- If you read just a little bit about the Great Recession, then you know that whenever one of the big Wall Street firms was in trouble, Bear Stearns, Lehman Brothers and even Morgan Stanley, they all at one time or another called Warren Buffett for an emergency loan. So it is interesting that Bank of America just got an infusion of $5 billion from Warren Buffett. Bank of America is having trouble fending off lawsuits over its Countrywide acquisition. It appears that several parties believe that countrywide acted in a fraudulent manner and continue to sue countrywide for large sums of money, with which Bank of America needs to settle. Warren Buffett’s infusion of cash does help.
- Hispanics are currently the largest minority group in college. They have just recently surpassed Blacks. All I can say is that we need more Americans in college. We need more Americans to graduate college. We need more government loans and grants to help pay for the ever-increasing expense that is college.
- Ben Bernanke, the Fed Chairman, and the rest of the world’s financial gurus are all gathered at Jackson Hole, Wyoming. This is the annual Fed meeting. This is the meeting where you would expect a lot of discussion and then finally a brilliant intervention to fix what is ailing our economy. Don’t expect it. With Republicans mired in reactionary policies which are going to hurt the economy and the Democrats mired in indecision, as usual, the Fed is stuck in molasses.
- Pakistan is
becomingthe new wild wild West.
- The US economy is growing, although it is growing at a very slow pace.
- One of the few programs that the government has instituted to help homeowners was buried in the Trouble Asset Relief Program. Over $45 billion was set aside to help homeowners fend off foreclosure. Only $2 billion of that has been used. Somehow, that money is going to be rolled back into the treasury in order to pay down the deficit.
- The manufacturing sector expanded modestly this month.
- Our own obesity is starting to cost us billions of dollars. Estimates that obesity is going to cost us over $66 billion by the year 2030 are hard to swallow (pun intended). As we struggle with our healthcare costs, we’re going to have to address the obesity crisis in the United States.
Over the weekend, multibillionaire Warren Buffett wrote an op-ed in the New York Times. The op-ed is titled, “Stop Coddling the Superrich.” For over 150 years, Americans have idolized those who’ve accumulated large sums of money. Whether it’s the Carnegies or the Vanderbilts of yesteryear or the Bill Gates and the Warren Buffetts of today, we have always had a love-hate relationship. For some reason, we always believe that the superrich should act like that guy in the movie Wall Street.
We are shocked when somebody like Warren Buffett stands up and says that they need to pay their fair share. The reaction from the left was one of surprise. The reaction from the right was as furious and irrational as one would expect. In one discussion group that I’m a part of a staunch conservative stated, “If Buffett wants to pay more in taxes, why does he elect to get most of his income in the form of capital gains instead of salary??? That is TOTALLY within his control. Warren Buffett is an asshole and a jerk.” This of course is a typical response wherein you never really address the underlying issue in the debate and instead attack the messenger.
Mr. Buffett said, “Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.” He stated on a number of occasions that it is not fair for him to pay such a low percentage of his income while those in his office who may make considerably less pay higher taxes by percentage.
The problem in America is that everybody believes that they are just this close to becoming a millionaire. Maybe if they sing just a little bit better they can be on American Idol. Maybe if they danced just a little bit better they could be on America’s Got Talent. Maybe, just maybe, we can win the lottery. Being rich is the new American dream. We all believe that we are so close to making it big. The reality is that the vast majority of us are where we are. We may make a few thousand dollars more here or a few thousand dollars less there. We are not going to be millionaires. Therefore, we need to think differently. We need to consider that we are all in this together. We need for everybody to pay their part if we’re going to get out of this huge financial hole.
Finally, Warren Buffett has some advice for the new super Congress, “Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get. But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.” Now, that’s good advice. It is good for America. It is good for the middle class. It is good for you and me.
Sometimes when I argue with conservatives I get a headache. In one discussion group, a conservatives is trying to argue that Warren Buffett knows nothing about the economy. The same conservative acknowledges that Warren Buffett understands the markets and start prices. I find the argument awfully convenient. Convenient? Painful is a better word. It is nonsensical. It gives me a headache. It’s like saying that I’m a great critical care surgeon but I don’t know anything about medicine.
It is my personal opinion that the middle class is shrinking. The middle class is shrinking because jobs are being shipped overseas and we have policies that benefit the rich over the rest of America.
Pulitzer Prize-winning journalist David Cay Johnston says it’s no accident that the middle class has been shrinking.
In fact, in a recent conversation with Aaron Task and Daniel Gross on Yahoo’s Tech Ticker, Johnston argues that the middle class is a direct result of a maze of subsidies and sweetheart deals that states and cities have doled out to big companies. (Johnston is the author of “Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill.”)
“We’ve changed the government rule book in tremendous ways this enormous growth of incomes at the top is not the result of market forces,” Johnston says, “it’s the result of all these rules nobody knows about.”
Among the questionable benefits that Johnston identifies are the deals received by teams in America’s biggest four sports which, he says, get subsidies that are worth more than their combined profit. Cabelas, a sporting goods store, got $1.37 in subsidies for every dollar of profit it brought in, he notes.