StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



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  • A Most Delightful Time Warp   5 years 41 weeks ago

    Print-on-demand may stave-off the extinction of the printed book, and satisfy those who, like me, enjoy holding books and flipping back and forth through their pages

  • Republicans For $1000, Alex   5 years 41 weeks ago

    The Republicans actually have that big tent the Democrats used to brag about. It's a fractious scne funder the canvas, but that's diversity for you.

  • Tim Russert, RIP   5 years 41 weeks ago

    Most curious thing about "Meet The Press" under Russert was that it was really "Meet Russert". The press, if all, was represented in the later part of the program by pundits, and sometimes print journalists moonlighting as pundits (hoping no doubt to develop a tv personnas to hedge against the decline of print journalism). The "Meet the Press" minute at the end of the program highlighted how little the program under Russert had to do with public officials facing the press. Hard to part with a storied brand, even if the claim of the show's "continuousness" was fanciful.

  • Andrew...Another Airline Question For You   5 years 41 weeks ago

    If that's the case, shouldn't we look at the stock of companies with airport concessions as a good buy right now?

    Great idea, until Congress hits them with a windfall profits tax.

  • Lowenstein on Needed Tax Hikes   5 years 41 weeks ago

    Since Jim has beaten me here, I'll link to his explication in 2004 of what the likely result will be of 'deficit reduction' now:

    ----------Quote-----------
    If in response to receiving $100 billion of tax revenue through a Social Security surplus Congress decides to curry favor among its constituents by increasing spending $50 billion on paper clips, B-52s, agricultural subsidies, civil service salaries, and whatnot, and also cutting income taxes by $50 billion, then the amount added to national savings is $0. The entire mechanism of surplus-and-trust fund then is worthless, no matter how many bonds eventually accumulate in the trust fund.

    ....A new empirical analysis of the Social Security surplus and its historical effect on government spending ventures a conclusion on the value of the surplus. And it surprisingly lies outside what seemed the logical bounds until now: 100% of the value of the trust fund bonds on the upside, and $0 on the downside.

    It is that the value of the accumulated Social Security surplus, represented by the Social Security trust fund, on national savings, is negative.

    From Is the Social Security Trust Fund Worth Anything? (.pdf), by Kent Smetters, PhD., Wharton School and National Bureau of Economic Research:

    ~~ quote ~~

    We find that there is no empirical evidence supporting the claim that trust fund assets have reduced the level of debt held by the public. In fact, the evidence suggests just the opposite: trust fund assets have probably increased the level of debt held by the public....

    ... each dollar of Social Security surplus appears to have actually increased the debt held by the public in the past by $1.76.
    [~~quote~~]
    -------------endquote-----------

  • Lowenstein on Needed Tax Hikes   5 years 41 weeks ago

    Problem #1: Re.: "My fellow Americans, I have a plan to raise taxes so that the budget will be closer to balance and future Americans won't have to worry about their retirement security."

    Increasing taxes to end current deficits won't do anything to achieve that objective. Current deficits are not the problem.

    Evidence: Back at the start of 2001 GAO made its long term budget projection (.pdf) assuming surpluses for years to come. No recession ... no 9/11 ...no Iraq war ... no Bush tax cuts ... surpluses accumulating for 15 years!

    The result: Annual deficits exceed 20% of GDP and are rocketing straight upward by the 2045-2055 period, and the 75-year projection is cut off then because govt can't continue to exist like that.

    That's the same projection as today for the same reason: Medicare/Social Security/Medicaid.

    Current deficit or surplus, whatever, it is dwarfed by the Big Three. Focusing on the current budget deficit in terms of "long term retirement security" is like focusing on the ice in your drink while sailing on the Titanic.

    So we don't need to hear a presidential candidate talking about budget trivialities like the estate tax or hedge fund pay. We need to hear:
    "Medicare/Social Security/Medicaid are on course to either increase your income taxes by 50% or sink the US credit rating to "junk" by 2030 -- just two-thirds of a home mortgage term away. And here's what we need to do about that..."

    Problem #2 Re. "That's the speech that should appeal to those on the Left. "

    It's easy propose tax increases that appeal to the Left. That doesn't help.

    What is needed is a general public understanding of the situation so that somebody produces both tax increases that appeal to the Right and cuts in entitlement spending that appeal to the Left.

    There'll be no meaningful fiscal progress until we get to that point, and 2030 is getting closer every year.

    So task #1: Public education.

  • Lowenstein on Needed Tax Hikes   5 years 41 weeks ago

    I believe in a lower capital gains rate (as opposed to ordinary income rates) only for those investments where the funds go directly into the company's coffers. Rewarding speculation where one stockholder buys the stock of another, which does exactly nothing to benefit the economy (other than making brokers richer), is counterproductive and is a gift to capital from labor. When Bill Gates' tax rate (i.e. 15% on capital gains from selling MSFT) is a third of mine when social security and medicare are added in, then something is terribly out of whack in this country.

  • Lowenstein on Needed Tax Hikes   5 years 41 weeks ago

    6. Tax capital gains as income. The theoretical rational for not doing so has little to no real-world evidence in its favor. Doing so would not only raise revenue and (for once) favor work over ownership, but end any number of tax-driven games. Do this and #4 and most people could do their taxes in twenty minutes.

  • Lowenstein on Needed Tax Hikes   5 years 41 weeks ago

    As one of those "righwingers", I agree with you about the failure to cut spending. This is one of my biggest complaints with President Bush and the Republicans in Congress....their lack of courage to reduce the size of government. I hope that before it is too late, we will have leaders in all levels of government who will have the fortitude to reduce the size of government...then and only then can we have lower taxes.

  • The Smartest Business Traveler is in Seat 2B   5 years 41 weeks ago

    American might not make money on the $15 additional fee, but it will save weight on each flight. As I mentioned before, if they can save an average of one pound per flight it saves $20 million annually in fuel costs. Multiply that by 50 or 100 or 200 pounds per flight and you start talking real money. The $15 is just to create an incentive to pack lighter or share bags -- it's a pittance really, but enough so that the middle class traveler will pack lighter or likely, within families, share bags.

    My husband and I often share a checked bag when we travel. Our trips are often just 4-7 days. The kids share too, so for four people we have two checked bags. I've seen many families where each kid is hauling like a pack animal. And ever since wheels put on bags people seem to pack everything but the kitchen sink.

    So American has implemented a system to make people pack thoughtfully and travel a bit lighter.

    Business travelers know the rules on carry ons like nobody else. Most experienced business travelers try to take only carry-ons to save time (no waiting at the spinning carousel). My husband can take a 10 day business trip without checking a bag.

    And American's policy might actually attract fewer family/vacation types, as they try to avoid the bag fee, thus freeing up more seats for business (which typically pay more per seat anyway).

    I'm guessing they ran the numbers and did their research before implementing the bag fee. Either that or they are truly desperate.

  • Ben Bernanke on the Budget   5 years 41 weeks ago

    "There are limits to how big the deficit and the debt can be. Soon it will begin to have effects on interest rates"

    You mean our current debt has no effect on interest rates? Is there any justification for these fear tactics that there is some debt cliff that we are about to fall off of? The effect of debt on interest rates should be linear. There have been much higher debt and deficit levels around the world without catastrophes.

    Now there is an absolute upper limit on how high taxes can go. I don't think anything has a bigger effect on interest rates and growth than Capital gains taxes.

  • Andrew...Another Airline Question For You   5 years 41 weeks ago

    Most people do seem to buy their food and drink before getting on the plane, more for variety than for price.

    Even if the concessionaires leased from the airlines, they price competitively against each other, so there's still plenty of choice.

    I did a nice roundtrip on Southwest this week. No complaints, none at all.

  • Economics in the Shadows of Darwin and Marx   5 years 42 weeks ago

    Darwin read a lot of Malthus and said it was reading Malthus that gave him his inspiration about the mechanism working in natural selection. One quote:

    "In October 1838, fifteen months after I had begun my systematic inquiry, I happened to read for amusement Malthus on Population, and being prepared to appreciate the struggle for existence which everywhere goes on, from long-continued observation of the habits of animals and plants, it at once struck me that under these circumstances favourable variations would tend to be preserved, and unfavourable ones to be destroyed. The result would be the formation of a new species."

    Hmmm, Googling around I find that and a lot more of Darwin on Mathus here.

    My memory is that Darwin also mentioned Adam Smith somewhere or other, as would be natural in knowing Malthus so well, but I won't swear to it, and it was Malthus who had the big impact on him.

  • Andrew...Another Airline Question For You   5 years 42 weeks ago

    "US Airways is about to start charging a few dollars for soft drinks..."

    Just for the record, with no judgment made, the industry seems to be moving to how the European discount airlines do it.

    They are really cheap on the basic fare -- make Southwestern's fares seem exorbidant -- but charge for everything extra, they charge for a cracker, and more for one that's not soggy. It's up to you if you want a cracker or not.

    If US Airways is charging $2/can, shouldn't we expect that the one alternative passengers have to buy water and soda --the concessionaires at the airport -- to compete by selling the same thing for, say, $1.75?

    This is getting to sound like the economics of movie theaters, and why popcorn is so expensive in them.

    Of course European airlines and movie theaters don't have TSA regulations messing with their pricing models.

  • Economics in the Shadows of Darwin and Marx   5 years 42 weeks ago

    The natural laws of Physics were stolen from economic theory too. You heard it here first. . . .

  • Economics in the Shadows of Darwin and Marx   5 years 42 weeks ago

    It's even more amusing if you follow the insight--Darwinism is just the application of 18th/19th century Anglospheric economic theory to our view of the world, but pretends that the theory is natural rather than intelligent.

  • McCain vs Obama Tax Policies   5 years 42 weeks ago

    AP wire says that Obama just today said he'd eliminate the SS payroll tax cap for folks over $250. I don't understand how the campaign could deny this is a plan or why it was not included in the TPC calculations.

    You're looking at strong tax avoidance with an effective marginal federal tax rate at 56-57%. Probably get up to a 65%+ (or higher if you live in say Montgomery CTY) for folks at $1 million+.

    OTOH, this would create a ton of short-term revenue especially if SS benefits are not increased as the cap is released.

    By CHARLES BABINGTON, Associated Press Writer 19 minutes ago

    COLUMBUS, Ohio - Democrat Barack Obama would apply the Social Security payroll tax to all annual incomes above $250,000, which he says would affect the wealthiest 3 percent of Americans.

    The presidential candidate told senior citizens in Ohio on Friday that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make, while millionaires and billionaires are only paying it on a very small percentage of their income."

    The payroll tax is now applied to all income up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to incomes between that amount and $250,000. But all annual income above the quarter-million-dollar amount would be taxed under his plan.

  • McCain or Obama, who has the better economic policy?   5 years 42 weeks ago

    I was too busy running the tax model on Capitol Hill to finish my masters degree in the late 1970s, although I took a number of doctoral level courses. Most of what I learned in economics came by way of the congressional policy process as we analyzed and debated the studies and assertions thrown at us from every direction. During that 11 years, I was fortunate to work with some of the best economists around and a few of the worst too.

    Distribution is a very important part of economics. If the middle class, which invariably carries the heaviest fiscal load, ever decides that the wealthy aren't paying their fair share of the burden, then watch out. Once voluntary compliance with the tax system goes, you're in real trouble. Take a look at Italy sometime. Approximately one-third of Italy's economy operates underground. Keeping the incentives balanced is very much a part of classical economics.

    It is possible to go too far in exempting the lower middle class from taxation. If they feel they have no investment in their government, the system loses balance. The wealthy are always well represented on Capitol Hill, I can assure you.

    Sure, I'd like to see a true capitalist as president. The presidents I thought were true capitalists, Nixon, Reagan, and Bush 43, turned out to be otherwise. Nixon imposed wage price controls. Reagan came the closest, but what true capitalist would triple the public debt in eight years like he did? Bush 43 will fall just short of doubling the public debt in his eight years, and his bills will keep coming in for a long time. Political expediency has trumped good economics at every turn in his administration, e.g. steel tariffs; Medicare Part D; promoting the highest incarcerartion rate in the world except for Russia; and by increasing federal spending by the highest rates since Lyndon Johnson, just to name a few. Once you've got the power of the presidency, rarely does one avoid meddling in markets or overreaching at great cost.

    I've learned to have a lot of respect for "ignorant citizens." In my experience talking to them, I've found them to be refreshingly free of ideological baggage, and they ask the basic, hard questions: How come gas prices are so high? Why can't I get proper health care? Why is my son in Iraq? It's only when you get educated that you ask questions like: How can we get the speculators out of crude oil commodity contracts? How can I get enough people into health savings accounts to change the incentives for providers? My son's in grad school, but doesn't somebody have to protect us from weapons of mass destruction in Iraq and now Iran?

  • McCain or Obama, who has the better economic policy?   5 years 42 weeks ago

    Good points, and a strong argument for present value budget estimates.

    We're going to look back on last year's 1.9% of GDP deficit as quite temporary and the lowest in memory.  There are too many expensive policies in place, too many pressures weighing on the economy, and too many entitlements going to aging Baby Boomers to return to budget balance anytime soon.

    Doug Holtz-Eakin is a real asset for Senator McCain.  If they win this November, hopefully Doug would get some influence in the White House as OMB Director or as National Economic Council Director.  Historically, with the exceptions of Bill Clinton and George Bush 41, most presidents use their economists as apologists for Rosy Scenarios and for "investments" for favored constituencies. 

  • McCain or Obama, who has the better economic policy?   5 years 42 weeks ago

    How much, if anything, would they do to lift the terrible $3.9 trillion of additional public debt that President Bush has incurred...

    That's over eight years, and his official deficits, like the puny $163 billion last year, have actually been below the average for the last 35 years.

    Ah, but Medicare Part D, that's $8.4 trillion present value all by itself, and he added $7 trillion of that in just one year (picked up a few votes in an off-year election!) and it's running about another $450 billion annually -- more than two times, approaching three times, the Iraq war.

    But then even that's pretty small compared to the $41 trillion present value for Medicare and SS combined, growing >$2 trillion annually (that's an annual deficit to be proud of!) ... which still, doesn't include Medicaid etc.

    Which candidate is going to talk about closing thisgap? Neither's going to go anywhere near it, of course. (How does one campaign to cut taxes or enact national health care while acknowledging an >$2 trillion annual accrual deficit?)

    But of the two mute blind mice, McCain did pick Holtz-Eakin, who has been big on the subject, as an advisor, so implicity it would seem he's aware of the issue. And while earmarks are a sub-triviality in budget dollar terms they are a meaningful sign of Congress's wasteful spending-for-votes culture, so attacking them might possibly make a larger political difference, maybe. (Here in NYC one of the most important steps in bringing about the huge drop in the crime rate was busting subway turnstile jumpers.)

    OTOH, from Obama I've seen budget-closing zip other than more tax cuts for most offset by more spending on national health care for everybody. More entitlements! Though maybe I've missed something.

    But if I haven't, my least bad choice follows.

  • McCain or Obama, who has the better economic policy?   5 years 42 weeks ago

    ...if you ask low-income workers, the poor, those without health insurance, and those whose jobs have been outsourced, Senator Obama would be favored...

    Dr. Davis, you are commingling economic policy with distribution of tax money. Obviously, low income people with no economic training will prefer the candidate who promises them the largest government handouts. Given their self-interest, my choice will always favor the candidate whose tax money redistribution plan is least favored by them.

    Regarding economic policy, shouldn't we favor the candidate who comes closest to supporting true capitalism (with minimal regulations), free trade & markets, low taxes, and low tariffs? Why would we wish to poll ignorant citizens about this? That would make as much sense as asking high school dropouts which medical science research proposals deserve funding.

  • McCain or Obama, who has the better economic policy?   5 years 42 weeks ago

    None of the Above

  • Very Good, Mr. Brooks, Very Good   5 years 42 weeks ago

    Oh my. Another blow to rational choice theory.

  • Very Good, Mr. Brooks, Very Good   5 years 42 weeks ago

    "If the people with whom you interact are willing to leverage themselves to the hilt to buy things--housing, durable goods, whatever--then they bid up the prices of these things when you have to buy them as well, even if you are trying to behave more prudently."

    Ahhh . . but here comes the lovely part. When the neighbors can no longer afford those expensive goods (and they're trying to raise cash to get through this month) they put those expensive goods out in their yards with sale tags attached. Who says you have to pay retail?

  • Very Good, Mr. Brooks, Very Good   5 years 42 weeks ago

    So state lotteries are a bad thing, but does the conservative Mr. Brooks support other less regressive, or dare we say more progressive ways for states to raise revenue? Is demagoguing all tax increases getting in the way of a reasonable tax policy at all levels of government.

    Our credit industry freely takes advantage of our lack of sophistication and basic understanding of finance to their own benefit. Do we need new laws to regulate the industry, better financial literacy of something else?

    We are frequently told in our country that we live in a consumer driven economy (as opposed to a producer-driven economy). The response is always to spend more, whether we are attacked by terrorists or a housing crisis. When is it OK to tell us to spend less?



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