I saw this as a diversion which is not too significant given the severe economic problems currently experienced in this country. The article stated that the Wyly's had given roughly $2.5 million to Republican candidates and committees during the past 20 years.
Here is the substance of my email response, edited slightly for posting here:
"Hmmm. $2.5 million over 20 years. That’s chump change compared to what the bankers have given to politicians – to both presidents and to congress. Here’s a quote from the April 21, 2010 WSJ:
“Since 1990, investment firms and their staff have given a staggering $683 million to federal election campaigns. While Democrats have done better in recent elections, this industry is not partisan: Over two decades the donations have split 51% to Democrats, 48% to Republicans. The GOP got a majority of the money from 1996 through 2004.”
On an unrelated matter, but certainly much more important, as a small business man, I’ve been monitoring the Democratic led congress these past four years, and of course, our current President Obama. So how are they doing? It’s important to me and I would expect, to you, as a small business person. But first, I think it’s useful to look at some government statistics. Small businesses, are businesses with less than 500 workers in the non-farm sector of the economy. This is what the Department of Commerce says about “small businesses”.
Small Businesses in the U.S.:
- Represent 99.7 percent of all employer firms.
- Employ just over 50 percent of all private sector employees.
- Pay 44 percent of total U.S. private payroll.
- Have generated 64 percent of net new jobs over the past 15 years.
- Create more than 50 percent of the nonfarm private gross domestic product (GDP).
- Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
- Are 52 percent home-based and 2 percent franchises.
- Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
- Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.”
Currently, Congress is obfuscating over a bill to create a fund of $30 billion for community banks. That money would be made available to banks at very low interest rates by the government. The banks would repackage this, and making a profit, provide loans to “small business”. An additional $5 billion is also to be available as “tax breaks” to small business. However, I understand that $5 billion is for special tax treatment which will actually benefit large businesses, including Airlines and Telecommunications companies. The name “small business” is being used as a smoke screen. It is likely that none of this money will help or be available to the majority of small businesses in this country.
Returning to the issue of priorities in government, in June, President Obama made a big deal about the 80,000 $250 checks he was sending to seniors to help with their medical payments. That’s $1 Billion that was given away. There were no checks for small business or any of the others in the U.S. for whom insurance is not subsidized by the U.S. government, but is paid by employers. Currently, 3.3 of us are working to for each beneficiary. We pay the taxes to provide SS and Medicare benefits to millions. That's a 7.65% tax on each employee, paid for by the small business employer, to the maximum required by law. There's nothing personal here, but it is a tax, and for many employers, that 7.65% could go elsewhere, including to fund their own and employees retirement 401K or SEP-IRA plans.
I hope you are saving a ton for retirement because the till will be dry. The Boomers will retire at standards below those of current seniors. GEN X will see their retirement life style significantly eroded. GEN Y will starve if they don’t save at least 10 to 15% for retirement.
Clearly, one has to have their priorities as a politician. One also has to be a master at obfuscation and misdirection. And they are.
Small businesses are important, it would seem. However, the government gave better than $60 billion to two automobile manufacturers. Twice what it is even offering to all the small businesses in this country. And what is it offering to small business? Low interest loans so we can pay mandatory expenses, such as SS and Medicare taxes!. I’ll spell this out to you. A bailout of big banks and even General Motors and Chrysler, to the tune of about $1 trillion was made by our government, and yet "small business" is being offered loans that amount to about 3 cents on the dollar. That's right, $30 billion is 3/100 of $1 Trillion. That’s real "chump change"!
So where are the politician’s obligations and priorities? It should be obvious.
Of course, none of this may be of interest to you. However, most small business people I talk to are struggling. Small businesses are usually self- funded with credit cards, cash from operations and in the past, from equity loans on homes. These sources of financing have disappeared for most small businesses, as I am sure you are aware. We are now entering the second phase of the recession in which many strapped businesses have exhausted reserves and credit and are failing. Time is and was of the essence. But for the President and Congress time apparently has no meaning and there is no urgency. That's too bad for the country!
If we had 3.3 workers funding each beneficiary of social security and we are at "unofficial" unemployment or underemployment of 15%, then we now have only 2.85 workers per beneficiary. There is now talk in government about "handling deficits" and even more talk about un-affordable entitlement programs. I see this as a shot across the bow of the middle class, and a warning to us. For the Boomers, be prepared for a retirement below that of current seniors. For the GenX group, I suggest you save more as your life style will be significantly less than that of those today in retirement. and the boomers who proceed you. For GenY, if you don’t save 10 to 15% of your wages for retirement, be prepared to starve.
Our leaders and politicians have missed a significant window of opportunity and I am now more pessimistic than I was even one year ago.
I hope you are doing well. My worst-case prognosis for the duration of this recession was “about 10 years”. I now see that more and more economists are aligning with that view. I hope you have a plan of substance. You will need it.
Comments, Corrections, Omissions, References
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I've sent abbreviated versions of this to my Congressmen and to the President at the White House. I have asked for a reply and so far, have received one automated response.
