There's a hole in my bucket, dear Liza, dear Liza

There’s a Hole in my Bucket, Dear Liza

The View from the Middle

It saddens me to say that our President has taken the “blame game” and the “credit grab” to a whole new level.  Now that the country has rejected his claims that we would experience locusts, plagues and pestilence as a result of the sequester budget cuts, he has a new strategy.  He is now blaming Republicans for results that haven’t even occurred yet.

He claims, with confidence, that these automatic cuts will cost 750,000 jobs in the future and reduce growth in our GDP (Gross Domestic Product) by over half a percent.  And we all know how accurate his past forecasts have been.  Unemployment never did go over 8%.  Oops, yes it did.  But, he was “dead on” with his original estimate of the cost of Obamacare.  Oops, the CBO (Congressional Budget Office) now admits that the cost will be DOUBLE the original estimates.  Oops, might be triple.

The President suggests that no matter what the results are in the future they would be better if we followed his plan.  If results are below expectations, it is the Republicans fault, but if the outcome is good – of course he gets full credit.  That’s a pretty cozy position if you can get it, a “no lose proposition”.

Of course, his suggestion is absurd, since he doesn’t actually have a plan to compare to.  He claims to be in favor of more tax increases (eliminating deductions just raises someone’s tax burden) and possibly some spending reductions.  In the true spirit of Washington DC, the taxes would be immediate but the spending cuts would come later (maybe).  However, since his plan has not been specifically defined, it can’t be scored.  Any more tax increases he could suggest would come with its own package of job losses and slowing economy. 

So, let me prognosticate.  The sequester cuts have gone into effect and we WILL have poor economic results this quarter.  There, I said it.  But, to blame these results on the sequester is like suggesting that the rooster’s crow causes the sunrise.  Chronology does not prove causation.

What will cause our future economic woes are the massive tax increases the President unleashed on America in January, and taxes are to an economy as holes are to a bucket of water.  Can you drill a few holes and expect to maintain the water level?  Actually, yes, if you have a hose filling the bucket faster than the water is leaking out.  But our economic hose is down to a trickle, so every hole can be devastating.

The first hole the President drilled was the elimination of the payroll tax holiday. This affected almost 80% of Americans.  According to the Tax Policy Center, this will take $900 to $1,000 a year out of the average Americans’ paychecks.

I can’t tell you how many people approached me in January to complain that their take home pay had mysteriously gone down.  After I explained the “mystery”, I asked them what they planned to do.  Without exception, they planned to delay a purchase or go out to eat less often.  This will give restaurant owners and staff insomnia.  Imagine this happening to 100 million families across American and you can feel the economy shrinking around you.

Next, we raised the tax rates on the top 1% of wage earners.  So what, I’m not in that group.  However, that 1% are the great employers and spenders in our economy.  If they don’t have the money, they can’t spend it on your product or give you a raise or a new job.  If you work in a plant that produces luxury cars, a layoff might be in your future.

And then there is Obamacare.  According to the “Obama Care Facts” website, this law will invoke 21 new taxes over the next year that will cost taxpayers $700 billion over the next 10 years!!  Now, I don’t care who is paying those taxes, this money will not be spent in our economy.  It is just 21 more holes in our economic bucket.  As a side note, one year’s worth of these taxes ($70 billion) is almost as big as the sequester cuts by itself.

Finally, the government has no incentive to make things better.  In fact, because of Obama’s claims, it has an incentive to make things as painful as possible.  Like canceling White House tours.  Really?

So, when the economic numbers come in below expectations for this quarter, remember that you heard it here first.  You can’t raise taxes on the spenders and job creators in our society, cancel the payroll tax holiday on 80% of Americans AND lay 21 new taxes on the backs of Americans through Obamacare, and expect our economy to substantially expand.