Monday, November 04, 2013

The Establishment's War on the Middle Class, By the Numbers

Demagogues who get elected to office promising to "tax the rich" to provide government goodies invariably wind up turning their guns on the middle class in order to fund their vote-buying schemes.  The rich after all, have options.  They can hire lobbyists to create loopholes, fund credible opponents, and if it comes right to it, simply leave.  They have the economic means to change jurisdictions which most middle class folks lack.

Like most predators, big-government politicians look for those who are easiest to victimize. The middle class have assets to pillage, but not so much that they can easily escape predation, so they are high on the list.    And let's not forget another favorite target- the next generation, who have no vote with which to defend themselves. They have no way to vote against being made into debt slaves by today's politicians who fund their big ideas by promising the earnings of tomorrow's children.

By some manner of cognitive dissonance, a large segment of our population considers them heroes for doing this.  I consider them moral degenerates, swindlers of children.  Those voters who support such villainy in the hopes of gaining some share of the loot are no better.  Let's hope they repent, because not even the best health care in the world (which they won't get anyway) can prolong life on earth indefinitely.   One day, we will all have to stand before the Strongest Child Advocate in the Universe.

If you just look at the math though, demagogues have to know that they cannot get the money to fund their larceny by "taxing the rich".   There simply are not enough rich to do the job.  That is why, to the extent they don't use debt, they must rob the middle class.   This scam has been going on for at least a generation, and in that generation the middle class has collapsed to a fraction of its former size.   And unless they wake up to the fact that class warfare is occurring, and take effective measures to fight back, the American Middle Class will soon be all but extinct.

I am drawing heavily from this Bruce Krasting article for my numbers.   His point was that there are not enough rich, that America is not a rich enough country, to pay for all of this socialism.

1) The "top 1%" of earners ($200K+ or $250K + for a couple) have about 14% of the income. Most of those are on the lower end of the scale, only 166 Americans make more than $50 million a year.   If we doubled the top 1%'s tax rates to 75% we would garner $150 billion extra- if they hung around and continued to work in order to have 3/4ths of their earnings confiscated for the sake of strangers.  Would you?   Nevertheless, our current debt is near $1 trillion dollars, so even if we did this it would only cover about a sixth of our debt, and that's before Obamacare really gets rolling.    The bottom line is "taxing the rich" to pay for the government we have now, much any less expansions, is a slogan, not an option.

2) About 46% of income earners earn 138% of the federal poverty level or less, and thus will be eligible for Medicaid under the new health care guidelines.   In dollar figures that represents about $16,000, for a couple $22,000, and around $33,000 for a family of four.   And of course the non-income earners are already eligible.  So the plan is to have half the country eligible for Medicaid.

3) In addition, families who make up to 400% of the Federal Poverty Level will be eligible for "subsidies" on the exchanges.   That goes up to $90,000 a year, but the subsidies taper off to next to nothing as you approach that figure.  Realistically, everyone under $50,000 a year is slated to get significant subsidies for health insurance.     73% of earners make under $50,000.

So 73% will be "takers" under the new system.   So let me ask you, who is going to be paying for all this government?  On whose backs will the burden be laid?   Not the rich, for they don't have to take it and there are too few of them at any rate.  No friends, it will be the 26% of the households in this nation who make more than $50,000 a year but less than $250,000, who will be expected to pay for all of this.  It might not all be in direct taxes either. By forcing healthy people who take care of themselves to pay higher premiums to cover someone else who made poor choices and whose premium is subsidized at any rate the government has in effect increased the taxes of the first person.   They just did it by mandate.

4) Because of the hidden tax of inflation, $50,000 is not very much money.  It is about the minimum a household needs to stay in the middle class in much of the country.   For example, this Inflation Calculator shows that an income of $50,000 in 2012 had the same buying power as an income of $16,396 in 1980. In 1980 a number of dollars that would put a man in the middle class would today make him eligible for Medicaid!    Yet so pernicious has been the theft by inflation via the Federal Reserve that a family making $50,000 today only has the buying power of $16,396 dollars based on their value the year I graduated high school.   The middle class is getting eaten alive from both ends as the high tax rates reach lower and lower into the earnings levels, while inflation means that the purchasing power of their dollars vanishes.


Our shrinking middle and upper middle class will be virtual hostages.  26% of the population is supposed to pay for all of this.   One out of four people are expected to pull the wagon that everyone else is sitting in.   That does not count the large amount of debt which will be pushed into the future and made into our kid's problem.   All because we refuse to accept fiscal reality.  We can't afford the wagon.  We can't afford the government that we have.   It would be wonderful if government could somehow pay for all the health care that we think we should have, but mathematical reality proves beyond any reasonable doubt that it can't.  It is not a realistic option, yet it is what we are presently trying to do because our ruling class does not want to face the reality that the party is over and we are out of money. Desperate voters sure don't want to face this reality either.   But it is still reality.

Facing reality is something that grown-ups are supposed to do, verses the escapism of perpetual adolescents and the mentally ill..  If we can't afford what we have now, we surely cannot afford the major expansion that is Obamacare.  We can't pay for all these things, we can't achieve utopia by means of government, but we can bankrupt ourselves trying.  This program will kill what is left of the middle class and keep those who have recently fallen out of it from ever re-entering.

Both parties want to expand government.   The Republican party has sometimes posed as the "alternative" which wants to shrink, or at least stop the expansion of, government.  It has absorbed the votes, money, and energy of those who want to stop the expansion of government on the basis of its posturing.   However, whenever it's supporters expect the Republican party to actually do something to stop the expansion of government, the people who run it become belligerent, hateful, and angry with the people who supported it on that basis.

Obviously it is past time that people who believe that government has gotten too big quit putting 100% of their political eggs in the Republican basket.   Local, organic, de-centralized, and hard to capture or corrupt alternatives should be pursued by any citizens who wants to actually defend their interests rather than ineffectually rail at the red team or put groundless hope in a party system which turns hostile when reminded of its recent promises.


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