Just one slight yet significant difference: Apple’s revenues last quarter grew by 58 percent, while IBM’s barely budged at 0.3 percent, which was lower than analysts had expected.
Even on the earnings front, the two companies are night and day: IBM’s operating earnings lurched ahead at around 4 percent, while Apple turned in an explosively impressive 95.4 percent gain.
Yet the stocks of both companies are trading at or near all-time highs.
IBM gets a pass for one simple reason: For several years it has boldly articulated a five-year “roadmap” on how it will get its earnings per share to $20 by 2015. That’s 49% higher than last year. It even breaks it down how it will get there by detailing how much will come from such things as base revenues, acquisitions and share repurchases. ...
Turns out I’m not the only one wondering about that at IBM. In the latest edition of his High-Tech Strategist newsletter, Fred Hickey raises red flags over the quality of IBM’s earnings. I’ve known Hickey for at least 20 years, and if he’s known for nothing else it’s that he doesn’t shy away pointing to the elephant in the room.
With IBM, that elephant is that it has slow-to-no revenue growth yet gets a growth valuation.
Writing in the latest issue of his newsletter, Hickey said, “Over the past five years, IBM’s revenues have barely budged ... that’s with a strong tailwind from a weaker dollar and the benefit of 55 acquisitions totaling to a cost of $17.25 billion and very few divestitures. It looks to me that real ‘organic’ growth has been negative, even throughout the economic rebound.” ...
Yet Hickey, in a lengthy analysis, questions the quality of the beat, noting that it came from a lower tax rate thanks largely to “a one-time benefit associated with a tax restructuring in Latin America.”
He points out another one-time gain, an accounting red flag, and how IBM wouldn’t answer his questions when he asked for more detail on the Latin America tax restructuring — not even whether it was the result of an individual country. ...
In response to Hickey’s analysis, an IBM spokesman referred me to the company’s roadmap in its annual report. ...
Right now investors are believing it. Doesn’t mean they always will. What is clear is that with the valuation IBM gets, there is zero room for error.
I retired as part of the March RA and am a second choicer. After leaving, I received both "COBRA Fact Sheet" and "Plan Year 2012 Benefit Options" documents from IBM. As part of the RA, IBM pays the first year of COBRA. After the first year I plan to pay an additional six months out of pocket. (COBRA lasts for 18 months, regardless of who pays for it.)
The "Play Year 2012 Benefit Options" document shows five different plans (Aetna High Deductible PPO, Aetna Medium Deductible PPO, Aetna Low Deductible PPO with Health Savings Account, IBM EPO-Aetna, and Kaiser Permanente.)
The COBRA fact sheet lists only the plan I was in before retiring, the High Deductible PPO with HSA. (Apparently you cannot switch your health plan upon retirement...I don't know if that's an IBM rule, an insurance company rule, or a government rule.) So, the only comparison I can make between COBRA cost (i.e. employee risk pool) and retiree cost (i.e. retiree risk pool) is the plan I was in before retiring.
Here's the numbers: For my wife and I the monthly cost under COBRA is $749.35. The monthly cost under the retiree pal is $1082.59, a 44% increase.
Dental insurance is similar. "IBM Dental Basic" for my wife and I under COBRA is $42.84 per month. Under the retiree plan, it's $59.24. After doing the math, I determined it was cheaper to pay for our dental care out of pocket rather than buying dental insurance. (This is even with one crown this year.)
The report shows ads excluding Americans on Dice.com were peppered with an alphabet soup of visa terms to attract foreign citizens on work visas using US Citizen and Immigration Services (USCIS) codes for these programs. ...
According to the report, employers used codes for foreign students who’ve just graduated from college (OPT) or are still in school (CPT) right in the title of the job ads such as “OPT Jobs” and “Hiring OPT Consultants for Training and Placements.” Thirty-seven (37) of the 100 job ads had no IT terms in the title—only codes for non-immigrant visa workers. ...
The report reveals that employers were even seeking foreign nationals holding obscure non-immigrant work visas, such as L-1, for foreign employees temporarily transferred into US jobs and L-2, their spouses or children. An ad featured in the report from PeopleCorp in McLean VA has advertised for these workers, along with targeting foreign students (OPT/F1), business visa holders (B1) and spouses of H1-Bs (H4). This ad is currently running with the phrase, “We are currently sponsoring H1B visas for candidates who are currently on L1/ L2 / B1 / H4 / OPT / F1.” PeopleCorp is offering free training and accommodation, along with green cards, in this ad.
In today’s ever-increasingly cutthroat work environment, a common notion among employees and bosses alike tends to be, “he who works latest works best.” And while it seems that the 40-hour work week has been largely dispensed with in our hardworking culture, new studies show that working more very seldom produces better results. Employees work many more hours now than they have in the past, but it’s coming at the expense of health, happiness, and even productivity. While it looks good to be the first to arrive and the last to leave work each day, it turns out that putting in 60 hours of work each week may do more harm than good in achieving end results. This infographic examines some of the lesser-known statistics regarding overtime work and its effects, and through it one thing becomes extremely clear: To boost productivity and foster excellent employees, the best thing businesses can do is to bring back the 40-hour work week.
Other business owners raised similar concerns, claiming the decision jeopardized their ability to provide health care coverage to employees.
But it is important not to overgeneralize when discussing the impact the health care law will have on businesses. In fact, for companies with fewer than 50 full-time employees, the law actually provides a golden opportunity for making the kind of investment that I believe make businesses stronger in the long run.
That’s because, under the law, those particularly small businesses are eligible for tax credits of up to 50 percent by 2014 to offset the cost of providing insurance to their employees. That would give millions of small businesses the ability to provide health insurance to employees.
Moreover, it would bring down premium costs for employers who are already providing health care benefits to their workers. ...
It is no wonder, then, that many small business owners are celebrating rather than lamenting the court’s landmark decision. In fact, one restaurant owner, for example, said the law gave her the confidence — and the tax credits — she needed to offer her employees health insurance for the first time.
Meanwhile, six Republican governors (so far) say they won’t go along with the law’s planned Medicaid expansion for 4 million uninsured people in their states, even though the feds would pick up nearly all the tab.
See the pattern here?
The Republican message to uninsured Americans in the wake of the Supreme Court’s recent ruling couldn’t be clearer: You’re on your own.
The party may not have officially adopted the “let him die” policy of right-wing hecklers at that CNN primary debate, when Ron Paul was asked what should be done when an uninsured man shows up at the hospital. But as a practical matter, Republicans are in pretty unsavory territory. What other conclusion can we draw when Rick Perry, who presides over a state where one in four people lack health coverage, makes swaggering indifference to these Texans’ plight a point of sovereign pride?
Fifty million uninsured Americans would be the immediate casualties of the GOP’s “let them eat the emergency room” mentality. But all of us would be at risk. In America — alone among wealthy nations — everyone is a pink slip or job change or new illness away from finding they have lost coverage or are uninsurable. ...
It was not always thus. It’s striking to recall that back in 1992, George H.W. Bush put out a serious plan to cover 30 million of the then 35 million uninsured. (Democrats at the time rejected it, figuring they’d do the job on their own terms once Bill Clinton won. We know how that turned out.) So the erosion of Republican seriousness over two decades can be tracked with unusual precision. As the ranks of the uninsured have soared, the size of Republican compassion has shriveled.
Daniel Patrick Moynihan gave me the most convincing explanation not long before he died in 2003. Summing up the Republican mind on the issue, he told me, “Those folks never vote for us, and we have our priorities for the money.”
Like trillions more in tax cuts for the best-off Americans over the next decade.
The governors of Texas, Florida, Louisiana and South Carolina, among others, have announced they will not accept federal funds to increase their state-run Medicaid programmes, which provides health services to the poor, because they are staunchly opposed to the administration’s Affordable Care Act.
In announcing his decision on Monday, Rick Perry, the conservative Republican governor of Texas, said those provisions of the law represented “brazen intrusions in to the sovereignty of the state”.
The development spells bad news for roughly 4m uninsured people – the working poor, as some analysts have defined them – who would have been eligible for insurance in those states. It is also devastating for hospitals who are legally obliged to treat those patients and take a hit to their bottom line whenever one walks through their doors. ...
Under the ACA, the federal government promised to pay for 100 per cent of the cost of expanding state Medicaid programmes to uninsured adults with incomes of up to 133 per cent of the federal poverty line – or about 16m new patients nationwide – for three years. After that time, the states would have to pay for up to 7 per cent of the cost of the expanded programme, while the federal government would pay for the rest.
The state governors that have been at the forefront of the move to say “no” to Medicaid expansion are the same states with the highest number of uninsured patients, including Florida and Texas. ...
Some analysts predict that hospitals will be using their lobbying clout in those Republican states to try to convince state legislatures to accept the Medicaid expansion or take other actions to increase coverage. ...
The Texas Hospital Association, which says hospitals in the state paid for $4.6bn in uncompensated care in 2010, said it wanted to see the state adopt its own health insurance exchange and use subsidies to help insure the very poor. John Hawkins, the THA’s senior vice-president of government relations, says: “At the end of the day, we need coverage expansion to make the commitment for the payment cuts to work.”
"Firefighters don’t need another photo-op in front of the cameras with someone who doesn’t care about us,” Randy Rester, President of Aurora Fire Fighters Local 1290, an affiliate of the Colorado AFL-CIO said in a prepared statement Wednesday. “What we need is someone who has our back with personnel, equipment, pensions, and health care. Mitt Romney doesn’t back Colorado firefighters where it counts. And neither do any of the Colorado members who support firefighting budget cuts.”
On a recent trip to Colorado Springs, the president was apparently moved by the men and women firefighters he met, senior administration officials said in an interview.
When he returned to Washington, he told his Cabinet that he wanted to "find a solution" for the hundreds of workers toiling in dangerous conditions without the option to buy into federal insurance.
The 15,000 or so temporary seasonal workers who descend into fire zones are usually young people who work sundry outdoor jobs, depending on the time of year. Some pick up contract work removing trees in the fall, or they work at ski areas in the winter. Many are college students.
But because they are not full-time U.S. Forest Service employees, before Tuesday's announcement they did not have the option of purchasing federal health insurance. ...
The announcement from the White House came the same day GOP presidential hopeful Mitt Romney stumped in Colorado: Grand Junction and then Colorado Springs. Romney met with firefighters in a roundtable Tuesday afternoon. His campaign had no comment about the president's directive. ...
Other Democratic members of the Colorado delegation also welcomed the news. Rep. Jared Polis, D-Boulder, said it was "only right" that firefighters get health coverage. "I'm happy the president acted so quickly following his visit to Colorado," Polis said.
Colorado's four Republicans were mostly silent.
A June Denver Post story described the firefighters' desire for health insurance from the front lines during the height of the Larimer County High Park fire. A Change.org Internet petition gathered 100,000 signatures in support of the idea, and several firefighters, on lunch breaks, called around to advocates and lawmakers to promote it.
Lovazzano is part of the 26 percent of U.S. women who had trouble paying medical bills in the United States in 2009-2010, according to a report released by the non-profit Commonwealth Fund on Friday. That’s double the rate of women anywhere else surveyed -- the rate's 13 percent in Australia and just 4 percent of German women report trouble paying medical bills. But Commonwealth, which advocates for health reform, says the 2010 health reform law will slash these numbers when it starts to take full effect in 2014.
Lovazzano, like many young adult Americans, took out a no-frills health insurance plan when she left a paid job to become a freelance film producer nine years ago. She called her former employer’s insurer to continue coverage after her insurance ran out under COBRA – the law that requires employers to offer coverage to employees for a few months after they leave work. The insurer, Lovazzano said, told her she was young and healthy and needed only coverage for catastrophic events. “They basically sold me junk coverage,” Lovazzano said in a telephone interview.
Catastrophe did strike, in the form of breast cancer. But Lovazzano found out she wasn’t even close to being fully covered. “When I went into surgery they said, ‘You need to write us a check for $1,000 right now’ and I said ‘I don’t have $1,000.' I knew I was in trouble.”
Lovazzano estimates she racked up $200,000 in bills and she was on the hook for about $70,000 of it. It didn’t even occur to her to declare bankruptcy, to negotiate with the hospital and her doctors, or to simply walk away from the debt. “That’s not my style,” she said. “I come from a middle-class family. I have never been part of any welfare system.”
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
Still, at the very moment anti-tax protesters were emerging as the most powerful force in American politics, handing Republicans landslide control of the U.S. House, the data show that people were sending the smallest portion of their income to the federal government since 1979.
During Obama’s first year in office, the average tax rate paid by all households fell to 17.4 percent, down from 19.9 percent in 2007, according to the CBO. The 2009 rate was significantly lower than the previous low of 19.4 percent in 2003 and well below the 30-year average of 21 percent. ...
The average federal income tax rate also reached a new low, settling at 7.2 percent in 2009 — two points lower than in 2007, the CBO said. Although detailed data are available only through 2009, the CBO said more recent estimates suggest that effective tax rates remained at historically low levels in 2010 and 2011.
“However much Republicans try to perpetuate false claims, the facts speak for themselves: Tax rates have never been lower than under President Obama,” said Rep. Sander M. Levin (Mich.), the senior Democrat on the House Ways and Means Committee, which has jurisdiction over taxes.
Mitt Romney has upended that tradition this year. He has released only one complete tax return, for 2010, along with an unfinished estimate of his 2011 taxes. What information he did release provides a fuzzy glimpse at a concerted effort to park much of his wealth in overseas tax shelters, suggesting a widespread pattern of tax avoidance unlike that of any previous candidate. ...
The 2010 tax return showed that the blind trust held by his wife, Ann, included a $3 million Swiss bank account that had not been properly reported on previous financial disclosure statements. (The account was closed by the trust manager in 2010 who feared it might become embarrassing for the campaign. He was right.) It also showed that Mr. Romney had used a complex offshore tax shelter, known as a blocker corporation, to shield the investments in his I.R.A. from paying an obscure business tax.
The use of that technique by wealthy taxpayers and institutions, long been blasted by Congressional tax experts as abusive, costs the treasury $1 billion a decade.
The return showed at least 20 investments not previously listed on disclosure reports, but it did not provide enough information to evaluate their size or holdings. Neither the tax return nor other disclosures have revealed the full amounts of the Romneys’ other offshore holdings over the years, including investments in Germany, Luxembourg, the Cayman Islands, Australia and Ireland. ...
Mr. Romney also has not fully explained the nature of his separation agreement with Bain Capital, the private-equity firm he founded, which he left in 1999. Last month, his trust reported receiving a $2 million payment from Bain as part of unpaid earnings from his work there. Of the 138 Bain funds organized in the Cayman Islands, Mr. Romney has interests in 12, worth up to $30 million, according to Vanity Fair.
Though the Romney campaign has often distanced itself from Bain’s recent corporate takeover work, voters have no way of knowing how much the candidate has received from Bain since he left, or how much is coming.
Firms like Bain park money in the Caymans because the islands have no taxes on capital gains, profits or income for foreigners. But just because it’s legal doesn’t mean it’s the right thing to do.
But by parking money in countries with tiny tax rates -- thus putting it beyond the reach of the American government -- wealthy businesses and individuals cost the federal government roughly $100 billion every year, according to a 2011 report from the California Public Interest Research Group. That's money that doesn't make it into the federal government's hands, even though it would probably come in useful -- again, given the trillion-dollar-plus national deficit.
As the CALPIRG report notes, many household-name corporations, including Goldman Sachs, General Electric, Exxon Mobil and Google, take advantage of offshore accounts, often saving billions in taxes in the process.
A New York City donor a few cars back, who also would not give her name, said Romney needed to do a better job connecting. “I don’t think the common person is getting it,” she said from the passenger seat of a Range Rover stamped with East Hampton beach permits. “Nobody understands why Obama is hurting them.
“We’ve got the message,” she added. “But my college kid, the baby sitters, the nails ladies — everybody who’s got the right to vote — they don’t understand what’s going on. I just think if you’re lower income — one, you’re not as educated, two, they don’t understand how it works, they don’t understand how the systems work, they don’t understand the impact.”
“I’ve often said that our biggest challenge right now isn’t just to reclaim all the jobs that we lost to the recession, it’s to reclaim the security that so many middle- class Americans have lost over the past decade,” Obama said in a brief speech in the East Room of the White House. “Many members of the other party believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans that will somehow unleash jobs and economic growth. I disagree, I think they’re wrong.”
But a strong subtext to the president’s speech declaring he will fight efforts by congressional Republican leaders and even some prominent Democrats to extend the tax cuts to the wealthiest Americans as well was concern about the mounting federal debt – and the prospects of adding trillions more in the coming years if the tax cuts are extended for everyone.
“I might feel differently . . . if we were still in [budget] surplus,” Obama told a gathering of middle-income supporters. “The money we’re spending on these tax cuts for the wealthy is a major driver of our deficit, a major contributor to our deficit, costing us a trillion dollars over the next decade.” The combination of the 2001 and 2003 tax cuts enacted under former Republican President George W. Bush, combined with the cost of two wars, added trillions to a national debt following four consecutive years of budget surpluses during the Democratic Clinton administration. Those two income and corporate tax cuts were set to expire at the end of 2010, but were extended through the end of this year as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 negotiated by Obama and Congress.
When the jobs crisis is discussed, the word "crisis" is seldom used, and the conversation is conducted with hushed tones and minimizing vocabulary. Therefore, when the monthly national jobs report was announced for June, there was quiet grumbling instead of passionate oratory; passivity instead of mobilization and action. ...
But the real story that the numbers tell in the jobs report is the trend that promises more unemployment. The economy has stalled, and threatens to slide backward again into recession. The "jobless recovery" that we have now is likely to evolve into a full-fledged depression.
Corporations already know this, which is why they refuse to hire more workers and are content sitting on their mountains of cash: why invest money in hiring or adding new machines if you think the economy may tank, spoiling the investment? Indeed, corporations have every right to believe the economy is headed downward. The New York Times explains...
Both Democrats and Republicans are aligned with the free market model of job creation, which amounts to massive state intervention to provide banks and corporations with bailouts, ultra-cheap/printed money, subsides, tax breaks, etc., in the hopes that these corporations will hire people. These ideas have already been thoroughly disproved by events, yet nobody in power can put forth an alternative, since doing so would change the landscape of American politics.
What America needs is what was done during the last depression: a massive dose of state intervention against these corporations and the wealthy, by demanding that their taxes be dramatically increased to fund a federal jobs program.
Thanks to President Obama, taxpayer money, mostly in the form of stimulus funds, ended up in the hands of companies overseas. Instead of creating jobs in America, the stimulus and other Obama policies created jobs or sent money to Finland, New Zealand, Indonesia, India, Mexico, Germany, Australia, Switzerland, China, Denmark, South Korea, the Dominican Republic, Thailand, Vietnam, Italy, Russia, Luxembourg, El Salvador, Great Britain, Spain, Japan, and France.
How did this happen? Consider the example of Fisker Automotive. The company received $500 million in loan guarantees from the U.S. government to produce electric cars. Then they took their money and decided to produce their $100,000 electric sports cars in Finland.
President Obama's policies may be spurring job creation in Scandinavia. But here at home, twenty-three million Americans are struggling for work. Millions of middle class families can barely make ends meet.
Recent developments in Pennsylvania — one of more than a dozen states where voting rights are under siege — should be enough to erase any lingering doubt: The GOP is trying to pull off an unconscionable crime.
Late last month, the majority leader of the Pennsylvania House of Representatives, Mike Turzai, was addressing a meeting of the Republican State Committee. He must have felt at ease among friends because he spoke a bit too frankly.
Ticking off a list of recent accomplishments by the GOP-controlled Legislature, he mentioned the new law forcing voters to show a photo ID at the polls. Said Turzai, with more than a hint of triumph: “Voter ID, which is gonna allow Governor Romney to win the state of Pennsylvania — done.”
That’s not even slightly ambiguous. The Democratic presidential candidate has won Pennsylvania in every election since 1992. But now the top Republican in the Pennsylvania House is boasting that, because of the new voter ID law, Mitt Romney will defy history and capture the state’s 20 electoral votes in November. ...
It turns out that 758,939 registered Pennsylvania voters do not have the most easily obtained and widely used photo ID, a state driver’s license. That’s an incredible 9.2 percent of the registered electorate.
Most of the voters without driver’s licenses live in urban areas — which just happen to be places where poor people and minorities tend to live. More than 185,000 of these voters without licenses, about one-fourth of the total, live in Philadelphia — which just happens to be a Democratic stronghold where African Americans are a plurality. ...
Prodded by GOP political activists, the Justice Department under Bush conducted an extensive, nationwide, five-year probe of voter fraud — and ended up convicting a grand total of 86 individuals, according to a 2007 New York Times report. Most of the cases involved felons or immigrants who may not have known they were ineligible to vote.
Not one case involved the only kind of fraud that voter ID could theoretically prevent: impersonation of a registered voter by someone else. Pennsylvania and other voter ID states have, in essence, passed laws that will be highly effective in eradicating unicorns.
But that was 44 years ago. And the contrast between George Romney and his son Mitt — a contrast both in their business careers and in their willingness to come clean about their financial affairs — dramatically illustrates how America has changed.
Right now there’s a lot of buzz about an investigative report in the magazine Vanity Fair highlighting the “gray areas” in the younger Romney’s finances. More about that in a minute. First, however, let’s talk about what it meant to get rich in George Romney’s America, and how it compares with the situation today.
What did George Romney do for a living? The answer was straightforward: he ran an auto company, American Motors. And he ran it very well indeed: at a time when the Big Three were still fixated on big cars and ignoring the rising tide of imports, Romney shifted to a highly successful focus on compacts that restored the company’s fortunes, not to mention that it saved the jobs of many American workers.
It also made him personally rich. We know this because during his run for president, he released not one, not two, but 12 years’ worth of tax returns, explaining that any one year might just be a fluke. From those returns we learn that in his best year, 1960, he made more than $660,000 — the equivalent, adjusted for inflation, of around $5 million today.
Those returns also reveal that he paid a lot of taxes — 36 percent of his income in 1960, 37 percent over the whole period. This was in part because, as one report at the time put it, he “seldom took advantage of loopholes to escape his tax obligations.” But it was also because taxes on the rich were much higher in the ’50s and ’60s than they are now. In fact, once you include the indirect effects of taxes on corporate profits, taxes on the very rich were about twice current levels.
Now fast-forward to Romney the Younger, who made even more money during his business career at Bain Capital. Unlike his father, however, Mr. Romney didn’t get rich by producing things people wanted to buy; he made his fortune through financial engineering that seems in many cases to have left workers worse off, and in some cases driven companies into bankruptcy.
And there’s another contrast: George Romney was open and forthcoming about what he did with his wealth, but Mitt Romney has largely kept his finances secret. He did, grudgingly, release one year’s tax return plus an estimate for the next year, showing that he paid a startlingly low tax rate. But as the Vanity Fair report points out, we’re still very much in the dark about his investments, some of which seem very mysterious.
Put it this way: Has there ever before been a major presidential candidate who had a multimillion-dollar Swiss bank account, plus tens of millions invested in the Cayman Islands, famed as a tax haven?
Get it? Everyone is treated exactly the same. Everyone gets a one-year extension of the Bush tax cut on the first $250,000 of income. No "class warfare."
Yet regressive Republicans want Americans to believe differently. The editorial writers of the Wall Street Journal say the president wants to extend the Bush tax cuts only "for some taxpayers." They urge House Republicans to extend the Bush tax cuts for "everyone" and thereby put Senate Democrats on the spot by "forcing them to choose between extending rates for everyone and accepting Mr. Obama's tax increase." ...
Regressives also want Americans to think the president's proposal would hurt "tens of thousands of job-creating businesses," as the Journal puts it.
A small business owner earning $251,000 would pay the Bush rate on the first $250,000 and the old Clinton rate on just $1,000.
Congress's Joint Tax Committee estimates that in 2013 about 940,000 taxpayers would have enough business income to break through the $250,000 ceiling -- and, again, they'd pay additional taxes only on dollars earned above $250,000.
All told, less than 3 percent of small business owners would even reach the $250,000 threshold.
A third lie is Obama's proposal will "increase uncertainly and further retard investment and job creation," as the Journal puts it.
Don't believe it.
The real reason businesses aren't creating more jobs is American consumers -- whose purchases constitute 70 percent of U.S. economic activity -- don't have the money to buy more, and they can no longer borrow as before. Businesses won't invest and hire without consumers. Even as executive pay keeps rising, the median wage keeps dropping -- largely because businesses keep whacking payrolls.
The only people who'd have to pay substantially more taxes under Obama's proposal are those earning far in excess of $250,000 -- and they aren't small businesses. They're the fattest of corpulent felines. Their spending will not be affected if their official tax rate rises from the Bush 35 percent to the Bill Clinton 39.6 percent.
Wait a minute: wasn’t gas supposed to be $5 a gallon now, costing $75 for that same trip? Let’s return to the experts:
“Certainly, this summer, we’ll see the highest gas prices in years.” So said House Speaker John Boehner, in February.
“Right now we’re headed toward $5 a gallon and by the end of summer – maybe 6.” That was Bill O’Reilly, of Fox News, in the same month.
“They’re gonna go to $5, $6, $7.” And that was Donald Trump in April, showing why he’s no better at predicting fuel prices than he is at reading public documents from the state of Hawaii. ...
But more broadly, this little economic parable is a good lesson in the phony politics that passes for a national debate on energy. Back in March, Mitt Romney, who certainly knows better, said there was “no question” that Obama was to blame for rising gasoline prices. At the same time, one of his surrogates, Senator John Barrasso of Wyoming, said Obama “should be held fully responsible for what the American public is paying for gasoline.”
O.K., so now that gas is much closer to $3 than $4, does Obama get the credit for the windfall, as Republicans indicated when they fell into this silly rhetorical trap? No, of course not. Fox hardly brings it up anymore. Gas prices – no story there.
But nor should Obama get to do a victory lap. Harvey, the invisible rabbit now strolling the boards on Broadway, has about as much power over the price of a global commodity like oil as the president of the United States does. And most voters, ahead of the politicians, understand that. ...
But increasingly not all American oil stays in the states. Last year, for the first time since 1949, the United States exported more petroleum products than it imported, the Energy Department reported.
I’ll openly make the argument here that I’ve been making in private conversations for years: tax me—and make education about education, not politics, not sports, not industry. I care that the kids in my northside neighborhood have good K-12 schools and get to go to college. I care that kids in Eastern Kentucky get an education. I care that my niece won’t be shackled by debt so she can choose a vocation rather than just a career (and that her parents won’t have to bleed dry their retirement funds in order to put her through school). I care that smart whippersnapper twenty-somethings can start their own businesses or non-profits because they aren’t awash in loans.
Once more the big banks are exposed in systematic fraudulent activity. When Barclays agreed to a $450 million fine for trying to rig the Libor, its CEO offered the classic excuse: Everyone does it. Once more the question remains: Will CEOs and CFOs, as well as traders, be prosecuted? Or will they depart with their multimillion dollar rewards intact, leaving shareholders to pay the tab for the hundreds of millions in fines?
The Barclays settlement exposed that traders colluded to try to fix the Libor rate. This is the rate used as the basis for exotic derivatives as well as mortgages, credit card and personal loan rates. Almost everyone is affected. Fixing the rate even a few hundreds of a percentage point could make Barclays millions on any single day — money taken out of the pockets of consumers and investors. Once more the banks were rigging the rules; once more their customers were their mark.
The stakes are staggering. The Libor should be as good as gold. It pegs the value of up to $800 trillion in financial instruments. The collusion was systematic and routine. Investigations are underway not only in the United Kingdom but also in the United States, Canada and the European Union. Those named in the probes are all the usual suspects: JPMorgan Chase, Citibank, UBS, Deutsche Bank, HSBC, UBS and others. This wasn’t rogue trading, as the Economist concludes; it was more like a cartel.
The Economist writes that what has been revealed here is “the rotten heart of finance,” a “culture of casual dishonesty.” Once more the big banks are revealed to have allowed greed to trample any concern about trust, respect or legality.
We are five years since Wall Street’s excesses blew up the global economy, and the scandals just keep coming. Each scandal reinforces the need for tough regulation and tough enforcement. Each scandal proves over again the importance of breaking up the big banks. Each scandal raises the question of personal responsibility. How come borrowers are prosecuted for defrauding their banks, but bankers seem never to be prosecuted for defrauding their customers? George Osborne, the conservative British chancellor of the Exchequer, put it succinctly: “Fraud is a crime in ordinary business — why shouldn’t it be so in banking?” He is demanding action: “Punish wrongdoing. Right the wrong of the age of irresponsibility.”
“The president’s announcement that he plans on extending (the tax cuts), just for certain classes of Americans — what he’s really saying is that those that are job-creators and small businesses are going to see a massive tax increase,” presumptive Republican presidential nominee Mitt Romney said, “and that will kill jobs.” He added, “The president’s plan is aimed at small business and job creators. It will kill jobs in this country and hurt the middle class,”
So, that got me to thinking. What would the president’s plan looks like as a pie chart?
As the president said yesterday, letting the Bush tax cuts expire for the wealthy would not impact 98 percent of American wage earners and 97 percent of small-business owners.
As has been the case for a long time, including the Bush-era tax cuts, the greatest benefit of new cuts would go to the wealthiest. Not by accident. By design. One third of the benefits of the Bush-era tax cuts went to the top one percent, 65 percent went to the top 20 percent, and the other third was shared by the rest of the population. This skewing is not a new phenomenon, and it is a major factor in the income inequality that plagues our society. ...
When John F. Kennedy announced his tax cut plan 50 years ago this December, the top marginal rate for the highest income households was 91 percent. That plan, which wasn't enacted until after his assassination, took that top marginal rate down to 70 percent. Changes since then have reduced it even further, now to 35 percent. Average federal taxes and the effective overall rate, that is, what people actually pay in taxes, is and was always considerably lower than might appear to be the case from looking at the marginal rate in isolation.
Mitt Romney epitomizes the problem with the way income tax cuts have been arranged, with an effective rate just below 14 percent, less than many Americans whose primary income comes from salaries or wages. Paul Krugman points out that Romney's defenders claim the taxes paid by the corporations Romney invests in should be counted as part of his tax burden.
But my guess is that conservatives really shouldn’t want to go there. Because if we do, we realize that tax cuts are a much bigger story in rising inequality than the right wants to hear.
Tax rates for the super-elite, the top .01%, have fallen in half since Mitt Romney’s father ran for president; or to put it differently, after tax income for this group has doubled due to policy alone. And bear in mind that the US economy flourished just fine under those [1960-70] tax rates …
Or, at least, they both use the Bush tax cuts as a canvas. Obama's plan would keep all the Bush tax cuts (which he's already extended) except for the rates on income above $250,000. Romney wants to extend the Bush law into perpetuity and cut each marginal tax rate by an additional 20 percent. That plan alone could increase the 2015 deficit by about 70 percent--not cool for a fiscal conservative. So Romney says he would also reform the tax code to make up the lost revenue.
Sounds simple enough. It's not. In fact, this idea might be even more politically improbable than a plan to raise taxes. ...
Romney's 20 percent rate reduction would lower tax revenue by $320 billion in 2015, compared to today's rates. One-third of $1 trillion is a lot of money to make up by eliminating tax spending, especially when you consider that most tax-spending items are untouchable. Romney wouldn't want to raise taxes on investments or retirements. He probably wouldn't try to pare back the deductions that primarily affect the poor, such as the the Child Tax Credit and the Earned Income Tax Credit.
That leaves a handful of big tax-spending items, such as deductions for home mortgage interest, charitable contributions, state and local taxes, medical expenses, and more. Romney would have to reduce these kind of tax spending items by 72 percent "to prevent the rate cuts from adding to the current policy deficit (assuming people don't change behavior)," Howard Gleckman at the Tax Policy Center writes.
The outcome is higher taxes for all but the rich. In the Tax Policy Center's illustration, Romney's plan would raise taxes on every income group except for the top 5 percent. The blue tips in the graph below show you what happens to effective tax rates in a revenue-neutral Romney tax plan. When the right bar is higher than the left bar, Romney's tax rate is higher than today's tax rate.
Sheldon Adelson is the casino mogul and philanthropist whose ten-million-dollar donation last month to a Super PAC supporting Romney was “by far the biggest gift to date,” according to Forbes. Then, two weeks ago, Adelson reportedly pledged ten million more, this time to 2012 campaign efforts involving the Koch brothers, “cementing a potent alliance of two of the biggest spending forces in conservative politics,” Politico reported. The end of that week brought a less glamorous headline: “Sheldon Adelson Denies Greenlighting A ‘Prostitution Strategy’ At His Macau Casinos.” That was a recap of the latest in a lawsuit working its way through Nevada courts, in which the former head of Adelson’s Macau operation has saddled Adelson with a range of lurid allegations involving Chinese triads, bribery, and criminal activity. (As I described in the magazine in May, those accusations have prompted the S.E.C. and Justice Department to investigate Adelson’s company.) ...
For much of the last decade, as Sheldon Adelson and other American casino investors plunged deeper into business in Macau, analysts liked to predict that the Americans would clean up the town. Perhaps, but one doesn’t hear that as often these days, at a moment when some of Macau’s old habits have reasserted themselves. That’s the thing about the Golden Bamboozle: it pulls you in.
Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s “sole stockholder, chairman of the board, chief executive officer, and president.”
Also, a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 100 percent of Bain Capital in 2002. And Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings.
The timing of Romney’s departure from Bain is a key point of contention because he has said his resignation in February 1999 meant he was not responsible for Bain Capital companies that went bankrupt or laid off workers after that date.
Contradictions concerning the length of Romney’s tenure at Bain Capital add to the uncertainty and questions about his finances. Bain is the primary source of Romney’s wealth, which is estimated to be more than $250 million. But how his wealth has been invested, especially in a variety of Bain partnerships and other investment vehicles, remains difficult to decipher because of a lack of transparency.
The Obama campaign and other Democrats have raised questions about his unwillingness to release tax returns filed before 2010; his offshore assets, which include investment entities based in Bermuda and the Cayman Islands and a recently closed bank account in Switzerland; and a set of “blind trusts” that meet the Massachusetts standards for public officials but not the more rigorous bar set by the federal government. ...
When he was named chief executive of the Salt Lake Organizing Committee on Feb. 11, 1999, Romney declared that he would not accept the job’s $285,000 annual salary until the Games were over and he had proven his turnaround worth. Romney continued to draw a six-figure salary from Bain Capital, according to State Ethics Commission forms.
In Romney’s 2002 race for governor, he testified before the state Ballot Law Commission that his separation from Bain in 1999 had been a “leave of absence” and not a final departure.
The Romney campaign called such statements by the Obama team “reckless” and asked the Globe to print a correction, which it has declined to do.
“When Mitt Romney ran for governor and now as he’s running for president, he consistently claimed he could not be blamed for bankruptcies and layoffs from Bain investments after February 1999 because he departed for the Olympics,” Stephanie Cutter, Obama’s deputy campaign manager, said in a statement. “Now, we know that he wasn’t telling the truth.”
On a conference call with reporters, Cutter alleged Romney, the presumptive GOP nominee for president, was either “misrepresenting his own position at Bain to the SEC, which is a felony, or he was misrepresenting his position at Bain to the American people.” ...
New evidence emerged late Thursday that raises further questions about Romney’s claim of a total disconnect between himself and Bain Capital entities after Feb. 11, 1999, when he became chief executive of the Salt Lake Organizing Committee.
In 2002, facing a ballot challenge from Democrats — who contended he had moved his residence to Utah — Romney testified before the state Ballot Law Commission as a gubernatorial candidate that “there were a number of social trips and business trips that brought [him] back to Massachusetts, board meetings” while he was running the Olympics.
Romney said he remained on the boards of several companies, including the Lifelike Co., in which Bain Capital held a stake until 2001. The Huffington Post and MSNBC also carried reports Thursday night about Romney’s continued membership on the Lifelike board. ...
Two other documents contain similar information, the Globe found. In his first year as governor of Massachusetts, in 2003, Romney disclosed to the State Ethics Commission that he still owned 100 percent of Bain Capital in 2002. Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings. ...
The Romney campaign did not dispute any facts reported Thursday by the Globe but nevertheless requested a correction, saying the story left the false impression that Romney continued to oversee Bain Capital’s day-to-day operations. Globe editor Martin Baron responded: “Having carefully reviewed that request, we see no basis for publishing a correction. The Globe story was entirely accurate.”
Baron noted that “the Globe story was based on government documents filed by Bain Capital itself” and said the article “also gave a full account of the Romney campaign’s position that, notwithstanding several years of regulatory filings, Mitt Romney ‘retired from Bain Capital in 1999 … [and] has had no involvement in the management or investment activities of Bain Capital, or with any of its portfolio companies, since that time.’ ”
“We are running elections in this country as if we are still in the 19th century,” she said. “The results are announced and there is no verification. At minimum, we should be doing manual post-election ballot audits for all major elections whether or not the results are close, because there even could be a major problem with an election with a wide margin.” ...
What’s alarming in 2012 is that different experts are citing a variety of worst-case scenarios, all of which might involve many states and vast numbers of voters. Some scenarios have been well covered in the media, such as the GOP’s war on Democratic voting blocks, which the Washington Post’s Eugene Robinson this week called “a crime.” And some have barely been covered, especially as the focus shifts to election administration or vote counting.
Specifically, these are people who believe that they are, as another Romney donor put it, “the engine of the economy”; they should be cherished, and the taxes they pay, which are already at an 80-year low, should be cut even further. Unfortunately, said yet another donor, the “common person” — for example, the “nails ladies” — just doesn’t get it.
O.K., it’s easy to mock these people, but the joke’s really on us. For the “we are V.I.P.” crowd has fully captured the modern Republican Party, to such an extent that leading Republicans consider Mr. Romney’s apparent use of multimillion-dollar offshore accounts to dodge federal taxes not just acceptable but praiseworthy: “It’s really American to avoid paying taxes, legally,” declared Senator Lindsey Graham, Republican of South Carolina. And there is, of course, a good chance that Republicans will control both Congress and the White House next year. ...
The first thing you need to know is that America wasn’t always like this. When John F. Kennedy was elected president, the top 0.01 percent was only about a quarter as rich compared with the typical family as it is now — and members of that class paid much higher taxes than they do today. Yet somehow we managed to have a dynamic, innovative economy that was the envy of the world. The superrich may imagine that their wealth makes the world go round, but history says otherwise.
To this historical observation we should add another note: quite a few of today’s superrich, Mr. Romney included, make or made their money in the financial sector, buying and selling assets rather than building businesses in the old-fashioned sense. Indeed, the soaring share of the wealthy in national income went hand in hand with the explosive growth of Wall Street.
Not long ago, we were told that all this wheeling and dealing was good for everyone, that it was making the economy both more efficient and more stable. Instead, it turned out that modern finance was laying the foundation for a severe economic crisis whose fallout continues to afflict millions of Americans, and that taxpayers had to bail out many of those supposedly brilliant bankers to prevent an even worse crisis. So at least some members of the top 0.01 percent are best viewed as job destroyers rather than job creators. ...
What about the argument that we must keep taxes on the rich low lest we remove their incentive to create wealth? The answer is that we have a lot of historical evidence, going all the way back to the 1920s, on the effects of tax increases on the rich, and none of it supports the view that the kinds of tax-rate changes for the rich currently on the table — President Obama’s proposal for a modest rise, Mr. Romney’s call for further cuts — would have any major effect on incentives. Remember when all the usual suspects claimed that the economy would crash when Bill Clinton raised taxes in 1993? ...
So, are the very rich V.I.P.? No, they aren’t — at least no more so than other working Americans. And the “common person” will be hurt, not helped, if we end up with government of the 0.01 percent, by the 0.01 percent, for the 0.01 percent.
And then, on July 3 at midnight, Johnson resigned. The Wall Street Journal:
Outsiders considered the turn of events highly unusual. New chief executives almost never quit days after accepting an employment contract, three executive-compensation consultants said.
It “is very odd” for a CEO to exit days after taking command, said David Schmidt, a consultant at James F. Reda & Associates, a compensation consulting firm in New York that wasn’t involved with either company. “I have never seen that before.”
But let us not weep for our once and not-future king. Bill Johnson’s golden parachute was not affected by his short flight.
Despite his short-lived tenure, Mr. Johnson will receive exit payments worth as much as $44.4 million, according to Duke. That includes $7.4 million in severance, a nearly $1.4 million cash bonus, a special lump-sum payment worth up to $1.5 million and accelerated vesting of his stock awards, according to a Duke regulatory filing Tuesday night. Mr. Johnson gets the lump-sum payment as long as he cooperates with Duke and doesn’t disparage his former employer, the filing said.
Under his exit package, Mr. Johnson also will receive approximately $30,000 to reimburse him for relocation expenses.
However politically unadroit such comments might be, they reinforce Schweitzer's image as being a straight shooter and a maverick, an image that was further burnished by a recent New York Times op-ed in which the governor called for a federal constitutional amendment that would allow states to ban corporate money from political campaigns.
The opinion piece recounts Montana's surprising populist history, where citizens demanded that corporate money be excluded from election campaigns - and got it way back in 1916. It happened after Montana's wealthiest citizen, the copper magnate William A. Clark, paid each of the state's legislators ten thousand dollars in cash ($250, 000 in today's money) for a seat in the US Senate. Public outrage against this brazen act of corruption boiled over, leading to the passage of a ballot initiative that effectively took money out of politics in Montana. Even private donations to politicians were eventually limited to a maximum of a few hundred dollars.
All meetings of state officials, in Schweitzer's telling, are required to be open to the public and all documents - including the governor's emails and hand-scrawled notes - are available for citizen inspection. Legislators in Montana are basically ranchers, teachers, carpenters, and others who put their professions on hold for a 90-day session, every other year, to serve for $80 a day. "There's very little money in Montana politics," Schweitzer writes matter-of-factly.
But all of this is about to change, under threat by the Supreme Court, after its Citizens United ruling two years ago opened the floodgates of corporate contributions to political PACS. In February, the court informed Montana that it could no longer enforce its own law. The state would have to allow dirty money to corrupt its political process.
Private equity is basically a racket. It may be a productive racket, although there is controversy about that. Some studies show that firms and plants taken over by firms like Bain Capital see bigger increases in output per worker than comparable companies that remain independent. But those productivity boosts are largely one-off situations produced by downsizing the labor force, firing people, and outsourcing some of the jobs they do. Sustained increases in productivity and innovation are much harder to find, as so is evidence that the rise of private equity has improved the performance of the economy as a whole, rather than just making a few people like Romney very rich.
But that’s not the issue here. What’s killing Romney now is another aspect of the private-equity business, and Bain Capital in particular, which has received rather less attention: its opacity and secretiveness. As a private company, Bain Capital isn’t legally obliged to say much about what it does, but its aversion to public disclosure goes beyond standard norms. Like the Carlyle Group and other big private-equity firms, it deliberately withheld as much information as it could, both to create an aura that would help it attract outside investors and to disguise how much money its partners were making. The clash between the demands of a Presidential campaign and the private-equity industry’s culture of secrecy was always going to be a problem for Romney. So it has proved. For as long as he and his former firm refuse to shed more light on their activities and finances, investigative reporters and Democratic researchers will continue to dig for nuggets of information that can be portrayed in a negative light.
The clash between the demands of a Presidential campaign and the private-equity industry’s culture of secrecy was always going to be a problem for Romney. So it has proved. For as long as he and his former firm refuse to shed more light on their activities and finances, investigative reporters and Democratic researchers will continue to dig for nuggets of information that can be portrayed in a negative light.
Bill Kristol, editor of the conservative magazine the Weekly Standard, said Romney should “take a hit for a day or two” and release up to 10 years of returns, to end the speculation once and for all. “Here’s what he should do. He should release the tax returns tomorrow,” Kristol said on Fox News Sunday. “In this craze, you've got to release 6, 8, 10 years of back tax returns. Take the hit for a day or two.”
Conservative columnist George Will broached a topic that seems to be causing some Republican hand-wringing: Romney might be hiding something. “Mitt Romney has said he has released all that’s necessary for people to understand ‘something’ about my finances," he said on ABC's This Week. "Now, ‘something’ is a pregnant word. The costs of not releasing the returns are clear, therefore he must have calculated there are higher costs to releasing them." ...
The refusal provided ample fodder for Democrats looking to make Romney’s wealth an issue. Obama campaign adviser David Axelrod tied the returns to Romney’s leadership capacity, arguing on CNN’s State of the Union that they may bring into question his values when it comes to tax reform. “I’m not suggesting that based on what we know, that he’s done anything illegal,” Axelrod said. “But what I am suggesting is that he’s taken advantage of every single conceivable tax shelter loophole that we can see. And now is he the guy that’s gonna clean up our tax code and make it advantageous to average taxpayers and the country? Or is he gonna look at it through the lens of his own experience?”
On Thursday, Rep. Pete Sessions (R-TX), who heads all House GOP campaign efforts, told reporters that questions about Romney’s holdings were on target, according to CNN.
“His personal finances, the way he does things, his record, are fair game,” Sessions said. While he declined to name a specific amount of information or number of years’ worth of tax returns Romney should release, he called the issue a “legitimate question.” Romney has only released his 2010 tax return and had said he will release his 2011 return before the election.
Wynn, the flamboyant Las Vegas billionaire who claims to have voted for President Barack Obama in 2008, was the perfect get for Rove. Wynn was loaded, had soured on Obama and was just the kind of wealthy businessman who could help underwrite a plan hatched by Rove and other influential conservatives to spend close to $1 billion total to win the White House, Senate and House in 2012. Wynn, a registered Democrat until recently, was reluctant to attach his name to any high-dollar gambles on the GOP, worried that Obama’s allies would make him a bogeyman. So Rove — who helped develop Crossroads GPS in 2010, one of a growing roster of non-profit groups that can now accept unlimited contributions for hard-hitting political ads — was a perfect get for Wynn, too. Rove knows all the players — and the groups he works with are skilled at minimizing media attention to their financial whales. ...
And Rove, who attended Wynn’s gala wedding last year in Vegas, recently got something of a personal bonus out of the relationship. After Wynn attended the veteran operative’s wedding last month in Austin — an intimate and until-now unreported affair also attended by former President George W. Bush — Rove and his new wife Karen Johnson flew to Naples, Italy, aboard Wynn’s Boeing 737 — a nearly 11-hour, 6,000-mile trip that could cost tens of thousands of dollars from a charter jet carrier. Wynn joined Rove in Italy.
This story, stitched together by talking to numerous people familiar with the Rove-Wynn courtship, as well as a review of federal records, illustrates how one of the biggest changes to politics in a generation — the explosion of unlimited secret money — really works.
One of them, Janis Adkins, drove a van filled with her belongings to Santa Barbara, where she panhandled at an intersection with a sign reading, “I’d Rather Be Working – Hire Me If You Have a Job.” Once upon a time she had a successful plant nursery business in Utah that annually grossed $300,000. But two years after the nation’s financial meltdown her sales had dropped by fifty percent and the value of her land plunged even more. She tried to refinance but four banks turned her down flat. “Everyone was talking about bailouts,” Adkins told reporter Jeff Tietz. “I said, ‘I’m not asking for a bailout, I’m asking you to work with me.’ They look at you, no expression on their faces, saying, ‘There’s nothing we can do.’”
“Nothing we can do.” And yet it was banks like these who helped get people like Janis Adkins into such desperate jams in the first place. When faced with their own financial catastrophes, all those big-time bankers came running to the government and taxpayers for those aforementioned bailouts worth hundreds of billions of dollars, then scooped up big bonuses and perks for themselves, and went back to business as usual.
And what a business! You’ve most likely been hearing about the newest scandal in banking, centering on Barclays Bank in Great Britain and something called Libor. That stands for London Interbank Offered Rate and involves a group of bankers who set a daily interest rate affecting trillions of dollars of transactions around the world. Your home mortgage, your college debt, your credit card fees; all of these could have been affected by Libor.
Manufacturing workers from across China flooded downtown Beijing to show their gratitude for Mr. Romney’s robust record of job creation in China while at the helm of the private equity firm Bain Capital
While Mr. Romney’s feats of outsourcing have taken a political toll at home, they have made him a national hero in China, according to workers like Qiu Huang, who attended the rally. “I owe my job to Mitt Romney, and so do many of my friends and family members,” he said. “His record as a job creator, in China at least, is second to none.”
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