Three Things I Learned Last Week

Greece


Greece's financial problems continue to threaten the European (and world) financial system.  What are the chances that they can solve their problems without defaulting and/or a massive bailout from the other Euro countries?  Zero, in my opinion.

Two key facts that show how difficult it will be for them to turn things around:

1. Greece's Social Security tax is 28% on the employer and 16% from the employee.  A total of 44%! This covers pensions, unemployment and care insurance.    Is it any wonder that the unemployment rate is over 16% in Greece. 
2. The Greek birth rate is only 1.38 children/woman.  A rate of 2.10 is necessary just for full replacement.  Mark Steyn notes a more interesting stat describing Greece's demographic problem.  For every 100 grandparents in Greece, there are only 42 grandchildren!

Energy Subsidies

We hear all the time about the subsidies that go to oil and natural gas from the Obama Administration.  Here is chart prepared by the House Budget Committee that shows the dollar value of federal subsidies for various forms of energy per megawatt hour of electricity produced from an analysis done by the U.S. Energy Information Administration:

Subsidies for renewable energy production have surged since the Obama Administration and the 111^th Congress dramatically increased taxpayer support for these sources of energy with the stimulus law and other appropriations. In 2010, $11.9 billion was recorded in total federal subsidies for electricity production, according to a report from the EIA. Of this nearly $12 billion in subsidies, renewable-energy sources received $6.6 billion, or 55.3%, even though they accounted for just 10.3% of the electricity generation. Wind plants alone accounted for 42% of total electricity-related subsidies.

Total subsidies for renewable energy, including biofuels, rose from $5.1 billion in 2007 to $14.7 billion in 2010. Much of that increase was due to stimulus spending, the report noted, a 188% increase.

The Department of Energy has issued $40 billion in new loan guarantees for private sector loans for renewable energy projects since the 2009 stimulus bill.  $535 million went to Solyndra which is now bankrupt.  We can undoubtedly expect more to come.

Paying for the Jobs Bill


President Obama keeps campaigning for his $447 billion job bill and keeps saying it is paid for.  Let's see how it is paid for.

• $400 billion from limiting the itemized deductions for charitable contributions, mortgage interest and other deductions for individuals making over $200,000 and families making over $250,000.
• $40 billion from closing loopholes for oil and gas companies
• $18 billion from higher taxes on fund managers for so-called carried interest
• $3 billion from changing the tax treatment on corporate jets

Therefore, 90% of the jobs bill is paid by taxing the 3% of the people in this country who earn more than $200,000 per year.  Their share of total income is about 25% but they pay 50% of the nation's income tax already.   This is fair?