09.23.08
The problem with deregulation
Even if the Department of the Treasury recovers some the Wall Street bailout funds over time, the idea of spending perhaps $700 billion or more on top of our current national deficit is mind-boggling. Can somebody justify for me why countless families are losing their homes while executives at these “failed” and restructured corporations earned hundreds of millions of dollars but aren’t being asked to return any of it? Can you tell me?
I heard an analogy from Professor Roy Grow, the Frank B. Kellogg Professor of International Relations in the Carleton College’s Department of Political Science, to help you think about what’s set up the crisis on Wall Street. The international relations program was originated in 1937 by former Secretary of State and Nobel Peace Prize winner, Frank B. Kellogg, through the establishment at Carleton of the Kellogg Foundation for Education in International Relations.
I’ll paraphrase Professor Grow’s dialectical discussion:
Imagine you’ve got ten large, healthy, competitive men gathered together. Set the task for them: win a game of basketball. They’ve all played basketball before. In fact, they’re quite good at it. But this isn’t college, with some fans of both teams cheering them on, there won’t even be a referee to call fouls or out-of-bounds. All the rules they’ve dealt with learning the game? Effectively gone, because you’ve deregulated the game.
Who will win?
Why?
There’s a fundamental problem with deregulation of the kind – and scope – that has taken place on Wall Street. Once there’s no reward for playing by mutually agreeable rules the ONLY reward is winning – at any cost. The value of deregulation seemed so great: let free markets determine what’s best; let competition determine the practices without the restricting burden of oversight.
In what other industry would you have confidence enough to let the people with the most to gain act without regulation? Would car companies be so concerned with passenger safety without regulation? Would you want doctors to practice unregulated- no assurance they’d act with YOUR best interest in mind? Lawyers? Accountants? Toy Manufacturers? Food processors? I’m not suggesting there’s nothing good about a free-market economy, nor am I suggesting every insurance company or investment firm is run by greedy executives, but there have been snake-oil salesmen preying upon the unwary since before the dawn of history as nearly as I can determine.
At one time we might have run such fast talkers out of town, or even applied tar and feathers, or worse. The notion that we’d let them leave smiling, with everything they’d pilfered intact, on their own schedule and terms? That, my friends, is a farce.
We’ve got a big problem. We’ve left foxes guarding the chicken coop. To borrow a phrase freighted with partisan overtones, we need to be “as careful getting out as we were careless getting in…” to this mess. I don’t pretend to know what the solution is; economics is not my forte, nor that of most of my close associates. I do know this: hasty proposals abound in any perceived crisis, but unless you’ve already been expecting the problem and have a plan in place taking time to consider several reasoned solutions often yields superior outcomes to adopting either the first idea or the one advanced by the loudest voice.
I’m disappointed, but not surprised, that some have tried to use the crisis for their own political and/or financial gain. That confirms the readiness of snake-oil salesmen and their ilk to exploit any suffering for their own personal advancement, and demonstrates one peril of trusting the lofty ideal of a free-market to work to everyone’s mutual benefit in the never-ideal real world.
Given that it’s tax dollars about to be put to use to repair the damage, given the complexity of the system(s), and balancing that complexity against the obvious repercussions to inaction, I hope a transparent set of priorities will allow wiser men than me to conceive and begin to implement the kind of oversight that has obviously been missing from this segment of the economy for years.
Given, lastly, that Senator Barack Obama had the foresight to write publicly to both Fed Chairmen Bernanke and Treasury Secretary Paulson about his concerns over looming repercussions from the questionable lending practices at the foundation of this crisis in March of 2007: Obama’s got both the fundamental familiarity and the network of advisors to facilitate identifying fiscal policy changes that should be on the table. It’s unfortunate that such an exercise would likely disrupt Obama’s presidential campaign, but he and his team have already given the problem serious thought; they must be included in the process.
09.11.08
Obama on Capital Gains and Housing Foreclosures – in APRIL 2008
Well before we had to bail out mortgage lenders, Obama was trying to get people to pay attention to the foreclosure crisis… but the thrust of this segment is a clear answer to a toughly worded question about Capital Gains taxes.
Gibson tried to get him to back off his stance in the early spring, but here we are in autumn and he’s maintaining the exact same answers. Obama understood the pressure the housing market was under, he’d written to Bernanke and Paulson over a year earlier – in March of 2007. He gets how taxes and the credit crisis he saw coming relate to the larger structures of our economy overall.
So, if you’re getting rumors in your email about Obama taxing water, or IRAs, or other accounts explicitly designed to be tax free, and wondering why the Wall Street Journal and Bloomberg prefer his policies? Do your homework, because Obama has a clear understanding of our economy and the value of genuinely responsible “pay as you go” fiscal policies.
If you’ve heard Obama has a plan to double our taxes, or tax the profits from home sales or other capital gains at a higher rate than McCain? Find an objective, non-partisan source, and soak up the facts.
The media has no interest in informing you; they sell commercials to earn their living so they will entertain you and use the language of an announcer calling a horse race. They are trivializing a critical national election, and hoping you won’t notice because you’ll be too awed by their fancy graphics and analysis – is this Monday Night Football, or an election for the U.S. President?
An informed electorate can pick the superior candidate. You may or may not agree with my views, but you owe it to yourself, your family, and future generations to be well-informed before you vote.
Digg this story!
09.10.08
Will Obama really tax water? What about Capital Gains? Home sales?
No, of course Senator Obama isn’t propsing a tax on water, but that’s among the fantastic smears being emailed around lately in what appears now to be a desperate attempt to mislead middle America.
Are we really that gullible? Do people sit around the cooler at work kicking this one around?
With “both John McCain and Barack Obama offering tax cuts,” according to the Christian Science Monitor, “the 2008 election promises a boost for the typical family budget” regardless of which one wins. But it could also strain the much larger budget of the US government, and there is abundant misinformation circulating about Obama’s plans (and a few outright lies.)
Meanwhile, the commercial media “news” sources (when they bother to report on the rumors) tend to focus on the rumor itself rather than either asking “who benefits” from the confusion, or trying to debunk the untruths. By serving to echo the lie(s) they instill doubts in the less savvy voters. Is that responsible journalism?
The Tax Policy Center has put out an analysis of the Obama and McCain tax plans. Here’s their conclusion:
If enacted, the Obama and McCain tax plans would have radically different effects on the distribution of tax burdens in the United States. The Obama tax plan would make the tax system significantly more progressive by providing large tax breaks to those at the bottom of the income scale and raising taxes significantly on upper-income earners. The McCain tax plan would make the tax system more regressive, even compared with a system in which the 2001–06 tax cuts are made permanent. It would do so by providing relatively little tax relief to those at the bottom of the income scale while providing huge tax cuts to households at the very top of the income distribution.
What follows is a brief discussion of some of the particulars people seem to be asking about often – with interest that may well stem from the debunked but still-circulating emails. In case you want it spelled out, Obama has never proposed or even hinted at a tax on water or any other natural resource.
Doubled Taxes?
The claim that “Under Obama your taxes will more than double!” circulating in some emails is simply false. The comparative rate tables that e-mail provides for McCain and Obama were fabricated for another false e-mail during the primaries and copied. It is supposedly a comparison of tax rates before and after the Bush tax cuts, but it grossly overstates the effect of the Bush cuts. Furthermore, Obama proposes to retain the Bush cuts for every single income level shown in this bogus table.
Taxing IRAs and 529s:
Contrary to the claim in this e-mail, raising tax rates on capital gains or dividends would not result in higher taxes on any investments held in Individual Retirement Accounts or in popular, tax-deferred “college funds” under section 529 of the Internal Revenue Code. The whole point of such tax-deferred plans is that dividends and capital gains are allowed to accumulate and compound tax-free, and neither Obama nor McCain proposes to change that. And as previously mentioned, any capital gains or dividend income from stocks, bonds or mutual funds owned outside of tax-deferred accounts would continue to be taxed at current rates except for couples making over $250,000, or singles making more than $200,000.
Home Sales:
The claim that Obama would impose a 28 percent tax on the profit from “all home sales” is false. Both Obama and McCain would continue to exempt the first $250,000 of gain from the sale of a primary residence ($500,000 for a married couple filing jointly) which results in zero tax on all but a very few home sales.
Capital Gains Rate:
It’s untrue that Obama is proposing a 28% capital gains tax rate. He said in an interview on CNBC that he favors raising the top rate on capital gains from its present 15% to 20% or more, but no higher than 28 percent. And as for a 28% rate, Obama added, “my guess would be it would be significantly lower than that.” Furthermore, he has said only couples making $250,000 or more (or singles making more than $200,000 according to his policy advisers) would pay the higher capital gains rate. That means the large majority of persons who pay capital gains taxes would see no increase at all.
Why all the misinformation?
Some of it’s based on simple confusion. After all, Obama’s not prone to cute sound-bites such as “Read my lips: No new taxes.”
Some of the emails circulating, however, are so consistently mis-representing the facts – easily verified – that one can only conclude a deliberately malicious intent to strike fear in the wallets of middle class voters is behind the lies.
In an ideal setting voters would all have access to reliable, current, accurate information sources. They’d also take the time to examine that information, no matter if it was Obama’s stand on taxes, McCain’s statements about taxes or his speeches on why health care doesn’t need the fixes Obama’s proposed, or rookie Governor Palin’s pork barrel “Bridge to Nowhere.” (Yes, I know she’s on record as being against it, but it turns out not only was she for it initially, she was also for a $24 million “access road” after the bridge was declared too ear-marky to survive public scrutiny, and she also KEPT the federal money after the project was cancelled.)
In practice, time is short, and rumors often get as much (if not more) coverage as facts on the evening TV news or in newspapers. It’s often hard to tell which part of a media report is the truth. The “news” producers have motives that must be examined: they profit from selling commercials, that’s their income. When in doubt, follow the money.
Questions:
Who profits from the election of McCain or Obama — or your mayor?
Who profits from voters feeling disenfranchised and tuning out?
Don’t ask what you can do – ACT!
The airwaves are as full of misinformation – willfully employed – as the email is. Are you ready to step up and be an Agent of Change, to contribute to help spread the truth?
Say it with me: “No more lies ! “
09.07.08
Let’s talk about politics
What does Gov. Palin think of the VP position?
See: www.youtube.com/watch?v=YZ04hQbvWTs
Then:
Zennie’s Zeitgeist, What is Palin’s “other side”? (Hero to Young)
Zennie’s Zeitgeist, What are the outstanding accusations against McCain’s VP choice?
Zennie’s Zeitgeist, What does Palin thinks a VIP does?
Zennie’s Zeitgeist, Alaska in a Skirt
Zennie’s Zeitgeist, Why did Palin want the library to ban books?
Why did Karl Rove flip flop on the value of Mayoral and Gubenatorial experience? He said Tim Kaine lacked credentials, yet Sarah Palin has more than enough?
