Pay attention to inflation and how it eats into your buying power. Watch the bond market. When the bond market finally realizes that inflation will be an enduring threat, bond yields will move up to compensate for the lost buying power - and the value of your existing bonds will drop.
From the Detroit News online:
Every first Friday of the month provides a bounty of data on the U.S. labor market. The unemployment rate gets most of the attention. But when 91percent of Americans in the work force have jobs, we need to look at what those jobs pay...
Average weekly earnings have been growing each month since December, and they are almost $37 per week higher than two years ago. That's a 5 percent pay increase for the average worker. Not bad, considering the sour economy in the past two years.
But here's why many don't feel as if they've gotten a raise: Inflation has risen slightly more than average pay.
Consumer prices are up 5.5 percent over the same two years. In other words, that average paycheck today has a little less buying power than that average paycheck two years ago.
Yes, a lot more of that pay goes toward food and energy costs. The $37 average wage increase won't even fill up the gas tank.
While getting a steady paycheck is key for a growing economy, seeing that paycheck grow steadily is vital for a sustainable economy.
Link: http://www.detnews.com/article/20110530/BIZ01/105300317/1488/BIZ01/Paychecks-are-growing--but-so-is-inflation
Monday, May 30, 2011
Sunday, May 29, 2011
U.S. has binged; soon it’ll be time to pay the tab
From Gretchen Morgenson at the NYTIMES.com:
'SAY this about all the bickering over the federal debt ceiling: at least people are talking openly about our nation’s growing debt load. This $14.3 trillion issue is front and center — exactly where it should be.
Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics...
“There may never be a single defining moment of crisis,” the authors write, “but rather a drift into ever-higher inflation and interest rates, ever-lower growth or deeper recession, and eventually hyperinflation along with rapid currency depreciation. Most economists would view such a prospect as a progressive strangulation of a nation’s well-being.”'
Link: http://www.nytimes.com/2011/05/29/business/economy/29gret.html?_r=1
'SAY this about all the bickering over the federal debt ceiling: at least people are talking openly about our nation’s growing debt load. This $14.3 trillion issue is front and center — exactly where it should be.
Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics...
“There may never be a single defining moment of crisis,” the authors write, “but rather a drift into ever-higher inflation and interest rates, ever-lower growth or deeper recession, and eventually hyperinflation along with rapid currency depreciation. Most economists would view such a prospect as a progressive strangulation of a nation’s well-being.”'
Link: http://www.nytimes.com/2011/05/29/business/economy/29gret.html?_r=1
Thursday, May 26, 2011
Economic growth still weak; Jobless claims jump
NEW YORK (CNNMoney) -- U.S. economic growth remained disappointingly weak the first three months of the year, the government reported Thursday....
Gross domestic product, the broadest measure of the nation's economic health, grew at an annual rate of 1.8% in the first quarter, according to the Commerce Department....
While the economy is still growing, most economists agree that it's not fast enough...
The report showed consumer spending slowed even more than originally expected, as consumption grew at only a 2.2% rate, a significant slowdown from the original 2.7% estimate...
The drop in consumption is a sign that consumers squeezed by higher energy and food prices are pulling back on their other spending, economists say. The report showed consumer prices rose 3.8% from the year before, more than twice the rate of inflation during the fourth quarter...
The higher rate of inflation is a drag on GDP, which is adjusted for inflation. As prices rise, even more growth is needed just to compensate for those increases...
-----
The Labor Department Thursday reported an unexpected jump in initial jobless claims to 424,000, marking the seventh straight week that closely-watched reading has been above the 400,000.
Paul Dales of Capital Economics said he also expects weak growth of close to 2% the rest of this year, and a slowdown in hiring.
"It just seems to make sense, when the economy is not that active, the economy just doesn't need as many new workers," he said....
Link to full article at CNN/Money:
http://money.cnn.com/2011/05/26/news/economy/gdp_report/index.htm
Wednesday, May 25, 2011
Bill Gross: The Caine Mutiny (Part 2)
... I would like to continue down the route of previous months’ Investment Outlooks and discuss the immediate threat to investment portfolios represented by low policy rates (fed funds in the U.S.) and the increasing negative real yields that they engender as inflation accelerates.
I spoke last month to the reality of investors being “skunked” and having their pockets picked simply by receiving yields less than inflation,
and suggested that as a major reason why the PIMCO ship was carrying a limited supply of Treasuries on board. Although we have warned for several years of the deteriorating creditworthiness of America’s AAA rating, our de minimis Treasury positions had less to do with much more immediate issues than America’s balance sheet prospects.
We are highly sensitive to the pocket-picking policies that governments in general deploy...
Link: http://www.pimco.com/EN/insights/pages/the-caine-mutiny-part-2.aspx
--------------------
I spoke last month to the reality of investors being “skunked” and having their pockets picked simply by receiving yields less than inflation,
and suggested that as a major reason why the PIMCO ship was carrying a limited supply of Treasuries on board. Although we have warned for several years of the deteriorating creditworthiness of America’s AAA rating, our de minimis Treasury positions had less to do with much more immediate issues than America’s balance sheet prospects.
We are highly sensitive to the pocket-picking policies that governments in general deploy...
Link: http://www.pimco.com/EN/insights/pages/the-caine-mutiny-part-2.aspx
--------------------
Once bullish, contrarian Jim Grant likes cash now
...Though detractors say he's far too negative, he's been praised for some timely calls. In the 1980s, he warned of an overheated junk bond market before it collapsed. He foretold of the bursting of the tech bubble in the late 1990s, and revealed the false alchemy of Wall Street's mortgage packaging business before housing crashed four years ago...
are excerpts, edited for clarity, from a wide-ranging conversation in which he lit into the Federal Reserve for our current troubles, warned of 10 percent inflation and waxed nostalgic for a time when Washington had the courage to let prices fall in crises rather than goose them up and prolong our agony....
It does seem improbable that the inflation rate would ever get beyond 3.5 percent, let alone knock on the door of 10 percent. But I'm here to tell you it's going to 10 percent....
Link: http://www.forbes.com/feeds/ap/2011/05/20/general-health-care-us-jim-grant-q-amp-a_8477138.html
------------------------
are excerpts, edited for clarity, from a wide-ranging conversation in which he lit into the Federal Reserve for our current troubles, warned of 10 percent inflation and waxed nostalgic for a time when Washington had the courage to let prices fall in crises rather than goose them up and prolong our agony....
It does seem improbable that the inflation rate would ever get beyond 3.5 percent, let alone knock on the door of 10 percent. But I'm here to tell you it's going to 10 percent....
Link: http://www.forbes.com/feeds/ap/2011/05/20/general-health-care-us-jim-grant-q-amp-a_8477138.html
------------------------
The Hidden State Financial Crisis
By MEREDITH WHITNEY in the Wall Street Journal Online
Next month will be pivotal for most states, as it marks the fiscal year end and is when balanced budgets are due. The states have racked up over $1.8 trillion in taxpayer-supported obligations in large part by underfunding their pension and other post-employment benefits. Yet over the past three years, there still has been a cumulative excess of $400 billion in state budget shortfalls. States have already been forced to raise taxes and cut programs to bridge those gaps.
Next month will also mark the end of the American Recovery and Reinvestment Act's $480 billion in federal stimulus, which has subsidized states through the economic downturn. States have grown more dependent on federal subsidies, relying on them for almost 30% of their budgets....
Link: http://online.wsj.com/article/SB10001424052748703421204576329134261805612.html?mod=WSJ_Opinion_LEADTop
-----------------------
Next month will be pivotal for most states, as it marks the fiscal year end and is when balanced budgets are due. The states have racked up over $1.8 trillion in taxpayer-supported obligations in large part by underfunding their pension and other post-employment benefits. Yet over the past three years, there still has been a cumulative excess of $400 billion in state budget shortfalls. States have already been forced to raise taxes and cut programs to bridge those gaps.
Next month will also mark the end of the American Recovery and Reinvestment Act's $480 billion in federal stimulus, which has subsidized states through the economic downturn. States have grown more dependent on federal subsidies, relying on them for almost 30% of their budgets....
Link: http://online.wsj.com/article/SB10001424052748703421204576329134261805612.html?mod=WSJ_Opinion_LEADTop
-----------------------
Monday, May 23, 2011
How Much!!?!! Ways to think about our debt
The Congressional Budget Office projects the total budget deficit in fiscal 2011 at about $1.4 trillion.
"The net worth of Bill Gates, roughly around $56 billion, could only cover the deficit for 15 days," said Jason Peuquet, a policy analyst with the Committee for a Responsible Federal Budget. "The net worth of Warren Buffet, roughly around $50 billion, could only cover the deficit for 13 days."
--------------------------
President Ronald Reagan once famously said that a stack of $1,000 bills equivalent to the U.S. government's debt would be about 67 miles high.
That was 1981. Since then, the national debt has climbed to $14.3 trillion. In $1,000 bills, it would now be more than 900 miles tall.
Above two quotes linked here:
http://www.realclearmarkets.com/news/reuters/finance_business/2011/May/19/pile_of_debt_would_stretch_beyond_stratosphere.html
--------------------------
At the end of fiscal 2008, which came on September 30 of last year, the American national debt stood at $9.6 trillion. That sum is, perhaps, quite beyond the imagining of most people. It is, after all, 250 million times the average per capita income. Even the total fortunes of the entire Forbes 400 list add up to less than 15 percent of it. To use a journalistic measure that dates back to the late 18th century—when the British national debt had become a major political issue in that country—if you laid 9.6 trillion silver dollars end to end, they would reach to the sun and back, with enough left over to wrap around the Earth more than 1,700 times.
link: John Steele Gordon
http://www.american.com/archive/2009/september/debt-be-not-proud-the-sorry-tale-of-america2019s-out-of-control-spending
"The net worth of Bill Gates, roughly around $56 billion, could only cover the deficit for 15 days," said Jason Peuquet, a policy analyst with the Committee for a Responsible Federal Budget. "The net worth of Warren Buffet, roughly around $50 billion, could only cover the deficit for 13 days."
--------------------------
President Ronald Reagan once famously said that a stack of $1,000 bills equivalent to the U.S. government's debt would be about 67 miles high.
That was 1981. Since then, the national debt has climbed to $14.3 trillion. In $1,000 bills, it would now be more than 900 miles tall.
Above two quotes linked here:
http://www.realclearmarkets.com/news/reuters/finance_business/2011/May/19/pile_of_debt_would_stretch_beyond_stratosphere.html
--------------------------
At the end of fiscal 2008, which came on September 30 of last year, the American national debt stood at $9.6 trillion. That sum is, perhaps, quite beyond the imagining of most people. It is, after all, 250 million times the average per capita income. Even the total fortunes of the entire Forbes 400 list add up to less than 15 percent of it. To use a journalistic measure that dates back to the late 18th century—when the British national debt had become a major political issue in that country—if you laid 9.6 trillion silver dollars end to end, they would reach to the sun and back, with enough left over to wrap around the Earth more than 1,700 times.
link: John Steele Gordon
http://www.american.com/archive/2009/september/debt-be-not-proud-the-sorry-tale-of-america2019s-out-of-control-spending
Sunday, May 15, 2011
What If the U.S. Treasury Defaults?
He is not Paul Krugman.
He is not a media columnist.
He is not running for office.
This is a useful, clear interview that frames the issue of the deep financial trouble the U.S. is facing in the most important way:
"'A financial crisis is surely going to happen as big or bigger than the one we had in 2008 if we continue to behave the way we're behaving," says Stanley Druckenmiller, the legendary investor and onetime fund manager for George Soros. Is this another warning from Wall Street that Congress must immediately raise the federal debt limit to prevent the end of civilization?
No—Mr. Druckenmiller has heard enough of such "clamor and hyperbole." The grave danger he sees is that politicians might give the government authority to borrow beyond the current limit of $14.3 trillion without any conditions to control spending...
Mr. Druckenmiller says he's "a registered independent" but says he admires New Jersey Gov. Chris Christie for the way he has explained that the state has to reform its benefit plans if it is going to be able to take care of retired government workers. He argues that the same case needs to be made nationally. "We don't have a choice between Paul Ryan's plan and the current plan, because the current plan is a mirage. . . . That money is not going to be there."
Given Mr. Druckenmiller's track record, officials at the Fed and Treasury may not have a choice, either. They may finally have to try to explain why technical default is a crisis, but runaway spending is not."
Read the full article at WSJ.com:
http://online.wsj.com/article/SB10001424052748703864204576317612323790964.html?mod=WSJ_newsreel_opinion
He is not a media columnist.
He is not running for office.
This is a useful, clear interview that frames the issue of the deep financial trouble the U.S. is facing in the most important way:
"'A financial crisis is surely going to happen as big or bigger than the one we had in 2008 if we continue to behave the way we're behaving," says Stanley Druckenmiller, the legendary investor and onetime fund manager for George Soros. Is this another warning from Wall Street that Congress must immediately raise the federal debt limit to prevent the end of civilization?
No—Mr. Druckenmiller has heard enough of such "clamor and hyperbole." The grave danger he sees is that politicians might give the government authority to borrow beyond the current limit of $14.3 trillion without any conditions to control spending...
Mr. Druckenmiller says he's "a registered independent" but says he admires New Jersey Gov. Chris Christie for the way he has explained that the state has to reform its benefit plans if it is going to be able to take care of retired government workers. He argues that the same case needs to be made nationally. "We don't have a choice between Paul Ryan's plan and the current plan, because the current plan is a mirage. . . . That money is not going to be there."
Given Mr. Druckenmiller's track record, officials at the Fed and Treasury may not have a choice, either. They may finally have to try to explain why technical default is a crisis, but runaway spending is not."
Read the full article at WSJ.com:
http://online.wsj.com/article/SB10001424052748703864204576317612323790964.html?mod=WSJ_newsreel_opinion
Saturday, May 14, 2011
Post-Recession, the Rich Are Different
Below are some excerpts from a good article found at the WSJ.com.
Ask yourself why you shouldn't apply this new thinking to all of your investments. We know how to save millions of investors tens of billions of dollars in annual cost savings. That is real value every investor can participate in and, grouped with other investors, exercise tremendous influence.
Article link follows graphic:
"Bentleys and Hermès bags are selling again. Yet the wealthiest Americans are emerging from the financial downturn as different consumers than they were...
new selectiveness is widespread among the wealthiest Americans. Though many of these people might seem unscathed by the financial crisis—they didn't lose their homes, jobs or retirement savings—they were deeply affected by what took place around them. "If you're conscious at all, it just seeps in"...
What's showing up in the latest research is a broad-based caution—a sudden aversion to salespeople, a tepid response to ads focused on brand images, and a new interest in price-shopping. In Harrison Group's first-quarter survey of consumers with a median income of $275,000, 38% said they wait for items to go on sale, versus 31% in 2010..."
http://online.wsj.com/article/SB10001424052748703730804576317202215630540.html
Ask yourself why you shouldn't apply this new thinking to all of your investments. We know how to save millions of investors tens of billions of dollars in annual cost savings. That is real value every investor can participate in and, grouped with other investors, exercise tremendous influence.
Article link follows graphic:
"Bentleys and Hermès bags are selling again. Yet the wealthiest Americans are emerging from the financial downturn as different consumers than they were...
new selectiveness is widespread among the wealthiest Americans. Though many of these people might seem unscathed by the financial crisis—they didn't lose their homes, jobs or retirement savings—they were deeply affected by what took place around them. "If you're conscious at all, it just seeps in"...
What's showing up in the latest research is a broad-based caution—a sudden aversion to salespeople, a tepid response to ads focused on brand images, and a new interest in price-shopping. In Harrison Group's first-quarter survey of consumers with a median income of $275,000, 38% said they wait for items to go on sale, versus 31% in 2010..."
http://online.wsj.com/article/SB10001424052748703730804576317202215630540.html
You better follow the bond market
Follow the bond market. The big players are taking action and positioning themselves. See the direction the big guys are going - and ask yourself why they might be doing this. I wrote yesterday about Bill Gross. Jim Rogers seems to be joining him.
But what about Goldman Sachs? A news report suggests they went LONG U.S. Treasuries; that means they bought them, like them, and are holding onto them.
Really? Can you trust Goldman Sachs? Are they in bed with the U.S. Government? Might they be a little too cozy and have other motivations?
Understand you can never duplicate what these "smarter than you, very big, and highly sophisticated bond market players" do. They know more and have more muscle than you realize. But watch them; and watch the actual movement in the bond markets and where interest rates are heading.
These are important times. Pay attention. Follow the bond markets.
----------------------
Here are some articles worth examining online:
Goldman Goes Long US Government Debt
Goldman Sachs dramatically increased its exposure to debt issued by the US government and government-sponsored agencies like Fannie Mae and Freddie Mac in the first quarter of this year, apparently bucking the trend of some of the biggest bond traders to short US Treasuries...
Read more:
http://www.cnbc.com/id/42972870
Jim Rogers says may short U.S. Treasuries, later today
Jim Rogers, the veteran investor and commodity bull, plans to short U.S. Treasuries, maybe today if he "gets around to it" and wants to buy more silver, he told Reuters in an interview.
Rogers, who rose to prominence as co-founder of the former Quantum Fund with billionaire investor George Soros four decades ago, said he expects bond prices to fall and the U.S. dollar to rally when the Federal Reserve halts its government bond buying program at the end of June.
"I'm not short bonds yet but I plan to short bonds -- maybe this afternoon if I get around to it," Rogers told Reuters Insider television on Tuesday....
The long-time commodities investor said he was unruffled by last week's commodities rout that knocked 13 percent off oil prices. Silver also fell 25 percent in its biggest correction since prices collapsed in 1980, hit by a succession of margin increases that nearly doubled trading costs. Silver had risen 27 percent in April.
Now he sees a buying opportunity.
"It's not the end of the silver market," he said. "I want to buy more silver."
The price of increasingly scarce commodities like oil and precious metals will be rising for a number of years, Rogers said, regardless of impressive market corrections.
"We are in a bull market that has several years to go. I don't know when it is going to end," Rogers said. "We have virtually no new supply of anything. The world's known reserves of oil continue to decline."
He described the commodity crash as "nothing unusual".
"Corrections happen all the time in markets," he said...
Read more:
http://www.realclearmarkets.com/news/reuters/finance_business/2011/May/10/jim_rogers_says_may_short_u_s__treasuries__later_today.html
But what about Goldman Sachs? A news report suggests they went LONG U.S. Treasuries; that means they bought them, like them, and are holding onto them.
Really? Can you trust Goldman Sachs? Are they in bed with the U.S. Government? Might they be a little too cozy and have other motivations?
Understand you can never duplicate what these "smarter than you, very big, and highly sophisticated bond market players" do. They know more and have more muscle than you realize. But watch them; and watch the actual movement in the bond markets and where interest rates are heading.
These are important times. Pay attention. Follow the bond markets.
----------------------
Here are some articles worth examining online:
Goldman Goes Long US Government Debt
Goldman Sachs dramatically increased its exposure to debt issued by the US government and government-sponsored agencies like Fannie Mae and Freddie Mac in the first quarter of this year, apparently bucking the trend of some of the biggest bond traders to short US Treasuries...
Read more:
http://www.cnbc.com/id/42972870
Jim Rogers says may short U.S. Treasuries, later today
Jim Rogers, the veteran investor and commodity bull, plans to short U.S. Treasuries, maybe today if he "gets around to it" and wants to buy more silver, he told Reuters in an interview.
Rogers, who rose to prominence as co-founder of the former Quantum Fund with billionaire investor George Soros four decades ago, said he expects bond prices to fall and the U.S. dollar to rally when the Federal Reserve halts its government bond buying program at the end of June.
"I'm not short bonds yet but I plan to short bonds -- maybe this afternoon if I get around to it," Rogers told Reuters Insider television on Tuesday....
The long-time commodities investor said he was unruffled by last week's commodities rout that knocked 13 percent off oil prices. Silver also fell 25 percent in its biggest correction since prices collapsed in 1980, hit by a succession of margin increases that nearly doubled trading costs. Silver had risen 27 percent in April.
Now he sees a buying opportunity.
"It's not the end of the silver market," he said. "I want to buy more silver."
The price of increasingly scarce commodities like oil and precious metals will be rising for a number of years, Rogers said, regardless of impressive market corrections.
"We are in a bull market that has several years to go. I don't know when it is going to end," Rogers said. "We have virtually no new supply of anything. The world's known reserves of oil continue to decline."
He described the commodity crash as "nothing unusual".
"Corrections happen all the time in markets," he said...
Read more:
http://www.realclearmarkets.com/news/reuters/finance_business/2011/May/10/jim_rogers_says_may_short_u_s__treasuries__later_today.html
Tuesday, May 10, 2011
PIMCO's Bill Gross bets against Treasury bonds
From Fortune Magazine:
"A little Treasury rally doesn't faze the loquacious bond bear Bill Gross.
Gross, the manager of the world's biggest bond fund, increased his bet against U.S. government debt last month while adding to his record cash position – even as bond prices rallied.
Gross' Pimco Total Return fund held 43 cents of cash for every dollar it had in assets, according to data from the end of April..."
Read more at Fortune.com: http://finance.fortune.cnn.com/2011/05/10/gross-boosts-wrong-way-bet-on-a-bond-crash/
--------------------------------
What does this mean? Bill Gross has been the best bond manager in the US for more than 30 years. He runs the biggest mutual fund and PIMCO manages more than $1 Trillion in assets.
When you read Bill Gross, as you can read his commentaries at the PIMCO website every month, you find he is clear about what he does and what he means. Getting money into cash seems reasonable.
Ask yourself this question: Do you want return of your capital more than you want return on your capital?
"A little Treasury rally doesn't faze the loquacious bond bear Bill Gross.
Gross, the manager of the world's biggest bond fund, increased his bet against U.S. government debt last month while adding to his record cash position – even as bond prices rallied.
Gross' Pimco Total Return fund held 43 cents of cash for every dollar it had in assets, according to data from the end of April..."
Read more at Fortune.com: http://finance.fortune.cnn.com/2011/05/10/gross-boosts-wrong-way-bet-on-a-bond-crash/
--------------------------------
What does this mean? Bill Gross has been the best bond manager in the US for more than 30 years. He runs the biggest mutual fund and PIMCO manages more than $1 Trillion in assets.
When you read Bill Gross, as you can read his commentaries at the PIMCO website every month, you find he is clear about what he does and what he means. Getting money into cash seems reasonable.
Ask yourself this question: Do you want return of your capital more than you want return on your capital?
Friday, May 6, 2011
Write the check already!
Shocking news! From WSJ.com:
The Tax-Me-More Lobby Doesn't Pay More
The same people who say they want to pay higher taxes don't bother to contribute more voluntarily.
By Stephen Moore
I wish I had a dollar for every time a wealthy liberal has declared he thinks he should pay more taxes. That list includes Warren Buffett, George Soros, Bill Gates Sr., Mark Zuckerberg and even Barack Obama, who now says that not only should rich people like him pay more taxes, they want to pay more. "I believe that most wealthy Americans would agree with me," he said of his tax-hike plan. "They want to give back to the country that's done so much for them."
...So why don't they? There is a special fund at the Treasury Department for taxpayers who want to make "gift contributions to reduce debt held by the public." But very few do. Last year that fund and others like it raised a grand total of $300 million. That's a decimal place on Mr. Zuckerberg's net worth and pays for less than two hours worth of federal borrowing...
...Liberals bristle at the charge that they are pro-tax hypocrites and even ridicule the idea that they should voluntarily pony up more in taxes when they lobby for tax hikes. Eric Schoenberg, a professor at Columbia University's Business School and a lobbyist for Responsible Wealth, recently told the Associated Press that "This voluntary idea clearly represents a mindset that basically pretends there's no such things as collective goods that we produce. Are you going to let people volunteer to build the road system? Are you going to let them volunteer to pay for education?"
Nonsense. Just because something is a collective good doesn't mean it has to be paid for out of coercive taxes. Central Park in New York is a collective good, but its remarkable renovation in the early 1990s was almost entirely financed through private donations, as have been many of our national monuments. Throughout history Americans have made heroic acts of patriotism, not because they were required to by law but for love of country.
Hundreds of thousands of Americans have volunteered to serve in the military and many have given their lives on the battlefield. They didn't say: "I will only die for my country if the fellow next door is required to." During the Revolutionary War many Americans gave their fortunes to help finance the cause of Independence. But Warren Buffett won't voluntarily contribute to pay down the national debt?
What liberals don't get is that there are patriotic reasons for strongly opposing higher tax rates. To name a few: Higher tax rates will damage the economy and throw Americans out of work. Higher taxes, history proves, won't be used to balance the budget but to finance government expansion. And higher taxes take the pressure off Congress to make the deep spending cuts that are so urgently necessary...
Link: http://online.wsj.com/article/SB10001424052748703849204576303040425833126.html
The Tax-Me-More Lobby Doesn't Pay More
The same people who say they want to pay higher taxes don't bother to contribute more voluntarily.
By Stephen Moore
I wish I had a dollar for every time a wealthy liberal has declared he thinks he should pay more taxes. That list includes Warren Buffett, George Soros, Bill Gates Sr., Mark Zuckerberg and even Barack Obama, who now says that not only should rich people like him pay more taxes, they want to pay more. "I believe that most wealthy Americans would agree with me," he said of his tax-hike plan. "They want to give back to the country that's done so much for them."
...So why don't they? There is a special fund at the Treasury Department for taxpayers who want to make "gift contributions to reduce debt held by the public." But very few do. Last year that fund and others like it raised a grand total of $300 million. That's a decimal place on Mr. Zuckerberg's net worth and pays for less than two hours worth of federal borrowing...
...Liberals bristle at the charge that they are pro-tax hypocrites and even ridicule the idea that they should voluntarily pony up more in taxes when they lobby for tax hikes. Eric Schoenberg, a professor at Columbia University's Business School and a lobbyist for Responsible Wealth, recently told the Associated Press that "This voluntary idea clearly represents a mindset that basically pretends there's no such things as collective goods that we produce. Are you going to let people volunteer to build the road system? Are you going to let them volunteer to pay for education?"
Nonsense. Just because something is a collective good doesn't mean it has to be paid for out of coercive taxes. Central Park in New York is a collective good, but its remarkable renovation in the early 1990s was almost entirely financed through private donations, as have been many of our national monuments. Throughout history Americans have made heroic acts of patriotism, not because they were required to by law but for love of country.
Hundreds of thousands of Americans have volunteered to serve in the military and many have given their lives on the battlefield. They didn't say: "I will only die for my country if the fellow next door is required to." During the Revolutionary War many Americans gave their fortunes to help finance the cause of Independence. But Warren Buffett won't voluntarily contribute to pay down the national debt?
What liberals don't get is that there are patriotic reasons for strongly opposing higher tax rates. To name a few: Higher tax rates will damage the economy and throw Americans out of work. Higher taxes, history proves, won't be used to balance the budget but to finance government expansion. And higher taxes take the pressure off Congress to make the deep spending cuts that are so urgently necessary...
Link: http://online.wsj.com/article/SB10001424052748703849204576303040425833126.html
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