Friday, February 27, 2009

Mortgage deductions: Wealthy on the losing end

Proposal will increase taxes for high-income homeowners.

By Les Christie, staff writer, Last Updated: February 27, 2009: 6:58 PM ET

NEW YORK ( -- The Obama administration hopes to tap the rich to help pay for its ambitious programs. Specifically, that would include slashing mortgage interest deductions for high-income taxpayers.

The proposal would cap at 28% the tax break for itemized deductions.

That would leave people in higher marginal tax brackets of 33% and 35% - the wealthiest Americans - with a smaller benefit from the deduction of mortgage interest, state and local taxes and other items such as charitable contributions.

The move is projected to raise $318 billion over 10 years and fits nicely with the president's campaign pledge to increase taxes only for families earning more than $250,000. Few, if any middle-income homeowners are in tax brackets of more than 28%.

Dean Baker, co-director of the Center for Economic and Policy Research, a D.C. think tank, said he was impressed with this part of the budget plan.

"It's a no-brainer for economists," he said. "Why have taxpayers been [in effect] subsidizing home payments for the highest income people in the country?"

The overwhelming majority of low and middle income people take the standardized deduction when they file their taxes [and] they receive no benefit at all from the mortgage interest deduction, said Patrick Fleenor, chief economist for the Tax Foundation.

"If you live in an inexpensive home or you're deep in your mortgage and paying little interest, you're better off taking the standard deduction," he said.

But homeowners in the highest marginal tax bracket, those earning more than $357,700 a year, get back 35 cents on their taxes for every dollar they spend on mortgage interest. Under the Obama plan, that benefit would be reduced by 20% to 28 cents on the dollar.

Broad impact
Housing industry sources were disheartened by the news, saying it would put downward pressure on home prices.

"The timing couldn't be worse," said Lawrence Yun, chief economist for the National Association of Realtors.

"With the housing market still reeling from its worst downturn since the Great Depression, this is not the time to talk about raising taxes on home buyers and home owners," said Joe Robson, president of the National Association of Homebuilders, in a statement.

The plan, which wouldn't start for another two years, is intended to focus solely on high-income Americans, but its impact would be much broader, say industry sources.

Yun said it would reduce the value of high-end homes by increasing ownership costs. Potential homebuyers calculate affordability as a total outlay of funds. If the tax deduction goes down, their ownership costs rise.

For example, someone in the 35% marginal rate bracket buying a million dollar home and putting 20% down would have an $800,000 mortgage. At 6% interest, they'd be paying interest of $48,000 a year, or $4,000 of their $4,797 a month mortgage payment.

Currently, 35% of that payment - $16,800 - is tax savings, but under the new plan, only $13,440 would be, a $3,360 difference.

Thursday, February 26, 2009

The 2% Illusion ... the New Math ... just add ink and paper!

  • Need a Real Sponsor here

The 2% Illusion

Take everything they earn, and it still won't be enough.

President Obama has laid out the most ambitious and expensive domestic agenda since LBJ, and now all he has to do is figure out how to pay for it. On Tuesday, he left the impression that we need merely end "tax breaks for the wealthiest 2% of Americans," and he promised that households earning less than $250,000 won't see their taxes increased by "one single dime."

This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can't possibly raise enough revenue to fund Mr. Obama's new spending ambitions.

Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and "the wealthiest 2%." Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That's about 7% of all returns; the data aren't broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% -- about 1.65 million filers making above $388,806 -- paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.

Note that federal income taxes are already "progressive" with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He'd also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won't come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.

But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.

Mr. Obama is of course counting on an economic recovery. And he's also assuming along with the new liberal economic consensus that taxes don't matter to growth or job creation. The truth, though, is that they do. Small- and medium-sized businesses are the nation's primary employers, and lower individual tax rates have induced thousands of them to shift from filing under the corporate tax system to the individual system, often as limited liability companies or Subchapter S corporations. The Tax Foundation calculates that merely restoring the higher, Clinton-era tax rates on the top two brackets would hit 45% to 55% of small-business income, depending on how inclusively "small business" is defined. These owners will find a way to declare less taxable income.

The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can't possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.

On that point, by the way, it's unclear why Mr. Obama thinks his climate-change scheme won't hit all Americans with higher taxes. Selling the right to emit greenhouse gases amounts to a steep new tax on most types of energy and, therefore, on all Americans who use energy. There's a reason that Charlie Rangel's Ways and Means panel, which writes tax law, is holding hearings this week on cap-and-trade regulation.

Mr. Obama is very good at portraying his agenda as nothing more than center-left pragmatism. But pragmatists don't ignore the data. And the reality is that the only way to pay for Mr. Obama's ambitions is to reach ever deeper into the pockets of the American middle class.


Wednesday, February 25, 2009

Understanding the Stimulus Bill

Shortly after class, an economics student approaches his economics professor and says, "I don't understand this stimulus bill. Can you explain it to me?"

The professor replied, "I don't have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I'll be glad to explain it to you." The student agreed.

At the agreed-upon time, the student showed up at the professor's house. The professor stated that the weekend project involved his backyard pool.

They both went out back to the pool, and the professor handed the student a bucket. The professor said, "First, go over to the deep end, and fill your bucket with as much water as you can." The student did as he was instructed.

The professor then continued, "Follow me over to the shallow end, and then dump all the water from your bucket into it." The student was naturally confused, but did as he was told. The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.

The confused student asked, "Excuse me, but why are we doing this?"

The professor matter-of-factly stated that he was trying to make the shallow end much deeper. The student didn't think the economics professor was serious, but figured that he would find out the real story soon enough. However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad.

The student finally replied, "All we're doing is wasting valuable time and effort on unproductive pursuits. Even worse, when this process is all over, everything will be at the same level it was before, so all you'll really have accomplished is the destruction of what could have been truly productive action!"

The professor put down his bucket and replied with a smile, "Congratulations! You now understand the stimulus bill."

Monday, February 23, 2009

Abu Dubai Real Estate ... bubble burst ...

Dubai Property Market Collapse. Lindsey Williams was Right !!!!!!!!!!!!!!!!!!!!!

Sunday, February 22, 2009

Jim Rogers: "abolish the World Bank and IMF" (Feb 13, 2009)

Tap Dancing on quicksand ...

Global Economic Collapse ! World Wide Riots !!!!!

Dubai becomes a Ghost Town Lindsey Williams was Right !!!!!!!!!!!!

Banking and money for dummies

There are several basic questions that are never explained. The following is designed to frame those questions within an easy to understand format.





When is a charity not a charity?

Rahm Emanuel Evading Property Tax On Home By Declaring Himself A Charity?

Wow. When I’m wrong I’m the first eventual one to admit it, so I’ll go ahead and say it, “I was wrong.” Yes, I doubted that Obama could bring about the “change” I needed to not have to worry about paying bills anymore like Peggy The Moocher told us.

Well Barack Obama has put my money where his Cabinet is with the news that his newly minted Chief of Staff, Rahm Emanuel, has possibly been evading taxes on his home for years. How could he do it? Easy! He created a sketchy charity in 2002, named it after him and his wife, set its address as his personal residence, and voila,taxes could be gone:

According to the Cook County Assessor’s website, the Chicago home of four-term Democrat Congressman and likely new White House Chief of Staff, Rahm Emanuel, doesn’t exist. While the address of 4228 North Hermitage is listed as Emanuel’s residence on the Illinois State Board of Elections’ website, there seems to be no public record of Emanuel ever paying property taxes on this home…

Why would 4228 North Hermitage property owners Rahm Emanueland wife Amy Rule not pay property taxes?

One reason could be because Emanuel and Rule declared their 4228 North Hermitage home as the office location for their non-profit foundation appropriately called the “Rahm Emanuel and Amy Rule Charitable Foundation”. As a non-profit headquarters, they may consider their home as exempt from paying taxes.

Skeptical? You shouldn’t be! After six years, the “Rahm Emanuel and Amy Rule Charitable Foundation” has had only two donors. Can you guess who?

The Rahm Emanuel and Amy Rule Charitable Trust was formed in 2002, when the Chicago lawmaker was first elected. The former Clinton White House aide and his wife, Amy Rule, are its only donors.

USA Today has a great article about Rahm and other Dems, including House Speaker Nancy Pelosi, who are illegally operating charities under their own names while failing to report that information.

Congratulations, America, you’ve just elected another corrupt politician who surrounds himself with corrupt supporters. “Yes we can” steal from the government and those we represent!

Source: Illinois Review and USA Today

Saturday, February 21, 2009

Rick Santelli's "Revolution" on Kudlow

February 19, 2009
His Plan Is a Sham
By Larry Kudlow

President Obama’s massive mortgage-bailout plan is nothing more than a thinly disguised entitlement program that redistributes income from the responsible 92 percent of home-owning mortgage holders who pay their bills on time to the irresponsible defaulters who bought more than they could ever afford. This is Obama’s spread-the-wealth program in action.

Team Obama is rewarding bad behavior. It is enlarging moral hazard. It is expanding its welfarist approach to economic policy. And with a huge expansion of government-owned zombie lenders Fannie Mae and Freddie Mac, Team Obama is taking a giant step toward nationalizing the mortgage market.

Reporting from the Chicago commodity pits, my CNBC colleague Rick Santelli unleashed a torrent of criticism against this scheme. Santelli said: “Government is promoting bad behavior. . . . Do we really want to subsidize the losers’ mortgages? This is America! How many of you people want to pay for your neighbor’s mortgage? President Obama, are you listening? How about we all stop paying our mortgages! It’s a moral hazard.”

All this took place on the air, to the cheers of traders. Santelli called for a new tea party in support of capitalism. He’s right....

Burris' Chief of Staff Resigns ... The Party is over!

The rats are leaving the ship ... not long now.  Once these guys lose their support staff they're just dangling in the breeze.  Washington is all about networking, chits, and relationships.

Burris' Chief of Staff Resigns
Interim Chief of Staff Darrel Thompson is going back to work as a senior adviser to Senate Majority Leader Harry Reid.
Friday, February 20, 2009

Interim Chief of Staff Darrel Thompson is going back to work as a senior adviser to Senate Majority Leader Harry Reid.

Thompson said in a Friday statement he was temporarily detailed three weeks ago to serve as Burris' chief of staff and the role ended Friday.

It was not immediately clear who would replace Thompson.

Burris is under pressure to resign from the Senate for not disclosing contacts with advisers to former Gov. Rod Blagojevich, who appointed Burris to the seat before being impeached and ousted last month over corruption allegations.

Earlier Friday, Illinois Gov. Pat Quinn called on Burris to resign, joining a growing chorus of politicians and newspapers.

The Democratic governor said it was a "mistake" for Burris to accept the Senate appointment.

"I would ask my good friend Senator Roland Burris to put the interest of the people of the land of Lincoln ahead of his own and step aside," Quinn said at a news conference Friday.

Quinn called Burris an honorable man but said there's a shadow over his service in the Senate.

Quinn said a new senator should be chosen by special election to fill the seat once held by Barack Obama.

Burris initially said there was no discussion of him doing any favors in exchange for the appointment. But Burris later acknowledged he did discuss the vacant seat with Blagojevich's friends and allies. He claims he was asked to raise money for Blagojevich but couldn't find anyone willing to contribute.

White House press secretary Robert Gibbs would not go so far as to call on Burris to resign Friday but did urge him to take time over the weekend to think about his future.

Burris needs to "come up with an explanation that satisfies" questions about the conflicting statements he has made, Gibbs said, adding that Obama supports "an investigation that would get some full story out."

Burris has stopped speaking publicly and answering any more questions about the evolving story of his Senate.

Friday, February 20, 2009


By their deeds you shall know them! Pogo where do we go from here?

A three cent dollar ... and panic from the dollar



Obama Stabs Automakers with One Hand, Offers Taxpayer Subsidies with Other

“The government’s view of the economy can be summed up in a few short phrases:  If it moves, tax it.  If it keeps moving, regulate it.  And if it stops moving, subsidize it.” 

~President Ronald Reagan, 1986 

President Reagan’s comment perfectly captures the bizarre, contradictory, suffocating, Orwellian essence of big government, as well as its self-perpetuating nature. 

First, preening politicians scapegoat successful industries and businesses, baselessly accuse them of “gouging” and punish them via excessive “windfall profit” taxes or by facilitating class action lawsuits.  Then, if the targeted industries survive, armies of bureaucrats impose innumerable and indecipherable regulations that even lawyers cannot reconcile.  Finally, when that procession of taxes, lawsuits, bureaucrats and regulations successfully suffocates the targeted entrepreneurs, the same politicians heroically swoop in to revive the corpse that they themselves have created. 

The American automobile industry provides an obvious example.  Recently reviled by liberals as producers of fuel-guzzling, environment-ravaging behemoths foisted upon helpless soccer moms, it was overtaxed and saddled with crippling regulations and economy standards.  Then, when those regulations pushed the automakers to the brink of death, along came government bailout dollars wrenched from the wallets of American taxpayers who were themselves suffering during this economic downturn. 

And this week, President Reagan’s wisdom about the nature of big government was illustrated perhaps more vividly than ever before. 

After advocating the aforementioned taxpayer bailout for General Motors and Chrysler just last month, President Obama turned around and ordered the Environmental Protection Agency (EPA) to accept proposals from individual states to impose even higher emissions standards. 

In a similar move, the Obama Administration also announced this week that it will order the Department of Transportation (DOT) to present new automobile fuel economy regulations by March, so that they can be imposed on 2011 model-year cars. 

Together, these decrees constitute an interesting and revealing victory of one constituency to which the Democratic Party is captive over another: environmentalists over unions.  The United Auto Workers (UAW) has already protested that these regulations inflict particular harm upon American automakers and their unionized workforces, who produce larger trucks, minivans and sport-utility vehicles than their less-unionized foreign counterparts.  Unfortunately for them, it now appears that Obama places environmental alarmists above Big Labor on his special-interest pyramid. 

But more fundamentally, this latest episode exposes once again the maddening, repulsive character of big government. 

For decades, federal Corporate Average Fuel Economy (CAFE) standards have crippled the American automobile industry by forcing them to produce smaller, less-safe vehicles that consumers refused to purchase.  In addition, such regulations failed to achieve their intended goal, because higher fuel economy encouraged drivers to live further from their workplaces, drive more often, and crowd highways and city streets even more. 

As destructive as those regulations were, however, at least there was generally one federal standard, rather than a spaghetti bowl of complex and conflicting environmental mandates from each of the fifty states.  Imagine for a moment the incredibly complex and costly process of designing and manufacturing automobiles for fifty different environmental regimes that are tougher than the federal government’s. 

Now, with the stroke of a pen, President Obama has compounded automakers’ difficulties.  Under his order, automakers may ultimately be required to manufacture different vehicles for whatever states impose their own unique mandates.  Indeed, no fewer than seventeen states have already indicated that they will do so. 

So how does this square with the farcical auto bailout pushed through just last month? 

It doesn’t, of course. 

Rather, it illustrates once again the endless destruction that occurs when we allow government to grow and play an increasingly prevalent role in our lives.  In a veiled rebuke to President Reagan’s characterization of big government, President Obama attempted to change the subject by asserting: 

“The stale political arguments that have consumed us for so long no longer apply.  The question we ask today is not whether our government is too big or too small, but whether it works.” 

But Obama’s attempt to change the subject completely misses the larger point.  Namely, that bigger government – by its very nature – doesn’t work as well as smaller government.  When government becomes too big, it naturally undertakes the type of contradictory, toxic behavior that we’re now witnessing.  When government is more limited, the opportunities for such bureaucratic harm are reduced. 

This farcical episode of government subsidizing American automakers with one bloated hand, while stabbing it with another, is merely the latest proof. 

Roland Burris getting push under the bus ...

CHICAGO – Gov. Pat Quinn on Friday called on fellow Democrat Roland Burris to resign from the U.S. Senate, saying the controversy surrounding Burris' appointment to the seat was hurting the state and his constituents. Meanwhile, White House press secretary Robert Gibbs said Burris must explain the conflicting statements that have put his appointment in peril and should take time this weekend to "certainly think of what lays in his future."

Second stimulus bill may be needed, Murphy says

By John Pirro Staff Writer
Posted: 02/19/2009 09:26:10 PM EST

DANBURY -- The ink is barely dry on the $787 billion economic stimulus package passed by Congress this week, but U.S. Rep. Chris Murphy, D-5th District, said a second stimulus bill will probably be needed before the year is out.

"The numbers are big, because the crisis is big," the second-term congressman told a gathering of business and education leaders Thursday evening.

Murphy acknowledged it is hard to imagine what nearly $800 billion looks like or represents, but said the money is needed to keep unemployment in the 10 to 11 percent range as the nation weathers its worst economic crisis since the 1930s.

Without the stimulus package, the jobless rate could soar as high as 14 percent, he warned.

Murphy defended spending part of the bailout money on infrastructure improvements and weatherization projects in low-income neighborhoods, saying the programs will create jobs.

But he conceded the package is a "leap of faith'' and will only go so far in resolving the current economic woes. A second stimulus bill will probably be needed by late summer or early fall, he said.

Responding to a question from local businessman Elmer Palma, Murphy said the current package, which will provide about $800 per year to the average family in tax relief and savings on college tuition, was preferable to giving people money directly.

When taxpayers received their $600 stimulus checks last year, most people saved the money rather than spending it, he said.

More than a dozen representatives of the local business and education communities attended the session at Henry Abbott Technical High School, which was sponsored by the Tribuna newspaper.

Murphy said the crisis provides an opportunity to make "transformational changes" in current energy, health care and immigration policies.

"Our economy is permanently in peril without fundamental reform to the systems that weaken our economic foundations," he said.

Murphy, who recently returned from a trip to Afghanistan and Pakistan, also addressed foreign affairs during a question and answer session.

He said while the surge in Iraq has been successful in allowing withdrawal of some troops, increasing U.S. forces in Afghanistan would be pointless without also addressing the situation in Pakistan, where Taliban militants often seek refuge.

"Simply pushing the problem across the border does us absolutely no good," Murphy said.

Contact John Pirro at or at (203) 731-3342.

Thursday, February 19, 2009

Would You Join Santelli's "Chicago Tea Party?"

19 Feb 2009 | 04:08 PM ET

CNBC's Rick Santelli leads the trader mortgage revolt. Would you want to join his "Chicago Tea Party?" Let us know:

Related Links:

What Readers are Saying:

The plan is a discrace!  I pay my mortgage and bills on time.  I live on a fixed income.  I find it tough each month to make ends meet, but do.  I did not go out and buy a home I could not afford.  No one is helping ME!  The Bleeding heart Democrats might as well give the country away.  God Bless Rick Santelli!! —Steve

Why are the very people who never seem to do the right things, being rewarded with my tax dollars? This country has come to the point where there is no incentive to do what's right! ... The government should be rewarding the successful people, not making them out to be the villain and confiscating their tax dollars,to redistribute it to the people living above their means! — David

Here is the message Obama and Congress are sending: Work hard, pay your bills on time, and you will be penalized by having your hard-earned money reward those who wallow in irresponsibility and have a total disdain for those who play by the rules. — Kathy

The Obama housing plan is absolutely ridiculous. As a disabled person, I could not afford to buy a home after housing prices took off. To think that if I had bought above my means the government would have paid my mortgage makes me now feel like a jerk. — Rob

I paid off my mortgage this month. What a mistake, I should have just sat back and demanded that the government [taxpayers] help me. I'm being punished for being successful and doing what was once deemed right. — Don

It's not fair to the TAXPAYERS! We'll never get out of this mess! We need to get back to the ones, that started this mess. They need to ALL go to prison! — Betty

Common Cents for 2-18-09 ...


Some refreshing news: The initial town and educational budgets that were recently submitted to the Board of Finance [BOF] would result in a tax increase that is slightly under 3%for next year. High fives to New Fairfield’s town department heads who were responsible for a net reduction of ½% for the next fiscal year [2009/2010] that begins on July 1st.

Anyone familiar with the budget preparation process knows that there is always built in “fat”, “kitties” “hidden contingency money” and the like. Hopefully the BOF will begin the process of analyzing the budgets and cutting out the fat, bringing down the increase to a figure closer to the projected increase in the cost of living for the next year.

Counterbalancing this favorable news is a $25 to $30 million dollar schools construction project that the Board of Education [BOE] will try to get approved sometime this year. Unfortunately, the BOE is too late to qualify for the favorable reimbursement rates from the State that were recently lowered. In addition, the BOE does not appear to be at all sympathetic to the recession related financial woes of us residents. We will have to wait to see how this plays out, but now is an awful time to promote a construction project that will burden us taxpayers with additional debt for 20 or 30 years.


About 7 years ago residents approved the expenditure of $175,000 for our cell tower at 302 Ball Pond Road and it was completed a year or two later. A major selling point for the expenditure was that the initial carrier revenues would first pay off the $175K cost and thereafter the annual revenue would be set aside for emergency communications equipment, maintenance, new radios, upgrades etc.

We have been garnering approximately $125 to $150K of revenue annually from the tower that was paid off 4 or 5 years ago. Over that period of time, I believe over a half million dollars of revenue has been received that was supposed to be earmarked for first responders equipment.

The questions are: [1] what happened to that revenue stream after the construction cost of the tower was paid off? [2] Related to the disappearance of that revenue stream, why do we now need to shell out money for new communications equipment? A lot of the funding necessary to improve the current communications system was supposed to be in place by now.


In the 4 or 5 years I have been writing Common Cents I have purposefully focused on local issues and kept away from commenting on national affairs.

However, I have been asked by a number of residents to comment on the massive economic stimulus plan that is about to be signed into law. My reply is in the form of this question for congress; "In the entire history of mankind, name me one nation that has successfully spent itself out of a recession [or depression]." I would love to hear their answer.

Hint: The United States under FDR’s “New Deal” is the wrong answer. The vast majority of economists agree that Roosevelt’s massive New Deal spending only prolonged the Great Depression. World War Two is what got our country out of the depression and transition into a robust American economy.

“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation.” – The late Dr. Adrian Rogers , 1931 to 2005

Doug Thielen

The Ballad of Bernie Madoff

Leonia Helmsley ahead of her time ...

Billionaire Paul Allen is a Microsoft cofounder, the owner of the NFL's Seattle Seahawks and the owner of the NBA's Portland Trailblazers.

And, thanks to the stimulus bill President Obama signed this week, he's also about to be as much as a billion dollars richer.

Here's how:
  • Allen owns a majority stake in cable provider Charter Communications.
  • Charter Communications this month said it would reduce its debt load by $8 billion and enter Chapter 11.
  • Normally, partners at a firm like Charter Communications would have to pay taxes on the amount of debt forgiven in this process, which is, in a sense a one-time income windfall. Tax law calls it a "deemed distribution."
  • But under the new bill, companies like Charter Communications will be able to avoid paying taxes on forgiven debt until 2014. Even then, Paul will have until 2018 to pay it completely off.
  • Paul owns about half of Charter, so his share of the Charter Communications' $8 billion debt forgiveness is around $4 billion. At a tax rate of 25%, Allen could avoid paying as much as $1 billion in taxes until 2014, tax expert Robert Willens told the WSJ.
  • We're not clear how a corporate tax benefit would be passed through to Paul's personal tax payments, but that's what Willens seems to be saying. Any tax experts out there care to clarify?
For what it's worth, one of Paul's representatives told the WSJ the billionaire didn't lobby for the windfall. It just fell into his lap, lucky dog.

So what will Paul do with that money until 2014? Invest it in technology that reduces our dependence on foreign oil and creates new "green collar" jobs for America, per the goals of Obama's stimulus plan, of course.

Or maybe Paul could buy a new boat! Here are the two he already owns:

Wednesday, February 18, 2009

GM and Chrysler flirting with Chapter 11 ... Duh?

These possible actions by GM and Chrysler is Chapter 11 ... exactly what many people said in December 2008 ... let them fail and go into Chapter 11. We [taxpayers have been hosed in the billions] ... this isn't rocket science. [click here]

Reid, Pelosi, Collins, Snow and Specter victory dance

When you cross the aisle ... music and dancing embraces "the three blind mice" ... its merely a matter of time before their feet will hurt ...

Now What? Will the stimulus actually stimulate? Economists say no

Will the stimulus actually stimulate? Economists say no

Kevin G. Hall | McClatchy Newspapers

last updated: February 12, 2009 11:35:55 PM

WASHINGTON — The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won't stimulate economic activity, according to a range of respected economists.

"I think (doing) nothing would have been better," said Ed Yardeni, an investment analyst who's usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.

"It's unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits."

House and Senate negotiators this week narrowed the differences between their competing stimulus plans. In so doing, they scrapped a large tax credit for buying automobiles that would've caused positive ripple effects across the manufacturing sector. They settled instead on letting purchasers of new vehicles deduct from their federal taxes the state and local sales taxes on the cars they bought.

The exception to this is for buyers of plug-in hybrids, cars that run off a battery that can be charged at home or in the office. Buyers of these vehicles, available in very limited supply, could get a tax credit of up to $9,100.

A Republican-backed proposal that would've provided a $15,000 tax credit to first-time homebuyers also was scaled back dramatically. Instead, the compromise provides first-time homebuyers a tax credit of up to $8,000, and it doesn't have to be repaid over the life of the mortgage. Incentives already in place offer buyers a $7,500 credit that must be repaid, so the bill is an improvement, but short of what many economists think is necessary.

Another reason that some analysts frown on the stimulus is the social spending it includes on things such as the Head Start program for disadvantaged children and aid to NASA for climate-change research. Both may be worthy efforts, but they aren't aimed at delivering short-term boosts to economic activity.

"All this is 25 years of government expansion jammed into one bill and sold as stimulus," said Brian Riedl, the director of budget analysis for the Heritage Foundation, a conservative policy research group.

The view wasn't much more supportive on the other side of the political spectrum. In a brief on the stimulus compromise, William Galston, a senior fellow at the center-left Brookings Institution and a former Clinton White House adviser, warned Thursday that a bank-rescue plan being finalized will make the $789 billion look like "pocket change."

"While the stimulus bill is a necessary condition for economic stabilization and recovery, it is hardly sufficient," Galston wrote. "As the lesson of Japan in the 1990s shows, fiscal stimulus without financial rescue yields stagnation — at best."

" . . . Serious observers believe that recovery cannot begin until we acknowledge that losses in the financial system amount to some trillions of dollars, rendering many institutions insolvent. The temptation will be to muddle along, hoping that these institutions can gradually regain strength without putting massive amounts of taxpayers' money at risk. If we go down that road, we are likely to end up with zombie banks whose balance sheets are riddled with near-worthless investments — banks that cannot lend to credit-worthy customers and who cannot trust one another," Galston wrote.

With the economy in a tailspin, doing nothing isn't an option, however.

"Something is better than nothing, and bigger was better than smaller in terms of the stimulus needed," said Chris Varvares, president of prominent forecaster Macroeconomic Advisers in St. Louis. "The economy needs a fiscal jolt."

Even some proponents of a stimulus are disappointed, however. Harvard University economist Martin Feldstein, a former adviser to President Ronald Reagan, was an early supporter. He said that government is now the only engine left to spark economic activity, but he said that the compromise falls short of what's needed.

"If the choice is between the current bill and an improved bill, I would say wait and improve the bill," Feldstein told CNBC on Wednesday after the compromise was announced. "I am disappointed with the structure of this bill."

Like Yardeni and other analysts, Feldstein wanted more incentives for consumers to make big purchases that have ripple effects across the economy. When a car is purchased, it helps not only the carmaker, but its suppliers, the trucking companies and railroads that transport cars, the states that issue license plates and so on.

Still, could this stimulus get the U.S. economy back on its feet?

By itself, probably not. The stimulus plan, however, is supposed to work in tandem with new efforts by the Treasury and the Federal Reserve to rid banks of distressed assets that are poisoning their balance sheets, and with other federal efforts to halt mortgage delinquencies and foreclosures. Much will depend on the details of both federal attack plans, which the Obama administration promises are coming soon.

There's also the problem of time. Much of the stimulus is to be spread over a two-year period or longer — and 2009 looks increasingly bleak.

A Wall Street Journal survey of 52 mainstream economic forecasters published Thursday found that while most forecasters still think there could be slow growth by the second half of the year, that won't offset steeper-than-projected declines in the first half of 2009.

That means this is essentially a lost year for the economy. Most scenarios envision the economy picking back up again next year.

The president of the U.S. Chamber of Commerce, in a speech in Detroit Thursday, tried to put a brave face on the tough year ahead. Thomas Donohue acknowledged that big business didn't get in the stimulus bill some of the tax-relief measures it most wanted, but promised the Chamber's support.

"The bottom line is that at the end of the day, we're going to support the legislation. Why? Because with the markets functioning so poorly, the government is the only game in town capable of jump-starting the economy," Donohue said.

Putin warns US to eschew socialism

February 18, 2009
Clarice Feldman

What is the world coming to? Pat Dollard reports the Russian leader warned the US against adopting socialism because it doesn't work:

Russian Prime Minister Vladamir Putin has said the US should take a lesson from the pages of Russian history and not exercise “excessive intervention in economic activity and blind faith in the state’s omnipotence”.

“In the 20th century, the Soviet Union made the state’s role absolute,” Putin said during a speech at the opening ceremony of the World Economic Forum in Davos, Switzerland. “In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.”[Snip.]

Sounding more like Barry Goldwater than the former head of the KGB, Putin said, “Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors, and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.”

Putin also echoed the words of conservative maverick Ron Paul when he said, “we must assess the real situation and write off all hopeless debts and ‘bad’ assets. True, this will be an extremely painful and unpleasant process. Far from everyone can accept such measures, fearing for their capitalization, bonuses, or reputation. However, we would ‘conserve’ and prolong the crisis, unless we clean up our balance sheets.”



The Tax Poem

At first I thought this was funny...then I realized the awful truth of it.
Be sure to read all the way to the end!

Tax his land,

Tax his bed,

Tax the table

At which he's fed.

Tax his tractor,

Tax his mule,

Teach him taxes

Are the rule.

Tax his work,

Tax his pay,

He works for peanuts anyway!

Tax his cow,

Tax his goat,

Tax his pants,

Tax his coat.

Tax his ties,

Tax his shirt,

Tax his work,

Tax his dirt.

Tax his tobacco,

Tax his drink,

Tax him if he

Tries to think.

Tax his cigars,

Tax his beers,

If he cries

Tax his tears.

Tax his car,

Tax his gas,

Find other ways

To tax his ass.

Tax all he has

Then let him know

That you won't be done

Till he has no dough.

When he screams and hollers;

Then tax him some more,

Tax him till

He's good and sore.

Then tax his coffin,

Tax his grave,

Tax the sod in

Which he's laid.

Put these words

Upon his tomb,

'Taxes drove me

to my doom...'

When he's gone,

Do not relax,

Its time to apply

The inheritance tax.

Accounts Receivable Tax

Building Permit Tax

CDL license Tax

Cigarette Tax

Corporate Income Tax

Dog License Tax

Excise Taxes

Federal Income Tax

Federal Unemployment Tax (FUTA)

Fishing License Tax

Food License Tax

Fuel Permit Tax

Gasoline Tax (44.75 cents per gallon)

Gross Receipts Tax

Hunting License Tax

Inheritance Tax

Inventory Tax

IRS Interest Charges IRS Penalties (tax on top of tax)

Liquor Tax

Luxury Taxes

Marriage License Tax

Medicare Tax

Personal Property Tax

Property Tax

Real Estate Tax

Service Charge T ax

Social Security Tax

Road Usage Tax

Sales Tax

Recreational Vehi cle Tax

School Tax

State Income Tax

State Unemployment Tax (SUTA)

Telephone Federal Excise Tax

Telephone Federal Universal Service Fee Tax

Telephone Federal, State and Local Surcharge Taxes

Telephone Minimum Usage Surcharge Tax

Telephone Recurring and Non-recurring Charges Tax

Telephone State and Local Tax

Telephone Usage Charge Tax

Utility Taxes

Vehicle License Registration Tax

Vehicle Sales Tax

Watercraft Registration Tax

Well Permit Tax

Workers Compensation Tax


Not one of these taxes existed 100 years ago, and our nation was the most

prosperous in the world.

We had absolutely no national debt, had the largest middleclass in the

world, and Mom stayed home to raise the kids.

What in the hell happened? Can you spell 'politicians?'

And I still have to 'press 1' for English !?!

I hope this goes around THE USA at least 100 times!! YOU can help it get there!!!!


Tuesday, February 17, 2009

O'Bama's Road to Recovery

Regurgitation at the Predators Ball

THE STIMULUS IS A STEP TOWARDS A SOVIET AMERICA Written by Senator Tom Coburn Tuesday, 10 February 2009 [Senator Coburn recently gave this speech on the floor of the Senate] We are going in exactly the wrong direction.  We ought to be standing on the principles that made this country great.

There ought to be a review of every program in the Federal Government that is not effective, that is not efficient, that is wasteful or fraudulent, and we ought to get rid of it right now.  We ought to say, Gone, to be able to pay for a real stimulus plan that might, in fact, have some impact.

I would be remiss if I didn't remind everybody that next week we are going to hear from the Obama administration wanting another $500 billion. 

Outside of this ["stimulus" bill], they are going to want another $500 billion to handle the banking system.

I want to make sure the American people know what is in this Stimulus bill.  I think once they know what is in this bill, they are going to reject it out of hand.  Let me read for my colleagues some of the things that are in this bill.

The biggest earmark in history is in this bill.  There is $2 billion in this bill to build a coal plant with zero emissions.  That would be great, maybe, if we had the technology, but the greatest brains in the world sitting at MIT say we don't have the technology yet to do that.

Why would we build a $2 billion power plant we don't have the technology for that we know will come back and ask for another $2 billion and another $2 billion and another $2 billion when we could build a demonstration project that might cost $150 million or $200 million?  There is nothing wrong with having coal-fired plants that don't produce pollution; I am not against that.  Even the Washington Post said the technology isn't there.  It is a boondoggle.  Why would we do that?

We eliminated tonight a $246 million payback for the large movie studios in Hollywood.

We are going to spend $88 million to study whether we ought to buy a new ice breaker for the Coast Guard.  You know what.  The Coast Guard needs a new ice breaker.  Why do we need to spend $88 million?  They have two ice breakers now that they could retrofit and fix and come up with equivalent to what they needed to and not spend the $1 billion they are going to come back and ask for, for another ice breaker, so why would we spend $88 million doing that?

We are going to spend $448 million to build the Department of Homeland Security a new building.  We have $1.3 trillion worth of empty buildings right now, and because it has been blocked in Congress we can't sell them, we can't raze them, we can't do anything, but we are going to spend money on a new building here in Washington.

We are going to spend another $248 million for new furniture for that building; a quarter of a billion dollars for new furniture.  What about the furniture the Department of Homeland Security has now?  These are tough times.  Should we be buying new furniture?  How about using what we have? 

That is what a family would do.  They would use what they have.  They wouldn't go out and spend $248 million on furniture.

How about buying $600 million worth of hybrid vehicles?  Do you know what I would say?  Right now times are tough; I would rather Americans have new cars than Federal employees have new cars.  What is wrong with the cars we have?  Dumping $600 million worth of used vehicles on the used vehicle market right now is one of the worst things we could do.  Instead, we are going to spend $600 million buying new cars for Federal employees.

There is $400 million in here to prevent STDs.  I have a lot of experience on that.  I have delivered 4,000 babies.  We don't need to spend $400 million on STDs.  What we need to do is properly educate about the infection rates and the effectiveness of methods of prevention.  That doesn't take a penny more.  You can write that on one piece of paper and teach every kid in this country, but we don't need to spend $400 million on it.  It is not a priority.

How about $150 million for a Smithsonian museum?  Tell me how that helps get us out of a recession.  Tell me how that is a priority.  Would the average American think that is a priority that we ought to be mortgaging our kids' future to spend another $150 million at the Smithsonian?

How about $1 billion for the 2010 census?  So everybody knows, the census is so poorly managed that the census in 2010 is going to cost twice what it cost 10 years ago, and we wasted $800 million on a contract because it was no-bid that didn't perform.  Nobody got fired, no competitive bidding, and we blew $800 million.

We have $75 million for smoking cessation activities, which probably is a great idea, but we just passed a bill, the SCHIP bill, that we need to get 21 million more Americans smoking to be able to pay for that bill.  That doesn't make sense.

How about $200 million for public computer centers at community colleges? 

I mean, did we talk with Dell and Hewlett-Packard and say, How do we make you all do better?  Is there not a market force that could make that better?  Will we actually buy on a true competitive bid?

No, because there is nothing that requires competitive bidding in anything in this bill.  There is nothing that requires it.  It is one of the things President Obama said he was going to mandate at the Federal Government, but there is no competitive bidding in this bill at all.

We have $10 million to inspect canals in urban areas.  Well, that will put 10 or 15 people to work.  Is that a priority for us right now?

There is $6 billion to turn Federal buildings into green buildings.  That is a priority, versus somebody getting a job outside of Washington, a job that actually produces something, that actually increases wealth?

How about $500 million for State and local fire stations?  Where do you find in the Constitution us paying for local fire stations within our realm of prerogatives?  None of it is competitively bid.

Next is $1.2 billion for youth activities.  Who does that employ?  What does that mean?

How about $88 million for renovating the public health service building? 

You know, if we could sell half of the $1.3 trillion worth of properties we have, we could take care of every Federal building requirement and backlog we have.

Then there's $412 million for CDC [Centers for disease Control] buildings and property.  We spent billions on a new center and headquarters for CDC. Is that a priority?  If we are going to spend $412 million on building buildings, let's build one that will produce something, one that will give us something.

How about $850 million for that most "efficient" Amtrak that hasn't made any money since 1976 and continues to have $2 billion or $3 billion a year in subsidies?

Here is one of my favorites: $75 million to construct a new "security training" facility for State Department security officers.  We already have four other facilities already available to train them.  But they want theirs.  By the way, it is going to be in West Virginia.  I wonder how that got there.

So we are going to build a new training facility that duplicates four others that we already have that could easily do what we need to do.  But because we have a stimulus package, we are going to add in oink pork.

How about $200 million in funding for a lease - not buying, but a lease - of alternative energy vehicles on military installations?

We are going to bail out the States on Medicaid.  Total all of the health programs in this, and we are going to transfer $150 billion out of the private sector and we are going to move it to the Federal Government.  You talk about backdooring national health care.

Henry Waxman has to be smiling big today.  He wants a single-payer Government-run health care system.  We are going to move another $150 billion to the Federal Government from the private sector.

We are going to eliminate fees on loans from the Small Business Administration.  You know what that does?  That pushes productive capital to unproductive projects.  It is exactly the wrong thing to do.

We are going to spend $524 million for information technology upgrades that the Appropriations Committee claims will create 388 jobs.  If you do the math on that, that is $1.5 million a job.  Don't you love the efficiency of Washington thinking?

We are going to create $79 billion in additional money for the States, a ``slush fund,'' to bail out States and provide millions of dollars for education costs.  How many of you think that will ever go away?

Once the State education programs get $79 billion over 2 years, do you think that will ever go away?  The cry and hue of taking "our money" away, even though it was a stimulus and supposed to be limited, it will never go away.  So we will continue putting that forward until our kids have grandkids of their own.

There is about $47 billion for a variety of energy programs that are primarily focused on renewable energy.  I am fine with spending that.  But we ought to get something for it.  There ought to be metrics.  There are no metrics.  It is pie in the sky, saying we will throw some money at it.

Let me conclude by saying we are at a seminal moment in our country.  We will either start living within the confines of realism and responsibility or we will blow it and we will create the downfall of the greatest nation that ever lived.

This bill is the start of that downfall.  To abandon a market-oriented society and transfer it to a Soviet-style, government-centered, bureaucratic-run and mandated program, that is the thing that will put the stake in the heart of freedom in this country.

I hope the American people know what is in this bill.  I am doing everything I can to make sure they know.  But more important, I hope somebody is listening who will treat the ``pneumonia'' we are faced with today, which is the housing and mortgage markets.  It doesn't matter how much money we spend in this bill.  It is doomed to failure unless we fix that problem first.

Failing that, we will go down in history as the Congress that undermined the future and vitality of this country.  Let it not be so.