the “they took our jobs” or “they want to take away our guns level”… or the famous tea party sign that read “keep your government hands off my medicare”.    The “food stamp” portion of the budget is in reality very low compared to the military costs you are so quick to dismiss.
As for taking from one persons pocket and putting it in someone elses… yes that is in fact how insurance works. You all pay in and then after it is invested if you live long enough (or die early enough)(or get sick more) then you get a pay out. In most cases the money is being taken out of a past you’s pocket and being put into a future you’s pocket. You could consider this a Ponzi scheme … much like the stock market as I refer to it. But the point with the government version is that it is remarkably more efficient than the private market version because of the percentages pulled off each transaction by the financial industry… a good portion of the economy is now related to money that is “made” in finance without anything actually being produced. That money is coming out of the middle class pockets and not one good or service is created.
Look at the problems in china right now due to their lack of a social safety net the savings rate in china is absurdly high and there is a severe demand and turnover shortage as a result. Without our demand there would be no Chinese economy.   They will need to create a social safety net in the next decade to allow their economy to survive when our demand continues to wane.
You claim we have a spending problem, but really when you remove debt servicing (which was created by not collecting enough resources) our spending is not high as a percentage of GDP. The reality is that we currently spend 1.5 % of GDP on infrastructure while our competition is spending between 4% (Europe/japan) and 9% (China) . Without an infrastructure the rich will move their money into off shore accounts and our kids won’t have an economy to work about .. we will be in decline as a society.

And quit changing the arguement - we were told that lowering tax rates under bush would create so much economic growth we would actually collect more revenue... that didnt happen so now we are supposed to believe that we just actually dont need more revenue and we should spend less?


Roger - the rich should not have access to things the rest of the market cannot access or we by definition have left the free market model. A free market requires freedom both from government interference and from monopoly interference. When the small guy doesn’t have the chance to become the big guy then what are we fighting for? While the government will never truly be able to level the playing field between the rich and those who would like to fight to be rich it exists exactly to try and do so – that goes back to why we over threw the king and the lords and ceded some of our freedom to our government. It certainly shouldn’t be working to stack the deck in favor of those that have already succeeded at the expense of those that would try.
Obama has proposed that those that clear more than a million a year in capital gains pay 30 percent, if that is truly a concern to you and you need to pull your vast millions out of the market all at once and put it under your mattress.. then my friend I truly do feel bad for you… but not that bad. Obama is of course far to the right of Reagan on this as Reagan taxed all capital gains (outside of the primary home sale exemption) at 28% and didn’t limit that to mega millionaires.   I am personally closer to Reagan as I am thinking somewhere around 100k the numbers should start to go from 15 towards 30.

Eric, did you ever look into shooting gel at your shop?

eric lavine wrote: Dave when you gonna get it, water takes its easiest path, all the extra revenue was being funneled to Iraq, Iraq too is considered spending...no Iraq, no spending... just like at home if your car blows a tranny, expenditure, you have to starve a couple months to pay for the repair, the spending is normal and the economy flows with spending....its when you throw in that little extra expense that creates deficit in the checkbook.... im not gonna hear that there never was a war am I? like someone didnt walk on the moon?

Eric, this government has blown a lot of trannys, but it has never starved for awhile. That is my whole point , we have overspent, and it is time to tighten the belt. 6 trillion in deficit spending in three years is not normal. As I pointed out, the war does not explain the deficit. in reality it is probably 10% of what barrack has accumulated. We are out of Iraq and winding down Afghanistan, we are also cutting our forces and weaponry. That should take care of the 10% that you are so worried about. Now what about the other 90%? Barrack is still asking for another trillion on the debt ceiling. There was a war, and it needs to be paid for. You do not do that by spending like a drunken sailor, you do it through self discipline.What is the exit strategy for the war on poverty?

JoeinNY wrote: “entitlements” that you refer to are primarily social security and medicare. Which are not funded by any of these taxes, but rather are funded through separate regressive taxes. They are remarkable successful and efficient programs that allow the market to function better, by allowing people to take risks in their youth both with their employment and their spending and investments while knowing that there will be a minimum level of security to keep them from being beggars in the street during their old age. When addressed as the separate and distinct programs that they are they are overwhelmingly considered by society to be worth their costs. The current “conservative” and I say that very tongue in cheek interests will not address them as individual units because they like to leverage them to muddy the waters and use the clowds keep the conversation at the “they took our jobs” or “they want to take away our guns level”… or the famous tea party sign that read “keep your government hands off my medicare”.    The “food stamp” portion of the budget is in reality very low compared to the military costs you are so quick to dismiss. As for taking from one persons pocket and putting it in someone elses… yes that is in fact how insurance works. You all pay in and then after it is invested if you live long enough (or die early enough)(or get sick more) then you get a pay out. In most cases the money is being taken out of a past you’s pocket and being put into a future you’s pocket. You could consider this a Ponzi scheme … much like the stock market as I refer to it. But the point with the government version is that it is remarkably more efficient than the private market version because of the percentages pulled off each transaction by the financial industry… a good portion of the economy is now related to money that is “made” in finance without anything actually being produced. That money is coming out of the middle class pockets and not one good or service is created. L

Joe, how is it that these remarkable and efficient programs are set to go broke in a little over a decade? They have overhead just like the finacial sector, who do you think pays for a social security employee that retires at 80% of their salary at 50? No body forces me to invest in stocks. I take the risk because I see a benefit. I am forced to pay into social security and medicare whether I see a benefit or not. Lets look at their history. When both programs were introduced they were sold on estimated costs that were projected for decades. The estimates have proven to be fractions of the true costs. What would happen if this were to take place in the private sector? There would be allegations of fraud and demands for regulation. When the government does it, no big deal. You are correct that the money was was collected, but most of it was paid out to retired individuals, not saved for those that contributed. Like all good Ponzi schemes it looked good when the baby boomers were contributing and few were collecting, but we knew decades ago that the funding was inadequate for the pay outs. We regulate private pensions and require them to be fully funded,we imprison people for running ponzi schemes, but the government has no such regulations and those that have run these schemes don't get life in prison, the get a pension for life. What would happen in the private sector if a a brokerage firm took a customers investment money and spent it on something else, putting an IOU in the account and then never paying the money back? Someone would get prison time. The US government has been borrowing money from the social security fund since it was created. They do pay interest on the loan but we currently have unfunded liabilities for social security of over a trillion dollars. I knew a builder who had a few homes go over budget (and he liked to spend on himself) he started using funds from new projects to complete older ones. He got caught and lost everything, narrowly avoiding jail time. Again what happens to our government officials that do the same thing? Barack is currently underfunding these programs with his employment tax cut. He knows the programs are going broke but he has cut their funding for political gain. What have we gained. He said in the state of the union that America was back, but in the news this week is an unexpected jump in first time unemployment claims and a downward revision in the predictions for next years economic growth. Soon we will be forced to deal with these programs going broke. Either we will all pay for a bailout of this remarkable and efficient system or someone will not get paid what they were promised. I would much prefer to give that money to my investment guy, take a 2 percent hit and at least know it is there and in my control.

I am forced to pay into social security and medicare whether I see a benefit or not. Lets look at their history. When both programs were introduced they were sold on estimated costs that were projected for decades. The estimates have proven to be fractions of the true costs. What would happen if this were to take place in the private sector?

Yes, and criminals are forced to pay for the justice system that imprisons them too, although i am sure they would rather not. It is a system that protects citizens, just like SS, Medicare, and other programs.

And what would happen if they did that in the private sector? Corporations do it all the time by filing for bankruptcy and getting out from under pension obligations. That is partially what corporate raiding is about.

And I think Joe in NY is correct on everything he said regarding financial markets. The only slight difference of opinion I have is that the overall market reflects consumer confidence in how the economy is expected to perform.

and.........the cut-off is 107k, so if you make a million a year, you only pay on 107k so once again the fcn middleclass picks up the burden.

John, ive decided i dont want anything more to do with fiberglass or spraying glass, its to labor intensive....and really when i price something i shoot it ridiclously high in hopes that they will walk, and if not, i have it priced high and then its worth doing

[QUOTE=eric lavine] and.........the cut-off is 107k, so if you make a million a year, you only pay on 107k so once again the fcn middleclass picks up the burden.

If this is not an entitlement plan but an insurance plan as Joe states and john agrees, the premiums would be based on the final payout. Imagine the heat if the government was replacing the income of a guy that made 5 million a year even if he had made the insurance payments on it. so they take the chicken$#!% approach and cut it of at 107,000 ( we paid someone a government wage and retirement to find exactly where this gag reflex line was), since they cut off the payout they have to cut off the payments. It is that easy, if you think they should pay on all their income but only collect at the 107,000 level than you discredit Joes argument. You cant have it both ways.

I still hear no solutions from you so called righties.. complaints about spending that the policys you advocate strenthing left behind is all. Complaints about the slow but steady growth that has replaced the the violent crash into the abyss that those policys left behind. Willingness to elect not only those that have been all too willing in the past to be lobbied for all these failed policys that benefit only the ultra wealthy (more like the .1%), but in this case to go right to electing the ones that were doing the lobbying that brough the world economy to the edge of the abyss.

No policies to move us forward... no explaination to why the last time tax cuts did nothing but raise the debt and regulation cuts did nothing but allow bad actors to pull out a ton of money before crashing the housing market, the stock market, the roofs of coal mines,

As to the overall market reflecting consumer confidence in how the market is expected to perform.. it does somewhat in the macro view.

However the massive amount of computerized trading that now goes on in fractions of seconds so small that having your computer closer to the main computers means a real and true advantage... the market also reflects how the programming whim of some 25 year old with a keyboard interacts with the programming whim of some other 25 year old. When these computerized "micro traders" make money off the market every single day whether it goes up or down.. it isnt due to any real risk it is just more profit being skimmed off the top.

Beyond that the market is highly influnenced by the feelings of relatively few fund managers spending them money of the middle class

And then only mariginally influenced by those who move their money around on a daily or weekly basis...

If it was an effective market it would actually be influenced by how the actual companies performed in returning profit to its owners

The CBO report shows that the deficit dilemma would largely be solved if the tax cuts enacted in 2001 and 2003 — and renewed in 2010 through the end of this year — were allowed to lapse. Under that scenario, the deficit would drop to $585 billion in 2013 and to $220 billion in 2017.

Hmmm... and here I was told we had a spending problem and not a revenue problem. But it seems like if you get rid of the bush tax cuts that produced no tangible economic benefit, then you get the deficit problem under control

Someone remind me why the "deficit hawk" republican candidates are all advocating not only making permanent all the bush tax cuts but also major additional tax cuts for the ultra wealthy in thier economic plans?

JoeinNY wrote: Someone remind me why the "deficit hawk" republican candidates are all advocating not only making permanent all the bush tax cuts but also major additional tax cuts for the ultra wealthy in thier economic plans?

Probably because the same report has unemployment rising again above 9% and staying over 7% Through 2016, and that it says economic growth will hover at an anemic 2% through the same period, Or it could be the the CBO has a history of being optimistic with forecasts that it revises later, or that the CBO 's accuracy rivals my local weather guys snow fall predictions.

I do not see 4 more years of unemployment at or near current rates as acceptable for 4 more years, I see it as proof of Obama's failed policy.