Government Motors no more?

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It looks like the US taxpayer will get it's investment back from the sale today of 200 million shares of GM stock our government bought. The 47% that do pay federal income tax will eat the difference between the $27.50 sell price and the $56.00 buy price. The good news is, the U.S. government is only selling half its investment. Net gain to the administration? A lot of votes. Loss to the 47% that pay income tax? More than $17 billion. Maybe they can get that back from the oh' so solid SS program that is fully funded untill 2033.

http://washingtonexaminer.com/examiner-editorial-gm-is-alive-and-taxpaye...

http://www.usatoday.com/story/money/cars/2012/12/20/auto-gm-stock/1782743/

Redwing's picture
Redwing
Joined:
Jun. 21, 2012 4:12 am

Comments

Quote Redwing:

It looks like the US taxpayer will get it's investment back from the sale today of 200 million shares of GM stock our government bought. The 47% that do pay federal income tax will eat the difference between the $27.50 sell price and the $56.00 buy price. The good news is, the U.S. government is only selling half its investment. Net gain to the administration? A lot of votes. Loss to the 47% that pay income tax? More than $17 billion. Maybe they can get that back from the oh' so solid SS program that is fully funded untill 2033.

http://washingtonexaminer.com/examiner-editorial-gm-is-alive-and-taxpaye...

http://www.usatoday.com/story/money/cars/2012/12/20/auto-gm-stock/1782743/

Considering all the government help Japanese, Korean, and German automakers get from their home governments, this is fine with me. What I do object to is taxpayer money going to industries that don't need it, like big oil.........or one of the wildly profitable companies....mainly financial companies that make nothing of value........... that skip out on U.S. taxes by having a PO Box in the Cayman Islands..........

al3's picture
al3
Joined:
Jul. 31, 2007 3:01 pm

Amen. Given all the supply chain jobs and businesses saved along with the auto companies, it is hard to see the downside on this deal. Bush's bank bailouts are pure shit, and Obama has not done what he should have done with the banks, but this is an example of how heads up their collective ass the GOPimps are.

drc2
Joined:
Apr. 26, 2012 11:15 am

Thanks for the post Redwing. It feels good to start off the holiday weekend with some good news. Merry Christmas!

organican's picture
organican
Joined:
Nov. 30, 2012 3:24 am

The minimum wage needs to be a little over $10/hour. Today the minimum wage is 30% LESS than in 1968.

This IRS xls spreadsheet of 'individual income tax' returns (this one classified by AGI size)

http://www.irs.gov/file_source/pub/irs-soi/09in11si.xls

shows on Row #35 that even of those who did file, 47 million returns (33.1% of total) were from filers with adjusted gross income LESS than $20,000

shockwave
Joined:
Nov. 12, 2012 11:14 pm

More cars would have been sold, and less food stamps needed, with a proper minimum wage.

shockwave
Joined:
Nov. 12, 2012 11:14 pm

Any talk about those that don't pay Income tax is a right wing ploy.

Everyone pays the taxes in todays world - go buy some gas - You're paying a tax....

Sales tax, property taxes (and the renter pays those too) -

FICA - which has been stolen for decades into the general fund never to be repaid equaling a TAX Increase on the poorest with no chance of a refund or big tax 'break' the 1% Freeloaders get.

That Fica is gone with Austerity to replace it -

If you add the TOTAL tax bill for Americans you'd find the rich are FREELOADERS paying a much lower overall marginal tax bill than the rest of us -

All the while adding multiple times their share of environmental degradation costs as well as added misery and poverty.

And frankly like the sociopaths the rich are - they argue they dont have enough and Deserve more and see not the historical patterns their sociopathology of Greed and lack of empathy has caused over the ages.

They see not that thru the ages their greed is like a rubber band that comes back to snap them -

Does Anyone here actually belive that the .01% sociopaths we call the Forture 500 and the Richest People in the World will actually allow a restructuring of the economic and environmemtal systems we obviously need to sustain genetically vibrant life on Earth?

Its a government and economy OF, By, and For the plunderers -

Scappoose's picture
Scappoose
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Mar. 30, 2012 6:49 am

And yet whenever the Democrats try to get Big Oil off the gubmint teat the entire Conservative movement rises up en masse.
It is in our interest to encourage commerce, just as the US did from our founding until 1981.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 7:21 pm

The statistic is 47% (of households) do NOT pay federal income tax.

http://www.taxpolicycenter.org/UploadedPDF/1001547-Why-No-Income-Tax.pdf

EDIT

I messed that up. The statistic is 47% of UNITS (which may be bigger than, or smaller than, a household) did not pay federal income tax (in 2009.)

I get that confused with the other statistic, that 49% of Americans live in a household where at least one person is receiving some federal entitlement. And I don't know if that's the same thing as saying that "49% of households have at least one person receiving an entitlement."

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/18/who-receives-...

chilidog
Joined:
Jul. 31, 2007 3:01 pm

While I acknowledge that there is a disparity between rich and poor, the rich got to be rich because we bought into their junk.

Everytime my mom says that athletes in professional sports are overpaid considering the nature of their "work," I tell her that is the truth. However, I also remind her everytime that the reason why such athletes get paid so much is because people are willing to spend $$$$$$$ on "nose bleed" seats just to watch those athletes.

If people just refused to buy junk for the overpriced things that they are, then the wealthiest people would be paid less because people would be spending money on other things, like food, shelter, a college education for their kids, etc.

micahjr34
Joined:
Feb. 7, 2011 3:57 pm

No, athletes and actors get paid so much not just because of ticket prices, but because of advertising rates. If fans wanted to support the local team, they'd sit at home and watch the game on the boob tube. That'd raise the ratings, increasing how much they charge for ads, which is greater a source of revenue than what happens at ticket office.
Stop watching tv, and shop through Consumer Reports, ignore ads, and don't drink calories.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 7:21 pm

I think the wealthy are making out just fine when I pay my rent, buy my potatoes, and put gas in my economy car. What is the statistic, 20% of all assets are owned by 1%, 93% of economic gains flow to the top 1%? I disagree with anyone who thinks that "this is working."

The shelter market, the college education market, and increasingly the calorie market are controlled by the financiers. Don't want to leverage 4x your annual earnings on a house? Have a look at this equivalent rental that will eat 40% of your earnings!

We need a wealth tax.

chilidog
Joined:
Jul. 31, 2007 3:01 pm

You have a point Phraedrus76. However, I still feel that it is a good idea for people to realize that the rich are rich because we buy what they sell. I refer you to the concept of "marketing psychology," the art of getting people in droves to pay top dollar for overpriced junk!

micahjr34
Joined:
Feb. 7, 2011 3:57 pm

Oh, yeah the rich get there because we buy the junk. But people usually do not understand what it is they are being sold, and where.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 7:21 pm

Again, very true. Beyond the point of just not buying things merely because they are being sold to us, a person needs to buy things purposefully, and not spur of the moment or "impulse." However, I concede that doing that is easier said than done.

micahjr34
Joined:
Feb. 7, 2011 3:57 pm
Quote Redwing:

It looks like the US taxpayer will get it's investment back from the sale today of 200 million shares of GM stock our government bought. The 47% that do pay federal income tax will eat the difference between the $27.50 sell price and the $56.00 buy price. The good news is, the U.S. government is only selling half its investment. Net gain to the administration? A lot of votes. Loss to the 47% that pay income tax? More than $17 billion. Maybe they can get that back from the oh' so solid SS program that is fully funded untill 2033.

http://washingtonexaminer.com/examiner-editorial-gm-is-alive-and-taxpaye...

http://www.usatoday.com/story/money/cars/2012/12/20/auto-gm-stock/1782743/

Just another great example of why the government should not be in the business of getting involved in private business. This was a beautiful example of President Santa Claus buying the states of Michigan and Ohio for his re election with borrowed money. He gets what he was after (re election) and the taxpayers get screwed in the process.

Mauiman2's picture
Mauiman2
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Jul. 27, 2012 6:24 am
Quote Mauiman2:
Quote Redwing:

It looks like the US taxpayer will get it's investment back from the sale today of 200 million shares of GM stock our government bought. The 47% that do pay federal income tax will eat the difference between the $27.50 sell price and the $56.00 buy price. The good news is, the U.S. government is only selling half its investment. Net gain to the administration? A lot of votes. Loss to the 47% that pay income tax? More than $17 billion. Maybe they can get that back from the oh' so solid SS program that is fully funded untill 2033.

http://washingtonexaminer.com/examiner-editorial-gm-is-alive-and-taxpaye...

http://www.usatoday.com/story/money/cars/2012/12/20/auto-gm-stock/1782743/

Just another great example of why the government should not be in the business of getting involved in private business. This was a beautiful example of President Santa Claus buying the states of Michigan and Ohio for his re election with borrowed money. He gets what he was after (re election) and the taxpayers get screwed in the process.

How many votes did Bush buy with the thousands of dead soldiers?

Phaedrus76's picture
Phaedrus76
Joined:
Sep. 14, 2010 7:21 pm

Mauiman2,

The reason why the company was saved by the government investing in it really was not about preserving the company or for the purpose of making a better product. It was done to save jobs, that is, the jobs of those autoworkers. Apparently, the spending was successful in preserving those jobs, but it is debatable if the company was saved or even if the company was ready to be "let go" by the government so that it can be self supporting again.

I find nothing wrong with government working with private businesses as long as the business is providing a service to the government, and not the other way around.

micahjr34
Joined:
Feb. 7, 2011 3:57 pm
Quote micahjr34:

Mauiman2,

The reason why the company was saved by the government investing in it really was not about preserving the company or for the purpose of making a better product. It was done to save jobs, that is, the jobs of those autoworkers. Apparently, the spending was successful in preserving those jobs, but it is debatable if the company was saved or even if the company was ready to be "let go" by the government so that it can be self supporting again.

I find nothing wrong with government working with private businesses as long as the business is providing a service to the government, and not the other way around.

Yes but how do you decide which companies (jobs) to save and which companies to let go under? Hopefully you don't think that the US Government should save all jobs of failing companies. Then you have elected officials whose main driver is re election making decisions that should be made by the private sector. All that would happen then is that the party in power would reward its constituants and buy votes. That is not what tax dollars are for,

And yes, you do seem to see the failing here. Therre are plenty of examples of companies getting government dollars, then going under anyways. Elected officials should not be doing things that the private sector can handle, that is not what they are good at.

Now it is Christmas Eve, time to sign off here until the 26th. Have a Merry Christmas everyone!

Mauiman2's picture
Mauiman2
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Jul. 27, 2012 6:24 am

You ask the right questions, but you don't know it. You ask them as if they were conundrums or offensive ideas we would resist just because you ask.

For example, about those "winners and losers," it is pretty easy to make some good choices between investing in capitalization and in capital extraction. You want to encourage companies to create jobs here, not subsidize them to offshore their costs at our expense. You also want to encourage the future and get us out of the past when the externalities are pollution v. clean; and in a democracy, you want to avoid powerful concentrations of wealth and commercial infrastructure.

The idea that the State does not have a primary interest in the nature and conduct of Commerce in democratic society is idiotic. It is popular, but idiotic nonetheless. Democracy is about having a State that nurtures and protects the public interest. Commerce has decided that it is only about fiduciary responsibilities, so the State has to take care of keeping them socially responsible. The idea that "we, the people" do this in the "market" is an insult to democratic thinking and also idiotic.

We, the People, are the State, and if we allow it to be hijacked, it is our responsibility to take it back. It is not enough to point to the hijackers and suggest that we get rid of government to get rid of them. We have to deal with how they could rip us off to begin with and prevent it happening again. That this could mean very fresh and innovative thinking is true. But, it is all about how to govern instead of being ruled over.

drc2
Joined:
Apr. 26, 2012 11:15 am

While direct subsidies to help the auto companies would be a typical mercantilist policy which has merit subsidies to owners do not. Thus the prior posting was confused. The reason for government ownership is not to transfer a fixed cost from the higher paid former owners to the current new owners at a net loss. The reason for government control of ownership of auto companies is to provide management control. Private Owners do not supply sufficient discipline or management expertise of large companies to make a difference, the company stands or falls on its management quality. Ownership in the sense of active participation in the affairs and business of the company is almost entirely a myth. Unless ownership has some responsibilities not pure profit for the company doing well this will not change. The state being larger and funded by the public at large can and does take a more active role in the companies they actually own than a typical investor. Thus state ownership of the means of production is actually superior to private ownership as long as the government provides private oversight something that normal owners rarely if ever do. It becomes inferior when the state tries to operate the companies on a day to day basis, something which would bloat any government beyond recognition. Large companies by law should be required to have both government amd employee representatives on their boards as a control of mismagement. The net profit of the company should be only one consideration of its success. As long as net profits included externalities like damage to the environoment or cost to workers of layoffs its a valid measure but as it stands these costs are improperly passed along to the society at large.

What would be illuminating would be to see how the U.S. spends its revenue dollars as compared to other industrialized countries especially the social democratic countries like Sweden. It also would be good to have a point by point comparison of benefits by countries. Countries like Germany, Sweden, Japan think its a good thing to be a member of their country and citizens are to be rewarded by services and benefits if they agree not to migrate. In the U.S. a citizen is treated like trash and given the little compared to the wealth of the country because being a member of the U.S. is not valued despite propaganda.

karlmarx1947's picture
karlmarx1947
Joined:
Dec. 24, 2012 7:42 pm
Quote karlmarx1947:

While direct subsidies to help the auto companies would be a typical mercantilist policy which has merit subsidies to owners do not. Thus the prior posting was confused. The reason for government ownership is not to transfer a fixed cost from the higher paid former owners to the current new owners at a net loss. The reason for government control of ownership of auto companies is to provide management control. Private Owners do not supply sufficient discipline or management expertise of large companies to make a difference, the company stands or falls on its management quality. Ownership in the sense of active participation in the affairs and business of the company is almost entirely a myth. Unless ownership has some responsibilities not pure profit for the company doing well this will not change. The state being larger and funded by the public at large can and does take a more active role in the companies they actually own than a typical investor. Thus state ownership of the means of production is actually superior to private ownership as long as the government provides private oversight something that normal owners rarely if ever do. It becomes inferior when the state tries to operate the companies on a day to day basis, something which would bloat any government beyond recognition. Large companies by law should be required to have both government amd employee representatives on their boards as a control of mismagement. The net profit of the company should be only one consideration of its success. As long as net profits included externalities like damage to the environoment or cost to workers of layoffs its a valid measure but as it stands these costs are improperly passed along to the society at large.

What would be illuminating would be to see how the U.S. spends its revenue dollars as compared to other industrialized countries especially the social democratic countries like Sweden. It also would be good to have a point by point comparison of benefits by countries. Countries like Germany, Sweden, Japan think its a good thing to be a member of their country and citizens are to be rewarded by services and benefits if they agree not to migrate. In the U.S. a citizen is treated like trash and given the little compared to the wealth of the country because being a member of the U.S. is not valued despite propaganda.

Never forget that when a company is losing money and sees no way to turn the tide, the company goes out of business and everyone loses their job. Sorry making money has to be the number one goal of a business.

But that does not give them a license to pollute, create an unsafe work environment, break the law or engage in other unethical processes, etc in their hunger for more profits. But as soon as you start putting too many other outside requirements on them, the number of people who will want to expand or open a busineses in such an environment goes down. California is an example of how that prinipal works.

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Mauiman2
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Jul. 27, 2012 6:24 am

California is an example of what Howard Jarvis and Reaganomics can do to a properous and well distributed economy with lots of neat things for the citizens like free university education. Price it all and squeeze the profits and see it go to hell.

You may not have understood that the auto bailouts were about doing the changes the privateers had resisted doing for way too long because of short-term thinking. Government can provide the long-term thinking needed to encourage real value creation instead of profit-taking. It can also be the structure we use to do a lot of things where the privateers give us low-grade service for top costs, like healthcare.

"WE" get nothing out of subsidizing entropy and failing to finance new birth. Those are the "entitlements" that remind us of royalty and the cost of having an upper class lording it over us. No, Downton Abbey is not where we want to live.

drc2
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Apr. 26, 2012 11:15 am
Quote drc2:

California is an example of what Howard Jarvis and Reaganomics can do to a properous and well distributed economy with lots of neat things for the citizens like free university education. Price it all and squeeze the profits and see it go to hell.

You may not have understood that the auto bailouts were about doing the changes the privateers had resisted doing for way too long because of short-term thinking. Government can provide the long-term thinking needed to encourage real value creation instead of profit-taking. It can also be the structure we use to do a lot of things where the privateers give us low-grade service for top costs, like healthcare.

"WE" get nothing out of subsidizing entropy and failing to finance new birth. Those are the "entitlements" that remind us of royalty and the cost of having an upper class lording it over us. No, Downton Abbey is not where we want to live.

So let's just nationalize everything and have the government run everything for the good of the people? That seems to be the logical conclusion from your comments above.

I hope you understand why that never works. Again, you confuse elected officials, who you want to give unlimited power to redistribute wealth, with saints. Those saints in public office will redistribute the wealth to themselves and their supporters. Is that what you want?

Mauiman2's picture
Mauiman2
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Jul. 27, 2012 6:24 am
Quote Mauiman2:So let's just nationalize everything and have the government run everything for the good of the people? That seems to be the logical conclusion from your comments above.
As liberal icon Pat Buchanan once wrote, when the citizens no longer feel they have a stake in capitalism, they will vote for more government benefits and move towards socialism.

Quote Mauiman2:I hope you understand why that never works. Again, you confuse elected officials, who you want to give unlimited power to redistribute wealth, with saints. Those saints in public office will redistribute the wealth to themselves and their supporters. Is that what you want?
And you confuse corporate CEOs with saints, who want to have unlimited power to concentrate wealth to themselves and shareholders - and bypass the people? Is a better alternative for the people? I think not. Unless you're talking the people of China.

al3's picture
al3
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Jul. 31, 2007 3:01 pm
Quote al3:
Quote Mauiman2:So let's just nationalize everything and have the government run everything for the good of the people? That seems to be the logical conclusion from your comments above.
As liberal icon Pat Buchanan once wrote, when the citizens no longer feel they have a stake in capitalism, they will vote for more government benefits and move towards socialism.

Quote Mauiman2:I hope you understand why that never works. Again, you confuse elected officials, who you want to give unlimited power to redistribute wealth, with saints. Those saints in public office will redistribute the wealth to themselves and their supporters. Is that what you want?
And you confuse corporate CEOs with saints, who want to have unlimited power to concentrate wealth to themselves and shareholders - and bypass the people? Is a better alternative for the people? I think not. Unless you're talking the people of China.

I must point out that I absolutely do not confuse corporate CEO's with saints, no way. You are right on the money when you say all they want (in the business world anyways) is more wealth. Even they will not deny that. At least with them you know what you are dealing with, they are not devils in sheeps clothing (like so many politicians are) but they are devils in devils clothing.

Mauiman2's picture
Mauiman2
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Jul. 27, 2012 6:24 am

So we should ignore the devils that don't attempt to disguise themselves? Hahahahahahaha

I like you Maui because you seem to be genuine in your posts. Very rare here among conservatives and libertarians. So please think just a little longer before making your posts. You are pretty intelligent and if you actually looked a little deeper into your concerns you might just be suprised.

Bush_Wacker's picture
Bush_Wacker
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Jun. 25, 2011 6:53 am
Quote Redwing:

It looks like the US taxpayer will get it's investment back from the sale today of 200 million shares of GM stock our government bought. The 47% that do pay federal income tax will eat the difference between the $27.50 sell price and the $56.00 buy price. The good news is, the U.S. government is only selling half its investment. Net gain to the administration? A lot of votes. Loss to the 47% that pay income tax? More than $17 billion. Maybe they can get that back from the oh' so solid SS program that is fully funded untill 2033.

http://washingtonexaminer.com/examiner-editorial-gm-is-alive-and-taxpaye...

http://www.usatoday.com/story/money/cars/2012/12/20/auto-gm-stock/1782743/

Dude, we will spend 35 billion in taxpayer money for the lame ass "Homeland Securit" next year alone. Get a clue.

Bush_Wacker's picture
Bush_Wacker
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Jun. 25, 2011 6:53 am

Mauiman2,

To answer your question, honestly...well I have to admit that I am straddling the fence between saving jobs and not using the government to save companies even if their sales are lackluster.

I believe that it is intellectual cowardice to deliberately let myself be a "straddler." I am going to take risk of being wrong and make the statement that it was a mistake for the government to bail out GM for the same reason that it was a mistake to bail out the banks that were about to fail because of the "mortgage backed securities" debacle. Businesses have to learn that if they make stupid mistakes, that they will fail and go belly up. However, it would have been AWFUL to see all of those autoworkers just lose their jobs by the tens of thousands. It would have made the "Hostess" debacle look trivial. ** All of those workers loosing their jobs at the same time! Horrible!

Mauiman2, I have to concede that I have no real way out of this "no win" situation. It is almost like making a choice between two evils! One option is to bail out businesses in spite of stupid mistakes, while the other unfortunate option is to have seen tens of thousands of workers being laid off virtually at the same exact time. I have no effective solution to this problem.

micahjr34
Joined:
Feb. 7, 2011 3:57 pm
Quote micahjr34:I am going to take risk of being wrong and make the statement that it was a mistake for the government to bail out GM for the same reason that it was a mistake to bail out the banks that were about to fail because of the "mortgage backed securities" debacle. Businesses have to learn that if they make stupid mistakes, that they will fail and go belly up.

Micahjr34, in theory you're correct. Textbook free market capitalism will lead to mismanaged insustries going away. However, we aren't in an era of pure free market capitalism that the right so often believes. The simple fact is our foreign competitors use HUGE amounts of government control and aid to their home industries, INCLUDING during the 2008 crash. Japan, Korea, Germany, etc. etc. etc. ALL these competitors had goverments step in to save "key" industries. So if we save GM, fine with me. I'd suggest a book by Eamon Fingleton, called "In the Jaws of the Dragon," to acquaint yourself with the practices of our "free market" trade partners. Some are as follows, these apply to China, although they all do this.

* A labyrinthine system of trade barriers.

* An artificially undervalued currency.

* An industrial policy that focuses on developing so-called "pillar" industries and uses export subsidies and other unfair tactics to give them a competitive advantage in world markets.

* Systematic pressure on foreign companies to transfer their most advanced production technologies to China.

The key to the East Asian model is a firmly authoritarian approach to government and a highly controlled economy. The model's spectacular success in powering economic miracles in one nation after another is based largely on a harsh program of suppressing consumption. The result is a preternaturally high savings rate which has fuelled an extremely fast pace of investment in key industries, particularly export industries. Unfortunately for the West, a major part of the suppressed consumption program is to restrict imports, most visibly imports of consumer goods -- a policy that puts Western exporters at a fundamental disadvantage, even as their home markets are targeted by export-hungry East Asian rivals.

THEIR GOVERNMENTS BAIL OUT AND HELP ALL THEIR KEY INDUSTRIES!

So when you hear those on the far right, including their rather vocal members here, howl about American unions “destroying U.S. manufacturing,” or whining about “bailing out the UAW,” trust that it’s merely politics they’re playing. Because reality shows that a system has been built by Washington and Western multinationals to structurally crush labor and thus the middle class. And while American unions and their poster child, the UAW/Big Auto ARE a bit self culpable for their own decline, MANY other outside factors – mainly arranged and championed by the financial industry and their associated cabin-boys in Congress – are to blame. But the right conveniently skips that, unless they are picking on Bill Clinton. Then it's his and the Dems' fault.

Our industrial competitors routinely bail out and support their home industries. ‘Bout time we did the same with ours! More power to the GM bailout!

http://www.unsustainable.org/index.asp?navID=5

al3's picture
al3
Joined:
Jul. 31, 2007 3:01 pm
Quote Bush_Wacker:

So we should ignore the devils that don't attempt to disguise themselves? Hahahahahahaha

I like you Maui because you seem to be genuine in your posts. Very rare here among conservatives and libertarians. So please think just a little longer before making your posts. You are pretty intelligent and if you actually looked a little deeper into your concerns you might just be suprised.

I'm glad you can at least give me some credit. And I am not suggesting we ignore the devils in devils clothing, but just realize who you are dealing with. You are dealing with people whose main goal in life is to make more money. Most them want to be in the game for the long term and they realize they have to do things legally to do that. Yes there are exceptions to that statement, but on a percentage basis it is actually pretty low.

Mauiman2's picture
Mauiman2
Joined:
Jul. 27, 2012 6:24 am
Quote al3:
Quote micahjr34:I am going to take risk of being wrong and make the statement that it was a mistake for the government to bail out GM for the same reason that it was a mistake to bail out the banks that were about to fail because of the "mortgage backed securities" debacle. Businesses have to learn that if they make stupid mistakes, that they will fail and go belly up.

Micahjr34, in theory you're correct. Textbook free market capitalism will lead to mismanaged insustries going away. However, we aren't in an era of pure free market capitalism that the right so often believes. The simple fact is our foreign competitors use HUGE amounts of government control and aid to their home industries, INCLUDING during the 2008 crash. Japan, Korea, Germany, etc. etc. etc. ALL these competitors had goverments step in to save "key" industries. So if we save GM, fine with me. I'd suggest a book by Eamon Fingleton, called "In the Jaws of the Dragon," to acquaint yourself with the practices of our "free market" trade partners. Some are as follows, these apply to China, although they all do this.

* A labyrinthine system of trade barriers.

* An artificially undervalued currency.

* An industrial policy that focuses on developing so-called "pillar" industries and uses export subsidies and other unfair tactics to give them a competitive advantage in world markets.

* Systematic pressure on foreign companies to transfer their most advanced production technologies to China.

The key to the East Asian model is a firmly authoritarian approach to government and a highly controlled economy. The model's spectacular success in powering economic miracles in one nation after another is based largely on a harsh program of suppressing consumption. The result is a preternaturally high savings rate which has fuelled an extremely fast pace of investment in key industries, particularly export industries. Unfortunately for the West, a major part of the suppressed consumption program is to restrict imports, most visibly imports of consumer goods -- a policy that puts Western exporters at a fundamental disadvantage, even as their home markets are targeted by export-hungry East Asian rivals.

THEIR GOVERNMENTS BAIL OUT AND HELP ALL THEIR KEY INDUSTRIES!

So when you hear those on the far right, including their rather vocal members here, howl about American unions “destroying U.S. manufacturing,” or whining about “bailing out the UAW,” trust that it’s merely politics they’re playing. Because reality shows that a system has been built by Washington and Western multinationals to structurally crush labor and thus the middle class. And while American unions and their poster child, the UAW/Big Auto ARE a bit self culpable for their own decline, MANY other outside factors – mainly arranged and championed by the financial industry and their associated cabin-boys in Congress – are to blame. But the right conveniently skips that, unless they are picking on Bill Clinton. Then it's his and the Dems' fault.

Our industrial competitors routinely bail out and support their home industries. ‘Bout time we did the same with ours! More power to the GM bailout!

http://www.unsustainable.org/index.asp?navID=5

You act as if the government money that the other countries spend to prop up their failing businesses comes out of thin air and is free. No, just like here it comes out of the productive part of the economy, making that productive part of the economy less profitable. There are costs asociated with doing that.

In Obama's case, the GM bailout was an attempt (a successful one at that) at buying the electorial votes of Michigan and Ohio, and rewarding his supporters (the UAW).

Mauiman2's picture
Mauiman2
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Jul. 27, 2012 6:24 am
Quote Bush_Wacker:

Dude, we will spend 35 billion in taxpayer money for the lame ass "Homeland Securit" next year alone. Get a clue.

How the hell did Homeland security get into the conversation? But now it is there. I would shut that down in a minute. Obama will never do that because it means a loss of union voters.

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Redwing
Joined:
Jun. 21, 2012 4:12 am
Quote Mauiman2:
Quote al3:
Quote micahjr34:I am going to take risk of being wrong and make the statement that it was a mistake for the government to bail out GM for the same reason that it was a mistake to bail out the banks that were about to fail because of the "mortgage backed securities" debacle. Businesses have to learn that if they make stupid mistakes, that they will fail and go belly up.

Micahjr34, in theory you're correct. Textbook free market capitalism will lead to mismanaged insustries going away. However, we aren't in an era of pure free market capitalism that the right so often believes. The simple fact is our foreign competitors use HUGE amounts of government control and aid to their home industries, INCLUDING during the 2008 crash. Japan, Korea, Germany, etc. etc. etc. ALL these competitors had goverments step in to save "key" industries. So if we save GM, fine with me. I'd suggest a book by Eamon Fingleton, called "In the Jaws of the Dragon," to acquaint yourself with the practices of our "free market" trade partners. Some are as follows, these apply to China, although they all do this.

* A labyrinthine system of trade barriers.

* An artificially undervalued currency.

* An industrial policy that focuses on developing so-called "pillar" industries and uses export subsidies and other unfair tactics to give them a competitive advantage in world markets.

* Systematic pressure on foreign companies to transfer their most advanced production technologies to China.

The key to the East Asian model is a firmly authoritarian approach to government and a highly controlled economy. The model's spectacular success in powering economic miracles in one nation after another is based largely on a harsh program of suppressing consumption. The result is a preternaturally high savings rate which has fuelled an extremely fast pace of investment in key industries, particularly export industries. Unfortunately for the West, a major part of the suppressed consumption program is to restrict imports, most visibly imports of consumer goods -- a policy that puts Western exporters at a fundamental disadvantage, even as their home markets are targeted by export-hungry East Asian rivals.

THEIR GOVERNMENTS BAIL OUT AND HELP ALL THEIR KEY INDUSTRIES!

So when you hear those on the far right, including their rather vocal members here, howl about American unions “destroying U.S. manufacturing,” or whining about “bailing out the UAW,” trust that it’s merely politics they’re playing. Because reality shows that a system has been built by Washington and Western multinationals to structurally crush labor and thus the middle class. And while American unions and their poster child, the UAW/Big Auto ARE a bit self culpable for their own decline, MANY other outside factors – mainly arranged and championed by the financial industry and their associated cabin-boys in Congress – are to blame. But the right conveniently skips that, unless they are picking on Bill Clinton. Then it's his and the Dems' fault.

Our industrial competitors routinely bail out and support their home industries. ‘Bout time we did the same with ours! More power to the GM bailout!

http://www.unsustainable.org/index.asp?navID=5

You act as if the government money that the other countries spend to prop up their failing businesses comes out of thin air and is free. No, just like here it comes out of the productive part of the economy, making that productive part of the economy less profitable. There are costs asociated with doing that.

In Obama's case, the GM bailout was an attempt (a successful one at that) at buying the electorial votes of Michigan and Ohio, and rewarding his supporters (the UAW).

You say: "You act as if the government money that the other countries spend to prop up their failing businesses comes out of thin air and is free." I say: No I don't believe it's free. However, do we just stand idly by while other countries bail out, subsizide, and otherwise prop up their own home industries during a historic financial meltdown? They don't even need a meltdown to do it, it's business as usual for them. It's an unfortunate by product of competing with countries that don't observe pure laissez faire capitalism. Once one country does it, others must follow or they will be the last patsy that can say "We're TRUE free market capitalists! and puff their chest out, while the rest of the world laughs, and proceeds to dismember our productive economy. Note this is happening already. If it was up to me, I'd support clawbacks from the financial industry to pay for the bailouts, but that ain't gonna happen any time soon.

You say: "No, just like here it comes out of the productive part of the economy, making that productive part of the economy less profitable." I say: I'm not sure what "productive part" of the economy it would have otherwise flowed towards, unless you consider Bain Capital or the financial industry a "productive part" of the economy. I don't. Maybe it would have also flowed to the Japanese and Korean auto transplants here, whose "productive" assets would have been given the competitive advantage of their own governments' help. While ours crashed and burned. I don't like gov bailouts any more than you do, but I believe it's an unfortunate necessary evil if competitors do it. There are a lot of stupid things businesses (or governments) do, and most of the time it's because they are forced to by competition. An industry is only as prosperous as its stupidest valid participant, and sometimes if that participant can structurally weaken an entire industry if they can stay around long enough to pollute the market and customer expectations. Likewise, many economists believe that "developing" economies are doing really stupid things ie government bailouts and subsidies, etc. etc. and distorting the global trading system. Mature economies, ie the US and Europe, probably need to respond by doing "stupid things" ie bailouts - in the short term - to meet that competition. We're already doing this with our march toward 3rd world wages. Why not with 3rd world style governemnent help? Note I only support this with productive industries - not finance.

You say: "In Obama's case, the GM bailout was an attempt (a successful one at that) at buying the electorial votes of Michigan and Ohio, and rewarding his supporters (the UAW). I say: I believe the primary objective was to save an iconic American industry, and tens of thousands of jobs in the teeth of a historic financial meltdown. There was significant restructuring - it wasn't money just thrown at "business as usual." Of course, the side benefit was it won him Michigan and Ohio, no doubt. And there's no guarantee GM will survive in the long run. But then again, the GOP's support of fossil fuel industry delivers many states where there's oil or coal.

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al3
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If other governemnts are doing stupid things (propping up business that would otherwise fail) why do we have to be just as stupid? You are taxing businesses that are profitable (and able to pay taxes and hire workers) to prop up businesses that can't pay taxes and hire workers. Why should success be punished?

You end up reducing the size (and tax revenue) of the successful businesses beuase they can't make as much money. So they do not expand where they might of otherwise.

I know you are not a fan of "trickle down" economics, but you have to realize at some point that concept does kick in. At some point tax rates get so high that a tax increase actually lowers revenue. The question that no one can answer is where is that point. I don't know where it is, and I'm not convinced that anyone actually knows where that point is.

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Mauiman2
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Jul. 27, 2012 6:24 am

Trickle Down has never worked out for the bottom 99%.

Ridiculus to think it ever has.

its class warfare.

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Scappoose
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Mar. 30, 2012 6:49 am

Trickle Down is a scam.

As Thom has pointed out, even Walmart workers need foodstamps.

shockwave
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Nov. 12, 2012 11:14 pm

If trickle down is a scam, then let's just tax everyone at 100% and see what happens then. You guys seem to think the government knows how to spend my money better than I do, therefore it should have the right to take all of my (and your) money because they are so smart.

At some point "trickle down" does come into play. Where that point is I do not know, and I'll argue no one really knows. But we probably aren't there in this country right now. In France, yes they are there at 75% tax rates, and they are paying the price for it.

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Mauiman2
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Quote Mauiman2:If other governemnts are doing stupid things (propping up business that would otherwise fail) why do we have to be just as stupid? You are taxing businesses that are profitable (and able to pay taxes and hire workers) to prop up businesses that can't pay taxes and hire workers. Why should success be punished?
You can't do it forever, of course, only until your competitors are out of businness. Kind of like Japan, Korea, Taiwan, Malaysia, etc. etc. etc......did to us, and and now China is doing to everyone. It's only done until you destroy the industry of the competition. We let it happen to us because we drank the Kool Aid of deregulation, trickle down, and the service economy, and it's pretty much led to another Depression.

Quote Mauiman2:You end up reducing the size (and tax revenue) of the successful businesses beuase they can't make as much money. So they do not expand where they might of otherwise.
But the "successful businesses" left under that model don't create quality jobs for working class people like the ones that we lost. Mainly retail, service, finance, etc. etc. etc. "McJobs" mainly , and a relatively few that pay very well.

Quote Mauiman2:I know you are not a fan of "trickle down" economics, but you have to realize at some point that concept does kick in. At some point tax rates get so high that a tax increase actually lowers revenue. The question that no one can answer is where is that point. I don't know where it is, and I'm not convinced that anyone actually knows where that point is.
No - Trickle down has run its course. Maybe in the beginning, it worked....until globalization, "greed is good" became the name of the game, and economic patriotism became a quaint notion - it was a valid program. If you read some of Reagan's team, like Dave Stockman, Bruce Bartlett, or John Paul Roberts, they say trickle down and deregulation was never intended to gut the productive U.S. economy and empower financial oligarchs. Trickle down has run its course, and it's now time for new ideas. Anyone who takes an honest look at the economic health as measured by income trends, debt, wage trends, upward mobility, and benefits cost of the formerly HUGE American middle class should be able to see that.

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al3
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Jul. 31, 2007 3:01 pm

[/quote] At some point tax rates get so high that a tax increase actually lowers revenue. The question that no one can answer is where is that point. I don't know where it is, and I'm not convinced that anyone actually knows where that point is.

[/quote]

Oh, but some people have studied this question. Those people are called economists. With 6 decades of post war data, from the US, Canada, Western Europe and Japan, the conclusion is the rate on high incomes where maximum income can be gained for the govt is the range of 68 - 85%. At those rates some will flee, but they typically don't produce anything people use or need.

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Phaedrus76
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Quote Phaedrus76:
At some point tax rates get so high that a tax increase actually lowers revenue. The question that no one can answer is where is that point. I don't know where it is, and I'm not convinced that anyone actually knows where that point is.

[/quote]

Oh, but some people have studied this question. Those people are called economists. With 6 decades of post war data, from the US, Canada, Western Europe and Japan, the conclusion is the rate on high incomes where maximum income can be gained for the govt is the range of 68 - 85%. At those rates some will flee, but they typically don't produce anything people use or need.

[/quote]

Well at least you show that there is a point where increasing taxes actually hurts an economy. I will still argue that "economists" who study this almost always have an axe to grind. They have to make some assumptions to come to their conclusions, and the validity of their conclusions are all based on those assumptions. This isn't like a scientific experiment where you can hold everything constant and change one variable. In real world economies, there are always several changing all at once. How can you tell the effect of any one variable? You really can't.

Your tax rates seem high to me, but I don't have any data to support my gut feel, so my gut feel may not be worth much. We'll get to see how France fares with their 75% rate thay have just put in place.

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Mauiman2
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Jul. 27, 2012 6:24 am

What will happen in France is those who earn alot through creative talents (actors, singers, writers) who are not tied to a location to work will relocate. Athletes, who earn by performing at specific locations, will be unable to move their earnings and will pay the higher taxes.

Businesses that produce things in France and sell them in France will still want to sell those things in France. They will continue to earn their money in France, and will continue to pay the rates in France. Businesses that do not sell things in France who are afraid of those rates will not enter the market, unless they believe that the profits taxed at the lower corporate rate are worth it, and they are able to find a regional VP willing to be subjected to the higher tax rates.

The French market will continue on. The demand for goods and services will continue on. Now those who benefit most from those conditions will pay more.

The leeches, those who feed on the productive people, the financiers and Bane Capital Vultures, will be faced with having to pay more to exploit the French market.

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Phaedrus76
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Quote Mauiman2:

At some point tax rates get so high that a tax increase actually lowers revenue. The question that no one can answer is where is that point. I don't know where it is, and I'm not convinced that anyone actually knows where that point is.

Quote Phaedrus76:

Oh, but some people have studied this question. Those people are called economists. With 6 decades of post war data, from the US, Canada, Western Europe and Japan, the conclusion is the rate on high incomes where maximum income can be gained for the govt is the range of 68 - 85%. At those rates some will flee, but they typically don't produce anything people use or need.

Quote Mauiman2:

Well at least you show that there is a point where increasing taxes actually hurts an economy. I will still argue that "economists" who study this almost always have an axe to grind. They have to make some assumptions to come to their conclusions, and the validity of their conclusions are all based on those assumptions. This isn't like a scientific experiment where you can hold everything constant and change one variable. In real world economies, there are always several changing all at once. How can you tell the effect of any one variable? You really can't.

Your tax rates seem high to me, but I don't have any data to support my gut feel, so my gut feel may not be worth much. We'll get to see how France fares with their 75% rate thay have just put in place.

Another problem is the reading comprehension of conservatives. No study has shown that high taxes "actually hurts an economy." I pointed that studies by real life economists have empirically proven that to maximize govt income the top rate should be around 70 - 85%. Above those rates the economy will continue to grow, but that growth will not be at the top of the ladder. Above those rates income to govt begins to fall, just as Prof. Laffer projected on his napkin.

Using data from 1946 to the present, across the US, Japan, Canada and Western Europe to test the hypothesis, and adjusting for other factors is a plenty large sample to generate definitive answers.

It is telling that the first thing the conservative does though is reject scientific based evidence. You missed the whole point, not only do some people study this shit and get answers, I pointed it out to you, and your mind twists away from research driven results because the outcome is contrary to your beliefs, and then you jumped to the unconnected idea that high taxes hurt the economy.

Heck, the conservatives in the Senate just squashed a CBO study that says the opposite of that.

Phaedrus76's picture
Phaedrus76
Joined:
Sep. 14, 2010 7:21 pm
Quote Phaedrus76:
Quote Mauiman2:

At some point tax rates get so high that a tax increase actually lowers revenue. The question that no one can answer is where is that point. I don't know where it is, and I'm not convinced that anyone actually knows where that point is.

Quote Phaedrus76:

Oh, but some people have studied this question. Those people are called economists. With 6 decades of post war data, from the US, Canada, Western Europe and Japan, the conclusion is the rate on high incomes where maximum income can be gained for the govt is the range of 68 - 85%. At those rates some will flee, but they typically don't produce anything people use or need.

Quote Mauiman2:

Well at least you show that there is a point where increasing taxes actually hurts an economy. I will still argue that "economists" who study this almost always have an axe to grind. They have to make some assumptions to come to their conclusions, and the validity of their conclusions are all based on those assumptions. This isn't like a scientific experiment where you can hold everything constant and change one variable. In real world economies, there are always several changing all at once. How can you tell the effect of any one variable? You really can't.

Your tax rates seem high to me, but I don't have any data to support my gut feel, so my gut feel may not be worth much. We'll get to see how France fares with their 75% rate thay have just put in place.

Another problem is the reading comprehension of conservatives. No study has shown that high taxes "actually hurts an economy." I pointed that studies by real life economists have empirically proven that to maximize govt income the top rate should be around 70 - 85%. Above those rates the economy will continue to grow, but that growth will not be at the top of the ladder. Above those rates income to govt begins to fall, just as Prof. Laffer projected on his napkin.

Using data from 1946 to the present, across the US, Japan, Canada and Western Europe to test the hypothesis, and adjusting for other factors is a plenty large sample to generate definitive answers.

It is telling that the first thing the conservative does though is reject scientific based evidence. You missed the whole point, not only do some people study this shit and get answers, I pointed it out to you, and your mind twists away from research driven results because the outcome is contrary to your beliefs, and then you jumped to the unconnected idea that high taxes hurt the economy.

Heck, the conservatives in the Senate just squashed a CBO study that says the opposite of that.

Believe what you want to believe. We'll see what happens to France now that they have jacked their rates up to 75%. They will have a very hard time attracting new business to set up there and getting existing businesses to invest and expand their French plants. It may not happen right away, but if they leave those rates in place for 10-20 years they are really going to be hurting.

So here is my prediction, in 15 years either those French rates will be much lower than what they are now, or their economy will be in shambles. I don't see any other outcome.

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Mauiman2
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Jul. 27, 2012 6:24 am

The top rate in the US was over 50% from 1933 to 1987. 54 years. Would you take that growth or the last 12 years?

Phaedrus76's picture
Phaedrus76
Joined:
Sep. 14, 2010 7:21 pm
Quote Phaedrus76:The top rate in the US was over 50% from 1933 to 1987. 54 years. Would you take that growth or the last 12 years?

Again, too many variables. You are being way to simplistic.

Besides, the years 1987-2006 were not too bad.

Mauiman2's picture
Mauiman2
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Jul. 27, 2012 6:24 am

Twenty years 1987 to 2006 included 1990-1995 and 2001-2003, nine years which were pretty lousy. Twenty-five years 1983 to 2007 shows more growth in economy, stock market, home prices, employment...

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Why did you cut it off at 2006? Could it be because the starve the beast, shrink the gubmint policies ran the largest economy into the ditch?

S&L's, LTCM, Enron, WorldCom, subprime mortgages, etc are all the work of twue conservative small gubmint deregulation and low taxes on the wealthy.

All of the progress in the 1980 - to present timeframe is technology driven. Higher taxes in Europe never made them grow slower.

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Phaedrus76
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Sep. 14, 2010 7:21 pm
Quote Phaedrus76:

Why did you cut it off at 2006? Could it be because the starve the beast, shrink the gubmint policies ran the largest economy into the ditch?

S&L's, LTCM, Enron, WorldCom, subprime mortgages, etc are all the work of twue conservative small gubmint deregulation and low taxes on the wealthy.

All of the progress in the 1980 - to present timeframe is technology driven. Higher taxes in Europe never made them grow slower.

I picked those years out of the air. Believe what you want to believe, this is a free country.

Here is a chart of GNP growth in the US from 1947 to present. Looks pretty flat to me. If I can find the raw data I can run some numbers, but just looking at this graph, you do not see any trend up or down after 1987.

http://www.tradingeconomics.com/united-states/gdp-growth

But as I have said elsewhere, these 1 trillion dollar a year shortfalls have got to shrink. Two ways to do it, cut social spending or raise middle class taxes by at least 50%. What is your choice?

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Mauiman2
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Jul. 27, 2012 6:24 am

People can still get rich with high tax rates. Not that we have high tax rates now, but Warren Buffett agrees that people can still make lots of money.

shockwave
Joined:
Nov. 12, 2012 11:14 pm
Quote Mauiman2:But as I have said elsewhere, these 1 trillion dollar a year shortfalls have got to shrink. Two ways to do it, cut social spending or raise middle class taxes by at least 50%. What is your choice?
No doubt these items probably need attention, but there are other ways - cut Military, Wall St. transaction tax, (more) taxes on the rich - ie raising Medicare contribution or means testing etc. etc. Why does it always have to be the middle class and social spending that bear the brunt? After all, it was the geniuses on Wall Street and the private sector that's caused this mess.

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al3
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