Obama is gearing up to give his “State of the Union” speech this week but in typical fashion there is some media build up to what he just might say. Today he and Biden released a few gems in order to peak the interest of the American audience. Of course the details aren’t available yet, and frankly will never be made available, because normal politicians just name a bill “The Sunshine and Margarita Bill” and come to find out we all get stuck in the Arizona Desert with only salt and limes for the rest of our lives. I digress, so now let’s discuss the wonderful ideas that were released in front of the big “Middle Class Task Force” sign where a bunch of “leaders” got together to discuss how to “help” the middle class.
First of who is the middle class? Is it simply based on income? Do we include standard of living, expenses, children, education level? Not sure how exactly this administration defines it but I would contend that families making up to $85,000 may be middle class, upper middle class, or even lower class. Class has a lot to do with the overall picture not just the amount of money a person earns. There are some families who are fiscally responsible and are providing a high quality of life for their families and some families in the same income bracket that are buried in a way too big mortgage, way too high car payments, way too much credit card debt, way too little health insurance… but plenty of I-Phones and X-Boxes. I guess we should just let the Government decide though – the heck with the actual choices people make.
Second, Why is it the Governments role to ensure any group of people anything, whether it is Corporate America, Middle Class, Unions, Lower Class, Rich, or Trade Associations? The only thing our Government really needs to live up to is our natural rights as defined by the Constitution, The Declaration of Independence, and The Bill of Rights. Other then that they really have no business ensuring anything for us. And I know some Liberal will want to discuss the “General Welfare” language but I don’t think tax cuts, stimulus money, or other Government welfare payments to specific groups actually provide for the General Welfare of the people. Having F-16 fighter pilots dropping bombs on terrorists provides for the General Welfare.
The Plan (as of Today)
1.”Require companies that do not offer retirements plans to enroll their employees into direct deposit retirement accounts, unless the employee opts out”. Most large companies offer retirements plans, so this additional requirement would effect small and medium size businesses the most. I own a small business and held a Series 6 license and retirement plans come at a rather large administrative cost. The cost is particularly disproportionate for smaller businesses -Retirement Company Admin Fees, Non-Discrimination Testing, Labor Cost for Administrative Time, Fiduciary Responsibilities & Annual Audits, along with more Government employees to ensure that the businesses are actually doing what the Government is telling them to do. Gee this sounds like a winner and a job creator. Who knows what the actually legislation would look like, but it could actually be more burdensome then I described. Just think maybe they will just require all companies to make a matching contribution to retirement plans. We already have one entitlement plan called Social Security that is going broke and several State Retirement plans are also going broke… neither one of those Government plans are working out to good, so I guess forcing business to subscribe to the failed methods of the Government makes good sense.
2. Increase the “Savers Credit,” a tax credit for retirement savings, for families making up to $85,000″ – This is already a gem that is on the books… Frankly I did not know about it but I found it on the IRS Website. Gee, my accountant never mentioned this one to me?? Basically you can get 1k as a tax credit for contributing to a retirement plan, not sure if that is a refundable tax credit or non-refundable, either way tax credits are just another term for welfare payments. Tax credits are an interesting little tool the Government uses because it feels sort of painless to the public. Let’s assume the Government has a pile of money – we will call that Revenue(Taxes), then it has Bills to pay(Spending)… if any money is left over there is a Surplus, if they are short we will call that a Deficit(we call it losing our house). A non-refundable tax credit reduces revenue and a refundable tax credit reduces revenue and can even increase Spending. Now if Revenue goes down and Spending goes up because of a tax credit – how do you make up the difference? Wait… think about it – take it from someone else or print more money(bad bad bad also, but not teaching that lesson today).
Be careful, because what the Dems are trying to do (and the Republicans like it just as much) is to move the threshold of dependency up the ladder. If the Government can push more people into an bracket where they are benefiting from a Government Welfare program the more votes they can get to be re-elected. Politicians have been playing this trick forever and that frankly is one of the flaws of a Democracy. Nobody is going to vote to stop giving themselves more “free” stuff – find more on that in Doctor Bulldog’s Blog, as he does a nice job explaining. We were founded as a Republic for a reason…
3. “Change some of the rules for 401(k) employer-sponsored retirement savings accounts to make them more transparent” – Gee where have I heard transparent before? Oh yeah in the health care debate and for some reason I am not sure most of us really know what is in that bill. Who knows what this means, “Transparent” is just another word that the politicians use to say Fair, Honest, Open… but how in the hell does that apply to a 401k plan is beyond me. What it likely means is more burden placed on the employer in administering the plan or maybe it means that the 401k plans need to tell the consumer how much risk there is when investing in the stock market and that the rich companies you invest in take big bonuses and are bad. Who knows what this means? Sounds good though!
4. “Increase the child tax credit rate to 35 percent of qualifying expenses from the current 20 percent for families making under $85,000 a year. Families making up to $115,000 would be eligible for some increase in the tax credit” – See #2 – this is called Welfare and why am I being punished for not having kids? Who decides that someone should have kids or not… last I checked the Right says God and the left says it is a Woman’s right… what happened to me? I think I will need to get together a group called “Married People Who Decided Not To Have Kids Association” so we can lobby and pay off some Politicians in order to get a tax credit for not having kids. Really middle class families tend to have kids so if we can get them more addicted to Government hand outs the better.
5. “Increase child care funding by $1.6 billion in 2011 to serve an additional 235,000 children” – Welfare – pay for your own kid… the Taxpayers already pay for enough of them. How does that help the middle class?
6. “Boost government spending by $102.5 million for programs aimed at helping families who provide home care for an aging relative.” – Remember #2 about spending… Gee this is sounding a lot like cradle to grave care… pay you to have kids, pay you to take care of kids, pay for your college(#7 ), pay for your health care, pay for your retirement, pay you to caulk your house, pay you to buy a new house, pay you get rid of your clunker & pay your family to take care of you. – Trust me I missed a bunch of them, the list is far longer.
7.” Ease the burden for student loans by limiting a borrower’s payments to 10 percent of his or her income above a basic living allowance” – Who decides the basic living allowance? Does that include of the Zit faced college kids who have the I-Pods hanging out of their heads oblivious to the rest of the world, banging out a text, tweet, or updating some social sight on the new Droid, Blackberry, I-Phone App… is that included in the basic living allowance? Today Biden talked about the poor college student who after graduation is burdened with such high student loans and the job they get just isn’t enough to make it. HE IS DEAD WRONG!!!! I graduated with over 20k in student loans and I have never missed a payment, NEVER! I have a job, I now own a business, I worked almost the entire time I was in college, I quit with 6 hours left for my Masters because I was broke and needed full time work, I had to take night classes for a year to finish… Guess what? I did it!!! Biden makes me want to puke when I hear him talking about student welfare.
Maybe the cost of college is disproportionate to the preparedness a college grad has for entering the job market. Maybe the free market recognizes that a college degree is only part of the equation, or maybe that in many well paying fields is not even required. Maybe our State run Universities and Secondary schools do such a miserable job preparing students that the pay reflects it. Or how bout this one, maybe the college education was worth every dime, maybe you have to have a roommate after you graduate as you progress into the next level of employment, maybe you can’t have a new car right away, maybe you have to actually work to achieve something in life. I know – Novel Concept – Just though of it – please spread the word along – this one might take off.
Finally all private banks will get out of the student loan business because they once again won’t be able to compete with the Government. If the Government tells them the exact terms of the loans, they will just find another line of work. But with all of the other crushing regulation that Obama wants to impose on banks there may not be much more work. And by work I mean money to loan to people and businesses in order to make a profit. Do you know who will be left standing? The Federal Government but that is okay because we want everything guaranteed for us from the day we are born to the day we die – go to public schools, get a college education, have known interest rates, get a good paying guaranteed job, with guaranteed benefits, guaranteed retirement, a guaranteed home, a guaranteed car, and for good measure maybe they can throw in a guaranteed kid and spouse. (Dating leads to so much heartbreak and pain)
7A – “If you enter public service your loan can be forgiven” – Another beauty which will also increase the size of government which will add to the cost for the very few taxpayers left. This is sort of like the last kick in the teeth and is self explanatory and does nothing to help long term “sustained” job growth and economic prosperity. Government only takes from society – they do not produce anything which means those that produce have to pay for Government which decreases wealth, which decreases employment, and only hastens our ultimate demise.
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