Obama's Transparent Hypocrisy

by Gerri Willis

Sad fact is one of politicians' favorite things to tell tales about is how honest and open they are.

Lately the President has been kicking up quite a fuss over transparency, running ads like this:

“More and more Republicans are calling for Mitt Romney to be straight with the American people, and release his tax returns. Put out as much information as you can!”

That's the attack, despite the fact Romney has already released two years of tax returns, and isn't even required to do that.But the President says he's all about transparency.

On his first day in office he made this promise:

“Starting today, every agency and department should know that this administration stands on the side not of those who seek to withhold information, but those who seek to make it known. Transparency and the rule of law will be the touchstones of this Presidency.”

Didn't happen. He promised to improve how the government handles requests under the Freedom of Information Act.

This is a key tool for holding our leaders accountable by letting citizens demand the government disclose its records. So how well do you think the Obama administration is doing with these requests?

At the end of last year, they had a backlog of over 83,000 requests for information. And when they do answer the requests?

The Obama administration is denying them 33% more often than during George W. Bush's term.

But this is just one of the President's broken promises about transparency.

Do you remember this one about writing the health reform law?

Obama: "I'm going to have all the negotiations around a big table. We'll have doctors and nurses and hospital administrators, insurance companies, drug companies ... We'll have the negotiations televised on C-Span."

Didn't work out that way either. Instead, the Obamacare negotiations happened behind closed doors.

In fact, we were left with Speaker of the House Nancy Pelosi telling us they had to pass the bill just so we could find out what was in it.

In light of all that, maybe you can appreciate the irony in this:

The President has spent over $15 million on polling this election cycle.

So he doesn't want you to know what he's doing, but he's very interested in keeping tabs on what you're thinking.

At the end of the day, I guess you can say this President is completely transparent. We can all see right through him.

Obama Declares War

by Gerri Willis


It was a big question in last night's State of the Union Address. And President Obama was pretty clear about who he thinks is getting the raw end of the deal.

"We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” he said. “Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules."

The President is vowing to use the power of government to close the gap between the super rich and the middle class.

He is demanding millionaires pay at least 30% tax rates, tapping into perceived public anger at low rates paid by the rich including Republican candidate Mitt Romney.

But here's where the lines between reality and rhetoric are completely blurred.

The truth is even the richest among us - the Romneys, the Buffetts - don't just pay a 15% rate.

According to Americans for Tax Reform, capital gains and dividends actually face a tax rate of closer to 45% because the money used to make these investments were already taxed usually at the 35% mark.

But this math seems to be getting into the weeds so let's simplify it.

The wealthy in this country, you know the bad guys, are already paying their fair share.

It really is that simple!

According to the I.R.S, not some right-wing radical think tank, the top 10% of earners in America pay nearly 70% of the Federal Income tax.

This big piece of the pie - with just 10% of American workers in it - pays 70%!

Breaking it down even further, the top 5% pays well over half the income taxes:

Again the balance is way off, and get this: the top 1%, the people getting hammered by protesters on Wall Street and others on the left, these big bad one percenters pay more than 38% of all Federal Income tax.

You tell me if that seems fair!

And if we're talking fairness here, it's not just about how much is paid in taxes. It's also about where the money goes and who gets what in return.

That again - to me - is not fair!

The tax foundation did an in-depth accounting study of Washington's "redistribution of wealth." Here's what they found.

The bottom 60% of families - those earning less than $85,000 a year - pay about $17,000 a year in taxes. But the benefits they receive from the government - everything from national defense to welfare - tops $20,000 a year!

And look at the lowest income Americans - those making less than $11,000 a year.

Their share of the taxes are about $1,700, but they get $17,000 worth of benefits!

In other words, they get more than $10 in benefits for every dollar they paid in taxes of any kind!

Even middle-class families get $1.15 for for every dollar paid.

Let's look at the flip side: the top 40%.

A family earning between $86,000 - $110,000 a year - comes out about even... 98 cents on the dollar.

But the wealthiest - those earning more than $712,000 - received only 43 cents on the dollar!

Mr. President, maybe it's time we stop worrying about what's fair, and start worrying about what works.

Nobody - left, right or center - thinks our current tax code is working.

It's time we take away the loopholes, the lobbyists, the long-wording, and switch to a flat tax.

Everyone cuts a check to the I.R.S. Everyone pays the same rate.

Because, let's be honest, 15% of $39 billion dollars is a heck of a lot more money than Warren Buffett's secretary pays.

What Obama Can't Take Credit for in SOTU

by Gerri Willis

President Obama tonight in his State of the Union is expected to announce a new era of American energy. He’ll claim credit for the jump in oil production and try to commandeer authorship of the natural gas boom as well.

But the facts tell a different story.

Once you look at the record, you realize the energy boom happened in spite of the Obama administration, not because of it.

Production in the Gulf of Mexico, for example, is down 35% from projections made by the Energy Information Administration just a little over a year ago.

Take a look at this chart...

By the way, the E.I.A is the federal government, not an industry trade group.

Why did production take a nosedive?

Obama shut down oil production in the wake of the BP oil spill for 137 days.

In fact, the moratorium wasn't lifted until drillers challenged it in court.

In other words, Obama turned that tap off and may have never turned it back on until a judge forced the issue.

The impacts of this lost production are pretty extreme – 90,000 jobs gone after 11 oil rigs were moved out of the region.

Here's where those rigs went (oh and in case your forgot, we gave Brazil a big fat loan to develop offshore oil reserves).

Losing those rigs is a $21 billion loss in capital investments for the region. And the impact on government isn't inconsequential. The government lost $5 billion in tax receipts after those rigs stopped production.

So it’s all the more impressive. We are making such huge inroads on energy independence.

You can attribute much of this to the fact technological advancements in fracking are boosting production, loosening natural gas and oil throughout the Midwest and the West.

Now according to the E.I.A: the U.S. has more than 2,500 trillion cubic feet of potential natural gas resources.

At the 2010 rate of consumption, that's enough to supply over 100 years of use.

But 69% of this production relies on hydraulic fracking to bring the energy to the surface.

Whether fracking will continue though is anybody's guess because eight federal agencies are investigating the technique (one, by the way, that has been around since the 1940s).

Oil industry advocates say production could soar even higher if the 85% of coastline was opened up to production.

But the gains already are impressive. Already, the U.S. is importing just 22% of its energy needs.

And that number is expected to decline to 13% by 2035.

That makes us much less dependent on foreign oil -- a good thing that presidents have been calling for four decades. We are closer now than ever before.

But has Obama led that new era of energy?

I’d say the facts point to no way. No how.

It’s a story as old as politics.

CEO's Open Letter to President Obama

by Gerri Willis

Billionaire investor Leon Cooperman made public his letter to the President, in which he calls for Obama to end his class warfare rhetoric and appeal to all voters today. Cooperman, below, makes the point that the President’s comments are divisive at a time we can least afford it. The chairman of Omega Advisors was a one-time Goldman Sachs asset management chief.

What do you think? Leave your comments below!


November 28, 2011

President Barack Obama

The White House

1600 Pennsylvania Avenue, NW

Washington, D.C. 20500

Dear Mr. President,

It is with a great sense of disappointment that I write this. Like many others, I hoped that your election would bring a salutary change of direction to the country, despite what more than a few feared was an overly aggressive social agenda. And I cannot credibly blame you for the economic mess that you inherited, even if the policy response on your watch has been profligate and largely ineffectual. (You did not, after all, invent TARP.) I understand that when surrounded by cries of "the end of the world as we know it is nigh", even the strongest of minds may have a tendency to shoot first and aim later in a well-intended effort to stave off the predicted apocalypse.

But what I can justifiably hold you accountable for is you and your minions' role in setting the tenor of the rancorous debate now roiling us that smacks of what so many have characterized as "class warfare". Whether this reflects your principled belief that the eternal divide between the haves and have-nots is at the root of all the evils that afflict our society or just a cynical, populist appeal to his base by a president struggling in the polls is of little importance. What does matter is that the divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them. It is a gulf that is at once counterproductive and freighted with dangerous historical precedents. And it is an approach to governing that owes more to desperate demagoguery than your Administration should feel comfortable with.

Just to be clear, while I have been richly rewarded by a life of hard work (and a great deal of luck), I was not to-the-manor-born. My father was a plumber who practiced his trade in the South Bronx after he and my mother emigrated from Poland. I was the first member of my family to earn a college degree. I benefited from both a good public education system (P.S. 75, Morris High School and Hunter College, all in the Bronx) and my parents' constant prodding. When I joined Goldman Sachs following graduation from Columbia University's business school, I had no money in the bank, a negative net worth, a National Defense Education Act student loan to repay, and a six-month-old child (not to mention his mother, my wife of now 47 years) to support. I had a successful, near-25-year run at Goldman, which I left 20 years ago to start a private investment firm. As a result of my good fortune, I have been able to give away to those less blessed far more than I have spent on myself and my family over a lifetime, and last year I subscribed to Warren Buffet's Giving Pledge to ensure that my money, properly stewarded, continues to do some good after I'm gone.

My story is anything but unique. I know many people who are similarly situated, by both humble family history and hard-won accomplishment, whose greatest joy in life is to use their resources to sustain their communities. Some have achieved a level of wealth where philanthropy is no longer a by-product of their work but its primary impetus. This is as it should be. We feel privileged to be in a position to give back, and we do. My parents would have expected nothing less of me.

I am not, by training or disposition, a policy wonk, polemicist or pamphleteer. I confess admiration for those who, with greater clarity of expression and command of the relevant statistical details, make these same points with more eloquence and authoritativeness than I can hope to muster. For recent examples, I would point you to "Hunting the Rich" (Leaders, The Economist, September 24, 2011), "The Divider vs. the Thinker" (Peggy Noonan, The Wall Street Journal, October 29, 2011), "Wall Street Occupiers Misdirect Anger" (Christine Todd Whitman, Bloomberg, October 31, 2011), and "Beyond Occupy" (Bill Keller, The New York Times, October 31, 2011) - all, if you haven't read them, making estimable work of the subject.

But as a taxpaying businessman with a weekly payroll to meet and more than a passing familiarity with the ways of both Wall Street and Washington, I do feel justified in asking you: is the tone of the current debate really constructive?

People of differing political persuasions can (and do) reasonably argue about whether, and how high, tax rates should be hiked for upper-income earners; whether the Bush-era tax cuts should be extended or permitted to expire, and for whom; whether various deductions and exclusions under the federal tax code that benefit principally the wealthy and multinational corporations should be curtailed or eliminated; whether unemployment benefits and the payroll tax cut should be extended; whether the burdens of paying for the nation's bloated entitlement programs are being fairly spread around, and whether those programs themselves should be reconfigured in light of current and projected budgetary constraints; whether financial institutions deemed "too big to fail" should be serially bailed out or broken up first, like an earlier era's trusts, because they pose a systemic risk and their size benefits no one but their owners; whether the solution to what ails us as a nation is an amalgam of more regulation, wealth redistribution, and a greater concentration of power in a central government that has proven no more (I'm being charitable here) adept than the private sector in reining in the excesses that brought us to this pass - the list goes on and on, and the dialectic is admirably American. Even though, as a high-income taxpayer, I might be considered one of its targets, I find this reassessment of so many entrenched economic premises healthy and long overdue. Anyone who could survey today's challenging fiscal landscape, with an un- and underemployment rate of nearly 20 percent and roughly 40 percent of the country on public assistance, and not acknowledge an imperative for change is either heartless, brainless, or running for office on a very parochial agenda. And if I end up paying more taxes as a result, so be it. The alternatives are all worse.

But what I do find objectionable is the highly politicized idiom in which this debate is being conducted. Now, I am not naive. I understand that in today's America, this is how the business of governing typically gets done - a situation that, given the gravity of our problems, is as deplorable as it is seemingly ineluctable. But as President first and foremost and leader of your party second, you should endeavor to rise above the partisan fray and raise the level of discourse to one that is both more civil and more conciliatory, that seeks collaboration over confrontation. That is what "leading by example" means to most people.

Capitalism is not the source of our problems, as an economy or as a society, and capitalists are not the scourge that they are too often made out to be. As a group, we employ many millions of taxpaying people, pay their salaries, provide them with healthcare coverage, start new companies, found new industries, create new products, fill store shelves at Christmas, and keep the wheels of commerce and progress (and indeed of government, by generating the income whose taxation funds it) moving. To frame the debate as one of rich-and-entitled versus poor-and-dispossessed is to both miss the point and further inflame an already incendiary environment. It is also a naked, political pander to some of the basest human emotions - a strategy, as history teaches, that never ends well for anyone but totalitarians and anarchists.

With due respect, Mr. President, it's time for you to throttle-down the partisan rhetoric and appeal to people's better instincts, not their worst. Rather than assume that the wealthy are a monolithic, selfish and unfeeling lot who must be subjugated by the force of the state, set a tone that encourages people of good will to meet in the middle. When you were a community organizer in Chicago, you learned the art of waging a guerilla campaign against a far superior force. But you've graduated from that milieu and now help to set the agenda for that superior force. You might do well at this point to eschew the polarizing vernacular of political militancy and become the transcendent leader you were elected to be. You are likely to be far more effective, and history is likely to treat you far more kindly for it.


Leon G. Cooperman Chairman and Chief Executive Officer, Omega Advisors

Obama's Empty Campaign Promises

by Gerri Willis

President Barack Obama delivers remarks on education at the University of Colorado in Denver, October 26, 2011. We all know campaigns are about promising lofty goals to the voters - telling them what they want to hear. And when these people get elected - for whatever reason - many of these promises just don't get carried out.

But apparently President Obama is the exception - at least if you ask him.

Here's what he said at a campaign fundraiser this week:

"I carry around a little checklist, and I think we've got about 60 percent of it done so far. And that's not bad for three years, because I need another five."

Sixty percent! That's a pretty good record! Too bad he's exaggerating his success rate slightly - according to the independent watchdog website: Politifact .com.

Candidate Obama made over 500 promises during the long campaign.

So doing his math that would mean he's kept more than 300 of them. Turns out he's only kept 151! That's less than 30 percent!

He did help some other proposals see the finish line - with a lot of compromise! But even if you include those - his record only goes up to 38 percent!

A lot of his broken or stalled promises come in the areas of the economy and taxes.

Now - not all of these failures are bad news. It just goes to show you when it comes to campaigns - even promises about promises must be taken with a grain of salt.

One of his biggest campaign talking points was increasing taxes on higher-income taxpayers - those making over $200,000 dollars a year.

We can give him points for effort here, but time and time again this promise goes nowhere because too many people know it would do more harm than good!

Now when he extended the Bush tax cuts - another broken promise - he also failed to include expanding the Child and Dependent Care Credit.

As seniors fought for a cost of living increase - they will get their first one since 2009 next year! Obama's pledge to end income taxes for low-income seniors has fallen off the radar!

When he joined forces with Joe Biden back in 2008, he and his new running mate promised to eliminate penalties for taking money out of your own 401(k) accounts.

That's not happening, and since day one, this president has seemed to have the oil industry in his cross-hairs. While he did manage to put off drilling - don't get me started on that - he failed to enact a windfall tax on their profits - or close loopholes many companies were using to save money on their taxes.

He also promised to restrict lobbying practices at the White House - but K Street plays as big a role as ever these days!

Obama did mention some of his big "accomplishments": ending the war in Iraq, ending ‘Don't Ask, Don't Tell', and of course, there's ObamaCare - the latter of which I'll agree to disagree.

Like I said, many of his promises did not come to fruition because they were and are simply bad policy. Blaming Republicans for your failures is not an answer.

Obama's Bridge to Nowhere

by Gerri Willis

Every once in a while one of President Obama's speeches really comes home to you - that happened to me today.

The president is pushing his plan to grow jobs at a bridge in Cincinnati, Ohio - one that I have probably crossed hundreds of times - that links Ohio with Kentucky.

He says the bridge needs to be replaced - and should be fixed as part of his $447 billion plan to fix the country's deep jobs crisis.

Government dollars funding government jobs. And to be sure, the Brent Spence Bridge does need help - a driver died on it recently and needlessly. The feds long ago deemed the bridge functionally obsolete and Cincinnatians have known for a long time the bridge needs help.

In fact, there's a plan for fixing the bridge - but it's not anywhere near completion - it's also not ready for federal dollars - not by a long shot.

The supposed shovel-ready project won't be ready until 2015 - after the plans for it pass environmental analyses and regulatory hurdles. Let's face it - the bridge isn't a shovel-ready project languishing for Republicans' approval but a prop for a political campaign.

President Obama's programs for jobs and the economy is a lot like the Brent Spence Bridge: functionally obsolete!

Voters aren't buying the rhetoric. Recent polls show nearly two-thirds of the country disapproves of Obama's economic performance.

Maybe it's because the public is sick of hearing the same old solutions from this White House. They just keep throwing good money after bad and hoping for a different result. I don't know about you - but that sounds like the definition of insanity doesn't it?

This Administration - just in stimulus spending - has committed nearly two trillion dollars of taxpayer money. Two trillion! Add in all the other government handouts - it's more like eleven trillion!

Where did that money go? First, the big stimulus bill - the American Recovery and Reinvestment Act - signed into law in February of 2009. That tab was to be around $787 billion, but the Congressional Budget Office now anticipates the law will top $862 billion by 2019. It was supposed to keep unemployment under 8% when it was signed - we were just over that mark. Since then we've topped ten percent and now can't seem to break below nine percent.

Great use of tax dollars!

By the way that doesn't include the more than $83 billion dollars spent on extending unemployment benefits over and over again. This White House is also under the delusion that government can fix the housing crisis.

One of the ways they've done that - bailing out Fannie Mae and Freddie Mac... again - using our money. Officials say they're willing to increase the tab - already above $100 billion - to $400 billion if necessary!

And that $25 billion mortgage modification program? More homeowners were thrown out of the program than helped. And foreclosures - last month more than 228,000 homes received notices. That's up 7% percent from July.

We can't talk about this Administration's spending without talking about ObamaCare - the CBO predicts costs for this plan: $938 billion by 2019.

The Federal Reserve has also tried to step in and help fix the economy by spending $600 billion on bond purchasing programs (just a fraction of the $7 trillion they've set aside to bailout the economy).

These are just the big ticket items - this doesn't include the bailouts of the auto industry, AIG, Cash-for-Clunkers or FDIC bank takeovers.

Unfortunately the list goes on and on.

All of those taxpayer dollars virtually wasted.

No matter what sector of the economy you look at - nothing has gotten better in the last two and a half years.

This flood of government spending just hasn't worked. That's not a political statement - I've just given you the cold, hard facts.

The Brent Spence Bridge needs to be actually fixed and not a prop in a presidential campaign.

Where are the jobs?

by Gerri Willis

It was the question House Speaker John Boehner posed at the start of his press conference this morning, but, frankly, who isn't asking that question today? The June jobs report isn't just disappointing, it's a disaster. We expected fewer public sector jobs. Much of the spike in government work came from the stimulus spending plus the bloat in public sector hiring of the early 2000s. But the true disappointment is in private sector jobs with just 57,000 new hires in the month.

Now, permabears like Nouriel Roubini are tweeting that the economy could stall by 2012 - which means he believes that the economy could dip again into recession (even though it feels like we never left it). Moreover, economist Mark Zandi predicting this morning that the White House will go for MORE stimulus spending, even though the track record on stimulus spending is poor, if not downright a disaster. And, Zandi should know - his projections and advice are closely followed by the Obama administration.

There is one thing that is working right now: Small business. This week's upbeat numbers from ADP - a payroll processing company - evidence that trend. Policy makers need to turn now to what can be done to encourage that sector. Our one best hope for this economy right now.

What the White House Hopes You Won't Notice

by Gerri Willis

For any journalist or news junkie for that matter, the Friday before a long holiday weekend is typically the time that you brace for a big story to break. That's because any public relations executive worth their salary will wait until just that moment when the media has its attention set on vacation to release info they hope you don't notice.Today, no bombshells, but an interesting report. The White House late this afternoon released its 2011 report to Congress - mostly notable for its table of salaries of people working for the president. Plenty of folks are making six figures -- top aides can make $172,000 - looks like no one would pay more taxes under the president's plan - which has $200,000 as a threshold.

Here's the report: http://www.whitehouse.gov//briefing-room/disclosures/annual-records/2011

Obama's jobs advisors cut jobs, don't grow them!

by Gerri Willis

The Obama's solution for every problem: Form a commission! That's what the President did with the jobs problem - he formed a jobs council packed with high-profile CEOs - just the folks who should know a thing or two about expanding payroll. But here's the problem - many of them have been CUTTING jobs in their own companies, not expanding them.

Case in point: the top dog for the jobs council - Jeffrey Immelt. The man tapped to lead the new era of jobs creation in this country runs General Electric, which has cut jobs over the last decade. GE went from employing 313,000 (168,000 in this country) to having only 134,000 American workers. Then, there's Xerox. CEO Ursula Burns has presided over layoffs of 2,500 workers and more are expected. American Express. Dupont. Boeing. Intel. The story is the same over and over. The people leading these companies - the ones that are supposed to advise the president on growing jobs have cut American jobs.

My favorite: Citigroup. During the recession the company laid off an astonishing 50,000 workers! And, oh yeah, it also took $45 bililon in taxpayer dollars!

Seriously, finding a way out of the jobs depression means talking to corporate leaders who know how to grow, expand and compete.

Surviving the double dip in housing prices

by Gerri Willis

Take a close look at those housing numbers out today - and you'll begin to understand how deep the housing crisis really is. U.S. single-family home prices dropped in March to fall below the low hit in April 2009 - that was right smack dab in the middle of the financial crisis. In other words - as I've been saying - we really are facing a double dip in housing prices. The S&P/Case Shiller data released today tells the story: Its composite index of 20 cities declined two-tenths of a percent from February. The national index, the 20-city composite and 12 cities all hit new LOWS through March 2011. The national index fell 4.2 percent over the first quarter alone, and is down 5.1 percent compared to its year-ago level. For homeowners - a quarter of whom are already underwater - owing more than their home is worth - the news is not encouraging. And , it's clear that you won't be able to rely on any government programs to bail you out. The first-time homebuyer's tax credit is simply extending the pain of the downturn rather than fixing it; while President Obama's HAMP program has had precious little impact. The good news is that owners don't have to realize this loss unless they sell or need to refinance their mortgage. If you're in that position, you may well be able to hang tight until the market improves. In other words, you're going to have to survive on your own. My advice if you are waiting out this downturn: Don't overinvest in the house you are living in. If you're tempted to drop a lot of cash building an addition or a state of the art kitchen, don't even consider it unless the improvements are matched by your neighbors' homes. The last thing you want to own is the fanciest home in your neighborhood. You'll have a hard time reaping the benefits of that investment. If you can drop your costs by refinancing - 30-year fixed rates are at 4.5 percent for people with good credit - do it.


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