Presentation on theme: "What I Learned While Writing a Book… or… The Truth Is Out There Somewhere!"— Presentation transcript:
What I Learned While Writing a Book… or… The Truth Is Out There Somewhere!
I was sick of it! All those claims from partisans on the right and left; The barrage of TV news about crime, corruption, and our decaying society; Newspaper stories that screamed of the impending demise of the economy, taxes, and government; (Market plunges or soars) but no sense of knowing anything from them.
And I realized more: There was a whole industry growing up to uncover these “Urban Legends”!
I decided to do some research, And I set some parameters. Sources must be reliable and politics-free. Must be long enough periods to see trends. The BIG influences in each area are what matters most.
It sounded simple. It wasn’t. Measurements didn’t exist, are hidden, or were behind “pay walls”; Measurements have differing times, units, or they included information that required extensive conversion.
I wound up with a huge spreadsheet: 66 lines high (1947-2012) 293 columns wide (with figures about the economy, taxes, government, health, education, population, politics and much more.) It totaled around 14,000 data points!
To make any comparisons valid, I set these standards: All dollar values must be in inflation-adjusted dollars. I used 2012. All things population-dependent must be expressed per-capita. Other criteria would be “per household” or “per child”, etc.
Why we inflation adjust: You know that answer, don’t you! In my first job in 1959, I made $400/month. Today, with inflation, it takes $3,217 to have the same buying power.
Of course, the politicians will still say: “Because of our party, wages are up by 800% since 1959!”
First, a question: Guess which of these statements are true? 1.Deficits vary widely from president to president or party to party. 2.Some presidents had surpluses rather than deficits. 3.Only one party set virtually all deficit highs when it was in power.
None are true! Every president since Eisenhower has had a deficit over his tenure. Deficits adjusted for inflation have been remarkably similar in every administration. Adjusted for inflation, deficits only started to go up in the early ‘80’s --- and we’ll talk about that later.
Let’s look at the debt two ways*: In Current Dollars (the numbers as they were in the year), and Adjusted to 2012 dollars. *Sources:Debt: U.S. Treasury CPI: U.S. Department of Commerce
For 30 years prior to 1982+/-, The real debt was quite constant!
Let’s look at the annual debt change. Guess which administrations or parties did best? What are your guesses? Why? Here are the figures in 2012 dollars (it’s a “upside down” chart…deficits are “up”):
2013 Sources: Deficit/Debt: U.S. Treasury. Parties in power: Congressional Record.
Now, a three-question quiz 1.What was the country’s highest income tax rate on a million dollars over the years? 2.What happened to National Debt Per Person due to the Korean and Viet Nam Wars? 3.What happened to the National Debt Per Person due to the Iraq & Afghanistan Wars?
To get the answers to all those questions, let’s look at the next chart. I think some conclusions will literally jump off the page: First, I’ll let you reach them yourselves, then give you mine.
On 250k & 1MM, top brackets were around 50% and 70-78% After the cuts, the debt per person grew by 384% Sources: Taxes: IRS & Tax Foundation Population: U.S. Census Debt: U.S. Treasury
Now, let’s take that tax rate chart and put another pair of plots on it. Let’s look, in 2012 dollars, at the incomes of the top 5% of households, and how they changed compared to most families as a result of that tax change*: *Sources: U.S. Census, Internal Revenue Service
Ratio was 4x the median… and grew to over 6x the median!
We had taken government taxes, and given them back to the wealthiest among us. Let’s look, in 2012 dollars, at: (1)median household incomes* and (2)the incomes* of the top 5% of households: *Sources: U.S. Census, Internal Revenue Service
In the book, after each chapter, I ask questions. Here are some related to that graphic: Income Taxes used to be much higher. What changed as a result of their lowering, especially after the 1980’s? Have personal incomes gone up or down? What happened to our National Debt?
Some perspectives… To be in the million-dollar bracket, it takes wages of around $1,300,000 annually, $500/hour. A ten-minute coffee break is about $83. In 2010, the Forbes 500 CEO’s averaged $8,650,000 in pay, $3,326/hour. A coffee break for them costs $554!
Some perspectives, continued… In 2013, the top 25 Hedge Fund Managers: Received $846 million average pay.* *NY Times, May 6, 2014 THE TOP THREE 1.$3,000,000,000 ($1,442,307/hour!) 2.$1,600,000,000 3.$1,400,000,000 That’s BILLIONS, much taxed at a special 25% rate, and in 2013, a max of 39.6%.
Some perspectives, continued… A local example: In 2011, Conoco-Phillips executives convinced its board to split it into two companies. Pre-split, executives shared income of $21,900,000. In 2012, the year after the split, they shared $57,303,000. (In 2013, it was $52,000,000+/-)
This has nothing to do with CAPITALISM! (Capitalism involves risking personal capital for future returns…) These managers have no money of their own at risk. They are not being rewarded with these payments for taking a risk with their own money. It is not capitalism.
How many of you have invested in businesses? How many of you signed personal guarantees to banks to do it? I love capitalism! I invested all I could, and all I could borrow, in four businesses in my lifetime. Two were disasters, I lost what were, for me, big chunks. One did OK. Later I had one big winner, but it was VERY CLOSE to a disaster at one point. It turned out fine, and I’m still living off of it.
Some say the old income taxes were too high. Yet, all the top earners up until 1980 were paying those high taxes. They lived very well. How did they do it? Some say high income taxes discourage innovation: “I never had a guy with a great money- making idea say, ‘I’d do it, but the Income Taxes would be too high!’” --- Warren Buffet Here are some questions I ask in the book:
Could the changes have been predicted? Is the nation as a whole better or worse off as a result of these changes? Does the government have more or less money? Do you think individuals were hurt by the higher taxes? How well did our country do in the 1950s, 60s, and 70s when personal income taxes were much higher?
The tax code is complicated. Is this good or bad? What are advantages and disadvantages of our progressive tax system? Corporate Income Taxes are higher in the U.S. than in other countries. What is the result? Some nations do not tax capital gains, but the U.S. does. Is this appropriate? How does this affect business expansion?
I haven’t pointed out anything new today. 1.All these trends have been here all along. 2.They are absolutely true and unvarnished. 3.We didn’t see them clearly because our media and our politicians don’t give us all the facts, or they are not clearly presented. 4.These problems are our fault, because we allow them (and the “perps”) to continue.
“Suppose you were an idiot, or suppose you were a member of congress… but wait, I repeat myself!” --- Mark Twain
Here’s an example 60 minutes discussed a little (but not fully) two weeks ago: In 1993, the Federal Highway Trust Fund tax was set at 18.3 cents/gallon. It was renewed at the same rate over and over until now. But by 2012, it would take 29.1 cents to do the same amount of construction. In effect, the support for now-critical highway work has been cut by 38%!
Let’s talk about the great recession: Let me give you an analogy. Two runners start a 10-lap race. They not only are competitive with one another, their speed increases a little every lap. However, while dead even, at the end of the first lap one runner stumbles and falls behind, and falls even further behind on the next. It’s the fourth lap before his speed finally starts to increase. Meanwhile, the other runner was gaining speed each lap, and by the end of the fourth lap, he has gained a half-lap on our poor, stumbling runner. Now, look at this last slide. This shows the REAL cost of the “great recession”, as we fell behind for four “laps”!
Year Actual GDP Projected GDP* Difference from Normal 2007 $ 16,038.0 $16,038.0 Annual Cumulative 2008 $ 15,698.0 $16,496.7$ -798.7 $ -798.7 2009$ 15,432.9 $16,968.5 $ -1,535.6 $ -2,334.3 2010$ 15,747.0 $17,453.8 $ -1,706.8 $ -4,041.4 2011$ 15,858.4 $17,953.0 $ -2,094.5 $ -6,135.6 2012$ 16,244.6 $18,466.4 $ -2,221.8 $ -8,357.4 Projected change in GDP 2007-2012, if No Recession (Billions of Dollars) * Based upon average GDP growth of 2.86% per year, 61 years, 1947-2007. WE FELL BEHIND BY 8.35 TRILLION DOLLARS. It was as though we had shut down for a half year!
What you’ve seen is the result of my research in just two of fifteen chapters. In my book unlike in this talk, I don’t tell you my conclusions. I just ask the questions. You can come to any conclusions, but at least you’ll have the facts to base them on! Maybe, just maybe, we can have some thoughtful, fact-based discussion of these issues!
USFactsFirst is available at: Village Books$25.95 Amazon Print Version $26.96(?) Kindle Version$ 3.99 Here at Rotary$20.00 For More free information, including all the data: USFactsFirst.com