Jon Stewart Mocks President Obama on the Debt Deal

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The Daily Show
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Franklin Roosevelt Stands Up to the Rich Vested Interests Like a Real Man

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Corporate Profits, Barack Obama and the Economic Disaster of 2012

Corporate earnings dropped from the first quarter of 2010 from 1465.9 trillion dollars to 1414.2 trillion in the second quarter. Corporate profits dropped to 1337.8 in the third quarter. Dividends sped upward during that same time.

Isn’t that weird? You’d think that dividends would drop with earnings, at least that’s what we’re told to believe. Unfortunately, reality is often different from what we’re indoctrinated to believe. Now let us get back to corporate profits.

Our corporate heroes adjusted their bottom lines and corporate earnings went up during the fourth quarter. Our heroes did this by curtailing contracts with other businesses, cutting back on hiring, freezing employee compensation, laying off employees and other cost cutting things.

The first sign of a potential recession is when dividends rise at a faster rate than profits. That has now occurred.
The next thing that happens as we roll toward a recession is that the hours of employees in the durable goods industries dips. That, too, has already begun. I dealt with that yesterday. Check out the article below this one if you’re interested in this issue.

There is a reason why profits dropped during the second and third quarters. The demand for goods was weak because the United States government has redistributed income and wealth at the greatest rate in the history of the USA from the working people who buy things to the idle leisure class.

President Obama has shown how little he knows about economics and this issue in particular. Oregon Congressmen Earl Blumenauer and Kurt Schrader also adhere to this policy. So does Senator Ron Wyden.

We’ll see if a recession will come to pass. We’re still a few steps away from that economic maelstrom. Hopefully, we won’t come to it. But I think we will.

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Employment in Durable Goods is Dropping 2011

At some point during any business expansion, dividends increase at a faster rate than corporate earnings. When that occurs, our know-nothing corporate heroes begin to cut jobs, reduce or hold steady employee compensation, or outsource jobs. They also curtail business-to-business transactions to save money and push earnings higher.

That’s why the demand for durable goods decreases prior to the beginning of every economic downturn. By the way, a durable good is any product that is expected to last a minimum three years, like cars, stereos, computers and copiers. As businesses that produce durable goods begin to fulfill their contracts, as consumer demand drops due to increasing lay-offs and stagnant compensation, as businesses cut back on business expenditures, the employees in the durable goods industries are the first to feel the effect. Their hours are reduced.

According the United States Bureau of Labor Statistics, the number of hours worked by employees in the durable goods industries have fallen from 40.9 in May 2011 to 40.7 in June and 40.6 in July. I should point out that the June and July figures are preliminary and could be revised upward. However, that is unlikely. Regardless, these figures are not a good sign, especially since they are following a contraction of corporate profits. This is a sign that we’re heading for an even greater recession than what we have experienced so far.

Now for the bad news. The largest redistribution of income from working people to the rich have occurred during the last thirty years. This has taken money out of the hands of working people and decreased the demand for goods and services. And that is why the current economic expansion is the weakest since the last one under President George W. Bush.

President Obama and good liberal politicians such as Senator Ron “Corporate Bitchboy” Wyden and Corporate Congressbitchboy Earl Blumenauer plan to vote for redistributing more income and wealth from working people to the rich via free trade pacts with South Korea, Columbia and Panama. I’ll begin a series on those redistributions tomorrow.

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Corporate Profits Have Dropped

Corporate profits dropped two quarters last year. I will get more specific about this in a day or two. The data is not available now because the United States Bureau of Labor Statistics is updating its tables. When the information is available I’ll explain it in depth.

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Does a Recession Approach?

The numbers are lining up; a recession appears to be on its way. The numbers have not completely lined up, but they appear to marching forward toward recession. This means President Obama’s policies are a terrible failure, his leadership totally lacking. The Republicans have played him for a fool. He should have taken the economic advice of Paul Krugman and George Stiglitz, but instead he took the advice of Wall Street drones like Lawrence Summers. Let’s face it. President Obama is a corporate bend-over bitchboy.

Experts have assumed that we may be heading for a repeat of 1937, when the economy dropped into recession in the midst of the Great Depression because FDR decided to reduce federal spending. However, there’s something more to fear than a repeat of 1937. What if the recession that began in December 2007 is more like the recession of 1927? That was a mild recession. If there is a potential comparison between the likely recession of 2011 or 2012 and the one that hit in 1927, then it is likely the next recession will be far worse than the recession of 2007-2009. That means both G.W. Bush and Obama will share the historical stage as being as bad on economic matters as Herbert Hoover.

There’s one thing that can be said about the coming presidential election. Obama is not the person this country needs, but all of the Republican candidates for president are even worse choices. The United States needs a new FDR, or a Harry Truman. We need a hero, a real leader, someone perhaps like Warren Buffett.

I’ll go more in depth on what’s going on in the economy in a day, maybe two.

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Warren Buffett Says Raise my Taxes

From the New York Times,

Op-Ed Contributor
Stop Coddling the Super-Rich
By WARREN E. BUFFETT
Published: August 14, 2011

Editorial: The Truth About Taxes (August 7, 2011)

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

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Middle Class Income Down in 2009–Thank you George W Bush and the Republicans

From Reuter’s

U.S. incomes plummeted again in 2009, with total income down 15.2 percent in real terms since 2007, new tax data showed on Wednesday.

The data showed an alarming drop in the number of taxpayers reporting any earnings from a job — down by nearly 4.2 million from 2007 — meaning every 33rd household that had work in 2007 had no work in 2009.

Average income in 2009 fell to $54,283, down $3,516, or 6.1 percent in real terms compared with 2008, the first Internal Revenue Service analysis of 2009 tax returns showed. Compared with 2007, average income was down $8,588 or 13.7 percent.

Average income in 2009 was at its lowest level since 1997 when it was $54,265 in 2009 dollars, just $18 less than in 2009. The data come from annual Statistics of Income tables that were updated Wednesday.

The average tax rate was 11.4 percent, up from 10.5 percent in 2007, the Internal Revenue Service data showed.

No income tax was paid by 1,470 of the 235,413 taxpayers earning $1 million or more in 2009, compared with the 959 taxpayers with million-dollar-plus incomes who paid no income taxes in 2007.

Total adjusted gross income reported on tax returns, measured in 2009 dollars, was $7.626 trillion, down from $8.233 trillion in 2008 and $8.989 trillion in 2007.

Total adjusted gross income was up only slightly from the $7.475 trillion reported in 2001, when there were 10 million fewer taxpayers. Adjusted gross income is the amount on the last line of the front page of a Form 1040 tax return.

The data from tax returns showed a startling drop in the total number of taxpayers reporting any wages. A taxpayer, as defined by the IRS, can be an individual or a married couple. The data showed almost 4.2 million fewer taxpayers reported wages in 2009 than in 2007, with about 116.7 million taxpayers reporting wages and salaries in 2009 — down from about 120.8 million in 2007.

Average wages fell, too, sliding $1,106 to $48,917 from $50,023 in 2007.

FEWER TAX RETURNS

The number of tax returns filed fell to 140.5 million, down almost 2 million compared with 2007, as millions of Americans went from working to having no earned income or so little that they did not have to file a tax return.

The number of Americans reporting incomes of $10 million or more also plunged even more than the steep drop in income for the population as a whole.

Just 8,274 taxpayers reported income of $10 million or more in 2009, down 55 percent from 18,394 in 2007. Compared with 2007, total real income of these top earners in 2009 fell 58.6 percent to $240.1 billion, but average income slipped just 8.1 percent to $29 million.

While the number of people who earned enough income to file a tax return fell, the share of those filing who paid no income tax rose to 41.7 percent of tax returns in 2009, up from 36.4 percent in 2008.

The average income of those filing but paying no tax was $14,483.

The share of households filing a tax return but paying no income tax results from two key factors:

* One is the drop in incomes because a married couple does not pay income tax until they make at least $18,300, and families with two children pay no income tax until they make more than $40,000 under policies started in 1997 and since expanded at the behest of Congressional Republicans, many of whom complain that too many households do not pay income taxes.

* The second reason was that in 2009, nearly all working taxpayers received the temporary Making Work Pay Tax Credit sponsored by President Obama, which saved as much as $400 ($800 for married couples) in federal income taxes in 2009. The credit continued in 2010, but then ended.

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