Retirement Nightmare: Feds Spending $4.28 Trillion of Taxpayer Money on Bailout

CNBC has added up all of the promises the corrupt parasites in Congress have made to their banker buddies on Wall Street and come up with a figure: $4.28 trillion! That is, CNBC says, approximately $4.2 trillion more than the U.S. spent fighting World War II, even adjusting for inflation.

Try $4.28 trillion dollars. That’s $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.

Not only is it a astronomical amount of money, its’ a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and new releases. Strictly speaking, not every cent is directed a result of what’s called the financial crisis, but it arguably related to it.

Some 68-percent of the sum falls under the Federal Reserve’s umbrella, while another 16 percent is the under the Treasury Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October. (The TARP alone is bigger than virtually any other US government endeavor dating back to the Louisiana Purchase. See slideshow.)

And here’s the REALLY bad news: This is what an allegedly conservative Republican administration has presided over.

When Barrack Obama and a possibly filibuster-proof majority of Democrats in both houses of Congress take over in January, the spending is going to go berserk. With Obama promising tax cuts for “95% of the American people”… with his ambitious program of free universal health care… with expanded Social Security and Medicare benefits… with current government pension and Social Security liabilities of some $56 trillion… it’s going to be a very EXPENSIVE four years.

No wonder so many early retirees are heading for the hills — or, more properly speaking, Caribbean tax havens where they can legally run their international consulting businesses free of Uncle Sam’s confiscatory taxes.

(It’s also little wonder that Congressional parasites like Rep. Carl Levin (D, natch!) are now promising a new campaign against expats and other free people who don’t allow the Feds to pick their pockets without a fight but use every legal strategy in the book. They are trying to close the loophole that allows Americans to earn up to $85,000 tax-free when living outside of the United States.)

Take Advantage of Recent Market Crash to Lower Retirement Taxes

CPAs are urging their clients to make lemonade out of lemons with the recent sell-off in the stock market by using a simple tax strategy to reduce their taxes when they retire.  The basic strategy is to put off taxes for later by making good use of IRAs and especially Roth-IRAs.

“Since the market is down, now is a great time to do a Roth conversion,” attorney and CPA James Lange told the Pittsburgh Tribune-Review.  Lange is the author of Retire Secure! Pay Taxes Later, which sold 100,000 copies and reached No. 1 in the retirement planning category at Amazon.com. Lange just finished its second edition, updating tax law changes, which will be published in February.

How can IRAs help in a market where the Dow Jones industrial average dropped from about 11,000 to about 8,000 within three weeks?

A traditional IRA may buy more securities, as the market is down and the investment capital is pre-tax dollars. A Roth IRA might even be better, said Lange.

In a Roth conversion, the person pays taxes on the amount moved to the Roth. The tax liability depends on one’s income-tax bracket. So, it’s better to convert the Roth after retirement, when the person is presumably in a lower tax bracket.

“If the market goes up later, the amount in the new Roth IRA account will grow income-tax free,” he said. “And when you or your heirs make withdrawals from that Roth IRA, it will be income-tax free.”

For example, a traditional IRA that was worth $100,000 a few years ago might have declined in value to $80,000 today, meaning there’s no taxable gain. Then, if that $80,000 is switched into a Roth IRA and increases to $120,000 in two years, the gain is tax-free because those are the rules of a Roth.

Had the money stayed in an IRA and the person in a 25 percent tax bracket withdraws all $120,000 two years from now, he would pay $10,000 in taxes.

One caveat, said Lange, is that those with gross income above $100,000 must wait until 2010 before they can convert a traditional IRA to a Roth IRA.

Lange also allows for the fact he is not an expert money manager. So, what if the market doesn’t recover in the next year or two, but continues to fall in a long, nasty recession?

To learn more, visit James Lange’s website.

Insurance Money and Senior Investment Income Under an Obama Administration

It’s difficult to estimate the effects an Obama presidency will have on insurance benefitsy (including annuities) and senior investment income. On the one hand, Obama has proposed eliminating income tax altogether on “the elderly” making less than $50,000. Also, both John McCain and Obama have been competing for the middle class – and thus, BOTH candidates have proposed significant tax cuts for people making $100,000 to $200,000 income a year.

According to the non-partisan Tax Policy Center, a two-earner family with six kids making $150,000 a year will get a $6,500 per year reduction in taxes under McCain’s plan and a $7,500 reduction under Obama’s.

Yet despite Obama’s claim that he will “cut taxes for 95% of the American people,” many experts believe he will end up presiding over the largest tax INCREASE in history on ordinary Americans. Here’s why.

First, Obama and his fellow Democrats will allow ALL of the Bush era tax cuts to expire – which will result in automatic tax INCREASES for most people .

Second, according to the authoritative “Preliminary Analysis of the 2008 Presidential Candidates’ Tax Plans,” published by the Brookings Institution/Urban Institute’s Tax Policy Center, Obama’s published plan would actually result in an INCREASE of 13% in taxes on families earning $31,000 to $45,000 a year. The reason why is because Obama increases the tax credits to families but makes them “refundable,” meaning they push families into higher tax brackets.

Third, Obama’s definition of “rich” is not $250,000 a year, as he claimed during the campaign, but actually $110,000 a year. His policies would result in a staggering 45% effective marginal rate for families in the $110,000 to $120,000 income range – an increase of 11% over current law .

Fourth, according to the non-partisan Tax Policy Center, the Obama plan would reduce taxes for low- and moderate-income families, but “raise them significantly for high-bracket taxpayers.” The institute estimates that even “middle-income taxpayers would see their after-tax income RISE by about 5% over the next four years.”

Fifth, Obama plans on increasing the amount of income subject to Social Security and Medicare taxes from the current threshold of $00,000 annually to NO LIMIT.

Sixth, Obama will nearly DOUBLE the capital gains tax, such as on sales of homes, from the current 15% to 28%.

Seventh, if Obama does not significantly alter or eliminate the dreaded Alternative Minimum Tax (AMT), his “tax cuts for the middle class” will instantly go up in smoke.

Finally, the great unmentioned factor in all of this discussion is the global economy. Both McCain’s and Obama’s projections for their tax proposals have been based on the Congressional Budget Office’s projections for the future based on the recent economy. However, if the U.S. goes into a significant recession, even depression, the tax revenues will plummet – and Obama will need to make enormous tax increases just to maintain current levels of government spending.

Our advice: Retire now and relocate to a tax haven outside the U.S. while you still can. With control of BOTH houses of Congress and a filibuster-proof majority in the Senate, liberal Democrats will have TOTAL CONTROL of the U.S. government for the first time since the 1930s.