The truth about Romney and the 2002 Olympics

You have probably heard how Romney SAVED the 2002 Olympics for Salt Lake City, was the key to the success of the Olympics that year, and was loved by everyone and hailed as a hero.  Now the truth.  In a long post, Daily Kos reports that records show  that  not only did Romney NOT save the 2002 Olympics, he behaved pretty much like a jerk while there, violated his contract, and made a ton of money for himself and his companies from his role in the Olympics.  Interesting reading here: http://www.dailykos.com/story/2012/07/31/1114110/-Romney-did-NOT-save-2002-Olympics-Lost-his-cool-Likely-breached-his-contract-Profiteered

UPDATE: 2012 Election Forecasts

Here are the most recent election forecasts as of 7/30/2012.  Obama needs 270 electoral votes to win.  Currently he is projected to win the election with 284 to 332 electoral votes. Without Toss Ups Obama Romney Total Election Projection 332 206 538 Five Thirty Eight 294 244 538 Electoral Vote 332 206 538 Real Clear Politics 289 249 538 Washington Post 284 254 538 Huffington Post 318 220 538 Attack Democrat 308 230 538 Note: Five Thirty Eight does not report toss ups.  Others toss ups allocated evenly.

Romney taxes are off the chart

Little wonder Romney doesn’t want to reveal any more than he has too about his taxes.  Compared to the taxes  previous presidents paid, Romney pays hardly any at all.

The Sunlight Foundation plotted the adjusted gross income and effective tax rate from all of the available tax returns of the last five presidents plus the tax returns Romney has released.  Romney was off the chart in both directions with the HIGHEST adjusted gross income and LOWEST effective tax rate.  This one chart tells it all – see it below or here: http://sunlightfoundation.com/blog/2012/07/25/putting-romney%E2%80%99s-tax-returns-in-presidential-context/

The NRA has won

According to reports the shooter at the theater in Aurora, Colorado used three weapons,

an AR-15 assault rifle, a Remington 870 12-gauge shot gun and a .40 caliber Glock handgun.  He apparently had another .40 caliber Glock handgun in his car.  He was able to purchase these guns and transport them legally.  He might not have even needed to have had a permit for the handguns as long as he did not conceal them.  The AR-15 and Glock handgun are weapons that were originally developed for the armed forces, law enforcement and/or security guards.  They are designed to be used as weapons to kill as many human beings as possible in the shortest period of time.  They have practically no use for any other purpose, particularly hunting.  And yet, just about anyone in this country can purchase these weapons and even outfit them with large capacity magazines in order to make them even more deadly.  We are already hearing calls for banning these weapons as in the case of other times when weapons of the sort have been used to kill innocent Americans.  Obviously, banning such weapons or making them difficult to obtain would make total sense.  The rights of few gun loving Americans would be affected since most Americans who own guns don’t own these types of weapons and we might be able to keep such weapons out of the hands of individuals such the shooter in Aurora or at least make it more difficult for such a person to acquire the weapons.  We probably could not prevent an attack such as the one in Auroa from ever occurring but by restricting readily available weapons to those like the Remington 870 12-gauge shotgun, we would undoubtedly make such attacks less deadly.  For example, apparently the Aurora shooter quickly exhausted his ammunition in the shotgun.  He would have had to have reloaded to keep firing. That delay might have given more people the chance to escape and/or provided a few seconds during which someone could have engaged with the shooter to stop the attack.  As it was, the shooter just discarded the empty shotgun and began using the much more powerful, rapid fire AR-15. 

As I said, it would make sense to ban or greatly restrict the purchase of weapons like those used in the Aurora shooting.  It would make sense but it will not happen for one reason, actually one organization—the National Rifle Association (NRA).  The NRA controls Washington and the state legislatures in almost all states.  The NRA is feared by every politician at every level.  The NRA has won the battle to make gun ownership in American, the ownership of any kind of gun for any purpose, including to kill, easier than in any other developed country.  Because of the NRA, we will continue to be unable to prevent mass murders such as the one in Aurora or even make them more difficult to commit.  A new Aurora may not happen next week or next month or even next year, but it will happen maybe at the movie theater you or members of your family are attending, maybe at the shopping mall while you are shopping, it could happen anywhere at any time and you can’t prevent it or even make it more difficult neither can or will your representatives.  Why?  The NRA.  The NRA has won.

Please write to the NRA and tell them just how what you think of their victory.  Click here to voice your opinion:  https://www.nrahq.org/contact.asp

Would a tax increase affect small business hiring? Nope. Here is why.

The main argument Republicans make for opposing raising the top marginal rate on those making over $250,000 (or letting the Bush tax breaks expire for those making over $250,000) is that any tax increase on the top earners would be a job killer since small business owners would have less money to hire workers.  Let’s leave aside for a moment the fact that only 1.9% of small business owners make over $250,000 and half of those make most of their money through investments and don’t have employees anyway.

Let’s assume that a small business owner has employees and has a taxable income over $250,000.  Also, let’s assume that this business owner would like to hire additional workers to meet increased demands for products/services from customers that he can’t meet with existing staff.  Would an increase in the top marginal rate or top two marginal rates keep him from hiring these additional workers?  Not likely.  Here is why.

If you are a small business owner, you probably have a LLC or similar company with “pass through” taxation.  In other words, your company doesn’t pay taxes, instead the profits of the firm represent income to you and you pay income taxes on those profits (or your portion if you have partners).  Notice, you pay income taxes on the profits—revenues minus expenses.  Employee pay is one of those expenses that you CAN DEDUCT.  The IRS says: You can generally deduct the pay you give your employees for the services they perform. The pay may be in cash, property, or services. It may include wages, salaries, or other compensation such as vacation allowances, bonuses, commissions, and fringe benefits.  See: http://www.irs.gov/publications/p535/ch02.html

Now think about it.  Since you DEDUCT employee and other employee expenses BEFORE you determine your profits/income, an increase in your top marginal tax rate has no impact what-so-ever on your decision to hire more employees.  It’s a wash. 

In fact, if you want to pay LESS taxes, your best strategy when your top marginal rate went up would be to HIRE MORE EMPLOYEES.  How is that?  Given the same amount of revenues, if you hire more employees, you reduce your company’s profits and therefore your taxable income by the amount you pay out in salaries for those additional workers.  You have LESS taxable income, so you pay LESS taxes.  It’s that simple. 

In fact, if you really wanted to teach the IRS and Obama and Democrats a lesson, you could calculate just how much your taxes would go up with the higher marginal tax rates and hire enough workers that you could cut you profits/income to offset any increases in taxes you might otherwise have to pay. 

Of course, those new employees might increase customer satisfaction to such a level or develop enough new high demand products and services that your revenues took off, your company grew exponentially and you started taking home profits/income of $ 1 million or $1 billion a year rather than $300,000.  In that case, you WOULD be paying more in taxes.  You might become as rich as Romney and have to begin stashing cash in off shore accounts.  So, it’s a tough decision.  BUT, IT HAS NOTHING TO DO WITH THE TOP MARGINAL TAX RATE.  

Is this why Romney won’t release his tax returns?

Rumor is that Romney doesn't want to release his tax returns because he used such aggressive tax avoidance strategies and off shore tax havens to deal with losses in 2008 and 2009 that he paid NO TAXES AT ALL in one if not both of those years or at most he paid only 3% to 5% tax. If that is true, I can understand why he wouldn’t want the American people to know. Rich guy uses tax tricks and off shore accounts to avoid paying taxes while the common guy gets stuck.

Joshua Green at Bloomberg says Romney’s 2009 return might be the biggest problem.  “He’s revealed what’s in his 2010 and 2011 returns; and he reportedly submitted 20-some years’ worth of returns to the McCain campaign when he was being vetted for vice president in 2008. Steve Schmidt, McCain’s chief strategist in that campaign, said on MSNBC last night that while he didn’t examine Romney’s returns himself, nothing that McCain’s vetters found in them disqualified Romney from consideration.

That would indicate that 2009 is singularly important and, if there’s anything to this theory, incredibly vexing for Romney because there’s no way he could release additional returns without including that year. And the chaos that would ensue would be bad enough that it’s probably worth enduring significant damage to avoid.”

Read more here: http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/17/did-mitt-romney-pay-any-federal-taxes-at-all-in-2009/

and here: http://www.businessweek.com/articles/2012-07-17/whats-romney-hiding-in-his-tax-returns

Is Romney over reacting to the Bain questions?

Is Romney over reacting to the Bain charges and actually making things worse for his campaign?  Nate Silver at FiveThirtyEight thinks so.  Silver points out that in spite of the questions Obama and the Democrats have raised about Romney’s tenure at Bain Capital, the polls have not changed that much.  Obama has maintained the same 2 point or so lead he has had for the last few weeks.  It could be that most Americans aren’t paying that much attention either because they are busy with summer vacations and/or they have already made up their minds—most have. 

Silver notes that most incumbent presidents since WWII have won by about 7.5 points.  Obama’s 2 point lead is thus mediocre in comparison.  But, says Silver, a 2 point lead is consistent with the high unemployment and weak economy.  Silver makes the point that there is NO STATISTICAL CORRELATION between the unemployment rate ON ELECTION day and the outcome of the election.  However, there IS A STRONG CORRELATION between the growth rate in the economy — as measured by G.D.P., jobs, income and other indicators — and the election result.  Silver says: “The recent rate of growth — about 2 percent across an average of indicators, which is below average but not recessionary — points to a below-average but not necessarily losing position for Mr. Obama. Mr. Obama may also be helped somewhat by the fairly low rate of inflation, which receives some weight in [Silver’s forecasting] model — and, we think, also, in voters’ perceptions about how the economy is performing. It’s a little easier to adjust to a new but mediocre “normal” if grocery prices aren’t rising every time you go to the supermarket.”

So, the race seems to be about where one would expect it to be given the state of the economy, which at this point neither Obama nor Romney can do much to impact.  Additionally, the Bain story so far does not seem to have caused much movement in the polls except perhaps to turn Romney’s Bain experience from a plus to a neutral. 

Silver says Romney’s response to the Bain attacks such as his appearance on five major news networks last Friday to defend himself may be doing more harm than good for his campaign since it gives the impression that he really has something to hide—which he does, of course.  Keep a watch on the polls over the next few weeks.  Looks like the Obama folks have turned Romney’s Bain advantage into a Bain neutral.  Let’s see if they can turn it and Romney’s tax problem into a Bain/tax disadvantage.  Hope so.

Proof: The job problem was artificially created by Republicans

What is the difference between unemployment at 8.2% and unemployment at 7%?  Answer: the Republican Party. 

The Republican Party’s persistent opposition to helping states and local governments avoid laying off public employees is almost TOTALLY responsible for the difference in unemployment that we might have expected at this point in the recovery (about 7% or so) and the level of unemployment that we have (over 8%).  The Republican Party INTENTIONALLY inflicted this pain on America.  They did so because the leaders of the party and party strategists decided shortly after the 2008 election that the best road to control of the House, Senate and White House for Republicans was one based upon delaying and obstructing any and all efforts by the Obama administration and Democrats to stimulate employment in the private sector and prevent the loss of jobs in the public sector. 

Republicans were only partially successful in blocking private sector job growth.  They were not able to totally block the 2009 stimulus.  As a result, the private sector has been adding jobs in a pattern similar to what we saw in the last two previous recessions.  However, Republicans have been VERY successful in purposely generating public employee job losses at the local and state level through a combination of delay and obstruction at the national level to proposed for relief to the states and orchestrated action at the state level by Republican-controlled state Governors and legislatures to eliminate as many public jobs as possible. 

We now have clear evidence of the damage Republicans have done for the most cynical of political reasons.

It would be a shame if Republicans are rewarded with success at the ballot box for such behavior.

Read the analysis here: http://econintersect.com/b2evolution/blog1.php/2012/07/11/public-employment-this-time-its-different

Is Obamacare a tax or not? The surprising truth.

Is Obamacare a tax?  Most (55%) of Americans seem to think so according to a recent poll.  Also, Romney and the Republicans have tied themselves in knots saying it is or isn’t or “what’s the talking point?”  So is Obamacare a tax or not?  The true answer might surprise you.

Let me clear up this issue by discussing the FACTS.

First, let’s get this straight.  Nowhere in their ruling did the Supreme Court address the issue of whether the Affordable Care Act (Obamacare) as a whole was a tax.  Just didn’t happen.  The court ruled on whether the penalties imposed to enforce the individual mandate were taxes.  These penalties and the individual mandate are just one small part of the Affordable Care Act, an important part but a small part.  The court DID NOT say, or even discuss, whether the other portions of Obamacare such as the pre-existing conditions clauses, the expansion of Medicaid, the right to keep a child on your insurance, and the hundreds of other positions in the Act were taxes.  The tax discussion in the decision ONLY INVOLVED the penalties under the individual mandate clause.

Second, the Supreme Court actually ruled that the individual mandate penalties both WERE and WERE NOT taxes.  I know that sounds strange but that was the ruling.

Roberts in the majority opinion first wrote that the individual mandate penalties WERE NOT taxes.  He had to do that or he could not have declared that the penalties WERE taxes so that he could uphold the act.  What?: you say.  Let me explain.  If the penalties were taxes, then the plaintiffs had no standing to sue for relief because of something called the Anti-Injunction Act which says you can’t sue for relief from a tax until you are actually subject to the tax.  Since the Affordable Care penalties don’t go into effect until 2014, plaintiffs would have no standing to sue because they had not yet been subject to a tax.  Roberts and the majority ruled that the penalties WERE NOT a tax in terms of the application of the Anti-Injunction Act.  The wording of the Act made it clear that Congress did not intend the penalties to be treated as a “tax” for purposes of the Anti-Injunction Act.

Next Roberts and the majority ruled that the penalties WERE taxes and thus were constitutional under Congress’ power to raise and collect taxes.  The majority ruled that while the penalties WERE NOT a “tax” when it comes to the Anti-Injunction Act, they WERE a “tax” when it comes to the application of the Constitution based upon how the penalties are imposed and collected.  Roberts wrote: “The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation…Neither the Affordable Care Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS.”  In short, the court reasoned that the penalties were really a special kind of tax levied to partially offset the expense of providing medical care to the uninsured.  It is similar to a tax on gasoline that drivers of cars must pay to help offset the cost of roads and bridges.

So, the truth is the Supreme Court ruled that the penalties assessed for failing to purchase insurance were a tax when it came to the Constitutional issue of whether Congress could impose them BUT were not a tax when it came to the issue of whether the Anti-injunction Act applied.  Clear?  Got it?

You can download and read the full decision yourself here: http://www.scribd.com/doc/98543022/SCOTUS-ACA-Ruling

Make corporations and unions follow the same rules

Daily Kos has come up with a great idea.  As you know the Supreme Court ruled that corporations can spend unlimited amounts of money to influence political campaigns.  Also, the Supreme Court ruled that unions had to get Opt In permission to spend union money on political campaigns.

Daily Kos has the simple idea that what is good for unions should be good for corporations.  They are collecting signatures on a petition to Senate Majority Leader Reid that reads as follows:

Senate Majority Leader Harry Reid,

Please introduce legislation requiring corporations to get opt-ins from shareholders to use resources for political purposes. This legislation would be a step towards limiting corporate money in politics.

Now, that’s a great idea.  Please join the Attack Democrat and sing the Daily Kos petition.  Go here:

http://campaigns.dailykos.com/p/dia/action/public/?action_KEY=165

FACT CHECK: Budget Reconciliation and Obamacare.

You have probably heard that the Republicans plan to use the Budget Reconciliation process to repeal Obamacare if they get control over Congress and the White House in November.  Can they really do that?  Maybe.  Let me explain.

Budget Reconciliation is a procedure that would allow them to pass legislation repealing all or part of Obamacare with just 51 votes in the Senate instead of a filibuster proof 60 votes.  Since they are unlikely to have more than about 50 or 51 Senate seats even if they win control over the Senate in November, Budget Reconciliation would be the only realistic way they could overturn Obamacare even with Romney in the White House.  Democrats are certain to retain enough votes in the Senate to deny Republicans the 60 votes required to end a filibuster and pass repeal legislation.  If Obama is re-elected, it will be impossible for Republicans to put together enough votes to repeal Obamacare because he would almost certainly veto any repeal legislation and the Republicans would need a two-thirds vote in BOTH the House and the Senate to override Obama’s veto, which would be impossible for Republicans to obtain.

Republicans claim they can use Budget Reconciliation to repeal Obamacare because the Supreme Court called the law a tax—according to them making it subject to reconciliation—and they say they are justified in using the process because Democrats used it to pass Obamacare in the first place.

Are they right?  Let me address the two issues:

Did the Democrats pass Obamacare using Budget Reconciliation?

Answer: NO and YES.

Here is what happened.  After a year of deliberation and wrangling, the Democratic-controlled House and Senate each passed a different version of health care reform in 2009.  On November 7, the House passed its version of the bill on a 220-to-215 vote. On December 23, the Senate voted 60 to 39 to end debate on the bill, eliminating the possibility of a filibuster by opponents. The bill then passed on a party-line vote of 60 to 39 the next day. 

Soon after the Senate passed the Affordable Care Act, Scott Brown was elected to take Ted Kennedy’s seat and the Democrats consequently lost their filibuster proof 60 votes in the Senate. Consequently, the most viable option for the proponents of comprehensive reform was for the House to abandon its own health reform bill, and instead approve the Senate-passed bill.  They knew they could not get an amended bill passed by the Senate since they would not have 60 votes to end a Republican filibuster.  However, a number of House Democrats who had reluctantly backed the president on health care reform didn’t like a number of provisions in the Senate version of the bill such as a provision that would have provided a higher rate of Medicaid reimbursements for Nebraska – the so-called “Cornhusker Kickback” that was designed to win the support of Democratic senator Ben Nelson of Nebraska.

House Speaker Pelosi made a deal to get the reluctant Democrats to go along with passing the Senate version of the bill.  If they would vote for the Senate bill, then the Democratic leadership agreed to immediately introduce and pass separate legislation under Budget Reconciliation amending the Affordable Care Act to address those members’ grievances.  The House passed the Senate bill on March 21, 2010 by a vote of 219 to 212.  The Patient Protection and Affordable Care Act was signed into law by Obama on March 23, 2010.  

Pelosi then introduced the Health Care and Education Reconciliation Act of 2010

to make changes to the Affordable Care Act. The Democrats used reconciliation to pass the amendments. On March 26, 2010, the Senate approved the amendments, 56 to 43, and the House passed them, 220 to 207.  Obama signed the Health Care and Education Reconciliation Act of 2010 into law on March 30, 2010.

So Obamacare—The Patient Protection and Affordable Care Act—was actually passed in normal fashion without the use of Budget Reconciliation.  However, Democrats did use Budget Reconciliation to amend the Act shortly after it was signed into law.

Can the Republicans really use Budget Reconciliation to repeal Obamacare?

Answer:  They may be able to use Budget Reconciliation to repeal some parts of the law but probably not all of the law but then only if they win control of the Senate and the White House and retain control of the House.

Under Senate rules, the Budget Reconciliation process cannot be used if the bill:

1. does not produce a change in outlays or revenues;
2. produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
3. is outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
4. produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision;
5. would increase the deficit for a fiscal year beyond those covered by the reconciliation measure; and
6. would make changes in Social Security.

Some portions, and perhaps all, of the Affordable Care Act may be immune to attack via Budget Reconciliation because they fall under these restrictions.  For, example, the current law reduces the deficit over time.  Any changes might result in increasing the deficit which would not be allowed under Budget Reconciliation.  Also, provisions of the act like restrictions on insurance companies being able to deny coverage for pre-existing conditions probably would be exempt since they don’t produce a change in federal outlays or revenues.  The Senate’s Parliamentarian, Elizabeth MacDonough will have to rule on whether the changes in any repeal legislation met the requirements for Budget Reconciliation.  If she reuled they did not, the Republicans would need 60 votes to override her ruling, something Republicans would not get.

However, many of the key provisions of the law – including the individual mandate to purchase health insurance, the creation of insurance exchanges where low-income families can buy subsidized policies, and Medicare and Medicaid funding measures –probably would meet the reconciliation requirements.

In short, the Republicans probably could repeal some, but not all, of Obamacare using Budget Reconciliation.  Unfortunately, the provisions they could repeal would be some of the most critical to the operation of the law.

In short, the best way to protect Obamacare is to make sure that Obama is re-elected so he can veto any legislation Republicans might pass to repeal the law.  And, NO--the Democrats DID NOT use Budget Reconciliation to pass the original law.

BREAKING NEWS: BLS report jobs up 80,000

The Bureau of Labor Statistics says the economy added just 80,000 jobs in June, far less than the 176,000 private sector job growth for June reported yesterday by ADP.  Unemployment remained at 8.2%.  These are disappointing numbers that Republicans will celebrate.  Analysts had expected the economy to add between 90,000 and 100,000 jobs in June.

Go to the Global Economic Intersection (GEI) for a good discussion of what these numbers mean and, in particular, the differences between the ADP and BLS methodologies. GEI says BLS can be off as much as 100,000 jobs in their initial estimates due to their sampling methodology.  GEI says that due to adjustments made in the BLS formula after the 2008 recession, BLS estimates of job growth have been consistently too low.  Go her and scroll down to the bottom of the GEI post to read more about problems with the BLS estimates: http://econintersect.com/wordpress/?p=23929

GOOD NEWS: JOBS UP 176,000 in June

ADP reports that the private sector added 176,000 jobs in June compared to a revised increase of 136,000 jobs in May.  Most (160,000) of the new jobs created in June were added in the service sector.  The ADP June report is considerably better than the 100,000 new jobs analysts expected in June.

Joel Prakken, chairman of Macroeconomic Advisers, LLC, says of the June numbers:

The gain in private employment is strong enough to suggest that the national unemployment rate may have declined in June.

Today’s estimate, if reinforced by a comparable reading on employment from the Bureau of Labor Statistics tomorrow, likely will ease concerns that the economy is heading into a downturn…

There seems little doubt that recent employment gains have been restrained by heightened uncertainty over the European financial crisis and by growing concerns about domestic fiscal policy. However, the acceleration of employment since April does lend credence to the argument that unseasonably warm weather boosted employment during the winter months, with a ‘payback’ spread over April and May.

If the Bureau of Labor Statistics report comes anywhere near matching the ADP numbers, it will be a good sign that the recovery is continuing which will be a boost to Obama's re-election prospects.  We'll know sometime tomorrow morning.

NEW POLL: Public opinion on Obamacare.

Kaiser Family Foundation has released the first of its tracking poll on Americans’ support/opposition to Obamacare since the Supreme Court Ruling.

Majorities of Americans (a) want to either keep Obamacare or expand it, and (b) have accepted Obamacare as the American approach to health insurance and want the opposition to just shut up.

Although Americans remain divided in support for the Affordable Care Act with 41% approving of the act and 41% disapproving.  

The 41% who disapprove of the Act include Americans who disapprove because they think the Act did not go far enough.  For example, they wanted a public option or to open Medicare to all.  The majority of Americans (53%) think the Act should be kept as it is or expanded.  Only 38% support repealing the Act or replacing it as Romney and the Republicans have proposed.

Regardless, most Americans say they are tired of all the arguing about the Act.  The majority (56%) want the opponents of the Act to shut up and move on to something else.  In short, most Americans whether they think the Act went far enough or not, are ready to accept the Act as the approach the country has taken to resolving the issue of how Americans should get health insurance.