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A CEO gets fired when he fails to deliver results, an important lesson

4 Feb

It’s not spending, it’s lower than expected revenue. Spin baby spin. The last time I checked there were two parts to an equation and they were supposed to be equal. One goes up the other goes down.
Read this from the Center for American Progress (man, do I love that word progress):

The federal budget deficit will again exceed $1 trillion this fiscal year, the Congressional Budget Office reported today. That news is sure to trigger another round of condemnations from politicians and pundits who have a political or ideological interest in pinning these deficits on the domestic spending policies of President Barack Obama.

Unfortunately for them, today’s report—along with dozens of other similar CBO reports in recent years—actually proves the opposite—that the current deficit is overwhelmingly the result of two factors: events that occurred before President Obama took office and tax cuts.

In fact, higher spending under Obama accounts for less than 20 percent of this year’s deficit, and nearly half of that was additional defense spending—not domestic spending. Bottom line: The narrative that an “Obama spending spree” caused our deficit problem is utterly false.

Events that occurred before Obama took office and tax cuts, ummmm, so what?  Tax cuts you say? I think you mean the tax rates in effect for more than four years.

Let’s think about this; Mr Obama ran for President knowing full well the state of the economy, all about the Bush bailouts, and the tax rates in effect then and now. He still promised hope and change.

For the last two years of the Bush Administration and the first two years of the Obama Administration Mr Obama’s party controlled the Congress providing ample opportunity for both hope and change (the good kind).

Knowing the tax rates and the state of the economy, it is no magical leap to estimate federal revenue thereby allowing a prudent manager to adjust spending accordingly if there is any goal to reduce or at least not increase the deficit. Instead the President spent most of his time with failed attempts to stimulate the economy and seeking out scapegoats from successful Americans to insurance companies and even the Supreme Court.

Are we to believe that the President of the United States, a man who seeks and accepts the most difficult job in the world is not responsible for dealing with events that occurred before he took office?  Bush increased the deficit, we get it. Obama increased it even more, we get that too. I haven’t received a raise in three years, to cope I watch my spending closely, and do not increase my debt, most Americans get that.

The view that taxes being too low is the cause of the deficit has got to be a reflection of the ass backwards thinking of the generation now in charge of our country.  A generation that grew up thinking uncontrolled spending and little saving had no consequences.
If an executive seeks a potentially lucrative CEO position with a company heading for bankruptcy and fails to turn the company around claiming that events leading to the bankruptcy occurred before his tenure caused his failure, he gets fired.  The buck stops with the person in charge.  Need I say more.

Where is Harry Truman when you need him?

48% of likely voters believe Congress is corrupt

4 Jan

See the following from Rasmussen.

New High: 48% Say Most Members of Congress Are Corrupt In Politics

A new Rasmussen Reports national telephone survey shows that 48% of Likely U.S. Voters believe that most members of Congress are corrupt. Just 28% disagree, and another 24% are not sure. Rasmussen Reports updates are also available on Twitter or Facebook. The survey of 1,000 Likely Voters was conducted on December 27-28, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC.

Many people don’t think Congress is doing a good job, that government is the problem and even that Congress is corrupt. Based on my personal experience with feedback it also appears people are willing to believe the most outrageous things about members of Congress, like they receive their pay for life and that Congress stopped the Social Security COLA for two years . . . And yet we keep electing the same people over and over so they become so ingrained in the system they are frozen with the fear of losing power.

Isn’t it really time for term limits?  We only need a few more signatures on our petition to get it released to Congress. Please click in the term limit link and sign the petition (U.S. citizens only please).

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If you thought Congress was dysfunctional in December 2011, just wait for 2012

2 Jan
46th United States Congress

Simpler times

Let’s see, Americans couldn’t handle expiration of the 2% payroll tax in 2011, but come 2012 they will be  faced with expiration of not only the payroll tax break, but all of the Bush tax rates.  And given the failure at deficit reduction, automatic cuts will kick in. Not to worry you say, there is a full year for Congress to fix things. True, but 2012 is an election year so rather than solving a problem with a real solution Congress and the Administration will look to popular “solutions” that appeal to this or that voter block and nothing more.

It is a sad commentary on our dysfunctional system that is perpetuating uncertainty, indecision and an economy that will see little change in 2012.

Have you considered signing the term limit petition?  See the link at the top of this page. 

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Stimulating the economy with your money

30 Dec
International Money Pile in Cash and Coins

Small change

Writing for The Huffington Post, Paul Kleyman talks about the very real shortcomings of the 2% payroll tax recently extended by Congress.  His point being it’s really not much of a cut for working families and that there were better ways to get money in workers (voters) hands (he is right about that). Here is a small part of what he said.

In other words, by giving everyone a 2 percent cut, Washington has gifted more money to wealthier people, those apt to salt the savings away in their banks, and less to middle and working class people, who would be more likely to spend it on rent, groceries and maybe a few holiday gifts.

So, it appears that within the last few years we have developed a society of poor middle – income Americans despite low inflation and interest rates. So much so that the two percent temporary tax cut will go to rent or groceries, and this among people who are working. No doubt everyone can find a way to spend two percent more in take home pay (if they even notice it is there), but it appears the media can’t resist playing up the idea that everyone short of the infamous 1% is poor. I’ll believe that when I start seeing nail salons, beauty salons, Chinese restaurants and Dunkin Donut shops going out of business.

While some people are spending their 2% on rent and groceries, others in the group attending a White House photo op promoting the tax cut said they were using it to give to charity or to go out to dinner. In any case, spending on necessities or donating the money hardly sounds like economic stimulus.

Whether it is a payroll  tax holiday or some other refund or rebate, it all boils down to one thing  the government giving you back your own money that has already spent on something else.  Doesnt that beg the question why the money was collected in the first place? This is not about stimulating much of anything other than your undying gratitude for the politician of your choice.

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Voters think Social Security tax cut good for economy … Live for today!

28 Dec

Will extension of the two percent payroll tax cut help the economy? Most people say yes, but that it won’t affect their finances … Ummmmmm?

This from a recent Rasmussen poll:

Most voters agree that extending a 2% cut in the Social Security payroll tax for all of 2012 will be beneficial for the economy but won’t significantly impact their financial plans for the year. Congress signed off on a two-month extension of the tax cut last week but are hoping to extend it for all of 2012 when they reconvene after the holiday.  A new Rasmussen Reports national telephone survey finds that 60% of Likely U.S. Voters believe that if the payroll tax cut is extended for the full year of 2012, it will help the economy at least a little. That includes 22% who think it will help the economy a lot. Only 10% feel extending the tax cut will hurt the economy, with just four percent (4%) who think it will hurt a lot.

Interestingly, in another Rasmussen survey 60% of respondents said government is the problem, not the solution. I wonder if voters have any idea what they want, except as George Meany famously said, “more.”

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The federal credit card

26 Dec

While members of Congress are busy patting themselves on the back for managing to extend a tax cut for two months, we should not lose sight of how this was paid for. Check this out from Huffington Post.

Although House Majority Leader Eric Cantor (R-Va.) has repeatedly insisted there are no large differences between what the two parties want, there are. When senators gave up on trying to reach a yearlong agreement before Christmas, it was because they could only agree on how to pay for about $100 billion of the $200 billion total cost.

And the only pay-for that both sides really embraced was raising $36 billion by levying fees on bank transactions with Fannie Mae and Freddie Mac, a funding source that will take a decade to cover the cost of the two-month extension.

So, a two month tax cut will be paid for over a ten – year period by adding to the cost of a mortgage for the upcoming generation. It’s a good thing they didn’t extend the cut for the full year, that would have taken sixty years to pay off. But hey, they did a darn sight better than in 2011, that tax cut wasn’t paid for at all … bazinga!

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Obama says “enough is enough,” I agree but I suspect we are talking about two different things

22 Dec
President Barack Obama signs the executive ord...

Just sign here I need that 2%

According to an article on Bloomberg.com December 21, “Democrats have spent the past several days warning that average middle-income workers could lose about $40 from each paycheck if the tax cut expires.” Supposedly everyone agrees the tax cut should be extended, there will be dire consequences if it isn’t, the recovery will be stalled, the middle class will be harmed, yada, yada, yada!

Somehow this has taken on a life of its own. No longer is anyone asking if we should do this at all or if we accomplished anything by doing it for 2011. Lost from the debate is the fundamental issue of changing the funding stream for Social Security. Democrats should be asking the question, what would FDR  do?  Instead the politicians are asking what will play well next November. And then we have the President doing this as reported by Politico:

“Surrounded on a stage by people who had responded to an invitation by the White House to describe how rescinding the tax cuts would affect them, Obama said that “enough is enough” and that “the people standing with me here can’t afford any more games.”

The very people who criticize corporations for wanting to relocate or to cut their workforce to meet earnings targets, are more than willing to do far worse to the country to meet their political goals as long as they can mask it as a benefit to the middle class. By this time next year unemployment may be at 8%, GDP 3% if we are lucky.  Will the 90% of workers who are currently employed and living their lives as they always have,  be in better shape to “lose about $40 from each paycheck” or will they be dependent on the extra 2% in their paycheck and be unconcerned about Social Security funding?

While counterproductive to increasing spending, earlier this year I suggested that people take the extra 2% in their pay and leverage it by increasing pre-tax 401k or IRA contributions to boost retirement savings and also avoid the shock of a future tax increase when the largess expires (assuming it does, of course). I still think that’s a good idea.

What the President probably meant to say was “the people standing with me here can’t afford me anymore.”

 

“Senator Reid and I have reached an agreement that will ensure taxes do not increase for working families on January 1.   Ah, good news …

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Give yourself a real Christmas or Hanukkah present

22 Dec

What better present can we give ourselves a present than to deal with the  spoiled children who pretend to run our country?

“I want a two month extension.” “I want a one year extension.”  ”I’m not talking to you until I get my way, so there!”

Vote for term limits and help stop this nonsense, sign the petition today!

Democrat or Republican, conservative or liberal, shame on you if you are not fed up at all that is going on .

The next thing you know they will be throwing their peas at us.

Term limits for members of Congress are essential, please support the petition

16 Dec

All across the US and indeed the world governments and individuals are learning there simply is not enough money now or from future generations to fulfill all the promises made by politicians.

Some of these promises were made in a sincere attempt to help people, other politically motivated and still others simply poorly thought out dumb ideas. It doesn’t matter, they all have to be paid for.

For our part we citizens generally welcome this largess be it subprime mortgages, Social Security COLAs, tax credits or generous pensions. Others see social goals such as the environment as primary over economics. Again, it doesn’t matter why we accept all this spending, it still has to be paid for.

Politicians are forever going to act in ways that get them re-elected with long – term consequences being secondary. We need to change that and to limit the potential damage so that re-election is no longer a driver of spending.

In essence, we need to protect ourselves from ourselves.

Please consider signing the Term Limit Petition. We need 100 people to sign to get to the next step and time is running out.

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Social Security payroll tax cut; bad policy made worse by bad logic

13 Dec
Franklin Delano Roosevelt, 1933. Lietuvių: Fra...

You're doing what to Social Security funding?

It’s nice to know I am not alone worrying about the difficulty removing the “temporary” cut in payroll taxes once ingrained in the economy. Take a look at this excerpt from a recent article in the San Francisco Chronicle:

Social Security advocates say they fear these cuts won’t be the last. It may not be any easier for Congress to allow them to lapse next year, with the elections in November and the unemployment rate projected by the Congressional Budget Office to average 8.5 percent. Forcing the government to tap further into general revenue could lead to the kind of funding fights that Social Security has avoided until now.

Representative Jerrold Nadler, a New York Democrat, said he supports extending the payroll tax cut, though reluctantly.

“To take it away would be a body blow to the economy,” said Nadler, who called the tax cut a “very bad” change in Social Security policy. So “we’ve got to live with it for another year or two.” Massachusetts Democrat Barney Frank said that while he didn’t like the tax cuts initially, it would be a “great mistake” not to continue them now.

Some critics of Obama’s proposal say their wariness stems from Social Security’s unique character. It was designed in 1935 by President Franklin Roosevelt to be an autonomous program that paid its own way through a dedicated tax.

So you see the trap, you approve something you don’t like, that’s “very bad” and then it becomes a mistake you have to live with,even though it remains bad policy. This is especially true when Congress tinkers with taxes. Increases can’t go away because they are relied upon for government spending even when they are supposed to be temporary or limited. Decreases can’t go away for the same reasons except replace “government” with taxpayer.
This is what happens when all thinking and policy setting is focused short-term or more accurately on the next election.

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President Obama and his nation of lobsters

10 Dec
President Barack Obama and Warren Buffett in t...

Sure, I enjoy a good lobster now and then

The President seems to be on his tear down America tour again. Nothing works because big business, banks and Wall Street are too greedy and corrupt and the middle class has no chance to move up.

He says the idea that big business and the wealthy can raise the tide for all just doesn’t work and never has. If the American system of capitalism never worked how did America become the greatest, wealthiest most powerful nation in the world in just short of 250 years? Sure, there were bumps along the way, as a nation we did some terrible things to many people, everyone didn’t always play fair, there were winners and losers along the way, but every person in America did benefit from the rising tide, every person had (and still has) opportunity and even the least advantaged among us are better off than most of the people in the world.

You can find fault and justified criticism of all the great industrialists and robber barons in our history. Ford, Firestone, Vanderbilt, Carnegie and all the rest took advantage of our system, took advantage of labor, but would we have what we have today or be better off without the likes of these people or what they ultimately accomplished for America under our free market system?

This President delights in finding scapegoats in an ever ongoing effort to pit Americans against one another either to deflect the real cause of economic problems or advance a far left agenda.  Over the centuries Jews, Gypsies, American Indians, the Irish, African-Americans and many others have been the victims of scapegoating to further someone’s political agenda. This President focuses on the wealthy (defined in interesting ways), business, Wall Street, banks, insurance companies, and the supreme court as his targets, all the while avoiding a positive, work together, we can succeed message about America.  He sees success in tearing down rather than building up.

Mr Obama finds comfort in blaming someone else; his predecessor, Congress (mostly any part of Congress that doesn’t agreee with him) and the 1%.  I am looking for an example of a CEO who kept his job very long using the problems he inherited when he took the job as an excuse for not raising earnings, revenue or market share. To be fair Mr Obama doesn’t know how to act like a CEO, he is after all a career politician and nothing more.

Free lunch? Let me at it, I'm not afraid of no stinking boiling water

Populism sounds great in auditoriums, but the reality is it doesn’t work because promising more and more on the backs of others is a false promise. The lobster enters a trap for a free lunch and ends up being someone else’s not so free dinner. The lobster can’t figure out how to let go and back out the same way he came in.

When Americans hear the ongoing drone that taxing the “wealthy” will raise them up and give them more opportunity, they should ask exactly how that is going to happen.  How will Warren Buffett paying an effective tax rate of 35% rather than 17% create jobs, cause US manufacturing to grow and make American goods more competitive on the world market?  If you could assure that no American could make more than $250,000 a year, would that make you feel good or would you say, “”Hey, someday I would like to earn more than that.” or “I hope my kids do better than that.”

I send a donation each month to a school that gives a free education to inner city minority children and then gets them scholarships to the best private high schools in the state with most going on to college also on scholarships. If you believe in the Obama rhetoric, then you must also believe that my monthly donation would be put to better use paid as taxes to the federal government. That is the essence of the issue.

No, everyone cannot be left to simply fend for themselves, nothing is right-wing simple. We need some safety nets, some national strategy and some regulation to assure fairness, but we also need individual responsibility and accountability.

To play on the theme that my life is the result of someone else or some system being unfair to me is the biggest trap of all.  Little in life is not the result of our own actions or inactions.

President Obama should be ashamed trying to make us a nation of lobsters

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When will it be a good time to raise the Social Security payroll tax?

8 Dec
Roosevelt Signs The : President Roosevelt sign...

It's insurance I said!

 This year’s 2% payroll tax cut was paid for by increased deficit spending. In other words we “temporarily” turned Social Security from a self-funded program into a Congressional budget allocation funded by more debt. That is exactly the opposite of the original design of the program.  On this path Social Security becomes another form of welfare subject to the political whim of each new Congress . . . but it’s only temporary. When you look on your paystub you will see “FICA” opposite the deduction for this tax.  Do you know what the I stands for?  It stands for Insurance, the Federal Insurance Contributions Act.  Messing with something that is supposed to be insurance funded by employer and employee contributions is nuts.  It undermines the very essence of the Social Security system for political expediency and places its funding not with the beneficiaries, but at the mercy of Congress.

Some ideas to pay for extending and enlarging this tax break, and I use the term loosely, include raising airport fees, gasoline taxes or taxes on other parts of the economy.  Even someone like me who got a C in Econ 101 can see the irony of this; raise the cost of gasoline… that should help the middle class. 

The many promises for this 2% tax break; new consumer spending, job growth, etc., we’re so successful politicians want to do it again also on a “temporary” basis. This time they want to raise the success level by cutting the tax rate to 3.1%, fully half the worker portion of 6.2% needed to fund Social Security (well, more is actually needed but that’s another story). This time they are actually going to pay for it by increasing taxes someplace or cutting spending someplace else thereby allowing some other federal money to be transferred to Social Security where it can be used to buy Treasury bonds to fund ongoing deficit spending, just like the payroll tax.

Social Security Poster: old man

Nothing to smile about now

Given this is all “temporary” (like the estate tax in 1918) what’s the big deal?  The big deal is what happens at the end of 2012?  Will the middle class be able to withstand a 3.1% tax “increase” then better than a 2% “increase” now?  Has the average beneficiary of this entire stimulus absorbed the 2% into their standard of living? Have they incurred new debt based on their new-found ability to repay?

To date we have sent stimulus checks to most Americans, we lowered their out-of-pocket health care costs, gave them tax credits to buy a car, a house, put in central air, new windows and I lost track of what else, now at the end of 2011 we are told diverting another $550 a year from Social Security to lower the average family tax bill will do the trick.

These tax games may be temporary, but it appears common sense is gone forever. 

 

 

Are your taxes going “up?”

6 Dec

From the AP:

The president has been seeking an extension and expansion to the payroll tax cut that will expire at the end of the year. The White House says taxes on the average family would increase by $1,000 if the cuts are not extended.

To make its point, the White House went so far as to put up a countdown clock during spokesman Jay Carney’s briefing to show when middle-class taxes would go up “if Congress doesn’t act.”

Fiddling with the isolated stream of Social Security revenue is a bad idea, we’ve talked about that before.  But it is also a bad idea to propagate false concepts and politically expedient rhetoric. If the scheduled expiration of a temporary reduction of the payroll tax on December 31 is a pending disaster, what will we call it on December 31, 2012?

According to the President, extending the tax reduction “Will spur spending. It will spur hiring and it’s the right thing to do.”  That’s a tall order for a tax reduction that has been in effect for a year with little or no such effect.  The latest version of paying for this is a lower temporary surtax on millionaires and new fees on lenders.

And then we have this from the White House:

Good afternoon,

It’s simple. If lawmakers don’t vote to extend the payroll tax cut, taxes for 160 million Americans will go up on January 1st.

President Obama just left the press briefing room at the White House where he called on Congress to extend the tax cut, pay for it responsibly, and expand it so middle class families get a $1,500 break next year.

He told Congress to put country before party and stop wasting time.

Every day, folks are fighting to make ends meet and businesses are working to keep their doors open. The longer Congress waits to extend the payroll tax cut, the more uncertainty it creates for ordinary Americans. So we’ve put a clock on every page of the White House website, counting down the days, hours, and minutes until taxes for the middle class increase. In the briefing room, where the President just spoke, that same clock is ticking down as well.

And to make sure you have the information you need to know exactly what this means for your family, we’ve put together a calculator to show how much of your money hangs in the balance.

This calculator illustrates for you what nearly every independent economist has said: letting this tax cut expire will be a blow to the economy. We can’t let that happen. Now is the time to make a real difference in the lives of the people who sent us here.
Check it out and pass it along:

http://www.whitehouse.gov/taxcu

Thanks,
David Plouff

Senior Advisor to the President

The clock is also ticking on a 27% reduction in  fees paid  to physicians treating Medicare patients. If that is fixed how  will it be paid for?  Perhaps a new temporary tax on health insurers, that won’t have any negative impact on anyone.    The estate tax was supposed to be temporary and the AMT was only to affect a handful of people who escaped paying any income tax.  Politicians have no common sense and economists find a way to validate that.

Get ready for your tax increase and pay cut in twenty-eight days…ho, ho ho!

3 Dec

While most of us are focused on the number of days until Christmas, politicians are focused on the number of days until Americans get a tax increase and doctors get a pay cut.

 
What the heck is he talking about?

 
Well, that 2% less you are paying for Social Security payroll taxes is set to expire at year end (which we all knew for the last twelve months), but that doesn’t stop some politicians from explaining the expiration of the tax holiday as a tax increase. Just imagine what they will say at the end of 2012 if the tax break is raised from 2% to 3.1% and extended to Jan 2013?

 
Just imagine what you will say when you look at your first pay stub in 2013. Oh what a tangled web we weave.  Better not use that extra cash for ongoing expenses because someday the expenses will still be going and the cash will be gone.

 
And about those doc’s pay, Congress has less than 27 days to figure out how to stop the 27% cut in Medicare’s physician payments scheduled to go into effect next year… again.

 
As I’ll conceived as this fee cut may be, and as obvious as it may be that temporary means temporary, these issues illustrate how politicians can’t deal with giving anyone less or taking away anything given even when Congress passed the laws that specify how the situations are to be handled.

 
And you really think all the parts of the Affordable Care Act will work as planned?

Barney Frank retires; another example of why we need term limits

28 Nov
Representative Barney Frank, co-architect of t...

Massachusetts Rep. Barney Frank, the ranking member of the House Financial Services Committee, will not seek reelection in 2012, his office has confirmed. Frank is a 16-term Democrat who last year helped pass the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Mr  Frank is 71 and was first elected in 1980; he made a career out of politics and it is hard to imagine that the people in multiple generations knew enough about his politics to affectively evaluate his sixteen terms in Congress. In most of his bids for reelection  he didn’t even have to campaign. Mr Frank is one of many such career politicians in both parties who overstay their welcome.

Mr Frank has a unique distinction however. While no one person can be blamed for the financial crisis and housing bubble, Mr Frank deserves a lot of the credit via pushing for sub prime mortgages, pressuring the federal mortgage agencies and most recently the ill conceived Dodd-Frank legislation.  One can only wonder if his constituents  even knew of these efforts or the unintended consequences.  He is not alone of course, politicians of both parties should be held accountable for similar social engineering disasters.

No matter, he is retiring with his federal pension and related benefits. His thirty-two year career as a “public servant” is over. However, it should have ended much sooner because we should be limiting the terms for members of Congress. Power corrupts and a long stay in Congress creates a lot of power and little accountability .

Sign the term limit petition by clicking on the link at the top of the page. 

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