4 years ago I was in grad school with a stipend, student teaching, and in the summer had a paid graduate internship at the National Gallery. Right now I make $0 a year. I guess that means I am worse off. It is Bush's fault. I know somebody else who had a great job in HR 4 years ago and now makes $0. She is worse off. It is Bush's fault. 2 > 1.
The Gini index for the USA has increased from 40 to 45+ since 2000, which indicates a rising gap in incomes between rich and poor.
The economy is booming in large part due to the influx of cash from a huge amount of government spending....medical expenses, disaster recovery and every industry associated with war products. Even businesses not directly associated with the government are getting the pass through effect providing goods and services for those people who are directly benefiting from it. This is all well and good until the bills come due; you think you are flush but in fact, as a US taxpayer you are toting a note for about $100,000 for your little family of four. America is flush with material goods because there is a giant new manufacturing economy in the world that is willing to work hard with little or no benefits and little or no controls on safety or pollution and is willing to exchange their products for your credit. At some time in the future China is going to want to cash in on some of it's US bonds. America is flush with construction because we have an exploitable labor force of 10 million people who will work for low wages and little benefits. It's not exactly like building the Pyramids with slaves but it's the same idea. The Federal Reserve has maintained interest rates are at historical lows allowing for a lot of investment liquidity. Normally this would fuel runaway inflation but the factors mentioned above have kept things in check. For my whole life, my baby boom generation has been in the sweet spot of priviledge and we will milk it for all it's worth, future responsibilty be damned. So you kids better get educated and get a good job, you've got all my medical bills to pay and I want to live to be 100.
Hmmm... When it comes to Bush's handling of the economy, 23% approve and 73% disapprove. http://politicalwire.com/archives/2007/07/23/bush_hits_25_approval.html
Most of you who say you are doing better, is your family making more than 75K or even more than 100k per year? If that is the case. you are in the top 25% of families by income. If I recall I had a poll here and vast majority of us make more than the median income for their state.
in all fairness, halliburton, the vice presidents former company moved to the united arab emirates. they are no longer an american company. they arent the only big company leaving these shores either. if it is so great, why are all these companies leaving the u.s.?
A weak dollar is nothing to worry about. It means that American goods can be more easily sold abroad, which is good for us. One of the reasons China's economy is doing so well is because the Chinese government keeps the yuan artificially low. The American economy is booming.
http://www.chron.com/disp/story.mpl/business/4958006.html BEIJING — A flurry of safety warnings about Chinese goods from toothpaste to tires failed to dent the world's appetite for China's exports in June. China's trade surplus hit a new monthly high as foreign consumers snapped up electrical appliances, clothing, low-cost furniture and other products the world depends on China to supply, according to government figures released Tuesday. The figures appeared likely to add to U.S. pressure on Beijing and calls in Washington for sanctions, despite Chinese efforts to rein in the trade gap. The June trade surplus jumped more than 85 percent to $26.9 billion from the same period last year, the Chinese General Administration of Customs said on its Web site. That pushed total surplus for the first half of the year to $112.5 billion — breaking the $100 billion barrier for the first time in a six-month period, the agency said. Exports in June soared by 21.7 percent to $179.6 billion, the customs agency said, despite decisions by the United States and other governments to recall or impose controls on tires, toothpaste, seafood and other goods from China deemed tainted or unsafe. Imports grew by 14.2 percent to $76.4 billion, the agency said. The official Xinhua News Agency said Tuesday the government was taking another step to rein in the surplus by eliminating an 8-year-old program rewarding big foreign earners with low interest rates and other privileges. Import growth has slowed from government efforts to contain booms in construction and investment it worries could cause a financial crisis. The efforts have cut into Chinese purchases of factory equipment and other foreign goods. Critics of Beijing's trade record say China keeps its yuan undervalued, giving its exporters an unfair price advantage. Some U.S. lawmakers are calling for legislation to impose punitive tariffs or other controls on Chinese imports if Beijing fails to let the yuan rise faster. The U.S. reported a $232.5 billion trade deficit with China last year — its biggest ever with any country. This year's gap is expected to exceed that.
Well if you had taken all your money in 2000 and put them in the euro you would have made about the same as putting is in the us stock market 7 years ago.
Tax Break Used by Drug Makers Failed to Add Jobs By ALEX BERENSON Published: July 24, 2007 Two years ago, when companies received a big tax break to bring home their offshore profits, the president and Congress justified it as a one-time tax amnesty that would create American jobs. Drug makers were the biggest beneficiaries of the amnesty program, repatriating about $100 billion in foreign profits and paying only minimal taxes. But the companies did not create many jobs in return. Instead, since 2005 the American drug industry has laid off tens of thousands of workers in this country. And now drug companies are once again using complex strategies, many of them demonstrably legal, to shelter billions of dollars in profits in international tax havens, according to their financial statements and independent tax experts. In one popular accounting move, companies declare their foreign markets as far more profitable than their American businesses — even though drug prices are typically higher in the United States than anywhere else in the world. Drug makers are not the only American multinationals using tax loopholes to declare large portions of their income beyond the reach of the Internal Revenue Service. The Brookings Institution estimates that multinational companies are using overseas tax shelters to lower their payments to the Treasury by about $50 billion a year. But the drug industry accounts for one of the biggest portions of that shortfall, according to the I.R.S. and independent tax experts. And the nature of their business gives drug makers techniques, like sheltering valuable pharmaceutical patents in tax-friendly havens like Ireland, that many other industries cannot use. Moreover, the sheer heft of the American drug industry, which had about $60 billion in pretax profits last year, can give disproportionate weight to the economic impact of its tax sheltering techniques. Even though the tax amnesty legislation has expired, its passage encouraged companies to be even more aggressive about sheltering money, expecting another holiday in the future, said H. David Rosenbloom, director of the international tax program at New York University. Democrats and Republicans supported the legislation, which passed with sizable majorities in October 2004. “Congress can swear on two stacks of Bibles that it’ll never do it again,” Mr. Rosenbloom said, “but they’ve lost their virginity.” With a few narrow exceptions, the drug companies are supposed to be paying as much as 35 percent of their worldwide profits in United States federal taxes. In reality they pay much less. Last year, for example Eli Lilly, the sixth-largest American drug maker, paid less than 6 percent of its profits of $3.4 billion to the United States government, according to its financial statement. Amgen, the American biotechnology giant, which reported last year that 80 percent of its $14.3 billion in sales occurred in this country, paid about 22 percent in United States federal tax on its $4 billion in profits. The discrepancy was possible because Amgen claimed a profit margin of almost 100 percent on its foreign sales, but only 15 percent on its American sales. The I.R.S. has recently increased the number of examiners trying to find hidden profits overseas. It has even had some victories, as in February when the drug maker Merck agreed to pay $2.3 billion to the government to settle a claim it had hidden profits in a Bermuda partnership. “This is really a priority for the service right now — there’s a lot of focus on cross-border transactions,” said Frank Y. Ng, the I.R.S. deputy commissioner for international tax matters. But even after adding resources, the I.R.S. has only about 500 examiners to review international returns. Lilly said in a statement that it complied with the law in taking advantage of the 2005 tax amnesty, which enabled the company to avoid more than $2.3 billion in American taxes. Lilly said it believed that the 2005 tax break had encouraged investment in the United States, noting that the company, which is based in Indianapolis, has invested $1.3 billion in the state of Indiana alone. Still, since the beginning of 2005, Lilly has cut its United States work force by more than 8 percent, reducing it to 22,000 jobs by last January. Lilly also noted that its overall reported worldwide tax rate for 2006 — which includes taxes paid to other countries and taxes that it has deferred but will theoretically pay at some future date — was about 20 percent in 2006. Pfizer, Merck and Amgen declined requests for comment. Tax experts like Michael J. McIntyre, a law professor at Wayne State University in Detroit, say the drug makers are taking advantage of antiquated rules that work better for manufactured products like steel and automobiles. Under this system, when companies transfer products between divisions in different countries, they must account for the sales internally through “transfer pricing.” But they have significant discretion in how they set prices for these transactions. That turns out to be especially so for high-margin products like drugs, which in pill form cost only a few cents each to make once they have been invented, but can be sold for several dollars apiece. The hefty profit margins result in part from patents that can protect the drugs from competition for years. And by transferring those valuable patents overseas, companies can declare that their profits should follow the patents overseas as well. Under the rules of transfer pricing, if a company moves patents or other so-called intangibles from its United States division to a foreign subsidiary, the foreign unit is supposed to pay the American division a fair-market price. But outsiders have a difficult time determining if companies have properly assessed the value of patents, trademarks and other intangible properties. To further complicate matters, some corporate subsidiaries in tax-haven countries, like Singapore and the Netherlands, now directly finance research in the United States. So they own the patents without ever having to “buy” them from their American parents, Mr. McIntyre said. “They don’t even have to push it offshore,” Mr. McIntyre said. “It’s already offshore. And once it’s offshore, they strip the income from the onshore activity.” In theory, companies are only deferring taxes on the profits they shelter overseas, not permanently avoiding tax. If they bring the money back to the United States to distribute to their shareholders, they still have to pay American taxes on it. But those rules were temporarily suspended when President Bush signed legislation in 2004 to let companies return overseas profits at a rate of 5.25 percent, far below the official tax rate of 35 percent, if they moved the money back by 2006. During that period, multinational companies of all stripes moved a total of about $300 billion into the United States, avoiding about $90 billion in taxes. Among them, the pharmaceutical industry was the largest single beneficiary. Leading the pack was Pfizer, the world’s largest drug company, which repatriated $36 billion. The quid pro quo was supposed to be that the drug industry would invest some of its tax windfall in American operations and jobs. Instead, struggling with a dearth of new blockbuster drugs, they have had mass layoffs. Again, Pfizer has been the leader, reducing its work force by about 8,000 in 2006 and saying early this year that it would lay off an additional 10,000 employees. Some experts now say the current system of taxing overseas profits should be scrapped. Even the companies that take advantage of loopholes might benefit if the system were changed, because they could save money on tax planning and have more certainty that the I.R.S. would accept their returns, said Michael C. Durst, a former I.R.S. official who is now special counsel to the law firm Steptoe & Johnson. The simplest solution, Mr. Durst said, would be shifting to a system in which companies would assign a portion of profit to each country where they made a sale, relative to the size of the sale. Instead of trying to tax profits made overseas, the United States government would simply take its share of the profits on American sales. Such a system would be harder for the companies to game, Mr. Durst said. But he and other tax experts say that any effort to close loopholes, to be politically viable, might have to be combined with a lowering of the corporate tax rate from its current 35 percent. And no one expects any legislation of that sort, at least not before the next election. http://www.nytimes.com/2007/07/24/business/24drugtax.html?_r=1&ref=todayspaper&oref=slogin
Well since our economy is debt based... if it is booming it means people and the govt. are still borrowing loads of money, there is a direct trickle down effect, money borrowed, fuels consumer spending, fuels company profits, fuels payroll levels the more we borrow the more we spend the more we spend the more companies prosper... When the dollar is declining against currencies you don't get alot of people investing in dollars. So the Fed has to manage this so that the dollar declines enough to absorb the increased debt load and doesn't decline so much that creates devaluation affecting consumer spending (devaluation of the dollar is the real definition of inflation). As long as we can keep increasing the debt load and our purchasing power is strong because our ability to borrow more money is strong, the economy will continue to expand and grow. Inflation is the result of the debt load getting too big too fast, thus causing a too rapid decline in the dollar. As long as the dollar loses value prices climb, when the dollar is strong and imported goods are cheap, prices tend to stabilize or even go down. The Fed walks a tight rope to keep the dollar propped up, but allowing 'soft' bubble pops (little raising of interest rates) keeps the spending flowing with the borrowed dollars while at the same time doesn't flood the market with dollars. It is quite a circus act to keep America prosperous. A bubble is just a large increase in debt that triggers spending. The tech bubble was created by speculation and debt. Tech start ups were everwhere, I have a friend who lost 5 million on a tech start up during the bubble. The real estate bubble has bolstered the economy for the past 8-9 years, this was a huge bubble as billions and billions were fueling the bubble in housing and real estate. This has pumped huge amounts of spending dollars into the economy, at a time when the dollar was fairly strong also, this gives a tremendous illusion of prosperity... Expect the Stock Market to continue to trend up maybe up to 15000 until the debt is back breaking and the Fed starts the interest rate lethal injection. Then it is correction time baby or in other words a little house cleaning. The Fed has to have these adjustments. When this happens it will probably take three wage earners to keep the standard of living that 2 are keeping today, so keep a friend or son or daughter handy. However all debt based economies come to an end.. This one we are in can't last probably another 10 years unless manufacturing returns in a strong way, debt is reduced significantly and personal savings increases strongly. The true measure of our prosperity is not how much money you make, not how many BMW's you own or how big your house is... The true measure of wealth is how many liquid hard assets you have verses your debt load. Don't forget to include your federal debt load which last I checked was about $65,000 for every man, woman, and child in America. This means if you have a family of 3 today you would need to cough up $195,000.00 to make the govt. solvent,, or pay off the federal debt (that is if EVERYONE could do this all at once) Administrations don't have anything to do with good economies, when you are borrowing money (the majority of our manufacturing long ago left these shores)- we have a prosperous economy because we can borrow tons of money and people still believe we can pay it all back. As long as we have that kind of confidence and a big army we should be able to keep borrowing. Ride the wave dude. We can borrow our way to prosperity; at least it will be prosperous in our lifetime... In 1968 a family of four needed $20,000 per year income to be middle of the middle class... I think you get the message... the dollar doesn't buy today what it bought in 1968. (it has probably lost about 3/4 of its value or purchasing power in the last 40 years) I was able to buy milk when it was $1.79/ gal (not too long ago) I can still buy milk at $3.79/ gal- so lets keep borrowing, it's working at this time. Debt is on the increase like never before and debt IS the bubble. Personal savings and hard assets have never been as low as they are today. Simply put, get all the loans you can afford and live it up... might as well go out with a bang
Which part of this story says they DON"T buy our goods? We just buy more from them than they do from us.
Who cares if the dollar is falling? That means the trade surplus will go down and more manufacturing jobs for low income families......the horror. More things will be made in America!
MORE manufacturing jobs, not lots of them. Some things are still produced here you know. (although because of how high the dollar is the rest of the world can't afford to buy lots of them.)
