A battle on all fronts

There’s been a not-too-unexpected knee-jerk response to Obama’s 3.6 trillion budget by conservative commentators. It’s being called class warfare, a war against the rich, a war against struggling Manhattan families trying to get their kids through private school on a household income of $250,000/year. If Obama was trying to bump marginal tax rates up to 70 percent that argument might hold sway. But he’s not; he’s letting the tax cuts for the very wealthy, or at least the richer among us, expire as they were scheduled to do under current legislation. That means tax rates would return to the levels of those egalitarian 90s when the rich really had it rough (marginal rates were 39 percent as opposed to today’s 35) and the government could actually balance the budget.

And the war he really is gearing up for is not with the rich, it is with the middle and lower classes who will get hurt the most when the federal government reins in so-called “entitlements,” which provide income to retirees and healthcare to the poor and retirees. One thing Obama does not want to do is cut those benefits (which is inevitable) while letting the rich off scot free.

(FYI, according to http://www.phrases.org.uk “a scot is a Scandinavian word for tax or payment. It came to the UK as a form of redistributive taxation which was levied as early the 13th century as a form of municipal poor relief. The term is a contraction of ‘scot and lot’. Scot was the tax and lot, or allotment, was the share given to the poor. Scot as a term for tax has been used since then to mean many different types of tax. Whatever the tax, the phrase ‘scot free’ just refers to not paying one’s taxes.”).

Entitlement contributions are a sore point for independent consultants like myself. They amount to about 19 percent of your first taxable $100,000 if you are in business for yourself; employees pay half that much. So with all that income supposedly going to support your senior years it would be nice to know you’re going to get some of it back. But “entitlement reform,” as it is euphemistically called, is all about getting less back. If the federal government could better balance its check book and/ or could break the back of the health care lobby the problem could be fixed equitably; however, that is going to be a tough fight and every lobbyist in town is gearing up to put a stop what Obama is proposing, at least as it affects their narrow interests.

To his credit, high on Obama’s list of priorities is bringing down health care costs, which are driven up by provider excesses and overall inefficiencies in the system. Many in the industry fret about universal health care but the truth is a good portion of health care in the U.S. is already socialized—seniors, the poor, the military, and uninsured children all receive medical care large free of charge. However the services are provided by the private sector with little government oversight. So we are really getting the worst of both worlds—unscrupulous health care providers and negligent civil servants.

Posted by patrickj on 03/01 at 12:35 PM
Politics • (0) CommentsPermalink


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