Archive for July 8th, 2011
Folks… you just can’t make this stuff up.
On July 6th, just two days ago, at least a dozen busybody Congressmen sponsored the introduction of HR 2411, the “Reduce America’s Debt Now Act of 2011.” They always come up with fantastic names for these pieces of legislation… and rest assured, the better/more patriotic the name, the more ominous the bill. This one follows the pattern.
HR 2411 states that every worker in America should be able to voluntarily have a portion of his/her wages automatically withheld and sent directly to the Treasury Department for the purposes of paying down the federal debt.
“Every employer making payment of wages shall deduct and withhold upon such wages any amounts so elected, and shall pay such amounts over to the Secretary of the Treasury…”
That’s right. Uncle Sam is so broke that he wants to give all the good little Americans out there the opportunity to contribute an even greater portion of their paychecks to finance government largess.
Desperate? Hmmm…. Don’t worry, it gets better.
Obviously, if an employee feels so compelled and should elect to have a portion of his/her paycheck withheld, the onus of responsibility is now on the employer to make it happen. The employer has to do all the paperwork, withhold the money, send the payment to the Treasury, maintain the account records, and probably submit to all kinds of new filing requirements.
You can imagine that, if passed, the bill will result in a host of new IRS regulations, complete with a battery of penalties for employers who don’t fill out the paperwork properly, submit filings on time, or make some administrative mistake.
Think about it: if a small business owner has one single employee who is dumb enough to think that it’s his patriotic duty to pay down the debt and decides to contribute $1/month, that owner will have the responsibility for all kinds of new forms and filings, plus submit to new ‘debt reduction audits.’
But don’t worry, it gets even better.
So let’s say there are millions of sheep out there who elect to donate a portion of their toil and sweat so that the Chinese and big financial institutions don’t have to worry about an American default. How does Congress plan on rewarding its most patriotic citizens? By sticking it to them on their taxes, of course.
HR 2411 stipulates that any contribution made to the Treasury in order to pay down the federal debt IS NOT TAX DEDUCTIBLE.
“The [Treasury] Secretary shall include. . . a reasonably conspicuous statement that any amounts deducted and withheld from wages. . . are not deductible as charitable contributions for Federal income tax purposes.”
Imagine this scenario: You make $100,000/year. In a fit of complete insanity, you decide that you want to withhold your entire annual salary to pay down the debt. Hey, you can always move in with mom for the next year, right?
Well guess what– Uncle Sam will gladly take your money… and then STILL expect you to pay taxes on the $100,000 that you earned, so you’d have to come out of pocket with an additional $40,000 or so.
Don’t worry, though. The Social Security and Medicare wages are reduced by the amount that you withhold, making you only liable for state and federal taxes. Seems like a good deal, eh comrades?
There are so many things utterly wrong with his piece of legislation, it’s hard to know where to begin other than by saying that such intellectual and philosophical perversion is only capable of springing from unprincipled sociopaths whose sole capability is the destruction of value.
There’s a great quote from Atlas Shrugged that comes to mind which sums this all up:
“[W]hen you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you. . . you may know that your society is doomed.”
We’ve discussed the story of the boiling frog so many times before– a frog, when put into a pot of water and slowly brought to a boil, doesn’t realize that he’s in danger until its too late. I think the boiling frog just got a little hotter. Have you hit your breaking point yet?
In case you were wondering, here are the Members of Congress responsible for this idea:
Rick Crawford, (R-Arkansas)
Pat Tiberi, (R-Ohio)
Stephen Fincher, (R-Tennessee)
Jeff Landry, (R-Louisiana)
Jeff Denham, (R-California)
Robert Dold, (R-Illinois)
Bill Flores, (R-Texas)
Tim Griffin, (R-Arkansas)
Austin Scott, (R-Georgia)
Bill Huizenga (R-Michigan)
Steven Palazzo (R-Mississippi)
Frank Guinta (R-New Hampshire)
You might want to drop them a line and suggest that if they want to pay down the debt, maybe THEY could STOP SPENDING AND STOP BAILING OUT INSOLVENT FINANCIAL INSTITUTIONS, including foreign ones. Or perhaps maybe they could forego their own pay, since they all just gave themselves and their staff big salary increases.
This chart represents the average duration of unemployment. The historical upward trend hasn’t slowed down since November of 2009.
Now what was that about ‘recovery’? Maybe for the banks that are continuing to be propped up courtesy of the US taxpayer. Maybe for the Federal Reserve, which continues to create money by devaluing our currency. But for you and I? Not so much.
Our Politicians Are Selling Off Pieces Of America To Foreign Investors – And Goldman Sachs Is Helping Them Do It
All over the United States, politicians are selling off key pieces of infrastructure to foreign investors and big Wall Street banks like Goldman Sachs are helping them do it. State and local governments across the country that are drowning in debt and that are desperate for cash are increasingly turning to the “privatization” of public assets as the solution to their problems. Pieces of infrastructure that taxpayers have already paid for such as highways, water treatment plants, libraries, parking meters, airports and power plants are being auctioned off to the highest bidder. Most of the time what happens is that the state or local government receives a huge lump sum of cash up front for a long-term lease (usually 75 years or longer) and the foreign investors come in and soak as much revenue out of the piece of infrastructure that they possibly can. The losers in these deals are almost always the taxpayers. Pieces of America are literally being auctioned off just to help state and local governments minimize their debt problems for a year or two, but the consequences of these deals will be felt for decades.
Sadly, this trend continues to accelerate. Just this week, a bill that will allow the state government of Ohio to proceed with plans to lease the Ohio Turnpike to investors was approved. The state government of Ohio will soon receive a one-time injection of cash and everyone in the area that uses the Ohio Turnpike will end up paying much higher tolls for decades to come.
Highways have also been auctioned off (most of the time to foreign investors) in Indiana, the city of Chicago, Florida, Virginia and Texas.
Amazingly, many politicians continue to insist that selling off pieces of infrastructure that have already been fully paid for by taxpayers is a wonderful thing. In fact, there are actually some politicians that have the gall to call it a “conservative” thing to do.
For example, Rick Perry has been at the forefront of the effort to “privatize” the highways of Texas.
You would think that the people of Texas would have gotten rid of him by now, but considering the fact that he may be running for the Republican nomination in 2012, he just might be our next president.
What makes the selling off of our infrastructure even worse is that big Wall Street banks such as Goldman Sachs are helping our corrupt politicians do it.
In fact, Wall Street sees a tremendous opportunity in the “distressed assets” of our broke state and local governments.
The fact that Goldman Sachs is making millions auctioning off our public infrastructure should make the blood of all red-blooded Americans boil. The following is a brief excerpt from a recent article posted on dylanratigan.com….
On Wall Street, setting up and running “Infrastructure Funds” is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman’s 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with “ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States.” While the bank sees increased opportunity in “distressed assets” (ie. Cities and states gone broke because of the financial crisis), the bank also recognizes “reputational concerns with the manner in which these assets are being operated or held.”
Why does Goldman Sachs always seem to be at the heart of so many things that are wrong with our financial system?
Unfortunately, Goldman Sachs is not the only one seeking to make a quick buck these days.
Foreign investors in particular seem to have an affinity for pieces of U.S. infrastructure, and Wall Street banks such as Goldman Sachs love to help them gobble it up.
The sovereign wealth funds of nations such as Saudi Arabia, China, Kuwait, Libya, Singapore and the United Arab Emirates are eagerly investing in highways, ports, toll roads and even parking meters all across America.
So precisely what is a sovereign wealth fund?
In a previous article I defined it as “a huge mountain of state-owned money that roams about the countryside looking for assets to gobble up.”
The combination of sovereign wealth funds with huge piles of money to burn and state and local governments that are desperate to raise cash has created something of a “perfect storm”.
In an article for Rolling Stone, Matt Taibbi documented some of the key pieces of infrastructure that these sovereign wealth funds have been gobbling up….
A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.
As Taibbi noted, the money that is raised from these long-term leases usually only helps fix budget problems for a year or two, but the pieces of infrastructure that are being auctioned off will be in the hands of foreigners for decades to come.
Sadly, much of our own infrastructure is not even built in this country anymore.
For example, a 2,050 foot bridge that is going to connect San Francisco and Oakland is actually being built in China and is being shipped over to the U.S. piece by piece.
This bridge is being constructed by the China State Construction Engineering Group, and according to an article in The Telegraph, they have been building a whole lot of major projects all over the United States….
CSCEC has already built seven schools in the US, apartment blocks in Washington DC and New York and is in the middle of building a 4,000-room casino in Atlantic City. In New York, it has won contracts to renovate the subway system, build a new metro platform near Yankee stadium, and refurbish the Alexander Hamilton Bridge over the Harlem river.
Massive corporations that are either fully or partially owned by the Chinese government are deeply integrating themselves into the U.S. economy.
For much more on this phenomenon, please see a previous article I authored entitled “The Chinese Government Is Buying Up Economic Assets And Huge Tracts Of Land All Over The United States“.
Sadly, as our state and local governments get even deeper into debt, the amount of infrastructure that is being auctioned off to foreigners will continue to grow.
Most Americans don’t realize how desperate many state and local governments have become. For example, things have gotten so tight that New York City is now actually rationing toilet paper at Coney Island.
The United States is drowning in debt from coast to coast and pieces of the country are literally being auctioned off. The looting and the “privatization” are only going to intensify as our state and local government debt problems get even worse.
Perhaps on all future maps of the world we should just put a big “for sale” sign on the United States.
What in the world has happened to this country?
Gee, where are all the people telling us that the economy is recovering and it will all be ok? ‘Da Bulls – where ‘ya be?
Nonfarm payroll employment was essentially unchanged in June (+18,000), and the unemployment rate was little changed at 9.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major private-sector industries changed little over the month. Government employment continued to trend down.
The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.3 hours in June. The manufacturing workweek for all employees decreased by 0.3 hour to 40.3 hours over the month; factory overtime edged down by 0.1 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.6 hours in June. (See tables B-2 and B-7.)
In June, average hourly earnings for all employees on private nonfarm payrolls decreased by 1 cent to $22.99. Over the past 12 months, average hourly earnings have increased by 1.9 percent. In June, average hourly earnings of private-sector production and nonsupervisory employees declined by 1 cent to $19.41. (See tables B-3 and B-8.)
So much for the ADP. Yeah, it prodded me into raising my expectations as well. Fortunately it didn’t also prompt me to buy into the rally yesterday based on that ADP number, because this morning it’s basically all gone (as it well should be.)
What’s even worse is that both the workweek and hourly earnings decreased. That is, while prices go up on commodities, including food and energy, your earnings are going down not only in inflation-adjusted terms but also in nominal terms!
That’s just plain old-fashioned bad.
What’s worse is that the population increased by 176,000 but the household survey says that only 101,000 jobs were added. That is, 75,000 fewer people were working when one adjusts for population change.
This is what I have repeatedly pounded the table on – the employment rate is going the wrong way and there has been no improvement of materiality in it whatsoever.
The “big chart” is here:
This looks like we’re just barely positive on employment trends. But that’s misleading, and misleading the public is what the media is all about this morning, as they’re saying that we had a positive number. We most-emphatically did NOT.
A few workers re-entered the workforce. But that contributes to things going the wrong way; now you have more people competing for the available jobs.
The employment rate continues to bounce along the bottom, making no headway.
When adjusted for population change, which is the number that matters not only for private prosperity but also for government funding sustainability, we appear to have topped out and are once again rolling over.
Bluntly: This report just plain sucks and is further validation of my thesis that government deficit spending does not create lasting economic recovery – it instead creates asset bubbles and distortions.
Time to face reality folks.