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>Obama’s "Tax The Rich" Is Outright Dumb!

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The reason I say it’s dumb to raise taxes on rich, successful “American” companies is that other countries are not resorting to tax increases during this recession so what’s to stop IBM, Microsoft, and others from moving their home offices to countries like India, Italy, or Brazil?

Tony Sagami’s take on this issue is what other smart people are saying. The new trillion-dollar health plan is a plan to wreck America, because where’s the money coming from? American industry that haven’t taken bailouts, that’s who. That would have the net effect of drastically weakening our tax base and destroying America because these top American company leaders are dead serious. They would rather take the company away from America than pay exorbatant taxes, wouldn’t you? . Now do you know why it’s dumb to raise taxes on the rich? Read my friend Tony Sagami’s article below. Don White

Penalize Success, Subsidize Failure?
by Tony Sagami

Tony Sagami

Since the market topped in 2007, I’ve written over and over about the major causes of the implosion — the multi-billion-dollar trade deficits, the tanking U.S. dollar, the lax lending practices, and the Fed’s low interest rate policy.

All of these factors and more led to overpriced U.S. stocks and a massive U.S. real estate bubble that popped hard.

Then came the multi-trillion dollar government spending spree to keep the economy moving.

But the drags on our economy remain in full force and have yet to play themselves out. Even worse there is a new threat to your portfolio that could pull the Dow Jones down to new lows and could push this painful recession into a full-blown depression.

Government Tax Grab
Rewards Failure

The threat I am talking about is President Obama’s tax grab that is designed to reward failure. It bails out General Motors, Chrysler, AIG, and bank after bank, while raising the taxes on our most productive businesses and individuals.

The math is simple and irrefutable. Our government is spending so much money that it has to raise revenues wherever it can. The easiest targets are the evil, rich corporations and high-income Americans.

First it was the evil big oil companies, then terrible banks, and then the pollution-spitting auto companies, all labeled in various ways as enemies of the people.

What I see is a repressive anti-business government that is seizing control of American companies, setting wages and compensation for private Americans, and raising taxes everywhere it can.

The newest target of this policy is America’s high tech industry, but they aren’t taking the tax attack without a fight.

Here’s what I’m talking about. The current tax code permits American companies to defer paying corporate tax rates as high as 35 percent on most types of foreign profits as long as that money remains invested overseas.

The Obama administration wants to end the ability to keep foreign profits tax-deferred in hopes that these global companies will return the profits back to the United States.

For example, Microsoft paid an overall tax rate of 26 percent in 2008. Its annual report states, “Our effective tax rates are less than the statutory tax rate due to foreign earnings taxed at lower rates.”

The CEOs of Microsoft and Symantec, two of America’s largest tech companies, are none too happy with Obama’s plan to raise their taxes because of their foreign business.

In 2008, Microsoft had 95,029 employees worldwide, with 56,552 or 59 percent of them based in the U.S. and 38,477 (about 41 percent) based outside the U.S.

Microsoft CEO Steve Ballmer says it is his  company's 'fiduciary responsibility' to shift jobs out of the United States to  countries with lower corporate taxes.
Microsoft CEO Steve Ballmer says it is his company’s “fiduciary responsibility” to shift jobs out of the United States to countries with lower corporate taxes.

Microsoft CEO Steve Ballmer said it is his “fiduciary responsibility” to shareholders to shift jobs out of the United States to other countries with lower corporate tax rates.

Ballmer also states that if Obama’s proposal to raise taxes on Microsoft’s foreign divisions is approved, “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

John Thompson of Symantec, the California-based maker of Norton anti-virus software, doesn’t like the taxes either, but he also takes offense to the name-calling.

Software companies are frustrated by being called tax cheats and compared with companies that moved their headquarters to low-tax countries such as Bermuda.

It is a little bit ironic that most of our most significant trading partners and partners globally have taken the tack that they’ll reduce corporate tax rates to stimulate economic growth and not raise corporate tax rates,” Thompson said.

IBM does business in 170 countries and employs 278,227 workers outside of the U.S. and 120,227 in the U.S. Think about that: IBM has more than twice as many workers outside the U.S. as it does inside the U.S.

Since IBM does business in 170 countries, I think it would be more accurate to call IBM a global corporation that happens to be based in the United States instead of a U.S. company with overseas subsidiaries.

And I certainly wouldn’t call Microsoft, Symantec, or IBM tax cheats for exploiting tax loopholes.

Increased Corporate Taxes
Will Hit U.S. Companies Hard

Name calling aside, what really matters is that the increased taxes will cost America’s multi-national companies a mountain of money. The Obama administration itself expects to raise an additional $190 billion in taxes.

Before you say ‘big deal,’ you should ask yourself: What will those additional taxes do to corporate America’s profits? The answer is it will hit them hard.

Don’t take my word for it. Microsoft’s Ballmer estimated that higher taxes on foreign income will reduce profits for 30 companies that comprise the Dow Jones Industrial Average by 10 percent to 15 percent.

Yup … 10 percent to 15 percent!

By the way, there are some winners from this tax increase: The Indian IT outsource companies such as Infosys (INFY), Wipro (WIT), and Satyam Computer (SAY).

>Happy Now? Obama Has Fumbled This Recession Into Depression

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Dear DON,
From the very beginning of this crisis, we’ve told you that, while Washington’s bailouts could delay the inevitable, there’s no free lunch. The Day of Reckoning for Washington was near …
The day of reckoning for Washington’s borrowing binge — when investors cut down their buying of U.S. Treasury bonds, or worse, begin stampeding for the exits …
The day of reckoning for Washington’s printing presses — when the dollar sinks uncontrollably, and …
The day of reckoning for Washington’s bailouts — when the Federal government will inevitably have to turn its attention to saving its own neck, cut back on the bailouts, and let the U.S. economy and stock market go into free-fall.
Now it’s clear that Washington is nearing the end of its rope.
In fact, in his Friday interview with C-SPAN, when asked WHEN the government would run out of money, the president had no choice but to admit “We’re out of money NOW!”
Meanwhile, global investors are recoiling from the record-shattering tidal wave of U.S. government issues flooding the bond market.
Treasury prices are plunging. The U.S. dollar has fallen to a six-month low.
Worse: Higher interest rates are pure poison for an economy already on the ropes — the coup de gras that will transform the worst recession in a half century into a depression that rivals the 1930s.
Or, as I said in last month’s online briefing,

“When Treasury Secretary Geithner unleashes an avalanche of treasuries to fund these bailouts he’s posing as the ‘savior’ of the economy. But in reality, it’s like mercy-killing.
“He’s like ‘Dr. Death,’ Jack Kevorkian, administering the poison that kills the patient.”

Now, just as I warned, thanks to massive federal borrowing, interest rates are rising. The yield on the benchmark 10-year treasury is up by 57% (1.57 times its earlier level) this year alone … and headed much higher.
Look: It’s no secret that massive federal borrowing drives ALL interest rates higher. Nor can anyone deny that, with consumers already cutting purchases to the bone, higher interest rates mean corporate earnings will be crushed in the months ahead.
Huge treasury offerings also siphon hundreds of billions of dollars OUT of the corporate, state and municipal bond markets, starving companies and local governments for desperately needed money. That, in turn, makes a new wave of bankruptcies a near certainty throughout the rest of 2009, in 2010 and beyond.
It’s all about to make the crisis we’ve seen so far seem like a walk in the park.

>Bank of America’s Lewis Says Paulson, Bernanke Forced Merrill Takeover

>Sponsored Link: <!–var d = new Date();r = escape(d.getTime()*Math.random());document.writeln('’);//–>How to protect your cash from the “Bailout Bombshell” right around the corner…


By Jason Simpkins
Managing Editor
Money Morning

Bank of America Corp. (BAC) Chairman and Chief Executive Kenneth Lewis said in testimony before New York’s attorney general that Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry M. Paulson pressured him not only to move ahead with a merger with Merrill Lynch despite reservations, but also to stay quiet about the mounting losses at the crumbling investment bank, The Wall Street Journal reported.
Transparency has long been a cornerstone of both democracy and the free market, but Lewis’s testimony that implies the CEO of one of America’s largest financial institutions – an institution that received more than $20 billion in taxpayer money – neglected to alert investors and potential shareholders to the full scope of Merrill’s losses prior to his company’s acquisition. It also implicates two prominent government officials in that decision.

>Americans Fed Up With Dumb Lawmakers Vote For Term Limits, Empty Congress

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Geithner Vows to Recoup AIG Bonuses as Lawmakers Express Fury

It’s Not With AIG That Americans Are Fed Up — We’re Fed Up With Congress! Why Don’t Lawmakers Get It?

Americans arise! Let’s Get a Term Limits petition going and throw out the entire Congress!

THE STORY: March 18 — Treasury Secretary Timothy Geithner told congressional leaders the U.S. will recoup executive bonuses paid by American International Group Inc. as outraged lawmakers raced to take back such payments from all companies getting federal bailouts.
Geithner, who has come under fire from Congress over the AIG payments, said in a letter to lawmakers last night the government will recover the money by requiring it be repaid from company operations and deducting the amount from the next $30 billion in aid being provided to the insurer.

DON WHITE: In selectively reducing the AIG bailout by the amounts of the bonuses, the question arises: If the complete $170 billion was needed — as said by AIG and as approved by Congress (if you can believe Congress did their oversight job and due diligence) — then why would you want to slow the come-back of the economy by the amount of the bonuses? It makes no sense. We have heard reports that those who got the bonuses have already left AIG, so in essence the bonuses do no good for the future. We know all the brohaha over bonuses will make it harder for AIG to hire top people because any new guys won’t get the lavish bonuses, but AIG’s competition, CityBank and others, still give those kinds of bonuses. The best people, naturally, will gravitate to the most money, which isn’t AIG, now 80% owned by Uncle Sam.

THE STORY: The senior members of the Senate Finance Committee from both parties proposed taxes totaling 70 percent on bonuses at AIG and other companies getting federal money during the U.S. financial meltdown. House Speaker Nancy Pelosi directed committees there to draft several alternatives and said her chamber may consider a bill as early as this week. Other lawmakers introduced their own plans.

DON WHITE: All of this 70% tax effort is self-defeating. Who’s going to want to work for AIG in the future? Lawmakers who have this mentality are sealing the doom for AIG, the company we, the people, own. Shouldn’t we be making it easier for AIG to get the top people to compete with Bank of America and other financial firms which still give big bonuses and whose bonuses are not subject to this kind of balony pile-on tax treatment? Second, these lawmakers who actually think once in a while are stupid. They are dreaming up ways to help AIG fail, which is wrongheaded. Better that lawmakers don’t think at all than to dream up fantasies for the private enterprise system, about which they know absolutely nothing.

THE STORY: “Millions lost their jobs; it’s an outrage that the people who somewhat caused this problem are now paying themselves bonuses,” Senate Finance Chairman Max Baucus, a Montana Democrat, said yesterday in Washington. He and ranking Republican Chuck Grassley of Iowa also proposed limiting some forms of deferred compensation to $1 million at companies getting bailout funds.

DON WHITE: Better still, why don’t we, the people, limit our lawmakers? Wlhy don’t we shout to them: NO MORE BAILOUTS PERIOD! Americans are angry and upset with AIG, but they should be more upset with Congress. We should pass term limits — get a petition going and bypass Congress — and get rid of all members of Congress, Democrats and Republicans alike. They are all incompetent frauds and don’t deserve to be in Washington. The above about Max Baucus and Chuck Grassley is off center. We shouldn’t be writing bills that limit bonuses at all. More importantly, such talk seems to be setting the stage for further bailouts.

STOP THAT NOTION NOW! DOESN’T CONGRESS GET IT? AMERICA ISN’T FED UP WITH AIG IT’S FED UP WITH CONGRESS. This angst against AIG is all a smoke screen. Baucus and Grassley — and all Democrats and Republicans — are all wrong. BAILOUTS BE GONE is my mantra. NO MORE BAILOUTS, PERIOD! LET’S HAVE TERM LIMITS FOR CONGRESS! LET’S STOP THE STUPIDITY THAT STARTS WITH THE CURRENT CROP OF DEMOCRATS AND REPUBLICANS.

>What If We Wake Up Some Morning And Find Out All Our Savings Are Gone?

>Bailout Bombshell!

Just days ago, the Obama administration announced plans to spend another $775 billion to $1 trillion on bailing out the troubled U.S. economy.
According to a study conducted by the San Francisco Chronicle, that brings the total bailout package up to $8.5 trillion (including the $700 billion Wall Street bailout… $600 billion to Fannie and Freddie… $168 billion in stimulus checks… the list goes on).
To put this into perspective, that’s more than this country spent on the New Deal ($500 billion)…
More than we spent on the invasion of Iraq ($597 billion)…
More than the entire lifetime budget of NASA ($851 billion)…
In fact, it’s more than all of these combined… and that includes throwing in the $256 billion we spent on the S&L bailouts of the 1980s… the $217 billion we spent on the Louisiana Purchase… and the $454 billion we spent on the Korean War!
And while this unprecedented ocean of artificial liquidity will surely lessen the effects of the recession… the unintended consequences could finish off the savings of millions of Americans… and they’re just days away.

We’re talking about something called the “Bailout Bombshell.” When this ticking time bomb explodes over the economy during the first quarter of 2009, it could destroy what wealth you have left.

For reasons that will become clear in a moment, almost no one will escape the next unexpected wave of the crisis.

Will Hepburn, president of Hepburn Capital Management in Prescott, AZ, assesses it this way: “Everyone is going to lose something. The winners will be those who end up losing the least.”
Gary Hager, president of Integrated Wealth Management, calls this threat the “8,000-pound gorilla in the room.” “We’re sitting in the room with the coffee cups vibrating.”
CNN Money reports that the coming shock is “right around the corner… even if actions taken by the Federal Reserve and the U.S. Treasury succeed at stabilizing the global financial system, and an economic recovery takes hold.”

Indeed, the “Bailout Bombshell,” as some experts are calling the coming catastrophe, could cause more damage to U.S. portfolios than anything the crisis has dished out yet!
In this report, America’s leading bear-market analyst will reveal the details of this brewing development.
More importantly, he’ll reveal an exact game plan for protecting your family – and even doubling your money – when the bombshell explodes just weeks from now. And it’s yours, free…
A bit of background…

The Global “Rush to Safety”… Headed for Disaster

When the financial crisis exploded early last year, investors worldwide began rushing headlong for the exits. EVERYONE wanted to exchange their stocks, funds and commodities (including gold!) for cold, hard cash.
And it wasn’t just individual investors. Hedge funds, hit by redemption demands from investors, were forced to liquidate their positions in exchange for cash (to the tune of $400 billion).
In a single 30-day span, investors yanked $127 billion from U.S. stock and bond mutual funds, seeking the “safety of Treasuries and cash,” according to the Investment Company Institute.
But the rush to cash didn’t stop there. Even with yields sinking below the S&P 500, the demand for Treasuries soared… all helping to drive the greenback up 21% in just five months.
All this has created what could be the biggest bubble in the financial world today… the bubble in the U.S. dollar! And now, that bubble is strained to the breaking point… even as investors the world over huddle in cash. It’s a disaster just waiting to happen… waiting for that “tipping point” event to set off the fireworks.
Consider…

>How Bush Joined The Socialist Party

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Spending Stimulus Plans Fail, Dummkopfs

By Don White

What does President Bush have in common with John McCain, Barry Obama and Congressional Democrats? Regarding the U.S. economy, they’re all ignoramuses, Nichtswisser, unwisenders, and outright dummkopfs.

It should be against the law to run for national office without passing an economics test. They also should be required to pass an idiot tests. Well, they did pass, but somewhere along the line they thought they had to be idiots to run the country and we got the dregs from the bottom of the pot.

None of them know enough to stop spending. Even Bush, who ran on a conservative platform, does not know that when you try to bail out someone or something you merely redistribute wealth. Hey, that isn’t even an original idea. Democrats like Obama have run on that one for years. If Obama has his way the rich will give to the poor and we’ll have a “leveling” of wealth take place in America–something that will deal a death blow to democracy and capitalism.

Bush should know better. He comes from wealthy parents who know how money is made. Come on, Barb and Dad Bush, start talking to your errant son. Didn’t you teach him nothin? If not, let me give you the economic scoop, too:

George W. Bush doesn’t understand enough to even balance his bank statement, let alone guide a county away from insolvency. The country is wondering if he is using drugs again. Isn’t it terrible, all three of the presidents from Clinton down were drug users, and we expect there is no permanent damage?

Bush is so sick that all he wants to do is sign bills this awful Treasury Secretary, Hank Paulson, pushes before him, assuring the soon to be out of office Texan that it’s the only ways America can avoid a depression. Nothing could be further from the truth. Doesn’t Bush have a mind of his own?

The biggest crisis of 2008 wasn’t the financial meltdown, it was when the Democratic Congress and the president signed the bill authorizing Secretary Paulson to deliver $700 billion in handouts to banks, Fannie and Fredie and similar defunct and unstable private institutions, all without controls and supervision.

Government stimulus bills are based on the idea that feeding “new money” into the economy will increase demand, and thus boost production.

Brian Ridel believes that the best measure of a policy’s impact on economic growth is through productivity rates. Lower marginal tax rates encourage working, saving and investment, all of which increase productivity (as opposed to tax rebates, which are grants that require no additional productive efforts). Reforming — rather than merely throwing money at — education and infrastructure will raise future productivity. These necessary improvements would take time and shouldn’t be considered short-term “stimulus.”

In an OP ED article he said: It’s time for lawmakers to stop futilely trying to wave the magic wand of short-term “stimulus” spending, which threatens to push the deficit above $1 trillion. Focusing on productivity will build a stronger economy over the long run and leave America better prepared to handle future economic downturns.

Mr. Riedl is a fellow at the Heritage Foundation.

Government doesn’t have any money, unless they beg, borrow or tax for it. Every dollar it injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. That’s where these financial geniuses go wrong. They think when the treasury prints new money it’s manna from heaven. In reality it has to eventually come from somewhere. That somewhere is you and me, the taxpayer.

Eventually we’re stuck, we’re on the line to pay it back–or in this case it might be our grandchildren and their children, and it isn’t fair. I would have let all the banks and the AIGs fail. Well, people say the entire U.S. society would come tumbling down since companies don’t have money and must borrow. And if the banks don’t have money to lend, business owners can’t get the money and, therefore, they must fire all the employees and stop making and selling widgets. That was the line we were fed.

But when we give money to banks, insurance companies, auto makers or investment bankers–or to anyone–it’s merely redistributed from one group of people to another.Of course, advocates of stimulus respond that redistributing money from “savers” to “spenders” will lead to additional spending. That assumes that savers store spare cash in their mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings (where it finances business investment) or deposit it in banks (which quickly lend it to others to spend). The money gets spent whether it is initially consumed or saved.

Governments don’t create new purchasing power out of thin air. If Congress funds new spending with taxes, it is redistributing existing income. If the money is borrowed from American investors, those investors will have that much less to invest or to spend in the private economy. If the money is borrowed from foreigners, the balance of payments must still balance. That means reducing net exports through exchange-rate adjustments, thereby leaving net spending on the economy unchanged.

Congressional Democrats just squandered another $15 billion on GM and Chrysler. The prepared red hen, /Ford Motors, had saved its money and merely said keep our share for later. But that’s small change for the Democrats. Now they are considering another large economic stimulus package to “inject” as much as $300 billion into the economy. The package will fail — just like last year’s $333 billion in emergency spending and $150 billion in tax rebates failed. There’s a simple reason why. It’s because that money hasn’t created anything, hasn’t changed raw materials into something valuable. It’s just money setting there to be handed out. We presume the banks will loan out the $300 billion and small businesses will make more widgets, but we can’t even be sure of that. Many of these banks will merely put that money into its reserves and won’t loan it out, and that’s part of the problem..

Congress will soon borrow $300 billion from one group of people and then give it to another group of people and tell us we’re all wealthier for it. We’re not. It’s a shell game. Money is just pushed around on the table, but you still have the same amount in the economy. You didn’t just happen to have this money sitting around doing nothing, you took it from one group and gave it to another. In my book that’s socialism of the worst kind. Bush is doing exactly what Obama said he wanted to do, level the economic status of all Americans, and I understand Obama is angry that Bush had to go and steal his thunder.

>Hard Times Aren’t All Bad!

>Tuesday Buzz
Written by LaVarr Webb & Associates

What if Tech Giants Got Bailouts?
As bailout plans for various economic sectors are developed, consider what things would be like if Congress had bailed out the big technology companies every time one of them got in trouble. We might not have Google today, and we might all be working off Sperry Rand mainframes and using DOS. Read Eric Lundquist’s blog post.