While We Were Watching Other Things…

Yesterday The Washington Examiner posted an article about what is currently happening in  Afghanistan. I’m not sure at exactly what point we totally botched our handling of Afghanistan, but we obviously did.

The article reports:

Over two years after the Biden administration abruptly pulled out of Afghanistan, China is sliding in with its eyes on the war-torn country’s natural resources.

China is being welcomed with open arms by the ruling Taliban government, according to a Pentagon audit.

What’s more, the Taliban are moving to warm relations with China, sending their first ambassador to Beijing, according to John Sopko, the special inspector general for Afghanistan reconstruction.

“On December 1, 2023, the new Taliban ambassador to China, Bilal Karimi, arrived in Beijing, marking the first ambassador the Taliban have sent to another country since seizing power in 2021. While no country formally recognizes the Taliban as the government of Afghanistan, China does maintain an embassy in Kabul,” Sopko’s latest audit for Congress and shared with Secrets said.

The audit suggested the Taliban are campaigning for more Chinese investment.

It said the Taliban have “reportedly asked” to join the China-Pakistan Economic Corridor and Belt and Road Initiative.

Sopko said the Taliban’s acting commerce minister, Haji Nooruddin Azizi, has been very direct in wooing Chinese investment. He quoted Azizi saying, “China, which invests all over the world, should also invest in Afghanistan. … We have everything they need, such as lithium, copper, and iron.”

In the last year, China and the Taliban have inked a 25-year mining contract at Amu Darya, said to have the world’s third-largest oil and natural gas reserves. A Chinese firm is also investing in Afghan power generation and building a major cement factory.

For a number of years, China has been quietly creating a monopoly on the raw materials needed to support modern technology. This is another step in that direction.

What Happens If The Trump Tax Cuts Are Repealed?

Yesterday The Washington Examiner posted an opinion piece with the following title, “Democrats want to repeal most important part of Trump’s tax cuts.”

I would like to note at this point that according to CNS News:

The federal government set records for both the amount of taxes it collected and the amount of money it spent in the first four months of fiscal 2020 (October through January), according to data released today in the Monthly Treasury Statement.

So revenue has increased under the tax cuts–not decreased.

The piece at The Washington Examiner continues:

Democrats are vowing to repeal the GOP’s 2017 tax reform bill, starting with raising the corporate income tax. The Democrat-controlled House Ways and Means Committee recently held a hearing laying the groundwork for this tax increase, falsely claiming that the corporate rate was lowered at the expense of middle-class families.

Reality belies this rhetoric. The corporate tax reduction from 35% to 21% has benefited families and workers alike by growing the economy, raising wages, and creating new jobs.

It’s no coincidence that, in the two years since the tax cut, unemployment has dropped to a 50-year low. It has hit all-time lows for key demographics including women, African Americans, and Hispanics. Thanks to these pro-growth policies, nearly seven million jobs have been created since Trump took office, and there are now fewer unemployed people than job openings.

Wages have also grown.

Annual hourly earnings have grown by 3% or more in the past 12 months. In fact, real median household income has increased by over $5,000 during Trump’s tenure, according to data released by Sentier Research. In addition to this wage growth, the tax cuts have allowed businesses to expand, hire new workers, and increase pay and benefits.

Savings are also on the rise.

When Trump was elected president, the Dow Jones sat at 18,332. It is now at roughly 29,000, an increase of about 60%. This stock market growth benefits the 100 million 401(k)s, the 46.4 million households that have an individual retirement account, and the nearly $4 trillion in public pension funds, half of which is invested in stocks.

And the Congressional Budget Office has revised revenue up by over $1.2 trillion, 80% of the cost of the tax cuts, due to improving economic conditions since the tax cuts were passed.

You have to wonder why the Democrats would want to undermine an economy that is obviously working for everyone. If federal revenue is at record levels, why would you change things?

The piece concludes:

Utility savings for households are another benefit of the corporate rate reduction. As a direct result of the corporate rate cut, utility companies in all 50 states reduced their prices. That means lower monthly electric, gas, and water bills for households and businesses. If Democrats raise the corporate rate, they will be saddling households with higher utility bills.

The Left won’t stop there, either.

Democrats have proposed trillion-dollar annual tax increases that include payroll tax increases, small-business tax increases, income tax increases, and even an increase in the “death tax.” The fact is, corporate tax cuts have grown the economy, lifted wages, and created more jobs. Democrats would undo these gains and harm middle-class families.

Are the Democrats economically ignorant, or do they simply not care about the impact of their policies on everyday Americans?

The Trump Economy

Fox Business reported today that the Dow has gained 10,000 points since Trump’s election.

The article reports:

The stock market has been unstoppable under the influence of President Trump.

The Dow Jones Industrial Average crossed 28,332.74 on Monday, meaning it has rallied 10,000 points, or more than 54 percent, since Trump’s election victory on November 8, 2016. The benchmark S&P 500 has gained more than 46 percent.

“The rally has been driven by pro-growth measures, de-escalation of trade tensions, huge liquidity injections by central banks and a FOMO approach by investors worried about missing out on a remarkable U.S. market outperformance that has set one record high after the other.” Mohamed El-Arian, chief economic adviser at Allianz, told FOX Business.

So if you are an average working American, why does this matter to you? First of all, most Americans have 401k plans. As the stock market rises, the value of those plans rises. However, there is another often overlooked aspect of a growing stock market. Many communities, counties, and states have pension plans for former employees. These are unfunded liabilities. That means that those payments are not considered when drafting budgets. Those payments are made from investment accounts. As the stock market rises, the possibility of having to decrease these payments diminishes and the possibility of the municipality involved having to raise taxes to cover these payments also decreases. People who work gain by both having the value of their retirement accounts increase and by not having to pay higher taxes to cover retirement costs.

The Accounting On This Would Cost More Than The Gains

MSN Money posted an article from The Wall Street Journal today. The article deals with the Democrats’ latest plan to raise taxes on things that are not currently taxed. The Democrats don’t seem concerned with cutting spending–they just want more of your money.

The article explains the plan:

The income tax is the Swiss Army Knife of the U.S. tax system, an all-purpose policy tool for raising revenue, rewarding and punishing activities and redistributing money between rich and poor.

The system could change fundamentally if Democrats win the White House and Congress. The party’s presidential candidates, legislators and advisers share a conviction that today’s income tax is inadequate for an economy where a growing share of rewards flows to a sliver of households.

For the richest Americans, Democrats want to shift toward taxing their wealth, instead of just their salaries and the income their assets generate. The personal income tax indirectly touches wealth, but only when assets are sold and become income.

At the end of 2017, U.S. households had $3.8 trillion in unrealized gains in stocks and investment funds, plus more in real estate, private businesses and artwork, according to the Economic Innovation Group, a nonprofit focused on bringing investment to low-income areas. Most of the value of estates over $100 million consists of unrealized gains, said a 2013 Federal Reserve study. Much has never been touched by individual income taxes and may never be.

Under current law, when stocks and investment funds are inherited, the person inheriting them pays no tax on the capital gains that were accrued during the time the previous owner possessed the stock. At the point of inheritance, new capital gains begin to accrue. For example, if a person of modest means bought five shares of a stock a month over a period of ten years and his $3000 a year investment was worth $300,000 at his death, his heirs would receive the $300,000 worth of stock and pay capital gains when they sold it on the basis of that $300,000. The idea is to encourage people to invest. The Democrats want to change that.

The article reports:

In campaigns, Congress and academia, Democrats are shaping tax plans for 2021, when they hope to have narrow majorities. There are three main options.

President Obama left office with a list of ideas for taxing the rich that might have raised nearly $1 trillion over a decade. The most important was taxing capital gains at death.

The idea was too radical for a serious look from Congress at the time. Now, to a Democratic base that has moved left, it looks almost moderate.

Former Vice President Joe Biden, the candidate most prominently picking up where Mr. Obama left off, has proposed repealing stepped-up basis. Taxing unrealized gains at death could let Congress raise the capital gains rate to 50% before revenue from it would start to drop, according to the Tax Policy Center, because investors would no longer delay sales in hopes of a zero tax bill when they die.

And indeed, Mr. Biden has proposed doubling the income-tax rate to 40% on capital gains for taxpayers with incomes of $1 million or more.

But for Democrats, repealing stepped-up basis has drawbacks. Much of the money wouldn’t come in for years, until people died. The Treasury Department estimated a plan Mr. Obama put out in 2016 would generate $235 billion over a decade, less than 10% of what advisers to Sen. Warren’s campaign say her tax plan would raise.

That lag raises another risk. Wealthy taxpayers would have incentives to get Congress to reverse the tax before their heirs face it.

Mr. Obama’s administration never seriously explored a wealth tax or a tax on accrued but unrealized gains, said Lily Batchelder, who helped devise his policies.

“If someone’s goal is to raise trillions of dollars from the very wealthy, then it becomes necessary to think about these more ambitious proposals,” she said.

Instead of attacking favorable treatment of inherited assets, Mr. Wyden goes after the other main principle of capital-gains taxation—that gains must be realized before taxes are imposed.

The Oregon senator is designing a “mark-to-market” system. Annual increases in the value of people’s assets would be taxed as income, even if the assets aren’t sold. Someone who owned stock that was worth $400 million on Jan. 1 but $500 million on Dec. 31 would add $100 million to income on his or her tax return.

The tax would diminish the case for a preferential capital-gains rate, since people couldn’t get any benefit from deferring asset sales. Mr. Wyden would raise the rate to ordinary-income levels. Presidential candidate Julián Castro also just endorsed a mark-to-market system.

For the government, money would start flowing in immediately. The tax would hit every year, not just when an asset-holder died. Mr. Wyden would apply this regime to just the top 0.3% of taxpayers, said spokeswoman Ashley Schapitl. Mr. Castro’s tax would apply to the top 0.1%.

The article concludes:

The Constitution says any direct tax must be structured so each state contributes a share of it equal to the state’s share of the population. A state such as Connecticut has far more multimillionaires per capita than many others, so its share of the wealth tax would far exceed its share of the U.S. population. How Ms. Warren’s wealth tax might be categorized or affected is an unsettled area of law relying on century-old Supreme Court precedents.

Still, the wealth tax polls well, and Democratic candidates are eager to draw a contrast with President Trump, a tax-cutting billionaire.

Republicans will push back. Rep. Tom Reed (R., N.Y.) says tax increases aimed at the top would reach the middle class. “It easily goes down the slippery slope,” he said. “If it’s the 1%, it’s the top 20%.” he said.

The bookkeeping would be ridiculous. The tax forms would be intimidating. Let’s keep moving in the direction of simpler tax forms and less taxation. The next step should not be more taxes–it should be less spending.

A Question That Should Have Been Asked Long Ago

According to Michelle Clarier.com:

Michelle Celarier is an award-winning journalist who writes about the world of money and power for New York magazine, Fortune magazine, Institutional Investor, Worth and Slate. She has reported on hedge funds and the men who run them for over a decade, including a four-year stint as a tabloid scribe with the New York Post. She was previously the editor of Absolute Return and its successor Absolute Return + Alpha (AR), which won several magazine awards under her leadership.

Ms. Celarier recently posted an article at New York magazine about Jeffery Epstein.

The article notes:

Long before Jeffrey Epstein pleaded guilty to prostitution charges in Florida more than a decade ago, his fellow Palm Beach resident and hedge-fund manager Douglas Kass was intrigued by the local gossip about his neighbor.

“I’m hearing about the parties, hearing about a guy who’s throwing money around,” says Kass, president of Seabreeze Partners Management. While stories about young girls swarming Epstein’s waterfront mansion and the sex parties he hosted for the rich and powerful were the talk of the town, Kass was more focused on how this obscure person, rumored to be managing billions of dollars, had become so wealthy without much of a track record.

Kass was well-connected on Wall Street, where he’d worked for decades, so he began to ask around. “I went to my institutional brokers, to their trading desks and asked if they ever traded with him. I did it a few times until the date when he was arrested,” he recalls. “Not one institutional trading desk, primary or secondary, had ever traded with Epstein’s firm.”

When a reporter came to interview Kass about Bernie Madoff shortly before that firm blew up in the biggest Ponzi scheme ever, Kass told her, “There’s another guy who reminds me of Madoff that no one trades with.” That man was Jeffrey Epstein.

“How did he get the money?” Kass kept asking.

For decades, Epstein has been credulously described as a big-time hedge-fund manager and a billionaire, even though there’s not a lot of evidence that he is either. There appears little chance the public is going to get definitive answers anytime soon. In a July 11 letter to the New York federal judge overseeing Epstein’s sex-trafficking case, Epstein’s attorney offered to provide “sealed disclosures” about Epstein’s finances to determine the size of the bond he would need to post to secure his release from jail pending trial. His brother, Mark, and a friend even offered to chip in, if necessary.

The article notes some unusual things about Jeffery Epstein’s investment success:

To begin with, there is much skepticism among the hedgies Intelligencer spoke with that Epstein made the money he has — and he appears to have a lot, given a lavish portfolio of homes and private aircraft — as a traditional money manager. A fund manager who knows well how that kind of fortune is acquired notes, “It’s hard to make a billion dollars quietly.” Epstein never made a peep in the financial world.

Epstein was also missing another key element of a typical thriving hedge fund: investors. Kass couldn’t find any beyond Epstein’s one well-publicized client, retail magnate Les Wexner — nor could other players in the hedge-fund world who undertook similar snooping. “I don’t know anyone who’s ever invested in him; he’s never talked about by any of the allocators,” says one billionaire hedge-fund manager, referring to firms that distribute large pools money among various funds.

The article notes one very believable theory on how Jeffrey Epstein became a billionaire:

Given this puzzling set of data points, the hedge-fund managers we spoke to leaned toward the theory that Epstein was running a blackmail scheme under the cover of a hedge fund.

How such a scheme could hypothetically work has been laid out in detail in a thread on the anonymous Twitter feed of @quantian1. It’s worth reading in its entirety, but in summary it is a rough blueprint for how a devious aspiring hedge-fund manager could blackmail rich people into investing with him without raising too many flags.

Kass and former hedge-fund manager Whitney Tilson both emailed the thread around in investing circles and both quickly discovered that their colleagues found it quite convincing. “This actually sounds very plausible,” Tilson wrote in an email forwarding the thread to others.

“He somehow cajoled these guys to invest,” says Kass, speaking of hypothetical blackmailed investors who gave Epstein their money to invest, but managed to keep their names private.

The fact that Epstein’s fund is offshore in a tax haven — it is based in the U.S. Virgin Islands — and has a secret client list both add credence to the blackmail theory.

The article concludes:

In the 2015 filing, Giuffre claimed that Epstein “debriefed her” after she was forced into sexual encounters so that he could possess “intimate and potentially embarrassing information” to blackmail friends into parking their money with him. She also said photographic and video evidence existed — an assertion that looms especially large now that federal investigators have found a trove of images in Epstein’s home safe.

There are other theories about how Epstein made his money–a Ponzi scheme, work for the intelligence community, money laundering, and offshore tax schemes. Now that Epstein’s New York City residence has been cleared of evidence by authorities, it will be interesting to see who is involved in his financial dealings (and other activities).

More Good Economic News

The following is a Press Release from U.S. Steel:

U. S. STEEL ANNOUNCES STATE-OF-THE-ART STEELMAKING TECHNOLOGY INVESTMENT AT MON VALLEY WORKS

PITTSBURGH May 2, 2019–United States Steel Corporation (NYSE: X) announced today it will invest more than $1 billion to construct a new sustainable endless casting and rolling facility at its Edgar Thomson Plant in Braddock, Pa.,and a cogeneration facility at its Clairton Plant in Clairton, Pa., both part of the company’s Mon Valley Works. The cutting-edge endless casting and rolling technology combines thin slab casting and hot rolled band production into one continuous process and will make Mon Valley Works the first facility of this type in the United States, and one of only a handful in the world.

“This is a truly transformational investment for U.S.Steel.We are combining our integrated steelmaking process with industry-leading endless casting and rolling to reinvest in steelmaking and secure the future for a new generation of steelworkers in Western Pennsylvania and the Mon Valley,” said David B. Burritt, President and Chief Executive Officer of U.S.Steel. “U.S.Steel’s investment in leading technology and advanced manufacturing aligns with our vision to be the industry leader in delivering high-quality, value-added products and innovative solutions that address our customers’ most challenging steel needs for the future. We believe that adding sustainable steel technology to our footprint will create long-term value for our employees, our region, our customers and our investors.

The installation of endless casting and rolling technology will give U.S.Steela world-class asset that will improve the quality and attributes of its downstream products for customers in appliance, construction and industrial markets. With this investment, Mon Valley Works will become the principal source of substrate for the production of the company’s industry-leading XG3™ Advanced High Strength Steel (AHSS) that assists automotive customers in meeting fuel efficiency standards. This project, in addition to producing sustainable AHSS, will improve environmental performance, energy conservation and reduce our carbon footprint associated with Mon Valley Works. First coil production is expected in 2022,contingent upon permitting and construction.

With this investment, U.S.Steel continues its more than a century-long commitment to innovative steelmaking in Pennsylvania. The technology will allow for optimization of the Mon Valley Works and other U.S.Steel facilities without increasing the company’s overall steelmaking capacity. The new endless casting and rolling facility will replace the existing traditional slab caster and hot strip mill facilities at the Mon Valley Works. Current and future employees will enhance their skills with more advanced manufacturing to operate and maintain the new facility through training programs developed in partnership with local universities.

As part of the project,U.S.Steel will also include construction of a new cogeneration facility, equipped with state-of-the-art emissions control systems at its Clairton Plant,to convert a portion of the coke oven gas generated at its Clairton Plant into electricity to power the steelmaking and finishing facilities throughout U.S.Steel’s Mon Valley operations.

Once completed, the new advanced steelmaking technology and state-of-the-art cogeneration facilities will incorporate the best available control technologies. Based upon current design and engineering data that is accompanying our air permit applications, we expect that the project will result in significant improvements in emissions compared to the existing facilities to be replaced, including reductions in emissions of Particulate Matter (PM) of approximately 60%, PM10 and PM2.5 of approximately 35%,sulfur dioxide of approximately 50%,and nitrogen oxides of approximately 80%. The project exemplifies our continued commitment to conserve resources and improve air quality in the Mon Valley.

Additional details on the investment, including an investor presentation,can be found at http://www.ussteel.com/MonValleyInvestment.

President Trump’s economic policies are working for everyone.

Facts Are Such Inconvenient Things

The biggest advantage the Republicans will have in 2020 is a strong economy. Because the Democrats know this, they are trying very hard to downplay the economic recovery that is currently taking place. They have invented some interesting facts in their attempt to do this. However, the alternative media has learned to fact check these attempts to downplay President Trump’s economic success.

Townhall posted an article today that includes some recent fact checking.

The article reports on some recent statement by Kamala Harris:

First, I’m not sure many economists or Republicans cite the stock market as the top indicator of economic health, despite her initial straw man claim. There are many other metrics that are more indicative and more helpful to building that argument, which we’ll mention in a moment.  But it’s also worth pointing out that a robust stock market is not merely good news for people who own stocks, as Harris sarcastically says.  Plenty of workers’ benefit and retirement funds, including those of many public sector employees, are tied into the performance of the stock market — so it’s not just investors who benefit when markets are humming along, and it’s not just investors who feel pain when markets sustain hits. 

Second, in her attempt to downplay the impressive, stable and low US unemployment rate, Harris recycles a claim for which AOC was slapped down by fact-checkers a few months ago.  Even left-leaning Politifact assigned her a “pants on fire” rating.  Harris’ spin is less explicitly clumsy and wrong than AOC’s, as she didn’t specifically state that the low rate is directly attributable to people working more than one job, which makes absolutely no sense — but she does use this argument to undercut the (compelling) argument that the economy is in good shape because so many Americans are employed.  While it’s certainly true that a substantial number of people are working multiple jobs in order to make ends meet, it’s not accurate to pretend that this phenomenon is sufficiently widespread as to justify Harris’ talking point.

The article further reports:

The February jobs report found that just five percent of the employed population is working more than one job, down from 5.2 percent one year ago.  The experiences of the people who constitute that five percent matter, of course, but they are not evidence of a larger trend — and certainly not a trend that represents a real basis to shrug off the historically-low unemployment rate.  The jobs report that came out on Friday was a major ‘miss’ on a key number, with the US economy adding only 20,000 jobs last month; economists were expecting 180,000.  That’s a potentially concerning data point, underscoring the folly of simply assuming that the current prosperity streak will continue unabated.  But there were positive statistics, too.  The previous two months’ job creation data was revised upward by 12,000, and the overall unemployment rate fell to 3.8 percent.  That marks 12 consecutive months, a full year, with the U3 figure at or below four percent, which is unambiguously good.

The article concludes:

Sustainability is a fair worry for the White House, but as of this moment, the most useful measuring sticks of the US economy are unemployment (3.8 percent), GDP growth (3.1 percent Q4 to Q4), and wage growth (3.4 percent).  All three are impressive.  Harris’ snarky point, therefore, is weak.  

As wages and jobs increase, voters will have to decide whether to believe what they are experiencing or what they are being told.

The Trump Economy Continues To Make News

Yesterday The Conservative Treehouse posted an article about the growth of the American economy under President Trump.

The article reports:

The Bureau of Labor Statistics has released some remarkable economic data today. There are more than seven million current job openings [See Here] and the year-over-year average wage gains are 3.3% [See Here]

I suggest you follow the link and read the entire article. It is a fairly detailed analysis of what has happened due to de-regulation and tax cuts.

The article concludes:

The investing class economy, ie. another name for a ‘service-driven economy’, has been the only source of historic reference for approximately three decades. These talking heads convinced themselves that a “service driven economy” was the ONLY economy ever possible for the U.S. in the future.

Back in January 2017 Deutsche Bank began thinking about it, applying new models, trying to conceptualize and quantify MAGAnomics, and trying to walk out the potential ramifications.  They began talking about Trump doubling the U.S. GDP growth rate when all U.S. investment groups couldn’t yet fathom the possibility.

It’s like waking up on Christmas morning every day to see the pontificating Fed struggling to quantify analysis of their surrounding reality based on flawed assumptions. They simply have no understanding of what happens within the new dimension.

Monetary policy, Fed control over the economy, is disconnected and will stay that way for approximately another 12-14 months, until Main Street regains full operational strength –and– economic parity is achieved.

As we have continued to share, CTH believes the paycheck-to-paycheck working middle-class are going to see a considerable rise in wages and standard of living.  How high can wages rise?… that depends on the pressure; and right now the pressure is massive.  I’m not going to dismiss the possibility we could see double digit increases in year-over-year wage growth in multiple economic sectors in several regions of the U.S.

Remember, as wages and benefits increase – millions of people are coming back into the labor market to take advantage of the income opportunities.  The statistics on the invisible workforce varies, but there are millions of people taking on new jobs in this economy and the participation rate is growing.

It is time that the average working American got a few economic breaks. President Trump is providing those breaks.

What Does This Mean For America’s Future?

The Washington Examiner reported today that the rate of homeownership in America has declined steadily since 2006.

The article includes the following graph:

HomeownershipThe article explains:

The only age group that saw a rising homeownership rate over the past year was 35-44-year-olds, with younger and older people turning more to renting.

So let’s take a look at this from a broader perspective. Part of the decline is due to the housing bubble. However, we need to look at the impact of homeownership on our society and how the decline in homeownership will impact us in the future.

Homeowners are invested in their houses and in their neighborhoods. Generally speaking they take pride in both and will endeavor to keep both their homes and neighborhoods clean and crime-free. Under most circumstances, a home will increase in value, providing a basic investment for people who may not be able to invest in other assets. The increase in renters means an increase in landlords, people who own the rental property. It seems to me that the increase in landlords and renters is an indication that the middle class is being squeezed out economically. I understand that in many parts of the country housing is extremely expensive, but there are also areas of the country where jobs are available and housing is reasonably priced. I fear that the decrease in homeownership represents a moving away from the idea of owning something, taking care of something, and having an asset in the future. It may be a reflection of our instant gratification society rather than an economic indicator. It also may be a reflection of the American culture versus the culture of the large number of immigrants currently coming to America from different countries. Private property rights are one of the backbones of our freedoms–other countries may not have those rights. In order to keep our middle class strong economically and help keep our neighborhoods crime-free, we need to encourage all Americans, whether they were born here or just arrived from another country, to own homes and take care of them.

A Ponzi Scheme Works As Long As There Are New People Getting In

Today’s Wall Street Journal posted an article about the 1,400 union-run retirement plans that are poorly run and underfunded.

The article reports:

…Multi-employer plans in the U.S. are underfunded by some $369 billion. An estimated $43 billion of that off-balance-sheet liability belongs to the 44 S&P 500 companies that are exposed to multi-employer plans. The other 88% of the $369 billion is borne by small, mid-cap or private firms that may be even less prepared to cover the obligations. The report says Safeway’s $6.9 billion in liabilities amount to 76% of the company’s market cap, for example.

The article points out that CEO’s and union chiefs have ignored the problem, preferring to invest in current wages and benefits rather than funding pensions. If these unfunded pensions are dumped into the Pension Guaranty Fund, the people expecting the pensions will receive a maximum of $12,800 a year–the maximum payout of the fund.

In June 2010 I posted an article (rightwinggranny.com) about the coming crisis in union retirement plans. When you consider the amount of money the unions spend on political causes, you would think they might have some they could invest to make sure their workers actually receive the benefits promised them. Right now, union pensions are a ponzi scheme (just like Social Security). That will not change until union members realize what is going on and force a change.

Just for the record, the website Open Secrets is reporting that labor PACS have contributed $28,047,761 to political campaigns this year (figures as of April 30, 2012). Of those contributions, 88% went to Democrats and 12% to Republicans.

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If Investors Ran Their Portfolios Like The Government Runs Theirs…

Today’s Detroit News reported today that the government has revised the estimated losses from the auto bailout up $170 million.

The article reports:

In the government’s latest report to Congress this month, the Treasury upped its estimate to $23.77 billion, up from $23.6 billion.

Last fall, the government dramatically boosted its forecast of losses on the rescues of General Motors Co., Chrysler Group LLC and their finance units from $14 billion to $23.6 billion.

Much of the increase in losses is due to the sharp decline of GM’s stock price over the last six months.

Three solar companies the government invested in went bankrupt or laid off workers last week. The losses in the bailout of the auto companies were considerably more than what was initially projected. Have we learned yet that the government should not be investing taxpayer money in private businesses? Government interference in the free market has done nothing but take large amounts of money out of taxpapayers’ pockets and increase the national debt. Someone is needed in Washington who can put a stop to the overspending and misuse of taxpayers’ money.

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