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If there is anything a numbers person admires or appreciates, it is someone who does state budgets 7 years in a row.  Yours was a herculean task. Like Clark Kent, laymen will never understand the super powers that lay therein, but rest assured, some of us do know.

You are a credit to our kind…..

Welcome home, soldier…….

Ann Vasalli…

 

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Where This Budget Stands
Courtesy of The Atlantic

This is a good illustration of how compromise works… After the Tea Party’s humiliating defeat, it appears all those left, have thrown their mesh skeletons into the trash can, and to each of their entreaties for redemption…. have given them a collective……

“Forget about it…”

It should hit you hard right now, of just how far back we are from where we’d be if 2010 Tea Party Revolt had never happened………

A bill was placed on the docket to change Delaware Law.  It was supposed to slip through the last minute when no one was watching.    That is Blevins SB 151 regarding the Treasury…   Since it was a surprise, a lot of hoopla as been thrown  in the fire by pundits reacting to the impact of first impressions.   In their defense that was all they had to go on…

Due to time constraints this investigation will take a series of small steps, probably spread across Delaware’s official blog circuit, with help from Starkey of the News Journal

But to back up the word coup in my title,  I first want to show you how the original language was written then show you how it looked with the changes after SB 151.  Of course this was stated as necessary to keep the state treasure in line, a ploy that El Som and Cassandra seem to have swallowed hook, line and sinker.

First the original bill:

For those who follow along (you all are great) here is the passage number  Title 29; 2716(a)(2)

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(1) Require as a condition to any deposit of such funds in any state or national bank or savings and loan institution that such deposits be continuously and fully secured by direct general obligations of or obligations the payment of the principal and interest on which are unconditionally guaranteed by the United States of America or other suitable obligations as determined by the Board;

(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis; and

(3) Require that temporary clearing accounts as well as major disbursement accounts be established in a bank or banks whose principal office is located within the State.

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That was the original piece of legislation.  Patty’s bill seeks to amend the section 2 of that piece, the embolden area.  From SB 151…

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(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis as defined by the Board.; It shall be the responsibility of the Board to approve the selection of each of the said financial institutions by a majority vote of the members of the Board. The Board, by a majority vote of its members, shall be responsible for setting the policy as to the allocation between short and long term investments and the allocation of funds to the respective financial institutions selected through the open and competitive process; and

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Notice a “lot” of new language. In the synopsis this was sold as a clarification of the responsibilities of the board and the trimming of the responsibilities of the Treasurer. Instead, in what is now typical Markell modus of operandi, this if more of a surreptitious law-change than a clarification.

Previously the directive was this should be done in on an open and competitive basis. The previous directive specifically states this further down: 2716 (e)(1)

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The investment of money belonging to the State shall be made by the State Treasurer in accordance with policies established by the Board and subject to the terms, conditions and other matters, including the designation of permissible investments relating to the investment of the money belonging to the State,

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It is obvious to all that the existing law separates the Treasurer specifically out from all other board members when it comes to the investment of the state’s finances.

And that was really all existing code says in regards to the investment portfolio of the state’s money.

But, the new law, the one proposed by Blevins titled SB 151, makes HUGE changes. Now the board must make that decision. The board which according to Title 29; 2716(c)(4):

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The Board shall meet as often as shall be necessary to properly discharge its duties; provided, however, that the Board shall meet at least 2 times annually; and provided further, that the State Treasurer or the Chairperson of the Board shall be authorized to call special meetings of the Board.

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and 2716 (c)(2)

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a quorum of 5 members shall be necessary to hold a meeting of the Board.

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and 2716 (d)(5)

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The use of teleconferencing or videoconferencing is authorized for use in conducting meetings of the Cash Management Policy Board.

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Even now under existing policy only 3 people out of nine, if they time their conference-call correctly, can decide the future investment strategy of this state. Patty Blevin’s law would now give those three people (whomever they might be) unprecedented power and remove the current oversight of the only elected official responsible to the public.

“Coup” is the proper term for it.

That is probably the biggest take-away historians will keep when they use today’s fiscal crises in future civic’s lessons across this country, precisely in order to teach students just how well put together this nation’s govermnent is…..

I have long blamed the filibustering Senate for intransigence.  Whenever we have an emergency, the House passes legislation quickly, and the Senate takes it’s time.  Things just   s  l  o  w   down in the Senate.

I have also blamed that in part upon the old age of Senators, and the cliques that evolve from spending 20 to 30 years together…  Senators are more worried about upsetting the feelings of Joe So-and-So instead of quickly passing the House’s legislation.  Legislation also gets tabled as a favor to Ms. La-La-La, for a favor she extended 15 odd years ago…

But it is precisely these negatives that allowed the Senate to take up the fiscal cliff legislation that was all-but-dead on arrival in the House….

John Boehner, was forced to give up his lead and capitulate, when his caucus voted down giving even billionaires a tax increase.  His caucus had too many Tea Partiers, who were still green behind their ears, and put their own personal principals, … over top the rest of the financial world’s welfare, including the USA….

John couldn’t control his caucus.  Why was that?  Because the founding fathers wanted the House to be reelected every 2 years.  The idea was that these people who were invested with the responsibility of spending the “people’s” money,  needed to be directly responsible to those back home, who’s money they were spending!  As a result, the Tea Party contingent, whose home-spun philosophy plays well on country porches, has no idea of how things work.  We don’t let two year olds drive cars for a reason.

But,…. who did solve the crises and bring both sides into agreement?

The top two members of the Senate, … The Vice President and  Mitch McConnell, a Louisville Cardnals fan.

For both, a deal was necessary and they crafted one that would sell.  It definitely sold the Senate… 89 to 8….  It sold the problem House of Boehner as well:  257-167 including….. with more Democrats voting for it… 172  than Republicans voted against it… 167.

85 House Republicans voted in support of this McConnell-Biden adaptation, keeping us from going over the cliff before the markets opened up in Asia…. (which at time of print are all up between .6% and 2.2%)..

Through a personal relationship based on a long history of dealing with each other in a non adversarial fashion, a deal was struck.  We were clued in two weeks ago that the $400,000 level would be the floor.  No surprise there.

But, now it is clear that Social Security will no longer be on the chopping block in two months.  Medicare will no longer be on the chopping block in two months.  Unemployment compensation (for those dismissed by their corporate employers for working too many hours under Obamacare), now will still dribble some cash to get by.  The Earned Income Credit, the best part of the year for anyone earning less than $30,000, is no longer on the chopping block!

For this, the increases in additional taxes on income, estates, and investments, were softened a bit.  Even though there will now be less movement of cash from the private sector to the Treasury than occurred under the boom years under Clinton, but… as long as the economy takes off, we can worry about that later.

For that, is why this bill was passed.   Signs are encouraging that the economy is getting better, now that the world KNOWS no Republican (whether he really wanted to be president or not) will run the country.

To nix that up, and again, hurt those who were most hurt before, is unconscionable.

For most Americans, working and living and dying in our towns, this is what is important.  It never could have happened under the dynamics of the House of Representatives.  Only in the Senate, could such an agreement even be possible….

Only there buried within the term of 6 years, is enough distance available to exercise good judgment on what is necessarily right for this country, then have time to deal and fix the political repercussions back home… Only there is an opponent also a dear friend, one you take seriously and trust, causing you to give up a little more on both sides.

Only there.  Once again, we see the great wisdom possessed in those we call The Founding Fathers…. Who could have known?

Two Legged Stools Can't Stand by Themselves

Governor Romney when pressed, says he will cut taxes 20%, he will balance the budget, and he won’t raise taxes on the middle class. He can do two of these, but not all three.

Let’s check this out.

If you cut taxes on the wealthy, and don’t make up the difference in cuts, you have two choices. You can tax the middle class; you can run a deficit. You can’t do both.

Revenue taken in is $1.1 Trillion. If 20% of that if it gets ignored under Romney, it means that we will now take in $880 billion. Now, we have to make up the difference of that missing $220 billion now returned back into the hands of the rich.

The discretionary budget (the part Romney will have control over) is $1.35 Trillion. $700 billion is in defense. $635 billion is in non defense. If we cut 20%, our budget will be $600 billion in military; and $535 billion in non defense.

What Romney means: In our military: cuts of $29 billion in operation and control; $16 billion less in personnel; $13 billion less in procurement of new equipment; $8 billion in R & D. Our military is extremely weakened.

What Romney means: $12 billion cut in Social Services; $9 billion cut in transportation; $7 billion in income security; $6 billion in health; $ 6 billion cut out of Veterans Services; $5 billion cut from the Justice Department; $5 billion in international affairs; and $15 billion from everything else. …

Romney is saying he will eliminate deductions to pay for this tax rate cut. According to the CBO, there is a total of $800 billion worth of deductions being taken now.

It is possible, Romney can eliminate tax deductions by $200 billion and keep the strapped down budgets currently set, still in place.

Here are the expenditures that can be cut. The deduction for health costs and benefits given to employers; the exclusion of pensions and annuities; exclusion of capital gains at death; exclusion of untaxed Social Security; deduction of mortgage interest; deduction of state and local taxes; deduction for charitable contributions; reduce tax rates on dividends and capital gains; earned income tax credit; child tax credit.

The total of these as said, is $800 billion. Romney will need to cut $200 billion out….. He has said he won’t affect the middle class. The only sectors that don’t affect the middle class, are… dividends and capital gains; and the employer’s portion of health care coverage; and the death tax. He has said he wants to eliminate capital gains taxes; get rid of the rollover at death of an estate without taxation, which means to find $200 billion, he has only the employer’s portion of supporting health care on which to focus.

If Romney revokes Obamacare on day one as promised, employers suddenly are bearing the full burden of one full percent of our GDP!.

But if he does what he says he won’t, ie gets rid of the mortagage deduction; if he gets rid of the exclusion for pensions and IRAs; if he gets rid of the deduction for health care expenses, the child tax credit, the deduction for state, local, Medicare, social security taxes, he can afford to do what he says…..

He can do two. He can’t do all three.

He can cut taxes and balance the budget, but he has to take the difference from the middle class.
He can balance the budget, keep the middle tax cuts, but he will have to tax the wealthy a lot more.
He can keep the middle tax cuts, cut 20% off what the wealthy pay, but he will balloon the deficit.

One can do two, but not all three… Romney is selling us a two legged stool…. It’s intriguing to look at, but you’re taking quite a tumble if you try to sit down on it….

It is a simple vote…

Should we or should we not put this man in an administrative function.

Please vote yes…. or no…..

(It should be open cut because a majority have already said they would support Cordray as head of the Consumer Financial Agency.) Just get it done…

But, it never goes to vote. In a motion to stop debate requiring 60 votes, 53 are found….

There is nothing more to debate. Vote yes or no… The argument has been on the table for months… But no… it cannot go forward because the Republican Party (all of it) had 45 members who voted against it…

The agency still has no one at the top to get it rolling. There is no one regulating Wall Street as we speak, simply because the entire block of Republicans, who voters put into minority receivership based on their previous track record, voted NOT to stop debate.

There will be no government until there are no Republicans.
There will be no Congress, until there are no Republicans.
There will be no Democracy. until there are no Republicans.
There will be no United States of America, until there are no Republicans.

(Sad thing this is not hyperbole. This is not campaign rhetoric. This is not hateful bantering. This is what is really happening. Makes a veteran want to cry)

Why you have to do a reality check everytime Gingrich speaks……

Gingrich quotes describing President Obama as the:

“finest food stamp president in American history” because more people will end up getting government aid than new jobs.

Fact: George W Bush followed Newt Gingritch’s plan while in the White House.

Fact: The best remedy for less public assistance, is more jobs.

Fact: During the 8 years of George W. Bush, there was 0 net job growth…. Zero.

Fact: Under Obama’s tenure, 2.9 million new jobs have been created, (get this) in the private sector.

Truth. Gingrich’s taunt works better against his own policies. They certainly don’t apply to those of President Obama.

Bottom line; If you want more welfare and public assistance, vote Republican.. If you want jobs, vote Democratic.

History is all the proof you need.


Right click to open full image… Pictograph Courtesy of Viral..

So, can someone tell me again, why we shouldn’t tax the rich, and instead, balance the budget on the backs of everyone else?…….

I seem to be missing that little detail where that all makes sense……

Call it temporary insanity but let’s pretend, let’s just say, …that at one moment in time, if I chose to donate my youth out for my country, to be compensated back in the form of low pay; to completely and unjudgingly offer my fate up to the will of bureaucrats, all for the loss of my own self esteem, all for unending stretches of boredom, sparsed with interludes of a few intense seconds, that fortunately thorough my reactions and training, enabled me to continue living as I do today………….

I could reasonably be expected to be honored for that service to my nation, right?

In a perfect world, that is….

One would think, that in a perfect world, as needs were being debated across the universe of public funding, that a hierarchy resembling this, would sort of be the guideline, if not the rule?

National Heroes…..

over

We, The People…..

over

LLC corporations….

After all, if it weren’t for us, there’s a good chance those LLC. corporations wouldn’t be able to do business in a free and prosperous society, you would think?….

One would think, that if one of these heroes needed medical care, with the tremendous amounts of money being thrown away by our government daily, in the forms of corporate tax breaks enabling corporations to make “record breaking profits”…. that they would be put at the top of the list.. don’t you think?

Sorry, CEO… your operation will have to wait… We have a veteran who is in dire need ahead of you….

In a perfect world….

One would think, that a voucher system would be in place, or a blank check, where any veteran could walk into any hospital, and get immediate, necessary medical attention, have his prescriptions filled as a privilege for his service, and that the bill would be willing be paid by those with monetary resources more than adequate for their own needs?

One would think, (right?)… that it would be CEO’s, those who give pink slips so they can break profit records, those who cut benefits so they can break profit records, those who don’t invest in America so they can break record profits, ….who should be the ones finding themselves regulated to CEO hospitals, where they would then have to settle in on a waiting list for the next opening to occur, where they had to endure budget cutbacks and go without life-saving medicine because there was no money left in the CEO fund, perhaps because it had all gone to Veterans to pay THEIR expenses?

In a perfect world…..

In a perfect world, veterans would need no freebies…. They would not need welfare, or a pension, or a humble stipend to eke an existence… They would be working, contributing to society, in any way they could… If they had no legs, they would be outfitted at corporate’s expense, so that would not be an issue… If they had no arms, they could be outfitted at corporate’s expense so that was not an issue. If they had psychological damage, (and who wouldn’t?) they could be treated at corporate’s expense… so that was not an issue.

If they were so badly damaged that they create an efficiency drain on society, they could be honored for their sacrifice, and a useful voluntary capacity could be created to honor that commitment once made so long ago… Perhaps speaking about serving one’s country in every class, in every school, in every county? Can you think of any better civic’s lesson?

There’s a lot that can be done…

The problem is that veterans are deemed as just another expense…. Because to corporate America, that is just what they are… An expense, an obligation to be met that gets in the way of their making more money…

Unfortunately, our Congress is owned by Corporate America….

What should and does need to happen, is this relationship needs to be exposed. We need to call them out on it…

Republicans and Democrats are both complicit in allowing corporate raiders this unprecedented power. But Republicans are the symbol of Corporate America. Republicans are the ones who championed the Corporate Takeover. Republicans are the ones who dismanteled the safeguards that had been put in place to prevent that takeover from happening. That is why they need to go. Disappear… Whoever is left, the remainder, most likely after seeing the elimination of a large majority of their peers, will think twice before following their Dark Lord, now a soul less wanderer eking existence.. ……

In a perfect world…

Unfortunately, today we need to contend with obscene amounts of money saying Corporate is Good; Government Fairness is Bad….

But we have our lives telling us the opposite… It will take courage and strong will, to override all the overload of sensory data being pipelined into our soul, but we still have hearts, and those hearts are attuned to what makes America special. great, and the best place to live on this earth….

WE can still dream….

And those dreams should include a perfect world… one we CAN make happen, at least for those without whom we would not have the freedom, the resources, the nation, we have today….

Here’s to a perfect world?

First his argument, then my rebuttal. Most of you have already read the article by Warren Buffet: Stop Coddling the Super Rich.

Jeffery Miron rebuts that with Why Buffet Was Wrong

Encapsulated (read the whole in the link above), Miron says Buffet was wrong because

1) number of $uper-rich too few to make a deficit dent.
2) focusing on the $uper-rich fosters a counter-productive attitude towards material success;
3) focusing on the $uper-rich distracts us from the real problems: “policies that make no sense”;
4) the tax on capital gains needs to be zero prevent economic stalemate.
5) High taxes on income/capital gains, drive investment overseas.
6) Buffet errs by focusing on outcomes, not policies…

His closing jab…. In economics, as in sports, we should adopt good rules and insist that everyone play by them. Then we should stand back and applaud the winners.

Agreed: As in sports, we should adopt good rules and insist that everyone play by them……

But which rules?

Take football. Formulated in 1873 the original rules representatives from Yale, Princeton, and Rutgers met to discuss formulating rules for this new game of football. The new rules consisted of reducing the number of men on the field from fifteen to eleven. Adding a fourth down before surrendering the ball. Tackling below the waist was allowed. …..

Yet the first legal forward pass wasn’t attempted until 1906, 33 years later… after a change in rules. So when one discusses following the rules, the immediate question is, which rules are we going to go by?

When it comes to football, obviously not the purest approach, instead we go by those rules reached by a consensus by those who represent those on the field who will be playing… (Incidentally, the previous year’s (1905) season saw several on-field football deaths and serious injuries around the country. President Theodore Roosevelt (The Bull Moose) met with universities officials to find ways to make the game safer. That’s when rules were modified to allow passing.) One can see why they would want to change…..

So something like the forward pass which we take for granted, was added as an innovation 33 years after the game was formulated…

Whose rules is Miron talking about? Keynes? The Chicago School of Business? This Libertarian’s Take?

Here are the fallacies of Miron’s argument.

Are the number of the $uper-rich too few to make a difference? Miron takes Buffets 10% surcharge and multiplies it out giving an optimistic $73 billion off of the top 1% adjusted gross income of $727 billion.

Allow me to ask a question? Would it be easier to balance the budget and cut back on the deficit if we had this additional $73 billion, or if we didn’t?

That is a no-brainer. Is $73 billion everything that we need? No, it is not $4 Trillion.. It is a $73 billion that should have already been in our system had the Bush Tax Cuts not been extended…. It is one simple step towards that $4 Trillion.

Furthermore, just playing with averages, taking this $73 billion in taxes, that Warren Buffet says his group would feel good about giving, especially since 99% of the population are suffering so much,…. This top 1% would at the end of one year…(.assuming they paid Buffet’s average of 17%, plus the proposed 10% surcharge, ie 123 billion plus 73 billion) ….be responsible for $196 billion of America’s Revenue.

Leaving $531 billion of their aggregate income left over for private investment. If receiving a return of 3% on that money (I earned 40%), just sitting their money gains an additional profit of $16 billion the subsequent year, which will will in itself, yield the following year at (17% + 10%), an additional 4.3 billion in revenue once it is taxed…..

So exactly the amount the Bush Tax Cuts are costing us per year of income by continuing them for the top 1% using the figures compiled by the extinguished Mr. Miron, is…. $75 billion if their rate of return that year, was 3%.

This year alone, we will be borrowing $1,270 Billion just to fund our Federal Government Spending…. So how can someone realistically say ,,, NO NEW TAXES! and continue borrowing $1270 Billion at hopefully less than 3% ($38 Billion) when they have the $uper-rich lining up to cut them a check for $73 Billion? And all they need to be, is asked? Instantly our budget deficit drops slightly and we now only have to borrow $1195 Billion which costs us at 3%, $35 Billion… We just saved $3 Billion in interest a year!….

How can anyone say this is a bad plan? Especially when it impacts ONLY 236,833 taxpayers….a number slightly less then the number of citizens of the nation’s second smallest state (Delaware), who have a bachelor’s degree or higher (246,932)

So Take Down 1: Miron says Buffet is wrong because the $uper-rich can’t make up all the difference! Correct: but that doesn’t make Buffet wrong; it makes not raising taxes on the wealthiest 1% wrong, because that $75 billion that is a difference, is one that will be paid at some point by 99% of Americans making less than $1 million a year.

Next:

2) Focusing on the $uper-rich, fosters a counter-productive attitude towards material success.

No offense to the distinguished Mr.Miron, but this is simply a stab in the dark. It, believe it or not, is attempting of all things, to use… the discipline of psychology, as an economic instrument. Most psychologists, can’t tell me what psychology is… As a science, it is very imprecise. In fact, I remember back in the day, when psychology was called “the discipline without discipline.” because it was mostly made up. Those students who could make up theories on a dime, and find threads of reality to defend those theories, did well. Back then, it wasn’t real science. There was no way to invade the brain to test ones theories… (Seriously, everything we do, is phallic? That’s what that discipline’s founder Freud said…)

Miron’s own words: The way to promote a hard-working, entrepreneurial and innovative society is to celebrate great wealth so long as it has been earned by legitimate means. When this is not the case, policy should target the wrongdoing directly, not demonize everyone who hits it big. This is called: preaching to the choir; it is repeating back what those listening want to hear; it is not something based in reality.

I know where he is coming from. Anyone who’d stood in West Berlin, and looked out across East Berlin, knows that the economics used on West Berlin side, were the more preferable. Communism wiped out wealth, and eventually they had no bread. But they had to actually kill millions of citizens to reach that point.

Denmark is pretty cool place to live; it’s top tax rate is 51$. Norway is ranked the best place to live in the world: it has a 40% tax rate. Belgium is a marvelous place: taxed at 50%… So there is a balance that can be achieved. Higher taxes do not necessarily imply an East Berlin. In fact, these three countries, for its own citizens, are the equivalent of a cruise ship. You pay one price (taxes) that you can afford, and everything thereafter is free. Really, if there was something wrong with that concept, why would so many Americans take cruises?

With those two myths out of the way, let’s look at his statement stripped of bluster, and poke at the skeleton of fact…. A quick question rather illustrates the inanity of the remark…

Dear Reader: you who can barely pay your bills, if you could make $28 Billion a year, would you want to? (Oh, I forgot the part where you really make $56 billion but give $28 back to the government, but that doesn’t really affect your choice now, does it?) Are you really going to stick with your $30,000 assembly line job, because if you made $56 billion, the government would take 50%?

So that line, that celebrating wealth is a requirement to motivate an entrepreneurial society, I can buy only if confined in certain contexts. It certainly doesn’t mean that the out-paying by the top 1%, of 10% more of their income to the Federal Government is going to stop all entrepreneurial activity… Did every business close its door, when our local electric company jumped its rates 60% over the previous year? No? Not one? And those same businesses won’t shut down if taxes go up. Paying taxes is just an additional cost of business. Fortunately people will always worship money, and will always work to make it, irregardless of the amount they pay out in taxes, provided that the amount they do make, is still deemed worth their effort…

Remember, the top marginal rate in 1944 was 94%… Back then the economy was booming; an entire Liberty ship was being built in 17 days! Again, we had boom years during the 1950’s (top marginal rate 82%) and again in the 1960’s (70%) and again in the 1970’s (70%)…. Real History disputes that statement by the distinguished Mr. Miron and his implication that increasing taxes on the wealthy, cause a lack of effort and growth.

Take down number 2: Just because a person says values are important for entrepreneurship and a productive economic system, doesn’t mean they are. The Amish do quite well in their business endeavors, but I doubt anyone would believe they worship and celebrate wealth. Certainly taking 10% more from the top 1%, will not destroy America’s work ethic and cause people to stop trying to better their financial lot.

So next.

3) Focusing on the $uper-rich draws our focus away from the real problems: policies that don’t make sense. Most specifically, policies that make no sense in the first place because they inhibit economic growth and that simultaneously redistribute from low-income households to the middle and upper classes.

Examples he offers: The deductibility of home interest rates; the favorable tax treatment of employer-paid health insurance; numerous loopholes for favored industries; Excessive licensing requirements, permitting fees, restrictive examinations and other barriers to entry into medicine, law, plumbing, hair styling and many other professions; crony capitalism; the too big to fail doctrine.. all of which inhibit an entirely free market place from functioning as it theoretically could.

He argues; the home interest rates benefit upper income levels, because the poor continue to rent. Employer based health insurance gives the wealthier greater benefit than the poor, causes excessive use, raises the cost for all; loopholes for favored industries, interfere with economics because what you sell, is not as important as “who you know”.
Excessive permits restrict competition, raising prices for the privileged few. Being too big to fail props up bad companies and swells executives salaries.

He argues these policies are what shifts the money flow upward: benefiting those more who make more, and taking money from those who now make less…. For example, bailouts allow a few to receive great gains in times of good, and taxpayers to pay the costs in times that are bad… Obviously a big shift of money upward.

Back to his original statement: focusing on the rich draws our attention away from these real problems…

No it doesn’t… Take Down #3: Each of these factors is a piece of the puzzle. Just taxing the wealthy 1$ an additional 10% does not take attention off or away from these problems. All pieces of the puzzle need to be in place before the puzzle is deemed completed. And though some of those other items mentioned might theoretically cause an upward shift of money, it appears you failed to see that a majority of these items pump extra money into our economy at the bottom. That money flowing upward through the economy, is the best thing that can happen for the two quintiles of Americans resting on the bottom.

Fourth, he argues that capital gains needs to be taxed at zero. Reminds me of my Santa Clause wishes when I was tiny. Of course anyone with money, would “wish” that capital gains need to be untaxed… The inherent problem with that scenario, is that it benefits only those already endowed with wealth. Those others who can’t save, see no benefit aat all, from it…

Mr. Miron states: Economists agree broadly that an efficient tax system should avoid taxing income, dividends and capital gains to promote savings, investment and growth… But are they right? If so… why then does it never work?

When tax rates were extremely high, the economy boomed. Think about that. Of course it would. If you were about to be charged 94% of everything you made after expenses, ….. you would do everything within your power to raise your expenses higher so that you had little or no income to be taxed!… You might build another factory; you might add on to your business; you might increase your sales force figuring more salesmen, more sales possibilities; you might decide to give a raise or two or three, because better to have experience by your side, than have it walk because someone else was less stingy with their money that they had to spend or lose too. Great things happen when you raise the top marginal tax rate.. And they happen for this very reason: so the amount of tax paid to the entity demanding it, is as small as possible….

Does this decrease the amount corporations pay to the treasury? Yes, but, those new, additional people now working for that corporation, will be paying income taxes; all that money was unavailable before. And once those people who are now working, are buying, the sales tax revenues climb back into each state’s coffers.

But lets look at the opposite spectrum. What happens when capital gains actually go to zero? In a global economy, money does flee the country. And it should. Why should a business build a manufacturing plant here, when he can build overseas for 1/10 of what his cost would be if built domestically? Currently, the unfortunate truth is this: there is no reason to build here in the US, unless one is forced to by a higher tax rate.

After all, what’s the point in building a US factory with ones current profits, a factory that may lose money it’s first ten years (costing you to have opened it), only to barely break even in it’s tenth year?

When instead, one could put those profits into a high-growth foreign investment fund and make 40% this past year alone! When tax rates are low, or close to zero… what incentive is there to invest in the United States? Absolute zero.

Conversely, if one owns a manufacturing site overseas when tax rates go up, one is better off to close it down, move back here, and open a new plant in the US, where one can expand, then write-off their taxes to zero because of all those expansion expenses.

And that is the problem that occurs when one follows the Chicago Business School’s model in a global economy. It doesn’t keep money in the US. If Reagonomics had said,”we will cut taxes but only on that amount of physical capital you put inside this country, then it might have worked. Unfortunately when it passed, it didn’t make that specification.

But that is exactly what higher tax rates do. If you raise the corporate and top marginal tax rates, expansion quickly follows as all that profit (1.7 Trillion this past quarter) tries to find somewhere to go… For example, if you are a bank, you make loans. Capital suddenly becomes available again.

Take down number 4: Contrary to what economists say, historians are right when they point out that an economy was far more lively and productive, and investment in physical capital flourished, when tax rates were higher. As soon as taxes were cut, jobs were as well.

Buffet is scolded in this remark.

“Buffet asserts that taxing capital income has never deterred anyone from investing. Well, then he has never discussed the issue with me or many of my friends.”

Again, a shallow statement. Are you telling me that you really expect us to believe that those with money put it under their mattress, in a tree with a hole, or under their squeaky floorboard, because tax rates go up?

You really expect us to believe that a person is going to choose to settle for a loss, just because tax rates are going up, instead of settling for some solid wins, minus the amount taxed off the gains?

If so, your friends are fools.. No personal offense; it’s just that only fools would pursue such a policy. Granted, I’ve met some; they are out there.

But I highly agree with you on this point.

More importantly, taxing investment returns plays a huge role in what kinds of investments occur, and where, even if it has minor effects on the amounts..

It sure does. If you want economic growth, and put that 2nd quarter’s $1.7 Trillion dollars of profit back into the economy where it can grow jobs, then you’d better raise the rates on capital gains and the top marginal tax rate of the top 1% of income. Suddenly there is an incentive, one that has been missing since 2003, to build and expand your business here in America.

Take Down Number 5: high taxation of investment drives investment overseas…. History proves this wrong: high taxes keep businesses here. Low taxes send companies overseas because that is where the higher profit is. If you can keep more of your money by burying it back into your business, then that’s what you do. If you build overseas, and Uncle Sam insists that you pay 40$ of that profit over here to this fed, you soon will realize it is better off to have put that profit into an expansion facility here in the US, and make more money per day, per week, per year through increased volume (all of which comes to you), as opposed to investing and then turning 40% over to the IRS…

Take down #6: Buffet focuses on outcomes; not on policies.

In fact, most citizens of this country are tired of policies being argued back and forth. They want outcomes.

Outcomes are what it’s about. All proper focuses need to be on outcomes. The outcome is what is important. Whatever policy which can reach that desired outcome is desirable. Some policies may work at different time and different people. Some policies may not work at all. But focusing on the outcome is exactly what the American people are saying they want. Forget policies and philosophies.

Fix it please…Make the top 1% bear more of the burden, please? It worked so well before, make it work that well again, please?

So it comes down to deciding which set of rules we are to follow. A set of rules desired for by a very small select group of people, the top 1% of the wealthy? Or… rules that will benefit the other 99%…

Sometimes when the results don’t quite work out, changing the rules is deemed a good thing…….

It’s time to tax the wealthy. We’ve starved the economy long enough.