Saturday, February 14, 2009

Shaft - How Obama Roped The Dopes For Support

From Reason:

Supporters of the package describe the legislation as transportation and infrastructure investment, the idea being to use new spending to put America back to work while at the same time fixing decrepit infrastructure. However, only 17 percent of the discretionary spending in this package is for infrastructure items. More worrisome still, the final version lacks any mechanism to ensure that spending will be targeted toward infrastructure projects with high economic returns.

If we include the massive amount of interest that will accrue on the increased debt, the overall cost will total to $1.14 trillion.

The conference report dedicates 30 percent of all discretionary spending to 33 new programs totaling $95 billion and expands 73 programs which are normally part of the regular appropriations process by $92 billion.

So now funds can go to museums, stadiums, arts centers, theaters, parks, or highway beautification projects. Most significantly, this reopens the door for many of the projects on the U.S. Conference of Mayors' wish list of "shovel ready" projects that includes many items that are nothing but waste and pork, such as doorbells, construction of dog parks, replacement of street lights, and money for a "mob museum."

6 comments:

Anonymous said...

Noel is absolutely right! It would be much better to stimulate the economy by giving money back to the richest 0.5% of Americans. These patriots received 50% of the gains in wealth created in the USA in the last eight years, and they deserved it because of their hard work in creating novel financial assets that increased America's real wealth. Now that the rich have suffered, the government should create new programs to replace their lost wealth. This is a much better use of money than supporting education for poor, dumb people who will just waste any money they get. The rich know how to spend money wisely to create jobs for people to build big houses for them and other things like that. The rich have made America great, and American needs to continue to make the rich great as a reward for their hard service. Thanks for your inspirational words, Noel.

Noel Kuriakos said...

Clearly you speak from your heart rather than looking at the facts. Your comments lead me to believe that you would rather have a socialist system and income redistribution. Unfortunately that is not what most American want. The rich got that way because they inherited it, earned and saved their wealth, took risks and got lucky with their rewards, possessed a scarce resource that society wants or acquired it illegally. The rich either save their money or spend their money. When then save their money they allow banks to use that savings to make loans that create jobs. If they spend their money on goods and services it creates job.

If you believe in educating the poor then you should cut back on your latte, sell you ipod, get rid of you cell phone and give the money to the schools.

Anonymous said...

Noel,
You probably make your living by working at a job. I collect dividends and capital gains but do not work. Let's assume that both of us earn $80K/year. You pay 22% income tax plus 10% Social Security and Medicare. I pay 17% income tax but no Social Security or Medicare. Your effective tax bill totals 32%, while mine is 17%. Even though I pay less, I find this troubling. What do you think about it?

Noel Kuriakos said...

First of all I don't believe that government should tax earned income. If you WORK hard using your knowledge and skills you should not be taxed for your efforts. There is a disincentive to work more because the government will take away more of your money (both state and federal gov).

I like to see a consumption tax. If you save your money that is great, if you want to spend your money then lets tax it at a small rate (1% to 2%).

That said SS and Medicare are entitlement programs and a way to transfer wealth from those with income to those that don't. That is morally wrong.

If you are receiving $80K in unearned income then you must have a capital base of about $1.6 million assuming a 5% div yeild. You already paid taxes on the $1.6 mil when you saved your earnings to build it up. Or perhaps you paid capital gains taxes each year if you held these in a mutual fund.

The dividends are from corporate earnings which has been taxed already at the corporate tax rate. So even though you personally did not pay the taxes the difference is made up in other places.

Consider this. Dividends are paid on common or preferred equity. That implies that the shareholder is risking his or her capital to get the dividends and capital gains. The government should not be taxing such risk taking activities because taking on risk (creating new products, gaining marketshare, entering new segments) creates jobs and provides a product or service demanded by society. WTF would you want to discourage this with taxes!

Anonymous said...

Noel,
What do you make of this article about bankers? http://www.ritholtz.com/blog/2009/02/bill-moyers-simon-johnson-financial-crisis/

Noel Kuriakos said...

What specific points are you referring to in this piece by Bill Moyers?

Bill is an unabashed liberal with an agenda. I would not consider him a journalist since he brings his bias without providing both sides of the story.

Seems like Simon Johnson does not understand that the TARP money provided to banks cannot be used to pay bonuses or awards. The TARP money is Tier 1 capital and is not used for expenses. Expenses come from the banks revenue and earnings. If banks want to reward their employees based on some predefined metric that is their business. Shareholders are the owners of the business and they should be liable for any actions by the banks. They elect the board of dir and the board contracts talent. Just basic corporate governance.