Debt & Taxes: Obama’s Rate of Change

February 18, 2010August 19, 2017 / L. M. Walker / 1 Comment

Obama’s Rates of Change

By: Larry Walker, Jr. [Revised]

Today I am observing the rates of change embedded in Barack Obama’s budget projections. My objective is to determine whether Obama represents ‘change you can believe in’, and whether or not his policies are in line with his rhetoric. I will compare Obama’s 4 year budget projections during his first (and only) term, to the previous 16 year period. An observance of rates of change can provide assurance that the course charted is the one navigated. Here are a few observations.

During the 16 year period ending with fiscal year 2009, GDP achieved an average annual growth rate of 6.8%, while government revenues (taxes) grew at 4.5%, and the national debt grew at 10.3%. Summary: The national debt outpaced economic growth, while tax revenues lagged the economy.
In following Obama’s budget projections for the four year period ending in fiscal year 2013, GDP will grow at an average annual rate of 5.2%, while government revenues (taxes) will grow at 12.9%, and the national debt will grow at 9.2%. Summary: Tax revenues will more than double the pace of economic growth, while the national debt will continue to grow faster than the economy.

“Tax revenues will more than double the pace of economic growth, while the national debt will continue to grow faster than the economy.”

After decades of reckless government spending, the change I would have expected, and could have believed in, would have led to an increase in GDP, a reduction in income taxes, and a dramatic reduction in government spending. Instead, it appears that the change I will get will be as follows:

GDP will grow at an annual rate which is 23.5% slower than what we experienced over the last 16 years. This means that our wealth will be diminished.
Income taxes will increase by 186% over the next 4 years. Taxes will consume more of a shrinking economy.
Although the National Debt will grow at a slightly slower pace, it will: (a) grow 77% faster than GDP, and (b) continue to grow in spite of massive tax increases.

Conclusion: The course Obama has charted, is not the one being navigated. Obama talks about controlling the debt and deficits, cutting taxes for 90% of working families, and building a new foundation for economic growth. The only problem is that by following his budget, we will experience an increase in the national debt, higher income taxes, and lower economic growth. This is ‘change’, but it is the kind of change that I cannot, do not, and will never believe in.

Sources:

http://www.usgovernmentrevenue.com/downchart_gr.php?chart=F0-fed

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

Obama’s Tax Fallacy

January 28, 2010August 19, 2017 / L. M. Walker / 5 Comments

By: Larry Walker, Jr. [Updates in Red]

Barack Obama – “I gave 95% of all Working Families a tax cut…”

Really?

First of all 43.4% of Americans don’t pay any income taxes. That leaves the rest of us. So did 95% of the 56.6% who actually pay income taxes get a tax cut? I doubt it, but even if that were true, it’s not 95% of all Americans (or ‘working families’, whatever that means) [see Tax Fallacy II: 95% B.S. for more on this].

Is a refundable tax credit the same as a tax cut?

But the real fallacy lies in the fact that refundable tax credits are not tax cuts, but rather, they are subsidies. Subsidies are paid for by taking money from some Americans and giving it to others. This is also known as ‘spreading the wealth around’.

I’m not very cheery knowing that while I have been faithfully paying my mortgage, people are buying foreclosed houses down the street for $110K less than what I owe. And not only that, but the Government is giving them an $8,500 subsidy out of my tax dollars. It’s as if the $110K of potential equity wasn’t enough of a subsidy. Also, when the government refunds a person $8,500 to buy a house, it only applies to those who bought houses, not to 95% of all Americans.

The $400 ($800 for joint filers) Making Work Pay Credit is also a refundable tax subsidy. It is however only available in full to those (a) who made less than $75,000 ($150,000 for joint filers), (b) is reduced if income exceeds these amounts, (c) and it is not available at all for those making over $95,000 ($170,000 for joint filers) in 2009. Is it possible that 95% of Americans who actually pay income taxes made less than $95K ($170K for joint filers) and will get the full credit? Not when the top 50% of wage earners pay 96% of income taxes.

The earned income credit is a well known tax subsidy. If you made $10,000 and have a child, you will pay no taxes and will get back a $4,043 tax subsidy ($3,043 earned income credit, plus $1,000 child tax credit). This is not a tax cut, but rather a 40.43% bonus awarded for not trying very hard.

Non-refundable tax credits represent true tax cuts, as they can only be used to reduce the amount of tax actually owed, with the balance being lost. The child care credit is an example of a non-refundable tax credit, and has not changed in years. The retirement savings credit would be a good way to cut taxes, but unfortunately if you made over $27,750 ($55,500 for joint filers), you don’t qualify. The education credit used to be a way to cut taxes, yet it is already $2,500 per year, so nothing new was stated by Obama when he said he will give out a $10K credit over 4 years. Uh, we already have that, sir. [What is new, however, is that as of 2009, now 40% of the education credit has become a refundable tax subsidy.]

Another tidbit, right now, all three of my kids are in college. I’m divorced and they live with their mother out of state. I am paying part of the way for one while the other two have full scholarships. Because I don’t claim any of them as dependents, I am not allowed any credit for the tuition that I’m paying. I wonder how many others are in the same boat. It’s not that I want anything from the Government, but just want to let you know that there are cracks in the real world.

Capital Gains Tax Cut for Small Business?

Finally, Obama wants to give a Capital Gains Tax Cut for Small Business Investment. What does that mean? A capital gains tax cut only applies if someone has an appreciated asset to sell, which they have held for more than one year. So, first you have to have an appreciated asset. Then you have to either have a small business that buys and sells appreciated long-term assets, or would need to sell your business in order to benefit. The only problem with what Obama said is that the lower Capital Gains Tax rate that we already have, which is currently 0% for those in a 15% or lower tax bracket, already applies. Nothing new here.

As a small business owner I haven’t quite figured out how anyone can really use this one. And what kind of tax rate are we talking about anyway? He didn’t say anything specific. The only way I could use it is if I sold my business. But I don’t want to sell the business. And if I did sell my business I would already benefit from the Section 1244 exclusion or the low capital gains rate.

While you are applauding Obama’s words, you should stop and think about how a capital gains tax cut can benefit a small business. If anyone can explain it to me, I’ll be glad to listen, but to me, it’s just rhetoric.

In conclusion, all I heard from Obama tonight, regarding taxes, was the same class warfare, wealth redistribution rhetoric that I heard in 2008 when I cast my ballot for the other guy.

___________________________________________________

References:

http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2276&DocTypeID=7

Obama Stumbles on Glass-Steagall

January 22, 2010August 11, 2017 / L. M. Walker / Leave a comment

How Novel!

It looks like Barack Obama has reverted back to stage one of the Obama Learning Curve, ‘unconsciously insular’.

His latest bright idea involves re-instituting the Glass-Steagall Act of 1933. Could this possibly be the same kind of overreaction which helped to prolong the Great Depression? After all, the Depression didn’t officially end until 1941. Obama constantly blames the 8 year Presidency of George W. Bush for our current economic woes, yet Glass-Steagall was repealed in 1999. I mean all you hear from this guy is the same tired whine about the ‘failed policies of the Bush Administration’. But then what does he do? He reverts to the failed policies of the FDR Administration.

Background

“In 1933, in the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress put their names on what is known today as the Glass-Steagall Act (GSA). This act separated investment and commercial banking activities. At the time, “improper banking activity”, or what was considered overzealous commercial bank involvement in stock market investment, was deemed the main culprit of the financial crash. According to that reasoning, commercial banks took on too much risk with depositors’ money…”

I thought our current dilemma was caused by a housing related bubble, not by commercial banks investing too much money in the stock market. In our time, banks took on too much risk by investing in risky home loans. Loans which were promoted by ‘liberal’ politicians under the false ideology that it was somehow a Natural, God-given, Right for everyone to own a home.

Reasons for the Act – Commercial Speculation

“Commercial banks were accused of being too speculative in the pre-Depression era, not only because they were investing their assets but also because they were buying new issues for resale to the public. Thus, banks became greedy, taking on huge risks in the hope of even bigger rewards. Banking itself became sloppy and objectives became blurred. Unsound loans were issued to companies in which the bank had invested, and clients would be encouraged to invest in those same stocks.”

Hmmm. This doesn’t even sound remotely related to our present woes.

Effects of the Act – Creating Barriers

“Senator Carter Glass, a former Treasury secretary and the founder of the U.S. Federal Reserve System, was the primary force behind the GSA. Henry Bascom Steagall was a House of Representatives member and chairman of the House Banking and Currency Committee. Steagall agreed to support the act with Glass after an amendment was added permitting bank deposit insurance (this was the first time it was allowed).”

It is interesting to note that even Glass himself moved to repeal the GSA shortly after it was passed, claiming it was an overreaction to the crisis.

An Overreaction to the Crisis?

It seems to me that all Obama has done is to stumble upon a method of prolonging the economic crisis. Instead of embracing obvious policies which have helped America out of every single recession since World War II (i.e. across the board tax cuts, and allowing the free market to correct itself), Obama has not only failed to come up with new ideas, he has ‘dug up’ the old tried and failed policies of the 1930’s. And this is the guy you were waiting for?

Barack ‘Carter Glass’ Obama could do us all a favor by just getting out of the way. If he would just sit down and hush up, the free market will eventually reach equilibrium. Sometimes it’s best not to meddle. You know what they say, “Jack of all trades; Master of none.”

Finally, what was it again which finally broke the Great Depression?

“Only when the federal government imposed rationing, recruited 6 million defense workers (including women and African Americans), drafted 6 million soldiers, and ran massive deficits to fight World War II did the Great Depression finally end.”

Is it possible that the War on Terror was our salvation, and not a mistake?

____________________________________

http://www.nps.gov/archive/elro/glossary/great-depression.htm

http://www.investopedia.com/articles/03/071603.asp

Give Me a Tax Cut, or Give Me Death II

December 20, 2009August 18, 2017 / L. M. Walker / 8 Comments

Small Business Tax & Toil

By: Larry Walker, Jr.

Small business owners, like myself, pay twice as much in Social Security and Medicare Taxes as regular employees. Yet when we ask for a payroll tax cut on our own pay, what we get from the government is a crackdown on regional banks to give us more loans. Aside from the fact that 140 of these banks have failed since January 16, 2009 (here), what Obama’s Cluelessian economists fail to understand is that wealth is not created through amassing debt.

If Obama wants to run the Federal Government based on the myth that wealth is created through debt, that’s one thing, but his attempt to sell this ideal to small business owners like myself makes him look inept. Small businesses are already in debt. Adding more debt does not translate directly into increased sales, but rather into higher monthly principal and interest payments (aka. ‘paying current expenses out of future income’). It’s one thing to borrow money to start a venture, or to secure lines of credit for working capital, but it’s entirely another to pile debt upon debt in a degenerating economy.

Wealth is created by increasing sales of products and services while maintaining or reducing expenses. Bankruptcy is achieved through maintaining or increasing expenses in the face of declining revenue. It is a fact, not a theory, that Obama’s reckless economic policies will lead to the latter.

So what is the Small Business solution? What could possibly help small business owners survive in the face of a colossal governmental failure? A payroll tax cut for one. And what is it that justifies a payroll tax cut for small business owners? As I pointed out in Part I, small business owners pay an unfair burden of Social Security and Medicare Taxes, and we receive nothing in return. By nothing, I mean that we will receive the same benefits as regular workers after having paid twice the amount of payroll taxes (see the chart below).

What we are asking for is fair. What we are asking for is economic justice. We want the Federal Government to stop unfairly burdening small businesses with an unjust burden of payroll taxes with no corresponding benefit. All we want back is some of our own hard earned money, produced from our own toil, in order to improve the future economic outlook of our communities and our nation.

If we get our desired tax cut, what will small business owners do? We will have been aided in paying our bills, in reducing our current debt, in not having to lay off additional workers, and in having survived for another day. And we will have done so with our own money, and not through a government handout.

Who will die? When I say, “give me a tax cut, or give me death”, it won’t be me or my fellow entrepreneurs who die. The first casualty will be the next laid off employee, and eventually the Federal Government. Every employee we lay off leads to negative government revenue, and reduced GDP. Most of us can scale back on spending and survive, but one can only cut so much before creditors are jeopardized. The Federal Government is well on the road that leads to death.

We will survive, but will the Federal Government? Small businesses have been cutting back on spending in the face of the economic decline. The Federal Government, on the other hand, has been increasing its debt. If Obama’s incompetent economic theory leads to the bankruptcy of the United States government, then that is just a natural consequence of spending more than annual revenue, year after year. Eventually the principal and interest payments will surpass revenue. But that’s Obama’s plan and not the road for me. As for me,

Give me a tax cut, or give me death!

—

Tips: 5 Ways To Manage Business Debt

National Debt Crisis – 2010

December 9, 2009August 19, 2017 / L. M. Walker / 3 Comments

Obama’s Debt Crisis

How much is the National Debt costing America?

It’s interesting to note that the total interest paid on the National Debt since 1988 has been $7,393 billion (that’s $7.4 trillion). That’s a lot of money being wasted by politicians in Washington, D.C. and there are not enough people talking about it. There is an even more deafening silence regarding what the cost will be over the next 10 years. The United States will pay almost as much interest as it did over the last 20 years in just the next 10. And no one in Washington is addressing the Debt Crisis. I would to God that somebody would wake them up before it’s too late.

Source: Treasury Direct

Plan A – Pay the Debt Now

The National Debt is currently $12,087 billion (that’s $12 trillion). If principal and interest payments were made over the next 30 years at 4.0% interest, the total remaining interest cost would be $8,883 billion (that’s $8.9 trillion). The total annual P&I payment would be $699 billion or roughly 31% of current government revenues (click on the chart below). But since it’s not likely that this plan will ever see the light of day, what is Plan B?

Plan B – Ignore the Debt until 2019

The National Debt is projected to grow to $19,224 billion (that’s $19 trillion) by the year 2019. This is calculated by adding the CBO’s projected budget deficit of $7,137 billion to our current debt. If the debt is not addressed until 2019, the cost of interest over the next 10 years would be $6,271 billion, since no principal payments will have been made (see chart below). Then, assuming that a plan is put in place to pay the debt off over the ensuing 30 year period, ending in fiscal year 2050, the total cost of interest over the next 40 years will be $20,397 billion (that’s $20.4 trillion). If the government starts making payments after 2019, the annual P&I payment would be around $1.1 trillion or 49% of current government revenues.

Obama’s Debt Crisis

If we address the National Debt now it will cost roughly $8.9 trillion in interest. If we wait until 2019 it will cost closer to $20.4 trillion in interest. If we never address our debt and continue to treat it as an interest only loan, then this number will “skyrocket”. In fact we may already be at the point of no return.

This is Barack Obama’s failure. Obama talks the talk but he doesn’t walk the walk. Obama will cost America $6.3 trillion in interest over the next 10 years by his failure to address the national debt. Add that to his $7.1 trillion (and rising) budget deficit and Obama will have cost America at least $13.4 trillion. So any success that Obama touts short of $13.4 trillion in savings, revenue or benefits is a joke.

The Consequences

What consequences could American’s face if the debt is not dealt with? Well, for one interest rates are currently at an all time low, and there is only one direction they can go, up. When interest rates begin to rise, so will the cost of the debt. As shown here, if interest rates rise to 5.0% and the debt is not brought down by fiscal year 2050, then the total interest cost jumps from $20.4 trillion to $36.8 trillion. That’s about the equivalent of three times annual GDP wasted on interest payments.

Also, the United States could lose its AAA-credit rating. Once AAA status is gone it will be tougher for the nation to borrow money and lenders will charge higher interest rates. Lenders may also begin to impose stringent standards on our nation’s fiscal policies. Don’t forget that a lot of this borrowed money comes from foreign countries. In other words, if we don’t deal with the debt now it will only cost more in the future and we could potentially lose some of our freedom in the process.

Is Congress Brain Dead?

When Congress talks about saving the country a couple of hundred billion over 30 years, by passing a health care entitlement bill, I can’t help but wonder if anyone is awake at the helm. Congress is on the path of costing the country roughly $6.3 trillion in interest over the next 10 years, plus another $14.1 trillion over following 30 years, and these are probably low-ball figures, and what are they up to? Telling us how they will save a few pennies by adding a few trillion more to the National Debt. Yet, if Congress fails to address the Debt by 2019, the interest costs will soar well beyond the $20 trillion mark.

Those who truly love this country could care less about the Congress saving $200 billion on a new entitlement program. I could especially care less since I know that it will cost 5 times as much to implement and more down the road. Don’t talk to me about Health Care reform while your back is turned on the more pressing $20 trillion problem. Will somebody please wake up the Congress, the Media, and the Borrower in Chief? Wake them up before it’s too late.

Note: This posting is based on the following assumptions: (1) that interest rates are fixed at 4.0%, and (2) that the debt is repaid over a 30 year term.

References/Related:

GAO Financial Audit of Public Debt 2007-2008

CBO Budget Projections through 2019

U.S. Treasury Direct

Jobs and O-bonics Interpreted

November 14, 2009 / L. M. Walker / 3 Comments

Why Take Math? So Your Ignorance Isn’t Broadcast Nationwide on the AP Wire

November 6, 2009

This is pretty funny. Or horrifying. Depends on how you want to look at it.

Several days ago, I noted on Twitter that there were a lot of “saved” jobs that weren’t saved at all but actually cost of living increases. About 24 hours after I noted this, there was an Associated Press article about that very phenomena.

Coincidence? Almost certainly. But I’ll flatter myself anyway.

But the laugh riot comes several paragraphs into the article as they look into why Southwest Georgia Community Action Council was able to save 935 jobs with a cost of living increase for only 508 people. The director of the action council said:

“she followed the guidelines the Obama administration provided. She said she multiplied the 508 employees by 1.84 — the percentage pay raise they received — and came up with 935 jobs saved.

“I would say it’s confusing at best,” she said. “But we followed the instructions we were given.”

“Confusing at best”? The multiplication of percentages is “confusing at best”? It seems obvious to me she should have multiplied 508 people by the amount the increase (.0184) and gotten 9.3. But she forgot that you have to divide the percentage by 100 before you multiply.

The fact that she had “saved” more jobs than there were people in the organization should have been a tip-off. But this is a pretty common problem with people who don’t have a very good grasp on mathematics… they don’t recognize obvious mathematical errors, they just plug in the numbers and go with whatever comes out.

And this, children, is why you pay attention at school. So you don’t get in the national news for doing something really stupid and then blame it on the instruction manual.

Via: Political Math Blog

———————————————————————————————-

My Comments:

So I take it that instead of creating or saving 1 million jobs, we only created or saved around 10,000 (after moving the decimal place two places to the left). And since we know that no jobs were actually created, what Obama really means, you have to interpret the Obonics, is that, “we lost 4.2 million jobs, and we think we would have lost 1 million more, but thankfully our $787 billion dollar stimulus program saved around 10,000″. Right?

Obama: Ready to Go!

October 19, 2009August 11, 2017 / L. M. Walker / 2 Comments

Most American’s were ready for Obama to go before his term started. Now after nine month’s in office, the first affirmative action POTUS declares that he is ‘ready to go’. I don’t know where he’s planning to go, but I suspect that it’s not anywhere that the rest of America would care to venture. Let’s review Obama’s performance as CEO of the United States.

According to the Associated Press, the Federal Budget deficit has surged to an all-time high of $1.42 trillion as tax revenues plunged while the Obama Administration was spending massive amounts on the way to its undeclared destination. The Obama Administration has projected that its deficits will total $9.1 trillion over the next decade.

For 2009, the Government collected $2.10 trillion in revenues, a 16.6% drop from 2008. That was the largest percentage decline in records going back nearly seven decades. Meanwhile, Government spending last year jumped to $3.52 trillion, up 18.2% over 2008, the biggest percentage increase since a 23.4% jump in 1975.

In the private sector, a CEO with such a record would not be able to weasel his way out of being fired through clever rhetoric. In fact, a search committee would be formed, with haste, to locate a new CEO who specializes in turnarounds. If Obama were not the current POTUS, it is highly doubtful that a man with his lack of experience and qualifications would be sought for the job.

The Review

Let me get this straight, Obama, you lost $1.42 trillion in your first nine months. You generated revenues of just $2.10 trillion, while you spent $3.52 trillion? And your plan is to lose another $7.68 trillion for a total of $9.1 trillion over the next ten years? And now you say, “I’m fired up and ready to go?” Well, you can go alright. You can go right now. In fact, YOU’RE FIRED!

You know, there is a Constitutional provision whereby a POTUS may be forced to leave office before his term ends. It’s called impeachment. Don’t rule it out. By the way, this isn’t personal, it’s business.

Reference:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10603996

Common Sense vs. Obamanomics

October 12, 2009August 18, 2017 / L. M. Walker / 4 Comments

Obamanomics: Putting the Cart in front of the Horse

By: Larry Walker, Jr.

If you caught Steve Wynn on FoxNews Sunday with Chris Wallace today, perhaps like me, you thought of the image above. Mr. Wynn is right! Barack Obama’s entire domestic agenda is based on a false premise. In fact, in all that Obama is pushing his fatal flaw is that he has put the cart before the horse. The cart being comprised of health care reform, economic stimulus, cap-and-trade, tax increases, wealth redistribution, ….etc….etc… And the horse being job creation.

The false premise being that you cannot redistribute what you don’t have. For the 15.1 million Americans who are jobless, giving them health care reform that they cannot afford is meaningless. Solving the problems of the universe through cap-and-trade by raising utility bills for those already on government assistance will only increase the amount needed for such entitlements. In fact without the ability to provide for ourselves, life itself is pretty much meaningless.

Last week 35,000 Americans lined the streets of Detroit hoping for a one time handout. If the government provides this one time handout, what will those people do next month? When the government provides a one time stimulus of $600 (or $250), how far does that go?

Mr. Wynn is right in saying that without job creation there is nothing. Obama is creating a Black Hole wherein an ever shrinking workforce will be forced to pay an ever increasing amount of taxes to support the ever expanding base of unemployed. And it won’t end until the government listens to people like Mr. Wynn and starts to implement tax policies that promote incentives for businesses to expand and hire.

The only way this is going to happen in a timely manner is for the priorities to change. Left and Right must join together as one, and demand that Congress change its priorities. Cap-and-trade, health care reform, so called economic stimulus, tax increases, and wealth redistribution need to be tabled. The number one priority today is job creation and the way to do it is through tax policies.

I live my life one day at a time. As a business owner myself, my revenues are directly affected by the economic condition of my customers. If my customers can’t afford my services, then my business suffers, and those who depend on me suffer. This is something that can’t wait. We can’t wait 4 years for Obama to impose his agenda while people are suffering daily. The uncertainty this administration has imposed on the business community is so thick you can cut it with a knife. We need action today.

“Hey Congress! The horse goes in front of the cart.” Jobs, jobs, jobs, and then you can talk to us about your utopian fantasies.

The Health Insurance Black Hole

September 23, 2009August 11, 2017 / L. M. Walker / 4 Comments

The Health Insurance Black Hole

By: Larry Walker, Jr.

Tweet

@CoachChic to @larrymwalkerjr Tell me: If Obama wants us to buy-into a healthcare package, why not just give us what congressmen get? I’m serious here.

Facts

With more than 1.8 million civilian employees, (1) the Federal Government, excluding the Postal Service is the Nation’s largest employer. The U.S. Postal Service employs an additional 636,000 (2) full-time employees.

Politicians and Federal employees receive the country’s best care – at taxpayers’ expense. While over 46 million Americans (disputed) remain uninsured and millions more underinsured, members of Congress receive health-related services that many in the U.S. will never see.

Representatives and Senators alike receive some of the best health care benefits in the country, much of it paid for with taxpayer dollars. Yet these same members seem unable – or unwilling – to extend similar protections to the rest of America.

Federal Employees Health Benefits Program

As soon as members of Congress are sworn in, they may participate in the Federal Employees Health Benefits Program (FEHBP). The program offers an assortment of health plans from which to choose, including fee-for-service, point-of-service, and health maintenance organizations (HMOs). In addition, Congressional members can also insure their spouses and their dependents.

Not only does Congress get to choose from a wide range of plans, but there’s no waiting period. Unlike many Americans who must struggle against precondition clauses or are even denied coverage because of those preconditions, Senators and Representatives are covered no matter what – effective immediately.

And here’s the best part. The government pays up to 75 percent of the premium. The government, of course, is funded by taxpayers; the same taxpayers who often cannot afford health care for themselves.

Self-only Estimates (Georgia Rates)

For non-Postal Employees, let’s use the federal government’s Georgia rates for Humana’s Standard Plan for self-only coverage. The total monthly premium in 2009 is $373.75. The amount paid by the employee is $93.44. The amount paid by taxpayers is $280.31 (3).

For Postal Employees, let’s use the federal government’s same Humana Standard Plan for self-only coverage. The total monthly premium in 2009 is $172.50. The amount paid by the employee is $23.29. The amount paid by taxpayers is $149.21 (4).

Click Image to Enlarge

Family Estimates (Georgia Rates)

For non-Postal Employees let’s use the federal government’s Georgia rates for Humana’s Standard Plan for Family coverage. The total monthly premium in 2009 is $859.67. The amount paid by the employee is $214.92. The amount paid by taxpayers is $644.75 (3).

For Postal Employees let’s use the federal government’s same Humana Standard Plan for Family coverage. The total monthly premium in 2009 is $396.77. The amount paid by the employee is $53.56. The amount paid by taxpayers is $343.21 (4).

Summary

Depending on the plan, and the State, the costs vary widely, but at the minimum, using Georgia’s insurance rates, which are among the lowest nationwide, taxpayers are on the hook for somewhere between $7.1 billion and $16.5 billion annually. Based on the rates in other states I think it would be safe to double these amounts. So let’s say it costs taxpayers between $14.2 billion and $33.0 billion per year to subsidize health insurance premiums for Federal Employees.

Again doubling the Georgia rates, health insurance subsidies for the 535 members of Congress cost taxpayers between $3.6 million and $8.2 million annually. To me this is a Black Hole. We pay for our own health insurance, and then we turn around and pay 75% of the cost for federal workers. Members of Congress and the Executive Branch need to start pulling their own weight. Especially since all they seem to be doing lately is spending money that we don’t have.

The Answer

Option 1: How much would it cost if the Congress were to grant the same health insurance plan that government workers enjoy, to the alleged 46 million uninsured?

If the government paid 75% of the premiums for the uninsured, the minimum cost to taxpayers would be somewhere between $154.7 billion and $355.9 billion. Since Georgia rates are about half of what they are in most States, the average is more reasonably, between $309.4 billion and $711.8 billion. Using the high-end figure of $711.8 billion, that’s about $2,372 per capita, annually.

Option 2: How much would it cost if Congress were to grant all 300 million of us access to the same 75% subsidized plan enjoyed by government employees?

The cost to taxpayers would be just over $1.0 trillion at Georgia rates, or more like $2.0 trillion nationwide. Using the high-end figure, again, $2.0 trillion is about $6,727 per year, per capita.

Thus it is unlikely that the nation could afford to offer all American’s access to the same kind of taxpayer subsidized health care which Federal employees receive. With the government paying 75% of the premiums, it would cost taxpayers around $2.0 trillion, or $6,727 per citizen, per year. And then we would still be responsible for 25% of the premiums.

As a Georgia resident, although my monthly premiums would only be perhaps $93.44, my taxes would increase by potentially $6,727 per year to subsidize everyone else. Thus, it would wind up costing me $7,848 per year, or $654 per month. For a family of four, the cost would be roughly $2,616 per month ($654 * 4). The average cost nationwide would be double the premium or $747 per month for individuals, and $2,990 per month for a family of four. Now that’s just outrageous.

Even if we could afford to give all Americans the same health insurance benefits hoarded by Congressmen and Senators, this still would not address the problems of rising annual health care costs, doctor shortages, rationing of care, lack of competition across state lines, undocumented workers, portability, unemployment, delinquent taxpayers, the recession, Medicare, Medicaid, the National Debt, the Budget Deficit, …etc….etc….etc…

Once again, I would conclude that it’s probably best to make some reforms to the current system, and not attempt any kind of radical ‘fundamental’ changes. However, one thing we can and should do right away is end the notion of taxpayer subsidized health insurance premiums for Federal Employees. We have to pay for our own insurance and then for 75% of theirs? This can and should end immediately, starting with the Black Hole – Congress, and the Executive Branch.

~A penny saved is a penny earned~

RT @CoachChic Again to my dream: That every American have on the tip of his/her tongue, “You design it, then join us!”

RT @CoachChic @HeavenandHealth My plan: Have pols design a healthcare plan, then join us in it. Fair enough?

RT @CoachChic Ya know, some of the most complicated problems have really simple solutions. 🙂

Sources:

The IRS as Health Insurance Police

September 21, 2009August 11, 2017 / L. M. Walker / 1 Comment

No Health Insurance? You’re going to jail.

By: Larry Walker, Jr.

Many of us had ‘hoped’ for some simplification of the Internal Revenue Code, which has grown from 14 pages to over 17,000 pages since its inception. But it doesn’t look like that will happen anytime soon. H.R. 3200 will increase the burden of the income tax code by making the IRS the primary enforcer of Mandatory Health Insurance.

Did you hear that? You get your ‘mandatory’ health insurance, but you had better file your tax returns, and file them timely and correctly. Not only that, but you will have to determine what kind of health insurance you have and report it on your tax return, and if you don’t have it, or if it’s not acceptable, then a hefty penalty will be imposed.

It’s found in Title IV, Subtitle A, on pages 167-215 called Amendments to IRS Code of 1986. The expanded powers of the IRS in H.R. 3200 would empower the IRS to require taxpayers to show proof of health insurance coverage, collect fines on individuals and employers who did not have adequate proof of health insurance and determine whether your health insurance was a government approved plan.

So let’s see, will this make life easier, or more convoluted? My theory is that it will not only do the latter, but in the process will deprive all American’s of what if any liberty remains.

Linear thinkers, like Obama and others on the left, are incapable of seeing beyond the end of their noses, so it’s up to us to do our part to shed a little light.

According to Table 16 (below), courtesy of the IRS, at the end of 2008 approximately 9.2 million taxpayer cases were in inventory for filing income tax returns with additional taxes owed to the tune of $94.3 billion (including interest and penalties). And approximately 3.4 million taxpayer cases were in inventory for not filing income tax returns at all, and owe around $21.2 billion.

You don’t suppose there’s any chance that the same 12 million people who either don’t pay, can’t pay, or won’t file income tax returns are the same ones lacking health insurance? Imagine that, the very same people who may owe the government over $100 billion now begging for free health insurance. No I’m not blaming them, but I’m just saying, it may very well be that the tax code is too complicated, that penalties are too stiff, or that income taxes are just way too high. But let’s leave that for another century, and let’s entertain our Messiah’s plan to make taxes more burdensome through Government-run Health Insurance.

Now let’s consider some logic. The IRS, a government agency that allows around 15% to slip through the cracks, will be in charge of a health insurance system that lets around 15% slip through the cracks. What will be the outcome? Do you think it’s possible to achieve 100% compliance with the tax code? Just ask the Obama Administration (Geithner) about ‘that one’. And do you think it’s possible to achieve 100% participation in health insurance, or in anything else human?

Short of placing government security cameras in our houses, a micro-chip in our heads, and completely brainwashing us, 100% participation in anything is not a human attribute. The 80/20 principle is generally good enough for us mere mortals. So on that count, the human factor, the plan fails.

Most likely, the outcome of Obama’s far-left, linear, robotic health insurance plan will be one of the following:

The same 85% who currently comply with income tax laws and have health insurance will continue to comply with income tax laws and buy health insurance, while the same 15% remain on the sidelines. (Most likely)
More people will choose to comply with income tax laws, and more will choose to be covered by health insurance. (You wish)
Less people will choose to comply with income taxes, and less will choose to be covered by health insurance. (Probable)
The 85% who currently comply with income tax laws and have health insurance will revolt, and stop paying income taxes and for health insurance. (Possible)
The ridiculous plan will die in committee, or if passed will subsequently be repealed. (Best)

What do you think?

Sources:

http://www.irs.gov/pub/irs-soi/08db16co.xls

http://www.irs.gov/taxstats/article/0,,id=207457,00.html

http://www.wnd.com/index.php?fa=PAGE.view&pageId=109741

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