General Motors Co. will pay more than $189 million in profit-sharing to 48,000 U.S. hourly workers and millions more in performance bonuses to salaried employees, according to company documents obtained by The Associated Press.
GM will pay most hourly workers more than $4,000 each as compensation for its strong financial performance last year, said a person briefed on the bonuses. The payments come less than two years after the automaker emerged from bankruptcy protection with the help of a huge government bailout. They’re more than double the previous record payment of $1,775 in 1999, at the height of the boom in sales of sport utility vehicles and pickup trucks.
“On the whole, we made tremendous progress last year,” CEO and Chairman Dan Akerson said in an e-mail message to employees announcing the payments on Monday. “With our collective teamwork, this can be just the beginning.”
GM’s 28,000 salaried workers, such as engineers and managers, will get bonuses equal to 4 to 16 percent of their base pay. Fewer than 1 percent will get 50 percent or more; another 3 percent will get from 16 percent to around 50 percent, the person said. GM is not giving annual pay raises.
GM made $4.2 billion in the first nine months of 2010 and is expected to soon announce a fourth-quarter profit. The company needed a $49.5 billion government bailout to survive a mid-2009 bankruptcy filing, and the government still owns 25 percent of GM’s stock. Chrysler, which needed a $12.5 billion bailout, plans to pay bonuses as well. The government owns about 9 percent of Chrysler stock.
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Brian intends to run an honest, transparent, and principled campaign. In the coming months, he looks forward to making the case with voters across Maryland that his approach to governance will provide the most opportunity to the most Marylanders.
Jobs are job one: Brian’s primary concern is the economy. Maryland’s high taxes, deficit spending, and anti-business environment have already destroyed hundreds of thousands of jobs. Maryland is a great place to live, but we need to start making it a great place to do business. Every point in Maryland is 50 miles from Pennsylvania, Virginia, Washington, DC, Delaware, or West Virginia. We must not take Maryland jobs for granted. Our tax policies must compete with those of our neighbors. If we don’t compete, Maryland jobs will continue to leave. And Maryland must rebuild its reputation with the business community. Maryland has the most talented labor pool in the nation. We deserve a Governor who will work with companies and encourage them to bring their operations here.
Leadership in Balancing the Budget
A top priority for Brian is balancing the budget without raising taxes. This will take leadership and it will take discipline. To that end, Brian will take a 25% pay cut for his first year in office, and ask his Lieutenant Governor, and all Senior Leadership to do the same. It is irresponsible for Brian to ask anyone in Maryland to do something he would not first do himself.
Brian is committed to ensuring every Marylander has access to safe, affordable healthcare. The first step is to grow Maryland’s economy, so every Marylander has more income. The second step is to address rising healthcare costs.
Our current model is like an “all you can eat” bonanza, where you never see the bill and have no incentive to spend less. This is foolish and unsustainable. Brian wants every Marylander to have more control over their healthcare, not less. When Brian lost his job at Constellation, he didn’t lose his car insurance, his life insurance, or his home insurance. So why did he and his family lose their health insurance? If healthcare is tied to employment, Marylanders feel less free.
To lower costs, every policy will be explored. Health Savings Accounts, wellness incentives, and tort reform are just the beginning to meaningful healthcare reform in Maryland. Costs can, and will, come down. Marylanders demand meaningful reform, and Brian is committed to implementing policies that provide it.
Brian is the son of an English teacher, and he and his siblings are products of Maryland’s public schools. Brian has an unwavering commitment to the education of every child in Maryland, especially those who live in lower income school districts and the urban areas of Baltimore City and Prince George’s County. While our public schools are among the best in the nation, a great deal of work remains to be done. Every dollar the government spends must be reviewed and accounted for. Brian wants to review the quality of dollars spent, not just the quantity of dollars. Successful programs must be supported and fully funded, and wasteful programs must end. Our children deserve nothing less.
Brian is committed to protecting our shared green spaces, our mountains, our farmland, our coasts and wetlands, and our spectacular Chesapeake Bay. He has heard innovative proposals from entrepreneurs on how to address the Bay’s dead zones, where oxygen levels are too low to sustain life. He wants to work with local farmers on ways to address run-off levels, without making farming even more expensive. He wants to address transportation issues, to find scalable, affordable, environmentally sensitive long-term solutions. By working with the private sector to craft solutions to these problems, Maryland will solve its own problems, and develop an expertise from which other states can learn.
One easy way to address our transportation issues is to make Baltimore City safer and more affordable. Hundreds of thousands of people commute into and out of the city every day. Just imagine the economic impact, and the environmental impact, if they actually lived in Baltimore.
Like all of America, Maryland has an unhealthy addiction to foreign oil. We send billions of dollars to countries that don’t like us very much, and that’s a problem. We have been saying this for 30 years, but are more dependent today than ever.
Brian has spent the majority of his career in the energy business. He supports bringing energy production closer to home and exploring alternative sources of energy. Brian supports Constellation Energy’s proposed expansion of their award winning Calvert Cliffs Nuclear Facility. This would create thousands of jobs, grow our economy, and build our tax base. Brian is disappointed in the current administration’s delaying of the Calvert Cliffs project for political reasons. Our energy needs, just like our economic needs, should not be politicized.
2nd Amendment Issues
Brian has the same view on the 2nd Amendment as the founding fathers: the right to bear arms was preceded only by freedom of speech. Brian is committed to protecting the 2nd Amendment rights of Maryland residents.
Brian understands that immigration is what defines America (after all, his last name is Murphy). But becoming an American citizen is a process, and no one is above the law. Our Federal Government refuses to secure our borders, so all Americans are less safe. Illegal immigration is against the law, it cheapens American citizenship, and it makes police officers’ jobs more difficult. Maryland must enforce our laws, we must protect our citizens, and we must do all we can to ensure the safety of our law enforcement officers.
Brian is Pro-Life, and is committed to standing firm for the sanctity of life. Brian opposes embryonic stem cell research, and he supports legislation which gives pregnant Marylanders the best possible information about abortion. Along with his wife, Joy, Brian intends to establish a program called “Joy’s House”, in which pregnant girls and women can gain the support they need should they decide to carry their pregnancy to term. Joy’s Houses will be established across the state, and will be funded exclusively with private money.
For those on the Eastern Shore of Maryland, there is information, t-shirts, bumper stickers and yard signs available. Please send an email to email@example.com for more information.
by Brian Darling
Remember all of those bold statements that the so called “Troubled Assets Relief Program” (TARP), the Bailout of Wall Street Bill, was a one time deal and our federal government should and will never do it again. Secretary of the Treasury Tim Geithner testified in January of this year before the House Committee on Oversight and Government Reform:
Many Americans look at what happened with AIG, and the rest of the financial rescue, and simply ask: Why was it necessary? Why was it fair for the government to take taxpayer money and put it into an institution that had mismanaged itself to the edge of collapse? The answer is that it was not fair, and it was not something our government should ever have to do. But those Americans, those families and business owners who played by the rules and played no role in giving rise to this recession, should understand that if the government had failed to act, that failure would have unleashed substantially greater damage upon them.
If TARP “was not fair” and not “something our government should ever have to do,” then why is Congress trying to impose the TARP model on small business? Congress will consider legislation this week to establish TARP, Jr. for small businesses to be administered and run by none other than Secretary of the Treasury Tim Geithner. The House is considering H.R. 5297, the Small Business Lending Fund Act that provides “temporary authority to the Secretary of the Treasury to make capital investments to eligible institutions in order to increase the availability of credit for small businesses.”
The legislation creates a federally run new bureaucracy called the “Small Business Lending Fund. ” To qualify a financial institution has to have less than $10 billion in assets and the new creation would have up to $30 billion in new investment authority. This allegedly temporary program is set up “without further appropriation of fiscal year limitation,” i.e. not temporary, to purchase “preferred stock and other financial instruments” from small business as a means to infuse money into local banks with the condition that they lend to failing small business. Local banks will be lending in exchange for equity small business, therefore these banks will be using federal monies to buy equity in companies. This is an idea born from socialism and one that will harm the free market for small business, because failure will be rewarded by federal subsidies while success will be punished.
The bill also creates a “Small Business Credit Initiative” with $2 billion of your tax dollars to be given to states that have created programs to provide funds to banks to bailout small businesses in trouble. This would provide an incentive for states to adopt the crony capitalism programs of the federal government exemplified by the federal takeover of General Motors and the activities of Fannie Mae and Freddie Mac. Setting up a system with private profits, yet socialized losses, will diminish capitalism and the American free market system. This legislation, TARP, Jr., extends the failed and free market offensive TARP model to small business. Considering that the original TARP program was “not fair, and it was not something our government should ever have to do,” Congress might want to heed the advice of Secretary Geithner of January 2010 and pause before creeping a few more steps toward American socialism.
Today’s corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market.
By ARTHUR LAFFER
People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.
It shouldn’t surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it’s also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.
People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, “high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994.”
Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn’t rocket surgery, as the Ivy League professor said.
On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush’s tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.
Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there’s always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.
Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.
Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe “double dip” recession.
In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn’t take effect until Jan. 1, 1983. Reagan’s delayed tax cuts were the mirror image of President Barack Obama’s delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.
But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don’t work until they take effect. Mr. Obama’s experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.
Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.
In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what’s going to happen to tax rates, this conversion seems like a no-brainer.
The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain’t seen nothing yet.
Mr. Laffer is the chairman of Laffer Associates and co-author of “Return to Prosperity: How America Can Regain Its Economic Superpower Status” (Threshold, 2010).
Crofton, Maryland – Brian Murphy, Republican candidate for governor of Maryland, calls Governor O’Malley’s InvestMaryland Program nothing more than a continuation of the failed policies of the past. Under the plan, Maryland would auction $100 million in tax credits, essentially borrowing money from the future, to fund investment in startup life science companies. Murphy calls this a state-level adoption of failed federal stimulus policies. O’Malley announced the plan earlier this week in Shady Grove.
“For the last two years, Maryland’s budget has been balanced by money borrowed from the federal government through the failed stimulus program, and by money borrowed from Maryland’s own rainy-day and infrastructure funds. Next year, the governor will have to either raise $2 billion in taxes or cut $2 billion in spending. My opponent continues to make empty campaign promises with borrowed money. Maryland has the most educated workforce in the nation. I have confidence voters won’t fall for this kind of empty rhetoric,” said Murphy.
“Instead of showing leadership and addressing Maryland’s economic realities, Governor O’Malley is committed to continuing failed policies. Instead of admitting he will support more than $2 billion in tax increases, he is promising more government spending. This program uses $100 million borrowed from the future and from higher taxes on the very companies he is promising to create. Unlike Governor O’Malley, I believe in our entrepreneurs. If Maryland creates a business environment that allows Maryland companies to compete in the region, billions of dollars, not just millions, will flow into our economy. Real stimulus cannot be created by our government, and it cannot be created with borrowed money,” said Murphy.
Brian Murphy and Robert Ehrlich are running in the Republican Primary on September 14. Governor Martin O’Malley is running in the Democratic Party Primary on September 14. The winners of the respective parties’ elections will square off against each other in the November 2 General Election.
Brian Murphy is a successful Maryland businessman with a B.A. in Economics from the University of Maryland and an M.B.A. from the University of Pennsylvania’s Wharton School. He is founder of the Plimhimmon Group, whose first investment, the Smith Island Baking Company, has been featured in The Washington Post, the Wharton Magazine, the Baltimore Sun, Businessweek, and other publications for its principled approach to job creation in Maryland.
By: Larry Kudlow
One day Team Obama announces a plan for enhanced rescission authority to impound wasteful spending, and the next day the House surfaces a plan for $200 billion in “stimulus” spending on transfer payments for welfare, even more unemployment compensation, still more Medicaid and a bunch of special-interest subsidies.
So are we to believe that President Obama will rescind the excess appropriations? Hardly. And since pay-go is dead, most of this new spending will not be offset. It will add to deficits and debt.
It’s the Greek disease. The welfare state run amok. Right here at home.
And in true class-warfare style, a small portion of the $200 billion is supposed to be offset by jacking up capital-gains taxes for investment partnerships. If passed, this would reduce investment, jobs and economic growth, and enlarge the deficit. Higher spending and investment taxing is a true austerity trap.
This business of raising the tax rate on investment partnerships would be a particularly onerous burden on American entrepreneurs. And it would put this country at a decided disadvantage to our competitors in China and elsewhere in Asia (outside of Japan).
Increasing the tax rate on the investment portion of these partnerships (i.e., the capital gains) would boost the penalty rate from 15 percent to 38 percent — and that includes the Obamacare payroll tax on investment scheduled for 2013.
So, instead of keeping 85 cents on the extra dollar earned from high-risk investment, the House proposal would drop the return to only 62 cents — a whopping 27 percent incentive rollback. And by the same amount, it would raise the cost of new capital, draining investment liquidity from the private sector in order to finance government transfer payments.
Nothing could be worse. This is spread-the-wealth in its most crass form.
And if all that weren’t bad enough, the House proposal would tax the so-called enterprise value of these firms by applying the same penalty-rate structure on the sale of all or part of an investment partnership. In other words, it would make real-estate, venture-capital and private-equity firms the only businesses in the country that are ineligible for long-term capital-gains treatment when they are sold in full or part.
One private-equity partner tells me that this would “tear apart the incentives for innovation that have been at the foundation of American enterprise since 1921, when the capital-gains differential vis-a-vis ordinary personal tax rates was first created.”
Compounding matters, we read in USA Today this week that private-sector personal incomes are at an all-time low, while government benefits as a share of income stand at an all-time high. I believe this is called redistribution.
And then comes a study from the Harvard Business School that states: “Stimulus Surprise: Companies Retrench When Government Spends.” What a shocker. (Hat tip to economist Don Luskin.)
House Democrats apparently don’t read newspapers from Greece or the United States. And they sure don’t read Harvard B-School studies.
Examiner Columnist Larry Kudlow is nationally syndicated by Creators Syndicate.
Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/columns/Greek-disease-in-the-House-95119989.html#ixzz0pFxlB7Mp