Gas Prices

It’s been in the news a lot lately and now I got this email:

Ok, so let’s investigate these “soaring” gas prices.  I went ahead and checked out gas prices before President Obama took office.  That is, before the start of this GOP graph.  Here is the result:

Now, you can easily see how the GOP tries to trick you.  The prices dove to levels that haven’t been seen in about 8 or so years (note, this is crude oil but it should be about the same):

Now, under what President prices started to go up?  President Bush in his first term.

Ok, so we now have established that President Obama didn’t create the rise in gas prices, but what has he done to counter them?

In order to answer that question, we have to look at what causes gas prices to rise.  First of all, the US does have a lot of oil and this can be used for gasoline.  Other places on this planet also have oil.  So what does that mean?  Well, if other places can sell us oil at a cheaper rate than we can produce, we will do that, as well as, produce some of our own to consume.  The point is, producing a large amount of the oil in the US–oil dependency–will cause prices to rise.

Another reason is that there are other countries that want a lot of oil and thus, they will pay more for it.  Take China for example, they need a ton of oil to support their massive economy.  And what happens when they demand a lot of oil?  The prices go up.  This is a big cause of increasing gas prices.

Now there are other things that can cause prices to fluctuate, war (yes the ones we are in), oil spills, etc.  But what do these all have in common?  The President can’t directly control prices like many people think.

So, let’s look at what President Obama has done about this:

barackobama.com,

American oil production is the highest that it’s been in eight years, and we are less reliant on foreign oil than at any time in the last 16 years. Natural gas production is at an all-time high.

Now, republicans always complain about how he has reduced our national security by relying on others for oil, etc  Here you can easily see that is not true:

So then, what has President Obama done?

He has lowered the dependence on foreign oil, increased production at home, all while keeping prices consistent or lower to the previous 4 years.  Republicans wanted independence from foreign oil, wanted more oil production at home and wanted gas prices lower.  This has for all practical purposes been done by President Obama.  And now, what has the delusional party acknowledged?  That prices are higher than the day President Obama took office.  That’s how you lie with statistics.

This is exactly how the republicans treat anything a democrat does, regardless of weather or not they wanted it.  When they get everything they asked for, it’s still not good enough.  So the question really is, are they actually that delusional?  I think it varies, but overall, it’s an overwhelming yes.

Now I should note, that a gas tax would be helpful.  See here: http://economistsview.typepad.com/economistsview/2012/03/the-benefits-of-a-gas-tax.html

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Class Warfare!

Since the introduction of the concept of the Buffett Tax, many Republicans have claimed that this is “class warfare” against the rich.  Some of these include Sen. Lindsay Graham, Paul Ryan, Mitch McConnell among others.

Let’s just see what class has “waged war” against another class.

Think Progress has developed a list of five things everyone should know about the top 1%.

1. The Top 1 Percent Of Americans Owns 40 Percent Of The Nation’s Wealth: As Nobel Laureate Joseph Stiglitz points out, the richest 1 percent of Americans now own 40 percent of the nation’s wealth. Sociologist William Domhoff illustrates this wealth disparity using 2007 figures where the top 1 percent owned 42 percent of the country’s financial wealth (total net worth minus the value of one’s home). How much does the bottom 80 percent own? Only 7 percent:

As Stiglitz notes, this disparity is much worse than it was in the past, as just 25 years ago the top 1 percent owned 33 percent of national wealth.

This doesn’t look like the poor staging a war against the rich.  It looks like the poor getting beat down over and over again.

2. The Top 1 Percent Of Americans Take Home 24 Percent Of National Income: While the richest 1 percent of Americans take home almost a quarter of national income today, in 1976 they took home just 9 percent — meaning their share of the national income pool has nearly tripled in roughly three decades.

As you can see, not only do we have a wealth inequality problem, but it keeps growing.

3. The Top 1 Percent Of Americans Own Half Of The Country’s Stocks, Bonds, And Mutual Funds:

You can easily see that the top 10% owns 90.3% of what is taxed with capital gains rates.  Below this group, people just don’t have the money to invest and in turn, the rich pay less taxes on their money.  (Capital gains is taxed at only 15%)

4. The Top 1 Percent Of Americans Have Only 5 Percent Of The Nation’s Personal Debt:

Using 2007 figures, sociologist William Domhoff points out that the top 1 percent have 5 percent of the nation’s personal debt while the bottom 90 percent have 73 percent of total debt:

5. The Top 1 Percent Are Taking In More Of The Nation’s Income Than At Any Other Time Since The 1920s: Not only are the wealthiest 1 percent of Americans taking home a tremendous portion of the national income, but their share of this income is greater than at any other time since the Great Depression, as the Center for Budget and Policy Priorities illustrates in this chart using 2007 data:

So, as we can see, the rich really are better off than everyone else.  And not by a little.  Looking at this last graph, under what president did the share of income switch to favor the poor?  Reagan.  Yes, class warfare against the rich does not exist, but rather, it has existed against the poor for a long time.  It’s time for the rich to pay their fair share of taxes and to take some responsibility for the shape of our economy.  After all, it is the rich who control it.

Edit:  For the conservatives who have been messaging me complaining that the rich aren’t rich enough, and that 46% don’t pay federal income taxes read what I have written before.  See here.

Now, 46% don’t pay the federal income tax because they don’t even make enough money to live on.  Furthermore, they do in fact, pay taxes.  They pay payroll taxes, sales taxes, etc..  You try giving up all of your money and assets and take in under $17,000 a year and prove how easy you claim their lives are.  The top 1% averages $1.5 million dollars a year, and yet you bitch that this isn’t enough and that the government is “stealing” your wealth.  You’re just horrendously selfish and ignorant on how economics works.

Noteworthy Parts of the Neanderthal Debate–Fox News and Google

I cringe when I type that there are noteworthy moments. But here is an ad hoc list.

The following from ThinkProgress:

9:02: Rick Perry opens with a shoutout to Florida Gov. Rick Scott, the most unpopular governorin the country.

Interesting to name drop the most unpopular Governor. But really, did we expect anything different?

9:06: Perry, when asked for his jobs plan, says “look what we’ve done in the state of Texas.” So we can all look forward to lots of minimum wage jobs?

Perry is an expert in creating jobs that are minimum and below minimum wage.

9:06: Mitt Romney calls for cutting corporate taxes. Yesterday, he called for raising taxes on the poor.

As I pointed out here, US corporations pay the second lowest taxes in the developed world.

9:27: Yesterday, Romney, worth up to $250 million, called himself part of the “middle class.” But a majority of Fox News views voted in a poll that earning over $1 million makes you “rich.” For the record, just 0.3 percent of the country makes that much.

Only 0.3% of this country is rich?  Somehow I doubt that.  This just shows how out of touch Republicans, Tea Baggers, etc. really are. (Yes, I said Tea Baggers. Like Bill Maher said, “When they stop saying Obamacare, I’ll stop saying Tea Baggers.”)

9:30: Perry says he never proposed sending Social Security back to the states. He definitely did.

Why does he keep saying back to the states? When was it in the states control?  How come nobody has pointed this out?

9:34: Mitt Romney says “Europe isn’t working in Europe.” The austerity-wracked Eurozone is certainly in trouble, but Norway is the richest country in the world and non-Euroized Sweden is enjoying its fastest economic growth ever thanks to a combination of fiscal and monetary stimulus.

As I and many others have said, austerity does not lead to economic growth.  How do you expect to reduce everything and in turn make the economy expand?  It’s ridiculous.

9:35: Audience goes nuts at Cain’s promise to eliminate the EPA. (A better idea: eliminating the Department of Commerce.) Over the summer, Cain said he would literally appoint Shell Oil’s CEO to set EPA regulations.

Ok, everyone that wants to eliminate the EPA should do this challenge and prove me wrong.  I say that if you go to China and position yourself on top of the output of pollution for a warehouse and stay there for 10 days with no adverse health effects, then I will re-evaluate my position on pollution and environmental regulations.  It isn’t difficult to realize that we need strict regulations.  Just look at the sky in China.

9:47: Bachmann says it is “reprehensible” that the Obama Administration sued to strike down Arizona’s unconstitutional anti-immigrant law. Maybe it’s because Obama swore an oath to “preserve, protect and defend the Constitution of the United States.”

This is more than expected, especially since the candidates are courting a racist, bigoted, and criminal sheriff, Joe Arpaio.

10:11: Amidst all this foreign aid bashing, nobody notes that Israel is the largest recipient of American foreign aid.

10:10: Florida pander! Bachmann says Cuba is a state-sponsor of terrorism, catering to the influential Cuban-American exile population.

Those are both noteworthy.  It pretty much says it all.

10:17: Audience boos gay servicemember for wanting to serve openly. “Any kind of sexual activity has no place in the military” says Rick Santorum, apparently planning to raise an army of monks and kick all the married officers out of the military. Watch it:

This will get much media attention. Not only was it egregious to boo a serviceman, but Santorum also claimed that being gay was equivalent to sexual activity in the military.

10:26: Bachmann defends repeating unsubstantiated rumors from a stranger about mental retardation and the HPV vaccine — which experts have said is counter-productive — saying the woman was distraught and she “merely related” her story.

No one was made retarded from any vaccine.  Period.  The way we eradicate a disease is through vaccination of nearly the entire population.  It doesn’t matter if it is for an STI or STD or for polio or smallpox.  Receiving a vaccination implies that one wants to maintain healthy as well as help prevent others from obtaining that disease.  This is why a mandate is necessary.  Furthermore, the HPV vaccine is one of the safest available.  For more information, see here.

10:27: Rick Perry promises that he “will always err on the side of life,” except when executing people.

He enjoys killing many people.  The count now is at 236, give or take.  See here.

10:31: Again, as President, Romney couldn’t provide a waiver from ObamaCare to all 50 states.

Yes, the waiver is illegal.

10:38: Romney concedes: “There are a lot of reasons not to elect me.”

Finally! Something truthful!  I see no reasons to elect him, or any of the others for that matter.

10:54: Moderators did not ask candidates about the death penalty, one day after a Georgia man who may have been innocent was executed. Were they trying to avoid another “cheering death” moment from the audience?

This was noteworthy.  I was hoping the whole time that a question regarding capital punishment would be asked.  Not so much to see the candidate’s responses, but rather, to listen to the audience.

Well, that pretty much sums up all of the interesting points in the debate.  It was terribly painful writing this and I had to cringe many times.

Note: I didn’t care much to include Gingrich, Paul, Cain, Johnson, Santorum as they have practically no chance of making it.  I included some from Bachmann for comedic purposes.

One last note: Fox News Allows Hate Group to Participate in Debate.  This should not be the least bit surprising.

It’s sad that Google co-sponsored such a ridiculous event with Fox News.

h/t ThinkProgress for the debate transcript/analysis.

Obama Buffett Rule Comments: Are Rich Actually Taxed At Higher Rate Than Middle Class?

Today, Stephen Ohlemacher from the AP, wrote and article with the title of this post

(ACS: This article from Ohlemacher is terribly misleading)

I have been asked to comment. Enjoy a decently long post.

Here is the link to is over at HuffPo.

This article is somewhat misleading. First, he claims:

“On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.”

This is true, but very misleading (he leaves out important statistics.) He does not explain that the top 20% control 84% of the nations wealth. Nor does he mention that the bottom 40% own the massive amount of 0.3% of the wealth. Wouldn’t you expect the people who control 84% of America to pay a larger sum of taxes? How can you expect to get a decent amount of revenue from someone that can barely feed their family?

Now for the tax rate:

Many of the wealthy own businesses. This means that they are able to write off many deductions on their taxes. The poor don’t have much to write off except for children, they just can’t afford things.

Here is what the article mentions with regards to this:

“People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out,” said Roberton Williams, a senior fellow at the Tax Policy Center. “People at the bottom of the distribution say, `But all of those rich guys are getting bigger tax breaks than we’re getting,’ which is also the case.”

This looks good.

Now for the kicker, the capital gains tax. This is a tax paid almost exclusively by the rich. The top 5% pay 90% of the capital gains. This is because the bottom 95% cannot afford to invest in stocks, bonds, etc.; they need the money now. The author does mention that the highest tax rate is 15%.

Obama’s claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.

This is where Ohlemacher’s complaint lies.

This is the rate that the ultra-rich pay (15%); a large portion of their income is from capital gains. Now, this tax in theory would help the poor and make the rich pay a little more, but in reality we see that is not the case as it is a measly 15%. Instead, this helps the rich, they don’t have to pay the 35% as they are only taxed at 15% for a large part of their income. This is why they pay such low rates. They can make $200,000, get more deductibles than the $200,000 and then get $50 million from capital gains. They will end up paying at a lower rate than their secretaries (15% for capital gains and no federal income tax since they had so many deductibles). The author of the article does mention this. But, he riddled his article with many misleading statistics showing how much percent each bracket on average pays.

Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes.

Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.

The latest IRS figures are a few years older – and limited to federal income taxes – but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.

Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.

Obviously the higher bracket pays a larger percent with regards to federal income tax (by definition it has to!) Although if you look at the rates in other developed countries you will see that we have a much larger wealth inequality. This means that the rich are not taxed at an appropriate level, be it capital gains or the federal income tax. You can also look at historical tax rates in the US and see how the economy did at certain levels. See here.

You’ll find that generally when we wall into a recession, the higher the rich are taxed, the better our economy does, as we collect more revenue to spend. It should be noted that we are in a liquidity trap too.  If you look at what happened from 1931 to 1932 you can see how taxes went from 25% to 63% and we started pulling out of the Great Depression (we cut back in 1937 and the economy started tanking again, then WWII helped us out.)  And yes, our current crises resembles that of the Great Depression

Overall, I find the first half of the article utterly confusing. The second half, that’s fine. He says it is a fact check, but he never even gave a final thought. He ended it with multiple quotes. But, I suspect that Obama is saying that the rich are paying at a lower rate because he is factoring in capital gains. It is not necessary to say he is including both taxes when speaking for two reasons. One, they both are taxes that go to revenue (who cares what you call them; I guess, for statistical purposes, you can separate them) and two, the majority of people do not have a clue how our tax system works. They think people are taxed at the bracket rate that they fall in. This is far from the case as people are taxed marginally, get deductions, etc.. If you don’t believe me, go up to anyone and ask them how much someone who earns $1 million a year pays in taxes when he falls in the highest tax bracket ($379,150) taxed at 35%. I am willing to bet nearly everyone will say $350,000. This is utterly incorrect. See here to see how the federal income tax is paid.

So, the question is, is this fact check correct? No. Obama never specified which tax(es) he was referring to. And to say this is a lie, is just another way to help millionaires avoid taxes and confuse the public. If the public had a firm knowledge on taxes, I would say there is a lot more reason for Obama to mention what specific taxes he is referring to (but even that is not necessary as the point is the ultra-rich sometimes pay at a lower rate.) But again, the public, even highly educated people, tend to be clueless on this issue. Very few people do their own taxes.

I should note that people making over $1 million dollars a year are in the top 0.3%. This is who this article seems to be trying to protect.

I am obviously not sure if Ohlemacher intended to make the article confusing or not. But it’s always disheartening when someone throws statistics around that are heavily misleading.

Anyone who is interested in wealth inequality as well as who pays what taxes should certainly read this (or either of the authors blog posts on the subject) article by Michael Norton (Harvard) and Dan Ariely (one of the leading behavioral economists, Duke.) http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf

Or at the very least, head over and take a look at the graphs.

Also, I just browsed through the comments on this over at the HuffPo and the second one I looked at thought pretty much the same thing as me. (I’m sorry I forgot the commenter, if it was you just email me, which can be found on the side of this page, and I will put your name in.)

“Stop making this confusing. Capital gains are taxed at 15%. Income is taxed much higher. People who use money to make money often pay 15%, while their salaried workers pay 25-35%. Tax capital gains at the same rate as income.”

I never said what rate to tax it at, all I said was higher. But, yeah, at the income level is much better.

One last note, it is important to also realize that corporations pay the second lowest taxes in the developed world. This needs to end. Oh, and just for fun, Iceland pays the lowest, and we all know they had a GREAT economy in this recession. Why don’t we follow their policies that so elegantly made them “not” collapse? Oh, wait. /sarcasm

 

Edit: I forgot to add the effect of payroll taxes. Payroll taxes benefit the rich as they are capped at income of a little above $100,000.  For more detail on this, Paul Krugman has elegantly explained it in this post on his blog today.

One is that you have to beware of the old trick of saying “taxes”, then slipping into “income taxes”. Most Americans pay more payroll than income taxes, but the reverse is true at high incomes. So focusing only on income taxes makes it seem as if the rich pay much more of the burden than they really do.

See here. The entire article is worth reading as it explains several tricks that the Right plays on Americans.

Austerity Leading to Global Disaster?

As Paul Krugman has said all along, this is not the time for austerity.

Wow, what a surprise. A U.N. study says austerity, spending cuts, and deregulation are hurting (destroying) economies worldwide. What do they suggest to do instead? Spend! Stop focusing on supply and instead focus on demand! It’s macroeconomics 101.

Austerity is the wrong way.