An Attempt to Demistify a Curious Phenemenon

                  

I guess what I find confusing in all the rhetoric flying about in these election year months is that the most ardent and violently partisan of the far right are really arguing against their own best interests! It also is interesting that the most vociferous fans of Mr. Romney (evangelicals and others) have no real idea of what his faith is, what its core  beliefs are, and how radically different from main stream Christianity they stray. This matters little to me, but by their own doctrines  should matter greatly to them, but apparently in the Boss's words, they have been "Blinded by the Light."

I've remarked on this before, but it bears another examination, I think. I'm going to start with a generalization and then deal with some representative specifics, else this will run to ten or 12 pages. The generalization is this: "Many middle class and below persons (Tea Party Neanderthals chief among them) support and parrot the Republican rhetoric about taxes, deficit,  Medicare, The Affordable Health Care Act, and all the other surface reasons for disliking the current administration's attempts to reduce the deficit and make all Americans pay their fair share. In the vast majority of cases, the issues they decry will never have any impact on their own lives. What this tells me is that the lords of the manor (so to speak - the 1%) have actually convinced the serfs that they,  they feudal magnates (the Romneys,  the Trumps, etc) care truly, deeply and passionately about the poor in spite of contraindicative  actions and lifestyles."         

      The examples I choose have no particular order or precedence.

 The claim:   A current "chain spam" e-mail circulating (and forwarded by persons whose intelligence I never questioned until now!) claims that  "there  will be a 3.8% real estate tax on all real estate transactions, as a part of the Affordable health care Act (hereafter referred to as the AHCA)"  The article goes on to say that this will apply to all transactions and will cost the seller of a $350,000 home  about $13k right off the top.

The reality:  The tax (a Medicare tax) applies to only those capital gains in excess of  $500k annually. If the proceeds of sale are used to buy another house, it isn't a capital gain. If a family has over half a million in  income from capital gains, they are not representative of the average American family by a long shot , and can well afford it.   Why are Tea Partiers, most of whom can't even conceive of investment income of over, say "nada," k  annually, complaining about this?

The claim: The ACHA has a provision which would limit expenditures from flexible health care spending accounts to prescription drugs or medical/dental costs.

The reality: true, but:  From the screams, you'd think a child had died, but think about it; do you, or anyone you know use flexible spending account money to buy a bottle of Robitussin or other OTC meds?  I know no one who does this, but there have been many cases of fraud where the CVS bill has been paid by tax free money and includes  diet drinks, magazines, etc.  Not the aim, I think, of flex spending accounts. So who is affected? Very few of us, and cheats, primarily.

The claim: The AHCA  increases the threshold for medical expense deduction from 7.5% to 10%, which will adversely affect millions of Americans.

The reality: The first part is true, the conclusion is bullshit! Of those taxpayers who choose to itemize, most do not claim medical expenses as deductions on their Schedule A. In fact, for the latest years that the IRS has made the data available, medical expenses were not the most popular Schedule A deduction – that would be taxes paid. They also were not the second, third or fourth most popular – those would be charitable deductions, home mortgage interest and miscellaneous deductions , respectively. According to the IRS, a mere 17% of taxpayers who itemized deductions in 2001 claimed medical expenses. If you do the quick math, that works out to about 6% of all taxpayers. It’s a rather unimpressive number. Of course, it’s not hard to understand why this happens when you look at the demographics and the restrictions. Most itemizers tend to be middle to upper income taxpayers since to hit the standard deduction limits requires generally – though not always – a certain level of income to support those expenses. The primary method by which those who do claim medical cost deductions reach this level is Health Insurance costs which is because the rich have Cadillac plans which cost a fortune (defined as in excess of 27k annually for a family!!!)  The "fun fact" here is that the rate used to be 3% of gross income until raised by another president. No, not Clinton or Carter. Reagan increased tax threshold for medical cost deductions by a factor of 2.5 (3% to 7.5%), Obama by factor of .33, (7.5% to 10%)! Those who weep at the memory of Ronnie have no clue.

The claim: The Individual Mandate Excise Tax. Starting in 2014, anyone not buying “qualifying” health insurance must pay an income tax surtax. It goes up each year until 2016 and beyond when a couple would pay a tax of the higher of $1,360 or 2.5% of adjusted gross income.

The reality: again True, BUT:  Simple solution, buy health insurance and stop being a drain on society. If you're a pack a day smoker - stop smoking and save double plus the cost of health coverage Buy health insurance, get checkups, preventive care, don't use the ER as a primary physician. No one who has cost issues will be forced into bankruptcy by this and most will be better off.  The key here is that the middle class whiners won't even be affected by it, so why whine?  Of course, if like the Ron Paul supporters  at the Republican primary debates, who shouted "Let 'em die"  (and who, I am almost certain regard themselves as fine, Christian folk) you have lost sight of morality altogether, you suffer from Conscience Deficit Disorder.

 The claim: The Republican Party is united in support of a platform. Corollary 1, the Republican Party supports women.

The reality: Clint Eastwood, who lamentably whored himself out in the "empty chair" charade in Tampa, has been  a  frequent and vocal supporter of same sex marriage, which is certainly not consistent with the 2012 platform. Regarding women's issues. Paul Ryan's voting record in Congress is as anti woman as is possible. He even rejected the "equal pay for equal work" Act.

  The claim: President Obama has increased the Deficit (and of course the debt) far beyond what Republicans (would have/have) done  

The reality: Sorry for the graphs, but they save a slew of words and will be easier for Republican readers (if any) to understand

 In 1981, the supply siders commandeered the Reagan Presidency (assisted by the fact that Reagan refused to listen to even the most conservative real economists)  and instituted their "Voodoo economics", as Bush senior had called it in 1980. As shown in the graph, the "magic" failed just as Bush predicted, and the supply siders turned a 32-year winning streak into a debt disaster that continues to this day. For 20-years, under Reagan and the Bushes, the national debt increased compared to GDP every single year. In most other years it decreased.  Bush senior fought against it, so the Republicans didn't support him and he lost to Clinton, who put an end to supply-side economics.

G. W. Bush brought it back full strength, with V.P. Cheney saying "Reagan proved deficits don't matter." Currently supply siders are still in full control of the Republican party. The green line shows what would have happened to the national debt if Reagan and the Bushes had balanced their budgets as Reagan claimed he would. G.W. Bush, in all modesty, claimed he would "retire nearly $1 trillion in debt over the next four years. This will be the largest debt reduction ever achieved by any nation at any time." Conservatives were (and are) , naturally,  quite embarrassed by this performance, so they  invented a cover story: The Democratic Congress did it. Nice try. But for 12 of the 20 years the Congress was not Democratic. Also, presidents can veto, and when it was Democratic, Congress passed smaller budgets on average than the Republican Presidents asked for.

             Debt and Deficit   Details grounded in Fact, not emotion and ill concealed "other" issues

·         Income tax payments dropped 51% for corporations and 23% for people. So the government had to borrow.   Bush signed the FY 2009 budget and the TARP bank bailout,But, the Recession itself caused most of the deficit. It took off under Bush, because the recession caused it.

·         Obama's job stimulus barely got started before the FY 2009 budget ended on Sept. 30, and by then the deficit had exploded.

                                      What Are the Four Causes?

So what are the causes of the deficit; who's to blame?  There are four distinctly identifiable causes.

 1.The biggest cause: Reduced tax payments, due to business slowdown, triggered by: insufficient regulation of financial markets which allowed (among other things totally unregulated instruments like hedge funds and derivatives) weak mortgages to be bundled and considered as if they were real money instead of risky IOUs.

 2. Second: Automatic increases in unemployment insurance and food stamps, and people starting social security early because they couldn't (can't)  find jobs.

 3. Military spending also increased (Bush's war), but is now fading.

 4. Bush's TARP and Obama's Jobs Stimulus (top layer) account for little of the deficit, and they are temporary.  • The deficit is from the safety-net helping the poor and the unemployed in a terrible recession, and helping all of us  (including businesses!) with lower taxes.

        Facts regarding employment and jobs growth.

The claim:  This by Mr. Ryan - Medicare and Social Security are "entitlements" (in other words gifts we expect from the Government)

The reality: Working Americans pay into both Social Security and Medicare throughout their working lives. For those reaching retirement, these are simply returns on investment. As an employed American for 48 years, I paid into Social Security (SS) all my working life and as a percentage of my entire salary (about 6.2%, matched by my employer). Medicare after 1966 was the same process. Of course, I paid that same 6.2% of income into SS all year, every year, because I never exceeded the income level where I could stop paying for the rest of the year. Mitt Romney, of course hit the cutoff in February and paid none the rest of the year! As far as solvency, SS payout is based on income during working life.  In 1936, 65 was old!  Many Americans didn't live to draw SS. To "fix" SS today simply requires the guts to increase eligibility window to reflect current life expectancy. In 1900, combined male female life expectancy was about 49 years of age, in 1930, about 59, in 2002, 77 years plus. Additionally, the life span of those who reached  65 increased, albeit more modestly, about 5 years longer. In plain speak, the average American didn't live to collect SS in 1935, but now that is no longer true. A good starting point would be (just my suggestion) early SS at 68, full SS at 72 unless disabled. If I leave college today and pay at current rates from my $50,000 annual salary for 45 working years and assume (hugely low) no pay increase for the period, I will have paid $145,000 into SS. At even a modest 5% yield, that equates to $447,000. Don't you dare tell me it's an "entitlement!"

As far as Medicare, mandate insurance (like the AHCA), which will radically lower Medicaid costs, and provide earlier, much cheaper interventions. Secondly, jail cheaters like Florida governor Rick Scott. Remove medical licenses for MDs who are Medicare cheats.  Just don't tell me that the benefits of Government mandated health care payments over my working life are now an entitlement!

And I do believe that's all I have to say about that, for now.