The truth is out there

It is becoming more and more like the X-Files out there.

So why are the Hollywood elite, many media hypers and some people so upset today? Well, as one of our board presidents used to say "follow the money."

Now, that's a great slogan but it is more difficult to do than one might imagine. My post yesterday provides some hints about this.

Many of the demonstrators are upset because they will "lose their rights." What do they mean? Well, following the money we see that even with record tax receipts for four years, the Federal government had to borrow an additional 50 cents for every tax dollar collected.

What does this mean? It means that the Federal government has run out of money. That's what. Now what happens when we run out of money and borrowing can't continue to increase? Well, that's when spending cuts appear. Same as with any home budget. Or perhaps taxes need to go up. Or both.

So who has the most to lose? Those benefiting by receiving the freebies, that's who. That's a lot of people. Another group is those at the top. Increase taxes and Hollywood will pay more than they do today, unless they are given loopholes.

Free college seems to be a pipe dream, and it always was. Want to get free college? It's called hard work and a scholarship. Attending school is supposed to prepare us for working for 35 or more years so we can be financially contributing citizens. It is not supposed to be a means to avoid work for another four or more years.

Trump has made them all angry. Streamlining the tax code? That means getting rid of loopholes which benefit special interest groups like the Hollywood rich. Or political rich. (the richest counties in America surround Washington, D.C.) Repeal and Replace Obamacare? That means that some of those generous subsidies will be reduced. Yes, another loophole closed. Stop Federal funding of abortions? That means that we might have to pay for our own abortions via personal health care which includes deductibles paid by the insured. Insurance companies are good cost negotiators. That means no open checkbook for Planned Parenthood. Deal with the expansion of Medicaid? Yes, just follow the money.

Yet, Medicare keeps expanding and costs will double by 2026. That impacts nearly everyone over the age of 65, and some under. The Federal government gave States a blank check for expanding Medicaid enrollments in 2014-2016.  More and more of us are getting freebies each year. Obviously someone has to pay the tax bill. Sounds like a formula for disaster, doesn't it?

With the labor participation rate dropping, fewer and fewer people are paying taxes each year. Yet the tax income to the Federal government reached or exceeded record levels in 2013, 2014, 2015 and 2016. So who is paying these taxes? 80% are from payroll and income taxes. In other words, substantially from the middle class. That's who. Even middle class retirees are paying income taxes. How is that? Save for 40 years in an IRA or 401(k) and at 70-1/2 you will be forced to take a percentage each year, add it to your social security benefits and then your income tax is calculated. Work even part time into retirement while collecting social security and you will pay payroll taxes. So will your employer. Cha-ching! Note that currently 18.8% of the population aged 65 or older is working and that percentage has increased steadily since 2000.   About 64% of these workers 65 or older are working full time.

I assert only the "poor" and the lowest tier of the so called "middle class" get the most generous freebies. The rest of the middle class works and pays the taxes. The elites get the tax loopholes.

So this is really all about money and "paying your fair share" as former Pres. Obama was fond of saying. That was another obfuscating slogan. But the Trump detractors don't want to pay. So who will? I suspect a lot of people have realized the truth; we are running out of middle class taxpayers. This means that all of us may be included in the "Pay your fair share" group in the future, and we really don't like it.

Yes, the truth is out there. But people like Anderson Cooper over at CNN would much rather argue about how many people came to the Trump Inauguration. Then, when his expert goes through the numbers and announces "probably 1 million" our journalist frowns and says "We need to go to a commercial." Nielson indicated 30.6 million tuned in to watch the inauguration, but that doesn't include streaming (live feeds) on Facebook and Twitter, as well as BBC, PBS, CNN, the  WSJ, NYT, etc.

The truth is out there, but too many people don't want to hear it. They don't want to hear it because they expect someone else to pay, and Trump is sounding too much like a revolutionary. Revolutionaries are change agents.  Despite all the rhetoric about "change" over the past eight years, many people don't want change unless it means more freebies and a system in which "Someone else pays their fair share."




Notes:

1. Roth IRAs currently get a special tax treatment. 
2. Medicare currently gets generous government subsidies. In 2015 Medicare accounted for 15% of the federal budget. Net Medicare payments were $540 Billion.  Medicare spending has more than doubled since 2000. It is expected to more than double again by 2026. 
3. Medicaid Federal subsidies to states are currently 50% to 100%. However, these are supposed to top out at 90% by 2020.  Medicaid spending in 2015 was 9% of the total federal budget.
4. Medicaid was greatly expanded in 2014 through 2016 when the Federal government promised it would pay 100 percent of Medicaid costs of those newly eligible from 2014 to 2016.
5. Only on reaching retirement age 65 is the middle Middle Class able to tap Medicare, and that is an 80/20 plan paid for by direct government subtraction from benefits (Parts A+B combined). Furthermore, if the middle Middle Class wants improved health insurance the retiree will take a significant portion of her or his social security benefit and hand it to an insurance company.
6. One work around for Medicare is to take early social security disability. Medicare then becomes available. 
7. As of November 2016 there were slightly more than 14 million on early social security disability (under the age of 65) or supplemental income, or both. In 2007 the number was abot 7 million. That is prior to the financial panic of 2008.