Posts Tagged ‘Occupy Wall Street’

Politics – My Take on Things Pt. 1

October 17, 2011

I rarely look at the political stage with high regard. It is showmanship and theater and beauty contest, and to the casual observer, it is filled with nothing but soundbites. I have a great many friends who are prone to listening for the soundbite, and critical thinking simply does not enter into the picture. I find this highly troubling.

Here are a few thoughts from my brain. Let’s see what the Republican debaters say tomorrow! Probably not much of any substance.

Tax Reform –

The current fallacy of modern taxation – the fairness pitfall is that money working for money (an investment) currently has a lower tax rate (15% capital gains rate) than labor or intellect working for money (up to 35% marginal tax rate). Money Talks – heck, the Supreme Court has ruled on more than one occasion that money is a protected vehicle of Free Speech. Corporations are afforded many of the same rights as people, and in some instances more rights and new rights that people don’t get to tap. My fear is that corporate influence will easily defeat meaningful tax reform.

Tax policy can drive significant elements of our economy. Want to encourage domestic investment? Lower the capital gains tax rate below the personal income tax rate. I bet that was the rationale for creating a lower capital gains tax rate in the first place – to keep investment dollars here in the US rather than see them go to Europe or Japan, though I have never seen that thought in print. I wonder what Congress’ actual rationale for establishing the lower gains rate was?

My view of personal income taxation is that all taxes – social security, medicare and internal revenue taxes should start to be assessed on the first dollar in excess of the annualized minimum wage plus some amount related to the number of dependents. A minimum wage worker, a welfare recipient or someone living in poverty should not be burdened by any taxes. Internal Revenue taxation is not too far from this principle. What is the justification, though, for the ceiling on Social Security wages  – why excuse the wealthy from this particular tax burden? Why excuse realized investment gains from social security and medicare taxes? I am genuinely asking the question – why was it done this way?

Market Volatility and the Occupy Wall Street Movement –

I am amazed that the “masses” who have lost relatively large portions of their 401K plan values and home value are complacent to “sit and take it” as they contemplate disappointing retirement prospects. They are still hopeful, I guess… One day, their losses will drive them to pick up signs and step beside the Occupy Wall Street protesters nationwide. There could be a ground swell of protest as the markets continue to dance around until dipping sharply with the next European financial calamity. My bet is that the Occupy Wall Street movement will grow dramatically next year.

Want to make the securities markets rational and suck the volatility from programmed trading out of the markets? Charge a Federal sales tax on every securities transaction whether at the market, an option or a future! I wonder how much tax revenue a 1% Federal financial transaction tax would generate? Hmmm… It won’t return the losses to the invested middle class, though.

Budget Deficits and Jobs

President Obama knows that troubled finances demand reform on the inflow and the outflow – on both ends. He “gets it”. I like President Obama, but he has a tendency to begin negotiations with an intransigent opponent with a meager appeal from the middle ground, and not something dramatic from the edge – you can’t move someone who is uncompromising towards the middle by starting from the middle – you can’t make radical change happen with baby steps. The President said that cutting the Federal Government’s mission and scope cuts jobs – he’s right. Cutting the Federal budget by 10% would potentially cut almost a half million Government jobs by my estimate at the very time when the President has challenged Congress to expand employment. The real challenge is to spend money smarter. I like President Obama, but I have to admit that I am disappointed by his small ambition to fix big problems.

I wish Robert Reich, President Clinton’s Secretary of Labour would run for President. He understands a thing or two about the “jobs economy”. He “get’s it” like few others do. I like Dr. Reich.

If Congress forms an “Infrastructure Bank” to rebuild roads and bridges and FAA systems and waterway systems to spur employment, it will only employ a small fraction of the unemployed. And it is unlikely to be sustained into the long term. A good idea with a small employment impact… But borrowing the money to rebuild infrastructures right now is cheap – a bargain! The newly reemployed in these programs would be dominantly manual laborers. There are vast numbers of highly skilled unemployed and underemployed who represent a huge untapped potential if employed and working hard – the “tails” are significantly unemployed – the least experienced and the most experienced face enormous hurdles in the labor market, and these programs do not address these highly (and narrowly) skilled workers very aggressively.

Speaking of unemployment, it is laughable that the official rate and the generally acknowledged actual rates are different by between a factor a half or a third…  The Government is wasting money to count a statistic that is simply and utterly wrong, and openly acknowledged as such. It’s a waste of my taxes for the Government to determine the unemployment rate. CNN can do better (and does). 14M unemployed; 11M underemployed; and how many uncounted?

My real concern for the future state of unemployment, in all candor, is that I’m not wealthy enough to employ security people to insulate me from the hardship of the unemployed. I don’t want indigents camping in our city parks or in my front yard or knocking on my door for food and other handouts. And they are already starting to knock on my door… This is one likely kind of societal impact from unemployment if it grows by a few more percent amidst Federal and State budget cuts that whack “survival” benefits.

This isn’t too organized a rant. Sorry about that. More later – maybe next Monday.