Daily Archives: July 8, 2011

Obama’s debt talks alarm Democrats about Social Security

This entry was posted in Greenberg's Law of The Media SteveG's Posts and tagged social security on by

The article Obama’s debt talks alarm Democrats about Social Security is worth reading for some of the comments.

However, I need to talk about the article Commentary: Obama’s tax plan to pay off debt counts on ‘rich’ who aren’t, in order for you to see where I was coming from in my response to the article mentioned in the first paragraph above. The author of the commentary article had made the following assertion:

No matter what Democrats say, the richest 1 percent of Americans – that’s everybody making $380,000 or more – do not get a free ride under the current tax code. They earn 20 percent of all income in America but pay 38 percent of income taxes.

I’ll get to my comment on this second article in a moment.  However, by the time I saw a comment on the first article, I had refined my ideas about the second.  In response to a comment  about tax loopholes for the poor, that I found in the first article I wrote:

The issue being debated by Congress and the President is future cuts in cost of living allowance, not past cuts.  Don’t muddy the waters.

Putting purchasing power in the hands of the people who would spend it and boost the economy (earned income tax credit) is not the same as putting the money into the hands of the ultra wealthy who suck it right out of the economy and invest it overseas or lend it back to the government by purchasing treasury securities (whose interest payment to the wealthy is not taxable.)

The rich may earn 20% of the income and pay 38% of the taxes, but remember that almost every penny of what the middle class earns is counted as income, but the vast majority of what the rich earn is not even counted.

The rich have vast amounts of unrealized capital gains that are not counted as income.  Any realized capital gains in tax deferred accounts are also not counted as income.

How else do the rich earn so little income, but their wealth is skyrocketing?  The wealth of the people who are earning 80% of the income is falling. Remember the golden rule, “He who has the gold, makes the rules.”

Now here is what I wrote in response to the claim that the payers of 38% of the taxes earned only 20% of the income:

Why limit your tax calculation to income taxes.? The middle class pay much more of their taxes as payroll taxes than the income taxes. Convenient ommission, don’t you think?

They may make only 20 percent of the income, but remember the tax code leaves out a whole bunch of stuff from what is included as income.  If the rich are so burdened by the tax code, why has their share of wealth skyrocketed over the last 20 years while the middle class’s share has plummeted?  How does that wealth get hidden from the tax collector?

That is like the corporate reports that claim we made x amount of profit, excluding certain items.  In other words excluding certain items that say we made far less than x amount of profit.  The GAAP (generally accepted accounting principles) do not allow them to exclude certain items.

In the case of the wealthy, the books they want to show us and the IRS are the ones that say they are burdened by the tax code.  The books they keep for themselves show quite a different story.

I have always said, I’ll believe a corporate CEO is poor when I see him brown bagging for lunch.

By the way, unrealized capital gains are not counted as income until you sell the stock. If you sell the stock in a tax deferred account 401k and IRA are exmaples, then you don’t count it as income until you withdraw the money from the account even if the income is realized by the sale of the stock.

GOP hardens resolve on debt talks after poor jobs report

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In the article GOP hardens resolve on debt talks after poor jobs report there is a quote from House Speaker John Boehner.

“Where are the jobs?” House Speaker John Boehner asked at a press conference today after the Labor Department reported that the the unemployment rate rose to 9.2 percent in June. The economy generated just 18,000 net new jobs last month, making it the slowest month for job creation in nine months.

He is great at misleadingly citing statistics to deflect the blame from himself and try to put it on Obama.

I had already done some other reading,  Stocks Fall 1% on Weak Jobs Data, before coming across Boehner’s misleading remarks.

The U.S. economy only added 18,000 jobs in June after gaining 25,000 jobs in May, according to the Labor Department’s report, which was well below the increase of 80,000 that the market had been expecting. The private sector added 57,000 payrolls, missing projected additions of 110,000, according to Briefing.com.

If the total added was 18,000, but the additions from the private sector was 57,000, then one would have to assume that 39,000 jobs were cut from the public sector.  One might also assume that the number of private sector jobs created would have been higher if we had not lost the consumer spending of the 39,000 people who lost their government jobs.  Had it not been for Republican obstructionism, the job numbers for this month could have been above 57,000 instead of the net 18,000 we got.  If the private sector had hit the target of 110,000 mentioned in the article and the government had not laid of 39,000, the job gains would have been 110,000.  Thanks, Republicans, you have been doing an excellent job of holding back the recovery.  You Republicans cut off as much as 90% of the job growth and then blame Obama.  Outrageous!!!

Indeed if you follow one of the links in the above article, you come to June Jobs Increase Falls Short.

However, Canally noted that the report was a “half empty, half full” picture. Although jobs in state and local governments dropped, retail and leisure sectors saw strong gains, Canally explained. He also added that the drop in manufacturing hours worked might be a bit “fluky” given that ISM’s reading on manufacturing was much better last week.

Why do I say that Boehner is misleading?  The cutback of jobs in the public sector is exactly what Boehner wants to happen.  He does not want the Federal government to keep supporting state budgets which would have prevented these layoffs.  In having to balance their budgets, and with their refusal to raise taxes on the wealthy, the states have had to layoff workers.  Thus the absence of net job creation comes exactly from the type of policies Boehner is proposing and not from the Obama policies that Boehner rejects.



Compare my analysis of the job numbers above with the above video of President Obama’s response today to those numbers. What a weak response he has made, when a strong one was needed. At about 1:50 into the video he did mention state and local budget cuts, and that was it for that topic. The President just does not get it, and I don’t think he ever will.


It is apparent to me that this President has just run out of steam and fight.


I saw a a comment on one of the boards that I read that really nails the issue. Our problem when we elected Obama was that we hired a mediator when we needed an advocate. President Obama is not the right person at the right time. We need a strong challenger in the Democratic presidential primary in 2012. This challenger needs to be an extremely strong advocate. If she or he foolishly talks about getting cooperation from the Republicans, we need to write that candidate off immediately.




Earlier this evening I was watching BBC news. They started talking about the job numbers and focused on the 18,000 net jobs lost. They did not dig into the composition of those number to give us any insight. At least they didn’t before I turned them off in disgust.


Later I was watching NBC news where there was a promise that they would dig in. When they brought forth Maria Bartiromo to comment, I could just not stand it anymore. It was better to watch the movie on TCM about the development of the British Spitfire fighter plane before World War II than it was to continue to watch the idiocy that passes for news (at least in this country and in Britain.)