Thursday, November 29, 2012

My View

Random ruminations from your resident curmudgeon...

Money, or capital, is agnostic. What do I mean by that? Simply put, capital is going to be employed or used where there is a high probability of safety and the best return possible commensurate with that safety. Those who make decisions about where to employ capital are not going to put it at risk without an appropriate return, and they are going to work to protect that capital. One way that capital is protected is to minimize the effect of taxes. Keep as much of your capital as possible without having it confiscated by the government. Now many of you may have read that last statement and said that is typical of a cold hearted conservative, but a funny thing has happened this week. Costco Wholesale Corporation, whose principals Jeffrey Brotman, James Sinegal, and Craig Jelinek were all large contributors to the Obama campaign, has declared a special $7 per share dividend, costing the company over $3 billion dollars. That dividend will be paid before the end of the year, when taxes are expected to go up and dividends are projected to lose their favorable tax treatment and be taxed as regular income. What this company has done is pay their principals and shareholders in the most tax efficient way possible, thereby preserving the greatest amount of capital for those beneficiaries. And Costco is not alone, as Tyson Foods (another big financial supporter of the Democrats), Wynn Resorts, and other companies look to preserve capital and avoid taxes. And there is nothing wrong with this. It is this fact that Washington continually fails to grasp: that capital will be employed in the most efficient way possible and will be used in the most tax efficient ways possible. Raising the tax rates will result in no more revenue coming in to Washington than currently does for this reason.

My mind works like lightning: one brilliant flash and it's gone.

While there is a lot of focus on income taxes and the impending "fiscal cliff" that happens December 31st, look for the Obama Administration to raise other taxes to siphon off more money from American workers. One area to pay attention to is the resurrection of the global warming hoax and the attendant taxes that will be implemented to arrest climate change. One of those taxes that will probably come up soon after the income tax issue is resolved is a carbon tax. This tax would be used to fund more green energy projects- as if 34 failed green energy companies in the first term of the Obama administration weren't enough- and more importantly, to force less automobile use because of the price of gas.  Stephen Chu, Obama's Energy Secretary, has made it his- and by extension- the Obama Administration's- stated goal to have the price of gas match what Europeans pay. If you didn't know, that is well over $5 per gallon. Stay aware of what happens once this fiscal crisis is past and see if we don't have another "climate change crisis" as a way to raise more tax revenue and to change your lifestyle.

I recently went to a very emotional wedding. Even the cake was in tiers.

Elections have consequences, and almost immediately after Obama was re-elected, companies began laying off large numbers of workers. Why? The hope was that if Mitt Romney won the election, there would be a serious effort to repeal Obamacare or gut out the most expensive parts. The election results meant that would not happen, so companies, faced with a staggering increase in health care costs that have been mandated under Obamacare, began to cut their workforce to contain those costs. To date, over 70,000 announced layoffs have occurred, and many more are expected. Couple these layoffs and those to come with an increased tax burden, and the economy is going to have a difficult time growing. You know... it sounds so academic to say "the economy" is going to struggle. The reality is that this election meant that you and I, the producers, income earners, and job creators, are going to struggle. Our communities are going to struggle. Charitable organizations are going to struggle. Prepare for a long trek through a dismal economic period. Elections do have consequences.

Build a man a fire and he will be warm for a day. Set a man on fire, and he will be warm for the rest of his life.

And that, my friends, is my view.

Friday, November 23, 2012

My View

Random ruminations from your resident curmudgeon...

Thanksgiving Day has come and gone with copious amounts of food consumed and an orgy of shopping has begun. For many of us, we have spent time with family and now the focus shifts to shopping and preparing for Christmas. The hum of daily life now turns into a roar as we shop and spend.

The beauty of Thanksgiving is that it calls all of us to focus, even for a brief time, not on "things", but on what we really deem to be important, the aspects of our life for which we should be thankful. Family, health, and daily provision move to the forefront.

Those transcendent blessings are often drowned out by daily life, by the choices we make and the demands forced upon us. We often bemoan the pace of life which crowds out a sense of peace and thankfulness.

Although our times are hectic, one of the most tumultuous times in the history of our nation was the Civil War. In the midst of this ferocious internecine strife, Abraham Lincoln issued a Thanksgiving Proclamation that calls to us today to remember the transcendence of the blessings that the nation enjoyed in that difficult time. That proclamation speaks to us today.

Here it is in its entirety:

The year that is drawing toward its close has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added which are of so extraordinary a nature that they can not fail to penetrate and soften even the heart which is habitually insensible to the ever-watchful providence of Almighty God.

In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign states to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere, except in the theater of military conflict, while that theater has been greatly contracted by the advancing armies and navies of the Union.

Needful diversions of wealth and of strength from the fields of peaceful industry to the national defense have not arrested the plow, the shuttle, or the ship; the ax has enlarged the borders of our settlements, and the mines, as well as the iron and coal as of our precious metals, have yielded even more abundantly than heretofore. Population has steadily increased notwithstanding the waste that has been made in the camp, the siege, and the battlefield, and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy.

It has seemed to me fit and proper that they should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow-citizens in every part of the United States, and also those who are in foreign lands, to set apart and observe the last Thursday of November next as a day of thanksgiving and praise to our beneficent Father who dwelleth in the heavens.

And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners, or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the imposition of the Almighty hand to heal the wounds of the nation and to restore it, as soon as may be consistent with the divine purpose, to the full enjoyment of peace, harmony, tranquility, and union.

As we move back into the rhythm of our daily lives, we are faced once again with struggles, political strife, and financial challenges. The call of Thanksgiving is to remember that despite these challenges, we are a blessed people. We have blessings that are bigger than daily life and its struggles.

May this time of Thanksgiving be a time of thankfulness that continues throughout the year.

And that, my friends, is my view.

Tuesday, November 20, 2012

Even Without Hockey, Predators Keep Making an Impact

Even though the NHL has taken a hiatus, that doesn't mean that the Nashville Predators have stopped being deeply involved in our community. The organization continues to make an impact in the lives of middle Tennesseans through numerous outreach efforts and by just being a good citizen.

As most of you know the Predators brought the entire game experience to a house league Pee Wee game at A-Game Ice Rinks in Franklin. You can watch the video of the Smash Mob here.

The event may appear on the surface to be just a fun gathering of Predator fans with nothing to do, but have no doubt that these young players and their families were positively impacted by the support of the Predators and their fans.

While the activities centered around the ice are fun and provide a positive experience to young hockey participants, the Predators continue to to impact lives that are far away from the hockey rink. The DNA of the organization has the team and its charitable foundation focused on the needs of those that are less fortunate and need a boost.

Today, the Predators Foundation and members of the front office and coaching staff delivered turkeys and food baskets to families at 9 organizations around the area. I caught up with several of the Predators at Community Child Care in Franklin.

Some of the sacks of food prepared by the Predators that were being delivered to Community Child Care Center. Along with the food sacks, each family also received a whole turkey.

In the foreground is the Director of the Predators Foundation, Rebecca King. It is not just the Predators Foundation that gets involved with these worthwhile activities, however. Joining Rebecca at this location were Predators Special Assistant Brent Peterson and Strength and Conditioning Coach David Good.

Gnash was there to make a grand entrance as well.

Gnash was there to entertain the kindergarten class and...

once they warmed up to him, the children had a great time with Gnash, Coach Peterson, and Craig "Partner" Baugh

Community Child Care was established in 1971 to serve the needs of the low income community in Franklin by providing a safe and nurturing environment. Currently, Community Childcare has 73 children enrolled , all from families that receive some form of public assistance.

The Predators "Partner" Baugh, Community Child Care Directors Matthew Cochran and David Praet, Gnash, Predators Special Assistant Brent Peterson, and Community Child Care Board Chairman Mark Blake.

Two very disparate events, yet two similar outcomes. Lives impacted by by an organization that has shown time and again its commitment to making a difference in our community. Young hockey players that were awed at a spontaneous show of support. Families that without this generosity would have been wanting in this time of celebration. Both groups touched and lives positively impacted by the Predators.

Yes, hockey as a game has frustrated many fans because we don't get to see our game, the sport we love, on the ice.

Yet the Predators organization has shown that they recognize that life and its needs do not stop even when their sport has.

And for that, we in Nashville are thankful.

Thursday, November 15, 2012

My View

Random ruminations from your resident curmudgeon...

Just over a week after the election, and Obama has ramped up into full class warfare mode. In his first press conference, he said that the recent election has given him a mandate for raising taxes on the rich. He is insisting that those households that make more than $250,000 should pay higher taxes. This is his first step in "curing" our deficit problems. By not extending the tax cuts for those making more than $250K, the Congressional Budget Office (CBO) estimates that in 2013 and additional $42 billion in taxes will be collected and in 2014 the amount will be $38 billion. Folks, our government spends $3.6 TRILLION per year. The increased tax collections from taxing the "rich" amount to 3 - yes, THREE, days worth of government spending.  And understand that there are implications to increasing taxes, one of which the CBO calculates will cost the economy 200,000 jobs. I have no doubt that to move toward curing our nation's financial problems, there will have to be tax reform (not necessarily increases. More on that in a moment), but there has to be serious discussion about entitlement and spending reform, none of which have occurred. Look past this charade and realize that we have a spending problem in this country that has to be addressed if we are going to get back on sound financial footing. No amount of class warfare and demagoguery by Obama or the left will change that fact.

My new dog is a rescue dog. He rescues food from the table, socks from the laundry room, and my shoes from the closet.

There is going to be significant and often heated discussions about taxes in the coming days and weeks. Here are some things you should know (WARNING: ECONOMICS AHEAD) about what is being discussed and how it impacts you. The nominal tax rate is the stated tax rate for a particular income level. For example, if a household has a gross income of $70,701 to $142,700, you are in the 25% tax bracket. The marginal  tax rate is the rate that applies to earning one more dollar of of income. It is the change in our tax obligation if our income rises. For instance, if a family has an income of $142,000 and they have an opportunity to increase their income by $10,000, the tax on that will not be 25%, but 28% as the additional income moves them into a higher income tax bracket. The effective rate is how much of the income does the government actually capture. For instance, my family that was just getting ready to move into a higher tax bracket may offset that move by increased deductions, such as moving to a bigger house and paying more mortgage interest or increasing charitable contributions. All of us try to legally lower taxes by lowering our effective rate. We may contribute more to charitable enterprises and claim as many legal deductions as possible so that we are paying less in taxes. As we debate tax increases, be aware that most families have a limited ability to manage their effective tax rate. Our ability to make certain deductions and legal tax saving moves is limited and will be further limited if certain deductions are lowered or eliminated. And this means that raising tax rates will fall squarely on our shoulders, not the "rich" that Obama was to punish.

My fitness goal is to weigh what I told the DMV I weighed.

While there is a lot of focus on rising tax rates if Congress fails to act by January 1, there is an aspect of the fiscal cliff that hasn't been discussed very much. But it will be. That discussion will center around the Alternative Minimum Tax (AMT). Currently, there is a patch in place that keeps most taxpayers from being affected by the AMT. If the AMT is not extended or modified, approximately 33 million taxpayers will fall under the AMT. What does that mean? A very large- and unexpected- tax liability for the current tax year. If Congress does not act on extending the AMT, then it becomes retroactive for 2012. What happens then? It creates a minimum tax rate for filers of 28%. Not only that, but child care costs are no longer deductible. Charitable contributions will not be deductible (think that will crush non-profit organizations?). Real estate taxes will not be deductible. State income taxes will not be deductible. These are standard deductions that many taxpayers claim to lower their federal tax liability. The effect of this is to increase marginal tax rates well beyond the 28% level (see the item above for the discussion of marginal tax rates). The effect to every tax payer is going to be more of their income subject to taxes. Think that is going to help a struggling economy? Pay attention to the battle that is occurring about how to deal with the fiscal cliff. All of us that are paying taxes are going to be dramatically impacted, and not just by raising tax rates.

My cooking is so awesome even the smoke alarm cheers for me.

And that, my friends, is my view.

Thursday, November 8, 2012

My View

The recently completed national election is one of the best examples of our numerous freedoms. All of us had the opportunity to vote without oppression, and our nation enjoys the freedom to elect the leaders we feel will best lead our nation or to peacefully dissent from those results.

Those freedoms and all our liberties were purchased at a great price. Throughout history, men and women have valued our freedom and defense of this great nation more than themselves. Some have made the ultimate sacrifice to defend our freedoms. Some have suffered physically. All have sacrificed time away from their family and their physical comfort in service to their country.

On this day where we honor our veterans, join me in thanking those veterans that are with us and remembering those who have gone before. We thank those that even now are defending our country and bringing the light of freedom to oppressed people. We stand on the shoulders of these giants. We enjoy a free society that is the envy of the world because men and women have sacrificed and are sacrificing for our safety and our freedom.

Thank you to our veterans. Thank you for your service and your sacrifice. On this special day and every day, we honor you and remember you.

Wednesday, November 7, 2012

My View: The Real Impact of this Election

The passion that the election stirred still runs high. One side exults in victory, while the other examines what went wrong and tries to improve. Snark reigns on both sides. Reasons for victory or defeat are analyzed and dissected.

Yet in a few weeks, the election will be behind us and we will get back to business as usual.

Only this time, it will be in an environment that has permanently changed.

We can talk about women's rights to abortion and their reproductive systems. We can talk about the U.S. being less jingoistic and a good world citizen. We can talk about "fairness" and the government providing a level playing field.

And none of this matters.

Because we as a nation are heading toward bankruptcy.

And we have done it to ourselves.

Now before you say this is sour grapes from a conservative that saw his candidate lose; before you say it is an alarmist reaction to take the sheen off an Obama victory, consider this: we now have an electorate that has control of the purse strings with the power to vote themselves continuing increases from your wallet.

Abetted by an indifferent body politic over the years, we have created a dependency class in this country that now has grown to the point that it can control an election. More importantly, it controls the access to your earnings. That control will not be relinquished by those that have it. They have seized control and they have no skin in the game. Your money is now theirs.

That is a formula for economic ruin.

Here is an excerpt from an essay by Porter Stansberry. He says it about as concisely and clearly as anyone:

This kind of progressive tax structure, where a tiny fraction of the population pays for essentially all of the government's spending, creates the illusion that the government and its services are free. Our system is a lie. The lie is that you can live at the expense of your neighbor.

Yes, it sure seems true right now. Today, about 10% of the population pays for roughly 75% of all income taxes. Looks like everything is working out the way the voters want… They want more government services… They want free "Obama phones"… and EBT cards that can purchase luxury items and booze… and discounted housing… and cheap mortgages… and free education… and free health care…

They want it all. And they will vote for it every time. More and more.

By 2011, 49.1% of American households received some form of direct benefits from the federal government. As a result, more than 60% of Americans now receive more benefits from the federal government than they pay in taxes.

Folks who are the recipients of this largesse have developed sophisticated arguments to explain why this is "fair" and "right." But the truth is, it doesn't really matter what they say. In a democracy, every argument about what's legal eventually comes down to the ballot box. And there's no way the 10% who have to pay can compete with the 90% who don't when it comes to a vote.

And so… since 1960, the average federal tax burden per family in the U.S. has soared. In real dollars (indexed to 2011), the tax burden in America has gone from $11,500 per household to almost $25,000 annually. Just ask yourself this question… how can the median household, which earned $50,000 in 2011, afford to spend half its income on taxes? Obviously, it can't. And by having sharply progressive taxation, it doesn't have to… at least on paper. We'll come back to this in a minute.

First… even though the mob can clearly vote itself whatever tax structure it wants… the tax burden is now painful enough to seriously harm the economy. That is, even though the political feedback loop is broken (the majority of voters don't have to pay the taxes, so there's nothing to stop them), the economic feedback loop can't be subverted. So the government has begun borrowing enormous amounts in order to satisfy the demands of the mob. Specifically, the federal government is now spending $3.5 trillion a year. Income taxes only raise $1.1 trillion a year. Thus, even if you doubled income taxes, we'd still run a deficit every year.

My friends… that's pure insanity. That's why every time there's a committee of one kind or another that's tasked with solving our government's giant fiscal problems, it always comes back with nothing. No one in Washington wants to admit how much trouble we're in. There's no way to fix the system. The hole is far, far too big.
No government can survive long when it spends more than twice what it collects in tax revenue. Not even when it holds the world's reserve currency and has the world's most powerful armed forces. Just ask the Romans.

Yes, I know, the feds also collect about $250 billion in corporate taxes, but that doesn't change the math in any material way. And yes, I know all about the payroll taxes that support Medicare and Social Security. But you can't count those funds against the current spending because all that money ought to be going toward the future obligations of those programs.

The problem is that our political process – where the masses are allowed to vote themselves nearly unlimited benefits – masks the underlying economics. While any given individual might not have to suffer these burdens, everyone lives within the same economic sphere. We, as a nation, have a limited amount of economic power. We have a limited amount of opportunity. We have a limited about of credit (believe it or not). And right now, the government is taking up a huge amount of these economic assets, an amount that can't possibly be sustained.

We are now spending $6.3 trillion a year on government at every level. That's $55,000 per household in the U.S. In other words, if we all paid equally for the burden of government on a per-household basis, the average household would owe the government more than 100% of what it brings in.

Obviously, if everyone had to pay these taxes… if everyone had to share equally in the burden of the government… then none of this spending would have happened. None of these debts would have accrued. And we would have never ended up in this position.

Politics masks these costs for the individual, who believes he won't have to pay. He thinks he can simply vote… and make people like me pay. But what he doesn't understand – and never will – is that the politics can't change economics.

Our economy can't afford our government. Our economy can't afford these debts – or even the debt service at any legitimate interest rate.

At some point very soon, this economic reality will overwhelm the political charade.

All of us want a nation that is strong, one that will provide opportunity for both us and our children and future generations. We want opportunity to succeed. Over the years, though, this mindset, which was the distinct majority, has been replaced with a notion that I have to "get mine" and the other person has "mine". Initiative and effort have been replaced with entitlement.

Stansberry is right- our political system is a charade that if not changed will come to a painful and calamitous end.

In this election, we have chosen to continue the charade, for in the past four years we have seen no substantive approach to addressing our fiscal crisis. In fact, we have made it markedly worse. If the charade is going to stop, you and I have to engage our elected representatives and begin to change our culture of dependency to one of independence and freedom.

Fail to do so, and eventually economic reality will overwhelm the political charade.

And it will be awful.

Like Stansberry says, "politics can't change economics." We can debate forever the role of government in our society. We can argue about the projection of American military might. We can fight over societal norms and the laws that legalize one form of marriage or the other.

None of that matters.

Because we are going to face a daunting economic reality, that if not addressed, will swamp our country.

So as this nation moves forward after the election, we have to be neither Democrat or Republican, conservative or liberal.

Instead, we have to honest.

The decisions that we face are going to be tough. The solutions will be tougher.

And if we choose to ignore them, it will not matter who is in the White House or who controls Congress.

And that, my friends, is my view

Friday, November 2, 2012

My View

Random ruminations from your resident curmudgeon...

Tuesday is election day, and some are calling this election one that will be a turning point for our country. Those of a conservative bent say that if Obama is re-elected, our nation will further deteriorate and slip deeper into a socialist economic quagmire. Those with a liberal persuasion say that if Romney wins, we become a callous nation that cares only about the wealthy to the detriment of those that are disadvantaged.

Regardless of your political beliefs, this election is very important.

But not for those reasons.

Political passions have been stirred, and voters are engaged in an attempt to get their candidate elected.

That is good. That is the way the system is supposed to work.

The importance of this election is not in having your candidate win, though. It is not in having your "side" emerge victorious when the votes are counted.

The importance of this election instead rests in the continued engagement of the electorate as difficult issues are addressed. The difficulty of the issues that we face as a nation cannot be understated. High unemployment, out of control spending, bankrupt social programs, and the lack of political will to have an honest dialogue about our problems are just some of the issues that we must confront.

Recent history has shown that we talk at each other rather than honestly discuss the issues. Scoring political points, whether one is an elected representative or a concerned citizen, is the norm. The sound and fury of this type of engagement signifies and accomplishes nothing.

The energy of this election has to continue in the form of honest discussion of the problems we face and potential solutions to those problems. The solutions will not be easy. No, they will be painful, and they will require sacrifice. Business as usual from Washington will not suffice. Trying to find political solutions that protect a party or a position will not work.

We as citizens have to stay engaged in the process. We have to demand more out of our elected representatives. Our voices must be heard and must be part of the dialogue. We have seen that Washington, left to its own devices, operates in its own best interest, which often does not coincide with the best interests of you and me as citizens.

Honest dialogue does not mean we set aside our principals. It does mean that we listen to divergent viewpoints. It means that we weigh alternatives, even if they come from political opponents. Honest dialogue transcends party or political platform. The problems we face as a nation are bigger than a political party or platform.

Harry Reid has already said that Senate Democrats would not work with Mitt Romney if he is elected President. There are Republicans that feel the same way about working with President Obama if he is re-elected.

That is not a formula for finding workable solutions to our problems, which continue to grow in severity.

This election is about direction. One side believes that government is the solution to all our problems. One side believes that the government should be limited.

We will choose that direction on Tuesday.

What happens after the election- no matter which side wins- will really determine the direction of our country.

It is up to us as citizens to be involved in the process and to determine to be heard as our nation confronts the challenges ahead.

It is too important for us not to be involved.

And that is the importance of this election.

That, my friends, is my view.