Thursday, March 19, 2009

Chuck Rangel Sums Up the Country's Tax Problems

Dealbreaker has the video of CNBC's Erin Burnett and Mark Haines interviewing Chuck Rangel on the bonus tax bill that the House is trying to pass today.  I try very hard to avoid paying attention to politics.  That has obviously become impossible, as government intervention is so rampant in the markets that an active trader and investor has to try to guess what the government will do next.  My main reason for hating politics and most politicians is that they have zero forecasting abilities and are always trying to govern retroactively.  Much of the credit crisis could've been prevented with the tiniest bit of intelligent legislation.  But since Congress was too busy investigating steroid abuse in baseball at the time, an obvious national epidemic that had to be resolved immediatly, it couldn't bother with any legislation that could've limited leverage on Wall Street, mortgage fraud, Fannie and Freddie's accounting problems, and the list goes on and on.  

Using the AIG incident as a tool to retroactively tax employees at all Wall Street firms that were coerced into taking money from the government, at a 90% tax rate, is typical political pandering.  It doesn't solve any of our problems but makes politicians look good to their angry constituents.  I predict that the first thing that happens if this legislation passes is that Goldman Sachs immediately hands the government $5 billion dollars, no doubt from the AIG collateral it received directly from the Treasury and the Fed when it was paid billions in the last government AIG bailout.  See?  Problem solved.  Other banks that can will pay the government back.  The rest will have a bunch of very angry employees to deal with who will prove how much their talent is really worth by trying to jump ship.  

In any event, the following dialogue sort of sums up why politicians can be so distasteful.  When Mark Haines questions Rangel's own tax issues, the congressman responds with the following line (and I am not making it up): "Well I wouldn't think that you would know what they are since what I did or did not is being investigated by a committee by me so what you're doing is reporting on what a reporter says because you have no clue as to what problems if any I have..."  At least it's somewhat reassuring that his problems are being investigated by a committee by him.  But certainly this qualifies him to weigh in on tax legislation...     

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