Seems the rich are paying their fare share. http://news.yahoo.com/fact-check-rich-taxed-less-secretaries-070642868.html

 

At the end of the article, Geithner makes the key point that I seldom hear Obama or Buffet make--that it all depends on where your income is coming from. If it's through investments, as is the case (I assume) with Mr. Buffet, then there's a 15% tax rate. If it's through wages then it's whatever percentage tax bracket you're in. That's an important distinction that hasn't been stated much in Obama's plan.

If the economy is shaky and someone's source of income is in question they are going to hold off on making big purchases as they would need that money if they lost their job. I agree with you there. The "Obama is creating uncertainty" argument seems to say that businesses could expand and grow profits, but don't because they fear Obama. This seems counterintuitive to me. If someone running a business had a strategy that would generate more profits, but refused to employ it, it would seem they would not be in the business game very long. What am I missing?

 

My own sense is that the business cycle hasn't turned over since coming out of a very bad recession. If the logic holds, downturns are something like vicious cycles where as some sectors or industries cut workers, lessen pay, etc. to gut out as much expense as possible there is then less money in the economy being spent on goods and services, causing other sectors and industries to begin gutting out expenses until the the economy grinds to a stop (the resulting peril of the almost exclusive focus on short term profits by investors). Vice versa for an upturn. I think we've reached and passed the nadir in this downturn, but businesses have been able to equal their former productivity levels and much of their profits with much leaner work forces. Coupled with the amount of competition seen from other countries, this does not bode well for the future of our country's economy, regardless of who is president. Will there be reason again to add American workers en masse?

 

If you thought hiring employees would increase profits, I'd agree with you that it seems counterintuitive and you are not missing anything. But my business clients are very scared and concerned about what is going on in DC and they have no confidence that hiring more employees will be profitable. If I had confidence that the economy was going to improve, I'd spend more money now because it's a great time to be a buyer on a lot of investments and purchases with prices being so low. Because of the uncertainty in DC (and in Europe I'll add) the business types (and I) think the economy is going to get worse not better. I think you are wrong in believing that we have reached the nadir.

 

The business types don't want to hire employees today and use those hoarded profits to pay salaries on the hope that the economy is going to get better, just to have to lay them off shortly down the road. Furthermore, they want to keep that cash on hand in case things get worse (like many are predicting, including the Global Investment Manager whose presentation I just returned from attending. It was rather depressing. I'll be attending another presentation next week by another institution. I'm hoping, but not expecting, that he has a rosier outlook. Today's presenter did not lay all the blame on President Obama or Congress, he's quite concerned about Europe also, but said that business does not have confidence in either Obama or Congress. Which of course was no surprise when you look at recent polling information.)

 

I agree with the concept that if all the large corporations used their cash on hand to hire more folks and if small businessmen/women expanded their business (which usually happens with borrowed money which is difficult to do right now) and hired more employees, there would be more cash in the hands of consumers; consumer demand for products would go up; and the economy would be improved (partially). It becomes a self fulfilling prophesy if you will. But the mentality of a lot of business types is that the current administration is not business friendly and that with the ill spirit in Congress, very little positive is going to get accomplished. They look at the mess that accompanied the recent debt ceiling debacle and see doom and gloom. When large business leaders are taking out ads imploring other large business leaders not to make any political campaign donations unless Congress changes the way it acts, it provides some great insight into how business feels about DC. It is bad. Some will blame it on the Rs for being obstructionists and only caring about their wealthy constitutients. Some will blame it on the Ds for refusing to acknowledge that spending must be cut and only caring about their union and welfare friendly constitutients. I've no where near an Obama basher, but I blame him for creating the environment that the moderates of both parties have moved to the extreme edges of their respective parties. I had hope that he would appeal to the moderates in Congress (and attract more to moderate positions) when he was elected. I don't think he can do that.

 

Most of my high net worth clients that I've spoken to would be willing to pay more in taxes IF: 1. the tax increase legislation could somehow be tied to some measure of the economy or jobless rate so that it automatically decreased as the economy/unemployment improved; and 2. spending is significantly decreased. That would take compromise by both sides. Does anyone think that given the current climate in DC such compromise like that is possible? They don't and I don't either.

 

It is critically important to reduce our debt. As a country we are very fortunate that interest is low. If it was higher, it would create real problems as a greater portion of our revenue would be spent on debt service. We are as a nation in a position that we can't afford additional stimulus spending, which is why President Obama's job creation plan is tied to raising revenues from the wealthy. But the Rs are in no mood to cooperate with a President that they believe ran rough shod over them on the health reform legislation; they are in no mood to force the wealthy to bail out the country's revenue problems caused by, they believe, a wasteful and excessive entitlement system; and they are in no mood to force businesses to pay more taxes to support a President that is viewed as anti business. Perception is reality and the perception now amongst my business owner clientele is that President Obama has lost the ability to lead Congress and the US. That may be totally wrong, but until he proves otherwise, that is what they believe; and what they believe determines what they will do.

 

As for the merits of health care reform, that is not the issue. It's not what was accomplished; it's how it was accomplished. It created an atmosphere of open warfare between Ds and Rs and that warfare presented itself in the debt ceiling debacle. When no Rs, not even the moderate ones, voted for the reform act but it was pushed through, Obama lost his ability to lead and lost any argument that he was going to act in a moderate and consensus building manner.

From Your Article - It does not deny that the rich pay a lower share even though the rate says it is higher.

 

With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.

 

Here's another article on the subject with some additional detail. Tax Policy Center calculates their average rate about double someone in the $50-$75k range. http://www.foxnews.com/politics/2011/09/20/irs-data-show-most-millionaires-pay-taxes-at-higher-rate-than-middle-class/.com/politics/2011/09/19/obama-yields-to-liberal-outcry-on-entitlement-reform/

Small employers and small businesses will create jobs if there is a need. New jobs come from small businesses or VC groups like the Angel Network.

 

Large businesses have been 'globalizing' for years. That was sold to them by the management consulting groups - McKinsey, Accenture, D&T, etc. It would seem you are correct. That this will likely continue.

 

I saw the CEO of GE on CNN last night on something about how America will bounce back. It was a joke. The multi-nationals have sold out and they are not looking to re-patriot jobs they sent offshore any time soon. Sadly.

 

Small businesses hire locally, they can not or do not want to 'off-shore' or use 'global resources'. They are connected to the community.

 

I want to like Immelt because he is a "local" guy, but......http://emergingcorruption.com/2011/08/ge-stabs-the-us-in-the-back/.

If you thought hiring employees would increase profits, I'd agree with you that it seems counterintuitive and you are not missing anything. But my business clients are very scared and concerned about what is going on in DC and they have no confidence that hiring more employees will be profitable. If I had confidence that the economy was going to improve, I'd spend more money now because it's a great time to be a buyer on a lot of investments and purchases with prices being so low. Because of the uncertainty in DC (and in Europe I'll add) the business types (and I) think the economy is going to get worse not better. I think you are wrong in believing that we have reached the nadir.

 

The business types don't want to hire employees today and use those hoarded profits to pay salaries on the hope that the economy is going to get better, just to have to lay them off shortly down the road. Furthermore, they want to keep that cash on hand in case things get worse (like many are predicting, including the Global Investment Manager whose presentation I just returned from attending. It was rather depressing. I'll be attending another presentation next week by another institution. I'm hoping, but not expecting, that he has a rosier outlook. Today's presenter did not lay all the blame on President Obama or Congress, he's quite concerned about Europe also, but said that business does not have confidence in either Obama or Congress. Which of course was no surprise when you look at recent polling information.)

 

I agree with the concept that if all the large corporations used their cash on hand to hire more folks and if small businessmen/women expanded their business (which usually happens with borrowed money which is difficult to do right now) and hired more employees, there would be more cash in the hands of consumers; consumer demand for products would go up; and the economy would be improved (partially). It becomes a self fulfilling prophesy if you will. But the mentality of a lot of business types is that the current administration is not business friendly and that with the ill spirit in Congress, very little positive is going to get accomplished. They look at the mess that accompanied the recent debt ceiling debacle and see doom and gloom. When large business leaders are taking out ads imploring other large business leaders not to make any political campaign donations unless Congress changes the way it acts, it provides some great insight into how business feels about DC. It is bad. Some will blame it on the Rs for being obstructionists and only caring about their wealthy constitutients. Some will blame it on the Ds for refusing to acknowledge that spending must be cut and only caring about their union and welfare friendly constitutients. I've no where near an Obama basher, but I blame him for creating the environment that the moderates of both parties have moved to the extreme edges of their respective parties. I had hope that he would appeal to the moderates in Congress (and attract more to moderate positions) when he was elected. I don't think he can do that.

 

Most of my high net worth clients that I've spoken to would be willing to pay more in taxes IF: 1. the tax increase legislation could somehow be tied to some measure of the economy or jobless rate so that it automatically decreased as the economy/unemployment improved; and 2. spending is significantly decreased. That would take compromise by both sides. Does anyone think that given the current climate in DC such compromise like that is possible? They don't and I don't either.

 

It is critically important to reduce our debt. As a country we are very fortunate that interest is low. If it was higher, it would create real problems as a greater portion of our revenue would be spent on debt service. We are as a nation in a position that we can't afford additional stimulus spending, which is why President Obama's job creation plan is tied to raising revenues from the wealthy. But the Rs are in no mood to cooperate with a President that they believe ran rough shod over them on the health reform legislation; they are in no mood to force the wealthy to bail out the country's revenue problems caused by, they believe, a wasteful and excessive entitlement system; and they are in no mood to force businesses to pay more taxes to support a President that is viewed as anti business. Perception is reality and the perception now amongst my business owner clientele is that President Obama has lost the ability to lead Congress and the US. That may be totally wrong, but until he proves otherwise, that is what they believe; and what they believe determines what they will do.

 

As for the merits of health care reform, that is not the issue. It's not what was accomplished; it's how it was accomplished. It created an atmosphere of open warfare between Ds and Rs and that warfare presented itself in the debt ceiling debacle. When no Rs, not even the moderate ones, voted for the reform act but it was pushed through, Obama lost his ability to lead and lost any argument that he was going to act in a moderate and consensus building manner.

 

I agree with most of what you've said. I see two main concerns that you raise: the question of when and if the economy will turn around and the mess that is our capitol. I understand businesses won't be hiring or expanding when the economy is stagnant with little prospects for it to turn around, but it seems the blame is placed on Obama for these dim prospects. Is this something a president can really control? As I understand it, when I hear "businesses won't expand again because Obama has created uncertainty" it is meant that businesses fear what Obama will do in the future (somehow turn their profits into losses) and not that the current economic outlook is grim. That doesn't add up for me.

 

I definitely agree about the partisan debacle that defines our politics these days, but what is our economy missing without them doing anything? Certainly the debt needs to be controlled and gridlock and a lack of competent, serious policymakers impedes that, but it still seems to be a long term problem and not something directly affecting the economy in the present. Borrowing is still cheap and all that.

From Your Article - It does not deny that the rich pay a lower share even though the rate says it is higher.

 

With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.

Lower share of compared to what?

As I have said before Obama approached his Presidency incorrectly-focusing on slamming through an upopular health care agenda, and at the same time always distinguishing a differnce between " Wall Street and Main Street". He wants to poke the eye of business in many of his speeches, and then think they will rally behind him. He has gotten bad advice on this theme, and it will cost him. He needs business to help turn around the economy, but they are reluctant because of the uncertainty of the tax situation, and because quite frankly, they don't trust him.

 

Another four years of Obama will lead to further stagnation, and many families are not in a good place now. Business wants a change on Pennsylvania Avenue.

As I have said before Obama approached his Presidency incorrectly-focusing on slamming through an upopular health care agenda, and at the same time always distinguishing a differnce between " Wall Street and Main Street". He wants to poke the eye of business in many of his speeches, and then think they will rally behind him. He has gotten bad advice on this theme, and it will cost him. He needs business to help turn around the economy, but they are reluctant because of the uncertainty of the tax situation, and because quite frankly, they don't trust him.

 

Another four years of Obama will lead to further stagnation, and many families are not in a good place now. Business wants a change on Pennsylvania Avenue.

 

David Axelrod was asked last week if taking on health care right away was a political mistake. He told the story of almost going bankrupt as a young couple paying for the health care of a severely ill daughter. He said that the issue was too important to be left undone for another generation. He is right. If Obama is a one term president, and I don't think he will be, he will have done more good in one term than most do in two. Not a bad legacy.

As I have said before Obama approached his Presidency incorrectly-focusing on slamming through an upopular health care agenda, and at the same time always distinguishing a differnce between " Wall Street and Main Street". He wants to poke the eye of business in many of his speeches, and then think they will rally behind him. He has gotten bad advice on this theme, and it will cost him. He needs business to help turn around the economy, but they are reluctant because of the uncertainty of the tax situation, and because quite frankly, they don't trust him.

 

Another four years of Obama will lead to further stagnation, and many families are not in a good place now. Business wants a change on Pennsylvania Avenue.

 

Many would argue that President Obama has been very kind to Wall St.

Many would argue that President Obama has been very kind to Wall St.

 

More specifically, kind to the large financial institutions - BoA, Chase, etc. And lets not forget the quasi-bank/government function - Freddie and Fanny. The banks exercise a lot of influence on both parties and whoever is in the WH.

 

The Banks have to have this influence to continue their 'success'. The financial crisis was mostly due to the policy of TBTF. As banks consolidated and merged they wanted special protection - and usually got it - from the government. This makes them basically oligopoly - with government help! And Adam Smith does not like oligopolies from a free market view and there is the problem of what happens when banks face failure? We have the answer to that - TARP.

 

The issues of TBTF are well known - but ignored.

 

http://en.wikipedia.org/wiki/Too_big_to_fail

 

Even Greenspan has indicated what the problem is.

 

From Link above -

As well, Alan Greenspan said that “If they’re too big to fail, they’re too big,” suggesting U.S. regulators to consider breaking up large financial institutions considered “too big to fail.”

 

Since TBTF goes against good market principles and against the security of financial system and even against common sense the banks must lobby the politicians to allow it to happen. To allow it and then indemnify them from themselves. So they influence both parties heavily.

I hear the argument that raising taxes on the wealthy(however that is defined) will lead to less employment. Conversely, that says low taxes should raise employment. We haven't seen that in the 2000s.I just don't see any evidence of a correlation between tax rates and economic growth.

I agree with most of what you've said. I see two main concerns that you raise: the question of when and if the economy will turn around and the mess that is our capitol. I understand businesses won't be hiring or expanding when the economy is stagnant with little prospects for it to turn around, but it seems the blame is placed on Obama for these dim prospects. Is this something a president can really control? As I understand it, when I hear "businesses won't expand again because Obama has created uncertainty" it is meant that businesses fear what Obama will do in the future (somehow turn their profits into losses) and not that the current economic outlook is grim. That doesn't add up for me.

 

I definitely agree about the partisan debacle that defines our politics these days, but what is our economy missing without them doing anything? Certainly the debt needs to be controlled and gridlock and a lack of competent, serious policymakers impedes that, but it still seems to be a long term problem and not something directly affecting the economy in the present. Borrowing is still cheap and all that.

 

Based on my conversations, a large number of business owners think the short term business out look is grim.

 

Borrowing is cheap right now but the fellow I listened to this morning expects interest rates to rise in 2012.

 

And while borrowing is cheap, credit worthy businesses are not borrowing. I represent several of the major commercial banks in Cincinnati. Every one of them tells me that a large majority of businesses attempting to borrow money are businesses that just aren't credit worthy.

 

Now for those of you that think businesses are not hiring as a result of being vindictive towards President Obama, I have two points: 1. If I am wrong and President Obama is not anti business, why would business owners/leaders have any reason to be vindictive towards him?; and 2. if business owners/leaders are the greedy, self interested lot they are criticized with being, wouldn't greed for money outweigh any ill will towards Obama? In other words, if hiring meant more profits, why wouldn't those greedy, big business, Wall Street fat cats be hiring?

 

They aren't hiring because they are concerned about the long and short term economy. Is that all on President Obama? Of course not. Europe's situation is truely frightening. But if you don't think that what happens in DC has an effect on the economy, we might as well stop the discussion because a there is a fundamental difference in opinion.

Based on my conversations, a large number of business owners think the short term business out look is grim.

 

Borrowing is cheap right now but the fellow I listened to this morning expects interest rates to rise in 2012.

 

And while borrowing is cheap, credit worthy businesses are not borrowing. I represent several of the major commercial banks in Cincinnati. Every one of them tells me that a large majority of businesses attempting to borrow money are businesses that just aren't credit worthy.

 

Now for those of you that think businesses are not hiring as a result of being vindictive towards President Obama, I have two points: 1. If I am wrong and President Obama is not anti business, why would business owners/leaders have any reason to be vindictive towards him?; and 2. if business owners/leaders are the greedy, self interested lot they are criticized with being, wouldn't greed for money outweigh any ill will towards Obama? In other words, if hiring meant more profits, why wouldn't those greedy, big business, Wall Street fat cats be hiring?

 

They aren't hiring because they are concerned about the long and short term economy. Is that all on President Obama? Of course not. Europe's situation is truely frightening. But if you don't think that what happens in DC has an effect on the economy, we might as well stop the discussion because a there is a fundamental difference in opinion.

 

I'm genuinely interested in your opinion here though. In your estimation what can Congress or the president do right now to improve the economy?

I hear the argument that raising taxes on the wealthy(however that is defined) will lead to less employment. Conversely, that says low taxes should raise employment. We haven't seen that in the 2000s.I just don't see any evidence of a correlation between tax rates and economic growth.

Yes we have. In 2003 growth and employment increased and continued until 2008.

Yes we have. In 2003 growth and employment increased and continued until 2008.

 

That growth was due to the housing market boom that ultimately collapsed.

 

2% job growth during President Bush's term.

Prior to the 2008 recession GDP grew about 2%.

Some reports say that income went down, even if you just measure the successful years, as compared to 2000 when adjusted to real dollars.