Can the market alone fix the economy?

[turbo]

We might have saved ourselves a lot of this grief if Congress and Bush had set strict compensation limits for bank officers that had their hands out for the first "bailout". I wonder how many of the beggars would have re-evaluated their "need" for the money and turned it down rather than having their compensations cut...

 

[Astronuc]

The economy may be starting to fix itself.

Stocks shoot higher on Citigroup profit news
http://news.yahoo.com/s/ap/20090310/ap_on_bi_st_ma_re/wall_street

NEW YORK – Wall Street has had its best day of the year, storming higher after some good news from Citigroup.

Citigroup Inc. says it operated at a profit during the first two months of the year. That energized financial stocks and in turn, the entire stock market. Surprised investors drove the major indexes up more than 5.5 percent to their biggest one-day rally of the year. The Dow Jones industrials shot up nearly 380 points.

However, many analysts are still cautious — noting that Wall Street has seen many blips higher since the credit crisis and recession began. Word of Citi's performance broke a months-long torrent of bad news from the banking industry but analysts weren't ready to say the stock market was at a turning point and about to barrel higher after a slide that's lasted more than 16 months.

"To have a sustained rally, we have to have a shift in sentiment," said Kurt Karl, chief U.S. economist at Swiss Re. "One day isn't going to make a trend."

Still, the Citigroup news offered investors some hope that the first quarter will show signs of improvement.

In a letter to employees Monday, Citi Chief Executive Vikram Pandit said the performance this year has been the bank's best since the third quarter of 2007 — the last time it booked a profit for a full quarter. Based on historical revenue and expense rates, Citi's projected earnings before taxes and one-time charges would be about $8.3 billion for the full quarter.

. . . .

Maybe time to by some shares in Citigroup, which moved up $0.40 or 38%. GE had a good day moving up $1.46 (19.70%). One day doesn't make a rally, but it may be a start. Nevertheless, we have to wait for the quarterly reports in early April.

 

[Ivan Seeking]

The economy may be starting to fix itself.

Since Obama gets blamed for the drops now, clearly this is a response to his recovery package.

We won't recover until the credit markets are in order.

 

[Ivan Seeking]

We might have saved ourselves a lot of this grief if Congress and Bush had set strict compensation limits for bank officers that had their hands out for the first "bailout". I wonder how many of the beggars would have re-evaluated their "need" for the money and turned it down rather than having their compensations cut...

By all accounts that I've heard, there was simply no time. Many people look to the first bailout as if it was intended to fix the economy, but it wasn't. It was intended to prevent a collapse of the financial system, which apparently it did.

 

[turbo]

By all accounts that I've heard, there was simply no time. Many people look to the first bailout as if it was intended to fix the economy, but it wasn't. It was intended to prevent a collapse of the financial system, which apparently it did.

It needn't have taken a lot of time. Simply specify that the bank officers could not get any bonuses or stock options until the TARP funds were repaid. Not a complex thing.

I bet that most of the beggars would have re-evaluated their positions when they found out that they would have to agree to forgo the "sugar" they were accustomed to.

 

[Ivan Seeking]

It needn't have taken a lot of time. Simply specify that the bank officers could not get any bonuses or stock options until the TARP funds were repaid. Not a complex thing.

I don't think that was possible. Bonuses are part of the normal income structure. It would be like telling a company that they can't pay their salesmen commissions until the loan is paid off.

I bet that most of the beggars would have re-evaluated their positions when they found out that they would have to agree to forgo the "sugar" they were accustomed to.

Keep in mind that they were told by Paulson that they would take the money - they had no choice. They were handed a one-page form and effectively ordered to sign it.

 

[Ivan Seeking]

Health care must move away from treatment toward prevention. It's much less costly to prevent illness, than to treat it. Of course, the industry would rather have people pay $10-100 billions for treatment as opposed to $million or a few $billion for prevention.

True, but a lot of progress can be made by simply increasing the efficiency of the system through IT. I would have dig around to find the figures, but it has been shown before that paperwork accounts for a signficant percentage of health care cost. Having been in the medical field myself, and being married to someone who has been in medicine for over thirty-five years, there is no doubt in my mind that this is the case. There are also many medical errors made that that cost lives and money, that could be prevented through IT. For example, one of the most common errors is to misread a doctor's handwriting. A simple mistake like this can result in many $millions in legal fees and settlements.

 

[Al68]

Good. You acknowledge that talk of free markets is just rhetorics?

I don't think so.

Now it all depends on where we draw the line. That is a purely subjective matter and determining the degree of rightness is also purely subjective. That is because in one model we can give some freedoms that don't exist in the other one. Comparing two freedoms and assigning them a quantized freedom value hasn't been done. So essentially any choice we make is in some sense the right and the free one.

That must be a joke.

 

[Al68]

I don't think that any individual should be taxed at a higher rate than any other individual. I do think that the profits of collective enterprises should be taxed at a higher rate than individuals , and that they should be held to higher standards of social responsibility than individuals.

These statements contradict each other.

Only if the consequences of the collective actions of two or more people are taken to be necessarily equivalent to those of a single person -- and since they aren't, necessarily, then it might be argued that the principle of individual liberty doesn't necessarily apply to collectives.

The tax rate paid by each member of the "collective" is exactly equal to the tax rate applied to the "collective". That makes your statements contradict each other.

However, until I learn something that changes my mind, and notwithstanding the apparent inconsistency of the position, I think that collectives should generally be held to higher standards of social responsibility (generally closer scrutiny by regulatory agencies and whatever it takes to keep them from screwing up environments, coercing government officials, monopolizing markets, undermining collective bargaining efforts, etc.) than individuals, because the power of a collective to suppress or diminish the liberty of its individual constituents, or other individuals who its actions might affect, is greater than the power of any of its individual constituents to do that.

I have no problem with, and I advocate laws that forbid violating anyone's individual liberty. Applicable to both businesses and individuals and government agents. Of course no private company has ever had any legal authority to give me orders or restrict my liberty in any way, so I've never had that problem. Maybe an example of what you're talking about would help.

As far as flat taxes, how about a Dick Armey style tax? Flat rate with HUGE standard deductions but no other deductions. This was about 15 yrs ago, but I remember the standard deduction being about $38,000 for a family of four. It had the advantage (or disadvantage?) that it was so simple that people couldn't easily be misled about tax policy.

Or the flat sales tax with a monthly check to everyone that re-inburses a fixed amount to everyone, which would effectively exempt all poor and most middle class income? Again, since it's simple, there is a great opposition to it.

 

[Ivan Seeking]

Here we go.

...Kerry's $350 billion figure for what's spent on health care paperwork and administrative overhead is far less certain, but still a reasonable estimate. Various scholarly studies have put the cost of paperwork and administrative overhead at anywhere from 7.6% to 31% of the total cost of healthcare in the US. Kerry's figure is just over 23%, on the high side but still not unreasonable...

http://www.factcheck.org/kerry_paperwork_ad_accurate.html

 

[WhoWee]

True, but a lot of progress can be made by simply increasing the efficiency of the system through IT. I would have dig around to find the figures, but it has been shown before that paperwork accounts for a signficant percentage of health care cost. Having been in the medical field myself, and being married to someone who has been in medicine for over thirty-five years, there is no doubt in my mind that this is the case. There are also many medical errors made that that cost lives and money, that could be prevented through IT. For example, one of the most common errors is to misread a doctor's handwriting. A simple mistake like this can result in many $millions in legal fees and settlements.

The investment in IT is nothing new in health insurance...all of the major insurers have large investments. By the way

http://www.mib.com/

...every prescription you've ever had filled is already available online, along with the most of your medical records.

One of the by-products of these technology advances was HIPPA and revised rules pertaining to debt collection.

http://www.hhs.gov/ocr/privacy/index.html

I'm over-simplifying my description...HIPPA it is more comprehensive than just protection of record handling/storage.

The concern now is how Government agencies might use the information they gather...and how they might share the information among other agencies.

I personally don't want a government worker deciding whether or not I should have an operation. I don't even want only a single doctor making that decision.

Here's a final thought...Japan has a Universal Healthcare system that many proponents point to as successful. However, did you know that Japan is the best market in the world for Aflac?

Why? Specifically...their cancer indemnity plans and hospital plans are needed to fill in the HUGE gaps in coverage.

It's good to address making health care better, but ...haste makes waste.

 

[Ivan Seeking]

The investment in IT is nothing new in health insurance...all of the major insurers have large investments. By the way

http://www.mib.com/

...every prescription you've ever had filled is already available online, along with the most of your medical records.

They have only scratched the surface. For example, only now do we find that most X-Ray departments have switched or are switching to digital technology, rather than using film, yet this technology has been around for decades. Patients could be given RFID tags that contain their entire medical history, medication schedules, patient history, scheduling information, and so on. Remote doctoring [using robots] could be implemented generally. This allows the doctors to make much more efficient use of their time; most patients even seem to like it. Nurses, doctors, and other hospital personnel could carry blackberries that allow one to interface with patient records; schedule surgery, send in presciptions, notify insurance companies. Medication conflicts could be generated on the spot so the attending physician can adjust accordingly. etc, all without ever generating any paper. These are just a few thoughts off the top of my head [taken from other discussions], but in no way is this scheme representitive of what we find in hospitals today.

The concern now is how Government agencies might use the information they gather...and how they might share the information among other agencies.

That is always a concern. If anything, an overhaul of the system would allow that better safeties be built-in. Right now your privacy is in the hands of insurance companies that have no interest in civil rights or privacy. In fact their economic incentives are contrary to privacy rights.

I personally don't want a government worker deciding whether or not I should have an operation. I don't even want only a single doctor making that decision.

Where does this come from? Besides, right now your insurance company is making the call. Also, I am quites sure that Obama has specified that doctors should make medical decisions.

Here's a final thought...Japan has a Universal Healthcare system that many proponents point to as successful. However, did you know that Japan is the best market in the world for Aflac?

Why? Specifically...their cancer indemnity plans and hospital plans are needed to fill in the HUGE gaps in coverage.

As opposed to what we find in the US today...?

It's good to address making health care better, but ...haste makes waste.

We have been trying to address health care for a century now. We know that the cost of health care benefits is why companies like GM can't compete. We also know that the future of the economy requires that health care costs be controlled. It is said to be a greater imperative than SS.

How long would you like to wait?

Any solution will require modifications over time. But there may never be a better time to finally pass health care legislation - the longer a President holds office, the less power he has.

 

[WhoWee]

GM (like many other union shops) spends too much on health insurance...if the insured person doesn't care what the cost is...then nobody will care. The market system only works if there is downward pressure on price.

GM retirees who are losing benefits and now need to pay $1,000+ per month on COBRA (great timing the 65% offset for 9 months in the stimulus bill?) are starting to realize how good they've had it. Many are also shopping for more affordable coverage...now that they need to pay.Also, let's not confuse Medicare with private health care. Medicare is the 800# gorilla in the industry. Again, nobody on Medicare cares what it costs the rest of us.

http://www.tscl.org/NewContent/101499.asp
http://www.cms.hhs.gov/apps/media/p...ge=&showAll=&pYear=&year=&desc=&cboOrder=date
http://www.hhs.gov/medicarefraud/

The problem of waste/fraud is well known...with recent estimates up to 35%.

Health care is a very complicated issue. Allocating a "down payment" of $hundreds of billions ...without a plan ...is ridiculous at best.

The government needs to learn how to run Medicare before it tries to take over the rest of the industry.

Are we ready for progressive policies like Holland?

http://www.independent.co.uk/news/world/europe/holland-is-first-country-to-legalise-euthanasia-622930.html

 

[OmCheeto]

Are we ready for progressive policies like Holland?

http://www.independent.co.uk/news/world/europe/holland-is-first-country-to-legalise-euthanasia-622930.html

Are we ready?...

Bah! They stole an American idea...

http://en.wikipedia.org/wiki/Oregon_Death_with_Dignity_Act

 

[lisab]

Are we ready for progressive policies like Holland?

http://www.independent.co.uk/news/world/europe/holland-is-first-country-to-legalise-euthanasia-622930.html

Ready and willing...it http://seattletimes.nwsource.com/html/nationworld/2008352350_assistedsuicide05m.html" , Washington. My life, how I live it and how I end it, is MY business, not the government's.

 

[SixNein]

I think in that the theory of capitalism has been broken. The basic idea is that greed will indirectly benefit society. Introduce globalization and you have the greedy people circumventing that concept. So I believe that regulation will have to occur on a number of different layers to restart that indirect effect.

 

[Astronuc]

Speaking of medical IT - Wal-Mart Plans to Market Digital Health Records System
http://www.nytimes.com/2009/03/11/business/11record.html

So let Wal-Mart run the entire medical insurance system. Low prices everyday!


Bernanke Says Financial Rules Need an Overhaul
http://www.nytimes.com/2009/03/11/business/economy/11fed.html

WASHINGTON — The chairman of the Federal Reserve, Ben S. Bernanke, called on Tuesday for a broad overhaul of financial regulation that would include a powerful new regulator to keep a much tighter grip on institutions considered “too big to fail.”

At the same time, Mr. Bernanke stoked a new controversy by endorsing more flexible accounting rules that would not force banks to book as many losses during an economic downturn as current rules require.

In so doing, the Fed chairman came closer than other top officials to supporting a policy known as “regulatory forbearance,” a phrase that became an epithet among policy makers after the savings and loan crisis of the early 1990s.

Although the Fed chairman did not use that phrase, he called for reducing the “pro-cyclical” aspects of current regulation — the tendency of accounting rules and capital requirements to aggravate both financial retrenchment during a slowdown and financial excesses during a boom.

Investors and supporters of the banking industry cheered. The battered shares of Citigroup and other banks rose more than 20 percent, though part of that was in response to a statement by Citigroup’s chief executive that the bank turned a profit in the first two months of this year.

But some regulatory experts denounced Mr. Bernanke’s proposals, saying they would merely give banks new ways to hide their true losses.

“If Bernanke thinks he can regulate the cyclicality out of banking, then he’s a fool,” said Lynn Turner, a former chief accountant at the Securities and Exchange Commission. “If you’re regulating banks and you’re doing a good job, you’re making sure that the banks are building their capital reserves during good times. The problem in this country has been that the regulators became captives of the banks and didn’t require them to build up enough capital.”

. . . .

It seems to me that the rules/regulations should be such that the current situation is preventable.

 

[neu]

It seems to me that the rules/regulations should be such that the current situation is preventable.

They should, but the solution isn't just regulation, it's a complete overhaul. The logic of free market capitalism is that regulation is the enemy; if something goes wrong it's because the market isn't free enough to obey the laws of Freidmanite economics. The fact that everything has gone to sh*t wouldn't disuede Freidmanites from their beliefs, they would see it a confirmation of their theory.

Developed democracies aren't able to perform complete free market reforms (not for want of trying).

Apologies, I haven't read the thread in full.

 

[ThomasT]

Al68, I'll reply to your statements below about taxes, as they affect the economy. Wrt other more philosophical considerations, I'll start another thread (in the philosophy forum?) later on today.

The tax rate paid by each member of the "collective" is exactly equal to the tax rate applied to the "collective". That makes your statements contradict each other.

Individual salaries and wages, and the profits of collective enterprises are separate tax categories.

As far as flat taxes, how about a Dick Armey style tax? Flat rate with HUGE standard deductions but no other deductions. This was about 15 yrs ago, but I remember the standard deduction being about $38,000 for a family of four. It had the advantage (or disadvantage?) that it was so simple that people couldn't easily be misled about tax policy.

No deductions. We want the income tax rate to be the same for every entity that's taxed. Individuals' incomes as well as collective profits. Not just for equality of liberty, but because it would be necessary in order to generate sufficient revenue.

The minimum flat rate would have to be about 22% -- probably more.

Or the flat sales tax with a monthly check to everyone that re-inburses a fixed amount to everyone, which would effectively exempt all poor and most middle class income? Again, since it's simple, there is a great opposition to it.

I don't think a federal sales tax would be necessary. But a simple way to do it would be to tax items costing over a certain amount. This would also effectively exempt the poor and lower middle classes without having to mail out 100 million checks every month.

Wrt income tax -- no reimbursements, no deductions, and no exemptions. No tax credits of any kind. No taxes on gifts or inheritances. Separate taxes on certain goods and services would be necessary though. Raise taxes on tobacco and alcohol. Legalize marijuana and prostitution and tax them. Etc.

Wrt income tax, the poor would pay the same percentage as the rich, but there are programs to help them with necessities that they can't afford. For example, medicare and medicaid programs can be extended.

I think a flat income tax would help to 'fix' the economy. Simplification is usually a good thing. Wrt the tax code, I think it's a necessary thing.

 

[WhoWee]

Speaking of medical IT - Wal-Mart Plans to Market Digital Health Records System
http://www.nytimes.com/2009/03/11/business/11record.html

So let Wal-Mart run the entire medical insurance system. Low prices everyday!


Bernanke Says Financial Rules Need an Overhaul
http://www.nytimes.com/2009/03/11/business/economy/11fed.html

It seems to me that the rules/regulations should be such that the current situation is preventable.

Unfortunately, they too will soon be a union shop (if card check passes - stock downgraded yesterday). Once the union takes over...WalMart "customer service" and low prices might undergo changes (not good ones either).

Speaking of unions...can anyone tell me why the government needs unions for their workers? If the rights of workers aren't protected by the government...?

Back to the economy...there are several news reports lately that the economy can not be fixed without addressing health care.

However, one major problem is not being discussed...litigation. The costs of malpractice insurance and the steps doctors take (unnecessary extra tests) have added tremendously to health care costs.

http://www.iii.org/media/hottopics/insurance/medicalmal/

# But the dollar amount of each claim is increasing. In a report on the medical malpractice insurance environment, Gen Re notes that claim costs for physicians and surgeons rose 7 percent and 9.5 percent for hospitals. Likewise, the insurance broker Aon, in its Hospital Professional Liability and Physician Liability 2006 Benchmark Analysis, examining more than 47,700 claims representing more than $4.4 billion of incurred losses, found that while claim frequency is stabilizing, the average size of claims continues to increase at a rate of 6 percent a year. The average amount paid to plaintiffs increased only 3 percent, while amounts paid to defend against liability claims rose 17 percent as hospitals mount a more aggressive defense of claims.

# Claims, Jury Awards and Settlements: A report on the state’s medical malpractice insurance market by the Florida Department of Insurance shows the breakdown of claims payments in 2006. Insurers paid out $602 million on 3,811 closed claims, with 62 percent going for economic damages and 38 percent for noneconomic damages such as pain and suffering.

http://www.nber.org/aginghealth/fall04/w10709.html

Tort reform IS helping...but to date the real and anticipated costs are all built into pricing matrices.

 

[Ivan Seeking]

Speaking of unions...can anyone tell me why the government needs unions for their workers? If the rights of workers aren't protected by the government...?

Unions are intended to level the field between employers and employees. Government employees don't have any more rights than any other employee.

Here in Oregon, employees have virtually no rights beyond the basic federal protections; and good luck trying to enforce those! Anyone can fire anyone for almost any reason. I was once fired from a job for giving notice. Talk about control freaks!

 

[Ivan Seeking]

I just spotted this in the news.

10 Best Uses for RFID Tags
...3// Surgical sponges
One out of every thousand or so intra-abdominal surgery patients "retains" a sponge. Oops! With SmartSponges, docs can find stowaways by passing a wand over the body.

http://www.wired.com/techbiz/it/magazine/17-03/st_best

 

[ThomasT]

Back to the economy...there are several news reports lately that the economy can not be fixed without addressing health care.

The cause(s) of the current economic problem (a severe decline in 'interbank' confidence, and therefore interbank lending) seem to have relatively little to do with the practices of any industry other than the banking-investment industry.

All of these institutions are 'overleveraged' to some extent, aren't they? Isn't this the nature of the business?

If so, then what was the source of pre-meltdown 'interbank confidence'?

Was the meltdown, mini-domino effect primarily due to declines in cash flow from real economy sources, or declines in the values of stock market portfolios? Or both, or neither? Was it primarily due to a sudden calling-in of debts from certain institutions? I can't think of any company or individual that I know that wouldn't be financially ruined if this happened. So, if this is what happened, why did it happen?

Clearly, I'm still pretty much clueless -- but I did spend the most of the night looking up and pondering healthcare and medical malpractice statistics, so at least I learned something.

However, one major problem is not being discussed...litigation. The costs of malpractice insurance and the steps doctors take (unnecessary extra tests) have added tremendously to health care costs.

I haven't found any reason to believe that testing that's ultimately found to be unnecessary, or excessively redundant testing, is affecting the incidence or results of malpractice litigations. It does add to healthcare costs, but not significantly.

Malpractice insurance has been a part of the cost of doing business for a long time. By itself, it isn't a significant fraction of the total cost of healthcare in the US, and the rate of premiums (which is somewhat regulated by government already) doesn't have much to do with the current economic crisis, afaik.

Tort reform IS helping...but to date the real and anticipated costs are all built into pricing matrices.

I haven't found any compelling evidence yet that 'tort reforms' (such as capping jury awards for noneconomic damages, or scheduling payments for injury type, etc.) make any difference in malpractice insurance premiums. From what I've read, insurance company malpractice premiums generally track costs or losses due to malpractice claim settlements or adjudications (the major components of which are medical and legal costs, and not 'pain and suffering' or punitive payouts) -- and both track inflation.

There are intermittant spikes and level intervals, the 'cycling' of the industry due to market conditions, etc., but the general upward trend seems to follow the economy as a whole and doesn't seem to be attributable to any inordinate changes in payouts.

It might be worth noting that the estimated incidence of malpractice claims is a relatively small percentage of the estimated incidence of malpractice, and a small percentage of claims result in litigation, and a small percentage of litigation results in judgements for the plaintiffs. So, focusing on tort reform, or legal system reform, or instituting special medical expert courts or panels might just eventually lead to larger insurance company expenditures. So, insurance companies might want to direct the focus toward the primary cause of medical malpractice claims -- which is medical malpractice.

 

[BarackZero]

At the end of World War II, the American responsible for helping Germany get back on its feet met with his German counterpart. I forget their names, which are inconsequential anyway.

The American says that they should allow prices to find their own level. In other words, encourage a free market. The German says that his professional economists tell him the new government must fix prices, at least until things turn around.

The American says, "Oh don't listen to them. My experts tell me the same thing."

And under a relatively free economy, progress was quickly made.

The lesson is this, and it is obvious: Capitalism works. No government, no bureaucracy has the wisdom and the speed to react to the trillions of economic variables that make up anyone single country. The most prosperous and desirable nations on Earth are those which run on free markets, i.e. capitalism. At the other end are the most miserable places on earth, from Zimbabwe to Sudan. They are collectivist cesspools.

 

[Astronuc]

It's about time -

Financial Fraud Is Focus of Attack by Prosecutors
http://www.nytimes.com/2009/03/12/business/12crime.html

Spurred by rising public anger, federal and state investigators are preparing for a surge of prosecutions of financial fraud.

Across the country, attorneys general have already begun indicting dozens of loan processors, mortgage brokers and bank officers. Last week alone, there were guilty pleas in Minnesota, Delaware, North Carolina and Connecticut and sentences in Florida and Vermont — all stemming from home loan scams.

With the Obama administration focused on stabilizing the banks and restoring confidence in the stock market, it has said little about federal civil or criminal charges. But its proposed budget contains hints that it will add to this weight of litigation, including money for more F.B.I. agents to investigate mortgage fraud and white-collar crime, and a 13 percent raise for the Securities and Exchange Commission.

. . . .

 

[WhoWee]

Not all losses are due to fraud by the financial institutions...of course, a small percentage are and should be prosecuted.

Some mortgages went bad because people lied on their applications...and they still qualify for the rescue plan. However, people just barementsly able to meet their payments and NOT in default...don't qualify. The latest "TREND" is to allow your mortgage to go into default...accumulate cash get a restructure...rel fair?

Some people made stupid investment decisions...these generate a lot of complaints and burden the system.

The Feds have been under-manned for a long time. The criminals know the threshold ($amount) before they will be investigated in various regions. Financial fraud is a forensic discipline...usually 3 to 5 (or more) years after the fact. People and records are lost and investigations lead nowhere.

 

[Al68]

Al68, I'll reply to your statements below about taxes, as they affect the economy. Wrt other more philosophical considerations, I'll start another thread (in the philosophy forum?) later on today.

Ok, I'll check it out. But I think a lot of people underestimate the influence of their personal philosophy on their positions on economic issues. Some even claim their positions aren't based on philosophy at all, then their personal philosophy is obvious when they explain their positions.

Individual salaries and wages, and the profits of collective enterprises are separate tax categories.

OK, but my only point was that some individuals get income from each, so having a different tax rate for each category means a different tax rate for different individuals.

No deductions. We want the income tax rate to be the same for every entity that's taxed. Individuals' incomes as well as collective profits. Not just for equality of liberty, but because it would be necessary in order to generate sufficient revenue.

The minimum flat rate would have to be about 22% -- probably more.

I don't think a federal sales tax would be necessary. But a simple way to do it would be to tax items costing over a certain amount. This would also effectively exempt the poor and lower middle classes without having to mail out 100 million checks every month.

Wrt income tax -- no reimbursements, no deductions, and no exemptions. No tax credits of any kind. No taxes on gifts or inheritances. Separate taxes on certain goods and services would be necessary though. Raise taxes on tobacco and alcohol. Legalize marijuana and prostitution and tax them. Etc.

Wrt income tax, the poor would pay the same percentage as the rich, but there are programs to help them with necessities that they can't afford. For example, medicare and medicaid programs can be extended.

I think a flat income tax would help to 'fix' the economy. Simplification is usually a good thing. Wrt the tax code, I think it's a necessary thing.

Be careful, most in the media, and all Democrats consider that "right wing wacko extremism to benefit the rich".

 

[WhoWee]

The media isn't always consistent...this is a must read...and from only 2 1/2 years ago...how things change.

http://www.cbsnews.com/stories/2006/10/31/opinion/main2139473.shtml

 

[Astronuc]

Interesting commentaries:

Is the Dow doing its job?
With Citi at $1 and others below $5, Dow's claim to lead is challenged

Only 15 Dow stocks have traded below that level over the past 39 years, according to Dow Jones Indexes. More shockingly, Citigroup Inc. (C), once the largest bank in the world, has now become the first blue-chip stock ever to slip below $1, according to Dow Jones data going back to 1970.

Ironically, McDonald's Corp.'s stock, currently trading at more than $50, is one of the four most influential stocks on the price-weighed Dow.

While investment professionals typically prefer to use the broad S&P 500 index as a benchmark, the Dow has long been viewed as the symbol of corporate and investment success in the public's mind.

That is until the ongoing banking crisis and economic recession, by some measures the biggest since the 1930s, cut in half the Dow's value from its all-time highs in Oct. 2007. In not even three months since the start of 2009, the Dow has lost nearly 25%, sending the benchmark and many of its components to 12-year lows.
. . . .

Times have changed. But then if McDonald's and Walmart are that influential, then perhaps the US economy is in real trouble.


At the very least, Dow stocks below $10 call into question the use of the term "blue chips" to describe them. The term refers to the highest-value chips used to play in casinos.
Besides Citigroup, Alcoa Inc. (AA, $5.98), Bank of America (BAC, $5.85), GE ($9.57), GM ($2.18), are trading below $10/share based on the closing prices today. America Express (AXP, $13.15) was trading less the $10/share last week, and Intel (INTC, $14.54) and Pfizer (PFE, $14.02) are just a few dollars above.

AIG plummeted last September, and was de-listed and replaced by Kraft.


General Electric's credit rating lowered by S&P
Shares of blue chip jump on relief that downgrade didn't go deeper

"We believe that GECC is under increasing earnings pressure, due to the recent sharp deterioration in general economic conditions around the globe," said S&P credit analyst Robert Schulz, referring to GE Capital. "This will result, in our opinion, in rising credit losses across key segments of GECC's finance portfolio."

As for the parent, "GE's industrial-based cash generation capabilities remain fundamentally strong -- even in the face of enormous global economic headwinds -- and that it will generate growing cash balances from current levels over the next two years," Schultz said.
Bond prices improved for GE after the news. Prices on GE Capital's 6% bonds maturing in 2012 improved, rising $1.62 to $94.37, pushing the yield down to 8% at last check, according to FINRA data.

However, Madoff and mini-Madoffs a black eye for regulators
Disgraced financier's scheme could keep Baby Boomers away from equities

 

[ThomasT]

Ok, I'll check it out. But I think a lot of people underestimate the influence of their personal philosophy on their positions on economic issues. Some even claim their positions aren't based on philosophy at all, then their personal philosophy is obvious when they explain their positions.

I haven't started a new thread. I think we basically agree. The point I was making about private companies and corporations (where they are made up of more than one person), collectives, is that they function sort of like mini-governments, and (large companies especially) have the power to diminish the freedoms of those inside and outside the company. Examples are waste production, removal and storage; union busting; monopolizing markets; coercing government in order to acquire real estate vis eminent domain; shady practices which diminish market and lending confidence, and eventually affect just about everybody negatively, etc., etc.

Be careful, most in the media, and all Democrats consider that "right wing wacko extremism to benefit the rich".

Taxing all individuals and business entities at the same rate, and doing away with all deductions, exemptions and tax credits would actually generate more revenue than the current system, while minimizing the possibilities for loophole exploitation and abuse. I don't think this would inordinately or necessarily benefit the rich. A lot of people and companies would pay more than they do now.

But, generally, simplifying and streamlining things benefits the economy as a whole, I think.

Of course it'll probably never happen.

 

[Al68]

Be careful, most in the media, and all Democrats consider that "right wing wacko extremism to benefit the rich".

Taxing all individuals and business entities at the same rate, and doing away with all deductions, exemptions and tax credits would actually generate more revenue than the current system, while minimizing the possibilities for loophole exploitation and abuse. I don't think this would inordinately or necessarily benefit the rich.

Well, the flat tax plans that have been proposed by Republicans have a flat rate with huge standard deductions that effectively exempt poor and lower-middle class from income taxes. Dems called those "right wing wacko extremism to benefit the rich". It's just hate speech, no substance.

I would favor a flat tax, but with huge standard deductions. The last thing we need is to increase the tax burden on poor and lower-middle class families. And since they are effectively exempt from income taxes now, a completely flat tax would be a huge tax increase on them.

Even with huge standard deductions, the flat rate would not need to be that high. 17-20% would replace existing revenue when we take into account the economic benefits of a flat simple rate and eliminating itemized deductions and loopholes.

 

[SixNein]

Well, the flat tax plans that have been proposed by Republicans have a flat rate with huge standard deductions that effectively exempt poor and lower-middle class from income taxes. Dems called those "right wing wacko extremism to benefit the rich". It's just hate speech, no substance.

I would favor a flat tax, but with huge standard deductions. The last thing we need is to increase the tax burden on poor and lower-middle class families. And since they are effectively exempt from income taxes now, a completely flat tax would be a huge tax increase on them.

Even with huge standard deductions, the flat rate would not need to be that high. 17-20% would replace existing revenue when we take into account the economic benefits of a flat simple rate and eliminating itemized deductions and loopholes.

The flat tax would make the problem worse because it would kill the poor, and what is left of the middle class would become poor. There is no deductions for anyone being proposed, all Americans are going to pay the same in taxes. It's offsetting the tax burden in this country onto the poor class.

 

[Al68]

Well, the flat tax plans that have been proposed by Republicans have a flat rate with huge standard deductions that effectively exempt poor and lower-middle class from income taxes. Dems called those "right wing wacko extremism to benefit the rich". It's just hate speech, no substance.

I would favor a flat tax, but with huge standard deductions. The last thing we need is to increase the tax burden on poor and lower-middle class families. And since they are effectively exempt from income taxes now, a completely flat tax would be a huge tax increase on them.

Even with huge standard deductions, the flat rate would not need to be that high. 17-20% would replace existing revenue when we take into account the economic benefits of a flat simple rate and eliminating itemized deductions and loopholes.

The flat tax would make the problem worse because it would kill the poor, and what is left of the middle class would become poor. There is no deductions for anyone being proposed, all Americans are going to pay the same in taxes. It's offsetting the tax burden in this country onto the poor class.

Why would you even reply to a post you obviously didn't read?

 

[SixNein]

Why would you even reply to a post you obviously didn't read?

Well, the flat tax plans that have been proposed by Republicans have a flat rate with huge standard deductions that effectively exempt poor and lower-middle class from income taxes. Dems called those "right wing wacko extremism to benefit the rich". It's just hate speech, no substance.

Maybe I just misread you, I was up like all that night =(

Flat tax is bad because there isn't deductions. It would tip the inequality imbalance even further then what it is now.

 

[Jimmy Snyder]

But then if McDonald's and Walmart are that influential, then perhaps the US economy is in real trouble.

Although McDonald's and Walmart are influential in the US economy, the quote you provided only mentioned McDonald's influence on the Dow.