WASHINGTON - Did you see the story about Costco borrowing $3.5 billion to pay a special $7 a share dividend to its stockholders before year's end to avoid being hit by President Obama's higher tax on investors?
What makes this story especially juicy is that it reveals how Obama's fat cat supporters, who bankrolled his bid for a second term and embraced his proposed tax increases, have taken steps to shield themselves from the president's "tax the rich" fiscal folly.
The tax avoidance maneuver, which Forbes magazine calls "a six-year advance on the company's current annual dividend of $1.10 per share", will be a windfall for Costco's richest investors if the tax on their dividends is raised, as Obama has sought to do over the past four years.
One of the people who will benefit from this deal will be Costco's co-founder and former CEO Jim Sinegal who owns more than two million shares of its stock and will collect about $14.4 million from the special dividend. Had he taken that next year, he could be slapped with a tax rate of 43.4 percent if Obama's proposed tax increases become law (boosting the tax rate on dividends to over 20 percent and adding a surcharge tax on millionaires).
Instead, Costco decided to pay its stockholders before Dec. 18 so that the special payoff plus a regular quarterly cash dividend of 27.5 cents will be taxed at the current 15 percent rate under the investment tax cuts wisely enacted under President George W. Bush in 2003.
This means Sinegal, who gave a prime-time speech in behalf of Obama's re-election at this summer's Democratic national convention, would avoid paying about $4 million in higher taxes next year.
Costco is not alone in its early tax-avoidance payouts. Many American businesses, from Wynn Resorts to Tyson Foods, have also declared special dividends to avoid the higher tax rate if the Bush rates expire.
One of the most notable Fortune 500 companies to join the pack is the Washington Post who endorsed Obama for a second term and has warmly embraced his tax increase plans. The media conglomerate has announced it will pay its 2013 dividends "before the end of this year to try to spare investors from anticipated tax increases," reports the Associated Press.
Among those who stand to benefit from the Post's beat-the-tax-deadline -- and pocket a bundle of money -- will be stock tycoon Warren Buffet and his Berkshire Hathaway firm, the newspaper's biggest shareholder.
The Omaha billionaire owns an estimated 1.7 million shares in the Post that could yield him about $17 million. This gives new meaning to Obama's oft-repeated "Buffett rule" that he used in his past campaign to excoriate those who, like Buffett, paid income taxes of 15 percent because most of their income came from stock dividends.
Buffett, who supported Obama, also calls for raising the capital gains tax rate, though he's no doubt happy to get the Post's early tax avoidance Christmas gift.
The rush to escape higher taxes next year isn't confined to just the super-rich, either. In a front page story Tuesday, the Washington Post says investors overall "aren't waiting for a 'fiscal cliff' deal," but "shifting assets to limit effects of looming tax hikes" and "taking preemptive action to get out of harm's way."
"Americans are moving to sell investment homes, offload stocks, expand [tax deductible] charitable donations and establish tax-sheltering gifts before the end of the year," the Post said.
The spreading fear of higher taxes, especially on investors, comes in the midst of an increasingly weak economy: in declining economic growth that may have slowed to 1.5 percent in the fourth quarter, meager job creation that is not keeping pace with population growth, a dangerously shrinking work force, a growing trade deficit, Europe in a recession with double-digit unemployment, and the government on track for its fifth consecutive trillion dollar budget deficit in 2013.
The news media's ballyhooed treatment of last month's lower 7.7 percent unemployment rate belied the troubling numbers behind it.
The Obama economy produced a puny 146,000 jobs in November, far below what is needed to bring the jobless rate down to more normal levels anytime soon.
Last month's jobless rate decline was in large part due to 350,000 long-term unemployed people dropping out of the labor force, saying they were no longer actively looking for work. That meant they weren't counted as unemployed and thus the jobless rate fell. The number of Americans who told the U.S. Bureau of Labor Statistics they had a job actually shrank by 122,000.
If adult labor force participation were the same today as it was in October 2009 -- when unemployment was at it's peak -- "the unemployment rate would be 9.7 percent," said University of Maryland business economist Peter Morici.
Add in more than 8 million part-time workers who can't find full time jobs, and the real jobless rate is 14.4 percent, he said.
The job climate is so bad that BLS said it reduced its estimates of jobs created in September and October by a combined 49,000.
The front page headlines read "unemployment down to 7.7 percent," but the statistics behind that number pointed to a stagnant economy at best and one in decline at worst.
The only reporter taking a really close look at last week's jobs report was Chris Kirkham of the Huffington Post. And it's not a pretty picture.
The BLS jobs report "is masking a deeper truth: many of the jobs being created aren't the kind of high-paying ones needed to bolster an economic recovery," he writes.
"More than half of the jobs created last month were in lower-wage industries, such as retail and hospitality," he found. Better paying construction and manufacturing jobs saw no growth at all.
Obama has failed abysmally to spur faster, job-creating economic growth which is sorely in need of a booster shot from private capital markets -- the very investors he wants to tax into oblivion in 2013.