# Worried about US debt Default?



## vckempson (Jul 28, 2011)

Anyone worried about our stalemated Washington allowing a default on our debt?  I'm sure I'm more sensitive to it than most since I'm a financial planner, but what about the masses?  

No specific political discussion here; I think that's against the rules.

We're starting to make concrete contingency plans today and tomorrow for our clients in case they don't work this out.  The impact would be horrendous for the markets and the economy.


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## Patri (Jul 28, 2011)

Nah. Life will go on one way or another. We pay our politicians the big bucks to solve these problems. I focus on my own little world - family, job, friends.


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## Ridewithme38 (Jul 28, 2011)

There have been dozens of Government shut downs like they are talking about in the past...a default will have absolutely NO effect on the common person, its just more talking points to distract us from whats actually happening in the world


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## heathpack (Jul 28, 2011)

Totally agree it's a disaster.  Effect on financial markets unclear but undoubtedly not good.

The bigger issue is that it demonstrates our country to be lacking in effective leadership.  Which is a very big deal, given that we like to consider ourself a country worth emulating.  We are a huge economy, world power, but our leaders are unable to work together to get the job done.

Totally disgusting.

H


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## loafingcactus (Jul 28, 2011)

Was already properly diversified including internationally diversified, so I've done what I can do.  I'm young, and I hold onto the fact that people who held through the Great Depression did just fine.  I'm a little emotionally worried, but I take that to my shrink and not my broker, which I know he appreciates. ;-)


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## vacationhopeful (Jul 28, 2011)

The longer this goes on, the more the working people will look at the persons who are supposed to guide and run our country act and think like out Hollywood movie stars - bimbos and airheads.

Yes, we had an 8 year President who was a bigtime actor --- but he had served many years as head of a major union. He had been a 8 year governor. But we knew where he came from and he never said he wasn't an actor.


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## Talent312 (Jul 28, 2011)

My attitude...

*A. The sky is not going to fall.*
Some contractors and maybe employees will not get paid on time. Oh well. 

A bigger risk lies in a downgrade in the U.S credit rating. That will drive up
interest rates for everyone for years and may delay an economic recovery.
Bond values will take a hit from rising interest rates, no doubt.

*2. Panic selling makes this a buying opportunity.*
... and when the issue is resolved, the market will recover.

Many large companies have a sufficient international base that what happens
in the U.S. plays a small role in their bottom line and some (ADP, Exxon, J&J,
Microsoft, etc.) will have a better credit rating than the U.S.

So, I plan to ride it out and probably do some bottom fishing as well.


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## vckempson (Jul 28, 2011)

loafingcactus said:


> Was already properly diversified including internationally diversified, so I've done what I can do.  I'm young, and I hold onto the fact that people who held through the Great Depression did just fine.  I'm a little emotionally worried, but I take that to my shrink and not my broker, which I know he appreciates. ;-)



Client's have a way of thinking we're supposed to be omniscient about these things.  Dang, where's that crystal ball of mine.


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## glypnirsgirl (Jul 28, 2011)

Ridewithme38 said:


> There have been dozens of Government shut downs like they are talking about in the past...a default will have absolutely NO effect on the common person, its just more talking points to distract us from whats actually happening in the world



I believe that the impact will be more significant than people realize. A default on the debt will downgrade our credit rating. A downgrade in credit rating will cause an increase in the interest rate. An increase in the interest rate will cause an increase in the amount of money required to service the debt that we always have.

Result, instead of decreasing the amount of spending, the default will increase the amount of spending.

Likelihood of it happening, close to ZERO - because I think that every congressman knows that it is ultimately futile to default.

elaine


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## glypnirsgirl (Jul 28, 2011)

Passepartout said:


> I won't give this thread a long life so here goes:
> 
> 1) The debt ceiling MUST be raised. This is about the honor of the USA to pay for PAST spending. World security would suffer without it.
> 
> ...



Agree completely!

elaine


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## vckempson (Jul 28, 2011)

glypnirsgirl said:


> I believe that the impact will be more significant than people realize. A default on the debt will downgrade our credit rating. A downgrade in credit rating will cause an increase in the interest rate. An increase in the interest rate will cause an increase in the amount of money required to service the debt that we always have.
> 
> Result, instead of decreasing the amount of spending, the default will increase the amount of spending.
> 
> ...



Part of what I was trying to gauge is the publics perception of this.  We haven't gotten many calls from clients, and I was trying to figure out why.  From where I stand, this could be as big or bigger than what happened in 2008.  Not sure if the impact is lost on people or weather they just can't envision it actually happening.  More and more we need to manage for what are knows as "fat tail" events.  That refers to the tail ends of the bell curve.  Avoiding some of the impact of these fat tail events is more critical than capturing massive returns during good times.  Managing for fat tail events is much harder than one might imagine, though.  You've got to figure out which threats are real and which are folly


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## loafingcactus (Jul 28, 2011)

I think this thread can survive as evidenced by the fact that *most* people have managed to stay out of the politics.

I think part of the reason for the lack of worry may be that we just got out of the Great Recession and for your reasonable clients that held, they just got a learning experience that holding works.  So they know that it really is true.  Also, all the mass media I'm getting exposed to (mainly CNN and NPR) is selling worry (of course), but they are also selling holding just as strongly.


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## bogey21 (Jul 28, 2011)

glypnirsgirl said:


> I believe that the impact will be more significant than people realize. A default on the debt will downgrade our credit rating. A downgrade in credit rating will cause an increase in the interest rate. An increase in the interest rate will cause an increase in the amount of money required to service the debt that we always have.
> 
> Result, instead of decreasing the amount of spending, the default will increase the amount of spending.



I agree.  My dollars have been moved to oil futures, low duration bond funds; and Southeast Asis stocks.  I would be in gold but not at $1,600/oz.

George


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## Conan (Jul 28, 2011)

It makes me think the US really is on the path to losing its #1 position in the world. Something we often hear (just as we hear there will be a day when the oil runs out) but don't really picture in a tangible way.

Our creditors in Asia are stuck with their Treasury holdings for now, but if you were China or Japan, wouldn't you be looking at ways to lighten your investments in the US and Europe?

*Foreign Holders of U.S. Treasury Securities*
http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_holders_of_U.S._Treasury_Securities


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## jlwquilter (Jul 28, 2011)

I think alot of 'average Americans' are just trying to get by themselves, day to day. They simply can not take on worrying about the bigger picture right now. How many have already been wiped out (lost jobs, lost homes, credit in the toilet, etc.) so how much more can they be effected in their day to day life?

Those lucky to have scrapped thru so far (still have a job, paying bills, living in their paid for home, etc.) need to be more worried, but still, it's all just so overwhelming and who knows what to really do anyway.

The sky IS falling but it will still take a long time to reach the ground.


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## siesta (Jul 28, 2011)

jlwquilter said:


> I think alot of 'average Americans' are just trying to get by themselves, day to day.


 Thats the problem, not alot of forward thinking these days


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## Nickfromct (Jul 28, 2011)

Talent312 said:


> My attitude...
> 
> *A. The sky is not going to fall.*
> Some contractors and maybe employees will not get paid on time. Oh well.
> ...



My plan as well.


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## vckempson (Jul 28, 2011)

As a result of eventual interest rates going up, we're positioned in a way that's already a pretty good defense for what might happen on Tuesday.  I'd love to share with you what all we're doing, but securities regulations put a damper on that.  

I will say I like some of Bogey21's ideas.


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## ronparise (Jul 28, 2011)

loafingcactus said:


> Was already properly diversified including internationally diversified, so I've done what I can do.  I'm young, and I hold onto the fact that people who held through the Great Depression did just fine.  I'm a little emotionally worried, but I take that to my shrink and not my broker, which I know he appreciates. ;-)



Find a couple of 90 year olds and ask them about their childhood.  My parents, uncles and aunts (all dead now) were children during the great depression. Ive heard their stories.....They got through it, but not just fine.

If we as a society are willing to tell our creditors, to "buzz off"
the next step will be for individuals to say the same thing to theirs....Interest rates will sky-rocket, credit will dry up and the stock market will crash. We'll go back to the days of 15% inflation and getting  unemployment  back down to 10% will be the goal.

If I was in the market I'd stay in the market on the chance (my expectation) that something will get done in Washington. But I'd buy puts on everything I own.

Remember this is a manufactured crisis..its not real. We as a country can pay our bills, we just dont want to


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## easyrider (Jul 28, 2011)

We are refinancing our home and are locked in at 3.50%. This will be used to pay off other lines of credit that are used to buy real estate. 

Thought about waiting to see what happens. BUT....The lines of credit are at 3.25% and are based off prime. The house mortgageis at 4.75 fixed. By consolidating the loans the monthly payment is lower and money earned from the extra real estate will pay the loan off in less than 8 years. The closing costs are only $1500.00. This will also open up our lines of credit to purchase realestae should a deal pop up.  

Watching for an "ALL IN" with another stock market plunge.


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## ampaholic (Jul 28, 2011)

ronparise said:


> -snip-
> Remember this is a manufactured crisis..its not real. We as a country can pay our bills, we just dont want to



Soooooo true - we always want the "other" guy to pay the bill. I think it's a variation of NIMBY. We can call it NOOMP or "*N*ot *O*ut *O*f *M*y *P*ocket".

:hysterical:


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## pgnewarkboy (Jul 28, 2011)

The immediate problem is, per various news reports, corporations and small businesses who could hire people are not hiring people because of the uncertainty the debt "ceiling" issue is bringing to the future of the economy.  Businesses are worried about higher interest rates caused by a downgrade of U.S debt  and therefore lower consumer spending.  They won't hire with that hanging over their heads.


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## BocaBum99 (Jul 28, 2011)

I am not concerned about a default.  We will not default on the debt.  It just will not happen.

I am more concerned about the $14.5T debt with the spectre of an additional $10T because we have a federal government that cannot get deficit spending under control.

Both of the proposals on the table barely cover 1 year of deficit spending.  It will do nothing to solve the problem.


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## BocaBum99 (Jul 28, 2011)

ronparise said:


> Remember this is a manufactured crisis..its not real. We as a country can pay our bills, we just dont want to



The federal debt and the specter of a credit rating downgrade is a real crisis.  The problem is the federal government doesn't treat it as one unless there is a gun to their head.


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## Ken555 (Jul 28, 2011)

BocaBum99 said:


> The federal debt and the specter of a credit rating downgrade is a real crisis.  The problem is the federal government doesn't treat it as one unless there is a gun to their head.



Absolutely correct, in my opinion. We need Washington to actually lead, not just pander.


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## pgnewarkboy (Jul 28, 2011)

BocaBum99 said:


> The federal debt and the specter of a credit rating downgrade is a real crisis.  The problem is the federal government doesn't treat it as one unless there is a gun to their head.



The money was authorized to spend by congress.  Now the time has come to pay the bill.  We must pay our bills.  When you don't pay your bills your credit rating goes down. When you buy a new card on credit you must pay the bill.  It is really that simple.  The gun you refer to  is being pointed at the head of the American People - not the federal government. 

The Constitution created three branches of government, That means the people of the United States created this government .  It is the people's government.  When the government doesn't pay its bills it means that the american people are not paying their bills and the american people suffer the consequences.


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## Ridewithme38 (Jul 28, 2011)

Ken555 said:


> Absolutely correct, in my opinion. We need Washington to actually lead, not just pander.



I'm not sure that they know how to do that...Its been decades and decades where all they've done is pander


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## pgnewarkboy (Jul 28, 2011)

Ridewithme38 said:


> I'm not sure that they know how to do that...Its been decades and decades where all they've done is pander



Everybody and I mean everybody is good at talking the talking but very few will walk the walk.  That includes all the ordinary citizens, the wealthy citizens, the poor and etc. ect. EVERYBODY.

A friend of mine recently was complaining that doing away with sped up depreciation of luxury jets would kill general aviation and cost thousands of jobs.  I told him what I am saying now - everybody wants their special treatment which is necessary to keep the world afloat.  They just don't like anyone else's special treatment.  Everybody wants something.


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## BocaBum99 (Jul 28, 2011)

pgnewarkboy said:


> The money was authorized to spend by congress.  Now the time has come to pay the bill.  We must pay our bills.  When you don't pay your bills your credit rating goes down. When you buy a new card on credit you must pay the bill.  It is really that simple.  The gun you refer to  is being pointed at the head of the American People - not the federal government.
> 
> The Constitution created three branches of government, That means the people of the United States created this government .  It is the people's government.  When the government doesn't pay its bills it means that the american people are not paying their bills and the american people suffer the consequences.



Your credit rating can go down even if you pay your bills.  If the government cannot prove it can get its spending problem under control, creditors should cut up their credit cards.  Don't you understand we have a $14.5T National Debt and budget deficits over the next 10 years to add another $10T?

What part of that is the real problem do you not understand?


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## BocaBum99 (Jul 28, 2011)

pgnewarkboy said:


> Everybody and I mean everybody is good at talking the talking but very few will walk the walk.  That includes all the ordinary citizens, the wealthy citizens, the poor and etc. ect. EVERYBODY.
> 
> A friend of mine recently was complaining that doing away with sped up depreciation of luxury jets would kill general aviation and cost thousands of jobs.  I told him what I am saying now - everybody wants their special treatment which is necessary to keep the world afloat.  They just don't like anyone else's special treatment.  Everybody wants something.



All I want is for the government to spend less than it takes in.  I dont' care how they get there.  I just want it to happen within the next 5-10 years and stay that way.


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## Ridewithme38 (Jul 28, 2011)

BocaBum99 said:


> All I want is for the government to spend less than it takes in.  I dont' care how they get there.  I just want it to happen within the next 5-10 years and stay that way.



The government prints the money and is a MAJOR player in valuing its own money....

If i used Ride-Dollars for exchange and decided that each Ride-Dollar was worth one chicken egg ....why does it matter how many Ride-Dollars are out in circulation...if it ends up i owe 500 gazillion ride-dollars i can just change the value for one hour, to 500 gazillion chicken eggs each...pay it off....then change it right back

When you control the whole market(what other medium of exchange are you going to use?) you can do what ever you want


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## dougp26364 (Jul 28, 2011)

vckempson said:


> Anyone worried about our stalemated Washington allowing a default on our debt?  I'm sure I'm more sensitive to it than most since I'm a financial planner, but what about the masses?
> 
> No specific political discussion here; I think that's against the rules.
> 
> We're starting to make concrete contingency plans today and tomorrow for our clients in case they don't work this out.  The impact would be horrendous for the markets and the economy.



I'm not worried about it but, I am actively reducing my debt as fast as I can. I don't like working overtime but, holding onto any debt might not be a good thing right now. It's looking like we might be entering an era where cash is king.


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## pgnewarkboy (Jul 28, 2011)

BocaBum99 said:


> Your credit rating can go down even if you pay your bills.  If the government cannot prove it can get its spending problem under control, creditors should cut up their credit cards.  Don't you understand we have a $14.5T National Debt and budget deficits over the next 10 years to add another $10T?
> 
> What part of that is the real problem do you not understand?



I understand the problem completely.  In order to keep your credit rating you pay your bills.  That is an undeniable principle of finance.  If your spending more money than you earn you must reduce your spending.  So what you do, is you pay your bills on time and in full  and reduce your spending.  Not paying your current bills is a very bad thing.  To the extent that you need certain things to run your house ie a roof that doesn't leak, protection against home invaders, power, transportation from your house to your work, etc etc. you must have enough revenue to make your "nut" as they used to call it.  What people are hopefully discussing is how big the nut needs to be.  One of the problems is that everybody want to talk about making the nut smaller - but not if it means making their room in the house the teeniest bit smaller.   It is okay to do away with the other guys room but don't decrease the size of my room by an inch.  The nut is the peoples nut.  It is not some other guys nut.  It is what we are all responsible for.   People need to discuss this matter without a gun to their head.   Deciding the size of the nut is the business of a free people not acting under duress. Threatening to not pay your bills put the entire house in danger of collapse.


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## ronparise (Jul 28, 2011)

BocaBum99 said:


> The federal debt and the specter of a credit rating downgrade is a real crisis.  The problem is the federal government doesn't treat it as one unless there is a gun to their head.



The debt is a problem that has to be managed, it is a problem but not a crisis. The us has always gone into debt to pay for its wars (ever since the revolution) and we have always paid it back down to reasonable, responsibly levels.

Defaulting on that debt when we have the means to pay it, by refusing to raise the debt limit and the impending credit rating down grade ...that's the crisis, and I agree it is a big deal and it is a crisis...but it didnt have to be, a simple debt limit bill would care of it...


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## ronparise (Jul 28, 2011)

BocaBum99 said:


> Your credit rating can go down even if you pay your bills.  If the government cannot prove it can get its spending problem under control, creditors should cut up their credit cards.  Don't you understand we have a $14.5T National Debt and budget deficits over the next 10 years to add another $10T?
> 
> What part of that is the real problem do you not understand?



Debt is not a problem, and neither is a lot of debt as long as you have the ability to pay it back and the will to pay it back.  Thats what bankers look at when deciding on a loan application....does this guy have the income to pay his bills and does his credit score show that he will pay his bills

I disagree that we have a spending problem...we dont. Im sure there is a good reason for every line item in the US budget and certainly if we went back to the income tax rates in place when I was a kid (90% top bracket) there is the ability to pay

The real problem is that we have lost our will to pay for what we spend. 

You might remember a discussion we had here on TUG where several of us presumed to offer advice to a younger member saddled with a fairly large credit card debt....The collective wisdom seemed to be:  cut back a little on spending and get a part time job..(cut costs and raise revenue) .Nobody advised him to stop spending all together,  just stop paying his bills, and cut back his hours at work 

That seems to be your solution for the government (cut spending and dont raise revenue and refuse to pay the debt) and you are willing to hold a gun to our collective heads to get what you want. At least thats what I think you said in one of your posts

To the op's original question....Am I worried?? absolutely, as long as there are folks like you, willing to get what they want with a gun to my head


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## ampaholic (Jul 28, 2011)

BocaBum99 said:


> Your credit rating can go down even if you pay your bills.  If the government cannot prove it can get its spending problem under control, creditors should cut up their credit cards.  Don't you understand we have a $14.5T National Debt and budget deficits over the next 10 years to add another $10T?
> 
> What part of that is the real problem do you not understand?



The United State's "paycheck" GNP for 2011 is about 13T.

Lets relate this to a real persons debt/asset ratio:

My Paycheck for 2011 is going to be "about" 130K dollars and my total debt (including mortgage) is "about" 145K dollars and I may buy 100K worth of stuff in the next 10 years.

So the US does about the same as I do just with T's instead of K's. not so big an issue looked at that way.

The crisis is just some don't want to write the check and pay the bills like I do - that's all.


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## ronparise (Jul 28, 2011)

ampaholic said:


> The United State's "paycheck" GNP for 2011 is about 13T.
> 
> Lets relate this to a real persons debt/asset ratio:
> 
> ...



And if you had some special expense, like a college education, to finance you might  borrow even a little more.  But you wouldn't ask the boss for a cut in pay at the same time


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## bogey21 (Jul 28, 2011)

ronparise said:


> Im sure there is a good reason for every line item in the US budget




You are kidding, aren't you?

George


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## HtownRose (Jul 28, 2011)

I'm not worried the U.S. will default on our debt.  The government takes in enough to cover the debt payments and then some.  It does not take in enough to cover all the spending though, so I do think it's possible some government workers might be furloughed & facilities closed or something like that until it can get resolved.  Didn't we come to the brink of a government shutdown not that long ago?

A big drop in the stock market would hurt a lot of people, but others who have been staying out waiting for a correction could benefit.  Same with interest rates, if they rise that will hurt those wanting to borrow, but will benefit savers. 

Not to say I have no worries over the situation, but my worries are political in nature so I will not share them here.


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## pjrose (Jul 28, 2011)

heathpack said:


> . . . We are a huge economy, world power, but our leaders are unable to work together to get the job done.
> 
> Totally disgusting.
> 
> H



With you Heathpack.  

Too polarized, too partisan, not enough discussion and compromise.


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## MuranoJo (Jul 29, 2011)

Wouldn't it be nice if we could spend to our heart's content and then ask our credit card companies to adjust our limits accordingly.


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## Kona Lovers (Jul 29, 2011)

muranojo said:


> Wouldn't it be nice if we could spend to our heart's content and then ask our credit card companies to adjust our limits accordingly.



Brilliant!  Then we could buy all the timeshares we wanted, and each year the increases in credit would cover SAs and MF increases!!


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## ampaholic (Jul 29, 2011)

Kona Lovers said:


> Brilliant!  Then we could buy all the timeshares we wanted, and each year the increases in credit would cover SAs and MF increases!!



yea and then we could just pay the minimum every month and just keep on keepin on. :hysterical:


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## tompalm (Jul 29, 2011)

vckempson said:


> Part of what I was trying to gauge is the publics perception of this.  We haven't gotten many calls from clients, and I was trying to figure out why.  From where I stand, this could be as big or bigger than what happened in 2008.  Not sure if the impact is lost on people or weather they just can't envision it actually happening.



Most folks that give their funds to an investment company don't have a clue about the market.  I worked with 300 pilots that had a 401k and most had a value deep into six digits.  However, very few watched the news, or were worried about the market.  Lots of them had their entire account in technology when the market went south in 2000 and they lost their shirt.  I worked with different pilots each week and often heard that they quit investing in their 401k because they lost too much money.  When I said just put it in cash, or a money market, they didn't know that they could do that. 

Sell in May and go away.  I put all my funds into cash when the Dow hit 12,500 and have been sitting on the sidelines for a couple months.  I usually sell in May and buy back in during September every year when the technical indicators look right.  Most of my assets are in retirement accounts, so I don't have to worry about taxes.  I am probably not doing any better than the average investor, but if we have another sell off like we did in 2008, I can't afford to go there.  Remember when the Nasdaq was at 5000, we never got that back.  I concur that if there is a major sell off, that it will be a buying opportunity, but it could be a very long time before we get back up to Dow 14,000, or the high we made a few years ago.


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## vckempson (Jul 29, 2011)

Ridewithme38 said:


> The government prints the money and is a MAJOR player in valuing its own money....
> 
> If i used Ride-Dollars for exchange and decided that each Ride-Dollar was worth one chicken egg ....why does it matter how many Ride-Dollars are out in circulation...if it ends up i owe 500 gazillion ride-dollars i can just change the value for one hour, to 500 gazillion chicken eggs each...pay it off....then change it right back
> 
> When you control the whole market(what other medium of exchange are you going to use?) you can do what ever you want



I've heard you say this before Ride, and it's just factually incorrect.  The world currency markets value the dollar, period.  The US gvmnt. can only do things to influence that by the political and economic decisions they make.


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## Zac495 (Jul 29, 2011)

Although I want to jump out of the market cause it worries me, I will do the level headed thing and sit tight. I did move my son's UGMA (he needs the money in 2 years) into conservative accounts rather than moderate and aggressive.


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## vckempson (Jul 29, 2011)

It's apparent that many don't actually understand the significance of the problem.  Yes, we must raise the debt ceiling and pay the bills we've already incurred.  That's a given, and that's the immediate pending issue.  The size of the problem, though, is way beyond what most seem to acknowledge..

BocaBum is spot on.  The size of our deficit is smothering our ability to be a world economic leader.  It's diminishing our chances for the dollar to remain the world currency.  It's robbing our children and our grandchildren of the opportunities in life that we've all had.

There's something called the tipping point, of which there are several. 

One tipping points is when the debt exceeds a percentage of our GDP by a given percentage. The debt to GDP ratio, by some studies suggest that debt levels at 77% of GDP or less are sustainable.  These are credible think tanks, much smarter than any of us.   Start to climb above that and it's flat out not sustainable.   By the end of the year we will blow past that and be at around 115%.  That's not only unsustainable, that's at crisis levels.  I'm sure you've all seen what's happened in Greece, right.  You're burying your head in the sand if you think that can't happen to us.

Another tipping point is when the majority of adult voters get more from the gvmnt than they pay in taxes.  We're already there.  I'm not talking about tax cuts, I'm talking about direct money paid to someone.  If they understand that power then they can control who gets into office.  And the only people they will vote into office are those that will continue to pander to a Nanny State.  Again, we're already there on that one.

Then you've got a third tipping point.  The majority of individuals (as in more than 50%) earning a taxable income, don't pay any taxes.  They expect others to pay taxes for them.  Again, if they understand the power they control, they will only vote in those that push that trend further. What next, 60% of wage earners not paying taxes.  If the non-taxpaying wage earners continues to increase, the system will eventually implode.  

Any of these three tipping points by itself is a significant problem.  We've got all three.  If we don't get our house in order, ASAP, we're headed down the same road as Greece.  What kind of legacy are we leaving to our children and grandchildren?


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## bogey21 (Jul 29, 2011)

I don't know the numbers but IMO the percentage of Americans getting payments from the Gov't and the percentage paying no income tax at all are too high. I am referring to Social Security, Veterans' Pensions and Disability, Food Stamps, EITC, Unemployment, etc.  I'm not saying that these may not have been earned by those getting them or that there is anything intrinsically wrong with them, but the problem we have to face is too many collecting and too few paying.

George


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## Tia (Jul 29, 2011)

Add government pensions to retired employees paying 100% of working wages, + medicaid, medicare paying more and more out due high cost of medical care then was ever contributed. It's an uneven system where  many beneficiaries receive more then the average person could ever afford themselves when paying for same services. If you have not paid anything in taxes you also should not get anything out as happens. 

How about looking at what a Congress person receives in compensation after they leave office?



bogey21 said:


> I don't know the numbers but IMO the percentage of Americans getting payments from the Gov't and the percentage paying no income tax at all are too high. I am referring to Social Security, Veterans' Pensions and Disability, Food Stamps, EITC, Unemployment, etc.  I'm not saying that these may not have been earned by those getting them or that there is anything intrinsically wrong with them, but the problem we have to face is too many collecting and too few paying.
> 
> George


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## Elan (Jul 29, 2011)

vckempson said:


> Another tipping point is when the majority of adult voters get more from the gvmnt than they pay in taxes.  We're already there.  I'm not talking about tax cuts, I'm talking about direct money paid to someone.  If they understand that power then they can control who gets into office.  And the only people they will vote into office are those that will continue to pander to a Nanny State.  Again, we're already there on that one.



  Let's not forget the politicians that pander to the ultra-wealthy (in order to secure financial backing) by promoting ill-advised tax cuts and tax "loopholes".  It's disingenuous to ignore the impact of the ultra-wealthy in swaying our elections and fiscal policies.  Every president of the past 30 years, save one, has promoted tax cuts or "no new taxes" to get elected or re-elected.  Probably time for folks to realize that's not working.

  Not trying to be political here, just illuminating the other side of the coin, since it somehow got overlooked.


----------



## vckempson (Jul 29, 2011)

> Let's not forget the politicians that pander to the ultra-wealthy (in order to secure financial backing) by promoting ill-advised tax cuts and tax "loopholes". It's disingenuous to ignore the impact of the ultra-wealthy in swaying our elections and fiscal policies. Every president of the past 30 years, save one, has promoted tax cuts or "no new taxes" to get elected or re-elected. Probably time for folks to realize that's not working.



I don't disagree with you but some facts might support moderation there.  In 1980 the top 10% of wage earners paid about 49% of all taxes received by our government.  Today,  the top 10% of earners pay about 72% of all taxes.  In 1980 the top 1% of earners paid 18% of all taxes and they now pay 42% of all taxes received.  Those are huge increases that are continuously heaped on them on them in a rather disproportionate way compared to the remaining 90% of us. It's a trend that has continued unabated and can't continue that way much longer.  At what point is it to much? 

BTW, if you look at those in the 26th to 50th percentile, they paid 20% of all taxes in 1980 and now pay just 10%.


----------



## Ridewithme38 (Jul 29, 2011)

vckempson said:


> I don't disagree with you but some facts might support moderation there.  In 1980 the top 10% of wage earners paid about 49% of all taxes received by our government.  Today,  the top 10% of earners pay about 72% of all taxes.  It's a trend that has continued unabated and can't continue that way much longer.  At what point is it to much?



they pay 72% of taxes yet control 98% of the wealth....I agree the trend has to change...its been too long with tax breaks, payoffs, loopholes and corporate welfare in our country...they should be paying much much more


----------



## Elan (Jul 29, 2011)

vckempson said:


> At what point is it to much?



  The best way to answer that question is to test the limits.  Nobody has ever proven that the Laffer curve (or the concept) is valid.  Even if the concept is valid, the last 30 year's of data would suggest that we're still on the under-taxed side of the curve.  One can verify this by looking at GDP as a function of tax rate from 1980 to present.

  I don't want higher taxes any more than anyone else.  But to think we can just suddenly turn the spending spigot off is unrealistic.  The solution to this crisis is _reducing spending while increasing revenue_.


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## bogey21 (Jul 29, 2011)

Ridewithme38 said:


> they pay 72% of taxes yet control 98% of the wealth....I agree the trend has to change...its been too long with tax breaks, payoffs, loopholes and corporate welfare in our country...they should be paying much much more



As an experiment for 1 year only, let's tax the top ten percent 100% of what they make and see what happens.  If it fixes things, leave it that way.  If not, then what?

George


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## Ridewithme38 (Jul 29, 2011)

bogey21 said:


> As an experiment for 1 year only, let's tax the top ten percent 100% of what they make and see what happens.  If it fixes things, leave it that way.  If not, then what?
> 
> George



i'd go wit 99%, 99% of 100million is still more money then the minimum wage worker will see in their lifetime...i think if we suppliment that with relieving the tax burden on the poor and middle class we will see our economy grow by leaps and bounds...

You see our economy is based on purchases, if the poor and middle class continue to be taxed into the poor house they are unable to purchase products, companies are unable to grow and produce more jobs and basicly, the economy fails....

I think taking the tax burden off of the job creators(the poor and middle class) will bring us back to being a successful country


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## Tia (Jul 29, 2011)

Elan said:


> ....
> I don't want higher taxes any more than anyone else.  But to think we can just suddenly turn the spending spigot off is unrealistic.  _The solution to this crisis is reducing spending while increasing revenue._



Exactly what we need to do. To cut spending don't do it with a chainsaw but get the scalpels out and close loop holes. Plus look at foreign welfare cuts.


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## bogey21 (Jul 29, 2011)

Ridewithme38 said:


> suppliment that with relieving the tax burden on the poor and middle class we will see our economy grow by leaps and bounds...



I think I read that the lowest 50% of those with taxable income pay no taxes at all. If I am wrong, let me know. Maybe we should extend that to 90% and have the remaining 10% pay all the taxes.  If that would balance the budget, I am all for it.  If not, then what?

George


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## SueDonJ (Jul 29, 2011)

I just want to say "thank you" to all of you because you're teaching me things in this thread.  And I appreciate that all of you are doing your best to keep the subject as un-political as possible despite the fact that it's a government-related issue.


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## capjak (Jul 29, 2011)

Ridewithme38 said:


> i'd go wit 99%, 99% of 100million is still more money then the minimum wage worker will see in their lifetime...i think if we suppliment that with relieving the tax burden on the poor and middle class we will see our economy grow by leaps and bounds...
> 
> You see our economy is based on purchases, if the poor and middle class continue to be taxed into the poor house they are unable to purchase products, companies are unable to grow and produce more jobs and basicly, the economy fails....
> 
> I think taking the tax burden off of the job creators(the poor and middle class) will bring us back to being a successful country



   Government does not create wealth it consumes it.  Until the spending is under control US wealth will continue to be consumed by the government.  I find it hard to believe that we can not get by on few trillion dollars a year...we need to stop automatically increasing the budget every year by 3-10%


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## glypnirsgirl (Jul 29, 2011)

vckempson said:


> I don't disagree with you but some facts might support moderation there.  In 1980 the top 10% of wage earners paid about 49% of all taxes received by our government.  Today,  the top 10% of earners pay about 72% of all taxes.  In 1980 the top 1% of earners paid 18% of all taxes and they now pay 42% of all taxes received.  Those are huge increases that are continuously heaped on them on them in a rather disproportionate way compared to the remaining 90% of us. It's a trend that has continued unabated and can't continue that way much longer.  At what point is it to much?
> 
> BTW, if you look at those in the 26th to 50th percentile, they paid 20% of all taxes in 1980 and now pay just 10%.



I believe that is disingenuous. 

The marginal rate of taxes on any one person making more than $250K per year has DECREASED from the peak of 92% in 1944 to 70% in the period from 1966 to 1976 to 33% in 1980 (where the marginal tax rate has stayed). 

The reason that the proportion of taxes has increased is not because any one tax payer is paying more money, but because the income growth in this country has shifted to being a fairly even distribution of increase to highly favoring the wealthy at the expense of the middle class and poor.


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## Ridewithme38 (Jul 29, 2011)

capjak said:


> Government does not create wealth it consumes it.  Until the spending is under control US wealth will continue to be consumed by the government.  I find it hard to believe that we can not get by on few trillion dollars a year...we need to stop automatically increasing the budget every year by 3-10%



The government doesn't create wealth this is true...But TAXES can be a HUGE factor in the creation or the fall of wealth....a poor person or lower middle class person being taxed 28% will never really be able to move more then a couple points up or down the wealth scale, because of that tax and the impact it has on his income...


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## vckempson (Jul 29, 2011)

glypnirsgirl said:


> I believe that is disingenuous.
> 
> The marginal rate of taxes on any one person making more than $250K per year has DECREASED from the peak of 92% in 1944 to 70% in the period from 1966 to 1976 to 33% in 1980 (where the marginal tax rate has stayed).
> 
> The reason that the proportion of taxes has increased is not because any one tax payer is paying more money, but because the income growth in this country has shifted to being a fairly even distribution of increase to highly favoring the wealthy at the expense of the middle class and poor.



I don't disput that possiblity but I don't have any facts to support it either.  My partner & I were talking about this over lunch.  The other side to the facts I presented is the disparity between the rich vs average person and whether it's grown and by how much.  That would be a valid reason to explain the increased tax burden on the rich.  I'll look into that.

Now what if we increase the taxes on the top 10% of wage earners to 100%, as in they pay everthing they earn in taxes.  Studies have confirmed that it barely puts a dent in the problem.  While increasing the taxes on them may be a part of the solution, it is factually only a part, and a small part at that.

Got a meeting now, more later.


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## vckempson (Jul 29, 2011)

Ridewithme38 said:


> The government doesn't create wealth this is true...But TAXES can be a HUGE factor in the creation or the fall of wealth....a poor person or lower middle class person being taxed 28% will never really be able to move more then a couple points up or down the wealth scale, because of that tax and the impact it has on his income...



The poor aren't taxes at all, and the lower middle class only pays 15% marginal taxes.  It helps to not just throw out information that sounds good, but to focus, at least partly, on factually accurate information.


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## Ridewithme38 (Jul 29, 2011)

vckempson said:


> The poor aren't taxes at all, and the lower middle class only pays 15% marginal taxes.  It helps to not just throw out information that sounds good, but to focus, at least partly, on factually accurate information.



I'd like to see some evidence of that...i'd consider myself poor and i pay 28% federal income taxes

Those making Over $8,500 but not over $34,500 get taxed 15%...thats not middle class...thats homeless, below poor...destitute

There is NO WAY someone can survive on only $34,500 a year


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## ronparise (Jul 29, 2011)

vckempson said:


> I don't disagree with you but some facts might support moderation there.  In 1980 the top 10% of wage earners paid about 49% of all taxes received by our government.  Today,  the top 10% of earners pay about 72% of all taxes.  In 1980 the top 1% of earners paid 18% of all taxes and they now pay 42% of all taxes received.  Those are huge increases that are continuously heaped on them on them in a rather disproportionate way compared to the remaining 90% of us. It's a trend that has continued unabated and can't continue that way much longer.  At what point is it to much?
> 
> BTW, if you look at those in the 26th to 50th percentile, they paid 20% of all taxes in 1980 and now pay just 10%.



What you describe is the progressive tax system we have been tinkering with since there was an income tax...the question isnt: Do the high income folks pay more? The question should be do they pay enough.

The tax code is first and foremost and income shifting system designed to  provide services to each of us according to our needs, paid by each of us according to our means. 

Secondarly, but also very important the systen is designed to prevent the concentration of wealth in the hands of a very few. We have as a society decided that we dont want a system like in medieval Europe, with a few lords and lots of serfs. We have, I think, decided that having a middle class is a good thing

I think these two goals (1. to each according to their needs, and 2. having a middle class) conspire to demand a tax system where a large part of the income of the very highest earners will go to taxes.

The question of course is how much...When I was a kid, the top bracket was 90%...now its much less. So much less in fact that Warren Buffet says his income is taxed at a lower rate than his cleaning lady.

We can argue all day about how much, in terms of real dollars or percentages that the highest earners should pay to support our society, but its clear to me that they should pay more.

To answer your question...At what point is it to much? ...I dont know, but I do know we havent tested the limits yet (because the rich are getting richer)

To continue on the course we have set recently (cut taxes and cut services) means thet the rich will get even richer, and the poor even poorer. with no middle.


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## vacationhopeful (Jul 29, 2011)

Ridewithme38 said:


> I'd like to see some evidence of that...i'd consider myself poor and i pay 28% federal income taxes
> 
> Those making Over $8,375 but not over $34,000 get taxes 15%...thats not middle class...thats homeless, below poor



If you were poor, you would be getting an EARNED INCOME TAX CREDIT. 

You just don't have the money to buy the toys you want. And if you made more money by working longer hours, you would not have the time to play with the new toys you brought.

Creation of wealth for either a person or a country is done in several ways. The least productive is by selling one's labor.
Next up the ladder of productivity, is to sell other person's labor.
Then to find a better way to use labor - ie using equipment inplace of people.
Continuing upward, specialized labor with specialized equipment invented for that task.
etc, etc, etc...
The highest form of creation of wealth, is a new idea - totally intellectual property to serve a vast number of people or functions.

So, RIDE, what is your plan to create more wealth for yourself?  Learn more skills, work longer hours, save & invest, work smarter with mechnical equipment, or invent a better mousetrap?


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## Texasbelle (Jul 29, 2011)

Compromise, elect moderates, be personally responsible.  A quote from a letter to the editors in yesterdays Houston Chronicle--"People and governments who pay interest are fools."  We didn't teach our kids well though, they all defaulted on credit card debt.


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## easyrider (Jul 29, 2011)

Ridewithme38 said:


> The government doesn't create wealth this is true...But TAXES can be a HUGE factor in the creation or the fall of wealth....a poor person or lower middle class person being taxed 28% will never really be able to move more then a couple points up or down the wealth scale, because of that tax and the impact it has on his income...



Our taxation system is a progressive system with specific deductions that taxes individuals based on earnings. These deductions can place an individual with high earnings into a lower tax bracket. The use of these deductions does create jobs or more future taxpayers.

I thought the topic of this thread was along the lines of what plans should a person make for the lack of a Federal Budget Deal. Two important things come to mind. Interest rates can not go much lower and the interest deduction may get put on the chopping block so it would be wise to lock in a low rate soon. Stock market losses make for good buy in times, so have your buys ready.


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## Explorer7 (Jul 29, 2011)

ampaholic said:


> The United State's "paycheck" GNP for 2011 is about 13T.
> 
> Lets relate this to a real persons debt/asset ratio:
> 
> ...



Good analogy but I have heard the Nation’s   debt to spending figures to translate more like a household earning 55Kper year spending 75K per year with 300K in existing credit card dept.  

No house could stand under those kind of figures unless their net work dwarfed the debt. The US net worth likely dwarfs the debt but what could we sell to keep living like this?


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## heathpack (Jul 29, 2011)

vckempson said:


> If we don't get our house in order, ASAP, we're headed down the same road as Greece.  What kind of legacy are we leaving to our children and grandchildren?



Totally agree with you.

How to get there?  It requires leadership.  The kind that says, "Look folks, we gotta fix this.  Some Americans feel it must be through spending cuts only, some feel taxes must be raised, there is no consensus.  Therefore, given the fact that inaction is not an option, we must compromise in order to move forward.  There must be spending cuts and tax increases.  Period.  Thats how it must be.  I care more about telling you the truth and doing the right thing right now.  If you decide not to re-elect me, so be it."

Being sputtering mad that you are not getting your way is of no use to anybody.  I challenge our political leaders to all go out there and articulate ONE way in which they think the other side is right on this.  Start the process by demonstrating to the American people that opinions which may be in opposition to your own are not necessarily deserving of contempt.
H


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## Tia (Jul 29, 2011)

easyrider said:


> .... Stock market losses make for good buy in times, so have your buys ready.



Anyone care to share what they think will be a good buy if things do drop down?


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## vacationdoc (Jul 29, 2011)

*Fanatics cannot govern a democracy*

According to Winston Churchill, "A fanatic is one who can't change his mind and won't change the subject". Did all our elected officials not take this OATH "I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic"?  At this point  many in the World must wonder if the USA has a governing body? Or is all of this mess political posturing that has gone on forever behind closed doors in Washington and we are now exposed to it because of instant coverage? If we had not already lost our place as the "World Leader", this mess will surely make others question why they should listen to the USA.



heathpack said:


> Totally agree with you.
> How to get there?  It requires leadership.  The kind that says, "Look folks, we gotta fix this.  Some Americans feel it must be through spending cuts only, some feel taxes must be raised, there is no consensus.  Therefore, given the fact that inaction is not an option, we must compromise in order to move forward.  There must be spending cuts and tax increases.  Period.  Thats how it must be.  I care more about telling you the truth and doing the right thing right now.  If you decide not to re-elect me, so be it."
> 
> Being sputtering mad that you are not getting your way is of no use to anybody.  I challenge our political leaders to all go out there and articulate ONE way in which they think the other side is right on this.  Start the process by demonstrating to the American people that opinions which may be in opposition to your own are not necessarily deserving of contempt.
> H


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## Talent312 (Jul 29, 2011)

Tia said:


> Anyone care to share what they think will be a good buy if things do drop down?



I'd be looking at either a Large-Cap Value funds or individual multinational mega-corporations. Some will tell you to look at large dividend-paying companies, but that's a defensive play. How about the four companies whose AAA credit rating may soon be better than that of the U.S.?

 Automatic Data Processing (NYSE:ADP)
 Johnson & Johnson (NYSE:JNJ)
 Microsoft (NASDAQ:MSFT)
 ExxonMobil (NYSE:XOM)

Then there's the top revenue producers. Among the 25 largest companies, these 10 have the most revenue...

Rank  - Company  - Revenues ($mil) - Profits ($mil)
1 Wal-Mart Stores ... 421,849 ... 16,389
2 Royal Dutch Shell . 378,152 ... 20,127
3 Exxon Mobil ......... 354,674 ... 30,460
6 China Petroleum ... 240,192 ... 14,367
10 Chevron ............ 196,337 ... 19,024
11 Total (energy)..... 186,055 ... 14,001
12 ConocoPhillips .... 184,966 ... 11,358
16 General Electric .. 151,628 ... 11,644
19 Berkshire Hathaway 136,185..12,967
22 Samsung ........... 133,781 ... 13,669

That's not the only criteria one should use, but its a starting point.
Notice how many are energy-related... wonder why?


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## vckempson (Jul 29, 2011)

Ridewithme38 said:


> I'd like to see some evidence of that...i'd consider myself poor and i pay 28% federal income taxes
> 
> Those making Over $8,500 but not over $34,500 get taxed 15%...thats not middle class...thats homeless, below poor...destitute
> 
> There is NO WAY someone can survive on only $34,500 a year



You are forgetting some things here.  You get a standard deduction of $5,800, and a personal exemption of $3,700.  Add those to $34,500 and you come to $44,000.  Admitedly, singles get shafted.  For a couple, the 15% bracket tops out at $69,000 + $11,400 (standard deduction) + $7,400 (2 exemptions) for a total of $87,800.    

So, the real income limits before you move past the 15% bracket are  $44,000 if you are single, or $87,800 if married.  If you think that represents the *"homeless, below poor...destitute.", *well, I just don't know what to say.

And if you happen to have kids and/or own a home, you could be looking at earning over $100,000 - $110,000 in income before you're out of the 15% bracket.  It's not even fair to call that "_*lower*_ middle class."


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## BocaBum99 (Jul 29, 2011)

Elan said:


> The best way to answer that question is to test the limits.  Nobody has ever proven that the Laffer curve (or the concept) is valid.  Even if the concept is valid, the last 30 year's of data would suggest that we're still on the under-taxed side of the curve.  One can verify this by looking at GDP as a function of tax rate from 1980 to present.
> 
> I don't want higher taxes any more than anyone else.  But to think we can just suddenly turn the spending spigot off is unrealistic.  The solution to this crisis is _reducing spending while increasing revenue_.



The solution is to buy low and sell high.  The solution is to spend less than they take in.  Those ideas are the same as what you have suggested as the solution.

We need to prove that this Federal Government can actually cut spending.  They have not proven they can do it.  I would be willing to agree to new taxes if they first implemented spending cuts.


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## pgnewarkboy (Jul 29, 2011)

BocaBum99 said:


> The solution is to buy low and sell high.  The solution is to spend less than they take in.  Those ideas are the same as what you have suggested as the solution.
> 
> We need to prove that this Federal Government can actually cut spending.  They have not proven they can do it.  I would be willing to agree to new taxes if they first implemented spending cuts.



That makes some sense.  Reduce spending and raise taxes.  What happened in the last six years  was we reduced taxes and did not reduce spending.  We actually raised spending.  Not a formula for success.


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## ronparise (Jul 29, 2011)

BocaBum99 said:


> The solution is to buy low and sell high.  The solution is to spend less than they take in.  Those ideas are the same as what you have suggested as the solution.
> 
> We need to prove that this Federal Government can actually cut spending.  They have not proven they can do it.  I would be willing to agree to new taxes if they first implemented spending cuts.



No we dont....We need to increase spending.

It dosent matter who does the spending, private enterprise, or the government. But private enterprise has shown its not up to the task...its time for the government to step in

we need to create jobs more jobs which would mean less government expense, (for welfare) and more government income (taxes) and might allow for a lower tax rate.   Since our corporations wont take their profits and spend the money to get out of this recession then government has to. 

Conveniently there is a bunch of stuff govermnent could do...We have to rebuild our infrastructure, fix the bridges, roads, water lines,. high speed rail, new power plants and the grid. There's lots to do...We have already tried to convince private enterprise to do it with lower tax rates...that didnt work, now its time for government to step it...a new WPA to put the country back to work, will make for new taxes and then perhaps a lower tax rate.

So to answer the op's question...Buy construction and heavy industry


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## vckempson (Jul 29, 2011)

glypnirsgirl said:


> I believe that is disingenuous.
> 
> The marginal rate of taxes on any one person making more than $250K per year has DECREASED from the peak of 92% in 1944 to 70% in the period from 1966 to 1976 to 33% in 1980 (where the marginal tax rate has stayed).
> 
> The reason that the proportion of taxes has increased is not because any one tax payer is paying more money, but because the income growth in this country has shifted to being a fairly even distribution of increase to highly favoring the wealthy at the expense of the middle class and poor.




As for the 92% marginal tax bracket in 1944 and how much is enough, here's my take.  The rich and ultra rich have options... lot's of options.  Their options are beyond those of the rank and file.  They constantly look at what's the best utilization of their money.  Specifically, here are two things they think about... that MY clients think about.

1.  Should I invest more in expanding my company (or the equity market) or should I just put it into tax free bonds.  When taxes cross a threashold, our national economic interests and those of the wealthy start to diverge.  Reinvesting in a company or the economy through the stock market, benefits us all.  If they are going to get taxed too much, they start to think about tax free bonds or tax shelters.  If the rich make more in tax free bonds/tax shelters than investing in companies or stock, then they do just that.  Tax free bonds and tax shelters don't help grow jobs, don't help the economy, and don't increase incomes for the remainder of us.  Money always flows to it's highest marginal utility of use.  A tax rate that's too high is a disincentive for the productive use of money.  The focus becomes where to put money to reduce taxes, not where to put money to be productive.  When that happens, it's bad for all of us.

2.  Should I move to reduce my taxes.  I've had clients buy a house in another state so they could change their residence and reduce their taxes.  In some cases, the tax savings exceeded the cost of buying another home. The ultra wealthy think of moving their residence to other countries, moving companies or operations to other countries, and even moving their citizenship if our taxes get too high. 

This is another one of those things where there is a tipping point, where you can start to do more harm than good.  I think Clinton hit a magic number when taxes peaked at 39.5%.  It was under 40% and no one dared think of anything but productive uses for capital.  We're below that now, but if we go above that, you'll start to see the focus change.  In the early 80's, being a "financial planner" meant one thing, tax shelters.  I don't want a return to those days.  I'm not a tax shelter specialist, nor do I want to be one.

I'm not trying to defend the rich and I don't think they mind paying more.  You must, however, understand the unintended consequences of the disincentives you set up when *only* raising the taxes on the rich.


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## vacationhopeful (Jul 29, 2011)

vckempson said:


> ...Specifically, here are two things they think about... that MY clients think about.
> 
> 1.  Should I invest more in expanding my company (or the equity market) or should I just put it into tax free bonds.  When taxes cross a threashold, their interests and our national economic interests start to diverge.  Reinvesting in a company or the economy through the stock market, benefits us all.  If they are going to get taxed too much, they start to think about tax free bonds or tax shelters.  If they make more in tax free bonds/tax shelters than investing in companies or stock, then they do just that.  Tax free bonds and tax shelters don't help grow jobs, don't help the economy, and don't increase incomes for the remainder of us.  Money always flows to it's highest marginal utility of use.  A tax rate that's too high is a disincentive for the productive use of money.  The focus becomes where to put money to reduce taxes, not where to put money to be productive.  When that happens, it's bad for all of us.
> 
> ...



*This is so true. *The rich can change their financial location, citzenship (Canada was selling residency visas to the rich Chinese of Hong Kong for $1,000,000 cash as in capital to start or invest in Canadian business) and residency with a big bank account. This is true to a much lower threshold in the USA - who owns all the cornor gas stations; Lukoil; etc. I have blue collar friends who are working on their EU citzenship via grandparents' birthplaces. It is called options ... for their future financial security. 

A heavy tax is a legal way to confiscate a family's money and security.


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## bogey21 (Jul 29, 2011)

Tia said:


> Anyone care to share what they think will be a good buy if things do drop down?



Put it all in Dunkin Brands (Dunkin Donuts) if you can buy for less than the IPO price.

George


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## Liz Wolf-Spada (Jul 29, 2011)

In answer to the original question: "Hell yes!"
Liz


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## BocaBum99 (Jul 29, 2011)

Elan said:


> Let's not forget the politicians that pander to the ultra-wealthy (in order to secure financial backing) by promoting ill-advised tax cuts and tax "loopholes".  It's disingenuous to ignore the impact of the ultra-wealthy in swaying our elections and fiscal policies.  Every president of the past 30 years, save one, has promoted tax cuts or "no new taxes" to get elected or re-elected.  Probably time for folks to realize that's not working.
> 
> Not trying to be political here, just illuminating the other side of the coin, since it somehow got overlooked.



And, the same is true for any other large lobby group such as Unions.  Why did you exclude a discussion on those entities?  Isn't that being disingenuous on your part?


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## pjrose (Jul 29, 2011)

Ridewithme38 said:


> I'd like to see some evidence of that...i'd consider myself poor and i pay 28% federal income taxes
> 
> *Those making Over $8,500 but not over $34,500 get taxed 15%...thats not middle class...thats homeless, below poor...destitute
> 
> There is NO WAY someone can survive on only $34,500 a year*



Tell that to the millions of people working minimum wage jobs - full-time, year-round, federal minimum wage comes to about $15K.  I'm quite sure they'd be delighted to be "destitute" at $34,500.  

Even a dual-earner minimum-wage couple is below that "destitute" level.


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## fillde (Jul 29, 2011)

ronparise said:


> No we dont....We need to increase spending.
> 
> It dosent matter who does the spending, private enterprise, or the government. But private enterprise has shown its not up to the task...its time for the government to step in
> 
> ...



I don't follow your reasoning. You want government to spend to create jobs. Well, that means  raising taxes or increasing the debt. If you want to look at the government getting invloved, you don't have to look any further than the Post Office. The government does not know how to run a business. Period.

We have to find out why big business is not hiring. Why is GE moving a a part of their operations to China? Could it be cheaper labor(no unions),  could it be lower taxes, could it be new regulations put on them by the EPA.Something isn't right. We've had recessions before and come out of them. I'm still waiting .

I know why smaller businesses aren't hiring. It's the uncertainty of many things. Healthcare for one.


----------



## easyrider (Jul 29, 2011)

Tia said:


> Anyone care to share what they think will be a good buy if things do drop down?



In the flash crash on May 6, 2010 comodities took a beating, especially oil. Proctor & Gamble lost about $22 a share. 

Any strong company on your watch list that drops in value really quick would be a buy.imo 

World events haven't changed to the better since the crash in 2009. In fact, it might be worse. Unemployment is still over 9% on average with some areas of the country over 25%. Banks are tight with funds, so it is harder to borrow. Businesses are still failing. Real estate is still having problems in many areas. Europe is still having problems. The politicians can not agree to even disagree. Its a real mess. 

One thing for sure, in a messed up world it is better to live in a country that has a standard of living like the USA.


----------



## Elan (Jul 29, 2011)

BocaBum99 said:


> And, the same is true for any other large lobby group such as Unions.  Why did you exclude a discussion on those entities?  *Isn't that being disingenuous on your part?*



  Sure, if one equates not mentioning *all* aspects of one side of a discussion with not mentioning *any* aspects of one side of a discussion.  But if that's the case, your post is as disingenuous as mine.


----------



## glypnirsgirl (Jul 29, 2011)

I have wondered for some time how purchasing existing stock in an existing company helps the company grow? Doesn't that money just go to the prior owner of the stock? Not to the company?

Why do we think that it is more worthy to earn money by our dividends than by our labor? 

And, I wonder if the top 5% top bracket was 90%, wouldn't it begin to make more sense for a CEO to hire more employees rather than to pay yourself more money?

And, I wonder what is the proportion of campaign spending that is spent by unions rather than by corporations and/or foundations?

I don't know the answers to those questions, they are thoughts that I have pondered, not researched.

elaine


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## Elan (Jul 29, 2011)

pgnewarkboy said:


> That makes some sense.  Reduce spending and raise taxes.  What happened in the last six years  was we reduced taxes and did not reduce spending.  We actually raised spending.  Not a formula for success.



  In the past 10 years we reduced taxes and started two wars.  Not exactly a sane way to reduce a deficit.


----------



## BocaBum99 (Jul 29, 2011)

Elan said:


> Sure, if one equates not mentioning *all* aspects of one side of a discussion with not mentioning *any* aspects of one side of a discussion.  But if that's the case, your post is as disingenuous as mine.



My point is as stated.  You made a disingenuous statement.  I am against all loopholes of any kind for any stakeholder group.  I recognize that many such as the mortgage deduction would have to be phased out over time.  I am simply against government picking winners and losers through the tax code or any other legislation.


----------



## stevedmatt (Jul 29, 2011)

BocaBum99 said:


> And, the same is true for any other large lobby group such as Unions.  Why did you exclude a discussion on those entities?  Isn't that being disingenuous on your part?



Let's face it, politicians are all bought. Some are bought by the rich, some are bought by the religious and some are bought by large lobby groups. 

This is all about balancing the budget. It will require some additional revenue and some cuts. Too much of either will produce some type of economic turmoil. One thing for sure is that we can't continue down the current path. 

I think our nation looks to the ultra rich to take on a large portion of the increased revenue part of balancing the budget. It is understandable to me considering the top 1% of the population hold almost 35% of all  wealth in the US. The next 19% hold just over 50% of all wealth. That leaves the bottom 80% to share the remaining 15% of the wealth. Raising taxes on the bottom 80% would just add to the separation in classes in our country.


----------



## BocaBum99 (Jul 29, 2011)

stevedmatt said:


> Let's face it, politicians are all bought. Some are bought by the rich, some are bought by the religious and some are bought by large lobby groups.
> 
> This is all about balancing the budget. It will require some additional revenue and some cuts. Too much of either will produce some type of economic turmoil. One thing for sure is that we can't continue down the current path.
> 
> I think our nation looks to the ultra rich to take on a large portion of the increased revenue part of balancing the budget. It is understandable to me considering the top 1% of the population hold almost 35% of all  wealth in the US. The next 19% hold just over 50% of all wealth. That leaves the bottom 80% to share the remaining 15% of the wealth. Raising taxes on the bottom 80% would just add to the separation in classes in our country.



No matter how much the rich are taxed, anyone can argue that they can still pay more.  Before we go any further down the road of arguing that the rich should pay more.  I would like to have a logical argument for how much is the max they should actually pay.


----------



## pgnewarkboy (Jul 29, 2011)

BocaBum99 said:


> No matter how much the rich are taxed, anyone can argue that they can still pay more.  Before we go any further down the road of arguing that the rich should pay more.  I would like to have a logical argument for how much is the max they should actually pay.



I would go with the rate under Ronald Reagan - 50%.


----------



## stevedmatt (Jul 29, 2011)

BocaBum99 said:


> No matter how much the rich are taxed, anyone can argue that they can still pay more.  Before we go any further down the road of arguing that the rich should pay more.  I would like to have a logical argument for how much is the max they should actually pay.



The truth is I am not for raising tax rates (other than long term capital gains) as much as I am for removing many of the loopholes that the rich have for saving tax dollars. There are way too many deductible expenses as well as shelters for those in the upper tier.


----------



## BocaBum99 (Jul 29, 2011)

stevedmatt said:


> The truth is I am not for raising tax rates (other than long term capital gains) as much as I am for removing many of the loopholes that the rich have for saving tax dollars. There are way too many deductible expenses as well as shelters for those in the upper tier.



What shelters would those be?  Most tax shelters were abolished in the 1980s.

The biggest tax deductions are Home Mortgage deduction, Capital Gains exclusion on primary residence, charitable deductions and state and local government.  Which of those deductions would you like to eliminate?


----------



## dioxide45 (Jul 29, 2011)

I am really surprised that this thread is still going, just because you don't name a political party doesn't mean they are not political comments.


----------



## BocaBum99 (Jul 29, 2011)

pgnewarkboy said:


> I would go with the rate under Ronald Reagan - 50%.



You must mean 28%.  

I would be okay with going back to the rates under Clinton as long as we also go back to the spending levels when the budgets were balanced.


----------



## SueDonJ (Jul 29, 2011)

bogey21 said:


> I think I read that the lowest 50% of those with taxable income pay no taxes at all. If I am wrong, let me know. Maybe we should extend that to 90% and have the remaining 10% pay all the taxes.  If that would balance the budget, I am all for it.  If not, then what?
> 
> George



That statistic, the lowest 50% who pay no income tax at all?  Here at home we have a disagreement about what that statistic is most indicative of.  Don (who is a real tax guy in an accounting firm) says that it indicates a problem with the tax code, too many loopholes for those wage earners - if that many people aren't paying taxes, we (the government) can't pay down our debts.  I look at it as an indication of how many people are struggling to do more than live paycheck-to-paycheck in this poor economy - if they're not making enough to get out of a tax bracket which "earns" them tax breaks which have been legislated based on need, how can they be expected to pay more taxes?

Neither one of us knows the answer to this question:  what is the highest dollar amount that one can earn and be a member of this [lowest 50% of wage earners who pay no taxes] bracket, and is it a livable wage that the person can afford to pay some rate of taxes but still take care of family needs?


----------



## stevedmatt (Jul 29, 2011)

I'm not saying all of these shelters are legitimate. Other than tax free bonds and deferred retirement savings, you are correct, shelters are all but gone. However, many wealthy people create businesses to shelter money. Businesses set up to lose or break even to cover travel expenses, etc. of their private lives. I guess correcting this would entail IRS enforcement, which would cost more government money. 

As far as deductible expenses, charitable contributions should have a cap. Mortgage deductions should only be available up to a certain income level as a incentive for lower income citizens. 

The biggest correction needed IMO is capital gains. The wealthy make a large portion of their money from long term capital gains. While they may be paying 35% on their wage income, being able to collect capital gains at a 15% rate is a huge advantage. 

And while I said I am not for raising tax rates, I should have said beyond repealing the Bush cuts.


----------



## Talent312 (Jul 29, 2011)

dioxide45 said:


> I am really surprised that this thread is still going, just because you don't name a political party doesn't mean they are not political comments.



We don't need to name anyone... we know who to blame.

"The fault, dear Brutus, is not in our stars, but in ourselves..."
-- _Julius Caesar _(I, ii, 140-141)


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## BocaBum99 (Jul 29, 2011)

stevedmatt said:


> I'm not saying all of these shelters are legitimate. Other than tax free bonds and deferred retirement savings, you are correct, shelters are all but gone. However, many wealthy people create businesses to shelter money. Businesses set up to lose or break even to cover travel expenses, etc. of their private lives. I guess correcting this would entail IRS enforcement, which would cost more government money.
> 
> As far as deductible expenses, charitable contributions should have a cap. Mortgage deductions should only be available up to a certain income level as a incentive for lower income citizens.
> 
> ...



LOL.  Good thing you don't make tax policy.  The US would definitely go bankrupt.  You probably have no idea that the rich can shield their money and there is nothing the US government can do about it.  The key to getting the rich to pay taxes is to trick them into paying more.  

For instance, if the US declared a tax holiday on overseas profits from overseas subsidiaries, it would result in Billions of dollars in taxes.

The rich pay as much tax as they want.  There is nothing the government ca do about that outside of simply nationalizing their wealth.  That happened.  In communist China in May 1966.

If you raised capital gains taxes to 35%, you would see capital gains tax revenues drop 75%.  Even Obama wouldn't do that.  He is on record that he would only go to 20% and that even that move would reduce revenue to the Federal Government.

I am afraid this thread is about done and will be closed within 5 posts.  I am just pleased it made it to 100.


----------



## Elan (Jul 29, 2011)

BocaBum99 said:


> *My point is as stated.  You made a disingenuous statement. * I am against all loopholes of any kind for any stakeholder group.  I recognize that many such as the mortgage deduction would have to be phased out over time.  I am simply against government picking winners and losers through the tax code or any other legislation.



  Fine, I acknowledged that within a certain context that my statement could be deemed disingenuous.  Within that same context, so could yours.  I also acknowledged that.


----------



## BocaBum99 (Jul 30, 2011)

ronparise said:


> No we dont....We need to increase spending.
> 
> It dosent matter who does the spending, private enterprise, or the government. But private enterprise has shown its not up to the task...its time for the government to step in
> 
> ...



Ah, another Keynesian.  Do you realize that Keynesian economics never works?  The most common reason cited?  "We didn't spend enough."

Fortunately, the US is tapped out.  Can't borrow any more.  Keynes is dead in the US.  It's been a long time coming.


----------



## Kal (Jul 30, 2011)

fillde said:


> I don't follow your reasoning. You want government to spend to create jobs. Well, that means raising taxes or increasing the debt. If you want to look at the government getting invloved, you don't have to look any further than the Post Office. The government does not know how to run a business. Period.
> 
> We have to find out why big business is not hiring. Why is GE moving a a part of their operations to China? Could it be cheaper labor(no unions), could it be lower taxes, could it be new regulations put on them by the EPA.Something isn't right. We've had recessions before and come out of them. I'm still waiting .
> 
> I know why smaller businesses aren't hiring. It's the uncertainty of many things. Healthcare for one.


 
Huh???

Just a few thoughts. The government is not a business and it was never intended to be so. Look at all the things done by the government that businesses would NEVER even think of doing. Medicare? Veterans? Supporting people due to disasters, etc.

Post Office? Check out the governments role in the U.S. Post Office

Cost of Labor? Do you really think anyone could compete with Chinese wages with or without a union? What about the wages at non-union enterprises? How does anyone compete with 75 cents per hour????? What would you do if you were the CEO of a company when your competition has zip labor costs.

Coming out of this recession? What does the US manufacture now? Look at all the plants that have shut down and moved to China (or the like). They're gone and will not return. We are a service industry and just take care of one another.

Healthcare uncertainty? The skyrocketing cost of healthcare is a certainty. Businesses are trying like crazy to shed the costs they incur by cutting benefits or increasing employee contribution. Or by moving to China where they pay no benefits.

EPA Regulations?  Do you think there is any positive value in environmental regulations?


----------



## MuranoJo (Jul 30, 2011)

Not a short-term solution to cutting costs, but *enablement of *welfare & SS abuse has always been one of my pet peeves.  

I see it all around me:  Many people drawing Social Security 'disability' for iffy reasons when they've had very flaky employment records. On top of that, once they're approved, their children also get benefits. Isn't it wonderful that my neighbor's son could get a new laptop with his benefits from his dad's bennies so he can spend even more time playing online games?

Meanwhile, I've been busting my fanny and paying into SS since 13.  Glad I could help and I only hope there's something there for me when I retire.

But who can blame some of them who may really want to work with all the outsourcing of jobs to India and China, etc.?

Just a rant above, but I believe we really do need to cut costs and increase revenue.


----------



## Mel (Jul 30, 2011)

SueDonJ said:


> That statistic, the lowest 50% who pay no income tax at all?  Here at home we have a disagreement about what that statistic is most indicative of.  Don (who is a real tax guy in an accounting firm) says that it indicates a problem with the tax code, too many loopholes for those wage earners - if that many people aren't paying taxes, we (the government) can't pay down our debts.  I look at it as an indication of how many people are struggling to do more than live paycheck-to-paycheck in this poor economy - if they're not making enough to get out of a tax bracket which "earns" them tax breaks which have been legislated based on need, how can they be expected to pay more taxes?
> 
> Neither one of us knows the answer to this question:  what is the highest dollar amount that one can earn and be a member of this [lowest 50% of wage earners who pay no taxes] bracket, and is it a livable wage that the person can afford to pay some rate of taxes but still take care of family needs?


I don't know exact amounts, but if you were a married couple with 3 children under 17, and have $25,600 of taxable income (after exemptions and standard deduction), you would own $2999, which would be wiped out by child tax credits in 2010.  Add in those exemptions ($18250 for a family of 5) and standard deduction ($11,400 for MFJ) , and you could have earnings of  $55,250.  In most places that should be enough to be a living wage. 



vckempson said:


> I don't disagree with you but some facts might support moderation there.  In 1980 the top 10% of wage earners paid about 49% of all taxes received by our government.  Today,  the top 10% of earners pay about 72% of all taxes.  In 1980 the top 1% of earners paid 18% of all taxes and they now pay 42% of all taxes received.  Those are huge increases that are continuously heaped on them on them in a rather disproportionate way compared to the remaining 90% of us. It's a trend that has continued unabated and can't continue that way much longer.  At what point is it to much?
> 
> BTW, if you look at those in the 26th to 50th percentile, they paid 20% of all taxes in 1980 and now pay just 10%.


This just shows how statistics can be used to show whatever you want.  What percentage of wealth did those top 10% of wage earners control in 1980 - and again today?  Without that statistic, what you're written doesn't really have significance.  Along with the "higher percentage of taxes" heaped on them, they also had a higher percentage of earnings heaped on them as well.



Ridewithme38 said:


> I'd like to see some evidence of that...i'd consider myself poor and i pay 28% federal income taxes
> 
> Those making Over $8,500 but not over $34,500 get taxed 15%...thats not middle class...thats homeless, below poor...destitute
> 
> There is NO WAY someone can survive on only $34,500 a year


You may be in the 28% tax bracket, but I doubt you pay 28% taxes.  A single taxpayer earning 100,000 only pays 19,098, or slightly more than 19% once you factor in a single exemption and standard deduction. 

Anyone single making $34,500 would in fact be paying  9% of his income in taxes to the federal government, assuming there are no extra deductions or tax credits.  Not a great living, but given the incomes I see in my tax office every year, I would hardly can $34,500 destitute.   


Kal said:


> Just a few thoughts. The government is not a business and it was never intended to be so. Look at all the things done by the government that businesses would NEVER even think of doing. Medicare? Veterans? Supporting people due to disasters, etc.
> 
> Post Office? Check out the governments role in the U.S. Post Office
> 
> ...


Very true, the government has a very different role from that of business.  But that doesn't mean government needs to operate in a completely different way.  Instead, we need to focus on spending - but perhaps consider that many of the tax loopholes are not in fact tax cuts, but a different type of spending.  Our government "spends" money to provide tax incentives to individuals and to businesses.  Perhaps if those businesses would be likely to take their business elsewhere even without the tax breaks, we shouldn't be offering those breaks.

Perhaps we should consider the biggest tax breaks, and not just who they benefit, but how much they really cost, and whether they really provide an appropriate incentive (and perhaps also what role they have played in our recent troubles).

Consider the mortgage deduction.  It is an incentive to borrow large amounts of money to buy a home.  Thing is, it probably encourages many to buy more home than they can really afford, to get a bigger tax break.  And those getting the biggest break get significantly more benefit.  The person with the higher income is in the higher tax bracket, so sees more savings, but also is likely to have a larger deduction, multiplying that savings even more.  And what role did this deduction play in running housing prices up?

Those with high income love this deduction because of the benefit it provides to them.  Those with low income don't even realize it does nothing for them, even if they have a mortgage.  The middle class hasn't come to realize yet that perhaps eliminating it, and lowering everybody's tax rate incrementally would be better for them.


----------



## stevedmatt (Jul 30, 2011)

BocaBum99 said:


> LOL.  Good thing you don't make tax policy. The US would definitely go bankrupt.



You are correct, it is a very good thing. I am a layman. I work very hard work the money I make.  I just feel that the top 1% who made their money off of great ideas and the backs of the bottom 80% should shoulder a large portion of he burden, but not the full burden. I have no problem paying taxes and would pay more within reason if it would help correct this mess. FWIW, my federal tax burden was 19.6% of my income last year.

I never said that capital gains should be raised to 35%, just that 15% is too low.

I am really not trying to start an argument, but I have offered ideas, no matter how bad you think they may be. You question my ideas but to this point have only offered "The solution is to spend less than they take in". While I agree, how would you suggest we do that? And your US bankruptcy comment...well maybe I am just as good as the people currently writing tax law.


----------



## rapmarks (Jul 30, 2011)

SueDonJ said:


> That statistic, the lowest 50% who pay no income tax at all? Here at home we have a disagreement about what that statistic is most indicative of. Don (who is a real tax guy in an accounting firm) says that it indicates a problem with the tax code, too many loopholes for those wage earners - if that many people aren't paying taxes, we (the government) can't pay down our debts. I look at it as an indication of how many people are struggling to do more than live paycheck-to-paycheck in this poor economy - if they're not making enough to get out of a tax bracket which "earns" them tax breaks which have been legislated based on need, how can they be expected to pay more taxes?
> 
> Neither one of us knows the answer to this question: what is the highest dollar amount that one can earn and be a member of this [lowest 50% of wage earners who pay no taxes] bracket, and is it a livable wage that the person can afford to pay some rate of taxes but still take care of family needs?


 
I have heard that the bottom 20% is mostly comprised of students who average 15,000 a year and the next 20% is mostly comprised of seniors who average 25,000 a year.  if that 25 thousand was the result of social security, no income tax. I have friends who take $385 thousand a year out of their business to live on, and say they pay under ten maybe as low as 5 thousand in income taxes a year. what the heck!


----------



## Patri (Jul 30, 2011)

The rich is always someone else, isn't it?


----------



## vckempson (Jul 30, 2011)

SueDonJ said:


> Neither one of us knows the answer to this question:  what is the highest dollar amount that one can earn and be a member of this [lowest 50% of wage earners who pay no taxes] bracket, and is it a livable wage that the person can afford to pay some rate of taxes but still take care of family needs?



For 2009 the bottom 50% of earners come in at a max of around $32,000.  Specifically, 47% of those earning that much or less didn't pay taxes.


----------



## vckempson (Jul 30, 2011)

Mel said:


> This just shows how statistics can be used to show whatever you want.  What percentage of wealth did those top 10% of wage earners control in 1980 - and again today?  Without that statistic, what you're written doesn't really have significance.  Along with the "higher percentage of taxes" heaped on them, they also had a higher percentage of earnings heaped on them as well.
> 
> .



I've heard that mentioned many times.  Taxes aren't levied on wealth, they are levied on income.  It is, after all, the federal and state INCOME TAX.   Their wealth is irrelevant unless we're talking about estate taxes. 

The trick is to drive them toward using their wealth in ways that benefit us all.  If you set up disincentives with high taxes, the wealthy will do just what what I see all too often:  they put it all in tax free bonds, pay NO taxes, and live happily ever after.    People need to face the reality that the rich are not the enemy.  Most are just like you and me, except they have the means to help others and the economy in ways we can't.


----------



## cotraveller (Jul 30, 2011)

Patri said:


> The rich is always someone else, isn't it?



Every time they say they are going to tax only the rich, I find out I am rich. I wish the bank would realize that.  

It's the Robin Hood syndrome.  Steal from the rich and give to the poor.


----------



## Rose Pink (Jul 30, 2011)

cotraveller said:


> It's the Robin Hood syndrome.  Steal from the rich and give to the poor.


The rich traditionally/historically steal from the poor.  Slavery, serfs, indentured servants ....  

IMO, low wages are another form of human trafficking.  As the gap widens between rich and poor, with the middle-class being squeezed into near non-existance, I'd say the rich are winning again.  

It's time for an adjustment.


----------



## glypnirsgirl (Jul 30, 2011)

BocaBum99 said:


> Ah, another Keynesian.  Do you realize that Keynesian economics never works?  The most common reason cited?  "We didn't spend enough."
> 
> Fortunately, the US is tapped out.  Can't borrow any more.  Keynes is dead in the US.  It's been a long time coming.



Amazing that our economy has been much more robust when following Keynes than when following Adam Smith and Milton Friedman or the Chicago School in general.

I agree with Ron that more spending is needed in areas that will be PRODUCTIVE. 

elaine


----------



## Tia (Jul 30, 2011)

You don't have to be wealthy to have a small business your pulling $$$$$ out of and living on then claim very little personal income. I know one spending on nice vacations/vehicles/house/kids with business credit cards/spending big money on lots of things so makes me wonder how common it is.  Not sure if audited it would pass, but for now _it is happening_. 




stevedmatt said:


> ....However, many wealthy people create businesses to shelter money. Businesses set up to lose or break even to cover travel expenses, etc. of their private lives. I guess correcting this would entail IRS enforcement, which would cost more government money.
> 
> 
> ....


----------



## bogey21 (Jul 30, 2011)

muranojo said:


> Not a short-term solution to cutting costs, but *enablement of *welfare & SS abuse has always been one of my pet peeves.



I just got home from Kroger.  A young lady offered me to let me use $22.50 on her welfare card (I think it was food stamps) in exchange for $15.00 cash!  How prevalent is this?  Incidentially I declined!!

George


----------



## bogey21 (Jul 30, 2011)

My last post reminded me of a tax return I prepared for young guy living down the street earlier this year.  He is in his last year of Med School, has a wife and 2 children.  His parents are paying his way through school.  He earned approximately $19,000 working at the school and had nothing withheld for FIT.  Due to the EITC and a couple of other credits (I think one was called "Making Work Pay" or something like that) he and his wife (filing jointly) received a "Refund" of over $8,000!!

George


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## glypnirsgirl (Jul 30, 2011)

bogey21 said:


> My last post reminded me of a tax return I prepared for young guy living down the street earlier this year.  He is in his last year of Med School, has a wife and 2 children.  His parents are paying his way through school.  He earned approximately $19,000 working at the school and had nothing withheld for FIT.  Due to the EITC and a couple of other credits (I think one was called "Making Work Pay" or something like that) he and his wife (filing jointly) received a "Refund" of over $8,000!!
> 
> George



His parents don't claim them as dependents on their own returns? I thought that people that were claimed as dependents could not qualify for EITC?

elaine


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## bogey21 (Jul 30, 2011)

glypnirsgirl said:


> His parents don't claim them as dependents on their own returns? I thought that people that were claimed as dependents could not qualify for EITC?
> 
> elaine



His parents did not claim him as a dependent.  I don't know why.  Maybe because they live in different cities.  All I know is that they don't.

I just wonder how many people in this country with two kids earning $20,000 get checks for approximately $8,000 from the Government.

George


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## SueDonJ (Jul 30, 2011)

bogey21 said:


> His parents did not claim him as a dependent.  I don't know why.  Maybe because they live in different cities.  All I know is that they don't.
> 
> I just wonder how many people in this country with two kids earning $20,000 get checks for approximately $8,000 from the Government.
> 
> George



I hope all of them, because I can't imagine trying to house, feed and clothe two little ones on just $20K a year!


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## vacationhopeful (Jul 30, 2011)

glypnirsgirl said:


> His parents don't claim them as dependents on their own returns? I thought that people that were claimed as dependents could not qualify for EITC?
> 
> elaine



It does NOT benefit him or his family to have his parents claim them. In addition to the EITC, they most likely qualify for rental assistance, heat and electric funds, phone & cell free service, food stamps, medical and scripts paid for ... these are not loans associated with his future employment but grants. If he is receiving "gifts" of his tuition and books, and it is more the $10,000, if he is paying a GIFT TAX .... I am sure his parents are paying the fee directly to the school. My low income clients have to bring copies of their bank & checking accounts with them to prove they are poor (and the agencies run there own gathering intelligence).


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## pgnewarkboy (Jul 30, 2011)

bogey21 said:


> His parents did not claim him as a dependent.  I don't know why.  Maybe because they live in different cities.  All I know is that they don't.
> 
> I just wonder how many people in this country with two kids earning $20,000 get checks for approximately $8,000 from the Government.
> 
> George



I wonder about that as well.  I also wonder why big agriculture is paid tens of millions of dollars every year NOT TO GROW certain foods.  I also wonder why oil companies, the richest companies in the world, receive tens of millions of dollars a year in tax subsidies.  I also wonder why Warren Buffet pay less in taxes than his secretary.  I wonder why the richest people in the entire world got paid over a trillion dollars in bailout tax money and then paid themselves bonuses in the millions of dollars.  I wonder who is really ripping me off.


----------



## vacationhopeful (Jul 30, 2011)

bogey21 said:


> ...I just wonder how many people in this country with two kids earning $20,000 get checks for approximately $8,000 from the Government.
> 
> George



A lot more than you see. I have seen this negative income tax and its effect for years. Clients get $4-8000 in a March check (EFT and pay the income tax services a big fee for the instant loan/get the money today!). Spend the money on TVs, cell phones, etc. Come requalification for their benefits and their assisted elements go up $250 for unreported income and retro back to makeup not reporting the income ... have to pay $400+ a month extra for their assisted housing. There is no extra weekly cash - so they become homeless. Tax services do NOT tell them to increase their withholding as they take a large chuck of the refund at payday loan rates.

Ever wonder why there are all those income tax storefronts in the lower income area ... it is a big profit center.


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## easyrider (Jul 30, 2011)

Mercury is in retrograde on August 3, 2011. The odds seem in favor of a major screw up especially with the current happenings.

http://thegreenduck.com/ka/mercrx.shtml


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## Carol C (Jul 30, 2011)

pgnewarkboy said:


> The money was authorized to spend by congress.  Now the time has come to pay the bill.  We must pay our bills.  When you don't pay your bills your credit rating goes down. When you buy a new card on credit you must pay the bill.  It is really that simple.  The gun you refer to  is being pointed at the head of the American People - not the federal government.
> 
> The Constitution created three branches of government, That means the people of the United States created this government .  It is the people's government.  When the government doesn't pay its bills it means that the american people are not paying their bills and the american people suffer the consequences.



Maybe the banks will bail us out. Or the Big 3 automakers? One good turn deserves another, after all!


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## ricoba (Jul 30, 2011)

Carol C said:


> Maybe the banks will bail us out. Or the Big 3 automakers? One good turn deserves another, after all!



  

I read this am that Apple could bail us out, just like JP Morgan did at one time


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## pjrose (Jul 30, 2011)

ricoba said:


> I read this am that Apple could bail us out, just like JP Morgan did at one time



Yes, Apple has more cash on hand than the US Government.  

So why, oh why, did our broker talk DH out of buying more Apple stock in the mid-80s when it was 14??  *Well at least I can say I Told You So! *


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## Mel (Jul 30, 2011)

vacationhopeful said:


> A lot more than you see. I have seen this negative income tax and its effect for years. Clients get $4-8000 in a March check (EFT and pay the income tax services a big fee for the instant loan/get the money today!). Spend the money on TVs, cell phones, etc. Come requalification for their benefits and their assisted elements go up $250 for unreported income and retro back to makeup not reporting the income ... have to pay $400+ a month extra for their assisted housing. There is no extra weekly cash - so they become homeless. Tax services do NOT tell them to increase their withholding as they take a large chuck of the refund at payday loan rates.
> 
> Ever wonder why there are all those income tax storefronts in the lower income area ... it is a big profit center.


Actually, if they had higher withholding, they would have an even bigger tax refund.  We encourage clients who will get Earned Income Credit to reduce their withholding as close to zero as possible.

And no, those tax refund loans are not in fact a big profit center - the banks get all the money for the loans.  If anything, the tax preparers would rather not process the loans because it takes more of our time, and we don't get a cut!  The fees for those loans are very high prepaid interest rates, and the reason they are so high is because there is a significant level of defaults.  H& R Block didn't have loans this year, and the other big companies had very limited loans.  

Also, EITC does not count as income when calculating benefits, but can count as an asset if it is not spent before requalification, so it is in their own best interest to spend it quickly.

Incidentally, a married couple with 2 children would have EITC of avout $5,000, plus $2m000 in child tax credits, and all of their income would be tax free, due to exemptions and the standard deduction.  So unless they don't qualify for either credit, all couples with 2 kids earning $20,000 will not only not pay any taxes, but will be given an extra $7,000 refund,  Of course, soem of them should not be getting the credit, because they do not provide at least half of the support for their families (the state does, through rental assitance, food stamps, and other programs).


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## pgnewarkboy (Jul 31, 2011)

ricoba said:


> I read this am that Apple could bail us out, just like JP Morgan did at one time



Actually JP Morgan did not bail out the government.  He bailed out the Banks.


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## e.bram (Jul 31, 2011)

The problem was brought on the unions. By overpricing manufacturing goods and diverting money from companies to be used the improve product design and manufacturing techniques, we gave production to foreign manufacturers . Creating loss of employment which is the root our present problem.


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## Kal (Jul 31, 2011)

e.bram said:


> The problem was brought on the unions. By overpricing manufacturing goods and diverting money from companies to be used the improve product design and manufacturing techniques, we gave production to foreign manufacturers . Creating loss of employment which is the root our present problem.


 
A novel idea.  Just get rid of unions and everything will be fine. :whoopie:  

I somehow keep wondering if 2 wars, a gigantic phony housing bubble, a prescription drug program and others had anything to do with it.


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## e.bram (Jul 31, 2011)

Probably too late. The damage is already done.
But with government employees unions it would help.


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## Tia (Jul 31, 2011)

Nothing to do with this?  http://real-agenda.com/2011/07/14/how-globalism-destroys-jobs-businesses-and-wealth/




e.bram said:


> The problem was brought on the unions. By overpricing manufacturing goods and diverting money from companies to be used the improve product design and manufacturing techniques, we gave production to foreign manufacturers . Creating loss of employment which is the root our present problem.


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## capjak (Jul 31, 2011)

Mel said:


> This just shows how statistics can be used to show whatever you want.  What percentage of wealth did those top 10% of wage earners control in 1980 - and again today?  Without that statistic, what you're written doesn't really have significance.  Along with the "higher percentage of taxes" heaped on them, they also had a higher percentage of earnings heaped on them as well.
> 
> .




According to the Congressional Budget Office, the top 20 percent make 59.1 percent of total income and pay almost 70 percent of all federal taxes. This share is 4 percent higher than in 2000.

When only looking at income taxes, the share of the top 20 percent increases even further. The top 20 percent paid 86.3 percent of all income taxes. This was an increase of 6 percent from 2000.



Read more: http://blog.thenewstribune.com/letters/2011/07/29/fairly-tax-the-rich/#ixzz1ThXAoJDf


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## stevedmatt (Jul 31, 2011)

e.bram said:


> The problem was brought on the unions. By overpricing manufacturing goods and diverting money from companies to be used the improve product design and manufacturing techniques, we gave production to foreign manufacturers . Creating loss of employment which is the root our present problem.



The problem was brought on by groups of people who fought for worker's rights, shorter hours and a liveable wage for their work? So, in your mind, their should only be rich and poor? 
If we would have imposed some tariffs on foreign goods to level the playing field, maybe those jobs would have stayed here. Now that they are gone, they will not be back.

Reminds me of a bumper sticker..."If we continue to buy foreign cars, where will our children work?" Just replace cars with everything that can no longer be bought MADE IN THE USA. 



Tia said:


> Nothing to do with this?  http://real-agenda.com/2011/07/14/how-globalism-destroys-jobs-businesses-and-wealth/



Very good article. I agree with most of it.


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## exyeh (Jul 31, 2011)

capjak said:


> According to the Congressional Budget Office, the top 20 percent make 59.1 percent of total income and pay almost 70 percent of all federal taxes. This share is 4 percent higher than in 2000.
> 
> When only looking at income taxes, the share of the top 20 percent increases even further. The top 20 percent paid 86.3 percent of all income taxes. This was an increase of 6 percent from 2000.
> 
> ...



Top 20% is very different from top 2%, look at all the reports about top 2% NOT paying taxes.


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## vckempson (Jul 31, 2011)

exyeh said:


> Top 20% is very different from top 2%, look at all the reports about top 2% NOT paying taxes.



I'm not familiar with that.  I'd be interested to read some of those reports.  Could you please point me towards them to see firsthand what these studies say?


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## vckempson (Jul 31, 2011)

stevedmatt said:


> I just feel that the top 1% who made their money off of great ideas and the backs of the bottom 80% should shoulder a large portion of he burden, but not the full burden.



That's a rather cynical view.  I thought that the likes of Bill Gates and Steven Jobs had created hundreds of thousands of jobs and turned tens of thousands into millionaires in the process.



Rose Pink said:


> The rich traditionally/historically steal from the poor.  Slavery, serfs, indentured servants ....
> 
> IMO, low wages are another form of human trafficking.  As the gap widens between rich and poor, with the middle-class being squeezed into near non-existance, I'd say the rich are winning again.
> .



This view is rooted in the belief that income and wealth is a finite amount, which it's not.  Gross earnings and wealth in the US are elastic.  There's not one asset pie or one earnings pie that must be divided amongst everyone.  We can bake as many pies as we are able, to increase everyone's portion.  As the rich innovate and produce, they create *new* income revenue and wealth.  Just because the top get richer faster than the rest of us, it doesn't mean that the rest of us aren't benefiting from it and doing better as well.  So what if the rich get there faster than you and me; we all benefit from this new wealth creation?

As long as the pie keeps getting bigger, we all benefit.  If and when the pie starts to shrink,  then it will start to get real ugly.  And if we don't get our debt under control, that exactly what's going to happen.


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## stevedmatt (Jul 31, 2011)

vckempson said:


> That's a rather cynical view.  I thought that the likes of Bill Gates and Steven Jobs had created hundreds of thousands of jobs and turned tens of thousands into millionaires in the process.



How many American jobs has Apple created? All of their products are made in China.
Interesting story about Apple

Again with Microsoft, are we talking about American jobs?
"how many people know that today 100% of Microsoft hardware products are made in China? This is actually part of the Memorandum of Understanding (MoU) signed between Microsoft and the National Development and Reform Commission (NDRC) of China to further strengthen cooperation (Phase II) in the software industry. Under this MoU, Microsoft will source hardware products worth over US$ 700 million each year from Chinese companies."
Link to quote from Microsoft's website. 

And most of the millionaires created by these companies were created through stock ownership where they paid capital gains taxes of 15%, less than I paid last year on my 5 figure salary.

Cynical? Perhaps. Blind? No way.


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## Tia (Jul 31, 2011)

vckempson said:


> ......
> 
> As long as the pie keeps getting bigger, we all benefit.  If and when the pie starts to shrink,  then it will start to get real ugly.  And if we don't get our debt under control, that exactly what's going to happen.



I actually feel we are past the getting bigger/we all benefit part  and standing on the edge of a shrinking/ugly era.


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## vckempson (Jul 31, 2011)

stevedmatt said:


> How many American jobs has Apple created? All of their products are made in China.
> Interesting story about Apple
> 
> Again with Microsoft, are we talking about American jobs?
> ...



My statement stands.  

Over 80,000 emplyees in the US between Microsoft and Apple.  The other 1/2 of their employess are spread out over the rest of the world.  That doesn't include any trickle down effect from US subcontractors, and that's just for 2 companies.  Innovation produces jobs, and we're the main beneficiaries of US innovation.  Companies and the economies of countries are global and intertwined these days.  That's just the way it is.  Should we say no to BMW, Mercedes, Nissan, Honda, and Toyota that all have plants here in the US?  When it comes to production and manufacturing, borders are rather porous.  

Yes, the millionaires at Microsoft & Apple got that way mostly from stock options.  So what?  More precisely, they became millionaires from working at great American companies that innovate and create something new.  Many of these millionaires are average Joe's, the very people that shouldered the weight of the work to make these companies what they are today.  We need more Microsofts and Apples... lots more.


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## pgnewarkboy (Jul 31, 2011)

vckempson said:


> My statement stands.
> 
> Over 80,000 emplyees in the US between Microsoft and Apple.  The other 1/2 of their employess are spread out over the rest of the world.  That doesn't include any trickle down effect from US subcontractors, and that's just for 2 companies.  Innovation produces jobs, and we're the main beneficiaries of US innovation.  Companies and the economies of countries are global and intertwined these days.  That's just the way it is.  Should we say no to BMW, Mercedes, Nissan, Honda, and Toyota that all have plants here in the US?  When it comes to pruduction and manufacturing, borders are rather porous.
> 
> Yes, the millionaires at Microsoft & Apple got that way mostly from stock options.  So what?  More precisely, they became millionaires from working at great American companies that innovate and create something new.  Many of these millionaires are average Joe's, the very people that shouldered the weight of the work to make these companies what they are today.  We need more Microsofts and Apples... lots more.



Yes, we need more innovators and to do that we need a better educated public.  So lets stop laying off teachers.


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## pjrose (Jul 31, 2011)

pgnewarkboy said:


> Yes, we need more innovators and to do that we need a better educated public.  So lets stop laying off teachers.



Right.  And let's figure out how to determine good teaching, which is not what percent of your kids score proficient on a test that you've been teaching to for the last umpteen months.  But that's a different topic.....


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## stevedmatt (Jul 31, 2011)

This thread has taken so many turns. My feelings are too strong to continue.

Now I understand why TUG doesn't allow political discussions. I think a lot of people may look at others posters differently after a thread like this. I respect so many people here for their contributions, I don't want this to happen to me. I currently have no hard feeling toward anyone whom I have questioned in this thread. I am going to keep it that way.

I will leave you with some positive news, or maybe not depending on your views:
News on pending debt ceiling resolution.


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## am1 (Jul 31, 2011)

pjrose said:


> Yes, Apple has more cash on hand than the US Government.
> 
> So why, oh why, did our broker talk DH out of buying more Apple stock in the mid-80s when it was 14??  *Well at least I can say I Told You So! *



If only it was that simple.  If the ipod was never developed where would apple be?  

It is almost like gambling.  If you win its just your turn.


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## e.bram (Jul 31, 2011)

If teachers could teach students to be innovative, why can't they be innovative themselves.


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## Talent312 (Jul 31, 2011)

stevedmatt said:


> This thread has taken so many turns. My feelings are too strong to continue... Now I understand why TUG doesn't allow political discussions.



I'm with you on that. What started as an innocuous topic has morphed dangerously into contentious areas, and I'm surprised the mods have let it run.

My parting comment:
Too bad NASA didn't sell seats on the shuttle. It might still be running today, and possibly covered a few months of credit card payments.

Perhaps the Department of Agriculture could set up a few lemonade stands?


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## Ken555 (Jul 31, 2011)

Fwiw, I'm glad the mods let this thread continue. I've found it interesting to read all of your opinions on the problem, what to do, etc. While political, I applaud all of you for your restraint and not letting it get completely out of hand. 

Our debt, what to do about it, and what government should provide to it's citizens is a fundamental concern of our society that we have struggled with since the founding of this country. Unfortuntaely, we have not handled it well in decades, and it seems as if we can't do any better now, either. The frustration we all feel on this issue regardless of position is palpable, and unfortunate. 

It seems as if my generation is about to pass responsibility for the debt onto the next, just as the previous did to mine. None of us are assuming enough responsibility in solving the problem, hence the great concern many of us have for the future.


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## ronparise (Jul 31, 2011)

glypnirsgirl said:


> Amazing that our economy has been much more robust when following Keynes than when following Adam Smith and Milton Friedman or the Chicago School in general.
> 
> I agree with Ron that more spending is needed in areas that will be PRODUCTIVE.
> 
> elaine



Thanks elaine

and a note to Boca...I dont care who does the spending.  A robust economy needs money in motion...Im tired of the phony distinction made between the government and the people, as if they are different

The government is of the people by the people and for the people...The government is us and we are the government...and we are not broke. at least big oil, big pharma, big farms and big insurance are not broke...and yet there are no new jobs....We reduced taxes to historic low levels as an incentive to create some new jobs...and it didnt work.  We have yet to find that sweet spot on the Lafer Curve where revenue is maximized....

We the people have to step in and we the people through our government can build some stuff....new bridges, new water lines, new high speed rail, a new elec grid, green power, alternative energy projects....big stuff, grand stuff, bold stuff...stuff that will last 50 years or more, built by private enterprise and run by private enterprise employing we the people...all built under contract with  us; we the people.


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## Kal (Jul 31, 2011)

Ken555 said:


> ...It seems as if my generation is about to pass responsibility for the debt onto the next, just as the previous did to mine. None of us are assuming enough responsibility in solving the problem, hence the great concern many of us have for the future.


 
Frankly, I'm not as much concerned about the next generation as I am about this generation.  If we don't get today's state of affairs in order, tomorrow won't happen.  Likewise, if we can't pay the rent, maybe we better cut back on saving money for the kids.


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## pgnewarkboy (Jul 31, 2011)

e.bram said:


> If teachers could teach students to be innovative, why can't they be innovative themselves.



Teachers don't teach students to be innovative.  They teach students the basic knowledge and skills they need in math, science, reading, language, etc. so the students can use that to innovate.  Bill Gates had to understand and be extremely proficient in math before he could invent DOS - the operating system that made him his first billion.  Engineers with good educations took us to the moon.


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## Tia (Aug 1, 2011)

This is a whole other topic that deserves a thread of it's own imho. 




pgnewarkboy said:


> Teachers don't teach students to be innovative.  They teach students the basic knowledge and skills they need in math, science, reading, language, etc. so the students can use that to innovate.  Bill Gates had to understand and be extremely proficient in math before he could invent DOS - the operating system that made him his first billion.  Engineers with good educations took us to the moon.


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## Tia (Aug 1, 2011)

Agree if our politicians don't get the countries state of affairs in order it's not going to be pretty. 

Saving money for the kids a nice reality for some... but my bigger concern is jobs to pay the mortgages people have and being able to save a couple nickles for the supposed golden years might be nice too.




Kal said:


> Frankly, I'm not as much concerned about the next generation as I am about this generation.  If we don't get today's state of affairs in order, tomorrow won't happen.  Likewise, if we can't pay the rent, maybe we better cut back on saving money for the kids.


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## e.bram (Aug 1, 2011)

People like Gates, Zuckerberg  the Google founders etc. could teach the teachers when they were students.


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## pgnewarkboy (Aug 2, 2011)

e.bram said:


> People like Gates, Zuckerberg  the Google founders etc. could teach the teachers when they were students.



Were you self taught?  Picked up a book and read it without anyone teachaing you how to read?  Teachers are far more important than politicians and corporate executives.  I understand its the "thing" to belittle teachers right now.  It is disgusting and bad for our families, our nation, the world.  Teachers deserve respect and help.  We all need them.


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