Archive for April 14th, 2010


An Economics State Of Mind

   Posted by: Michael Bernier   in Today's Reality

The debate over whether our country’s economy is improving or not always seems to get more lively around this time of year. That’s probably because tomorrow is Tax Day, the day everyone’s personal income tax returns should be at least in the mail heading to the IRS. [As I mentioned in an earlier post (Death and Taxes…Mostly Taxes), my wife and I filed our tax return a couple of weeks ago;  now, we get to sit back and watch as those late filers make their mad dash to the post office as the midnight deadline looms ever closer.]

I was reading a posting elsewhere today by someone who appears to be a strong supporter of the current Administration; he made a comment which (paraphrased) said, “Through his stimulus programs, the President has cut the deficit and lessened the tax burden on Americans more than any other president in our lifetimes.”

That’s a pretty substantial claim. Do you suppose it’s true? Or not?

I’m not going to argue either way about that statement; as I’ve also said in an earlier posting, I am not good at debates, so I won’t even try. I’ll leave that to you, my readers, to discuss/debate/argue any and all points of that claim. Please leave me out of it!

Instead, I would like to offer some personal observations:

When I studied economics in college 30-odd years ago, the rule was that if you are already in debt, and you spend more money (or you borrow money from someone else and then spend it), the result is that you go deeper into debt. How does one cut a deficit (or reduce a debt) by spending more money? Has our President somehow changed the laws of economics? Why hasn’t anyone else figured out how to do this before? Is there a secret handshake that goes along with knowing how to do that?

As far as tax burdens go, I can’t say that my situation has improved any in the past year or so. Last spring I had to take a pay cut to keep my job, and the entire company shut down for half of December; this year, we were told the pay cuts and annual shutdown will stay in place and that we shouldn’t expect to see any changes in the foreseeable future. I’m also paying more for my health coverage this year than ever before, and not hearing even a rumor about those costs coming down anytime soon. Wasn’t the new health care bill recently signed into law supposed to reduce my medical costs? When and how does that happen? I haven’t got a clue; no one (for good or bad) has been able to explain it to me in terms that make any sense, or that show me in real dollars where I’m going to save any money.

I don’t live an extravagant life by any measure I can think of. My newest vehicle is 14 years old, my house is in need of significant repairs, and I haven’t taken my family anywhere on vacation in close to 10 years. If something major breaks, it may take a while before we can afford to fix or replace it. Given that the costs for basic needs (food, fuel, prescription drugs, utilities, clothes for the kids, car insurance, etc.) continue to go up each year but my income does not, it is highly unlikely that I will have any disposable income to afford things like new vehicles or vacations in the foreseeable future. Even my future feels somewhat uncertain; when I took the pay cut, I stopped contributing to my 401k retirement plan to make up some of the loss…with the result that I’m not saving anything to live off of when I reach my golden years. I can’t afford it right now.

All in all, I suppose things may be better for some people, but from what I can tell I am not one of them.

I guess I don’t know the secret handshake.