GOVERNMENT TRUE-ISMS

I don't make jokes. I just watch the government and report the facts. -Will Rogers

OBAMA ADVISER SAYS THE GOVERNMENT SHOULD FORCE US TO SAVE

Obama adviser backs automatic savings programs

Austan Goolsbee, a member of the Council of Economic Advisers and the chief economist for the President's Economic Recovery Advisory Board, says he believes automatic savings programs are more effective than tax credits when it comes to getting people to save for retirement. "A lot of people have a hard time actually going down and saying, 'Take money out of my paycheck and put it in the bank,' ... but if you default them into a savings program ... you automatically have money put into a 401(k)," he said. "The evidence suggests that for a lot of people that's way more effective than even giving them big tax credits to encourage them to do it because people are too busy." The Washington Post

INMATES RUNNING THE ASYLUM

It's bad enough that the person in charge of the IRS, Treasury Secretary Timothy Geithner, is an acknowledged tax cheat who claims not to understand how to use Turbo Tax. Now, Charlie Rangel, the Chairman of the House Ways & Means committee, which writes all of the tax laws, has been discovered to be hiding even more income and assets than were previously disclosed.

Here are just a few of the current news stories, courtesy of Drudge:

The Absent-Minded Chairman. Charlie Rangel wins the personal lottery.

OOPS! CHARLIE FORGOT THIS $1M HOUSE. REALTY BITES TAX-THEM-NOT-ME RANGEL

CHARLIE'S MORTGAGE BARES HOME UNTRUTH

Stop embarrassing us, Mr. Rangel. Resign

HOUSE GLOBAL WARMING BILL COSTLY

'Climate bill could cost 2 million jobs'

(The Hill) -- TheHill.com reports that a new study by the National Association of Manufacturers (NAM) and the American Council for Capital Formation (ACCF) finds the House global warming bill could "cost 2 million jobs by 2030." According to the story, "one key finding is that the climate bill will hurt the manufacturing sector particularly hard. As much as 66% of the total job loss from the climate bill could come from manufacturers, the report notes." The story notes that "though the impact of the bill will grow over time, the economy will start feeling the effects of the carbon cap almost immediately." The ACCF and NAM study can be found at <http://www.accf.org/publications/126/accf-nam-study>. The Hill story may be seen at <http://thehill.com/leading-the-news/climate-bill-could-cost-2-million-jobs-2009-08-12.html>

'House global warming bill's new bureaucracy: $8 BILLION'

(USA TODAY) -- USAToday.com reports "it will cost nearly $8 billion over the next decade to pay for the expanded federal bureaucracy needed to combat global warming under a bill passed by the House of Representatives, a report by the non-partisan Congressional Budget Office says." According to the story, "the complex bill, which runs more than 1,400 pages, assigns new tasks to at least 21 federal agencies, from the Energy Department to the Commodity Futures Trading Commission. It also creates new government programs, such as an effort to limit deforestation in developing nations." See the USA Today story at <http://www.usatoday.com/weather/climate/2009-08-10-climate_N.htm>

THE LAW OF BIG NUMBERS

I've talked about The Law of Big Numbers before, but I really think people should understand the magnitude of what the government is talking about when they say Million, Billion and Trillion.

Recently, while speaking at Senator Johanns' Roundtable on Healthcare Reform, I brought this issue up again.

This is what I said:

The papers have abounded with big numbers. The bailout - $700 billion dollars, the deficit - $1.2 trillion dollars. Million, Billion, Trillion...

The only difference between the words is one letter and sometimes people get those things confused. I think there should be a law of big numbers so people really understand the difference between a million, and a billion, and a trillion. Everett Dirksen once said, “a million here, a million there, pretty soon we’re talking big numbers.”

Being a math guy, I like to explain it like this:

If you were going to count to a Million, and you counted one count per second, it would take you a little bit over eleven and one half days of counting non-stop.

Now let's go to a Billion, mostly when I ask people this, they usually guess 100 days. Well actually, to count to a billion, would take you 31 years and 8 ½ months. Remember, a billion is a thousand millions.

Then we can talk about a Trillion. How long would it take to count to a trillion? Do the math. Again you move the decimal point but it would take you 31,709 years plus 8 months to count to a trillion.

Think about this the next time you hear a politician talk, or when you look at the deficit calculator.

Larry Kopsa CPA

GOVERNMENT TRUE-ISMS

"Suppose you were an idiot. And suppose you were a member of Congress....But then I repeat myself." -Mark Twain

READ MY LIPS, NO NEW TAXES

One of President Obama’s pledges was that he would only increase taxes on those wealthy Americans who make over $250,000 per year. I’m not sure exactly what he meant by this but it appears to me that with some of the proposals they’re talking about in the health care reform, it seriously increases people’s taxes.

Here’s an example. I just had a young couple in my office. Both are college graduates who are working hard. He is a banker and she is a nurse. Between them, they are making close to $100,000. The income they are making throws some of their income into a 25% federal bracket and a 7% state bracket. In addition to this, they have to pay social security of 7.65% which is matched by their employers.

As we discussed their situation, the conversation evolved into health care reform. Currently, their company is providing them with $4,200 of health insurance. They are putting $5,000 into a cafeteria plan and they are completely funding a health savings account in the amount of $5,950. In Washington D. C. they are discussing eliminating the deduction for all of these items. If this were the case, I calculated that their tax will increase by $5,551. They couldn’t believe it. They don’t have an extra $5,551 with three children, house payments, etc.

I told them it’s actually worse than this. If they consider it, their tax cost is actually $5,551. In their tax bracket, they would have to go out and earn an additional $9,200 to bring home this amount of money. In addition to this, their employer would have to pay social security on those funds which would cost the employer an additional $700 in taxes.

Although President Obama didn’t say, “Read my lips,” as the first president Bush did, he certainly doesn’t seem to be following his promises. If they pass these measures to fund health care, he definitely isn’t following his promises.

WHO ARE AMERICA'S LARGEST POLITICAL DONORS?

A political action committee, or PAC, is a private group that organizes to elect political candidates. PACs receive and raise money from the group’s constituents and make donations to political campaigns. PACs that donate to federal races (e.g., U.S. Senate and House races or presidential races) must report all of the financial activities to the Federal Election Commission (FEC), which makes the reports available to the public.

To see the list of top political contributors go to: Top Political Donors.

THE GOVERNMENT DEBT CLOCK

The government debt clock is still running. See what it's up to now.

http://www.usdebtclock.org/

THE GOVERNMENT DEBT CLOCK

I wonder what you would do if this was your personal debt clock or a debt clock for your business? Just how long can this go on before people realize that the country will not be able to pay for all of this?

Both the conservative and liberal economists are in agreement that we are creating some very serious problems for our future. See my earlier posting from Fortune magazine.

http://www.usdebtclock.org/

WHEN CONSERVATIVES AND LIBERALS AGREE I PAY CLOSE ATTENTION

Normally Paul Krugman, the liberal pundit and Nobel laureate in economics, and Paul Ryan, a conservative Republican congressman from Wisconsin, share little in common except their first names and a scorching passion for views they champion from opposite political poles. So when the two combatants agree on a fundamental threat to the U.S. economy, Americans should heed this alarm as the real thing.

See the entire article from Fortune magazine at CNNMoney.com/Fortune.

WHAT DOES ONE TRILLION DOLLARS LOOK LIKE?

All this talk about "stimulus packages" and "bailouts"...A billion dollars...A hundred billion dollars...Eight hundred billion dollars...One TRILLION dollars...What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I'd take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We'll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slighty fewer have owned them. Guaranteed to make friends wherever they go.

A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for a week or two of shamefully decadent fun.

Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...

And $1 BILLION dollars... now we're really getting somewhere...

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing about so much. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.

You ready for this?

It's pretty surprising.

... I give you $1 trillion dollars...

(And notice those pallets are double stacked.)So the next time you hear someone toss around the phrase "trillion dollars"... that's what they're talking about.

REMEMBERING THE PAST

Cartoon from 1934 Chicago Tribune
Those who cannot remember the past are condemned to repeat it.
George Santayana, The Life of Reason, Volume 1, 1905

LET'S THINK ABOUT THIS

WANT TO SEE PRESIDENT OBAMA'S TAX RETURN?

Drudge has a link to download the 43 page pdf copy of the Obamas' 2008 income tax returns, showing their income of almost $2.7 million. Maybe I need to write a book.

Minor picky point - This tax return is for 2008, before they took over the White House. Yet, look at what they showed as their occupations for 2008.

JOE THE PLUMBER

I don’t know how I had missed the following joke during the election season, but thought that you might enjoy. It is about applying the tax policy change philosophy to plumbing bills.

Barack Obama discovers a leak under his sink and calls Joe the plumber to come and fix it.

Joe drives to Obama’s house, which is in a very nice neighborhood where it’s clear that all the residents make more than $250,000 per year (or $200,000 per year or $150,000 per year, depending on who’s speaking and when).

Joe arrives and takes his tools into the house. He’s shown the room that contains the leaky pipe under the sink. Joe figures it’s an easy job that will take less than ten minutes. Obama is standing near the door and asks Joe how much it will cost.

Joe immediately says, “$9,500.”

“$9,500?” Obama replies stunned. “But you said it’s an easy job!”

“Yeah, but what I do is charge a lot more to my clients who make more than $250,000 per year so I can fix the plumbing of everybody who makes less than that for free,” responds Joe.

Obama tells Joe there’s no way he’s paying that much, so Joe leaves.

A week later the leak gets so bad that the Obamas have had to put a bucket under the sink, and it fills up every two hours, so they call Joe back. Joe goes back to the Obamas’, looks at the leaky pipe, and says, “It’ll cost you about $21,000.”

Obama exclaims, “A few days ago you told me it would cost only $9,500!”

Joe explains, “Well, a lot of rich people are learning how to fix their own plumbing, so there are fewer of you paying for all the free plumbing we’re doing for the people who make less than $250,000 - and I refuse to charge the lesser income people for plumbing work.”

Obama tries to straighten out Joe. “But don’t you get it? If all the rich people learn how to do their own plumbing and you won’t charge the poor people, what will you do for money?”

Joe immediately replies, “I guess I’ll run for President.”

RECALLING OUR FOUNDER'S WISDOM

“A people ... who are possessed of the spirit of commerce, who see and who will pursue their advantages may achieve almost anything.” - George Washington


“Agriculture, manufactures, commerce, and navigation, the four pillars of our prosperity, are the most thriving when left most free to individual enterprise.”- Thomas Jefferson

“To take from one because it is thought that his own industry and that of his father’s has acquired too much – in order to spare to others, who, or whose fathers, have not exercised equal industry and skill – is to violate arbitrarily the first principle of association, the guarantee to everyone of a free exercise of his industry and the fruits acquired by it.”- Thomas Jefferson

“A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned -- this is the sum of good government.” - Thomas Jefferson

"The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government -- lest it come to dominate our lives and interests."- Patrick Henry

“There are more instances of the abridgement of the freedom of the people by the gradual and silent encroachment of those in power, than by violent and sudden usurpation.”- James Madison

“[T]he government of the United States is a definite government, confined to specified objects. … Charity is no part of the legislative duty of the government.”- James Madison


“When the people find that they can vote themselves money, that will herald the end of the republic.”- Benjamin Franklin


“It does not take a majority to prevail ... but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men.” - Samuel Adams

EDITORIAL FROM THE WALL STREET JOURNAL - ARE WE READY FOR A LIBERAL SUPERMAJORITY?

(Wall Street Journal) -- Friday's Wall Street Journal editorial states that if the current polls hold, Barack Obama will win the White House on November 4 and Democrats will consolidate their Congressional majorities, probably with a filibuster-proof Senate or very close to it. Without the ability to filibuster, the Senate would become like the House, able to pass whatever the majority wants. "This would be one of the most profound political and ideological shifts in U.S. history," writes the Journal. "Liberals would dominate the entire government in a way they haven't since 1965, or 1933. ... If the U.S. really is entering a period of unchecked left-wing ascendancy, Americans at least ought to understand what they will be getting, especially with the media cheering it all on." The Wall Street Journal lists several policy proposals that "have very good chances of becoming law in 2009 or 2010" if current polling is accurate. They include: Medicare for all ("The Obama plan would shift between 32 million and 52 million from private coverage to the huge new entitlement. Like Medicare or the Canadian system, this would never be repealed."); Overhaul of the business sector ("The financial industry will get an overhaul in any case, but telecom, biotech and drug makers, among many others, can expect to be investigated and face new, more onerous rules."); and union supremacy ("One program certain to be given right of way is 'card check' ... trashing the secret-ballot elections that have been in place since the 1930s. The 'Employee Free Choice Act' would convert workplaces into union shops merely by gathering signatures from a majority of employees, which means organizers could strongarm those who opposed such a petition.") The Journal also claims that "taxes will rise substantially, the only question being how high" -- adding he wants to lift or eliminate the cap on income subject to payroll taxes that fund Medicare and Social Security.