Choosing Whose Blood to Shed

Bloody riots in the streets demonstrated how Greek government employees felt about being paid for twelve months’ “work” a year instead of receiving fourteen “monthly” paychecks a year on the way to fully-paid retirement at age 55, as I recall. It makes one wonder how the 40% of those employed in America who work for government at some level would react to having their pay cut in half to reflect what similar jobs in the private sector pay. We might get lucky, of course, and they would go on strike; little would improve this country as much as a whole lot less regulating going on.

I read recently that a garbage collector in Seattle makes over $109K, a splendid example of “jobs that Americans won’t do,” and Oakland has fired 10% of their police who can’t get along on an average $162,000 plus lavish benefits. The “labor” dispute is over whether the cops should be required to match the 9% contribution Oakland makes to their pension funds in return for a one-year freeze on lay-offs or hold out for a three-year freeze. Their very generous pension benefits.  But that’s okay, because the Police Chief resigned in disgust and the department announced that it won’t even investigate 44 types of crime ranging from poisoning animals to grand theft.  The Supreme Court has already held that the police have no obligation to protect any particular citizen.

Our basic problem is that everyone feels “entitled:”

1. Congress feels “entitled” to pass devastating laws its members are not obliged to abide by, and a great many members feel that flouting any inconvenient laws is a perquisite of office;

2. The professional welfare class feels “entitled” to food, housing, medical attention, “earned income credits” for one day’s work, and at least four dozen other goodies paid for by others;

3. Government workers feel “entitled” to lavish salaries, all public holidays, more than generous vacations, sick leave, and “family” leave, all of which can be turned into money, and virtual freedom from being fired no matter what they do or how little they do;

4. Unions, Farma, Pharma, banks, Wall Street, et al., have demonstrated that they are “entitled” to massive payoffs for campaign contributions;

5. Nidal Hassan, the mass killer at Ft. Hood, appears to be “entitled” to draw his $6,000/mo salary while sitting in a civilian clink;

6. Queen Michelle apparently feels “entitled” to a half-million dollar tax-payer funded vacation in Spain for herself, one daughter, a bunch of her dear friends, and, of course, an enormous entourage, only having had eight vacations plus a trip to England in the last eighteen months, poor dear;

7. Teachers feel “entitled” to far more money for far less work–and far fewer working days–for job performance that would get anyone else fired;

8. Illegal aliens feel “entitled” to everything the welfare class gets plus citizenship and the right to desecrate our flag, trespass, run drugs, murder ranchers, and clog our jails and hospitals;

9. The Secretary of the Treasury and the Head of the Fed have demonstrated that they are “entitled” to counterfeit and launder money through their favorite banks; and

10. The few, the employed, the tax-paying are deemed “entitled” to pick up the tab for all of this. Well, not exactly, since half of all employed Americans pay no income taxes at all.

The Federal government is broke, most of the State governments are in the red, cities are unable to pay their bloated bills, and everyone involved pretends that the “budgets” they can’t fund also cover pension plans. Well, except Congress, which pretends there will be money for “off budget” pensions, Social Security, Medicare, and Medicade and “deems” the budget to have been passed, using Geithner’s funny money to make payoffs. Pay bills. Whatever.

Something has to give, something other than those of us who have been raped all of our lives. Everyone else’s choice is that #10 should continue to “spread the wealth,” but we have reached the point where we are dropping out, avoiding taxes, not even trying to increase our incomes, and definitely feeling that charity begins at home. The milk of human kindness has definitely curdled and we don’t believe Al Gore, either.

There are only five ways to handle having overspent recklessly for fifty years: raise taxes (and everything the top 20% make wouldn’t pay the bills), lower expenses (unthinkable), cut taxes, borrow more from increasingly unwilling lenders, or ignore the whole mess as long as possible. Problem is…ALAP is now. Somebody other than # 10 has to start ponying up or scaling down.

Which leaves our tax lords with four choices of who the sacrificial victims shall be:

A. The welfare classes, solid D voters and known to be more than a little violent (over 40,000,000 are on food stamps now);

B. The Unions and other special interests, solid Statist voters and always willing to fund campaigns ($50 Bn last cycle) for fractions of pennies on the dollar for what they will receive;

C. Illegals, with a proven record of violence and virtually guaranteed to vote for the left; and

D. The Social Security crowd, with the Baby Boomers nearing their mid-sixties, more likely to vote R or I than D, who submitted tamely when told there will be no COLA for three years “because there is no inflation.” There is, at least 3.5%, and even if there weren’t, chances are we will see rampant inflation in ’11 and ’12 and beyond. Age of eligibility is ooching up and the latest proposal is seventy, and never mind that many do not have the stamina or health to work until then or are employed by firms which do not allow that.

Another hit is on the way. If you aren’t drawing genuine SS you may not know that Medicare is not optional. Well, I do not have to pay them over a hundred dollars a month, which is going up, along with co-pays on medical services and prescriptions, because the government will be delighted to keep my entire check if I refuse. And whee! As of 1/1/11 my Medicare “entitlement” will be treated as “income” and will have funds withheld from it for new taxes…and guess who gets to set the “worth” of that niggardly policy? Not anyone who is going to analyze my use and gloat, “She almost never goes to the doctor more than twice and she only uses one Rx!” Does anyone here believe A and C will be charged taxes on Medicare/Medicade?

Obviously, the sacrificial classes of choice remain small business, the elderly, farmers/ranchers, and those without political connections. The real question is: who is next, because we can’t cover the demands at all levels from Fed to village? Gotta love tiny Bell, CA, pop. under 39,000, whose Mayor was paid over three-quarters of a million, with a hundred thou’ for the part-time City Council members. So useful to be able to raise your own salaries…

B is clearly going to get a pass so long as the system manages to stagger onward, the Obama-Pelosi-Reid axis will push “amnesty” through one way or another in order to meld C and A…and sooner or later we will either have a total breakdown of the economic system or civil war. The cynical, power-hungry class knows this, and their plan is to increase regulations, increase “law enforcement” groups and use of US troops for “crowd control,” expand their powers of confiscation, and do everything possible to break the middle class which made the old America possible. The whole thing is a dull version of Atlas Shrugged with dangers even the brilliant Ayn Rand did not foresee, including making it illegal to grow and process our own food.

As one vivid book title states, Everything I Want To Do Is Illegal. Well, almost everything. Evading taxes is illegal; avoiding them is not. You all know that it is not possible to collect enough tax money even to get public debt to manageable proportions. The higher taxes are, the less we indulge in behavior that results in a greater level of confiscation. I smile when I consider how far tax revenue is below projections this year, and I urge you to do your best to starve the tax beast.

Here is a bright little idea of my very own in addition to buying nothing you can get from a tax-free source (Craig’s List, for example) and buying only those things you can eat or protect yourself with. I am on record endlessly as advocating pulling down to one telephone per household, cancelling cable TV, and ridding yourself of every other expense you can which carries numerous taxes.

You have slightly over 4 1/2 months to figure out what you are going to cut to cover having your health insurance plan treated as “income” and showing up on your withholding in January. The first thing to do is analyze your family’s use patterns. Unless you have elderly members or someone on dialysis or in need of major surgery that “free” insurance is almost certainly a rotten deal just as it is. If you simply pay the bill an office call will be $100 or less and your doctor might agree to a reduction because you’ll save him large administrative expenses.

What is your deductible? Work out how many times a year, on average, anyone actually goes to the doctor.  If you’re looking at a $2,000 deductible, see if that is enough to purchase a catastrophic health care plan and one for prescription drugs. Next, ask your boss what the “value” of your health package will be deemed to be for tax purposes. If the figures are as I expect for many of you, see if you can negotiate a raise in return for dropping health care. He may well be glad to cooperate, and if he is au courrant on politics and the firm you work for has 50 or more employees some beancounter somewhere has already worked out it will be much cheaper to pay the fine than to provide government health insurance for you–at which point you will be stuck with Obamacare, if nothing changes.

Yes, I’m serious! Insurance was never meant to cover routine expenses; its purpose is to protect you against the extraordinary. If you buy your own health care plan, well, that obviously isn’t “income,” now, is it? It is clear out-go. A raise you get in return is income, but it will be real income, not mythical. The Obama scheme is rather like taxing us on air to breathe, something we’ve always had. I would mind paying taxes on a raise if I were going to get one in the next three years, which I’m not, but I am infuriated by the idea of having to pay taxes on the Medicare I didn’t want in the first place because I have Tri-Care…which is secondary to Medicare, the Army really believing in taking care of its own.

On average you could be looking at a $500/month bite in new taxes on your insurance alone, and unless someone is undergoing months of rehabilitation it is very unlikely your bills add up to that. If they do, either live with the consequences of your current plan or find a catastrophic care policy that covers therapy following surgery. Add up your premiums, your deductible, your co-pays, and the new tax, and I will be very surprised if you can’t come up with a better solution unless you are well up in years. When John died I was offered COBRA for myself and Andrew, then 20. At $840/month! Ludicrous. In three years Andrew and I were ill once, and it cost us $100/each to see the doctor, including shots in lieu of a prescription antibiotic. $840/mo X 36 months = $32,400, and my refusal saved us over thirty thousand dollars. AFTER tax dollars. Since dental and opthalmologists (Andrew has flawless teeth and sight better than an eagle’s) weren’t covered anyway…

We’re all hoping for a change in control of Congress after the elections, but despite some naive Legislator’s attempt to get Pelosi and Reid to agree to propose no new legislation, only “housekeeping,” after that Tuesday (riotous laughter; Dubya was stupid enough to fall for, “How dare you contemplate vetoing the stimulus package when you know Obama wants it and he won big and can have it in three months?” but I assure you any “lame duck” Congress will be working overtime vindictively right up until the third week of January of 2011) a lot more bad things are coming down the pike. If they push through “Cap and Trade” the estimated tab is an additional $300/month for most households. If you do not work out where to get the money for these new expenses who will? It will hurt less if you do it before you have no choice.

Linda Brady Traynham
Whiskey & Gunpowder

August 12, 2010

The Daily Reckoning