Thursday, August 16, 2012
One of the loudest and most consistent mantras from the Obama administration has been that so many of the problems that we face today were inherited, that they were the fault of former President Bush and that Obama has been working diligently to get us out of this mess. Oh really? As you know, your faithful curmudgeon is not afraid of the truth and certainly not afraid of exposing the lies of those in Washington. So let me ask you, do you remember January 3, 2007? That date is important because it was the date that the Democrats, as a result of the mid-term elections during the second term of President Bush, took control of both houses of Congress. For the first time since 1995, the Democrats controlled both the House and the Senate and exerted great influence and control over the federal legislative process. Let me refresh your memory about a few things. In January 2007, the GDP for the recently completed 4th quarter of 2006 was 3.5%; unemployment was 4.6%; and the U.S. had just completed a record 52 straight months of net new job creation. Also in January 2007, Barney Frank took over leadership of the House Financial Services Committee and Chris Dodd took over leadership of the Senate Banking Committee. Under the leadership of these two men- both Democrats- within 15 months the financial services industry melted down and created a recession from which we are yet to recover. The last budget that was passed by Congress- again under the control of Democrats- was in 2009 with the passage of a massive omnibus spending bill that included "stimulus dollars" that turned out to be mere payouts to the allies of the Democrats. No budgets have been passed by Congress since then. Oh, and that unemployment and GDP? Unemployment is now 8.2% (real unemployment continues to hover around 16%) and our nations economic output as measured by GDP has shrunk to an anemic 1.5%. Many of these problems are the making of the current administration or the exacerbation of existing problems that are now much worse. Remember that when you hear the current administration say they inherited these problems.
Sometimes I wrestle with my inner demons. Most of the time, we just hug.
We are now finding out that the bailout of the auto industry is going to cost the U.S. taxpayer more than was originally projected. A lot more. The current estimate is now $25 billion, according to the Treasury Department. That is an important number for two reasons: obviously it is money that you and I as taxpayers must bear since those dollars are coming out of the public fisc; but here is the other interesting thing about that number. According to labor researchers James Sherk and Todd Zwywicki, the Obama administration redistributed $26.5 billion more to the United Auto Workers than that group would have received if they had been treated as any other creditor in normal bankruptcy proceedings. When Chrysler and GM were bailed out, the bankruptcy proceedings were anything but normal, as the administration interjected itself into the process and manipulated the law to favor one group of creditors. Even Obama's "car czar" Stephen Rattner has admitted "We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay." No, and they certainly favored the UAW over other workers. 20,000 Delphi non-union employees lost heir pensions while the unionized employees were made whole. Fair? Equal treatment under the law? Absolutely not. And this administration confiscated your tax dollars to pay for this travesty.
They say that managing people is ultimately about the carrot approach or the stick method. I try to play it safe and use carrot sticks.
If you are not brave of heart, you may want to avoid this next item. If you earn one more dollar of income next year, what is your marginal tax rate? Your marginal tax rate is simply the tax assessed on earning one more dollar. Now all of use want to see a raise and have more money in our pockets, and if we get that raise, how much of it will disappear in taxes? Why don't we do a little exercise. Many taxpayers are in a 25% tax bracket (oops- there goes 25 cents of your raise right off the bat). Next, we have to factor in the Social Security and Medicare payroll tax of 13.3%, of which 5.65% is removed from your paycheck and your employer pays the remaining 7.65% (here is what you need to know: you are really paying that 7.65% because without it, your wages would be that much higher. The payroll tax does not affect the cost of labor. Oh yeah- if you are self employed, you are paying all of it anyway). So now with income taxes of 25% and payroll taxes to fund Social Security and Medicare, we have given up 38.3% of our new dollars we obtained in our raise. Wait... don't forget state income taxes, which nationally average 4.82%, bringing our total to 43.12%. But wait- in January, that 25% income tax bracket is going to automatically rise to 28% if Congress doesn't extend the current tax rates, and the payroll taxes are scheduled to rise from 13.3% to 15.3%. Now we are looking at just over 48 cents of every new dollar you earn beginning January 1, 2013 being siphoned away in taxes. Go back and read the item just above this one. Now doesn't this make you concerned about what Washington is doing with your hard earned dollars and angry about why they keep asking for more?
I told my wife I would go through anything for her. She said, "How about the door?"
And that, my friends, is my view.