No Coat Tails

In light of the Massachusetts senate election is now official:

Barack Obama has the political coat tails of a naked midget.

Health Costs In One's Final Year

During the course of the debate on television last night after President's O'Bama's "news conference" a pundit mentioned something interesting. He said, statistically, fully one fourth of an American's total health care costs occur in the final year of life.

Can anyone confirm this?

If true, it takes no genius to see where "cost cutting" will occur when generational warfare breaks out over this massive national debt.

Federal Income Tax on Non-Profits?

The nonprofit industry includes over 1 million organizations across the US with combined annual revenue of more than $1 trillions. Major organizations include Goodwill Industries, Ascension Health, National Cancer Institute, New York University, and the Bill & Melinda Gates Foundation. The industry is highly fragmented: large organizations with assets of $10 millions or more represent just 6 percent of the industry but account for more than 80 percent of the sector's total annual revenue. A modest annual federal income tax of 2% on those organizations with + $10 millions in assets would thus generate in the neighborhood of $16 billions. A more realistic tax similar to the "corporate income tax rates" would generate some $272 Billions. That's roughly equivalent to 5 times the total annual budget for the State of Illinois. These companies pay Social Security and Medicaid/Medicare taxes. They pay other federal taxes. Why not an income tax?

Here Come The Services Taxes

Illinois currently doesn’t apply the sales tax on services such a movie rentals, carpet cleaning, dog grooming and a number of other such services. That could change under a budget-balancing plan being considered by the Senate.

If approved the 6.25 percent state sales tax would be applied to the following, for which there’s currently no sales tax:

Warehousing and storage
Travel agent services
Carpet and upholstery cleaning services
Dating services
Dry cleaning and laundry, except coin-operated
Consumer goods rental
Health clubs, tanning parlors, reducing salons
Linen supply
Interior design services
Other business services, including copy shops
Bowling Centers
Coin operated video games and pinball machines
Membership fees in private clubs
Admission to spectator sports (excluding horsetracks)
Admission to cultural events
Billiard Parlors
Scenic and sightseeing transportation
Taxi and Limousine services
Unscheduled chartered passenger air transportation
Motion picture theaters, except drive-in theaters
Pet grooming
Landscaping services (including lawn care)
Income from intrastate transportation of persons
Mini-storage
Household goods storage
Cold storage
Marina Service (docking, storage, cleaning,
repair)
Marine towing service (including tugboats)
Gift and package wrapping service
Laundry and dry cleaning services, coin-operated
Other services to buildings and dwellings
Water softening and conditioning
Internet Service Providers
Short term auto rental
Information Services
Amusement park admission and rides
Circuses and fairs -- admission and games
Cable and other program distribution
Rental of video tapes for home viewing

Interestingly enough there is no tax on dental services. They were the ones proposing taxes on "sugary drinks" you will recall.

The Numbers Speak For Themselves . .

Hold On To Your Hat . . .

This is just plain scary:

Stimulus Spending vs. Overall Government Spending

Federal, State and Local Government agencies along with public educational institutions award thousands of contracts in any given month. In February 2009 alone, there were over 65,000 purchases and projects in motion across the United States. The billions of dollars in stimulus spending is supplemental to existing budgets and will be spread over time.

he chart below compares February 2009 spending from existing budgets with early spending from the American Recovery and Reinvestment Act.

What's wrong with this picture:

Chicago Style Politics Versus The Rule of Law

Finem Respice has a great post on the Administration’s bare-knuckle tactics in trying to enforce its will (against the dictates of bankruptcy law) on Chrysler:

It should be obvious to most observers that, recent allegations of strong-arm tactics in negotiations with Chrysler creditors notwithstanding, given the current situation the White House shouldn’t need to resort to anything so openly thuggish as naked threats issued by the likes of Steven Rattner. Assuming for a moment, and for the purposes of conversation, that the allegations are substantially true (and I believe they are), the fact that a bit of Chicago-style thuggery seems to have been required- and seems to have failed- says a lot about this White House. It also says quite a bit about the wild overconfidence intrinsic in the administration and how entirely unused to being denied their will are the senior members thereof. A more deft executive need not have pushed so hard, or rattled the saber of class warfare so loudly, but then a more deft executive would not have expected so much….

There are three things that are scarier than the actual resort to common thuggery. The ease with which it comes to this administration. The ubiquitous and rank ineptitude that makes a resort to thuggery necessary in the first place- and promises it will become a common tactic in the days to come. And the forgiveness the population regularly affords the administration after one or another of these episodes is, yet again, made public.

The tantrums that follow missed targets sketch an interesting family portrait of a class of politically spoiled children, think Hillary Clinton meets Paris Hilton- totally devoid of real executive experience but somehow still used to getting their way no matter what some silly law book says. I believe I’ll take my chances with the “speculators” over these alternatives any day, particularly when the spoiled children have the 82nd Airborne Division in their toy chest.

Saudi royal: "you can't get rid of oil . . ."

A key member of the Saudi royal family who headed the country's intelligence service for 25 years accused both the Obama and Bush administrations Monday of "deceiving" the American people that the U.S. can ever end its dependence on foreign oil.

"You can't get rid of oil. You can't get rid of fossil fuels — gas and coal — unless you want to price yourself out of existence," Prince Turki al-Faisal, former ambassador to Washington, told editors and reporters at The Washington Times.

"I'd hope that the general public in the United States would be wiser than to be deceived into thinking that the U.S. can ever be energy independent," he said.

"The U.S. has rising energy needs despite the economic downturn," Prince Turki said. "If you are going to be paying for wind, electric and solar energy equivalents that cost five or 10 times more than it costs to use oil, you are going to price yourself out of the market. You are going to lose whatever competitiveness you have in your products."

Lloyd Webber: "Exodus Is Inevitable"

The opinion polls have uttered. The country loves the new 50 per cent top rate of income tax. Soak the rich. Smash the bankers. So Government spin doctors are in second heaven. The Conservatives' silence redefines a tomb. And I suppose there'd be quite a turnout for the public flogging of Sir Fred the Shred. But before you book your tickets, hold hard. And before you lynch me as a rich b*****d flying a kite for my own cause, let me beg you to believe that I am not. I believe that this new top rate of tax could be the final nail in the coffin of Britain plc. I am 61 years old. I have lived and worked in Britain all my life. Not even in the dark days of penal Labour taxation in the Seventies did I have any intention of leaving the country of my birth. Despite a rumour put around some years back, I have never contemplated leaving Britain for tax reasons. But in the 40-plus years I have been lucky enough to work here, I've seen a bit. So I must draw your attention to what is really proposed in this Budget. Here's the truth. The proposed top rate of income tax is not 50 per cent. It is 50 per cent plus 1.5 per cent national insurance paid by employees plus 13.3 per cent paid by employers. That's not 50 per cent. Two years from now, Britain will have the highest tax rate on earned income of any developed country. I write this article because I fear the inevitable exodus of the talent that can dig us out of the hole we find ourselves in. It is inevitable, given that other countries are bidding for entrepreneurs. The Government must modify its proposals. I give you this example. I have altered the details of the family I write about for obvious reasons. But the essentials are true. Last Thursday I met with a thirtysomething guy. I absolutely depend on him in a highly technical area of theatrical production. For legal reasons he has to employ himself through his own company. Under the new tax regime, he will have to pay 13.3 per cent to employ himself before he pays himself anything. And then he will have to pay 51.5 per cent on what's left. This is a guy at the cutting edge of his profession who works all over the world. He is in demand in every major territory where entertainment is produced. He has a young wife and two children. Last Thursday he told me that he and his wife had decided that the UK was no longer where they wanted to live. His wife thinks the State education system is inadequate. And she fears that a bankrupt Britain will increasingly be a worse place in which to live as the horror of our present financial mess hits us all in the solar plexus. He says that he is young enough to set up shop somewhere else. The new tax rates were the final straw. These talented young people know they will make it impossible for them to educate their kids privately in the UK. So Britain plc loses not just the 40 per cent he would have paid in personal taxes under the old regime - plus NI and everything else - but... Come on, I don't need to explain the knock-on effect. It's obviously huge and immensely damaging - that's why I am writing this article quickly and probably with too much passion. Will the 50 per cent tax rate drive the rich away? The extraordinary thing is that, back in 1974, even Denis 'squeeze the rich until the pips squeak' Healey realised that you can't crush these talented people - who work much of the year abroad and away from their families - like specimen butterflies. He introduced a reduction in tax of 25 per cent for any work performed by a UK resident overseas. This, amazingly, rose to 100 per cent if the work took the individual out of the UK for a year. These reductions were scrapped by the Tories when they introduced the 40 per cent top rate. In the Healey days, there was no open-ended national insurance tax. Then national insurance was supposed to be just that, not the gigantic Ponzi scheme financed through direct taxation that it has become. Of course there are thousands of people like my friend - some employing themselves through their own companies, some self-employed, some employed by others. But all are part of the wealth-creation engine that has helped power Britain's economy. There is another dangerous aspect to the proposed tax climate. I am grateful to the distinguished crossbench peer who pointed it out to me. That is the wide disparity between the capital gains tax (CGT) rate at 18 per cent and the new top rate of income tax, which is effectively three times as much. So it's far more rewarding to keep 82 per cent of that clever speculation you did in the property market than bust your guts creating real wealth. Yes, it's laudable to have a CGT rate that encourages the creation of new enterprises. But it does not help Britain if the top rate of income tax is so high that the system actively encourages speculation, and therefore the repetition of the mess that we find ourselves in today. So I ask the Government to reconsider what it is doing. More than ever before we need to keep high-flying professionals in the UK. We can't, as we have done in the past, dump on them through penal personal taxation. Of course we know that there have been some shocking excesses in the City of London. But for years we have also had drummed into us that the City of London proudly took over from manufacturing as the UK's main source of income. New Labour rejoiced in the fruits of the excesses of the bankers. Of course, with hindsight, their bonuses were obscene. But New Labour gratefully taxed them. So, I beg readers not to confuse overpaid bankers with the rest of Britain's entrepreneurs. The next few years are going to be horrendous in the UK. The last thing we need is a Somali pirate-style raid on the few wealth creators who still dare to navigate Britain's gale-force waters.

The True Cause Of College-Tuition Inflation?

By Stephen J. Dubner

For college students and their parents, the steady spike in tuition prices in recent decades has been not only troubling but mysterious: why on earth is tuition inflation double the general inflation rate? What’s behind these huge tuition bills: Massive legacy costs? Less public funding? The cost of acquiring real estate?

While none of those reasons are necessarily off the table, consider this article by Tamar Lewin in today’s Times:

Over the last two decades, colleges and universities doubled their full-time support staff while enrollment increased only 40 percent, according to a new analysis of government data by the Center for College Affordability and Productivity, a nonprofit research center.

During the same period, the staff of full-time instructors, or equivalent personnel, rose about 50 percent, while the number of managers increased slightly more than 50 percent.

Support staff! And what kind of work are they doing?

The growth in support staff included some jobs that did not exist 20 years ago, like environmental sustainability officers and a broad array of information technology workers. The support staff category includes many different jobs, like residential-life staff, admissions and recruitment officers, fund-raisers, loan counselors, and all the back-office staff positions responsible for complying with the new regulations and reporting requirements colleges face.

This explanation seems satisfying (intellectually, at least, if not emotionally). But it’s probably also important to consider how much money colleges have been putting into student amenities as well. When I visited my undergrad alma mater a few years ago, the chancellor pointed out that three buildings had gone up in the past decade or so that were each larger than any existing building on campus. There was a library, a convocation center (a multipurpose arena), and a huge student gym. The gym, he said, was a top priority because parents and prospective students increasingly think of themselves as customers, shopping for the most amenities for the best price, and the colleges that didn’t come to grips with this would soon see their customers going elsewhere.

Why The Folks Are Angry.

Constitutional Right To Arm Bears

Fed Obligations Exceed WORLD GDP!

Anyone worried YET?

By Jerome R. Corsi
© 2009 WorldNetDaily

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.

The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.

But the numbers in the 2008 report are calculated on a GAAP basis ("Generally Accepted Accounting Practices") that include year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.

Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.

"Stimulus" $2 Billion for HeadStart; $50 Million For NASA

As more industries continue to beg President Obama for money from the next $819 billion economic plan, NASA was largely left out of the latest stimulus package.

Although Obama said the next $819 billion -- which was approved by the House -- will be another step towards other money packages, NASA was not granted $2 billion for space exploration and Orion development. NASA officials were dismayed to find they were only given $50 million from the House, despite the high costs of developing a next-generation space craft and repairing damage caused by Hurricane Ike.

Despite problems in the House, NASA officials hope to have better luck with the Senate bill, if all goes according to plan. Some politicians are upset there is so much money being granted towards social programs while programs such as NASA are trying to scrape together funding for future missions to Mars and moon.

By the way, the House included an additional $2 billions for Headstart programs. Other than stimulating social programs, what the heck kind of "stimulus" priority is that? When the headstart kids grow up I guess they can become social workers but not NASA engineers.

As an aside, although infrastructure construction and repair creates jobs, what help is that to my unemployed office worker friend, my unemployed banking friend, and my unemployed copy writer friend? Should they all be "retrained" to be union construction workers and move to other states where the pork projects are located?

Is The U.N. Still Holding To That?

Last year the U.N. reported that Iceland was the "best country to live in". You think they will change their minds this year?

updated 11:48 a.m. CT, Mon., Jan. 26, 2009

REYKJAVIK, Iceland - Iceland's coalition government collapsed Monday, leaving the island nation in political turmoil amid a financial crisis that has pummeled its economy and required an international bailout.

IL State Employee Retirement Pensions Severely Underfunded

From the Illinois Review:

Terry Savage lays out a dire scenario in the Sun-Times for those state lawmakers and Chicago city employees expecting a retirement pension. Here's a look at the dire situation for the retirement plans of state workers ranging from police to judges to university professors to members of the Illinois General Assembly. All are counting on generous state pensions, but may soon wake up to a brutal reality.

A financial war is brewing -- and it's likely to pit these public employees against Illinois taxpayers who are responsible for paying those generous pension promises. There simply isn't enough money in all these retirement plans (see below) to send out the promised checks. If you think Bernie Madoff had a Ponzi scheme going, wait until the wave of boomer retirement hits the reality of pension underfunding.

Complicating matters is the fact that the Illinois Constitution guarantees pensions to be paid before any other obligations. Savage gives the facts on how poorly these expected pensions are currently funded, just as baby boomers are heading towards retirement years:

* State Universities Retirement System (SURS): 58.5 PERCENT

* Teachers Retirement System (TRS): 56 PERCENT

* State Employees' Retirement System (SERS): 46.1 PERCENT

* Judges Retirement System (JRS): 42 PERCENT

* General Assembly Retirement System (GARS): 32 PERCENT

One Illinoisan's Perspective On Property Taxes

From a letter to the Northwest Herald, Crystal Lake, IL 60014: Outrageous property taxes

To the Editor:

My wife and I moved into our Woodstock retirement home more than two years ago. Last year’s property taxes were $5,099. This year’s were a whopping $7,259. That represents a jump of more than 40 percent.

We had moved out of a huge, five-bedroom home in Arlington Heights because we couldn’t afford the $7,200 property taxes there.

We left an area with great amenities, including the Lake County Forest Preserve only two blocks away, a beautiful park just three blocks away, and loads of nearby shopping.

I’m 64 and disabled. I thought moving to McHenry County, with its much lower land values, would equate to lower taxes. (I was wrong.)

We live in the smallest, three-bedroom home, with a half basement, on the smallest lot in our development. Yet, our neighbors, with much larger homes, full basements, and on larger lots, pay less than we do. Does this make sense?

I’ve spoken to both the county treasurer’s office and the township office, and hear the same “excuses” that my tiny home is worth more.

What can I do?

All I can afford to do is move to a much less expensive area, such as western or southern Illinois, or Iowa.

William Bodzioch

Woodstock

Breach of Faith

As the promises have grown so have the unfunded liabilities:

Sub-Prime Losses By Company To Date

MAIN SUB-PRIME LOSSES SO FAR

Citigroup: $18bn

Merrill Lynch: $14.1bn

UBS: $13.5bn

Morgan Stanley $9.4bn

HSBC: $3.4bn

Bear Stearns: $3.2bn

Deutsche Bank: $3.2bn

Bank of America: $3bn

Barclays: $2.6bn

Royal Bank of Scotland: $2.6bn

Freddie Mac: $2bn

JP Morgan Chase: $3.2bn

Credit Suisse: $1bn

Wachovia: $1.1bn

IKB: $2.6bn

Paribas: $197m

Source: Company reports