April 10, 2025 • 36 mins
The economic anxiety gripping America takes center stage as we explore mounting signs of a potential recession driven by escalating trade tensions. Market slides, Wall Street jitters, and economists' warnings paint a concerning picture as the S&P 500 falls into correction territory amid the implementation of sweeping tariffs targeting dozens of countries.
Through a comprehensive analysis, we break down the warning signs of economic downturn - from job market shifts to consumer spending patterns - while providing historical context about previous recessions and their lasting impacts. The comparison between today's housing affordability crisis and the Great Depression offers a particularly sobering reality check: it was actually easier to purchase a home during America's worst economic disaster than it is for today's middle class.
BlackRock CEO Larry Fink's observation that "nearly everyone" he speaks with expresses unprecedented economic anxiety aligns with America's plummeting position on global happiness rankings. Meanwhile, the Federal Reserve's data shows Americans' ability to raise emergency funds has hit record lows, highlighting the financial vulnerability many households face as recession risks grow.
Beyond just identifying problems, we outline practical strategies to protect your finances during uncertain economic times. Financial advisors recommend paying down high-interest debt, building emergency savings, and exploring low-volatility investments - while avoiding panic-driven financial decisions that could make your situation worse.
Wondering how to navigate these challenging economic waters? Subscribe to hear more analysis on developing economic trends and practical advice for maintaining financial stability regardless of what markets do next.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the Darrell McLean Show.
I'm your host, darrell McLean,episode 451.
We've been on a hiatus Notbecause I did not want to talk
to you, but because my laptopcrashed and I had to take it to
a facility to get surgery, andit's been getting surgery for a
(00:21):
while.
Is the US economy headedtowards a recession?
Here is a playbook of what tolook for the signs of a
recession, how they affect thepublic and how can you prepare
for one in case it comes.
Concerns are heightening.
(00:42):
The US economy is headedtowards a recession as stocks
markets slide amid Trump'sadministration's implementation
of tariffs.
President Donald Trump and hissenior advisors appeared
optimistic that an economic boomis on the horizon, even as
economists warn that thelikelihood of a recession is
(01:03):
being amplified by the WhiteHouse sweeping tariffs.
Trump has not taken thepossibility of a recession off
the table, telling Fox Newsanchor Maria Bromberg Romo that
he that the morning futures,that he hated predicting things
like that, and that was back onMarch, the 9th.
Wall Street, though, has beenworried.
(01:25):
The benchmark S&P 500 stockindex fell into correction
territory, defined as declining10% from a recent peak Well.
That was a week after atech-heavy NASDAQ composite
index did so.
The economic signs for recession.
What are they?
They, a recession is defined assix months of negative growth
(01:50):
in a nation's economy, so I'lltake some time before an
official recession is declaredby the national bureau of
economic research.
It takes time because which andthe National Bureau of Economic
Research is the officialarbiter of US recession the
(02:11):
group considers a number ofeconomic factors, including
what's happening in the jobmarket, are with people's
incomes, before making thedetermination that a country is
in recession.
But warning signs, which caninclude a surge in job losses,
stalling wages and consumerspending less, would probably be
(02:32):
evident beforehand.
Now, claudia Shahim, a chiefeconomist at New Century
Advisors, say the job market canbe an early indicator of a
looming recession.
The unemployment rate isn't thefirst thing to be affected, but
once it starts rising, it tendsto keep going.
So far, the labor market hasslowed slightly, but remains
(02:57):
strong, with the unemploymentrate at 4.1% At least, according
to the February jobs report.
However, most recent data didnot contain all of the impact of
Elon Musk's US doge servicesslashing the federal workforce.
Is the US headed for a recession?
Economists aren't certainwhether the United States is
headed for one, for a recession,but they are warning that the
(03:21):
risk is probably higher thanthey had previously thought, in
a large part because of theWhite House's new policies.
People are looking at tariffs,saying if we revisit the
economic history books, tariffshave been a great in terms that
there will be a recession,because it has not been great in
terms of personal growth.
(03:42):
Now that's coming from MicahShoemaker and he's the head of
macro strategy at Wells Fargo.
The probability of a recessionhas gone up and it has not given
or even 50%, but whether yourforecast was a few weeks ago,
it's definitely higher than 50%now.
Now Goldman Sachs raises 12months per seventh probability
(04:07):
from 15% to 20%, noting that itsaw policy changes as a key risk
.
The White House has the optionto pull back if the downside of
risk look more serious.
A Goldman Sachs economicforecast said If policy is
headed in the direction of ourrisk scenario or if the White
House remain committed to thesepolicies, even in the face of
(04:30):
much worse data, recessions riskwould rise further.
The JP Morgan analysis said thatTrump's frequent changes to
trade policy make forecastinggrowth and inflation this year
an especially fraught exercise.
When was the US's lastrecession and how long did it
(04:53):
last?
The average modern dayrecession has lasted 11 months.
According to data from the MBER.
The last US recession, whichwas also the shortest in US
history, was the economicdownturn of March of April of
2020, during the coronaviruspandemic.
(05:14):
It was not declared a recessionby the NBER until July of 2021.
Now, before that, it wasactually the Great Recession of
2007 to 2009,.
And that lasted for 18 months.
It is considered to be theworst economic disaster since
(05:35):
the Great Depression.
Of course, we have to ask cantariffs cause a recession?
Because that's what's going onnow.
So Trump's proposed tariffscould have a big impact on the
economy, depending on theduration and any potential
retaliation from tradingpartners.
According to economists fromBNP Paribas, in the event of an
(06:00):
uncontrolled tit-for-tat tradewar, a sharp decline in business
sentiment is possible.
If large enough, could berecessionary.
Now BNP wrote in a market 360analysis.
Bnp Paribas warned that thelarger tariff, the greater the
(06:20):
economic costs it will have.
The greater the economic costsit will have.
The impact, it said, willprobably be felt by the average
of US consumers.
The last tariffs are expectedto cost the typical American
(06:43):
household more than $1,200 ayear, according to the Peterson
Institute for Internationaleconomics.
Even if tariffs are temporary,simply leveraging them as a
negotiating tool will causeuncertainty to businesses and
firms hiring or investmentdecisions.
How do the recessions affect thepublic?
Recessions typically correlatewith the expansive job losses
(07:04):
which spark financial problemsthat can lead to evictions or
foreclosures.
The contracted job markets of arecession also hurt those who
keep their jobs, making itharder to find a new job or get
a raise.
Recession often feel theycannot afford to be choosy about
(07:28):
employment and will accept lowstarting pay that can set back
their earnings for years to come.
At the end of the day,recessions are bad because
people suffer financially, saidSham, and this was being told to
the Washington Post back in2022.
They're a big hit and theyhappen to touch everyone.
Why and what should you do toprotect your finances before
(07:53):
recession?
Now, economics and financialadvisors say that the prudent
move is often to tighten yourpurse strings to save money, but
they also warn that doing socan actually hasten a recession
because it takes money out ofthe economy.
When they're not spending,they're not creating income for
(08:15):
other people, george WashingtonUniversity economic professor,
tara Sinclair, said back in 2022.
Michael Signatary, the Post'spersonal finance columnist,
offered seven tips to preparefor a recession back in 2022.
Michael Signatary, the Post'spersonal finance columnist,
offered seven tips to preparefor a recession back in 2022.
Among them pay off credit carddebt, build up your savings,
look at low volatility optionssuch as bonds, and don't panic.
(08:39):
What you shouldn't do is makemoves based on fear that can put
you in a worse positionfinancially.
She wrote.
So a lot of trade talk going on,trump.
Obviously we're in the midst ofa trade war with several
countries, one of the biggestthat I remember seeing in a long
(09:01):
time the United States versus192 other countries.
So obviously people panicked alot when the stock market
started to go down, becausethat's the first effect.
You see, it seems like Trumppanicked when the bond market
started to go down, because thebond market is actually the boss
(09:25):
of the markets.
So now we know, or at least wehave answered some of the
questions Is the US economyheaded towards a recession, what
to look for over the next fewmonths or so, and what to do to
prepare yourself to be safe?
Let's get some quick headlines.
(09:46):
So On April 9, 2025, theescalating trade war between the
US and China reached a new peakas China announced retalitat
measures, with Trump's tariffsalso targeting 60 other
(10:14):
countries deemed worst offendersin trade practices, including
Japan, south Korea and Cambodia,with tariffs ranging up to 49%.
The US tariffs aim to addresstrade imbalances, but they've
sparked global economic concerns.
European and Asian markets sawsignificant declines, with
(10:42):
investors selling US governmentbonds traditionallya safe haven,
leading to a spike in USborrowing rates.
Brent crude oil prices droppedbelow $60 a barrel, the lowest
since February 2021, potentiallyaffecting the fuel and supply
costs worldwide.
(11:02):
A new study has actually comeout and it shows that and this
is a study that shows that umeliminating processed food from
the children's diet reduces adhdsymptoms by 53 percent.
A study published in the lancetfound that the dietary
(11:24):
intervention, specificallyremoving proposed processed
foods, addict and artificialcoloring, significantly reduced
attention deficit hyperactivitydisorders, so ADHD, in children.
Researchers observed improvedbehavior of birthless,
supporting the growing linkbetween diet and mental health
(11:48):
in young individuals.
In young individuals, themedian annual pay during the
Great Depression was 32% of thecost of the average home.
Today it's 19%.
That means that pay relativelyto home costs made it easier to
buy a home during the GreatDepression than it is right now.
(12:11):
Let that sink in than it isright now.
Let that sink.
In United States, households arerunning out of emergency funds.
It's becoming harder forAmericans to raise funds in case
of an emergency.
According to the New YorkFederal Reserve Survey of
Consumer Expectations, theaverage likelihood of Americans
being able to come up with$2,000 within a month if an
(12:33):
unexpected need arose hit 62.7%in February.
That's the lowest level sincethat survey began tracking the
data point in October of 2015.
The United States has neverbeen more unhappy.
A new report finds Finland wasnamed the happiest country in
(12:57):
the world for the eight years ina row, according to the World
Happiness Report in 2025,published on Thursday.
When it comes to decreasinghappiness and growing
unhappiness, the United Stateshas dropped to its lowest ever
position, at 24, havingpreviously peaked at 11 place in
(13:17):
2012.
Black Rocks CEO Larry Fink saysalmost everyone he talks to is
more anxious about the economythan any time in recent memory.
Everyone keeps telling the CEOof the world's largest asset
manager how they're worriedabout the United States economy.
I hear from nearly every client, nearly every leader, nearly
(13:40):
every person I talk to.
Blackrock CEO Larry Fink wrotein an AOL letter on Monday
they're more anxious about theeconomy than any time in recent
memory.
Flink's comments came outMonday when the stocks market
slipped as soon as it opened andinvestors feared impending
tariffs could further hurt theUnited States economy.
Like when they wanted toprivatize the British railroads,
(14:03):
the technique was defund themand then, when they don't work,
people get angry and say let'sdo something.
Speaker 2 (14:09):
So you hand it over to private enterprise, which
totally ruins them, and then thestate has to come back in at
big cost and try to reconstructit somehow.
It's known as privatization,and that's exactly what's
happening with Social Security.
It's in good shape.
Now, when you read in thenewspapers as you do, that the
big problem of the deficit isentitlements and Social Security
, medicare, medicaid, socialSecurity is a zero problem.
(14:33):
For one thing, it doesn't addanything to the deficit because
people pay for it, and foranother thing, it's in pretty
good shape.
Certainly, the last of thefamous baby boomers will be gone
before there's any problem init.
That's why there's a bigpayroll tax increase 30 years
ago to ensure that.
But if it's defunded it'll be aproblem.
(14:53):
Then there'll be pressure toprivatize it.
That's a huge bonanza for thefinancial institutions.
They'll put trillions ofdollars into their hands which
they can then use to make a tonof money with risky investments
which are therefore veryprofitable.
And when it tanks, as it will,when the economy tanks, there's
a technique you pick up yourcopies of Milton Friedman and
(15:15):
Hayek and Ayn Rand and you runto the nanny state that you've
nurtured and you make sure thatthey bail you out.
That's really existingcapitalism and it means that the
scam can go on.
Speaker 3 (15:27):
We didn't give a hoot about democracy.
I mean, it was fine if agovernment was elected and would
cooperate with us, but if itdidn't, then democracy didn't
mean a thing to us and I don'tthink it means a thing today.
The true goal of the UnitedStates government is control,
(15:48):
and they feel that if the UnitedStates did not control the
governments of Latin Americathen somebody else would.
And the principle of governmentby the people, for the people,
other people, that is just silly.
Speaker 4 (16:04):
300 million stores are packed with Japanese
products.
The Japanese seem to controlelectronics, but today the
Reagan administration slapped ahuge tariff on $300 million
worth of Japanese goods On thelist color TV sets, laptop
computers, power tools andcalculators.
This tariff is 100%.
(16:25):
That means a TV that cost astore, say $300, will now cost
$600.
Speaker 3 (16:31):
I think it's firing a shot over the bottle, and then
we'll see how they react to it.
Speaker 4 (16:34):
The US General Accounting Office reported
yesterday, the Japanese violatedan agreement they signed with
our government last year.
They're dumping microchips atprices below cost and that's
hurting American producers.
Because of that, Reagan imposedthe tariff.
Speaker 3 (16:49):
Consumers are going to be paying a lot more money
for these goods, and I wouldexpect that to happen
immediately.
Speaker 4 (16:54):
But Highland expects little, or?
Speaker 3 (16:56):
no effect.
A lot of major brands are madeare Japanese companies, but
they're manufactured in theUnited States.
Speaker 4 (17:04):
And those products will not be affected.
The tariffs affect less thanone-half of one percent of all
the goods Japan sends to thiscountry.
According to Senator Benson,the tariff is little and it's
late, but he hopes it sends amessage that this time this
country will visit.
Speaker 1 (17:19):
Superstores are packed.
So when this happened in 1987,the US slapped the 100% tariff
on Japan goods and it actuallycaused a crash.
Six months later, the stockmarket crashed on what has been
(17:39):
called Black Monday, and it wasarguably the worst crash in
history.
Now, when it comes to some ofthe market news sorry about that
Warren Buffett's the Oraclefrom Omaha Nance Burr is up so
far in 2025.
(18:01):
The worst of the world's top 15wealthiest people have all lost
money.
So Trump's terroristannouncements sparked global
sell-off, leading to losses formany investors across the world.
The world's richest people sawtens of billions of dollars
(18:22):
wiped from their net worths in amatter of days.
One notable exception wasBerkshire Hathaway CEO, warren
Buffett, whose net worth hasgrown by $11.5 billion since the
start of 2025, according to theBloomberg Billionaires Index.
Buffett is currently ranked asthe world's fourth wealthiest
(18:44):
person by Bloomberg, with a networth of $154 billion from the
six wealthiest on Monday.
Of the top 18 individuals onthe list, the investing icon is
the only one who's estimatingpersonal wealth has grown this
year as of Tuesday morning.
(19:06):
So if you want to see how manyother notable names on the list
have lost and find out howBuffett is defying.
You can go to Bloombergcom andcheck it out.
Historically, the most terriblethings war, genocide and
(19:28):
slavery have resulted fromdisobedience, no, but from
obedience.
Speaker 2 (19:43):
This quote comes from the World War II veteran, the
college professor, the lateHoward Zinn.
I'm worth over a hundredbillion dollars and a very
significant portion of my wealthwas made from owning Coca-Cola
stock.
We own roughly 400 millionshares and that yields Berkshire
a little less than a billiondollars a year in dividends.
Now you probably wouldn'tbelieve it, but Coca-Cola's
first year in business they onlysold about 25 bottles.
(20:06):
That should be a testament toanyone here listening that
business is a marathon, not asprint.
Success takes time, persistenceand continuous effort.
Just because you don't seeimmediate results doesn't mean
you're not on the right path.
Keep pushing forward.
Speaker 1 (20:22):
So that's from the Oracle, from Omaha, warren
Buffett, richest Americans, bigbusiness, might welcome some IRS
cuts.
Speaker 5 (20:33):
This news story was written by Shannon Najmabadi.
Richest Americans bigbusinesses might welcome IRS
cuts.
Officials say About 7% of itsworkers have been let go and
more cuts are expected.
The Internal Revenue Service'sburgeoning efforts to more
closely inspect the taxes ofsome of the country's richest
people and most powerfulcompanies are stalling because
of layoffs imposed by the Trumpadministration.
(20:54):
Current and former IRSemployees say the IRS terminated
about 7% of its roughly 100000-person workforce in February
, including at least 5,000 inthe enforcement and collections
divisions.
More layoffs are expected,which would slice staff by
almost 20%, according toinstructions from the US Doge
Service.
Meanwhile, tax investigatorsworking on drugs and criminal
(21:16):
syndicates may be reassigned tohelp the Department of Homeland
Security.
Current and former employeesdon't know who will take on
pending audits amid these staffcuts, but some say one
demographic stands to benefitthe wealthy 100 percent, said
Anthony Kim, a longtime IRSattorney now in private practice
.
It's a sharp turnaround from2022, when Congress gave the IRS
$80 billion over a decade underthe Inflation Reduction Act,
(21:39):
including funds to beef up itsauditing of the wealthiest
Americans.
The agency hired new employeesand bulked up units trained to
detangle some of the mostcomplicated corporate returns,
which can run hundreds orthousands of pages.
It's not clear how many laidoff employees were specifically
auditing big businesses, but taxexperts say the cuts undermine
the agency's much touted effortto crack down on wealthier
Americans, who for years havefaced slimmer and slimmer odds
(22:01):
of being audited and generallyhave more resources to respond
than middle and low incometaxpayers.
We do get outgunned, there isno other way to say it.
Former IRS commissioner CharlesReddick said in congressional
testimony in 2021,.
Others say it's like havingshovels and digging holes, said
IRS agent David Caron, who leadsthe local Treasury Employees
(22:22):
Union in Arkansas and Louisiana.
You have less people to dig theholes now, so there's only so
much the remaining people candig.
Critics of the agency, however,say the IRS has a culture of
conducting fishing expeditionsthat hit households or small
businesses, or point to watchdogreports that have questioned
IRS expenditures and its abilityto stay focused on high-income
filers.
Are taxpayers supposed to trustthe repeatedly broken assertion
(22:44):
that the IRS is only puttingthe screws to Scrooge McDuck and
Rich Uncle Pennybags, said JohnKarch with anti-tax group
Americans for Tax Reform.
The loss of probationaryemployees, some of whom have
specialized experience invaluation, engineering or
corporate tax law, comes amid abroader shakeup at the agency
that has destabilized day-to-dayoperations.
According to interviews withmore than a dozen current and
(23:06):
former employees, overnighttravel has been suspended,
limiting revenue agents' abilityto conduct in-person
examinations or locate documentsfor audits.
According to seven employees,employees have been told not to
open new business cases.
Four employees said Some bigbusiness cases have already been
closed.
According to a senior managerwho said he has spent the last
two years hiring employees fromthe private sector and a
(23:26):
transformation and strategyoffice that oversaw new agency
initiatives, those funded withthe $80 billion appropriation
was recently disbanded.
According to a former agencyofficial In West Virginia, four
of the state's nine revenueagents were laid off in February
, said Matt Kirk, a revenueagent and another union chapter
leader.
He estimated the laid-offemployees had about 40 cases
between them each, looking atpeople making $400,000 or more.
(23:49):
With those losses, we don'thave the manpower to absorb that
volume of cases, kirk said.
White House spokeswoman LizHouston said that Trump is
focused on saving tax dollars,eliminating bloat and increasing
the agency's efficiency, incontrast to President Joe
Biden's wildly unpopular plan tohire thousands of additional
IRS agents.
Calling the premise of thisstory incorrect, a Treasury
(24:10):
Department spokesperson said theagency is considering major
investments in modernization tomore accurately target suspected
tax evaders and is working onother initiatives to improve
compliance and taxpayer customerservice and to ensure a smooth
filing season.
However, no plan has beenapproved yet.
The spokesperson saidRepublican pushback.
Conservatives have longtargeted the IRS, arguing a more
muscular tax agency wouldharass middle-class Americans.
(24:32):
Trump's nominee to lead theagency, billy Long, has
supported abolishing the IRS.
Republican lawmakers have usedthose arguments to justify cuts
and so far have rescinded orfrozen half of the $80 billion
the agency was allocated.
Some former officials saylayoffs don't mean audits of
wealthy Americans have to godown.
The agency, for example, couldretrain and reassign agents who
(24:53):
look at small businesses to keepscrutinizing the highest income
earners, said David Cotter, whowas acting IRS commissioner
during part of President DonaldTrump's first term.
As long as they've got auditorsavailable, they've got choices
to make, he said.
Others say the cuts will have amore limited effect, given that
some employees were stilltraining and not carrying full
caseloads, or that the layoffsforced the IRS to rethink its
operations or rely more ontechnology.
(25:14):
Proponents of more IRS funding,however, say the agency offers
a solid return on investment,making layoffs there
counterproductive.
Each dollar the IRS spendstracking down unpaid tax dollars
from the wealthiest 10%generally brings in $12 or more,
according to one NationalBureau of Economic Research
study.
If you're concerned about thedeficit, then the last thing in
the world you want to do ishamstring your revenue agents
(25:36):
and your revenue arm, said JohnKoskinen, irs commissioner under
President Barack Obama.
How much tax revenue goesuncollected is the subject of
wide-ranging estimates runningfrom about $500 million to $1
trillion each year.
Audits conducted by the IRS'slarge business division, which
handles some of the agency'smost sophisticated tax matters,
can recover many millions ofdollars, said Reddick, who was
(25:57):
IRS Commissioner from 2018 to2022.
It would not be unusual, hesaid, for such a case to involve
a disputed issue in the rangeof more than $500 million.
One new employee, WesleyStanovsek, had three open cases
when he was laid off from an IRSglobal high wealth division
that was beefed up after the2022 funding became available.
Two of the cases involvedenterprises with more than one
(26:19):
tax filer, he said.
He estimates about 20 employees, of whom 5 to 10 worked on big
business cases, were alsoterminated from the Columbus
Ohio office where he wasemployed.
John Witkowski, a recent hire,who was laid off in February, a
week after finishing theagency's training program
expects managers will end updismissing some of the
probationary employees' casesbecause of staffing shortages.
He left behind four cases, eachfor a filer with more than $250
(26:42):
million in annual assets, hesaid More than two dozen
employees also were laid off inhis West Coast office.
He said I imagine they'll say,hey, you won the audit lottery,
we're just going to close yourcase and let it go.
Witkowski said Specialistshired to help audit
sophisticated cases such as awind turbine project eligible
for tax credits were also laidoff.
That includes engineer VanessaRollins and appraiser Jack
(27:04):
McCumber, who left behind acombined seven cases when they
were let go from their officesin Chicago and Seattle
respectively.
The amount of cases thatengineering specialists are able
to help audit will justcompletely plummet, said Rollins
, who estimates that sevenengineers in the Illinois office
about half were laid off oraccepted deferred resignation
offers this year.
Beating the odds, the IRS'sscrutiny of big businesses has
(27:26):
fallen in recent decades, drivenin part by budget cuts after
the GOP gained a majority in theHouse in 2010.
In the mid-1990s, the agencyaudited returns for about 50% of
companies with $250 million ormore in assets.
That rate dropped to 8.8percent in the 2019 tax year.
According to an IRS document,the number of revenue agents
shrank from 14,600 to 8,700between the 2010-2019 fiscal
(27:49):
years.
By the time the InflationReduction Act passed, there was
one IRS examiner reviewingreturns for every 150
millionaires and largecorporations, former IRS
Commissioner Danny Werfel told acongressional committee in 2024
.
Picture that one IRS auditor orexaminer backing in 150
truckloads of paper, he said.
Unlike typical salaried workers, most ultra-wealthy filers
(28:12):
don't have an employerautomatically withholding
federal income taxes onpaychecks or a W-2 listing their
earned income.
Instead, they may havethousands of partners,
international operations and arange of investments.
Partnerships have become morecommon and often have obfuscated
structures with 20 or morelayers.
According to the nonpartisanGovernment Accountability Office
.
Fewer than 0.2% of partnershipswere audited in recent years
(28:32):
odds akin to getting hit by ameteorite, senator Ron Wyden,
democrat Oregon, said in 2021.
Kim, the former IRS attorney,said the agency can face a total
mismatch in resources whenauditing a filer with private
accountants and attorneys.
While working at a Big Fouraccounting firm, kim once
supervised a team of four peoplewho sent 10 to 15 boxes of
documents to the sole IRS agentassigned to audit their client.
(28:54):
He saw what it was like on theother side when he worked in the
IRS's Office of Chief Counselyears later and was told there
was no budget for him toaccompany a revenue agent to a
meeting with a tax filer'srepresentatives.
Kim, now in private practiceand mostly working with small
businesses, tells clients thatthere are pros and cons to the
layoffs.
On one hand, the tax agentsmight be too drained or
overworked to pursue their audit.
(29:14):
On the other, a pending auditmight just sit there and you
don't get the resolution quickly.
Either way, he said thesystem's broken from the inside.
Jeff Stein contributed to thisreport.
Speaker 1 (29:33):
So, look, a lot of people, when those 88, look, I
want to say it was somethingvery high, 88,000, which could
be wrong IRS agents were hired,I think a lot of people thought
that they were hired to go afterMain Street and the middle
class and I don't think theyrealized that what actually
(29:54):
happens is because a lot of thecuts end up happening at the IRS
.
Because a lot of the cuts endup happening at the IRS, instead
of them going after what wehave labeled as white-collar
crime, the resources willinstead be used to go after the
(30:17):
middle class and the workingpoor.
The middle class and theworking poor, because they're
not going to have morecomplicated, uh, taxes.
They're not going to have ateam of lawyers who are doing
everything they can to somewhatuh hide what's going on.
(30:38):
They're not going to have acompany who sends in 15 boxes to
one agent because they'regetting audited.
A lot of people saw this as awin when the cuts came to the
(31:02):
IRS.
I kind of think it's one ofthose things where I think that
people somewhat had been playedto, where they're firing a
certain amount of staff at thisagency in order to be able to
continue to fleece the police.
(31:23):
Just my thoughts on the topic.
A lot of people don't likegovernment agencies, but a lot
of people also don't fullyunderstand, and I think that's
because the government does abad job of explaining.
A lot of people don't fullyunderstand what certain
government agencies do.
Lot of people don't fullyunderstand what certain
(31:43):
government agencies do and thedistrust in institutions are
because a lot of people don'tfeel the material gain or the
material benefit from theinstitutions in their everyday
uh operations.
Um, I watch this show.
One of one of my favorites isactually american greed and it's
a crime type show but itattracts uh white collar, the
(32:08):
type to climb some some bluecollar crime on there, but all
in the financial realm.
Most of the time when people arecaught doing something wrong,
it's by the irs, it's by the FBI, it's some fraud agency.
And then we've got to rememberfamous gangster, famous gangster
(32:30):
Al Capone was caught at the endof the day by the IRS.
We're going to be back thisweek, got to get some catching
up.
Got a lot of things going on,got a lot to talk about.
Thank you for tuning in andI'll see you on the next episode
.
Welcome to the Darrell McLean Show.
I'm your host, darrell McLean,episode 451.
We've been on a hiatus Notbecause I did not want to talk
to you, but because my laptopcrashed and I had to take it to
a facility to get surgery, andit's been getting surgery for a
(00:21):
while.
Is the US economy headedtowards a recession?
Here is a playbook of what tolook for the signs of a
recession, how they affect thepublic and how can you prepare
for one in case it comes.
Concerns are heightening.
(00:42):
The US economy is headedtowards a recession as stocks
markets slide amid Trump'sadministration's implementation
of tariffs.
President Donald Trump and hissenior advisors appeared
optimistic that an economic boomis on the horizon, even as
economists warn that thelikelihood of a recession is
(01:03):
being amplified by the WhiteHouse sweeping tariffs.
Trump has not taken thepossibility of a recession off
the table, telling Fox Newsanchor Maria Bromberg Romo that
he that the morning futures,that he hated predicting things
like that, and that was back onMarch, the 9th.
Wall Street, though, has beenworried.
(01:25):
The benchmark S&P 500 stockindex fell into correction
territory, defined as declining10% from a recent peak Well.
That was a week after atech-heavy NASDAQ composite
index did so.
The economic signs for recession.
What are they?
They, a recession is defined assix months of negative growth
(01:50):
in a nation's economy, so I'lltake some time before an
official recession is declaredby the national bureau of
economic research.
It takes time because which andthe National Bureau of Economic
Research is the officialarbiter of US recession the
(02:11):
group considers a number ofeconomic factors, including
what's happening in the jobmarket, are with people's
incomes, before making thedetermination that a country is
in recession.
But warning signs, which caninclude a surge in job losses,
stalling wages and consumerspending less, would probably be
(02:32):
evident beforehand.
Now, claudia Shahim, a chiefeconomist at New Century
Advisors, say the job market canbe an early indicator of a
looming recession.
The unemployment rate isn't thefirst thing to be affected, but
once it starts rising, it tendsto keep going.
So far, the labor market hasslowed slightly, but remains
(02:57):
strong, with the unemploymentrate at 4.1% At least, according
to the February jobs report.
However, most recent data didnot contain all of the impact of
Elon Musk's US doge servicesslashing the federal workforce.
Is the US headed for a recession?
Economists aren't certainwhether the United States is
headed for one, for a recession,but they are warning that the
(03:21):
risk is probably higher thanthey had previously thought, in
a large part because of theWhite House's new policies.
People are looking at tariffs,saying if we revisit the
economic history books, tariffshave been a great in terms that
there will be a recession,because it has not been great in
terms of personal growth.
(03:42):
Now that's coming from MicahShoemaker and he's the head of
macro strategy at Wells Fargo.
The probability of a recessionhas gone up and it has not given
or even 50%, but whether yourforecast was a few weeks ago,
it's definitely higher than 50%now.
Now Goldman Sachs raises 12months per seventh probability
(04:07):
from 15% to 20%, noting that itsaw policy changes as a key risk
.
The White House has the optionto pull back if the downside of
risk look more serious.
A Goldman Sachs economicforecast said If policy is
headed in the direction of ourrisk scenario or if the White
House remain committed to thesepolicies, even in the face of
(04:30):
much worse data, recessions riskwould rise further.
The JP Morgan analysis said thatTrump's frequent changes to
trade policy make forecastinggrowth and inflation this year
an especially fraught exercise.
When was the US's lastrecession and how long did it
(04:53):
last?
The average modern dayrecession has lasted 11 months.
According to data from the MBER.
The last US recession, whichwas also the shortest in US
history, was the economicdownturn of March of April of
2020, during the coronaviruspandemic.
(05:14):
It was not declared a recessionby the NBER until July of 2021.
Now, before that, it wasactually the Great Recession of
2007 to 2009,.
And that lasted for 18 months.
It is considered to be theworst economic disaster since
(05:35):
the Great Depression.
Of course, we have to ask cantariffs cause a recession?
Because that's what's going onnow.
So Trump's proposed tariffscould have a big impact on the
economy, depending on theduration and any potential
retaliation from tradingpartners.
According to economists fromBNP Paribas, in the event of an
(06:00):
uncontrolled tit-for-tat tradewar, a sharp decline in business
sentiment is possible.
If large enough, could berecessionary.
Now BNP wrote in a market 360analysis.
Bnp Paribas warned that thelarger tariff, the greater the
(06:20):
economic costs it will have.
The greater the economic costsit will have.
The impact, it said, willprobably be felt by the average
of US consumers.
The last tariffs are expectedto cost the typical American
(06:43):
household more than $1,200 ayear, according to the Peterson
Institute for Internationaleconomics.
Even if tariffs are temporary,simply leveraging them as a
negotiating tool will causeuncertainty to businesses and
firms hiring or investmentdecisions.
How do the recessions affect thepublic?
Recessions typically correlatewith the expansive job losses
(07:04):
which spark financial problemsthat can lead to evictions or
foreclosures.
The contracted job markets of arecession also hurt those who
keep their jobs, making itharder to find a new job or get
a raise.
Recession often feel theycannot afford to be choosy about
(07:28):
employment and will accept lowstarting pay that can set back
their earnings for years to come.
At the end of the day,recessions are bad because
people suffer financially, saidSham, and this was being told to
the Washington Post back in2022.
They're a big hit and theyhappen to touch everyone.
Why and what should you do toprotect your finances before
(07:53):
recession?
Now, economics and financialadvisors say that the prudent
move is often to tighten yourpurse strings to save money, but
they also warn that doing socan actually hasten a recession
because it takes money out ofthe economy.
When they're not spending,they're not creating income for
(08:15):
other people, george WashingtonUniversity economic professor,
tara Sinclair, said back in 2022.
Michael Signatary, the Post'spersonal finance columnist,
offered seven tips to preparefor a recession back in 2022.
Michael Signatary, the Post'spersonal finance columnist,
offered seven tips to preparefor a recession back in 2022.
Among them pay off credit carddebt, build up your savings,
look at low volatility optionssuch as bonds, and don't panic.
(08:39):
What you shouldn't do is makemoves based on fear that can put
you in a worse positionfinancially.
She wrote.
So a lot of trade talk going on,trump.
Obviously we're in the midst ofa trade war with several
countries, one of the biggestthat I remember seeing in a long
(09:01):
time the United States versus192 other countries.
So obviously people panicked alot when the stock market
started to go down, becausethat's the first effect.
You see, it seems like Trumppanicked when the bond market
started to go down, because thebond market is actually the boss
(09:25):
of the markets.
So now we know, or at least wehave answered some of the
questions Is the US economyheaded towards a recession, what
to look for over the next fewmonths or so, and what to do to
prepare yourself to be safe?
Let's get some quick headlines.
(09:46):
So On April 9, 2025, theescalating trade war between the
US and China reached a new peakas China announced retalitat
measures, with Trump's tariffsalso targeting 60 other
(10:14):
countries deemed worst offendersin trade practices, including
Japan, south Korea and Cambodia,with tariffs ranging up to 49%.
The US tariffs aim to addresstrade imbalances, but they've
sparked global economic concerns.
European and Asian markets sawsignificant declines, with
(10:42):
investors selling US governmentbonds traditionallya safe haven,
leading to a spike in USborrowing rates.
Brent crude oil prices droppedbelow $60 a barrel, the lowest
since February 2021, potentiallyaffecting the fuel and supply
costs worldwide.
(11:02):
A new study has actually comeout and it shows that and this
is a study that shows that umeliminating processed food from
the children's diet reduces adhdsymptoms by 53 percent.
A study published in the lancetfound that the dietary
(11:24):
intervention, specificallyremoving proposed processed
foods, addict and artificialcoloring, significantly reduced
attention deficit hyperactivitydisorders, so ADHD, in children.
Researchers observed improvedbehavior of birthless,
supporting the growing linkbetween diet and mental health
(11:48):
in young individuals.
In young individuals, themedian annual pay during the
Great Depression was 32% of thecost of the average home.
Today it's 19%.
That means that pay relativelyto home costs made it easier to
buy a home during the GreatDepression than it is right now.
(12:11):
Let that sink in than it isright now.
Let that sink.
In United States, households arerunning out of emergency funds.
It's becoming harder forAmericans to raise funds in case
of an emergency.
According to the New YorkFederal Reserve Survey of
Consumer Expectations, theaverage likelihood of Americans
being able to come up with$2,000 within a month if an
(12:33):
unexpected need arose hit 62.7%in February.
That's the lowest level sincethat survey began tracking the
data point in October of 2015.
The United States has neverbeen more unhappy.
A new report finds Finland wasnamed the happiest country in
(12:57):
the world for the eight years ina row, according to the World
Happiness Report in 2025,published on Thursday.
When it comes to decreasinghappiness and growing
unhappiness, the United Stateshas dropped to its lowest ever
position, at 24, havingpreviously peaked at 11 place in
(13:17):
2012.
Black Rocks CEO Larry Fink saysalmost everyone he talks to is
more anxious about the economythan any time in recent memory.
Everyone keeps telling the CEOof the world's largest asset
manager how they're worriedabout the United States economy.
I hear from nearly every client, nearly every leader, nearly
(13:40):
every person I talk to.
Blackrock CEO Larry Fink wrotein an AOL letter on Monday
they're more anxious about theeconomy than any time in recent
memory.
Flink's comments came outMonday when the stocks market
slipped as soon as it opened andinvestors feared impending
tariffs could further hurt theUnited States economy.
Like when they wanted toprivatize the British railroads,
(14:03):
the technique was defund themand then, when they don't work,
people get angry and say let'sdo something.
Speaker 2 (14:09):
So you hand it over to private enterprise, which
totally ruins them, and then thestate has to come back in at
big cost and try to reconstructit somehow.
It's known as privatization,and that's exactly what's
happening with Social Security.
It's in good shape.
Now, when you read in thenewspapers as you do, that the
big problem of the deficit isentitlements and Social Security
, medicare, medicaid, socialSecurity is a zero problem.
(14:33):
For one thing, it doesn't addanything to the deficit because
people pay for it, and foranother thing, it's in pretty
good shape.
Certainly, the last of thefamous baby boomers will be gone
before there's any problem init.
That's why there's a bigpayroll tax increase 30 years
ago to ensure that.
But if it's defunded it'll be aproblem.
(14:53):
Then there'll be pressure toprivatize it.
That's a huge bonanza for thefinancial institutions.
They'll put trillions ofdollars into their hands which
they can then use to make a tonof money with risky investments
which are therefore veryprofitable.
And when it tanks, as it will,when the economy tanks, there's
a technique you pick up yourcopies of Milton Friedman and
(15:15):
Hayek and Ayn Rand and you runto the nanny state that you've
nurtured and you make sure thatthey bail you out.
That's really existingcapitalism and it means that the
scam can go on.
Speaker 3 (15:27):
We didn't give a hoot about democracy.
I mean, it was fine if agovernment was elected and would
cooperate with us, but if itdidn't, then democracy didn't
mean a thing to us and I don'tthink it means a thing today.
The true goal of the UnitedStates government is control,
(15:48):
and they feel that if the UnitedStates did not control the
governments of Latin Americathen somebody else would.
And the principle of governmentby the people, for the people,
other people, that is just silly.
Speaker 4 (16:04):
300 million stores are packed with Japanese
products.
The Japanese seem to controlelectronics, but today the
Reagan administration slapped ahuge tariff on $300 million
worth of Japanese goods On thelist color TV sets, laptop
computers, power tools andcalculators.
This tariff is 100%.
(16:25):
That means a TV that cost astore, say $300, will now cost
$600.
Speaker 3 (16:31):
I think it's firing a shot over the bottle, and then
we'll see how they react to it.
Speaker 4 (16:34):
The US General Accounting Office reported
yesterday, the Japanese violatedan agreement they signed with
our government last year.
They're dumping microchips atprices below cost and that's
hurting American producers.
Because of that, Reagan imposedthe tariff.
Speaker 3 (16:49):
Consumers are going to be paying a lot more money
for these goods, and I wouldexpect that to happen
immediately.
Speaker 4 (16:54):
But Highland expects little, or?
Speaker 3 (16:56):
no effect.
A lot of major brands are madeare Japanese companies, but
they're manufactured in theUnited States.
Speaker 4 (17:04):
And those products will not be affected.
The tariffs affect less thanone-half of one percent of all
the goods Japan sends to thiscountry.
According to Senator Benson,the tariff is little and it's
late, but he hopes it sends amessage that this time this
country will visit.
Speaker 1 (17:19):
Superstores are packed.
So when this happened in 1987,the US slapped the 100% tariff
on Japan goods and it actuallycaused a crash.
Six months later, the stockmarket crashed on what has been
(17:39):
called Black Monday, and it wasarguably the worst crash in
history.
Now, when it comes to some ofthe market news sorry about that
Warren Buffett's the Oraclefrom Omaha Nance Burr is up so
far in 2025.
(18:01):
The worst of the world's top 15wealthiest people have all lost
money.
So Trump's terroristannouncements sparked global
sell-off, leading to losses formany investors across the world.
The world's richest people sawtens of billions of dollars
(18:22):
wiped from their net worths in amatter of days.
One notable exception wasBerkshire Hathaway CEO, warren
Buffett, whose net worth hasgrown by $11.5 billion since the
start of 2025, according to theBloomberg Billionaires Index.
Buffett is currently ranked asthe world's fourth wealthiest
(18:44):
person by Bloomberg, with a networth of $154 billion from the
six wealthiest on Monday.
Of the top 18 individuals onthe list, the investing icon is
the only one who's estimatingpersonal wealth has grown this
year as of Tuesday morning.
(19:06):
So if you want to see how manyother notable names on the list
have lost and find out howBuffett is defying.
You can go to Bloombergcom andcheck it out.
Historically, the most terriblethings war, genocide and
(19:28):
slavery have resulted fromdisobedience, no, but from
obedience.
Speaker 2 (19:43):
This quote comes from the World War II veteran, the
college professor, the lateHoward Zinn.
I'm worth over a hundredbillion dollars and a very
significant portion of my wealthwas made from owning Coca-Cola
stock.
We own roughly 400 millionshares and that yields Berkshire
a little less than a billiondollars a year in dividends.
Now you probably wouldn'tbelieve it, but Coca-Cola's
first year in business they onlysold about 25 bottles.
(20:06):
That should be a testament toanyone here listening that
business is a marathon, not asprint.
Success takes time, persistenceand continuous effort.
Just because you don't seeimmediate results doesn't mean
you're not on the right path.
Keep pushing forward.
Speaker 1 (20:22):
So that's from the Oracle, from Omaha, warren
Buffett, richest Americans, bigbusiness, might welcome some IRS
cuts.
Speaker 5 (20:33):
This news story was written by Shannon Najmabadi.
Richest Americans bigbusinesses might welcome IRS
cuts.
Officials say About 7% of itsworkers have been let go and
more cuts are expected.
The Internal Revenue Service'sburgeoning efforts to more
closely inspect the taxes ofsome of the country's richest
people and most powerfulcompanies are stalling because
of layoffs imposed by the Trumpadministration.
(20:54):
Current and former IRSemployees say the IRS terminated
about 7% of its roughly 100000-person workforce in February
, including at least 5,000 inthe enforcement and collections
divisions.
More layoffs are expected,which would slice staff by
almost 20%, according toinstructions from the US Doge
Service.
Meanwhile, tax investigatorsworking on drugs and criminal
(21:16):
syndicates may be reassigned tohelp the Department of Homeland
Security.
Current and former employeesdon't know who will take on
pending audits amid these staffcuts, but some say one
demographic stands to benefitthe wealthy 100 percent, said
Anthony Kim, a longtime IRSattorney now in private practice
.
It's a sharp turnaround from2022, when Congress gave the IRS
$80 billion over a decade underthe Inflation Reduction Act,
(21:39):
including funds to beef up itsauditing of the wealthiest
Americans.
The agency hired new employeesand bulked up units trained to
detangle some of the mostcomplicated corporate returns,
which can run hundreds orthousands of pages.
It's not clear how many laidoff employees were specifically
auditing big businesses, but taxexperts say the cuts undermine
the agency's much touted effortto crack down on wealthier
Americans, who for years havefaced slimmer and slimmer odds
(22:01):
of being audited and generallyhave more resources to respond
than middle and low incometaxpayers.
We do get outgunned, there isno other way to say it.
Former IRS commissioner CharlesReddick said in congressional
testimony in 2021,.
Others say it's like havingshovels and digging holes, said
IRS agent David Caron, who leadsthe local Treasury Employees
(22:22):
Union in Arkansas and Louisiana.
You have less people to dig theholes now, so there's only so
much the remaining people candig.
Critics of the agency, however,say the IRS has a culture of
conducting fishing expeditionsthat hit households or small
businesses, or point to watchdogreports that have questioned
IRS expenditures and its abilityto stay focused on high-income
filers.
Are taxpayers supposed to trustthe repeatedly broken assertion
(22:44):
that the IRS is only puttingthe screws to Scrooge McDuck and
Rich Uncle Pennybags, said JohnKarch with anti-tax group
Americans for Tax Reform.
The loss of probationaryemployees, some of whom have
specialized experience invaluation, engineering or
corporate tax law, comes amid abroader shakeup at the agency
that has destabilized day-to-dayoperations.
According to interviews withmore than a dozen current and
(23:06):
former employees, overnighttravel has been suspended,
limiting revenue agents' abilityto conduct in-person
examinations or locate documentsfor audits.
According to seven employees,employees have been told not to
open new business cases.
Four employees said Some bigbusiness cases have already been
closed.
According to a senior managerwho said he has spent the last
two years hiring employees fromthe private sector and a
(23:26):
transformation and strategyoffice that oversaw new agency
initiatives, those funded withthe $80 billion appropriation
was recently disbanded.
According to a former agencyofficial In West Virginia, four
of the state's nine revenueagents were laid off in February
, said Matt Kirk, a revenueagent and another union chapter
leader.
He estimated the laid-offemployees had about 40 cases
between them each, looking atpeople making $400,000 or more.
(23:49):
With those losses, we don'thave the manpower to absorb that
volume of cases, kirk said.
White House spokeswoman LizHouston said that Trump is
focused on saving tax dollars,eliminating bloat and increasing
the agency's efficiency, incontrast to President Joe
Biden's wildly unpopular plan tohire thousands of additional
IRS agents.
Calling the premise of thisstory incorrect, a Treasury
(24:10):
Department spokesperson said theagency is considering major
investments in modernization tomore accurately target suspected
tax evaders and is working onother initiatives to improve
compliance and taxpayer customerservice and to ensure a smooth
filing season.
However, no plan has beenapproved yet.
The spokesperson saidRepublican pushback.
Conservatives have longtargeted the IRS, arguing a more
muscular tax agency wouldharass middle-class Americans.
(24:32):
Trump's nominee to lead theagency, billy Long, has
supported abolishing the IRS.
Republican lawmakers have usedthose arguments to justify cuts
and so far have rescinded orfrozen half of the $80 billion
the agency was allocated.
Some former officials saylayoffs don't mean audits of
wealthy Americans have to godown.
The agency, for example, couldretrain and reassign agents who
(24:53):
look at small businesses to keepscrutinizing the highest income
earners, said David Cotter, whowas acting IRS commissioner
during part of President DonaldTrump's first term.
As long as they've got auditorsavailable, they've got choices
to make, he said.
Others say the cuts will have amore limited effect, given that
some employees were stilltraining and not carrying full
caseloads, or that the layoffsforced the IRS to rethink its
operations or rely more ontechnology.
(25:14):
Proponents of more IRS funding,however, say the agency offers
a solid return on investment,making layoffs there
counterproductive.
Each dollar the IRS spendstracking down unpaid tax dollars
from the wealthiest 10%generally brings in $12 or more,
according to one NationalBureau of Economic Research
study.
If you're concerned about thedeficit, then the last thing in
the world you want to do ishamstring your revenue agents
(25:36):
and your revenue arm, said JohnKoskinen, irs commissioner under
President Barack Obama.
How much tax revenue goesuncollected is the subject of
wide-ranging estimates runningfrom about $500 million to $1
trillion each year.
Audits conducted by the IRS'slarge business division, which
handles some of the agency'smost sophisticated tax matters,
can recover many millions ofdollars, said Reddick, who was
(25:57):
IRS Commissioner from 2018 to2022.
It would not be unusual, hesaid, for such a case to involve
a disputed issue in the rangeof more than $500 million.
One new employee, WesleyStanovsek, had three open cases
when he was laid off from an IRSglobal high wealth division
that was beefed up after the2022 funding became available.
Two of the cases involvedenterprises with more than one
(26:19):
tax filer, he said.
He estimates about 20 employees, of whom 5 to 10 worked on big
business cases, were alsoterminated from the Columbus
Ohio office where he wasemployed.
John Witkowski, a recent hire,who was laid off in February, a
week after finishing theagency's training program
expects managers will end updismissing some of the
probationary employees' casesbecause of staffing shortages.
He left behind four cases, eachfor a filer with more than $250
(26:42):
million in annual assets, hesaid More than two dozen
employees also were laid off inhis West Coast office.
He said I imagine they'll say,hey, you won the audit lottery,
we're just going to close yourcase and let it go.
Witkowski said Specialistshired to help audit
sophisticated cases such as awind turbine project eligible
for tax credits were also laidoff.
That includes engineer VanessaRollins and appraiser Jack
(27:04):
McCumber, who left behind acombined seven cases when they
were let go from their officesin Chicago and Seattle
respectively.
The amount of cases thatengineering specialists are able
to help audit will justcompletely plummet, said Rollins
, who estimates that sevenengineers in the Illinois office
about half were laid off oraccepted deferred resignation
offers this year.
Beating the odds, the IRS'sscrutiny of big businesses has
(27:26):
fallen in recent decades, drivenin part by budget cuts after
the GOP gained a majority in theHouse in 2010.
In the mid-1990s, the agencyaudited returns for about 50% of
companies with $250 million ormore in assets.
That rate dropped to 8.8percent in the 2019 tax year.
According to an IRS document,the number of revenue agents
shrank from 14,600 to 8,700between the 2010-2019 fiscal
(27:49):
years.
By the time the InflationReduction Act passed, there was
one IRS examiner reviewingreturns for every 150
millionaires and largecorporations, former IRS
Commissioner Danny Werfel told acongressional committee in 2024
.
Picture that one IRS auditor orexaminer backing in 150
truckloads of paper, he said.
Unlike typical salaried workers, most ultra-wealthy filers
(28:12):
don't have an employerautomatically withholding
federal income taxes onpaychecks or a W-2 listing their
earned income.
Instead, they may havethousands of partners,
international operations and arange of investments.
Partnerships have become morecommon and often have obfuscated
structures with 20 or morelayers.
According to the nonpartisanGovernment Accountability Office
.
Fewer than 0.2% of partnershipswere audited in recent years
(28:32):
odds akin to getting hit by ameteorite, senator Ron Wyden,
democrat Oregon, said in 2021.
Kim, the former IRS attorney,said the agency can face a total
mismatch in resources whenauditing a filer with private
accountants and attorneys.
While working at a Big Fouraccounting firm, kim once
supervised a team of four peoplewho sent 10 to 15 boxes of
documents to the sole IRS agentassigned to audit their client.
(28:54):
He saw what it was like on theother side when he worked in the
IRS's Office of Chief Counselyears later and was told there
was no budget for him toaccompany a revenue agent to a
meeting with a tax filer'srepresentatives.
Kim, now in private practiceand mostly working with small
businesses, tells clients thatthere are pros and cons to the
layoffs.
On one hand, the tax agentsmight be too drained or
overworked to pursue their audit.
(29:14):
On the other, a pending auditmight just sit there and you
don't get the resolution quickly.
Either way, he said thesystem's broken from the inside.
Jeff Stein contributed to thisreport.
Speaker 1 (29:33):
So, look, a lot of people, when those 88, look, I
want to say it was somethingvery high, 88,000, which could
be wrong IRS agents were hired,I think a lot of people thought
that they were hired to go afterMain Street and the middle
class and I don't think theyrealized that what actually
(29:54):
happens is because a lot of thecuts end up happening at the IRS
.
Because a lot of the cuts endup happening at the IRS, instead
of them going after what wehave labeled as white-collar
crime, the resources willinstead be used to go after the
(30:17):
middle class and the workingpoor.
The middle class and theworking poor, because they're
not going to have morecomplicated, uh, taxes.
They're not going to have ateam of lawyers who are doing
everything they can to somewhatuh hide what's going on.
(30:38):
They're not going to have acompany who sends in 15 boxes to
one agent because they'regetting audited.
A lot of people saw this as awin when the cuts came to the
(31:02):
IRS.
I kind of think it's one ofthose things where I think that
people somewhat had been playedto, where they're firing a
certain amount of staff at thisagency in order to be able to
continue to fleece the police.
(31:23):
Just my thoughts on the topic.
A lot of people don't likegovernment agencies, but a lot
of people also don't fullyunderstand, and I think that's
because the government does abad job of explaining.
A lot of people don't fullyunderstand what certain
government agencies do.
Lot of people don't fullyunderstand what certain
(31:43):
government agencies do and thedistrust in institutions are
because a lot of people don'tfeel the material gain or the
material benefit from theinstitutions in their everyday
uh operations.
Um, I watch this show.
One of one of my favorites isactually american greed and it's
a crime type show but itattracts uh white collar, the
(32:08):
type to climb some some bluecollar crime on there, but all
in the financial realm.
Most of the time when people arecaught doing something wrong,
it's by the irs, it's by the FBI, it's some fraud agency.
And then we've got to rememberfamous gangster, famous gangster
(32:30):
Al Capone was caught at the endof the day by the IRS.
We're going to be back thisweek, got to get some catching
up.
Got a lot of things going on,got a lot to talk about.
Thank you for tuning in andI'll see you on the next episode
.
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