Obama’s tax plan

The effort to cut the federal deficit is shaping up to be a battle between the haves and have-nots.

President Obama has proposed tax increases for the wealthiest taxpayers as part of a plan to find $3.2 trillion in budget savings over the next 10 years.

In announcing his proposal, Obama “vowed to veto any approach that does not include new levies on the wealthy alongside any benefit cuts in Medicare, the health insurance program for the nation’s retirees. He proposed nearly $250 billion in Medicare savings, largely by reducing excessive payments,” report the Post’s Zachary A. Goldfarb and Rosalind S. Helderman.

“I will not support — I will not support — any plan that puts all the burden for closing our deficit on ordinary Americans,” Obama said. “We are not going to have a one-sided deal that hurts the folks who are most vulnerable.”

Republican leaders call Obama’s plan class warfare.  But Post opinion writer Eugene Robinson says, “spare us the histrionics.”

“The GOP and its upper-crust patrons have been waging an undeclared but devastating war against middle-class, working-class and poor Americans for decades,” Robinson writes. “Now they scream bloody murder at the notion that long-suffering victims might finally hit back.”

Robinson points out that since the beginning of the Reagan years, the share of total income captured by the top 1 percent of earners has doubled, while the share taken by the bottom 80 percent has fallen.

“The rich are getting richer at the expense not only of the poor but of the middle class as well,” he writes.

David Brooks of The New York Times had another take on Obama’s plan.

“He repeated the old half-truth about millionaires not paying as much in taxes as their secretaries,” Brooks wrote this week.

He continued: “This wasn’t a speech to get something done. This was the sort of speech that sounded better when Ted Kennedy was delivering it. The result is that we will get neither short-term stimulus nor long-term debt reduction anytime soon, and I’m a sap for thinking it was possible.”

What’s your opinion of Obama’s debt reduction plan? Send your responses to colorofmoney@washpost.com for this week’s Color of Money Question. Be sure to include your full name, city and state. Put “Obama’s Tax Plan” in the subject line.

Celebrity Cash

Speaking of the rich, what can we learn from those whose wealth has evaporated? There certainly are plenty of financial horror stories of professional athletes who have gone broke.

There’s boxer Mike Tyson who earned more than $300 million in his career but ended up filing for bankruptcy in 2003. Hall of Fame quarterback Johnny Unitas lost more than $3.5 million because of failed business ventures. (I actually broke the story of Unitas’ bankruptcy while a reporter covering bankruptcy for The Evening Sun in Baltimore). New York Jets player Mark Brunell’s failedreal estate deals forced him to file Chapter 11 bankruptcy protection in 2010.

New York Times columnist Ron Lieber wrote an interesting article about the financial issues facing some athletes. 

“Sports stars may or may not mess up more often than the average person who earns a lot of money really fast, but their troubles seem outsize because of their fame and the pathetic schemes they fall for,” Lieber writes.

Like Lieber, I’ve written about what we can learn from the cash mistakes celebrities make. Lieber pointed out three good lessons that you can apply to your own financial situation:

--Go slow. “Don’t think there is some secret society out there that has the investment knowledge, and you’re not in the know,” says former NFL player Steve Young and managing director at Huntsman Gay Global Capital, a private equity firm.

-- Watch your spending. How do you go broke after making $200 million? You spend $201 million. When Michael Vick, quarterback for the Philadelphia Eagles, filed for bankruptcy he listed between $120,000 and $150,000 on jewelry for his brother.

-- Scrutinize the people you hire to handle your money. Be certain your financial adviser is working in your best interest.

Video and Text Chats Today

Are you ready to talk money?  Join me at 11:45 a.m. for my live video chat. I will answer your personal finance questions and announce the newest Debt Defeater.

At noon, my live text chat begins. My guests will be Gail Parent and Susan Ende, authors of my September Color of Money book club pick, “How to Raise Your Adult Children: Real-Life Advice for When Your Kids Don’t Want to Grow Up.” 

Be sure to send your questions in early or read the archives later.

Debt Defeaters

I am still looking for Debt Defeaters. I want to hear from people who have successfully eliminated or made a major dent in their debt.

Send your story to colorofmoney@washpost.com. Tell me: How much debt have you paid off? How long did it take? What sacrifices did you make to become debt-free? Be sure to include a statement describing the positive effects you’ve felt after wiping out the debt. Put “Debt Defeater” in the subject line of your e-mail.

If I read your story during my live video chat, you will receive a free Debt Defeater T-shirt.

Reponses to “Millennial Money Worries”

A survey by PNC Financial Services Group found that only 18 percent of adults between 20 to 29 years old, whose adult lives began amid the recent recession, are financially prepared for retirement. Just 23 percent of young adults said they are "totally financially independent."

For last week’s Color of Money Questions, I asked, “Are you still supporting your adult child in some way? How does that make you feel?”

Here are some comments.

“Our youngest son has needed support for the last few years. He has just found a job in a small IT department but still is living at home and I still pay his cellphone and give him bus money as needed,” wrote Harry J. Green III of Mercer Island, Wash. “Since I know the economy is really bad, I am willing to help him get his feet on the ground. However, as I am past retirement age and only working because my house is underwater and I could not pay the mortgage if I were to retire, his added out of pocket expenses are creating some issues. But, a loving parent does what is needed as long as they can.”

Linda Soaft of San Diego, Calif. is supporting her 38-year-old son who graduated from college three years ago with a degree in political science. 

She writes: “My son lives with his girlfriend and I now cover part of his rent, all of his baby son’s needs, cellphone, student loan and internet service plus a variety of other necessities such as clothing, gas money and dry goods not covered by his food stamps.  I also loaned him a car and pay the insurance. He’s applied for at least 500 jobs with no luck. My other son is 42 years old, very intelligent, completed two years of college and lives with me because he can’t afford even a single room in San Diego and I pay all of the household expenses. I have increased electric bill and food costs as a result.  He works part time. I feel frightened because I am afraid I will never have enough money to retire!”

Upcoming Events

-- --If you’re in the D.C. metro area, come out to two panel events about money that will take place at the Congressional Black Caucus Legislative Conference. The discussion, which is free and open to the public, will be held at the Washington Convention Center from 1 p.m. to 5 p.m.

The first panel, which runs from 1 p.m. to 3 p.m., will address money, power and respect and will be moderated by Derrick Dingle, Editor-In-Chief of Black Enterprise Magazine. Next, from 3 p.m. to 5 p.m., I’ll be on the panel "Inside the Money Pit: Economic Stars Share Secrets to Economic Success." My fellowpanelists include economist Julianne Malveaux, reality TV personality Omarosa Manigault and Marc Morial, president and chief executive of the National Urban League. Nationally syndicated radio host Warren Ballentine will moderate the panel. 

-- On Thursday, Oct. 6th, I will be honored with the Bridge Builder Award at the 18th anniversary dinner and auction for The Training Source. This is a fundraising event for The Training Source, a great non-profit organization in Prince George's County that, among other services, provides training and employment placement assistance, leadership training for at-risk youth, and free professional clothing for job candidates.

The event will be held at Newton White Mansion at 2708 Enterprise Rd. in Mitchellville, Md., from 6 p.m. to 9 p.m. For more information about the event, go to www.thetrainingsource.org.

Tia Lewis contributed to this e-letter.

 You are welcome to e-mail comments and questions to singletarym@washpost.com . Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested. 

 

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money.”
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