When Teachers Act Like Thugs ‘for the Children!’
Posted By Paula Bolyard On March 11, 2013 @ 8:20 am In Children,Education | 35 Comments
When the substitute teachers arrived at the Strongsville police station for background checks, striking teachers greeted the “SCABS” with aggressive screaming and taunting. The applicants had to be escorted into the building by police officers.
“Go home, SCAB!”
“Have some integrity!”
“Get an honest job!”
One union member said, “We’re trying to scare them off in hopes that something positive can come out of this.”
Something positive “for the children,” no doubt.
Several white men screamed at a black woman, with one shouting:“Don’t do it, honey; it’s not all about you,” and “Rosa Parks would be ashamed.”
No doubt there is an important history lesson “for the children” in this mob scene.
Strongsville, Ohio, a normally quiet suburb just south of Cleveland, recently became Ground Zero in the public-sector union war.
Earlier this month, after months of failed negotiations, teachers voted to strike when the school board submitted their “last best offer” to the Strongsville Education Association (SEA). With the high-stakes Ohio Graduation Test looming the week of March 11th, the 6000-student district hired substitute teachers to fill in during the strike. Not surprisingly, this didn’t go over well with the union teachers, who decided to intimidate and harass anyone who crossed the picket line — “for the children.”
Laura Rowley, a parent with students in the district, described her experience registering to be a substitute teacher:
I can’t put into words how these EDUCATORS behaved in front of the police station. Blocking the entrance, screaming in my face, calling me a b**tch, pounding on the doors of the building, going on and on…every other word was mother f*cker, dumb piece of s**t—I swear I was walking thru [sic] death row. Really it made me sob—I’m embarrassed that these are the people that are teaching my children. We had to have police escorts to leave the building, is this [sic] beyond crazy. Honestly, I am afraid to send my kids to school tomorrow.
She added, “There were subs crying and hyperventilating, thought they were going to call an ambulance.”
One parent who drove by the scene that day told Bob Frantz on WTAM radio, “I heard the most foul language and I thought my car was going to be mobbed.”
Was that really “for the children”?
To emphasize the point that this strike was “for the children,” the Strongsville Education Association (SEA) posted pictures of the “SCABS” on their Facebook page with the title “Wall of Shame” and the caption “Here’s a visual of who the Board is hiring as replacements (SCABS) to educate OUR children!” Media Trackers Ohio captured screenshots of the pictures ; the caption “And the hiring of ‘teachers’ begins. … Looks HIGH-LY Qualified, but is he?” was next to one picture of a black substitute teacher.
One parent wrote: “Very scary. … I wouldn’t expose my children to this.”
A teacher wrote: “As a Cleveland teacher and a Strongsville resident you have my support 100%, however, I do think some of the captions under the pictures are inappropriate. I realize they are SCABS, but personally poking fun at them to a degree is bullying and we don’t want our kids to see our teachers doing that.”
Another comment: “I am a Strongsville resident and a Cleveland teacher and I fully support you but please review some of these captions, they could easily be viewed as racist and discriminatory and don’t paint the SEA in a good light.”
Eventually the SEA relented and removed the album.
Some teachers tried to frighten their students with the “Wall of Shame” pictures and captions. One mother told WTAM Radio that her daughter “was sent those pictures from her teacher to tell them ‘This was who was going to be teaching.’”
The negotiations are at a standstill over a variety of issues. The district projects a deficit of $10.8 million by 2016 if it cannot contain costs; currently, compensation packages consume nearly 90% of the district budget. The union says the district is not being truthful about the deficit. The most contentious issue is a freeze on automatic step-increases through the 2014-2015 school year. For the children, of course. Teachers are being asked to pay $200/month for the family medical plan instead of the $150 they currently pay and are being asked to pay their own share of the pension contribution — 9.3%. Currently the district is paying the teachers’ 9.3% share plus the district’s share — the 14% the state requires them to pay. Again, presumably for the children. The district even agreed to increase the teachers’ salaries so they would not see a change in their paychecks as a result of the pension adjustment.
The two sides are miles apart, and it’s understandable that tensions are high. But it’s doubtful that anyone in this all-American suburb expected the shocking behavior of the teachers. Media Trackers Ohio reported that Superintendent John Krupinski described the union’s tactics as coming out of Saul Alinsky’s playbook:
It’s like a playbook. It’s based on a book — a play-by-play replay of this book about how to strategize, and be successful in obtaining what you want. Rules for Radicals,” Krupinski said. “If you’ve read that book, that’s exactly the game plan that they’re pulling off.
That’s the OEA playbook: Rules for Radicals.
Neighborhoods where the substitute teachers live were blanketed with bright pink flyers announcing, “Do you know a SCAB lives in your neighborhood?” The flyers give the names, addresses, and the phone numbers of the teachers and then rattle off a few SEA talking points, giving credence to the superintendent’s assertion that the union is using Alinsky tactics. Parents were stunned to see their friends and neighbors treated like this. “Who knows what this guy will go through?” said Dan Dubecky. “I don’t know him or his circumstances, but I’m sure he’s just a guy trying to work”
But there’s one thing the union didn’t count on.
Community members, using alternative and social media, are doing an end-run around the mainstream media and the union spin.
Alternative media outlets like Strongsville Patch and the Strongsville Post are providing a forum for students, parents, and teachers.
They are covering important details about the strike that the mainstream media conveniently avoid. Community members share information on Twitter and Facebook, including a Facebook page called “End the Strongsville Teachers Strike NOW.” The page moderator, referring to the thuggish union tactics, had this insightful comment on Thursday:
Why do those tactics work? Because they assume silence. They assume that nobody else will ever know. The victims will stay victims, and the bullies will have their way.
That was then. This is now.
Today, we have the Internet. We have social media sites like Facebook and Twitter and Instagram. A person can now put a message on the Internet, and within hours, it has reached hundreds (or thousands) (or more) people who never would have seen it before that technology existed. Look at today: flyers were distributed this morning, saying that a teacher was a “scab.” By early afternoon, several pictures of the flyers had appeared on social media sites. By early evening, the action of distributing those flyers had been loudly (and correctly) criticized by loads of people, including some of the very people who received those flyers. The entire tactic, which once was an effective way to coerce, is now a very quick way to turn lots of people AGAINST your cause.
Parents have figured out that this strike is not “for the children.”
When teachers try to keep the children out of school by using thuggish, Saul Alinsky tactics, there can be no doubt that the teachers are more concerned about the contracts than the kids.
Though early on in the Strongsville strike negotiations community sentiment seemed to favor the teachers, as word of the unions’ extreme tactics spread throughout Strongsville via alternative media, a shift seemed to occur.
Unlike many strikes, where public opinion almost universally sympathizes with the teachers and against the mean, evil school board, this one seems different. People are angry about the bad behavior of the teachers and are probably more than a little frightened that these people will again be entrusted with the care of their children. Many resent the sense of entitlement from the teachers when they hear words like “deserve” and “fair share” as they see their own health care costs rising and their own pay stagnating while taxes increase. Thanks to Sunshine Laws, anyone with an internet connection can see the teacher salaries in the district and the $1 million+ guaranteed pension plans many of the teachers will enjoy upon retirement at age 55 (fully funded by the taxpayers).
In the past, the unions and the mainstream media controlled the narrative. Today, Americans have the tools to access the truth for themselves and can share this information with their neighbors. This, in the end, may prove to be the demise of the big-union stranglehold on public education.
Saturday, March 23, 2013
Saturday, March 9, 2013
Jeff Sessions for President
Why Jack Lew Is a Disaster for Our Country
By Sen. Jeff Sessions - February 28, 2013
Sen. Jeff Sessions (R-Ala.), ranking member of the Senate Budget Committee, delivered the following remarks from the Senate floor on February 27, 2013:
During my remarks today I have exhaustively documented the case against the confirmation of Mr. Lew. I have detailed his disastrous budget plans, rebuked by editorial boards across the country and unanimously rejected by Congress.
I have discussed his repeated, knowing, and deliberately false statements about those budget plans—most notoriously his claim that “Our budget will get us, over the next several years, to the point where we can look the American people in the eye and say we’re not adding to the debt anymore; we’re spending money that we have each year, and then we can work on bringing down our national debt.”
As I close my remarks, I would appeal to my colleagues to oppose Mr. Lew.
I would appeal to my colleagues to defend the integrity of the Senate, to defend the right of our constituents to hear the truth from government officials, and to defend the idea, the very concept, of truth itself.
I would also like to place this in a wider context.
Today is the 1,400th day since Senate Democrats passed a budget. Why has this gone on so long? Because they decided it would be better to offer no solution, no plan to help struggling Americans, and instead to tear down anyone who dared to offer a plan to solve our nation’s economic problems.
This is the heart of the problem here in Washington right now. We have one political party that sees the budget debate as exercise in political warfare, not problem-solving.
At the center of this strategy is the White House.
In his campaign for re-election, President Obama repeatedly said that he had a plan to “pay down our debt.” He even ran a campaign ad saying: “I believe the only way to create an economy built to last, is to strengthen the middle class—asking the wealthy to pay a little more so we can pay down our debt in a balanced way. So we can afford to invest in education, manufacturing, and home-grown American energy, for good middle class jobs.”
But this is all totally false.
Again, this was the strategy: offer a plan that does nothing to alter our dangerous debt course while pretending the opposite.
Then, once you’ve done that, attack anyone who dares to reduce the size of the bureaucracy. Attack anyone who suggests Washington is too powerful. Attack, attack, attack—while never offering anything to help Americans who are struggling every day.
After the White House budget was submitted in 2011, President Obama spoke at George Washington University and, with Congressman Paul Ryan sitting in front of him, and said:
“One vision has been championed by Republicans in the House of Representatives… It’s a plan that aims to reduce our deficit by $4 trillion over the next ten years… But the way this plan achieves [that goal] would lead to a fundamentally different America than the one we’ve known throughout most of our history… This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit. And who are those 50 million Americans? Many are someone’s grandparents who wouldn’t be able afford nursing home care without Medicaid. Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome… These are the Americans we’d be telling to fend for themselves.”
Majority Leader Reid said of one Republican reform effort that it was “a mean-spirited bill that would cut the heart out of the recovery that we have in America today… It goes after little children, poor little boys and girls… We want them to learn to read.”
This is how the White House and Senate Democrat leaders approach the budget debate. It’s the same strategy with the sequester. And Republicans, candidly, have not done enough to stand up to these egregious slanders. Voting against Jack Lew would be a vote against these dishonest tactics. Misrepresentation of fact.
The painful truth is, the White House strategy has been largely successful up until now. President Obama and his Senate Majority have blocked fiscal reform and continued our path to fiscal disaster.
It is time that we pointed out that the establishment they are shielding from cuts—the big-government apparatus they are defending—is hurting people every day. Their policies, their endless support of the bureaucracy, has created poverty and joblessness and dependency.
In cities like Baltimore, Detroit, and Chicago—governed almost exclusively by Democrats at every level—good, hardworking people are hurt every day by the policies of the Left.
-In the city of Baltimore, one in three children live in poverty. One in three Baltimore residents are on food stamps.
-In Chicago, there were roughly 500 homicides in 2012. Fifty-one percent of the city’s children live in a single-parent family.
-In Detroit, almost one in three households had not a single person working at any time in the last 12 months. The city’s violent crime rate is among the worst in the country. More than half of all Detroit children live in poverty.
This should not happen. These are the consequences of leftist policies. We are fighting to create jobs, to create rising wages, to create opportunity, to help more people earn a good living and care for themselves financially. We are trying to lift people out of poverty, to strengthen family and community. And we are trying to protect the good and decent people of this country from a debt crisis.
Where does Mr. Lew stand? Where does the White House stand?
They did everything they could to defend the bureaucracy—no matter the cost in wasted tax dollars or lost jobs. Mr. Lew submitted an indefensible budget plan that would have caused further social and economic devastation, deliberately misled the nation about that plan, and then participated in a strategy to shut down GOP efforts at reform.
I urge my colleagues to reject these tactics from the White House. I urge them to stand up for the good and decent people of this country and to oppose Mr. Lew.
By Sen. Jeff Sessions - February 28, 2013
Sen. Jeff Sessions (R-Ala.), ranking member of the Senate Budget Committee, delivered the following remarks from the Senate floor on February 27, 2013:
During my remarks today I have exhaustively documented the case against the confirmation of Mr. Lew. I have detailed his disastrous budget plans, rebuked by editorial boards across the country and unanimously rejected by Congress.
I have discussed his repeated, knowing, and deliberately false statements about those budget plans—most notoriously his claim that “Our budget will get us, over the next several years, to the point where we can look the American people in the eye and say we’re not adding to the debt anymore; we’re spending money that we have each year, and then we can work on bringing down our national debt.”
As I close my remarks, I would appeal to my colleagues to oppose Mr. Lew.
I would appeal to my colleagues to defend the integrity of the Senate, to defend the right of our constituents to hear the truth from government officials, and to defend the idea, the very concept, of truth itself.
I would also like to place this in a wider context.
Today is the 1,400th day since Senate Democrats passed a budget. Why has this gone on so long? Because they decided it would be better to offer no solution, no plan to help struggling Americans, and instead to tear down anyone who dared to offer a plan to solve our nation’s economic problems.
This is the heart of the problem here in Washington right now. We have one political party that sees the budget debate as exercise in political warfare, not problem-solving.
At the center of this strategy is the White House.
In his campaign for re-election, President Obama repeatedly said that he had a plan to “pay down our debt.” He even ran a campaign ad saying: “I believe the only way to create an economy built to last, is to strengthen the middle class—asking the wealthy to pay a little more so we can pay down our debt in a balanced way. So we can afford to invest in education, manufacturing, and home-grown American energy, for good middle class jobs.”
But this is all totally false.
Again, this was the strategy: offer a plan that does nothing to alter our dangerous debt course while pretending the opposite.
Then, once you’ve done that, attack anyone who dares to reduce the size of the bureaucracy. Attack anyone who suggests Washington is too powerful. Attack, attack, attack—while never offering anything to help Americans who are struggling every day.
After the White House budget was submitted in 2011, President Obama spoke at George Washington University and, with Congressman Paul Ryan sitting in front of him, and said:
“One vision has been championed by Republicans in the House of Representatives… It’s a plan that aims to reduce our deficit by $4 trillion over the next ten years… But the way this plan achieves [that goal] would lead to a fundamentally different America than the one we’ve known throughout most of our history… This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit. And who are those 50 million Americans? Many are someone’s grandparents who wouldn’t be able afford nursing home care without Medicaid. Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome… These are the Americans we’d be telling to fend for themselves.”
Majority Leader Reid said of one Republican reform effort that it was “a mean-spirited bill that would cut the heart out of the recovery that we have in America today… It goes after little children, poor little boys and girls… We want them to learn to read.”
This is how the White House and Senate Democrat leaders approach the budget debate. It’s the same strategy with the sequester. And Republicans, candidly, have not done enough to stand up to these egregious slanders. Voting against Jack Lew would be a vote against these dishonest tactics. Misrepresentation of fact.
The painful truth is, the White House strategy has been largely successful up until now. President Obama and his Senate Majority have blocked fiscal reform and continued our path to fiscal disaster.
It is time that we pointed out that the establishment they are shielding from cuts—the big-government apparatus they are defending—is hurting people every day. Their policies, their endless support of the bureaucracy, has created poverty and joblessness and dependency.
In cities like Baltimore, Detroit, and Chicago—governed almost exclusively by Democrats at every level—good, hardworking people are hurt every day by the policies of the Left.
-In the city of Baltimore, one in three children live in poverty. One in three Baltimore residents are on food stamps.
-In Chicago, there were roughly 500 homicides in 2012. Fifty-one percent of the city’s children live in a single-parent family.
-In Detroit, almost one in three households had not a single person working at any time in the last 12 months. The city’s violent crime rate is among the worst in the country. More than half of all Detroit children live in poverty.
This should not happen. These are the consequences of leftist policies. We are fighting to create jobs, to create rising wages, to create opportunity, to help more people earn a good living and care for themselves financially. We are trying to lift people out of poverty, to strengthen family and community. And we are trying to protect the good and decent people of this country from a debt crisis.
Where does Mr. Lew stand? Where does the White House stand?
They did everything they could to defend the bureaucracy—no matter the cost in wasted tax dollars or lost jobs. Mr. Lew submitted an indefensible budget plan that would have caused further social and economic devastation, deliberately misled the nation about that plan, and then participated in a strategy to shut down GOP efforts at reform.
I urge my colleagues to reject these tactics from the White House. I urge them to stand up for the good and decent people of this country and to oppose Mr. Lew.
Sunday, March 3, 2013
Saturday, March 2, 2013
Stan Druckenmiller Entitlement Transfers (Coming Storm)
Druckenmiller Sees Storm Worse Than ’08 as Seniors Steal
Stan Druckenmiller, one of the best- performing hedge fund managers of the past three decades, has a warning for the youth of America: Don’t let your grandparents steal your money.
Enlarge image
Stan Druckenmiller, chairman and chief investment officer of Duquesne Family Office LLC. Photographer: Scott Eells/Bloomberg
23:04
March 1 (Bloomberg) -- Stan Druckenmiller, founder of Duquesne Capital Management LLC and one of the best performing hedge fund managers of the past three decades, discusses his concerns about entitlement spending, the economy, investment strategy, and tax policy. He speaks with Bloomberg Television's Stephanie Ruhle. (This is the full Interview. Source: Bloomberg)
Druckenmiller, 59, said the mushrooming costs of Social Security, Medicare and Medicaid, with unfunded liabilities as high as $211 trillion, will bankrupt the nation’s youth and pose a much greater danger than the country’s $16 trillion of debt currently being debated in Congress.
“While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit,” Druckenmiller said in an hour-long interview with Stephanie Ruhle on Bloomberg Television’s Market Makers. “I am not against seniors. What I am against is current seniors stealing from future seniors.”
Druckenmiller said unsustainable spending will eventually result in a crisis worse than the financial meltdown of 2008, when $29 trillion was erased from global equity markets. What’s particularly troubling, he said, is that government expenditures related to programs for the elderly rocketed in the past two decades, even before the first baby boomers, those born in 1946, started turning 65.
Druckenmiller stopped managing money for outside clients in 2010 after three decades in the business, including more than a decade as chief strategist for billionaire George Soros. From 1986 through 2010 he produced average annual returns of 30 percent, one of the best long-term track records in the industry.
Spending Cuts
President Barack Obama and Congressional leaders are locked in a disagreement over the U.S. budget deficit. If no agreement is reached today, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years. Half of the cuts would come from defense and half from domestic spending. The reductions were designed to be so unpalatable that lawmakers would come up with a way to replace them.
Americans want Congress to delay the spending cuts to give the economic recovery more time to take hold, according to a Bloomberg News poll conducted Feb. 15-18. When Washington does confront the deficit issue, Americans back a compromise that includes more tax revenue and fundamental changes to Social Security and Medicare. Fifty-one percent of respondents said overhauling Social Security is necessary to substantially reduce the deficit, and 58 percent said the same of Medicare.
Seniors’ Lobby
In 2011, Social Security, Medicaid and Medicare accounted for 44 percent of the government’s $3.7 trillion in expenditures, up from 34 percent in 1990, according to statistics compiled by the government’s Bureau of Economic Analysis.
“The seniors have a very, very powerful lobby,” Druckenmiller said. “They keep getting more and more transfer payments” from younger generations through what’s essentially a pay-as-you-go system, he said.
“AARP has been on the forefront of a national conversation with over 6 million Americans about potential options for strengthening Social Security and Medicare -- and ultimately health and income security in retirement,” said David Certner, the legislative policy director at AARP, the Washington-based senior citizens lobby with more than 37 million members. “Older Americans know how important these programs are and want to make sure they are strong for their children and grandchildren.”
There were 40 million people in the U.S. 65 and over, according to the 2010 U.S. Census, the year before the first baby boomers hit retirement age. By 2020, that number is expected to grow to 55 million, according to the U.S. Department of Health and Human Services.
Speaking Out
As the elderly population rises, the number of workers who pay into Social Security is dropping. By 2030, there will be about two workers per retiree, down from 3.4 workers in 2000, according to the 2004 book “The Coming Generational Storm” by Laurence Kotlikoff and Scott Burns. If a three-year-old today is taxed at the same rate as today’s working population, he will get less than half of the benefits that our current seniors are getting, Druckenmiller said.
Usually press shy, Druckenmiller said he chose to speak out on the issue now, because he felt he hadn’t done enough before the financial crisis.
As early as 2005, he forecast the impending real estate crisis and its effects on banks “backing all those silly instruments,” he said. He met with a couple of policy makers and a representative of the U.S. Congress at the time. He also spoke at the Ira W. Sohn Investment Research Conference in New York.
30 Charts
“I had my 30 charts with colors and pictures and laid out for them why I thought it was going to be a huge, huge problem for the U.S. economy and the U.S. financial system,” he said in the interview.
Today he sees an even bigger reason for concern because of the government’s massive unfunded liabilities. He also sees trouble with what he calls its trickle-down monetary policy.
The Federal Reserve’s decision to hold interest rates near zero and buy $85 billion of assets a month is pumping up the stock market, all with the hope that rich people will spend those gains, and that money will trickle down to the rest of the country.
While stocks may continue to rise for a while because companies are buying back shares and retail investors are coming back to the market in search of returns, the gains probably won’t last, Druckenmiller said.
No 1982
“The chances of this being a new bull market like 1982 aren’t high because we’re not attacking the crux of the problem, which is too much leverage and too much debt,” he said. “I don’t know the timing of when the markets will respond to this, but it will happen.”
Druckenmiller suggested changing eligibility ages for Social Security and benefit structures for wealthy retirees, as well as removing disincentives for those who would rather work in their later years. Adding a federal consumption tax would help, he said, because seniors consume about the same amount as people in their 20s or 30s, yet pay less in income taxes.
Another way to shift the burden as the population ages would be to fully tax dividends and capital gains, since retirees typically rely more on those forms of income, he said. To avoid double taxation, the government could abolish corporate taxes, which would also eliminate some incentives for companies to move business abroad.
Carried Interest
Druckenmiller also proposed ending the tax benefit given to private-equity, venture-capital and hedge fund managers that treats carried interest, the portion of profits they take from successful investments, as capital gains rather than ordinary income.
“Current income is current income,” he said. “That thing should have gone away years ago.”
Druckenmiller said his next step is to talk to young people directly, including at his alma mater, Bowdoin College in Brunswick, Maine.
“Look at our young people who are obsessed with the environment,” said Druckenmiller, who sits on the board of the Environmental Defense Fund. “They are looking at the consequences of our actions 50 to 60 years from today.”
His goal is to get them to have the same far-sighted reaction to their economic future.
“With the proper education and with proper voices out there, we could have 40 million kids marching down to Washington.”
https://www.google.com/search?q=Stan+Drucken
miller&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
See Stan Druckenmiller
Stan Druckenmiller, one of the best- performing hedge fund managers of the past three decades, has a warning for the youth of America: Don’t let your grandparents steal your money.
Enlarge image
Stan Druckenmiller, chairman and chief investment officer of Duquesne Family Office LLC. Photographer: Scott Eells/Bloomberg
23:04
March 1 (Bloomberg) -- Stan Druckenmiller, founder of Duquesne Capital Management LLC and one of the best performing hedge fund managers of the past three decades, discusses his concerns about entitlement spending, the economy, investment strategy, and tax policy. He speaks with Bloomberg Television's Stephanie Ruhle. (This is the full Interview. Source: Bloomberg)
Druckenmiller, 59, said the mushrooming costs of Social Security, Medicare and Medicaid, with unfunded liabilities as high as $211 trillion, will bankrupt the nation’s youth and pose a much greater danger than the country’s $16 trillion of debt currently being debated in Congress.
“While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit,” Druckenmiller said in an hour-long interview with Stephanie Ruhle on Bloomberg Television’s Market Makers. “I am not against seniors. What I am against is current seniors stealing from future seniors.”
Druckenmiller said unsustainable spending will eventually result in a crisis worse than the financial meltdown of 2008, when $29 trillion was erased from global equity markets. What’s particularly troubling, he said, is that government expenditures related to programs for the elderly rocketed in the past two decades, even before the first baby boomers, those born in 1946, started turning 65.
Druckenmiller stopped managing money for outside clients in 2010 after three decades in the business, including more than a decade as chief strategist for billionaire George Soros. From 1986 through 2010 he produced average annual returns of 30 percent, one of the best long-term track records in the industry.
Spending Cuts
President Barack Obama and Congressional leaders are locked in a disagreement over the U.S. budget deficit. If no agreement is reached today, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years. Half of the cuts would come from defense and half from domestic spending. The reductions were designed to be so unpalatable that lawmakers would come up with a way to replace them.
Americans want Congress to delay the spending cuts to give the economic recovery more time to take hold, according to a Bloomberg News poll conducted Feb. 15-18. When Washington does confront the deficit issue, Americans back a compromise that includes more tax revenue and fundamental changes to Social Security and Medicare. Fifty-one percent of respondents said overhauling Social Security is necessary to substantially reduce the deficit, and 58 percent said the same of Medicare.
Seniors’ Lobby
In 2011, Social Security, Medicaid and Medicare accounted for 44 percent of the government’s $3.7 trillion in expenditures, up from 34 percent in 1990, according to statistics compiled by the government’s Bureau of Economic Analysis.
“The seniors have a very, very powerful lobby,” Druckenmiller said. “They keep getting more and more transfer payments” from younger generations through what’s essentially a pay-as-you-go system, he said.
“AARP has been on the forefront of a national conversation with over 6 million Americans about potential options for strengthening Social Security and Medicare -- and ultimately health and income security in retirement,” said David Certner, the legislative policy director at AARP, the Washington-based senior citizens lobby with more than 37 million members. “Older Americans know how important these programs are and want to make sure they are strong for their children and grandchildren.”
There were 40 million people in the U.S. 65 and over, according to the 2010 U.S. Census, the year before the first baby boomers hit retirement age. By 2020, that number is expected to grow to 55 million, according to the U.S. Department of Health and Human Services.
Speaking Out
As the elderly population rises, the number of workers who pay into Social Security is dropping. By 2030, there will be about two workers per retiree, down from 3.4 workers in 2000, according to the 2004 book “The Coming Generational Storm” by Laurence Kotlikoff and Scott Burns. If a three-year-old today is taxed at the same rate as today’s working population, he will get less than half of the benefits that our current seniors are getting, Druckenmiller said.
Usually press shy, Druckenmiller said he chose to speak out on the issue now, because he felt he hadn’t done enough before the financial crisis.
As early as 2005, he forecast the impending real estate crisis and its effects on banks “backing all those silly instruments,” he said. He met with a couple of policy makers and a representative of the U.S. Congress at the time. He also spoke at the Ira W. Sohn Investment Research Conference in New York.
30 Charts
“I had my 30 charts with colors and pictures and laid out for them why I thought it was going to be a huge, huge problem for the U.S. economy and the U.S. financial system,” he said in the interview.
Today he sees an even bigger reason for concern because of the government’s massive unfunded liabilities. He also sees trouble with what he calls its trickle-down monetary policy.
The Federal Reserve’s decision to hold interest rates near zero and buy $85 billion of assets a month is pumping up the stock market, all with the hope that rich people will spend those gains, and that money will trickle down to the rest of the country.
While stocks may continue to rise for a while because companies are buying back shares and retail investors are coming back to the market in search of returns, the gains probably won’t last, Druckenmiller said.
No 1982
“The chances of this being a new bull market like 1982 aren’t high because we’re not attacking the crux of the problem, which is too much leverage and too much debt,” he said. “I don’t know the timing of when the markets will respond to this, but it will happen.”
Druckenmiller suggested changing eligibility ages for Social Security and benefit structures for wealthy retirees, as well as removing disincentives for those who would rather work in their later years. Adding a federal consumption tax would help, he said, because seniors consume about the same amount as people in their 20s or 30s, yet pay less in income taxes.
Another way to shift the burden as the population ages would be to fully tax dividends and capital gains, since retirees typically rely more on those forms of income, he said. To avoid double taxation, the government could abolish corporate taxes, which would also eliminate some incentives for companies to move business abroad.
Carried Interest
Druckenmiller also proposed ending the tax benefit given to private-equity, venture-capital and hedge fund managers that treats carried interest, the portion of profits they take from successful investments, as capital gains rather than ordinary income.
“Current income is current income,” he said. “That thing should have gone away years ago.”
Druckenmiller said his next step is to talk to young people directly, including at his alma mater, Bowdoin College in Brunswick, Maine.
“Look at our young people who are obsessed with the environment,” said Druckenmiller, who sits on the board of the Environmental Defense Fund. “They are looking at the consequences of our actions 50 to 60 years from today.”
His goal is to get them to have the same far-sighted reaction to their economic future.
“With the proper education and with proper voices out there, we could have 40 million kids marching down to Washington.”
https://www.google.com/search?q=Stan+Drucken
miller&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
See Stan Druckenmiller
Subscribe to:
Posts (Atom)