Has Anyone Else Completely Lost Faith In The Government?

Also check this out. Ive heard a lot of things before from "conservitives" that say Obama never has meetings with much of his cabinet (http://michellemalkin.com/2011/01/25/obama-cabinet/) and that he doesnt ask anyone for their opinions or help except from yes men but this is Chris Matthews saying this:

Chris Matthews — Obama’s Not Happy in White House: ‘I Hear Stories That You Will Not Believe’ | TheBlaze.com (http://www.theblaze.com/stories/chris-matthews-has-harsh-words-for-obama-i-dont-have-a-sense-that-hes-ever-had-a-meeting/)

You are absolutely right. It has been a fraud since the beginning, and both sides knew it the entire time. The republicans set this whole debt reduction thing up with the intent on not making any real concessions and then reversing any military cuts after they win the white house in 2012. Its ridiculous.

You know what would have worked. You make check points so each month they have to cut a tangible (not including interest) 75 billion or a tangible 100 billion in automatic cuts will happen, with the bulk of the cuts to come at the very end. Lets say at the very end there is still 500 billion to cut, well you make it so that if both sides cant come up with the 500 billion the automatic cuts are still the same as they currently are, the 984 billion. So at the very least they have to cut 984 billion, but if they dont work together they will be forced to cut a lot more. Theyre acting like kids so they should be treated as such.

And seriously do you really care about this carried interest “loophole”, I mean its maybe 2 billion per year in additional revenue. That’s 0.2% of the 984 billion they need to cut. Plus it actually sounds pretty fair when you look into it. It’s just a capital gains tax when selling the ownership of an asset someone received when they met certain performance measurements. Based on how the current capital gain system is set up that sounds pretty fair to me. The thing i would be for it that they dont get automatic vested 1 year long term treatment. So they acutally have to hold it for a year after they earn it or else its taxed at the short-term cap gains rate (income).

After getting our economy on track and balancing our budget (via cuts or new revenues) the most important thing to me is scraping our entire tax code and coming up with something that’s fair, transparent/simple and loophole free. Until that happens individuals can not be treated fairly.

1. You want them to start pinching pennies from everywhere possible yet you don't think 2 billion is worth going after? This is the sort of mentality that got us to spend 2 billion here, 3 billion there and now we sit on 15 trillion debt. Make up your mind!

2. Did you fail to comprehend how the carried interest scheme works? When you and I take our money, invest, and hold assets for a year we get taxed 15% capital gains taxes for OUR gains. These fund managers getting paid 20% of the profits in their client's portfolio is fair. Paying themselves 20% of the profits and having to pay 15% capital gains tax rate on money they didn't invest themselves is complete and utter horse shit. With the way the game is currently rigged they can pay themsleves $1 and pay a flat 15% on a 4 billion yearly payday.

1. You want them to start pinching pennies from everywhere possible yet you don't think 2 billion is worth going after? This is the sort of mentality that got us to spend 2 billion here, 3 billion there and now we sit on 15 trillion debt. Make up your mind!

2. Did you fail to comprehend how the carried interest scheme works? When you and I take our money, invest, and hold assets for a year we get taxed 15% capital gains taxes for OUR gains. These fund managers getting paid 20% of the profits in their client's portfolio is fair. Paying themselves 20% of the profits and having to pay 15% capital gains tax rate on money they didn't invest themselves is complete and utter horse shit. With the way the game is currently rigged they can pay themsleves $1 and pay a flat 15% on a 4 billion yearly payday.


1) You make up your mind! When did i ever say anything about pinching pennies?? Although i do believe that when in a deficit (either personal or national) cutting spending is generally more responsible and realistic then increasing revenues. And always start with the big things (for both cuts and revenue increases) then get nitpicky and pinch pennies, otherwise youre just wasting time.

2) You have no idea what youre talking about! The "hedge funds" we are talking about are limited partnerships not 40 act mutual funds.

Investors are limited liability partners that make investments in a investment partnership, much like other investors make investments in more traditional type businesses. The industry standard compensation structure is 2 and 20. For the first part of this compensation the manager/general partner of the LP charges investors 2% of all the money they invest in his company, and this is taxed as income. For the second part he takes an ownership position in his LP thats equal to 20% of the increase in value (if any). So if investors give him 900k to manage and he turns it into 1 mil then he earns 20k of assets (20% of a 100k) by taking ownership of the underlying assets of the company, equal to 20% of the appreciation amount. In this example he increased the value of the business by 100k so he takes ownership equal to 20k, or more correctly, 2% (20k/1mil) of the business's total assets. At this point IF he sells his share of ownership hes taxed just like an investor would be because...... he is one!

And a 4 billion dollar yearly payday is just a ridiculous statement thats simply not true. The 4.9 billion referenced in the article was a one time thing by the year's most successful manager and was an all-time record for hedge funds. More importantly its estimated that 4 billion of the 4.9 billion was earned by his own personal investment already in the fund and had nothing to do with his compensation structure. So in reality the 1 billion he earned was from charging a 2% management fee on the businesses underlying assets with the rest related to the 20% carried interest rule. Furthermore there are normally stipulations that say the manager must meet certain hurdle requirements and that investors in the LP cannot have losses before a manager is compenstated by taking position of the amount he has ownership interest in. A lot of these big paydays are one time deals after years of hard work, kind of like an IPO of a business someone started. We also forget that the 2% management fee is used to cover most of the funds expenses and that the 20% incentive fee isn’t pocketed by one guy its split up amongst the general partners of the LP.

And although John Paulson apparently made 4.9 billion last year it isn’t worth anything until its actually sold, and word is that Paulson didn’t sell anything. His flagship fund was down 47% YTD ending sept 30. Apparently these hedge fund things and their managers can lose money too? Should investors that have losses that are recongized but not realized be able to deduct those losses in the same way you want to tax someone that has recongized but unrealized gains? Do we deduct loses against income or capital gains, if you want to tax carried interest at income levels?

Look im with you in that our tax system doesnt make sense. But just because someone makes a lot of money doesnt mean they should be penalized and taxed more so then you or me.

The problem is we have a tax code so complex that “loopholes” are inherent in it. Adding more complexity and rules to the tax code will only open up new and unforeseen avenues for more loopholes. That’s part of the reason I think a transparent, super easy, and fair tax code is so desperately needed. The current tax code has become a monstrosity because it was set up to eventually become one. Instead of continuing to add to the monster lets just scrap it and start over.

1) You make up your mind! When did i ever say anything about pinching pennies?? Although i do believe that when in a deficit (either personal or national) cutting spending is generally more responsible and realistic then increasing revenues. And always start with the big things (for both cuts and revenue increases) then get nitpicky and pinch pennies, otherwise youre just wasting time.


In light of your support for Contract with America I was under the impression that you hated wasteful spending even if it's a measly 2 billion a year. Given this one would think you are an advocate for penny pinching. Further more it isn't wise to assume cutting spending is necessarily the most prudent and realistic course of action to take and when it comes to solving complex budgetary issues you don't go after the big things first whether your are managing a personal or national budget. From a personal budgetary standpoint you first look to increase revenue first and if that isn't immediately feasible you don't cut the electricity before you cut the cable TV or Netflix subscription. Always start with small things because the big things are mortgage payments.


2) You have no idea what youre talking about! The "hedge funds" we are talking about are limited partnerships not 40 act mutual funds.

Investors are limited liability partners that make investments in a investment partnership, much like other investors make investments in more traditional type businesses. The industry standard compensation structure is 2 and 20. For the first part of this compensation the manager/general partner of the LP charges investors 2% of all the money they invest in his company, and this is taxed as income. For the second part he takes an ownership position in his LP thats equal to 20% of the increase in value (if any). So if investors give him 900k to manage and he turns it into 1 mil then he earns 20k of assets (20% of a 100k) by taking ownership of the underlying assets of the company, equal to 20% of the appreciation amount. In this example he increased the value of the business by 100k so he takes ownership equal to 20k, or more correctly, 2% (20k/1mil) of the business's total assets. At this point IF he sells his share of ownership hes taxed just like an investor would be because...... he is one!

And a 4 billion dollar yearly payday is just a ridiculous statement thats simply not true. The 4.9 billion referenced in the article was a one time thing by the year's most successful manager and was an all-time record for hedge funds. More importantly its estimated that 4 billion of the 4.9 billion was earned by his own personal investment already in the fund and had nothing to do with his compensation structure. So in reality the 1 billion he earned was from charging a 2% management fee on the businesses underlying assets with the rest related to the 20% carried interest rule. Furthermore there are normally stipulations that say the manager must meet certain hurdle requirements and that investors in the LP cannot have losses before a manager is compenstated by taking position of the amount he has ownership interest in. A lot of these big paydays are one time deals after years of hard work, kind of like an IPO of a business someone started. We also forget that the 2% management fee is used to cover most of the funds expenses and that the 20% incentive fee isn’t pocketed by one guy its split up amongst the general partners of the LP.

And although John Paulson apparently made 4.9 billion last year it isn’t worth anything until its actually sold, and word is that Paulson didn’t sell anything. His flagship fund was down 47% YTD ending sept 30. Apparently these hedge fund things and their managers can lose money too? Should investors that have losses that are recongized but not realized be able to deduct those losses in the same way you want to tax someone that has recongized but unrealized gains? Do we deduct loses against income or capital gains, if you want to tax carried interest at income levels?

Look im with you in that our tax system doesnt make sense. But just because someone makes a lot of money doesnt mean they should be penalized and taxed more so then you or me.

The problem is we have a tax code so complex that “loopholes” are inherent in it. Adding more complexity and rules to the tax code will only open up new and unforeseen avenues for more loopholes. That’s part of the reason I think a transparent, super easy, and fair tax code is so desperately needed. The current tax code has become a monstrosity because it was set up to eventually become one. Instead of continuing to add to the monster lets just scrap it and start over.

I understand perfectly how it works, I just believe it is the most vile tax loopholes out there. It is completely irrelevant how the profits are shared by the fund's managing partners or when they sell their 20% cut from the profit because ultimately when they do sell they will pay 15% on whatever they made.

Truth is no one would have a problem with them getting 20% or 50% or 80% cut from the profits if their clients choose to do so, what people such as myself have a problem is that this loophole allows these guys to double dip by first collecting a base 2% fee on managing the fund (puts these fund managers in 1 percentile of income earners) and then get 20% of the profit at a 15% tax rate without taking any risk with their own money. No one wants to deny these guys wealth and prosperity but they shouldn't have a tax advantage over the average Joe. It is not unreasonable to want them to pay a 35% marginal rate minus the deductions they are entitled to.

Im not really all that familiar with the Contract With America, its a little before my time, however, i am a supporter of the Contract From America. The later doesnt really take a position on penny pinching, unless youre referring to earmarks. I am against earmarks in general and I am always against wasteful spending, even trivial amounts.

Not wasting money or penny pinching is different that nickel and diming people, even those disgusting rich people that we all hate. Its nickel and diming to me because we are talking about a trivial amount in relative terms, and not everyone sees it’s a loophole or fraud on the tax system. I truly understand your side but I mostly disagree with it.

This might be a question for a different thread but lets pretend everything a person “made” was treated the same, no matter if a long term gain, earned income or passive income. Do you think people who make more should be taxed at a higher percentage? If so why? And im not talking about the very poor so lets pretend they arent taxed (like now), so maybe everything under 15 or 20k is tax free.

Im going to revise my statement in the number 1 part, because frankly you are you are more right. Stopping all new discretionary spending and cutting all the easy and small bills should come before making cuts to the big things. But America’s deficit is a spending problem and not the reverse, so i still think revenue increases should be last. If it was the other way around then im all for increasing revenues.

mlmpetert, saden1 - interesting stuff. Thank you for the read.

Perhaps there is a salvation for our lost faith?

Barney Frank To Announce Retirement | Fox News (http://www.foxnews.com/politics/2011/11/28/barney-frank-to-announce-retirement/)

I dont get it. So Boehner and the right are adamant not to raise taxes of the top 2%, but will play chicken with the lower and middle class and the payroll tax? So they are more willing to raise taxes on the middle class?

I had gained some respect for Boehner over the last year, all gone now. Really bad idea to pick this as a battle.

Arrrrggggghhhhhh!!

Dr. Coburn Releases New Report on Wasteful Government Spending in 2011: "Wastebook 2011" - Press Releases - Tom Coburn, M.D., United States Senator from Oklahoma (http://www.coburn.senate.gov/public/6946d43b-bccf-4579-990e-15a763532b40.html#.TvIZGEunJaI.facebook)

Obama to merge 6 federal agencies saving $3 billion over 10 yrs.

Obama to Propose Merging Agencies - WSJ.com (http://online.wsj.com/article/SB10001424052970204542404577158361834894658.html?m od=e2tw)