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Obama on the Money - SOTU Edition

Bruce Krasting's picture




 

 

The Big O will give us the SOTU pep talk tonight. Obama will pound on the theme of income inequality in America. A Wordle of the SOTUS will look like:

 

Screen Shot 2014-01-27 at 7.17.10 PM

 

The President will be using language that misses the mark. The issue at hand is not just Income Equality, it's Wealth AND Income Inequality. The problem that Obama faces is that America does not tax wealth, it only taxes income. So until America gets around to a tax on wealth, the Prez is stuck with increasing income taxes (reducing deductions) for high income folks in his attempt at leveling the playing field.

To be sure, there is plenty of income disparity in the USA. The question is how much, and what has changed over time. I looked at data on all EARNED income over the past 23 years. The info come from the Social Security Administration (AKA Treasury/IRS). The link to this data, a few graphs of the results:

 

How many people make it to the 1% club every year? I was surprised that the number has not changed all that much over a 1/4 decade. The number of folks who made the financial limelight has varied by only 400k. It's worth noting however, that 2012 produced the largest number of 'fat cats' ever.

 

Screen Shot 2014-01-27 at 7.01.11 PM

 

What income level did it take to be in the 1% club?

 

baseincome_edited-1

 

How many total dollars have the 1% taken in each year? In 2012 the 1% raked in 1.05 Trillion. Four times what they made in 1990.

 

Screen Shot 2014-01-27 at 7.02.11 PM

 

What was the 1%ers total income as a percent of GDP? It's increased quite a bit over time, and it's the highest ever today.

 

Screen Shot 2014-01-27 at 7.01.38 PM

 

What is the 1%'s income as compared to total earned income? (A better way to look at this). This comparison shows a trend that should be a bit scary to those earning the big bucks. As of 2012 it was 17% of all income. 1% make 17%. That's pretty far out of whack.

 

Screen Shot 2014-01-27 at 6.59.01 PM

 

The numbers from SSA confirm that a small percentage of workers take home a huge percent of the pie. So what's Obama going to propose tonight? He can yack about a bunch of things that might make a small difference, but if he really wants to move the needle on inequality, he has to raise taxes on the 1%. The problem that O faces is that he's already tapped this well. Tax rates on the 1% are now at the highest level in a long time:

 

012614krugman2-blog480

 

One of the 1%ers, Tom Perkins, a heavy hitter with Kleiner Perkins Caufield & Byers. (VC - of course) , manged to get an OpEd letter at the WSJ. Tommy likened the rising sentiment against the 'haves' to a Nazi atrocity.

Kristallnacht was unthinkable in 1930; is its descendent “progressive” radicalism unthinkable now?

 

Looking good Tommy! Not....

4811e8542d1937a0d89b0a1b0465b52f

 

Mr. Perkins needs to get a grip. If he feels threatened today, he's going to be crapping in his pants tomorrow. Obama will be gunning for his pocketbook. And tonight, when O does call for higher taxes on the rich, half of the congressmen will stand and applaud.

 

classwar

 

 

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Tue, 01/28/2014 - 10:45 | 4374917 ptoemmes
ptoemmes's picture

But like most SOTU circus acts not much, if anything, will come of it.  Will keep FOX News and MSNBC and a suite of Sunday Talk Shows busy for a week or so.  While Perkins is a jerk, I do not think he needs to buy any extra toliet paper.  O can't EO this kind of thing through and it's never gonna pass Congress. It could be interesting to see if the 2016 Democrat Congressjerks run to or from O based on his SOTU agenda.

Now, he could talk about Ending the FED in the context of income/wealth inequality: http://www.zerohedge.com/news/2014-01-28/want-reduce-incomewealth-inequa...

Add Spying and End The FED to the Wordle.

PS

Bruce, how about a weather report?

Tue, 01/28/2014 - 11:17 | 4375079 Bruce Krasting
Bruce Krasting's picture

Working on a weather story.....

Tue, 01/28/2014 - 20:27 | 4377557 New_Meat
New_Meat's picture

Bruce, you freezing your ass off?

- Ned

Tue, 01/28/2014 - 13:36 | 4375749 Mercury
Mercury's picture

...as will everybody else after O declares war on it tonight.

Tue, 01/28/2014 - 15:53 | 4376484 negative rates
negative rates's picture

What do you think those all weather tires were all about? Stayin on the road or a buffer for insurance co's??

Tue, 01/28/2014 - 10:41 | 4374908 earnyermoney
earnyermoney's picture

Funny. Progressives have controlled the Presidency and one or both chambers of Congress for 14 of those 22 years. Tonight's speech will be another attempt at cynical hypocracy. Progressives care for the "common man" is an outright lie.

Tue, 01/28/2014 - 16:31 | 4376655 DaveyJones
DaveyJones's picture

Progressives care for the common lobbyist

Tue, 01/28/2014 - 11:24 | 4375123 ArkansasAngie
ArkansasAngie's picture

Progressives were taken over in much the same way as Tea Partiers.  

Tue, 01/28/2014 - 13:06 | 4375605 TheReplacement
TheReplacement's picture

Who took over the communists?  Err, I mean progressives. 

Durr Durr Durr

Tue, 01/28/2014 - 20:24 | 4377550 New_Meat
New_Meat's picture

a distinction without a difference?

- Ned

{or is their "bible" that makes the difference?}

Tue, 01/28/2014 - 11:50 | 4375235 kaiserhoff
kaiserhoff's picture

Good to see you, Annie.

There's a full scale war going on among republicans in my neck of the woods,  between the sell-outs and the fed ups.  I think its  too late for that, but it's a big ship of state.

The biggest shift recently has been among the blue collar Dudes.  They are waking up, and they are not amused.

Tue, 01/28/2014 - 13:08 | 4375621 TheReplacement
TheReplacement's picture

Seeing as how the blue collar dudes are the dipshits who pay union dues and work so hard to elect the scum they should be breaking mirrors all over. 

Tue, 01/28/2014 - 10:39 | 4374900 Oracle 911
Oracle 911's picture

Higher taxes for the rich, and still the middle class respectively the upper poor will pay it, because of the loopholes in the laws.

Because the stratification will be fucking poor, middle poor, upper poor and filthy rich aka the new feudals or landlords.

Tue, 01/28/2014 - 14:15 | 4375918 Firepower
Firepower's picture

It's good to be da king.

Tue, 01/28/2014 - 17:16 | 4376834 Boris Alatovkrap
Boris Alatovkrap's picture

Break king bad.

(is good for local economy)

Tue, 01/28/2014 - 10:32 | 4374872 LawsofPhysics
LawsofPhysics's picture

Define "rich".  As a relative few continue to be grossly overcompensated for their "labor" (capital and resource mis-allocation), the value of all those paper promises they consider "wealth" continues to go to zero.  Fuck em.  The structural problems and lack of any rule of law (moral hazard) remains unfixed and that which cannot be sustained, won't be.  I see all kinds of trade happening, most of this exchange is avoiding any and all fiat. Things should finally start to get interesting.  Plenty of opportunity for those of us who can produce things or services of real value, about god damn time.

Tue, 01/28/2014 - 14:55 | 4376197 James
James's picture

That pic of Perkins looks like an old Pajama Boy.

Quick, somebody get him a mug of hot chocolate

Tue, 01/28/2014 - 13:11 | 4375643 TheReplacement
TheReplacement's picture

How about this?  Anyone worth more than say, $10M dies and has 100% confiscated.  That should take care of the kleptos on Wall Street, over paid CEOs, and corrupt politicians.  We'll just do this once to make a clean break.  Every year after, only the richest person is executed and their wealth confiscated.  Sucks to be #1 but 2 or 3 is pretty good, until next year.

Make as much as you want, just to be THE RICHEST.

Thu, 01/30/2014 - 04:36 | 4383379 James
James's picture

How about this....................... You just won the state powerball for 270 million

Tue, 01/28/2014 - 13:51 | 4375823 atomicwasted
atomicwasted's picture

This was called the Khmer Rouge.  Look that up and read about it, if you're actually able to read, and see how well that worked out for everyone involved.  

Stupid and violent is a bad combo.  It's how the Nazis got started.  At least the Bolsheviks could read, not that it matters whether the guy shooting you for having $10M or a turnip is literate or not.

Tue, 01/28/2014 - 17:14 | 4376824 Boris Alatovkrap
Boris Alatovkrap's picture

You are mistake... Khmer Rouge, inner party circle, all is teacher. True, many foot soldier is country farmer, but is not illiteracy, is fear which is make good people do bad thing.

Tue, 01/28/2014 - 12:42 | 4375407 lordbyroniv
lordbyroniv's picture

 

Brusting Krasting is now officially a communist. 

Hey Bruce,....get on your knees and take my cock in your mouth.

Tue, 01/28/2014 - 23:11 | 4378239 dexter_morgan
dexter_morgan's picture

Just 'cause he only donates to dems don't make him a full blown commie

Tue, 01/28/2014 - 15:49 | 4376470 negative rates
negative rates's picture

That ain't what communism is all about, big shot.

Tue, 01/28/2014 - 12:44 | 4375490 Cpl Hicks
Cpl Hicks's picture

Now, now. Don't be so hard on him.

He is a European.

Tue, 01/28/2014 - 11:22 | 4375113 ArkansasAngie
ArkansasAngie's picture

The top 85 own 46%.  Yes ... go ahead and tax them.  Please start with Warren Buffet

Tue, 01/28/2014 - 11:35 | 4375173 dontgoforit
dontgoforit's picture

Cut the size of govt by 30%; cut govt salaries to private sector size; balanced budget amendment; term limits with no govt 'pension' benefits for pres, sen, congress, staff - they are supposed to 'serve' not be served, cut taxes, close the loop holes - go to a flat tax.  Many things that could be done.  None of which will be....the lawyers are in control of the govt and they are not going to let go peacefully.

Tue, 01/28/2014 - 14:39 | 4376076 max2205
max2205's picture

I can't listen to this bs for one more second

Tue, 01/28/2014 - 15:48 | 4376461 negative rates
negative rates's picture

When you can bag that many fat cats, you don't have to look good.

Tue, 01/28/2014 - 16:45 | 4376722 Boris Alatovkrap
Boris Alatovkrap's picture

Remember shave cat first before consume.

Tue, 01/28/2014 - 16:55 | 4376753 kaiserhoff
kaiserhoff's picture

Sounds like the voice of experience.

Remember kill squirrel before trying to skin.

Tue, 01/28/2014 - 17:20 | 4376850 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is enjoy extra crispy original recipe.

Tue, 01/28/2014 - 17:22 | 4376857 akak
akak's picture

Deep-fry cat is only way, as everyone know cat is not like to be wokked.

Tue, 01/28/2014 - 20:18 | 4377527 New_Meat
New_Meat's picture

tastes like chicken ;-)

Tue, 01/28/2014 - 11:21 | 4375106 dhengineer
dhengineer's picture

Exactly.  I have worked as a private chef for a few of the 1% types.  Most of them won't change a lightbulb or fix a simple meal for themselves because such work is beneath them.  They throw money at those of us with skills so that they don't have to get their precious hands dirty.  I finally got fed up with that gimme-gimme attitude and moved to upstate where my wife and I (without help) renovated our small house.  We have tools, seeds, a garden, a snug house, and our own well, all paid for.  Our neighbors, who have little more than high school educations, are "richer" than the 1% fools because they know how to work hard and can fix or build anything.  I have more respect for my farmer neighbors than I do for any Ivy-League suit I've ever met.

Wed, 01/29/2014 - 12:10 | 4379953 RazvanM
RazvanM's picture

It depends. If you only have one our per day that is yours to spend with your family you will pay somebody else to do any job that can be done without you. And this is just one example.

Tue, 01/28/2014 - 22:37 | 4378108 Larry Dallas
Larry Dallas's picture

I'm calling bullshit on this one dhengineer. Your former employers are rich because they own businesses and profitable systems and they, wait for it, value their time more than you do. Whether they are fucking their side piece or doing something charitable. They treasure their time being able to do what they want, not what they have to.  

Regardless of changing a lightbulb or picking up dog poop, most of all they cherish their freedom. Owning a farm in upstate NYS isn't freedom if you consider freedom going back to an agrarian way of life.

Sure, they don't do it in your way, perhaps they don't love their families, but they do love their freedom and ability to do what they want. Don't vilify the wealthy. They did provide you with a job, after all.

So don't be hatin'. To me, vilfiying the wealthy, in my opinion, is un-American. And don't think for one moment NYS isn't going to tax you to an oblivion. So you're free and clear of a mortgage it sounds like never of property taxes. Why do you thiink everyone here loves the Bitcoin (generally speaking) and the golds and silvers. You'll be expected to pay for the brown people who live "downstate" and, in the same tone as Cuomo, and all the "gaaayeees" parades.

You just took a detour to serfdom. Boom.

 

Tue, 01/28/2014 - 16:46 | 4376708 Boris Alatovkrap
Boris Alatovkrap's picture

You are outrage at 1%. Maybe Soviet-style economy is preference where EVERYONE is poor... except elite member of political class who must have caviar, German automobile, French wine, Italy furnishing and Faberge Egg, because political elite is equal, but is more equal.

At least in free market America (not krony kapitalist AmeriKa), when someone is eat caviar and drink fine wine, they are pay for by self, not as like Stalin, Hitler, or Soetoro.

Wed, 01/29/2014 - 12:06 | 4379939 RazvanM
RazvanM's picture

In a system that is corrupt, to pay no taxes is the wish of everybody. So, just asking myself, who will be able to pay less taxes (game the system): a poor guy or a rich guy?

Taxing the rich is just a campaign slogan. Because the rich are the ones making the law - and they don't want to lose power, nor money.

The socialists that have the power now in Romania came with the promise to help the poor, bring jobs and not increase the income tax etc. Instead they created tens of other taxes, including an increase of tax on car fuel (because only the rich should be able to drive cars apparently) and a tax on every <strong>pole</strong>. So, basicaly they increased the tax structure and the poor and less educated will be hit harder than others. And because the tax structure was increased we will lose thousands of jobs - and the budget will be hit in a feedback loop. So the wealth disparities will increase even more.

Tue, 01/28/2014 - 20:16 | 4377522 New_Meat
New_Meat's picture

Boris:

"... is preference where EVERYONE is poor..."

Da

and everyone is "equal"

Don't cha' know

- Ned

Tue, 01/28/2014 - 22:36 | 4378096 philipat
philipat's picture

@Boris

As Margaret Thatcher said during the Soviet era, "Socialism is misery spread evenly".

Incidentally, if we are talking "Fairness" is it "Fair" that the bottom 50% (aka the FSA) pay NO Federal Taxes but can still vote (Mostly in favor of more welfare programs)?

Similarly, a chart of the percentage of ALL Federal taxes contributed by the top 1% and the top 10% (75%) would have helped to balance the debate. Is that not "Fair"?

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