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Author: EliasFardo Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 210470  
Subject: Teaching Date: 8/29/2011 12:53 PM
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I have been a shareholder in Berkshire Hathaway continually for decades, so I have seen how many good things that have been brought to this company by Warren Buffett. And I have also seen how good of teachers Buffett and Munger can be. But I believe that Buffett’s comments on political issues such as taxes are now hurting him, and possibly Berkshire as well.

I know that Buffett and Munger consider themselves to be teachers as well as business operators. And it is something they do well. But in the same way in which an investor should stick to his circle of competence in investing, teachers should stick to their circle of competence in instructing.

For sure, the list of topics that Buffett could discuss is very long. He has many years of experience and thinking in many business areas, and I know that there are many of us who would appreciate his insights on these topics.

How fascinating would it be to listen to Buffett give examples and explanations of how he arranges compensation packages for the operating executives of Berkshire’s subsidiaries? Not real ones with names and dates, but examples of how he would attempt to align the incentive compensation for the executive with his desires for the company.

He says that his managerial style borders on abdication, until it doesn’t. But, when is that line crossed? We know that he talks to his managers, but what kind of concerns can he discuss with them and still remain consistent with that style? Berkshire is probably the only company of this size that gives its managers such free reign, and we would all appreciate more of his thoughts on this.

I look at all the different industries in which Berkshire operates. Who would not like to read an essay by Warren Buffett on running a furniture store, railroad or brick manufacturing facility?

When it comes to Buffett and Berkshire, there is no lack of topics; no reason to stray. So I consider essays or discussions by Buffett on the political issues of Washington to, frankly, be a poor use of his time and energy. Yes, he has the right to talk or write about what he pleases. And, yes, people are interested in hearing what he has to say. But that does not mean that he should. It is like a school assigning the best musical instructor in the country to teach history and shop.

I am reminded of an episode of “West Wing” when one of the president’s top aides attempted to confront commentators on the internet that he felt were wrong or misleading. When his secretary discovered this she was aghast. She said something like, “You don’t know who those people are,” and made him stop. He had no concept of the kind of cesspool he was entering, but she did. I feel the same way the aide’s secretary felt. For a teacher who has so much to say about Main Street and Wall Street, Warren Buffett does not need to go to Washington to find something useful to discuss.
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Author: LONGREITS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180197 of 210470
Subject: Re: Teaching Date: 8/29/2011 1:04 PM
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Or maybe the tax issue could be one of the most important he has ever discussed. Buffett gets its, that he was born in the greatest country in the world. Most in the US are myopic, not having traveled abroad, let alone the third world, and they think they deserve all the riches they have if they are fortunate enough to have any. The reality is they probably got rich due to a combination of hard work and luck, the latter in part being their birth in this country, not Zimbabwe or 1940s India, like my dad.

I traditionally vote Republican but the party's stance on taxes is an embarrassment. Is anyone really still arguing that trickle down economics works?

I expect to pay more than my fair share of taxes in my lifetime and I have no real incentive to want to raise taxes other than its just the right thing to do in a country as great as ours.

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Author: hclasvegas Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180198 of 210470
Subject: Re: Teaching Date: 8/29/2011 1:16 PM
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Buffett gets its,>>

truly shocking, hard to believe. i suggest you go back and read the buffett piece another 5-6 times at least. buffett said 250k isnt rich, go after those making 1 mil plus, no ? is that what obama is saying ? buffett wants to allow those with huge unrealized cap gains to gift those gains tax free, still with me ? how does that create jobs or reduce the deficit ? what happens if you tax long term gains on the rich at 40 % ? what will happen to unemployment rates ? look what buffett nonsense has done to you, YOU, are proof he should stop talking. buffett hurts, obama, the country, the worlds view of america, the dollar, the markets, brkb, and he pumps gold while saying he wouldn't buy it. go figure ??????

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Author: hclasvegas Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180200 of 210470
Subject: Re: Teaching Date: 8/29/2011 1:25 PM
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<< I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. >>

a healthy informed guy wouldnt say such nonsense.

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Author: hclasvegas Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180201 of 210470
Subject: Re: Teaching Date: 8/29/2011 1:27 PM
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<<< But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate. >>>

what part of this cant you understand ? scary stuff shows up on this board ?????

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180202 of 210470
Subject: Re: Teaching Date: 8/29/2011 1:34 PM
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Or maybe the tax issue could be one of the most important he has ever discussed. Buffett gets its, that he was born in the greatest country in the world. Most in the US are myopic, not having traveled abroad, let alone the third world, and they think they deserve all the riches they have if they are fortunate enough to have any. The reality is they probably got rich due to a combination of hard work and luck, the latter in part being their birth in this country, not Zimbabwe or 1940s India, like my dad.

I traditionally vote Republican but the party's stance on taxes is an embarrassment. Is anyone really still arguing that trickle down economics works?

I expect to pay more than my fair share of taxes in my lifetime and I have no real incentive to want to raise taxes other than its just the right thing to do in a country as great as ours.


I wouldn't be so adamant against a tax increase if I felt that a tax increase would help balance the budget. Unfortunately, that historically hasn't been the case.

As you can see from the link below, real taxes per capita are much higher now than before the so-called Reagan and Bush tax cuts, even in the middle of a severe economic downturn. Real taxes per capita were about 18% higher in FY 2010 than they were in FY 1980. If you go back to FY 2007 before the downturn, real taxes per capita were about 52% higher than they were in FY 1980. Despite the large increase in tax revenues, we are running far more massive deficits than when the revenue was much lower.

http://boards.fool.com/taxes-and-spending-per-capita-in-2005...

Deficits are not a result of a lack of revenues any more than celebrities going bankrupt is a result of lack of income. The problem is fiscal irresponsibility. If you give more money to someone who is irresponsible, it won't cure their irresponsibility.

Since Democrats are always going on and on about the Bush tax cuts, a few weeks ago I suggested that Republicans should offer a deal to Democrats:

"Republicans should offer a compromise. They should agree to roll back taxes to the way they were before Bush became President in exchange for an agreement by Democrats to roll back spending to the way it was before Bush was President.

Of course Democrats will never go for it because that would mean reducing spending from about 25% of GDP to 18.2% of GDP."


http://boards.fool.com/republicans-should-roll-back-bush-tax...

By the way, I think that if Buffett is going to do any teaching, then he should confine himself to things within his circle of competence like business and investing. Economics clearly does not fall within that circle.

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Author: JeanDavid Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180203 of 210470
Subject: Re: Teaching Date: 8/29/2011 1:59 PM
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buffett wants to allow those with huge unrealized cap gains to gift those gains tax free, still with me ? how does that create jobs or reduce the deficit ?

Most charities spend their gifts as fast as they come in. Part of it goes to salaries of employees who proceed to spend it. This improves the businesses nearby. I operated a little business long ago. When we went out of business, a couple of our suppliers went out of business soon after. I suppose the business I brought them was not a huge amount, but it may have been the difference between making money and losing money. This is really a case where trickle down works.

The salaries paid get taxed. The the businesses the charity deals with are taxed many ways. It is not like the charities send their gifts to numbered Swiss bank accounts.

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Author: LONGREITS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180204 of 210470
Subject: Re: Teaching Date: 8/29/2011 2:03 PM
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Is real taxes per capita what we are after? Or are we after taxes as a percentage of income?

The wealth gap has never been wider. The taxes George Soros pay, or those that mediocre S&P 500 CEOs pay, skew per capita numbers. Arguably per capita numbers have never been LESS relevant as the concentration in wealth has never been greater.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180205 of 210470
Subject: Re: Teaching Date: 8/29/2011 2:09 PM
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But I believe that Buffett’s comments on political issues such as taxes are now hurting him, and possibly Berkshire as well.

I'm trying to figure out how this would "hurt Berkshire as well." Shareholders who disagree will sell their stock? Others who disagree won't buy it? An elephant walks by, but the owner doesn't like the fact that Buffett has a (modestly) different political opinion, so he won't sell? What?

But in the same way in which an investor should stick to his circle of competence in investing, teachers should stick to their circle of competence in instructing.

Apparently Bill Gates should have no opinion on education or health, and an investment manager like Liaquat Ahamed should never write a history book.

These seem strange rules.

I'm going with the theory that you just don't like hearing things you disagree with, so you criticize him because he holds a differing opinion than yours.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180206 of 210470
Subject: Re: Teaching Date: 8/29/2011 2:15 PM
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Is real taxes per capita what we are after? Or are we after taxes as a percentage of income?

The wealth gap has never been wider. The taxes George Soros pay, or those that mediocre S&P 500 CEOs pay, skew per capita numbers. Arguably per capita numbers have never been LESS relevant as the concentration in wealth has never been greater.


If you are after taxes as a percentage of income, our federal tax system is extremely progressive as it is (although you might not know it from hearing Buffett and other Democrats talk). The link below shows federal effective tax rates. It shows the *total* federal effective tax rates as well as the effective tax rates of the components of federal revenue:

http://www.cbo.gov/publications/collections/tax/2010/average...

Also, keep this mind:

"...the individual income tax actually brought in less revenue when the highest tax rate was 70% to 91% than it did when the highest tax rate was 28%.

When the highest tax rate ranged from 91% to 92% (1951-63), even the lowest rate was quite high—20% or 22%. As the nearby chart shows, however, those super-high tax rates at all income levels brought in revenue of only 7.7% of GDP, according to U.S. budget historical data.

President John F. Kennedy's across-the-board tax cuts reduced the lowest and highest tax rates to 14% and 70% respectively after 1964, yet revenues (after excluding the 5%-10% surtaxes of 1969-70) rose to 8% of GDP. President Reagan's across-the-board tax cuts further reduced the lowest and highest tax rates to 11% and 50%, yet revenues rose again to 8.3% of GDP. The 1986 tax reform slashed the top tax rate to 28%, yet revenues dipped trivially to 8.1% of GDP."


From:

Why 70% Tax Rates Won't Work

http://online.wsj.com/article/SB1000142405270230425930457637...

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Author: thesaltyone Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180210 of 210470
Subject: Re: Teaching Date: 8/29/2011 2:50 PM
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I get the vibe from a lot of fellow businessmen that a tax increase would not be so hard to swallow if it included everyone. We are all in the same boat, so we all need to pony up. Very disturbing to hear that roughly 50% do not pay any federal income tax .... is this true, or am I the victim of someone's propaganda?

jg

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Author: voiceinthedin Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180211 of 210470
Subject: Re: Teaching Date: 8/29/2011 3:13 PM
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For a teacher who has so much to say about Main Street and Wall Street, Warren Buffett does not need to go to Washington to find something useful to discuss.

EF,

you would rob this nation of its founding with such logic....

Jefferson and Hamilton went at it night after night with George Washington between them. YOU might have sent Jefferson home to appease your sense of conservatism.......quite lame of you.....

you know if Hamilton had survived the duel, and Jefferson was killed instead the radical side would have won in this nation......like how Stalin was to have Trotski sp? killed in Mexico......instead all worked out for the better.......the ultra right wing is only now some two hundred plus years later threatening this nation......

Dave

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Author: voiceinthedin Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180213 of 210470
Subject: Re: Teaching Date: 8/29/2011 3:14 PM
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Longreits,

god bless you....more than concise and to the point.....

thanks,

Dave

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Author: Umm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180221 of 210470
Subject: Re: Teaching Date: 8/29/2011 3:51 PM
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"If you are after taxes as a percentage of income, our federal tax system is extremely progressive as it is (although you might not know it from hearing Buffett and other Democrats talk)."

Actually your assertion is not completely true.

Our tax system is a little bit progressive (not really extreme as you describe it) for the lowest 99% of Americans but not for the top 1%. See "Figure 6: Share of income paid as tax, including local and state tax" at the following link:

The chart is about 3/4 of the way down the page.

As Buffett belongs in that top 1%, his statements about him being taxed less are quite true.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180222 of 210470
Subject: Re: Teaching Date: 8/29/2011 4:02 PM
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"If you are after taxes as a percentage of income, our federal tax system is extremely progressive as it is (although you might not know it from hearing Buffett and other Democrats talk)."

Actually your assertion is not completely true.

Our tax system is a little bit progressive (not really extreme as you describe it) for the lowest 99% of Americans but not for the top 1%. See "Figure 6: Share of income paid as tax, including local and state tax" at the following link:

The chart is about 3/4 of the way down the page.

As Buffett belongs in that top 1%, his statements about him being taxed less are quite true.


No, my statement was very true. I said our federal tax system is very progressive, and I provided data to back it up. Also, the top 1% have the highest effective rates.

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Author: RaplhCramden Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180223 of 210470
Subject: Re: Teaching Date: 8/29/2011 4:14 PM
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First of all, Madcap, thanks for references to great tables. There is a lot of heat and not a lot of light in the media discussion. Here we can actually get some perspective on it.

You state:

"Republicans should offer a compromise. They should agree to roll back taxes to the way they were before Bush became President in exchange for an agreement by Democrats to roll back spending to the way it was before Bush was President.

Of course Democrats will never go for it because that would mean reducing spending from about 25% of GDP to 18.2% of GDP."


Of course you are referring to when Clinton was president. If you go back a little further to when Bush (pere) was president, and before him, Reagan, you see outlays typically in the 22% range, and peaking up to 23.5% under Reagan. If Obama gets it down to that, does he get a pass? Because the same data you cite does have the presumably democratic projections coming down in to the 22s, presumably under assumptions that the business cycle continues.

We do have a few jumps over 25% recently, do you suppose 2 wars, a major recession, and new medicare drug benefits have anything to do with this? Or rather I should say how much do they have to do with this? As the data you show does show, 25% is peanuts, in WWII we were over 40% for a few years.

I am personally excited that the teabaggers may force a reform of soc. sec. and medicare so that the gap between fiction and government widens and the gap between government and reality narrows.

I do think it is incorrect to suggest that there is anything obvious about the idea that tax rates on people making $250,000 or $1,000,000 or whatever should be where they are. The idea that Buffett has somehow lost it for not realizing this "obvious truth" is just more people wanting to be able to sell their own soap and hating being on the other side of the issue from Buffett.

I don't know we'd be better off with a steeper tax curve. I do know that it is not an obvious question. I do believe that in the absence of spending cuts we WOULD be better off with higher taxes, that continuous deficit is more harmful than higher taxes could be.

R:

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Author: DavidAnglin Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180225 of 210470
Subject: Re: Teaching Date: 8/29/2011 4:31 PM
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Elias,

Please send this or a similar letter to WEB. I am sure that you can revise this idea so that he "gets it" without getting his goat.

The cesspool analogy is very good.

Sincerely,

jan

:^)

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Author: NoxiousDog One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180226 of 210470
Subject: Re: Teaching Date: 8/29/2011 4:36 PM
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I get the vibe from a lot of fellow businessmen that a tax increase would not be so hard to swallow if it included everyone. We are all in the same boat, so we all need to pony up. Very disturbing to hear that roughly 50% do not pay any federal income tax .... is this true, or am I the victim of someone's propaganda?

I agree with your first contention both from what I hear from others as well as my own personal viewpoint.

As to the latter, 51% pay no NET federal income tax. They pay it, but then receive it all back in the form of credits and refunds.

They do, however, pay both Social Security, Medicare, and Medicaid taxes.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180228 of 210470
Subject: Re: Teaching Date: 8/29/2011 4:55 PM
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Of course you are referring to when Clinton was president. If you go back a little further to when Bush (pere) was president, and before him, Reagan, you see outlays typically in the 22% range, and peaking up to 23.5% under Reagan. If Obama gets it down to that, does he get a pass? Because the same data you cite does have the presumably democratic projections coming down in to the 22s, presumably under assumptions that the business cycle continues.

First of all, let's stop pretending that the President is solely responsible for spending. Not a single dollar of taxes can be raised or a single dollar can be spent without Congress' approval. Did you know that we haven't run a surplus while Democrats controlled Congress since 1969?

Secondly, why would I give Obama a pass? I'm not a Republican (and I've never been a Republican), and I have been *highly* critical of their policies (even Reagan, the Republican god). I think spending of 18.2% of GDP is *far* too high as it is, so I'm certainly not going to give anyone a pass at 22%.

We do have a few jumps over 25% recently, do you suppose 2 wars, a major recession, and new medicare drug benefits have anything to do with this? Or rather I should say how much do they have to do with this? As the data you show does show, 25% is peanuts, in WWII we were over 40% for a few years.

Yes, of course all this contributes to it, but there is nothing that says Congress *must* spend this much. Congress uses lame-ass Keynesian rationalizations to do what they want to do, and that is spend like crazy. Do you realize that government spending increased 29% from FY 2007 to FY 2009? Or that non-defense spending increased 31% from FY 2007 to FY 2009? That is an insane increase for only two years time.

By the way, war spending was $162 billion in FY 2010, which was only 4.7% of total spending. It would help to eliminate it, but we have far bigger problems than that.

As much as I am favor of limited government, I'm even more in favor of fiscal responsibility. From FY 1970 thru FY 2007 (before the downturn), tax revenue as a percentage of GDP averaged 18.2% of GDP. Spending, on the other hand, averaged 20.6% of GDP, creating an average gap of 2.4%. That sickens me, and it is only getting worse. That's not the worst of it. These results are using cash-based accounting. Proper accrual-based accounting would be *far* worse because the government would then have to accrue an expense for all those entitlement liabilities that they keep promising.

If the citizens of the U.S. decide that Big Government is really what we want, then let's raise taxes FIRST before we increase spending. What? Can't get the tax increase passed? THEN DON'T INCREASE SPENDING. If the spending is so damned important, then the citizens will demand tax increases. The point is that we absolutely have to stop making excuses why it is absolutely necessary for us to live above our means.

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Author: GanznSchmuck One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180231 of 210470
Subject: Re: Teaching Date: 8/29/2011 5:28 PM
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Elias,

Being that you are one of the most appreciated contributors to this board, please consider that if you think Buffett is waisting his time on those matters, many of us probably think you are falling in the same trap, waisting your time with those same matters as well!

Regards!

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Author: FDWBaltimore Two stars, 250 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180235 of 210470
Subject: Re: Teaching Date: 8/29/2011 5:51 PM
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I think spending of 18.2% of GDP is *far* too high as it is, so I'm certainly not going to give anyone a pass at 22%

It's actually worse than that, since 20%+ of disposable personal income and personal consumption expenditures are funded by personal current transfer receipts, which include Social Security, Medicare, food stamps, unemployment benefits, etc. Those are "transferred" from government consumption and investment expendiures to PCE, which is the largest component of GDP, at 70%. if you move those expenditures back to the government component of GDP, PCE would be 54.5% of GDP (a 16-year low, as adjusted) and government spending would be at 36.5% (a postwar high). All of thise is quite separate from whether it's fair and how it can be fixed. I just like to re-arrange the numbers simply to get a better handle on the P&L. And as someone else said, if we did this using accrual accounting, the accretion on the $50+ trillion in unfunded liabilities would add another monster number to the heap (we would need to back out of expenses current outlays on these liabilities, as these aren't expensed under GAAP while service expense and liability accretion are, less ROA on pension fund assets, etc). Bottom line, our government's P&L is pretty unrecognizable in many ways and it really obscures the discussion, in my opinion.

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Author: jwiest Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180236 of 210470
Subject: Re: Teaching Date: 8/29/2011 6:14 PM
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Apparently Bill Gates should have no opinion on education or health, and an investment manager like Liaquat Ahamed should never write a history book.

And movie stars and musicians shouldn't make political comments, unless they're Ted Nugent.

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Author: jwiest Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180238 of 210470
Subject: Re: Teaching Date: 8/29/2011 6:18 PM
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I wouldn't be so adamant against a tax increase if I felt that a tax increase would help balance the budget.

Except for the times it did, like under Clinton.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180239 of 210470
Subject: Re: Teaching Date: 8/29/2011 6:28 PM
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And as someone else said, if we did this using accrual accounting, the accretion on the $50+ trillion in unfunded liabilities would add another monster number to the heap (we would need to back out of expenses current outlays on these liabilities, as these aren't expensed under GAAP while service expense and liability accretion are, less ROA on pension fund assets, etc). Bottom line, our government's P&L is pretty unrecognizable in many ways and it really obscures the discussion, in my opinion.

I was the one who made the comment about accrual accounting. I'm an accountant, and I think the government's accounting is inexcusable. The GAO doesn't even require an accrual for the entitlement liabilities on the *GAAP* financial statements, much less the budget. I have no idea how they rationalize that. Not only that, the GAO has not been able to express an opinion on the financial statements in the 14 years since they began preparing consolidated financial statements. Can you imagine the outrage from our politicians if a publicly traded company tried to do that?

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180240 of 210470
Subject: Re: Teaching Date: 8/29/2011 6:33 PM
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And as someone else said, if we did this using accrual accounting, the accretion on the $50+ trillion in unfunded liabilities would add another monster number to the heap (we would need to back out of expenses current outlays on these liabilities, as these aren't expensed under GAAP while service expense and liability accretion are, less ROA on pension fund assets, etc). Bottom line, our government's P&L is pretty unrecognizable in many ways and it really obscures the discussion, in my opinion.

I was the one who made the comment about accrual accounting. I'm an accountant, and I think the government's accounting is inexcusable. The GAO doesn't even require an accrual for the entitlement liabilities on the *GAAP* financial statements, much less the budget. I have no idea how they rationalize that. Not only that, the GAO has not been able to express an opinion on the financial statements in the 14 years since they began preparing consolidated financial statements. Can you imagine the outrage from our politicians if a publicly traded company tried to do that?


Oops, I meant to post the link to the financial statements:

http://www.gao.gov/financial/fy2010/10frusg.pdf

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180241 of 210470
Subject: Re: Teaching Date: 8/29/2011 6:58 PM
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I wouldn't be so adamant against a tax increase if I felt that a tax increase would help balance the budget.

Except for the times it did, like under Clinton.


Yeah, that lasted long. 4 freaking years. I mean on a *sustainable* basis. The only reason that we had a balanced budget was because spending came down from 22.3% of GDP in FY 1991 to 18.2% by FY 2000. Such spending restraint is not dependable with politicians, as they have clearly proven.

Even if we let the Obama tax cuts (formerly the Bush tax cuts) expire, we won't come close to balancing the budget. Even if we match the record tax revenue relative to GDP (20.9% in 1944), we won't come close to balancing the budget.

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Author: FDWBaltimore Two stars, 250 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180243 of 210470
Subject: Re: Teaching Date: 8/29/2011 8:24 PM
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Agree fully. Thanks for the link.

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180245 of 210470
Subject: Re: Teaching Date: 8/29/2011 9:11 PM
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?As to the latter, 51% pay no NET federal income tax. They pay it, but then receive it all back in the form of credits and refunds.

They do, however, pay both Social Security, Medicare, and Medicaid taxes.



and gas taxes, and utility taxes, and sales taxes, and liquor taxes, and property taxes.





( interesting how WEB is the most genius businessman in the world until he mentions taxes ... and then he's a demented old fool <g> )

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Author: Smurfdogg One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180246 of 210470
Subject: Re: Teaching Date: 8/29/2011 9:15 PM
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it should also be noted that "freelancers" pay both halves of SS taxes and unemployment...though they can't collect unemployment if they lose their income. Lots of companies are putting people in the "self-employed" category...

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Author: Ryan68 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180247 of 210470
Subject: Re: Teaching Date: 8/29/2011 9:23 PM
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government spending would be at 36.5% (a postwar high).


How are you arriving at this figure? Is it including state and local spending?

I understand Federal gov't spending can be separated into gov't expenditures that show up in GDP and gov't transfers which show up elsewhere.

Still, if gov't spending, i.e. all federal spending, is ~25% of GDP (and that 25% can be broken down between transfers and spending) how does it get to 36.5% of GDP?

Thanks,
Ryan

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Author: Ryan68 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180250 of 210470
Subject: Re: Teaching Date: 8/29/2011 9:51 PM
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I think this is it FDW (first time linking to a self-generated FRED graph...so hoping it works...)

http://research.stlouisfed.org/fred2/graph/?g=1Tb

Or, maybe this (it gave me two options):

http://research.stlouisfed.org/fredgraph.png?g=1Tb

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Author: FDWBaltimore Two stars, 250 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180251 of 210470
Subject: Re: Teaching Date: 8/29/2011 10:00 PM
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The data are available on the NIPA portion of the BEA website. Google will take you there easily.

In a nutshell, you know C + I + G +/- (X - M) = GDP, or personal comsumption expenditures plus private investment plus government consumption expemditures and investment plus or minus net exports or imports equals gross domestic product.

Government expenditures last quarter were $5,470B annualized. The "G" component of GDP was only $3,038B. The difference is 98% explained by $2,385 in personal current transfer payments, which are counted as comsumption in personal comsumption expenditures. Government expenditures are equal to 36.5% of GDP, but the "G" component of gross domestic product is equal to 20.3% of GDP. The difference is 16.2 percentage points, which in this light makes government 80% larger as a proportion of the economy than the GDP equation states it. You can also see this in personal income data -- it's an absolutely huge piece of the pie.

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Author: FDWBaltimore Two stars, 250 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180252 of 210470
Subject: Re: Teaching Date: 8/29/2011 10:04 PM
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Here is the link to the tables:

http://www.bea.gov/iTable/index_nipa.cfm

That was all levels of government spending, by the way.

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Author: Ryan68 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180253 of 210470
Subject: Re: Teaching Date: 8/29/2011 10:10 PM
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Thanks. Yep, got ya'...the St. Louis Federal Reserve, it appears, pulls the data from the BEA; just wasn't clear if you were including state and local.

-Ryan

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Author: Umm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180254 of 210470
Subject: Re: Teaching Date: 8/29/2011 10:41 PM
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Sorry, forgot the link:

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Taxes in America are not as progressive as people are led to believe and the Mega Ultra Rich (the top 1%) do pay at the lower percentage then those right below them.

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Author: DBrown7 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180255 of 210470
Subject: Re: Teaching Date: 8/30/2011 12:10 AM
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Yipee! Finally, a thread to discuss politics on a Fool board. It's such a rare event.

Don

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180257 of 210470
Subject: Re: Teaching Date: 8/30/2011 12:58 AM
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it should also be noted that "freelancers" pay both halves of SS taxes and unemployment...though they can't collect unemployment if they lose their income. Lots of companies are putting people in the "self-employed" category...



yes. Been There, Done that.

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Author: voiceinthedin Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180264 of 210470
Subject: Re: Teaching Date: 8/30/2011 9:28 AM
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If the citizens of the U.S. decide that Big Government is really what we want, then let's raise taxes FIRST before we increase spending. What? Can't get the tax increase passed? THEN DON'T INCREASE SPENDING. If the spending is so damned important, then the citizens will demand tax increases. The point is that we absolutely have to stop making excuses why it is absolutely necessary for us to live above our means.

MC,

that sounds so great....it is total bunk over time.....

you know before Queen Victoria came to power and the English empirer really took off the ratio fo debt to GDP was 250%......because of Adam Smith's policies failing......of course in his fifth book he advocated for better policies on taxation and govt interferrence in order to level the playing field of the British economy......

We are not there yet.....but in the coming years we will see a much more robust rise in the power of the US......

some suggestions.....get rid of the cap on income that is taxable for the payroll tax.......raise capital gains taxes some......make the income tax still more progressive by lowering it on laborers......

this will cut social spending longer term.....in other words pay folks to work.......stop the shame of this nation that we work for not......

Dave

PS I brought up Smith's fifth book again.....please challenge again for a link.......you'll get one......aint life grand.....

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Author: gregoryvg Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180272 of 210470
Subject: Re: Teaching Date: 8/30/2011 12:12 PM
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I'm kinda surprised, as a businessman, Buffet doesn't address the other side of the issue some - the spending. Maybe part of the solution (to a balanced budget) are increasing taxes, but the bigger part has to come from spending less. But I guess that wouldn't make him as popular if he mentions cutting Medicare, Medicade and Social Security. Tax the rich plays better.

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Author: hclasvegas Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180273 of 210470
Subject: Re: Teaching Date: 8/30/2011 12:16 PM
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<< Tax the rich plays better.>>

sure, let the conman fool you. should unrealized long term gains be taxed at 15 % prior to being gifted ? guys like buffett and gates dont care about the tax benefits, right ? how does buffett feel about a tax that he couldn't avoid ? he should move to miami and take munger with him its embarrassing.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180275 of 210470
Subject: Re: Teaching Date: 8/30/2011 12:24 PM
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I'm kinda surprised, as a businessman, Buffet doesn't address the other side of the issue some - the spending. Maybe part of the solution (to a balanced budget) are increasing taxes, but the bigger part has to come from spending less. But I guess that wouldn't make him as popular if he mentions cutting Medicare, Medicade and Social Security. Tax the rich plays better.

You might as well read what Buffett actually wrote on the subject:

"Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances...

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate."


http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-...

So Buffett wrote about the need for big cuts on "some future promises," and then he goes on to suggest that taxes need to be increased only on the top 0.3%.

One of the problems that I have with what he wrote is that he only thought that "Job one" deserved two sentences out of his whole op-ed, and he totally wimped out by not explicitly saying that he was talking about entitlements.

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Author: DrtThrwingMonkey Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180277 of 210470
Subject: Re: Teaching Date: 8/30/2011 12:34 PM
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One of the problems that I have with what he wrote is that he only thought that "Job one" deserved two sentences out of his whole op-ed, and he totally wimped out by not explicitly saying that he was talking about entitlements.

OK, for the number of sentences imbalance, but that is partially remedied, as you say, by calling it "Job one".


...and he totally wimped out by not explicitly saying that he was talking about entitlements.


Isn't this a synonym for 'entitlements': "pare down some future promises that even a rich America can’t fulfill".

I think he has waded into this debate far enough without being too explicit about exactly which 'future promises' he wants cut. But it is unfortunate that you have to read between the lines to see that some of his support for his political friends seems to be in spite of the fact that their intentions are quite different from his recommendations. For instance, do massive future health care commitments qualify as things that need to be 'pared down'? And if so, how is that consistent with ramping up those commitments, which the president wants to do?

Regards, DTM

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180279 of 210470
Subject: Re: Teaching Date: 8/30/2011 1:12 PM
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One of the problems that I have with what he wrote is that he only thought that "Job one" deserved two sentences out of his whole op-ed, and he totally wimped out by not explicitly saying that he was talking about entitlements.

OK, for the number of sentences imbalance, but that is partially remedied, as you say, by calling it "Job one".


Partially remedied? Try microscopically remedied. People hardly said a word about his talk of cutting spending.

...and he totally wimped out by not explicitly saying that he was talking about entitlements.

Isn't this a synonym for 'entitlements': "pare down some future promises that even a rich America can’t fulfill".


I obviously assumed that he was talking about entitlements. My problem with it is that he wasn't explicit. It would have been much more powerful if he was explicit. Democrats are fighting entitlement cuts tooth and nail, and I want them to not have any excuse to ignore what the rest of us know and finally was mentioned by one of their own, and that is that we have to make significant cuts to entitlements. Instead, Democrats are going to say we have to listen to Warren about tax increases, but they will ignore what he said on "future obligations."

I think he has waded into this debate far enough without being too explicit about exactly which 'future promises' he wants cut. But it is unfortunate that you have to read between the lines to see that some of his support for his political friends seems to be in spite of the fact that their intentions are quite different from his recommendations. For instance, do massive future health care commitments qualify as things that need to be 'pared down'? And if so, how is that consistent with ramping up those commitments, which the president wants to do?

Regards, DTM


See what I mean? You have proved my point. Because he wasn't explicit, you don't know what he was talking about either. Don't ask *me* if massive future health care commitments qualify. It's impossible to figure out from what he wrote.

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Author: Ryan68 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180282 of 210470
Subject: Re: Teaching Date: 8/30/2011 1:33 PM
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Buffett has said (paraphrasing here and going from memory, so double-check) the tax issue was sort of, kind of, cover for the spending cuts. His plan raises, by his own calculations $50 billion a year or thereabouts. Which is pretty minor, in the scheme of things. So, it seems he just doesn't like the prospect of, say, cutting entitlement spending on the Middle Class and poor without asking the wealthy to pay more in taxes.

He would prefer to see a deficit of around 2% (which with normal GDP growth would shrink the debt-to-GDP ratio) of GDP. As MC points out, Buffett taken at his word is talking about large spending cuts (reigning in the growth of spending more like it).

I don't know why he chose goofy math (by any normal definition of income and taxes, there is no way his employees pay an average 36% effective tax rate), and Class Warfare rhetoric.

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Author: karensie Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 180306 of 210470
Subject: Re: Teaching Date: 8/30/2011 4:47 PM
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"Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues."

I would drop the hoax that Social Security and Medicare are "insurance programs" with "lock box" financing and just admit that they are a "pay as you go" welfare program for the elderly (not that there is anything wrong with that). As I understand it, President Roosevelt had to sell the program as an "insurance policy" to get it through Congress.

Means testing for social security is one thing I suspect the "wealthy" would be willing to accept. I don't consider myself "wealthy" and I would be very willing to accept that. I'm already subject to taxation on a portion of my Social Security.

If all earned income were subject to withholding, the percentage could be lowered for both the individual and the company (and of course the wealthy would be paying more).

And lastly, I suspect the only way to tax the "underground economy" (I'll cut down your tree for $800 cash in $100 dollar bills or $1000 check) and pay for some modified form of health insurance that covers virtually everyone is a form of "consumption tax". Perhaps food (unprepared) and medications could be exempt. In my area all County taxes go to cover state mandated Medicaid and the only available County income comes from a 8.5% sales tax.

.....a few thoughts from someone with no power to have any meaningful input.

Tim

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