Dear Sen. McCain,
I admire your desire to cut taxes, and to eliminate the pork barrel spending that costs all Americans our hard earned money.I like your Maverick spirit.
However, after the events on Wall Street this past week, my hope is that you will completely retract your economic strategy and do the prudent thing, which is to say that your strategy of tax cuts is no longer viable when the government is about to take on what could be anywhere between 500Billion and 1 Trillion dollars in debt to support retaining liquidity in our financial system and in turn keep our economy running smoothly.
Dear Sen. Obama,
I respect your desire to reduce the tax burden on the middle class, and in fact give them a tax cut, while increasing the tax burden on those earning more than 250k annually. I understand that your goal was to have the wealthy pay for the tax cuts of the many. Speaking for exclusively for myself, I was willing to accept the tax increase and examine your candidacy based on other issues.
However, after the events on Wall Street this past week, I have to take a new look at your economic strategy. The trillion plus dollars of market valuation that have been lost in the stock market has come from primarily those you would like to increase taxes for. The reality of the market was that it has given greatly to the wealthy over the past 8 years, in the span of a few weeks, it taketh away .
I know many people who have lost much if not all of their networth, and during my trip to NY this past week, met several who have been completely wiped out. Their entire life savings, gone because they owned stock in the several financial institutions that have gone bankrupt or sold at pennies on the dollar and their jobs were lost as a result as well. My hope is that you will completely retract your economic strategy and do the prudent thing, which is to say that your strategy of tax cuts for the middle range of earners, and tax increases for those earning 250k is no longer viable when the government is about to take on what could be anywhere between 500Billion and 1 Trillion dollars in debt to support retaining liquidity in our financial system and in turn keep our economy running smoothly.
Senators McCain and Obama, failure to recognize that what the financial markets went through changed the fabric of our economic model and in turn the impact of your economic policy is completely irresponsible.
The prudent thing for each of you to do, and I know neither of you is asking me for this advice, but Im offering it anyways, is to say the following:
“Based on the series of events on Wall Street this past week, I am withdrawing my economic proposals. Once the market settles down, I will meet with Secretary Paulson, who has done a phenomenal job in handling this crisis, and gain a better understanding of where the economy is and where it can go from here. Based on that information, I will present to the American people my new economic strategy.
In the meantime, because the economic future of this country depends on the funding of the plan Secretary Paulsen has proposed, I will set aside my campaigning and work with my colleagues in the Senate and across my party to quickly get this bill passed. The future of our economy depends on it”
That is what my candidate will hopefully do.
And one last thing I have to mention. Does everyone realize how much bigger a disaster last week would have been had Social Security been privatized ? Why ? Because the cash from the accounts would have allowed for more leverage in the system, making this delevering process even more painful. Who knows how many would have placed their money in what they thought were safe instruments, created and sold to them by companies like Lehman, only to see those funds value greatly diminished or destroyed. I believe its also safe to think that those Soc Sec funds would have jacked up the markets to even higher levels, meaning the fall the last weeks and months could have been even more dramatic.
Please, let us all remember that when the topic comes up again in the future.
Mark, fellow IU grad here, former inner city teacher in Indianapolis for 7 years…have a legitimate opportunity to save America for $100 per person…tell me your honest thoughts!
Eric
Comment by Eric -
Truthfully, it wouldn’t have mattered what the McCain camp did.
Obama spoke a message of “change” without really providing any indication as to what that change meant while successfully repeating “I’m not Bush” over and over.
This election was less about the issues.
Comment by Sam -
Both candidates will reassess the situation, that goes without
saying. Saying it would only instill doubt and uncertainty into
their campaign. I think that’s bad advice.
Comment by Jeff Hock -
Mark,
Again, you serve up a practical, balanced, spark of wisdom into the world, The failuere of either to respond directly to the question in the debate of how their economic plans would be changed by recent developments on wall street. If either candidate had proposed your common sense answer , they’d have swayed key undecides into their camp because this offering is the prudent and wisest oiption at this critical moment in time.
Comment by Dan'l Terry -
Have you researched the FairTax? If so, I’d love to hear your thoughts on it.
Comment by Beas -
Question, if Paulsen is doing such a great job at managing the mess
where was this organizational skill to foresee this mess and put in
place strategies and/or tactics to combat the events leading up to
now?
So much for McCain suspending his campaign.
Comment by Rozano -
Mark,
I have watched you on Fox in the recent days talking about the bailout.
I wanted to ask the same question Zahara asked.
Please run for President in 2012.
At that time, America will need a President like your quality more.
Frank
Comment by Frank Fang -
Hi Mark!
Why don’t you run for Prez? You are very clear on what is happening to our country and how to possibly fix it……
Zahara
Comment by Zahara Mossman -
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Mr. Cuban,
Looks like you got your wish. CNN is reporting the following:
“Republican presidential hopeful John McCain says he is suspending his campaign to go to Washington to work on U.S. economic crisis.”
Comment by Breakline Marketing -
Apparently McCain reads your blog…
CNN.com just reported that he is suspending his campaign to work on the economy.
Comment by Shane -
Well as you have seen, Obama has done close to what you have requested…. Think he read your blog :)..
Comment by Wes -
Well said. Thanks.
Comment by J. C. -
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Mark,
I have an idea, why don’t YOU run for President in the next election?
I’m not trying to be a smarta$$, I’m serious…we do need change, but
I’m not sure either of our choices have any idea about the avg
person. You actually do seem to have a clue!
Thanks,
Marty B
Comment by Marty B -
Mark,
Let me add one more point:
Do you know what drove the markets so high in the 1990s? The advent and eventual widespread acceptance of the 401K account. Money came into markets like crazy, and money was put to work. And no one who put money in a 401k in 1990 is regretting the decision today.
H. J.
http://www.hjmann.com
Comment by HJ Mann -
The Dow Jones Industrial Index is calculated using price appreciation only. It does not include “total return”….dividends and interest paid from a portfolio. If the DJIA was recalculated from its beginning using total return it would currently be over 100,000. So, no, “privatizing” social security is not a dangerous idea. Letting bureaucrats rig housing markets with trillion dollar subsidies is dangerous as hell though.
Comment by Robert -
Rich CEOs can get it wrong. As for Obama not only we are going to funding the bailout but also every other new government entitlement like healthcare off the backs of the rich. In 2006 the top 10% made 37% of the reported income yet they already pay 60% of the tax burden. Obama want to raise taxes on the to give the bottom 50% who only pay 3% of tax burden but consume far more in government services. Not to mention any tax increase will result in a reduction of gross tax receipts to the government.
As for the Stock market, you are so obsessed with shot term gyrations you are missing .the long-term picture. The average growth of the S&P 500 has been around 10.83% from my working life 1980 to the present. The brings me to social (in)security me to again obsession with short term stock market gyrations missing long term picture. The problem is Social Security will be the next economic bomb. It nothing more that a Ponzi scam paying retires with what is collected today. First, when social security started it took 11 workers to fund one retiree, today it is more like two workers to one retiree. The system cannot handle to influx of baby boomers who retirement is fund by the following baby bust generations. To make matters worst, there are no funds in the Social security account but government IOUs, I.E. more debt. Now remember I said about the S&P 500, I would had been better off if I was able to put my social security tax in my own private account than letting government borrow it with no possibility of return or growth.
Comment by Richard Brown -
Mark,
Have to disagree on the issue of Social Security. Does it occur to any of you that the only organization out there with worse accounting practices than Lehman Brothers is the US Government?
The odds of the entire investment being wiped out are negligible, whereas instead the money has been placed into a “Trust Fund” that is and remains within arm’s reach of politicians who have “borrowed” and keep “borrowing” from it. The “borrowed” money is gone and is never coming back. At least in the market, the politicians would not be able to put their greedy hands on money in the Trust Fund.
I would go as far as to say this: if you went back five years and you put every dollar that came into the Trust Fund into the market as it entered the Trust Fund, and kept the goverment from “borrowing” or otherwise leveraging against it, even after the recent carnage there would still be more raw dollars left in the Trust Fund than what are actually in the trust fund today (today, it’s just a pile of IOUs that are worth about as much as Lehman bonds).
By the way, not to compound the bad news, but you know what? Don’t count on Social Security to provide anyone any kind of retirement. It won’t be there for any of us under 40.
Spreading the good cheer,
H.J.
Comment by HJ Mann -
You said: “I know many people who have lost much if not all of their networth,…met several who have been completely wiped out. ”
There’s always room for more down here in the Middle Class. Bring on the Tax Cuts.
Comment by bigga -
I agree. The United States will not have money for tax cuts. I also wonder if we’ll have the money necessary to invest in new energy technologies, health care, our schools and infrastructure. I also recall how GW Bush didn’t step in with price controls during the California electricity deregulation debacle resulting in the near bankruptcy of the state.
Comment by Darrylp -
The government should not be bailing any of these companies out. If our economy collapses, then so be it. Collectively, we are ALL to blame.
The poor man will despise the rich man and blame him for all that is wrong, but will rack up huge debt to emulate him. Meanwhile, greed fuels the rich to leverage the shirt off the poor man’s back until the poor man can’t pay his bills for the big house and big car. So the payments stop arriving, and the rich stop getting their money. Poof, economy gone. And who’s to blame? Both, rich and poor. And all the time, Uncle Sam sits and watches it happen.
Everybody loses their shirt, grandma comes to live with you because you can’t pay for assisted living anymore, and people learn not to take things for granted. And people won’t need Jenny Craig because we’ll all be eating less and excercising more. Suffering is not always bad, so long as you don’t suffer alone. Our grandparents survived a version of this.
But instead, the government saves the day with a bailout. And as a result, we the people, poor and rich together, don’t learn that greed and envy are immoral, and the cycle continues. And people will continue to blame gov’t for their problems on one hand, yet expect gov’t to save them when times are tough.
Comment by flybynight -
Mark, I usually agree with you 100%, but this time I can’t get behind your logic. First, you seem to be confusing wealth and income. No one that lost their job and all their net worth is going to be paying higher income taxes on the money they made this year—unless Obama’s plan to allow the Bush tax cuts to lapse is going to be applied retroactively. The universe of people wiped out in the last few weeks because of no fault of their own, but still making over 250k next year and barely making it by, has to be pretty darn small.
Furthermore, I don’t see how you can justify renewing the Bush tax cuts if it is too dangerous to give the middle class a tax cut because of the mountain of new debt.
I do agree 100% on your comment on Social Security. Those that are pro-privatization like to point to historical returns, but, as well all know, past performance is not indicative of future gains. In the 50 years after WWII, the United States faced less competition and enjoyed cheaper energy and commodity prices than we will ever see again—to count on getting the same returns over the next fifty years would be foolish.
Comment by Jay -
Cubes –
I feel so sad that the rich millionaires and billionaires lost their LIFE savings in the stock market 🙁 Proves that some of the rich aren’t really that smart, they might just be rich from an inheritance or an illegitimate approach. The first lesson you learn with investments is to diversify your funds, which might mean diversifying your investment bank too? Tax cuts may never be the answer, but I have no sympathy for the wealthy, when it comes to these situations. They have much more financial flexibility and resources to manage those funds than the middle class. It’s about time the masses reaped the benefits of a tax cut. That $600 rebate is gone already. I pay the same amount of money for gas that you do and buy the same groceries and pay the same tolls. The only difference is that it affects you a lot less than it affects you.
The middle class lost jobs as a result of these elite financial doo doo heads making bad decisions with loans and investments. The same fools that get to drive Ferrari’s and spend the summer on the tip of Long Island, F*&^ em. Now they know what it feels like to struggle, let’s see if they can come from the bottom back to prosperity. Bet you I’ll beat them there this time around.
ONE
Comment by Chuck Black -
Dear Mark,
Great post. Can you please reiterate at every opportunity your comment about the disaster that would have been if we had privatized Social Security. If you could make a public service spot about it, it would probably be the most important one of this silly season.
jake
Comment by jake -
Cut spending? I’d be happy with a freeze on increases. If you can’t get
what you need done with 3 trillion dollars you’re doing something wrong.
Comment by H man -
Hi Mark –
Great post. However, Have you considered that if Social Security were privatized at least there would ACTUALLY be some money in those accounts? As it is now, money paid into Social Security is moved into the General Fund. No wonder we have a problem. Social Security should be treated like a “Trust Fund” and the Congress and President have a Fiduciary duty to keep that money safe, not just write a bunch of IOU’s!
Regulation could be implemented to prevent those dollars from being leveraged at all.
I think the Alaska Permanent Fund is the perfect model for our social security fund. Take a look at http://www.apfc.org/ The fund is managed by a private corporation with public oversight and unbelievably it works extremely well with a $35 Billion fund.
Comment by Kevin -
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Mark:
I guess I need to remind you and all the other Social Security Privitization Boogey Men that the DOW Jones industrial average is up 18% in the past five years and 44% in the past ten years and that is with the turmoil of the past week. I guarantee you that when I am eligible for Social Security (which is a long time) I will be lucky if it still exists. I would kill for a 44% return on that money. Those of us advocating the privatization of social security are only asking to give people the option to choose. You can still choose the gov’t program or choose to go out on your own. Its all about freedom and choice when it comes to an individuals money which is a concept that you and your fellow liberals really struggle with.
Comment by andwrig -
Not to be rude, but did you actually mail the letters
or just post them here?
I hope you did mail them so they have an opportunity
to read what you are saying. I don’t think their advisors
are being much help to them lately.
Thanks for points well taken.
Comment by Adam Bryson -
Would private Social Security accounts be any riskier than the IOU’s guaranteeing them now?
Comment by de -
I have a two word solution to the entire tax/bailout/deficit problem.
CUT SPENDING.
Thank you. I shall await my consultancy fee with baited breath.
Comment by Stan -
Most Americans enjoyed a very pleasant and jocund economy over the past few years. Most American’s saved less than $1,000 during each of those years. They over extended their credit. They both a bigger home and a piece of the American Dream. The banks did the same thing. Lehman Brothers bought more mortgage back loans than anyone else last year.
In 2005, total loans in the U.K. were 162% of the GDP according to Central Banking data. In the U.S. loans were 111% of GDP.
We don’t know the impact of the U.S. government bailout. Will it curb the riasing inflation around the globe? WIll commidity prices continue to fall or level-off? This market scares me.
I don’t know what will happen in the short-term. But, I know American’s will eat hamburgers, steaks, and rent cars because we like what every else is bad for us. We will always buy cars too!
Comment by NoToACentury -
While I am very confident that the situation that you described will never happen I do like the thought of it. I am a John McCain support but the points you made were very effective. I also like your point on Social Security, at one time I did support the idea of it being privatized. I never thought about what would happen if it had been, based on recent events. Thanks for bringing that to light for me.
Comment by Dustin -
Mark, when do YOU plan on taking any responsibility for any of this?
today short selling and financial crisis are spoken under the same tongue. You, however, are on record spouting out on how short sellers can’t destroy anything. so how is it short sellers were about to take down wall street?
Before you challenge others regarding accountability, take a little medicine yourself.
From MC:
Personally, the concept that short selling was going to take down these financials is ridiculous to me. As Warren Buffet said about the matter, tell them to short Berkshire Stock, all they want.
Comment by dave -
Nice work Cuban….have you considered a advisory role in the McCain / Obama White House? You have a proven past of generating money and creating jobs. Forget that Cubs idea and move the DC.
Comment by Shawn -
I am greatly opposed to any legislation that bails out financial institutions in such a manner as is currently being proposed. This legislation has all the earmarks of being the greatest financial scam ever to be perpetuated on the American taxpayers.
First and foremost, there has been no disclosure or accounting of the losses and especially the underlying assets which comprise this “crisis.” Very little mention of the underlying asset which is a house which has inherent value as a home is being considered. Instead all we hear about is the losses in mortgage backed securities which have been hedged by arcane financial instruments known as credit default swaps. My guess is the losses in these swaps is the true culprit. From an accounting perspective, it is entirely possible that if the underlying asset, the house, if appraised using “a fair market value” versus the approach known as “mark to the market’ would reduce paper losses and restore capital accounts to manageable levels which would reduce the crisis to one of liquidity instead of the current fearmongering of calling this an economic crisis. Since I am required to guess if this is possible then this means that there is no transparency in this market let alone any disclosure. Without this transparency and disclosure, the taxpayer is being used by so called “experts” to reward their bad behavior. True political leadership versus going along to get along is at stake. I doubt that any candidate will step up to plate to address this issue but outrage by the American taxpayer could make a difference.
Ralph
Comment by Ralph Harrison -
I too do not want thousands of people to lose their jobs but why stop
with the financials. If our government is going to bail out the finacials,
why not the automakers? They made bad business decisions as well but the
government let them lose billions and cut thousands of jobs. I might be
wrong but didn’t Enron move losses off the balance sheet and this was illegal.
Now the government wants to do the same thing to the financials but this time
it’s ok. If businesses cannot suffer the consequences of their actions, what
will prevent them from doing it again?
Government interference in free markets will lead to worse consequences down
the road. Why should we think the government bailout will fix the problems?
They are the ones that created the environment and allowed it to happen. My
memory isn’t the best but I can remember government officials being quoted that
interest only loans and complex derivatives were a good thing for our economy.
They lowered interest rates to obscenely low levels and encouraged risky lending
practices. Now Henry Paulson is going to fix it? Didn’t he run Goldman Sachs
and had his firm doing the same things the companies he now wants to bail out did?
In regards to Social Security. The market is only down around 20%. Without
government intervention maybe it drops by 50%. This would not be the end of the
world for us as the money would be almost entirely in diversified stock and bond
funds. The market has had and will have worse declines in its history. Each one is
usually preceeded by the reckless actions of financial firms.
The companies that overleveraged themselves and threw risk out the window should be
allowed to fail. It will hurt but our economy will become stronger as a result.
Comment by Tim -
If there’s anything we’ve learned from the recent financial crisis, it’s this: Debt is Pretend.
Go into debt on your house? You can foreclose and walk away.
Go into debt with your credit cards? Declare bankruptcy, walk away.
Go into debt with your major financial services or insurance company? Let the government take over, and walk away.
So why would US government debt be any different? Why tax real money from real people to pay Pretend Debt?
Comment by Atwater Village Newbie -
I’m just curious what standard Mark uses to classify an individual’s net worth being “completely wiped out”? Are these fat-cat money managers and brokers having to “scrape by” on a measly $10 Million dollars? How about a paltry $5 Million?
I just think it isn’t easy for a multi-billionaire to comprehend the problems of the general public, when he probably defines poor as not having enough money to buy a 150-foot boat.
From MC:
No, these are secretaries and regular people whose 401ks are torched. Some also made 250k plus, and saw the money they had in funds their employer set up, get decimated, and face the real possibility of losing their jobs. Believe it or not, real people work on Wall Street. And the only fat cats in their family are the ones that eat Purina
Comment by Jack -
Mark,
Where did the $1T go ? I lost some money playing blackjack at the venetian last month.
I know where it went. The Venetian has it. The $1T – I think I know where it went too.
It went to the hedge fund managers and investment bankers who bought CDS and shorted bank stocks.
The tax payers shouldn’t pay. The money Carlyle and others made should be given back and these kinds of contracts should be made illegal.
Comment by ColinToal -
Nice try–but neither candidate is about to admit the size and scope of the finacial seachange we are undergoing as the result of 20 plus years of Wall Street piggies at the trough. God onlhy knows what will happen next, but we will be lucky if old folks aren’t eating out of garbage cans in 20 years–Social Security or no Social security–Excellent post. This is my first visit here and I’ll definitely be back:-)
Comment by Roberta -
Your post reminds us how important it is for everyone to research the issues and then vote.
Comment by http://funniestwebsites.blogspot.com/ -
So, Who are you endorsing? Did I miss something?
Comment by Corey Delaney -
Why not create a condition, of this massive bailout, to fund Social Security? If the American taxpayer is going to be on the hook for all of their larceny, the least they could do is to contribute a percentage of their profits to the very people who will have to try and save them.
Also, they definitely need to purchase “bail-out” insurance, as their credit ratings are extremely “sub-prime.”
Comment by D.Woods -
“Does everyone realize how much bigger a disaster last week would have been had Social Security been privatized ? Please, let us all remember that when the topic comes up again in the future.?”
That’s intelligent.
I am sure that all the money would be invested exclusively in financial companies leveraging themselves 35x on bad investments or insurance companies with dumb underwriting.
Any investment made by SS would be in broad index funds and, unless you doubt America’s performance over the long term, it would have more benefit to Americans than the underfunded ponzi scheme going on now.
Comment by Hop -
Mark,
First I admire your courage to say what you think is right every time. What disappoints me most about our current situation is, even if the protection and forward advancement of the military led ppolicies in the middle-east/iraq, etc. we of value prior to this, the simple economic fact is we cannot afford it after this week. We need immediate withdrawal on purely financial basis. We can no longer afford the $1B/day that the Iraq War is costing us. We should at this point be getting the governmental equivelant of “transaction disapproved” on this stuff until we get our own fiscal house in order.
Then… tax cuts aren’t a fiscal reality either. If the US Population doesn’t realize how much $700B cannot be raised without a tax INCREASE. Wake up folks, we have to pay the bill for the speculation.
I hope my fellow citizens can start to SEE where we are… and start to make their decisions based on that.
Comment by Bill -
And one last thing I have to mention. Does everyone realize how much bigger a disaster last week would have been had Social Security been privatized ? Please, let us all remember that when the topic comes up again in the future.
Barack Obama Does – http://www.youtube.com/watch?v=DUYnxO3fECE
Comment by J. Lee -
Hey Jim, maybe this will help explain it:
Subprime Mortgage Crisis Accurately Explained:
http://filmmakeriq.com/general/off-topic/subprime-mortgage-crisis-accurately-explained.html
Comment by Dennis -
500 billing to 1 trillion….Isnt that what you are worth? Kidding aside, I agree with you 100%. What sucks is the more I try to read and understand whats going on with the markets and banks, I just cant grasp it. I get into blah, blah, this and blah blah that. I am at the point where I hope my 401k at least keeps its value and I dont have to pay $5 for a loaf of bread or a dozen eggs. Is there anything that regular Joes can do? Probably not.
Comment by Jim K -
First, Jason is right (to a point). It’s a shell game when we talk about social security and taxes. It’s like saying I’m not going to take it out of this side of the bucket, I’m going to take it out of the other side. I’m going to leave out the effect on pension programs for another day.
Second, everyone loves to blame Wall St. or Washington, and yes they are a big part of this, but…. This is a result of everyones greed. Americans went crazy. They bought homes they couldn’t afford. They took out second and third mortgages to buy crap they don’t need. They ran up credit card debt, etc, etc. And when it came time to pay the bill they just walked away. If you think the government can or will take care of you…. well I’ll just steal a line from Star Wars: “Who’s the more foolish: The fool, or the fool who follows him?”
Third, It should be noted that there is a good chance the tax payer will make money off this deal in the long run. Although that may be even scarier. Socialism is alive and well.
There I made it through my rant without mentioning Jim Johnson who led Obama’s vice presidential vetting team was the former chairman of Fannie Mae… shit.
Comment by Dennis -
Great point Jason.
PS Mark Market is still up 44% over the last 10 years I don’t see how that would be an economic wipeout if I were in control of my Social Security pension rather than the Feds which are earning me how little?
From someone in their upper 30s who knows they will never see a dime of the money they put into Social Security. Heck Mark my parents don’t even expect it to pay for any of their retirement.
Comment by Thomas -
Does everyone realize how much bigger a disaster last week would have been had Social Security been privatized ? Please, let us all remember that when the topic comes up again in the future.
Naomi Klein touched on this same topic on “Real Time with Bill Maher”
last Friday if anyone wants to watch it. Thanks for your blog, Mark.
I really enjoy reading your view of things.
Comment by whodatdare -
Does everyone realize how much bigger a disaster last week would have been had Social Security been privatized ?
Not at all? Retirees actually living on social secrity would have their money rebalanced into bonds and cash, just like 401ks do as people near retirement age.
The rest of us would have taken a huge hit this week, but we’d be relying on the fact that the stock market has never appreciated less than 10% in a decade, even during the depression. Meanwhile money we currently pay in doesn’t appreciate at all because it isn’t there at all – it’s been spent, and we’ll never see a dime again.
Comment by Bryan -
Mark, why do you focus on raising taxes in a fragile economy? Wouldn’t it make a lot more sense to reign in spending?
From MC:
It absolutely would. One topic at a time 🙂
m
Comment by Norman Rogers -
Mark –
Please explain how privatizing social security and losing money in the stock market is any different at all from losing $700 billion (on the very low end) to bailing out these institutions? In reality these losses both come from the same place. If you think we’re going to have money to fund social security when our deficit is jumping by the week, I would like to hear your rational.
Jason
Comment by Jason Kolb -
Just my two cents, but no one wants to privatize all of what’s now social security. I may be mistaken, but it was about giving people that wanted a choice that option.
Comment by Vin -
I agree with you however there is a big problem with this. If one of the candidates were to do this, the other would not. The reason why is because it is political suicide. The candidate that takes your stance will lose in November. I don’t think it matters which candidate were to get rid of their tax cuts. The one that does loses. It’s unfortunate that this is the case since that is exactly what needs to be done.
Comment by Brian H -
McSame’s problem with his economic policy is that it involves wasting American’s hard earned tax money to fight an enemy in Iraq that we created and in the meantime let Americans struggle to put food on the table.
Comment by eddie -
OK, Chris Bowen’s comments not withstanding, I don’t get the link to privatizing Social Security. In my view the dollars “contributed” to the system are already gone. The are not in a bank
somewhere — they are an IOU from one government entity to another. They do not currently exist as a tangible financial asset anywhere. To pay out benefits, the government has to print the money.
Not unlike the current bailout as it’s being defined.
If one defines privitazation as the choice to put their retirement savings where one chooses, then at least the individual would have the option to put the funds in a CD, brokerage account, or under a mattress. M. Freedman had it right; for that matter so did T. Jefferson. An individual should be free to choose.
Comment by Robert -
Dear Mark & Chris:
Did either one of you bother to see where the overall stock market ended up at the end of the week, before throwing SS privatization under the bus? It always helps to check the facts before making broad statements like that. And for someone as financially sophisticated as Mark Cuban to make a statement like that, frankly, is surprising and discouraging.
Over the long term, for the average person, the stock market provides the highest, and most consistent rates of return for your investment. No one is saying that privatization would all be in one stock, it would be a balanced portfolio (actually, no one is saying that either. McCain’s proposal to put it all in T-bills is even worse).
Mark, while I respect your opinions generally, I think you’re out in left field here on SS privatization. Now, I may not have 2.3 billion in the bank, so maybe SS means a little more to me than it does to you. And frankly, being told that all the money that has been taken out of my pay over the last 25 years isn’t going to be around when I retire, is an indication that the current system isn’t working at all. Call me un-patriotic for not wanting to fork over my money for everyone else to use.(Joe Biden’s new campaign phrase is “ask not what your country can do for you, ask what your checkbook can do for the country)
So, next time, instead of throwing BS around, would you give some more thought to this?
Thanks.
Comment by Mike -
You’re absolutely right that neither candidate’s economic plan could
now be responsibly adopted. The outlay of $500 billion to $1 trillion
is massive — thousands of dollars for every person in the country.
How much money is that? I’ve been watching coverage of the new Cowboys
stadium and new Yankees stadium, both of which are massive
public/private projects valued around $1 billion. If you took
the amount of money Congress is being asked to pony up this week,
you could build one of these new sports stadiums in every city or suburb
in the country down to 100,000 in population, including Wichita Falls.
Actually, since there are fewer than 300 cities at that level,
you could build each of them two or three (empty) stadiums.
Would this be a huge waste? Absolutely. Domed little pyramids across the
plains. But that’s how much money we’re talking about spending. This week.
I hope that both candidates step up, tell us the truth that their plans
no longer are the responsible thing to do, and tell us what
they would propose to do next year and beyond.
That’s the only meaningful economic or domestic policy
question we can ask either of them. (The “witch hunts” of looking for
invisible “greedy” little people who “caused” this won’t help anyone.
Let’s say you find “them” — do they have all our money in a little
pot of gold at the end of a rainbow? Get real. The bubble burst.
It just turns out that it was a really, really big bubble. I’m sure
there was some malfeasance in some of the institutions, but it wasn’t
“the cause” of either the bubble or the bust. That’s just what happens
when prices are out of whack with values.)
As for social security, I’m not sure it would have been much worse if
privatized, but I know it would have *felt* worse. As it is, the investment
side of retirement security (pensions, 401(k)s, etc.) took exactly the
same hit as you’re talking about. And the public side of social security
is just government IOUs anyway. There is no real “trust fund” anywhere.
So… do you think the government debt is now worth more or less than
before? We will eventually have to fund those IOUs through another
round of tax increases or program cuts and — after this week —
we have about $1 trillion less to work with. [No, I’m not really for
privatizing it. I’d just like us to fix the accounting so we’re honest
about what’s really “secure” and what’s not.]
Love the blog (and the team).
Comment by dc -
Good article. Frankly, both candidates leave a lot to be desired this coming election day. I imagine it will come down to a popular vote as always the case on simple cosmetics. It’s a shame that such an important decision comes down to who has the best looking vice president or what race a person happens to be.
Comment by lewp -
Does everyone realize how much bigger a disaster last week would have been had Social Security been privatized ?
I thought the intent of Social Security Privatization was to pump billions of dollars into the market to keep its value propped up. So instead of falling from 11500, where it had been pretty much stalled, to 10500, it would’ve dropped from a well-inflated 15000 to 14000 and been much less of a concern. The real problem would be years down the road when the $$$ going out topay for seniors’ lifestyles exceed the $$$ coming into the market (which some analysis shows happening earlier than the “Social Security Bankruptcy” would have). That would be The Final Financial Bubble that would dwarf this one and destroy America’s pseudo-capitalist economy completely. IMO.
Comment by wendell -
Mr. Cuban,
Surely you are researching and considering much more than economics in your presidential vote!
Simply research Obama’s friends, mentors, and socialist views. Wealth redistribution??…..socialism has never
been successful and the last thing we need is a racist in the while house whether he be black or white.
Read his book and his feelings about his mother’s race. I did. Read Michelle Obama’s dissertation. I did.
She was quite upset that her black colleagues at Princeton did not share her feelings of animosity and
discrimination that she harbored, observing that they were out of touch with black America.
One of my associates was remarking that her father used racial terms, that her brother and sister and herself
had no feelings of racial superiority on any level, and that her little boys told her they wished she had
married a black man so that they would be black. We have come a long way….I know there is still
bigotry and hatred out there, but one only needs to look at the most successful woman in America,
the highest paid actor in America, and the wealth abounding with black athletes to see that there must
be something good happening here for blacks. I know that my chances of getting a scholarship, job, etc.
are greatly reduced because I am not a minority, even though I may be much more qualified.
It’s late, I’m rambling, and just know that even though I am a die-hard Jazz fan and season ticket holder,
I do clap for you guys, at least during the introductions. Being a native Texan makes it a necessity.
And speaking of Texas, think about this when you vote….look at the result of a Hurricane when a Democratic
governor and mayor are in charge, and the result of a hurricane when a Republican Governor and mayor
are in charge…..Surely your vote is looking more red as your read….
Kelsie
Comment by Kelsie Williams -
I should also add that I respect your criticism of both candidates; you do not feel as if you must support one or the other; that is admirable, and it shows an individualism not seen much in modern American society.
Comment by Joel -
Mark,
I am a major fan of the NBA, a Nuggets fan at heart, though I have always respected the Mavericks because of your drive to succeed. You took your business skills, and applied it to basketball. You have always been dedicated to your players, as they often are to you as well. I respect that. I respect the way you have chosen to stand by Josh Howard, and show some of the prejudice that still remains among the “patriotic” who have no respect for free speech.
That said, I do not agree with your political views as related to taxes. You speak of the trillions of dollars in future government expenditure, and you accept that is if it is okay. Why should the government be spending trillions of dollars of hardworking, taxpaying adults, and putting our country deeper and deeper into debt? Keeping taxes at the current level is short term solution, but if our country continues to borrow money, prop up failing banks and reward them for this failure, what message does this send to Americans? How long can we continue to print dollar bills, occupy other nations, fight terrorism, provide expensive health services for free (which will be likely within the next five years), subsidize Big Oil, fight the War on Drugs before the federal government, with its propped-up corporations and banks, has spent itself into oblivion? I repsect your views, but please consider my statements. Why must we continue to support the trillions of dollars in government expenditure. Instead, I believe we should support freedom and responsibility, with a government that provides only the most basic services and does not try to govern and provide for so many aspects of American life and global policy. Please just consider what I’ve said.
Comment by Joel -
While I’m glad you are examining both candidates,
I don’t think your idea of them pulling themselves off the campaign
trail is very likely. However, in a Utopian society they would set
aside differences and come together and work it on out.
To my point, when AIG was bailed out for 85 Billion dollars, we all
became socialists [some willing & some scratching their heads saying
wtf just happened]. Of course, it needed to be done because if AIG
fell, then it would of created a bigger problem with the economy.
However, we [taxpayers] will never see a dime of their profits when
everything is on the up and up again, so how and why were we forced
into socialism? The GOP is against socializing health care, but we
[taxpayers] have to knuckle down and bail out big companies that got
too greedy, made huge profits in the past, shared nothing with the
little guy struggling to pay his rent-groceries-gas-ect…
Okay, I’ve ranted enough, but this was a good post, and I know their
are always two sides to a coin, but Barack Obama & Joe Biden are
about something new and John McCain & Sarah Palin sound and look too
much like what’s got America in this mess in the first place…
Comment by jamessye -
You have my vote in 2012 if you run.
Comment by Brian -
hard money meets web 2.0:
http://www.obamaloan.com
$2300 limits, how quaint.
Comment by the obama loan -
I feel bad for folks who lost their jobs, but I have a hard time empathizing with anyone who was “completely wiped out.” I’m a middle class slob who works his tail off, and even I know about “asset allocation.”
This “heads I win, tails the taxpayers lose” attitude towards financial markets is where the focus should be. This doesn’t change my opinion that the progressive tax scheme should be more progressive — after all, who benefits more than the wealthy from a stable society where wealth generally grows and you don’t have to employ knights to protect it all?
Comment by sajennings -
Mark, I have admired your rise to success. You have worked hard, made smart decisions, and these decisions have paid off for you tenfold. The most impressive thing that you have done in your life is: Be Responsible. When you have committed to something, you have committed wholehearted. When you make a mistake, say something you should not have, or done something you should not have you took responsibility for it. Case in point the Dairy Queen incident.
What occurs in the markets on a day to day basis is incredibly volatile, but what no one expects is that each and every person in America be responsible. See, I should just sign that loan knowing I can’t afford the house, but it’s not my responsibility it was the loan officer’s for offering it to me. I should just put my money in that 401k and not worry about it and if something happens who should I blame, oh the financial person from the retirement fund. I should just send my kids off to school and give them a key and in the mean time I will pursue my career, go out with friends, never miss a big game or performance, oh and then as an afterthought remember that I have kids and act completely befuddled and blame the education system, law enforcement, and a lack of morals on why they are dropouts, drug users, and pregnant.
No, what the problem is Mark is that as Americans, a great majority of us have gone to sleep at night assuming that the Government will solve all our problems, will look out for us at every turn, yet in the same breath we pray that the Government does not involve itself in our affairs. The message I expected from you was “Be Responsible” with your money, your family, and your life. It is a message that is rarely if ever discussed in public schools, homes, and even churches. Instead, all we are told is “don’t worry the government will be responsible for you, that’s it’s job!” No the government’s job is to protect us from attack on our soil and insure that we are guaranteed our rights in the Constitution. For that I am disappointed that you would expect a bailout by the Government, because it proves nothing to the industry but that the Government once again will come to the rescue. People who lose their jobs, money, and lifestyle because of bad decision making, they learn that they need to be more responsible in the future.
Comment by Beachpig -
And while I’m at it let me tell you about the heehaws in my town. last year the mayor lost his re-election bid- this year he running for surveyor? a councilman lost his re-election so this year he’s running for treasurer. they have campaign signs with interchangeable elected offices! “vote dave dumbass for (insert office here). last month our county council voted to give themselves a raise, a 5% raise, a much larger than usual raise. the stated reason for the larger than usual raise- they didn’t know if they would have the money in the budget to give themselves a raise next year so they did it this year! that was the stated reason, they wouldn’t even lie to us!! this month that same county council voted to reduce the hours of county employees to help save money. ###end rant-
Comment by Shawn Shepherd -
Does everyone realize how much bigger a disaster last week would have been had Social Security been privatized ?
THANK YOU. Dear holy GOD, someone’s figured it out. I’m not the only one!
It’s one thing to take out the wealth of speculators who knew what they were getting into when they got involved in the stock market. It’s another thing altogether to take out the retirement of elderly people that actually rely on social security. Social security privatization only benefits those that don’t need Social Security, and that’s one of the few things that should be reliant on the government. Without it, we might as well take anyone that needs it and shoot them in the head.
That sounds crass, but that’s essentially what we’d be saying. We’d be saying “you people are a drain on our society, and if you can’t make it on your own, we won’t support you”. Why waste the time?
If you think that sounds great, then fine. You’re also a social pollutent who should SERIOUSLY reevaluate your priorities. The rest of the 98% of society should be appaled at the idea.
Comment by Chris Bowen -
My vote will go to the first candidate to drop out of the race. I’m not comfortable with anyone who actually wants that job. Who in their right mind would want the headaches??
Comment by Shawn Shepherd -
My nearly $60,000 of IRA contributions have dwindled to around $17,000. Most of these investements were in companys that have tripled and quadrupled earnings and profits over the past few years. Even that doesn’t hurt as much as seeing civil liberties stripped in the guise of homeland security and the god be damned war on terroism. We are all more at risk getting behind the wheel of automobiles driving to thankless jobs that barely make ends meet, while franchises in the NFL NBA and MLB hold fans hostage with PSLs, and tax incentives to build stadiums the average person cant afford to attend, let alone write off like corporate ticket holders. I remeber when it was a game, but it just is not fun anymore. I still pay for the NFL package and the premium DirecTV package and the High Definition extra charge, ut low and behold I am not a SuperFan and so not entitled to the High Definition broadcast. Enough is enough; I don’t even want to watch on television anymore. I just sit on the seawall and watch the yachts float by, and mourn the fortunes lost of the once billionaires.
Comment by BeGeezus -
First, tax cut actually bring in more revenues because it spurs growth. This is well documented but people like jeff aren’t familiar with facts.
We need to get as far away from socialism as possible and that includes these bailouts, univ healthcare, etc.
Mark, why can’t individuals control their own social second money and be able to pass it onto their children? As you well know, if you put your money in an index, it make grow 5 to 10 times over its life. Last week wouldn’t be a blip on the screen to long term holders of stock.
Comment by josh -
Anyone who is earning over $250k a year and was completely wiped out by recent events was wildly unbalanced in their investments. If they went from being worth $150 million to 10 million, I’m not going to cry too much for them. Trickle down doesn’t work. Give the money to the middle earners, they’ll spend it.
Comment by CB -
I completely agree with you Mark.
Especially your last comment concerning the numbskull idea of privatizing of Social Security.
The sooner that people realize “playing the Stock Market” is simply legalized gambling the sooner the idea of privatizing Social Security will die.
The “Pro’s” in general don’t even know how to make money in the market (proved by how few make their millions and then retire). How many of them put out ‘tips’ that don’t pan out. Imagine if John Q Public lost not only their 401k, but also their smaller nest egg of social security?
Comment by GrizDave -
Mark, first off, any former wealthy person that has been “completely wiped out” will have dropped out of the top tax bracket. Tax increase problem solved. Second, as personality (rightly or wrongly) appears to be a driving force behind many people’s vote, no candidate would dare stop shaking hands and kissing babies, nor should they. Third, no candidate is going to risk being perceived as a one-issue candidate with a war going on, a healthcare crisis, an energy crisis, and so on, nor should they. And lastly, while being a Senator and getting bills passed is important, being elected President is a loftier ambition that takes precedence, as it well should.
Comment by Jeff Mitchell -
Bravo! Someone in this political season with sense. I too am waiting
for a candidate to man up and address this crisis with a sense of
purpose. This is not a time for bombastic party speak, relying on polls
and vague generalities to excite a base, but rather a time for a leader
to step up and address this situation with intelligence, understanding,
and clear understanding. Now is the time for a true chief to assert
himself above the fray.
Comment by jd -
I liked your tax proposal to treat EARNED vs. FOUND money differently. I would be interested to see if the excess revenue generated off of the FOUND money would allow for an across-the-board tax cut for EARNED money even under the current position the U.S. federal govt is in.
Comment by Anthony -
Pingback: Worst Finiancial Crisis Since The Great Depression (Fiat Lux)
Mark,
Great post.
on another topic, I have been reading your blog from the start
and the old layout was much better.
Comment by David -
Nice post, but we all know the chances of this actually taking place,
unfotunately.
http://www.jdiazblog.wordpress.com
Comment by jdiazblog -
I’m pretty sure both of their tax cuts were not viable long before the events of the past couple weeks.
Comment by Nick -