US DEBT: THE BIG PICTURE

Source: New York Times/Boston Globe

DID YOU KNOW THAT:

1) 93% of all the debt America has accumulated in its entire history has happened since 1980?

2) 71% of all the debt America has accumulated since 1980 happened under Presidents Reagan, Bush Sr, and Bush Jr?

3) 54% of all the debt accumulated under President George W. Bush was caused by waging two wars while at the same time cutting taxes?

4) 32% of all the money borrowed by the US has come from surpluses in the Social Security trust fund?

5) 100% of this problem can be solved over time by simply spending a little less and paying a little more?

Jon Stewart: Republicans go out on "THE TOWN."

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How do you like them Apples?

Apple nears most-valuable status

Fueled by the iPad and iPhone, products not on the market five years ago, shares in Apple topped $400 for the first time.

By Adam Satariano

Bloomberg News

NEW YORK - Apple Inc., a week after reporting record sales and profit, surpassed $400 a share for the first time and is gaining ground on Exxon Mobil Corp. to become the world’s most valuable company.

The shares rose $4.91 to $403.41 yesterday.

Apple has climbed 25 percent this year and 7 percent since the company reported third-quarter results on July 19.

Apple, on the brink of bankruptcy when chief executive Steve Jobs reclaimed the top job more than a decade ago, now has a bigger market value than Microsoft Corp. and Intel Corp. combined, fueled by new products such as the iPhone and iPad.

The shares are up from a split-adjusted $5.48 on Sept. 16, 1997, the day Jobs returned after his 1985 ouster.

“It started with the Mac, then iPods, iPhones, and now the iPad,’’ said Giri Cherukuri, head trader for Oakbrook Investments, which manages $2.7 billion, including Apple shares. “It’s incredible.’’

The stock price gives Cupertino, Calif.-based Apple a market capitalization of about $374 billion, trailing by $41.6 billion the $416 billion value of Texas-based Exxon Mobil Corp.

Apple’s rise comes amid a reversal of fortunes for rival makers of smartphones, including Research In Motion Ltd. and Nokia Oyj, which have lost market share and fired workers.

Apple said last week that profit more than doubled to $7.31 billion on revenue of $28.6 billion, compared with the same period a year earlier.

The company had record sales of iPhones and iPads, products that did not exist five years ago but which now account for more than 70 percent of the company’s revenue.

Apple also has accumulated about $76.2 billion in cash and other holdings.

“I don’t see too much slowing them down,’’ Cherukuri said yesterday.

Americans get it. But in congress, common sense is not so common.

Americans back mixed solution for debt

By Steve Holland

Americans overwhelmingly are concerned about the U.S. debt crisis and a majority backs the type of compromise pushed by President Barack Obama, a Reuters/Ipsos poll found on Tuesday.

The poll found that 56 percent of Americans want to see a combination of government spending cuts and tax increases included in a deal to bring down the U.S. budget deficit and permit a vote to raise the country's $14.3 trillion debt ceiling.

This is the approach favored by Obama and his fellow Democrats to begin to put America's fiscal house in order.

Republicans oppose tax increases and instead want to cut back deeply on spending, saying the federal budget has gotten out of control.

"It does seem to be that the popular narrative is falling on the side of the president on this one," said Ipsos pollster Julia Clark.

The Reuters/Ipsos poll of 600 adults, including 512 registered voters, had a margin of error of 4 percentage points for all respondents and 4.3 percentage points for registered voters. It was conducted overnight on Monday.

Keeping taxes very low on America's "job creators" really pays off....NOT!

Goldman doubles profit, plans layoffs

By Christina Rexrode

Associated Press / July 20, 2011

NEW YORK - Goldman Sachs Group more than doubled its profits last quarter, to $1.05 billion.

Goldman also said it would eliminate as many as 1,000 jobs to cut costs.

Goldman will be cutting about $1.2 billion in expenses, which could include as many as 1,000 employees nationwide, said David Viniar, the bank’s chief financial officer. He also said the bank will be “prudent’’ with spending and maintaining high levels of reserves.

Investment banking revenue jumped 54 percent on an increase in mergers and acquisitions and underwriting other kinds of deals. Revenue from investment management, rose 14 percent.

Goldman paid a $550 million fine last year - the largest ever paid to the Securities and Exchange Commission - after it was accused of misleading investors about mortgage securities.

State Street cutting 850 technology jobs, most of them in Bay State

By Beth Healy

July 20, 2011

State Street Corp. said yesterday it will cut 850 jobs, including 558 in Massachusetts, as it launches a second major round of layoffs in less than a year.

The cuts come as State Street reported yesterday an 18 percent surge in its second-quarter earnings from a year ago, to $502 million, or $1 per share. 

The company has a history of rolling out layoffs even when its finances appear strong. In late 2008, as it accepted a $2 billion capital infusion from the federal government during the financial crisis, State Street announced plans to cut 1,800 jobs. The company repaid the funds in 2009 and went on to post a $1.6 billion profit in 2010, as markets rebounded.

Even with that success, State Street filed for an $885 million federal tax refund for 2010, after taking a loss on billions of dollars in risky mortgage investments the prior year.

Tea Party take note: Ronald Reagan on raising the debt limit.

And now, a brief word from the adult in the room:

Since the federal income tax was established in 1913, the US economy grew faster and created more jobs when top tax rates were the highest.

“All you need to know is that revenue is now 15 percent of GDP,’’ says Alan Simpson, former assistant Republican leader in the Senate and co-chairman of the recent bipartisan deficit commission. “That is the lowest since the Korean War. The historical figure has been 19 to 20 percent."

---Boston Globe  July 13, 2011

Jon Stewart tries to understand:

Scot Lehigh nails it:

Partisanship over compromise

By Scot Lehigh, Globe Columnist

WASHINGTON REPUBLICANS have just made an unmistakable declaration about their priorities: Preventing tax increases is more important than reducing the deficit - even with a federal default looming on the near horizon.                       

We can now discount GOP rhetoric about acting like adults, about not kicking the can down the road, about making tough decisions today to spare our kids from more debt tomorrow.

Sadly, Republican leaders have revealed the emptiness of that lofty talk. They are either unwilling or unable to strike a broad bipartisan compromise on the long-term deficit. House Speaker John Boehner, who had repeatedly urged the president to do a big deficit deal, has just walked away from a possible package that reportedly would have done 75 to 80 percent of the deficit reduction on the spending side. Why? Because of a backlash from rigid right-wingers who rule out any revenue increases.

“Here is what’s amazing to me: The Republicans are in a position where they could have an extremely favorable deal, and they won’t take yes for an answer,’’ says Bob Bixby, executive director of the Concord Coalition, a nonpartisan deficit watchdog. Bixby is rightly amazed. What reasonable political leader - for that matter, what rational adult - faced with the chance of leveraging a one-third share of power into a package constructed largely according to their wishes, walks away from the prospective deal?

But that’s what the GOP has now done.

They insist the deficit is a spending problem. But though spending commitments constitute a large part of the long-term deficit, fiscal experts say tax cuts have also played a significant role. And thus that more revenue should be part of the solution.

“All you need to know is that revenue is now 15 percent of GDP,’’ says Alan Simpson, former assistant Republican leader in the Senate and co-chairman of the recent bipartisan deficit commission. “That is the lowest since the Korean War. The historical figure has been 19 to 20 percent."

This week, Obama declared himself willing to take heat from Democrats on spending cuts and called on Republican leaders to show the same fortitude on new revenue. He needs to break out the charts and graphs and explain to the American public, in prime time, the real roots of the long-term deficit, the impact on Medicare and Medicaid of a cuts-only approach, and the consequences of default.

That’s a battle he can win - but to win it, he needs to wage it more forcefully.

Got tickets? The ImprovAsylum vs. Fenway scalpers:

Even conservative columnists are fed up with the radical right:

The Mother of All No-Brainers

By David Brooks

July 4, 2011

           

The Republicans have changed American politics since they took control of the House of Representatives.  They have turned a bill to raise the debt limit into an opportunity to put the U.S. on a stable fiscal course.

The Democrats have agreed not to raise tax rates. They have agreed to a roughly 3-to-1 rate of spending cuts to revenue increases, an astonishing concession. There are Democrats in the White House and elsewhere who would be willing to accept Medicare cuts if the Republicans would be willing to increase revenues.

If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases.

This is the mother of all no-brainers.

But we can have no confidence that the Republicans will seize this opportunity. That’s because over the past few years, the Republican party has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

The members of this movement do not accept the logic of compromise, no matter how sweet the terms. If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no. If you ask them to raise taxes by an inch to cut government by a yard, they will still say no.

The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.

The members of this movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money. But the members of this movement talk blandly of default and are willing to stain their nation’s honor.

The members of this movement have no economic theory worthy of the name. Economists have identified many factors that contribute to economic growth, ranging from the productivity of the work force to the share of private savings that is available for private investment. Tax levels matter, but they are far from the only or even the most important factor.

Over the past week, Democrats have stopped making concessions. They are coming to the conclusion that if the Republicans are fanatics then they better be fanatics, too.

The struggles of the next few weeks are about what sort of party the G.O.P. is — a normal conservative party or an odd protest movement that has separated itself from normal governance, the normal rules of evidence and the ancient habits of our nation.

If the debt ceiling talks fail, independent voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.

And they will be right.

Make Paul Krugman our Treasury Secretary!

Corporate Cash Con

By PAUL KRUGMAN

July 3, 2011

Month by month, with stunning speed, the lessons of the 2008 financial crisis have been forgotten. Over the last two years profits have soared while unemployment has remained disastrously high. Why should anyone believe that handing even more money to corporations, no strings attached, would lead to faster job creation?

How can people simultaneously demand savage cuts in Medicare and Medicaid and defend special tax breaks favoring hedge fund managers and owners of corporate jets?

And then there’s the repatriation issue.

U.S. corporations are supposed to pay taxes on the profits of their overseas subsidiaries — but only when those profits are transferred back to the parent company. Now there’s a move afoot — driven, of course, by a major lobbying campaign — to offer an amnesty under which companies could move funds back while paying hardly any taxes.

We’ve already seen this movie: A similar tax holiday was offered in 2004, with a similar sales pitch. And it was a total failure. Companies did indeed take advantage of the amnesty to move a lot of money back to the United States. But they used that money to pay dividends, pay down debt, buy up other companies, buy back their own stock — pretty much everything except increasing investment and creating jobs. Indeed, there’s no evidence that the 2004 tax holiday did anything at all to stimulate the economy.

How can anyone imagine that lack of corporate cash is what’s holding back recovery in America right now? After all, it’s widely understood that corporations are already sitting on large amounts of cash that they aren’t investing in their own businesses. If corporations already have plenty of cash they’re not using, why would giving them a tax break that adds to this pile of cash do anything to accelerate recovery?

It wouldn’t, of course. Claims that a corporate tax holiday would create jobs, or that ending the tax break for corporate jets would destroy jobs, are nonsense.

Lack of corporate cash is not the problem facing America. Big business already has the money it needs to expand; what it lacks is a reason to expand with consumers still on the ropes and the government slashing spending.

What our economy needs is direct job creation by the government and mortgage-debt relief for stressed consumers. What it very much does not need is a transfer of billions of dollars to corporations that have no intention of hiring anyone except more lobbyists.

Prez: "We can live within our means, while still investing in our future."

UMASS STUDY: Wall Street Speculators Drove Up Gas Prices

According to a University of Massachusetts study by Robert Pollin and James Heintz, excessive speculation in crude oil futures on the part of financial traders added 83 cents to the cost of a gallon of gasoline in May.

The finding of the UMass Political Economy Research Institute showed that the influx of billions of dollars chasing oil futures led the average price of a gallon of gasoline nationwide to rise to $3.96 in May. Pollin said if normal market forces, traced over decades, were in play, a gallon of gas would have cost $3.13 in May.

The study, "How Wall Street Speculation Is Driving up Gasoline Prices Today," traced the rapid rise and fall of commodities in recent months to the lack of regulation of financial markets.

The findings have led to a renewed call from advocates for robust rules that limit the actions of speculators, traders and investors under the Dodd-Frank Wall Street Reform and Consumer Protection Act passed a year ago. The full impact of the law has been blunted because the federal rule-making body responsible for implementing it has not yet adopted the necessary rules. Although they were given a year under the law to adopt the rules, they claim they need another six months to complete their work.

The study also refuted claims that uprisings across the Middle East caused oil production to wane, leading to higher gas prices at the pump. Pollin and Heintz found that total global crude oil production averaged 87.6 million barrels per day between September and December and 87.9 million barrels per day during the period of January through March, in the midst of the uprisings.