While over 26 million workers, along with their families suffer the far reaching pain of under and unemployment, President Obama spoke from the White House Rose Garden, calling the August 2010 jobs report increase from 9.5 to 9.6 percent, “positive news.”
“The Bureau of Labor Statistics, which issued the report, says it strives to issue the unemployment data free of any characterization that might influence how people interpret the change,” wrote Alan Zibel, with the Associated Press. Citing comments from Gary Steinberg, a Labor Department spokesman Zibel also wrote, “They hold meetings to discuss what kind of language to use. “We’re trying to provide context to the data without political comment.””
Any increase to a labor market already at an all time 30 year high, can only be interpreted as change for the worse. Political comment or not, the present administration has the duty to correct this.
The most recent statistics from the Bureau of Labor Statistics “Job Opening and Labor Turnover Survey,” found five unemployed workers for every job opening, compared to 1.8 when the recession started.
Unemployment is not the only income problem for Americans. Declining wages are also taking a toll. John Schmitt, an economist with the Center for Economic and Policy Research, a Washington, D.C. based research firm, stated, “A large number of people have taken jobs that pay less than the job they lost.” When there are far more people vying for a position than there are positions, there is no incentive for an employer to increase wages.
A report released Tuesday, August 31, 2010, from the Economic Policy Institute in Washington D.C. noted the business cycle from 2002 to 2007, (before the stock market crash of 2008), and revealed labor productivity grew by 11 percent but wages declined $2000.00 for the average American family. When the Institute took into account the Consumer Price Index, real wages fell 1.4 percent over the last current year for workers in non-government jobs. Those with government jobs have actually seen salaries increase.
The overall economy, the decline in Real Estate, the lack of consumer confidence, the looming national deficit and woeful job market are tremendous burdens for the American people. But add the soon to be increased taxes and one wave after another is pummeling the American people.
Effective January 2011 the largest tax hikes in the history of America will take effect. They will hit families and businesses in three great waves.
The first wave: Expiration of 2001 and 2003 Tax Relief impacting small business owners and families. The top personal income tax rate will rise from 35 to 39.6 percent, which is the same rate two-thirds of small businesses profits are taxed. All the rates in between will also rise. Itemized deductions and personal exemptions will be phased out. The impact of these marginal rate hikes mean that the 10 percent tax bracket rises to 15 percent; the 25 percent bracket rises to 28 percent; the 28 percent bracket rises to 31 percent; the 33 percent bracket rises to 36 percent and; the 35 percent bracket rises to 39.6 percent. Additionally, taxes on married couples will increase, the child tax credit will be cut in half, the standard deduction for married couples will be reduced, and dependent care and adoption tax credits will be cut. We will also see the return of the Death Tax – as high as 55 percent estate tax. Lastly this first wave will impose higher tax rates on savers and investors.
The second wave: Obamacare brings with it over twenty new or higher taxes, several which will go into effect January 1, 2011. The Health Savings Account, or Flexible Spending Account or Health Reimbursement adversely impacted. No longer will pre-tax dollars be available to purchase non- prescription over the counter medicines, except insulin. The “Special Needs Kids Tax” imposes a cap on flexible spending accounts of $2500.00, where currently there is no limit. (Consider the enormous costs for special needs children’s education alone!) The Health Savings Account withdrawal tax increases on non-medical early withdrawals from 10 to 20 percent, disadvantaging them relative to IRA’s and other tax-advantaged accounts which remain at 10 percent.
The third wave: The Alternative Minimum Tax and employer tax hikes take affect. The Alternative Minimum Tax will ensnare over 28 million families – up from 4 million last year. Small business expensing will be slashed and 50 percent expensing will disappear – depreciating equipment will be cut all the way down to $25,000. Larger businesses can currently expense half of their equipment purchases. Taxes will be increased on all types businesses, including the loss of research and experimentation tax credit. Tax benefits for education and teaching will be reduced, the deduction for tuition and fees no longer available. Tax credits for education will be limited. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families. Charitable contributions from IRA’s no longer allowed. And your employer provided medical insurance must be reported as income.
Combining high marginal tax rates with the loss of this tax relief will cost jobs. Nearly all of us will be forced into a higher tax bracket at a time when we are either not working or working for less, and losing what we have worked so hard to gain. And this is before the greatest tax hike in American history.
Income and jobs are central in the minds of voters, so it is a pivotal issue for the White House and congressional leaders.
The President promised change during his campaign, but believing that I speak for the vast majority of Americans from any political persuasion, the change we are experiencing and the change that is scheduled to occur January 2011, is not anything we want. More significantly, it is not something we can possibly bear.
President Obama indicated that he plans to unveil a broader package of ideas next week to shore up this unprecedented economy, but declined to give specifics. Unfortunately we must wait and see what he proposes and learn what the November elections bring.
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