This past week the American federal debt rose to $15.2 trillion, a big milestone. Why? Because our Gross Domestic Product (all the goods and services this country produces) is $15.1 Trillion. Yep, our debt is over 100% of our GDP. That is only supposed to happen in places like Italy and Greece. Maybe France.
But not worry, Americans. Obama has saved our economy by extending the "Payroll Tax Holiday". Obviously that is the case are the media would not have given this legislation such attention. If fact all the smart folks say that Obama was so brilliant in how he handled this major crisis that it just might insure his re-election. Must be a really big deal, huh?
Let's take a look. The law extends the payroll tax cut, set to expire on Dec. 31, through Feb. 29. That means workers will only pay 4.2% on the first $110,100 of their wages into Social Security. That is 2 percentage points below the normal 6.2% rate.
If the payroll tax cut is extended for all of 2012 -- which both parties say they want and will work to do when they return from their Christmas recess -- workers would reduce what they pay into their retirement funds from several hundred dollars if they're low-income to more than $2,000 if they earn six figures.
Estimated cost of a two-month extension: $21 billion. If extended for one year: $126 billion will not be available for social security funding. Ain't that great!
The proposed extension of the payroll tax holiday is touted by the idiot in the White House to prevent a hit to our anemic economic recovery. The White House and members of Congress have sold the end of the holiday as a tax increase on the middle class. In fact, this Social Security payroll tax is actually an investment into one’s retirement account. Promoting continued reduced payment into Social Security is the same as telling folks to borrow from their retirement and spend the money now. Obama used the story of a woman who said if she did not get the $20 per week "tax cut" she would not be able to have pizza with her daughters each week. She is happy to trade off her retirement for pizza?
Shame on any citizen who buys into the idiot pitch that the opponents of extending this underfunding of future security just want to increase tax rates for the middle class. Greater shame on those immoral politicians who make that claim. Similarly, replacing the billions of dollars (approximately $126 billion/year) that don’t come to Social Security from workers paychecks by funds the government has to borrow to cover its huge deficit is bad policy. Surely there are better initiatives to support economic growth (how about permanent tax cuts paid for by reduced government spending?). Bottom line the politicians continue to rob our social security system to buy votes.
The passed legislation also extended jobless benefits: Emergency federal unemployment benefits, also scheduled to expire on Dec. 31, will be extended through February. Without that extension, an estimated 1.8 million jobless workers in January would have run out of benefits, which average $296 a week. Obama claims this extension some how creates jobs by giving the unemployed money to spend.
With the dramatic decrease in unemployment from 9% to 8.6% you would think we will not need this provision. Oh, I forgot. The reduction in unemployment numbers were because of the way we count. Over 300,000 people left the workforce last month and only 120,000 people took new jobs. Since we don't count those that left the workforce our employment percentage goes up and unemployment percentage goes down. Got that? Obama doesn't get into weeds like this.
Estimated cost: $8.4 billion.
Next comes the extension of the "Doc fix": The new law prevents a scheduled 27% cut in payments to Medicare physicians for the first two months of next year. The American Medical Association has noted that even with the regular intervention by Congress, Medicare payments lag 20% behind the cost of caring for seniors.
Many in Congress would like to pass a permanent doc fix, but the biggest stumbling block to doing so is figuring how to pay for the estimated $300 billion cost over the first decade. So the politicians just sneak it by the public one little piece at a time. This is a perfect example of what happens when the government takes over an industry. Medicare and medicaid are a mess, and Obamacare is even worse. The continuation of these programs as they are will doom this nation to bankruptcy, and soon.
Estimated cost: $3.6 billion.
The last item in the legislation is a congressional push to force the President to expedite his decision on whether to allow construction of the 1,700-mile Keystone oil pipeline. The Obama administration has said that if forced to make a decision before the election Obama will decide against the pipeline. Why doesn't Obama want to make a decision now? If he approves the pipeline HE LOSES HIS CONTRIBUTIONS FROM ENVIRONMENTALISTS. If he disapproves the pipeline HE LOSES HIS CONTRIBUTIONS FROM THE AFL/CIO LABOR UNIONS. Surprise, surprise it is about idiot in chief's re-election.
And of course the pols argued and argued about HOW TO PAY FOR THESE EXTENSIONS. What did they settle on? The law calls on mortgage financing giants Fannie Mae and Freddie Mac to charge lenders more to guarantee repayment of new loans. Fannie and Freddie play a central role in destroying the housing market by purchasing mortgages from banks and bundling them into mortgage-backed securities (and getting taxpayer bailouts when their corrupted strategies don't work). New housing starts in the US are at an all time (since they started keeping records in 1963) record low in 2011 at about 325,000. To economically recover we need them to be over 700,000. So let's raise the cost of buying a new home so a lady can take her daughters out to have pizza. Makes complete sense doesn't it.
Estimated to raise: $36 billion over 10 years. Note how we always spend the money now and pay for it over 10 to 20 years.
What didn't make the cut? Not every expiring tax provision is accounted for in the new law. Left out was any action on a host of other "temporary" tax breaks that expire this year. These include the research and development credit for businesses and a state and local sales tax deduction for individuals.
Also left out was the usual fix to protect the middle class from getting hit by the Alternative Minimum Tax when they file their taxes for 2012. I don't know about you but every year I am unable to write off my mortgage interest and some other deductions because the AMT kicks in. Enough said about the big tax loopholes for the rich.
And then to top things off. Obama's media is quoting "unnamed sources" who are wanting to fire John Boehner, Republican Speaker of the House. I have a better suggestion. DITCH MITCH! Fire Mitch McConnell, the Republican Senate Minority Leader, who sided with Obama, Reid, and Pelosi against the House Republicans in supporting this insanity.
Bottom line: What a shameful week.
Think about it,