This idea works better than a stimulus package. Obama's stimulus package failed to deliver largely because most of the money got routed to state and local governments. The aim of a stimulus package is to stimulate the economy and private sector growth. Government plants the seed. However, since so much of the money got routed government agencies, the money got hoarded instead.
No income tax for the year would mean that people who are struggling get themselves on their feet. It means people can raise capital quicker to start a business (more jobs) or build up enough for a down payment on a house.
What about the rich? According to Forbes, the richest 400 people pay only an average of 18% in taxes. Since everyone else pays a higher percentage, it is everyone else who is helped the most by this.
This of course will never happen. Obama shot off all his ammo with the healthcare bill. He has nothing left, and I doubt he'd ever promote such an idea anyway.
The Debt Ceiling Isn't Getting Raised
Matters that get the attention of everyone tends to lead to lots of misinformation. The reason is because we get the information from our lawmakers who in turn get their information from special interests, the Bible, and journalists, many of whom do no research. Here are few examples:- China owns most of our debt. (False. The Social Security Trust Fund does. China does not rank second either and is not even close.)
- The US will default if we don't raise the debt ceiling. (False. The US can avoid default if it chooses to pay the interest on Treasuries next week.)
- We need a balanced budget amendment to get our fiscal house in order. (False. Even if revenue amounted to $2 trillion last year, Congress could budget for $2.1 trillion next year and still wind up with a surplus if next year's revenue ultimately totals $2.2 trillion.)
- Tea Party members are the reason why the debt ceiling isn't getting raised. (False. Tea Party members constitute just a small percentage of Congress. Passing a bill does not require unanimous vote. The fact that lawmakers are crying that the Tea party fails to recognize their place as junior members of Congress only reinforces the need for term limits. The sense of entitlement is through the roof.)
You cannot blame Republicans or Democrats exclusively for the failure to pass a bill. All lawmakers share the blame equally for one simple reason: The Boehner plan didn't have a single Democrat vote when it passed. In the Senate, just about all the Republicans rejected Harry Reid's plan. That screams partisanship from both sides that goes beyond a few Tea Party members. The President deserves blame too, but not in the way whiny lawmakers make it out to be ("The President isn't giving us any direction on where to go. Waa waa waa.") The President miscalculated when he demanded a debt ceiling raise PLUS a long term fiscal policy to address the debt (Sorry, Lawrence O'Donnell, but the President isn't outsmarting any of the Republicans on a daily basis.). He already forgot how entrenched party members delayed his healthcare plan. Congress has failed to put forth any fiscal plan for several months. Obama should have instead called for a debt ceiling raise independently. Then after passage, some serious work on the debt commission's recommendations.
Still, the President deserves only a limited amount of blame for this. Sorry Sean Hannity, but when it comes to this issue, you are wrong on days that end in "y". The blame is squarely on the shoulders of Congress. Both parties.
Whereas before I expected the debt ceiling to be raised before the August deadline, I now doubt it. When TARP was proposed, Congress did not pass it the first time. I expect the same thing to happen again with the second time being the charm - that is, with a whole lot of pork. Both sides will capitulate and we'll wind up a poorly imagined long term debt plan.
Stock Market Stuff
JP Morgan Chase (JPM) estimates an additional $100 billion annually in taxpayer costs if the US gets downgraded on its credit . That's based on an estimated 60 to 70 basis point (0.6 to 0.7%) increase in interest rates. Sounds like little, but that's tremendous if one considers the delicate nature of mortgages and housing. Of course, any rise in rates makes stocks less attractive. ... The debt ceiling resolution will inevitably mean lowered government spending, a perpetuation of recent trends (teachers are getting laid off for example). Revised GDP numbers also show that the economy shrunk more than expected during the recession (1% more) and that growth since then has been worse than previously determined. In short, we have economic uncertainty - bad for stocks. ... Dunkin' Donuts (DNKN) went public (again). It's had an impressive first three days so far given the state of the market. It's still above its IPO price. How much of a push will it get when the debt ceiling gets resolved? ... For those hoping for another bite at Apple (AAPL) might not have to wait too long. It's showing a bit of weakness after its earnings jump. Pray for another 6% drop, but be ready to get in when market bottoms.Bottom Line: Hopefully you've raise cash. When the debt ceiling gets raised, I expect lots of money to flood into the market. That will be your buying opportunity. Don't try to buy early, because the market could really sink before it bounces.
Stuff The May Only Interest Me
Football is back as both union and owners have agreed to a collective bargaining agreement. And not too soon because many players were getting into trouble with the law. For some, the NFL is like a Boys Club - keeps them out of trouble during their free time. ... Wells Fargo got fined $85 million by the Federal Reserve for conning customers, their good ones, into more costly loans and falsifying information on customer applications. To give you an idea of how much that is, Wells Fargo brought in $20 billion in revenue last quarter. So they bilked John Q Public over the last few years, and have to pay 0.4% of their sales made in the last 3 months - essentially the interest they pay on their CDs. In addition, Wells Fargo doesn't have to admit any wrongdoing. No one gets fired. No one goes to jail. ... Reuters reports that robosigning are occurring again even though banks agreed not to do it. Slap-on-the-wrist fines mean nothing and you're seeing it here. Where's the accountability? ... A recent survey of men in the US, Canada, Britain, and Australia revealed that men are sick of hearing about guys like Justin Beiber (47%) and Charlie Sheen (20%). No surprise. As for women that men are sick of hearing about: Lady Gaga (29%), Sarah Palin (25%), and Kim Kardashian (17%). Kim Kardashian's numbers is interesting in that in the UK, her disinterest number is actually 42%. Maybe if her teeth were crooked, she'd have more appeal. ... Fans of Chutes & Ladders and Candyland, rejoice. Battleship (as in "You sank my battleship") is coming to your local cineplex next year. To spice it up, they've added aliens so now it looks like "Battle: Los Angeles" on water. Some talk about seeing Monopoly: The Movie when it comes out, but that's a little too reality TV for me. I like to escape when I see movies. ... Monster-dot-com ranked Elementary School and Special Education Teacher two and five respectively as the worst paying degrees of 2011. That said, Monster acknowledges that job growth prospects for these positions should be very good because of shortage of qualified teachers. I'd add attrition due to working conditions and wages is a mighty contributor to job growth, too. ... Any country that has the kind of debt our country has shouldn't have any billionaires. Yet, we do have quite a number of them. ... Despite all the political shenanigans, bond yields went lower for the week. Why is that? Probably because even in a bad neighborhood, US Treasuries are still considered safe. No one is looking to ditch them - even if China protests. ... Though Obama-McCain was worse than Clinton-Romney, I am happy that McCain isn't president. If McCain were elected, the Treasurer would have been Phil Gramm. A lot of people, myself included, have been very dissatisfied with the choice of Timothy Geithner as Treasurer, but it would have been ten times worse with Gramm who spearheaded legislation that led to the creation of Too-Big-To-Fail institutions. Yet, we still wound up with Lawrence Summers as chief of Economic Advisory Council (he aided in the deregulation of derivatives), so I guess there's no escaping them. Ideological knuckleheads were destined to run our economy into the ground no matter what. ... So much for the name "Maverick". After talking about how wonderful Tea Party candidates would be for Congress last year, John McCain is now calling them "hobbits" because of the debt ceiling debate. Nevermind that Democrats didn't vote for the Bummer - er, Boehner - bill either (maybe "Bill Buckner bill" is more appropriate). A real maverick would point out that both Democrat and Republican bills are Debt-Plan-Lite. ... Starbucks is telling customers in Russia to leave their cigarettes outside . It literally is bad for business, because of second-hand smoke. Not for customers, but for the coffee. Anyone who has left a box of baking soda open in a refrigerator knows that it absorbs all the odors. Same holds true for cigarette smoke and coffee. Starbucks reached the conclusion that all the smoke has been tainting the flavor of the coffee. So leave the butts outside. ... If taxes go really high as a result of the debt debate, I wonder how many people will start maxing out their Roth IRAs since they are tax-free? ... Hard to find any articles on this to corroborate this one but the company's website seems genuine, so I'll make light of it anyway: Somewhere in Italy, you can buy Hitler Beer. Or you can order online if you crave a different kind of German beer. Or if Mein Kampf Premium isn't your style, you can go with the Stalin Amber with hops that been genuinely hammered and sickled. A case of 12 bottles comes roughly to $40, without shipping. Quite frankly, I'd rather drink a bottle of O'Doul's that's been sitting in the sun all day. ... Illinois is offering advertising opportunities for corporations on its license plates. For a fee, one can have their corporate logo plastered on the state plates. Registrants who want a registration fee cut can simply opt to have a corporate logo plastered on it. So the average joe pays a smaller fee/tax, and the company gets billed for the advertisement. In all, the state makes out better. It's only a matter of time before all sorts of services get on the plates (For a good time, call 1-800- - - ) ...Articles
- Interactive Unemployment Map
- Wall Street and Economists Have This Recession Wrong (Why This Recession Will Be Prolongued)
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