Buffet, Is He Senile?

We are getting concerned with the sanity of Warren Buffet, the so-called Oracle of Omaha. In past months he has proposed that high wage earners pay more, challenged those to put money down against the debt and has selected his (farmer)  son as the new chairman of Berkshire Hathaway even though he has no experience in the investment area. We don't get it and are starting to wonder if he he has lost it. Could he be experiencing dementia or Alzheimers?

When you tie in some of his recent investments (Bank of America--probably the weakest of the national banks today) and his estate planning (giving away a large portion of his estate to charities), it has to make someone wonder.

What have you heard?  Are we babbling or could there something here?  Let us know.

Meanwhile, read the following article and see how out of touch he seems to be.

Conservative Tom

The Most Ridiculous Tax Challenge Ever

By Bobby Eberle January 13, 2012 7:13 am

          

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Billionaire Warren Buffet is at it again. Remember last summer? Buffet wrote an op-ed in the New York Times (imagine that) titled "Stop Coddling the Super-Rich" in which he lamented the state of affairs in America and how the "mega rich" were spared from contributing their "fair share" of taxes. Now, he has thrown down a challenge that is even more ridiculous than what he wrote for the New York Times.

Back in August, Buffet wrote that his income tax bill amounted to $6,938,744. He notes that this came out to be only 17.4 percent of his taxable income. And because of this logic (or lack thereof), Buffet came to the conclusion that the rich are getting a break and that they need to pay more.

Barack Obama loved this! He came up with a tax plan called the Buffet Rule. He gave speeches blasting the rich... saying that they didn't pay their "fair share." He noted, as Buffet did, that Buffet's secretary is taxed at a higher rate than the billionaire himself. Blah, blah blah.

Rhetoric aside, the facts are well known. The so-called "rich" fund most of the government. They pay most of the taxes. With the tax cuts of George W. Bush, half of all working Americans don't even pay federal income tax! The reason Buffet's secretary is taxed at a higher rate is because she is still earning a paycheck and paying income tax on it. Back when Buffet's primary source of income was a paycheck, guess what? He was taxed at a higher rate too. He paid his income taxes all along the way. Then, he used his ingenuity, began investing, and more and more of his "income" was made off of money he already paid income taxes on. That's why his rate is lower.

With the Buffet Plan that Obama has outlined, everyone making $200,000 or more would see his or her taxes go up. Unemployment is still high, yet Obama wants to tax the job creators even more. How is that supposed to create jobs?

Now, Buffet has laid down a challenge to Congress. As reported at Fox Business: "The billionaire is now offering to donate $1 towards paying down the national debt for every dollar donated by a Republican in Congress." The offer doesn't cover Senate Republican Leader Mitch McConnell. For him, Buffet said he would pay $3 for every dollar donated by McConnell.

Perhaps Buffet wanted some air time again or was just bored, but nothing in his challenge makes any sense. The problem is not about taxes. The problem is about spending. The federal government spends too much money! Spend less, tax less. What's so hard to understand about that?

In her report, Elizabeth MacDonald at Fox Business notes that in addition to primarily paying taxes on capital gains, Buffet also lives on loans taken out against his assets, and lowers his tax bill further by deducting that interest on his returns. And he makes generous charitable contributions, which he can also deduct on his tax returns.

Indeed, Buffett's second of three contractual conditions for his ongoing pledge to the Gates Foundation reads: "The foundation must continue to satisfy the legal requirements qualifying Warren's gift as charitable, exempt from gift or other taxes."

MacDonald's best line in her analysis is this: So if Warren Buffett wants to reduce the deficit, he should encourage policies to create more millionaires, not lobby to tax them more.

This country used to be one in which someone would look at the "rich guy" and say, "I want to be like him." Now, we live in a country in which the government says, "Look at that rich guy. We will take from him and give to you." This will NOT make people more successful. All Obama's rhetoric does is promote jealousy and laziness. Buffet just adds fuel to the fire.

If Buffet wants to pay more in taxes... go ahead! Be my guest. But that would be like throwing money into the wind. Would I invest money in a sinking ship? No. I would invest money in a company that would fix the sinking ship! We need to fix the federal government, not throw more money at it.

Buying The Election Obama Style

When the history of this time in American History is written, it will be shown to be one where government officials were able to convince the public that there was an emergency and that we did not have time to even think of the ramifications of the actions they were taking.  Whether it was the mortgage crisis, the debt crisis, the debt limit crisis or the failure of GM and Chrysler, no one took a calm, reasoned approach to any of these problems.

Yes, they were problems, however, we do not think they were ones that would have crashed the economy or ended the automobile business in this country.  In retrospect, some banks might have failed but that is what should happen when irresponsible business people make bad decisions. Other banks would have stepped into the fold and picked up the pieces. 

On the other hand, had "the bright people" not warned that without government intervention, the whole system would collapse, other solutions could have been created to solve the issue. For example, when the Savings and Loans got in trouble in the 80's, the government took over the bad loans and did a work out, off the books of the S&Ls.  Why would that not have worked?  Or the government could have taken the bad loans, put them in a fund to work them out, given the banks 20% on the dollar for those instruments. The banks would have been free from the junk and could proceed on with their daily business.

The same goes for the car companies.  If one or both had to declare bankruptcy, there would have been a restructuring of the company (option 1) or it would have gone out of business (option 2.)  Had the courts or the company  selected option 2, there would have been other companies both foreign and domestic who would have picked up the plants and some of the employees. It would not have ended the car business here.  That was a scare tactic.

Instead, the government in its wisdom(???), chose to violate centuries of bankruptcy law and gave precedence to the unsecured unions over other secured creditors. Why? One can only assume it was a payback to union bosses.

Additionally, independent dealers had their agreements with the manufacturers cancelled, or should we say, confiscated. To this day, no one had been able to convince us that this was a necessary step to save the companies. Dealers are independent business people deriving their income from the sale of cars.  The companies sell the cars to the dealers who retail them to the public. The only other financial tie is warranty repairs for which the dealer is reimbursed by the company. 

Additionally, eliminating dealers drives up the cost to the public as there is less competition. In fact, in many rural areas, the dealers were eliminated causing the public to drive to the larger cities to make their purchases.

We see no reason, financially, for the car dealers being eliminated. Yet, politically there was a reward. Most dealers are independent and therefore many are Republican and they gave contributions to the party.  So when the opportunity arose to eliminate a strong group of contributors, the Obama Administration jumped at the chance.  When an analysis of those dealers who were forced to close, it was found that the vast majority had given contributions to the Republican party.  It did not matter how many cars they sold, their performance scores or their customer satisfaction (all of which were reasons the Administration professed to be using), if they gave to Republican campaigns they were forced out of business.

Now we read the White House is proposing new ways to get people out of their mortgages. In the following article we see the next bribe of the day done by this Chavez- like Administration. Will the we see another decade as a free people?

This is not the way we do business in this country. The abuse of power shown by this Administration regarding the banks and the cars companies and the recent appointments which made even though the Senate is still in session is nearing dictatorial levels. It must not be allowed to continue past January 2013!

Tell us what you think.

Conservative Tom

Salvato: Raiding of the Treasury to Bribe the Irresponsible

By Frank Salvato January 13, 2012 6:58 am

          

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A little publicized political story, if played out to the satisfaction of California Democrats (read: Progressives), would not only set the stage for a politically motivated raid on the US Treasury, it would afford President Obama, his administration and political operatives plausible deniability in any “coincidental” benefit to Mr. Obama’s re-election campaign. And if you don’t think that has David Axelrod, Valerie Jarrett and David Plouffe salivating, you haven’t been paying attention for the past three years.

According to a report by TheHill.com:

“A long list of California Democrats is urging President Obama to name a new housing regulator using a controversial recess appointment. 

“In a letter to the president, more than two dozen House members said the temporary head of the Federal Housing Finance Agency (FHFA), Edward DeMarco, simply hasn't done enough to help struggling homeowners avoid foreclosure. The lawmakers are pushing the president to name a permanent director ‘immediately.’ 

“‘FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners,’ the lawmakers wrote. ‘Installing a permanent director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy.’”

Okay, let’s first examine the FHFA. According to their website:

“The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing & Economic Recovery Act of 2008. The Act gave FHFA the authorities necessary to oversee vital components of our country’s secondary mortgage markets – Fannie Mae, Freddie Mac and the Federal Home Loan Banks...FHFA’s mission is to provide effective supervision, regulation and housing mission oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market...”

The reason the California congressional delegation is pushing for a permanent replacement for Mr. DeMarco has little to do with the well-being of California’s citizens whose mortgages are both underwater or in foreclosure. It has everything to do with 2012 being an election year. The California delegation’s letter to President Obama urging the so-called “recess appointment” of a new FHFA director presents as a gift to the Obama re-election effort. I say “so-called recess appointment” because the US Senate is in pro-forma session and it is unconstitutional for the president to make recess appointments when either house of Congress is in session. I and the rest of the Conservative and Republican rank-and-file arestill waiting for congressional Republicans to do something about the initial round of “recess appointments.” Of course, one needs a spine to stand-up to a bully, so we probably shouldn’t hold our collective breath.

I say that the letter presented to the President and his team is a gift because it is a win-win situation that indirectly provides enormous benefit to his re-election campaign.

Should Mr. Obama make an unconstitutional recess appointment to fill the FHFA directorship, the director would be able to take action, almost immediately, to mandate the re-negotiation of any and/or all of the mortgages held by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. That mandate could literally include the forgiveness of sizable portions of monies due to those organizations by mortgage holders who are either underwater, on the bubble of foreclosure or both. This is, effectively, an exercise in debt forgiveness...without the tax liability for the borrower.

Debt forgiveness, by definition, is:

“...a reduction in loan value where a loan is discounted from its original principal or charged off as a bad debt...Under IRS rules [the amount of the reduction] is reportable as income to the borrower for loans discounted or charged off.”

Because this move by the FHFA would be recognized as a mandated re-negotiation of the loan, the borrower wouldn’t be subjected to the IRS rules pertaining to debt forgiveness. That leaves this question: How would Fannie Mae, Freddie Mac and the Federal Home Loan Banks recoup the monies lost in mortgage re-negotiations? If you answered, “from the federal government” or “from the US taxpayers,” give yourself a gold star. The mandated re-negotiated mortgages would literally facilitate a raid on the US Treasury by the Obama Administration under the guise of affordable housing and the “correcting” of the mortgage industry.

Now, here’s the part that makes David Axelrod, Valerie Jarrett and David Plouffe drool.

Being the narcissistic political opportunist that Barack Obama has demonstrated himself to be, any of the so-called “political strategist” talking heads seen blathering on nightly on your cable news channel of choice could tell you that as soon as the first reduced mortgage bills are sent to the “rescued” (read: bailed-out, or, better yet, bribed) voters...er, excuse me, borrowers, Mr. Obama will be on television, radio, in print and on the Internet trumpeting how his administration “saved” or “thwarted the foreclosure of” hundreds of thousands – if not millions – of family homes.

I can hear it now:

“This morning, the Director of the Federal Housing Finance Agency, initiated a plan to save the homes of millions of Americans who were tricked, deceived or otherwise forced into signing on to home mortgages unfairly by the greed merchants of the Wall Street One-Percent. Exacting social justice on these filthy Capitalists, the FHFA director has ordered the heads of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to renegotiate any and all home mortgages that are either underwater or on the brink of foreclosure. While I had nothing to do directly with this decision, I did, in my infinite wisdom, appoint the director and, therefore, am due your support in my bid for re-election to the presidency of the United States. Thank you very much and goodnight. Be sure to tip your bartenders and waitresses on your way out. They work hard. You’ve been great.”

Sir Alex Fraser Tytler, a Scottish lawyer, writer and Professor of Universal History, and Greek & Roman Antiquities at the University of Edinburgh, is quoted as saying:

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess of the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship...”

To clarify, the United States of America is not a Democracy, we are a Constitutional Republic with a democratic electoral system, that understood, Tytler’s axiom still holds true. Once the voting public realizes that they can elect pillagers to office who have no problem achieving full political cowardice in their sycophancy to special interest voting blocs, the gates to the Treasury are no longer secure and the Republic is doomed.

It is for this reason that two events simply must take place.

First, congressional Republican leadership must – immediately – cease being the gaggle of spineless political geldings that they have been since Mr. Obama took office. They must challenge, in every way, shape and form the unconstitutional (read: illegal) recess appointment of Richard Cordray atop the newly established Consumer Financial Protection Bureau and Mr. Obama’s recent appointments to the National Labor Relations Board. This opposition should include consideration of a radical move: organizing a congressional walk-out, ala the tactics of the Democrat lawmakers in Wisconsin and Indiana, who brought those state legislatures to a halt over the legitimate limitations imposed on public-sector labor unions in those states by the duly elected.

And second, Republicans simply must become more aggressive with branding issues, with messaging. This would be a perfect opportunity to get ahead of the message; to frame the issue before the Progressive “history re-writing machine” gets a chance to sell the American public a bill of goods that is fundamentally Socialist in nature (redistribution of wealth is a Socialist tool to placate the masses). Sadly, if the same message wizards in the GOP hierarchy execute their status quo they will once again find themselves on the defensive and operating from a disadvantaged position, just as with the tax-cut extension issue, the deficit issue, the entitlement reform issues, the budget issue, etc.

Should the Republican leadership – both in Congress and at the RNC – refuse to take this battle on with the intention of winning without compromise, we can all be sure that Mr. Obama and his team of Progressive anti-Capitalists will “fundamentally transform” the raiding of the US Treasury – disguised as an affordable housing initiative – into a dedicated voting bloc come November 2012. If the Republican leadership – both elected and at the Party level – allow this to happen then the subsequent demise of the Republic becomes the GOP’s legacy to the human race.

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Frank Salvato is the Executive Director for BasicsProject.org.