What is the Fiscal Cliff?

Posted on by

Let me begin by saying the term “Fiscal Cliff” is misleading.  Before January 1, 2013 the US government collected too little in taxes as a result of various tax cuts.  Also, the US government spent too much money.  After January 1, 2013 various tax cuts expire (read: more tax collection with a caveat) and spending is cut.

So, what exactly is “cliff-like” regarding two steps towards a balanced budget: increased tax revenues (expiration of tax cuts that didn’t help anyway) and cutting spending (of admittedly bloated entities)?

Here is the article.  My interpretation of what constitutes the “Fiscal Cliff”:

  1. The end of the payroll social security tax cut.  SS will go back to 6.2% from the current 4.2.
  2. End of the capital gains and dividend tax cuts.  This will “harm “Bill Gates more than you or me.  Conversely, the tax cuts benefited Bill Gates way more than you or I could imagine.  Just see my post on the trillion dollar increase in net worth of the richest 400 Americans over the past year while the tax breaks were in effect.
  3. Spending cuts agreed to as part of the debt ceiling increase negotiations of 2011.  This includes the military and medicare.
  4. End of certain business tax breaks.
  5. Beginning of taxes related to healthcare reform.

Most “American” cars index

Posted on by

Yes, this article causes endless debates.  My opinion: buy whatever car you want to with the money you earned.  If you buy a Ford Fusion made in Mexico by exploited cheap labor you can say “the profits stay in the US.”  But ask yourself, in that situation, who has those profits?  Is it primarily in the hands of the executives (read: the 1%).  If you buy a Toyota Camry and are told “all the profits go to Japan” ask yourself (and the questioner) “just how much of every $1 spent on a Camry goes to US workers / US executives / Toyota in Japan and how does that compare with the $1 spent on a Ford fusion made in Mexico?”

I have not come across any numbers in that amount of detail.  Also, the profit margins on mass-produced midsize sedans like the Camry are relatively low to begin with.  Given that, what precisely are “all the profits going to Japan?”  I hear that argument in a Cadillac vs. Lexus debate.  It does not make much sense to me in a Mexican assembled Ford Fusion vs. a Kentucky assembled Toyota Camry.

Why Does Wall Street Dislike President Obama So Much?

Posted on by

That is a good question considering the following quote:

Standard & Poor’s compared he historical performance of the stock market, corporate earnings and the economy under Democratic and Republican presidents and found all three did better when a Democrat occupied the White House. The S&P 500 gained an average 12.1% per year since 1901 versus 5.1% under Republican presidents; GDP increased an average 4.2% annually since 1949 compared to 2.6% under Republicans; and corporate profits since 1936 rose 10.5% a year under Democrats compared to 8.9% under Republicans

Under Obama, the stats on the economy aren’t as good but for stocks and earnings they’re even better. GDP has gained an average of just 1% a year but corporate profits have surged an average 51.8% a year and the S&P has rallied 12.3% since his inauguration.

Checkout this article to read more.