WHAT WILL TURN ME MORE BULLISH ON THE U.S.A.
David Rosenberg discusses what would get him to abandon a negative view on equities
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WHAT WILL TURN ME MORE BULLISH ON THE U.S.A. — HERE’S A LIST OF TEN IDEAS (SEND YOURS IN!)
1. An energy policy that truly removes U.S. dependence on foreign oil (shale case, coal, nuclear).
2. A complete rewrite of the tax code that promotes savings, investment, and a revamp of the capital stock. Cut tax rates, eliminate loopholes and costly tax breaks. Tax consumption, promote savings and investment. That is crucial. But it will take political courage (ask Brian Mulroney).
3. A credible plan that reverses the runup in the debt to GDP ratio. This includes not just on-balance sheet items but new rules governing entitlements too. We need delineation of the future of Fannie and Freddie if there is any … they became wards of the government nearly three years ago and there is still no clarification on this file (slightly more important than these periodic consumer spending gimmicks that have surfaced over the past few years). We need a complete rewrite of social contracts and a reversal in sacred cows that have been created over the years that are completely unaffordable. Plus, people are not going to learn to live within their means if our politicians continue to set a bad example. The act of dipping into Social Security, incentivizing companies who are already cash-rich to spend more on new equipment and extending a Bush tax cut that always had a 10-year expiry date at the expense of the already severely strained public purse was political expediency at its worst.
4. A massive mortgage write-down by the banks — a Jubilee of biblical proportions — that provide much-needed equity to upside-down homeowners.
5. A creative strategy to put people to work instead of paying them to be idle — having nearly half of the unemployed ranks out of work for over 15 weeks and a 25% youth jobless rate is unacceptable at any level.
6. Tort reform. The only way to rationally bring down health care costs to more manageable levels.
7. And from six — use whatever proceeds they can save to enhance their education skills, especially in the sciences and mathematics where the U.S.A. is sliding down the global scale.
8. Financial sector regulatory reforms that actually have some teeth.
9. Change tax policy to free up the hundreds of billions of dollars of corporate cash sitting in reserve in overseas accounts — bring this money home!
10. Our Republican friends may not like this too much but in Canada, we understand the importance of immigration inflows and the U.S.A. should be doing more on this front to stimulate its long-run growth potential. This is where Japan’s decade of lost growth became two decades but its decision to resist immigration rule changes is more cultural in nature. The U.S.A., like Canada, is already extremely diverse. But as economists, what goes into economic growth is both simple and complicated. The simple part is merely identifying the two ingredients: growth in the population (more specifically, the part of the population that is working) and productivity (what most of the other nine ideas listed above would attempt to generate). But the dependency ratio is working against the U.S.A. and a smart immigration policy would help at least stem the runup.
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January 22nd, 2011 at 9:15 am
#1: Not likely to happen until truly needed…
#2: Not likely to happen with so many making so much off the current tax code…CPA’s, Lawyers, Intuit,…a lot of deep pockets motivated to prevent change. In addition, politicians find it easier to issue tax credits and deducts rather than cut taxes.
#3 Go to the debt clock website…you will see that as a nation our total debt is dropping. Yes, it is increasing in the government category…but everything else is reducing debt and getting stronger. There will be a time when the most obvious answer will happen–higher taxes. Regardless, the current net-debt of the country is improving.
#4 A wholesale Old Testament style write-down isn’t realistic and Rosie should know that… Look, we were still dealing with S&L clean up ten years after…it will be the same with this mess.
#5 I whole heartedly agree on this point. What did Clinton call it? Work-fare? We’ve got too much national infra-structure that needs maintained, repaired, or replaced…much of it from another era when out-of-work people built it…hmmmm. And the hardest hit sector with regards to jobs are in construction? This is not rocket science…
#6 Yeah, yeah tort reform…what is causing our healthcare to go up is twofold. The rest of the world jams price controls onto drugs and devices—and we don’t. So the companies “make up” their losses in the U.S.A. This is basic. The other is that most of our health care companies are publicly traded and that simply is a two edge sword. One edge gives access to capital which feeds R&D, the other edge is Wall Street expects double digit growth…how to you get that in a world where the FDA is turning down almost every new drug, refusing to extend patents on old, and most drugs are to a targeted audience? You increase your target audience (off label use) and you raise your prices every year to meet Wall Streets expectations… I you want to address out of control health costs you need to get other countries to loosen their cost controls and you need to temper the Wall Street affect somehow… both of which are not going to happen.
#7 Sliding down or are we just in stasis and everyone else is moving up? My kids are doing more in science and math at an earlier age than I ever did–and we were the leaders then…
#8 Agreed, but has no relevance to the success or failure of U.S. stock markets. It is needed though.
#9 If all your growth for the next twenty years is coming from overseas, and your cash is overseas, and labor is cheaper overseas, please tell me the motivation from an economic standpoint of bringing your billions back to the U.S??? Even if the tax policy was zero. Nope, don’t see any micro or macro econ theories that have that making any sense at all. Money will go where it is best utilized. If Cisco can build a plant in Asia that serves that geographic region with cheaper labor and transport cost, why bring it to SanFranCisco?… makes no sense.
#10 Immigration has always been key to US growth and innovation. Always will be. We need this open door policy. Close the door and all you get are nut jobs who want to hurt us. Open the door and the nutters are offset by those seeking out the American Dream. We need the next Andy Grove and many, many others to be here when they innovate… Immigration is our salvation as a country. It is who we are and always will be.
January 22nd, 2011 at 9:22 am
David’s too honest. He should’ve just said “The return of Wall St. creativity aided by bought-off politicians.”
January 22nd, 2011 at 9:24 am
Sorry. By honest I mean he actually gave thought-out and reasoned analysis instead of just cutting to the chase with my previous statement.
January 22nd, 2011 at 9:32 am
This week I read a Bob Ivry of Bloomberg article on Citi selling defective mortgages to Freddie Mac as recently as 2009 & 2010. How many of these mortgages were the transfer of credit risk on Citi’s books to the GSE? The article makes these out to be new mortgages but perhaps they are refis… The tax payer is still absorbing massive losses on behalf of the banks who are either failing to ensure proper risk guidelines or finding creative ways to transfer as much of their risk to the GSE’s as they can get away with. Forcing the banks to write down their true mortgage exposure would be very bullish in the same way as a colostomy cleans out the system.
January 22nd, 2011 at 9:33 am
Great list.
January 22nd, 2011 at 9:38 am
I had this in cue for an OT thread:
meteor** hits planet capitalism
advertising deduction abolished
why
1. make advertising purchases make fiscal sense ie: return on investment
2. cease & desist workcations while producing spots on the captured consumers dime
3. cease & desist offbooking profits into shell affiliated corporations
why
stop waste* & fraud
*coda – actual stuff into landfills & gas burnt to work & time spent on fluff that is not exportable
**coda – ok now regroup
(seems to fit the general attempt @ po’ing folks into a better world)
January 22nd, 2011 at 9:51 am
“6. Tort reform. The only way to rationally bring down health care costs to more manageable levels.
Bullshit. Tell me about your views on Tort reform AFTER a Dr. fucks up and changes your life, for the worse, forever. Torts are around 1.4% of US medical costs.
Here’s what’s poisoning our system:
Higher prices for a lower level of health care services paid by other industrialized nations.
Much higher administrative and overhead costs than in other countries with simpler health-insurance systems (single payer would fix this).
The corporatization of healthcare. Medicine is no longer a practice, it’s an industry. The bottom line is profit margins for management/shareholders, not good medical outcomes or affordable.
January 22nd, 2011 at 9:52 am
I believe the banks have already accomplished #4
They sold all their bogus MBS to the Federal Reserve, who will pass it on the US Treasury, that’s you and me!
My suggestion, a Constitutional Convention and a clean sheet of paper.
Create a new tiny Federal government with limited powers as originally intended.
When this is done, pull the plug on the current Federal Government.
The system is to corrupt to be reformed.
However, financial collpse will accomplish the same thing and is more likely to happen before a Constitutional Convention.
Nothing can stop the avalanche of fraud, greed, theft, useless government workers and programs.
Collapse will pull the plug wihout all the bickering of a Con Con.
January 22nd, 2011 at 9:53 am
Oh yeah:
Other than the above, I agree with the list.
January 22nd, 2011 at 10:03 am
I gotta a psst too .. I’d really prefer fluffy fluff for everyone as long as it doesn’t drag down MotherEarth & the general population is happy .. but like MQ I don’t wanna have to pay for someone elses pleasure if I’m not getting mine
January 22nd, 2011 at 10:33 am
1. You can’t break the laws of physics. There is not enough uranium or solar efficiency or wind (except on the blogs) to replace cheap oil.
2. The paradox of thrift says if everyone saves, your economy collapses. Japan will default in 2 yrs and they don’t save as much as they used to.
3. True.
4. The damage is done. Inventories are coming down.
5. They tried it in the 30s to minimal advantage. (why not outlawing overtime?)
6. I told my doctor that I almost immigrated to NZ in the 70s. He said he did too, but then decided he could make more money here.
7. That’s being done now. They expect Sallie Mae to go bankrupt due to (attempted)defaults on student loans. (don’t try it the govt comes after you cause it’s federal money) The IRS will get you!
8. The regulations they just instituted are having a negative effect. GS profits down 53% Yawn.
9. Carrot incentives and Tax sticks to make them use that corporate money to retool or rehire!
10. That’s why I said in a previous post (somewhere?) that the Mexicans may save us. We aborted a whole generation that we needed to pay for our boomer retirement. And you are right about Japan. I lived there for two years.
January 22nd, 2011 at 10:39 am
Four word foreign policy: We’re not your mommy.
January 22nd, 2011 at 10:55 am
Hi Barry, I read you daily and appreciate the hard work and the insight. Reading these comments, I must ask, does they bring a touch of despair to you? You’re trying to foster a conversation and this is what you get.
Good luck,
ChubbCo
January 22nd, 2011 at 10:55 am
1. An energy policy that truly removes U.S. dependence on foreign oil (shale case, coal, nuclear).
Sorry about that one David. Oil shale will probably never be economic or politically feasible. You are essentially mining rock at the surface, loading it in dump trucks, busting it up, and using a LOT of energy to heat it up to get the oil out of it. THEN you have to dispose of millions of tons of shale-not a pretty environmental sight. If you change this to using Canadian tar sands, then at least you are borderline economic (after all, Canada IS just the 51st state, right?).
Nuclear is fine. Coal could even be liquified to oil (Germans did this 80 years ago). Or we could try clean coal technology that sequesters the CO2. Unfortunately, the DOE killed this project a few years ago. They bid it out and were ready to build the plant near Mattoon Illinois but dropped the funding.
Another possibility is to require all near-term electrical generating plants to run on natural gas. This will work for awhile for our future electrical generating capacity, as natural gas is plentiful and cheap RIGHT NOW. Wouldn’t want to rely on this for too long, though, as a rise in demand could result in a tripling of price (has happened several times in the past).
Also, it wouldn’t hurt if the tree-huggers in Washington let us actually drill for oil onshore and offshore for our own reserves we know are there. After all, I don’t think the Alaska pipeline wiped out the caribou population. It wouldn’t hurt either if the government let industry build the natural gas pipeline from North Slope to lower 48 that they have wanted for years.
January 22nd, 2011 at 11:00 am
‘… extending a Bush tax cut that always had a 10-year expiry date at the expense of the already severely strained public purse was political expediency at its worst’ … yet not a bloody peep about dismantling the global military empire that unproductively gobbles up nigh on 5% of GDP.
Sorry, Canuckastani gov-worshipper — your brain is froze!
January 22nd, 2011 at 11:00 am
I guess I am confused here, but why wouldn’t “get the 2nd largest economy in the world off of our dollar”, be #1? In my opinion this is the most insane situation we have ever gotten ourselves into. I feel like we are going to look back at this time/era and just shake our heads and wonder why we were so stupid. An economy that won’t let us invest in their businesses, pegs to our dollar, creates massive businesses for free on labor arbitrage, and we sit there and watch? WTF? The ONLY reason politicans aren’t complaining about this is because of the lobbying efforts from the massive corps….WMT threatens, we back off….no backbone. Companies like WMT are nothing but a bunch of arbitrage junk to the tune of $100s of billions. And this is not about buying all American, we are a global economy, but you create what you are best at creating and let the economic forces do as they will and you adapt. We have and are losing our edge to a massive scam, but oh, we are now a “service” economy…what a joke. Understand, I am all for global trade, but when you peg, it is a huge win for that economy to develop for free and a massive loss for us.
January 22nd, 2011 at 11:18 am
6. Tort reform. The only way to rationally bring down health care costs to more manageable levels.
Sorry Barry, but Tort Reform is just plain bullshit. One-half-of-one-percent of medical costs are due to insurance costs. Another one-half-of-one-percent is due to malpractice payouts.
That leaves us with 99% of the costs and no solution to the problem. Most of which is caused by gross inefficiencies in US medical care. Beyond the obvious one that every doctor wastes half his/her day (on average) fighting with insurance companies over proper care, we have the less addressed (but equally inefficient) burdens in billing and record-keeping.
Heck, you fix those three areas (insurance company claim burdens, record keeping inefficiencies and billing inefficiencies) and we don’t need to worry so much about doctor’s salaries.
But tort reform? Sorry Barry, but I practiced as a CPA for over twenty years. I’ve seen more doctor financials than you can shake a stick at. The bottom-line is that insurance and malpractice payouts are insignificant costs, albeit conservative lightning rods. Rather, it’s the excess staffing, constant record-duplication and doctors wasting significant portions of their practice day fighting with insurance companies to do their jobs.
~~~
BR: THis eas written by David Rosenberg, not me
January 22nd, 2011 at 11:19 am
@ machinehead:
“yet not a bloody peep about dismantling the global military empire that unproductively gobbles up nigh on 5% of GDP”.
Now machinehead, you know the legions must continue to fight the barbarians out in the wilderness, lest they be at our gates some day. How else can the empire maintain a large quantity of triremes, centurions, ballistas, not to mention slave girls to service the soldiers.
Just do what the Romans did- take every silver coin, cut it in half, and restamp it with Caesar’s face and the original denomination-works for me. Then, if necessary, we repeat the process all over until the coins are paper thin.
January 22nd, 2011 at 11:21 am
6. Bringing down healthcare costs. Tort reform may be a piece. Another is to strengthen primary care. The non-system that exists today stems from the destruction of primary care. These folks are the gatekeepers that can prevent duplicative testing, imaging and procedures. Economic and workload constraints are making primary care physicians, family docs, an endangered species.
Also need to revisit the definition of insurance…if it is required, then it isn’t insurance. Need to eradicate the concept from patients that healthcare is free and ought to be. Food isn’t free; why should medicine be.
7. Education. I like JasRas thoughts. It isn’t a weakness in mathematics and sciences that is the problem. It is a lack of integrative, critical thinking skills. When JasRas was in school, the curriculum was likely more balanced. Since then, schools are trying to squeeze more information into the same school time and placing and emphasis on the mechanical skills, mathematics and sciences. In solving technical problems, perhaps any problems, it is the human element of the problem that presents the greater difficult. The technical part is challenging, but is comparatively easy because, as El Viejo said, you can’t break the laws of physics. An integrative education, based on the classics will take us further than STEM.
January 22nd, 2011 at 11:28 am
The one thing that would get me really optimistic for the future would be a strong reversal of the current trends in income distribution. Consumers are 70% of our GDP and anything we do except for strengthening the income of the consumer class will just be like rearranging the chairs on the deck of the Titanic. Our country is currently sinking into an Argentina like structure and the economy will follow the structure. The fake GDP created by financial “innovation” will not carry much in the long run.
January 22nd, 2011 at 11:34 am
While I generally agree with the list, I can’t buy the bit about tort reform. Based on what I’ve read, it’s a relatively small component of the cost of healthcare. What’s surprising is that it’s not much bigger given the acknowledged prevalence of malpractice and mistakes that we have in US medical care.
Jim
January 22nd, 2011 at 11:36 am
+1 for DeDude’s comment about income distribution.
Jim
January 22nd, 2011 at 11:54 am
I’m having a hard time believing Rosenberg could have actually written this. As pointed out above, achieving item #1 above requires repeal of the laws of physics.
So I logically conclude that so long as the laws of physics apply to Planet Earth, Rosenberg will have a negative view of US equities. Excuse me, how useful is such a “strategist”? I could replace him with a sticker that reads, “negative on US equities.”
January 22nd, 2011 at 12:35 pm
You’ll have a better chance meeting Godot than you’ll have living to see the day of tort reform.
January 22nd, 2011 at 12:36 pm
“Change tax policy to free up the hundreds of billions of dollars of corporate cash sitting in reserve in overseas accounts — bring this money home!”
I have heard this one before, but I am ignorant of the history of WHY such an a$$-backward system exists. Does anyone know specifically:
1) When this was implemented.
2) Why this was implemented.
3) Who (administration/person) pushed for it.
Maybe knowing its history would help understand it better.
January 22nd, 2011 at 1:23 pm
I find it really, really interesting that Rosie did not mention anything about stock market valuations. Does this mean to say that he is bearish on the U.S. regardless of the prevailing equity valuations? Really?
Like johnhaskell above, I think that there is zero likelihood that all of Rosenberg’s conditions will ever be met. Therefore there is zero likelihood that Rosie will ever turn bullish on the U.S. Monotone strategists and their monolithic musings are not helpful.
January 22nd, 2011 at 1:37 pm
Agree with much of this list, especially the idea of tort and tax code reform.
Lawyers and accountants are the barnacles on the ship that is the United States.
It’s a shame that so many of the best and brightest were lured into those fields because of our perversely large and complicated tax schemes as well as the generally litigious society we have become.
We needed some of those people to become engineers and scientists instead.
January 22nd, 2011 at 1:38 pm
Tort Reform is hardly the main reason for health care costs rising so dramatically. Turn the clock back to Nixon and HMO’s. Take the Profit Motive and tone it down. Imagine a nation where the health and welfare of our citizens is as important as torturing and killing innocent brown people in foreign lands. Hard to do, isn’t it.
Tort Reform is touted as a panacea to all rising costs and the cure for low corporate wages. Well, I for one am all for making our tort system less restricted, not more. Without citizen’s access to civil courts, there would be no bounds or controls on the corporations which run America. Without tort law we would not have recalls of dangerous medecines, dangerous cars, or dangerous foods.
The tax code should be simplified. Imagine the savings to our nation of implementing a flat tax with NO FRICKIN’ DEDUCTIONS. We would save billions upon billions of dollars every year in accountant’s fees, lawyer’s fees, banker’s fees, and individual and corporate time. We could cut the IRS staff by 75%. And we would increase revenues. Let’s start out by taxing everyone at the same rate that Warren Buffet pays but start taxing at $30k.
Energy independence is one of those stupid Tea Party platforms which sound great but are totally stupid. There is NO CHANCE IN HELL of becoming energy independent as long as we are using carbon fuels. It would cost the US economy trillions to switch to coal and tar sands. It would devastate the ecology. I suppose it would create jobs, but so would blowing up buildings at random and then having them put back up. Why shouldn’t we use up everyone else’s relatively cheap oil first. Then when the Saudis run out, we can use coal and tar sands.
But guess what. Everything you suggested is about as likely as the Good Witch of the North floating in one her bubble and granting us all ten wishes. But hey, it makes for good conversation fodder.
January 22nd, 2011 at 1:40 pm
I think the key word in David’s summary, is courage.
All political behaviour is driven by the first two of the four points of politics:
POINT ONE: the first priority of any politician/political party is to get into power.
POINT TWO: the 2nd priority for any politician/political party, is to STAY in power
As you can see, the issues that David is concerned about are secondary to the above. Perhaps tertiary.
Hence, you’re not going to see much in the way of courage. History does in fact rhyme.
January 22nd, 2011 at 1:47 pm
1 “An energy policy that truly removes U.S. dependence on foreign oil ”
Several years ago my crew framed a house over looking the MO river valley. we got to see the rail traffic, most of it coal out west going east. An impressive sight, really drove home the basic point of , we use a lot of energy and simplistic thinking gets us nowhere. You can’t “remove” but we can reduce. A good conservation policy would be a start.
2 A tax policy that is not based on outmoded 20th cen. ideas. We are in a world economy and both the left and the right refuse to recognise it. Some of my best stocks have been those heavily investing over seas. A capital gains break on those stocks does nothing to promote growth in this nation but does promote more over seas investment. Just the opposite of what we should be doing..
3 basic recognition that no matter how you collect the taxes, income pays taxes. Right now it will take a 30% tax on all income to balance the budget. (national income about 9 trillion, current budget about 3 trillion)
If people aren’t talking those numbers then they are not being serious and there is a lot of non seriousness being spouted everyday by people who should know better.
Healthcare, lol, if only shooting all the lawyers woud cure it.
Education, We have such shitty primary and secondary education, then such brilliant college students.
Ever wonder if all the folks measuring education are measuring the wrong thing?
One real problem is , the school district where you live makes a difference in the quality of your education.
January 22nd, 2011 at 1:52 pm
As far as barnacles on the ship of the United States, I think you could add most financial professionals as well. Where would we be without those who created the “financial weapons of mass destruction”?
Talk about the best and the brightest being lured into a field because of perversely large and complicated financial schemes whose only redeeming quality was to enrich those whom created them?
Where are all the customer’s yachts?
January 22nd, 2011 at 2:13 pm
“6. Tort reform. The only way to rationally bring down health care costs to more manageable levels.”
What are the health care costs for the tort system? Where’s the data showing that tort reform may bring it down to “rest of the world”?
January 22nd, 2011 at 2:14 pm
“shitty primary and secondary education” .. well – not sure thats to the point .. this complex world requires excellence and the generic education has its place but but but the real knowledge is in the catcombs of supercorps – and departmentalized at that – keeps raiders and turncoats squelched … maybe we should vote in the old world marriage contracts “newborn baby to a supercorp” (wow – thats sounds TigerMomish)
and before submit I gotta do a shoutout for apprentice & journeyman matchups – as an educational system in many trades – that I benefited from greatly
January 22nd, 2011 at 2:20 pm
Rosenberg is so persistently bearish he’s lost credibility with me. Yes, someday the world will end, but between now and then you can live your life. Anyone who’s acted on Rosenberg’s macro economic advice hasn’t exactly made any money over the past year or two, have they? Sure there are tough problems — and we all know them. We all can list more of them. What we don’t know, yet, are the creative solutions that clever, incentivized people will apply to solve or to ameliorate at least some of those problems. People always sound so smart when they preach gloom and doom, but it’s because they can’t predict the unexpected. Wel, that’s because it’s unexpected. Club of Rome, anyone?
Yes, we’re on an unsustainable course. Manage your personal and business affairs with that in mind, work hard and hope for a bit of luck. But really, things aren’t coming to an end tomorrow, next week, next month, next year.
Man, I’m getting tired of this. (There’s no sense in going to Zero Edge anymore, either, it’s just more of the same, and juvenile, too.) Maybe there’s a reason Rosie no longer works at Merrill Lynch. Maybe the reason is that clients who follow his advice would lose money.
January 22nd, 2011 at 2:34 pm
#1 is inadequate– you left out the key word, “sustainable”. That’s what policies are for– planning into the future.
#6 tort reform is going to solve the fact that businesses can’t afford long-term employees? To pick a random example, current Economist has story about India/China producing medical devices 1/10 price of US products. Yes, they’re just as good. And no, they won’t be allowed here.
Missing: The USA military budget is equal to the entire rest of the world combined. If you pegged national defense spending– note that word, “defense”, meaning response to external threat– to equal the next 5 countries combined, it would save roughly $300 billion per year. 3 of those 5 are allies.
Missing: discrediting of major political parties and media figures keyed solely to opposition at any cost. Make this one happen and maybe half of the rest will follow, in some fashion.
January 22nd, 2011 at 3:46 pm
Rosenberg continues to show himself as a moron.
He’s been a huge bear for roughly 100% return in market. Now ” he could become a bull if”? It’s idiotic.
The list is pretty mediocre too. “tort reform” is maybe 3% of the healthcare problem. Again, silly.
Howabout something simpler! IF GDP will grow by 3% or more in US (it will). And 3% or more worldwide (it will). Then earnings, cash- flow, jobs and stocks will rise. Looks like an accelerating recovery on GDP.
January 22nd, 2011 at 4:17 pm
add: create incentives to encourage more people to participate, and vote. Let’s move election day to July 4th, that way the turnout isn’t affected by bad weather, and everyone already has the day off. What could be more patriotic than voting?
and folks that don’t vote don’t get their tax refund. If you don’t care enough about your country to vote, then your country doesn’t care about you either, so we’ll just keep your overpayment, thank you very much.
January 22nd, 2011 at 4:44 pm
4. A massive mortgage write-down by the banks — a Jubilee of biblical proportions — that provide much-needed equity to upside-down homeowners.
NEVER going to happen!
America is under Corporatocracy + Banksters subsidiary of Global Financial Oligarchy!
First, we need Campaign Contribution reform and reduce or remove the influence of Money. Till then, short of ‘pitch fork’ revolution NOTHING will change.
January 22nd, 2011 at 4:46 pm
TerryC,
see: http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Bakken+Shale+Unconventional+Oil
most probably what DR is referring to, in type..
also, related, new Technology application for, said, Fields.. http://finance.yahoo.com/q?s=GFS.V
January 22nd, 2011 at 4:56 pm
Flood of Corporate Debt Hits Market
“…Month’s $51 Billion of Issuance Makes History…”
“… Goldman Sachs issues rare 30-year bond…”
http://online.wsj.com/article/SB10001424052748704754304576095762866477984.html
I guess these guys are bearish on interest rates.
January 22nd, 2011 at 6:07 pm
What a scattershot list of ideas.
Half are just wrong, half have no roadmap, half are mutually inconsistent.
This is the kind of plan we come up with after 10 beers each after work.
January 22nd, 2011 at 6:27 pm
1. An energy policy that truly removes U.S. dependence on foreign oil (shale case, coal, nuclear).
That’s easy to implement. Just add a $50/bbl tax on all foreign oil and energy equivalents. Tax goes up $50/year. We’ll be off foreign oil within 5 years.
You don’t even need a “policy,” because the market will adjust. You might need an army of giant laser-wielding robots, though.
January 22nd, 2011 at 6:38 pm
I like all of your ten, David. I especially like 4, 8, and 2.
I agree with machinehead that our military industrial complex needs to be rationalized. We need someone from the outside of that whole mess criticizing the purchasing. Too much inbreeding in that whole process.
I agree with DeDude about income distribution. I think that 4, 8, and 2 go a long way on that.
On healthcare reform, there are two fundamental problems that we have to address with major systemic overhaul:
1. I think we are screwed as long as we use an insurance-based system to handle maintenance. If I failed to do normal maintenance on my car, and it broke down, my insurance isn’t going to pay for that. Why is healthcare different? Health insurance should only cover accidents and unpredictable failures. If I smoke then lung diseases are not covered. If I drink then damage to my liver isn’t covered. If I mistreat my body and die young then maybe people will learn from my mistake and take better care of themselves. But if I’m 12 and get lukemia then that’s covered because it isn’t my fault. Isn’t that what the term ‘insurance’ means?
2. As long as the person receiving the healthcare isn’t allowed to know what it costs in advance we will never bring the prices down. Make the doctors and hospitals post their prices publicly. Make the receiver of the care sign off on an estimated bill before the treatment. Make the receiver of the care take that bill home and fax it to their insurance company to get it paid. The doctors and nurses will have to compete on price, and people will have to think about what healthcare costs.
Preventive care should be reimbursable (as part of your not-quite-insurance program) or tax-deductible. I have an HSA, and it is wonderful. It’s been making money for me, and I’ve stopped putting money into it for my family of 6. Those should be required for everyone.
But my biggest gripe is that we need to see some serious reform of Washington. We are screwed as long as the Washington elite can exempt themselves from legislation and judge their own ethical breaches. They are above the law.
* Publicly fund campaigns. No more campaign contributions. No more political warchests.
* All ethics and legal violations will be tried before a jury of regular citizens in the accused’s home district. The jury will be given a full range of punishments, up to and including life in prison without parole.
* Anyone who serves in or participates in a political party, or similar group, is banned from running or serving for 5 years from the end of their affiliation with that group. The people and media can bicker all they want. But the people making the decisions have to remain independent of the political party apparatus.
January 22nd, 2011 at 6:39 pm
2. A complete rewrite of the tax code that promotes savings, investment, and a revamp of the capital stock. Cut tax rates, eliminate loopholes and costly tax breaks. Tax consumption, promote savings and investment. That is crucial. But it will take political courage (ask Brian Mulroney).
Most tax breaks and loopholes go to the rich. Your energy policy had the poor and middle class rioting in the streets, so this should help get the upper middle class out there too.
Probably best to go for a VAT, dump the mortgage deduction, most tax credits, tax cap gains as income. A 37% VAT should do it. Use the revenue to buy more laser-wielding robots.
The poor are already rioting, so who cares what they think?
January 22nd, 2011 at 6:45 pm
3. A credible plan that reverses the runup in the debt to GDP ratio.
I snipped the incoherent rambling, bit “We need a complete rewrite of social contracts” is a good idea – those seniors should get out in the street too. Sure they’re old, put money into social security, etc, but what can they do? One giant robot vs a mob of old people using walkers is just funny.
January 22nd, 2011 at 6:55 pm
4. A massive mortgage write-down by the banks — a Jubilee of biblical proportions — that provide much-needed equity to upside-down homeowners.
Huh? The country is in flames, and now you want to piss off the bankers too? Some will fight (well, the retail security guards,) and some will head overseas (black cars to the airport + biz class.) Hey, things are getting Biblical (your word.)
January 22nd, 2011 at 7:18 pm
dss@1.52
Agreed.
Though, part of the oversized financial sector can be attributed to having the reserve currency of the world. Once the US Dollar is no longer in this spot, you’ll see the financial sector shrink accordingly.
January 22nd, 2011 at 7:19 pm
David,
# “1. An energy policy that truly removes U.S. dependence on foreign oil (shale case, coal, nuclear).”
All three are non-starters.
# “2. A complete rewrite of the tax code that promotes savings, investment, and a revamp of the capital stock. Cut tax rates, eliminate loopholes and costly tax breaks.”
Oh brother.
Just ANOTHER excuse for more failed tax cuts for the Rich & Corporate.
It has NEVER worked.
# “3. A credible plan that reverses the runup in the debt to GDP ratio.”
Easy.
According to the independent non-partisan Congressional Budget Office, the vast overwhelming majority of the current federal deficits & debt, as well as the future projected federal deficits & debt is as a result of the massive plunge in federal income tax revenue from the numerous rounds of tax cuts for the Rich & Corporate enacted during the previous administration.
Simply reverse the failed tax cuts for the Rich & Corporate, then you can look at two of the largest budget items, the Military Industrial Complex and Corporate Welfare.
# “6. Tort reform. The only way to rationally bring down health care costs to more manageable levels.”
UTTER NONSENSE.
You cannot possibly be this gullible.
Tort reform/malpractice reform is a scam:
* According to the independent non-partisan Congressional Budget Office, malpractice costs are not a driver of health care spending and the prescription of capping non-economic damages has failed in the thirty-one states where it has been tried.
* Thirty-one states have enacted caps on jury awards, but the caps haven’t lowered or even stabilized insurance rates, and have not lowered healthcare costs.
* The CBO also estimates that reductions in the utilization of medical care due to “tort reforms” might reduce national health care expenditures by only THREE TENTHS OF ONE PERCENT.
* The Institute of Medicine has reported that preventable medical errors kill as many as 100,000 people a year. It’s the sixth largest killer in America.
* Studies supervised by physicians, using a very strict definition of “negligent”, have shown that about 1 out of every 100 hospitalized patients are victims of negligent malpractice. However, less than 5% of those patients who are victims of medical negligence ever even file a legal claim, 95% of that 5% settle out of court for rather meager amounts, and only a tiny percentage of that tiny percentage actually ever receive a jury award.
# “7. And from six — use whatever proceeds they can save to enhance their education skills, especially in the sciences and mathematics where the U.S.A. is sliding down the global scale.”
More nonsense.
That claim is only true if you compare other nation’s crème de la crème to all of our students.
Don’t fall for the propaganda.
# “9. Change tax policy to free up the hundreds of billions of dollars of corporate cash sitting in reserve in overseas accounts — bring this money home!”
Oh please.
The vast overwhelming majority of corporations already pay ZERO taxes.
Must we do EVERYTHING in this country for the Rich & Corporate ?
January 22nd, 2011 at 7:23 pm
“That’s easy to implement. Just add a $50/bbl tax on all foreign oil and energy equivalents. Tax goes up $50/year. We’ll be off foreign oil within 5 years.
You don’t even need a “policy,” because the market will adjust. You might need an army of giant laser-wielding robots, though.”
Seriously gorobei, that’s the STUPIDEST thing I’ve seen written here in at least 24 hours. The comment reveals a lack of understanding about the global oil trade and economics in general.
January 22nd, 2011 at 7:25 pm
His #6 “tort reform” isn’t even from the same planet. However you measure the expenses of the medical malpractice system, it’s 1-3% of the total cost of the health care system.
Physicians complain about having to order unnecessary tests as wasteful “defensive medicine”, but I’m not aware of any good studies on this. The classic example is unnecessary skull films on ER patients who’ve had head trauma, but common sense suggests that kind of testing is a small fraction of what it costs to run an ER.
I try to avoid reading about this stuff because it’s depressing and reform is hopeless, but the rational analysis is to stand off and analyze it as the cost of one category of accidents. Medical accidents are a significant real world expense, whoever we classify them legally. Running them through the tort system adds the expense of deciding whether there’s negligence, often an arbitrary determination. Studies have shown that only a fraction of possible malpractice winds up in the hands of an attorney. This part of the legal system is randomly related to events in the real world.
Any intellectually coherent reform scheme would be expensive, even if it didn’t run up against entrenched interests. Some people use “tort reform” as code for putting the brakes on plaintiff’s attorneys. Many of them come across as flamboyant cowboys, but curtailing plaintiffs’ access to courts is probably a net increase in social inequality, which is already at unhealthy levels.
The glaring inefficiency in the health cafe system is that the insurers add 20% for administrative expenses that other countries aren’t burdened with. A lot of it goes to ways of avoiding insuring risky people and denying coverage to the sick. Single player is the obvious rational choice, but countries like Australia regulate medical insurance companies so they can’t play games with coverage. The expense of the system is drastically less, but the PE’s and growth rates of the companies are uninspiring, according to John Hempton’s description. But we can’t deny people their G0d-given right to quarterly-report games. It’s the American way. And corrupt. Um, I think I committed a tautology there.
Rather than Rosenberg’s shopping list of reforms, we could just run a sector analysis. The egregious overallocations are, in approximate order, (1) FIRE, (2) oil companies, (3) health care, (4) military. Each of these is supported by government action (tax breaks, regulatory barriers to entry, subsidies, bailouts) and a supporting lobby force. There will be reason to be bullish on the US when the fraction of GDP going into those sectors is more in line with their contributions.
January 22nd, 2011 at 7:30 pm
Seriously gorobei, that’s the STUPIDEST thing I’ve seen written here in at least 24 hours. The comment reveals a lack of understanding about the global oil trade and economics in general.
Andy T,
oh dear, you are going to *really* hate my proposals for #2 through #10.
January 22nd, 2011 at 8:16 pm
Instead of lowering the tax on all that overseas earnings, why not RAISE the tax if they DON’T bring it home. It’s sitting over there because they NEVER paid taxes on it in the first place for all you tax moralists.
January 22nd, 2011 at 8:56 pm
this excess in capital and lax controls has turned America into the duck with the international financiers making foie gras.
Venn, you got that one right. How the hell does a supposedly American company get to keep its profits overseas?
What happened to the patriotic idea of investing in American production? Too old fashioned?
Its too much like hard work apparently.
I love steve jobs but why the hell are all Apple products made overseas? It was the genius of Americans to integrate productivity and smarts better than anyone else but it seems that all we have now are guys claiming that they are the second Galt. All privilege and no balls.
January 22nd, 2011 at 9:04 pm
Rosenberg is everything that is wrong with economic and stock market forecasting.
January 22nd, 2011 at 10:14 pm
the problem with health care costs has nothing to do with torts. we (Texas) did it. you can’t sue successfully as you won’t even get the costs of filing the suit back, never mind get reimbursed for damages (that is after all what torts are bout right?). I seem to recall there was a study last year of what is driving the costs. part of it was caused by the fact we have monopolies in health insurance and care providers. and neither has any real interest in controlling costs (unless you count not selling insurance to many, or denying claims as ‘cost’ control. even valid claims are rejected. and you can have your coverage canceled even after having paid for it for years. usually on mere pretext of errors, even the companies). and we have more trouble with the fact the state agency that is suppose to be policing the doctors, doesn’t. doctor’s can’t even loose their licenses if the commit crimes. guessing that will drive up the cost malpractice insurance.
January 22nd, 2011 at 10:29 pm
1. An energy policy that truly removes U.S. dependence on foreign oil (shale case, coal, nuclear).
like this idea. we need to do this, but removing dependency on foreign oil means replacing oil as we don’t have it. the largest source of oil is that dastard foreign country, Canada.
2. A complete rewrite of the tax code that promotes savings, investment, and a revamp of the capital stock. Cut tax rates, eliminate loopholes and costly tax breaks. Tax consumption, promote savings and investment. That is crucial. But it will take political courage (ask Brian Mulroney).
taxing consumption means cutting jobs as its to easy to avoid taxes. but that will cut jobs as every one sells some thing to some one else.
5. A creative strategy to put people to work instead of paying them to be idle — having nearly half of the unemployed ranks out of work for over 15 weeks and a 25% youth jobless rate is unacceptable at any level.
as much as many would like to believe it, UI is much of an incentive to not work. you can have a full time job at minimum wage and earn more. our problem is really labor structure as much as we may a lot of people who would move to a new job if they could but are hamstrung by having a house they can’t sell. of course there is one other problem. we have created incentives for business to exports their jobs. but that hits demand so they still end up struggling because they just exported their customer.
7. And from six — use whatever proceeds they can save to enhance their education skills, especially in the sciences and mathematics where the U.S.A. is sliding down the global scale.
this is more of a scam than any thing else. we don’t have lots of math and science degrees because we have no demand for them in private sector, the vast majority of what demand there is from the government.
8. Financial sector regulatory reforms that actually have some teeth.
Yea. when do we start?
9. Change tax policy to free up the hundreds of billions of dollars of corporate cash sitting in reserve in overseas accounts — bring this money home!
we have tried to do this many times last time was in the 2000s. didn’t work then. if we do it again why would it work this time? i am guessing if we do it again the result will be the same unless we make it so that if they want the incentives they have to spend in this country, otherwise it waste of effort and money
January 22nd, 2011 at 10:34 pm
#6 Tort Reform
Texas already has strong tort reform. Their medical costs and growth rates are not much better than other states.
In any case, the large parts of most tort awards it in payment for future medical care, which is now assured under universal care.
January 22nd, 2011 at 11:24 pm
Does anybody really want principal write downs, except for the homeowners who are underwater? What about the homeowners who aren’t underwater? What do they get? Do we give one to everyone even citizens who aren’t homeowners, maybe we could give them the equivalent of a principal write down to purchase a home or car to be fair?
Or we could actually address the real problem by signing the petition at unitedinprosperity.org for “change to occur”.
January 22nd, 2011 at 11:55 pm
@Peatey Wheatstraw
Firstlly, let’s establish a fact. I have spent a LOT of time living all over the world and it is a fact that EVERYTHING costs LESS in the US than in the rest of the developed world. In fact, I travel to the US with empty suitcases all the way from Indonesia just to go shopping. EVERYTHING, that is, except medical care. Most medical insurance policies in countries outside the US specifically EXCLUDE elective medical care in the US for this reason. The US spends 17% of its GDP on healthcare that covers only 70% of the population and results in outcomes (Life expectancy, infant mortality, various critical events/capita etc). that are substantially worse than the rest of the developed world. The avearge healthcare spend in the rest of the developed world is 9%, which covers, in most cases ALL the population, so about half of the US or, if factoring in the missing 30% in the US, about 30% of US levels.
Now, you can have your own opinion but NOT your own facts. Until the average US citizen realises that there truly is a problem, then the right wing obfuscatory rhetoric will continue to prevail. I have stated my HO regarding the reasons for high US costs on many prior occasions, after a career in the healthcare industry and, at the risk of repetition, I repeat as follows:
1.Throughout the world, heath experts agree, it has been proven that a “Fee for service” model is oxymoronic with cost controls. There needs to be regulation governing procedures and costs, otherwise the medical profession and the healthcare industry will just do and charge what they see fit. Remember, it’s not like buying a car. Most people do not shop around for medical costs for several reasons. Firstly, they don’t have enough knowledge and, secondly,”Someone else is paying”. The latter conclusion is, of course, debatable but that discussion is not central here, so let’s leave it alone.
2.Medical insurance costs in the US are higher than elsewhere in the world because they must reflect the costs implicit in Item 1 above AND because existing regulation restricts competition, for instance across State lines. It is also the case in the US that insurers refuse patients with “Pre-existing conditions”. Elsewhere in the world, the medical care infrastructure incorporates the concept of universal risk pools, which is actually what insurance is intended to be.
3.US physicians cahrge too much because of Item 1 above. They also must pay excessive insurance premia to cover the very real risk of malpractise suits, the vast majority of which are frivolous. In the case of (In this context) high risk specialties, for instance a surgeon, the annual premia can reach six figures. This cost has to be built into overheads costs and it also forces US physicians to practise a highly defensive type of medicine. This means running every test known to mankind and prescribing the latest brand name medicines becuase, if they do not, then the friendly lawyer at a location near you will use this in a malpractise suit. Nobody is saying that a genuine case of malpractise should not be pursued but analysis after analysis shows that the vast majority of malpractise suits in the US are frivolous, for one reason or another.
4. US MNC Big Pharma makes about 80% of global profits in the US market alone and yet pays virtually no US Federal taxes. This is for several reasons. Firstly, they get tax credits for “Research”, most of which costs are, in fact “Development”. SO most of the research gets done in the US because it is largely free. The real money in pharmaceuticals is in the “Active” patented raw materials, NONE of which are manufactured in the US. These are manufactured in “Tax havens” such as (Previously) Puerto Rico and now Ireland, Singapore etc. These active raw materials may cost, say, USD 10/Kilo to manufacture in Singapore then get shipped to local affilaites in countries around the world, including the US, for, say USD 10,000/Kilo (That is a realistic example incidentally). In this way, USD 9,990 remains in Singapore where there is an extended tax holiday. This called “Transfer pricing” and it amounts to tax evasion because the healthcare systems of all recipient countries, including the US, are paying over the top to import such materials and, of course, the inflated cost reduces profits in such recipient countries, again including the US, which reduces or eliminates profits and therefore local taxes, again including in the US. The Big Pharma lobby is very powerful in defence of its practises and is a major contributor to political causes. Of course, MOST large US Companies pay very little tax in the US so the taxation component implicit above is actually of a more general concern, but Big Pharma provides a very good example.
Many drugs in Canada sell for a fraction of the US cost because the active raw materials are manufactured in Ireland etc., imported into the US at a loss and manufactured into pills, which are then exported to Canada at a further loss (Single payer system so what can we do, prices are fixed by the Government. This bad according to the right wing doctrine). The same pills are sold in the US at 4X the cost. SO why not start by allowing re-importation of US MANUFACTURED drugs from wherever. There are, after all no safety issues (Americans seem to believe that only the US is capable of manufacturing anything properly, except of course that hardly anything is actually manufactured in the US any longer) because these drugs are indeed manufactured in the US. If I were a US citizen, I would buy all my medicines in Canada to take advantage of the irrational cost differentials resulting from more common sense and less political corruption north of the border.
I believe that adressing the above matters, none of which is actually rocket science, the cost of healthcare could quite easily be normalised in the US. The potential savings are enormous.
Hope this helps on the healthcare part of the debate.
January 23rd, 2011 at 1:44 am
Change tax policy to free up the hundreds of billions of dollars of corporate cash sitting in reserve in overseas accounts — bring this money home!
Lets see ,I wounder how the Chinese would treat HIGH TREASON
January 23rd, 2011 at 2:45 am
>5. A creative strategy to put people to work instead of paying them to be idle — having nearly half of the unemployed ranks out of work for over 15 weeks and a 25% youth jobless rate is unacceptable at any level.
This is not complicated.
Four words: EITC.
Expand it, bigtime.
Reform the tax system to be actually progressive to pay for it.
January 23rd, 2011 at 7:12 am
What a joke, Rosenberg says to encourage more kids to go into math and sciences !!??
The problem with that is that in the U.S and Canada the smart kids in math and sciences have long ago figured out that if you’re good at those things, you should not become and engineer or scientist since the pay is comparatively lousy compare to being a medical doctor or investment banker- neither career creates any wealth.
Failed culture, no hope, I’m afraid.
T.S. in Michigan
January 23rd, 2011 at 7:23 am
Rosenberg is a total dousche………… I’d love to hear how the Republicans – who he perpetually fellates – will enact 1, 3, 4, 7, 8, 10 on this list.
January 23rd, 2011 at 8:38 am
The re-headline of Rosie’s list should be: “If you see 3 out of 10 from the following list, you’re probably too damn late to make any money!” Rosie becomes so focused on the negatives and poo-poohing the incremental positives (the second derivatives, the good numbers off the horrid low, the profits from the layoffs, the buyouts from industry consolidation, the Fed stimulus that actually serves a purpose b/c there’s a government variable in almost every econ equation, …) that he fails to see the tide turning.
January 23rd, 2011 at 10:38 am
To the extent we (USA) do these things, we prosper. To the extent we don’t, we not only will not prosper, we just might become irrelevant.
January 23rd, 2011 at 11:08 am
willid3 at10:29pm [9. Change tax policy to free up the hundreds of billions of dollars of corporate cash sitting in reserve in overseas accounts — bring this money home!] .. ya – shut off the MIC influence abroad – bring em back into the perimeter – messy but effective – hire their own police forces abroad … before submit that old saying “every action = reaction”
and philipat’s WarHealthCare post immediately following .. dont ya just love the round’n’round of this pop
and Chris reveals probably have to instill “purchase courthouse time” like a reception hall too ie: [9. Change tax policy to free up]
ps – before submit Thanks go out to those who wish to save the Union of the States of America and best wishes to the money grubbers .. (I guess markets take all kinds)
January 23rd, 2011 at 1:49 pm
Instead of writing down mortgages, why not restructure the collateral?
Offer underwater homeowners the opportunity to rewrite their mortgage to purchase their homes while leasing their land. Technically, this is called, “dividing the Fee.” Lease terms could be written for zero drag on homeowner’s budget and allow them to reassemble the estate at a future date.
Since land value is typically 20ish% of mortgage debt, these leases could absorb a considerable chunk of any upside down transaction.
Adjust the remaining balance to market and rewrite the payment terms to meet the homeowner’s budget.
The bank ends up with a decent mortgage, a zero payment lease and a much smaller loss on their balance sheet. The homeowner gets to stay in their house, build equity and have a payment they can live with.
Empower Fanny & Freddy to hold these mortgages & swap the leases for zero interest 30 year treasuries. Everything offsets.
Nobody loses when everybody wins.
January 23rd, 2011 at 3:20 pm
I agree with your list and would add at least another Term Limits. There is no way a politician who wants to continue feeding on the tax payer will touch the third rails unless they know this is their last harrah.
January 23rd, 2011 at 3:36 pm
and after reading the comments my comment to Petey Wheatstraw Says: who says
Tort reform is BS.
As a retired Hospital CEO, I know all about medical liability and the over ordering of tests that comes with protecting yourself from law suits. I’d like to know where Petey got his 1.4% figure..proly the trial bar.
In my twenty five years in Hospital Administration I saw many frivolous cases settled for 25-50k simply cuz it would have cost more than that in legal fees to defend the case. I am quite sure that it is impossible to predict what the cost of defensive medicine, frivolous cases, and premiums that are elevated far beyond what they should be really is.
I think more mediation and arbitration and less court cases would save alot. How bought we try it before we say it won’t save resources.
January 23rd, 2011 at 4:10 pm
Gorobei –
If Jonathan Swift is looking in from somewhere on high, you’ll have warmed the cockles of his heart.
I’m long lasers and giant robots, short walkers.
January 23rd, 2011 at 9:49 pm
Yes tort reform is BS, it has been instituted in many states and not caused any measurable reduction in cost.
Defensive medicine is also BS, for the same reason as above. The reason doctors order all these tests and procedures of questionable cost/benfit ratio is that they produce revenues. Just like Japan where giving economic incentives for prescriptions has produced a huge excess in prescriptions, here in the US the economic incentive given for doctors and hospitals to do tests and procedures have given this country an excess of them.
January 24th, 2011 at 7:33 am
@Greg0658:
“and philipat’s WarHealthCare post immediately following .. dont ya just love the round’n’round of this pop”
Thanks for the lucid and detailed rebuttal of my considered opinions, which really contributed fiurther to the debate. Yawn…………………………
January 24th, 2011 at 11:04 am
:-) without writing a book .. I’m just infuriated that guns vs butter debate in America .. the taxpayers of America pay taxes to police the world thru our investment in the military industrial complex and the continued flow thru for years to come via healthcare & pension costs for our American veterans … or – are their promised benefits next on the chopping block for our national fiscal survival … seems this is our problem – we burn up stuff* to move forward / isn’t the best return on capital when you invest in something that has a lasting production value ?
* 1 stuff burnt is oil/gasoline but thats another book chapter
January 24th, 2011 at 2:27 pm
My one major quibble is with [9], which sounds likely a thinly-veiled Call for a “tax holiday”. Instead of yet another trillion-dollar giveaway to corporate America, how about forced repatriation, at the tax rates which applied when the money was banked? Republicans and corporate types will screech that this is a “job killer”, to which I reply:
1. Most of those foreign profits involved overseas operations, so if taxing those the same way US operations are “kills” some of that job migration, so much the better;
2. Since these taxes by definition are on *profits*, there is no plausible resulting disincentive to do business – what, you going to curtail running a profitable business because you have to pay tax on profits? Do highly-educated white-collar workers quite their high-wage jobs in protest because they pay more taxes than minimum-wage burger flippers?