American Shareholders Association

WSJ Picks Up Story on Obama Not Being in the Investor Class

John Fund of the WSJ today picked up ASA's analysis of the Obama family's lack of exposure to stock markets:

Ryan Ellis of the American Shareholders Association has examined the Obama returns for calendar years 2001 to 2006 and found that, in all of those years, the couple reported a mere $1,188 in dividends in 2006 and another $2,754 in dividends in 2005. In the previous years, they reported no dividends of any kind.  Indeed, even though Michelle Obama had income from the University of Chicago's Hospital System that exceeded $1 million during the period the tax returns were filed, she appears to have neither a 401(k) plan nor an IRA for retirement contributions. In another sign the Obama household wasn't into building a nest egg, the couple cashed out $6,260 from a pension or 401(k) plan in 2000.  Given all this, Mr. Ellis asks why the Senator is so "hell-bent on pursuing punitive taxes on capital that would wreck America's retirement savings?" His answer: Perhaps it's "because, by and large, he doesn't have any skin in the game."

Obama Lays Out Tax Increase Plan on Cap Gains

It looks like investors have CNBC's Maria Bartiromo on our side.

Here and here, Obama discusses his plan to hike the capital gains tax to as high as 28%.

Meanwhile, there are apparently a whole bunch of economists in Washington who think that the Bush tax cuts are hurting the economy.  Huh?

Payroll Tax a Raw Deal for Younger Workers

In light of the Social Security Actuaries Report released this week (the one that showed a $14.133 hole for every man, woman, and child in America), Bob Novak writes about the evil payroll tax.  The real problem is that younger workers pay this tax, and have little expectation they are going to get much if any of it back.  So why not cut the payroll tax, and allow younger workers to opt out of future benefits?:

Even Republican advocates of cutting the payroll tax talk about offsetting it with reduced future benefits. That's a bargain young workers would buy in a minute, and current Social Security recipients would be assured that their pensions would not be reduced one penny. Nevertheless, Democrats would feast on any Republican hint of slashing payments...As part of the Democratic obsession with making a progressive tax system still more progressive and redistributing income, Obama actually would raise the $102,000 cap on the payroll tax, and his tax credit would not change payroll tax withholding for employees or employers. There is an open field for John McCain, if he has the wit and will to enter it.

The Audacity of Cheapness

Yesterday, I blogged on "Friends of ATR" about Obama's paltry charitable giving since 2000 (with a decided uptick once he decided to run for President).  This is further borne out by a George Will op-ed on how conservatives are more generous than liberals.

Don Luskin at the Conspiracy Blog writes about it today:

Hey, the liberal agenda is never about personal, voluntary generosity. It's about them forcing you to be generous with your money for their causes. Here are the year-by-year portions of AGI that went to charity -- and this includes his contributions to the hate-mongering "reverend" Wright.

Would You Let Obama Fill Out Your Tax Returns for You?

Dave Freddoso of NRO has a good piece today on Obama's plan to fill out your tax returns for you.  I point out that this will have a--shall we say--upward effect on tax revenues:

“At first, when they only apply it to the simplest returns, they probably wouldn’t have that much more money coming in,” says Ryan Ellis of Americans for Tax Reform. “But when they expand it — oh yeah, then they would have a lot more money coming in. People have better things to do than to fight the IRS, and they figure they’ll lose even if they do.”

Employers Seeing Lower Health Insurance Costs The More They Switch to HSAs

Kiplinger's reports today that employers who successfully switch over to an HSA plan are seeing a first-year drop of 30% in their health insurance premiums.  Going forward, their annual cost increase is only 1%--well below inflation:

The most successful employers are aggressively pushing consumer directed health plans (CDHPs), which put more control in the hands of workers, usually by combining a high deductible insurance policy with a tax advantaged health savings account. Some firms are setting the premiums for such plans at 30% below traditional plans to encourage participation, and it seems to be working. Employers that offer them as an option report that participation hit 15% this year, up from 10% in 2007 and likely to hit 20% next year.

Obamas Are Strangers to the Investor Class

Barack Obama released his tax returns since 2000 last night, and we learned something interesting about Barack and Michelle.  They have next to no stake in the investor class.

Here's what they reported in qualified dividends per year, and the implied taxable portfolio holdings from them (assuming a 3% dividend yield):

2006: $1188 ($39,204 in implied holdings with an AGI of $983,826)
2005: $2754 ($90,882 in implied holdings with an AGI of $1.65 million)
2004: $0 ($0)
2003: $0 ($0)
2002: $0 ($0)
2001: $0 ($0)

Surely, you might protest, Obama simply held securites that issued no dividends until 2005 (unlikely), or he held all his investments in IRAs, 401(k)s, annuities, etc. (more likely).  That's belied by two observations:

1. Michelle Obama earned a quite lucrative annual self-employment contract from the University of Chicago Hospital System (in some years, approaching $1 million).  Yet, Mrs. Obama didn't appear to have a self-employed 401(k) plan or a SEP-IRA to make retirement contributions from.  This implies that the Obamas are not exactly the best tax-deferred investors in the world.
2. In 2000, the Obamas cashed out $6260 from either a DB pension or a 401(k) plan.  This is a sure sign of a household that does not build and accumulate a nest egg for their future.

Why is Barack Obama so hell-bent on pursuing policies that would wreck America's retirement savings?  Because, by and large, he doesn't have any skin in the game.

Social Security Faces $4.3 Trillion Deficit

The Social Security Trustees today released their annual report which shows that Social Security faces a shortfall of $4.3 trillion over the next 75 years.  That's $14,333 for every man, woman, and child in the United States.

Starting in 2017, Social Security taxes will not longer be sufficient to pay benefits that year.  By 2041, the Social Security Administration will no longer be able to legally pay full promised benefits.

Under the intermediate assumptions, the worker:retiree ratio will fall from 3:1 today to 2:1 in 2085.

Medicare Faces $85.6 Trillion Funding Shortfall

The annual Medicare trustees report was released today, and the news (as usual) is catastophic:

• Medicare spending will rise from 3.2% of GDP today to 11% of GDP in 2080
• Medicare faces a funding shortfall of $85.6 trillion over the "infinite horizon"
• Medicare's Part A Hospital Insurance will run out of money in 2019, a mere decade from now
• If the Medicare shortfall were made up for by increasing Medicare taxes, the tax rate would have to rise from 2.9% under current law to 13.4% over time
• If the Medicare shortfall were made up for by increasing premiums on the elderly, the premium level would be between $3000 and $4900 per month by the time a child today collects Medicare
• The cost of Medicare's Part B (office visits) is expected to double every 9 years

In one sliver of good news, the long-term unfunded liability of Medicare Part D (prescription drugs) remained constant at $17.2 trillion over the infinite horizon.  However, this represents a decline from 1.5% of GDP to 1.3% of GDP.  Not surprisingly, Part D is the only section of the Medicare program with significant private sector competition.

Is Inflation Now Around the Corner?

The consensus seems to be that the Fed's actions over the past several weeks (rate cutting, brokering the Bear Stearns buyout, etc.) has stopped the bleeding.  Many think the worst is over in financial markets as a result.  The S&P 500 Index closed at 1350 yesterday, up smartly from the 1277 close of a week ago.  That 5.7% pop seems to be a signal markets are giving that stocks are pretty cheap.

But is there another shoe to drop?  If inflation is always and everywhere a monetary phenomenon (as Milton Friedman famously said), the Federal Reserve may have a double effect to all its easing.  It may have prevented a credit crisis that could slip the U.S. into a deep recession, but in so doing its "easy money" policy might foment a bought of inflation.

Rich Lowry makes that point today in NRO:

This is an economic environment that the Federal Reserve helped create. It fought a phantom deflation in 2002-2003 by cutting the federal funds rate to 1 percent and keeping it there for a year, blowing hot air into the credit and real estate bubbles. Now that those bubbles have burst in spectacular fashion, the Fed is trying to forestall or minimize a recession with more rate cuts.  In effect, the Fed is creating more dollar bills, and thus depreciating their value. This isn’t the sole cause of price increases. An ill-conceived ethanol program has driven up food prices, and global demand is bidding up the price of oil. But oil wouldn’t be at $100 a barrel if the dollar weren’t so weak. The Fed’s rate cuts benefit Wall Street by lowering the cost of borrowing and potentially homeowners with adjustable-rate mortgages, but at the cost of everyone else who wasn’t improvident in business dealings or home-buying.

Iowa Has the Highest Corporate Income Tax Rate...In the World!

It's a familiar refrain that the United States has the second-highest corporate income tax rate (39.3%) in the world, behind only Japan.  That number is arrived at by combining the federal corporate rate with the various state corporate income tax rates.

Of course, that means you could do a state-by-state combined corporate income tax rate.  The Tax Foundation did.

Interestingly, it found that Iowa has the highest corporate income tax rate in the entire world, at 41.6%.  In fact, 24 states have a combined corporate income tax rate higher than even world-leader Japan.  Even the best states (those without a state corporate income tax at all) only beat out Japan, the U.S., Germany, and Canada.

Gives a whole new meaning to "prarie socialism."

If It Keeps Moving, Regulate It...

Chances are, when we look back at this credit crisis, we'll have found that the government screwed up and created most or all of the mess.  It's usually when government tries to "help" that things get really sketchy. 

The best thing the government can do is butt out and let the markets fix this problem.  Unfortunately, the government thinks up a new way to be activist every day.  Now, the government wants to create a mortgage guild:

Licensure has three basic problems. First, any kind of regulation makes it harder to enter a profession...Second, licensing requirements don't always have much to do with being good at the profession...Finally, licensure may make consumers worse off by deterring talented people from entering a profession.