Warren Buffett, better known as the Oracle of Omaha, earned $40 million last year and paid $7 million of it in taxes. But in his editorial in the New York Times on Sunday, he claimed that he doesn’t think he’s paying enough, and neither are his friends. So he’s asking the SuperCommittee to stop “coddling” him and his friends, and raise their taxes as part of the deficit reduction scheme they are hatching.
He began by suggesting that government leaders have called for “shared sacrifice” but that he didn’t get the call. “I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.”
Unfortunately, facts are not only stubborn, they are different. In his editorial, Buffet notes that incomes of the top 400 taxpayers (many of them his friends) had grown from $16.9 billion in 1992 to $90.9 billion in 2008, but that their actual tax rate over that period had declined.
Is President Barack Obama working on a proposal to keep Uncle Sam deeply involved in the mortgage business and taxpayers on the hook for billions of dollars in home loans? The White House says no, the President is merely examining his options. Meanwhile, the Washington Post, based on leaks from anonymous officials, reports that he is indeed looking to maintain the federal government’s outsized role in guaranteeing mortgages.
Most sound observers of the mortgage crisis say that to maintain the status quo would be incredibly foolish. They have concluded that federal guarantees of subprime mortgages via “government-sponsored enterprises” Fannie Mae and Freddie Mac, along with other federal policies encouraging banks to issue loans to less-than-creditworthy borrowers, were one of the major causes — if not the major cause — of the mortgage meltdown. Fannie and Freddie, since taken over fully by the government, have thus far cost taxpayers over $150 billion in bailouts, an amount that is expected to reach $259 billion by the time all is said and done. Who in his right mind, analysts ask, would want to continue down such a disastrous path?
The bad news from the European Union is growing almost daily. Germany, the largest economy in Europe, had almost no economic growth at all in the last quarter The entire 17-nation European Union grew at the miniscule rate of .2 percent from the prior quarter. The prior quarter’s eurozone economic growth had been .8 percent, larger than last quarter but still far short of what is required to create confidence that the sovereign debt crisis can actually be managed. That represents the slowest economic growth since late 2009. The French economy also stalled during the quarter and the Italian economy grew only .3 percent.
French President Nicolas Sarkozy and German Chancellor Angela Merkel met to discuss how to address the sovereign debt crisis that began in Greece and Ireland, quickly spread to Spain and Portugal, and now threatens to produce tremendous stress on the European Union. Furthermore, the recently announced Italian plan for a combination of austerity and tax increases may not work. Sarkozy has called for a "new economic government" for Europe that would meet at least twice a year with European Union President Herman Van Rompuy.
People are beginning to compare Barack Obama's administration to the failed administration of Jimmy Carter, but a better comparison is to the Roosevelt administration of the 1930s and '40s. Let's look at it with the help of a publication from the Mackinac Center for Public Policy and the Foundation for Economic Education titled "Great Myths of the Great Depression," by Dr. Lawrence Reed.
During the first year of President Franklin D. Roosevelt's New Deal, he called for increasing federal spending to $10 billion while revenues were only $3 billion. Between 1933 and 1936, government expenditures rose by more than 83 percent. Federal debt skyrocketed by 73 percent. Roosevelt signed off on legislation that raised the top income tax rate to 79 percent and then later to 90 percent. Hillsdale College economics historian and professor Burt Folsom, author of "New Deal or Raw Deal?", notes that in 1941, Roosevelt even proposed a 99.5 percent marginal tax rate on all incomes more than $100,000. When a top adviser questioned the idea, Roosevelt replied, "Why not?"
Starbucks Chief Executive Officer Howard Schultz has made his disdain for the Obama administration public. As a business leader, his disappointment with the Obama administration does not place him in the minority, but he has made it clear that he is willing to take on this Congress.
According to Bloomberg News, “Starbucks Corp. (SBUX) Chief Executive Officer Howard Schultz urged other CEOs to stop donating to U.S. political campaigns to encourage leaders to solve the nation’s growing budget deficit.”
Schultz wrote in an email to business leaders, “I am asking that all of us forego political contributions until the Congress and the President return to Washington and deliver a fiscally disciplined long-term debt and deficit plan to the American.”
The email went out to NYSE Euronext CEO Duncan Niederauer and Bob Greifeld, CEO of Nasdaz OMX Group Inc., who reportedly emailed letters to companies in return.
At the White House Rural Economic Forum in Peosta, Iowa, on Tuesday, President Obama unveiled new economic initiatives to help stir job growth and capital investment in rural America. "These are tough times for a lot of Americans — including those who live in our rural communities," the President said in a press release. "That’s why my administration has put a special focus on helping rural families find jobs, grow their businesses and regain a sense of economic security." With firm opposition from Republicans over another federal stimulus package, the White House has been seeking ways to curb the 9 percent unemployment rate without needing congressional approval. Agriculture Secretary Tom Vilsack and Small Business Administrator Karen Mills alleged that the new economic package will have a meaningful impact on rural jobs — a critical element of U.S. unemployment, they claim, because although 16 percent of Americans live in rural areas, 90 percent of persistent poverty exists there.
Recommended by the White House Rural Council, Obama’s plan offers four economic initiatives:
While many are complaining about the recent debt-ceiling deal, is it really the issue? Sure, statists say that the Republicans steered us toward crisis with their initial unwillingness to compromise, while traditionalists complain that the GOP folded and “let us down again.” Our problems, however, lie not in our politicians but in ourselves.
Just so you know, my solution to our spending woes would be to once again limit the central government to only that which our Constitution dictates it may do, which would cause its budget to immediately shrink by at least two-thirds — and probably far more. Of course, this would involve eliminating bureaucracies such as the Department of Education, Environmental Protection Agency, and Equal Employment Opportunity Commission, and programs such as Social Security and federally provided food stamps. There would be nothing to fear, either, as there is much duplication here; for example, states have their own environmental and education agencies and other bureaucracies/programs that render the feds’ corresponding ones redundant. And why are we paying for two different levels of government to do the same thing? As for third-rail program Social Security, it could be devolved to the states, whose residents could then decide what its future would be.
The U.S. Postal Service (USPS), which has been cited for decades as a case study in government inefficiency, waste, and top-heavy bureaucracy, has announced that it will make deep cuts to its staffing, as well as overhaul the generous benefits package it provides to employees. According to the Federal Times, the USPS will cut 120,000 workers — about a third of its work force — by 2015. In addition, the government agency is seeking to set up its own health benefits plan for postal workers, as well as eliminate pensions for new employees.
“The Postal Service is essentially bankrupt and will run out of cash next month, which is forcing it to take drastic steps to cut costs,” reported the Federal Times. In a draft document of the plan, one USPS official waxed candid about the agency’s dire financial state, noting: “If we were a private company, we already would have filed for bankruptcy and gone through restructuring — much like major automakers did two years ago.”
Almost everyone is aware that the federal government pays farmers not to grow certain crops. But not many know that taxpayers are also being forced to pay airlines to fly empty planes. It’s true. According to the Associated Press, the $200 million federal Essential Air Service (EAS) program subsidizes airline service to less populous areas of the country; and because it does so on a per-flight — not per-passenger — basis, airlines sometimes fly empty planes back and forth just to keep the free funds flowing.
EAS was created in 1978 as an outgrowth of airline deregulation — deregulation, like most words, not meaning the same thing in Washington as it does outside the Beltway. Some in Congress believed that airline service to rural areas was so critical that it had to be maintained even if it was unprofitable to airlines; and who better to take on an unprofitable venture — and guarantee its continued unprofitability — than Uncle Sam?
University of California at Berkeley professor Severin Borenstein, one of the designers of EAS, told the AP that “Congress originally intended for the program to end after 10 years.”
Tea Party activist Ryan Rhodes confronted President Obama publicly at a town hall meeting in Iowa and demanded to know whether or not Vice President Joe Biden did in fact call Tea Partiers “terrorists” during the debt ceiling debate. Reports indicate that Obama did engage in a “heated back and forth” with the activist but refused to directly answer the question.
On August 1, Vice President Joe Biden and a number of other House Democrats issued a verbal lashing to Tea Party Republicans, accusing them of having “acted like terrorists” in the fight over the debt ceiling.
According to Politico, Biden was “agreeing with a line of argument made by Rep. Mike Doyle,” who said, “We have negotiated with terrorists. This small group of terrorists have made it impossible to spend any money.” Biden later made a similar statement, “They have acted like terrorists.”