The pandemic clock chimes three: “We’re not in Kansas anymore”

To quote an historical figure who will be nameless here: “There are decades when nothing happens; and then there are weeks when decades happen.” As many of us can sense, we may well be in such times. Two months ago we were governed with our consent (mostly). We had life, liberty and were pursuing happiness each in our own special way. We then entered an unprecedented national societal lockdown and told, for own safety, not to venture out. We complied – because literally there was no place to go. As time wore on, a trip to the supermarket became the highlight of the week.

We were told, “just a month longer.” We grew mighty restless. We materialized at our state capitals to petition our petulant rulers with our justified grievances. We were scoffed at, ridiculed, lectured, humored…anything to disperse us for the moment. As we returned to voluntary confinement, our “non-essential” businesses atrophied by the day. And then there were murmurs of a coming lifting of the insufferable pall. Yes, there will be a reopening, but our rulers warned – “not so fast…there will be rules…there will be a new normal.” Again, that term we have come to despise. It’s code for changes decreed under cover of a crisis. We’ll take plain normal, thank you.

And they weren’t kidding. Home Depot can open, but if you open your hair salon you’re going to jail. You can push your child in her stroller on the sidewalk, but if you push her on a swing in a park you’re taking a ride in a squad car. You must be masked in public, and if you don’t wear it properly in the New York subway you’ll be body slammed on the platform by six transit police. You’re now welcome at your local restaurant but only if you eat outside. You can have a drink, but only with a meal. If you’d like one at the bar, you may not – but you may get one to go. And if you’re dining in Washington state, Governor Inslee will have your name and cell number recorded just in case there’s virus lurking and you must be tracked down. What could be a more naturally social distancing setting than a beach (and Coronavirus hates sun and heat). But if you head to one of Long Island’s endless beaches and decide to stop and pitch a blanket, Governor Cuomo will have you summoned. And don’t even think of going in the water. If you do, NYC mayor de Blasio will have you removed, and you may ruin it for everyone, as he has threatened to fence off the water at Coney Island – just because he can.

Yes they’re jailing us for cutting hair, but they’re releasing criminals from prison “for their own safety” onto the public streets. You can go to church but only online – cause they’re handing out $500 fines for attending services in your car in the church parking lot. You can run a NASCAR race – but only if there’s no one watching in the stands. Illegals in California are now invited to apply for pandemic relief checks. Both legal immigrants and illegals can enter the U.S. with no bio-testing, but it’s said our rulers are rumbling about requiring immunity tests for citizens to come out in public. Of course this entire piece could be filled with such examples causing us mental backflips. But as Ayn Rand was fond of saying, “there are no contradictions – check your premises.” So, if most all of these measures seem insidiously confounding on their face, is there an organizing theme?

Any illumination requires we see past the immediate paranoia and widespread concern generated by the chaotic development of the Pandemic. Though the national cues were taken from the Coronavirus Task Force, the actions which have impacted our lives and communities have largely emanated from the governors’ offices. And while their motivations and justifications surely vary, tactically they involve heightened control and surveillance of the citizenry. The initial lockdowns descended upon us swiftly in mid-March. With the expectation they would be short-lived we played along “just to be safe” and to keep the healthcare system from being overwhelmed. But we were quickly bait-and-switched with a barrage of case, hospitalization and fatality data, into another thirty to forty five days of lockdown, lest we open too soon and risk the Son of Coronavirus in the fall!

The financial catastrophe envisioned in the first tick of our pandemic clock was now becoming real for small business owners, but state control rendered them unable to take action. While we were effectively under house arrest, our TVs blared at us from all channels that “we’re all in this together.” No we aren’t – the people who are incessantly telling us this, all have jobs. We’re told to clang pots and pans daily at 7pm to thank the healthcare workers and we’re shown pictures of people doing exactly that on the evening news. They’re testing our patience and testing our limits. To many of us it all feels like a psy-op. And just when there seemed to be a new state-capital protest each day, our rulers finally released some steam from the national pressure cooker, as limited reopening activities commenced state by state. But many businesses are mandated to function under the most ludicrous and financially debilitating regulations.

One only has to look back over the past few decades to see that government power, extended during a crisis, is never, ever fully returned to the people. Our Constitutional rights are consistently ratcheted away from us, and this episode promises to be the worst case of our lifetimes. The Pandemic has now been politicized and we can see distinct differences in the approaches of red vs. blue states.

In the blue states, generally home to the big cities teaming with knowledge workers, the governors are taking a hard line and are slow to reopen. “Stay at home, don’t be selfish, consider the health and safety of others” rolls so easily off the tongue of someone comfortably working from home, but still expecting their supermarkets to remain open and stocked. These people may never have faced real life risks before. Why should those who don’t daily face real risk have so much control over the rest of us who do? The unconnected workers and small “non-essential” business owners who are out of work and have so much more at stake, feel like they’re being incinerated by capricious government decrees, and those who issue them. Red state people know safety cannot be assured – we flattened the curve, now let’s get on with it.

Blue state governors are generally in worse financial shape, and have traveled to the White House seeking federal bailouts under cover of the pandemic. They are slow to open, worsening their financial condition, perhaps to bolster their case for a federal bailout, or perhaps to further weaken the economy to impair Trump’s prospects. Here in Connecticut, Governor Lamont has laid off his responsibility to the Reopen CT Advisory Group, a bevy of some 48 members, meeting in private. They announced a three phase reopening orchestration which stretches into the last days of July, and concocted a grid of metrics by which they can easily move the goal posts should they see fit. We small business people formed the “Council of Non-Essential Businesses” and just filed a FOIA request with the governor’s office to obtain access to his Advisory Group’s deliberations. It may be denied and we’ll have to sue. That’s what it’ll take to regain our rights. Over in the UK, when asked last week what he’s learned during this ordeal, Prime Minister Boris Johnson noted, “I’ve learned it is much easier to take people’s rights away than to give them back.” Ain’t that the truth!

In selected U.S. cities they’ve put drones in the air to monitor social distancing, and some have the capability to measure the relative body temperatures of the people under observation. Others have speaker systems ready to bark orders from the sky should we stray from proscribed behavior. Then there’s the steady hectoring that there’s not enough testing and tracing – now coupled with murmuring about a soon to be released phone app to do exactly that. Soon we won’t be able to leave our homes without a test and a phone with the tracking app in our pockets – don’t doubt it.

Yes, as our pandemic clock strikes three the theme is control and its coercive cousin – surveillance. They are on the march and must be met. No, we’re not in Kansas anymore – don’t know where we are exactly – could be at the dawn of the seventh crisis.

Ocasio-Cortez and her plan for the 70% tax rate bracket

There has been enough commentary on Alexandria Ocasio-Cortez’s (D-N.Y.) suggestion to add a tax bracket of 70 percent for income earned more than $10 million that I need to chime in. We’ve all heard the cries of “the rich don’t pay their fair share” for years. It’s a complete lie and I’ve discussed it in at least one column in the past.

So how does Ocasio-Cortez’s plan hold up? What does it do, how many people will it affect and more importantly, how much money will it bring in?

It’s not hard to calculate an estimate. I headed to the IRS website, and hunted down data including Individual Statistical Tables by Size of Adjusted Gross Income. Then I opened the 2016 spreadsheet for All Returns: Selected Income and Tax Items. (2016 is the most recent data provided.)

In that spreadsheet, we find:

  • There were 16,087 individual federal returns who had an adjusted gross income more than $10 million
  • That’s 0.0107 percent of all returns. Yes, that’s about 1/100th of a percent.
  • Those 16,087 individuals (or families) currently pay 5.6 percent of the total federal income tax collected

Stop and look at the last figure again.

The spreadsheet shows the average adjusted gross income for those 16,087 making more than $10 million is about $30 million. So at best, Ocasio-Cortez’s plan would bring in 33 percent of $20 million, multiplied by 16,087. (Families currently pay 37 percent income tax on earnings more than $600,000, so the difference is 33 percent.) That’s $6.6 million per family, or a total of $106 billion.

So the plan is to confiscate $106 billion per year from 16,000 families who are already contributing more than 5 percent of the income tax collected.

And that’s a best-case scenario where no families take legal steps to reduce their tax burden. And trust me, they will do everything possible and legal to reduce their tax burden. Including electing to not make that much. Would you work harder to take home less than 30 cents of every dollar you earn?

Don’t forget many are paying state income tax. In Connecticut you’ll take home less than 24 cents for every dollar earned. California? How about less than 17 cents?

The federal government spent about $4 trillion in 2016. $100 billion is 2.5 percent of the total amount spent. The 2016 federal deficit was $587 billion. The increased tax collected – if this plan was implemented in 2016 – would not even cover 20 percent of the deficit.

And get this, even if we confiscated 100% of every dollar those 16,000 families earned in 2016 … we still would have been $105 billion short of covering the deficit! That’s a hypothetical that could never happen, but it is illustrative of the problem.

Stefanowski and the payday loan business

A post in the Washington Times this morning concerning Connecticut’s Republican candidate for governor Bob Stefanowski’s previous business ventures caught my eye. I wrote about payday loans previously about eight years ago, so I thought I would revisit the subject.

Stefanowski led DFC Global Corp. in Pennsylvania for a couple of years during 2014 and 2016. DFC Global provides financial services – short term loans and other services – to “unbanked and under-banked” consumers. When pundits refer to “payday loans” it’s in-part reference to unsecured short-term consumer loans. These are the type of loans your local bank is normally not interested in providing.

No matter what you hear from the pundits, the short-term, unsecured loan market is regulated by the federal government and individual states where they are legal. The other important aspect is there is a demand for loans less than $250 for days or a couple of weeks.

There are many who will heavily criticize Stefanowski for “taking advantage of poor people.” Others will point out payday loan outfits provide a needed service to a community not being served by traditional financial institutions.

In Connecticut, payday loans are pretty much illegal. The state legislature ensured that by capping the interest rate at 12 percent. If you need $200 to cover your car payment for the next week until you get paid – hence the term payday loan – you’re totally out of luck. There is not a financial institution in the state who will help you. The risk is way to great for a return for a profit of about 53 cents. ($200 at 12 percent for about one week.)

I took a look at the website for a large payday loan outfit in Florida. It took me about three minutes to locate their finance charge schedule. The first think you’ll notice is the annual percentage rates … they are between 286 and 521 percent. If you have moral objections to these interest rates, that’s fine. But I’ll ask you to take a closer look.

In Florida, the amount financed can be as little as $50, and up to $500. If you need $300, you’ll owe $335 in two weeks. (That’s a 304 percent interest rate.) You’ll need to meet certain qualifications and present some required items to get the loan, but you’ll get the money you need. The loan term is between 10 and 31 days. Again, these are short-term loans.

As I mentioned, I wrote about payday loans almost eight years ago. I’ll use the numbers above for another example.

… let’s say you have to make a $300 car payment today, but you will not have the money to pay the debt until your next paycheck coming in two weeks. We’ll lay out two options for you.

Option 1: An offer of a $300 loan – due in two weeks – that you will have to pay a $35 to get. (Total cost $335)

Option 2: Car most likely repossessed within the next 14 days.

What would you do? If you morally object to the $35 interest charge, what would your advice be to that person? Be honest with the answer. If you morally object to the rate paid, would you be willing to invest in a company offering financial services to underserved customers at an interest rate you find morally acceptable? What would that rate be?

Below is the video I included in my previous post for reference. Some information may be out-of-date.

Note the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 – passed and signed four years prior to Stefanowski running DFC Global – gave the Consumer Financial Protection Bureau the power to oversee financial products and services, including payday loans. (They really did not start implementation until 2012.) President Obama promised he would limit payday loan rates to 36 percent. Although some sources say he kept his promise, those same sources note…

It’s worth noting that the 36 percent interest cap, something Obama specifically cited in this promise, is not included in the new agency’s purview.

Nice how the “fact finders” lie is it not?

Final comment. There has been plenty of discussion and articles concerning the Trump administration’s proposed changes to the federal act passed in 2010. Sorry, but I just do not have time to dive into any of that.

Trump budget increases Medicare funding $4 trillion in next decade

After seeing dozens of news reports about “devastating cuts” to Medicaid, you might think the Trump budget reduces the amount of spending on Medicaid. In reality, the proposed spending for Medicaid would increase by $4.7 trillion during the next decade.

Welcome to the world of baseline budgeting. Forecasters assume spending will go up in future years, and if a new budget still spends more – but less than what was planned previously – the media gets to use the “cut” word and liberal politicians get to claim “this budget will kill people.”

I have a huge problem with the way the media deals with this. But it really should be expected, since most are in total support of the liberal agenda – and the goal to destroy the Trump administration. You’ll have to ask them why they refuse to take just a few moments to provide the real information, instead of dishing out not even half the story.

Let’s say you take over leadership of a large sports apparel marketing department. Your budget this year is $1 million, and your predecessor’s budget assumed a $100,000 increase in spending every year for the next 10 years. Eventually, the budget would be $2 million per year.

You’ve been hired to run the department more efficiently, while still providing a quality product and good service. You work with your team and come up with a budget that increases $50,000 each year for the next 10 years. Your budget will be $1.5 million per year 10 years from now.

After you release your budget plans and inform the media, the financial reporters announce you’re cutting the marketing budget to the tune of $500,000 over the next decade. How absolutely absurd is that?

That’s exactly what the mainstream media does. And the liberal politicians love it. They absolutely love to cry wolf, claiming the Republicans and the Trump administration have no problem with kids and adults dying with “no access” to health care. Right from the playbook.

ABC News is the only mainstream media outlet to attempt to explain this. That said, they still used the term “artfully evasive” when referring to Budget Director Mick Mulvaney’s real-world, easy-to-understand explanation. But still, right there in the story, they admit…

So, yes, Medicaid spending would increase by $4.7 trillion over a decade.

I guess they figured they had to explain things in a “AP Fact Check” article.

Below, is Mulvaney’s tutorial during a press conference earlier this week.

Wondering how bad it is? Just take a look at media headlines concerning Trump’s budget. Keep in mind, the proposed budget* does not cut funding dollars much at all, if anything. The federal government spends more and more every year.

The above are just a few of the examples. In my world, if you spend more money next year than you did this year, you’re increasing your budget. Sure, many will claim it’s “more complicated” implying you’re too stupid to understand. Many will state it’s important to look at budget numbers as a percentage of GDP. Many will state it’s important to consider inflation. Fine, do that if you wish, but stop claiming there are cuts. Be honest, and say the budget reduces the previous administration’s rate of growth. We’re spending more than previous years, just not as much as proposed previously.

Don’t let the media and Washington insiders brainwash you with claims of “devastating cuts” to any program when the federal government’s budget for those programs continues to grow.

* The Trump Administration did remove the budget [PDF format] from the White House website. Do you blame them? In the document they clearly show increases in spending, but the media ignores the facts. I don’t blame them for pulling it, why bother even publishing it if the media will lie about it?

Clinton actually tries to walk back her “businesses don’t create jobs” statement

Hilarity from Hillary. Really? Really? Hillary Clinton’s statement at the Elizabeth Warren event was clear as day. It was clear and concise, and now liberal news outlets are claiming she fumbled the line?

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Billionaire USA families couldn’t cover one-fifth of Obama’s deficits

It’s time to bash the wealthy! News media love to tell the common people just how rich the top 1 percent are, letting us know what kind of stuff they own and remind us that most of them contribute to [evil] Republicans.

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The value of a mortgage investment vs renting

Recently, we’ve seen multiple news stories suggesting buying a home and having a mortgage is not necessarily a good investment, and when making the decision to buy a home, you really should not consider it as an investment vehicle since your “rate of return” would suck. Why has this become a news-cycle theme all of a sudden?

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Does a higher minimum wage effect job stability?

Jim asked me to reference this article as he plans to discuss it on the big radio show this morning between 9 a.m. and noon on WTIC. The minimum wage has been a frequent topic here at RVO, and this story illustrates another – yet foreign – example.

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Hinderaker: Obama is a liar of epic proportions

So true it seems. Our friend John Hinderaker over at Power Line reflects on the just-released Obama administration 2015 budget proposal and President Obama’s own comments concerning the budget at an elementary school in Washington, D.C. earlier today.

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Minimum Wage… President Obama, where does the extra $3 come from?

It’s a very honest question, but my guess is nobody – not one person – will dare to ask President Obama when he arrives at my alma mater on Wednesday. When you arbitrarily increase the minimum wage one, two or three dollars per hour, where does the money come from?

On Feb. 4, Gov. D.P. Malloy (D-Conn.) put forward the notion of a $10.10 state minimum wage. He says phasing in the increase over three years will “move as many people as rapidly to the middle class as we can.” Malloy’s lieutenant, Nancy Wyman said the change “will not put any kind of burden on our employers and it will start to really help those people that work the hardest.” Got that?

  • You people who make $20 per hour don’t work as hard as those making minimum wage,
  • there will be zero burden on employers, and…
  • the result will be to move people “rapidly” to the middle class.

Hail the utopia! But the same question must be asked of Malloy and Wyman. Where does the money come from?

I know where the money comes from, and I’ve written about this multiple times. When you raise the minimum wage one quarter from the current $7.25 federal minimum, that’s a payroll increase of at least 3.5 percent, and for a small business with 20 teenagers working 20 hours a week in the summer, that’s “only” $100 per week, or $433 per month.

But where does it come from? Businesses can and will end up doing a combination of the following.

First, they are going to see if they can increase prices for their goods and services. Of course, you can’t blindly increase prices as a result of higher costs, because demand is changed by price. It would be nice if you could tell customers your price is higher because your costs are higher and they buy anyway, but consumers make decisions on price, quality and service. You’re not guaranteed they will buy, and some will go elsewhere.

Of course, higher wage costs for low-wage employees effects those making more than minimum wage. Union pay scales are based on a minimum wage. If the minimum goes up, everyone’s wages go up. When consumers are paying more for goods and services, isn’t a portion of their wage increase flowing right out of their pocket for the higher prices? That’s what we call inflation don’t ya know? Nobody wins.

Second, the business owner can take a look at their own salary. Some will certainly be willing to take a cut in pay and hand some of it over to employees, but business owners have bills to pay and a retirement to plan for too. Remember, the entire sales pitch from Obama, Malloy and other Democrats is people making minimum wage are not being treated fairly by business owners, and the government must step in to solve the issue. That theory ticks me off to no end.

That $433 per month (or whatever) could be money the employer planned to use to expand their business through a variety of means. Maybe now they won’t do that? Maybe they wanted to start increasing the staff from 20 to 22 to 24 to 28 to 40? Maybe they wanted to increase hours and make more employees full time? Maybe that won’t happen now?

Third, they have to look at the value of the employees they currently have on staff. If the minimum wage goes up – let’s say from $7.25 to $10.10 like Obama did with a stroke of a pen for federal employees a couple of weeks ago – can the business owner get a higher quality employee for $10.10 as compared to $7.25? We know they can. You might be worth $7.25 per hour to the business, but you might not be worth $10.10. If you’re not, you get laid off and replaced by someone with more experience.

Fourth, they look at their total payroll. Can a business owner cut the payroll costs of those making minimum wage and get the salaried employees to pick up the slack? Give more hours to the more experienced employees making more than minimum? Would the business owner be willing to step in and work more hours? Would it make sense to open the business at 10 a.m. instead of 9 a.m.? Those are all real-life examples of what small business owners look at!

Finally there is benefits. What benefits are necessary? What benefits are mandated? What benefits can be cut? Those training programs small employers offer employees to improve their value to the workplace costs money, and a small business might just cut the funding for training and development of employees.

That’s where the money comes from, and it’s an honest evaluation. What good comes from those changes? If you claim more money will allow you to contribute more to the economy, get a nicer apartment for your family or maybe buy a home, you totally missed the point of the previous seven paragraphs. Let me make it clear, if you don’t think there is a connection between the rent you pay and the minimum wage, you’re head is buried in the sand. By no means is it a one-to-one connection, but when a landlord or property management company is mandated to pay a higher wage to employees and contractors, your rent goes up.

Got that?

The left’s argument is specific to “raising people out” of poverty, and that it’s impossible for a family to earn “a living wage” when they only make minimum wage. Pulls on the heart-strings does it not? Yet, they know it’s not that simple, and they refuse to discuss where the money comes from, and you should know why.

Don’t let emotion rule the day. It’s an election year, politicians want to hand out candy for votes. Don’t be a low-information voter. Share this post with someone who thinks the minimum wage will improve the economy for individuals and start a conversation.