Yes, they are "a pack of lies."

http://www.factcheck.org/askfactcheck/would_obama_tax_my_profits_if_i.html

I found this in my email inbox today.  I thought I would post it here for a good laugh.


Taxes - Must Read

> > INTERESTING DATA JUST RECEIVED ON TAXES
> >
> > Spread the word.....
> >
> >  This is something you should be
> > aware of so you don't get blind-sided.
> >  This is really going to catch a lot
> > of families off guard. It should
> >  make you worry.
> >
> >  Proposed changes in taxes after 2008 General
> election:
> >
> >
> >  CAPITAL GAINS TAX
> >
> >  MCCAIN
> >  0% on home sales up to $500,000
> > per home (couples) McCain does not
> >  propose any change in existing
> > home sales income tax.
> >
> >  OBAMA
> >  28% on profit from ALL home sales
> >
> >  How does this affect you?
> > If you sell your home and make a profit, you
> >  will pay 28% of your gain on taxes.
> > If you are heading toward retirement
> >  and would like to down-size your
> > home or move into a retirement
> >  community, 28% of the money you
> > make from your home will go to taxes. This
> >  proposal will adversely affect the
> > elderly who are counting on the income
> >  from their homes as part of their retirement
> income.
> >
> >  DIVIDEND TAX
> >
> >  MCCAIN 15% (no change)
> >
> >  OBAMA 39.6%
> >
> >  How will this affect you?
> > If you have any money invested in stock
> >  market, IRA, mutual funds,
> > college funds, life insurance, retirement
> >  accounts, or anything that pays
> > or reinvests dividends, you will now
> >  be paying nearly 40% of the money
> > earned on taxes if Obama become president.
> > The experts predict that 'higher
> > tax rates on dividends and capital gains
> > would crash the stock market yet
> >  do absolutely nothing to cut the deficit.
> >
> >  INCOME TAX
> >
> >  MCCAIN (no changes)
> >
> >  Single making 30K - tax $4,500
> >  Single making 50K - tax $12,500
> >  Single making 75K - tax $18,750
> >  Married making 60K- tax $9,000
> >  Married making 75K - tax $18,750
> >  Married making 125K - tax $31,250
> >
> >  OBAMA
> >  (reversion to pre-Bush tax cuts)
> >  Single making 30K - tax $8,400
> >  Single making 50K - tax $14,000
> >  Single making 75K - tax $23,250
> >  Married making 60K - tax $16,800
> >  Married making 75K - tax $21,000
> >  Married making 125K - tax $38,750
> >
> >
> >  Under Obama your taxes will
> > more than double!
> >  How does this affect you? No explanation
> > needed. This is pretty
> >  straight forward.
> >
> >  INHERITANCE TAX
> >
> >  MCCAIN 0% (No change, Bush repealed this tax)
> >
> >  OBAMA Restore the inheritance tax
> >
> >  How does this affect you? Many families
> > have lost businesses,
> >  farms and ranches, and homes
> > that have
> > been in their families
> >  for generations because they could not
> > afford the inheritance tax.
> >  Those willing their assets to loved
> > ones will not only lose them to
> >  these taxes.
> >
> >  NEW TAXES BEING PROPOSED BY OBAMA
> >
> >  * New government taxes proposed on
> > homes that are more than
> >  2400 square feet
> >
> >  * New gasoline taxes (as if
> > gas weren't high enough already)
> >
> >  * New taxes on natural resources
> > consumption (heating
> >  gas, water, electricity)
> >
> >  * New taxes on retirement accounts
> > and last but not least....
> >
> >  * New taxes to pay for socialized medicine
> > so we can receive the same
> >  level of medical care as other
> > third-world countries!!!

Here is a good discussion of the supply & demand fundamentals from Angry Bear.


Surowiecki on Oil Prices


 
Andrew Sullivan finds the discussion of the oil market by James Surowiecki illuminating. I’m not so sure. Let me begin with this confusion:


But wait a second – doesn’t the quantity demanded equal the quantity supplied at the market clearing price? If Surowiecki is trying to say that the demand curve shifted outwards along a fairly inelastic supply curve – then maybe we have a pretty good explanation of the rise in oil prices. The Excel file from the Energy Information Administration has some useful information from 2003 to 2007 including total world demand and total world supply – which both grew by about 5 million barrels per day from 2003 to 2006. During this period, OPEC supply grew by almost 4 million barrels per day. Now from 2006 to 2007, world demand growth seems to have outstripped world supply growth with the difference being world demand and world supply being either reported draw downs of inventories or the “statistical discrepancy”. Given their data has most of this difference being the statistical discrepancy – it is hard to pin down precisely what their data is telling us.

Surowiecki argues against the usual suspects – market manipulation by greedy oil companies or speculative forces – and he’s likely correct. But then he argues:


Why would anyone assume that the assumptions of rising world demand and shrinking supply be wrong? What if they are correct? Then couldn’t the current market price be a rational response to these rational expectations? Which might leave one to argue that allowing the market to work is the preferred policy to all the nonsense we are hearing from politicians such as John McCain.

Food for thought...



http://www.trendlines.ca/monthlyreport.htm#barrel

The Black Swan, Nassim Taleb

I saved this from an article I read back around 1999.  It's pretty funny looking at it now, today.

·  13,000 by 2000: Prudential Securities' director of technical research, Ralph Acampora
·  15,000 by 2005: Deutsche Morgan Grenfell economist Ed Yardeni
·  18,500 by 2006: Prudential's chief technician, Ralph Acampora
·  21,000 by 2008: Harry Dent, author of The Great Boom Ahead
·  21,200 by 2010: Sheldon Jacobs, No-Load Fund Investor
·  30,000 by 2010: Frank Jennings, Oppenheimer Funds.
·  49,200 by 2013: Investor's Business Daily projection
· 120,400 by 2025: Roger Ibbotson, economist
· 153,000 by 2023: Investor's Business Daily again
· 400,000 by 2047: Kiplinger's magazine

I'm not arguing whether citizens have the right.  There is no question there.  If people wanted a complete socialism, they have the right to enact that, too.  I am arguing the wisdom of ever greater under funded entitlements, and the impact on our long term economy.  I think the risks are clear.  I am also arguing the wisdom of a retirement for every person over 65 with little regard to life expectancy or the means of people wealthy enough to care for themselves.  I am arguing the wisdom of doing this by relying on a shrinking working class. 

Maybe we could provide universal health care and balance the budget through reasonable SS & defense cuts, and modest tax increases?  I don't want to trample anyone's "rights," but I would also like to see a reasonable entitlement program when I get old enough to retire.  The business as usual model of run away medicare/medicade & deficit spending paid for by borrowing from SS ensure that I will not.

Quite simply, the govt had no business "promising" a retirement & medical coverage for every person over 65 no matter what their means with no plan to address longevity, cost, or burden placed on an ever decreasing ratio of working participants.  If you really think the govt owes you something just because they made a misguided promise following one of the greatest periods of financial uncertainty in at least the last century, we are just going to have to agree to disagree.

This doesn't mean that privatization is anything more than a thinly veiled poison pill with the real intent of forcing an end to a program for those who truly need it as well as those who don't.  That doesn't mean that social security, in some artificial budgetary isolation, isn't solvent for the foreseeable future.  That also doesn't mean that a budget consumed by medicare/medicade entitlements will be able to afford any entitlements at all including SS.  That also, finally, doesn't mean that, even if we could afford all these entitlements, that we should provide them to those people who can easily work and/or live comfortably off of their own savings by taxing the ever dwindling ratio of those who still work.

Today's entitlement system is a well intentioned, but very broken & underfunded system that will likely never be fixed until it is too late to save any part of it including SS.  Short sighted, and easily manipulated, voters will simply continue to vote in more entitlements, greater tax cuts, and scream, holler, and stamp their feet about what "promises" they feel the govt owes them until the economy collapses under the weight of ever increasing demands, debt & currency debasement.

The greatest threats to free, wealthy, nations is the hubris of foreign military interventionalism, and the creeping "promises" of bloated entitlements ... in that order.


US Dollar (X Axis) vs Brazilian Real (Y Axis)

That sounds like an ironically accurate description of the Bush plan before we invaded.

Why, exactly, should a retiree who can easily support themselves by their own means expect a monthly check from the govt funded by those still working?  You have avoided addressing this issue every time I have brought it up.  How do you justify this?

The problem is SS.  It is part of the larger entitlement problem.  There is no logical justification of SS for those who do not need it other than greed.  If I am wrong, please provide one reasonable explanation why you should receive a check funded by my income if you can otherwise support yourself?

I have long supported lifting the cap on FICA.  The tax is currently regressive, and I have posted on this board for literally years in opposition to regressive taxation such as FICA.  Do some research on my positions before making more incorrect assumptions.

Third, the best way to encourage employment for those 65 and older is to raise the retirement age.  There is no reason an otherwise healthy person over 65 can't work.  Research has even shown that working into retirement can improve overall wellness & longevity.  If you don't want to have to work, provide for yourself, instead of expecting the govt to. 

Huh?  My financial plans are sound, and they do not rely on any inheritance, SS or medicare.  Anyone in my generation would be a fool to plan otherwise.

You have never presented any reasoning why we should continue to have a retirement program with full benefits available 20 yrs before life expectancy.  The disincentives rob the workforce of very capable workers over 65 yrs old.  It serves absolutely no purpose other than a redistribution of income from working participants to retirees who face no means test to determine if they need these retirement benefits.  You also present no plan to compensate for the dwindling ratio of retirees to workers as life expectency continues to increase while the retirement age barely moves.  This is not sustainable over the long run.  The current business as usual approach will inevitably lead to no benefits being available to anyone.  Naturally, this is of little concern to you, as someone who will not be around to see the consequences of your own generation's anecdotally justified greed.

I have lumped all entitlements together because the reality is that the huge shortfalls in medicare/medicade will surely effect the govt's ability to provide any entitlements including SS.  Universal healthcare is no silver bullet.  It is not even the best solution, although it is certainly better than the current system. 

Finally, I don't care what McCain's plan is or what benefits he may specifically get.  I don't intend to vote for him, and he is a perfect example of the kind of retiree who doesn't need SS hand outs in order to pay his living costs.  There is no justification for forcing current workers to pay retirement benefits to the many retirees such as him who don't need them.  There is simply none.

I agree completely.  I lump them together because I think both benefits are important.  Making prudent budgeting changes to both could allow a combination of these benefits to all who need them for the foreseeable future without creating an unreasonable burden on working participants.

As we have seen already, borrowing from SS to fund other govt services threatens even services like SS that may not, by themselves, be at risk.

You asked about how my parents were going to afford retirement.  I told you.

As far as inheritance, you are wrong again.  My grandfathers wealth will divided 3 ways & pass through my mom.  Since she & I are not on perfect terms, and she is not the most financially responsible person, so I don't expect to see any of it.  I will see one third of one half of whatever my father has.  He does well, but whatever I may end up getting probably wouldn't pay off my mortgage, much less cover my retirement. 

I am, in actuality, one of the salaried workers you describe.  My retirement plan depends solely on what I save in my 401k & having a paid off mortgage when I retire.  I do not expect any SS/medicare or even a penny of inheritance.  I expect to live comfortably, and it hasn't taken anything more than minimal efforts, just good decision making & a responsible personal budget.  This is something anyone of even modest means should be able to do assuming they don't get caught up in debt, consumerism & poor life choices such as dropping out of school or having children outside of a stable marriage.  Sure there are hard luck cases, but that is why it SS/medicare should be a safety net rather than 20+ years on the dole.

That is only relevant if you plan on living in another country when you retire.  I won't be converting any of my dollars to euros unless I move to Europe.  Everything else is reflected in the inflation figure.

Please feel free to elaborate on whatever you think I am missing in SS/medicare benefits with actual empirical data.  I am anxious to see what you have to back up your anecdotal assertions.

The "Me Generation" is a synonym for baby boomers.  I'm not a baby boomer, and when I referred earlier to the "me" plan, I was referring to a retirement plan where I am responsible for "me," not the govt.  Personal responsibility seems to be sadly lacking among retirees such as yourself who feel entitled to rely on the shrinking ration of workers such as myself to support you.  We know the benefits you enjoy will not be there when we get to be your age, and you are complicit in this failure by expecting the govt to take care of you even when you may be able to care for yourself. 

SS/medicare were intended to be a safety net.  There is no question about this.  Again, when SS was established, the retirement age was the same as life expectancy at the time.  The program was never intended to give people a 20+ year hand out to those who can easily work or rely on their own savings.  I am sure you have no problem continuing to bankrupt future generations you will leave behind; you will not have to pay the bill. 

I didn't go to high school in Utah, but why not add one more incorrect assumption to your list. 

Studying history is certainly worthwhile, but the problem is that people like yourself always expect that the future continue just like the past in linear fashion.  Look no further than all of the rhetoric about how Saddam & Iraq was just like Hitler & Germany to see how misleading this mentality can be. 

The fact is that the business as usual program of increasing life expectancy & increasing benefits for retirees is a train wreck in slow motion.  I have no problem raising taxes to cover reasonable benefits, but raising taxes will not be nearly enough.  Sooner or later will have to either scrap the programs all together or cut benefits.  The fool is the person who chooses to ignore the problem so that they can take their hand outs without any consideration of the bankruptcy they are creating for the generations left behind.  This is a blatantly selfish mentality thinly veiled behind some hard luck anecdotes of starving seniors.  Sooner or later more people will catch on, and the party will be over. 

Calling military retirement benefits welfare is plainly ridiculous.  I am no fan of McCain, but I honor his service, and he is entitled to the military benefits he has earned.

If he benefits from his wife's inheritance, then that's his business, and has no relevant bearing on this discussion.  FWIW, I favor taxing inheritance as regular income from the first cent.  That is, however, a completely different discussion worth its own thread.

It is clear that politicians of both parties lack the political courage to address the growing entitlement problem.  I have no hope of seeing a solution until it is far too late to salvage even a means tested system.  Certainly the war in Iraq has been a costly misadventure in terms of both lives & money.  I have a brother in law who will be serving a second tour there in about a month.  I can only hope for him & ever service person there to return safely.  I sincerely regret what better use the money & lives could have been put too than there.  Unfortunately, there is no easy solution at this late point.

As for China, we are probably quite lucky that we have a country so willing to finance our consumerism.  The truth is, our fates are now tied.  As our dollar falls, so does the value of the vast amount of our debt they hold.  I only hope that this doesn't lead to more protectionism as seems likely based on recent political rhetoric.  Protectionism hurts both sides of the lost trade relationship.  Ironically, our best tool for exporting democracy is trade.  In the long run we may follow our failure to produce a democracy in Iraq militarily with a failure to nurture positive political developments elsewhere with protectionism.  In any case, these are also subjects deserving of their own thread.

I agree, however, raising taxes alone will not solve the problem.  In 1950 there were 6 beneficiaries per 100 workers paying in.  By 2050 there are projected to be 50 beneficiaries per 100 workers paying in.  We have only made this problem worse by increasing medicare benefits which are already rising faster than inflation even without the new drug program.

Something has to give.

I am aware that working reduces your benefits.  It should.  If you can work, I can see no reason to depend on the govt for entitlements.

I am very familiar with average rates of return on various asset classes.  Inflation has averaged 3.0% over the last 80 years.  Large cap stocks have averaged 10.4% over that same period.  Investing in a diversified stock index fund should net you 8.4% on average over inflation (of course, it would be wise to invest in lower risk assets as you near your retirement goal).  Investing 10% of your income over your lifetime should easily cover your retirement at a lifestyle equivalent to that of your working years.  Investing 15% of your income would allow you to retire quite comfortably.  Saving 15% should hardly be a strain on anyone of moderate or better income.

I actually know these numbers pretty well.  I would be happy to do the math for you if you would like to look at a few different scenarios.  It's not that hard.

First, my parents are quite capable of supporting themselves with or without SS/medicare.  Both my grandfather on my mother's side, and my father are private business owners.  I am sure that either of them would be insulted by any offer on my part to support them.

Second, I am sure you understand why anecdotal evidence is a very poor basis to support an argument, so I won't remind you.  This is aside, of course, from the fact that, once again, means testing, by definition, would not prevent hardship cases such as these from getting benefits.  It would prevent, however, people who can work, or have savings enough to support themselves, from relying on a dwindling ratio of working age participants to fund their retirement.

I don't see how this is relevant.  The federal government was under the control of two seperate parties at the time we had a line item veto and a balanced budget.  I believe that having two branches of govt controlled by different parties leads to greater fiscal responsibility rather than less.  I would be surprised if data on historical spending did not back this up.

Congratulations on having been a congressional staff member.  It makes more sense, now, that you prefer anecdotal evidence over emperical.  Anecdotal evidence is certainly the currency of political persuasion, unfortunately.  Perhaps if you had spent a greater deal of time working in the private sector you would be more sympathetic to those who would like to rely less on govt entitlements for future income.