(Don't) Read My Lips: Higher Taxes Are Inevitable

Thomas F. Cooley is the Paganelli-Bull Professor of Economics at the Leonard N. Stern School of Business at New York University. He spearheaded a collaborative research and policy initiative, Restoring Financial Stability: How to Repair a Failed System. He also writes a weekly opinion column for Forbes.com and is a member of the Council on Foreign Relations.

President Barack Obama campaigned on the pledge that he would not raise taxes on the middle class. If you believed that, I have some bad news for you (if you haven't figured it out on your own). President Obama's promise is unsustainable. Virtually every individual and every investor will face higher taxes. There is an inevitability about this because his economic program is not fiscally sustainable. I can also tell you the form the taxes will take.

First, a few facts
Last fall, the U.S. Treasury closed the books on fiscal 2009, and the news was not good. The fiscal deficit for the year was $1.4 trillion dollars -- an increase of more than $960 billion over fiscal 2008. In a $14 trillion dollar economy that represents 10% of GDP. The Congressional Budget Office (CBO) -- the independent agency that provides non-partisan evaluation of the budgetary implications of various initiatives -- estimates that if current policies stay in place, the 2010 deficit will be slightly smaller at $1.3 trillion, but the total outstanding debt held by the public at the end of 2010 will be 60% of GDP -- the highest it has been since 1952.

The longer-term projection is equally grim. In the CBO's baseline projections, by 2020 the annual interest on the debt will be more than $700 billion. These facts should seriously temper any euphoria over the recent turnaround in GDP growth and the improvements in the U.S. economy because they will constitute an enormous drag on the economy. Simply stated, we are spending our way into a very big problem.

Consider the following picture of government revenues and outlays as a percentage of GDP (care of the CBO):






















Wishful thinking
The dashed vertical line shows where we are right now (end of government fiscal year 2009). Everything beyond that is a projection (read: wishful thinking) based on these assumptions -- no new spending programs, expiration of the Bush tax cuts, no more adjustments to the Alternative Minimum Tax, and very optimistic assumptions about economic growth over the next decade. Even with these assumptions, it is not a sustainable path.

The administration has painted itself into a very difficult corner. It has dramatically increased spending and it has refused to acknowledge that its commitment to not raise taxes on taxpayers earning $250,000 or less is not sustainable. We are borrowing like crazy, just as we have been for the past decade -- the difference is that it is now the government that is levered to the hilt, not the private sector.

This is a bleak picture indeed, but there is some good news to go with it. As economic theory would lead us to expect, the savings rate in the U.S. has increased in response to the huge deficits. Private savings can offset the public dissaving up to a point.

The other good news is that the U.S. dollar is and will continue to be the world's reserve currency. Why is that good news? It means that the U.S. can run a persistent current account deficit because other countries need dollars for reserves. This is why we find it easy -- even now with staggering deficits -- to sell U.S. Treasuries at low interest rates. In response to the financial crisis last year there was a flight to the safety of U.S. Treasury obligations. That reaffirmed the world's belief in the long-term credibility of the U.S.

But, here is the rub: that credibility is not assured to last forever. In order to continue to do this and fund our deficit, we have to be perceived to be on a sustainable fiscal path. Exactly what constitutes a sustainable path can be hard to define. Market participants have to be confident that in the long run, revenues and outlays are moving closer to one another and will not be characterized by a gap that is increasing ad-infinitum. Stated simply, the government needs to spend less and collect more revenue.

What are the options?
As the economy improves, receipts will increase, but it will take a very robust recovery to make even a small dent in the gap. That leaves tax rates and spending cuts as the main levers to restore sustainability. And, how credible is it to assume that they will confront the problem by decreasing spending? The feeding frenzy of special political interests that erupted around the stimulus package ought to answer that question.

That leaves raising taxes. Rather than confront the problem directly as the Office of Management and Budget should do, the president has sought pseudo bi-partisan cover by creating a Commission on the deficit to study the problem. The commission will conclude that the best way to close the budget gap is with a value added tax (VAT) -- a tax levied at each stage of production on the value added at that stage. Think of it as a stealth sales tax.

Value added taxes can be a good fiscal tool. They are less distorting than other taxes, so if they substitute for other taxes that can be a good thing. But they have one huge drawback: Once they are in place they can be increased with a stroke of the budgetary pen. They become an ATM machine for spendthrift politicians. Europe has relied heavily on VAT for decades. Average rates in the E.U. are around 20%, but they can be much higher. In Germany, they started out at 4% but are now at 19%.

If we end up addressing our fiscal problems with a value added tax without cutting some other tax rates and spending, we will be on a very slippery fiscal slope. Credibility is something that is very easy to lose with irresponsible fiscal policy, and very, very hard to rebuild once it is lost. Right now it is leaking away.

Thomas F. Cooley thinks taxes are going up soon via a value added tax. What do you think? Share your thoughts in the comments box below.

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  • Report this Comment On April 07, 2010, at 10:48 AM, caltex1nomad wrote:

    Nice article Thomas and I don't have a problem with the VAT, only with who will be managing it. I would prefer a Flat Tax which is more transparent and easier for the average Joe taxpayer to understand.

  • Report this Comment On April 07, 2010, at 10:57 AM, ikkyu2 wrote:

    I just hope that there's no VAT levied on goods and services I buy with my Roth IRA retirement money. Because that money's supposed to be tax-free when withdrawn; it was already taxed when it was put into the Roth.

  • Report this Comment On April 07, 2010, at 11:18 AM, ETFsRule wrote:

    "The longer-term projection is equally grim. In the CBO's baseline projections, by 2020 the annual interest on the debt will be more than $700 billion. These facts should seriously temper any euphoria over the recent turnaround in GDP growth and the improvements in the U.S. economy because they will constitute an enormous drag on the economy. Simply stated, we are spending our way into a very big problem."

    It seems strange that you mention the $700 billion number without putting it into context. The CBO estimates that our GDP will be $22.77 trillion in 2020. So the cost of servicing our debt will be a little under 3% of our annual GDP. That's not unsustainable.

    And that's assuming that we don't make any additional cuts to our budget before 2020... I'm sure we could cut a couple percentage points from our defense spending without even noticing.

    Anyway, it seems like this article is resorting to scare tactics without discussing the true cost of servicing our debt.

    Some good reads:

    http://krugman.blogs.nytimes.com/2010/03/05/debt-is-a-politi...

    http://krugman.blogs.nytimes.com/2010/03/27/dealing-with-the...

  • Report this Comment On April 07, 2010, at 12:22 PM, DJDynamicNC wrote:

    To paraphrase Oliver Wendall Holmes Jr., I rather like taxes, for they are the price we pay for civilization. I am willing to pay more for a better, more modern, and more capable civilization. I am willing to pay more for a stronger America.

    Consequently, I'm absolutely in favour of tax increases, on myself as well as on others. It is only responsible to pay for our nation's debt and support our country. It is the patriotic thing to do, I believe.

  • Report this Comment On April 07, 2010, at 12:24 PM, nottheSEC wrote:

    ETFsRule brilliant stuff and agreed. Caltex1nomad, a "flat tax" is not a simplification of the tax code but a strategy to shift the tax burden from the rich to the poor and lower middle class. I would absolutely agree with a flat tax if we all were allowed just one standard deduction of $100,000. This would provide tax relief were needed to the poor and forgotten middle class. All IMHO ....J

  • Report this Comment On April 07, 2010, at 12:25 PM, nottheSEC wrote:

    Pardon "were needed" should read "where it is needed."

  • Report this Comment On April 07, 2010, at 1:10 PM, davejh23 wrote:

    "It seems strange that you mention the $700 billion number without putting it into context. The CBO estimates that our GDP will be $22.77 trillion in 2020. So the cost of servicing our debt will be a little under 3% of our annual GDP. That's not unsustainable."

    $22 trillion by 2020 is extremely optimistic...this assumes 6%+ GDP growth annually...impossible without above average inflation. Current GDP, excluding deficit spending, is closer to $12 trillion. Assuming 3% GDP growth over the next decade, GDP will probably be closer to $16-17 trillion in 2020. The national debt will likely be around $22 trillion. In addition, the $700 billion interest number assumes that Treasury yields will remain low. Many analysts have shown that even moderate increases in borrowing costs could push interest payments on the national debt to 10%+ of GDP by 2020...possibly much higher. You can project whatever you want. The CBO numbers probably represent a best case scenario. 3% GDP growth, increasing borrowing costs, and a national debt larger than GDP within 10 years are highly likely scenarios...not worst case scenarios. If anything, this article might understate the problem. In any case, these aren't the main points of the article...I'd say that the conclusion that taxes will be increasing for everyone is guaranteed.

  • Report this Comment On April 07, 2010, at 1:14 PM, BMFPitt wrote:

    I'd much rather spendthrift politicians had an ATM card than a credit card like they do now.

  • Report this Comment On April 07, 2010, at 1:16 PM, fadler1 wrote:

    Tax at these new levels and the "spirit" and "reason for success" in America is DEAD. Democrats don't care since they pander to those that don't understand. We need first to fix the problem (SPENDING) and then pay back the debt but nowhere in any of the "President's Wisdom" is a plan to cut spending.

  • Report this Comment On April 07, 2010, at 2:33 PM, dmccartney wrote:

    It's not just projected that we get tax increases, there are a number of tax increases already enacted into law with the health care bill, and many of them will affect the middle class.

    For example, the requirement to purchase health insurance, with a penalty tax for non-compliance, will affect many people in the middle class.

    Another example is the raising of the threshold for deducting medical expenses. It is currently at 7.5% of adjusted gross income, and is scheduled to go to 10%. By taking away medical deductions, the politicians have effectively raised taxes for a number of people, including many in the middle and lower income groups.

    I also do not believe Congress will enact a value added tax, because it's too obvious. I believe they will continue to play games and bury the tax increases like they have done so many times in the past, and continue to do now.

  • Report this Comment On April 07, 2010, at 2:51 PM, Borbality wrote:

    Good stuff.

  • Report this Comment On April 07, 2010, at 3:52 PM, nottheSEC wrote:

    Davejh23.your analysis of ETFsRule confuses. Allow me to explain what I think is a salient point. Pardon the rushed typing as I am at work

    He said the COST of debt financing would be 3% of GNP or 700 billion if the economy improved at 22.77 Trillion at 6% Annual GNP growth by 2020.

    You estimated something approaching an expenditure of 10 % of GNP than said the debt would be 22 trillion? In an apples to apples comparison the COST of debt financing 700 million at a more modest 16 billion GDP would be ( 22.77/16)*3% or 4.27 % of GNP. If we estimate the cost fo financing to increase 50 % that is still no where near 10%.

    ETFsRule said " it seems strange that you mention the $700 billion number without putting it into context. The CBO estimates that our GDP will be $22.77 trillion in 2020. So the cost of servicing our debt will be a little under 3% of our annual GDP. That's not unsustainable."

    Davejh23. "Current GDP, excluding deficit spending, is closer to $12 trillion. Assuming 3% GDP growth over the next decade, GDP will probably be closer to $16-17 trillion in 2020. The national debt will likely be around $22 trillion. In addition, the $700 billion interest number assumes that Treasury yields will remain low. Many analysts have shown that even moderate increases in borrowing costs could push interest payments on the national debt to 10%+ of GDP "

  • Report this Comment On April 07, 2010, at 4:02 PM, nottheSEC wrote:

    @davejh23 @ current rates

    700 Billion cost of borrowing for 22.77 Trillion GDP = 3% of GDP

    700 Billion cost of borrowing for 16 Trillion GDP = 3% of GDP= 4.26 % of GDP

    1)How does that interest rate more than double to your prescribed/analyst prescribed 10%

    2) What kind of treasury yields would that be?.

    3) Is not16 trillion a worst case scenario as much as 22 billion is a best case scenario?

    4) Please excuse the typing at work

  • Report this Comment On April 07, 2010, at 4:03 PM, nottheSEC wrote:

    Sorry this thing double posts a lot

  • Report this Comment On April 07, 2010, at 4:27 PM, iterativedev wrote:

    "To paraphrase Oliver Wendall Holmes Jr., I rather like taxes, for they are the price we pay for civilization. I am willing to pay more for a better, more modern, and more capable civilization. I am willing to pay more for a stronger America."

    Yeah. Uh huh. And we all know that there's nothing "better, more modern, and more capable" than the Post Office and the DMV. Just think how much better this country would be if we just raised taxes to 100% and let the government provide us with all the goods and services we need!

  • Report this Comment On April 07, 2010, at 4:36 PM, baltimoregirl wrote:

    the dollar cred may last longer than you think. what is the alternative to the dollar right now? the euro? look what happened with Greece! and there is more of that stuff coming.

    so perhaps things are not as bleak as they seem... and I totally agree with DJDynamicNC.

  • Report this Comment On April 07, 2010, at 4:48 PM, footchester wrote:

    If only we could return to those 'God, mom and apple pie' days of the 1950s; everything would be A-OK. Oh, thats right, the top tax rate was 93% then, ninety-three percent! But somehow the 'spirit' and 'reason for success' seemed quite strong back in the 'Father Knows Best' era.

    And yes, we could solve just about everything with some prudent and well informed cuts at the Pentagon. With NO loss of security, but possible some small loss of our ability to play 'Team America, World Police.'

  • Report this Comment On April 07, 2010, at 4:54 PM, PositiveMojo wrote:

    More taxes, either directly or indirectly obtained, reduces the amount of disposible income that a household has to spend.

    Some of the comments on this article in favor of taxes because they promote civilization are ABSURD! Did these people ever hear of the American Revolution, the French Revolution, even WWII (Germany's inflation and worthless money). Higher taxes and a drop in disposible income frequently result in a "breakdown" of civilization and revolt. This is an undisputed fact proven by history.

    When people are out of work and/or cannot pay the rent and feed their families they more often than not take up arms. Our politicians are walking down a very dangerous path. They are as arrogant as those leaders thoughout history who had no regard for those whom they served.

  • Report this Comment On April 07, 2010, at 4:55 PM, BigHackAttack wrote:

    This nation's greatest problem is that our individual survival no longer depends on our willingness to work.

    Both of my own children are in their early 20s, **completely** capable of working up to 80 hours per week, but they choose to party every night and sleep all day. (Nope, they're no longer welcome in my home.) Their unemployment checks are direct-deposited and their EBT cards (food stamps) are reloaded automatically each month.

    Naturally, most of their friends are doing the same thing and think America is the greatest country on earth. None of them care in the least that I'm working myself into an early grave and pay $80k in taxes every year.

    I'm to the point now where I'm beginning not to care either -- my retirement funds will be completely worthless long before I need them. I'm preparing for a rapid ramp-up in civil unrest, which will quickly lead to the end of civilization.

    The citizens of this once-great nation will get what we deserve. We voted for the scumbags that created the mess we're in and we continue to re-elect them.

    Learn to hunt, and quickly.

  • Report this Comment On April 07, 2010, at 4:55 PM, PositiveMojo wrote:

    More taxes, either directly or indirectly obtained, reduces the amount of disposible income that a household has to spend.

    Some of the comments on this article in favor of taxes because they promote civilization are ABSURD! Did these people ever hear of the American Revolution, the French Revolution, even WWII (Germany's inflation and worthless money). Higher taxes and a drop in disposible income frequently result in a "breakdown" of civilization and revolt. This is an undisputed fact proven by history.

    When people are out of work and/or cannot pay the rent and feed their families they more often than not take up arms. Our politicians are walking down a very dangerous path. They are as arrogant as those leaders thoughout history who had no regard for those whom they served.

  • Report this Comment On April 07, 2010, at 5:02 PM, Borbality wrote:

    BigHack: Holy crap.

  • Report this Comment On April 07, 2010, at 5:02 PM, NoFreeRide wrote:

    I agree with iterativedev lets go ahead and give 100% to the government then we can all stop trying so hard to get ahead. There would no longer be a reason to working 40 hour weeks? We could all stop and smell the roses while drinking government supplied coffee.

    A national government is a needed to coordinate between the states and provide for a national infrastructure and defense. We need to pay for it, but how much? Ray Stevens (a song writer) once wrote a song "If Ten Percent Is Good Enough For Jesus (It Oughta Be Enough For Uncle Sam)". Our government should have a fixed income percentage and budget within it. Maybe government officials should be required to listen to Dave Ramsey.

  • Report this Comment On April 07, 2010, at 5:04 PM, NoFreeRide wrote:

    I agree with iterativedev lets go ahead and give 100% to the government then we can all stop trying so hard to get ahead. There would no longer be a reason to working 40 hour weeks? We could all stop and smell the roses while drinking government supplied coffee.

    A national government is a needed to coordinate between the states and provide for a national infrastructure and defense. We need to pay for it, but how much? Ray Stevens (a song writer) once wrote a song "If Ten Percent Is Good Enough For Jesus (It Oughta Be Enough For Uncle Sam)". Our government should have a fixed income percentage and budget within it. Maybe government officials should be required to listen to Dave Ramsey.

  • Report this Comment On April 07, 2010, at 5:10 PM, dialysisjoe wrote:

    Value Added Taxation will have little meaning, since we don't produce anything in this nation, anymore. What Obama will be doing is trying to squeeze blood out of a rock. Jobs will continue to tank, due to the fact that more and more of what we consume is produced outside of the USA. Clearly, no economy can subsist on a service industry. We have to begin making thing, again, and that's simply not going to happen. I believe that Mr. Cooley is doing the CFR song and dance, concerning his views on the dollar. The dollar will continue to deflate, over time and as it does, this economy will deteriorate into a depression. The dollar is being held up by the fact that the Fed is purchasing our treasury bonds like their going out of style. If this were not happening, the dollar would already be falling to Wermark Republic levels, which caused German Citizens to have to use wheelbarrows to go grocery shopping. The reality is that we no longer make things. In order to sustain an economy, you must be a producer, not a consumer nation. We are the latter. The economy will get worse, the dollar will fall and we will have a depression. We already have a depression. It's like being dead, but denying it. The fact that the Fed is buying our own treasury bills is the only thing holding this nation up. If the world becomes wise to that parlor trick, the man behind the curtain will be exposed and we will be doomed.

  • Report this Comment On April 07, 2010, at 5:18 PM, FinnMcCoolIRA wrote:

    Good write-up!

    The sad and infuriating thing is that virtually all of these onerous tax increases ON EVERYONE could have been avoided.

    Too many Americans were totaly ignorant - some may say stupid - in having voted for a 'Big Government', tax and spend 'Messiah' viz. Obama.

    The facts were available to warn us that Obama would be a far left leaning president - some would say (not without reason) - socialist.

    Unfortunately, Obama was able to sell the 'snake oil' of "...hope and change...' to gullible, foolish and often greedy people.

    Well, the gullible, foolish and greedy got what they wanted and deserve.

    It is sad because those of us who realized what would happen under Obama must also also pay the price for the 'fools'!

  • Report this Comment On April 07, 2010, at 5:22 PM, pkluck wrote:

    Once again some education is needed. The high tax rates in the 50's were on certain income in excess of 400,000, which would be like $4,000,0000 in todays dollars. Additionally there were many more deductions back then to shield income. If you don't think higher taxes deminish the number of jobs and take productive people out of the work force you're either a fool or on the Gov't take. On top of my income my wife made around $100,000 but between Fica, Federal, and State taxes she was taking home around 50% of that. Factor in childcare and it was a no brainer she quit work. I paid well over $100,000 in taxes last year and my income is not that high. Glad people with incomes less than 100,000 will now share in my tax pain under our current tax and spend Gov't.

  • Report this Comment On April 07, 2010, at 5:42 PM, BigHackAttack wrote:

    @Finn,

    Your comments are a bit too political for my liking, but I take a philosophical attitude regarding your comments about a subset of voters ruining things for the rest of us:

    The rest of us didn't do enough to prevent the situation (myself included), so we're ALL going to get what we deserve.

  • Report this Comment On April 07, 2010, at 5:44 PM, csd128 wrote:

    The promise to not raise taxes may, indeed, be kept by simply creating a new tax(think VAT), thus permitting the politicians to smile and claim to be honest as they pander to the populist notion that the "no tax increase" statement is true.

    This leaves the gate wide open for allowing future tax increases on the so-called rich, which would not impact the "average" worker.

    The real problem to overcome is not taxation, it is the pathetic lack of critical thought in voters who, in their belief that a tax does/will not affect them, rush to elect such scoundrels

    Few people realize that the most inflationary component of our goods and services is the imbedded (and therefore,hidden) taxes which function to make it that much more difficult for the truly economically marginal buyers to make ends meet, but these same marginal people will flock to support the very politicians who would build upon the very system that does them the most harm in the marketplace.

    Fix this Pied Piper mentality by implementing the "Fair Tax" as proposed by fmr US rep John Linder, and perhaps these woefully shortsighted and ignorant people would begin to realize how they have taken it in the shorts for decades.

    OMT; if one does not pay taxes, why should one be permitted to vote on such matters as how revenue is raised or spent?

    Would you let your children vote on the household budget?......that amounts to what we do as a nation.

    Aristotle said, "Excellence is not an act, but a habit...we are, therefore, what we repeatedly do"

    That statement applies to failure as well.

  • Report this Comment On April 07, 2010, at 5:50 PM, DJDynamicNC wrote:

    @iterativedev

    You said: "And we all know that there's nothing "better, more modern, and more capable" than the Post Office and the DMV."

    Do you know how FedEx delivers packages to rural areas? It drops the packages off at the local post office for delivery and pays the postage. Why? Because it wouldn't be efficient to deliver to those rural areas. In a truly free market, people who live in rural areas would simply not be worth providing mail to. Similarly, they wouldn't be worth providing with electricity (thank the TVA and other adjuncts of the Rural Electrification Act for that).

    Just because something is efficient, doesn't make it right. Just because something is less than perfectly efficient, doesn't make it not worth doing.

    Your argument, essentially, is that progress has a price that is born by society as a whole, and part of that price is a loss of efficiency. I agree - and feel that this price is worth paying for a stronger, smarter, modernized America.

    For that matter, I feel that being able to reliably mail something across a continent for 44 cents is a pretty darn good deal. And an organization like the DMV being able to process and organize extremely important documents like photo ID, and training and licensing for potentially fatal vehicle equipment operation, all in a matter of a few couple hour visits, is extremely impressive. I'm certain with better funding it could be streamlined still further - but there exists a certain amount of opposition to raising taxes to pay for services. Curiously, these people then complain about the lack of services. Dishonesty, or plain old cognitive dissonance? We report, you decide.

  • Report this Comment On April 07, 2010, at 5:51 PM, DJDynamicNC wrote:

    Wow that was poor phrasing - please strike "a few couple hour visits" and replace with "a few visits of just a matter of hours" or something similar.

    Take that, English! :lol:

  • Report this Comment On April 07, 2010, at 5:54 PM, OPTIONNUT wrote:

    OK...I agree with Tom and we all must pay in one way or another or otherwise face the guilt of passing the total USA debt to our Grandkids.

    However, lets look at what our economy has endured and what looks like an economic recovery to me vs. total collaspe of our world economy.

    So what I am saying is that we need to create jobs that provide real tangible products here in the USA AND BUY

    AMERICAN MADE PRODUCTS!

  • Report this Comment On April 07, 2010, at 6:02 PM, FinnMcCoolIRA wrote:

    @BigHack

    The reality of modern America is that one can NOT divorce the 'political' from the economic .... the Federal government has grown much too big to make such a distinction.

    I agree that MANY "...didn't do enough to prevent the situation".

    However, I WAS NOT ONE OF THEM! In fact I railed against Obama's past record, his associations and his 'left wing political bent' all the time he was campaign was spewing the lies and false hope ... alas, to no avail ... and often to curses!

    Thanks for the feedback.

  • Report this Comment On April 07, 2010, at 6:06 PM, DJDynamicNC wrote:

    @csd128

    I rather like this turn of phrase:

    "Aristotle said, "Excellence is not an act, but a habit...we are, therefore, what we repeatedly do"

    That statement applies to failure as well."

    I investigated the Fair Tax website and I'm not thrilled with it, but I am willing to admit it is a logically consistent alternative to the current system. I would advocate a rather higher standard of "prebate," however, as simply meeting poverty-level tax needs simply ensures that the climb out of poverty is that much harder. If we're going to do that, I think it only reasonable (since people living in poverty are not contributing nearly so much to the economic engine as they could be with the disposable income to get further ahead and really become invested in the economy) to set the poverty mark quite a bit higher. This also ties in with "living wage" considerations. It is simply poor economics (as well as atrocious ethics) to let people languish in poverty when they are willing to work hard, as I'm sure you can agree.

    With some tweaks, though, I could see this being palatable.

  • Report this Comment On April 07, 2010, at 6:11 PM, DJDynamicNC wrote:

    @FinnMcCoolIRA - Did you likewise rail against Bush's massive deficit spending and sliding the Iraq and Afghanistan war costs off the primary budget books?

    I like intellectual and rational consistency in a person almost as much as I like ideological mutability in the face of facts.

    @NoFreeRide - If ten percent is all you wish to pay, then would you be willing to forego half the services you currently receive (since you don't wish to pay for them)?

    You can keep a chunk of the interstate highway system, part of the space program, a few brigades of the military, and a couple of policemen here and there. But next time you want to send a letter, you'll just have to FedEx it in a box for 10 bucks. And I might advise finding out which police officers are staying and moving quite close to them. There are an awful lot of crazy people with guns out there lately, I hear.

  • Report this Comment On April 07, 2010, at 6:12 PM, buntyp wrote:

    To think of the Govt. at this time or any time soon, cutting back on Spending is an idle thought.

    That would be like trying to stop the Queen Mary dead in it's tracks.

    The Credoitors, particularly the 'Sovreign Funds' Folk, will soon determine that thieir support, of what they have repeatedly said is an un-sustainable path, will inevitably cause Taxes to be raised by one means or another.

    The Health Care debacle, as it unfolds by it's attempted Implementation, will cause such a strain on State Govts., that the whole Law of 'Diminishing Returns' is going to be once & for all show the premise of that 'Law' to be so, so Valid.

    That is the point at which the Govt. also suddenly realizes that a significant amount of Capital had already taken Flight.

    It is at about this point that everyone will feel the Downwrd 'G Forces of the elevator as you try to arrest the slide at about a 3rd. World Status.

    It will also become noticeable to everyone, that the shots are being called from outside of the Country.

    How sad that all this seems inevitable, & apparently welcomed by this Admistration.

  • Report this Comment On April 07, 2010, at 6:15 PM, DJDynamicNC wrote:

    @Graybear - You said: "More taxes, either directly or indirectly obtained, reduces the amount of disposible income that a household has to spend. "

    That is true - IF those taxes do not result in a concurrent increase in services, which no longer have to be paid for out of pocket. And if those taxes do not generate a stronger economic infrastructure within which people can prosper. And if those taxes do not come disproportionately from wealthier people who can best afford it, thus creating efficiency for lower income taxees.

    However, all of those things are often the case, which I'm afraid nullifies your argument as it stands (though I am most willing to hear additional counter arguments).

  • Report this Comment On April 07, 2010, at 6:15 PM, artintheair wrote:

    When we have an unexpected bill we try in every way to reduce our costs, 'cause we have relatively little control on our revenue. The feds can control both - taxes for revenue, cutting programs for costs.

    The people who seem to be complaining about this tax increase are those who, by all accounts, will not be affected - those with incomes less that $250,000. Bill Gates, his Dad, Warren Buffet and Bill Clinton, among many others, feel that our present tax laws are inequitable. If THEY are willing to dig deeper Congress should take them at their word and get rid of that enormous pre-Obama debt right now.

    In 1954 the marginal tax rate on $200,000 and over was ~90%. Up until Pappy Reagan it was ~ 70%. Of course, no-one paid that rate 'cause the money went to alternate uses - exploration, research, new products, new markets, JOBS, JOBS ...

    Since Reagan the 'smartest guys in the room' have sucked the money out of the economy and left us in the dust behind. Can you imagine what it would have been like if Bush got his way and 'privatized' Social Security? Us retired folks would have our tin cups out, standing on the corners to pay for food and health care.

    My solution is to take the marginal tax rate back up to 70% - 90% and - in a grand experiment, just like the last 30 years - see what happens.

    My best guess? Stability and opportunity, just like it was 'in the old days'.

    artintheair

  • Report this Comment On April 07, 2010, at 6:16 PM, DJDynamicNC wrote:

    @buntyp - What?

  • Report this Comment On April 07, 2010, at 6:31 PM, VirtualViking wrote:

    Enough is enough. Cut the spending. Period.

    We get a VAT, I'm "going Galt". Simple as that.

    And Holmes was wrong...taxes are the price you pay for "government", not "civilization". And the price has become way too high. Sometimes you need a good fiscal collapse to get your priorities straight - or, as Jefferson suggested, a good revolution every 30 years or so.

    Clean out the clutter. Hit the Reset button.

  • Report this Comment On April 07, 2010, at 6:39 PM, DJDynamicNC wrote:

    @VirtualViking - I am interested in your perscription for civilization absent government. You may not care for THIS government, but I find it unlikely you simply wish to return to a state of nature.

    In the absence of effective government, somebody stronger than you will impose one. This is why we have a vested interest in having a strong nation with an effective government. Taxes make that possible.

  • Report this Comment On April 07, 2010, at 6:55 PM, Howard1ii wrote:

    I believe that the Obama administration will continue to encourage class warfare, and come up with still more ways to tax the "rich."

  • Report this Comment On April 07, 2010, at 7:12 PM, deeandjay100 wrote:

    it scares me what the Obama administration considers " the rich"

  • Report this Comment On April 07, 2010, at 7:27 PM, FinnMcCoolIRA wrote:

    @DJDynamic

    Yes, I certainly did rail against the UNNECESSARY Bush spending... such as Medicare D. Also, his failure to veto just about anything, etc.

    Bushs' mistakes should not be repeated (indeed greatly expanded) and by waving some magic populist mantra ( 'hope and change') magically and suddenly become 'wonderful' acts of a statesman!

    The real point is that we've become much too dependant upon government and the expectation of 'free stuff'..... it doesn't exist.

    Unless we change QUICKLY we are dead in the water as an independent people.

  • Report this Comment On April 07, 2010, at 7:55 PM, memoandstitch wrote:

    Kudos for an article that doesn't promote a MF newsletter.

  • Report this Comment On April 07, 2010, at 8:47 PM, ecoloney wrote:

    Taxes are a tool of oppression. Governments are about oppression by their very nature. That's why the founding fathers specifically enumerated what powers the federal government could have and absolutely no more. So much for their good ideas.

    There's no question about a VAT on the horizon. What better, simpler way to get at all that "tax free" growth in billions of dollars of Roth IRAs. And watch them try to justify it saying, "Corporations will pay the bulk of those taxes." Corporations only collect and write the check for taxes. It is the consumer that PAYS the taxes.

    Certainly the clowns in government know they're spending us broke. It has GOT to be their intention.

    The purge began on Jan 19, 2010. May the purge continue in November.

  • Report this Comment On April 07, 2010, at 9:35 PM, matthunt97 wrote:

    We seem to forget that every dollar spent on taxes is lost to some other potential use. Not that that is good or bad, but to service a debt with tax dollars is similar to credit card debt,,,,,a drain on the household and lost opportunity. Why do we make the collective choice to do such? Greed? or?

  • Report this Comment On April 07, 2010, at 9:44 PM, dpbEsq wrote:

    Are Obama and Biden trolling this site to put in their support for taxes?? Paying taxes is patriotic?? Who is that idiot and God help us all if he is an investment consultant or a CPA!

    Paying taxes are not patriotic - its called the Boston Tea Party. And paying taxes are especially not patriotic when the reason taxes must be increased is to fund the obsessive (and not beneficial) spending coming out of DC at this point in history. Higher taxes for cash for clunkers, paying for others who couldnt afford their mortgages in the first place, paying for the debacle that is now mandated health insurance??

    That's not patriotic in any sense of the word.

  • Report this Comment On April 07, 2010, at 9:59 PM, xetn wrote:

    Just as there is no good tax, there is no good government. Government is a monopoly, can legislate and tax to its heart's content, and enforce the results on you with the threat of imprisonment or death.

    You have asked for and got what you wanted. No personal responsibility, and no prosperity. Now, the phrase "be careful what you ask for; you might get it" will become painfully aware when the average American is finally impoverished.

    The constitution is guarantees only one thing, any shill that gets into office can interpret it to mean anything he wants and, the Supreme Court being employed by him will agree.

    Take, for example the 1792 coinage act that specified what real money was, silver and gold coins, the weight and purity and if anyone debased it, was guilty of a fraud punishable by death. The Supreme Court decided it really didn't mean commodity money, but fiat paper money. Thus, we have a piece of paper that has lost over 95% of its value since the founding of the Fed. And guess what occurred the same year, the beginning of the income tax, with a "maximum rate" of 6%. Get the picture? Any time the government decides it needs more money, it will just create a new tax or increase the rate or eliminate exemptions.

  • Report this Comment On April 07, 2010, at 10:52 PM, Marshalldedr wrote:

    @ etfsRule: I do not understand this attraction to debt on both a national and individual, family level. Who controls the debt controls the debtor. The more bonds we sell to China and other countries the more security we give up. And do not think for a moment that at some point our debt cannot be called and if we cannot pay it we will be in deeper trouble than we already are. The entire Health-care bill was aimed at creating a permanent voting block for Progessive liberals by commiting resources provided to people many of whom live on the outskirts of society and exist in the black market by hard working people who have never been helped by any of the people they will now be supporting and so let's make durable goods even more expensive by creating a VAT? And do not think this will apply to only goods manufactured here. The VAT is easily applied to ALL goods sold here whether manufactured here or elswhere. I can only wish America could learn to zip up our wallets and stop this crazy consumerism. That would jam the VAT up Pensylvania Avenue.

  • Report this Comment On April 07, 2010, at 11:34 PM, getrichdietrying wrote:

    I did not read the article, I am an independent leaning Democrat right now, I am low poor-middle class, and I just read the headline of this story so I have to say to all of you "Duh".

    We have been getting tax breaks for the last couple of Decades and the deficit keeps going up where eventually the "piper," will come ugh all coming and IRS will have to close all loopholes in the system and suspend all to every deductions and credits to save the financial system in US. As to when will this be, hopefully after I am dead and gone in a hundred years or so.

  • Report this Comment On April 08, 2010, at 2:23 AM, QuandoInQuando wrote:

    The Value-Added Tax, or VAT wouldn't be so bad if it could be our ONLY tax. Instead of paying tax when we earn money, we would pay the tax as our money is spent. It is a type of "consumption" tax. Having a VAT as the only tax would eliminate that army of tax "experts" that we need to help us fill out or tax forms every year. Also, the opposing army that we call the IRS would be much smaller and would function somewhat differently.

    Sadly, any money on which we have already paid income tax would be taxed a second time.

    Which brings up the subject of the Roth IRA. The Roth IRA has always seemed to me like a bad idea from the Govenment's point of view. Suppose all of the boomers converted everything to the Roth this year. The government would enjoy a big influx of money now, but how would they operate when the boomers retire? Instituting some kind of consumption tax would solve that problem as they would get to tax the money twice.

    Note to self: Avoid the Roth IRA.

  • Report this Comment On April 08, 2010, at 2:54 AM, SetMyPeopleFree wrote:

    Love these Progressives/ Marxists/Socialists wanting willingly giving up their, and our, freedom for an oppresive and power hungry government that the

    constitution was written SPECIFICALLY to prevent. Worked out well in the old monarchies, the Roman empire when it became corrupt and recently Germany and all the Marxists countries. Well, I guess the same people love the fact that we are probably a billion carbon footprints short of were we would be as a result. By the way, why are they reading a nesletter dedicated to making obscene capitalists profits? Maybe they are progressive plants whose job is to push the4 Marxist agenda of this regime whenever any facts shed light on the situation; look how many post DJdynamic put out immediately. Go to red China or Sweden where your kind of patiotism will be both appreciated and demanded.

  • Report this Comment On April 08, 2010, at 4:22 AM, wpr101 wrote:

    I still can't believe anybody actually voted for Obama. It was obvious that his background is in communism. Soon we all be equal - working back to back in rice fields.

  • Report this Comment On April 08, 2010, at 5:23 AM, PeterBradshaw wrote:

    IMHO, the biggest threat to the US is the immense growth in the ratio of CEO pay to average worker pay. In the 1950s the ratio was around 25 to 1, now it is closer to 250 to 1. The ratio of Wall Street bankers pay to the rest of us seems even higher. That is the kind of discrepancy that led to the revolutions in France and Russia, not to mention the slew of revolts all over Europe in 1848.

    Maybe the rich better decide to pay higher taxes, to keep the rest from turning society over!

    And why all the bad-mouthing of the Post Office. I have just been pricing the cost of sending one of my wife's paintings to a friend at the other end of the state, and the Post Office price is about 1/2 of the FedEx price. And it is not just in rural areas that FedEx transfers items to the Post Office, it happened recently to a package shipped to us in the heart of Silicon Valley! Actually, I wish the Post Office were LESS efficient at delivering all the junk mail we get!

  • Report this Comment On April 08, 2010, at 8:29 AM, MPov wrote:

    Great article. The increases are already happening - at the state and local levels. Local taxes and property taxes are increasing at an alarming rate, mainly because local governments cannot run deficits. Their budgets have to be balanced every year. It is interesting that most commentators and politicians in Washington seem to focus on tax and spending issues at the national level, yet ignore the relationship to taxes at the local level. Cuts in spending at the federal level allow the politicians to claim an aura of fiscal responsibility, but they often result in tax increases at the local level as local governments try to make up for the loss of funding for programs. Taxes are taxes, after all, and they are all going up.

  • Report this Comment On April 08, 2010, at 8:46 AM, econlibrarian wrote:

    Christina Romer (chair of the Council of Economic Advisors ) has a paper forthcoming in the American

    Economic Review that was written before she took a leave from her position at Berkeley to join the Obama administration. The title of the paper is:

    THE MACROECONOMIC EFFECTS OF TAX CHANGES: ESTIMATES BASED ON A NEW MEASURE OF FISCAL SHOCKS

    I quote from the paper's conclusions:

    "Our results indicate that tax changes have very large effects on output. Our baseline specification implies that an exogenous tax increase of 1% of GDP lowers real GDP by almost 3%. Our many robustness checks for the most part point to a slightly smaller decline, but one that is still typically over 2.5%."

  • Report this Comment On April 08, 2010, at 8:50 AM, catoismymotor wrote:

    For your reference:

    www.fairtax.org

    US Federal Individual Income Tax Rate History: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=356213&t=0...

  • Report this Comment On April 08, 2010, at 9:07 AM, efhouse wrote:

    I wish the tax whiners would look at the chart in the article again. Since 2000, we are paying lower taxes relative to GDP that we have since at least 1970. That was partially OK b/c from 1995 until 2008, we also were spending well below the long-term average.

    Well, the spending has moved way above average, and both are going to have to change. The spending needs to move back below the long-term average, and the taxes will have to move to at least the average, and probably higher, so we stop the digging.

    The rich will have to pay more, and the middle class will have to pay more. The poor will receive less. By populist definitions, my family qualifies in the rich category. We know we will have to pay more in taxes. But we can't carry it all. Far-right conservatives have convinced the majority over the past 30 years that ANY level of taxation is bad. That education is going to have to be changed. Some level is necessary, and we have to be able to sit down at the table to have a rational discussion over the right level, w/o some minority screaming at the first mention of taxes.

  • Report this Comment On April 08, 2010, at 10:31 AM, starfish36 wrote:

    Gosh, people are discovering that they need to pay for what they buy and that the unfunded wars amid tax cuts for the rich aren't so swell for the middle class. When will they learn of the history of U.S. income taxes, of top marginal rates of as much as 91% under a Republican president (Eisenhower) who had to deal wirth a war? When will they learn that "tax cut," in the 60s, meant a reduction in the top marginal rate all the way to 77%? Sure, these were the top rates, but the next bracket was not 35%. Why is this society so unwilling to serve its counrtry and so willfuly ignorant about the history of taxation? The USA does not have high taxes, as people who take the time to compare its tax rates with those of many other countries know. We need to reinstate the draft or some alternative national service requirement so that Americans understand their obligation to help their fellow citizens. It is not a "slippery slope" top pay for what you buy. It's called common sense.

  • Report this Comment On April 08, 2010, at 11:16 AM, njdolfan wrote:

    PeterBradshaw wrote:

    And why all the bad-mouthing of the Post Office. I have just been pricing the cost of sending one of my wife's paintings to a friend at the other end of the state, and the Post Office price is about 1/2 of the FedEx price. And it is not just in rural areas that FedEx transfers items to the Post Office, it happened recently to a package shipped to us in the heart of Silicon Valley! Actually, I wish the Post Office were LESS efficient at delivering all the junk mail we get!

    Do you understand that the post office loses money every year... So your taxes and mine are proping up the post office... how is this efficient... it's not, i have no problem paying 50, 60 even a $1 to send letters or cards through the mail. But how th epost office not being another source for welfare...

  • Report this Comment On April 08, 2010, at 11:43 AM, woodland95695 wrote:

    AP article today says 50% don't pay taxes, so they don't care or it doesn't apply. Democratic voters?

    However, Obama may be able to keep his pledge to not raise taxes- he will simply leave it for the next one to do?

    Meanwhile the damage will be done unless rationality happens and a lot of repealing is done to stop the crazy spending. Clinton Legacy is Monica. Bush is war on terror without results. Obama will be that he spent us into a long term Japan situation and the government will control most industries- either by regulation or taxing them to the point of more profit goes to the government than the shareholders. What incentive is that. Smart people will move on to the next capitalist country to invest and prosper. As someone said, Rome, etc. fell, and we can too if we are not careful. Obama is just accelerating the possibility.

    November elections will be interesting and indicative of a one term president?

  • Report this Comment On April 08, 2010, at 11:43 AM, nwind wrote:

    The bighack is right on!

    My kids have been told and they are younger than yours, that you'll get nothing from us unless you are willing to WORK FOR IT.

    I was shown how to work by my Gramps who came to the Toronto area with 5 kids ,spoke no English,had no job, but in 1990 died at 90 a millionaire.

    He is still the only one who did that on either side of my family. He worked hard at keeping as much of HIS MONEY as possible.

    He was a carpenter who became a home builder.He grew up in the depression.

    I and my older brother worked for Gramps through high school for 5 years building homes. We were grunts at the age of 12 when we started.

    This is part of why I think like the bighack.

    We worked every Saturday and summers so when I was 16 one evening during the summer time I started to drink alchohal so I was hung over the next morning. This was Mom's Father so when she said at 7am you better get to work I fell back to sleep.She knew what was coming.

    Next thing I feel and then see is Gramps looking down at me after he threw a bucket of cold water on my bed.

    Wagging his finger at me saying ..let's go we have a busy day!

    Kind of hard to forget that and I know there are folks shocked reading this now but that changed my life for the good.

    I work hard and teach my kids the same.

    The only free cheese is in the mouse trap folks!

    So bighack is shocking the PC crowd here but what is happening to our N.A. culture to me is simply disgusting.

    Hard asses like myself ,bighack and my Gramps are outcasts almost.

    Look I don't eat babies or beat my kids but when I say something you better listen and look at me or Mom and be respectful.

    My kids don't have a cell phone (oh shocking) or TV in their rooms or their own computers..especially in their rooms.

    Get outside and play like we did.Figure it out.

    Our disease of political correctness comes from our government run school systems, our governments of course ,the pop culture media and those of you who teach this garbage to kids.

    How does this fit with the higher tax problem?

    Well it starts with teaching the kids reponsibility so they can get the maturity to take care of themselves.

    What's wrong with that you PC crowd?

    Because if we don't turn this around we have countries full of kids like the bighacks sons.No offense meant to you.

    That's when the the "looters" start to control the "producers" and that is when the end is near.

    Read page 410 of Atlas Shrugged by Ayn Rand.

  • Report this Comment On April 08, 2010, at 1:43 PM, QuandoInQuando wrote:

    The tax rate must be between zero and 100%.

    First consider a 100% tax rate. If the government took all of our money then the economy couldn't function so their income from taxes would soon go to zero. As they backed off from 100% they would collect more money.

    Similarly, a zero tax rate would give the government zero income. As they raised the tax rate their income would increase.

    There is an optimum point between zero and 100%, the point of diminishing returns. Going above this point will result in less tax revenue while backing off from this point will likewise result in less tax revenue. Some people think that right now we are already beyond the point of diminishing returns so that lowering taxes (so called "supply side" economics) would actually increase tax revenue. Not everyone agrees.

    During most years, the government should tax at something less than the point of diminishing returns so that they can temporarily tax at that "optimum" level now and then without destroying the economy.

    Beyond that, the government should operate on something less than their income during most years so that they can build up a surplus to be used during lean years. And in the unlikely event that there is a natural disaster during the time that we are fighting a war while there is a continuing major recession then the government can use up the surplus AND increase the tax rate to the "optimum" level.

    In my opinion this will not happen without a balanced budget amendment to the United States Constitution. In my opinion, the government should be able to operate on a deficit only during the time of a declared war. That's it.

  • Report this Comment On April 08, 2010, at 3:39 PM, DJDynamicNC wrote:

    @dpbEsq - "Paying taxes are not patriotic - its called the Boston Tea Party."

    You mean that event whereby colonists protested the British government manipulating and lowering business tax rates - specifically duties and tariffs, even more specifically the Townshend Duties - preferentially to favour a powerful corporation? Yes, I can see how that would be a problem for patriots, then and now. And how did the young United States pay for its government after the Revolution? Tariffs and duties. Imagine that. The issue was not that all taxes are evil, the issue was that taxes were being manipulated to favour a specific few at the expense of the colonists, who no longer felt they were under British jurisdiction at all.

    So yes, I concede your point while recognizing that it supports my own.

    @ FinnMcCoolIRA - You said: "Bushs' mistakes should not be repeated (indeed greatly expanded) and by waving some magic populist mantra ( 'hope and change') magically and suddenly become 'wonderful' acts of a statesman!"

    That's completely fair. I may not agree with your stance, but you've been intellectually consistent and reasonable in coming to your position.

    @ Ecoloney: You said: "The purge began on Jan 19, 2010. May the purge continue in November."

    Which part of the purge was it that entailed Barack Obama and Democrats receiving millions more votes from American citizens in Novemeber of 2008? Or don't those votes count? Elections have consequences. That's how democracy works.

  • Report this Comment On April 08, 2010, at 3:42 PM, DJDynamicNC wrote:

    @ xetn - You said: "Just as there is no good tax, there is no good government."

    Am I to understand, then, that you support NO taxes and NO government? You are thus in direct opposition to the authority of the United States government and Constitution? That's treason, my friend.

    Also, I'm going to need you to stop driving on public roads, stop using products invented by people at public universities, and stop using GPS powered by satellites launched by NASA. Also, no more 911. But in exchange, you can stop paying taxes!

    Actually, I've got just the place for you - no government, no taxes, and plenty of guns. Somalia is Republican heaven!

  • Report this Comment On April 08, 2010, at 3:52 PM, DJDynamicNC wrote:

    @ nwind - your post is full of both great advice and ridiculous assumptions. I have had a job since I was 15 years old, starting with working on a farm doing manual labour, and hardly missing a day since. I haven't had a TV in the house since I was 10 years old. There is absolutely zero correlation between any of these things and my stance on taxes. Try to stay on topic.

    I learned early on from my family and my time in the army that "WE" are always stronger than "YOU" or "I" will be. I also absorbed the Christian ideal of compassion. Looking out for your fellow man is NOT a weakness, and refusing to do so does not make you a "hardass." It just makes you an ass.

    It is the height of arrogance to assume that nothing bad ever happens to good people. It is shockingly naive to assume that all people can take care of all things at all times. The market works extremely well to find efficient short term solutions to most problems. But there are things that are neither short-term nor efficient that are nonetheless worth doing. And I happen to feel that America should be the best at doing them. I am proud of what we the people can do when we set our minds to it; and I am proud of government of the people, by the people, and for the people, and the incredible things it has achieved. Perfect? Not hardly. Worth it? Absolutely.

    I'm proud to pay my taxes and be a shareholder in America. I don't understand why you are so ashamed of it.

  • Report this Comment On April 08, 2010, at 3:56 PM, DJDynamicNC wrote:

    @ njdolfan - as we explained above, the post office delivers mail even to where it isn't economically efficient to do so. This is because we, the people, have decided that even people in BFE, Wyoming, deserve to be able to send and receive mail. You could easily make the post office profitable by cutting service to the rural areas of the country, but the cities subsidize service to the rural areas (this is a common trend, actually - red states receive far more in federal tax dollars than they put in, whereas blue states put in far more than they get back out, in essence putting most of Republican America on welfare for their services).

    Government specifically exists to do things that need doing that are not efficient, because if they were economically efficient, you wouldn't need government to do it - the market would take care of it.

  • Report this Comment On April 08, 2010, at 5:48 PM, Glycomix wrote:

    THE VAT, helps exporting businesses survive the socialist drag.

    If the VAT is so horrible to the poor, why do ALL of the socialist EU countries use it?

    Ask the average American,

    What would you prefer...

    - a good job or a mortgage?

    - a good job or cheap health-care?

    Do you think they'd say, "I'd rather be unemployed and have a mortgage?"

    With NO job, you lose food, shelter, clothing and self respect.

  • Report this Comment On April 08, 2010, at 6:41 PM, csd128 wrote:

    DJDynamicNC

    Thanks for the follow-up, please spread the word on "The Fair Tax".

    Economically, our problems are many, and money caused, not alleviated them.

    Before government grew to its present, preposterous, size, commerce was being committed by honest people, and it was good.

    Government had/has a rightful place in such matters as involves our banking system and economy by provision of mechanisms to resolve or prevent issues from disrupting civility while assuring safety and security as business in done.

    Think of it this way...beyond providing a level of security and a judicial framework (and please, don’t start quibbling the basic point) how has government beneficially affected our citizens as they interact on affairs economic?

    Certainly not by removing the external forces of politics, and allowing our system function as intended, where losers lose, but prudent investors and legitimate businesses can thrive .

    What it should not do is perpetually heap debt onto us while spoon feeding our selfish political agendas, as was and is being done at this very moment.

    We are a nation built upon the debt of individuals and government, which taught, or allowed consumers to be taught, that we could have it all, and all at once.

    "Levering" purchases is a way of life for most, a method that is relatively successful until the cyclic nature of supply/demand and need vs want disrupts the flow of cash, and then we scream to be saved by the same officials who led us down the path of our doom.

    Imagine your portfolios had you (all) made nothing except margin buys, but because your real power lay in your ability to manipulate the market, you had a steadily increasing value, and continued making only margin buys while NEVER paying the margin loans down.

    You KNOW your power is not absolute, so inevitably you are faced with a market correction that wipes out your value and therefore your ability to repay the debt.

    Now, imagine that you do not have to CREATE wealth with which to prop up your failed "business model", just pass the hat and demand it be filled by whomever can be held up as the root of the problem - typically the so-called rich, because they just never seem to pay enough taxes, do they?

    A similar catastrophe-in-the-making has played out in virtually everything from food, to housing, to employment, and each time some sorry-ass politician is fronted for one of the major political parties as the cure d'jour, and once in office they simply repeat the old process, changing only the beneficiaries of their larcenous largesse as they skew the system.

    I submit that real change requires, at the very least, real belt tightening, a willingness to pay as we go, a resolve to no longer buy into tax and spend political solutions that are ACTUALLY NOTHING MORE THAN PONZI SCHEMES, and we must demand that the economy be left to find its way based on reality, not relationship.

    We can no longer afford more bridges named after a party shoe-shiner.

    Eventually, such a reality could shock some sensibility into our way of doing business, but only if we allow that to occur.

    The next time you vote, think about all those tax dollars being sent to “Friends Of”, and then consider third-party options, it is time for reformation.

  • Report this Comment On April 08, 2010, at 7:07 PM, buntyp wrote:

    DJDynamicNC, one of these days when you get around to doing some reading, other than this forum, You may endeavour to enlighten yourself as to the Meaning of the phrase 'The Law of Diminishing Returns'.

    Should you ever find the time to break-away from these 'Word-Smith' games with which you seem to indulge yourself, you may start to realize that it is this sort of Mindless Debate, that has your Foreign Creditors so worried about the future of the U.S.

    I suggest & strongly urge you to take a breather, & try & get 'Clued-in', on what's happening elsewhere in the World.

    I doubt you have a clue how to arrest 'Capital Flight' & or stop Companies from moving Overseas.

    And, this is happening, as we carry on with a debate that sems to be moving as Circular Logic usually does- Nowhere, you might look outside of the U.S. & take note.

  • Report this Comment On April 08, 2010, at 11:14 PM, csd128 wrote:

    OMT, if one believes that government, regardless of who is in power, has the citizens well being first and foremost in mind, guess again.

    Our politicians realize the source of all their power is rooted not in dollars, but control of them, and unless a trackable flow of cash exists, government cannot skim it for taxes.

    Combine that fact with the aforementioned tracking of that flow, the personally identifiable information provided by our present income tax system and the push for ever increasing(ly) personal info, and one can finds oneself with a boot on their neck.

    Why do I chant this mantra?

    Because the resulting pandering to political "friends Of" has continually skewed the market from a normal cause/effect behavior, and I need to acknowledge and account for that fact before I invest.

    That is why the monkeys with darts are usually more successful at picking stocks; markets respond to the chaos of political forces more readily than to identifiable market forces or mathmatical certainties.

    Don't think so??

    Research Al Gore's past decade of escalating wealth, or that of virtually any long-term "public servant"

    Good day!

  • Report this Comment On April 09, 2010, at 9:41 AM, DJDynamicNC wrote:

    @csd128 - I agree with a fair bit of your premise, although I would argue that government - by bringing power, roads, infrastructure, and education to the great mass of the American population, and by funding pure research which has led to practical technological acceleration - has in fact done a great deal to encourage economic activity.

    Where I most strongly agree with you is in the "pay as you go" mentality that must be achieved and maintained, and the belt-tightening that will be needed to get there. This is a critical point being overlooked all too often on both sides of the spectrum.

  • Report this Comment On April 09, 2010, at 9:49 AM, DJDynamicNC wrote:

    @buntyp - I like when people start attacking me personally instead of attacking my ideas; it is almost always indicative of the fact that they have no factual response to the meat of my ideas and so must resort to the ad-hominem. So kudos to you!

    To answer your question, I certainly do not advocate a 100% tax rate, as - according to diminishing returns - there will come a point at which the tax rate will begin to depress the economy to the point where tax income is even lower than it would have been with a lower rate setting. My argument is simply that taxes are necessary and proper, and that the point at which diminishing returns are reached is likely to be higher than the point at which are now. This isn't too hard to imagine, given that we have had much higher tax rates during much greater periods of prosperity in the past. Or do you feel that America is losing its touch?

    Capital flight is a serious issue, and I'm glad you brought it up, even though I imagine you'll hate my solution even more than you hate the process itself. Differential costs of doing business drives capital towards investment; locations with a lower cost of doing business will generally receive more investment if we assume that investors act rationally (not a particularly good assumption, in many cases, as anyone who has ever made an irrational decision can tell you, but one routinely made by economists). An international standard for workforce treatment - localized minimum wages, employee protections, and so forth - coupled with a global framework for taxation would go a long way towards ironing out the artificial disparities between regions and leave only economic disparities, creating a much more efficient and reflective system by getting local governments on the same page.

    But somehow I don't think you're a big fan of global government.

  • Report this Comment On April 09, 2010, at 10:36 AM, MaxTheTerrible wrote:

    I'm still perplexed by why some politicians keep thinking that increasing taxes would help to close the deficit. If history is of any indication, we should be lowering taxes to increase revenues.

    “The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business.” - Andrew Mellon, Taxation: The People’s Business (New York:Macmillan, 1924), p. 13.

    Cheers

  • Report this Comment On April 09, 2010, at 12:10 PM, DJDynamicNC wrote:

    @MaxTheTerrible - here I cite the same principle that conservatives often cite when talking about taxes - diminishing returns. There is an inverse situation which might be referred to as "sub-optimal returns," in which one could reasonably generate higher taxes by raising the tax rate, as one is currently taxing below the optimal taxation rate.

    Given that, historically, American taxes have been quite a bit higher, and that historically the United States has been quite a bit more prosperous under these higher tax rates, I suggest that we may well be below the optimal tax point (I do NOT suggest that there is a direct correlation between high current tax rates and prosperity, although I will happily argue that raising taxes toward the optimal tax rate would generate greater long term prosperity by allowing for increased infrastructure within which the economy and can grow).

    Given this information, I am forced, as a fiscally responsible person, to conclude that we must both cut spending and raise taxes toward the optimal taxation point in order to meet our debt burden obligations and begin to relieve them.

    Would you be willing to consider a "Fiscal Responsibility Tax Increase" with clear sunset clause and a prohibition against renewal? Coupled with needed spending cuts - in particular, we probably don't need new C-5 Galaxies, for example -this could bring our deficit to more sustainable levels quite quickly.

  • Report this Comment On April 09, 2010, at 12:22 PM, ETFsRule wrote:

    "I'm still perplexed by why some politicians keep thinking that increasing taxes would help to close the deficit. If history is of any indication, we should be lowering taxes to increase revenues."

    Yeah, the Bush tax cuts sure did a great job of reducing the deficit...

  • Report this Comment On April 09, 2010, at 1:17 PM, PositiveMojo wrote:

    @DJDynamicNC

    Your idea that taxes "generate a stronger economic infrastructure within which people can prosper" is hogwash.

    PRODUCTIVITY generates a stronger economic infrastructure within which people prosper NOT TAXES.

    The government does not "produce" anything. You might say they produce roads - but in reality they are simply a middle man and provide no labor in that regard. Prosperity is dependent on the labor of our citizens.

    The government has record of mismanagement and a lack of integrity. For example - citizens pay into their Social Security account. I once got a statement of my account from Social Security and it showed how much I had "contributed". But how much of my Social Security Taxes are in the account? None! It is a ponzi scheme that make Bernie Madoff look like a rookie.

    Thinking that giving an incompetent and unethical government more money for them to throw away or use for political purposes is a best case foolish and at worst case dangerous for the future of our country.

  • Report this Comment On April 09, 2010, at 1:19 PM, PositiveMojo wrote:

    @DJDynamicNC

    Your idea that taxes "generate a stronger economic infrastructure within which people can prosper" is hogwash.

    PRODUCTIVITY generates a stronger economic infrastructure within which people prosper NOT TAXES.

    The government does not "produce" anything. You might say they produce roads - but in reality they are simply a middle man and provide no labor in that regard. Prosperity is dependent on the labor of our citizens.

    The government has record of mismanagement and a lack of integrity. For example - citizens pay into their Social Security account. I once got a statement of my account from Social Security and it showed how much I had "contributed". But how much of my Social Security Taxes are in the account? None! It is a ponzi scheme that make Bernie Madoff look like a rookie.

    Thinking that giving an incompetent and unethical government more money for them to throw away or use for political purposes is a best case foolish and at worst case dangerous for the future of our country.

  • Report this Comment On April 09, 2010, at 1:43 PM, csd128 wrote:

    DJDynamicNC ....agreed, and thanks for the feedback..

    Your earlier posting related to infrastructure (postal, specifically) was correct.

    The problem naysayers ignore is the fact that we dare not let private enterprise have total domination over such vital and strategic infrastructure and services because such an omnipotent monopoly could paralyze the country and leave us exposed to enemies in a weakened state, therefore, total public tranparency, voter oversight and citizen involvement is imperative.

    We also need a representative body that is more than one-generation durable and can plan for needs that extend into the future, supporting coming generations - interstate highways are another example.

    My resistance is to the overeach and needless econmic burden of bridges to nowhere, "public/private partnerships" that push sports arena using public funds, and to propagandizing education; as Joe Friday would likely say; "just the facts, mam, just the facts".

    We need good sewers, clean water, good roads, etc., and these must usually be paid for over a period of time, but my point is that things never get paid for anytime, while the elected elite pile ever more debt on our plate.

    When the ax falls, as it certainly has, how much did that really help the working stiff? Nada!

    It simply set the stage for increased and new, hidden, imbedded taxes for us all to pay, and The Great Unwashed get told "it will not affect you".

    Add to this the fact that both the Republican and Democrat Parties have literally conspired to freeze out any third party from making a serious bid, and we are forever being whipsawed as political extremists bid(and I mean actually "bid", using our own damned money!) for domination, and there exists NO option to draw them to the middle where , I truly believe, at least 70% of the citizens find common ground.

    Final thought: If we cannot prevent the continuing peeing contest where politicians use our money, this country will fail due to what I call the One Great Truth, that is, one cannot support infinite demand with finite resources, and when the motivation to create wealth is finally eliminated by the horrendous level of taxation required to service the debt created by our impetuous politicians, the fabled goose will die leaving nothing but IOU's.

  • Report this Comment On April 09, 2010, at 2:20 PM, MaxTheTerrible wrote:

    @DJDynamicNC

    Although today's tax rates may be below historical average, my problem with raising taxes is that we have such a bloated government that I have no trust whatsoever that any tax increases will be spent responsibly.

    @ETFsRule

    As much as I don't like president Bush, the effect of his tax cuts on the deficit was minimal, I would argue, since the cuts were offset by increased tax base. Spending during the Bush's era is another question, though.

  • Report this Comment On April 09, 2010, at 4:42 PM, DJDynamicNC wrote:

    @Greybear - If you truly believe that hundreds of thousands of competing private entities laying out plans for sewer systems and roads across the country would have created a more efficient system than a central plan, I am interested in your technique.

    In the absence of government, competition is quickly throttled - think the robber barons of the early 1900s - and monopoly or oligopoly quickly sets in. This is to nobody's advantage except those few running the company in question - particularly in an era when a nation or foreign conglomeration with large reserves of currency could purchase outright those companies controlling our most vital strategic services.

    While I do not disagree that there is a history of mismanagement in government, I think it is extremely naive to believe that this is a product of government alone. Mismanagement occurs wherever human beings gather in groups, be it the Oval Office or the corner office. Government is most assuredly not perfect - but neither is anything else. It is a flawed argument indeed to believe, essentially, that since government is not perfect we shouldn't let it do anything.

    As for incompetence, I believe you'll find a comparison of Republican presidencies to Democratic ones in terms of GDP and economic growth most enlightening.

  • Report this Comment On April 09, 2010, at 4:51 PM, DJDynamicNC wrote:

    @ csd128 - I think you have a good handle on the dilemma. The choice is not the black and white "no government at all vs SOCIALISM!" that the Glenn Becks of the world would have us believe. There IS a role for government to play, as the Founders believed and as we believe now (most of us). The question is where to draw the line.

    Government SHOULD be involved in provision of services relevant to national security, or services that are not economically efficient but that are nonetheless worth doing. Postal work, national defense, infrastructure, regulation, and so on.

    Government should NOT be engaged in spending for spending's sake, as the examples you highlight amply demonstrate - public money on private sports teams, bridges to nowhere, defense contracts for planes the Pentagon doesn't need or want that are built in the "right" district, and so on.

    As you say, a big part of the problem is the two party system forcing people towards the poles. Most of America is socially liberal (we want people to leave us alone and in exchange we leave them alone) but fiscally conservative (because we all have to balance budgets and think it makes sense for our government to). The Democrats are generally liberal socially but not so hot with balancing the budget; the Republicans have proven time and again that they are just as bad if not worse with the budget, and any group that thinks government should tell you who you can or cannot marry is NOT for limited government or individual freedom in the slightest. This doesn't leave the regular, decent American with a lot of choices.

    Quite the conundrum, indeed.

  • Report this Comment On April 09, 2010, at 4:54 PM, DJDynamicNC wrote:

    @ Max - that's a fair point indeed. I believe taxes are necessary in principle, but I can certainly understand a healthy distrust of government. I've watched my tax dollars pour into a nonsense war for almost a decade, picking up the tab to build any nation but ours. Not thrilling at all.

    Transparency is the best - indeed, only - answer. Sites like Wikileaks are a good step in this direction, particularly in the absence of a mainstream media worthy of the name, and Obama's commitment to putting everything his government does on the web is a positive start too, but I am sure there is more that can be done.

  • Report this Comment On April 09, 2010, at 7:46 PM, chuckles107 wrote:

    Footchester said that the 50's were dynamic in spite of 93% taxes. That tax rate applied to very very few people. In addition the 50's were a recovery period from WW2 and everyone was working hard to recover from the deprivation of the war and to get on with a "real" life.

  • Report this Comment On April 09, 2010, at 8:05 PM, piinob wrote:

    This article says exactly what I said when the taxcuts were passed in Bush years. It just means we have to pay more down the road because now we have to pay the interest on the money we borrowed. If you take the home equity/company equity cashouts from the GDP numbers for the Bush era you realize that without them most years had negative GDP. We the people spent ourselves into this mess. We the People allowed sweet talking pols to waste our money on their friends and family in the name of God Country and Apple Pie. Unfortunately it was more like pie in the face. I am all for God Country and all, but just because some politician say it doesn't make it so. I supported Obama myself. Not because I thought he was going to magically solve all our problems. But because I think he is truley concerned about regular folks as much as anyone in the Top Dogs seat can be. For all the right wing hoopla he has indeed governed from the center and will continue to try to. Nevertheless all elected officials bear close scrutiny because power changes people and they need to remember whence they came. Meanwhile we have to pay the bills and we are all collectively responsible for the crap that has been foisted offf on the country called "Reaganomics".

  • Report this Comment On April 09, 2010, at 9:21 PM, RipeOldAge wrote:

    Declining costs of the Iraq will will help somewhat, but let's face it. There will be no tax discussions until after the November elections. It's just way too risky.

    If the Republicans win the election by gaining control of either the House or the Senate, they won't dare to raise taxes but will try to cut costs, but too severe and they will be vetoed, too bad for the Democrats, but probably good for the country unless the Republicans continue to polarize the country.

    The Democrats, if they keep control, will probably increase the higher rates, but keep the lower rates. They may even impose a "supertax" on outlandish executive compensation. Too bad for the Republicans, but good for the country. The argument that you need to pay extra for top talent falls away if it is taxed away for all.

    Anyhow, I have never seen such drivel as I see above from the parroting right wingers. Tea parties miss the point. The original Tea Party objected to taxation without representation. Today we have representation, the tea baggers just don't like the fact that the representation chosen doesn't conform to their ideals. Instead of Tea Parties, they should be advocating Guy Fawkes parties. That would not be as "phony patriotic" of course, but since they essentially advocate "blowing up the government", it may be more historically correct.

    Some increase in Medicare rates may well happen

  • Report this Comment On April 10, 2010, at 1:54 AM, xetn wrote:

    DJDynamicNC

    Where are you from? Do you not realize that the founding fathers were anti government? That the Revolution was anti-government? That the Bill of Rights is anti-government?

    Thomas Paine wrote in one of the more popular political tracts of the revolutionary period that "government, even in its best state, is but a necessary evil; in its worst state an intolerable one." James Madison hedged on Paine's sentiments only to the extent that he wrote, "It has been said that all Government is an evil. It would be more proper to say that the necessity of any Government is a misfortune." And Thomas Jefferson's warning that "[t]he natural progress of things is for liberty to yield, and government to gain ground."

    It is government regulation (over 70000 pages of them) which adds over $6000.00 for every man, woman and child to the cost of business each year (resulting in higher cost of goods) plus taxes that have driven American manufacturing off-shore. It is the stupidity of the Obama tire tariff on Chinese tires (many of which are made by American companies) that now mandates higher costs for Americans who need replacement tires, and only benefit union labor at the expense of everyone else.

  • Report this Comment On April 10, 2010, at 10:34 AM, majac3356 wrote:

    my daddy always said, "spend less than you make!" the government never listened to him and obama, who never worked a real job in his life, never heard it! and one day we'll all have to pay for his foolishness which makes him the motliest fool of all!

  • Report this Comment On April 10, 2010, at 4:09 PM, DJDynamicNC wrote:

    @ RipeOldAge - I think you nailed it exactly on the head here.

    @ xetn - Believe it or not, I am quite familiar with the history of this nation and of the founding fathers. I am also familiar with the fact that human civilization has changed dramatically in 200 years, which is why the founding father's build a government that was flexible enough to meet new challenges. Regulating lead from manufacturing or poison from our food was not a huge issue in pre-industrial America, but clearly is now. Who do you suppose should regulate those things if not the government?

    Government regulations DO add to the cost of doing business. They also make doing business possible. Without those regulations, you get 1910 America - child labour, 100 hour work weeks, lead in the water, poison in the air, sulfur in the rain.

    But rest easy, my friend. Somalia has almost no government regulations, plenty of guns, and lots of religion. It's Republican heaven, and I'm sure they're taking immigrants. In fact, they probably don't even check, since government functions like national defense and border control are so tyrannical and, you know, governmental (and we all know government is bad). Ayn Rand would love it!

  • Report this Comment On April 10, 2010, at 4:17 PM, DJDynamicNC wrote:

    @ majac3356 - care to define for me what a "real" job is? Is that like a "real American"?

  • Report this Comment On April 10, 2010, at 10:08 PM, flyingmonkey1980 wrote:

    Forgive me for I am new here and I am not(yet) an investor or an economist. But it seems to me that it is in the government's best interest to continuously carry a deficit. We borrow money at 1% to pay back at a rate ~3% cheaper each year... seems to me like a net gain of 2% each year we overspend. Knowing that they can always "run the presses" and increase inflation, there is really no incentive to balance the budget ESPECIALLY when spending is what gets them elected in the first place. I'm sorry, but in lower-middle class America, where I live and work, if you told anyone you would bring back cash for clunkers they would vote for you in a heartbeat. It really shouldn't be so amazing that our government's balance sheet looks just like the average joe's that elected officials represent. We as Americans feel like we deserve the best of the best all the time whether it be schools, health care, defense, and yes even the post office yet when the bill comes due for 5 star service everyone turns to point the finger at someone else to pay. Rich, poor, Boomers, genX, or my personal favorite "our grandchildren." Seriously, everyone should be required to spend time in India or China or even Mexico to realize that even middle class America has it insanely good in comparison to the nations we are outsourcing the jobs that Americans flat out refuse to do. I realize that everyone wants to be wealthy (I do too!) but to put things in perspective, there isn't a 100k+ wadge earner in the us that cant meet his/her basic needs for survival and an extra 3% would drastically change your day to day way of life? Big picture... any tax hikes will only lead to less lattes and Ipads.. luxury items we probably didn't need in the first place.

    Just my 2 cents... flame away

  • Report this Comment On April 12, 2010, at 4:15 PM, tpartee wrote:

    It's not going to be pretty, but it's not so pretty now. In a (not so) perfect world, the DC "reps" would cut programs like their lives depended on it, including a wage freeze for themselves & their staffs.

    Citizens would get ready to bear down, because it's going to hurt; they'd get their own lives in "extreme haircut" mode.

    Additionally, citizens would INSIST on cuts & DEMAND addtl spending stops.

    We know what's coming - - even if some (me, too!) would prefer to close their eyes.

  • Report this Comment On April 12, 2010, at 4:32 PM, tpartee wrote:

    Flying M1980! Hope you don't need to be an economist to comment here!! I do disagree with your $100k+ comment.

    First, remember cost of living in NJ is diff from OH, so $100k means diff things.

    Second, many high earners may already be at work before their local Starbucks opens! :)

    Every higher earner I know (I am NOT one of them) worked hard to get where they are & continue to work even harder to stay there! ALL grew up with ONLY "basic surviv needs met," found that was pretty scary & decided not to repeat that as adults.

  • Report this Comment On April 12, 2010, at 9:15 PM, FutureMonkey wrote:

    OH NO, the tax bogeyman is coming to getcha. Run!!!

    Yawn.... this is the same nonsensical rhetoric that has been trotted out to scare the young'ens since Eisenhower was in office.

    Taxes are a social contract. In exchange for the privilege of earning an income USofA and earning income, I pay taxes. Taxes on income I very likely would not be able to generate if not for the security and stability provided by local, state, and federal government.

  • Report this Comment On April 12, 2010, at 9:57 PM, retireewannabee wrote:

    Agree with PeterBradshaw

    "IMHO, the biggest threat to the US is the immense growth in the ratio of CEO pay to average worker pay."

    It's obscene.

    the rich have become MUCH RICHER and the poor have become MUCH POORER.

    One must have money to be able to shelter it from taxation, the poor simply will never be able to do anything but live paycheck to paycheck. Unless they follow the jobs overseas. Or become politicians. Or turn to crime.

    Soc Sec could be fixed quite easily - remove the cap on the amt of income that it applies to. Doesn't have to be same amount above that line, but SSN intake should not stop at the 90000 line with so many making many MANY multiples of that.

    Tax reform is needed and it's unlikely that all Americans will be happy with it but things have to change. We cannot let the poor work themselves to death by 40 and still barely put food on the table. Wages must grow for the common man.

  • Report this Comment On April 29, 2010, at 10:21 AM, Classof1964 wrote:

    In the US today we have a political, and economic problem.

    The political problem has two aspects: 1) some 90% of our federal representatives are elected and reelected from safe, commonly gerrymandered districts. Such districts allow incumbents to hold and promote extreme views. Moderates, who would be more likely to be elected in a non-gerrymandered district based neutrally on geography or population only, have been regularly defeated and/or eliminated. The Republican Party today has virtually no moderates left; hence no compromise in Washington with the moderates of the left. Hence government gridlock, or policies (no new taxes) that are extreme and unrealistic.

    On the economic side, we today have some of the lowest federal taxes in decades. The Bush tax cuts bankrupted the federal government; just look at the graph in the article. The situation in the country is that for the last 30 years about 70% of the population has seen no increase in real income and buying power (income adjusted for inflation). Naturally these folks are not in favor of tax increases.

    The Gross National Product has doubled in that period. Where did the greater wealth all go? Roughly the next 20% of the population has kept its share of the GDP.

    With the Bush tax cuts where the new wealth has gone is to the top 10% of the population, and particularly to the top 1%, which has doubled its share of the GDP from about 11 % to around 22%.

    As a small point on the gross inequality that has been created, hedge fund managers' income is considered "carried interest" and is taxed at 15%. Hedge fund managers can make $500 million in a year. 98% of Americans make less than 250,000 per year.

    Some of the ideologues will call the drift of these comments class warfare. I see it as a response to class and special interest legislation. Anyone with an open mind should profit from David Cay Johnston, Free Lunch or his Perfectly Legal.

    As a nation we have created a level of inequality equal or greater than the inequality that existed in 1929. If roughly 70% of our economy depends on consumption, we surely have to create more equality and buying power for the 70% of those who with inflation have seen a drop in their buying power since 1980.

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