One Stock; Four Funds; Everything April 28, 2011March 24, 2017 AMRN So it was reported that the company has retained Lazard to pursue a sale for $2 billion or more – which would be about $16 a share or more. With the stock more than doubling in a month, and up from its 52-week low of $1.63, Guru understands why there would be lots of profit-taking here but holds out hope for the “or more” part of that report. Based on his comments, I’d assign a 10% chance to some unpleasant surprise; 40% to a sale around $16; 50% to a sale at a better price. No harm selling half so that from then on you’re playing with “the house’s money.” But if these are the true odds (as no one can ever know), they would argue for hanging on to at least half. FORMULA INVESTING I had lunch with Joel Greenblatt, whose four Formula Investing mutual funds I have recommended since their recent inception – FVVAX, FNSAX, FNVAX, and FNAAX. (Because they are not particularly tax efficient, they’re best suited for tax-deferred retirement accounts.) In addition to the case I make for them in the new edition of my investment guide, I learned something else: Joel has a talented team working full time to compile the underlying data his computer then crunches. He does this because, when examining the data he had been purchasing from a third party (and that other value-weighted index funds purchase), he found that his team could do it better, giving his funds yet another edge. PARADIGM SHIFT Everyone’s reading Jeremy Grantham’s latest quarterly letter, which he summarizes, “The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.” That is actually just the “summary of the summary.” Given Jeremy’s brilliance and track record, it’s well worth the click (and free registration).
Taxes, Progress, and Censorship April 27, 2011March 24, 2017 PROGRESS Yesterday: the link to where your tax dollars go. Today: the progress those tax dollars have allowed us to make since pulling back from the brink of depression. THE CASE FOR TAXATION Russell Bell: “Isn’t the best rationale for tax policy that it makes us free, safe, healthy, wealthy, protects persons and property, makes society just? Steve Jobs isn’t wealthy just because he’s brilliant but because he lives in a society that maintains a physical infrastructure that makes the stuff Apple Computer produces the next thing almost everyone wants to buy and an educational infrastructure that provides him competent workers and citizens wealthy enough to buy his products. We will have a freer, safer, healthier, and wealthier country if we expect government to provide the services that make us that way and pay for them. You accept the argument that taxes are a burden and that wealthy people have to pay a larger share because they can, not that taxes are the appropriate price of valuable services and the wealthy pay a larger share because they reap a greater benefit. Have you read Edmund Phelps’ Rewarding Work: How To Restore Participation And Self-Support To Free Enterprise? It’s about the social value of work. The underlying idea is that society can spend money on individuals that benefits society. I commend this idea as the legitimizing idea for taxes. You can read my modest and short review here.” UTERUS. THERE: I SAID IT If you have five minutes (or a uterus), watch this censored Florida legislator make his case for choice. He calls out his state legislative colleagues for espousing small, hand s-off government for corporations but big, intrusive government for average citizens like his wife.
Free Education April 26, 2011March 24, 2017 WHERE YOUR TAX DOLLARS GO Here it is, based on your own income level. Seeing it this way helps to focus the discussion of what and how much to cut. (I would cut things the military doesn’t want, for starters. But the biggest impact I’d make on the deficit is, as Alan Greenspan suggested on “Meet the Press” a couple of weeks ago, just reverting to the Clinton tax rates.) HOW HEAVILY ARE WE TAXED? “In a survey of 28 developed nations by the Organization for Economic Development and Cooperation,” writes blogger Ted McLaughlin, “it was shown that only two of those 28 nations have a lower tax burden than the United States — Mexico and Chile. Currently all taxes totaled together (federal, state and local) comprise about 24% of U.S. Gross Domestic Product (GDP) — by comparison, Great Britain’s tax burden is 34.3% of GDP, Germany’s is 37%, and Denmark’s is 48.2% (the highest of all 28 countries).” Ralph Mason: “I engaged in a debate recently with someone who claimed that the American economic dynamo has been increasingly hampered by big government from Wilson on down, made much worse especially by the New Deal and the Great Society. I looked up GDP per capita since the Civil War to see if there were evidence for this. The result surprised even a liberal like me. Apparently the modern era of ‘big guv’ment’ has been the best thing that ever happened to us.” WHERE TO GET A FREE EDUCATION Bill Gates thinks Salman Kahn has the answer, in 12-minute modules. And it’s here now, free. Here’s converting fractions into decimals. Here’s natural selection and the owl butterfly. Here’s the Fed funds rate. Here’s U.S. history from Jamestown in 1607 to the Civil War (in 18 minutes). There are more than 2,000 of these in all; knock yourself out. Yet think about it: if you can’t afford Tulane but have access to the Internet – and you did 20 videos a day (three to four hours worth) – you’d have done them all in a long summer. And still have time to make some money lifeguarding.
Would Warren Buffett Use Delta Bonus Miles To Buy FCSC? April 25, 2011March 24, 2017 FREE MILES: AMEX TO DELTA Transfer American Express Membership Rewards Points to a Delta Airlines Frequent Flyer account before June 30 and you will get a bonus of either 25% (under 100,000) or 40% (100,000 or more). So if you transfer 100,000 points you get 140,000 miles – 40,000 extra. I just transferred enough to fly me to the moon. Not literally, of course; whom do I know on the moon? But Delta’s partners currently include Aeroflot, Air France, Alitalia, Avianca, China Airlines, KLM, Korean Air, and Singapore Airlines, among others, so there are lots of places I could go. And Delta miles don’t expire, so I have time to decide. There is a small per mile fee, but it’s capped at $99, so if you were to transfer 200,000 miles – and if you figure they are worth a penny each (arguably, they are worth a lot more if you want to fly business class) – then the 80,000 mile bonus is worth $800, and $99 isn’t too bad. If this could be helpful to you, visit delta.com/servingupmiles. WARREN BUFFETT IN 1983 Fortune first ran this piece 28 years ago, and have trotted it out again this week to coincide with this year’s Berkshire Hathaway annual meeting. As I have lamented many times: if only I had invested the $1,500 they paid me to write it in a share or two of Berkshire Hathaway stock. ANOTHER SPECULATION I sure would have preferred to buy this one a few months ago, much cheaper, but – only with money I can truly afford to lose – I bought a few shares anyway: Guru: “The company is Fibrocell Sciences. On June 22, 2011, they should be getting FDA approval for a product that amounts to giving your own skin to you. They take a biopsy from behind your ear (where a tiny incision won’t be noticed and will grow back seamlessly), grow it for several weeks, then send it back to your doctor in an injectable form. The initial use will be aesthetic: filling in deep lines and wrinkles around the face and repair of acne scars. For wrinkles, it does not have quite the “filling” capacity of leading products such as Juvederm and Restylane (both made of a naturally occurring sugar molecule called hyaluronic acid), but those products get resorbed and must be replaced. Fibrocell gives you your own skin that grows and stays there – you might find you need more elsewhere, but not where it was injected originally. For acne, it’s really the only viable therapy. Laser treatments won’t fill in an acne scar. The cost will probably be about double Juvederm, but you’ll get a more natural look. . . . They went in front of an FDA Advisory Committee in 2009 that voted overwhelmingly in favor of efficacy, but felt there hadn’t been detailed follow-up of the implants to rule out the possibility (however remote) that the injection stimulated cancer formation. In 2010, the company undertook a study that did histology analysis after implantation at 3 and 6 months to look in detail at what happened to the cells. They reported earlier this year that nothing of note was found and they filed this data with the FDA. I don’t see anything that would impede an FDA approval on time. Longer term, they have a research agreement with UCLA to do gene therapy via skin and they have preliminary data in repairing injured vocal chords and in burns. . . . They have been raising money and will need to raise more. By the time of launch, they should have about 100 million shares outstanding. Rodman and Renshaw picked up coverage recently with a fair value of $3/share (stock now $1). I think some of their assumptions are aggressive, but say it’s worth $1.50 – still good upside from here.” ☞ Hey, every 50% helps.
Will AMRN Buy Me a $40 Million Mansion? April 21, 2011March 24, 2017 MANSIONS AND BRIDGES Which is better: (a) Build a $40 million mansion – which is a very nice thing for a rich person to have. (b) Build a $30 million mansion – still nice – and put $10 million into repairing a bridge that thousands of people use every day? That’s essentially the choice we make when we decide what the top tax bracket should be on income, dividends, and capital gains for the very wealthy. The Republican Party answers (a) while the Democratic Party answers (b). For all I know, you choose (a). I just don’t understand why. DON’T SELL YOUR AMRN? So we bought it March 25 at $7.10 – albeit only with money we could truly afford to lose, because they don’t all work out this way! – and at $17.10 three weeks later I was quoting Guru making the case for a target of $25 or more. (The stock closed last night at $16.20.) Yesterday, I posted John’s argument that people won’t take such big pills and that, in any event, fish oil is fish oil . . . followed by Guru’s I-thought-persuasive response. But I am privileged to have some very smart readers – you, for example – and one of them (Wedgewood Communications’ Scott Koppa) responded to that with his own long analysis, most of which soared so high above my head it didn’t even collide with all the other stuff whizzing by: AMRN is really just a marketing play. Hate to say it, but it is. (This is what I do for a living). In the long run — like when they actually go to sell this stuff — it will need a very strong marketing campaign to convince any doc there’s a difference here. And you’re going against Glaxo. So, problems with the marketing campaign: First and foremost, if you’re going to say that EPA alone is better than EPA/DHA, you better have a head to head study. And they’ll never do it, because there is a very real chance that the difference between the two products won’t be significant, especially when coupled with statins. If you look at the Lovaza data on their website, you’ll see the following in the (what would be comparable) statin combination study: [Here, he pastes Table 3, which makes no sense to me and wouldn’t format legibly on this page anyway, so I’ll spare you. Indeed, if I were you, I’d skip anything else that’s not bolded.] Now, you cannot compare PI to PI, so a sales rep can never say any of this. But look at the LDL-C line. The change is 0.7% with the combo. Not great, but not horrible. Note that the end of treatment (EOT) median was 88 mg/dL, which is below the current standard of 100 (that’s one hundred) for patients with a prior cardiac event or multiple risk factors for MI. I have attached a copy of the current guidelines FYI. I think you can see that these patients were comfortably below that level. I do want to read the study (which I have to find) to explain how the median EOT value is reduced below the baseline value while reporting a median % increase, but this is their label, and it’s what the docs will read. And, as a business guy who I’m sure has taken way more stats than me, I know you know that 0.05 is a barely significant difference. Frankly, clinically, it means nothing. I can’t stress that enough. Furthermore, in patients with really high triglycerides, the issue is raising HDL more than lowering LDL, as LDL will be lowered by the statin you’ll use (and they will use a statin). Crestor or Lipitor would do way better than these numbers. You can see, tho, that Lovaza significantly raised HDL above the level you’re getting from the statin, and simva is a pretty good statin for raising HDL. I saw nothing in the release about how the Amarin product affects HDL. This is important too. If you don’t improve HDL, and their HDL is low, the doc will likely combine statins with fibrates, like gemfibrozil (cheap generic) or Tricor. Those also reduce trigs dramatically and bump HDL (their side effect profile is more complex than fish oil, however, particularly when combined with statins, which is why these agents have a spot). But it is important to realize that it ain’t all about lowering LDL, particularly when the whole profile is considered (ie, trigs/chylomicrons, VLDL, IDL, HDL and total cholesterol). There’s more, but again, they will have to displace a standing product with data that won’t support a switch. So, pricing play? Duke it out with Glaxo or go to OTCs. Docs will run labs on their patients anyway, and I gotta tell you, 3 grams of EPA/DHA a day drops trigs like a stone. Prescription or no, combined product or single malt. Clinically, it simply won’t matter what you’re taking. It’s all marketing, man. Also, there’s a danger here. If you’re saying that EPA alone has a different pharmacologic effect than the combo of EPA/DHA, what effect does that have on all the beneficial ancillary effects of the oil, such as the antiinflammatory and anticoagulant effects? FDA might require that these be studied as well — phase III or if they’re lucky, a phase IV postmarketing study. That may be a Pandora’s box that they don’t want opened. FDA would likely require a head-to-head, and you wouldn’t want to run that trial as a noninferiority trial, which is what Amarin did here. It might show that both products were not significantly different for any of the primary or secondary endpoints to be studied. Then they’re second to market with a bigger debt burden and no niche to crawl to. Meanwhile, Lovaza just keeps selling as the only prescription product available. ☞ Guru responds . . . Lovaza was unable to get a “claim” for reduction of triglycerides in patients between 200 and 500. (You can go to the FDA website to see all the details.) The data led the FDA to determine that there was a statistically significant increase in LDL from Lovaza, so the FDA did not give them a “claim.” Without a “claim” on the label, Glaxo is unable to advertise Lovaza to patients between 200 and 500 or they risk a serious fine from the FDA. Glaxo also has a harder time get reimbursement. Amarin has SPAs from the FDA for patients greater than 500 and 200-500. They have satisfied the FDA parameters to be able to get a “claim” that they lower triglycerides in both groups without raising LDL. AMRN will be able to advertise that their product benefits patients between 200 and 500: Glaxo is unable to do so. AMRN will get a big corporate partner (Pfizer, Astra Zeneca, lots of possibilities). So ultimately, your reader is correct: it is all about marketing. AMRN will be able to market their drug as effective for all patients with elevated triglycerides, while Glaxo can market only for the small group of patients over 500. Those are the rules. ☞ So who is right? I asked Aristides’ Chris Brown to read both comments and make his own: Guru is right. That’s why I added to our position the other day. The indication is going to be broader than Lovaza. Your reader is also considerably right. My wife (who is an endocrinologist), would be more inclined to agree with the assessment that HDL-raising is hard to come by, whereas LDL-lowering can be fairly easily achieved with a statin, so given a choice of a drug that lowers TGs and raises HDL but raises LDL slightly (this is Lovaza) or a drug that lowers TGs and lowers LDL and has presumably no significant effect on HDL (AMRN), she would actually be inclined to choose Lovaza. Now, that’s a practice pattern from fellowship. It may or may not agree with the fine details of the guidelines (I suspect it probably doesn’t agree, but I’m not going to spend time looking something up to disagree with the Dr./Mrs. – I know better than that.) So, some physicians will prefer Lovaza. The indications will be broader for AMRN’s drug. The great thing about these drugs is that there’s a selling point for each one, so probably the class as a whole indeed expands, and a price war is unlikely. As an investment… Lovaza is on track for $1 bil in revenue. AMRN’s product is going to be more broadly indicated, and the class will grow. AMRN’s valuation is easily justified here. I agree with guru’s investment thesis. ☞ Please note that I’m not suggesting you buy AMRN at $16.20 – just that if you bought it last month at $7.10 you not necessarily rush to sell all of it.
Updates: AMRN, YMI, EMIS April 20, 2011March 24, 2017 But first a quiz. Alan S.: “I got 20 and Bob got 26 on this. Out of 30. I think I need a brush-up course (LOL).” ☞ I should say so! (Not that I’m competitive or anything.) And now . . . AMRN AGAIN John: “The research you quote says, ‘very solid effect sizes at both the 2g and 4g doses, which was even better than our “big fish in a big ocean” scenario.’ Well, 2 grams is approx 1/2 teaspoon MOL. That’s a large dose of anything. Getting people to take a full teaspoon of an oil-based medicine could be a neat trick. Those are considered ‘horse pills.’ Even 1000 mg fish oil caplets are only about 1/4 tsp. If a person were to take two or four fish oil caplets, one should expect an effect similar to AMRN, and unfortunately, a similar rate of patient compliance. Hey, if they succeed in business, I’m all for it. Based on their research, I’ll just start taking two caplets in the morning and two at night and see what happens.” Guru responds: “Most fish oils look like Lovaza (which looks to do $1 billion in sales this year) with significant amounts of DHA and EPA. But Lovaza has quite a different effect from Amarin’s drug: Lovaza raises LDL cholesterol (the bad cholesterol), whereas Amarin either does not raise it (2 mg) or lowers it (4 mg). People with high triglycerides would do better to lower their bad cholesterol than to raise it! So you can’t obtain these benefits just by taking over-the-counter fish oil. AMRN has patents on how to formulate the product so it is more than 96% EPA. They go out 15+ years. Thus, AMRN should have a strong franchise: the only drug that lowers triglyceride (for patients >500 and 200-500) AND lowers bad cholesterol. No one in the US will have that claim but them for a long time. Here is one site that shows about an even amount of EPA and DHA in one brand of fish oil caplet. Here is a site that shows the EPA and DHA content of Lovaza. You’ll see it is very similar to the fish oil caplet (and still on track to sell $1 billion), but remember that this combination of EPA and DHA caused INCREASED LDL.” YMI, EMIS UPDATES While we have Guru’s attention: YMI (suggested in December at $1.65, $2.96 last night). Guru writes: “The lead investigators at the Mayo clinic yesterday updated their results at their center from when they first reported them in December. They continue to see a 58% ‘anemia response’ which is very good and not seen with the leading candidate for MPF from INCY. Data from other centers encompassing an additional 80 patients will be presented at ASCO in June. So the story continues to play out. Price targets range from 4 to 6.” EMIS (suggested last August at $1.25, $1.52 last night). Guru: “Novartis announced on their first quarter call today that the second trial in osteoarthritis is still ongoing, but that the ‘strategy’ in osteoarthritis is ‘under review.’ In January, Novartis said they expected to file for approval in osteoarthritis this year, so the announcement today certainly indicates that they are less certain they will do so – but I suppose they haven’t decided one way or another. The problem is that the trials were designed to see if calcitonin could build cartilage and bone so that the spaces in the osteoarthritic joints got smaller (i.e. bones got bigger). In December, they announced that the European trial missed that “co-primary endpoint” but succeeded in demonstrating efficacy on the other ‘co-primary endpoints’ of pain and function. No details have been provided. I’m guessing the data for the US trial – which is ongoing, but should be out in the next several weeks – will look the same. If so, they have two trials that missed this ‘joint space’ endpoint, but showed efficacy on the other two endpoints. They ‘could’ get FDA approval in Europe on this data, but would probably have a hard time getting it in the US. . . . Meanwhile, what Novartis DID reaffirm today is that the osteoporosis trial (the one we’ve always believed in – we were always cautious on osteoarthritis) will be done in 3Q 2011 and they reaffirmed their plan to file for approval. A win on either of these should make the stock go much higher.” SKIN CELLS TO HEART CELLS Ryan Troseth: “I should have mentioned yesterday, the experiment was done with mice.” ☞ Ah. Well, mice, humans – we both like cheese, so this will probably work. Tamara Hendrickson: “I hadn’t seen the Nature Cell Biology paper Ryan highlighted. The really cool thing about heart cells is that they beat in sync with each other just like a natural human heart. I’ve now skimmed this paper, and, as Ryan noted, they were able to convert skin cells to inducible pluripotent stem cells, which they then converted to heart cells. I’ve watched one of their videos, where you see the cells beating – a cell colony (lots and lots of cells) on a solid support that contains media to help the cells stay alive. It blows my mind that they started out as skin cells!!!! Unfortunately, you need a subscription to the Nature journals to see the video (or you can buy a copy for $32).”
Thomas Jefferson Also Said . . . (But first a few words about AMRN) April 19, 2011March 24, 2017 In this space three weeks ago: AMRN – about $7.10 a share. “Data could be out in April,” Guru writes, “but for sure second quarter. I’ve checked all the studies and there is a remarkable consistency: its product lowers triglycerides, especially in conjunction with statins, and it lowers LDL (the bad cholesterol). If this trial doesn’t work, it will be the first time. The beauty is that even if it doesn’t work, the stock is still worth comfortably more than 7. I hate to say ‘can’t lose’ because there always seems to be some way, but this looks as close to a can’t lose as I’ve seen since, say, INCY.” ⒀ INCY brought us a triple. “Can’t lose” always scares me. Even so, how could I resist? The stock closed at $17.10 last night, up 140% in three weeks. Proving yet again that Guru is often, albeit not always, right. His current view: “AMRN met all endpoints. Leerink Swann’s analyst thinks fair value under this scenario is 25. (‘Bottom line: The ANCHOR study of AMR101 in patients with mixed dislipidemia met all primary and secondary endpoints with very solid effect sizes at both the 2g and 4g doses, which was even better than our “big fish in a big ocean” scenario. We reiterate our Outperform rating and raise our 12-month fair value estimate to $25 from $15. This appraisal does not include an M&A premium which we believe could provide significant additional upside.’) Seems like an obvious candidate to be bought out, since Glaxo bought the competing company, Reliant, for $1.7 billion in order to market Lovaza (on track for about $1 billion in sales) and AMRN’s product will now become the first product that lowers triglycerides and lowers LDL cholesterol in patients at all levels of triglyceride (above 500 and 200-500). It could/should reach the high teens/20s in the next few days. We are buying more today [at $14.73].” ☞ I sure didn’t buy more yesterday – but I didn’t sell, either. I put in a good-til-canceled order to sell some shares I hold in in my tax-deferred retirement account at $18-and-change. John Leeds: “Shortly before Guru recommended this stock, I kept seeing a ‘FISHGURU’ NY license plate on the pier here, where the Spring Hudson River estuary fishing season is well under way. I’d always think of the investing Guru and wonder what, if any, was the connection. Now it seems prescient as AMRN is fish oil. Of course, humans are good at creating patterns where none exist – such as lower taxes for the rich mean a booming economy and everything will just trickle down to the little guy. Send my thanks to Guru. I owe him a buckskin pouch to hold his hoard of gold. The offer is sincere, and the buckskin is made by me (usually from roadkills, though not always.)” Ryan Troseth: “I really appreciate your Guru updates, advice that little guys normally couldn’t afford. I took some time to analyze his picks over time and found that he has a great success ratio. I feel pretty comfortable jumping in when I see his recommendation (only with play money) and today had fun watching Amarin go through the roof. . . . Separately, I’ve picked up on your interest in stem cell research and the great benefits that we hope develop from it. I wanted to send you some news that comes out of one of the labs I work with at the Scripps Research Institute in La Jolla, California. As you probably know, Californians voted in 2004 to approve $3 billion for stem cell research. Recently, the professor I work for was able do something pretty amazing: In 11 days he turned regular skin cells into heart cells, which were actually beating! This research isn’t completely new, however the speed in which the cells were transformed is a great improvement. Here’s a link if you are interested.” THOMAS JEFFERSON ALSO SAID . . . Russell Turpin: “Yes, Jefferson wanted the industrious to enjoy the rewards of their efforts, and objected to the leveling of that. But he also worried about excess concentration of wealth. While observing France in 1785, he wrote the following in a letter to Madison: The property of this country is absolutely concentered in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics, not labouring. They employ also a great number of manufacturers, and tradesmen, and lastly the class of labouring husbandmen. But after all these comes the most numerous of all the classes, that is, the poor who cannot find work. I asked myself what could be the reason that so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are kept idle mostly for the sake of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be laboured. I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. “Note the direct call for a progressive income tax! The full letter is here. The modern right-wing wants our founders to be as ideologically minded as they themselves are. They do not realize that the great past thinkers they pretend to admire looked at questions from multiple angles and held in mind the tensions of conflicting goals, without succumbing to the naive notion that there is one right answer, to be scried from what was handed down on high.” ☞ Amen, Russell – whose own blog can be found here.
Thomas Jefferson On Taxes and Wealth April 18, 2011March 24, 2017 BRAVE NEW WORLD Nothing immediate, but I’m tellin’ ya . . . if we don’t screw it up, these next few decades are going to be amazing. Latest example: “Solar Power Without Solar Cells: A Hidden Magnetic Effect of Light Could Make It Possible.” DC HAS NO REPRESENTATION? Lyn B: “You’re slipping, Andy. Democrat Eleanor Holmes Norton represents D.C. in Congress, as probably hundreds of others have told you by now. I’m sure you meant that they don’t have representation in the Senate. In light of all of the pressures related to tax day that we are all feeling, I’ll let it slide this time.” ☞ LOL. Well, the only thing is, the Rep. Holmes Norton has no vote in Congress. In that sense, it surely is taxation without representation. By the way, today IS tax day – don’t forget to file Form 4868 for an extension, if you need one, and Form 1040-ES for your first 2011 quarterly estimated tax payment if you’ve had appreciable taxable income this year on which no tax was withheld. TAX ME MORE Steve: “Found this quote and thought of you and quite a few of my other liberal friends. ‘To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.’ – Thomas Jefferson.” Thanks, Steve. We all admire Thomas Jefferson. I paid $5,000 for a Thomas Jefferson letter (penned December 1, 1803, to a Doctor Eustis, thanking him for a fish). Still and all, is it your view that everyone should pay the same amount of tax? And that those who can’t should be eliminated somehow? If not, then it’s just a question of balance, fairness, and empirical common sense. The Clinton-era Nineties worked a lot better for us, prosperity-wise, than the decades that preceded or followed. No? But wait: I’m not being fair to you (or Jefferson). And you are perhaps not being fair to your liberal friends. I think we can actually all agree with Jefferson here: It would be a bad idea to tax a billionaire more than a janitor because “it is thought his own industry and that of his fathers has acquired too much.” If that were the reason we did it, it would be a bad reason! But the rationale for the progressive income tax – and for taxing the dividends and interest that wealth generates – is not that the best-off have “acquired too much.” Rather, it’s that they are best able to afford the sacrifice. We can applaud the billionaire’s wealth as well-earned and the outsized contribution he makes, through his taxes, to the common good. And by the way? Not all wealth is acquired through admirable industry and skill. Not every billionaire is a Steve Jobs. Jefferson’s and his father’s wealth was acquired largely through the industry and skill of their slaves. The wealth of many others, certainly including lottery winners, is acquired through pure luck. And of still others, through cheating and stealing, much of it technically legal. So I think quotes like this don’t get us very far. We have practical problems to solve different from those of the Eighteenth Century; they require resources; we need to find fair effective ways to come up with the resources. Taxing billionaires at a lower effective rate than their groundskeepers doesn’t strike me as fair or effective.
You Know What Today Is? April 15, 2011March 24, 2017 NOT TAX DAY . . . . . . because it’s Emancipation Day in the District of Columbia, and – though the taxpayers there are denied representation in Congress – their holiday is honored by the IRS. Monday your taxes are due. If you can’t complete your return by Monday, file Form 4868 for an extension. Monday is also the day your first 2011 quarterly estimated tax payment is due, if you have had appreciable taxable income this year on which no tax was withheld. That’s Form 1040-ES. TOGETHER FOREVER Steve Baker: “Thought you might be interested in this story from the Toronto Star about a couple celebrating their 50th year together.” (“In a life rich with famous friends and dazzling diamonds, Toronto socialites Alan Hanlon and Andy Body have one priceless treasure — each other.”) ☞ When the time comes, they want their cremains to rest in side-by-side stainless steel martini shakers. These two items are related because if you’ve been together for 50 years – or even just 50 days – and you’re legally married in Iowa or Massachusetts (say) and you’re gay, then you have three more days to decide . . . IS IT OK TO LIE TO THE IRS? IS IT MANDATORY? The federal government does not yet recognize your marriage – must you lie on your Federal Form 1040 (under penalty of perjury) and say you are single? As a practical matter, I’d say not: The IRS is not likely to come after you for telling the truth. But you can learn more of the pros and cons, if you’re curious about them, on the Refuse to Lie site and from this excellent New York Times report. AND SPEAKING OF MARRIAGE Did you see that the right-winger who organized last summer’s national bus tour against same-sex marriage – who actually drove the bus – has changed his mind? On his tour, he wound up actually meeting the gays who were following his bus in protest. Once he came to see them as nice people like him with the same kinds of hopes and fears as anyone else, he decided they should have the same rights and respect as anyone else. Go figure. FINALLY Might criminal prosecutions be looming for some of the folks who were involved in the housing bubble and Wall Street’s collapse? Goldman Sachs (and others) in the hot seat? Hats off to Senator Carl Levin for pursuing this. If no one did anything wrong, no one should be prosecuted. But it’s high time we took a look. Have a great weekend.
A Responsible Way Forward And a DCTH Surprise April 14, 2011March 24, 2017 OUR ECONOMIC FUTURE Music to my ears. Read it below, or watch it here. THE PRESIDENT: Thank you very much. (Applause.) Please have a seat. Please have a seat, everyone. It is wonderful to be back at GW. . . . I’m grateful for all of you taking the time to attend. What we’ve been debating here in Washington over the last few weeks will affect the lives of the students here and families all across America in potentially profound ways. This debate over budgets and deficits is about more than just numbers on a page; it’s about more than just cutting and spending. It’s about the kind of future that we want. It’s about the kind of country that we believe in. And that’s what I want to spend some time talking about today. From our first days as a nation, we have put our faith in free markets and free enterprise as the engine of America’s wealth and prosperity. More than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government. But there’s always been another thread running through our history -– a belief that we’re all connected, and that there are some things we can only do together, as a nation. We believe, in the words of our first Republican President, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves. And so we’ve built a strong military to keep us secure, and public schools and universities to educate our citizens. We’ve laid down railroads and highways to facilitate travel and commerce. We’ve supported the work of scientists and researchers whose discoveries have saved lives, unleashed repeated technological revolutions, and led to countless new jobs and entire new industries. Each of us has benefitted from these investments, and we’re a more prosperous country as a result. Part of this American belief that we’re all connected also expresses itself in a conviction that each one of us deserves some basic measure of security and dignity. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff may strike any one of us. “There but for the grace of God go I,” we say to ourselves. And so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, those with disabilities. We’re a better country because of these commitments. I’ll go further. We would not be a great country without those commitments. Now, for much of the last century, our nation found a way to afford these investments and priorities with the taxes paid by its citizens. As a country that values fairness, wealthier individuals have traditionally borne a greater share of this burden than the middle class or those less fortunate. Everybody pays, but the wealthier have borne a little more. This is not because we begrudge those who’ve done well -– we rightly celebrate their success. Instead, it’s a basic reflection of our belief that those who’ve benefited most from our way of life can afford to give back a little bit more. Moreover, this belief hasn’t hindered the success of those at the top of the income scale. They continue to do better and better with each passing year. Now, at certain times -– particularly during war or recession -– our nation has had to borrow money to pay for some of our priorities. And as most families understand, a little credit card debt isn’t going to hurt if it’s temporary. But as far back as the 1980s, America started amassing debt at more alarming levels, and our leaders began to realize that a larger challenge was on the horizon. They knew that eventually, the Baby Boom generation would retire, which meant a much bigger portion of our citizens would be relying on programs like Medicare, Social Security, and possibly Medicaid. Like parents with young children who know they have to start saving for the college years, America had to start borrowing less and saving more to prepare for the retirement of an entire generation. To meet this challenge, our leaders came together three times during the 1990s to reduce our nation’s deficit — three times. They forged historic agreements that required tough decisions made by the first President Bush, then made by President Clinton, by Democratic Congresses and by a Republican Congress. All three agreements asked for shared responsibility and shared sacrifice. But they largely protected the middle class; they largely protected our commitment to seniors; they protected our key investments in our future. As a result of these bipartisan efforts, America’s finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt free, and we were prepared for the retirement of the Baby Boomers. But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program -– but we didn’t pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts -– tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade. To give you an idea of how much damage this caused to our nation’s checkbook, consider this: In the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years. But that’s not what happened. And so, by the time I took office, we once again found ourselves deeply in debt and unprepared for a Baby Boom retirement that is now starting to take place. When I took office, our projected deficit, annually, was more than $1 trillion. On top of that, we faced a terrible financial crisis and a recession that, like most recessions, led us to temporarily borrow even more. In this case, we took a series of emergency steps that saved millions of jobs, kept credit flowing, and provided working families extra money in their pocket. It was absolutely the right thing to do, but these steps were expensive, and added to our deficits in the short term. So that’s how our fiscal challenge was created. That’s how we got here. And now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s. We have to live within our means. We have to reduce our deficit, and we have to get back on a path that will allow us to pay down our debt. And we have to do it in a way that protects the recovery, protects the investments we need to grow, create jobs, and helps us win the future. Now, before I get into how we can achieve this goal, some of you, particularly the younger people here — you don’t qualify, Joe. (Laughter.) Some of you might be wondering, “Why is this so important? Why does this matter to me?” Well, here’s why. Even after our economy recovers, our government will still be on track to spend more money than it takes in throughout this decade and beyond. That means we’ll have to keep borrowing more from countries like China. That means more of your tax dollars each year will go towards paying off the interest on all the loans that we keep taking out. By the end of this decade, the interest that we owe on our debt could rise to nearly $1 trillion. Think about that. That’s the interest — just the interest payments. Then, as the Baby Boomers start to retire in greater numbers and health care costs continue to rise, the situation will get even worse. By 2025, the amount of taxes we currently pay will only be enough to finance our health care programs — Medicare and Medicaid — Social Security, and the interest we owe on our debt. That’s it. Every other national priority -– education, transportation, even our national security -– will have to be paid for with borrowed money. Now, ultimately, all this rising debt will cost us jobs and damage our economy. It will prevent us from making the investments we need to win the future. We won’t be able to afford good schools, new research, or the repair of roads -– all the things that create new jobs and businesses here in America. Businesses will be less likely to invest and open shop in a country that seems unwilling or unable to balance its books. And if our creditors start worrying that we may be unable to pay back our debts, that could drive up interest rates for everybody who borrows money -– making it harder for businesses to expand and hire, or families to take out a mortgage. Here’s the good news: That doesn’t have to be our future. That doesn’t have to be the country that we leave our children. We can solve this problem. We came together as Democrats and Republicans to meet this challenge before; we can do it again. But that starts by being honest about what’s causing our deficit. You see, most Americans tend to dislike government spending in the abstract, but like the stuff that it buys. Most of us, regardless of party affiliation, believe that we should have a strong military and a strong defense. Most Americans believe we should invest in education and medical research. Most Americans think we should protect commitments like Social Security and Medicare. And without even looking at a poll, my finely honed political instincts tell me that almost nobody believes they should be paying higher taxes. (Laughter.) So because all this spending is popular with both Republicans and Democrats alike, and because nobody wants to pay higher taxes, politicians are often eager to feed the impression that solving the problem is just a matter of eliminating waste and abuse. You’ll hear that phrase a lot. “We just need to eliminate waste and abuse.” The implication is that tackling the deficit issue won’t require tough choices. Or politicians suggest that we can somehow close our entire deficit by eliminating things like foreign aid, even though foreign aid makes up about 1 percent of our entire federal budget. So here’s the truth. Around two-thirds of our budget — two-thirds — is spent on Medicare, Medicaid, Social Security, and national security. Two-thirds. Programs like unemployment insurance, student loans, veterans’ benefits, and tax credits for working families take up another 20 percent. What’s left, after interest on the debt, is just 12 percent for everything else. That’s 12 percent for all of our national priorities — education, clean energy, medical research, transportation, our national parks, food safety, keeping our air and water clean — you name it — all of that accounts for 12 percent of our budget. Now, up till now, the debate here in Washington, the cuts proposed by a lot of folks in Washington, have focused exclusively on that 12 percent. But cuts to that 12 percent alone won’t solve the problem. So any serious plan to tackle our deficit will require us to put everything on the table, and take on excess spending wherever it exists in the budget. A serious plan doesn’t require us to balance our budget overnight –- in fact, economists think that with the economy just starting to grow again, we need a phased-in approach –- but it does require tough decisions and support from our leaders in both parties now. Above all, it will require us to choose a vision of the America we want to see five years, 10 years, 20 years down the road. Now, to their credit, one vision has been presented and championed by Republicans in the House of Representatives and embraced by several of their party’s presidential candidates. It’s a plan that aims to reduce our deficit by $4 trillion over the next 10 years, and one that addresses the challenge of Medicare and Medicaid in the years after that. These are both worthy goals. They’re worthy goals for us to achieve. But the way this plan achieves those goals would lead to a fundamentally different America than the one we’ve known certainly in my lifetime. In fact, I think it would be fundamentally different than what we’ve known throughout our history. A 70 percent cut in clean energy. A 25 percent cut in education. A 30 percent cut in transportation. Cuts in college Pell Grants that will grow to more than $1,000 per year. That’s the proposal. These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget. These aren’t the kinds of cuts that the Fiscal Commission proposed. These are the kinds of cuts that tell us we can’t afford the America that I believe in and I think you believe in. I believe it paints a vision of our future that is deeply pessimistic. It’s a vision that says if our roads crumble and our bridges collapse, we can’t afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we can’t afford to send them. Go to China and you’ll see businesses opening research labs and solar facilities. South Korean children are outpacing our kids in math and science. They’re scrambling to figure out how they put more money into education. Brazil is investing billions in new infrastructure and can run half their cars not on high-priced gasoline, but on biofuels. And yet, we are presented with a vision that says the American people, the United States of America -– the greatest nation on Earth -– can’t afford any of this. It’s a vision that says America can’t afford to keep the promise we’ve made to care for our seniors. It says that 10 years from now, if you’re a 65-year-old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today. It says instead of guaranteed health care, you will get a voucher. And if that voucher isn’t worth enough to buy the insurance that’s available in the open marketplace, well, tough luck -– you’re on your own. Put simply, it ends Medicare as we know it. It’s a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit. Who are these 50 million Americans? Many are somebody’s grandparents — may be one of yours — who wouldn’t be able to afford nursing home care without Medicaid. Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome. Some of these kids with disabilities are — the disabilities are so severe that they require 24-hour care. These are the Americans we’d be telling to fend for themselves. And worst of all, this is a vision that says even though Americans can’t afford to invest in education at current levels, or clean energy, even though we can’t afford to maintain our commitment on Medicare and Medicaid, we can somehow afford more than $1 trillion in new tax breaks for the wealthy. Think about that. In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That’s who needs to pay less taxes? They want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors each to pay $6,000 more in health costs. That’s not right. And it’s not going to happen as long as I’m President. (Applause.) This vision is less about reducing the deficit than it is about changing the basic social compact in America. Ronald Reagan’s own budget director said, there’s nothing “serious” or “courageous” about this plan. There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. And I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. That’s not a vision of the America I know. The America I know is generous and compassionate. It’s a land of opportunity and optimism. Yes, we take responsibility for ourselves, but we also take responsibility for each other; for the country we want and the future that we share. We’re a nation that built a railroad across a continent and brought light to communities shrouded in darkness. We sent a generation to college on the GI Bill and we saved millions of seniors from poverty with Social Security and Medicare. We have led the world in scientific research and technological breakthroughs that have transformed millions of lives. That’s who we are. This is the America that I know. We don’t have to choose between a future of spiraling debt and one where we forfeit our investment in our people and our country. To meet our fiscal challenge, we will need to make reforms. We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I’m President, we won’t. So today, I’m proposing a more balanced approach to achieve $4 trillion in deficit reduction over 12 years. It’s an approach that borrows from the recommendations of the bipartisan Fiscal Commission that I appointed last year, and it builds on the roughly $1 trillion in deficit reduction I already proposed in my 2012 budget. It’s an approach that puts every kind of spending on the table — but one that protects the middle class, our promise to seniors, and our investments in the future. The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week. That step alone will save us about $750 billion over 12 years. We will make the tough cuts necessary to achieve these savings, including in programs that I care deeply about, but I will not sacrifice the core investments that we need to grow and create jobs. We will invest in medical research. We will invest in clean energy technology. We will invest in new roads and airports and broadband access. We will invest in education. We will invest in job training. We will do what we need to do to compete, and we will win the future. The second step in our approach is to find additional savings in our defense budget. Now, as Commander-in-Chief, I have no greater responsibility than protecting our national security, and I will never accept cuts that compromise our ability to defend our homeland or America’s interests around the world. But as the Chairman of the Joint Chiefs, Admiral Mullen, has said, the greatest long-term threat to America’s national security is America’s debt. So just as we must find more savings in domestic programs, we must do the same in defense. And we can do that while still keeping ourselves safe. Over the last two years, Secretary Bob Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again. We need to not only eliminate waste and improve efficiency and effectiveness, but we’re going to have to conduct a fundamental review of America’s missions, capabilities, and our role in a changing world. I intend to work with Secretary Gates and the Joint Chiefs on this review, and I will make specific decisions about spending after it’s complete. The third step in our approach is to further reduce health care spending in our budget. Now, here, the difference with the House Republican plan could not be clearer. Their plan essentially lowers the government’s health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government’s health care bills by reducing the cost of health care itself. Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion. My approach would build on these reforms. We will reduce wasteful subsidies and erroneous payments. We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market. We will work with governors of both parties to demand more efficiency and accountability from Medicaid. We will change the way we pay for health care -– not by the procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results. And we will slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services that seniors need. Now, we believe the reforms we’ve proposed to strengthen Medicare and Medicaid will enable us to keep these commitments to our citizens while saving us $500 billion by 2023, and an additional $1 trillion in the decade after that. But if we’re wrong, and Medicare costs rise faster than we expect, then this approach will give the independent commission the authority to make additional savings by further improving Medicare. But let me be absolutely clear: I will preserve these health care programs as a promise we make to each other in this society. I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves. We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations. That includes, by the way, our commitment to Social Security. While Social Security is not the cause of our deficit, it faces real long-term challenges in a country that’s growing older. As I said in the State of the Union, both parties should work together now to strengthen Social Security for future generations. But we have to do it without putting at risk current retirees, or the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market. And it can be done. The fourth step in our approach is to reduce spending in the tax code, so-called tax expenditures. In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again. Beyond that, the tax code is also loaded up with spending on things like itemized deductions. And while I agree with the goals of many of these deductions, from homeownership to charitable giving, we can’t ignore the fact that they provide millionaires an average tax break of $75,000 but do nothing for the typical middle-class family that doesn’t itemize. So my budget calls for limiting itemized deductions for the wealthiest 2 percent of Americans — a reform that would reduce the deficit by $320 billion over 10 years. But to reduce the deficit, I believe we should go further. And that’s why I’m calling on Congress to reform our individual tax code so that it is fair and simple — so that the amount of taxes you pay isn’t determined by what kind of accountant you can afford. I believe reform should protect the middle class, promote economic growth, and build on the fiscal commission’s model of reducing tax expenditures so that there’s enough savings to both lower rates and lower the deficit. And as I called for in the State of the Union, we should reform our corporate tax code as well, to make our businesses and our economy more competitive. So this is my approach to reduce the deficit by $4 trillion over the next 12 years. It’s an approach that achieves about $2 trillion in spending cuts across the budget. It will lower our interest payments on the debt by $1 trillion. It calls for tax reform to cut about $1 trillion in tax expenditures — spending in the tax code. And it achieves these goals while protecting the middle class, protecting our commitment to seniors, and protecting our investments in the future. Now, in the coming years, if the recovery speeds up and our economy grows faster than our current projections, we can make even greater progress than I’ve pledged here. But just to hold Washington — and to hold me — accountable and make sure that the debt burden continues to decline, my plan includes a debt failsafe. If, by 2014, our debt is not projected to fall as a share of the economy -– if we haven’t hit our targets, if Congress has failed to act -– then my plan will require us to come together and make up the additional savings with more spending cuts and more spending reductions in the tax code. That should be an incentive for us to act boldly now, instead of kicking our problems further down the road. So this is our vision for America -– this is my vision for America — a vision where we live within our means while still investing in our future; where everyone makes sacrifices but no one bears all the burden; where we provide a basic measure of security for our citizens and we provide rising opportunity for our children. There will be those who vigorously disagree with my approach. I can guarantee that as well. (Laughter.) Some will argue we should not even consider ever — ever — raising taxes, even if only on the wealthiest Americans. It’s just an article of faith to them. I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. I don’t need another tax cut. Warren Buffett doesn’t need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare. Or by cutting kids from Head Start. Or by taking away college scholarships that I wouldn’t be here without and that some of you would not be here without. And here’s the thing: I believe that most wealthy Americans would agree with me. They want to give back to their country, a country that’s done so much for them. It’s just Washington hasn’t asked them to. Others will say that we shouldn’t even talk about cutting spending until the economy is fully recovered. These are mostly folks in my party. I’m sympathetic to this view — which is one of the reasons I supported the payroll tax cuts we passed in December. It’s also why we have to use a scalpel and not a machete to reduce the deficit, so that we can keep making the investments that create jobs. But doing nothing on the deficit is just not an option. Our debt has grown so large that we could do real damage to the economy if we don’t begin a process now to get our fiscal house in order. Finally, there are those who believe we shouldn’t make any reforms to Medicare, Medicaid, or Social Security, out of fear that any talk of change to these programs will immediately usher in the sort of steps that the House Republicans have proposed. And I understand those fears. But I guarantee that if we don’t make any changes at all, we won’t be able to keep our commitment to a retiring generation that will live longer and will face higher health care costs than those who came before. Indeed, to those in my own party, I say that if we truly believe in a progressive vision of our society, we have an obligation to prove that we can afford our commitments. If we believe the government can make a difference in people’s lives, we have the obligation to prove that it works -– by making government smarter, and leaner and more effective. Of course, there are those who simply say there’s no way we can come together at all and agree on a solution to this challenge. They’ll say the politics of this city are just too broken; the choices are just too hard; the parties are just too far apart. And after a few years on this job, I have some sympathy for this view. (Laughter.) But I also know that we’ve come together before and met big challenges. Ronald Reagan and Tip O’Neill came together to save Social Security for future generations. The first President Bush and a Democratic Congress came together to reduce the deficit. President Clinton and a Republican Congress battled each other ferociously, disagreed on just about everything, but they still found a way to balance the budget. And in the last few months, both parties have come together to pass historic tax relief and spending cuts. And I know there are Republicans and Democrats in Congress who want to see a balanced approach to deficit reduction. And even those Republicans I disagree with most strongly I believe are sincere about wanting to do right by their country. We may disagree on our visions, but I truly believe they want to do the right thing. So I believe we can, and must, come together again. This morning, I met with Democratic and Republican leaders in Congress to discuss the approach that I laid out today. And in early May, the Vice President will begin regular meetings with leaders in both parties with the aim of reaching a final agreement on a plan to reduce the deficit and get it done by the end of June. I don’t expect the details in any final agreement to look exactly like the approach I laid out today. This a democracy; that’s not how things work. I’m eager to hear other ideas from all ends of the political spectrum. And though I’m sure the criticism of what I’ve said here today will be fierce in some quarters, and my critique of the House Republican approach has been strong, Americans deserve and will demand that we all make an effort to bridge our differences and find common ground. This larger debate that we’re having — this larger debate about the size and the role of government — it has been with us since our founding days. And during moments of great challenge and change, like the one that we’re living through now, the debate gets sharper and it gets more vigorous. That’s not a bad thing. In fact, it’s a good thing. As a country that prizes both our individual freedom and our obligations to one another, this is one of the most important debates that we can have. But no matter what we argue, no matter where we stand, we’ve always held certain beliefs as Americans. We believe that in order to preserve our own freedoms and pursue our own happiness, we can’t just think about ourselves. We have to think about the country that made these liberties possible. We have to think about our fellow citizens with whom we share a community. And we have to think about what’s required to preserve the American Dream for future generations. This sense of responsibility — to each other and to our country — this isn’t a partisan feeling. It isn’t a Democratic or a Republican idea. It’s patriotism. The other day I received a letter from a man in Florida. He started off by telling me he didn’t vote for me and he hasn’t always agreed with me. But even though he’s worried about our economy and the state of our politics — here’s what he said — he said, “I still believe. I believe in that great country that my grandfather told me about. I believe that somewhere lost in this quagmire of petty bickering on every news station, the ‘American Dream’ is still alive…We need to use our dollars here rebuilding, refurbishing and restoring all that our ancestors struggled to create and maintain… We as a people must do this together, no matter the color of the state one comes from or the side of the aisle one might sit on.” “I still believe.” I still believe as well. And I know that if we can come together and uphold our responsibilities to one another and to this larger enterprise that is America, we will keep the dream of our founding alive — in our time; and we will pass it on to our children. We will pass on to our children a country that we believe in. Thank you. God bless you, and may God bless the United States of America. DCTH I’m hoping you missed yesterday’s column or failed to see it early. Because if – like me – you sold most of your DCTH on the weakness of Tuesday’s conference call, you would have missed the stock’s big jump at half past noon yesterday when European approval was announced. Frustrating! But we have to remember Guru has no inside information. He will not always be right. Which is why we must make these bets with money we can truly afford to lose. First suggested here 15 months ago at $5.37, it opened yesterday at $7.16 but closed at $8.80 in afterhours trading.