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9/11/2012 4:28 PM
Lindsay Makes Sense????
By Charles Payne, CEO & Principal Analyst
"I've cut taxes for those who need it: middle-class, families, small businesses" President Obama Tweet
"@Barackobama we also need to cut them for those listed on Forbes as "millionaires" if they are not, you must consider that as well." Lindsay Lohan Tweet
Beyond the fact the Lindsay Lohan did more harm to her Hollywood career with that single tweet than any drug addiction, impulse to shoplift, or reputation for showing up late for filming ever could, she hit on an important point. The proposed tax hike on families earning more than $250,000 is destructive and unfair. It's unfair to label these households "rich" and to hint they somehow got all the breaks and are taking advantage of poor people. Yet, this is exactly what President Obama is doing and without a trace of contrition.
Calling someone a millionaire that clearly isn't a millionaire is wrong on so many levels, but these days the speech has been altered to calling these households "billionaires," and in the heat of the moment—usually on a college campus where romanticism rules—you will hear these people described as "trillionaires." Small businesses that are producing jobs would be crushed by higher taxes. The fact is, most businesses aren't using tax breaks offered by the administration, which is fine with me, as I prefer they hire people instead of buying a new copy machine for accelerated tax write offs.
Liberals are having a field day with the Lohan tweet because shooting the messenger is easier than shooting fish in a barrel, and the message gets taken down in the process. I think my first reaction was feigned concern for this over pampered Hollywood brat, but a second look at the tweet (not her face), and she actually hit the matter squarely on the jaw. The bulk of people that will feel the Obama tax onslaught are not rich but successful through individual effort. This brings me back to my top conviction; this entire policy is more about punishment than economics. It is destructive, mean-spirited and will fail miserably.
At the rate this administration is spending money, a time will come when the "fair share" argument will drift to those households earning $100,000 a year. The utopian state envisioned for this nation is a money-eating monster. The more people lose their jobs and the more corporate profits are raided, the fewer jobs are created as entrepreneurship is discouraged and the lack of accountably from watered down education will mean high paying jobs will shift abroad, and all this means more people on government assistance.
People that succumb to the urge to take money earned by others to right the wrongs of yesterday or to assuage their own feelings that things are unfair must understand that that mindset is no different than going outside and hitting someone at an ATM machine with a brick.
We can joke around that more often than not Lindsay Lohen sounds like she's been hit over the hit with a brick or even in the face, but her tweet is a punch to the gut once we get over the source and to the heart of the matter.
I'm becoming more anxious about the market, and after the late summer rally, we'll need to see better numbers. For now, Fed action is pushing money to a point where it has no choice except to go to work, and that means inflating equity and home prices. It also inflates other things like milk and bread prices, not to mention gasoline. We know we can't fight the tape, but we have to look beneath the surface. The sun is shining harshly from a string of poor economic data, so we can keep skating, but let's understand the ice is thinning.
There is an old saying about canaries in a coal mine, and I think that applies to consumers and credit cards, too. The experts were looking for July consumer credit to expand by $9.2 billion, but instead it declined $3.3 billion and June was revised to a decline of $9.8 billion. The red flag is revolving credit (credit cards), which decreased $4.8 billion during the month. I suspect people are using debit cards, which means spending cash, and while this can stop many from getting in over their heads, it dovetails with a larger narrative that feels like more and more we are living for the moment with less faith in the future.
They are giving away sub-prime loans on cars, and the government is pumping college loans to a tipping point.
The good news, however, is that loans in China surged $111.1 billion last month.
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