July 27, 2011

Raising Taxes: Now or Ever?

Filed under: Politics and The Economy — DoNP @ 12:58 am

‎@All of you who think raising taxes is a good idea:

People who earn more than enough to pay their bills usually save and invest that money. Money that’s not handed to the big banks by Bernanke, is money that’s saved by those people and those businesses who earn a profit, usually AFTER they’ve paid their income taxes (albeit with loopholes). Taxing away a portion of these savings or profits will not hurt the individual taxpayer or company…their lifestyles won’t change at all. What does happen is that money will come directly out of the bank savings account, mutual funds (which are actually investments in business bonds or stocks) it will remove capital from venture funds that create companies and from private equity funds that promote the creative destruction (see Joseph Schumpeter) that our free enterprise system depends on for the constant upgrading and renewal of our business sector. Sure, wealth is being concentrated among fewer people and within fewer companies…that’s because the engine of commerce has been in reverse or at best in neutral since our boy Obama took office. Sure, he inherited a mess from Bush. But he’s done little if anything to promote small and medium size American business since he’s taken office.

Middle class America NEEDS a surge in small business to win the war against many things, the concentration of wealth, the lethargic jobs market and the exportation of jobs and wealth by our largest corporations. The only way to shift wealth is to take market share from the biggest companies who now have most of it. In the 90’s Apple had to borrowed $150 million to convince Microsoft to port Office 98 to Mac. Now Apple’s market cap exceeds Microsoft’s.

Do you have an idea for a better iPad? For a better, cleaner fuel, for a safer, faster car, bike, scooter or plane? Do you have an idea for a better search engine, social network or Facebook game? Need money to get that idea off the ground? Tax more and see how much more difficult it will be to get your idea moving. Have a small business but need to buy some new equipment to make you more competitive with the knock-off from China? It’s nearly impossible to get a loan now. Tax more and see how much easier it becomes.


July 17, 2011

Class Warfare: Get Ready for the Long Battle

Democratic super PAC Priorities USA, taking a shot at republicans, said in an ad this weekend: “We cannot rebuild America if they tear down the middle class.”  Exactly WHAT are they referring to?  This bellicose mantra will pervade the airwaves until the 2014 elections.  The middle class is under siege, not from conservatives but from the global economy.

Today the USA and the EU represent approximately 40 percent of global GDP while India and China are around 12 percent.  By the end of the decade India and China will be on par with the U.S. and the EU.  Our middle class will need to be retrained, reeducated, redeployed in enterprises where the U.S. can compete.  No longer will factories and the smokestack industries of the 20th century define our working class.  Innovation, development and intellectual property will define us in this century.  Liberals hold on to the notion that we just want to put things back the way they used to be, but that’s not how we will compete in the global economy.  Sadly, our government is not willing to give the American people a dose of this new reality.  Until they do, the middle class will sadly suffer.

June 23, 2011

Re-Post: Is Obama Dividing the Nation?

Filed under: Politics and The Economy — DoNP @ 3:30 pm

I was asked by a commentor to this blog why I felt Obama was dividing the country.  The commentor’s point was that things are grim but not that grim…that foreign investors can’t foreclose on America’s debt and that debt as a percent of GDP is no worse than it was coming out of World War II  Here’s my response:

I’d say it’s a little disingenuous to compare the immediate post-World War America with today’s situation. We aren’t funding a world war (although you could argue that $900 billion in Iraq is a whole lot of cheddar) and we won’t have the lurches in technology, innovation and productivity that came in the 50 years that followed WWII. Because today more than 50 percent of America’s debt is in the hands of foreign investors, dumping say a couple of $100B of our treasuries could result in lowering our bond ratings and causing our debt service to go up, while it’s already 10 percent of all government expenditures. That was not the case in 1950. We bought savings bonds and funded our government debt with investments by Americans, not communists. We have 10 percent unemployment, which is why even the most conservative estimates of near-term economic growth fall flat. Without that revenue base, the growth won’t come.

Small business creates 60 percent of all new jobs. Yet, businesses that can’t float commercial paper or sell bonds or stock, can’t raise money. Bank regulators have put the clamps on community and regional banks, raising the hurdles for small business borrowing. With companies like CIT out of the equipment lending business, small business has to rely on general assets and long-term historical performance to persuade banks to lend to them. The abysmal lack of consumer confidence, and the turmoil of the past 3 years, has had a deleterious affect on small business balance sheets. This presents a hurdle for banks or even private equity. Banks and leasing companies want 3 year operating histories with positive EBITDA’s. Only profitable firms can attract private equity.

Something has to break the cycle and our people and our government seem divided on how to do that. Obama has the role of bridging the divide. Leaders take on that responsibility. No one expects Obama to pull a “Kirk Gibson” but we expect him to try. If Gibson had gone down watching a third strike go by no one would remember that day. Fans would have pilloried Lasorda for putting a hobbled Gibson in to pinch hit. Although I did not vote for Obama he is our president. At a time when our country is mired in bipartisan politics, exacerbating the unrest of a confused and divided electorate, he stands at the plate watching the pitches go by. He may not be dividing the country put he is surely failing to bring it together.

Here are just a few things I believe Obama could take a swing at although he would have to accept the risk that comes with leadership:

  1. He could propose to extend the FICA withholding tax to include all income on the employee contribution rather than capping it at it’s current $106K. Cap the employer contribution, uncap the employee portion. This taxes the highest paid people who won’t miss the 6.2 percent.
  2. He can propose to raise the eligibility age for Medicare to 70 for anyone with an income of $100K or more or assets of $3 million or more.
  3. He can propose to raise the early retirement age for SS to 65 from 62 and raise complete eligibility to 68.5 or 70 from 66.5. When SS was conceived, the life expectancy of men and women was about 8-10 years less than it is now.
  4. He could expand the SBA micro-loan program to businesses with at least 1 year of operating history so long as the borrower has sufficient collateral.
  5. Half of all NIH funding should be redirected from pure research to the development of actual products. RIght now, almost all funds are going to projects within research universities where it funds interns and graduate researchers. Higher education tuition has increased some 60 percent in just the past 5 years while incomes have actually declined. We’ve killed the space program that produced things like the transistor and the integrated circuit. What is governments’ role in research anyway? Celera did with $300M what NIH couldn’t do with $3B.

President’s are remembered for their leadership, not for their politics. How will Obama be remembered?

May 19, 2011

The USA’s Role in the Middle East

Filed under: Politics and The Economy — DoNP @ 9:27 am

Theocracy capitalizes on religious fundamentalism to control a people.  Although it may seem to be in our best interests to see totalitarian governments in Egypt, Libya and other Arab nations overthrown, there is a downside.   Supporting the establishment of a democratic system of government may be our role, but if it takes the U.S. or NATO’s presence in these countries, not to nation-build but to foment a secular government, then we MUST support it.  Leave that to chance  and we open the door to theocratic influences from Syria and Iran or even Saudi Arabia to fill the void, which could light a fuse that we can’t stamp out.

Lebanon is a perfect example of what happens when instability is left to languish in the Middle East.  Once a stable, harmonious amalgam of Palestinians, Sunni Muslim, Shiite Muslims and Christians, Lebanon’s secular, very hands-off Libertarian-like central government was the envy of much of the Middle East, but in an area of such unrest it was also its downfall.  Sharing a tiny border with Israel, Iran organized, equipped and funded Hezbollah to enter Beirut and to take over control of the country.  Hezbollah’s mission: clash and provoke Israel.  Today, there is no effective government in Lebanon but for the iron-grip held by Hezbollah.  To reestablish Lebanon will take certain war with Iran.  Should we care what goes on in the Middle East?  If you use oil and don’t think the U.S. should be carving up Colorado, Utah and Wyoming to get to oil shale reserves that could yield more oil than Saudi’s are sitting on, I guess you should care.

February 13, 2011

Egypt, Slavery and Lindsey Lohan

Filed under: Politics and The Economy — DoNP @ 12:35 am

Hosni Mubarek’s 30 year run as Egypt’s dictator fell this week because the people of Egypt finally figured out that they were being duped. While Mubarek and his corrupt cronies fed off the backs of the Egyptian people, their leaders, like in many Arab countries, focused the people on religious fundamentalism. Like the Saudi sheiks and the ayatollahs in Iran, the people of the Arab world are being held down by their governments through a public policy of returning their people to their fundamental Islamic roots.  Remember, the 911 hijackers were led by an Egyptian and 15 of the attackers were Saudi.  Both country’s governments are outwardly friendly to the U.S., but the people of those countries consider all Westerner’s and especially Americans infidels.   By distracting the people with religious reformation and denouncing western values, their governments keep the people distracted from what is really going on around them: oil sheiks getting richer, the ayatollahs more powerful and the dictators more oppressive.

Similar is what happened here in American during the 18th century when Christian fundamentalists were hired by the slave owners to bring Jesus to the slaves (the first Great Awakening). Christianity’s promise of a perfect afterlife, so long as you behaved well in this life, served to keep the oppressed “in line.” Enlightened whites and free blacks brought slavery down by revolting against it (the second Great Awakening), not unlike what just happened in Egypt.

Enter, Lindsey Lohan. Watching the news the other day, I was struck by the obsessive coverage of her misadventures with the law, drugs, larceny and her choice of wardrobe for a court appearance. Lohan is just one in a series of obsessions with anti-news. Anti-news is that genre of information that just takes up space. When commercial time on CNN costs over $10K per second, one has to wonder why so many of those valuable seconds are utterly wasted on Ms. Lohan.  Maybe it’s so you become addicted to this salacious anti-news, which in turn keeps you from having to hear about real news. Obama and Congress live for anti-news. They design their campaigns and appearances around anti-news, mudslinging commercials and character assassinations punctuated by the mere sound-bite of actual information.

Are we being fed this steady diet of anti-news to distract us from the real news: social security’s insolvency, a deficit that can only be paid-off by our children’s children’s children, 1 out of 10 people who want to work but can’t find it, small business lending that continues to decline in spite of the banks’ return to solvency (a solvency we the taxpayer paid for)?  The list goes on and on.  Did you know that Obama is considering disbanding Fannie May and Freddie Mac?  Do you know what they do?  Do you know what it means?

While we watch Dr. Drew convince once D-list celebrities to give up the pipe and booze, or Nancy Grace rail about Tot-Mom and what she ate for breakfast, or watch the discombobulated lives of teen moms, real shit is going on out there.  Get a clue people.  Until we wake up and get involved in the real news we are just wasting time wallowing in the trials and tribulations of Lindsey Lohan.  Watch how CNN now cites Us Weekly or TMZ as sources of the news they’re sputtering.  Seriously???  I even heard them attribute a story to Perez Hilton.  That would be like the New York Times citing The National Enquirer.

One day, soon I hope, the American people will take their country back, just like the Egyptians did this past week.  One day, I hope for our sake and for Ms. Lohan, that we stop caring about her problems and start focusing on our own.  Tick, tock people.  Tick, tock.

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