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What is the Matter with Kansas – no Liberal Kansans?
In what seems like eons ago I posted what I thought was an innocuous blog copied from the NYT defining the 1%. In a response to a post in that thread I observed that Mr. Obama was favoring the “poor” at the expense of the middle class. I was challenged and deferred a response to a future blog because the topic is not answered by a thirty second sound bite. . This is the start of that blog. More will follow;
First of all when I suggest that Mr. Obama is doing this I mean he is doing it in his role as the head of the Democratic Party implementing party policy planks from their convention. He represents a philosophy, acting not as an individual but in support of a group. Secondly I am not referring exclusively to federal income tax. I am addressing all taxes, policies, regulations and the like. Third I am addressing wealth in the traditional sense where a lifetime of experience and education yields a growth in income and savings to be supplemented by social security. This is not about the "haves" and the "have-nots". It is about you today and you thirty years from now.
As a first example and as a matter of public policy we have been trying to hold down all interest rates. The stated purpose is to try to encourage job growth through cheap financing of business expansion (and the cost of government borrowing). An intended side consequence of this policy is to reduce the wealth of those in the $50K to $250K income group – the group that over a lifetime makes small investments to provide for a meaningful retirement.
How so you ask? Simple. People nearing and in retirement tend to make low risk investments as they are most reluctant to risk their hard earned nest egg so late in life. The government policy has resulted in those investments experiencing a zero to 1% return. How does that mater you ask, as inflation has been low. Nor really. Health care, fuel and taxes to mention a few cost components have increased significantly but those increase are little reflected in inflation calculations The results is that appropriate investment opportunities for those in the $50 to $250K income group are losing value compared to the cost of living.
Bottom line is that to help people in the $0 to $50K income group find jobs today we are reducing the future retirement standard of living of many more Americans in the $50K to $250K income group (might even be the same people). The 1% of course can invest in opportunities not as secure and essentially not available to the smaller investor. Some are seeing 20% returns.
It has been suggested we go further and start to means test social security as a way to reduce the costs of contributions by the lower income participants in the near term (or providing for a payroll tax reduction). Doing so will of course even further erode the standard of living of the $50K to $250K group essentially transferring wealth from them to the $0 to $50 crowd.
Now by no stretch of the imagination or ideological motivation can we argue that this is not a policy that favors the “poor” at the expense of the “middle” while holding the “rich” contributors harmless. It is not isolated and more examples will follow.