Get out your check books
Actually, no need to even do that thanks to the scam known as withholding.
Check it out America: Obama is looking at raising your taxes to pay for the “explosion” in the budget deficit. Let’s be honest. To pay for all the bailouts, “Cash for Clunkers” money and health care reform your taxes will have to go up. There is simply no other source of revenue for the government that is as easy to tap and as easy to increase as the income tax. And Obama’s administration is not just taxing the rich. No sir. He’s going to hit middle class America with tax increases. That’s you and that’s me.
The bottom line is that Obama has taken full advantage of a Democratic Congress and spineless Republican leadership to move America even closer to socialism. He’s done it by spending money like a drunken sailor on shore leave in Thailand. The good news is that now middle-class America will finally take its head out of its ass and realize that when Democrats will take only the rich, they are talking about middle-class America. The bad news is that it may be too late to stop what is already in motion. Let this be a lesson to you America. Pay attention to what your government is doing.
(Side note: I think my favorite line in the article is this one “If we want an economy that’s going to grow in the future, people have to understand we have to bring those deficits down. And it’s going to be difficult, hard for us to do. And the path to that is through health care reform,” Geithner said. How does SPENDING BILLIONS on health care reform bring down a deficit? It doesn’t!!!! This is probably the worst attempt at working the party line into an answer in the history of politics. It’s hard to believe that Geithner is the best person to head up the Treasury if he doesn’t understand simple economic concepts. Spending creates deficits; it doesn’t bring them down. I totally agree that deficits need to be eliminated for the economy to achieve robust growth. But I disagree with the idea that spending outrageous amounts of money to make health care worse is the way to do it.)
Random Stuff
I’m taking a page from my compadre and posting a few random thoughts about the economy and the runoff election in Georgia.
First, there was a report issued by the National Bureau of Economic Research that states the US has been in a recession since December of 2007. That’s right, it’s taken almost a year for the NBER to figure out what the American public has known for quite some time. What was it that clued them in? Was the housing crash? The financial crisis/credit crunch? The drop in the Dow? Hard to believe that these academics are almost a year late in determining that we are in a recession. Further proof that you college folks shouldn’t take everything your professors say as gospel. Do they teach you some good stuff? Yes. Are they the foremost experts on every economical and political issue? No. They spend too much time patting themselves on the back for their perceived intellectual prowess to realize what’s going on in the real world.
Up next: Ford. Ford’s CEO, Alan Mulally, must have giant brass balls. He has stated that he will work for only $1 a year if the government supplies them with bailout dollars to keep the company afloat. That’s a very generous gesture. I’m assuming that it would be modeled after Ed Liddy’s contract at AIG ($1 in salary but loads of company stock). Here’s the problem. If Mulally really wanted to see Ford succeed, he would have cut executive salaries and reduced his own salary long before Ford hit rock bottom. Instead, he has waited until it looks like his company might not get the tax payers money and made one last desperate grab at our money. He sacrificed everything he could before he was willing to cut his own bloated salary. And anything over $0 is bloated for a man who has helped destroy one of the largest companies in the world through poor management. Sadly, I think that Congress will fall for this move and give Ford and the other automakers $25 billion of our money.
Finally, Georgia held its runoff election today between Democrat Jim Martin and incumbent Republican Saxby Chambliss. As of 9PM, Chambliss leads Martin 59% to 41% (50% of precincts reporting). This lead is good for 2 reasons. First, if Saxby retains his seat, then the Democrats will not have a super majority in the Senate. This is good for the long term health of our country. Nothing would be worse than a liberal president and more than enough votes in the Congress to back anything he wants to do (like expand social programs and government run health care). Second, and perhaps most importantly, there will be no more Chambliss and Martin campaign ads on TV. And after enduring 6 months of these ads, I’m sick of seeing them.
More on the Auto Bailout
Here’s a couple of follow-up pieces regarding the proposed bailout of the auto industry.
First, if you paid close attention to my first post regarding the the auto bailout, you will notice that I mentioned that the UAW was lobbying the Democrats to send an obscene amount of money to the auto makers to delay their inevitable demise.
Looks like I was correct. UAW president Ron Gettelfinger has stated the workers will not make any more concessions to help the slumping auto makers. Gettelfinger called for Congress to act quickly on a bailout plan for the auto industry.
Don’t you just love this? The UAW refuses to make concessions and then demands money from the government. Does it matter that a big reason the auto industry is failing is because unionized employees blackmail employers into paying far more in benefits and salary than they are worth? No. What matters is that unions retain their power. If Ford and GM go under, these unions and union leaders suddenly hold no power and they will not stand for that. So, instead of making concessions from their insane salary and benefits demands, they require that government give the industry money to keep it afloat. They trade the votes of the union membership for money in order to retain their power. Democrats are more than willing to play along since they are also seeking to retain power in the government.
Now to address another article I read regarding the auto industry bailout. I stated before that the Democrats were putting on a clinic on how to buy votes by pushing for an auto bailout. As it turns out, the current administration is guilty of this as well.
Bush is suggesting that the money used to bailout the auto industry come from loans that were approved in September (but not dispersed). He is suggesting that Congress accelerate the availability of these loans. Originally, these loans were earmarked for the purpose of helping auto makers build more fuel-efficient vehicles so that they could become more competitive in the global marketplace (even though they have failed to do this for decades spending their own money). Now these loans will be used to simple keep the companies from crapping out financially.
To sum up – Democrats want to send $25 billion from the financial bailout to the auto makers to secure their votes and Bush has upped the ante by allowing money that was originally set aside for the development of fuel efficient vehicles to be used to keep the auto makers from going under. Looks like the Republicans are going to secure a few votes for themselves in the next election.
Its bi-partisan vote-buying like this that has driven me to libertarianism. And the worst part is that they are buying votes with MY money.
Vote Buying 101
Senate Democrats are putting on a clinic in Washington on how to buy votes. They are pushing forward with plans to introduce legislation that would earmark a portion of the $700 billion bailout for the failing American auto companies.
So how is this vote buying? Simple. The auto makers employees are members of the UAW. The UAW is lobbying the Democrats to send money to the auto industry in exchange for votes. If the Democrats send money to the auto makers, the unions will strongly suggest (i.e. coerce) that their membership vote Democrat in the next election.
The Democrats don’t give a crap about whether the workers in Detroit and other auto factories across the country keep their jobs or not. They care only about seizing power and using that power to steal the American public’s money and spend it on more vote buying programs so that they can maintain power.
Now, I think it’s been evident from other posts that I’ve made, that I am against the bailout. But just the possibility of the auto makers being bailed out makes me madder than anything else. The auto makers have been failing for years – why should they be bailed out now (other than the aforementioned vote buying scam)?
Companies like AIG, Bank of America, etc. are being bailed out because they got caught up in the booming economy and made some incredibly risky decisions revolving around the expanding credit markets. Things suddenly went sour and they lost a ton of money. Don’t get me wrong, I still don’t think that’s an excuse to bail them out, but it makes more sense than the auto makers.
Auto makers – and let me be clear, I’m talking about GM and Ford – have a history of making poor decisions that long ago crippled them and begin their demise. They weren’t caught off guard by a slumping economy and suddenly found themselves in the tank. They’ve been in the crapper for a long time.
Why? Because they allowed their employees to unionize and control all their employee related costs. Because they failed to understand the American auto market and adapt quickly. Because they failed to make themselves more efficient when their competitors (Honda and Toyota) were revolutionizing the industry with how they assembled cars and changed production lines. Because they failed to control overhead by reducing the number of employees, factories and dealerships as the demand for their cars fell.
For all of these reasons, GM and Ford don’t deserve our money. All this $25 billion will do is delay the inevitable. GM and Ford are ill equipped to compete in the auto market in today’s economy because they have completely failed to change the way they do business. Even as they lay dying, they continue to crank out SUV’s, even though the American market is moving away from gas guzzling behemoths. They will crash and burn with or without our money.
This is another opportunity for us as Americans to use our purchasing power to make a statement to government and private industry that we are displeased with the bailout. Don’t buy Ford or GM products. Actually, I don’t really need to say that, as most people don’t buy them now.
Don’t let the Democrats get away with buying votes using your money. Contact your Senator and make him or her fully aware of your displeasure in what the Democrats are attempting to do. Make them aware that your vote cannot be bought and will be used to support another candidate should they support the Democrats in their bid to buy votes.
You have a voice America. Use it.
The Truth About the FairTax
Like my cohort mentioned in his last post, Democrats in Georgia (and likely in other states as well) are using inaccurate or incomplete information regarding the FairTax to misrepresent their opponents position regarding taxes. Since many Americans simply don’t bother to educate themselves on the issues in an election, most will see this ad and think that Saxby Chambliss wants to increases taxes by increasing the sales tax. And that’s not the case. Here’s a brief explanation of the FairTax. Eventually, I’ll do a detailed post (maybe around April 15th), but for now, here’s the basics.
The first thing you should know is our current tax code is incredibly complex. If you don’t believe me, try doing your taxes by hand next year (using Turbo Tax doesn’t count as “by hand”). The code is written in several thousand pages and can be confusing even for the smartest CPA’s to follow and know all the ins and outs of the code. The FairTax would eliminate all those complexities. It’s very simple to understand and easy to follow. When signed into law, the FairTax would repeal the: individual income tax, the alternative minimum tax (AMT), corporate and business income taxes, capital gains taxes, social security taxes, medicare taxes, the self-employment tax, estate taxes and gift taxes. All of those taxes (and the associated tax codes) would be replaced by a simple consumption tax – a single-rate sales tax on new goods and services.
This single-rate tax will be about 23%. Consumers will pay an embedded personal consumption tax (the 23%) at the retail level (it will not be imposed on the sale of used goods). Now you are probably saying “So the price of goods will go up 23% – how is this good?” Well, that’s not the case. Under the current tax code, companies are required to pay a corporate income tax. I hate to break it to you, but companies don’t pay income taxes – you pay them for the company. Companies embed their taxes in the price of the goods they sell (much like your trash pick-up company passed along the increased cost of gas to you by raising rates), so they are able to pass along their tax burden to you.
Under the FairTax, companies would no longer pay corporate income taxes. If they aren’t paying those taxes, then they have nothing to pass along to the consumer (you and I). By not having these corporate taxes (and some other stuff) embedded in the price of the goods you buy, the price of goods would drop by roughly 23%. Now where have we heard 23% before? That’s right! The tax rate of the FairTax is 23%. So, while you would see a 23% sales tax on goods, the price of goods would not increase (they would most likely drop slightly) under the FairTax plan.
Now, I haven’t gone through the full FairTax plan, but that’s by design. I just wanted to address the incomplete information in Jim Martin’s campaign ad. Jim Martin is correct that the FairTax plan supported by Saxby Chambliss will implement a 23% increase on everything we buy. What it leaves out is that this same plan will abolish the income tax burden on corporations – a burden they pass along to you and I. By eliminating this, the prices of goods and services will drop by roughly 23% (if not more). So the 23% would be a wash in terms of the price you will be charged for retail goods.
Be on the aware America – politicians are trying to deceive you. They will use your ignorance against you by passing off lies and half-truths as fact. Don’t let them get away with this – be informed about the issues. Time to educate yourself, America.
(PS – I’ll do my best to educate you, so check back later for a complete break down on the FairTax. In the mean time, check out www.fairtax.org or The FairTax Book by John Linder and Neal Boortz.)
Biden wants your 401(k)
You can kiss your 401(k) account goodbye if Obama and Biden are elected. As Kristian stated in his previous post, Biden has gone on record as stating that he wants the money from your 401(k) plan. He, along with all the other House Democrats, want to eliminate the tax breaks given to 401(k) accounts and redirect those into mandatory, government run accounts.
More specifically, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation. The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
What does that mean for you and I?
One of the big draws of 401(k) plans for employees is the company match. Many companies match your contributions at various rates (anywhere from $.50 for every dollar put in, up to as $1.50 or more for every dollar put in) up to a certain percentage of your income. For example, depending on company performance, my company will match up to $1.50 for every dollar I put in, up to 5%. Even in the very worst years of company performance, my company will match at $.50 for every dollar I put in. That’s a 50% ROR on my money, even in trying economic times like these. If you can find a better rate right now, let me give you my cell phone number so that you can tell me where.
Under the plan that Biden and House Democrats are proposing, tax breaks for employers would be eliminated. Many employers match 401(k) funds to receive these tax breaks on their own defined-contribution plans. Without those tax breaks, employers will have no incentive for matching 401(k) contributions. Like most Americans, I really enjoy the match that my employer gives me because it helps grow my retirement account much faster. Without that match, I would likely have to work longer to have the kind of lifestyle I want to have in retirement.
Sadly, not having the company match is not even the worst part of this plan. Take a look at that second paragraph again. You will be required to put 5% of your pay into a retirement account administered by the Social Security Administration.
Read that one more time, just to be sure that you understood it. The government will require you to direct 5% of your pay into an account administered by the SOCIAL SECURITY ADMINISTRATION. This is the same group that runs the current Social Security system that, at best, will be bankrupt in 2042 and at worst will be bankrupt within the next 10 years. Under the proposed plan, they will be squandering even more of your money. More specifically, the money that you will need in retirement. If that doesn’t scare the liberal out of you, I don’t know what will.
On top of that, the money will be invested in government bonds that will earn 3% a year, adjusted for inflation. For comparison, here’s my 401(k) returns, by year, for the past 5 years:
2004: 38.3%
2005: 27.8%
2006: 7.5%
2007: -1.8%
2008 YTD: -44.5%
3% blows. Sure, the last 2 years have been crappy, but take a look at the other 3 years. All of them are over 3%. If all I wanted was 3%, I’d stick my money into a savings account or a CD. I have it in my 401(k) because I can invest in equities, which, over time, will provide me with much greater returns. Granted, the risk is higher (as evidenced by that 2008 YTD number), but I’m willing to take it in order to achieve the other numbers.
And risk is what this is all about. With all the uncertainty in the markets these days, people are shying away from risk out of fear. And Democrats are like dogs – they sense fear and feed off it. Democrats are using the American public’s fear of the markets and of risk to scare the public into allowing Obama, Biden and their Socialist Posse to steal even more of Americans hard earned money and use it for their own Socialist vote buying programs.
I’ll leave you with this. If you don’t think that Obama, Biden and other Democrats actually will “spread the wealth around”, take a look at this quote from Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, the woman who is the mastermind of the above plan. When speaking of this new plan, she had this to say: “I want to spend our nation’s dollar for retirement security better. Everybody would now be covered.”
Not “the individual will spend their dollar for retirement security”. Not “if you work hard and put money in, you will get money out. No. She and other Democrats think that they know what’s best for you and they will remove your money from your paycheck in order to spend it in a way that they see fit – which includes covering everyone, even if they have done nothing to contribute towards their own retirement.
Democrats don’t think you are smart enough to handle your own money. They think they know how to take care of you better than you know how to take care of yourself. But what it really comes down to is that Democrats are salivating (again, like dogs) at the prospect of spreading your wealth around to buy votes that keep them in power.
One has to wonder if the American public will take it head out of its ass long enough to keep this from happening or if they’ll simply remove it so that Obama and Biden can screw them.