Category: Economy

Class warfare is a staple of the Democrat Party. They are constantly berating Republicans for being rich and claiming they are for the little guy. In my previous article I showed extensively the comments of a coworker that leans Left. He blames Republicans for being rich, greedy, and screwing the little guy. In his mind that is their only reason for existence. For people like him, “the rich” are often defined as anyone making a dollar more than you do. Envy and jealousy are biblical names for this particular sin.

After reading my blog post (08-02-2017) to my wife last night, she challenged me to research the rich and try to refute my coworker with facts.

My first thought is that followers of the Democrat Party are not persuaded by facts only emotions.  However, I’m up to a challenge so I took a look at the subject.

As with everything else in our society, everything I found in my research was highly politicized to try to prove either that most rich are Republicans or most rich are Democrats. My first observations were these:
• Many “rich” play both sides of the political divide but typically lean heavily one way or another.
• The one figure that is cast in both camps depending on who you read is Oracle owner Larry Ellison.

Second, there are actually two types of “rich” in our society. In times past they were called the wealthy and the nouveau riche. For those from Rio Linda, perhaps a definition is in order before proceeding.

Nouveau riche (French: ‘new rich’) is a term, usually derogatory, to describe those whose wealth has been acquired within their own generation, rather than by familial inheritance.
Link: Definition Nouveau Riche

Before going further, let’s talk about wealth. Most people think in terms of payroll because that is how they get paid. They are more than happy to vote to tax the rich—especially here in California—but they are dupes. Yeah, they will be able to get taxes from some middle manager in Silicon Valley or aspiring actress in Hollywood but the CEO types? Never! You see, after a certain level, wealthy folks don’t get large paychecks.  As a result, a 13 percent state income tax in California or a 39 percent federal income tax rate (combined tax rate of 52 %) don’t bother them. Wealthy folks have trusts, derivatives, municipal bonds, and other financial vehicles that aren’t available to folks like you or me. That’s why Warren Buffett can say that his secretary pays more in taxes than he does and get a standing ovation from the Democrat National Committee for making the comment. You see, his wealth isn’t from a payroll check—he is beyond the likes of such inefficient stuff. However, he is perfectly fine pitting the poor and middle classes against the nouveau riche ‘cause it’s no skin off his nose.

When you hear about the Forbes lists of wealth people, rest assured that you have left the lifestyle of the nouveau riche far behind. The top of the 2017 list by Forbes is dominated by Democrats even when you put Larry Ellison into R bucket. Guiding these folks are literally the best lawyers and accounting firms that money can buy.

Link: Usual suspects at the top of Forbes list of world’s richest billionaires

Beyond the Forbes list, I began to take a look at the broader group of wealthy and their political contributions and the subject was permeated with so much partisanship that it was impossible to make sense of the information. I found one list that said by grouping the rich by families that 75 percent were Republican and another list that claimed 75 percent were Democrat. Hard money, soft money, 527’s, surrogates, etc. it’s simply impossible to track it all down. Maybe the Sith Lord has time to try but the rest of us are too busy. Direct contributions are easy to identify—to a point—but after that the trail gets cold rapidly. Anybody that claims to be in full possession of the facts is blowing smoke. What you can say is that some folks on each side are more public than others about giving in certain areas be it politics or charities. We all know there are other ways of giving that keep your fingerprints off the contributions.

Additionally, since the days of Bill Clinton, money from other countries has been flowing into US politics but those receiving it find excuses not to keep track of it. We may have some idea of how much but not from where. The bottom line is if you have a will to give, there is a way that you can do so—the variable is the paper trail that you are willing to leave behind.

Clearly, Buffett and the Tech Kings are on top of the hill in terms of assets. They openly favor the Democrat brand and many of us on the Conservative side expect them to remake the party of Clinton and Obama in their image sooner rather than later. Maybe starting in 2020, stay tuned.

When you work for a government agency, you expect to find many folks on the payroll that lean to the Left. But silly me, when I saw this article on the KOVR-TV website yesterday, I thought I had found a teachable moment. Consider the following:

Anthem Blue Cross Ends Health Care Exchange Coverage in Most of California

Monthly premiums for California health insurance plans sold under Obama’s Affordable Care Act will rise by an average of 12.5 percent next year.

The 12.5 percent average increase is slightly lower than last year, when premiums rose by more than 13 percent.

OK, so that’s a 25.5 percent increase in the last two years. With a rate of inflation at or below three percent annually, such increases in healthcare are astronomical. But there’s more:

About 10 percent of people enrolled through Covered California will also be forced to look for a new plan, as Anthem Blue Cross plans to end the coverage in most of the state. State officials say Anthem will continue providing coverage only in Santa Clara County and parts of Northern California and the Central Valley.

So, in the same story, Anthem Blue Cross is exiting most of California except Santa Clara County—can you say Google, Apple, and Facebook—while the rest of the customers can look elsewhere. So 10 percent of those on Obamacare (Arnoldcare on steroids) in California just got the boot. Only those in the heart of Silicon Valley will continue to be served by Blue Cross.

The same story on the KCRA-TV website has additional details worth considering:

Consumers could lower their increase to about 3 percent if they switch to the lowest-priced plans, officials said, though that could require them to change doctors.

More proof Obama lied. Low premiums and you get to keep your doctor, yeah, right!

The article states that Covered California sells insurance to 1.4 million folks in California.

Peter Lee, executive director of Covered California, said the state shows that insurance markets are not failing. “We in California … are not just stable, but stable in a way that is truly working for consumers,” Lee said.

Talk about lipstick on a pig, this program is a mess and don’t forget that California is the most vibrant and successful of the healthcare exchanges in any state with a large population. Elsewhere premiums next year are going up by 30 percent—if any insurer even offers coverage in your area.

Top health insurance companies in numerous states are looking to hike premiums by double-digits – some by roughly 30 percent or more – for ObamaCare plans in 2018…

Insurers seeking huge premium hikes on ObamaCare plans

However, all the above is only half the equation because you still need to find a doctor willing to accept your insurance and nobody is talking about that particular problem right now. The pool of folks willing to accept the Obamacare insurance is shrinking also.

Given all this, how does a certified Liberal read these disturbing trends? Well the universe next door sees the world quite differently.

Reacting to the news of the rate hike, my Liberal coworker writes, “Great, the rich keep robbing and stealing from the poor.”

My response was:

What do “the rich” have to do with this?

Who is stealing?

These rates are with government subsidies that are supposed to make healthcare more affordable.

Also, rate increases have to be approved by Dept of Insurance which isn’t run by anybody that I voted for.

His reply:
“All of this extra money generated won’t be going to any poor people it will all be going to the rich people. The rich are stealing, when we pay more they pay less.“

My next response:

If what you say is true then how can the rich steal from poor if they aren’t engaged in commerce with them?

Trust me, if there was money to be made then Blue Cross would be insuring more folks not pulling out of markets.

You seem to think that for one guy to get rich that he must steal from someone else. This assumes that the economic pie is only so big and can never grow. This was basis of Keynesian Economics which was popular in the early part of the last century. Reality has proven that this is a defective way to view economics but it remains popular in some circles.

Wealth can in fact be created without screwing someone else. The economy can expand or contract over time, it is not static.

My friend’s next response was like an editorial from CNN:
“Insurance companies are owed and run by Billionaires and Millionaires. Yes, money is very finite….to poor people. Rich people can always get more. Yes sometimes wealth can be made without screwing people, sometimes. The AFA is a 95% Republican bill including the tax penalty which is 100% Republican idea. Of course no rich person ever paid the penalty. The Penalty was put in under the guise of if the poor people are taxed more then we (R) will support the AFC. Of course that was never the plan, no R voted for it, but the Republican penalty stayed in the bill to assure poor people pay more so the rich won’t have to.”

In my response I tried to break the above into pieces and respond. My comments were these:

• Insurance companies are also owned by retirement plans and retired people. Part of your pension is invested in such companies by CalPERS.
• All I can add is that most Wall Street traders are Democrats—look at the New York vote for Clinton and the market reaction to Trump winning. After hours trading on election night was down over 750 points on the news. Lastly, by a large majority, millionaires in Congress are members of the Democrat Party.
• No, Republicans did offer amendments, most were described as technical. It’s not their bill.

If you recall, the House Speaker told Republicans that it must be passed to know what was in it. They did try to soften some of the edges of the bill which they knew they could not kill but the bill was never fully vetted thru the committee process in Congress. However, by offering amendments, as the minority party at the time, it does allow the bill to be called bipartisan in a narrowly defined way.
• The penalty was put in to encourage young people to get coverage. It is programmed to increase each year until it gets to the point that insurance is cheaper than continuing to pay the penalty. Trump reportedly has suspended the collection of this penalty by the IRS. The whole thing is wrong so I don’t particularly care what Party you want to blame. Using the power of the State in this way is wrong regardless of who is doing it.

The bottom line is this, logic and facts don’t work with Liberals. As a group, they are economic illiterates that hang their hats on disproven ideas just because they hear something in the idea that they like regardless of how much evidence to the contrary that you can muster. In reality they are the bitter clingers to such dumb and outmoded ideas as Keynesian Economics. Many truly believe that the economy is static and the only way to get wealthy is on the backs of others. Ironically, the people like Buffett and Musk that are in their Party really behave that way so some examples can be sighted but they are the exceptions. They also believe that government creates jobs and other nonsense.

I just need to remember that their blindness is primarily spiritual and their dependence on government to solve their problems is idolatry—a worship of a false god.

If you needed proof that I’m really right then here you go.

Eric Cantor served in the House for 13 years. He was succeeded as the Republican House majority leader by Kevin McCarthy.

Remember the summer of 2013, when the “Defund Obamacare Tour” drove the news cycle all through Congress’s August recess? The town halls organized by the political arm of the Heritage Foundation enlivened the base and furthered what had been the GOP’s core message since 2010—that Obamacare was bad and, if Americans helped Republicans hold both chambers, it could be repealed.

Cantor helped create that perception. Earlier that summer—after many failed attempts over the years to shred the law piecemeal—Cantor promised colleagues that the House would vote on a “full repeal.” But even after it did, the measure was dead on arrival in the Democratic-controlled Senate…After seven years of pledging they could dismantle Obamacare, if only they had control of Congress and the White House, Republicans—at last in charge of both—have faced deep divisions over a replacement.

Asked if he feels partly responsible for their current predicament, Cantor is unequivocal. “Oh,” he says, “100 percent.”

He goes further: “To give the impression that if Republicans were in control of the House and Senate, that we could do that when Obama was still in office . . . .” His voice trails off and he shakes his head. “I never believed it.”

Yeah, here’s the proverbial “smoking gun.” Republicans never believed they could win on Obamacare. They just wanted the issue for votes. They also didn’t believe Trump could win the White House. Republicans controlling the levers of power is the Establishment’s worst nightmare.

It’s a stunning admission from a former member of the party leadership—that the linchpin of GOP electoral strategy for the better part of a decade was a fantasy…

Oh, lastly is Cantor’s advice for the current leadership is do nothing!

All it takes, Cantor will tell you, is for party leadership to do what it’s been doing—to keep quiet, hold its breath, and watch the party return from the anger detour.

The author of the story then asks the question that logically follows:

But what if he’s wrong?

“God help us,” Cantor says. “Because how does it end?”

Link: Eric Cantor: “If You’ve Got That Anger Working for You, You’re Gonna Let It Be”

By now you should know that X hates three things: The CRA, Aaron Park (and his idiot brother I’m calling Igor from now on), and Warren Buffett; it’s time to Buffet Buffett again.  I’m going to tell the story of Buffett and his Brazilian friends at 3G Capital and how they are destroying American family jobs and lifestyles.  Warren Buffett is lauded as the most successful investor ever and 3G Capital is a group famous for cutting expenses to the bone and deleting unnecessary expenses—think zero based budgeting.

(Editors note: this is not the zero based budgeting often proposed in bygone years as a solution to federal spending but taking budget line items to zero for short-term gain of shareholders.)

This particular example of Buffett malfeasance started in February 2013 when Buffett and 3G Capital announced they were buying iconic American ketchup maker Heinz for the price of 23 billion.  Like most companies who take over or buy a competitor, there are “synergies” or opportunities to cut jobs etc. to save the acquirer money.  These “synergies” started immediately with the laying off of 350 workers in the Pittsburgh headquarters.  X doesn’t like layoffs but most of these were likely duplicate jobs or as X likes to call them “so we got rid of the assistant secretary’s secretary?”  These jobs were white collar, but X figured innovation or something would save the day.  Nope. The maker of ketchup, ORE-IDA, and several other brands did nothing other than “reformulate their mustard.”

Several manufacturing plants were closed, hundreds of workers laid off.  But Buffett/3G continued cost cutting with such innovations as:
• No more mini fridges in your office or at your desk.
• No more free products.
• Coupons would be phased out as well as deep discounting of products.
• Copies must be in black ink only, and must print on both sides of each page.

Remember this is good ole, all-American, folksy Warren Buffett folks.  Yeah, the guy that causes Democrats to wet themselves with pride and envy every time they hear his proclamations.

This process of downsizing went on for about two and a half years. Through those years, efficiency increased, but layoffs increased as well. There were cuts every year, as well as plant closings.  That raise you thought you were getting?  Yeah, no.

3G’s President Bernardo Hees—who by the way has no experience in consumer packaged goods—became president and CEO of Heinz.  Hees has experience in…..you guessed it railroading.  Hees has been quoted numerous times stating employees should have no life outside of work, and need to always work faster and harder.  So I guess you can say he no longer railroads with trains, he railroads humans now.  Buffett—for what it’s worth—basically insulates himself saying he provided the financing not the daily operations, 3G does.

Herein lies the problem when you cut, cut, cut. Year-over-year revenue at Heinz has declined every year since they were acquired by Buffett and 3G.  The reasons?  Well there are several:
• Employee morale being bankrupt doesn’t help.
• Consumer tastes changing plays a part.
• No more couponing or discounting.
• Lack of any meaningful innovation.

If the best you can do in 3 years is re-doing your mustard recipe, then maybe you used to run a railroad.

Given the train wreck they made out of Heinz, guess what Buffett and 3G did in 2015?  Buy Kraft Foods. Buffett/3G returns Heinz to public stock market and Kraft-Heinz was born.  Make no mistake; Buffett got his $$$ back. His vehicle of investment—Berkshire Hathaway—and 3G Capital own 51% of the shares outstanding so what they say and want goes.  In addition Buffett financed the deal and is paying himself back with a 10% interest earning note.  Again this sounds like a wonderful gig, where do I sign up?

Kraft is a maker of all kinds of iconic brands, and is in nearly every single North American household, so Buffett and 3G were smart and wouldn’t let the same mistakes foil them again right?  Nope.  First they decided to move Kraft headquarters to Chicago from Northbrook, and downsize 30% of employees.  Again the zero based budgeting started and the old company perks were gone.
Free Jello?  Gone
Mini fridge?  Gone.

Then came massive layoffs and the shutdown of 5 plants.  This process was repeated in 2016, and again in 2017. These guys are so ruthless they moved Oscar Mayer out of Madison, Wisconsin and into Chicago.  Apparently they think Oscar Mayer is a variation of the Chicago Dog (or soon plan to market Soylent Green).  However, innovation has also been slim to none and this company has north of 100 brands.  Once again, to this date layoffs at the company have reached nearly 5,000 since, nice guy, folksy Buffett took over.

Not trying to defend Buffett here but the consumer packaged goods scene is not very good right now. American tastes have evolved and they are closely reading label ingredient lists.  Also why by a Heinz picnic pack for $7.99 when you know in a week or so they will be on sale 2 for $5.  One other factor, Millennials are helping drive changes in tastes. Kraft-Heinz has ignored them, at least until now.  Recently Kraft executives have been working to revive and revitalize many of its old products, including; Oscar Mayer, Miracle Whip, mac n’ cheese, Kool-Aid (a favorite drink of the CRA I may add), Jell-O, Lunchables, Kraft Singles, Velveeta, Maxwell House Coffee, and Capri Sun.  Despite their efforts, sales still have not improved; actually they have dropped company wide.  As I address these issues one at a time, remember Kraft-Heinz owns many iconic brands.

The biggest issue at Kraft-Heinz is perception. Most Millennials and Generation X see their products as terrible for your health; those stereotypes are hard to break. As more baby-boomers die off, it will be harder and harder to replace lost sales and revenue.  The all-important demographic females 18 to 34 are moving away from Kraft and Heinz brands.

Here’s some examples of their corporate tone-deafness:
• Oscar Mayer is built on heavily processed mystery meat sold in all sorts of containers, so you removed the preservatives?  I think I will still pass.
• Miracle Whip is heavily processed egg based products similar to mayonnaise, once again, strong pass here.
• Kraft Mac N Cheese has the same issue; younger generations remembers it as dust mixed with water to create a gooey cheese sauce for the mac, never trying that again.
• Kool-Aid?  Last time I drank that was at a CRA meeting, no seriously it’s a powder that is chocked full of preservatives and other things I cannot pronounce, pass.
• Jell-O, nothing says hospital healthy more than a processed cup of….well maybe we don’t want to know, never buying that stuff.
• Lunchables are another thing of the past for X; in addition to meat that was… well, boiled or something, and the cheese that could be rolled up and bounced like a basketball… yeah not giving this to my grandchildren.
• Kraft Singles, aren’t bad on a burger that’s been grilled, but I’m not putting that processed cheese oil product on anything resembling real food.
• Velveeta is a block of cheese product you can melt down and cook in a skillet to make cheese product. In related news, shares of Tide are down due to a reduction in children having accidents related to the consumption of Velveeta cheese.
• Maxwell House and Capri Sun have the same issues, it’s an old tired product that’s very bland and many better offerings are available at the same price point.

My main goal is not to attack Buffett, but to expose him for who he really is.  Buffett says that he wants the masses to pay more taxes—especially the rich; however, he structures his compensation to be mostly dividends and returns of capital which are taxed at far lower rates than regular income taxes.  These tax dodges are not available to any but the super wealthy robber barons.

Buffett also calls himself a champion for the middle class, ha! What says middleclass more than 2 iconic American companies he is slashing and burning with thousands of middleclass folks laid off and plant closures in the name of short-term shareholder return?  Buffett profits every step of the way and benefits more as each piece of the carcass is liquidated.

Ever been laid off in a job like these factory workers before?  Livelihoods are lost, families can be broken apart. It isn’t easy to pack your family up and move from Council Bluffs, Iowa, to Springdale, Arkansas.  The ones that can move to find jobs often end-up with the same fate a year or two down the line.  The ones who cannot?  Usually they find themselves taking a pretty hefty haircut in salary & benefits and find themselves working longer hours for less.  Just remember that in every step of these “synergies” people lose benefits, livelihoods and careers, but Buffett and his ilk profit at every single step.

After reading my series on Buffett, hopefully this sheds some life on the so called “oracle of Omaha.”

I’m not through with you yet Buffett, but til next time,

X

Governor Brown signed the gas tax bill one week after it was introduced in the legislature. Apparently we had to pass it to learn what’s in it because I doubt anybody that voted YES actually read it.
Link: news story from KCRA-TV

Per media reports, the bill is supposed to raise 52 billion dollars over ten years. If you believe that this is a temporary tax, then I’ve got a bridge in Brooklyn that you might want to buy.

The pretext for this bill is that we have horrible roads because we are woefully under taxed. Now, California has the highest taxes in the country but somehow it is never enough. We have a spending problem not a revenue problem. Anyway, I digress.

Just for fun, I put all the numbers in my trusty Excel program and learned some interesting stuff.

KCRA’s math doesn’t work.  Right off the top, 7 billion dollars are missing.  I guess this is the cut off the top being diverted to the General Fund or to backfill underfunded pensions.

Of the remaining 45 billion, 24.44 percent is going to public transportation and non-road repair purposes.

Thus, 34 billion is supposed to be going to road repair over ten years. This means the tax is generating 3.4 billion per year for road repair. Currently the state diverts about two billion from road repairs from just two taxes that it collects on commercial vehicles. Extrapolating the other funds diverted from road repair means that there is no reason to have this tax. If the legislature would just follow both the law and the promises made to the people, all our repair needs would be fully funded with no new taxes.

But it’s actually worse than this. Money currently going to transportation can now be diverted from transportation to the General Fund. The way government budgeting works, this is the reality of what happens. Plus, the legislature is lying when they say that this money will go to its intended purpose. Yes some will but look at their miserable track record on this issue. Every few years they find a way to weasel out of promises made in the previous election cycle.

Tax revenue creates a government dependency on the revenue source, much like the homeless guy with an addiction problem; however, what happens in 2030 (a mere 13 years from now) when the internal combustion engine is outlawed in California. On this subject, look for two things to happen simultaneously: cars with gasoline engines will no longer be sold and gas stations will be outlawed via regulatory power and people that own “legacy” automobiles simply won’t be able to purchase fuel.

Lastly, did you notice that one Republican sold his birthright to give the governor a YES vote?  In the proud tradition of Maurice Johannsson and Roger Niello,  Anthony Cannella voted YES in exchange for 500 million dollars. This is less than one percent of the total amount of revenue the new taxes are supposed to raise; plus the governor can now say there was bipartisan support for the bill. Any bets that this guy is out on term limits soon?