Tag Archives: political economy

Taxes and the Fiscal Cliff

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As Senate Minority Leader Mitch McConnell (R, KY) pointed out the other day,

[T]here is no consensus on raising tax rates.

Additionally, McConnell reminded us

[W]e still have yet to hear an actual plan from the president for addressing the great economic challenges we face.  What’s needed now is a realistic and specific proposal from the president that can actually pass the Congress.

Indeed, we haven’t heard anything President Obama in the way of a specific plan, beyond two budget “proposals” from the last session that can only be taken as having been improv satire.

McConnell laid down his marker, and it’s a correct one:

One issue I’ve never been conflicted about is taxes.  I wasn’t sent to Washington to raise anybody’s taxes to pay for more wasteful spending and this election doesn’t change my principles.

Is Obama serious or not about recovering our economy?  We’ll find out in the coming days.

Good News

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There really is some coming out of the election last Tuesday.

Reelecting President Obama notwithstanding, voters validated central conservative tenets:

  • Exit polls demonstrate that by a 51%-43% margin, Americans believe that today’s government already does too much that more properly belongs to the private sector.
  • By a 63%-33% spread, Americans said not to raise taxes as a means of cutting the Federal budget deficit.
  • Concerning the economy, the national debt, and the budget deficit generally, the voters preferred the Republican over the Democrat.
  • Voters also reelected an overwhelmingly conservative and Republican House, thereby explicitly and materially validating the House’s expression of those conservative tenets over the last two years.

There’s more.

In California, Democrats won voter approval to raise the top income tax rate to 13.3%.  More importantly, they also won a legislative supermajority.  California has in its state constitution an amendment requiring a two-thirds majority of both houses of the state’s government in order to raise taxes.  The Democrats have won that two-thirds majority in both houses.

Now we’ll have an object lesson, fresh in our minds at the time of the 2016 elections, about the outcome of Progressive policies implemented wholesale.  California will be that demonstration.  Watch carefully.

Welcome to Obamacare

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Here are some handy facts that my insurance company sent me the other day.

  1. Limit on flexible spending account (FSA) contributions.  Today, employers set their own caps on how much employees can contribute to these plans that let them use pretax money to pay for health care expenses.  For 2013, the government will enforce a $2,500 limit per employee.  [Because government Knows Better than you or your employer.]
  2. A new Medicare surtax on investment income.  Until now, Medicare taxes have only applied to earned income. For 2013, taxpayers filing individually with wages and self-employment income above $200,000 ($250,000 for married couples filing jointly) will pay a 3.8% surtax on the lower of:
    • Their net investment income—which includes interest, dividends, capital gains and other amounts.
    • The amount of their modified adjusted gross income that is greater than $200,000 ($250,000 for married couples filing jointly)
  3. An additional Medicare tax on wages and self-employment income for some.  The existing Medicare payroll tax of 2.9% (of which 1.45% is paid by a taxpayer through payroll deductions) will be increased by 0.9% on wages or self-employment income that exceeds $200,000 for single and qualifying head of household and widow(er) filers ($250,000 for married couples filing jointly).
  4. Higher hurdle for deducting medical expenses.  Currently, out-of-pocket medical costs only are deductible to the extent they exceed 7.5% of your adjusted gross income.  For 2013, that hurdle will rise to 10%. But if you’re 65 or older, that threshold remains frozen at 7.5% through 2016.  [Then it rises—with 2013’s 65-year-old then 68.]

And what do we get for our money?

  • Reduced access to medical care for seniors from reduced payments to doctors and hospitals by Medicare.
  • Reduced access to medical care for the rest of us from a shrinking doctor population.
  • Elevated health insurance premiums to pay for the tens of millions of Americans now covered by fiat.
  • Elevated health insurance premiums to pay for those who still don’t buy insurance until they’re already at the ER.
  • Elevated health insurance premiums to pay for pre-existing conditions which companies are required to cover at “no additional cost.”
  • Elevated insurance premiums to pay for coverage for grown adults on their parents’ policies until these adults are 26.
  • An insurance board that will tell your doctor and hospital what illnesses, injuries, and procedures for which they will reimbursed for treating you.

It’s a brave new world.

What’s Next?

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Yesterday I wrote about compromise.  Today, from Marc Thiessen at AEIDeas, here’s what we can expect given that compromise, over the next four years.  This comes against the backdrop of our—as usual—conflicted view of what we want (resolution of which puts a premium on two things: an honest press establishment and the conservatives among us doing a better job of getting our message out.  The lack of the former is no excuse for our not doing the latter, however).

Exit polls show that by a margin of 52-43, Americans want less government, not more.  By a margin of 63-33 they do not want to raise taxes to balance the budget.   And by a margin of 49-45, they want Obamacare either partially or entirely repealed.

With those clearly expressed requirements, which we’ve been expressing for the last two years, we re-elected President Obama and a Democrat-controlled Senate—while reelecting a Republican-controlled House.

Now those expectations:

  1. Obamacare will now become a permanent feature of the American political landscape.  It will never be repealed.
  2. The unprecedented levels of spending in Obama’s first four years will become the new floor, as America sets new records for fiscal profligacy and debt.
  3. Job creators will face massive tax increases, and more Americans will come off the tax rolls—resulting in fewer citizens with a stake in keeping taxes low and more with a stake in protecting benefits.
  4. Government dependency, already at record levels, will continue to grow.
  5. Four lost years in dealing with the entitlement crisis will become eight—digging us into a hole from which we may not be able to emerge.
  6. Obama, unworried about the impact of gas and electricity prices on his reelection, will finally wage the regulatory war on fossil fuels the Left demands.
  7. He will unleash the Environmental Protection Agency to impose crushing new burdens on US business.
  8. His administration’s assault on religious freedom will go on and expand to new areas.
  9. The Defense Department will be gutted, with cuts so deep that America will no longer be a superpower.
  10. Obama will almost certainly have the opportunity to appoint more liberal Supreme Court justices, possibly replacing conservatives on the high court—ending the Roberts court in all but name for a generation.

Unemployment

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The last Labor stat on the unemployment rate is out, and as usual, there are some interesting underlying numbers, also, as reported by Jeff Cox of CNBC.

First, the headline number: overall unemployment rose to 7.9% in October.  It’s important to note that due to problems related to the impact of Sandy, New Jersey and DC data are not included in this estimate; BLS says they estimated these missing data.

The underlying numbers:

  • 171,000 new jobs
  • the number of those employed part-time who would rather work full-time and those discouraged and so dropped out decreased to 14.6%
  • labor force participation rate, which consists of those working or looking for jobs (which includes the above underemployed), edged higher to 63.8%

But it wasn’t all even as “good” as those tepid numbers.  From the Bureau of Labor Statistics:

  • black unemployment rose to 14.3%—nearly twice the national average
  • Hispanic unemployment rose to 10%—25% above the national average
  • unemployment duration rose to 40.2 weeks
  • average work week showed no change
  • average hourly earnings for private nonfarm employees dropped by 1¢
  • number of unemployed rose by 170,000

Cox notes this, also:

President Barack Obama has touted the more than 4 million jobs created [sic] since the 2009 economic nadir, though the number is much lower—less than 200,000—when compared to the jobs lost.

As someone once said, this isn’t what a recovery looks like.