Where is the Outrage?

One of the great hopes of the new Obama administration was his promise of transparency and re-establishing people’s trust in its government. That hope was shattered with the appointment and confirmation of Timothy Geithner as Secretary of the Treasury. In these challenging economic times, a rather pedestrian cabinet appointment has been catapulted into one of the most powerful positions in the United States. This man will be in charge of supervising the Obama administration’s economic recovery plan, responsible for the disbursal of hundreds of billions of dollars and restoring confidence in the nation’s financial system and institutions. Trust and honesty should be the hallmark of the office. Instead, we got a tax cheat and a liar. We should be outraged.

Mr. Geithner is no slouch. For a relatively young man, he has had an illustrious career, including heading up the New York Federal Reserve Bank, no small post. He also was a protégé of Robert Rubin when Rubin was Secretary of the Treasury under Bill Clinton. FYI, Rubin went on to be a big wig at Citigroup, and was a major promoter of Citigroup’s growth policies which ultimately led to its near collapse. Rubin recently resigned from the Citigroup Board of Directors.

The problems with Mr. Geithner came from his stint as the Director of the Policy Development Department for the International Monetary Fund. Because of the nature of the organization, the IMF did not pay its ½ of Mr. Geithner’s FICA tax. The agreement was Mr. Geithner was to pay the tax as a self-employment tax, and file for reimbursement of ½ the amount from the IMF. Mr. Geithner didn’t pay any of the tax, but filed for and received reimbursement for the unpaid tax from the IMF. In addition, he deducted his children’s summer camp expenses as a child care expense.

He was cited in 2006 for nonpayment of the taxes for 2001 – 2006, but only paid the taxes for 2004 and 2006 claiming a statutes of limitations issue for 2001 and 2002. It was only after he was nominated for Secretary of the Treasury that he ’fessed up and paid the amount owed plus a small penalty.

In true “that’s my story and I’m sticking with it” fashion, this former head of the New York Federal Reserve Bank, this former Undersecretary of the Treasury, this Vice Chairman of the Federal Open Markets Committee, with numerous degrees in economics and business and international affairs….said he was careless. He blamed TurboTax for not finding the error, which made it worse because he apparently did his own taxes. If you believe him, I have some swamp land in Florida I would like to talk to you about.

This man is now head of the Internal Revenue Service, and I can guarantee you that if you were to make a “careless” mistake, he would not afford you the same understanding that the United States Senate afforded him.

If he were a Republican, he would be in jail right now. There would be calls from the press for numerous investigations about this outrage. The press, however, still refuses to crawl out of Obama’s tank, even to criticize a lying tax cheat. You mean out of all the talented people we have in the United States, this is the only man who can do this job??

More than that, it shows the disconnect between our elected officials in Washington, and the people they are supposed to represent. There is a set of rules for the elite, and then there are the rules for the rest of us. Obama said he was going to end that.

Shame on Mr. Geithner…Shame on Barack Obama.

The $150 Million Hypocrisy

That swooshing sound you hear is $150,000,000.00 flushing down the toilet for the cost of President Barack Obama’s inaugural. That’s a lot of swooshing. Washington must be in a celebratory mood and feeling flush, perhaps reflecting the mood of the nation? Right!! In this time of severe, national economic distress, is this obscene or what?

This is the most expensive inaugural in the nation’s history. Yes, some of it will be paid for by private funds…one news report has the total amount to be paid by the Federal government (tr. “the taxpayer”) for this blow-out event is $49,000,000.00. But situation is “fluid,” and may top $75,000,000.00. The governors of Virginia and Maryland, and the Mayor of the District have told the Feds that security and transportation alone would top $75,000,000.00 by itself.

The rest would come from private donations of up to $50,000.00/per from socially concerned Democrats who would rather fund a glitzy, showy affair than give the money to the poor. That would by a ton of food, clothing and shelter for those Americans who are in poverty or out of work or homeless.

Normally, I wouldn’t begrudge the victors this kind of event. But why did I think Obama would prefer a “people’s inaugural”? One based on allowing the maximum participation of those who elected them. The scope of the event is staggering. Instead of an example of fiscal restraint, what we got was a Sunday afternoon concert by liberal entertainment types, on public land at the Lincoln Memorial, the rights to which were “sold” to HBO for $5,000,000.00. If you weren’t an HBO subscriber, you didn’t get to see the event. How many people with foreclosed houses or lost jobs have discontinued luxuries like cable, let alone HBO?

On the other hand, I shouldn’t be surprised. I have always been put off the hypocrisy of limousine liberals. Back when the Kennedy brothers pushed their vision of education through forced bussing for you and me, they sent their children to private schools. The same goes now. Obama will be sending his daughters to a private school, while bashing school choice voucher programs for everyone else. I can take a liar. I can take a crook. I have NO tolerance for hypocrisy.

So while we are told to tighten our belts, to cut back on our spending, to pay more taxes, to pay higher utility bills, to cut back our driving to save energy, to join in the sacrifice all Americans must make…the party in Washington goes on. Looks like the change we can believe in is the same song on a different day. What a shame.

The Coming Deficits: DANGER DANGER DANGER

I guess I am a supporter of President-elect Barack Obama’s $750 billion stimulus package, or not. It is fraught with danger, and it could be the cure that kills the patient. Economic rules are constant. Obama has commented these past several days that the stimulus package could grow to over a trillion dollars, and that we, as a nation, should get used to years of trillion dollar debt.

Let’s start with the good the stimulus package could do. Notwithstanding all of the other financial disasters that have befallen America in 2008, if he concentrates on infra-structure, there is a tangible solid result at the end of the spending that ultimately will be used for future economic development. Plus…these things need to be done, and should have been done years ago.

Our bridges are beyond repair. Some water and sewer systems are patchwork at best, with some parts being 150 years old. Our electric grid is at the breaking point, and if we are looking to electricity to assist in our energy problems, we better get moving now.

Traffic is a nightmare. Freeways need to be expanded to at least 3 lanes each direction. And I am a big supporter of trains and rapid train development. High speed trains in specific corridors would be a big success. In our area, the Cleveland/Pittsburgh corridor with a stop in Youngstown would be a blessing. The Cleveland, Columbus, Cincy corridor would provide substantial relief to the fiasco on I-71 notwithstanding the new three lane portions of the freeway.

ON THE OTHER HAND, the rules of economics are the rules. An article in today’s International Herald Tribune states that China is balking at purchasing anymore American debt. It holds too much already, and it has proven to be a bad investment. Besides, it has its own problems and needs to spend some of its money in its own country.

That is the beginning. Although interest rates are low right now, if the United States can’t sell its debt, interest rates will start to go up…fast! It is a competitive market. In addition, in order to stimulate the economy, the government is printing money and flooding the markets. Sooner or later that money will hit the system and it has to go somewhere. It will start to chase goods. Too much money chasing too few goods results in inflation, and it will be big time inflation.

Those are Economics 101 rules. If demand for debt goes down, interest rates will rise until the debt can be sold. While companies are cutting production back right now, the government is flooding the economy with dollars to open up the credit markets…and eventually all of those dollars will drive up the cost of goods.

What we can end up with is the 1970’s all over again, when inflation was 11% and interest rates were 21%, except this time it could be worse.

I truly hope that these guys know what they are doing. Their track record leads me to believe otherwise.

It's Only Fair!!!

Have you ever known government to do anything right? I walked into the Clerk of Courts Title office this morning and got a very bored “Can I help you?” from one of the clerks between her eating a donut and drinking a cup of coffee. She looked a little pained, but she got the job done in relatively short order and managed a smile when I left.

I know many folks who work in government, and are fine, hard working people who try to do their job as best they can. But by its nature, government is inefficient. In an effort to do a good job, it promulgates rules on top of rules in order to protect itself and the people that work for it from getting into trouble. That’s not good or bad…it just is. That is why I view with trepidation any expanse of government. And make no mistake about it, government is expanding. Obama’s stimulus package, which I support to a degree, will be mind blowing.

How we pay for it is a concern. Here are some eye opening statistics.

41% of the US population pays no tax. In 2006, out of 136 million tax returns filed, 43.3 million of returns had no tax liability. There are 15 million households that file no tax return at all. 2/3 of single filers or singles who file as heads of households pay no tax at all. Compare that with married taxpayers who file 40% of the returns, and pay 75% of the nation’s tax burden. It is called pyramiding income.

Here are some interesting statistics. The states with highest percentage rate of non-taxpayers are Mississippi, Louisiana, Arkansas, New Mexico, and Alabama. The states with highest percentage rate of taxpayers are Alaska, Massachusetts, Connecticut, New Hampshire, and Minnesota. As a percentage of its population, more Ohio citizens pay federal taxes than New York, Pennsylvania, Nevada, Michigan and Maine.

Now add to that the tax proposed “cuts’ which go to those people who don’t pay any federal taxes. Of course, the nanny government argues, they may not pay income tax, but they pay payroll taxes and social security and Medicare. Boo hoo. Boo hoo. Boo hoo.

The figures that really interest me are how the tax burden is shared among the population. The wealthiest 1% of Americans earns 19% of the nation’s income and pay 37% of the collected taxes. The top 10% of wealthy Americans pay 68% of the total taxes paid. The bottom 50% of Americans earn 13% of the country’s income and pay 3% of the total tax paid.

Here is the conclusion. If you are paying federal income tax, you are rich. Remember that when you hear the Democratic mantra about the Bush tax cuts that benefited the wealthiest Americans. When Obama says he will give a tax cut to 95% of all Americans, it is a mathematical impossibility to do that as 41% pay no federal tax. I will guarantee you that if Obama follows through on his promise, and you are already paying federal income tax, you will get a tax hike, not a tax cut.

How long can this country afford to support this type of tax structure? Which part of the equation would you like to be on…the receiving end or the paying end?

But here’s the good news. If you make over $28,000.00/year, you are rich. So when the spending starts, and the taxes start to rise….you can have peace in your heart knowing that you are among America’s anointed, and you need to share your prosperity. It’s only fair.