What Else Do You Need To Know?

We tax all the others and pass the revenue on to you

AIG... you remember, the guys who got $170 bil of your money for bailouts in the last seven months, those guys? American Insurance Group.

The guys who won't tell Congress where the $170 bil went?

The guys who won't tell us who their "trading partners" are, the trading partners that the Wall Street Journal reports got $50 bil of that money, trading partners that include Goldman Sachs and Merrill Lynch?

The guys who already spent a bunch of bailout money on a party for their executives?

The guys who just got a comittment for another $30 bil of your money for bailouts?

Those guys?

They're going to pay out $100 mil in bonuses!

Have to, they say. Bozo bonuses.

What else do you need to know about the bailouts? If this was a rational world there would never be another government bailout of anyone for anything.

NEVER!

Words fail me.

Sacred Cows

We tax all the others and pass the revenue on to you

What about eliminating farm subsidies? "But prices will go up" is the lament. If market economics has any validity at all, higher prices will attract more sellers and growers and bring fallow land back into production, lowering and stabilizing prices. If there's money in beets then people are going to grow beets, even if they have to do it in their back yards.

"It will force more farmers out of business." Maybe, but they aren't the family farmers of Norman Rockwell paintings. They are the agri-giants and if they can't compete, they fail. Just like you. What they stop doing is sucking up your tax revenue in the process.

When milk price supports were eliminated did you notice? No. Dairies that couldn't make it without your tax dollars were either bought out by others who could or went out of business. That's the market for you.

I like the prez's position on this but I think it should go a lot further; I don't like his chances, though.

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Last week Annette Nazareth looked like a cinch to become TimmyG's deputy. Nope. She dropped him like last summer's boyfriend.

H. Rodgin Cohen did the same thing yesterday, withdrew his name from consideration for DepSecTreas, not the boyfriend thing.

They must figure there's no point in taking the pay cut and losing your credibility.

Who ever imagined that the DeptTreas would run the American economy?

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Switzerland and Austria are loosening their bank secrecy laws... a little bit. And I only mentioned it yesterday. Oh, the power of the press. Or the prez. Good onya, prez. And TimmyG? Good on you, too.

Taxation with representation ain't so hot either. -- Gerald Barzan

Last Year's Business

We tax all the others and pass the revenue on to you

"Last year's business", that's what the president called the budget he just signed, the one will the disgraceful 9,000 pork projects. You know, last year when he and the rest of Congress were supposed to be working on it? They didn't. He seldom showed up for work at all. McCain either, so don't get touchy. Too busy campaigning. Campaigning was good for him; bad for us because he got the Oval Office and we got stuck with last year's business... and the bill.

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Watch For It...

... The prez to bring on Bill Clinton as some sort of buck-a-year "special advisor" on budget and the economy. He's got so many of the old gang there already, why not bring back the big dog? Maybe he can contribute something. His budget surplus was a little bit smoke and mirrors but I'll grant that it wasn't $3 tril downhill like we've had recently, and that after Bush took us a tril downhill beforehand.

"Change you can count on?" He never said what kind of change. He won for being less like Bush than McCain, period.

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Lichtenstein is renouncing its status as a rogue tax haven state. Andorra, too. I feel better already. Switzerland? Maybe not.

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I was shocked, shocked I tell you, to learn that a congresswoman had thrown in with her husband's old bank to press for some of that free bailout money. Weren't you? Only got $12 mil -- hey, they're a small bank -- but that was under Bush. Maybe next time, Maxine Waters. After all, just because the bank was paying for its president's Porsche Cayenne and maintaining his Santa Monica beachfront estate didn't mean that the bank didn't need more money. Maybe he needed another Porsche.

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Were any of you planning to die in 2010 to take advantage of the estate tax suspension that year? Well, forget it. Ain't gonna happen so put dying on the back burner for now.

Say, you did know that there is no death tax, didn't you? The estate tax taxes a transfer of wealth in excess of a certain minimum. I don't have a dog in this fight because I'm a few mil short of the minimum. This has become largely a demonizing euphemisms fight. Death tax v. estate tax is like pro-life v. pro-choice. The labels don't tell you much.

There's a lot of trash talk on the right about this issue, less on the left other than "They're dead so why don't we take their stuff." Sort of like post-Katrina looters.

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Let me say this again. No significant health care reform AND energy policy reform AND economic recovery in the first two years of this administration. Whatever political capital the prez has left is going toward economic recovery.

"The plan" calls for 8% unemployment this year. It's going to hit 10% before Christmas. You're not going to spend, the merchants aren't going to sell and 2010 is shaping up to be another bad year.

Glimpse of the future: Michigan reports sales tax revenues down 18% in Feb. and more income tax refunds than income tax received so far. Their unemployment is already 11.6% and rising fast. Jan. taxes YTD were down by $200 mil, another $100mil in Feb. Thanks, Chicago Tribune... I think.

Horse sense is the thing a horse has which keeps it from betting on people.
W. C. Fields

It's Only 1%... of $787 Bil

We tax all the others and pass the revenue on to you

The prez isn't proud of his funding bill but he does remind us that earmarks are "less than 1%" of the proposed spending." $7 bil is less than 1% of $787 bil and even adding in the sure-to-come cost overruns it will probably still be less than 2%.

TimmyG boasts of the $730 mil that the stimulus gives to the SBA, which he sees as a pillar of any economic recovery. Less than 1% is significantly low to the prez. Less than 1/10 of 1% is significantly high to TimmyG. It's a shell game, the pea is our money and we don't have a chance of winning.

Meanwhile, TimmyG tells us that ""we are doing in weeks what countries did in years." Maybe, but is that a good thing?

In my Feb. 9 blog I asked "What if the plan doesn't work?" Now we know the answer: More spending, even if more spending hasn't helped. Bush spent the first tril and it didn't work. The prez spent the second tril and it didn't work. From Bloomberg March 5:

Geithner also said yesterday that details on a separate $1 trillion program to remove distressed mortgage assets from banks’ balance sheets will be coming within the next two weeks.

Isn't "removing distressed mortgage assets from banks balance sheets" what the TARP plan -- since renamed the "Financial Stability Plan" -- was supposed to do? We overpaid $78 bil for TARP assets but weren't we supposed to get something for the remaining $272 bil? That was only from the first $350 bil (did you know the word "tranche" before this?) and how much financial stability did we get for that?

OK, playing only slightly loose with the numbers, that's $3 tril we're talking about already. Here's what three tril looks like:

$3,000,000,000,000.00

If that doesn't give you sticker shock, just wait for the next plan. Two tril down, another on the way and what are we going to get for it? Let's hope it's not a plan for the 4th tril, but what are the chances?

“It’s going to require more carefully designed, appropriately conditioned capital from your government, as well as a much more powerful set of direct credit support to the markets that are critical for consumers and small businesses.” -- TimmyG to the Senate last week. Good-bye chances.

Carefully designed, appropriately conditioned capital? How much of that have we seen so far?

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David Brooks of the NYTimes offers a good summary of the administration's general position on the budgets HERE. It is thought-provoking and reasonably objective and a good piece.

Don't get it right, just get it written. -- James Thurber

No Help Needed

We tax all the others and pass the revenue on to you

Paul Krugman is a Nobel laureate economist and a NY Times columnist. An odd and egocentric combo but there you have it. He lamented Sunday that the problem with the stimulus-bailout is that it's too small, as a consequence of which the administration won't be able to pass another stimulus-bailout bill this fall.

That's a warning from a Nobel-winner. The current plan is tanking and is going to need its own bailout. Problem is, how much money will be needed then and where's it going to come from and who is going to support more spending when this round fails? Will the prez have the political capital to pull off another round of massive spending?

Krugman hedges by saying it's a warning, not a prediction. That's what Nobel economists do instead of giving answers to problems they tell us about. The second stimulus is already on its way, count on it.

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"Carried interest" at its heart treats some hedge fund income as capital gains, resulting in billions in tax savings to market manipulators. The administration has the good idea of characterizing it as the ordinary income it is. There was a good article in the NY Times yesterday. Republicans have no thoughts on the issue (qu'elle surprise). Lobbyists for the investment industry, the National Venture Capital Association for one, abhor the idea. Even Magic Johnson has weighed in with warnings about the effect on investors in minority communities. That effect would be, um... the same tax rate on those investors as on the members of the minority communities? Sounds pretty fair, which is exactly their problem with it.

Half of what you pay for gas is taxes. Roughly the same for cigs, beer, the things you buy on a daily basis. What taxes do stock traders pay for their purchases? Nothing. Time to bring back Bob Hebert's idea of a .0025% tax, sort of a sales tax, on stock market purchases. (See my 1-14-09 blog.) You drive to work, you pay gas and road taxes. You buy stocks for free, sitting in your PJs in front of your PC? Tax-free purchases and capital gains tax treatment on the back end if you hold them long enough. If you lose money on the deal, you suffer the loss, no more. Looks like an ideal place for a use tax to me.

Hey TimmyG! These two ideas will bring in revenue with minimal impact on your boss or his core constitutency. They're worth a shot.

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Hey Republicans, where are your ideas and plans? At least get them on the table for us to see. We're all in this together, remember? If your ideas are better than what we have now, you'll eventually prevail. No, really, that's how it works.

And if you have an idea that might help, can you contact TimmyG or his minions? Well, no. Check out the DeptTreas website. They've got a "contact us" page, of course, but no place for you to offer your help. Guess they've don't need any.

Any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction. -- Albert Einstein

Tax Collectors Wanted

We tax all the others and pass the revenue on to you

In two seemingly unrelated announcements:

1. IRS has done away with private tax collection practices. They never worked anyway.

2. IRS is hiring 568 new revenue officers, the folks (I was one for 27+ years) who collect taxes when people can pay but won't. "Tax collectors" in most other parts of the world, those whose patron saint is Matthew. In Laguna Niguel (SoCal) they're even offering a $5,000 hiring bonus, according to the Orange County Register. That's new. It ain't easy to find people who actually want to be tax collectors. Here's the story of how I became one.

It's not easy to find out about these openings. Try googling revenue officer + hiring + (name of a city you are interested in working in) and/or visit any IRS office and inquire.

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Can't have it both ways, plunging government revenue and soaring promises that turn into public demands, without massive tax increases which, in turn, discourage the very endeavors that produce taxable private revenue. NJ is among the tanking state economies. John Corzine promised to use his experience at Goldman Sachs to bring order to the NJ budget. Ooops.

Still, he's better off than Arnold. Redeeming those RWs yet Arnold? No, I didn't think so. Memo to Californians: Adjust your withholding.

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Why doesn't TimmyG have a deputy or any undersecretaries? Hint: Sanjay Gupta didn't want any part of being Surgeon General for the same reasons. This may not be the ideal administration to hitch your wagon or your reputation to. Who really wants to part of it given its missteps so far? (Hillary, did I see your hand go up?) We might get Dr. Howard Dean in the job. Maybe it's the best he can do. Yee-hah!

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The more you drive, the more you pay. Sounds reasonably fair, right? One alternative is for government to monitor your driving and tax you on the number of miles you drive. The prez says not on his watch, immediately contradicting SecTrans Ray LaHood's comments. Problem is, gas tax revenue goes down when you improve gas mileage and switch to alternative fuels. Government's gonna get you one way or the other. Look for this one to re-surface soon if Congress gets serious. Oregon is getting serious about it already. You're going to pay more either way, count on it.

Congress wants the money you're giving to charities. If you're "wealthy" then the deductibility of your charitable contributions is going to be limited, resulting in higher tax without a "tax increase". Think about the beneficiaries of your charitable contributions, then think about how well Congress will use your money. That'll make strong men weep. Disclaimer: I help operate this charity.

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One of the problems these days is that there are no responsible plans issuing from the other side of the aisle. There isn't one single viable national alternative to anything that the Obama administration is doing. We can't have a meaningful dialog if one side isn't talking.

Can't anyone here play this game? -- Casey Stengel

TimmyG: It's Bush's Fault

We tax all the others and pass the revenue on to you

TimmyG was prez of the NY Fed Reserve for 5+ years prior to becoming SecTreas. He had oversight of, inter alia, the multiple criminal conspiracies and massive failures on Wall Street. He failed, we lost, he got promoted to SecTreas.

He told the Senate Finance Committee yesterday "We begin our time in office after a long period..." of government failures. He limits those failures to "health care, energy and education" so as not to implicate himself. He wants you to ignore the economic and Wall St. collapses on his watch. Watches, actually, first as NY Fed prez and now as SecTreas. He's the government common denominator that spans both failures.

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$43 bil... no, make it $65 bil! for clean energy tech. TimmyG says the former to CharlieR in hearings on Tuesday, the latter Wednesday to the SenateFinCmte. He's SecTreas and he's testifying about his budget and he can't get closer than $22 bil one way or the other on this? I'm feeling stimulated again.

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Thanks, Bloomberg: Allowing companies and individuals to escape paying their share “isn’t fair, particularly given the scale of the fiscal challenges we inherited”, Timmy tells the SenFinCmte.

Let's review: He did his own taxes because no tax pro would sign off on them. He received extra pay to offset his income tax liabilities but he kept it rather than pay what he owed. He lied about it and didn't pay until the Obama vetting team caught him in the act. Now he's telling us what is and isn't fair when We pay Our taxes. Have we become so immune to hypocrisy?

Ron Kirk? More administration tax problems but I'm not excited. I'll jump on cheats but I try to accept brainos. I've made 'em too, and that looks like what his is.

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From Bloomberg again: "Treasury Secretary Timothy Geitner warned the U.S. recession is worsening, and the Federal Reserve said there’s little hope of an improvement in coming months."

And: "Geithner also said yesterday that details on a separate $1 trillion program to remove distressed mortgage assets from banks’ balance sheets will be coming within the next two weeks."

Another tril? The eyes glaze over.

Mortgage breaks for the wealthy. NancyP chokes on tax breaks for the wealthy (it's not fair) but she's OK with refinancing toxic home mortgages up to $729K -- including second mortgages! -- and reducing renegotiated mortgage rates to as low as 2%. That's fair? Who does she think has mortgages that big? The DC mindset can't imagine us with our 150-350K mortgages.

Paul Volcker thinks that TimmyG's miserable performance is because he doesn't have a deputy or any undersecretaries. Maybe in part, but he had all of that when he was prez of the NY Fed and he didn't do any better then. AP says the reason turns out to be that they're taking extra time vetting potential nominees. Can't seem to find enough honest applicants.

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USA -- Big, powerful, lots of home-grown rich folks

Switzerland -- Tiny, snooty, where the rich folks play and hide their money

Tell me again, why can't we get banking information from the Swiss to use in our criminal tax investigations? Time to get tough on this one, Tim. Oh, I forgot, no deputies.