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Time for a New, New Deal?

What are people thinking? 

It is interesting to see so many of the same people calling for a "double dip" recession while at the same time railing against government spending.  The US Government is spending $3.5Tn this year.  Admittedly that's $1.5Tn more than they have, but it's quite a lot of money no matter how you look at it.  Conservative, born-again deficit hawks (they were born-again the day Obama was elected) will tell you the solution is to cut taxes and let corporations trickle their wealth down on the bottom 99%, well over 20% of whom are unemployed or under-employed.

The Big Lie being told by the right is that we can solve our problems by cutting spending and (ROFL) lowering taxes.  Let's put lowering taxes over to the side and look at cutting spending.  By far, our single biggest discretionary line item is Defense, at $782Bn a year.  The sum total of all other discretionary spending is only $437Bn so cutting 100% of non-defense discretionary government spending would knock not even 1/3 off our $1.5Tn debt. 

What exactly would be included if we make all or part of those $437Bn in cutbacks?  Here's a great chart from Wallstats on Death and Taxes, which I think every deficit hawk should buy the poster of (6 square feet) and put in their office with red lines through all the programs they can do without.  Try it, it's fun – see how much money you can save!


Of course, let's keep in mind that the $1.5Tn the government spends directly employs 2.7M people and millions more indirectly so, for every person you cut, make sure you add back $20,000 a year for unemployment benefits and administration (or are we going to throw them all on the street?).  So that's, unfortunately, $20Bn spent for every million jobs you destroy.  Gosh, this game gets complicated, doesn't it?  Here's a nice chart you can throw darts at and see how many of these guys you can kick to the curb by Christmas because that'll fix the economy, won't it?  Don't worry, I'm sure none of them are your customers because surely you don't deal with THOSE kind of people: 

So we cut, for argument's sake, 50% of our $437Bn discretionary budget and that leaves $1.1Tn to cut out of our $782Bn defense budget.  Hmmm, tricky…  I suppose we're done with TARP in 2010 so there's $150Bn gone but maybe we don't want to default on our interest or other mandatory spending items just yet so that leaves, AH HA, Social Security and Medicare/Medicaide to give up $1Tn of their $1.35Tn – problem solved!

Well, almost solved because, according to the 14th Amendment to the Constitution (oh that thing),  right there in section 4, is the statement that: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."  So we're stuck with those damned Social Security obligations (the ones people put money into their whole lives on the good faith that the US Government would take care of it for them and pay them back when they retire) unless we can figure out a way to get that 14th Amendment repealed so we can default on that obligation. 

Well thank goodness once again for our Conservative cousins because House Minority Leader, John Boehner, is already on the case and has suggested repealing the 14th amendment under the guise of blocking citizenship for children born in the US to immigrant parents.  Aside from the fact that Boehner and the other yahoos who are in favor of this amendment may as well pull up Lady Liberty's skirt and bend her over Ellis Islad and gang-rape her on national television, it is now becoming clear that the ENTIRE anti-immigration mania, from the day Bush first suggested a fence between Texas and Mexico, has really been about mounting a back-door attack on Social Security – the true enemy of the right since it's founding in 1935. 

Even today, the Government of the United States collects about as much money from it's working citizens for Social Security ($891Bn) as they do in total taxes ($915Bn), which is kind of strange when you consider that Social Security payments stop being collected after $106,000 in income (the bottom 90%) and they are only 6.2% from the employee and 6.2% from the employer so it would seem a bit surprising that our supposedly 35% income tax only manages to take in a grand total of $24Bn (2.7%) more than the social security payments, doesn't it?  I guess we'd have to conclude that SOMEONE (perhaps the top 10% of the someones) is not paying their taxes… 

This is where part two of the Conservative Big Lie comes in.  Cutting taxes will lead us to prosperity.  Sure, I could take the easy way out and say "no it won't, it will only leave us further in debt," but that is obvious to a 5-year old.  I won't insult your intelligence by explaining that, if you are a business (and the US Government is a business) and your bills exceed your income – then voluntarily cutting your income is not likely going to cause magic fairies to appear and wipe away your bills

Of course the real glove-across-your-face insult to your intelligence comes when they try to tell you that giving tax breaks to the rich and to corporations will help.  Here's the chart on the right – US Corporations only paid a grand total of $138Bn in taxes in 2009 (6.5% of all taxes collected).  Let's say we cut their tax rate in half – that would only save $69Bn!  If they didn't take ANY bonuses and didn't pay ANY dividends with their unpaid taxes and plowed every single dollar into hiring people who make $30,000 a year, that would employ a grand total of 2.3M people – almost exactly the number of "overpaid" government employees the Conservatives want to lay off in order to fund these tax cuts for the top 1% - albeit hiring back the workers at drastically lower wages while letting vital government services go to hell. 

What it would not do, is "create or save" any of the 9M jobs we have lost in this recession.  It would not balance our budget and it would not make our nation stronger.  US Corporations have done nothing but outsource America's future for decades and it is time for the bottom 99% of the income earners (those earning less than $250,000 a year) to wake up and smell the class warfare that is being waged against them.  How can we even begin to entertain the idea of cutting government and cutting government spending when the sum total contribution of Big Business America represents a rounding error in our national budget?

That is why destroying Social Security is so high up on the "Conservative" (and what exactly are they conservative about?) agenda as those corporations have had their arms twisted to MATCH the 6.2% wage contributions paid in by their workers.  Forget about saving them their $138Bn in taxes they pay on the profits they couldn't manage to hide in offshore shells – this is about them no longer having to match $445.5Bn in retirement savings their workers have been foolish enough to count on getting back and have been faithfully contributing to for the last 75 years

There's a VERY simple way to fix Social Security TOMORROW if we want to.  3/4 of the income in this nation is earned by people making more than $160,000 a year.  All we have to do is simply eliminate the cap on Social Security contributions and we will take in an additional $668Bn a year.  Viola – a surplus of $919Bn! 

Wait a minute – did I say $919Bn?  Isn't that more than the additional taxes raised?  Well sure it is but that's because we're NOT currently running a deficit in SS at all.  Total outlays to 51M people in 2008 were $615Bn so I'm calling it $640Bn for last year, just so people don't say I'm underestimating (although you'd think Wikipedia would be more on the ball with updates).  So, if you are fortunate enough to be making $206,000 instead of $106,000 a year, this change would affect you by a grand total of $6,200 but we would save both Social Security and Medicare for future generations.  Wasn't that easy?  

How about Housing?

I can fix that too.  Instead of the Federal Reserve buying $2.5Tn worth of toxic assets from the banks to make them whole against homeowners and small business owners who had a rough time during the recession and instead of our Government spending Trillions more bailing out the Banks and the IBanks etc – why don't we help the actual homeowners? 

I have a very simple plan that falls entirely under the auspices of the Treasury Department who are charged with administering lands acquired by the United States in addition to being responsible for supervising the Banks, managing debt and advising on monetary policy.  My plan is this:  In exchange for a $125,000 first lien against a property (up to 50% of current value) the Government will pay down $100,000 worth of that property's first mortgage.  The government would own that percentage of the house and would benefit from any increased value when the property is ultimately sold.

On a 6% mortgage, this principle reduction would knock $600 a month off the interest payments on the home, effectively giving a $7,200 annual stimulus to any homeowner that participates.  The $25,000 "surcharge" and the profit participation would discourage speculators and wealthy homeowners from taking advantage of the program, which can be accomplished by signing a single-page form over at the bank.  The bank is happy because they get the same $100,000 we are giving them anyway for their toxic assets and we are improving their loan portfoilio quality by improving the ability of the homeowners to pay.

Technically, this is not even taking on more government debt because we are picking up hard assets in exchange for what could easily be the greatest stimulus program in the history of the World. 

  • For every 1M homeowners that participate, $100Bn of cash will be pumped into the banking system, improving their balance sheets.
  • For every 1M homeowners that participate, $125Bn worth of assets will be placed on the government's books as they invest back into United States Real Estate (also a nice vote of confidence in the long-term value).
  • For every 1M homeowners that participate, $7.2Bn worth of additional capital will be placed directly back into consumers' hands EACH year. 

Perhaps 25M homeowners choose to participate (25%).  That would be $2.5Tn placed in the banks, 25M homes that are no longer in danger of foreclosure, $3.125Tn worth of assets acquired by our Government and $180Bn of cash flowing through the economy annually as 25M families are relieved of a substantial portion of their monthly mortgage payments.  Where is the downside? 

How About Jobs?

When Corporations refuse to make use of the asset we call the American Labor Force, it is up to our government to do so.  We have/had the best-educated, best-skilled work-force in the World and letting it sit idle while it ages (not to mention hamstringing the education and training of the next generation) is unacceptable.  Even worse, Corporations are shipping the jobs overseas and stifling potential competition by lobbying to prevent our Government from creating programs that will create American jobs that might compete with their cheap and shoddy foreign labor.  That's right, the top 1% do not want the bottom 99% to find other work – they want to be the ONLY game in town – isn't that what Capitalism is really all about – monopolizing the markets and exercising pricing power? 

What sectors are "chronically underemployed," where there simply are not enough jobs for the numbers of trained people looking for them?  Wouldn't it make sense to make use of our resources where we have them in most abundance?  There are currently 2.3 unemployed Teachers and Health Care Workers and Government Workers for each job opening.  That sounds bad but it's about normal in any economy.  Financial, Information and Business and Professional Services are all around 3-4 people per job – still not so bad.  Wholesale and Retail Trade, Leisure and Hospitality and Non-Durable Manufacturing have 6-7 unemployed people waiting for each job opening so that, clearly, is starting to be a problem.

If you think that's bad, however, let's think about our worst-off citizens.  There are 11.3 Transportation and Utility Workers trying to fill each job offered in that sector.  There are 14.2 men and women hoping to fill each opening in Oil and Gas Extracting and Mining operations.  16 people are lined up for each opening in the manufacturing of Durable Goods and 34.8 people are available for each position that opens up in the Construction sector.  Does this give you some idea of where we should be focusing our efforts? 

Hopefully, my housing proposal will put some of those Construction workers back to work but clearly we need to do more.  We already know the US has a vast, untapped wealth of coal, shale and natural gas that could decrease our need for foreign oil.  We send $700Bn a year out of the country buying crude oil alone, which wrecks our balance of trade, devalues the dollar, increases the price of fuel and throws millions of Americans out of work – all things it would be nice to fix. 

So I very much support the Pickens Plan to invest $1Tn in developing both our natural gas and wind power, which can help to put two of our most unemployed segments of the population back to work and will, according to Pickins' projections, reduce $300Bn (42%) of that annual trade imbalance owed to oil imports.  That's $300Bn a year that stays in the country, spent on energy produced and maintained by Americans with the profits going to American corporations, who might even pay some taxes one day because it's a lot harder to hide US-generated profits in foreign shells (but we can probably trust GS et al to make a fortune figuring out how). 

Of course we also need high-speed rail and local mass transit projects and you know we eventually have to fix our nations bridges and tunnels SO WHY NOT NOW?  Tax cuts will not get them fixed, Big Business will not get them fixed.  Should we wait to spend the money when there are plenty of jobs and when resource utilization is high and it stresses our economy and causes inflation or should we spend what we need to spend now, to invest in America and improve the infrastructure assets of our nation?

Dave Johnson has a "Local Jobs for America Plan" and I have another plan – a Davis Plan for employing our nation's 5M unemployed constructions workers which is not building new homes, which we don't need – but improving the homes we already have.  One of our nation's largest unfunded liabilities is our aging $3Tn electrical grid that is badly in need of replacing.  I very much doubt we have the political will to tackle that project until the transformers start blowing up in Republican voting districts so we'll shelve that for a year or two and focus on something we can accomplish now, which is REMOVING 20M homes a year from the US electrical grid. 

How can we do that?  Very, very simply by employing 2M workers and resources to install solar panels on every viable rooftop in the country.  This plan is so simple it doesn't need bullet points.  Solar companies can make a home energy independent for an average of $50,000.  That includes all the labor and materials.   We can target creating 400,000 5-man crews who complete one home a week and that's 20M homes off the grid in year one.  The cost would, of course be $1Tn but let's treat it like a business and charge the homeowners 50% of their current utility bill so approximately $200 a month or $40Bn a year – plenty of money to pay back the $1Tn "loan" over 30 years.  

Not only does this program decrease our need for foreign oil by 5% for each 20M homes we transform, but it takes the pressure off our failing grid, cleans the air, employs 2M Americans (not to mention all the support industries – especially if we make sure we ONLY buy American components)  and saves the homeowners the same $40Bn they are paying out.  With any luck, the program will spur the developement of better and more efficient systems and by the time we get to the first 40M homes that are "easy" to power, we will have made enough improvements to power another 40M homes – taking 80% of the US homes off the energy grid in 5 years, saving $200Bn a year in energy costs for our homeowners and decreasing our imports of oil by 20% – another win, win, win for America! 

Henry Morgenthau, Jr. was the Treasury Secretary of the United States from Jan 1934 through July 1945.  He played a major role in designing and financing the original New Deal.  Morgenthau believed in balanced budgets, stable currency, reduction of the national debt, and the need for more private investment.  Morgenthau and Roosevelt put forth a "double budget" — that balanced a regular budget, and an “emergency” budget for agencies, like the Works Progress Administration (WPA), Public Works Administration (PWA) and Civilian Conservation Corps (CCC), that would be temporary until full recovery was at hand. 

Morgenthau gave a speech to the Academy of Political Science at New York's Hotel Astor, in which he noted that the Depression had required deficit spending, but that the government needed to cut spending to revive the economy. In his speech, he said:

"We want to see private business expand. … We believe that one of the most important ways of achieving these ends at this time is to continue progress toward a balance of the federal budget."

When private business fails to expand, when the budgets cannot be balanced because 25% of the population is unable to make income tax contributions due to loss of jobs and homes – then a wise man knows when it is time to step in and let the Government fill the void.  Not with more bailouts to the rich who, like Reagan's deficit "are big enough to care for themselves" but with bold programs that invest in the future of this country and utilize the skills and labor of this country and make America strong and independent

Imagine if Roosevelt and Morganthau hadn't acted and we were still in the midst of a Japanese-style 20-year recession on December 7th, 1941 - when our Navy was ambushed at Pear Harbor.  How many years would it have taken us to get back on our feet?  How fast could we have restarted our manufacturing from scratch?  Would we even have won the war?  The strength of multi-national corporations is not the strength of America – they've already taken all our jobs overseas – how about we stop kissing their asses for the lousy $138Bn (less than 4% of spending) they contribute to the running of our nation and tell them what the New, New Deal is going to be?


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  1. Phil
    I am going to be blunt. You are allowing your political opinions to taint your better judgement – As an astute economist, you know we will not be able to turn our economy around without a re-generation of business growth, and innovation. The business community abohrs additional taxation, at a time the uncertainty in the market place is so tenable. Since they are the vangard to lead us out of this horrible mess, why must we disregard their clarion call for " no new taxes". Take away the undue risk, drop the tax increases for now, and have the Fed take away the free candy the banks have been given so they are forced to lend to the business community and consumer, and we will see the recovery we need. It appears to me, we need to educate our leaders about basic economics, as they seem to accept the concept of the government sparking the economy into recovery, which is definitely a non-starter.

  2. But aren’t business taxes at generational lows now?  Was there a failure to innovate in the 50′s and 60′s when rates were higher ( I think they were higher).  Companies have record profits now with the current tax structure, and they are not reinvesting the money.   Is part of ‘business innovation’ getting a mailing address in Bermuda and buying stuff as cheaply as possible from China to sell back in the states?  Should that process which does nothing but enrich the very few who run that sham company be restricted. 

  3. gel/opinions – but Gel, Phil’s math works – that’s what I find so interesting, he puts his ideas together by what works with the numbers. Argue him from that basis; show me how his numbers don’t work; give me other numbers that work better. As a radical, of course, I think the whole system needs to be replaced, but that’s just me & I haven’t done the math like Phil has.

  4. snow
    Phil is a genius mathemetician, and I am aware of this, but my point does not relate to mathematics. It is solely based upon the "psychology" surrounding the business community and their assessment of fear. Until we see a significant reduction in the fear surrounding business risk, then we will be sitting in this mess for a very long period of time. New taxes at the corporate level or taxes that might impact the consumer are all a part of the mix that constitutes risk. Politicians who have never taken risk, or directed a business entity on a day to day basis will never understand the emotional side of risk, and the decisions that evolve from it. will take the support of the business community to resolve the problem, so my point is – wy must we ignore this and continue on with activity that is repugnant to the support of the ultimate solution? I am not trying to suggest what tax policy should be, but only a suggestion for the immediate resolution of a "sluggish" economy.

  5. snow
    As a post script to my previous missive – numbers are very relevant to decision making, but most long term decisions are made with much more than calculations of numerical values.  We, as investors always do the " math" first when considering  a play on an stock, but the final determining emphasis is weighted to the emotional feel and where the risk may exist.- this, has much to do with the overall direction of the market at the time, and the anticipation of future specific influences of the surrounding well- being of the fundamentals.  Mathematics, as it interfaces with the end decision. is secondary to the principal driver, which I believe is confidence of the future, and that is influenced by rhetoric such as tax increases and other negatives created by our government.. Corporations operate in the same manner, and are equally as diligent – probably more so, as their decisions are usually made with a time frame in years, compared to our decisions that are sometimes focused on "days" or even hours.  My point is – the government needs to encourage a feeling of optomism in the minds of the corporate decisiom makers – not the inverse with the threat of destroying the enterprise through over regulation or taxation for purposes of penalizing those they idealogicially disagree with.  This is reality, as I have been there – Obama no, he has not, and for this reason he does not understand it whatsoever. Obama is in charge, and the future will determine who had the correct vision for our best interests, at this time.

  6. Greed will still motivate innovation, independent of taxation. The breaking point is a matter of debate, but I’d suggest we are no where near it. 

  7.  Gel,
    The primary motivation of capital business is profit. They don`t like taxes  or regulation because they reduce profit. Taxes and regulation are clearly defined.  There is no "fear" or "risk" involved. Its simply greed. Greed is good, right?

  8. Cap
    Thanks for the debka link…. Geez – it appears Medvedev and Putin just broke their promise to Obama ( how would anyone have thought?).  August 21 is the "drop dead" date for sure, if Isreal is to take pre-emptive action.  Do you, as a handiCAPper, place a probability on a takeout of this facility?

  9. Phil:
    I’m not a lawyer, but I don’t think SS is covered under the 14th Amendment. The Supreme Court (Fleming vs Nestor, 1960) ruled that no citizen has a contractual right to SS benefits. They stated SS was not an example of accrued property rights, was non-contractual, and could not be analogized to the holder of an annuity.
    Technically, I think SS is simply a payroll tax on the input side, and a welfare benefit on the output side.

  10. ben1be
    Your thesis is correct, with the exception of the tax issues. Nobody knows what the final disposition of the tax revisions will be. .Taxes are but one component is making an assessment of risk.  If, for ezxample, an entrepreneur is contemplating the creation of an enterprise that depends solely on consumer purchases, then this entrepreneur is concerned about the consumers sentiment toward spending,  if an increase in taxation will temper their purchasing activity, then this is a negative andincreases risk.. Risk is toxic to entrepreneurial enthusiasm, so we must limit it wherever possible. "Greed" is hard to define, as everybody has their own subjective image of what it is. My personal definition is " a desire to acquire success in excess of what you would otherwise achieve by sitting on your ass and doing nothing"  In this context, I believe "greed" is very positive, and is a force for achievement, and therefore happiness ( in some – not all )..

  11. I feel there is an anger and a rage that is seething just below the surface of this country and its close to exploding.  I am also left-leaning and I see the virtue of Phil’s argument, but I feel that the more acts that could be construed as "socialist" there are, the closer we get to setting off a wave of militant unrest in this nation.  Thats why I don’t see the Democrats doing anything of political significance.   One thing that sets the the radical left and the radical right apart is that the right stockpiles guns and ammo and they believe God is on their side they are on His.     I don’t believe the "Lets Play Nice" Party has any intention of sparking an armed revolution.  On the other hand, I wouldn’t put it beyond them to stage a false flag event or create some casus belli for further war.  The Shock Doctrine always seems to work like a charm in this country….

  12. Phil: More on SS contractual obligations, from the Congressional Research Service, prepared for members and committees of Congress, entitled "Social Security Reform, Legal Analysis of Social Security Benefit Entitlement Issues," Jan 31, 2008:
    "Social Security is a statutory entitlement program. Beneficiaries have a legal entitlement to receive Social Security benefits as set forth under the Social Security Act. However, the fact that Social Security benefits are financed by taxes on an employee’s wages does not limit Congress’s power to fix the level of benefits under the Social Security Act, or the conditions under which they will be paid. Congress’s authority to modify provisions of the Social Security program was affirmed in the 1960 Supreme Court decision in "Flemming versus Nestor," wherein the Court held that an individual does not have an accrued "property right" in his or her Social Security benefits. The Court has made clear in subsequent decisions that the payment of Social Security taxes conveys no contractual rights to Social Security benefits."

  13. Phil as always has a PLAN well thought out with FACTS (Math).  I agree with gel that candy should be taken from the banks. In my opinion, it should never have been given to them in the first place.  Regarding "No New Taxes" and it’s affecting the psychology of the business community… with no disrespect to gel’s opinion this refrain by the republicans, the conservative democrats, the pundits (Larry Kudlow and guests etc is becoming very old. A very well known Republican Reagan economist (can’t think of his name this morning) and now David Stockman an original architect of supply side economics, trickle down theories and even less taxation are seriously doubting these economics.  A problem……. "the business community abhoring taxation" , quite frankly I don’t know who these people are because again we speak in generics.  I do know the Chamber of Commerce sounds like it speaks for small business but recieves most of it’s funding from large corporate sponsors. Frankly, I don’t trust many organizations’s positions because I don’t know who is paying them.  I believe the Chamber of Commerce is VERY DISINGENUOUS… they do not represent the smaller business community. .Here’s what I do know to put things in perspective: There are approximately 26.9M business establishments broken down as follows: 19.5M are single Employees, 5.9M have 2 Employees, 2.8M have 1-5 Emloyees, 1M have 5-9 Employees, .67M have 10-19 Employees, .69M have 20-99 Emplooyees, .33M have 100-500 Employees and there are 2.9M with 500> Employees.Three quarters of all business’s have NO PAYROLL.  Source SBA. Office of Advocacy   Sooo… it would appear to me I would doubt all these enities are fighting higher taxation because I think it would not affect them.  Let’s face it, no one likes to pay taxes.  But, it is one thing to talk of tax bracket rates and another to talk of effective taxes paid. Many large corporations pay NO TAXES while others pay very little compared to their profits but the effective taxes paid are far less than many years ago with a different tax structure under Clinton or Reagan.  Since, the large banks and large multi national corporations are not interested in "pitching in" the government should be lending directly (as with Farmers and Ranchers) through designated, certified accountants (release of funds and provide sound business planning with annual review to reduce number of failed small businesses) with very innovative loan programs and these smalll business’s would thrive. The business would grow and expand with plenty of profits and paying slightly more taxes, if necessary, would not be a burden.  I also, believe there should be less and more effective.regulation.    

  14. Phil
    I have a question…. Do you regard the presidency of Kennedy and Reagan as a symbol of success? They both cut taxes and the ecomomy soared….. What is so bad about cutting taxes, if it has worked in the past. (historicially proven). I am older than a 5 year old, and it makes sense to me.  Why did it work then, but you say it is a Conservative lie, but  history proves I am not lying, so why won’t it work again?

  15. So, in other words, Congress can set SS payments to zero tomorrow if they wanted to with the 14th Amendment in place.

  16. Gel1:  My definition of "Greed" is anybody willing to pay $60.00 for a hot dog in a New York restaurant… LOL  My own belief regarding "Greed" would be something beyond success.  Everyone desires reasonable security in living, having healthcare and a secure retirement.  Beyond obvious security is the desire to create an abundant life style for yourself, family and those you care.  Having a few hobbies and toys along the way is a great goal. So, I guess this is "happiness".  For me, everyone has a different drive which creates success through entrepenuership. There are many examples that "Greed" does not create happiness, sometimes it creates misery… in fact, it might have very little to do with monetary value. In my opinion, You can become highly successful in monetary measurement without being "Greedy"…. probably it could be defined as ME, MYSELF AND I…… or as Gerry Spence, the famous lawyers father once said…. Enough is Enough when it’s Enough…. 

  17. acobra / greed
    You have said it well.  Many associate "greed" with the acquisition of assets of any form, through devious or illegal means, and therefore are not deserving of the ensuing benefit or ownership. This is why we sometimes refer to the crooks on Wall Street as "greedy bastards". Definitions are truly subjective.  Was it not Yogi Berra that said " enough is enough, and that is why you don’t need more"?

  18.  Gel,
    Forgive the quote(Wiki)
    "Reagan very significantly increased public expenditure, primarily the Department of Defense, which rose (in constant 2000 dollars) from $267.1 billion in 1980 (4.9% of GDP and 22.7% of public expenditure) to $393.1 billion in 1988 (5.8% of GDP and 27.3% of public expenditure); most of those years military spending was about 6% of GDP, exceeding this numbers in 4 different years. All these numbers had not been seen since the end of U.S. involvement in the Vietnam War in 1973.[14] In 1981, Reagan significantly reduced the maximum tax rate, which affected the very wealthy, and lowered the top marginal tax rate from 70% to 50%; in 1986 he further reduced the rate to 28%.[15] As a result of all this, the budget deficit and federal debt increased considerably: debt grew from 33.3% of GDP in 1980 to 51.9% at the end of 1988 [16] and the deficit increased from 2.7% in 1980 to more than double in 1983, when it reached 6%; in 1984, 1985 and 1986 it was around 5%.[17] In order to cover new federal budget deficits, the United States borrowed heavily both domestically and abroad, raising the national debt from $700 billion to $3 trillion,[18] and the United States moved from being the world’s largest international creditor to the world’s largest debtor nation.[19] Reagan described the new debt as the "greatest disappointment" of his presidency.[18]"
    What he did was reduce taxes on the wealthiest and raise the payroll taxes(including SS) to partially offset the difference. He ran a serious deficit to pay for those reductions and turned America into a debtor nation.

  19. gel; I don’t know how to handicap that.  This has been the subject of speculation for several years now. 
    ultimately the question is can or will Israel act w/out US blessing ?  or what will Obama do to thwart what must be done.
    clearly a lot of military assets have been prepositioned in the area, including significant US military assets.
    It is hard to believe that Obama would support Israeli action; it is even harder to believe he would support US action.
    Is it possible that the US will act militarily anyway ?  Or that Obama the dove will acquiesce ?
    Or are there and have there been clandestine activities occurring that have not been widely reported ?
    I just don’t know….
    Me, I think Bush should have acted; he got cowed into inaction by anti-Bush elements in the permanent bureacracy at State and leakers in the CIA.  All to our detriment.

  20. Phil
    I have one last point to make in my submission of my Sunday editorial.  You have stated "When corporations refuse to make use of the asset we call American Labor Force,. it is up to the government to do so"  I believe it is up to the government to incentivize the business community, or entrepreneurs in general, to create enterprise and in doing so create employment, certainly not our central government.  The government has proven to be the least effective and efficient employer ever. I will not get into examples. The Socialists in various geographical areas of the world have followed this theory in the past, and they have all failed in productavity and economic success. Why follow a failed economic system? The United States thrived on the private "free enterprise" system for 240 years, to the point we dominated the world in innovation and economic stability. These forces of liberalism, have taken the country down now to a point we are reliant on others to have pity on us, and we have become so weak, we are now vulnerable to the predators that are stalking our borders, and thumbing their noses at us.  I think it is time to revert back to what made us successful in the past, in order to salvage what is left.

  21. The amount of greed in any given system is usually relative to how much you can get away with. Lack of regulation in the banking system fostered never before seen amounts of greed, while States benefited through taxation of said greed. It was a  win- win situation, but once it reached a level of greed that could no longer be sustained for what ever reason, the cries for regulation return adding to uncertainty and further tightening of purse strings, be it corporate, state or society.


  22. re: The bank is happy because they get the same $100,000 we are giving them anyway for their toxic assets and we are improving their loan portfoilio quality by improving the ability of the homeowners to pay.
    I don’t get it. Isn’t the bank giving up $125,000 in first-lien rights for $100,000 of loan pay down – potentially putting them out $25,000? Didn’t the Fed give them $125,000 for $125,000 of mortgage principal, and take the mortgages completely off their books in return for reserves on which the Fed pays interest? I don’t see why the banks would be happy compared to what they got.

  23. Risk/Gel – I take your point, and it’s a good one – people in general are terrible at realistically assessing risk, and need somehow to be educated if Phil and his minions (us) are to effect change. Just as an example or two from my most comfortable realm, public health, diseases like AIDS and the African hemorrhagic fevers, Ebola, Marburg and such – are frightening, perceived as very dangerous – I have a bit of an ongoing war with certain AP reporters who insist on calling Ebola "highly contagious" which is pure bullshit – guess it sells papers. The really scary diseases, in terms of world-wide deaths, are things like flu and diarrhea (and not even special diarhhea like cholera, just ordinary reoviruses).  Not sure how all this applies to the business community and the powers that we need to control/overthrow as we bring Phil to power, but there’s some sort of analogy here. People are generally crappy at assessing risk, at thinking of a term longer than a business quarter, and at thinking in terms of broader community benefit (especially seeing how they as an individual benefit from bringing benefit to a community). This latter point is where a Confucian society has us beat all holler.

  24. acobra65,

    Nice post! The problem is that facts confuse the masses. This is why Phil has such a hard time getting his point across. People, unfortunately seem to base their beliefs on short attention grabbing headlines and don’t have the patience for facts. Facts require verification, which requires time, which becomes too cumbersome for most in today’s society. The statistics you have provided show why some of the members of this site are so off base when they think the problem today is indecision by businesses due to possible tax increases. The real problem is very simple, it is called unemployment.
    As you have shown, the vast majority of small businesses have no or almost no payroll. What happens when unemployment rises? When unemployment rises, the unemployed take on more tasks themselves. If a person is unemployed, he or she will try to fix their own plumbing, will try to repair their own cars, will mow their own lawns, and will even have time to do their own taxes. This behavior affects the small businesses that normally provide these services, which compounds the problem caused by unemployment.
    I read all the time about the lazy American worker who just sits around and waits for a free handout called unemployment benefits. I have even seen articles lately lamenting the fact that some on unemployment are turning down jobs, insinuating that they are lazy bums. Yes, there will always be some lazy people in this country. Are they the norm? No! For those of you too caught up in your own little world to figure it out for yourselves, I will attempt to shed some light on the subject. The average weekly unemployment benefit is around $320 per week which is $8.00 per hour. I know it is hard for some of you to understand how someone can turn down an offer of $9.00 an hour when unemployment pays $8.00, but it is not because the person would rather sit home and live the high life on $320 per week (less the income taxes that have to be paid at the end of the year). The reason they turn down the job is because they cannot live on $9.00 per hour. Can you guess what the average lazy American worker does? I’ll tell you, he/she takes the $8.00 per hour and does whatever work they can do to earn cash. I know it will be appalling to some of you to learn that these people do jobs to earn cash that they do not disclose or report or pay taxes on and they do so while receiving unemployment benefits. The unemployed take their benefits and work at cash paying endeavors until a job comes along that allows them to sustain themselves and their families.
    So, as long as we have high rates of unemployment we will have compounding problems that will continue to ripple throughout the small business communities. Small businesses today are trying to stay afloat. It is foolish to think that future tax rates are holding back these businesses. Most small businesses are concerned with revenue generation, they are being squeezed so hard by the economy that future tax rates are a non-issue at this point. The issue today is having revenue period. To think that letting Bush’s tax cuts expire will destroy the business community is preposterous. Bush’s tax cuts did not stop us from going into a recession and did not create good paying jobs for Americans. It is time to let the tax cuts expire and allow the government to create jobs with that revenue (as Phil has proposed) since Corporate America greedily refuses to do so.

  25. Dear Phil,
    I subscribe to you for your market insights, not your long ago discredited liberal theology.  If you keep using your service to disseminate your ignorant Leftist rants I shall cancel my subscription.

  26.  Ron,
    Threaten to hold your breath, that usually slows him down a bit. 

  27.  Unemployment / RJ : You note that someone "cannot live on $9 an hour," which (having tried it) I generally agree with. But, isn’t this part of our fundamental problem? Most people cannot (and certainly don’t want to) work for $9 an hour. In NYC, i had trouble living on $15/hour. Yet, in many parts of Asia, South America, and the Middle East, this hourly income is envied. A job paying this much would attract an educated, motivated, eager employee. In the USA, it’s become nearly a subsitence wage in many cities. With the fluidity of international trade, and the ease of transportation (both getting easier), how can the US labor force compete? Perhaps the question is not when we will get back to full employment, but if we will ever see sustained full employment in this country again.

  28. Well there are liars, damn liars (present company excluded of course) and statistics.  Endless wars, fiat money and egalitarianism.  It’s never worked before, but surely, we can pull it off this time.  Whether we are racing (or have arrived at the finish line) of fascism or or socialism, it all ends up the same….one ugly totalitarian mess. 
    The only way we will ever turn our country around is to take our Hadecol.  I am always intrigued by conservatives who rail against socialism from the left but are ecstatic about printing trillions of dollars out of thin air to chase a few Muslims across middle eastern deserts. 
    We’re Doomed

  29. Ronresnick, Why don’t you take your subscription fees and invest them in something YOU think is valuable, like a Rand Paul or Newt Gingrich campaign fund contribution…. I’m sure they’ll make you a ton of money….LMAO. Your attempt to hold Phil hostage with your subscription fees is both laughable and pathetic. This is Phil’s site, Phil’s business and he can say what he damned well pleases. And sorry if the truth offends you so much. Maybe you should email Glenn Beck and warn him of the insanity going on at PSW…

  30. @Hanna 5
    Absolutely right. 
    As of this minute only 50% of the people in this country work for a salary, wage, tips, or other cash compensation in this country. The others too old, young, infirm, on generations of welfare of many kinds which provide better than subsistence living including cash, Sec 8 housing, food stamps, health care, private taxi transportation, and cell phones.
    It’s time we stopped kidding ourselves that we need  employment to support our population or that we will ever return to a sustained full employment again. We never did.  
    Whether anyone realizes it or not this country passed into effective socialism a long, long time ago, and from the looks of things we are headed further down the leftist path, which should dovetail very well with Phil’s lefty leanings.

  31. Asia market is waking up… Dow futures up marginally.  If we do not have an up day tomorrow, I believe it will be an ominous signal going forward, after  such a prolonged slide in the markets.

  32. Dear Phil,
    Just to counter balance Ron (above) keep the "Leftist rants" coming! To me they sound like a long missing
    voice of the center. Which for to many years now has been drowned out by the yeller’s and screamers at both edges.
    Hopefully your comments are based on some the conversations in DC this weekend and they will the light of day.

  33. doro
    Left will soon be "right", as there will be nothing left!

  34. Japan equity markets have opened soft… not good for our open in the morning.  With tomorrow possibly a down day, I believe it will be prudent to lighten up significantly on long positions.

  35. gel, ICE took a beating on Fri.  Do you still like it?  I am thinking about initiating a Sept Bull Put spread.

  36. IMHO……government better find a way to stimulate business and the private sector…..rather than treat them as the villains….because this grow government and give away everything to anyone policy is unsustainable and won’t have a good ending.

  37. Phil,
    I joined your service for the investing ideas and it has been even better than expected.  Thanks to you, your team and to fellow subscribers for their trade ideas.  
    The bonus in your service IS your political and macroeconomic insight.  It is refreshing to see solutions put forward as well.  As for maintaining lower taxes for the rich, you make a convincing argument why this won’t work and it’s amazing to me that the MSM has done such a good job convincing people that higher taxes on the top 1% are bad for the country.
    As you know,  there are other countries that are more considerate of the bottom 99% (with the corrersponding taxes to pay for it) and seem to be doing ok.  Leftist Germany put up some good growth numbers and pinko Canada is doing pretty well on the job and economic front.  It seems that a living wage and fair taxes can create jobs and be good for the economy and government finances.  Who would have figured?  The United States is lucky that fiscal solutions could be relatively simple per your suggestions above and/or with a VAT.  The real challenge is getting rid of the bi-partisan political BS, getting electoral finance reform and counterbalancing the corporate MSM agenda. 

  38. The lefties and their accomplices on this board fail to grasp even the most basic tenet of economics: Their "living wage" guaranteed for everyone will accomplish nothing without a corresponding law passed by CONgress to freeze prices.
    living wages and taxes, as STUMAN rants above, do not create jobs. Not a single one.

  39. Jo / ICE
    I still like it a lot. There is nothing in the news that I have seen that would negatively impct the stock. I do believe, however, there are a lot of investors in the market that are losing patience with the recovery, as the numbers are just not good. This could take the entire market in a southward direction. I am personally concerned, and over the next few days I plan to "lighten up"

  40. Jo / ICE
    I am holding 50 long calls (December 125′s) , and am going to do some adjustments tomorrow. This company is continuing to report record revenue and profits, and the recent drop in price presents an opportunity, IMO.  Do you have the strikes scoped out for this one?

  41. Great Illustrations Phil, nice work.

  42. Phil,
      Great work today with all the facts, figures, charts & solutions. Should ignite alot of spirited debate.
      I still see the heart of the problem as being the Wall Street Banksters.  The housing/credit bubble was their irresponsible doing, & the collapsing of the bubble is all to their benefit with the bailout money, accounting rule changes,  & free money to loan back to the issuer with interest.  Who could ask for more ?
      As long as they are able to illegally push the market around,  fix commodity prices, & graft to themselves productive people’s profits & wealth with impunity, how can any recovery  plan really work ?
      They could crash the market tommorrow on a whim.
      And ZIRP is a disaster to responsible peoples savings, retirees, pension funds, & to Social Security.  The low yeilds cause insurance premiums to rise which is another tax on the people.
      All for the bad characters, with the deep pockets in the big banks on Wall Street, & to hell with the good chumps on Main Street.

  43. Even today, the Government of the United States collects about as much money from it’s working citizens for Social Security ($891Bn) as they do in total taxes ($915Bn), which is kind of strange when you consider that Social Security payments stop being collected after $106,000 in income (the bottom 90%) and they are only 6.2% from the employee and 6.2% from the employer so it would seem a bit surprising that our supposedly 35% income tax only manages to take in a grand total of $24Bn (2.7%) more than the social security payments, doesn’t it?  I guess we’d have to conclude that SOMEONE (perhaps the top 10% of the someones) is not paying their taxes…
    As a note of clarification, Social Security and Medicare are calculated on gross income whereas federal income tax is based on net income.  Also, based on the chart, the $891B includes both Social Security (6.2%) and Medicare (1.45%) and includes the matching employer 6.2% and 1.45%.  Finally, their is no ceiling on Medicare taxes.  The employee and the employer pay Medicare tax on every penny of gross income. 

  44. Phil
    Now that I have structured my plays for tommorow, I will taks a moment to opine on your ‘housing plan, wherin the government takes up to a 50% ownership interest in residentual property that is underwater financially.
    I think it would be a very bad plan for the taxpayer, as the government ownership interest is without rent service by the occupant. You have waived any payment whatsoever that otherwise would be owed to the lienhohder, without your program in place. Sure, this free money in the pockets of the homeowner is nifty for those that are interested in welfare, as this is exactly what it is. The taxpayer is screwed in perpetuity, as the occupant has no incentive to ever move out, as the co-owner ( government ) never receives a dime until the property is sold, which maybe never, unless it doubles in price ( good luck with that one ). Phil this is a welfare program, that destroys incentive and creates another entitlement that is structured in perpetuity. You asked "what is wrong with this" and I have responded.  Where am I wrong?

  45. Hey Guys!

    I’m still in DC – totally exhausted!   I’ll be here tomorrow too but will be around until lunch.

    Thanks for being "blunt" Gel – always good to have a reality check from a California Conservative…

    Taxes/Fjd – It doesn’t matter how low they get, that’s the joke.  If they were 5% Gel would be saying they are hindering capitalism.  Taxes are meant to redistribute wealth – either from the poor to the rich or the rich to the poor, depending on who is in charge.  I have put up endless charts and figures demonstrating that CLEARLY in the past 3 decades, capital has very sharply an clearly flowed from the poor to the rich but it isn’t enough.  It will never be enough and when the suck the last dime out of the last poor person before kicking their rotting corpse to the curb, they will finally turn on each other in a bloody orgy of capitalism and the empire will fall.   Sadly, this always happens throughout history but we never learn…

    Numbers/Snow – Why bother with facts when you have clever catch-phrases and vague sterotypes?

    Iran/Cap – Not doing much for the price of oil so far.  $75.66 at 11:30.

    Optimism/Gel – That’s what the New Deal was all about.  Big Business fought it every inch of the way and the little guys were encouraged enough to get back in the game and it’s the little guys that make this country, not the monopolists that suck the life out of it. 

    Fleming/Chaps – Good point and I’ll have to ask someone about that tomorrow.  I disagree but I’m weak on that legal stuff – how can you take money for a retirement program and then pretend it’s not an implied contract?

    War/Kinki – I very much feel we are heading for class warfare – especially if the right comes back and puts more of a squeeze on the bottom 99%.  Unless, of course it turns out Gel, Cap et al are right and if we just make Government go away and stop taxing and regulating us that all of us will once again be fully employed and able to pay off the mortgage on the McMansions and we’ll all live in that shining city on the hill we were promised…. 

    Thanks for follow-up Chaps.  Of course, courts can change their minds (but not this one).

    Good points Acobra.  Most of these small businesses file as sub-s corps and their taxes fall under personal, not corporate income.  That means the wealth disparity is far worse than it seems because a very large part of of the top 10% is already those small businesses that the top 1% claim to care about.  I agree the C of C is a huge scam of misdirection, as is the API (funded by big oil) and, of course, the Tea Party – all ways to control the masses by pretending to give them an "independent" voice. 

    Taxes/Gel – Man do you need a lesson in relativity.  Kennedy and Reagan cut taxes from 90% and 70% to 70% and 50% but at 28%, Reagan realized he made a mistake and began to reverse some tax cuts as they were already damaging the economy.   That’s when Da Boyz decided to pull off the first bank crisis to back the government into a wall.  Your argument is not just specious, it is ridiculous.  You can prune a bush and make it more healthy but if you keep cutting and leave no buds, it may die.  Going from top marginal rates of 90% (and America thrived) to 70% (and America thrived) to 50% (and we began mounting debts) to 35% (and debts are now 120% of GDP and climbing 10% a year) is not just cutting off the buds – we’ve cut off the branches and you now suggest we hack away to roots to "save" the tree.  As I said, ridiculous and no longer worthy of being entertained as a valid suggestion – that is one of the things we’ve been discussing this weekend – time to stop being wishy-washy on the language of low taxes – they are too low for the rich and that’s that!

    Sorry ben1 – Your comment had a lot of links and was held for moderation by spam filter.  If something like that happens – let me know (but that doesn’t help if I’m not around!).   Totally great synopsis of the action.  As I said, the poor were robbed to give to the rich…

    Yes, Cap, going to war with Iran would have been the solution to our problems.  Why are we going to attack them?  Because they have a nuclear plant and possibly weapons like 100 other nations on Earth?  Is that our policy now – attack first and come up with justifications later?  What the Hell has happened to America that we have people talking about first stikes on significantly weaker nations based on what they "might" do?

    Incentives/Gel – You don’t think that ultra-low interest rates and several Trillion in bailouts constitutes incentive???  This is exactly what I’m talking about – it’s NEVER going to be enough is it?  There is no amount of corporate welfare that can be doled out to you whiny capitalists that will make you feel "safe."  Of course you won’t get into examples because there’s a chart above that clearly indicates that 1.6M out of 2.7M government workers are in the post office and the military so start badmouthing them and then explain how just 1.1M other employees manage the remaining $2.5Tn worth of expenditures and revenues – which works out to over $2M per employee, which is more efficient than AAPL or GOOG or even GS so please – don’t even bother to get into examples because the BS myth you cling to is so much more convincing than the truth…

    What made us successful in the past 240 years were SMALL BUSINESSES, higher tax rates, MASSIVE Government programs from 40 Acres and a mule through the purchase of Louisianna, the Spanish lands of Texas and California and Alaska and, of course, massive war spending, New Deal and Great Society Programs, NASA and a dozen other alphabet agencies that used to drive R&D in this country but, along with our great social programs, have been gutted until, yes, this country has been left vulnerable to predators.  But those predators have not been stalking our borders – as Pogo observed:  "We have met the enemy and he is us."  Congratulations Gel, you got the America you voted for in the Reagan revolution and the very brief save by Clinton was quickly reversed and we stayed the course all the way to the bottom yet you still want more, don’t you?

    Regulation/Kustomz – Don’t forget we used to have laws against monopolies too.  10 businesses that have 10% market share may employ 1M people each and pay top dollar for the best people and fight to keep prices down and spend local money advertising and strive to improve their products but 2 businesses with 50% market share will each cut themselves down to 3M people each and will spend their efforts driving down costs (wages) since (as coke and pepsi, MCD and BK demonstrate) there  is very little to be gained running at each other.  Anti-trust laws led to a huge resurgence in American business as monopolies were recognized as one of the causes of the huge imbalances that led to the great depression.  I think they even made a game out of it….

    $100K/Chaps – If the property is impuned then it is written off more than 25% anyway.  If the morgage is not upside down, then the value equation should hold but I suppose the government would have to have a formula with the banks on properites that are right on the line.  Say there is a $300K no money down mortgage with no principal paid down and now worth $220K.  Government gives the bank $100K and mortgage goes down to $200K  and govenment takes $100k first position, leaves the bank with $200K 2nd and government gets $25k third position.  Still better for the bank and, assuming ability to pay has been established and works out – then eventually $200K mortgage goes away and government has $125K first lien.

    Unemployment/RJ — Good point. Where were all these "lazy" people when there were jobs to be had?  You would think from the Conservative blather that this is what people do when there is unemployment insurance yet we just came off most of a decade with effectively zero unemployment (3.5% is normal turnover) when every single able-bodied person in this country was working.  I guess they were just all waiting for their moment to pounce onto the couch and get on the dole according to our Conservative Comrades…

    Bye, bye Ronresnick – don’t let the door hit you in the ass!

    And what Kururi said.  I love that you think you can wield your money as a weapon to force others to cower and give up their ideals – I wish you the best in finding the right kind of spineless wimps who will bow and scrape before you and tell you only what you want to hear.  As you age and decay they can tell you how young and vibrant you are and when you make a mistake they can tell you how wise you are – as long as you keep paying…

    LOL Ben!  I used to do that to my Mom – not nice….

    Wages/Hanna – We can expect wage and price adjustments but it’s up to the government to have some level of protection for US jobs.  Also, we can encourage the growth of US-based industries.  As above, there are plenty of things we can build here that we already need and, if we are creative, we will find things to export to the world but there is no room for creativity when the banks don’t lend and money pools up to the top 1% giving no chance for an ordinary American to get off the hampster wheel and engage in real capitalism.  Why?  Because every one of us is a potential threat to Big Business.  The dot com boom really upset the apple-cart and they circled the wagons and cried "never again" would they lose market share to smart guys who worked hard and were creative so they stifly capital and the crush creativiity and they constrict capital so there are no more VC firms willing to invest in new businesses (they all turned into hedge funds who seek to maintain the status quo).

    Doomed/Skipper – I have spent most of the past month working with people who feel otherwise.  While there are many who want us to fiddle while Rome burns, there are many more who still believe in this country (and by that I mean the people and ideals of this country, not the people who have co-opted it for their own gains under the guise of Holy Capitalism and Patriotism).

    Socialism/Flips – I think we went there in the 30s and I think that unbridled capitalism is a Randian fantasy that has not worked anywhere ever and that is the outmoded concept that people need to let go of. 

    Thanks Doro.  As always, DC is both frustrating and invigorating.  So many good people here working so hard to make a difference yet also so many people who wait for any opening to thrust a knife in and put a stop to any progress.  A lot of frustration but also amazing determination and, yes, hope.   Best of all, I have never seen so many energized black people.  I hope that doesn’t come across racist but it is striking to me how many black people I’m meeting who believe in the system and want to work to make things better – a huge change in just a few years as black people have come from around the country who finally feel that politics is for them as well, very exciting!

    Japan/Gel – I thought they were on holiday?

    Government/Exec – Don’t you get it?   Big Business uses (by relative GDP) 60% of the government’s production but pays just 6% to support it.  That means they are stealing about $1Tn a year from the system.   That does make them the villians.  You are worshipping the tumor because it has grown big and strong while the patient withers and dies and your argument is to feed it more and maybe it will finally be happy and start giving something back – that’s just not how it works.  The math is irrefutable, we cannot shrink our way out of this and we cannot expect tax cuts to drive growth.  We need to stimulate and grow this economy or all it will be good for is to be picked over by the vultures as it withers and dies.

    Thanks Stuman – The biggest mistake the liberals made was ceding control of the media to the conservatives.  Yes, the media did used to be liberal but the conservatives mounted a very successful war against the leftist media elite and slowly but surely took over the media and the message.  It’s going to be a long, hard war to win it back but step one is to stop putting up with the BS they try to shove down our throats.

    Living wages/Flips – Price controls are very dangerous but minimum wages are essential.  In Europe, a person working at McDonalds can live in an apartment, has access to medical care, a college education and will be able to retire.  In the US, the person who works in McDonalds is one bad bit of luck away from homelessness with no possibility of a comfortable life.  Are the 100M people who fill the service jobs in America sub-human or do you just consider them losers who deserve the nothing they get?  Either way, it all comes down to what kind of society you will be proud to live in…

  46. Thanks Yip!

    Thanks Ekor!  Banksters are a huge problem as they used to make 10% of all profits pre-Bush and now they make 33%.  Same tumor issue, they deprive the other sectors of 23% of the profits they used to make.  And, of course, those other sectors employed millions of more workers than the financials do.  Sometimes it’s not so good to maximize efficiency….

    Net income/Gra – Yes but still a massive difference that is not negated by including a few deductables.  I can’t write a master’s thesis to document every single statement of these posts would be very long and dull.   I don’t know about the Medicare breakdown, if you find a table with those details I’d love to see it as that would be interesting and would give us a very good idea of the effect of taking the cap off SS too.

  47. Phil,
    I do get it……you keep referring to the private sector as "Big Business".  Big Business is government…….with all their lobbing and campain contributions the control these elected morons.  Take Bama……it’s painfully obvious that he makes decisions on how it effects his support groups…..take unions for example.
    When I say they need to cut government and support the private sector, I’m talking about cutting the government waste……virtualy everwhere you look in government the waste is staggering……and they’re not cutting any of it…..instead they add more……..and I’m not referring to "Big Business"……rather all the small business in this country.

  48. Phil,
    I thought I was hedged enough, but no. What would your recommend for a downside play here? Thanks

  49. We again replay the old argument between those who believe if there are needs, meet them, and those who know that incentives matter.
    Phil has the microphone, and I suggest there can be no debate of ideas when the guy with the microphone can not ever concede one little bitty point to the other side. If you watched all this from afar, you would assume this room consists of a teacher and a bunch of idiots. And the final point, I’m sure, will soon be: If you idiots actually managed to earn and save something, the system has to be rigged, and a crime had to have been committed somewhere.
    I am more of a libertarian than a party man, and I have to tell you that hearing everything I know about people, and how things work being called dead wrong, stupid, or at worst, a criminal plot, it gets hard to take. I urge a different tone.

  50. I think the main idea of this morning’s rant is that we need to teach people there is no point in earning more than you need, because the government will just take it. You don’t need to save because if you need something, and our government believes its a "legitimate" need, you will be given it.
    That may work, but it ain’t right.

  51. RE: Phil re: living wages
    Where in France can a McDonald’s employee live as you describe?  In Paris?? Please show me.
    Prices without controls rise to suck the living wage back to a previous level. 
    The system you want is called communism. 

  52. COME ON GUYS……CAN’T WE ALL JUST GET ALONG????   If  anybody here thinks Phil will change his mind about anything political, you haven’t been around long!!  He’s got more ‘facts’ than most of us, and it is his site, so lets stick to the the REAL reason we are ALL here…..GREED!!!!!! LOL

  53. barfinger
    I’m with you…  Business has problems……government has problems…….Businesses can’t TAKE your money without your knowledge/ consent/ ……Government can/ does.

  54. ronresnick
    Just to show you how off you are with numbers, lets assume Phil only has 300 premium members and nothing else @ $250 per month thats $75,000 per month. How much does your threat of stopping $250 per month mean? .3% and like people who pay $10 per year for a magazine think that thier threats to cancel will change what they don’t like, it won’t. I think you should a least try to counter Phil’s rants, gel and others keep trying and if you and the others would just back up your beliefs with an occasional fact it would make a difference. Give it a try, threats and fear aren’t working anymore.

  55. There is a strong change in the markets, the RUT is leading the market and doesn’t care that TBT is way down.