Report says $872.5 Billion was spent on unemployment benefits and “a top watchdog for the Labor Department estimated there could have been “at least” $163 billion in unemployment-related “overpayments,” a projection that includes wrongly paid sums as well as “significant” benefits obtained by malicious actors.”
Meanwhile, $669 Billion was spent on the Paycheck Protection Program which was administered by the Small Business Administration and the banks. The program’s goal was to funnel money to the “job creators” to keep people on the payroll during the COVID pandemic.
So we could have “at least” $163 Billion of fraud in unemployment compensation and $443 Billion of “job creator” fraud in the PPP program, yet we focus our enforcement effort on single mothers getting food stamps.
These programs were very badly managed. The amounts involved were large enough to impact the inflation in the asset markets and even some consumer price inflation.
At the same time, the payment moratoriums for rent and student loan repayment cost billions from the landlords and the taxpayer. I can speculate that the rent payment moratoriums had an effect at the current rapid rise in rents. If I was a landlord, I would raise rents to make up for over a year of lost rentals. (Of course, the landlords still had to pay their mortgages, taxes and other costs of the rental properties.) This will produce long-term harm to renters.
Despite the mess everywhere we look, I think that the overall effect of these programs was positive. Without them, Hurricane Covid would have caused a deep economic depression that would probably still be with us.
Hopefully, next time (if there is a next time) government programs (including food stamps) will have excellent oversight to prevent fraud. Of course, anytime free money is being handed out there will be fraudsters figuring out ways to cheat the system. Even without cheating the system, some of these programs were designed to hurt some parties, such as the landlords whose tenants received payments but did not pay their rents. The money should have been sent directly to the landlords…but then some landlords would have figured out a way to cheat the system.
How does this cynical, negative discussion help us invest?
Wendy
How does this cynical, negative discussion help us invest?
America revolves around fraud and corruption, ignorance and innumeracy. If you understand this, you can do very well.
I’ve made considerable money in drug stocks over the past 30+ years, and it’s not because of the R&D.
Being able to buy off Members of Congress for relatively paltry sums to prevent price competition, and direct to consumer advertising (which most educated and developed nations prohibit) encourages poorly informed patients to take name-brand drugs at 20x the price when a generic will do.
No one ever lost money betting on the ignorance and innumeracy of the American people. I’m confident that drug stocks will continue to do well as long as you’re able to bamboozle people with cries of “socialism” every time someone tries to have Medicare negotiate drug prices.
Your point on inflation is correct. But it is the money with the FED stimulus funneling upwards to the rich that is the problem. Taxes are too low on the rich allowing for asset prices to rise along with inflation.
BTW unemployment is admin on the state level. Claw backs in the states paying $7.25 per hour minimum wage is a strong possibility. It was highly resented that anyone get unemployment in those states.
It wont stop inflation to try and get $600 plus benefit amount out of the working poor. Meanwhile the money is with the rich.
I can also see what commonly happens and PoC being targeted for the claw backs by zip code.
The 1%'era - there’s not enough of them. If we confiscate the entire Fortune 500 - take it all - - we can’t balance the Federal Budget.
Hopefully the time comes where Americans aren’t divided and conquered - - so they stop fighting with each other for a minute - and put political pressure on the 20%'ers. Yes - -the 20%'era - the very ones who want “fairness” but don’t participate in it.
*End 401K tax benefits and deferrals. Ditto IRA
*A.M.T reform? Roll it back. Nix it. Go back to the good ol days of AMT.
*Advanced degrees - perhaps an excise tax on future earnings after graduation.
*Sanctions for any public university that
A.) Raises costs more than inflation.
B.)Doesn’t provide a ‘basic’ version - meaning full learning and credentials - but minus things like dorms and sushi bars and pools and gyms and sabatacles and cushy admin jobs.
*Tax all investment income for everyone - at normal income tax rates.
We can’t have fairness – if the people advocating from it – - enjoy a plethora of wealth enhancing benefits that the poor single mom, or the person of color does NOT participate in at nearly the same level.
(OR, in an alternate universe that doesn’t exist - we can have a national dialogue on culture. On why personal finance is NOT a requirement for graduation especially in disadvantages areas and why that might be on purpose to perpetuate a cycle of failure. Also… when looking at disadvantaged and economically disadvantaged communities - have a true dialogue on why so many first generation Americans - many non-white, are living in America’s more affluent zip codes and in good professions. Look at their family structures- – for starters and deduce some lessons. Otherwise - it’s just the same old people advocating for ‘fairness’ - but wanting 1% of the people to somehow pay for all that - without participating themselves. Consider this a draft - not military - but financial conscription. Everyone either say “I’m for fairness, I’m willing to pay out of my pocket”…or just say “it’s my money. Leave me alone”. Whole population centers - have been left behind - I feel - on purpose. And a huge Underclass is about to become permanent and it’s going to lead to polarization, violence, stymying progress - -because each of these tribes will cling to any demagogue that “gives good ear”…sound familiar? )
No one ever lost money betting on the ignorance and innumeracy of the American people. I’m confident that drug stocks will continue to do well as long as you’re able to bamboozle people with cries of “socialism” every time someone tries to have Medicare negotiate drug prices.
**
Well put, fully agree. For the life of me I don’t remember the author or title - but years ago I read book by an ex HMO executive about the HMO industry. I was absolutely floored. I used to think AARP and AIPAC and NRA were the most powerful lobbies - - and yes they are very strong.
But the HMOs are whip smart, and very well organized. It was truly eye opening.
Last week I started dabbling in United Health for all the reasons you state. Who is going to screw with them anytime soon - nobody. Who needs them - - everybody. And going forward they are going to keep devising ways to deliver less and charge the same or more.
And a public - that doesn’t realize it is adapting 3rd world traits vis a vis balkanization and tribalism - - is going to sit back and continue to let it happen.
The 1%'era - there’s not enough of them. If we confiscate the entire Fortune 500 - take it all - - we can’t balance the Federal Budget.
That is always said but never true.
Regardless I am not for balancing the budget. Those that want that misunderstand how any of this works on the macro level of econ. I get the point of view of balancing the budget is pandered to.
No one ever lost money betting on the ignorance and innumeracy of the American people. I’m confident that drug stocks will continue to do well as long as you’re able to bamboozle people with cries of “socialism” every time someone tries to have Medicare negotiate drug prices.
The millennials, Zs and Aphas think otherwise.
Some of us will go to our graves clutching onto misbeliefs. Okay with me but the rest of the country wont care either.
No one ever lost money betting on the ignorance and innumeracy of the American people. I’m confident that drug stocks will continue to do well as long as you’re able to bamboozle people with cries of “socialism” every time someone tries to have Medicare negotiate drug prices. **
Well put, fully agree. For the life of me I don’t remember the author or title - but years ago I read book by an ex HMO executive about the HMO industry. I was absolutely floored. I used to think AARP and AIPAC and NRA were the most powerful lobbies - - and yes they are very strong.
Wendell Potter, Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans
Also that idea about “the ignorance and innumeracy of the American people” isn’t original to me. Lyndon Johnson said the same thing in the early 1960’s.
As President Lyndon B. Johnson said in the 1960s to a young Bill Moyers: “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”
Regardless I am not for balancing the budget. Those that want that misunderstand how any of this works on the macro level of econ. I get the point of view of balancing the budget is pandered to.
Budget balance isn’t the prize I was seeking - I was just illustrating that to say 1% this, and CEO that - it doesn’t exactly solve problems in critical mass - and the very people claiming to want more fairness - would indeed be considered “the rich” by someone making $25,000 a year. And those “rich” 20%'ers- don’t seem to want to give away too many of their economic advantages.
But, going back to budgets - I wonder - if it was balanced and trillions a year - were not being borrowed - could interest rates be lower?
OR could interest rates be raised to truly tackle inflation - without adding so much interest to the debt?
And if so - could the money be diverted to anything from infrastructure, or climate, or health care or education.
Either way - moot point, you are getting your wish. Balanced budget will never ever ever happen.
But money will eventually have to be raised - and it’ll have to come from more than 1% of the population - especially the 1% that is rather well connected regardless who is in power. 20%'ers…the time has come.
But money will eventually have to be raised - and it’ll have to come from more than 1% of the population - especially the 1% that is rather well connected regardless who is in power. 20%'ers…the time has come.
In the United States we tax transactions (e.g., the receipt of a paycheck, sale of a share of stock, etc), except somehow we’ve exempted the largest transaction of all – when someone dies and transfers their assets to their heirs.
I’d start with that, then make investment income taxed at the same rate as wage & salary income.
Thank you for recommending this post to our Best of feature.
Eventually a Value Added Tax will arrive.
I’d actually support a true consumption tax fair and square for everyone.
…
No credits, no write offs, no where to hide - everyone pays.
Forty-five states and the District of Columbia collect statewide sales taxes. Local sales taxes are collected in 38 states. In some cases, they can rival or even exceed state rates. Jan 6, 2021
and the very people claiming to want more fairness
“Fairness” is only one aspect.
The real issue is growing the GDP responsibly. Supply side econ is a complete failure at doing this in every way. Supply side econ is totally corrupt and useless to the country at large.
I want a much larger manufacturing base. That takes infrastructure including childcare for parents. Neglecting the American public is short sighted and dumb.
"The real issue is growing the GDP responsibly. Supply side econ is a complete failure at doing this in every way. Supply side econ is totally corrupt and useless to the country at large. "
Agreed. Supply Side continues to be in power.
“I want a much larger manufacturing base. That takes infrastructure including childcare for parents. Neglecting the American public is short sighted and dumb.”
One wonders why that base didn’t grow more - and why whole cities are ghost towns.
Child Care would be a marvelous thing. I wonder if we can look back at periods after WW2 when America’s manufacturing base grew nicely - – and the wealth gap was less… what did the Federal Government do to handle child care? Maybe we an copy it and tweak it…
Last week I started dabbling in United Health for all the reasons you state. Who is going to screw with them anytime soon - nobody. Who needs them - - everybody. And going forward they are going to keep devising ways to deliver less and charge the same or more.
I first bought UNH on 5/16/06 at $47.20. I bought and sold it through 2008, each time with a small gain, but only kept a few shares long-term till now.
Naturally, I regret every sale, regardless of the small gain at the time.
Looking at my tracking spreadsheet, I see that I bought some on 10/8/08 at $20.05 and sold it 2 months later at $25.00. Huge mistake!
If you include all trades and all cash flows in UNH (as I do in my spreadsheet), my IRR in UNH is 17.57% now (from 2006 till today). Pity that it is just a tiny portion of my portfolio.