Spending Daily | December 7, 2012
350K drop out of labor force, Unemployment Falls to 7.7%
Marketwatch reports, “The U.S. added 146,000 jobs in November and the unemployment rate fell to 7.7%, the lowest level since December 2008, the Labor Department said Friday. Hurricane Sandy appeared to have little effect on hiring and employment last month, the government said. Economists surveyed by MarketWatch had expected an increase of just 80,000 jobs because of the disruption caused by the storm. The unemployment rate was projected to hold steady at 7.9%. It fell mainly because 350,000 people dropped out of the labor force.”
Washington Playing a ‘Petty Peevish and Dangerous Brand of Politics’
The Associated Press reports, “Here we slow again. Washington’s leaders are back to form, playing a petty, peevish and dangerous brand of politics. All that’s at stake is the fate of the economy. Everyone in this town knows how it goes in a time of a standoff: Posture until the deadline, try to win over the public and work over the media, then cut a deal just before disaster strikes. The crises come and go; this one happens to be about the ‘fiscal cliff,’ the looming set of tax hikes and blunt spending cuts set to start Jan. 1. … Polling already shows more people than not think Obama and Congress will fail, even though failing would mean tax hikes for all and a punch to the gut of the economy. And even if the outcome ends up fine, every day squandered to squabbling is one that could be spent fixing so many other problems.”
On The Bright Side: Many Are Giving Away Their Money Before Washington Takes It!
The Wall Street Journal reports, “Tax uncertainty in Washington is setting off a mad scramble among wealthy taxpayers and charities to maximize donations before the end of the year. Their worry: The tax deduction for charitable giving, a fixture of the tax code for nearly a century, is coming under pressure as part of a broader fiscal agreement now being hammered out on Capitol Hill. The rush shows the extent to which wrangling in Washington over deficit reduction already is affecting the way taxpayers are spending their money. In addition to rethinking their charitable giving, some taxpayers are accelerating large medical expenses, selling appreciated stock and even prepaying mortgages, financial advisers say. Fidelity Charitable, an affiliate of Fidelity Investments, took in $1.2 billion for the first nine months of 2012, up 63% from the same period in 2011, while Schwab Charitable, an affiliate of Charles Schwab Corp., recorded a 74% jump for the third quarter.”
Gov’t Agency Spends $500 Million Deigning Facility Too Small To Build
The Washington Guardian reports, “Imagine spending your life savings to design your dream home, only to discover your blueprint was too small to fit all your furniture and family. That’s essentially what the Energy Department’s National Nuclear Security Administration did, leaving taxpayers with a jaw-dropping bill and nothing to show for it yet. NNSA, which oversees the nation’s nuclear arsenal and nuclear weapons research, already has spent a half-billion dollars mapping out a new uranium processing building at its Y-12 weapons plant in Oak-Ridge, Tenn., only to discover the 340,000 square foot building it designed wasn’t big enough to house the equipment it owns. … For spending so much money without erecting a single wall, the NNSA wins this week’s Golden Hammer, a weekly distinction awarded by the Washington Guardian to the worst examples of government waste and misspending.”
Obama’s Tax Victory: ‘Paltry’
Kimberely Strassel editorializes in The Wall Street Journal, “To read the current fiscal-cliff coverage, President Obama holds the upper hand and is poised for the ‘victory’ of winning an increase in the top two tax rates. So successful has the White House been in defining this fight, few have stopped to consider how paltry that victory is likely to be. For a short-term win on this ideological issue, President Obama may well cede most everything else. … If Republicans have to fold on the top tax rates, it’s a decent bet they will do only that—and nothing more. … The president will also finally have to show his math. He has argued his entire presidency that America’s debt hole could be filled by soaking the rich. He’ll now get his way, in a bill that likely provides $800 billion in revenue over 10 years, or $80 billion a year. To repeat: $80 billion a year. That is 7% of the $1.1 trillion deficit Mr. Obama ran in fiscal year 2012 alone. His tax hikes in hand, he can now explain why the hole keeps getting bigger
Cliff Talks Now Only Between Obama and Boehner
UPI reports, “U.S. ‘fiscal cliff’ talks are now just between House Speaker John Boehner and President Barack Obama to streamline the discussions, aides and lawmakers said. … Limiting the talks to Obama and the Ohio Republican improves the chances of success, officials on all sides — including those excluded — told the newspaper, because it minimizes the number of people who need to go along with an initial agreement.”
“White House to GOP: We’re not moving”
According to Politico, “If Wednesday’s phone call between Speaker John Boehner and President Barack Obama seemed like a hopeful sign in the fiscal cliff standoff, think again. On Thursday, with the House out of session, White House congressional liaison Rob Nabors trekked to Capitol Hill and delivered a firm message: We aren’t moving. In a meeting with leadership staff, Nabors reiterated the administration’s hard line that tax rates on top earners must go up, according to Republican sources with knowledge of the meeting. The White House is also insisting that Congress give it power to raise the debt limit on its own. … But another source familiar with the discussion offered a conflicting take, saying Nabors repeated that Obama isn’t wedded to every detail of his plan. Nabors also conveyed that, once Republicans move on rates, ‘they can get a deal very quickly,’ the source said.”
IRS to Congress: Failure to Address AMT Means Tax Filing Delays, “strain on taxpayers”
According to Bloomberg, ‘Failure by Congress to act on the alternative minimum tax by year’s end will lead to ‘significant’ delays in tax filing and a strain on taxpayers, said Steven Miller, the Internal Revenue Service’s acting commissioner. The alternative minimum tax, or AMT, is part of the so- called fiscal negotiations in Congress. Leaving it untouched would affect taxpayers early in 2013, because its reach would be expanded for returns filed for tax year 2012. Without action by Congress, the parallel tax system would affect 32.4 million households for tax year 2012, up from 4 million in 2010, according to the Congressional Research Service. It would increase tax collections by $92 billion, shrinking or erasing many taxpayers’ expected refunds.”
Dem Leaders Signal Willingness to Accept Cuts
Bloomberg reports, “Two Senate Democratic leaders signaled they may have to accept cuts to U.S. entitlement programs to secure a deficit-reduction deal, after someRepublicans expressed willingness to discuss higher tax rates for top earners. Dick Durbin of Illinois, the second-ranking Senate Democrat, said he is open to alternatives including expanded means-testing — charging higher-income seniors more — for Medicare. Republicans are seeking limits to spending onentitlement programs. Durbin and New York Senator Chuck Schumer, the chamber’s third-ranking Democrat, didn’t rule them out while speaking with reporters today in Washington. More than $600 billion in tax increases and federal spending cuts will start taking effect in January unless Congress acts. President Barack Obama has made clear that no agreement is possible on the so-called fiscal cliff without raising income tax rates for the top 2 percent of earners. Republicans need a concession on entitlement programs, Durbin said, in exchange for any agreement on higher tax rates.”
Republicans Hold Debt Ceiling As Leverage For Cuts
The Washington Post reports, “As Republicans consider making a strategic retreat from their traditional opposition to higher taxes, a new flash point is emerging in the high-stakes budget negotiations: the legal limit on government borrowing Federal borrowing is on track to hit that limit early next year. Without an increase in the debt ceiling, the government would default on its obligations. Republican lawmakers, sensing that this gives them bargaining power in the budget talks, are resisting any increase in the limit unless the White House makes concessions, such as agreeing to deep spending cuts. House Speaker John A. Boehner (R-Ohio) has said that any increase in the debt ceiling should be matched dollar for dollar with new spending cuts. Earlier this week, Boehner made an offer to the White House that called for $2.2 trillion in deficit reductions, not enough to offset the increase in the debt limit that’s needed.”
Coburn: “Waste, Incompetence and Stupidity”
Senator Tom Coburn (R-Okla.) said in an interview with ABC News that everywhere you look in government is “waste, incompetence and stupidity.” Click here for the video from the Washington Free Beacon.
Wealth is not Created at the Top: It is Only Devoured There
The UK has left the EU and we can argue about the minutiae of Wealth until we’re blue in the face. But the overriding factors are apparent and in one of the richest countries in the world it is shocking that so many people can’t even be sure if they are going to be able to eat enough today or provide for their loved ones.
These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurial-ism that are helping to advance the whole world – Opinion by Rutger Bregman
… across the spectrum virtually all agree that wealth is created primarily at the top and so entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.
Bankers, pharmaceutical giants, Google, Facebook … a new breed of rentiers are at the very top of the pyramid and they’re sucking the rest of us dry
In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue.
To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.
But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.
But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely that makes us overlook their massive rent-seeking…
The problems we face are that the politicians are firmly in the hands (pockets) of the uber wealthy. We live in a corporate plutocracy and those holding all the wealth and therefore power have no intention of changing the status quo, even if it isn’t sustainable. They remind me of bacteria (or cancer) devouring the host body more and more even though eventually it will kill them too.
Donald Trump Forgets Important Lesson From Grandad:
Harper’s Magazine reprints an interesting letter from US President Donald J. Trump’s own grandfather that may get you thinking. Here is it then:
The Emigrants – By Friedrich Trump – From a letter written in 1905 by Friedrich Trump, Donald Trump’s grandfather, to Luitpold, prince regent of Bavaria. Trump had been ordered to leave Bavaria for failing to complete mandatory military service and to register his initial emigration to the United States twenty years earlier.
Prince Luitpold rejected Trump’s request for repatriation; the family later settled in New York. Translated from the German by Austen Hinkley.
Most Serene, Most Powerful Prince Regent! Most Gracious Regent and Lord!
I was born in Kallstadt on March 14, 1869. My parents were honest, plain, pious vineyard workers. They strictly held me to everything good — to diligence and piety, to regular attendance in school and church, to absolute obedience toward the high authority.
After my confirmation, in 1882, I apprenticed to become a barber. I emigrated in 1885, in my sixteenth year. In America I carried on my business with diligence, discretion, and prudence. God’s blessing was with me, and I became rich. I obtained American citizenship in 1892. In 1902 I met my current wife. Sadly, she could not tolerate the climate in New York, and I went with my dear family back to Kallstadt.
The town was glad to have received a capable and productive citizen. My old mother was happy to see her son, her dear daughter-in-law, and her granddaughter around her; she knows now that I will take care of her in her old age.
But we were confronted all at once, as if by a lightning strike from fair skies, with the news that the High Royal State Ministry had decided that we must leave our residence in the Kingdom of Bavaria. We were paralyzed with fright; our happy family life was tarnished. My wife has been overcome by anxiety, and my lovely child has become sick.
Why should we be deported? This is very, very hard for a family. What will our fellow citizens think if honest subjects are faced with such a decree — not to mention the great material losses it would incur. I would like to become a Bavarian citizen again.
In this urgent situation I have no other recourse than to turn to our adored, noble, wise, and just sovereign lord, our exalted ruler His Royal Highness, highest of all, who has already dried so many tears, who has ruled so beneficially and justly and wisely and softly and is warmly and deeply loved, with the most humble request that the highest of all will himself in mercy deign to allow the applicant to stay in the most gracious Kingdom of Bavaria.
Your most humble and obedient,
… Well then. Long ago, yes.. Still applies? You tell me.
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