Take a Free Trial
Try Charles' premium stock selection services free for 7 days.
Check it out in real time!
You will get actionable advice, trading ideas and email alerts.
7/9/2012 12:00 AM
Responsibility Is Rewarded
By Charles Payne, CEO & Principal Analyst
With President Obama going around the country browbeating successful people in the harshest tone, it's no wonder that needle on the economic gauge isn't moving. According to his rhetoric, rich people don't have values or principles, which bleeds into notions that somehow every rich person in America cheated to get closer to the top (save for that bastion of integrity, Hollywood, where presumably a few people simply slept their way into stardom). This narrative was reserved mostly for big businesses and Wall Street the last time around, but now it's personal. If you are rich, you are the problem with America, and it's time for your comeuppance.
The most dangerous line that President Obama keeps spewing is one that will discourage risk-taking and hard work while also enabling poor decision-making from people that would rather wallow in misery with a couple of brews and a comfortable sofa:
"...but, what we ask for is that hard work pays off, that responsibility is rewarded"
Barack Obama Poland, Ohio
Well, guess what Mr. President, responsibility is rewarded! Friday's jobs number actually underscores the fact that the more skin put into the game via education the more likely you are to have a job. Granted, a lot of college graduates aren't working in their dream job but they are in the workforce and not a drag on society. A look at education levels, participation rates and the unemployment rate shows how one end of society is not making the effort while the other end of society not only made sacrifices to have certain qualifications, but continue to get out of bed and head to work each day even when it's enticing to sit this dance out at home.
Not only does society lack jobs for 25 year olds and older that have dropped out of high school, it's made it easier for them not to look for jobs (participation rate), but still the unemployment rate is 12.6%. You could argue society has punished people that didn't do the right and minimum thing of at least finishing high school. I find it despicable the idea is to lavish praise on those that haven't worked as hard to better them academically and to go a step further, using the cover of demonization to loot those that society has rightfully rewarded.
By the way, the employment-population ratio is really what we all should be keyed into as a way of taking the pulse of the economy and a backdrop to job creation. It's the percentage of working age population that's actually working. I think this number reflects the impact of government policy on jobs more so than any other metric from employment data. In 2001, the American employment-population ratio was 73.1, tumbled to 66.7 in 2010 and last month was at only 58.6. I think this puts America at the bottom quintile of the world. In fact, below are just some nations that have done a better job in creating jobs for its entire population:
Burkina Faso 81
Papua New Guinea 74
I find it interesting that the nations where governments were overthrown during the Arab Spring all had anemic employment- population ratios. Moreover, currently, Syria has a ratio of just 39 and only Bahrain, which came close to regime change, had a higher number of 64 but its revolt was based more on religious animosity. Maybe the magic number for Americans to wake up is an employmen-population ratio under 50—it did in these nations:
Take this Job (market) and Shove It
It is also important to look closely at participation which underscores a kind of loathing, frustration and indifference toward the job market. Once again the table reflects the notion that hitting the bricks and looking for a job, otherwise known outside the White House as "hard work," is rewarded. Younger people are dropping out of the jobs market in droves while older people are getting back into the jobs market and getting 70% of new jobs. Sadly, instead of pushing young people to really do the right thing from taking jobs that don't pay well and wasn't their major to getting off the sofa and actually looking for a job the old fashioned way of going door to door, President Obama is telling them they did everything right, have values and principles and should be rewarded with other people's money.
Instead we hear about community colleges for two million Americans in the same sentence that begins with talk of top-flight educations. I suspect their notion is this will be the GED of the new millennia-wrong! It's just another easy out instead of a stepping stone. Hey, had trouble in high school and need to catch up via community college, that's fine and even smart. But, to encourage community college as an answer to our shortage in great paying STEM jobs and slipping competitive advantage is ludicrous. Trade schools for plumbing and electricians are a good idea but build smarter students, not more community colleges.
It's all a Smoke Screen Anyway
Getting embroiled in all of this just feeds the trap set by the progressive agenda of the administration. It's not about helping people per se as much as it is about bolstering a central authority that will dictate our lives. The boogeyman is the rich person and envy is the fuel that will be burned across this nation between now and November. By relentlessly attacking the rich, the White House gets to hide the fact that targets of its scorn and policies aren't rich. Big time taxes kick in for households earning more than $250,000 a year- not Bill Gates money. In fact these are the folks that are the poster children for why hard work pays off and yet the president burns them in rhetoric effigies at every campaign stop.
Nobody likes a spoiled brat that inherited gobs of money. Yet, that isn't the average millionaire in America. In January 2008, the WSJ printed an article that showed inherited wealth waning. One NYU professor said that of the 1%, only 9% inherited their wealth versus 23% in 1985. One firm, Prime & Associates puts inherited wealth at just 10% of millionaires while the Spectrem Group pegs the number closer to 2%. It's clear that rich people (using income of $1 million as the starting number) are self made and a reflection of America. I say a proud reflection of America. But, you can't pay for health care insurance for 30 million people and food stamps for 76 million people and disability for 9 million people by pillaging the "rich" alone—you have to go after those other people ....
... the ones that acted responsibly, made sacrifices, did the right thing and now have a target on their backs.
By the way, the program to make success a dirty word while making ordinary effort something to be admired goes all the way to attacking people that work overtime, go on business trips and take work home. This is a comment heard often by President Obama last week:
"...what made us rich was spending time together"
For me, this is yet another reason why successful people should be admired and not dragged through the mud. Oh, yes, forgot to mention that while Obama was painting the picture of who should be admired and who has values, his wife Michelle wasn't there next to him. That's right, the President of the United States works overtime, goes on business trips and has to take work home at night. With the little free time they have, some play golf or take the family to a ranch.
Although today is the official start of earnings season, it still all about the Fed and more stimuli to boost the economy. Charles Evans hinted the Fed will come to the rescue while Goldman and Bank of America are out saying zero percent interest rates will be extended into the middle of 2015. In the meantime the fiscal cliff battle ratchets higher with President Obama saying Bush tax cuts should be extended for a year for those households making less than $250,000. Of course this admits that Bush tax cuts were for all Americans where as this proposal looks to punish those families, most of whom wouldn't call them rich, for achieving a certain level of success.
Mike OBrien on 7/9/2012 9:30:06 AM
|with mortgage pmt, taxes,children,insurance(s),college,food,fuel,utilities and the always unforseen. 250,000 seems paltry.|
Brad Graham on 7/9/2012 9:44:58 AM
|250,000 is not rich|
keng on 7/9/2012 9:45:58 AM
|No. I'll bet many of us just reaching that income level still have student loans to pay off, making that income much lower in perspective.|
jeanne on 7/9/2012 10:00:17 AM
|$250,000 makes you rich if you are not living in an area of a major city where housing costs are $250,000 per bedroom. But in NY, LA, Chicago, Boston, San Francisco that is hardly an option for a family raising our next generation.|
D Parker on 7/9/2012 10:03:14 AM
|Doesn't come close to making you rich! Obama is using this as another hate the rich slogan! We are growing the welfare state and killing the free enterprise system!|
george dodson on 7/9/2012 10:04:55 AM
Obama wants people dependent on govt. people who are not can''t be manipulated by govt. he can't meet everyone behind closed doors to make deals that keep his power intact.
Becky on 7/9/2012 10:09:48 AM
|No if household income (husband and wife). With kids not on welfare, and who study rather then work, this $250,000 allows you to make a traditional IRA contribution and little savings. IF only husband working you just get by.|
Edward D. Ptacek on 7/9/2012 10:11:32 AM
|As most measurements in life, rich is a relative term. Of course to people like you and me, making 200k per annum is definitely not rich. To my brother making 35k, 200k is beyond his wildest imagination and 150k would be considered rich. To some people---you included, 1 million is probably not rich but to many, many others, you would have an impossible sell. Enjoy your wealth and find some room in your heart to share.|
Phil Cimino on 7/9/2012 10:18:04 AM
Denny T. on 7/9/2012 10:27:17 AM
|This question is very relative. If you live in Arkansas or Mississippi it pretty much does. If you live in New Jersey or New York it does not. You should rephrase your question.|
Mark Edgerton on 7/9/2012 10:27:55 AM
|Two Hundred and Fifty Thousand certainly does not make one 'rich'. It's barely enough to keep the wolf from the door and provide support for all of the deadbeats as required by our present flawed system. Tax increases on the wealthy should start some place North of 5 billion. Seems like most of those folks are Obama lackeys so perhaps they should be the ones getting hit to support the couch potatoes.|
Robert tucker on 7/9/2012 10:31:57 AM
|You very rightfully so, talk about how important education is, yet what we have decided to do in this country is attack teachers and make their job a miserable experience now, cutting salaries in many cases for teachers by 25%. If you value education and feel that it is important, why would you not also realize that the way to go about improving education is not to berate teachers and reduce their income by 25%. Every other business understands that if they want to get the best employees they pay MORE money, not reduce their wages by 25% and berate them. Heck Wall-Street just rewarded someone at Chase Bank who lost them 2 billion dollars with a tens of millions of dollars severance package for a job well done, yet teachers who bust their behinds have their wages cut by 25% and are berated. Any by the way, the public education system is the best in the country right here where this is happening. And this is the teacher's reward? There is something wrong with this country, but it is pretty much the exact opposite of what you seem to think it is. And all of these statements are coming from someone who was a life-long Republican until I woke up and realized a few months ago that I was wrong.|
Mark Edgerton on 7/9/2012 10:37:20 AM
|It all depends on where you live and how you live. I would feel rich if that was my income. But, the question is do we want to tax job creators and the answer is no. In fact, I don't think we should tax income at all. We work for our money and it should be ours. I am for the fair tax. Then, when the wealthy buy jet skis, jets, and all, we would be glad they were rich and purchasing big price tag items because they would be anti-ing up their "fair" share. Then, we should legalize marijuana so we get the taxes paid on that, too. Everyone's "fair" share. :)|
Fran Touchette on 7/9/2012 11:02:20 AM
|This socialist view that Obozo is promoting is going to lead us to a one world government based in Europe. The democratic party has become the socialist party of America. He must be stopped in November|
Paul on 7/9/2012 11:09:10 AM
|Romney needs to pound this message.|
Lane Godshall on 7/9/2012 11:17:34 AM
|Except in some of the most expensive cities such as Tokyo and NYC, $250K/year most definitely makes you rich. Texas rich? No. But for most people, it makes you able to buy a couple of nice cars, get kids in excellent colleges, buy health insurance, eat well, go on vacation, own your own home, save enough to pay for retirement, and give some of it away to people who haven't been as furtunate or to causes that matter to you. Does it enable you to buy the useless, ego-stroking crap that a lot of really rich people buy, like 10,000 SF houses for 2 people, or 125' yachts? No, but that's not important in the long run.|
Art Fox on 7/9/2012 11:18:12 AM
|We need to fix the education problem from kindergarden up. No trophies for everyone. Earn what you get. Stay in your grade til you learn what you should. If the third grade teacher gets kids who don't know what they were suppose to learn in second grade, send them back, and ask that second grade teacher why she passed them. Don't blame the teachers for student failures, praise them for an honest grading system, In a few years, kids and parents would get it. Oh, if I want to ever get out of school, I have to actually to the work and study. Then, as seniors they might think graduation and college were in their reach and worth it. You can't have students doing well in STEM courses if they don't know their times facts and so many many of them do not know 7 times 8. A calculator is not the answer. It's the answer for 78 times 2348, but not 5 times 6.|
Fran Touchette on 7/9/2012 11:21:17 AM
|No! A household income of $250,000 does not make one rich. It makes one a target of a sniveling do-gooder who never held a real job in his life and yet somehow managed to become a millionaire. The real question is not what makes one rich or poor, the real question is where does the federal government derive the authority to take one person's property and give it to another? Certainly not from the Constitution.|
George on 7/9/2012 11:38:46 AM
|At $250,000 you are just at the point when you can start a business not pay more taxes.|
Norma Varela on 7/9/2012 11:45:41 AM
|In some states it could, over time with wise investing. In high cost big cities, it's mediocre but better than many.|
Mike Kihm on 7/9/2012 12:10:28 PM
|I just had the unfortunate sight of El Presidente' continuing his National Socialist attack on America. It's not Revenue, it's Spending!|
dennis logan on 7/9/2012 12:28:46 PM
|Does a household income of $250,000 make one rich?|
No, but it does qualify your household to be the beast of burden for those in in the government and the "welfare" mindset. The millionaires and billionaires complain that they are under attack by Mr. Obama and his socialist wealth-redistribution cohorts but it is us members of the former middle class that on the economic and political frontlines. Our strength was in our numbers but because of economic attrition and political apathy (look to our presence at the voting booths) we are endangered population about to go the way of the dodo bird. We need to fight back!
Rich Powell on 7/9/2012 12:31:21 PM
Grace on 7/9/2012 12:57:31 PM
|President Obama is airing ads that say, "what you believe counts" The ads then try to paint Mitt Romney as someone who exports jobs. This is false and perhaps even slanderous.|
But since Obama brought up the topic of "beliefs", it would be great to hear or see in print the things that Obama believes in. I would bet that his list of beliefs do not match up very well with most Americans (even Liberal Americans) How can he hide his feelings and beliefs behind rhetoric that says the exact opposite? Let the record show the truth.
Glen Allie on 7/9/2012 1:00:13 PM
|Not even close. Just happens to be the point at which you lose all of the existing income indexed gov't subsidized help programs (i.e. education etc.) and have to pay more than the other guy making less. Step backwards until you start making much more than $250,000.00|
Bill Bahlburg on 7/9/2012 1:26:05 PM
|No, most people or couples in that bracket lose the breaks given to others in the 'low'income level and are on the cusp of getting any benefits from a higher income. It is difficult enough in the rural areas but I can't imagine living on that income in an urban area. The economic world is out of whack when the first six months of your earning goes to the government to support pet projects etc. I am in agreement and will gladly give money to those in true need but subsidizing habitual non-workers has gotten out of hand.|
Patricia Knapp on 7/9/2012 1:30:19 PM
|Maybe back in 1912, but not in 2012. I have not respect for Obama as the President or Commander-in-Cheif. This man has no idea what he is doing and the Demcratics are maving away from in in numbers. Also, I don't believe the polls. I think Rommey is ahead at least by 10 points.|
Bob Medkeff on 7/9/2012 1:32:05 PM
|$250k annually before Fed, state, and local income tax in NYC should qualify a family of four for food stamps.|
Gary Gross on 7/9/2012 1:33:04 PM
|Oh, sure - just like a warm, sunny day makes the whole world seem perfect. It would be more effective to get rid of some of those recently created government sinecures, which help nobody, unlike the work of many people who actually earn their $250,000.|
Patricia Flynn on 7/9/2012 2:21:19 PM
|Given that most of the world lives in poverty to make that kind of money makes you very wealthy in relative terms, yes.|
Trey Caldwell on 7/9/2012 2:39:56 PM
|No, $250k doesn't categorize someone as rich anymore. My personal "I'm rich now - I'm done" number has gone from $3 million clear sitting in the bank to $10 million clear sitting in the bank over the 30 years since I graduated from college. I have a four-bedroom house that's 80% paid off, 10 miles from the population center where I work. My wife and I combined make much less than $250k per year, but since we spend less than we make we are relatively well off. All the anti-rich rhetoric turns me off. If you don't like the rich then figure out what they do and get rich yourself!|
Mike on 7/9/2012 3:33:04 PM
|Being content with what you have and what you do in life makes one rich. |
Making $250,000 a year provides a person with a comfortable lifestyle and a high tax bill, but still a difficult road to security from needing the next paycheck.
It does not afford the $250,000 earner with the idle richness that the administration is trying to imply to evoke envy on the part of many.
Tony Stinsa on 7/9/2012 3:38:23 PM
|I am amazed by the answers. Some are honest and say that expenses vary by where one lives. But others are ridiculous in saying that $250K is barely above homelessness. The fact is that a FAMILY can live VERY comfortably ANYWHERE in the USA on half that much money (after tithe, income taxes, college funding, and retirement savings).|
But, comfortable and rich are different things. Rich includes having a servant or staff. Rich includes a couple foreign vacations each year in first class. For "rich", one really needs to clear about $500K after tithe and taxes. With the I'll-bum-u plan, that means $5M/year before taxes, since he clearly wants 90%. Then, of course, you need to up the retirement savings so that you can retire at the same level, meaning you need to put aside $2.5M/year so that you will have $100M in the IRA at retirement. That means that you need to make $30M/yr in a 90% tax bracket in order to reach a sustainable $500K annual after-tax income. Of course, that won't work if you are tithing 10%.
So, the answer is not that you nees to make $1B a year to be rich, it is that you can get by easily with $1M/year if you just move to a nice Caribbean island that isn't going socialist.
Bob G on 7/9/2012 3:51:20 PM
|Charles, you are the Man. God did bless with you. Thank You Sir.|
James on 7/9/2012 4:10:01 PM
|NO, having 5 million doesn't mean anything today... This Obamie has no clue, he should listen to Charles Payne.|
James Hennessey on 7/9/2012 4:14:27 PM
|Our, my wife & I, annual household income is just above $250k and it's not what it used to be. While we don't carry any debt beyond a newly refinanced 15yr affordable mortgage, there's not all this money lying around. Our cars are 13 & 7 years old. It seemed to us through the years we've always been on the cusp of an income or tax threshold and it looks like that trend will continue. If $250k is the new threshold we will be at the bottom of the barrel getting hit hardest with the proposed tax increases for all earning 250 or more. 250 is the new 100 in 2012. Our 401k have balances that reflect pretty much what we've deposited (maximum allowed) along with a company match. Very little gain to speak of and have lost track of the loses over the years. And now it's looking like the withdrawals will be exposed to higher taxes than our predecessors. We have a few after tax dollars saved but not enough to even think about retirement. We payed for our three children's college out of pocket and now find that they still need continued support to survive out there. At 55, it's very frustrating and scary at the same time.|
Texrunner on 7/9/2012 4:16:13 PM
|No. Not anymore.|
Nick Salaita on 7/9/2012 4:36:01 PM
|No 250,000 does not make you rick. It means that you worked hard and sacrificed a lot to get there. Only lazy people don't know what hard work is.|
Butch Matherne on 7/9/2012 5:21:35 PM
|Absolutely not! My husband and I have worked hard for over 30 years to get to the $250,000 point. We live debt free except our mortgage, but our lifestyle is not extravagant. We're trying to set ourselves up to hopefully retire within 5 years. Why would you want to punish people who live responsibly and don't put a burden on the government or state?|
Darlene on 7/9/2012 6:38:23 PM
|I would not categorically say the $250k per year income makes one "rich." However, it is more than I ever made in my working life and I can afford most of what I would like to have or do. I think the important point should be that every American should have the desire to earn as much as he/she can and enjoy life as much as possible without being rediculed by a President who has done NOTHING in life worth remembering.|
Rick Day on 7/9/2012 7:28:18 PM
|You're not serious are you? $250k in Fairfield County is middle class. I still can't afford to live in Westport or Greenwich and save for my 2 kids college funds.|
Obama's war on success is the height of hypocrisy.
Steve Bayliss on 7/9/2012 9:26:19 PM
|I just wish the liberals would quit it already. Especially Obama. They are dividing our Country into classes which is no different than what was done in communist countrys of old.|
David Nunez on 7/10/2012 12:28:15 PM
|No, a household income of 250k does not make you rich... it can if you invest/spend correctly.|
james on 7/11/2012 10:21:19 PM
|No, depending on how many are in your family, it will either be a breakeven situation or you will be comfortable. Where you live is also a major consideration. When you are "rich" and your job is ripped out from under you, removing your ability to enjoy that comfort, it is a wonder to me that no one running for office has latched on to the obvious issue in this country of age discrimination. Heck no, $250K is definitely not rich.|
Connie Helgason on 7/12/2012 12:02:44 PM
|It depends on the individual definition of rich. It also depends on if there is more money coming in or more money going out. In other words there is no all inclusive answer to this question. People buy trash all day long thus making most of their purchases go to zero in value.|
Ben on 7/12/2012 4:41:30 PM
|I say most anyone who earns $5,000/week or $1,000/day, is rich because that's 4 or 5 times the national income average. Of course $250,000/year goes a lot farther in Texas or Indiana or South Dakota than it does in NYC, Illinois, West Los Angeles, La Jolla or Hawaii. So from that perspective it's all relative.|
SD Jerry on 7/13/2012 2:22:48 PM
W. Burlew on 7/15/2012 10:06:58 PM
|In a word, yes. But it's all relative, isn't it? Where you live, what you do for a vocation, which country you live in, etc. By world standards, you would be considered rich.|
Rose Hill, KS
James Carr on 7/16/2012 12:52:50 PM
|$250K make one rich?..... Only if you're single with no kids, no debts and no problem attaining a fat pension for the next 20 years|
Darren Harris on 7/16/2012 4:08:52 PM
Albert C. Perkins on 7/16/2012 4:21:01 PM
|No, and I say this as someone who is well below this rate and lives in a rural area. I also find it interesting that Obama's plan penalizes married couples. An individual can make $200,000, but a couple can only makde $250,000, or $125,000 each (for the President's math-challenged advisors). Once again the equal protection clause is gutted. All of this is being done to pay for about 8 days worth of government.|
T on 7/16/2012 4:38:59 PM
|yes&no depending where you live & your age|
roy on 7/16/2012 7:47:06 PM
|What does "rich" mean? |
Unfortunately, the answer is not simple. It all depends on where you live, your family size, and most importantly, your spending habits.
Up here in New Hampshire (outrageous property tax notwithstanding), a married couple with no kids can live comfortably on $250K and save 1/3 to 1/2 of it. A family of four just outside the DC Beltway in Virginia (my son's) barely gets by on $250K.
At any rate, the tax argument is a Red Herring. The problem is Congress' passion to pander to voters to get reelected. They know we cannot continue to spend more than we make, but they simply do not care as long as they get re-elected.
Of course, just my humble opinion.
David Cox on 7/16/2012 11:39:18 PM
|I make 20,000 dollars a year, I live with my mom, I go to school full-time and I work part-time. I wake up everyday wanting more in life. I find it absolutely pathetic for the Federal Government to decide how much to define people who are rich. When has mediocrity when adored in this country? What incentive does the state of the tax system give businesses to hire workers who want to climb the economic ladder? What it boils down to is less revenues to Treasury, deficits and decline, higher unemployment, the crowding out effect of private investment in the market due to high issuance of treasuries, and less risk taking and future opportunity for this country. What the government should do is return non-security spending to 2008 levels- that is a $100 billion in savings. They should index Social Security benefits to inflation, there is another $85 billion. Next the Federal Government should block grant Medicaid and Repeal Obamacare, there is $300 billion in savings. Next, we should apply StrongAmericaNow Lean Six Sigma to every federal agency and save 500 billion in savings. Then the government should reform the tax code like a flat tax in two brackets 10% and 25%. We keep the investment taxes at 15%. I just hate people that demonize those that are successful.|
Ryan Duncan on 7/17/2012 1:49:21 AM
Add a Comment!