Tag Archives: middle class

Taxes: Yours are Going UP

Forget what you’ve been hearing about the fiscal cliff being averted. Your taxes are going up.money capitol

Beginning January 1 your FICA taxes (Social Security and Medicare) will return to their 2009 levels. In 2010, in an attempt to jump start the economy, President Obama reduced payroll taxes from 6.2 to 4.2 percent. Congress, in its efforts to keep us from falling off the financial cliff, neglected to continue this reduction and so now all taxpayers will see an increase.

Some will say that we should be glad to see this money returning to the Social Security and Medicare funds; that these programs are in severe need of significant changes if they are to remain funded beyond the next ten years.

This unexpected tax hike isn’t just a blow to working families. It will also be a shock to the economy. Economists have considered the payroll break one of the more effective ways of stimulating the economy because, as working families enjoy larger take home pay, they have more money to spend. That, in turn, helped boost businesses’ bottom lines and spur the fragile economic recovery. Many economists think it’s too early to tell exactly how much the higher payroll tax will hurt the economy, but generally agree that there will be a negative effect.

The initial amounts of the increase don’t sound so bad…after all, it’s spread out over a year. But imagine this: A family making $50,000 per year (not rich by any means) will now see an increase in payroll taxes of $20 per week or $80 per month, $1,000 in total. If you are that family you know that extra money is needed each month to buy groceries, buy winter coats, or maybe pay for the kids to be in a soccer program. It is real money and will be felt by real people.

It’s remarkable that despite the bluster of Team Obama not to raise taxes on the middle class they are doing just such. Did they think we wouldn’t notice?

This month as your Democratic voting friends notice their paychecks are a little smaller ask them first, who they voted for and if they truly believed Obama would keep their best interest at heart?

Do not be a low information voter.

Over-Regulation Nation

Liberals love to cite how tax rates are at their lowest in recent memory, ballooning corporate profits, and how Bush era policies caused the financial meltdown.  They seem to think these are ample reasons to argue why we shouldn’t deregulate our over-regulated economy.  However, it is becoming harder for the political left to argue this point  since we are witnessing the worst recovery in American history.

The depth of the 2008 meltdown was shocking, but to lust to curb “reckless” capitalism from the political left was not only irresponsible, but also detrimental to America’s long-term economic health.  We are an over-regulated nation.  Florida requires its residents to file reports if a vending machine label is missing.  The Federal Railroad Administration mandates that a letter “F” be painted on the front of a locomotive to indicate which end of the train you are on. Bethesda officials closed a lemonade stand run by children because they lacked a trading license.

If markets are over-regulated, capitalism cannot flourish, entrepreneurship stalls, and the innovative cream that is inherent in the fabric of this nation cannot rise.  Free market enterprise is the only system that has achieved remarkable benchmarks in society.  Take China for example.  When Deng Xiaoping took over following Mao’s death, he gravitated more market-oriented reforms, especially in the rural parts of the country to help farmers.  The loosening of regulations on private business allowed them to flourished and outpace state-run enterprises.  He instituted Special Economic Zones, which allowed capitalism to flourish and attract foreign direct investment.  In short, China is an economic tiger  today because of Mr. Xiaoping.  I remember my East Asia Studies Professor, David Strand, stating in lecture that in this period the middle class of china grew from 5-15 million to nearly 300 million during this economic restructuring.

By loosening regulation, China was allowed to grow.  America’s political left should consider this.  Instead, we roll out disastrous financial regulations, like Dodd-Frank, which is a monstrous 848 pages long!  It contains 400 new mandates, of which only 93 are law and intelligible enough to follow.   The new law is a mess, whose difficulty has been cited by firms. The regulatory leviathan is worse when you look at health care.

On average, one hour spent on a patient is equivalent to thirty minutes of paperwork.  The number of federally mandated reimbursements for hospitals for various ailments will increase from 18,000 to 140,000 that range from parrots, burns, and flaming water skis.  In the Obama’s administrations huge power grab with Obamacare, it only adds more red tape, paperwork, and headaches.  It is the wonder of socialized medicine. In all, the cost of these regulations is staggering.  A study from the Small Businesses Administration found that our over-regulated economy costs an employer $10,585 dollars.

America’s overregulation derives from big government.  President Obama’s desire to increase the welfare state has proven to be expensive and killing America’s potential to have robust economic growth.  His reforms and new mandates costs employers capital that could be used for investment to grow their businesses.  These aren’t fat cat bankers.  Small businesses employ the most workers in America and make less than $250,000 a year, but suffer at the behest of President Obama’s intransigent liberalism.   Government involvement, and the resulting ineptitude that is killing America’s middle class, can best be summarized in the words of Milton Friedman, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”

Oh Dear, Middle Class Wages Down

Oh Dear! In 2008, President Barack Hussein Obama, while campaigning, said that George W. Bush caused wage losses among the middle class. Now we find, according to Mike Dorning writing for Bloomberg, that, after 39 months under Obama and his policies, wage losses are even more pronounced. All you Obama fan liberal/progressive/Democrat Kool-Aid drinkers who live in constant denial may want to watch this video from Bloomberg.

Dorning continues: Even among those who are employed, the rebound from the worst recession since the 1930s has generated relatively few of the moderately skilled jobs that once supported the middle class, tightening the financial squeeze on many Americans. “It started long before Obama, but he hasn’t done anything,” said John Forsyth. “He kept pushing this change, change, change, and he hasn’t done anything.”

Key phrase: “he hasn’t done anything.” As this source illustrates, median household income, both nominal and inflation adjusted, fell during the Obama presidency.

Dorning continues: Yet real median household income in March was down $4,300 since Obama took office in January 2009 and down $2,900 since the June 2009 start of the economic recovery…. Want “proof?” Dorning cites this study by Sentier Research. According to the Sentier Research study (page 3): “The February 2012 median annual household income of $50,065 was 5.7 percent lower than the median of $53,085 in June 2009, the end of the recent recession and beginning of the “economic recovery.” The February 2012 median was 8.1 percent lower than the median of $54,481 in December 2007, the beginning month of the recession that occurred just over four years ago. And the February 2012 median was 9.0 percent lower than the median of $55,031 in January 2000, the beginning of this statistical series.” This study, BTW, is a very interesting read.

Please see also Figures 1, 2, and 3 (pages 8, 9, and 10) in the same report.

Regarding unemployment, the report (page 2) says “A broader measure of employment hardship, which includes the unemployed, marginally attached (or discouraged) workers, and persons working part-time for economic reasons, declined slightly from 15.1 percent in January 2012 to 14.9 percent in February 2012.” Here the report is discussing the U-6 unemployment rate. Somebody has, in the past, said that the U-6 rate was more indicative of what the effect of unemployment is. That “somebody” was … ME!

And the same report (still on page 2) says “An important factor impeding the recovery of real median annual household income has been the recent up tick in inflation.”

But that’s just my opinion.

“It isn’t so much that liberals are ignorant. It’s just that they know so many things that aren’t so.” – Ronald Reagan

Cross-posted at RWNO, my personal web site.

Osawatomie Speech – When Were We "On Our Own?" and "Preserve the Middle Class?"

On Tuesday, December 6, 2011, President Barach H. Obama gave an amazing speech while in Osawatomie, Kansas. He said in his speech, “This isn’t about class warfare.” But as fellow Democrat Dale Bumpers testified at the Clinton impeachment trial, “When you hear somebody say, ‘This is not about sex,’ it’s about sex.” Among other things, he said that while a limited government that preserves free markets “speaks to our rugged individualism” as Americans, such a system “doesn’t work” and “has never worked” and that Americans must look to a more activist government that taxes more, spends more and regulates more if they want to preserve the middle class. That sounds to me as if he is calling for more government, more taxes, more regulation, and more spending (of money we don’t have). He blamed the bad economy on “this brand of ‘you’re on your own’ economics.” “We simply cannot return to this brand of ‘you’re on your own’ economics if we’re serious about rebuilding the middle class in this country,” said Obama. Oh, really? Let’s look further, to see when we were ever “on our own” or what he has done for the “middle class.”

  • Housing: First we got the Dodd-Frank fiasco, now we have Obama Loan Modification, or the Making Home Affordable Program. The benefits of Obamas home affordable refinance plan can be accessed through the Home Affordable Refinance Program (HARP), that shifts the financial liability for refinanced loans to the American taxpayer. On our own, huh? Helping the middle class, huh?
  • Education: In 2009, Obama, through the Department of Education, went far beyond the role of the federal government in education policy and showed a disregard for the guidance of parents in their children’s political formation, by releasing lesson plans for teachers in grades pre-K-12. In October, 2011, Obama’s Department of Education is engaged in a campaign of intimidation designed to implement Obama’s odd take on what constitutes discrimination on American campuses. The Office of Civil Rights of the Department of Education has refused to afford Jewish students the same protections against harassment and intimidation as it grants to every African-American, Latino, and Arab student. This means that the Jews can fend for themselves. Is this what Obama means by “on our own?”
  • Healthcare: To say that the Patient Protection and Affordable Care Act (better known as ObamaCare) is unpopular would be an understatement. And look at the chicanery Democrats went through to (try to) get it passed. Former House speaker Nancy Pelosi was instrumental in securing ObamaCare’s passage, but 20% of the waivers went to her constituients.
  • EPA Regulations: The Environmental Protection Agency (EPA), under Obama, is destroying jobs and is trying to destroy the fossil fuel industry and gain control over the entire American economy. On our own? Helping the middle class?
  • Student Loans: On October 25, 2011, Obama announced a new program to increase college affordability by making it easier to manage student loan debt. He said he was making this move because we can’t wait for Congressional Republicans to act. On our own, huh? And who does he propose pay for this? “And we can do it at no cost to the taxpayer,” said Secretary of Education Arne Duncan. Where have we heard this before? Helping the middle class, huh?
  • Fairness: In his speech, Obama defined “fairness” in terms of emotions and failed to define his version of “fairness” in a way that the high school students, which comprised most of his audience, would be able to understand. If he wanted those high school students to understand “fairness,” he should have used their school grades as an analogy for wealth, as grades are the main “fruits of their labor” at this point in their lives. Students all have an equal opportunity to work hard to earn grades, and their wealth is the knowledge that they gain in the process. What the education system does NOT guarantee is that there will be an equality of outcome. Under Obama’s definition of “fairness” it is unfair that those who have achieved the highest marks get to keep all of their grades. Just like wealth, Obama says it’s unfair to keep grades earned, and that it would be more fair if grades (wealth) could be “spread around.” On our own, huh?
  • Tax Cuts: In his speech, Obama said, “…in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did they get us? The slowest job growth in half a century.”  [emphasis mine]  Was he implying that the 2001 and 2003 tax cuts benefited only the wealthy? The 2001 tax cuts were marginal rate cuts, which extended to all taxpayers, including the middle class. The 2003 tax cuts included a reduction in taxes on dividends and capital gains. His claim of “slowest job growth” includes the loss of jobs under his administration. Help the middle class, huh?

  • Central Planning: In the “too big to fail” department, the Obama administratrion took over General Motors (GM). China’s $19,000 subsidy to produce the Chevy Volt in China is a slap at market capitalism, and is envied by Obama, who hands his own $7,500 electric-car subsidy to America’s upper class and wastes national resources to buy expensive electrics for his government. Helping the middle class, huh? On our own, huh?

Above are just eight examples of “government help” but I had to stop somewhere. I am sure that you can think of others. It would be truer, I think, to say that the present situation reflects the total failure of “you’re not on your own” economics. And how much more “help” can the middle class stand from Obama?

Ronald Reagan was correct when he said, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.'”

But that’s just my opinion.

Obama – Hoist With His Own Petard

Perhaps President Barack Obama, when videotaping his weekly address, should, before opening his mouth, at least look at what his own administration is releasing. Obama made a demonstrably false statement about what has happened to incomes of middle-class Americans over the past thirty years.

On Tuesday, October 25, 2011, the Congressional Budget Office (CBO) released a report entitled, “Trends in the Distribution of Household Income Between 1979 and 2007.” The very first sentence (page 11 in the .pdf file) of this report revealed a fact that runs counter to the impression Americans get from the MSM about what happened to the average American’s income in the approximately three decades that preceded 2008, the year that Obama was elected president. It said that after deducting federal taxes, accounting for government transfer payments (redistributions of wealth) and adjusting for inflation, the income of the average American household had grown significantly in the 28 years from 1979 to 2007.   [emphasis mine]   “From 1979 to 2007, average household income, measured after government transfers and federal taxes, grew by 65 percent.” The “middle class,” BTW are represented (in this histogram) by the second, third, and fourth quintiles.

Said Obama during his Saturday, October 29, 2011, weekly address, “This week, a new economic report confirmed what most Americans already believe to be true: over the past three decades, the middle class has lost ground while the wealthiest few have become even wealthier.” He continued, “And this has happened during a period where the cost of everything from health care to college has skyrocketed.” But… the increases in income that the CBO documented were in inflation-adjusted dollars, meaning that each type of household saw its income rise over and above the level of inflation between 1979 and 2007.

It must really hurt to be “hoist with his own petard,” but Obama doesn’t care since the MSM will slavishly broadcast anything he says.

But that’s just my opinion.