Tuesday, February 17, 2009

$500... No, Wait... $400 Each

We tax all the others and pass the revenue on to you

$400, that's your share of the stimulus bill, $7.69 a week. Buy anything great for $7.69 lately, a fast-food steak sandwich maybe? Good, you can do it agin next week. Seems puny compared to the billions in stimulus-funded bonuses. Congress can get pretty aggressive about reducing your share (remember when it was $500?) but they can't seem to get those bonus billions back. If you were the 696th-highest-rated employee at Merrill Lynch you still got a $1 million+ bonus. You know, to retain your talent and reward your achievements? ML was such a talented achiever that they... um, failed and took your money out the back door.

$7B for rural high-speed internet? Private industry decided there wasn't enough demand to justify the expense of serving that slice of America because... it's RURAL! (Sometimes I miss Sam Kennison.) No problem, let the stimulus pick it up. Broadband providers must love this provision. Infrastructure costs picked up by us and the providers still get to charge full rates for their services. I smell stimulus bonuses here. Sweet.

The G7 (used to be the G8) says our stimulus is OK but they would like to see us spending more. MORE? (Thanks again, Sam.) The G7 doesn't include Russia (kicked out) or India or China or South Korea (all uninvited) or any country south of the US. Ever wonder why not?

* * * * *

We're already being set up for the failure of the stimulus bill. "It's not perfect" says the prez. Here's a thought: If you wanted it to be better, maybe someone should actually have read the freakin' bill before we spent the $800B! If everything goes right (and how often has that happened?), still "a 30% chance of failure" says the VP. Biggest effect not until 2010 says IHS Global Insight. Can't get much assurance for a tril these days.

Let's say you're a major investment firm or the manager of a large pension. You've gotta put your money somewhere, right? Do you bet on the stimulus working or not working? You hedge, of course, but sooner or later you're gonna have to bet the black or the red or lose your accounts to someone who will. Which way do you bet -- it works or it doesn't? How well has California done by going in the hole by $42B? It's a clue. As a wise man wrote, "What if it doesn't work?"

Remember the angst when we lamented our declining savings rate? Now we're giving money away and screaming "Don't save it, BUY something!" Cars and houses, preferably, and more than one if you can... with your $7.69. Confused yet?

I'll wrap it up with a comment from Italy's finance minister regarding our stimulus package:

"If the problem is an excess of debt, the cure is not adding more debt, whether that debt is public or private."

I think he gets it. Do we?

Monday, February 9, 2009

What If It Doesn't Work?

We tax all the others and pass the revenue on to you

What's Plan B for the economy? We've spent nearly a tril over the last six months bailing out financial institutions and buying TARP assets at inflated prices. Our government (both parties) hopes we'll overlook that they didn't provide for any oversight for the spending of that tril. It's only money and we'll forget pretty soon anyway, won't we? We always did before.

Now we're going to spend another tril or so on "stimulating" the economy. Around $820B but there'll be more, direct and indirect. Count on it. I can't quite describe how that stimulates me. You probably think that people like you and me are going to get big shares of the money to spend (stimulate) because, after all, it's our money. Nope. 500 bucks or so each, maybe some minor tax cuts, that's all we can be trusted with.

The lion's share of the money is going to major banks... again. We can trust them, can't we? Who could blame you for asking "Aren't those the same people who got us into this mess?" And yes they are, overseen by the same folks who overspent $78B of your money on TARP assets just a few months ago. $78B is a LOT of money. A tril is a lot more.

All this is by way of asking, what happens if the plan doesn't work? We can't do it again, the plan uses up all our money. Maybe not all of it but all the government has to spend right now. If we need much more, if the plan doesn't work and work well, who's left to tap? China, the Saudis or our home-grown rich? The latter are already getting out of Dodge (hello, Dubai!) and the other two are waiting, lurking, planning their own strategies to sop up the stimulus gravy.

When the worst seems to have passed, on that blessed day you can expect payback time, when interest rates and gas prices and necessities spike prices higher than you could ever imagine. The west, especially the US, has few friends. It's every country for itself. Witness Russia's energy aggression on top of its real and threatened aggression. What are we going to do about it? What CAN we do if we spend our future now... and it doesn't work?

There's only going to be us left to fix what we didn't break, to pay for the excesses of those who robbed us, to turn our backs on the friends who once trusted us absolutely.

God willing, the plans will work and we'll put this crisis behind us in fairly short order. Maybe our leaders will actually lead us out of our wilderness. Maybe fraud, waste and abuse will diminish. Maybe we'll each personally commit to sacrificing for the greater good of our country and fellow Americans. Maybe we'll buy only what we can afford and skip a few luxuries, be content with less. Maybe the people we give our money to will use it wisely, even return it someday.

Maybe... but what if it doesn't work?

Even if you're on the right track, you'll get run over if you just sit there. Will Rogers

Sunday, February 8, 2009

Free Mexican Food

We tax all the others and pass the revenue on to you

We once asked our college freshman daughter to join us for dinner. Her reply: "Oh boy, free Mexican food!" No, darlin' daughter, there's no free Mexican food. A $35 dinner bill is one thing, a tril bailout is quite another. It's free Mexican food today that you have to pay for forever.

Refundible tax credits sound pretty benign, like something any of us might benefit from. Not quite. It's the problem that lies at the heart of using taxes to shape social policy. Are taxes about government revenue or are they about "fairness" as the prez told us during his campaign? If the former, shouldn't tax policy feature revenue-enhancing components? If the latter, is fairness merely a subjective concept momentarily defined by the party in power?

Does Congress lack the honesty to tell us that they're redistributing income via tax credits for people who don't pay taxes? Yes, policies like that already exist but they're getting way out of hand. That's what CharlieR was talking about when he said “From the tax point of view I think we’ve done a great job”. He wasn't talking about taxes, he was talking about Free Mexican Food. Charlie is OK with taxing us to chase votes because... (drum roll please) he doesn't pay all his own taxes. Kind of like Congressman Wm. Jefferson complaining about the hell of being investigated AFTER the feds found $90 large in marked money in his freezer. C'mon, guys.

Does it feel like Congress wants to take more of your money for no other reason than they've identified voters who are unfairly burdened by not having your money? And does that feel kinda weird? It's not just your money, they're taking money from all your heirs... maybe forever. How long do you think it takes to repay, say, 2 tril? Maybe 3 tril? Pay up, heirs.

If Congress was a good steward of our money it might all go down a little easier. Maybe we could pretend that the administration's tax scandals are not definitve of our circumstances. But now it seems like they just overpaid by some $78 billion for TARP assets in the first bailout. $78 BILLION! Isn't that 22% of the first $350B, wasted? Remember the outrage when the first year of the Iraq war was going to cost $70 billion? For or against the war, at least the $70B paid for something. The $78B got us nothing but a snicker from the folks who knew we were overpaying but kept their hands out anyway, and they still have them out.

There's no free Mexican food. Somebody always gets stuck with the check. Can you look your kids in the eye and tell them it's going to be... them? Poor them.

This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer. -- Will Rogers

Thursday, February 5, 2009

What's A Health Czar?

We tax all the others and pass the revenue on to you

TommyD is out. Q'uelle suprise. Nancy Killefer is too. A little harsh, the latter, but I'm OK with it. TimmyG is still in and how does he get that bye from the prez and Congress? Sam's Foreign and Domestic Auto Center may trip up Rep. Hilda Solis' bid for SecLabor. Her hubby ignored $6 large in LA taxes, maybe. Not much money but he did it enough times that LA filed 17 liens to try and get its money. He's a tax jerk, but what does that say about her? Not much, but Hilda forgot to mention that she was on the board of a labor rights organization that campaigned for bills that she later sponsored. That gives me more pause than the taxes.

Amidst all this I learned that TommyD has stepped down as White House Health Czar. Say what? Who knew? What do Health Czars do?

The Rangel Rule? There is an ex-Texas judge in the House who is a bizarre jokester. His latest is to offer the Rangel Rule. Instead of bringing lawmakers up to the standards they demand of Americans he proposes to bring Americans down to the standards of their lawmakers. The RR will waive the consequences of non-compliance with federal tax laws for all of us, not just our reps. Strange guy, this Texan. Don't take him too seriously. DO take Charlie R seriously as he has seriously cheated us out of some serious money.

WH spokesman Robert Gibbs has a strange view of it all. "Nobody's perfect" he said of TommyD. Well OK, but maybe cabinet members/nominees should be a litle closer to the mark than they have been lately. I know, spin is his job.

NYTimes opines that it's the screwed-up tax code, not the individuals at fault. That's what the LATimes said about TimmyG, remember? Now poor Tom and Nancy have to go back to being wildly rich for doing... what was that they do? Better than being a health czar, I bet, but you don't get to hang around the West Wing as much.

Take this to the bank: No major health care reform this year or any time soon. DOA, despite CharlieR's "by the end of 2010" promise. Ain't gonna happen, folks. No will, no money. Maybe some window dressing, that's all.

Monday, February 2, 2009

The View from Ventura

We tax all the others and pass the revenue on to you

Californian Pam Pecarich, an ex-tax policy analyst, writes in the Ventura County Star: "It is not a time to cut taxes further for the well-to-do — rates are at their lowest now in three decades — or cut spending programs for those who are suffering. It is time to show us all that government can work again for all the people." That must pass for analysis in Ventura.

Pam, could you be just a little more specific? And aren't there just two possible inferences from that? 1) Leave things the way they are, and 2) raise taxes and/or spending?

Sing it, Willie: "Run that by me one more time..."

* * * * *

Are you going to keep your $500 tax credit if it passes? I am. I don't like myself for it but if I'll pick up a dime off the street I'll claim 500 bucks on my 1040. What are you going to do with yours? What kind of a difference will it make in your life? Will you buy health insurance? Probably not, isn't that going to be free anyway? Donate it to a charity? Whoa, let's not get carried away here. Apply it to cover your underwithholding? Maybe, but doesn't that kind of defeat the purpose? Me? My MasterCard, probably. MC won't notice or thank me but I did promise to pay them and I guess I should. They don't take RWs.

* * * * *

Nobody takes Z-Bux anymore, either. Mr. Mugabe made it official that they can take foreign currency now. No one noticed. At the end two cans of soup and a loaf of bread cost a trillion new (less the ten zeroes) Z-Bux. Saw it on CNN so it must be true.

True story: I'm in Tbilisi, as you may know. Not that long ago, when the dollar was in its previous freefall, a vendor at the flea market asked me if I could pay in anything but US dollars. Man, if I'd only had some Z-Bux then. Are Ameri-Bux going down the same drain? Some people sure don't trust them.

Working In Tbilisi

We tax all the others and pass the revenue on to you

I'm in Georgia -- the Tbilisi one, not the Atlanta one -- for a 4-week gig with an EU tax project. I haven't kept up my blog and I won't be regular (in more ways than one) until I get home later this month. Keep checking back, though. I'll try not to ignore my responsibilities here.

There was a war here last August. If you'd like to read a story about it, check THIS one out.

OK, back to the traces.

* * * * *

Mortgagedfuture.com takes an interesting view of the fiscal debacle in California HERE. S/he opines that California's massive debt has accrued to support unreasonable spending plans that amounted to a "super stimulous" program... and it has been a colossal failure. They offer it as a bad example to our stimulous gurus. CA can't borrow any more money. Now what? No one knows. More and more people and unprotected entities (hello Trinity County) are getting RWs instead of payments. You remember RWs from previous mention here, don't you? RWs promise a 5% interest rate but where's that going to come from, and when?

* * * * *

And remember our discussion about revenue vs. fairness? Turns out, the richest 400 Americans paid more in inflation-adjusted dollars after Tax Cuts for the Rich (TCFR) than they did before them. Thanks, Bloomberg. TCFR equals more tax revenue. You know, like Mr. Reagan and Mr. Bush promised... and proved. Can we agree that tax increases for the rich might mean less revenue?

NancyP wants to roll back TCFR, of course. I just can't remember why. There's a good reason the president is holding off on his promise to eliminate TCFR. He needs the money and he needs it now. Get it, Nancy? Ask Arnold how well his spending packages have worked so far, and how well his RWs are going over with Californians. Poor Californians.

Can't anyone here play this game? -- Casey Stengel

Sunday, February 1, 2009

It's Only Health and Human Services

We tax all the others and pass the revenue on to you

I used to be upbeat about the president's vetting squad. They caught TimmyG cheating for four years straight. The prez didn't care, sure, but his team caught him. They did their part.

Not so for Tom Daschle, former South Dakota senator and the president's pick for Secretary of Health and Human Services. They whiffed on him. TommyD owed us -- you, me and the rest of the nation -- $140 large in back income tax and interest. And no one noticed.

No wonder there's a financial crisis. Our senior government officials and cabinet nominees aren't paying their freakin' taxes! Oh, and TommyD omitted another $88 large in 2007 consulting income. What's that, another 20, 30, 40 large in taxes? Change he could count on... in his pocket.

TommyD has an angel, Leo Hindery. Hindery paid TommyD a million a year through his company Intermedia Partners (gotta keep it deductible, don'cha know?) plus a luxury car and driver.

Your main employer gives you a luxury car and driver and you think it's not taxable income? C'mon. Hey Tommy, do you think Leo's outfit was deducting what you weren't claiming? Bet your sweet patootie.

You can't teach integrity, Mr. President. We wanted you to change the DC way of doing business, remember? Instead you're giving us tax breaks for people who don't pay taxes and leaders who don't pay either. Who's left? Just us. Poor us.

In your inaugural address you told us "The question we ask today is not whether our government is too big or too small, but whether it works...". It usually does work, Mr. President, but in spite of, not because of, men like Mr. Geithner, Mr. Daschle, Mr. Richardson, Mr. Blagojevich and Mr. Spitzer.

It works because ordinary people struggle to make it work in spite of the venalties of their office holders and political appointees. It works because little people bear heavy burdens to make it work while our leaders too often bear none. They make it work because it's all they have. It's their only hope. They have no angels to consult for or senate seats to sell or offshare bank accounts to pay hookers with or multiple legal residences to claim tax exemptions for or bricks of cash in freezers. This is all we've got, Mr. President. This, and you. Make it work.