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Tuesday, November 27, 2012

It’s more of the same but it’s being repackaged

The fiscal cliff continues to overshadow a problem that would remain with us even if we get a bipartisan agreement to start getting our fiscal house in order. If we don't start to do something about income inequality; we will continue to have fiscal cliffs.

The corporate philosophy during the post-war era was to produce enough income to be able to share a sizable share of the wealth with their employees. Company loyalty was a plus and much of their gains were used build new plants, invest in the newest technology and hiring new employees. Today, those same corporations only allegiance is to their shareholders. Corporate CEOs are driven to increase the bottom line to make their shareholders wealthy. In turn, they are given lucrative stock options and benefit packages.


The nation's largest private employer is Walmart but it also continues to be the worst company to work for, when you compare their worker's pay and benefits to the company's profits. They're not ashamed of the negative publicity and they proved it this Thanksgiving, by taking away a holiday from their employees just to hear the ringing of the cash registers. It's not that Walmart had to take those measures to remain profitable because Costco continues to pay their employees more than $20.00 an hour and provides them with good benefits and health care. Costco still has the post-war era corporate philosophy because to them; employee turnovers are costly and unnecessary.

The politicians in Washington are fiddling around the edges in trying to come up with a plan that will not hurt their reelection prospects. It shouldn't be a secret that eliminating loopholes and capping deductions for the wealthy will not get you close to $800 billion, so marginal tax rates will have to be raised on the rich. I think a deal could be made by raising the marginal rates by 3% and increasing the capital gains rate by 5% for now. The entitlement cuts will be a little more difficult because I can't see how you would cut spending on the beneficiaries. There's talked of rising the Medicare requirement age to 67 but I would only be for that only after the Affordable Care Act makes it a seamless transition. I don't think it makes sense to have 65 year old go two years without health insurance. I think it's wise to give waivers to those who work in the more labor intensive jobs.

I'm not that impressed that seven republicans have vowed to break the Grover Norquist pledge of never raising taxes, to keep from going over the fiscal cliff. The senate already has a bipartisan bill that retains the Bush tax cuts for 98% of the people. The challenge will be in the House of Representatives where the GOP currently has a 50 seat margin. The 88 Tea Party members think they have a mandate not to raise taxes or the debt ceiling. We have to remember that not raising taxes is a core principle belief for most republicans. Let's just say that 100 republicans will not vote for a tax increase under any conditions; that leaves 141 republicans to get the 27 votes from (if all the 191 democrats vote yes) to pass a bill. Nearly all of the 141 republicans will not be challenged by democrat but they will be challenged by a more conservative republican.

I'm hoping the marginal rate for those making more than $250,000 gets raised to 39% and hedge fund managers get taxed at ordinary rates rather than the capital gains rate. I don't want to punish wealth but the wealthy will still go out and work just as hard for a 70% profit as they did for an 85% profit. It's been proven that higher tax rates will make the wealthy will keep more money in their companies to make it more profitable rather than buying more expensive toys.

We are a consumer driven economy, so we will remain stagnant unless employees have more money to spend.Oh yes, higher wages will be passed onto other consumers but according to a study I saw, that would only be about $171 yearly. If you believe we are all in this together, then it's well worth the extra cost when you consider the alternative.

My sympathies don't lie with corporations because they are doing quite well and they have most of America fooled. The corporations have gotten out of costly pensions; they weren't fully funding anyway and have gone 401ks. The average worker today will never retire if we don't do something about income inequality. It’s been proven that workers aren’t good investors, so they will never accumulate the funds necessary to retire in comfort. There is so much I could tell you about 401ks but it would take another blog. For example, it worked for me but we were in a bubble when I made all my gains and by a streak of good luck, I converted those gains to IRAs before the bubble burst.

If we don't want any form of socialism, then we need to do something about plutocracy. I'm all for market based solutions but if three million people have 99% of the wealth, that system alone is unsustainable. Redistribution is not a bad word if it's used in proper context.

I feel much better now, because writing this blog allows me to release all the frustration I held over Thanksgiving weekend. I wanted to write about the housing crisis but I’ll save it for another time but when someone tells me that all our problems are because of President Obama, welfare or undocumented workers; don’t be surprised if I unload the rest of my frustration.


born2Bme said...

Unload away!!
I feel your same frustration everytime I watch the news or read the paper. This election didn't teach anyone anything, other than they "all" still think they are right and they should keep going the way they have been going.
Unfortunately, the midterm elections are notorious for low turnout among Democrats, so Republicans are going to try and wait it out until then.

Mike said...

I hear you born but the republicans know that they are on the losing side of the argument. Recent polls indicate that if a deal is not made people will blame the GOP again. Over 60% of the people think that the tax rate on the wealthy should go up.... A Pew Research poll made up of democrats, republicans and independents wanted Medicare to be left alone by an average of 62%.

I tuned in to see what the commotion was about on Fox News a while ago.. It was a fight between Monica Crowley and Christian Powers arguing whether the hedge fund managers taxes should go up.... Monica, arguing from the right said America was a land of opportunity and the hedge fund managers should be applauded and not made to pay more taxes to redistribute to the poor... In the first place, there's no concrete evidence that the extra taxes that will be collected will go back to the poor... In a progressive tax system, redistribution works both ways...The Bush tax cuts of 2001 & 2003 were redistributed to the wealthy. .... They benefited greatly, now it's time to pay the piper.

It is true that democrats don't usually come out in large numbers for midterm elections( they did in 2006) but passing this budget, raising the debt limit, and phasing in the Affordable Health Act will all take place before the 2014th midterm elections. In that time, Senate Majority Leader Harry Reid may take away the GOP's obstructionist tool,(filibuster) and make them actually stay on the floor if they want to take advantage of their minority status.

Mike said...

On another note, I’m all Benghazied out. Now, republican Senator Susan Collins wants to know Ambassador Rice’s potential role in protecting the American embassies in Kenya and Somalia that were hit by al Qaida attacks in 1998, when Rice served as assistant secretary of state for African affairs….Excuse me, what did the investigation say her role was 14 years ago?

The republicans haven’t been that demanding of then CIA director Petreaus or Secretary of State Clinton and they bear most the responsibility… Is it because one is a republican and the other one will tell them where to go?

Senators Lindsey Graham and John McCain are one press conference away from having a stroke over Benghazi. Now the two amigos have a new tag along in Kelly Ayotte demanding answers from Susan Rice. Not one of the above named senators chairs any committees, Susan Rice just met them as a common courtesy but she wasted her time.

Senators Collins and Coker pretty much said that she was too partisan and that’s the reason they won’t vote for her… At least that’s honest.

It has not been determined if Al Qaida elements were responsible for the attacks or if they came from the old bin Laden’s Al Qaida… There is a difference.

born2Bme said...

The Benghazi thing is just a smoke screen to get the general public's minds off of the fiscal cliff talks. They want that to be what is heard most on the right-leaning talk shows, instead of what is most important now.
Afterall, what good is it really going to do to press this issue? The election is over. It's all done, overwith, and being looked into. Are they trying to keep the egg off of their faces or what?

Edith Ann said...

No,the Benghazi thing is about John Kerry's seat!

If they say they will confirm Kerry, maybe the President will appoint him, and they have their special election and putScott Brown back in his 'rightful' place.

Rachel Maddow ALWAYS figures it out!

born2Bme said...

Ahhh, I guess I missed that. Makes sense.

Mike said...

I gave them the benefit of the doubt and watched several people from Fox try to explain the grave sin of lying on the Sunday talk shows… All 5 shows put together probably draw about two million people and only half were listening to the words of Ambr. Rice… Here it is in November and they still can’t wait for Hillary Clinton to give her testimony, so we can get to the important questions.

John McCain suggested John Kerry would breeze through the nomination and yes, that would leave an open spot for Scott Brown but that’s not a given… Congressman Ed Markey indicated he might be interested in running for that spot. Scott Brown ran a terrible campaign against Elizabeth Warren and the voters remember that.

1.The GOP senators may have backed President Obama up in a corner where he has no other choice.

2.The GOP thinks because Scott brown one Massachusetts once, he can win it again.

3.It doesn’t matter what the committee rules; the GOP will blame Ambassador Rice like they did ACORN.

Mike said...

It may the environmentalists who hold up the Susan Rice appointment… The State Dept. will have to approve the XL pipeline and according to her 2011 financial reports, Ambassador Rice and her husband own $300,002 to $600,000 in TransCanada stock.

I’m beginning to get a better picture of what some republicans are saying about the Benghazi incident… Senator Collins said the administration is trying to paint a picture that liberating Libya was a complete success and it’s on its way to becoming a democracy. She said that they were trying to make the American people think that Al Qaida was decimated thus giving the president more credit than he deserves….. I think the final report will show that we use private contractors to guard most of our consulates and dignitaries abroad… Libya does not want them in their country and this left us to depend on Libya’s unreliable militia forces to guard our embassies. I also believe and that the CIA had a secret operation going on in Benghazi and they thought they could provide the needed security…. It’s still not sure whether it’s homegrown militia forces calling themselves elements of Al Qaida who attacked the compound or if it was coordinated by the original terrorist group from Pakistan.

I like what I read on Juanita’s blog” I think President Obama ought to say, “Fine. I appoint Bill Clinton to be secretary of state.”

Call their bluff, Mr. President. I would pay cash American money to see Bill Clinton wipe the floor with Mitch McConnell. I would.”

Mike said...

I get a kick out of watching Mitch McConnell and John Boehner getting all upset because President Obama is taking it to the people to put pressure on their representatives to come up with a deal. They would much rather for the president to stay in Washington, so they could go to the podium or the floor of the senate every few hours to say what they will or will not do instead of negotiating. This is the 21st century and the Tip O’Neill and Ronald Reagan deals are things of the past. The president can reach more people with the White House web site, Twitter and Facebook and it’s effective.

And if I didn’t know any better I would’ve thought that the GOP won the last election because they are the only ones I see on TV….. Mitch McConnell and the GOP have come up with a new buzzword…. They are now calling the raising of tax rates “wealth destruction.”… Lol

On another note, I had a good discussion with a friend I use to work with. He’s fixing to retire and was picking up a prescription from Walgreens. He’ll be 60 in two years and will retire without health insurance. He called a few insurance companies over the Thanksgiving holidays and got a rude awakening. He found out a couple things,(a) the insurance companies were not that enthused about having him and(b) if they did accept him, the premiums are going to be very high… It debunks the myths that having all the health insurance companies competing will bring down the cost.