Enjoying a Saturday morning, after a 3 mile run. Best morning, with coffee and IBD (except the hot water heater stopped working, but that is another story).
Sequestration has begun. The President got his tax hikes a while ago, and couldn’t find his way to negotiate away from his own “bad idea” sequestration policy. He could find his way to campaign against Republicans in his constant blame-game.
So IBD reports (and I want to capture here) that Americans, in January paid record taxes ($2.6B for personal and social insurance (Obama-care)), as the payroll tax relief expired, and tax rates rose on higher earners. And let’s not forget the Medicare payroll tax hikes.
Real personal spending was anemic -> 0.1% of GDP. Personal income was down 3.6% in January, with disposable income down by 4%. Households about $250k now face a 3.8% hospital insurance tax on income – earned and investment gains.
Personal income suffered the biggest drop in 20 years, and disposable income its biggest drop in 50 years.
These essentially erased on all the income gains since September. Consumer spending did increase – but not due to prosperity – rather due to rising energy prices.
It is my personal belief that Obama’s redistribution of wealth plan is not aimed just at the wealthy or upper middle class, but at all Americans.
It does not take a rocket scientist to figure out that if I work 60 hour weeks to get ahead, but the government takes half of that, then I might as well only work 30 hours, net about the same, and have more free time.
As a matter a fact, here are two true stories for you:
First, and ex-employee returned to our business to apply for a work. He had originally left 5 years earlier to go to a competitor, and since he was a good worker, I was happy to have him back. Seeking info on my competitor, I asked why he left them. He replied that he had left them years ago. I then asked why he now wanted to come back to us and he replied, “because my unemployment insurance ran out”.
Second true story. A contractor friend of mine had a (legal) visiting worker from Mexico, who later brought his wife and young son to the States. The son had spina bifoda. It was not long before CA had purchase a brand new shiny wheelchair for the family. The wife became pregnant. Twins. Wife became pregnant again, twins again. All the while, they were on food stamps. The worker had to ask the contractor to pay him half in cash, because his benefits were going to be cut due to his income. When the contractor refused, the worker quit. And we taxpayers are paying for the son’s special needs, and the food supplies for that family, and their extended family.
Meanwhile, our daughter and her family sold their home and are moving out of CA due to the high cost of living here.