Low benefit, high cost
The latest iteration of President Trump’s signature legislation package looks increasingly like a box of horrors as it makes its way through the congressional sausage making machine. Sure, it has some positive provisions, but for the most part they appear to be serving as inducement to pass negative ones. Alas, latter list is much longer than the former, with some 537 amendments already submitted for consideration.
So I won’t even attempt an exhaustive analysis. The biggest negative is its effect on deficits and debt, the biggest threat to the future of the American economy. It appears to be a US Trump attempt to replicate the UK Truss debacle.
Yet for the cost, the benefits are small. For example, there are “work requirements” for Medicaid. This would cost a list of time and money to save a few bucks, hardly a model of efficiency. For an administration eager to trim the number of government workers and the burden they impose on ordinary citizens, the increase in paperwork, checkers, and checkers checking the checkers, seems strikingly out of place.
There is none of the promised “no taxes on Social Security benefits”. In order to gain a small cut in taxes on Social Security payments, American seniors get handed an even more complex algorithm to figure it. Did Congress even opt for something like reducing the 85% taxable rate to 50%? No … there is a separate deduction of up to $4000 that phases out as a function of modified adjusted gross income (MAGI). Something only seniors’ accountants could love. The benefits are even less because, like the breaks in overtime and tips, they’re temporary. And for this microscopic crumb, Social Security’s balance sheet takes another hit, when it’s already in dire need of rescue.
Why not just make Social Security benefits tax exempt? Like it was before 1984. If SS can’t afford it, make them fully taxable. Or 50% taxable. When you’re taking someone’s money, is it really necessary to make it even more painful by making it so complicated?
What Social Security really needs is to halt the ongoing divergence between the age at which seniors become eligible for full benefits and the age to which they decease being eligible. The world changes. People are living longer. If SS is headed for a “demographic crisis”, is it because reality changed, or because the rules didn’t? Rigid and inflexible government programs are incompatible with a dynamic real world. There is no “demographic crisis”. Just a refusal-to-adapt crisis.
It’s not as if it’s even politically unrealistic. The age was already stepped up from 65 to 67. The question is why must it stop there.
A deduction for interest on cars with certain US content? Government playing favorites in industry is never a good idea, but if you’re going to do it, why also play favorites with borrowing? America is not indebted enough?
Then, after teasing the world with the possibility of a 50% cut in the war budget, it was instead increased. This administration’s sense of humor is macabre. And when the world finally stops lending to the federal government as if it’s a good credit risk, the economic crisis will be even worse.
The Federal Reserve will be forced to play lender of last resort, conjuring the lent dollars from nothing, dollars will lose their value even faster, and the cost of living will explode higher.
Don’t sell yer gold yet …
Mega’s dispatch from England:- Blades are getting sharpened
Oh Dear, seems the PM (Starmer) is getting worried……
As you might be aware he suffered a “little local difficulty” in that a group of Ukraine young male models AKA Rent boys attacked his private home & car…..setting both of them on fire.
The Police are dealing with this right now & as best they can the news is out.
So, feeling that someone might try to make good use of this somewhat unfortunate situation he has decided to strike 1st. A major cabinet reshuffle is coming & Angela Rayner is the target.
She is very much of the old HARD left of Labour, not too bright… very much of the “Tax the rich” ……..or the poor people who can’t escape.
Story after story is no appearing in the press “Leaked plans for more tax rises”…….that sort of thing. Given that the IMF now sez Blighty will have almost ZERO growth & Ukraine (Rent boys aside) is going down fast i say he now in major troubles………
Mike
If you allow a broad definition of taxes to include the inflation tax, taxes = government spending.
In other words, every unit of purchasing power government spends comes from somewhere. It’s not manna from heaven. If it’s not taken in direct taxes, it’s borrowed and printed. The purchasing power gained by government in this way shows up as lost purchasing power of the citizenry. The accoutrements of middle class living standards … like housing … become increasingly unaffordable.
Looks like taxes are going up all over.
Trump just hit Europeans with 50% taxes!!!!!
Je Sus
Waaay tooo high. He also announced a 25% specifically on Apple iPhones:
Trump threatens to hit Apple with 25% tariff on iPhones made outside U.S.
Waaay tooo granular. Government’s role is to regulate the playing field, not the plays of the game.
Drill Limey….DRILL!
New US ambassador meets Starmer after Trump urges Britain to drill for more oil
US Ambassador Warren Stephens has met Sir Keir Starmer “convey the priorities of the Trump administration”, after Donald Trump urged the UK to ditch wind power projects and drill for oil.
The US Embassy said those priorities include “maximising the US-UK partnership to advance our shared interests, such as the recently announced trade deal and our defence and security alliance which promotes stability and prosperity worldwide”.
The embassy said the meeting at 10 Downing Street was the second for the two men since the ambassador, a billionaire investment banker and Republican donor, took up his post on May 12.
Let’s hope it’s just suggestion and left at that. It’s not the US’s place to tell other countries how to run their internal affairs.
Not least in energy policy … what works best in one location isn’t necessarily best for all. I’m not a fan of wind power, but it is notoriously local … famously traditional for the Dutch … what power works where should be decided by businessmen and engineers, not politicians and bureaucrats.
Curious headline crossed on Bloomberg TV to the effect that Trump has put plans for a “sovereign wealth fund” on the back burner so he can focus more on the deficit.
A lot to unpack in there … uhm … the BBB is already a missed opportunity to focus on the deficit, unless by focusing on the deficit you mean growing it. And before that, there was that expansion of the military budget. The implicit suggestion that the deficit is somehow a separate issue from taxes and spending is absurd.
We already lampooned the idea of a “sovereign wealth fund” when it first popped up. Just a little common sense that to invest sovereign wealth, you first have to have sovereign wealth. Sure, the US government has assets, but that little matter of having already pledged some $37T worth of them to lenders would seem to amount to a bit more than a technicality.
This SWF would also ostensibly invest in stocks … TikTok was cited as an example. Setting aside the question of just how productive a cultural wasteland like TikTok might be, government ownership of the means of production is called communism.
Trump is slashing out, the US Empire is dying.
The US Navy chased out of the RED sea, its missile defence shield FAILED in Israel.
Russia has shocked everyone & is still growing……………China making Hi tec goods & EVs.
India told US to get lost.
Hard to see a way forward…
Empire isn’t the beginning of greatness; it’s the end. Many here had hoped Trump’s America First agenda would mean less focus on ruling the world and more on domestic affairs; regaining average Americans’ lost ground on living standards.
It’s been downhill since the turn of the century. By the end of the 1990s, deficits were shrinking and the federal budget was in such good shape experts were starting to speculate how financial markets would get along in a world without a Treasury market.
Then it got bogged down in a stock market bubble, a couple trillion dollar wars, a housing bubble, an explosion of the welfare state, and years of aggressive central bank excess, and here we are again, only 25 years later, speculating about the end of the Treasury market, but for the opposite reason.
READ THIS & SAY TO YOURSELF…….. “PERSONAL RESPONSIBILITY”
Is 50/50 enough? The ‘ludicrous’ divorce settlements leaving many women ‘devastated’
By Brad Young, Money feature writer
Abandoning her career to look after their two daughters was what Isobel’s* ex-husband wanted.
Six years after their divorce, she earns a quarter of his salary while caring for the children six out of seven days.
Despite having two university degrees, she is “trapped” on universal credit and frustrated with a “ludicrous” divorce system that didn’t account for years of unpaid work to support her ex and raise their family.
“I feel hugely let down and I feel cheated by a system that feels so orchestrated towards women being on the back foot,” said Isobel, 44, from Berkshire.
Data suggests she is not alone.
The numbers
Divorce slashes women’s household incomes far more than men’s, new research by Legal and General has revealed.
Wives can expect their income to be halved on average in the year after ending the relationship, compared with a 30% drop for husbands.
A closer look at Isobel’s divorce settlement – and why half didn’t seem anywhere near fair
Isobel was earning £19,500 working for a pharmaceutical company in 2007 when she married her ex-husband.
She took voluntary redundancy while on maternity leave in 2008 and over the next nine years only briefly worked part-time.
“It [the jobs] didn’t last very long because he didn’t manage very well with me being at work,” she said.
When they divorced in 2019, she had been back in work for two years. But her care assistant salary was just £17,000 – much less than her likely salary if she hadn’t given up her career to be a mum. As for her husband – he was now taking home approximately £52,000.
In a roughly even settlement, she was awarded the car, one buy-to-let flat with £50,000 equity, and £55,000 of £200,000 equity from the family home, plus child maintenance. He was awarded the remainder of the equity and a separate buy-to-let flat.
She spent £20,000 on solicitors’ fees and, given her low wages, much of the rest of her capital was used to pay off debt accumulated after separating and renting from 2018 onwards, she said.
“Why on earth would it [the settlement] be a 50-50 split when my earning capability is a quarter of what he earns?” said Isobel, who is now a nurse on £25,000 a year while her ex-husband earns six figures.
“I’ve had six years out of work, I’m the primary carer for the children, I’m never going to be able to get a job that gives me £100,000, am I? That’s ludicrous. And why is that not taken into account?”
Some more data
Double the number of divorced women (14%) have cut their hours to manage caring responsibilities compared with men (7%), Legal and General (L&G) found.
“Women still pick up the majority share of caring responsibilities, both for children as part of the family unit, but also elderly relatives,” said Lorna Shah, managing director of retail retirement at the pension provider.
Shah sees a lot of cases where married women prioritise the family unit over their own financial well-being and long-term earning potential.
Emma Hitchings, professor of family law at the University of Bristol, agrees: “Wives, and particularly mothers, are in a precarious financial position at the point of divorce.”
Her wide-ranging 2023 study, Fair Shares on Divorce, found married women were more likely to be employed part-time, with 28% taking home under £1,000 a month compared with 10% of men.
One key asset that’s often overlooked – pensions
Pensions are one of the three main assets divvied up in any divorce settlement, alongside capital and housing.
Yet Hitchings said her study found there is a “lack of awareness, understanding and interest in pensions” on divorce.
“Women are far more likely to surrender any rights over pensions,” said Shah, adding they often prioritised the family home.
Legal and General found 28% of women waived their rights to access their partner’s pot, compared with 17% of men.
This is despite women having smaller pensions for the same reasons their wages are lower post-divorce: the gender pay gap (which stands at 7%), longer parental leave and more career breaks for childcare.
“There’s a reticence for some women to call on their partners’ pensions,” said Shah.
“I think it feels like it’s not theirs, but obviously if they’ve had joint finances as part of a marriage, then actually they’ve contributed to that in other ways and therefore it should all be considered.”
Grace’s divorce and her husband’s ‘hidden’ pay rises
Among the women waiving that right is Grace*, 48, from the Midlands, who feels “forced to take the bare minimum” in her ongoing divorce proceedings.
Her husband has offered her £70,000 if she doesn’t make a claim to his pension or future earnings, she said, and she feels she has to agree so she can leave their home as quickly as possible with a deposit for another house.
“I’m devastated if I’m being honest with you because all I ever worked for was just to have a solid home and a family.”
In 2005, she gave up her £26,000 job at an energy company and the £160,000 home she owned in Greater London to move in with her husband-to-be and his children.
Grace said she invested £30,000 in renovating their home in the Midlands and, while still working full-time, took on the role of “homemaker”.
“I would be the one looking after the house, the general running, the washing, the cleaning and all the typical wifey things.”
Her husband took control of all the finances – to the point she was “shocked” to find out he had not disclosed pay rises from £50,000 to £80,000. Grace earns £26,000.
“I feel incredibly ripped off – manipulated. I feel hopeless,” she said, adding the house she once owned in Greater London is now worth approximately £400,000.
“The worst thing is that I feel it’s really hard to wrap my head around everything after having let go for so many years to let him control everything – and then trying to make the right decisions when you’re emotionally distraught all the time.”
Knowledge is power
Lack of understanding is common in divorce proceedings, Professor Hitchings’ study found.
Again, the division of pensions provides a perfect illustration.
That’s because pension sharing requires a court order, and there is less understanding of the process since legal aid for private family proceedings in England and Wales was cut in 2015, she said.
In 2023, only 11% of divorcees with a pension yet to be drawn had made an arrangement for pension sharing.
Some 37% did not know the value of their own (let alone their ex-spouse’s) pension.
Around 10% of homeowners with a mortgage did not know what the equity in their home was at the point of divorce.
Karen Stainton, 55, found her background in finance invaluable during a protracted and painful divorce 10 years ago.
Karen Stainton
Karen Stainton
She offered to pay her ex-husband a £135,000 lump sum out of the proceeds of the house, in return for him waiving access to her pension.
“And why should he, after he’d not given me any child benefit or helped me look after the kids after the split,” she said.
She took on three jobs and worked seven days a week to earn the £45,000 she needed to look after their children, Joe, John and Peter, aged 18, 15 and eight, at the time of the divorce.
“I was completely running on adrenaline. It wasn’t good,” she said.
But a decade later, her pension is valued at £450,000 – far more than the lump sum.
Law ‘definitely needs reform’
Professor Hitchings added that there are areas of the law that “definitely need reform”.
It gives couples too much discretion at the expense of having a full account of all of their assets and their future prospects, particularly pensions.
In December, the Law Commission published a scoping report on whether the existing law – the more than 50-year-old Matrimonial Causes Act of 1973 – needs reform.
The government was given six months to respond to the report and decide whether the commission should investigate further and suggest options for reform.
“We are grateful to the Law Commission for reviewing the current laws governing finances in divorce, including in relation to pensions,” said a Ministry of Justice spokesperson.
“The government is carefully considering the findings of the report and will provide a response in due course.”
What divorcees can do
Whether a divorcee should prioritise pension sharing, capital, or the family home depends on their circumstances, said Shah.
“Gather as much information as you can up front; try to get some financial advice if you can afford it or guidance otherwise,” she added, pointing to a financial health checking service Legal and General provide online.
“Divorce is a really emotional time for everybody involved. But being able to take that step back and actually look at it from a logical perspective on really what is the best for both parties, both at the time and in the longer term, is really important.”
Keep an eye on this
https://www.ricardo.com/en/products/magnet-free-electric-motor
Stimulus Does Not Stimulate
He on his way…………..Bastard who cause riots up & down the nation, then threw people into jail for the wrong Meme
https://www.youtube.com/watch?v=mfYrJXsDUXE
Mega’s dispatch from England:- Black lives matter……again.
All of a sudden George Floyd is back in the news.
It was 5 years ago & while i feel sorry for the bloke he was not MLK!
Indeed i recall the fall of Afghanistan, the Taliban flooding into the Capital & finding a statue of dear George in what was the western side of town.
Being non white it was quite impossible for them to be racist in anyway, thus their decision to pack as much C4 as they had around the base of said statue & blew up straight to Maris was simply their way of confirming that Black lives matter.
What is strange is the fact that the British press (like ALL of them) are suddenly trying to Dog Whistle BLM back from the dead. I sense that something is in the works & “They” need a distraction.