Today's News Outlets: Where Freedom of The Press and Integrity Has Been Replaced By Conflict Of Interest, Part 2

Yesterday, we took a first cut at examining our hypothesis that freedom and integrity of the press have been replaced by blatant conflict of interests on the part of our news outlets. We examined the family relationships that exist between high ranking officials in the Obama administration and their relatives, spouses, etc. who hold high ranking positions in news organizations that have generally given the Obama administration failures a free pass.

We discussed how many career journalists have forsaken their careers in journalism to take high ranking positions int he Federal government and how all of these former journalists came from news organizations that were almost always easy on and sympathetic to the Obama administration's many failures and shortcomings. In both areas. we raised the question of whether conflict of interest was becoming more important in today's press than integrity of reporting.

Today we will continue that loss of integrity question, starting with the old cover photo switcheroo tactics of Time magazine:

3) The September 16, 2013 issue of Time magazine in the United States had a picture of a football player and the question: “Is it time to pay college athletes?” Nothing suspicious there unless you find out what Time put on the cover of its non-United States covers for their September 16th edition:






Yes, the rest of the world got a feature article and cover that focused on the rise of Vladimir Putin and how he had rescued President Obama, Secretary of State John Kerry, and the rest of the world from a potential military fiasco if the U.S. had attacked Syria. We have already discussed what a mess the President had made of the Syria crisis in a series of posts starting with:

http://loathemygovernment.blogspot.com/2013/09/political-class-insanity-special.html

We will not go into those Syrian details here. The real story is how the left leaning news organization, Time magazine, has protected the President’s foreign policy bungling  by not carrying the same article about Putin’s rise to prominence at the expense of the United States in its U.S. edition.

The foreign covers acknowledge Putin’s triumph over Obama, telling foreigners that Putin “doesn’t care what anybody thinks of him.” Another example of certain news outlets protecting “their” guys rather than being true journalists and reporting facts and realities.

Oh, by the way, Time editor Rick Stengel was a managing editor of Time magazine over the summer but recently fulfilled his decision to leave Time magazine for a position …wait for it…of running the State Department’s public diplomacy mission. He will be working for none other than John Kerry, one of the Obama administration bumblers who totally mismanaged the Syria situation. He apparently received the offer early this summer and immediately accepted but not leaving Time until very recently.

Makes you wonder if journalistic integrity took a back seat to a new job in the State Department when  Mr. Stengel got around to putting the latest Time magazine covers together, both domestic and foreign.

4) But apparently, this is not the first time that Time magazine has protected their guy on the left by having a  different cover in the U.S. edition of Time magazine from the covers shown across the world. On July 2, 2012, the overseas covers featured China’s fast-growing manufacturing sector, while the U.S. cover was about “The History of the American Dream.” Wouldn’t America have been better served if we had a better understanding of how well China was doing vs. our shrinking manufacturing base?

The Dec. 5, 2011 cover featured an alarming picture of Egyptian street protests, while the U.S. cover told increasingly worried U.S. readers that “Anxiety is Good for You.” Wouldn’t America have been better served to learn all it could about the dynamics and forces going on in Egypt, a situation that the administration never saw coming, than worrying about how good anxiety was for us? 

Yes, in both cases it would have been more beneficial and better journalism if these real world problems were presented to the American public. However, it would not have put the Obama administration in the best light so just like with the Putin/Syira cover switcheroo, Time magazine took the political way rather than the integrity way.

5) One last example of potential journalistic conflicts of interest. This one had baffled me for a while until I understood the underlying dynamics. To me, for the last five years, MSNBC has been nothing more than an extension of the Obama administration’s public relations arm. 

Everything Obama did, no matter how much it blew up and failed, was either a success or the result of Republican or conservative sabotage. If you did not agree with the President’s policies, according to MSNBC you were a racist. Facts, realities, respect for a difference of opinion did not matter, you were a racist or an idiot. Hardly the stuff of unbiased news reporting.

The nadir of MSNBC’s reporting occurred during the run up to the 2012 Presidential election. At that time, MSNBC put together a montage of movie scenes where buses exploded into a fiery death scenes. They billed the video as a wish that this would happen to the Mitt Romney Presidential touring bus. 

At that moment it became abundantly clear to me that MSNBC, more than any other news source in this country, had lost all journalistic and human integrity when it wished a fiery death on a political opponent. The details of this disgrace and our contempt and disgust for their behavior can be accessed at:

http://loathemygovernment.blogspot.com/2012/06/hated-and-vile-polticial-dialog.html

But I still wondered what would make a so-called news organization behave so disgracefully. And then it hit me. Up until relatively recently, MSNBC and its sister news properties had been owned by General Electric. 

General Electric received hundreds of millions of dollars from Obama’s economic stimulus program. General Electric does a nice chunk of business with the U.S. government and the U.S. Military. The General Electric chairman sat on Obama’s economic development council. A council that accomplished nothing. But most importantly, General Electric generally makes billions and billions of profit dollars every year and usually gets a tax refund, rarely paying anything in U.S. business income tax. Details at:

http://loathemygovernment.blogspot.com/2011/06/relationship-between-president-obama.html

Thus, there has been a very cozy relationship between General Electric and the Obama administration, one that likely extended into the world of journalism, given how rabidly MSNBC protects Obama’s image and interests, and how much, until recently, General Electric benefited from Obama’s policies and lack of any tax reform strategy.

As I said before, I am not making any accusations of conflict of interest, quid pro quo, etc. But I believe that we no longer have a free press in this country, we have a press that takes sides, distorts facts, ignores facts, and denies the American public the ability to make decisions based on the realities and facts of our issues.

And maybe that is one of the reasons why major issues of our times never get resolved. We are still losing the war on drugs after decades of failure. We are still under educating our kids relative to the rest of the world, a situation that Reagan identified as a problem thirty years ago. We still do not have a coherent national energy strategy, almost forty years after the Arab oil shocks. 

Quite possibly, as the examples over the past two days have shown, our press has been too busy concealing and spending much less time help us correct: “No matter how imperfect things are, if you've got a free press everything is correctable, and without it everything is concealable.” Tom Stoppard

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Term Limits Now:http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/http://www.youtube.com/watch?v=08j0sYUOb5w

Part 9, August, 2013 Political Class Insanity: General Electric Cronyism,

This is our ninth and final post this month in our monthly series on political class insanity. It is not that I ran out of insanity to discuss from our politicians, I am just too depressed, for the time being, to continue with the review of idiotic statements, wasteful spending, incompetence, government inefficiencies, etc. After today, we will postpone any further political class insanity reviews until the September series rolls around.

Before we check out on this month’s lunacy, let’s squeeze in a few last insults form the politicians in Washington and elsewhere.

1) In 2012, General Electric had operating profits of about $16 billion, not revenue, profits. They are one of the biggest and most profitable companies in the world. There is no reason American taxpayers should be paying General Electric for anything.

But, like most crony companies in the country, General Electric is well connected to the Washington political class. This connection usually involves the exchange of campaign financing dollars to incumbent politicians and crony taxpayer dollars back to private companies.

When Congress and the Obama administration passed  the 2009 economic stimulus bill, the package was loaded with payoffs for special interests, many for the $16 billion profitable General Electric. According to Recovery.Gov, the official government website that tracks stimulus spending, General Electric received 47 stimulus grants totaling almost $100 million. But those were not the only taxpayer funded perks. Earlier this year,  GE got another $5 million from the Department of Energy. 

With a national debt of about $17 TRILLION, it makes no sense to give very profitable companies like GE millions and millions of taxpayer dollars. But making no sense is a specialty of Washington politicians. If you agree, go to the following website to sign the petition to stop these types of crony-based handouts:

https://secure.freedomworks.org/site/Advocacy?cmd=display&page=UserAction&id=985&s_subsrc=FWFBaaGiveItBackGE

2) Remember the now comical statement that Obama was going to run the most transparent Presidential administration in history. We have often reviewed how this administration has allowed its top bureaucrats to ignore legally required Freedom of Information Act requests, how this administration has gone after twice as many government whistle blowers than all other administrations COMBINED, and how top government bureaucrats maintain secret email addresses in violation of government protocol.

But Obama’s Labor Department recently took this transparency hoax to a new low. The Labor Department tried to charge the Associated Press more than $1 million for providing a list of secret email addresses of political appointees. $1 million for a piece of paper with some secret email addresses on it. A number of disgraces in this escapade:

• This request is clearly illegal since the Freedom of Information Act legally restricts the fulfillment cost to the charging for photocopies after the first 100 pages, no other costs.
• A million dollars for a list of email addresses, was this extortion just to get Associated Press money or was it an attempt to discourage the request and protect top bureaucrats’ illegal emails addresses?
• Or is the government that incompetent that truly takes $1 million to collect a handful of email addresses from a single government department?

In any case, the demand for $1 million for such a pittance amount of information is an insult to liberty and illegal. Pathetic.

3) A July 30, 2013 article from the Washington Times reported on some disturbing news on government incompetence which gives you a pretty good idea why the Federal government has been unable to prevent over 10 million illegal immigrants from entering this country. A recent General Accountability Office investigative report found that the Department of Homeland Security can identify about 1 million foreigners who have entered the country over time but has not idea if they are still in the country.

The GAO audit also concluded that the Department would be incapable of developing a coherent and effective entry-exit program. This process was supposed to be set up back in the 1996 immigration law but seventeen years later, the Federal government is so incompetent that it has not fulfilled that legal requirement from the Clinton administration. Pathetic.

4) An old joke goes as follows: how can you tell when a politician is telling a lie? Answer? Whenever his lips are moving. That joke came to mind when I recently came across a quote from Congressman Charles Rangel that was uttered earlier this year in the midst of the gun control debate and follies in Washington: “We’re talking about millions of kids dying — being shot down by assault weapons, were talking about handguns easier in the inner cities, to get these guns in the inner cities, than to get computers.” 

Another old sayng goes that if you are going to tell a lie, make sure it has at least some sense of credibility, unlike Mr. Rangel’s assertion that “millions” of kids are being killed by assault weapons. According to the Health and Human Services Department of the Federal government:

• In 2011, there were 32,163 gun deaths in the United States.
• But only 11,101 were homicides, the remainder, 19,766, were suicides.
• Of those 11,101 homicides, a majority were committed with handguns.
• Less than a thousand, 679, were committed with long guns.
• But only 323 of those murders were committed by rifles or assault like weapons.
• Let’s make the radical and incorrect assumption that all 323 deaths by rifles and assault weapons were kids. 
• Doing a little math we can calculate that it would take 3,095 years for one million kids to be killed by “assault rifles.” 
• And Rangel claimed that “millions” are killed by assault rifles, not just one million.

Ridiculous accusation to make in the face of the real numbers and reality. Also, a little embarrassing if he actually believes what he says. If he does, he is existing in a different reality from the one we live in and that makes it very scary that he and others like him in Congress actually make the laws that govern this country.

5) On July 17, 2013, the Sheriff’s department in Pinal County, Arizona announced that it had arrested a Mexican national by the name of Daniel Jupa-Fino. What is significant about this arrest? Consider:

• Mr. Jupa-Fino has already been caught and deported eleven times for being here illegally.
• He was arrested for speeding and when pulled over, engaged in a fight with arresting sheriffs.
• His car was carrying 220 pounds of marijuana with a street value of about $165,000.

You cannot claim, like many in the Obama administration claim, that the borders are secure when you catch and release the same guy eleven times, a guy who obviously is always in this country conducting illegal business. This is just another reason why there should be no amnesty program for illegal immigrants until the borders are secured.

6) The Washington Times reported on really disturbing news on July 10, 2013 relative to Federal government wasteful spending and general chaos. Keep the following facts and realities in mind the next time President Obama cries poverty on behalf of the Federal government and insists that taxes need to be raised:

• The General Accountability Office (GAO) recently released some findings of its research which basically concluded that the Federal government bureaucracy was “flying blind” when it came to managing its budgets and finances.
• It claimed that the Federal government made a whopping $107.7 billion in inappropriate and excessive payments last year.
• This is the equivalent of every American household paying an extra $936 or so in income taxes every year just to pay for this incompetence.
• One of the reason for these bogus and illegal payments is that the Federal government has been unable to compile a simple list of all of it programs and entities, that is how large and out of control the Federal government bureaucracy has become.
• Only 37% of government managers knew if their government programs had been reviewed and evaluated over the past five years and 40% were unsure if their programs had EVER been evaluated for effectiveness.
• The $107.6 billion does NOT include the Department of Defense, whose financials are in such horrible shape that the GAO claims that it has been impossible to audit the department for the past twenty years.
• Their report claims that the Army is so disorganized that it does not know month to month how many of its people are getting paid and whether they are getting paid the correct amounts. Unbelievable.
• And the $107.7 billion waste estimate is highly likely to be conservative sine the GAO claims that it does not have enough people or resources to track down all of the possible areas of government waste.
• Chairman of the House Oversight Committee summed up this pathetic situation quite nicely: “Imagine beginning every month not knowing what money you have and not being able to track what you spent. Yet, year after year, that’s where the Federal government operates.” 

Comptroller General Gene Dodaro, who presented these discouraging findings when he testified in front of Congress also stated that the only way to get this reckless wasteful spending under control would be for the Obama administration to show greater leadership and Congress to show greater oversight. In other words, the President and members of Congress need to do their jobs.

But what the chances of that happening? Obama has been President for more than four and half years and we have seen a few feeble, half hearted attempts at cost control but certainly nothing that would rise to the level of leadership. Congress and the members in it that have been present for the evolution to this state of chaos are obviously part of the problem, they helped create this situation with their lack of oversight.

To expect these career politicians to fix what they created is the height of folly. That is why we need to implement term limits as soon ass possible before another $107.7 billion is flushed down the drain. You can join that effort at:

www.howmuchworsecoulditget.com

That will do it for this month’s political class insanity. Unfortunately, we did set the record again this month, requiring nine full days just to chronicle one month’s worth of idiocy, lunacy, and incompetence form the American political class. A more pathetic, miserable, and incompetent bunch of politicians has likely never come together to create so much havoc in the history of our country.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/
http://www.youtube.com/watch?v=08j0sYUOb5w 

April, 2013 Political Class Insanity, Part 4: Oxycodone Medicare Scams, Congressional Staffers Going Hungry and More

This is Act IV of this month’s political class insanity. Despite the fact that we had already spent a lot of time reviewing stupid government spending in the latter part of March, it looks like we will still need four posts this month to cover the idiotic and inane actions of the American political class. Their behavior continues to waste taxpayer wealth, decimate our liberty and freedoms, and personally enrichment themselves.

1) I am a great believer that taxes should be as low as possible for both businesses and individual citizens. Governments should be as small as possible, doing only those functions that can be handled by an efficient central entity vs. having individuals be responsible for those functions. These functions would include such limited functions as national defense, a judicial system, police and fire protection and not much more.

However, this wish and hope for low taxes does not mean that large corporations, rich individuals, or politicians (see yesterday’s post (XXXXXX) should not pay their fair share. The fact that businesses, individuals, and politicians can rig the system for their own self-enrichment, causing others to pay more to cover their shortfall, should not be allowed to occur.

Which brings us to Apple and Facebook. According to a BBC.com article that was summarized in the November 16, 2012 issue of The Week magazine, Apple paid a corporate tax rate of only 1.9% on its earnings outside of the United States in its last fiscal year according to regulatory filings. On foreign profits of $36.9 billion, Apple paid only $713 million in taxes.

Facebook’s tax treatment is even worse. According to a Businessweek.com article that was summarized in the March 1, 2013 issue of The Week, Facebook’s first annual public earnings report showed that it had $1.1 billion in pre-tax profits but paid nothing in Federal and state income tax. Even worse, the company is expected to receive a $429 million tax refund.

Thus, while the vast majority of Americans saw their taxes go up 2% at the start of the year as a result of the fiscal cliff deal, these corporate giants were paying almost nothing in taxes. This is not surprising since we have previously reported how other companies, notably General Electric:

http://loathemygovernment.blogspot.com/2011/06/relationship-between-president-obama.html

constantly pay little or nothing in taxes, often using the out of control tax code to get hefty tax refunds.

Again, in a perfect world, no one and no company should have to pay any taxes. We do not live in a perfect world but in an imperfect world, the U.S. tax code, and the politicians responsible for it, should not allow such wide differences in taxation.

Of course, we all know the reason why this type of thing happens. I would bet that Facebook, Apple, General Electric and plenty other companies and unions are heavy contributors to incumbent politicians’ reelection campaigns. Donations for tax breaks, the corruption cycle continues.

2) The massive, and massively flawed legislation called Dodd-Frank that was supposed to reform the financial industry in this country, seems to be not working, at least relative to the concept of making the nation’s economy not fall victim again to the “too big to fail” syndrome.

According to an article from Bloomberg.com, that was summarized in the March 1, 2013 issue of The Week magazine, the four biggest domestic banks, JP Morgan, Bank of America, Citigroup, and Wells Fargo, have combined assets of $14.7 billion, which is about the equivalent of 93% of the U.S. Gross National Product in 2012.

Thus, if the legislation was supposed to relieve the nation of the worry that a large bank failure would not substantially impact the economy, it has failed miserably. When the entire nation’s total economic output is just a little bigger than just four banks’ assets, too big to fail is also bigger than ever, thanks to the political class inability to fix a broken banking system.

3) An article in the monthly AARP magazine showed why Medicare and Medicaid waste over $100 billion a year due to criminal fraud and inefficiencies. The article described the exploits of a Georgia woman who could not get enough painkiller pills from her doctor for her needs.

As a result, she went around and eventually found 58 medical people who prescribed 3,655 Oxycodone pain pills for her in a single year. Obviously, this comes out to about a 1,700 day supply of regular pain killer usage. And worst of all, Medicare, and the American taxpayer paid for all of it.

Her case came to the forefront when the General Accounting Office reported on 170,000 identified cases where people went doctor shopping (defined as visiting at least five or more doctors to get their hands on one of 14 prescription drugs). This has focused law maker attention on those that operate the Medicare and Medicaid programs that they are screwing up when it comes to protecting taxpayer assets in this type of fraud.

Let’s do some simple math. It is tough to find a standard answer on what a single pill costs. It apparently depends on how potent the pill is, where, you live, who is prescribing it or illegally pushing, etc. A conservative/lo estimate would be $10 per pill.

If the AARP Georgia example is average, than the 170,000 identified cases of fraud (there may be more that have not been identified) would cost the American taxpayer about $6.2 billion a year. This wasted money would be enough to put an armed police professional in over 80% of the schools in this country to protect against another Newtown school shooting or would pay for half of the infrastructure funding that Obama wants in his new budget. The insanity of waste.

4) Our out of touch politician of the month goes to Florida Congresswoman and Chairwoman of the Democratic National Committee Debbie Wasserman Schultz. She recently made the most ridiculous claim that her poor Congressional staffers are unable to afford “good meals” because of the sequester.

This statement is so asinine on so many levels. First of all, most of Wasserman Schultz’s staffers earn between $44,000 and $160,000 a year, placing them well above the average American income level, they are not starving or cannot afford good meals. Second, I do not believe that the sequester resulted in her staff taking any kind of pay cut, which even if they got the average sequester cut of 2%, they would still be much more able than most Americans to get a good meal.

According to news reports, her Congressional office spent over $95,000 on mail and printing services in 2012. One of her part-time staffer alone earns $60,000 a year. If her staff actually got a pay cut, maybe she should have thought about downsizing or making her staff more efficient in order to keep her staff‘s salaries whole. We recently reported on the fact that Senator Rand Paul trimmed his Senate office expenses by $600,000, why couldn’t she have given him a call for the sake of her staff?

Why didn’t she? Because she does not care what happens to Americans and their 2% tax increase in January, only worrying about her little slice of life.

Let’s review: Facebook and Apple make a lot of money but pay little or nothing in taxes, a Congresswoman is more worried about her well paid staff than suffering Americans, Medicare and Medicaid get stiffed for billions of dollars a year in fraudulent claims, and the nation’s banks are bigger stronger and more likely to destroy the economy than before the Washington political class set out to make this situation go away.

Yep, sounds like a typical month’s worth of destruction from the politicians in Washington. We will finish off this month’s roundup of political class insanity and idiocy tomorrow when we review a fresh list of frivolous and stupid Federal government spending that has been recently compiled. If you are Elvis fans or fans of snowmobile racing, you do not want to miss it.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.reason.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com
http://www.youtube.com/watch?v=08j0sYUOb5w 

The Slime, Sleaze, Immorality, and Corruption Of The American Political Class: Part 3

We have spent the past two days steeped in the sleaze and corruption of the members of the American political class. From lying adulterers to outright criminal activity to personal enrichment, there does not seem to be any depth that the politicians in this country will not stoop. 

Unfortunately, there is so much disgrace that we could not contain it in just one post. Turns out we will need five separate posts to get everything in. While the first two days have been a potpourri of different types of slimy behavior, today we will focus on the area of cronyism and how politicians use our wealth and government functions to pay off political friends, connections, and donors to their election campaigns. 

These payoffs usually result in unfavorable use and abuse of taxpayer wealth and freedom that optimizes the politician/crony relationship, usually not the best interests of the country. As always, our sources are well known, if not well respected, main stream media outlets, in order to not get my liberal friends and family members in a snit for using Fox News and the like.

Before we get started, let's lay out a definition of crony capitalism so we are all working off of the same definition:

Crony capitalism is a term that describes an economic system where people with good connections to the center of power manage to place themselves in positions of undue influence over economic policy, thus deriving great personal gains.

Nowhere in this definition we will be using does it say or require that these people are the best options for the country or the taxpayers' wealth or they are the most competent to execute the needed actions.

Thus, as if we did not have enough slime from the previous two days, lets load on some more, courtesy of cronyism:

1) The most recent case of cronyism was laid out in an Associated Press news report from August 9, 2012 which covered the news that the Federal Justice Department will not investigate or prosecute criminal charges against either Goldman Sachs the company nor Goldman Sachs employees related to trades they made during the financial crisis that were highlighted in a detailed 2011 U.S. Senate investigative report. The unusual announcement not to prosecute criminally came in an unsigned statement attributed to the department, i.e. no one in Justice had the courage or integrity to admit to this blatant non use of Justice resources.

The Senate investigation uncovered company emails showing Goldman employees deriding complex mortgage securities sold to banks and other investors as "junk" and "crap," i.e. the company knew what it was selling to its customers had virtually no chance of creating or even maintaining value. The chairman of the Senate committee that did the investigation, Democratic Senator Carl Levin "said during his subcommittee's investigation that he believed that Goldman executives "misled the Congress" and that Goldman "gained at the expense of their clients and they used abusive practices to do it."

Two interesting aspects of this decision to not proceed with an investigation. The Senate research and investigation and subsequent report were not done by Republicans. This recommendation came from a Democratic Party controlled Senate, the same political party of Barack Obama, so we can assume this was not politics at work, it may have actually been a rare case of Congress actually doing its job. Thus, one has to assume there really was some real smoke going on in this matter, it should have been the sworn duty of Justice to investigate on its own to see if there was real fire also.

Second, we should not be surprised nothing is happening. Goldman Sachs has been a heavy contributor to Obama's political campaigns, both in 2008 and again in this election cycle. Would not surprise me, or many other Americans, if those contributions and the decision by this administration to protect those contributors are linked together.

Combine this with information from the same article that reported the Securities and Exchange Commission had decided not to file charges against Goldman Sachs over a $1.3 billion subprime mortgage portfolio issue and it is pretty clear that the Goldman/Obama cronyism fix is in.

2) The postal child for Obama's cronyism is Solyndra, a bankrupt California solar panel company, which went belly up after it blew through more than $530 million of taxpayer wealth after receiving an ill-advised government loan guarantee. Prior to going out of business, Solyndra donated $7,500 to the California Democratic Party and company employees had also contributed more than $20,000 to Democratic candidates.

Furthermore, an Obama appointed advisor to the Energy Department, Steven Spinner, was a major driver of approving the Solyndra Federal loan even though his wife worked for Solyndra's law firm. A New York Times article from early October, 2011 discussed Solyndra-related emails: "The emails show Spinner discussed the pending final decision often with Solyndra officials, Energy Department colleagues, and the White House budget office.

3)  According to an ABC News report, Fisker Motors is a Finland based automotive company that is working to develop expensive electric cars. Unfortunately, two years ago, the Obama administration approved a taxpayer backed loan for $529 million for this Finnish company to help with their technology development.

Why did U.S. taxpayer dollars back a government loan to a Finnish auto company to develop and build cars in Finland with Finnish workers? Could crony capitalism be at work again:

•One of Fisker's biggest financial supporters is the California venture capital firm Kleiner Perkins Caufield & Byers. Kleiner Perkins partner John Doerr, a California billionaire, hosted President Obama at a February dinner for high-tech executives at his secluded estate south of San Francisco.

•Doerr and Kleiner Perkins executives have contributed more than $1 million to Federal political causes and campaigns over the last two decades, primarily supporting Democrats.

•Doerr serves on Obama's Council on Jobs and Competitiveness.

•Former Democratic Vice President Al Gore is another Kleiner Perkins senior partner.

Now you start to understand that giving money to a Finnish car company to make a high end niche car model that the average American will never be able to afford has more to do with cronyism and campaign donations than sound government decision making.

4) But the auto cronyism is not confined to Fisker:

•The Department of Energy has also invested almost another half a billion taxpayer dollars with a loan to another electric car manufacturer, Tesla Motors.

•SEC filings show that Tesla has never had a profitable quarter and has no experience in mass auto production. It eventually wants to “mass produce” an electric car that costs about $57,000. Mass produce, car, and $57,000 in one sentence is one of the biggest incongruities of all time.

•A former Tesla board member, Steve Westly, is an Obama campaign donation bundler who raised hundreds of thousands of dollars for the President in 2008 and for his 2012 re-election campaign.

•The Westly Group was also a financial supporter of Tesla Motors until Tesla went public in 2010, and Westly continues to back the company.

•Tesla's founder and CEO, Elon Musk, is a major political contributor who has primarily backed Democrats, including Obama.

5) Solar energy cronyism is not confined to Solyndra. In late September, 2011, the Department of Energy approved a $737 million loan guarantee to a company called Solarserve that is working on a solar plant in Nevada. Given Obama's history of cronyism with Solyndra, Fisker, and Telsa, it should come as no surprise that this project was also infected with cronyism. Turns out that the brother-in-law of Democrat Congresswoman Nancy Pelosi, Ronald Pelosi, is second in command at the primary energy investment fund that backs the Solarserve effort. Surprise, surprise.

6) The Department of Energy also granted a $135 million loan guarantee to a wind power company in early 2011, Brookfield Asset Management. For the past two years, the company has been represented by the lobbying firm called Heather Podesta and Partners, LLC. If the name Podesta sounds familiar, it should be. Heather Podesta, a top election campaign fundraiser for Obama, is married to Tony Podesta who is the brother of John Podesta who has served long and loyally in Obama's past political efforts. Disgusting conflict of interest.

7) The Department of Energy handed out another Federal loan guarantee to another solar company in September, 2011, this one worth $1.37 billion, to BrightSource energy. This company wants to build the largest solar power plant in the world. A former board member of the company, John Bryson, was Obama's Commerce Department secretary until his recent resignation due to some bad driving incidents in California.

8) Consider the highlights of an April 3, 2012 Washington Beacon News report, keeping in mind that Harry Reid, the majority leader in the U.S. Senate, represents the state of Nevada:

•Three large renewable energy projects, Nevada Geothermal, Ormat Nevada, and SolarReserve, all of whom have received large grants of taxpayer wealth from Obama's Energy Department, are located in Reid’s home state. Executives from all three companies have donated to Reid and his fellow Democrats' election campaigns to the tune of over $58,000 since 2008.

•Brightsource Energy, which received a $1.6 billion loan guarantee from the Energy Department and will also operate a solar facility in Nevada, has donated at least $21,600 to Democrats' election campaigns since 2008. It has donated zero dollars to Republicans.

•Reid received almost $4,000 from Brightsource executives in the 2010 cycle, including $2,400 from CEO John Woolard, who hosted a fundraiser for the majority leader.

•Woolard is also a Barack Obama donor and has visited the White House almost a dozen times since Obama took office.

•Reid’s staffers have been a key part of Washington D.C.’s revolving door, setting up shop with lobbying outfits that have ties to green energy companies and the Department of Interior, which oversees such projects.

•For example, Kai Anderson, a top lobbyist for Ormat, is a former deputy chief of staff for Reid. Paul Thomsen, who handles government affairs for Ormat Nevada, Inc., is also a former Reid Staffer. Neil Kornze, the acting deputy director of policy for the Bureau of Land Management under the Department of Interior, is also a former energy staffer for Reid. Sanjay Wagle served as a renewable energy advisor at the Energy Department and he formerly worked for Vantage Point Venture Partners, a major backer of Brightsource Energy.

•Kathleen Weiss, the lead lobbyist and Vice President of First Solar, had 16 meetings at the White House with Valerie Jarrett and other senior administration staffers. In 2008, she donated $2,300 to then-Senator Ken Salazar (who is now Secretary of the Interior) and Harry Reid.

•The Department of Interior’s fast-track program was spearheaded by Steve Black, a counselor to Ken Salazar, and Janea Scott, special assistant to Black and former attorney for the Environmental Defense Fund.

9) Getting back to banks, consider an article by Bloomberg on June 18, 2012 that outlined how the American taxpayer, and taxpayers around the world, subsidize their countries' major banks, encouraging risky banker behavior that always seem to lead to bank bailouts. The details of the article can be read at:

http://www.bloomberg.com/news/2012-06-18/dear-mr-dimon-is-your-bank-getting-corporate-welfare-.html
I am not an expert on banking by any stretch but the following excerpt summarizes the insanity quite nicely:

JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.

The article goes on to state that:

•The U.S. taxpayer ends up paying the major U.S. banks about $76 billion a year in similar subsidies.

•This $76 billion is more than what the Federal government spends on education of our kids every year.

•This subsidy estimate is about equal to the annual total profits of these 18 banks, i.e. without the subsidies over the past twelve months, these banks would be a breakeven proposition from a profitability perspective.

•The article states it is difficult to get rid of this taxpayer burden since the banking industry has already made over $285 million in campaign donations in the 2012 election cycle, a cycle that is no where close to ending.

The article proposes a series of logical, easy to understand steps that would fix the situation, noting that: "Like all subsidies, the taxpayer largess distorts supply. If the government supports corn farmers, you get too much corn. If the government subsidizes banks, you get too much credit." And in hindsight, it is now obvious that too much credit created too many easy mortgages which led to the housing bubble which led to the Great Recession.

$76 billion a year in taxpayer wealth down the drain to support bankers who take needless risks while greasing the reelection wheels of incumbent politicians. Insanity and crony capitalism at its finest.

10) I will not go into details of a new CATO report today but will in a future post. The analysis and report can be found at the following link:

http://www.cato.org/publications/policy-analysis/corporate-welfare-federal-budget

The bottom line of their analysis of the 2012 Federal budget is that the American taxpayer funds corporate welfare to the tune of about $100 billion a year. This comes out to annual subsidy of almost $900 for every American household. Ask yourself: would America be better off if every American household had an additional $900 to spend every year or it is better for large corporations to get Federally funded corporate welfare?

11) And finally let's talk about General Electric. This is the company that makes billions of dollars in profit every year and rarely pays any U.S. income tax. This is a company that recently shipped out the upper management of a whole division to China but whose Chairman serves on the President's job commission. This is a company which avoided paying a new tax ("active financing tax") by simply donating money to some schools in an influential Congressman's district in NYC.

We could go on and on about GE's crony pals in Washington but it would be easier just to read the past post that went into such detail:

http://loathemygovernment.blogspot.com/2011/06/relationship-between-president-obama.html

Time for a shower top wash off today's sleaze lesson in crony capitalism and the selling out of Americans' freedom and wealth by the American political class to the highest bidder. Tomorrow our series on the slime, sleaze, immorality, and corruption of the political class will focus on how our politicians do not just enrich their political donors and allies but also do a fine job enriching themselves and their personal friends and family members, all at the expense or the American taxpayer.

Please visit our Presidential website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at http://www.loathemygovernment.com/. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/

Retro 24 - A Nation Should Have A Tax System That Looks Like Someone Designed It On Purpose

Due to family visitors and events this week, we will be posting some of our most popular previous posts. We will start posting new posts later this week.


Wednesday, January 4, 2012



A Nation Should Have A Tax System That Looks Like Someone Designed It On Purpose

The title for today's post comes from William Simon who long ago served as the U.S. Treasury Secretary, from 1974 to 1977, under both Nixon and Ford. He was being sarcastic when he coined the phrase, realizing that even decades ago, the United States did not have a tax system that looked like an intelligent being designed it on purpose. Such a system would be easy to comply with, easy to understand, and not a burden on the economy.

Over time, the political class has continuously used the tax system to reward both constituents and reelection campaign donors and tried to manage social and political changes by manipulating the tax code to advantage those changes. As a result, we have ended up with a tax system that is anything but fair, easy to understand, efficient, and easy to comply with.

Consider the following factoids about our nation's tax system:

- I first started out trying to find out a basic fact: how many pages are in the Title 26 Federal Tax Code? The answers I found were never exactly the same but were pretty consistent, most around 70,000 pages. However, most of the estimates were prior to 2011, they probably did not take into account the additional Federal tax changes that Obama Care seeks to put into place so at least 70,000 pages seems like a solid number.

How long is 70,000 pages? If you were reading my three volume edition of J.R.R. Tolkien's "Lord Of The Rings" tome, which measure about 5 inches across, you would have to read it about 70 times. If you bought the King James version of the Bible that is currently available on Amazon, you would have to read it about 46 times. And both of these examples are probably much easier reads than 70,000 pages of tax code.

- An online article from U.S. News and World Report in April, 2010 also estimated 70,000 pages but provided some additional, fascinating, and depressing statistics:

•Americans spend about 7.6 billion hours a year just preparing their tax returns.

•This is the equivalent of placing 3.8 million Americans into full time jobs.

•Using this criteria, the tax preparation effort in this country is six times larger than the auto making industry in this country.

•The original Federal tax code published in 1913 was 400 pages long, making it about .6% the size of what we deal with today.

- According to a Business Week article from its Insider report for Spring, 2011, there is a $345 billion gap between what U.S. taxpayers are supposed to pay in Federal taxes and what they actually pay. This gap theoretically places an additional tax burden of about $3,000 on each U.S. household, all because the political class and the government it runs does not know how operate an efficient tax collection system. The size and complexity of our 70,000 page tax code probably has a lot do to with tax evaders being so proficient at hiding the taxes the owe.

- According to a short article in the December 12, 2011 issue of Business Week, 51 Federal tax breaks were expected to expire at the end of 2010. A sampling of these 51 tax breaks give a good indication of how convoluted and needlessly complex our tax system has become (remember these are the tax components that went away, there are probably thousands and thousands of other similar ones that did not go away and which take up the 70,000 pages):

1.Special expensing rules for certain film and television productions.

2.Mine rescue team training credit.

3.Temporary increase in limit on cover over of rum excise tax revenues to Puerto Rico and Virgin Islands.

4.Credit for electric-drive motorcycles, three-wheeled vehicles, and low speed vehicles.

5.Seven year recovery period for motor-sports entertainment complexes.

6.Look through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules.

7.American Samoa economic development credit.


8.Tax credit for first time DC home buyers.

These were some of the 51 tax components that I understood. Many of the other ones are complicated and apparently narrowly focused. Few, if any of these 51, apply to the vast number of ordinary Americans. They were likely developed and inserted into the tax code at the behest of Washington politicians to support a narrow geographic, personal, or business interest.

Did any politicians personally make use of that tax credit to buy DC home and real estate? Did Hollywood interests kick in some political campaign donations for those special expensing rules? How many Americans qualify for the mine training credit? Special rules for special political people all of which add to the complexity of our tax code, favor special interests, and cost ordinary Americans more in their own tax bill.

- A March 21, 2011 article in Business Week magazine reported how American corporations are holding $1 TRILLION worth of profits and cash overseas since it is a better business, financial, and economic decision to do so than to bring that wealth back to the United States and have it heavily taxed.

$1 TRILLION is about 25% more than what the Obama administration spent on its economic stimulus program. Dumping $1 TRILLION back into the U.S. economy, would have to have a positive economic on our unemployment situation. Wouldn't it be nice if we had a tax code that encouraged American companies to bring money and wealth back into America for investment in America which would generate jobs for Americans?

- A recent Wall Street Journal article, that was summarized in the April 29, 2011 issue of The Week magazine, estimated that U.S. taxpayers expend about $431 billion a year to comply with the complexity of the U.S. tax code. This money could be so much better spent on productive expansion of the economy and employment rather than tax paperwork.

- Another Business Week article in the Spring, 2011 issue had some interesting facts regarding corporate tax realities. According to the article, although the top U.S. corporate tax rate is 35%, that rate is applied haphazardly and grossly unfairly against different companies and different industries:

•For the business quarter that ended on December 31, 2010, Proctor and Gamble had an effective tax rate of 17.9%.

•Other the past three years, Walmart has had an effective tax rate of 33.6%, about twice the tax rate of Proctor and Gamble.

•But wait! Over that same time frame, General Electric had an effective U.S. tax rate of 3.6% even though it had billions in revenue and profits, about one ninth the rate of poor Walmart.

Looks like Walmart needs to significantly improve its Washington lobbying effort, given how poorly the tax code treats it vs. how well the same tax code treats General Electric. You cannot say you have a fair and balanced tax code when different sections of the economy are treated radically different from each other.

- Let's stay with General Electric for a while to show how ridiculous our 70,000 page tax code is. According to November news reports, the latest General Federal tax filing, if it had been printed out rather than submitted electronically, would have been about 57,000 pages in length.

In other words, just one company's one year tax filing would have been about 80% the length of the entire tax code. To make it more tangible, these 57,000 pages, if stacked one on top of another, would be about 19 feet tall.

Think about how many GE resources went into compiling a 57,000 page, one year tax return. Think about how much more productively GE could have used those resources to create new products and expand the economy.

Think about how many government resources will have to be expended to go through one 57,000 page tax return. Think about how easy it is for GE to cheat on its 57,000 page tax return, which I am definitely not saying it did, since I doubt even the Federal government has the resources to thoroughly go through all 57,000 pages to determine if the filing was accurate.

Think about how much better those government resources could be used if we had a simpler tax system, possibly diverting those resources to go after the criminals and fraudsters that rip off Social Security, Medicare, and Medicaid of hundreds of billions of dollars every year.

Details of the GE 57,000 page, 19 feet tax filing can be found at:

 http://www.weeklystandard.com/blogs/ge-filed-57000-page-tax-return-paid-no-taxes-14-billion-profits_609137.html

The details of how unproductive a 70,000 page tax code be is now pretty obvious. It creates an incredibly complex process that makes tax cheating and tax evasion so easy. It allows politicians to use the tax code to reward their financial backers or to personally enrich themselves.

It wastes time, resources, and wealth, all of which could be used for far more productive purposes, either reducing government fraud and waste or allowing individuals and companies to focus on expanding their businesses and lives. Replacing non-productive tax activities with productive economic activities would certainly go a long way to reducing unemployment in this country.

How do we get to this new view that taxes should be simple, fair, compassionate and not a drain on the economy? Believe it or not, the first step has to be installing term limits (Step 39 from "Love My Country, Loathe My Government) into our political processes. Our current set of politicians, in both parties, are not interested in simplifying the tax code. If they did, they would lose a primary source of political and financial power. They need to be replaced and the only way to do that is via a Constitutional amendment that imposes a "one and done" term limit restriction on all Federal politicians.

In the mean time, we will propose a simplified tax code approach within the next week that is fair, easy, effective, and efficient. It is not hard to do if you use reason, logic, and a little math, three attributes that constantly appear to elude most of Washington's political class.

Until then, consider two paragraphs about GE that we reported on in our July 6, 2011 post:

"Let's look at General Electric for a business example. They recently announced they had 2010 profits of $5.1 billion on their U.S. operations. [Note: GE also had about $9 billion worth of overseas earnings] Very impressive. However, more impressive is that they paid no Federal income tax on those profits. Even more impressive, they were able to legally work the complexity of the tax code so that they actually received a $3.2 billion tax credit from the United States government."

This is really nice work if you can get it. Earn billions of dollars, pay no taxes on those billions, and the government will give you billions more."

If this is not the poster child for fair and efficient tax reform, I do not know what is. More on our plan next week.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/

The Federal Reserve - Conflict of Interest and Its Conflict With Freedom

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford.

Henry Ford might be right, if America ever gets around to reading a General Accountability Office (GAO) report that was recently published, as mandated by the Dodd-Frank law. The report is extremely critical of the cozy relationship between the banking industry and the Federal Reserve Board and the potential for abuse and greed that this relationship has over the American economy, the potential for wasting taxpayer money, and the potential for massive conflicts of interest that sub-optimize the economy in this country.


The report was made public by Senator Bernie Sanders and includes the following highlights:

• The GAO study concluded that since people in the banking industry both elect and serve on the Federal Reserve’s board of directors, there is an obvious "appearance of a conflict of interest" and poses "reputational risks" to the Federal Reserve System.
• As a result of the Great Recession, at least 18 current or former bankers who were or had been Federal Reserve Regional bank directors were able to arrange loans and other financial assistance for their banks from the Fed amounting to $4 trillion at near zero interest.
• JPMorgan received  $391 billion out of the $4 trillion in emergency funds at the same time the bank was used by the Fed as a clearinghouse for emergency lending programs.
• In March of 2008, the Fed provided JPMorgan with $29 billion in financing to acquire Bear Stearns. JP Morgan also got the Fed to provide an 18-month exemption from risk-based leverage and capital requirements.
• JP Morgan was not done milking the Fed since it also convinced the Fed to remove risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired the troubled investment bank.
• In 2008, the New York branch of the Fed approved an application from Goldman Sachs to become a bank holding company giving it access to cheap loans from the Federal Reserve. At that time, Steve Friedman, a former chairman of the New York Fed's board of directors, sat on the Goldman Sachs board, an obvious potential conflict of interest arrangement.
• Friedmnan also owned Goldman stock during his time working for the Fed, something that was prohibited by Federal Reserve conflict of interest regulations. But not to worry, his friends in the banking industry and Fed allowed him to receive a waiver from the Fed's conflict of interest rules, news that was not made public until this report. GAO investment records show that Friedman continued to purchase shares in Goldman from November 2008 through January of 2009.
• General Electric CEO Jeffrey Immelt was a New York Fed board member at the same time his company helped create a "Commercial Paper Funding Facility" during the financial crisis. GE later received $16 billion in funding from the Fed under this emergency lending program.

Seems like a very closed, secretive, and almost incestuous relationship between the Fed and the major banks in this country. Not discussed in the article highlighting the GAO findings, but previously reported in this blog, is another banking industry gross conflict of interest issue. When the Fed went through its first two "quantitative easing" efforts, those programs pumped over $2 TRILLION of fake wealth into the economy.

That process was managed through the New York branch of the Fed which was being run by a former member of the Goldman Sachs investment bank, William Dudley. Dudley used Goldman Sachs to facilitate the quantitative easing process of the Federal government taking over bonds and bad assets of the major banks including Goldman Sachs.

A few observations:

1. At no time in the past few years, as the Fed and the banks were busy taking care of each other with bailouts and staffing, was there any oversight from the Washington political class or the American people on whether or not the people ultimately responsible for the $4 TRILLION, the taxpayers, had any say at all into this process.
2. The appearance of conflict of interest is just as bad as actual conflict of interest, and when there is a constant revolving door between membership on the Fed' staff and the Fed's boards and employment by the major banks, conflict of interest, real or potential, is a real problem.
3. Despite all of the machinations of the Fed, its employees, and its ability to devalue the dollar with $4 TRILLION worth of fake wealth, the economy is still in the ditch with hardcore and high unemployment, subdued business growth and bank lending, and TRILLIONS of dollars of cash liquidity sitting around that will eventually ignite some serious inflation. Thus, not only is there massive and inefficient conflicts of interest, the economy and the taxpayers never even got an economic boost from the Fed and the banking industry.
4. A statement from Senator Sanders' office summarized this previous point more elegantly: “This report reveals the inherent conflicts of interest that exist at the Federal Reserve. At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks.”

You start to understand why people like Ron Paul want to audit the Fed. The above conditions listed above are only the ones we know about. Only a detailed and independent audit will determine if the situation is only as bad as described above or is far worse. If the Fed has nothing else to hide, then submit to an audit and clean the slate.

At the very least, there has to be a way to ensure that the conflict of interest potential is eliminated. A democracy should not be run and manipulated by unelected bureaucrats, bureaucrats that ensure their "home" companies and industry friends always get their mistakes remedied with taxpayer bank bailouts or whose profitability is not driven by their success as business people but by their success in manipulating government functions.

Secrecy and conflict of interest should never be a part of a functioning democracy. Henry Ford recognized long ago, we are mostly ignorant about how the Fed and its banker friends undermine our democracy and our wealth. Unfortunately, nothing has changed since a contemporary of Ford, President Woodrow Wilson, first identified the problem long ago: "The government, that was designed for the people, has got into the hands of the bosses and their employees, the special interests. An invisible empire has been set up above the forms of democracy."

In this case the special interests are the Fed and its banker friends, an empire that can put the American taxpayer on the hook for $4 TRILLION in the most invisible way possible.



We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of our times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/

A Nation Should Have A Tax System That Looks Like Someone Designed It On Purpose

The title for today's post comes from William Simon who long ago served as the U.S. Treasury Secretary, from 1974 to 1977 under both Nixon and Ford. He was being sarcastic when he coined the phrase, realizing that even decades ago, the United States did not have a tax system that looked like an intelligent being designed it on purpose. Such a system would be easy to comply with, easy to understand, and not a burden on the economy.

Over time, the political class has continuously used the tax system to reward both constituents and reelection campaign donors and tried to manage social and political changes by manipulating the tax code to advantage those changes. As a result, we have ended up with a tax system that is anything but fair, easy to understand, efficient, and easy to comply with.

Consider the following factoids about our nation's tax system:

- I first started out trying to find out a basic fact: how many pages are in the Title 26 Federal Tax Code? The answers I found were never exactly the same but were pretty consistent, most around 70,000 pages. However, most of the estimates were prior to 2011, they probably did not take into account the additional Federal tax changes that Obama Care seeks to put into place so at least 70,000 pages seems like a solid number

How long is 70,000 pages? If you were reading my three volume edition of J.R.R. Tolkien's "Lord Of The Rings" tome, which measure about 5 inches across, you would have to read it about 70 times. If you bought the King James version of the Bible that is currently available on Amazon, you would have to read it about 46 times. And both of these examples are probably much easier reads than 70,000 pages of tax code.

- An online article from U.S. News and World Report in April, 2010 also estimated 70,000 pages but provided some additional, fascinating, and depressing statistics:

• Americans spend about 7.6 billion hours a year just preparing their tax returns.
• This is the equivalent of placing 3.8 million Americans into full time jobs.
• Using this criteria, the tax preparation effort in this country is six times larger than the auto making industry in this country.
• The original Federal tax code published in 1913 was 400 pages long, making it about .6% the size of what we deal with today.

- According to a Business Week article from its Insider report for Spring, 2011, there is a $345 billion gap between what U.S. taxpayers are supposed to pay in Federal taxes and what they actually pay. This gap theoretically places an additional tax burden of about $3,000 on each U.S. household, all because the political class and the government it runs does not know how operate an efficient tax collection system. The size and complexity of our 70,000 page tax code probably has a lot do to with tax evaders being so proficient at hiding the taxes the owe.

- According to a short article in the December 12, 2011 issue of Business Week, 51 Federal tax breaks were expected to expire at the end of 2010. A sampling of these 51 tax breaks give a good indication of how convoluted and needlessly complex our tax system has become (remember these are the tax components that went away, there are probably thousands and thousands of other similar ones that did not go away and which take up the 70,000 pages):

1. Special expensing rules for certain film and television productions.
2. Mine rescue team training credit.
3. Temporary increase in limit on cover over of rum excise tax revenues to Puerto Rico and Virgin Islands.
4. Credit for electric-drive motorcycles, three-wheeled vehicles, and low speed vehicles.
5. Seven year recovery period for motor-sports entertainment complexes.
6. Look through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules.
7. American Samoa economic development credit.
8. Tax credit for first time DC home buyers.

These were some of the 51 tax components that I understood. Many of the other ones are complicated and apparently narrowly focused. Few, if any of these 51, apply to the vast number of ordinary Americans. They were likely developed and inserted into the tax code at the behest of  Washington politicians to support a narrow geographic, personal, or business interest.

Did any politicians personally make use of that tax credit to buy DC home and real estate? Did Hollywood interests kick in some political campaign donations for those special expensing rules? How many Americans qualify for the mine training credit? Special rules for special political people all of which add to the complexity of our tax code, favor special interests, and cost ordinary Americans more in their own tax bill.

- A March 21, 2011 article in Business Week magazine reported how American corporations are holding $1 TRILLION worth of profits and cash overseas since it is a better business, financial, and economic decision to do so than to bring that wealth back to the United States and have it heavily taxed.

$1 TRILLION is about 25% more than what the Obama administration spent on its economic stimulus program. Dumping $1 TRILLION back into the U.S. economy, would have to have a positive economic on our unemployment situation. Wouldn't it be nice if we had a tax code that encouraged American companies to bring money and wealth back into America for investment in America which would generate jobs for Amercians?

- A recent Wall Street Journal article, that was summarized in the April 29, 2011 issue of The Week magazine, estimated that U.S. taxpayers expend about $431 billion a year to comply with the complexity of the U.S. tax code. This money could be so much better spent on productive expansion of the economy and employment rather than tax paperwork.

- Another Busines Week article in the Spring, 2011 issue had some interesting facts regarding corporate tax realities. According to the article, although the top U.S. corporate tax rate is 35%, that rate is applied haphazardly and grossly unfairly against different companies and different industries:

• For the business quarter that ended on December 31, 2010, Proctor and Gamble had an effective tax rate of 17.9%.
• Other the past three years, Walmart has had an effective tax rate of 33.6%, about twice the tax rate of Proctor and Gamble.
• But wait! Over that same time frame, General Electric had an effective U.S. tax rate of 3.6% even though it had billions in revenue and profits, about one ninth the rate of poor Walmart.

Looks like Walmart needs to significantly improve its Washington lobbying effort, given how poorly the tax code treats it vs. how well the same tax code treats General Electric. You cannot say you have a fair and balanced tax code when different sections of the economy are treated radically different from each other.

- Let's stay with General Electric for a while to show how ridiculous our 70,000 page tax code is. According to November news reports, the latest General Federal tax filing, if it had been printed out rather than submitted electronically, would have been about 57,000 pages in length.

In other words, just one company's one year tax filing would have been about 80% the length of the entire tax code. To make it more tangible, these 57,000 pages, if stacked one on top of another, would be about 19 feet tall.

Think about how many GE resources went into compiling a 57,000 page, one year tax return. Think about how much more productively GE could have used those resources to create new products and expand the economy.

Think about how many government resources will have to be expended to go through one 57,000 page tax return. Think about how easy it is for GE to cheat on its 57,000 page tax return, which I am definitely not saying it did,  since I doubt even the Federal government has the resources to thoroughly go through all 57,000 pages to determine if the filing was accurate.

Think about how much better those government resources could be used if we had a simpler tax system, possibly diverting those resources to go  after the criminals and fraudsters that rip off Social Security, Medicare, and Medicaid of hundreds of billions of dollars every year.

Details of the GE 57,000 page, 19 feet tax filing can be found at http://www.weeklystandard.com/blogs/ge-filed-57000-page-tax-return-paid-no-taxes-14-billion-profits_609137.html

The details of how unproductive a 70,000 page tax code be is now pretty obvious. It creates an incredibly complex process that makes tax cheating and tax evasion so easy. It allows politicians to use the tax code to reward their financial backers or to personally enrich themselves.

It wastes time, resources, and wealth, all of which could be used for far more productive purposes, either reducing government fraud and waste or allowing individuals and companies to focus on expanding their businesses and lives. Replacing non-productive tax activities with productive economic activities would certainly go a long way to reducing unemployment in this country.

How do we get to this new view that taxes should be simple, fair, compassionate and not a drain on the economy? Believe it or not, the first step has to be installing term limits (Step 39 from "Love My Country, Loathe My Government) into our political processes. Our current set of politicians, in both parties, are not interested in simplifying the tax code. If they did, they would lose a primary source of political and financial power. They need to be replaced and the only way to do that is via a Constitutional amendment that imposes a "one and done" term limit restriction on all Federal politicians.

In the mean time, we will propose a simplified tax code approach within the next week that is fair, easy, effective, and efficient. It is not hard to do if you use reason, logic, and a little math, three attributes that constantly appear to elude most of Washington's political class. Until then, consider two paragraphs about GE that we reported on in our July 6, 2011 post:

"Let's look at General Electric for a business example. They recently announced they had 2010 profits of $5.1 billion on their U.S. operations. [Note: GE also had about $9 billion worth of overseas earnings] Very impressive. However, more impressive is that they paid no Federal income tax on those profits. Even more impressive, they were able to legally work the complexity of the tax code so that they actually received a $3.2 billion tax credit from the United States government.


This is really nice work if you can get it. Earn billions of dollars, pay no taxes on those billions, and the government will give you billions more."

If this is not the poster child for fair and efficient tax reform, I do not know what is. More on our plan next week.



Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.


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http://www.cato.org/
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http://realpolichick.blogspot.com/
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http://www.reason.com/
http://www.repealamendment/