government

Extremist v. Extremist, Intolerance

/ L. M. Walker / Leave a comment

charlottesville81217If you’ve ever been out in the streets protesting anything, you’re an extremist. If you’ve ever assembled peaceably to petition anyone, other than the government for redress of grievances, you’re an extremist. If you can’t handle the First Amendment rights of peaceable assembly and freedom of speech, you don’t deserve to be called an American.

According to the First Amendment, “Congress shall make no law …abridging the freedom of speech, …or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

Freedom of speech may be defined as, “the right to express any opinions without censorship or restraint.” The right to peaceably assemble, and to petition government for redress of grievances may be defined as, “the individual right or ability of people to come together and collectively express, promote, pursue, and defend their ideas; and make a complaint to, or seek the assistance of, one’s government, without fear of punishment or reprisals.”

Congress has, thus far, made no laws abridging the freedom of speech, or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. Yet others, including some local governments, federal government employees, extremist groups, the Democratic Party, Google / YouTube, and Facebook, often enforce their own un-American statutes.

For example, Google recently suspended my Google Plus account indefinitely, without any right of appeal, simply for declaring myself to be a Trump supporter and posting pro-Trump news articles. Of course, prior to doing so my Collection, entitled, “Trump 2016 / 2020” had over 10,000 followers and more than 10,000,000 views. My attempts to reinstate the account fell on deaf ears.

Since I did not violate any of Google’s rules, it claimed that I violated its impersonation policy, even though, unlike others, I used my real name and biographical profile. Thus, I am no longer a part of Google’s social networking experiment. I no longer have the freedom to express myself, nor the right to peaceably associate with friends and followers, at least not using Google’s services. Nine years of associations, thousands of followers, hundreds of posts and comments, gone in a flash. So, what’s next?

If the KKK, Neo-Nazi’s, white nationalists, Alt-left, Black Lives Matter, Blue Lives Matter or any other group wants to assemble peaceably to petition the government, they have a right to do so without fear of punishment or reprisals. Certainly, such groups have the right to assemble, and the freedom to write or say whatever they wish. But, that’s not the problem in this era. The plight of our day lies in counter-protests.

Counter-protesters serve no useful purpose other than to deny others of their basic Constitutional guarantees. Government condemnation of domestic hate groups serves no meaningful purpose, as they have a right to exist. The role of the federal government should be to condemn intolerance. There is no place for intolerance, at any level, in our society.

Counter-protesters are not petitioning the government for anything. They are rather protesting against other people’s rights to speak freely, to assemble and to petition the government. Shutting down the right of free speech, or the right to associate and petition the government is not the American way.

What the federal government should do is shut down counter-protest movements in every shape, form and fashion. Congress must pass additional laws protecting basic first amendment rights, by cracking down on counter-protesters. It must also outlaw the practice of street protests. Allowing opposing groups to protest at the same time, in public venues, is asinine.

Allowing any group to protest in the streets, or public places, violates the rights of others. Allowing groups with opposing views to counter-protest encourages violence. Rather than cultivate intolerance and violence, the federal government should do everything within its power to discourage it, while at the same time protecting everyone’s First Amendment rights.

The role of the federal government, and all who have taken oath to uphold the Constitution, is not to pick sides, but rather to promote tolerance in a diversity of ideas.

Google’s actions against me are reprehensible. But, the freedom I have was not granted by Google, and Google cannot take it away. Rather than fight, I have chosen to take my business elsewhere.

If you don’t like MSNBC or CNN, don’t watch. If you don’t like Donald Trump, don’t go to a Trump rally, stay at home. Better yet, pow-wow with the candidate of your choice and prepare for the 2020 election. If you don’t agree with the KKK, Neo-Nazi’s, white nationalists, the Alt-left, Black Lives Matter, Blue Lives Matter, the Democratic Party, or any other group, don’t support them or attend their functions. Instead support and associate with groups you agree with. Actions such as these are not extreme in nature, but are simply the American way.

U.S. Labor Force Declines by 720K

/ L. M. Walker / 1 Comment

October Unemployment Manipulation

– By: Larry Walker II –

The big story out of the October household survey was the decline by 720,000 in the headline labor force, which largely reflected the loss of longer-term unemployed into the broader U-6 unemployment measure.

In fact, since January 2009, the U.S. Labor Force has only grown by 607,000. Yet, over the same period, 11,034,000 persons have been removed from the labor force (see chart above). Once removed, such are neither counted as employed nor unemployed, each amounting to the equivalent of zero-fifths of a person in terms of modern governmental accounting.

In Manipulation 101: The Real Unemployment Rate, we learned that as the size of the labor force erodes, the unemployment rate artificially declines. So let’s recall how the unemployment rate is calculated. The unemployment rate is calculated by dividing the number of unemployed persons by the size of the labor force:

[ (A) Total Unemployed / (B) Labor Force = (C) Unemployment Rate ]

Thus, the official unemployment rate of 7.3%, as reported by the Bureau of Labor Statistics (BLS) on its November 8, 2013, Employment Situation Report, was calculated as follows:

However, when the 720,000 longer-term unemployed which were removed from the labor force in October are added back, the real unemployment rate actually rose to 7.7% (shown above). And, if we were to add back all long-term unemployed workers, removed from the labor force since February 2009, the real unemployment rate would be 13.4% (also shown above).

As I reported earlier this year, in Black Unemployment Rate Closer to 37.9%, there is an alternative to the federal government’s phony reporting. Shadow Government Statistics publishes a more accurate measure of unemployment based on pre-1994 BLS methodology. The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994.

In other words, the SGS Alternate Rate adds millions of long-term discouraged workers back to the BLS estimate, which only includes short-term discouraged workers. In case you didn’t catch that, this means the BLS has eliminated long-term discouraged workers (i.e. those who have been without a job for so long that they haven’t bothered to look for work in more than 12 months) from official unemployment statistics since 1994, thus distorting the true employment situation.

Accordingly, although the Bureau of Labor Statistics boasts of an official U-3 unemployment rate of 7.3%, and an official U-6 rate of 13.8%, the real unemployment rate, based on pre-1994 BLS methodology, has actually increased from 18.3% in January 2009 to 23.5% as of October 2013 (shown above).

Of course the Chief of the White House will simply continue to repeat something like, ‘Now that we’ve fixed (i.e. effed up) the nation’s health care system, it’s time to finish fixing (i.e. effing up) the economy.’

“How long, O LORD? Will you forget me forever? How long will you hide your face from me?” ~ Psalm 13:1 (ESV)

Related: #unemployment #manipulation

U.S. Government Manufactures 469,000 Jobs

/ L. M. Walker / 2 Comments

Phony Current Employment Statistics (CES)

“How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg.” ― Abraham Lincoln

– By: Larry Walker, Jr. –

According to the U.S. Bureau of Labor Statistics (BLS), via its September 26th CES Preliminary Benchmark Announcement, the number of Private Sector Jobs reported in March 2013 was overstated by 136,000, and the number of Government jobs was understated by 12,000. But not to be outdone by a deteriorating economic reality, the BLS eliminated this bad news through a major change in its reporting methodology. After the change, instead of an overstatement of 124,000 nonfarm jobs (-136,000 + 12,000), the BLS will instead be reporting a net gain of 345,000 jobs on its January 2014 employment situation report. It’s magic!

Here’s what the BLS said (emphasis mine), followed by the translation in plain English.

“Each year, employment estimates from the Current Employment Statistics (CES) survey are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from State Unemployment Insurance (UI) tax records that nearly all employers are required to file. For National CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus three-tenths of one percent of Total nonfarm employment. The preliminary estimate of the benchmark revision indicates an upward adjustment to March 2013 Total nonfarm employment of 345,000 (0.3 percent). This revision is impacted by a large non-economic code change in the Quarterly Census of Employment and Wages (QCEW) that moves approximately 469,000 in employment from Private households, which is out-of-scope for CES, to the Education and health care services industry, which is in scope. After accounting for this movement, the estimate of the revision to the over-the-year change in CES from March 2012 to March 2013 is a downward revision of 124,000.”

What this means in plain English is that the BLS has once again changed the rules of the game, this time adding an estimated 469,000 Private Household Employees to its accounting of private sector jobs. So what’s wrong with that? Aren’t private household employees considered part of the private sector? The answer is no. Private household employees have never before been considered part of the private sector. The main reasons they have not been are as follows: (1) the BLS has no way of knowing how many household employees really exist, (2) no idea how many are considered full-time, part-time or temporary, and (3) will have virtually no way of tracking changes in the number of such employees on a monthly basis (i.e. its reports are issued monthly).

Unlike private sector businesses, which are surveyed monthly and file quarterly employment reports, private households are not surveyed in the same manner and only file employment reports on an annual basis. According to the Internal Revenue Service (IRS), although household employees are most commonly associated with child care providers, such as nannies, private household employees also include service providers such as gardeners, cleaning personnel or maids, babysitters, housekeepers, private nurses or home health aids and drivers or chauffeurs. Since such employees have never been included in private sector reporting in the past, the federal government’s employment statistics after January 2014 will be forever inconsistent with every prior period.

The table above, courtesy of the BLS, shows the March 2013 preliminary benchmark revisions by major industry sector. I have added a second column showing the changes without the addition of the newly concocted 469,000 private household employees. As you can clearly see, consistent with all prior CES statistics, there are actually 124,000 fewer nonfarm jobs than previously reported.

The bottom line: The number of private sector jobs reported in March 2013 was overstated by 136,000. The number of government jobs reported for the same period was understated by 12,000. That’s reality. Those are the facts. Just like the Bureau of Economic Analysis has been overstating Gross Domestic Product due to changes in its reporting methodology, the BLS has been following suit. As the U.S. economy continues to crumble, aside from QE3, the only tool the federal government has left to combat this new reality is to lie through its teeth. Changing the rules midstream in order to paint a rosy economic scenario through phony statistical reporting is not only dishonest, but reprehensible. The problem with lying is that eventually reality catches up. When there are no longer any warning signs, yet the national economy collapses, who will you blame?

Related:

2013 GDP Growth Rate Closer to -1.75% ― Phony Government Statistics: GDP

Black Unemployment Rate Closer to 37.9% ― Phony Government Statistics, Detroit and Black Americans

Entertainment R&D Boosts Federal GDP Calculation Following Formula Changes

The new GDP methodology: What you need to know: U.S. economy over $500 billion larger due to new definitions

Government Economic Reports: What You’ve Suspected but Were Afraid to Ask.

2013 GDP Growth Rate Closer to -1.75%

/ L. M. Walker / 3 Comments

Phony Government Statistics: GDP

– By: Larry Walker, II –

“There are six things that the Lord hates, seven that are an abomination to him: haughty eyes, a lying tongue, and hands that shed innocent blood, a heart that devises wicked plans, feet that make haste to run to evil, a false witness who breathes out lies, and one who sows discord among brothers.” ~ Proverbs 6:16-19 ~

Gross Domestic Product (GDP) is one of the broader measures of economic activity and is the most widely followed business indicator reported by the U.S. government. But according to Economist Walter J. Williams of Shadow Government Statistics, “Upward growth biases built into GDP modeling since the early 1980’s have rendered this important series nearly worthless as an indicator of economic activity… With reported growth moving up and away from economic reality, the primary significance of GDP reporting now is as a political propaganda tool and as a cheerleading prop for Pollyannaish analysts on Wall Street.”

On August 29, 2013, the Federal Government reported that Real Gross Domestic Product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.5 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the “second” estimate released by the Bureau of Economic Analysis (BEA). In the first quarter, real GDP increased 1.1 percent. (The BEA will release its final number for the second quarter 2013 on September 26, 2013, at 8:30 A.M. EDT.)

However, this GDP headline number refers to the most-recent quarter’s annualized quarter-to-quarter rate of change (what that quarter’s percent quarter-to-quarter change would translate into if compounded for four consecutive quarters). This can mean that the latest quarter can be reported with a positive annualized growth rate, while the actual annual rate of change is negative, as was the case for the 3rd quarter of 2009. So is the economy really growing or not?

Note: The chart above, courtesy of ShadowStats.com, shows Annual Growth (Year-to-Year Percent Change). This is not the annualized quarterly rate of change that serves as the headline number for the series.

Shadow GDP

According to Shadow Government Statistics, the annual growth percentage change in GDP for the second quarter 2013, based on Official BEA data, was a mere 1.64%. However, when the aforementioned upward biases, inserted into GDP since 1984, are removed, the annual growth percentage change for the second quarter 2013 was actually more like -1.75%.

In fact, if you study the chart above, in conjunction with source data courtesy of Shadow Government Statistics, other than an anemic growth rate of less than 0.51% for the first, second, and third quarters of 2004, based on pre-1984 methodology, annual GDP growth has been negative ever since the second quarter of 2000.

Even worse, every time the BEA makes a new Pollyannaish change in its GDP reporting methodology, all prior data is restated back to the year 1929. For example, according to Shadow Government Statistics, methodological changes made in 2004 led to increases in previously reported GDP of 2.86% for 1980, and 5.25% for 1990 (see table below).

Unless this nonsense is reigned in, I suspect that in the near future, the Great Depression will be referred to as the Booming 30’s. Should you wish to study this topic further, please take a few moments to read the series authored by Walter J. “John” Williams, “Government Economic Reports: Things You’ve Suspected But Were Afraid To Ask!”

The Bottom Line: Nearly every key statistic reported by the Federal Government is a lie. Virtually every word emanating from Washington, DC is a lie. Although the American people may be exceptional, the Government of the United States, as it stands today, has strayed so far from the mark that there will be none other to blame as it seals its own demise.

Related:

Black Unemployment Rate Closer to 37.9%: Phony Government Statistics, Detroit and Black Americans

Entertainment R&D Boosts Federal GDP Calculation Following Formula Changes

The new GDP methodology: What you need to know: U.S. economy over $500 billion larger due to new definitions

PRISM Schism

/ L. M. Walker / 1 Comment

Heads or Tails?

– By: Larry Walker II –

Carla Dean: “Well, who’s gonna monitor the monitors of the monitors?” – Quotes from Enemy of the State

PRISM is allegedly a covert collaboration between the NSA, FBI, and nearly every tech company you rely on daily. PRISM has allegedly allowed the government unprecedented access to your personal information for at least the last six years. I say allegedly because every tech company in question denies its existence.

According to the Washington Post:

The National Security Agency and the FBI are tapping directly into the central servers of nine leading U.S. Internet companies, extracting audio and video chats, photographs, e-mails, documents, and connection logs that enable analysts to track foreign targets… Equally unusual is the way the NSA extracts what it wants, according to the document: “Collection directly from the servers of these U.S. Service Providers: Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube, Apple.”

However, Apple, Microsoft, Yahoo, and Google have all given full-throated denials of any involvement whatsoever. According to Google (emphasis mine):

You may be aware of press reports alleging that Internet companies have joined a secret U.S. government program called PRISM to give the National Security Agency direct access to our servers. As Google’s CEO and Chief Legal Officer, we wanted you to have the facts.

First, we have not joined any program that would give the U.S. government—or any other government—direct access to our servers. Indeed, the U.S. government does not have direct access or a “back door” to the information stored in our data centers. We had not heard of a program called PRISM until yesterday.

Second, we provide user data to governments only in accordance with the law. Our legal team reviews each and every request, and frequently pushes back when requests are overly broad or don’t follow the correct process. Press reports that suggest that Google is providing open-ended access to our users’ data are false, period. Until this week’s reports, we had never heard of the broad type of order that Verizon received—an order that appears to have required them to hand over millions of users’ call records. We were very surprised to learn that such broad orders exist. Any suggestion that Google is disclosing information about our users’ Internet activity on such a scale is completely false.

Schism

Now we hear that the federal government may be launching an investigation in order to find the person who leaked details regarding PRISM to The Guardian and Washington Post newspapers. In other words, the government wants to know who, within its ranks, blew the whistle. Sounds like another government-manufactured conundrum to me.

Great, so now the government is going to waste time and resources finding out who leaked the details of a program which never existed. Seems to me like the White House would be a great place to start, especially since its Deputy National Security Adviser, Ben Rhodes, has a master’s degree in fiction-writing from New York University. What’s up with that? I mean, in the mind of a fiction writer, wouldn’t it seem like one of the best ways to deal with a series of scandals would be to manufacture an even bigger one, and then quash it?

By that time won’t everyone have forgotten about Benghazi, the IRS Scandal, James Rosen, Eric Holder, Verizon, the Budget Crisis, Illegal Immigration, the Secret Kill List, Obamacare and everything else? Well, not in the real world. Nevertheless, for my two cents, if there is a leak investigation, in an effort to save both time and precious taxpayer resources, it should be performed by a Special Prosecutor, and should begin and end at 1600 Pennsylvania Avenue.

——————–

Addendum

I’ve actually known about Comverse Technology, Inc. since around 1994. The company merged with Verint Systems, Inc. early this year. This video discusses how the Verint Communications and Cyber Intelligence products and solutions help make the world a safer place (i.e. a less private place).

Verint CIS Solutions from Verint on Vimeo.

Budgeting 201: An Immediate Debt Crisis

/ L. M. Walker / 1 Comment

USA vs. Cyprus: Gross Government Debt to GDP

– By: Larry Walker, II –

According to Speaker of the House John Boehner, “We do not have an immediate debt crisis.” No, then what would you call it? Seems to me it was immediate in 1995, and again in 2008, so what is it now? Are we just screwed? And according to Barack Obama, “We don’t have an immediate crisis in terms of debt. In fact, for the next 10 years, it’s gonna be in a sustainable place.” Yeah, what place is that, Wonderland? Have you people lost your minds?

The chart above is from data published by the International Monetary Fund in its World Economic Outlook Database, October 2012. Based on what’s happening in Cyprus, for some reason I don’t believe either of them. We had an immediate debt crisis in 1995 when our debt-to-GDP ratio reached 71%, insomuch that the government was shut down. And another in 2008 when it reached 76%, just before all hell broke loose. And now suddenly, as gross U.S. debt has surged beyond 100% of GDP, the problem is no longer immediate. If the debt isn’t an immediate problem, when will it become one? Let me answer that for you.

The debt will become an immediate crisis when our economy inevitably dips into recession, a phenomenon which has occurred historically about once every 5 years since World War II. In fact, recession is exactly what’s happening in Cyprus right now. But surely recession will never reoccur in the U.S., because government fixed that problem once and for all, right? I mean it cost us around $6.7 trillion over the last four years, but the problem is solved, right? With GDP surging at a robust growth rate of 0.4% (revised) in the 4th Quarter of 2012, how can our government possibly be wrong? Oh give me a break!

I believe part of what exacerbated the crisis of 2008 was an excessive amount of government debt. So what do you think is going to happen with our debt hovering above 100% of GDP, as the next crisis hits? Is the U.S. government prepared for another recession? Is there anything left in the tank? It sure doesn’t look like it. Well, we’re not going to sit around and let the government continue to tax us to death, and we’re definitely not going for the unlawful seizure of our money and property, so I suggest you government guys get your act together and get serious about your spending problem, and that means now.

Instead of loosening standards and letting everyone who wants to – go on disability, welfare and food stamps; granting any illegal alien who desires – a free pass; and subsidizing any and everyone’s health insurance bill, while the other half of us and our grandchildren get stuck with the bill, now is the time to tighten standards and cut the slack. The sequester is right! Reducing the size of government is right!

Government needs to learn how to say, “No”. It should be, ‘Sorry, you’re going to have to go back to work, and you’re going to have to go back to your own country, and you’re going to have to chip in on taxes, because we can’t have 50% of the populace taking care of everyone else.’ If our government doesn’t learn how to say no, it’s going to destroy this nation and along with it our freedom. Yes, the debt is an immediate crisis, and it is an imminent threat to the survival of the Republic.

The chart above is from the Federal Reserve Bank of St. Louis. I’ll ask again. Does this look like it might be an immediate crisis, or just a tiny little problem years and years from now? It sure looks immediate to me, but maybe I’m just a bit more focused on surviving the unknowns, than sitting around fooling myself into thinking everything is going to be rosy ten years from now, if I just fold my hands, play a little more golf, and trust that someone else will handle it for me. Yeah, just like Cyprus, right? It’s time to stop playing politics and face reality.

References:

My Data – USA vs. Cyprus: Debt to GDP

IMF: World Economic Outlook Database, October 2012

Related:

Budgeting 101: A Balanced Approach

What Does Sequestration Mean To You?

From AAA to AA- in Four Years

Uncorrelated: GDP and National Debt

#Debt

Budgeting 101: A Balanced Approach

/ L. M. Walker / 1 Comment

I do believe that at some point government has borrowed enough. Although tax revenue is directly tied to economic growth, government spending is not.

– By: Larry Walker, II –

How does one balance a budget? Let me count the ways. Spend less than you take in annually, and you’ll live within your means. But how can governments comply? Why that’s easy. Simply calculate the rate of revenue growth in the previous year, then adjust the prior year’s spending level by this multiple for the current year. If a deficit ensues, trim spending back into balance. If a surplus results, pass it back to taxpayers in the form of tax rate reductions. Most of us would call this a balanced approach.

Of course proponents of big-government will retort, “It doesn’t work like that. We must spend around 50% or more than we take in, to stimulate revenue; so that we can spend around 50% more than we take in, to stimulate even more revenue; so that we can spend around 50% more than we take in, stimulating ever more revenue, ad infinitum…” Yet, it’s rather obvious that the modern day extreme left-wing’s touted correlation between government borrowing and economic growth is nonexistent, as we proved in – Uncorrelated: GDP and National Debt.

It might be helpful for far left-wingers to remember the words of the Original Democrat, Andrew Jackson, who once said, “I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country.” For more, see my post entitled, From AAA to AA- in Four Years.

You see, “For Jackson politics was very personal,” says H.W. Brands, an Andrew Jackson biographer at the University of Texas. “He hated not just the federal debt. He hated debt at all.” Before he was president, Jackson was a land speculator in Tennessee. He learned to hate debt when a land deal went bad and left him with massive debt and some worthless paper notes. Thus, unlike POTUS #44, Jackson brought practical business experience to the White House.

When he ran for president, Jackson knew his enemy: banks and the national debt. He called it “the national curse”. In Jackson’s mind, debt was “a moral failing”, says Brands. “The idea you could somehow acquire stuff through debt almost seemed like black magic.” But now days, if you listen closely to the Democratic Party, its enemy is no longer the national debt, but rather the average, anti-debt, fiscally responsible, Tea Party patriot.

The Balanced Approach

What would the federal government’s surpluses and deficits look like had it followed a balanced approach since 1929? Per the chart below, having begun with a surplus of $1 billion in 1929, the federal government would have realized a surplus of $835 billion in the 3rd quarter of 2012, compared to an actual deficit of around $1.1 trillion. Of course, all surpluses along the way could have been returned to taxpayers through periodic tax rate reductions, making income tax compliance at least somewhat worthy of the effort.

Under the balanced approach, when all spending is totaled from 1929 through 2012, the federal government would have spent a total of $39.4 trillion, versus the $66.9 trillion actually spent, for savings of $27.5 trillion. That means instead of a national debt fast approaching $17 trillion, we could be sitting on a national surplus of around $10.5 trillion.

The Unbalanced Approach

In contrast, what has the federal government’s unbalanced approach yielded? Per the second chart (below), having begun with a surplus of $1 billion in 1929, the federal government wound up running a budget deficit of approximately $1.1 trillion in the 3rd quarter of 2012. As you can see, the main imbalance has occurred since the year 2008, which is when the federal government adopted its current philosophy, where expenditures are completely decoupled from revenue growth – as if spending is suddenly a function of an imaginary 22nd Century economic boom. Meanwhile, approximately $6.7 trillion has been added to the debt since 2008, and the economy grew at a paltry annual rate of 0.4% (revised) in the 4th Quarter of 2012.

Conclusion

Although federal tax revenue is a function of economic growth, government spending is not. In other words, as the economy grows, tax revenue increases; and as it shrinks, tax revenue declines. Anyone who doesn’t understand this should return to the 6th grade for a refresher in basic math. On the other hand, government spending is a function of revenue. That is to say, as tax revenue rises and falls, so follows the amount available for government expenditures. Surpluses and deficits are directly linked to the level of government spending. When government spends less than it takes in, there is a surplus; when it spends more than it takes in, a deficit. It’s really that simple.

If the federal government is to ever regain control over spending, it must start with the rate of revenue increase (or decrease) in the previous year, since this is the only reasonable way of projecting the amount available for the current year, and then adjust its current year spending level accordingly (up or down). As soon as a deficit appears, the role of government is to trim spending back into balance. When a surplus results, government’s role is to pass the savings back to taxpayers, in the form of tax rate reductions. This we call, “the balanced approach” – and there is none other. Don’t patronize me. There is really only one question, Will the Democratic Party ever recover its bygone common sense?

Reference:

My Worksheet on Google Drive

BEA: Table 3.2. Federal Government Current Receipts and Expenditures

Related:

From AAA to AA- in Four Years

Uncorrelated: GDP and National Debt

#Debt

What Does Sequestration Mean To You?

/ L. M. Walker / 3 Comments

Government is the Problem

– By: Larry Walker II –

“Originally passed as part of the Budget Control Act of 2011 on the heels of the debt ceiling compromise, the sequester was intended to pressure the Joint Select Committee on Deficit Reduction (the “Supercommittee”) to agree on a budget of $1.5 trillion by way of spending cuts and revenue increases over the next decade.”

The above excerpt is from the National Council on Disability’s webpage entitled, What Will Sequestration Mean for People with Disabilities? A similar blurb may now be found on about every other government agency website, followed by a breakdown of how many disabled, homeless, widows and orphans will be left for dead, unless the federal government repeals its week-old budgetary cuts and instead raises taxes by around 40.7% across-the-board, which is about what it would take to come anywhere close to balancing the federal budget without such cuts.

But, the real question is what does the sequestration mean to you? I can’t answer that, but I can tell you what it means to me. What the sequestration means to me is that the U.S. government has decayed to the point of passing dummy laws, solely for the purpose of pressuring the very lawmakers who pass them, to enact real laws. In other words, government enacted the Sequester as law; solely as a means of pressuring itself into repealing it, and when its attempt failed, the mock law remained permanent.

I mean it’s akin to me signing a blood covenant stating that, “In my household, we will do without cable television, cell phone data plans, dining out, movies, snacks, and all other non-necessities, until such time as we actually have the money to pay for it,” but doing so, solely for the purpose of pressuring myself into deciding which we are going to do without – cable television, cell phone data plans, dining out, movies, snacks, or all other non-necessities. However, since there already wasn’t enough money to go around, and since I had already signed the covenant in my own blood, there was really nothing else to decide. So why didn’t I just make that decision from the get go? Actually, I did. “To thine own self be true.” ~ Anonymous

The lesson for government: Don’t pass a law you don’t intend to enforce. And for the public: Government is not the solution to our problems, government is the problem. Signing a bill into law, solely for the purpose of pressuring lawmakers to repeal it, and then whining about it when they refuse, is indicative of the kind of leadership emanating from the White House these days. “In America you have a right to be stupid – if you want to be.” ~ John Kerry, Secretary of State (2/26/2013). Yeah, so who’s looking stupid now?

GAO: “No Opinion” on U.S. Financial Audit

/ L. M. Walker / 3 Comments

Comments on 2012 Financial Statements of the U.S. Government

– By: Larry Walker II –

The Government Accountability Office (GAO) is required to audit financial statements for the U.S. government each year. What the GAO found in its Fiscal Year 2012 Audit published on January 17, 2013 is clearly unacceptable. If you take a few moments to read the report, what you’ll discover is that not only has the U.S. government been operating without a budget for the last three years, but even worse its books and records are so out of order that financial auditors were unable to render an opinion. You can bet that all the major credit rating agencies are paying attention and will render an opinion when judgment day arrives, and that day should be right around the corner. Following are some highlights from the latest report (in italics) along with a brief commentary.

Disclaimer of Opinion

“Because of the federal government’s inability to demonstrate the reliability of significant portions of the U.S. government’s accompanying accrual-based consolidated financial statements for fiscal years 2012 and 2011, principally resulting from limitations related to certain material weaknesses in internal control over financial reporting and other limitations on the scope of our work, we are unable to, and we do not, express an opinion on such accrual-based consolidated financial statements. As a result of these limitations, readers are cautioned that amounts reported in the accrual-based consolidated financial statements and related notes may not be reliable.”

Based on the auditor’s inability to express an opinion on the federal government’s financial statements, it is my opinion that any request to raise the debt ceiling should be summarily denied. Were the federal government a private entity, its creditors would be cashing out now and asking questions later. But since the federal government has a seeming unlimited ability to borrow without ever reducing its debt principal, perhaps my personal perceptions are overly rational. Then again, any decision based upon uncertainty or unreliable information can later come back to bite. If the federal government’s financial statements are so unreliable that auditors are unable to express an opinion, my gut instinct is to limit exposure, cut losses and move on.

“While significant progress has been made in improving federal financial management since the federal government began preparing consolidated financial statements 16 years ago, three major impediments continued to prevent GAO from rendering an opinion on the federal government’s accrual-based consolidated financial statements over this period: (1) serious financial management problems at DOD that have prevented its financial statements from being auditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.”

The Department of Defense (DOD) is no longer the largest drag on the federal budget; the Department of Health and Human Services (HHS) came in at number one last year, while the Social Security Administration (SSA) clocked in at number two, responsible for 23% and 22% of net federal costs, respectively. DOD now represents the 3rd largest item in the federal budget, consuming 21% of the government’s $3.8 trillion in net costs for FY 2012, yet its financial statements are currently not auditable. That means we really have no idea what DOD is buying, what it already owns, or the true nature of its future liabilities.

Further, according to GAO, most of the increase in DOD’s cost during FY 2012 was attributed to its Military Retirement Fund and other benefits programs. Since at the same time, the bulk of HHS and SSA costs come from major social insurance and postemployment benefits programs administered by those agencies (e.g., Medicare for HHS, and Social Security for SSA), that means better than 50% of federal spending (more than $1.9 Trillion) is directed towards retirement security, medical care, and other social welfare programs, which technically account for the entire $1.3 trillion shortfall realized by the federal government in FY 2012, and then some.

Intragovernmental Insanity

The national debt is comprised of debt held by the public and intragovernmental holdings. Intragovernmental holdings are debts the federal government owes to itself, a phenomenon only possible within the realm of the criminally insane. For example, as of the end of FY 2012, the Treasury has borrowed a total of $2.7 trillion from the Social Security Administration (its entire Trust Fund), and more recently from federal employee pension funds in order to meet its unmanageable over-inflated obligations. The total debt outstanding has grown from $5.7 trillion at the end of fiscal year 2000 to $16.4 trillion as of January 17, 2013. Included within this figure, intragovernmental debt has grown from $2.3 trillion at the end of fiscal year 2000 to $4.9 trillion as of January 17, 2013 (see table below).

As if the sheer weight of its total debt isn’t bad enough, according to GAO, the federal government can no longer adequately account for and reconcile its intragovernmental activity or the balances owed between federal agencies. Here’s an example. Back on June 28, 2010, the United States Postal Service, Office of Inspector General (OIG) discovered that the Postal Service had made a $75 billion overpayment to the Civil Service Retirement System (CSRS). However, since according to Note 24 of the GAO report (page 120), the Civil Service Retirement and Disability, and Civil Service Health Benefits Program Trust Funds are currently $849.1 billion and $240.0 billion in the hole, respectively, why would CSRS care?

USPS to CSRS: “Hey, you guys owe us $75 billion.”

CSRS to USPS: “Hey, give us a break; we’re already over a trillion dollars in the hole.”

USPS to CSRS: “My bad, we keep forgetting.”

World War Infinity

“Prior to 1917, the Congress approved each debt issuance. In 1917, to facilitate planning in World War I, Congress established a dollar ceiling for Federal borrowing. With the Public Debt Act of 1941 (Public Law 77-7), Congress and the President set an overall limit of $65 billion on Treasury debt obligations that could be outstanding at any one time. Since then, Congress and the President have enacted a number of debt limit increases. Most recently, pursuant to the Budget Control Act (BCA) of 2011, the debt limit was raised by $400 billion in August 2011 to $14.694 trillion, by $500 billion in September 2011 to $15.194 trillion, and by $1.2 trillion to $16.394 trillion in January 2012.”

Let’s make this clear. Prior to 1917, Congress approved each and every debt issuance request made by the Treasury Department. It was with the outbreak of the 1st World War that a debt ceiling was first established. This gave the Treasury some latitude in keeping the government afloat without impairing wartime activities. So it would make sense that after the end of World Wars I and II, Congress would resume its role of approving each debt issuance. But instead, the U.S. government has morphed into a permanent war mentality. Now, a small minority of borderline insane pundits are actually advocating for complete removal of any form of debt ceiling. It’s World War Infinity, they surmise. Like spoiled little children, they have conned themselves into believing that the role of government is to borrow and spend our way into a utopian entitlement paradise. Where are the adults?

Material Weaknesses

“In addition to the material weaknesses underlying these major impediments, GAO identified four other material weaknesses. These are the federal government’s inability to (1) determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce improper payments, (2) identify and resolve information security control deficiencies and manage information security risks on an ongoing basis, (3) effectively manage its tax collection activities, and (4) effectively monitor and report loans receivable and loan guarantee liabilities.”

While a minority within the realm of the spoiled and irresponsible are vying for total removal of any limits on the national debt, we have just been informed that the federal government has no control over improper payments, no ability to manage information security risks, cannot effectively manage its tax collections, and is unable to effectively monitor and report its loans receivable and its ballooning loan guarantee liabilities. It seems to me that the federal government should get a grip on its internal infrastructure before another dime is borrowed or spent. However, even if the federal government were able to show improvement in these areas, there are other issues on the horizon threatening to derail its entire operation.

Risks and Uncertainty

According to GAO, there are risks that other factors could affect the federal government’s financial condition in the future, including the following:

  • The U.S. Postal Service (USPS) is facing a deteriorating financial situation as it reached its borrowing limit of $15 billion in fiscal year 2012 and finished the year with a reported net loss of almost $16 billion.

  • The Federal Housing Administration (FHA) reported that its liabilities exceeded its assets by about $15 billion as of September 30, 2012, and that the capital ratio for its Mutual Mortgage Insurance Fund fell below zero during the fiscal year. In addition, the ultimate roles of Fannie Mae and Freddie Mac in the mortgage market may further affect FHA’s financial condition.

  • Several initiatives undertaken during the last 4 years by the Board of Governors of the Federal Reserve System to stabilize the financial markets have led to a significant change in the composition and size of reported securities on the Federal Reserve’s balance sheet. The value of these securities, which include mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and the Government National Mortgage Association, is subject to interest rate risk and may decline or increase depending on interest rate changes. Therefore, if the Federal Reserve sells these securities at a loss, future payments of Federal Reserve earnings to the federal government may be reduced.

The USPS, FHA, and Federal Reserve are in over their heads, and either technically bankrupt, or soon to be. Yet, the only answer proffered by our so-called leaders in Washington, DC is to keep borrowing. Is this really the only viable solution? The Post Office borrowed $15 billion and then lost almost $16 billion last year. Does that sound like an entity worthy of another loan? Not in my world. It seems to me that instead of continuing to prop it up, it’s time for the USPS to go the way of the dinosaurs. The FHA and Federal Reserve can follow suit.

Also according to GAO, examples of assets and liabilities reported by the federal government that are subject to substantial uncertainty include the following:

  • The federal government’s consolidated financial statements as of September 30, 2012, include approximately $109 billion of investments in two government-sponsored enterprises—the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) (reported net of about $85 billion in valuation losses). In addition, as of September 30, 2012, the financial statements include about $9 billion of liabilities for future payments to Fannie Mae and Freddie Mac and disclose a projected maximum remaining potential commitment to these entities of about $282 billion under agreements between Treasury and the entities. The future structures of these two government-sponsored enterprises and the roles they will serve in the mortgage market must still be determined.

  • The federal government reported Troubled Asset Relief Program (TARP) direct loans and equity investments of approximately $40 billion as of September 30, 2012 (reported net of about $23 billion in valuation losses), of which approximately $20 billion related to loans to and equity investments in certain entities in the automotive industry.

  • The federal government reported that the Pension Benefit Guaranty Corporation’s (PBGC) liabilities exceeded its assets by about $34 billion as of September 30, 2012. PBGC is subject to further losses if plan terminations that are reasonably possible occur.

In other words, the federal government “invested” $109 billion into Fannie Mae and Freddie Mac, which resulted in $85 billion in valuation losses, yet it plans to invest another $291 billion going forward. Another $63 billion was invested in loans made to TARP, which reported $23 billion in valuation losses ($20 billion of which is attributable to loans made to the auto industry). And the PBGC’s liabilities now exceed its assets by around $34 billion and it may be subject to further losses going forward. And what’s the federal government’s solution? Raise the debt ceiling, borrow more, and keep propping up failed entities, otherwise it fears the whole house of cards may come crashing down. Perhaps it’s time to get real and just go ahead and begin dismantling the entire criminal enterprise, one failed agency, entity and fund at a time.

Conclusion

The GAO was not able to express an opinion on the U.S. government’s financial statements, but that doesn’t stop us from reading between the lines. Either we deal with our fiscal problems now, or later. Leaving my granddaughter’s a legacy of failure is not something I’m willing to support. It’s time to grow up, and demonstrate it by cutting the federal government down to its bare bones. Do this today and we might have a chance; wait until tomorrow, and according to GAO, the U.S.A.’s debt-to-GDP ratio will reach 395% by fiscal year 2087 and rise continuously thereafter. If Congress raises the federal government’s debt ceiling without fundamental fiscal reform, then we all deserve everything we’ve got coming to us, nothing. Until such reform takes place, government ilk can count me out. Don’t call me, don’t write me, don’t ask me to invest in federal debt issues, and don’t dare ask me for another dime.

References:

Financial Audit: U.S. Government’s Fiscal Years 2012 and 2011 Consolidated Financial Statements

What GAO Found

Related:

War on Wealth III | National Debt Review

Postal Service OIG Discovers $75 Billion Overpayment, Again

Social Security: A Breach of Trust – Notes on 2010 Financial Statements of the U.S. Government

Real Effective Tax Rates | Romney’s versus Obama’s

/ L. M. Walker / Leave a comment

Content of Character ::

According to a report released by the Tax Foundation, an effective federal tax rate of 14.0% is higher than what 97 percent of Americans pay.

– By: Larry Walker, Jr. –

And according to The Tax Policy Center, the average effective federal tax rate for all Americans, as a percentage of cash income, was only 9.3% in 2011. Those in the Top 20 Percent (with incomes over $103,465) paid an average of 14.9%, while those in the Bottom 20 Percent (with incomes below $16,812) received back refundable tax credits averaging 5.8% of their incomes.

Within the Top Quintile, the Top 1 Percent paid an average rate of 20.3%, while the Top 0.1 Percent paid an average of 19.8%. It’s important to note that these are averages, which means that within each quintile some pay more than the average and others less. But overall, since the average effective federal tax rate for all of America is 9.3%, this represents a kind of minimum benchmark. What’s your effective federal tax rate?

Under the traditional model, in 2011, Mitt and Ann Romney paid an effective federal tax rate of around 14.0% (see definitions at the end), while Barack and Michelle Obama paid 17.8% (see table below). So does that mean the Obamas are more patriotic? Before you answer that, consider that the Romneys paid a total of $1,912,529 in federal income taxes, versus the Obamas $150,253. So does this give the Romneys the upper hand?

Digging a little deeper, it turns out that the Romneys paid an effective state and local tax rate of 11.3%, compared to the Obamas 7.0%. The Romneys also paid $1,541,905 in state and local taxes, compared to the Obamas $59,804. Shouldn’t state and local taxes be counted as well, since they are, after all, taxes? Yes, of course.

So when all taxes are on the table, the Romneys overall effective tax rate was 25.2%, compared to the Obamas 24.8%. And, the Romneys paid a total of $3,454,434 in federal, state and local taxes, versus the Obamas $209,057. So in light of these facts, is one of the two presidential candidates better suited for the Oval Office than the other? Is one a tax deadbeat and the other a saint? If a presidential candidate’s effective tax rate matters, then this election should be a toss up. But if it doesn’t, then Barack Obama’s entire – fair share monologue – is nothing but rubbish. The question is – what really matters?

Real Effective Tax Rates

Perhaps a more suitable measure of patriotism may be found in one’s real effective tax rate. One way of lowering U.S. tax liabilities is through charitable giving. When gifts are given to charity, the taxpayer no longer controls the assets, and so is granted a deduction against his (or her) taxable income of as much as 50% of adjusted gross income. Depending upon one’s marginal tax bracket, the tax savings may be as high as 35% of the amount given.

What happens to the money once it has been gifted? It gets spent by recipient organizations on salaries and wages, goods and services, real property, or is otherwise invested toward its charitable endeavors. Thus, charity is wealth redistribution, or if you will, a type of voluntary taxation. I would add that charitable giving is a much more efficient means of spreading the wealth than the U.S. government’s wasteful method, which after a certain limit may be summed up as little more than legalized robbery.

In 2011, the Romneys gave away $4,000,000, or about 29.0% of their income, although they only chose to claim a tax deduction of $2,250,772. The Obamas donated $172,130 or about 20.0% of their income. When we add this voluntary taxation to the total amount of taxes paid, we find that the Romneys paid a real effective tax rate of 54.4%, compared to the Obamas 45.1% (see table below).

Just to add some perspective I included data from the Roosevelts and the Carters tax returns (above). It’s interesting to note that in 1937, Franklin and Eleanor Roosevelt donated $3,024, or only about 3.2% of their income, while in 1978, Jimmy and Roselynn Carter gave away $18,637, or about 7.0%. When we add the amount of the couples voluntary taxation through charitable gifts, to the total amount of taxes paid, we find that the Roosevelts paid a real effective tax rate of 33.3%, compared to the Carters 45.6%. So was FDR a slacker? Was Jimmy Carter slightly more patriotic than Obama? And isn’t Mitt Romney a better man than them all?

Note: The Roosevelts income of $93,602 in 1937 is equivalent to $1,504,178 today, while the Carters income of $267,195 in 1978 is equivalent to $948,325. A study of historical Presidential tax returns is interesting, informative, and highly recommended for anyone serious about tax reform, as is a study of historical income tax rates.

Tax Return Analysis: Romneys versus Obamas

Following are some other key statistics from the Romneys and Obamas tax returns:

It’s notable that 94.8% of the Romneys income came from investments – interest, dividends and capital gains, versus -12.8% for the Obamas. The Obamas tax return includes a capital loss carryover of $116,151, a consequence of failed investments from the past. That’s interesting, since Barack Obama is the one always harping on the idea of government investment, yet all the while it turns out that successful investing is a trait beyond the scope of his expertise. Small wonder his taxpayer-funded green energy investments have turned out to be dismal failures.

What’s even more notable is the fact that roughly 62.4% of the Romneys income came from capital gains and qualified dividends which, based on current law, are taxed at a maximum rate of 15.0%. In contrast, around 99.0% of the Obamas income came from wages and net book sales which are taxed at ordinary rates of as high as 35.0%. Thus the Romneys effective tax rate should be considerably lower than the Obamas; but it turns out that both couples effectively paid about the same overall effective tax rate, 25.2% versus 24.8%, as explained earlier. So in spite of favorable capital gains rates, overall effective tax rates tend to balance out. One reason for this phenomenon is that most of the States don’t reciprocate (i.e. there is no favorable capital gains rate at the state level).

Next, we find that the Romneys paid $102,790, or 0.8% of their income, in foreign taxes, while the Obamas paid $5,841, or 0.7%. Thus, on a percentage basis, both families earned about an equal amount of their income from foreign sources. So is either candidate more likely to outsource American jobs than the other? I guess Obama could limit sales of his books to the USA, and cut-off the rest of the world, as if that would make any sense. I’ll let you figure that one out.

Next, we discover that the Obamas claimed a retirement contribution deduction of $49,000, or 5.8% of their income, while the Romneys claimed none. Foul! The question is that since Barack Obama now qualifies for a $191,000 a year presidential pension, why is he continuing to maximize the simplified employee pension account (SEP) deduction? In the private sector, the most anyone can exclude from income for retirement purposes, including employer matching contributions, is $49,000 per year. Yet Barack Obama gets to claim this maximum deduction, while at the same time deferring taxes on the annual contributions the U.S. Treasury makes to his pension account. Does that sound fair to you? Is Obama paying his fair share?

Is a guaranteed $191,000 a year for life, on top of a virtually unlimited presidential expense account, insufficient for Mr. Obama? In stark contrast, Mitt Romney refused to take a salary while he served as Governor of Massachusetts. So has anyone bothered to ask if he would waive his presidential salary? Would he also consider waiving the presidential pension and lush lifetime expense account? Somebody needs to ask that question. By the way, Mitt Romney could have claimed exactly the same SEP-IRA deduction that the Obamas did, based on his net business income, which would have further reduced his tax liability, but chose not to. So what does this say about character?

Next, the Obamas also claimed a $47,564 home mortgage deduction amounting to 5.6% of their income, while the Romneys claimed none. Wow! So since the Obamas claimed both a $47,564 home mortgage deduction, and the $49,000 maximum retirement contribution exclusion, while the Romneys claimed neither, this gave the Obamas an 11.4% handicap. Note: According to the Internal Revenue Service, in tax year 2010, only 25.8% of tax filers claimed the home mortgage deduction, which kind of makes the case for placing limits on this deduction.

Now when it comes to charitable contributions, as stated earlier, the Romneys gave $4,000,000, or around 29.2% of their income, while the Obamas gave $172,130, or 20.4%. But since the Romneys only chose to write-off $2,250,772, their actual deduction amounted to just 16.4% of their income. So once again the Obamas had a slight advantage, yet when their total itemized deductions are compared, we find that the Romneys amounted to 34.2% of their income, while the Obamas amounted to 33.0%, or about the same.

Finally, the Romneys federal taxes included an Alternative Minimum Tax (AMT) of $674,512, representing 4.9% of their income, while the Obamas incurred a liability was $12,491, or 1.5%. The AMT limits certain deductions and tax preferences to ensure that high income earners pay at least a minimum amount of tax. So what will happen when the AMT is eliminated? Will the rich pay less in taxes? Not necessarily, because if the same deductions and tax preferences for high income earners were eliminated from the get go, then the AMT wouldn’t be necessary. Isn’t this the objective of tax reform, to eliminate deductions and preferences, lower tax rates, and thus simplify the tax code? So when tax rates are cut by 20% in the next year or two, and that’s where we’re headed, the first place to look for deductions and preferences to eliminate is within current AMT regulations.

Content of Character

So what’s the point? First of all, we learned that in 2011, the Romneys paid a total of $3,454,434 in federal, state and local taxes, while the Obamas paid $209,057. When state and local taxes were added to the mix, we found that the Romneys paid an overall effective tax rate of 25.2%, versus the Obamas 24.8%. But when charitable contributions were figured in, we discovered that the Romneys paid a real effective tax rate of 54.4% compared to the Carters 45.6%, the Obamas 45.1%, and the Roosevelts 33.3%.

What should be clear is that measuring a person by the size of their effective tax rate reveals nothing about their character. If those who pay the largest share of taxes are the most patriotic among us, then that all but eliminates everyone except for the Top 1 Percent. If effective tax rates are so important, then why not simply convert to a flat tax (i.e. the FairTax)? That way the concept of effective tax rates becomes meaningless. In a perfect world it seems this would be the goal.

Is paying more taxes than absolutely necessary savvy? No, but anyone who voluntarily pays more must really love this country. Mitt and Ann Romney didn’t claim all of the charitable contributions they could have, and thus paid a higher amount in taxes than legally required. When it comes down to it, no one that I know cares anything about increasing their own personal effective tax rate; most are like the Obamas, preoccupied with finding ways to reduce it.

The main point of this post has been to prove that measuring any American by the size of their effective tax rate reveals next to nothing about the content of their character. Thus, Barack Obama’s entire fair share mantra turns out to be nothing but rubbish. The rich already pay more than their fair share sir. It’s time to bring on a business guy, someone who really understands what’s going on in this country. It’s time to lower income tax rates, limit deductions and preferences, broaden the tax base, and reduce the size of government. It’s time to lower the federal deficit and move towards a balanced budget. It’s time to purge Barack Obama’s jaded philosophy of – do as I think, not as I do.

Definitions:

(a) The Traditional Model – Under the traditional model, the effective tax rate is calculated by dividing total income taxes (before tax credits and other taxes), by total income (before exclusions and deductions).

(b) Effective Federal Tax Rate – The effective federal tax rate is determined by dividing total federal income taxes (before tax credits and other taxes), by total income (before exclusions and deductions).

(c) Effective State and Local Tax Rate – The effective state and local tax rate is determined by dividing total state income taxes, real estate taxes, and personal property taxes claimed on federal Schedule A, by total income (before exclusions and deductions).

(d) Overall Effective Tax Rate – The overall effective tax rate is calculated by dividing total federal income taxes (before tax credits and other taxes), plus total state and local taxes as in (c), by total income (before exclusions and deductions).

(e) Real Effective Tax Rate – The real effective tax rate is calculated by dividing total federal income taxes (before tax credits and other taxes), plus state and local taxes as in (c), plus charitable contributions, by total income (before exclusions and deductions).

References:

The Romneys 2011 Tax Return

The Obamas 2011 Tax Return

The Roosevelts 1937 Tax Return

The Carters 1978 Tax Return

Romney’s Taxes: A Window Into Charitable Giving

Even at 14%, Romney Pays a Higher Rate than 97% of His Fellow Americans

Ex-presidents have huge expense accounts

President Obama’s Taxpayer-Backed Green Energy Failures