ULTRAMAN VH
05-20-2009, 07:50 AM
Paul B. Farrell
May 19, 2009, 12:01 a.m. EST
22 reasons Obama will raise your taxes ... soon!:anger:
'Tax Bomb' dead ahead: Former GAO chief says your taxes will double
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- Yes, taxes will go up. Must. Why? Debt: federal, state, corporate, bank, pensions, personal. The hole just keeps getting deeper, bigger. Well over $100 trillion of debt is being piled on future generations, while our GDP is only $15 trillion annually.
Reagan was right, "government is the problem," both the GOP and the Dems.
Geithner: "Things have stabilized"At a Newsweek event in Washington, D.C., Treasury Sec. Timothy Geithner said that the economy is showing signs of stabilization, including a thawing of credit markets. Even after recovery, Americans still have to learn to live within their means, he said. Video courtesy Fox News.
Imagine doubling your taxes: That's what David Walker, the former U.S. comptroller general and GAO chief, recently said on CNN: "The federal government has spent more money than it takes in at an increasing rate. Total federal debt almost doubled during President George W. Bush's administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama," with our "tax bill doubling over time."
Debt is killing the American Dream. We've mortgaged our future, and now Obama's adding a new $1.84 trillion federal deficit. That's four times Bush's record deficit last year, with deficits over $500 billion annually for the next decade. The president's gambling, doubling down, betting the farm, going "all in," with a huge bet that could break the bank. Is this America's last hand in a high-stakes poker game?
More grim tax facts: A few years ago Peter Orszag, Obama's new budget director, said "balancing the budget would require a 41% cut in spending on Social Security and Medicare, a 47% cut in discretionary spending, or a 17% cut in all non-interest spending." Last week Treasury Secretary Tim Geithner gave us an update: "The longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be."
Those two trust funds already eat up more than a third of the federal budget and increase $2 trillion a year. Still, AARP lobbyists will fight benefits cuts more than tax increases, despite a new study: Medicare surpluses will run out in 2016, Social Security by 2037, both earlier than previously estimated. Together they account for roughly $80 trillion to $120 trillion in unfunded liabilities, with Medicare 80% of the total ... and please note, America's debt now exceeds the $50 trillion GDP of all economies in the entire world!
Wake up, you're in denial, the 'tax bomb' is dead ahead
Still, most Americans are in denial. We want to believe Fed Chairman Ben Bernanke's recent optimism about a recovery this year: Investor sentiment got a big boost since March from that 30% market gain, many believe we've hit bottom and it's not a sucker's rally, not a dead cat bounce in a secular bear. Then we hear corporate insiders are selling their stock -- still, we're in denial.
Please listen: Excessive debt virtually guarantees your taxes are going up, way up. But how much debt will drive the demand increased taxes? In March of 2008 when it looked like McCain vs. Clinton we wrote a column: "10 Reasons the New President Will Raise Your Taxes." We saw this coming, and it didn't matter who got elected, Bush left a massive hole of debt. Read previous Paul B. Farrell.
But let's go back even further, to 2005 when we started surveying America's burgeoning debt as a trigger for a coming meltdown. The Dow was roughly 10,000. It peaked at 14,164 in October 2007, in spite of the obvious warning signs. Get it? Our average Main Street investors saw the global meltdown coming nearly three years before it happened. In fact, it was quite obvious to 86% of our readers back in 2005. But not to a greedy Wall Street and Reaganomics-obsessed Washington. They were in total denial into 2008.
So we researched, updated and reprioritized 22 debt/deficit areas that will push us over the edge, forcing a sharp increase in taxes. There's a perfect storm dead ahead: Any one of the 22 could trigger the dominoes cascading into a black hole, demanding higher taxes, triggering the "Great Depression 2" we've discussed often. Be prepared.
How to score: Give each of these areas of debt 1-5 points. Add the points for all 22. Then let us know whether/when/ how/why you think your taxes will start going up, up and away, through the roof. We'll tabulate and report back to you on the results, and some investment strategies for the future, based on your predictions, as we did in 2005:
1. Federal budget deficits/debt
Federal debt is now $11.5 trillion. Add $1.4 trillion this year. That's almost 100% of GDP.
2. Social Security unfunded debt
No longer a political "third rail," we have no choice: We must raise taxes, or cut benefits.
3. Medicare unfunded obligations
Unfunded after 2016, $65 trillion by 2041, consuming 100% of tax revenues by 2075.
4. Health care insurance liabilities
Costs rising at double the inflation rate, 47 million uninsured. Obama plans universal coverage of this mega-$2.5 trillion business. Can we trust insurers sudden offer to help?
5. Military/defense budget costs
Budget $662 billion. Add veterans affairs, Afghan, Iraq: $1.45 trillion 55% of budget.
6. Homeland insecurity risks
Ports, chemical plants, borders at risk. Black Swans are lurking; with unpredictable mega-buck consequences.
7. Real estate/mortgage losses
Global real estate from $40 trillion to $70 trillion in 5 years. Total global wealth lost since 2007, $50 trillion. U.S. mortgages shot from $7 trillion to $14 trillion in 8 years, now down $6 trillion, with 20% of homes worth less than the mortgage.
8. Peak oil and energy alternatives
Oil's soon declining. Extraction costs will exceed sale price. Nuclear energy cost: $75 trillion. Coal's dirty. Wind, biofuels: costly.
9. Cap and trade
Taxing fossil-fuel emissions will increase energy costs. But it won't change much. China won't stop. So population grows, with demand and global warming.
10. Foreign trade deficits
Annual deficits continue hovering around $600 billion. Foreigners buy 70% of our debt. Many convert to equity: Today foreigners own a net value of $2.5 trillion in America.
11. Corporate pensions
Two-thirds of them are underfunded. Taxpayers cover losses through the Pension Benefits Guarantee Corporation, also underfunded by $500 billion.
12. Local government pensions
Latest estimates of retiree benefits and health-care costs now called a "$2 trillion hole."
13. Weak U.S. dollar
U.S. foreign debt nearly equals our $15 trillion GDP; China's replacing dollar reserves.
14. Personal savings debt
We're consumers. Our savings rate dropped from 8% in 1980 to zero last year. Only 30% save enough to retire. And yet, economists warn increased savings would slow economic recovery. They want consumption.
15. Credit card and consumer debt
Consumer debt is now at $2.5 trillion. Personal bankruptcies are rising. Still, we're card addicts. And card companies are stealing from us.
16. Fannie Mae/Freddie Mac
They're owners of $5.5 trillion in mortgage debt, half the nation's total, with foreclosure rates at historic highs.
17. War on drugs
Drug addiction in America plus our misguided, unwinnable supply-side wars on drugs in Mexico, Afghanistan -- all over the globe -- costs hundreds of billions annually. Worse, our domestic demands are increasing the total costs.
18. Shadow banking system
The Fed and Treasury prefer secrecy with loans and credits now over $5 trillion. Auto and insurance companies now getting money.
19. Democracy by lobbyists
Forget socialism, capitalism, democracy: America is run by 42,000 lobbyists. It's "Washington's Biggest Business" controlling all politicians.
20. Class gap widening
CEO salaries vs. worker pay rose from 40:1 in 1980 to over 400:1 before the meltdown, while inflation-adjusted pay of workers fell.
21. International credibility
With friends and enemies, our war/torture was costly.
22. What did we miss? Resources, tech, educational, environment, jobs, you pick
New taxes are inevitable at this level of debt. Please, total up your scores on each of these individual tax-creating debt areas. Tell us your total score. Add comments and tell us your opinions about the coming "tax bomb:" When? How much? Can we stop it? Is this the "last hand" before the "Great Depression 2" in 2011, during Obama's next campaign? Is the president doubling down in a high-stakes poker game, betting the farm, going 'all in,' gambling on your kids/ future, with a bet that will break the Treasury?
MarketWatch.com Home (http://www.marketwatch.com) :
May 19, 2009, 12:01 a.m. EST
22 reasons Obama will raise your taxes ... soon!:anger:
'Tax Bomb' dead ahead: Former GAO chief says your taxes will double
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- Yes, taxes will go up. Must. Why? Debt: federal, state, corporate, bank, pensions, personal. The hole just keeps getting deeper, bigger. Well over $100 trillion of debt is being piled on future generations, while our GDP is only $15 trillion annually.
Reagan was right, "government is the problem," both the GOP and the Dems.
Geithner: "Things have stabilized"At a Newsweek event in Washington, D.C., Treasury Sec. Timothy Geithner said that the economy is showing signs of stabilization, including a thawing of credit markets. Even after recovery, Americans still have to learn to live within their means, he said. Video courtesy Fox News.
Imagine doubling your taxes: That's what David Walker, the former U.S. comptroller general and GAO chief, recently said on CNN: "The federal government has spent more money than it takes in at an increasing rate. Total federal debt almost doubled during President George W. Bush's administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama," with our "tax bill doubling over time."
Debt is killing the American Dream. We've mortgaged our future, and now Obama's adding a new $1.84 trillion federal deficit. That's four times Bush's record deficit last year, with deficits over $500 billion annually for the next decade. The president's gambling, doubling down, betting the farm, going "all in," with a huge bet that could break the bank. Is this America's last hand in a high-stakes poker game?
More grim tax facts: A few years ago Peter Orszag, Obama's new budget director, said "balancing the budget would require a 41% cut in spending on Social Security and Medicare, a 47% cut in discretionary spending, or a 17% cut in all non-interest spending." Last week Treasury Secretary Tim Geithner gave us an update: "The longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be."
Those two trust funds already eat up more than a third of the federal budget and increase $2 trillion a year. Still, AARP lobbyists will fight benefits cuts more than tax increases, despite a new study: Medicare surpluses will run out in 2016, Social Security by 2037, both earlier than previously estimated. Together they account for roughly $80 trillion to $120 trillion in unfunded liabilities, with Medicare 80% of the total ... and please note, America's debt now exceeds the $50 trillion GDP of all economies in the entire world!
Wake up, you're in denial, the 'tax bomb' is dead ahead
Still, most Americans are in denial. We want to believe Fed Chairman Ben Bernanke's recent optimism about a recovery this year: Investor sentiment got a big boost since March from that 30% market gain, many believe we've hit bottom and it's not a sucker's rally, not a dead cat bounce in a secular bear. Then we hear corporate insiders are selling their stock -- still, we're in denial.
Please listen: Excessive debt virtually guarantees your taxes are going up, way up. But how much debt will drive the demand increased taxes? In March of 2008 when it looked like McCain vs. Clinton we wrote a column: "10 Reasons the New President Will Raise Your Taxes." We saw this coming, and it didn't matter who got elected, Bush left a massive hole of debt. Read previous Paul B. Farrell.
But let's go back even further, to 2005 when we started surveying America's burgeoning debt as a trigger for a coming meltdown. The Dow was roughly 10,000. It peaked at 14,164 in October 2007, in spite of the obvious warning signs. Get it? Our average Main Street investors saw the global meltdown coming nearly three years before it happened. In fact, it was quite obvious to 86% of our readers back in 2005. But not to a greedy Wall Street and Reaganomics-obsessed Washington. They were in total denial into 2008.
So we researched, updated and reprioritized 22 debt/deficit areas that will push us over the edge, forcing a sharp increase in taxes. There's a perfect storm dead ahead: Any one of the 22 could trigger the dominoes cascading into a black hole, demanding higher taxes, triggering the "Great Depression 2" we've discussed often. Be prepared.
How to score: Give each of these areas of debt 1-5 points. Add the points for all 22. Then let us know whether/when/ how/why you think your taxes will start going up, up and away, through the roof. We'll tabulate and report back to you on the results, and some investment strategies for the future, based on your predictions, as we did in 2005:
1. Federal budget deficits/debt
Federal debt is now $11.5 trillion. Add $1.4 trillion this year. That's almost 100% of GDP.
2. Social Security unfunded debt
No longer a political "third rail," we have no choice: We must raise taxes, or cut benefits.
3. Medicare unfunded obligations
Unfunded after 2016, $65 trillion by 2041, consuming 100% of tax revenues by 2075.
4. Health care insurance liabilities
Costs rising at double the inflation rate, 47 million uninsured. Obama plans universal coverage of this mega-$2.5 trillion business. Can we trust insurers sudden offer to help?
5. Military/defense budget costs
Budget $662 billion. Add veterans affairs, Afghan, Iraq: $1.45 trillion 55% of budget.
6. Homeland insecurity risks
Ports, chemical plants, borders at risk. Black Swans are lurking; with unpredictable mega-buck consequences.
7. Real estate/mortgage losses
Global real estate from $40 trillion to $70 trillion in 5 years. Total global wealth lost since 2007, $50 trillion. U.S. mortgages shot from $7 trillion to $14 trillion in 8 years, now down $6 trillion, with 20% of homes worth less than the mortgage.
8. Peak oil and energy alternatives
Oil's soon declining. Extraction costs will exceed sale price. Nuclear energy cost: $75 trillion. Coal's dirty. Wind, biofuels: costly.
9. Cap and trade
Taxing fossil-fuel emissions will increase energy costs. But it won't change much. China won't stop. So population grows, with demand and global warming.
10. Foreign trade deficits
Annual deficits continue hovering around $600 billion. Foreigners buy 70% of our debt. Many convert to equity: Today foreigners own a net value of $2.5 trillion in America.
11. Corporate pensions
Two-thirds of them are underfunded. Taxpayers cover losses through the Pension Benefits Guarantee Corporation, also underfunded by $500 billion.
12. Local government pensions
Latest estimates of retiree benefits and health-care costs now called a "$2 trillion hole."
13. Weak U.S. dollar
U.S. foreign debt nearly equals our $15 trillion GDP; China's replacing dollar reserves.
14. Personal savings debt
We're consumers. Our savings rate dropped from 8% in 1980 to zero last year. Only 30% save enough to retire. And yet, economists warn increased savings would slow economic recovery. They want consumption.
15. Credit card and consumer debt
Consumer debt is now at $2.5 trillion. Personal bankruptcies are rising. Still, we're card addicts. And card companies are stealing from us.
16. Fannie Mae/Freddie Mac
They're owners of $5.5 trillion in mortgage debt, half the nation's total, with foreclosure rates at historic highs.
17. War on drugs
Drug addiction in America plus our misguided, unwinnable supply-side wars on drugs in Mexico, Afghanistan -- all over the globe -- costs hundreds of billions annually. Worse, our domestic demands are increasing the total costs.
18. Shadow banking system
The Fed and Treasury prefer secrecy with loans and credits now over $5 trillion. Auto and insurance companies now getting money.
19. Democracy by lobbyists
Forget socialism, capitalism, democracy: America is run by 42,000 lobbyists. It's "Washington's Biggest Business" controlling all politicians.
20. Class gap widening
CEO salaries vs. worker pay rose from 40:1 in 1980 to over 400:1 before the meltdown, while inflation-adjusted pay of workers fell.
21. International credibility
With friends and enemies, our war/torture was costly.
22. What did we miss? Resources, tech, educational, environment, jobs, you pick
New taxes are inevitable at this level of debt. Please, total up your scores on each of these individual tax-creating debt areas. Tell us your total score. Add comments and tell us your opinions about the coming "tax bomb:" When? How much? Can we stop it? Is this the "last hand" before the "Great Depression 2" in 2011, during Obama's next campaign? Is the president doubling down in a high-stakes poker game, betting the farm, going 'all in,' gambling on your kids/ future, with a bet that will break the Treasury?
MarketWatch.com Home (http://www.marketwatch.com) :