Judgment Day is nigh
Nov. 6 is drawing near. This will be my last commentary before that transcendent moment and I want to sum up my thoughts on the battle taking place. Battle is the proper term for what we’ve been experiencing for the last four years. America, and by extension the citizenry is in the midst of a crisis and the gathering storm lies just over the horizon.
My thoughts have been criticized as “toilet bowl viewpoint” in the past; however, I challenge anyone to dispute my facts today. So what has convinced me of our dire straits?
The real rate of unemployment, according to the Bureau of Labor Statistics, is 17 percent. The rate would be much higher if the people who have dropped out of the labor force were counted.
There are now 23 million Americans unemployed. People on food stamps rose by 17 million since Obama took office.
The unemployment rate when Obama took office was 5.8 percent; one year into his reign it rose to 9.3 percent.
Middle class household income has dropped by $3,500 from 2008 to 2012.
Middle class net worth went from $152,950 to $93,150, a loss of almost $60,000.
Now for the national debt, which, as of Oct. 4, 2012, stands at $16,147,364,250,000 — 16 trillion dollars. That’s a pretty big number to understand; but here’s something we all can understand. We each now owe, on Oct. 4, $141,079.
If that number didn’t choke you try this one; $58,426,888,700,000 — 58 trillion dollars. That is the total public debt, and that works out to $391,684 per taxpayer. The federal government borrows 41 cents of every dollar it spends. The interest on that borrowed money is $4 million each year.
U.S. GDP (gross domestic product) has averaged 3.3 percent annual growth over the last 60 years. The last four years’ projected average is 0.7 percent.
Our current gross-debt-to-GDP ratio is 105 percent. Italy’s ratio is 120.7 percent; Greece’s stands at 160 percent.
Government debt as a percent of GDP is used by investors to measure a country’s ability to make future payments on its debt, thus affecting the country’s borrowing costs and government bond yields. As I pointed out earlier, we borrow 41 cents of each dollar and most of that comes from China!
Bear with me and all these figures for two more issues; “Taxmageddon” and the recession forecast by most economists.
Hopefully I won’t cause your eyes to glaze over with more numbers; but here is “Taxmageddon” in a nutshell. On Jan. 1, 2013, Americans will see a tremendous tax increase; $996 billion.
About 34 percent of the increase comes from the expiration of President Bush’s 2001 and 2003 tax cuts. Another 25 percent comes from the expiration of the payroll tax cut. Most of the remaining increases come from Obamacare taxes such as the hospital insurance 3.8 percent surtax on all forms of income over $250,000.
Taxmageddon primarily affects middle and low-income Americans. That’s because 60 percent of the Bush tax cuts went to middle- and low-income taxpayers. The Alternative Minimum Tax will go into effect and these taxpayers will be paying a tax not intended to affect them. The average American household would see its taxes rise by $4,100 in 2013, with higher taxes in the succeeding years. This looming threat has had the effect of slowing or in some cases stopping hiring by businesses. The uncertainty of Taxmageddon and how the new taxes and Obamacare will affect their businesses has stopped them from making important economic decisions.
The Congressional Budget Office has forecast a fresh recession if these increases are not halted. The House passed a bill that would prevent the largest share of Taxmageddon but the Senate declined to finish the job and all went off to campaign in August.
The good news is that Congress could prevent most of Taxmageddon if they act in the lame duck session. If so, economists predict the economy will still be sluggish and only grow at 1.7 percent and maintain the 8 percent unemployment.
The bad news is that if they don’t act; the economy shrinks by another 0.5 percent and unemployment rises to 9.1 percent.
So in addition to the $4,100 tax increase the CBO projects a 1.6 million increase in the unemployed.
So tell me why my “toilet bowl” viewpoint is incorrect!
Larry Tradlener lives down McElmo Canyon.