What Does $40 per Week Mean To You?

– Let’s see, to me one thing it means is that the federal government will be adding another $120 billion to the national debt. For my friend Jeff, at Liberty Works, it means – we’ve been bamboozled again. –

By: BoomerJeff | Liberty Works

“… On Thursday Obama ramped up the theatrics and gave us a preview of his New Year strategy for diverting attention away from his manifest failures. He stepped to the microphones to prove he identifies with the struggles of the helpless against those cruel Republican Scrooges (transcript). His tone dripping with pious solicitude, he began:

We’ve been doing everything we can to make sure that 160 million working Americans aren’t hit with a Holiday tax increase on January First…If you’re a family making about $50,000 a year this is a tax cut that amounts to about a thousand dollars a year. That’s about forty bucks out of every paycheck.

So far the President’s math is correct, since most employees are paid either bi-weekly or semi-monthly.

It may be that there are some folks in the House who refuse to vote for this compromise because they don’t think forty bucks is a lot of money. But anyone who knows what it’s like to stretch a budget knows that at the end of the week or the end of the month forty dollars can make all the difference in the world…

So on Tuesday we asked folks to tell us what it would be like to lose forty bucks every week.

Wait a minute! “Every week?” He just changed it from $40 out of every paycheck to $40 every week! But the temporary tax cut is worth only $19 every week to his hypothetical $50,000 per year family.

You’d have to earn $104,000 a year for Obama’s Social Security tax markdown to be worth $40 every week.

Obama then quoted some of the emails from his “folks” about how they would deal with the loss of $40 per week.

Joseph from New Jersey would have to sacrifice the occasional pizza night with his daughters. My 16 year old twins will be out of the house soon – I’ll miss this.

Richard from Rhode Island wrote to tell us that having an extra $40 in his check buys enough heating oil to keep his family warm for three nights. In his words, and I’m quoting, If someone doesn’t think that 12 gallons of heating oil is important invite them to spend three nights in an unheated home.

Pete from Wisconsin told us about driving more than 200 miles each week to keep his father in law company in a nursing home. $40 out of his paycheck would mean that he could only make three trips instead of four.

Dinner out for child who’s home for Christmas, a pair of shoes – these are the things that are at stake for millions of Americans. They matter a lot.

Obviously these emails are absurd. If you earn $104,000 and have to give up $40 per week, are you really going to have to deny your kids a pizza or a pair of shoes? Will you shiver for three nights without heating oil?

Of course, there are some folks to whom $40 every week would be make a real difference:

  • A hotel maid who works full time for $8.50 per hour

  • A construction worker who has been cut back to half time work at $17 per hour

  • A self employed business owner whose customers were hammered by the recession and now barely survives by depleting his savings. He generated only $17,700 profit this year after paying his employees and the employer’s half of the payroll tax which was not reduced by the Obama payroll tax markdown.

To each of these people Obama’s temporary payroll tax cut is worth not $40 but $6.80 per week.

But much of the media have already begun to help Obama plant a false perception in the minds of uninformed voters that Republicans would deny everyone $40 per week. (For example, see the headline here.)

Obama knows that informed voters will figure out the deception. But he doesn’t care about informed voters. They won’t vote for him anyway.”

Guess You Can’t | Super Committee 2.0

~ Too Big, Messy, Tough and Democratic for Obama

– Larry Walker, Jr. –

When that year was over, they came to him the following year and said, “We cannot hide from our lord the fact that since our money is gone and our livestock belongs to you, there is nothing left for our lord except our bodies and our land. Buy us and our land in exchange for food, and we with our land will be in bondage…” ~Genesis 47:18-19

At a fundraiser in Chicago on August 3, 2010, Barack Obama said, “It’s been a long, tough journey. But we have made some incredible strides together. Yes, we have. But the thing that we all ought to remember is that as much as good as we have done, precisely because the challenges were so daunting, precisely because we were inheriting so many challenges, that we’re not even halfway there yet. When I said ‘change we can believe in’ I didn‘t say ’change we can believe in tomorrow.’ Not change we can believe in next week. We knew this was going to take time because we’ve got this big, messy, tough democracy.”

We have a big, messy, tough democracy? So is Obama advocating an alternative form of government? Would change come quicker if we had a dictatorship, or a super-committee? If I understand Obama correctly, what he is saying is that, “a government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system”, is too big, too messy, and too tough for him. Well, I have one suggestion for you: ‘Quit’! Go back home, and use your community organizing (a.k.a. destabilizing) tools to try to fix what you got wrong in Chicago. This will relieve you of a couple of hundred thousand dollars per year that you didn’t need anyway, while giving us a chance to clean up the damage you have done to our nation in such a short time span.

A democracy can also be described as a state of society characterized by formal equality of rights and privileges. The way it’s supposed to work is that whether majority or minority ideas are put on the table, they are given equal respect. One side calling the ideas of the other evil, terroristic, or selfish does not a democracy make, especially when such ideas may be more plausible than its own. Is killing the leader of Libya and his supporters democratic? Does the execution of one political party leader promote equality of rights and privileges for all?

“For in the same way you judge others, you will be judged, and with the measure you use, it will be measured to you.” ~Matthew 7:2

In the United States, one side believes that raising taxes on those who are more prosperous will solve all of society’s problems. They call this, shared sacrifice. But when others point out that the process will only raise $70 billion per year against a budget deficit of $1.2 trillion, thus leaving a $1.13 trillion per year gap, they are called “terrorists”, and blamed when the nation’s credit rating is slashed. So what about the other $1.13 trillion per year? The compromise: ‘We will form a new democracy, comprised of 12 politicians, six from each major political party, and let them decide’. Is this how democracy works? What happened to the fundamental right of ‘no taxation without representation’?

One side believes that if more tax revenues are needed, then taxes ought to be raised on the 5% who already carry water for the other 95%. But another school of thought believes that if more taxes are needed, society should encourage the creation of more taxpayers. When one side points out that 51% of the labor force pays FICA taxes, but doesn’t pay any income taxes, while the other 49% pay both, they are called evildoers, haters of the poor, and accused of being against the concept of “shared sacrifice”. What gives?

“A man planted a vineyard. He put a wall around it, dug a pit for the winepress and built a watchtower. Then he rented the vineyard to some farmers and went away on a journey. At harvest time he sent a servant to the tenants to collect from them some of the fruit of the vineyard. But they seized him, beat him and sent him away empty-handed. Then he sent another servant to them; they struck this man on the head and treated him shamefully. He sent still another, and that one they killed. He sent many others; some of them they beat, others they killed. He had one left to send, a son, whom he loved. He sent him last of all, saying, ‘They will respect my son.’ But the tenants said to one another, ‘This is the heir. Come, let’s kill him, and the inheritance will be ours.’ So they took him and killed him, and threw him out of the vineyard. What then will the owner of the vineyard do?” ~Mark 12:1-9

While one side devises to kill capitalists, who are also citizens, and distribute their property to the masses, the other simply asks, “Do the 51% who don’t pay personal income taxes benefit from a national defense? Do they drive on federally funded roads and bridges? Have they not benefited from public education, and other federal programs?” We have a government that dishes out up to $8,000 per year in income tax refunds to families who pay no personal income taxes, taking it from those who do, and when the families who pay question the logic, they are called selfish. But is it selfish to ask why the one who has sacrificed time and effort to plant, build, and employ others must be brought down, while those who have not are lifted up? Shall the life’s work of the few be stolen and distributed to the masses in the name of good? What will the owner of the vineyard do?

“For if the willingness is there, the gift is acceptable according to what one has, not according to what he does not have.” ~2 Corinthians 8:12

Everyone who owns real property in my community pays real estate taxes, a form of shared sacrifice, to help fund our common welfare. The tax is based on the value of each property. Even senior citizens, widows, veterans, and those with disabilities pay, although at lower rates. Homesteaders receive a discount, while landlords pay the most, but no one is exempt. Even renters pay real estate tax, which is embedded in the rent. But when it comes to federal income taxes, 51% are given a pass, while a minority is robbed. One side believes that “shared sacrifice” means, “Everyone should pay something”; while the other believes that, “the most fortunate should pay it all”. So who’s right? If all who own or use real property must pay real estate taxes, shouldn’t all American citizens and residents who have income pay some measure of the income tax?

There is one change you can believe in, and it will be here in November of 2012. You can believe that the haters of democracy, those who continually bash the most noble ideals which made this nation great, who instigate racial, class, and party division, who seek to buy their jobs through political favors, who call their neighbors terrorists, and selfish evildoers, who destabilize other nations, killing women and children in the process; it is they and their leader in the White House who will be sent packing. That’s how democracy works, that’s what’s coming, and you can bank on it.

Joseph said to the people, “Now that I have bought you and your land today for Pharaoh, here is seed for you so you can plant the ground. But when the crop comes in, give a fifth of it to Pharaoh. The other four-fifths you may keep as seed for the fields and as food for yourselves and your households and your children.” ~Genesis 47:23-24

2011 Tax Increase : A Reality Check

Income Tax Reality Check

Compiled by: Larry Walker, Jr.

“If you make less than $250,000, you will not see your taxes increase by one dime.” ~ B. H. Obama

Left-wing pundits are claiming that the Bush tax cuts were for the wealthy, which is simply not true. Next year when the 10% tax bracket disappears, and tax rates return to pre-2001 levels, will represent an across the board tax increase affecting every American. In addition, the child tax credit will return from $1,000 (per child under age 17) to $500 representing a tax increase for everyone who has children, not the wealthy. The fact is that the Bush tax cuts applied to every American at every level of income, and when they expire taxes will rise from the bottom up.

In 2011, if you make over a nickel in taxable income, your taxes will increase a minimum of 9%, and as much as 50%. Since our tax rates are progressive, taxes on the first $16,750 for couples ($8,375 for singles) will increase by 50%. Taxpayers who make under $8,375 in taxable income will see the largest tax increase at 50%. Middle income earners will see their taxes rise by no less than 9%. The contention that the Bush tax cuts only affected the wealthy is a bald-faced lie. Similarly, the contention that Obama’s tax increases will only affect the wealthy is nothing but a fairy tale. Americans are educated and can comprehend income tax tables. You can choose to believe whatever you want, but reality should not be optional.

2010 Tax Brackets

Nickel over at fivecentnickel.com has projected how the 2011 income tax brackets may look. The commentary below is attributed to Nickel. I have retouched his 2011 table (below), and added the 2010 table (above) for comparison.

Income tax bracket changes for 2011 – In case you weren’t aware, the Bush tax cuts of 2001 and 2003 are set to expire at the end of 2010. Thus, if Congress doesn’t act, the relatively low income tax rates that we’ve been enjoying (hah! enjoying?) will soon be a thing of the past. They will be replaced by the pre-2001 tax brackets.

In other words, the 10%, 15%, 25%, 28%, 33% and 35% tax brackets that we’ve grown accustomed to will be replaced by 15%, 28%, 31%, 36%, and 39.6% brackets. It’s hard to say exactly where the income cutoffs will lie, but if we base the numbers on the 2010 income tax brackets and add 3% for inflation, the 2011 tax brackets might look something like this:

2011 Projected Tax Brackets

Capital gains tax changes in 2011 – Beyond the increased federal income tax brackets, the capital gains tax rates will also be changing (and not for the better). The top rate for long-term capital gains will be rising from 15% to 20%, and the 0% rate for those in the lowest tax brackets will be replaced by a 10% long-term capital gains rate.

Why worry about 2011 income tax changes? – Since the 2011 tax year is so far off, you might be wondering why we’re even talking about it right now. Well, as I noted above, the time to be planning for things like this is right now – before the changes go into effect as these potential income tax rates have the potential to take a big bite out of your savings account.

What sort of planning should you be doing? I can think of several things off the top of my head. For starters, if you’re in a position to accelerate income from 2011 into 2010, you might want to do so. In many cases this is easier said than done, but it’s worth exploring if you’d like to shield your income from the potentially higher rates.

Also, if you’re anything like me, you may wait until the end of the year to make your charitable donations. If so, then by waiting just a few more days (until January 1, 2011) to write that check, you could net a substantial tax savings. While you’d have to wait longer to claim the deduction, it might be worth it.

Similarly, if you anticipate selling investments to generate cash during 2011, you might consider moving that up to the end of 2010 to get in on the (presumably) lower capital gains tax rates.

Reference: http://www.fivecentnickel.com/2010/02/15/2011-federal-income-tax-brackets-irs-income-tax-rates/

The Progressive Slide to 2020 | GDP vs. Debt

2020 GDP vs. National Debt

By: Larry Walker, Jr.

The question of the day is what will the USA’s Gross Domestic Product (GDP) need grow to by the year 2020 in order to keep pace with the Progressive’s ruinous spending? And based on the answer to that, at what annual rate should our economy be growing?

If we add the CBO’s 2010 to 2020 projected estimate of the president’s budget deficit to the current national debt of $12,948.7 billion (as of 4/30/2010), then the National Debt will total $23,170.0 billion by the year 2020.

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As of the end of the 1st quarter of 2010, based on the Bureau of Economic Analysis (BEA’s) latest preliminary estimate, GDP is averaging $14,601.4 billion annually.

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Depending upon the rate of growth of our economy over the next 11 years, our National Debt will exceed GDP, sooner or later. We know that even the Progressive’s say that our National Debt is unsustainable, but the question is just how unsustainable? If we take a look back to the days when our debt was sustainable and the economy was growing at roughly 5% per year with low unemployment, for example 2003, we will discover that our Debt to GDP ratio was 60.9%.

Scenario #1, below, determines the rate of growth necessary in order for GDP to match our projected debt by the year 2020. Scenario #2 determines the rate of growth needed in order to return to the 2003 debt-to-GDP ratio of 60.9%. Finally, Scenario #3 reveals what the debt-to-GDP ratio will be by 2020 if GDP maintains its current pace.

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Scenario #1 – The road to nowhere

GDP must grow from $14,601.4 to $23,170.0 billion in order to equal the National Debt by 2020. In other words, GDP must maintain an average sustained growth rate of 5.3% per year for the next 11 years, in order to achieve a Debt to GDP ratio of 100%. This represents ‘the road to nowhere’. Although, per the BEA, GDP grew at a rate of 3.2% in the first quarter of 2010, as you can see, this will not be enough to reach the destructive Progressive goal of a 100% debt-to-GDP ratio.

Scenario #2 – The way back to 2003

In order to return to the more prosperous 2003 Debt-to-GDP ratio of 60.9%, GDP must grow at a sustained annual rate of 14.1% for the next 11 years. In order to achieve such a rate of growth, our economy would have to grow at the pace of an emerging market, a feat which is clearly impossible for an industrialized nation. This is precisely why the president’s debt commission has stated publicly that, we will never grow our way out of this ‘man-made disaster’.

Scenario #3 – The Hellenistic toboggan slide

If GDP maintains its present annual growth rate of 3.2%, then by the year 2020 our debt-to-GDP ratio will reach 117.4%. Welcome to the Progressive Utopia. Welcome to the Republic of Greece.

Conclusion

The end of the Progressive trail leads to Greece. What you are seeing in Greece today is precisely where Progressive ideology will take us. Prepare for riots, violence, chaos, class warfare, and national bailouts. If that’s what you want, then support Barack Obama, and his Progressive entourage, and vehemently defend all of their policies. But, if this is not where you want to be in 2020, then identify and support true fiscal conservatives. Join with independents and moderates, and let’s elect responsible mainstream leaders who will lead us out of the wilderness, through sound fiscal policy, and free-enterprise solutions. It’s time to put the Progressives in their place: prison.

Sources:

http://www.bea.gov/newsreleases/national/gdp/2010/txt/gdp1q10_adv.txt

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm

http://www.treasurydirect.gov/NP/BPDLogin?application=np

http://www.cbo.gov/ftpdocs/112xx/doc11231/frontmatter.shtml

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Gross Domestic Product (GDP) Mumbo Jumbo

Give me a break!

by: Larry Walker, Jr.

Worthless Government Statistics

It was just back on November 3rd when the Bureau of Economic Analysis (BEA), a division of the U.S. Commerce Department, declared that Gross Domestic Product grew at an annual rate of 3.5% during the 3rd quarter of 2009. Then on November 23rd, the Bureau declared that the revised rate of growth for the 3rd quarter was only 2.8%. The question that came to mind, right away, was: What exactly does this mean?

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First of all what it does NOT mean is that the economy grew at the rate of 2.8% during the 3rd quarter of 2009. The rate of 2.8% is derived by taking the rate of increase from the 2nd quarter to the 3rd quarter of 0.70% and assuming that this will stay constant for the next 3 quarters (0.70% times 4). Why is this a bogus way of measuring the economy?

When I open my quarterly 401K statement and it reads that my portfolio has increased by 8.0% during the recent period, I don’t automatically assume that my annual rate of return is 32.0% (8.0% times 4). No, on the contrary, I look at the past four quarters to determine my annual return. If I lost 8.0% in the previous three quarters combined, and then gained 8.0% in the most recent quarter, then I am close to breaking even. But have I broken even? No.

To demonstrate, let’s assume my portfolio was valued at $100,000 at the end of the previous fiscal year. After declining by 8.0% in the succeeding three quarters, the value had dropped to $92,000 ($100,000 times 0.92). Now, after gaining 8.0% in the most recent quarter, the value of my portfolio has increased to $99,360 ($92,000 times 1.08). You will note that I have yet to break even. I am in fact still down by 0.64% ($640 divided by $100,000) having started with $100,000 and declined to $99,360 over the past four quarters. So much for growth. Now back to GDP.

GDP has declined by 1.42% over the past four quarters

Now when it comes to GDP, a more reasonable way to look at our present rate of growth, similar to measuring an investment portfolio, is to look at the past 4 quarters. Since the BEA only publishes figures in annual terms, I will approach this by using their figures, but keep in mind that the quarterly GDP figures are shown as annual amounts (in billions).

  • 4th Quarter 2008 – $14,347.3

  • 1st Quarter 2009 – $14,178.0

  • 2nd Quarter 2009 – $14,151.2

  • 3rd Quarter 2009 – $14,266.3

Dividing the above by four, the average GDP over the past four quarters is $14,235.7 billion. The final GDP figure for all of 2008 was $14,441.4. So GDP has dropped by $205.7 billion ($14,441.4 minus $14,235.7) over the past four quarters. That equals a percentage drop of 1.42% ($205.7 divided by $14,441.4) since 2008.

GDP has declined at the rate of 1.21% since 2008

An even more accurate way to look at this is to start with the 2008 total GDP of $14,441.4 billion and to measure the decline over the next three quarters. In this respect GDP declined by 1.82% in the 1st quarter of 2009, by another 0.19% in the 2nd quarter of 2009, and then improved by 0.80% in the 3rd quarter of 2009. Overall GDP has declined by 1.21% since 2008. This is the statistic that’s most meaningful to me.

GDP has declined at the rate of 1.21% since 2008. In dollar terms that’s $175.1 billion per year in lost production in our economy. That’s the equivalent of losing 3.5 million jobs paying $50,000 per year. That’s more meaningful to me than the BEA’s mumbo jumbo.

GDP growth averaged 4.93% per year from 2003 to 2008

While we are at it, you will note on the chart above that GDP was $11,142.1 billion in 2003 and grew to $14,441.4 billion in 2008. That’s an increase of 29.6% over the six-year period, or an average of 4.93% per year. It also represents an increase of $3,299 billion in U.S. production over the period. That’s the equivalent of an increase of around 65.9 million jobs paying $50,000 per year.

So wake me up when Obama’s economy killing policies have created 65.9 million jobs, or when GDP reaches $18,490.7 billion (an increase of 29.6% from today’s level), whichever comes first, but don’t bother me with meaningless government statistics.

Sources:

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

http://www.bea.gov/newsreleases/national/gdp/2009/xls/gdp3q09_2nd.xls

Common Sense vs. Obamanomics

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.