Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1459.3 | 5.5 | 0.38% |
| Eurostoxx Index | 2569.4 | 16.4 | 0.64% |
| Oil (WTI) | 93.42 | 1.0 | 1.08% |
| LIBOR | 0.369 | -0.004 | -1.01% |
| US Dollar Index (DXY) | 79.11 | -0.303 | -0.38% |
| 10 Year Govt Bond Yield | 1.79% | 0.02% | |
| RPX Composite Real Estate Index | 194.5 | 0.0 |
Markets are higher this morning on no real news. Today is Triple Witching (the expiration of Sep index options and futures) so sometimes you get funny moves pre-open and on the close. There is no economic data this morning. Bonds are down a few ticks, while MBS are up a few.
KB Home reported good numbers last night, with 16% increase in revenues and a 33% increase in backlog. “It is clear that the recovery in housing is gaining momentum across the country as inventory levels are declining and home prices are on the rise. In particular we are seeing dramatic improvement in California, where we are the state’s largest homebuilder, as the continued strengthening in the coastal markets is now spreading inland to Sacramento, the Central Valley, and the Inland Empire.” The stock is up 2.5% pre-open.
While housing is definitely improving here, Europe still has to contend with its slow-motion bank run. Which means that banks in Spain or Italy have to increase deposit rates to prevent capital from leaving, which naturally gets passed on to borrowers. Which contracts credit in spite of what the ECB is trying to do.
The Senate is looking into high frequency trading. The regulators are looking into whether HFT increases volatility, which is the wrong question to ask. The correct question to ask is if they are front-running orders – meaning if you enter your order to buy 200 shares of Apple stock via your Charles Schwab account, does someone see your buy order before it hits the exchange and are they stepping in front of you and buying the stock that is out there in the hopes of selling to you a penny or two higher? Arbitraging the different exchanges is one thing – front running is another. To put it in perspective, if I did that as a block trader, I would probably lose my job and maybe my Series 7 license if the regulators found out. This could become a battle royale, because the NYSE loves HFT because it is such a money maker. And it is a private entity. However as Jack Reed points out, the capital markets are also a public good. Meh, as much as I used to gripe about the specialists on the floor of the NYSE, they did serve a purpose. But market-making, at least in the equity markets, is long gone.
Filed under: Morning Report |
All Things in Moderation 
Off topic, but a rant based on Wonkblog this morning.
I promise to talk the economy later
Three separate pieces from Wonkbook this morning prompt me to comment on the heart of Obama’s problems:
“The most important lesson I’ve learned is you can’t change Washington from the inside,’ President Obama said in Univision forum today. ‘You can only change it from the outside. That’s how I got elected. That’s how the big accomplishments like health care got done.”
As even Ezra himself was forced to admit, this view is totally at odds with the reality of how he has governed and how the ACA passed
“Think about it. Change is the first bill I signed into law — a law that says you get an equal day’s work — somebody who puts in an equal day’s work should get equal day’s pay — (applause) — because our daughters should be treated just like our sons and have the same opportunities. That’s c
hange.”
No, it really didn’t Lily Ledbetter already won her discrimination case, but the SCOTUS said it was beyond the statute of limitations, so Congress acted to expand that in response. That’s it essentially. That’s all it did. Obama is taking credit for things that had already happened.
But it extends beyond him, to his acolytes in the media too:
“Obama’s education reforms have been far more sweeping than most know. ”In 3 1/2 years in office, President Obama has set in motion a broad overhaul of public education from kindergarten through high school, largely bypassing Congress and inducing states to adopt landmark changes that none of his predecessors attempted. He awarded billions of dollars in stimulus funding to states that agreed to promote charter schools, use student test scores to evaluate teachers and embrace other administration-backed policies…The president has said changes are needed to close the persistent gap between poor and privileged students, drive up high school graduation rates and produce a workforce that can compete globally.” Lyndsey Layton in The Washington Post.”
Now almost none of that is true, except the tiny amounts of money involved, because as in the same colum a piece from Matt Miller says:
“Even conservatives in other countries agree that poor kids need greater investment to overcome disadvantage. Yet calling attention to this scandal is taboo in American politics because it hides behind the mask of ‘local control.’…The solution is a bigger role for the federal government in school financing. Nowhere in the Constitution does it say that federal officials should provide only 8 percent or 9 percent of the money for K-12 education.” Matt Miller in Bloomberg.”
Therein lies the problem. The Miller piece directly contradicts the Layton piece but the latter is how Obama sees it himself
Republicans and Obama are dysfuncttional in uniquely different ways.
Republicans believe that nothing they said or did yesterday matters, so they want a clean slate to work on each day without repercussions. (hence the exorcism of George W. Bush)
Obama on the other hand, believes nothing actually happened before him. Therefore a hodgepodge conglomeration of ideas tried in various places and times before becomes something no one else has attempted.
The dichotomy between them is at the heart of our currently failing government
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Someone had the gall to write Nowhere in the Constitution does it say that federal officials should provide only 8 percent or 9 percent of the money for K-12 education.
Education is a word that does not appear in the federal constitution but is central to every state constitution.
In our “50 questions” I asked:
The federal economic role in public primary and secondary school education was limited, in 1962, to funding the schools impacted by the presence of federal reservations and military bases, and to a national school lunch program that was a handy adjunct to agriculture policy regarding surplus goods. Additionally, the Public Health Service had access to schools for vaccination of children against communicable diseases. What, if any, additional economic role do you think the federal government should be continuously undertaking wrt to public elementary and secondary schools, beyond that of fifty years ago? Why?
I ask it again, now. Why should a primarily state function be usurped by the federal government? What purpose is served? I think it is thought to be a way to create a revenue stream from DC without having to take the pain of going to local taxpayers, and I think that is wrong.
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Blackstone is buying up a bunch of real estate in Tampa for rentals.
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John, I agree with what you’re saying but I still think it’s money that is causing the failure of our government. What you’ve detailed are the repercussions of what’s hiding behind the curtain while everyone is pretending otherwise. I doubt any of them actually want change but they get votes by pretending they do and presenting narratives of minor success or promises without detail.
Update: In case no one sees my earlier comment on another thread………have a great weekend everyone. Enjoy your football!
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MIke
That’s interesting I wonder if the story is accurate about single family homes though, I would guess there is a substantial number of condos still left in that market which would seem to be a better investment.
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Swtiching topics, with all the talk of saving a million jobs in the auto parts suppliers in the bailout, it’s really just an Indian summer for that industry.
The Chinese are on the march like it’s Korea in 1950 but the bugles haven’t been sounded yet:
http://www.manufacturingnews.com/news/12/0207/Chinaautoparts.html
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john, for what it is worth, I couldn’t be happier about that…
My kid did a number on my driver’s side and passenger’s side mirrors. If I had gone to the dealer to have them fixed, it probably would have cost me several hundred $$ per mirror assembly, plus the labor.
Instead, I went to a website that had exactly the replacement mirrors I needed for $35 a piece. Found a You Tube video on how to take off the door panel on my car and was back in business within an hour. Probably saved me $600.
So, I am not unhappy with chinese auto parts one bit.
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Minium 5 years, maximum ten, you will be buying Chinese made cars here in the US. They are already starting to import them into Canada, but that’s just a test run to set up the tranportation network.
Count on buying a Chinese made Volt that sells for at least $10,000 less in the future.
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Brent:
There are a lot of condos too, mostly in Pinellas (St. Pete, Clearwater). Those tend to be vacation condos though, so perhaps Blackstone is only interested in year-round renters. It will be interesting to see what that investment does to our market though. Foreclosures have ticked up, so it will be a target-rich environment for Blackstone.
At least for a while.
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“lmsinca, on September 21, 2012 at 8:39 am said:
John, I agree with what you’re saying but I still think it’s money that is causing the failure of our government. “
As long as the government is making decisions that have significant economic ramifications to private interests, i.e. the bailout, and more specifically are “picking winners and losers” by favoring say wind power over coal, there will always be money in politics and the government. The more the Federal government expands it reach, the more money will flow in to control the distribution of benefits.
Or as was noted elsewhere:
“The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money. ”
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confining it to a relatively small geographic area is smart.
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Worth a read:
“Sheila Bair and the bailout bank titans
September 20, 2012: 5:00 AM ET
As the financial system melted down in the fall of 2008, the Treasury Department gave the nation’s biggest banks billions in new capital. Was it all necessary? No, says the former FDIC chief in her new book.
By Sheila Bair, contributor”
http://finance.fortune.cnn.com/2012/09/20/bair-bull-horns/
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“Found a You Tube video on how to take off the door panel on my car and was back in business within an hour.”
I fixed a dishwasher the same way. googled part number, found video. $50 part and an hour vs. cost of repairman or a new machine.
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nova and brent
Thanks for keeping unemployment high.
Throw eggs at the houses of blue collar workers on your way to work why dontcha!
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john, I am a white collar worker being paid like a blue collar worker right now….
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Please, I have my staff do that. I just point out the houses I want egged .
sometimes I don’t even watch. I just read about it in my morning briefing.
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“At a rare public hearing Friday, members of the committee indicated they were prepared to accept the findings of an outside lawyer hired to examine her conduct. The lawyer, Billy Martin, found that Waters believed she was intervening on behalf of ALL (emphasis added) minority-owned banks—and not directly on behalf of OneUnited Bank of Boston, in which her husband held stock.
He therefore found no evidence that she knowingly violated House rules. When she learned that OneUnited, on whose board her husband once sat, was seeking federal bailout funds, she ended her involvement, Martin concluded. (she cancelled plans to bring the check home to her husband herself)
OneUnited ultimately received $12 million through the federal Troubled Asset Relief Program to help offset losses from investments in Fannie Mae and Freddie Mac. Waters’s actions occurred during the height of the financial crash, when many banks were facing difficulties because of investments in the federal housing agencies.”
http://www.washingtonpost.com/blogs/2chambers/post/california-rep-waters-cleared-of-ethics-charges/2012/09/21/75d346c2-03f3-11e2-8102-ebee9c66e190_blog.html?hpid=z4
It really depends on what your definition of “is” is.
“The long-awaited end of the ethics probe clears the way for Waters to become the ranking Democrat on the key Financial Services Committee in the next Congress, after the retirement of Rep. Barney Frank (D-Mass.).”
Not dumb and dumber, but dumb and OMG! (pray for a GOP House)
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brent:
switch to commodities they’re the coming thing, or so I’ve heard
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nova:
I thought you skipped those briefings a lot.
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Sure. That golf game isn’t going to play itself.
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From Banned’s article:
“The conclusion of the investigation was delayed after it was revealed that two staff attorneys to the committee had leaked information in 2010 to Republican committee members.”
How does one “leak” information from staff to members of Congress who are on the relevant committee?
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“Romney earned nearly $14 million in 2011, paid 14.1 percent tax rate, campaign says”
http://www.washingtonpost.com/politics/decision2012/romney-earned-nearly-14-million-in-2011-paid-141-percent-tax-rate-campaign-says/2012/09/21/e62e5096-0417-11e2-91e7-2962c74e7738_story.html?hpid=z1
hot off the presses!
Now cue all the numb nuts who think they pay more than that themselves.
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“How does one “leak” information from staff to members of Congress who are on the relevant committee?”
Using “The Cone Of Silence” I’m guessing.
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Now cue all the numb nuts who think they pay more than that themselves.
I’ll volunteer. I pay a higher rate than that and that is excluding FICA (which his probably does). Plus he under-reported his charitable donations just to goose the effective rate.
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From Don Juan’s Wapo link:
Warren Buffett’s secretary must be fuming.
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I’ll have to recheck my return from 2011, but I’m pretty sure I pay a higher rate as well. Some of that is self employment income so I get the double FICA rate.
However, in the case of Romney vs the tax code, I don’t blame the player. I blame the game.
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“The Senate is looking into high frequency trading.”
Cisco markets to these people too:
“Gain competitive advantage for high-performance trading with the Cisco Nexus 3548.”
http://www.cisco.com/web/strategy/financial/algo_speed.html
Click to access highperftrade_poster.pdf
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I don’t blame the player. I blame the game.
Understandable. But some players are also the referees.
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he paid almost 2 million in taxes. that’s more than his fair share. the effective rate stuff just doesn’t bother me.
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http://www.americanprogressaction.org/press/advisory/2012/09/21/38946/statement-tom-perriello-on-romneys-2011-tax-return-and-9-percent-tax-rate-suggests-more-questions-than-answers/
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Hey, I had the same effective tax rate as WMR last year (not including payroll taxes of course)! I am the 1%, baby! Now, if only my income would reflect that ….
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Mike
I wish you paid as much as Buffett’s secretary, nothng personal of course.
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yeloo
if you do, for God’s sake stop doing your taxes yourself, buy a house get married and have kids. Advertise in Russian dating sites if you have to.
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I’d argue that “buy a house get married and have kids” costs more in the long run than just paying the taxes.
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“Americans paid an average tax rate of 17.4 percent in 2009, according to a report from the Congressional Budget Office”
Simply not true
That is not the effective Federal tax rate. Wherever you got that from, it wasn’t the CBO report itself
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jnc
not until the divorce!
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About 80% of Ameicans pay less than 15% effective Federal tax rate.
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to be perfectly honest, mine is about 9%
(but if I sold Facebook right now it might be zero!)
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banned:
Even better, I don’t pay state income tax anymore, so I’m really paying less than Buffett’s secretary.
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mike
but still more than GM!
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Today at AARP
I give him kudos for speaking because those old people are dead serious about their Medicare. I did notice that several times he sucked in a big breath like it might be his last.
http://www.youtube.com/watch?v=gIMc6hxuLSs
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The firm of Deloitte, Touche and Sargent still have their doubts
http://www.washingtonpost.com/blogs/plum-line/post/expert-romney-may-have-paid-less-in-taxes-over-20-years-than-it-appears/2012/09/21/41b27e00-041e-11e2-91e7-2962c74e7738_blog.html#comments
Psst Greg, Roberton Williams is a smart guy and all but he’s not actually an accountant.
EDUCATION
Ph.D. in economics, Stanford University, 1999
A.B. in economics, Harvard University, 1994
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The only thing I can think of is that Romney wanted to use the tax returns to change the subject from 47%.
The whole 20 year average argument is counterproductive. He shouldn’t bring that up unless he’s prepared to release the actual returns.
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I have much lower expectations of Senator Reid. Holding him to the same standards as a campaign flack sounds about right.
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A unique interpretation of a legal case, Banned. I’d love to hear that conversation between the attorney and client.
Attorney: We won the case!
Client: Wonderful!
Attorney: But you won’t be getting anything
Client: WTF
Attorney: The statue of limitations means that you can’t get any damages.
Client: So we lost, then.
Attorney: Well, yes. But just on a technicality. So we won!
Client: …
Attorney: Anything else?
Client: So how about changing the law so people like me don’t get screwed?
Attorney: But we won!
Client: …
BB
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she won in district court and got damages but Goodyear appealed and won in the 11th circuit and at SCOTUS
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Romney’s tax returns show that he paid no federal income tax. Hard to see the 47% thing going away when Romney is in the 47%.
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Capital gains tax is part of the federal income tax.
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Also, Banned my effective Federal rate for 2011 was 19.15%.
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By drawing from investment income while putting the absolute maximum of our earned incomes that we can deduct into retirement plans we keep our effective rate down to about 11%, postponing our tax until we draw from our IRAs, etc. I withhold 20% on my actual pay, none on my SS, and my wife pays in 20% as well, but none on our investment income. So we usually get a refund.
So I am in the class that wonders why anyone would think WMR’s return is anything but exemplary of a big charitable donor. OTOH, I do not think it makes sense to treat dividends and interest more favorably than earned income, so WMR’s return and our personal one are examples of a seeming questionable tax policy.
In our tax discussion, we did not touch on the issue of deductible contributions into retirement plans, or the tax shelter of holding growth in an annuity or life insurance policy. I have planned my retirement around both since I was 38-51, at the latest, and would only say that if we change that, it should be with at least a fifteen year changeover period, so that retirement strategies can change, too.
Rosanne is reading the return as it appeared at the Boston Globe’s website and notes first that it is stamped “in process”. I will let you know if she finds anything unusual. She is a tax specialist.
Update: The bulk of the income appears to flow through a family trust and two blind trusts. This “in process” return suggests that a foreign tax credit will be taken but the information is not yet available. Rosanne wants to know if this return that appears at the Globe site is what people are talking about, because it is incomplete and in no way an actual return.
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The only thing I can think of is that Romney wanted to use the tax returns to change the subject from 47%.
Ezra Klein goes through the timeline and decides that this is strategically the best Friday to news dump it because the debates are still two weeks away and that gives the news time to mellow.
The whole 20 year average argument is counterproductive. He shouldn’t bring that up unless he’s prepared to release the actual returns.
Agreed. It just creates another water torture drip. Romney is determined to drag this out as long as possible. At least until November 8 when he can file an amendment to claim the charitable deductions he left off so as to hit his 14% threshold. Without that, the actual effective rate is under 10%.
There is something odd going on because his charitable deductions seem to typically be in the 10-15% range, 10% tithe to the Mormon church, funding of his pet MS charities, and a little bit to other smaller worthwhile causes. This year his gross income has fallen from the $20M projected in the spring to the $14M actually claimed. This is why the percent of charitable contributions is so high this year. Some PWC flunky is getting sent down to the retail tax return office for this big a goof.
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markinaustin, on September 22, 2012 at 6:56 am said:
“In our tax discussion, we did not touch on the issue of deductible contributions into retirement plans, or the tax shelter of holding growth in an annuity or life insurance policy. ”
I did. I’d whack the deduction for contributions into retirement plans. In terms of the annuity or life insurance policy, you would be taxed on the proceeds when you received them.
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So the call was overturned upon further review. Shall we check the Republican votes on that? Let’s see here. 7 in favor, 209 against.
Congress didn’t act on that. DEMOCRATS did. And Obama signed it.
BB
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yello:
“Fortunately, the Congressional Budget Office recently released updated data on effective average federal tax rates — that is, the percentage of their entire incomes that Americans hand over to the federal government in the form of personal income, social insurance, corporate income and excise taxes. As this is effective tax data, it also takes into account the fact that many Americans use deductions that make their taxes lower than statutory rates would imply.
Source: C.B.O.
The main findings: The overall effective federal tax rate (the ratio of federal taxes to household income) was 20.7 percent in 2006, with the highest quintile of American households paying 25.8 percent of their income in federal taxes.”
http://economix.blogs.nytimes.com/2009/04/08/how-much-americans-actually-pay-in-taxes/
Please note the distinction. This is not the Federal effective individual income tax rate
The second chart down in this group from the Tax Policy Foundation is the one Romney was referring too (as are most of us I think)
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456
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mark:
Rosanne wants to know if this return that appears at the Globe site is what people are talking about, because it is incomplete and in no way an actual return.
Don’t know about the Globe site, but the Romneys’ (and Ryans’) tax returns are posted on the campaign website.
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Thanks, Mike. I will download it and the trust returns and send them to her.
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blade
I’m not saying the law was bad at all, but that Obama blew it out of proportion as he does with most things.
Please note also that the actual pay discrimination began 30 years ago. No doubt it still goes on in the US today, but the core of the case is when did she learn of the pay disparity. At that point, existing law said she had six months to file a claim. There was testimony that she either learned in 1992 or 1998 when she filed her claim.
The jury believed the latter, the appeals courts the former and so the judgement was thrown out.
The new law changes the time frame, BUT the discrimination involved has been illegal for many, many years, not just since Obama’s immaculate inception in November 2008.
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banned:
the core of the case is when did she learn of the pay disparity. At that point, existing law said she had six months to file a claim.
Actually, existing law said she had six months to file a claim from the initial discriminatory act. Ledbetter’s argument was that every paycheck issued was a part of the discriminatory act. SCOTUS disagreed. So the Ledbetter Act changed the law so that each new paycheck that results from the discriminatory act resets the 180 day statute of limitations.
Of course, I might be talking out my ass — Mark is the employment lawyer.
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Mark:
I’ll be interested in what Rosanne has to say, if those returns are different from what she saw on the Globe site.
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“Actually, existing law said she had six months to file a claim from the initial discriminatory act.”
I don’t believe that’s correct. If so, all that would be necessary for an empyoyer to do is to disguise it for six months.
According to what I have read of the case she was first employed at a lower wage in 1979-1980. If your interpretation were correct, then the claim would have been disallowed upton being filed in 1998
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banned:
The interpretation of statute of limitations was raised by Goodyear on appeal of the original verdict. The original decision found that Ledbetter’s evaluations were discriminatory, leading to pay disparity.
You can read the background in Justice Alito’s opinion here. Justice Ginsburg addresses your point about disguising the discrimination in her dissent here.
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Mike
I thought you were saying (and you will correct me if I’m wrong) that it made no difference whether or not the employee was aware of the discrimination for the tolling purposes.
I have never done employment law, but I still don’t think that is the correct interpretation. From reading the opinions, the problem was that she received the biased evaluations in 1992 but did not do anything about them at that time, even though she was aware of a disparity, and waited until she retired in 98 to make her claim.
Was that your reading also?
(as we make everybody else but Mark look for a bridge to jump from)
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“JERUSALEM (AP) — It is a taboo for Israeli leaders to give even the slightest hint of favoritism in politics in the United States, Israel’s closest ally. So some Israelis are squirming over a perception that their prime minister is siding with Republican Mitt Romney in the U.S. presidential race, in the belief he will take a harder line on archenemy Iran if elected.
With President Barack Obama holding a narrow lead in opinion polls, Benjamin Netanyahu’s perceived strategy looks risky to Israelis who fear their alliance with the U.S. could be in trouble if the incumbent wins.
“If our prime minister doesn’t get along with their leader, it will hurt our relations,” said Shai Hugi, 20, a car rental clerk in Jerusalem. “The United States is Israel’s best ally, and it’s always good that you have a strong friend behind you.”
http://news.yahoo.com/israelis-fear-pm-meddling-us-politics-161611300.html
Why whatever gave them that idea the Romney t-shirt that Netanyahu wears?
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Oh brother, but I guess it was predictable:
“Three people wounded in the July mass shooting at a Colorado multiplex are suing the theater owner, claiming that security was lax the night a gunman opened fire and killed 12 people.
Two lawsuits filed Friday against Cinemark USA Inc., owner of Century Aurora 16, allege negligence on the part of the corporation because the theater lacked adequate security or sufficient alarm systems.
“Although the theater was showing a midnight premier of the movie and was expecting large crowds of people to attend the midnight showing, no security personnel were present for that showing,” according to both lawsuits, which were filed by the same law firm.
“The exterior doors to the theater were lacking in any alarm system, interlocking security systems, or any other security or alarm features.”
http://www.cnn.com/2012/09/22/justice/colorado-shooting-lawsuit/index.html?hpt=hp_t3
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Three people wounded in the July mass shooting at a Colorado multiplex are suing the theater owner, claiming that security was lax the night a gunman opened fire and killed 12 people.
Because, of course, it should have just been expected that some whacko would storm the movie theater and shoot it up!
As if the federal government weren’t doing enough to keep metal-detector manufacturers in business. . .
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banned:
Your understanding of my interpretation is correct.
Ledbetter’s claims should probably have been denied in 1998. In fact, Ledbetter’s Equal Pay Act claims were denied, but the district court allowed her to proceed with her Title VII claims and the jury found in her favor. Obviously, the Eleventh Circuit and SCOTUS had a different reading of the statute and precedent.
For Title VII, my understanding is that, prior to the Ledbetter Act, the 180 days statute of limitations began at the discrete act of the “pay-setting” decision, whether or not the employee was aware of a discriminatory action. My recollection is that Ledbetter did not become aware of the pay disparity until she got an anonymous note in 1998, much later than the original “pay-setting” decision early in her career (bad reviews in 1979-1981). So, Goodyear was able to disguise their pay disparity for 19 years, allowing the statute of limitations to expire for any potential claims.
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mike
Thanks and yes I do agree with Ginsburg’s dissent not that it matters now.
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“IPhone 5 Defines Apple Success, Tim Cook-Style”
http://www.cnbc.com/id/49131162
Very interesting piece. Is Cook the new Steve Ballmer a guy good with numbers but lacking in “the vision thing”?
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I’d say no. Cook is continuing to execute the existing successful strategy. Ballmer has actively fucked up Microsoft.
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jnc:
Can I quote you?
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I find it hard to conceive of a worse idea:
The NYT Editoral board seems to forget that the Federal government already forces you to contribute 12% to Social Security and now proposes to tack on an additional 3% for “professional investment managers” to run. The last thing I would want is my retirement funds managed by state selected “professional investment managers”. I suspect the opt-out clause will last until the first funding crisis, given that there is a guaranteed rate of return.
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Worth a read:
“Egypt’s New Leader Spells Out Terms for U.S.-Arab Ties
Tara Todras-Whitehill for The New York Times
By DAVID D. KIRKPATRICK and STEVEN ERLANGER
Published: September 22, 2012”
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Here’s another idea to throw into the tax reform kitty, not that any of our ideas or this guy’s will ever see the light of day.
Actually, conservatives should favor even fewer people paying income tax
The deeper problem isn’t that too few people are paying federal income taxes, as DeMint and Representative Michelle Bachmann and now Mitt Romney maintain. Rather, it is that most of the taxes we do pay, with the big exception of retail sales taxes, are quite stealthy. In the days before income tax withholding, taxpayers had to write checks to the federal government. Now, many taxpayers have a better sense of the size of their income tax refund than of what they’ve actually forked over to the federal government.
It turns out that the best way to address Romney’s underlying concern – that a large and growing number of Americans have lost sight of the real cost of government – might be to remove even more households from the income tax rolls and create a very visible new tax to make up the difference. That is why Republicans, Mitt Romney included, should give serious consideration to Michael Graetz’s Competitive Tax Plan (CTP).
That’s not all. Imagine also that the federal income tax only applied to income over $100,000 for married couples, $50,000 for single filers, and $75,000 for head of household filers. Households that earn less than this “family allowance” would be under no obligation to file a federal income tax return. In that case, the 12.3 percent consumption tax would pay for liberating millions of Americans from the IRS. According to a recent analysis from the Tax Policy Center, the tax policy rules in effect today will require 147,540,000 tax units to file taxes in 2015. Under Graetz’s CTP, that number would fall to 36,625,000.
Even those poor souls who still have to file under the CTP will benefit, paying a much-reduced federal income tax at a basic rate of 16 percent and a surtax rate of 25.5 percent on income above $200,000. These low marginal tax rates would improve work incentives for high earners far more than Mitt Romney’s proposed tax cut and would be an even bigger improvement relative to President Obama’s proposed tax increase for the top 2 percent of households. And though the CTP wouldn’t completely eliminate taxes on savings and investment, it dramatically lowers them, particularly for families of modest means.
http://blogs.reuters.com/reihan-salam/2012/09/20/actually-conservatives-should-favor-even-fewer-people-paying-income-tax/
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jnc
I agree this CA pension plan doesn’t seem very well advised. However if
Most of the opposition has come from the financial industry, undoubtedly because the plan would be a better deal than many of the retirement products they have on offer. Of course, they do not put it that way.
this is true, I might have to consider it. Anything the financial industry opposes my first instinct is to say “let’s do it”………………………..hahahahahaaaa
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jnc:
you nailed it, a new bailout guaranteed just waiting to happen
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That’s the NYT Editorial page spin on it. Note this:
“Instead, criticism has linked the new system to public pensions, which have been widely criticized as fiscally irresponsible. The connection is misleading. The new plan is essentially an automatic individual retirement account, with improvements including professional management, not a traditional pension.”
Last I checked, the existing pension systems in CA were “professionally managed”, which is part of the problem as the professional managers are subject to political control by the state, hence the unrealistic assumptions on rates of return for CalPers among others.
This is just taking the unsustainable state pension design and forcing it upon private sector workers. California lawmakers should devote their efforts towards fixing their existing state pension system before expanding it to cover other people. It wouldn’t surprise me in the least if somewhere down the line they proposed to merge the two to help cover up underfunding in the state one.
Also, note the ERISA issues:
http://www.msnbc.msn.com/id/49036834/ns/business-personal_finance/t/new-wave-pension-plan-california-dreamin/
My primary issue with this scheme is that I’m confident that any shortfall between the guaranteed rate of return, which can be increased by the politicians say when they are running for reelection and the earnings generated by the “professionally managed” investments will be borne by the tax payers and or the businesses themselves.
http://money.msn.com/business-news/article.aspx?feed=AP&date=20120901&id=15510359
http://www.sfgate.com/news/article/Critics-blast-state-retirement-for-private-workers-3773519.php
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Defined benefits plans should not be the core of a state financed system for the reasons JNC notes plus the fact states cannot handle the potential indebtedness, if that was not implied by JNC. However, a hybrid that included an annuity is possible, so long as the lege cannot move the goal posts after the game has begun.
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Deval Patrick, worst governor of Massachusetts ever?
“A defiant Gov. Deval Patrick finally signed a welfare reform bill into law yesterday — only to say he won’t enforce key parts of the measure, drawing the wrath of lawmakers working to crack down on widespread abuses of the system.”
http://bostonherald.com/news/politics/view/20220728deval_ebt_enforcement_not_feasible
“Beacon Hill was the scene of great fanfare earlier this month when Governor Deval Patrick signed controversial new healthcare reform legislation into law. The governor proudly proclaimed that Massachusetts was “the first to crack the code” on the problem of ever-increasing healthcare costs.
The mood outside the statehouse, however, has been far more sober. In reality, Patrick’s new law will restrict patient access to vital medical treatments and squeeze a hospital system that’s already in dire financial straits.”
http://www.forbes.com/sites/sallypipes/2012/08/20/gov-deval-patricks-new-health-law-is-flat-out-dangerous/
“A “rogue chemist” is being blamed with potentially compromising tens of thousands of drug samples at a Massachusetts’ state crime lab, a scandal that has already resulted in the resignation of Massachusetts’ Public Health Commissioner, and which is threatening to ensnare Gov. Deval Patrick (D).
The Boston Globe reported on Wednesday that the crisis “has the potential to taint [Patrick’s] national image and keep him bogged down in the details of governing,” and that the scandal speaks “directly to Patrick’s management of a critical public safety function.”
http://tpmmuckraker.talkingpointsmemo.com/2012/09/deval_patrick_drug_lab_scandal.php
“Gov. Deval Patrick said he was unaware until this morning that of allegations that Teamsters shook down top Democrats and threatened to block a 2009 Patrick fundraiser at a Hub hotel where President Obama spoke.
“I just heard about it,” the governor said today at the State House. “I’m shocked at the allegations. If there’s anything the investigators need from us, we’ll certainly cooperate.”
http://www.bostonherald.com/news/regional/view.bg?articleid=1061161809&srvc=rss
“Gov. Deval Patrick on Thursday curiously seemed to suggest he would not be involved in the decision whether to appeal a federal court judge’s ruling requiring the state to pay for a convicted murder’s gender reassignment surgery.
His staff, however, later clarified his comments, and said the governor’s office would play a role in the decision-making process after reviewing recommendations from counsel at the Department of Corrections and Executive Office of Public Safety.”
http://www.bostonherald.com/news/regional/view.bg?articleid=1061161848&srvc=rss
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forgot these :
“The Bay State is now three spots away from being ranked as the worst state in America to do business, according to Chief Executive magazine’s annual survey released today.
Falling two spots from last year to No. 47, Massachusetts only ranks higher than Illinois, New York and California in the survey.
“California and Massachusetts are in a league of their own for anti-business regulatory environment,” wrote one executive, while another said, “California, Massachusetts and Vermont have enacted anti-business policies that are detrimental, especially to the medical device industry.”
http://bostonherald.com/business/general/view/20220502survey_bay_state_among_worst_to_do_business
“The 10 Best and Worst States for Small Business”
(Massachusetts 43rd)
Read more at http://www.thefiscaltimes.com/Blogs/Business-Buzz/2012/05/09/The-10-Best-and-Worst-States-for-Small-Business.aspx#sjJZcvDJjjrFW8XO.99
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I saw this graph this morning. Where’d the money go?
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lms
What you’re looking at is the explosion in the Fed interventions since Greenspan took office.
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banned, I just wish everyone would quit whining about the unfair tax advantage the 47% have.
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buy gold, join the 53!
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lol john. We can’t even seem to collect the rent on our one good investment, what little we have left is going between the mattresses.
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“Riots Break Out at Foxconn Factory in China: Report”
http://www.cnbc.com/id/49142549
What would Steve Jobs do?
(probably threaten to pull their contract if there was any more publicity about it)
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These lists of best and worst states for business always reminds me of the Yogi Berra line about the restaurant nobody goes to anymore because its too crowded. If New York is so bad for business, why are there so many there? Perhaps they have a bad reputation because they don’t need to give away the store in incentives to draw in companies. There does seem to be a certain sour grapes aspect to the whining.
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yello
Perhaps then I could interest you in Massachusetts projected 1.3 billion dollar deficit next year or almost twice as much as Romney left him
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markinaustin, on September 24, 2012 at 8:01 am said:
…
so long as the lege cannot move the goal posts after the game has begun.”
I would direct you to the existing history of public employee pensions, which seems to completely refute that premise.
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