Throughout his campaign, President Barack Obama touted his tax plan that would “cut taxes for 95% of all taxpayers.” As he announced his stimulus package, Obama reiterated his promise for the tax reductions as he pointed to the “Making work pay” initiative that will provide the average worker $13 per week.
Good thing we’ve got that break but don’t go spending it all yet.
Between FY 2009 and 2010, Obama plans to increase debt by $2.9 Trillion. With around 115 Million US households, the debt alone amounts to over $25,000 per US household. If you add interest to it and amortize it over 30 years, the amount of debt that each household is now responsible for easily offsets the $13 per week in tax reductions. The problem is that the tax story doesn’t stop here.
Obama has several initiatives in his budget that are geared to not only offset any pittance of reductions that he has provided but, when taken together, will increase government imposed burdens in a dramatic fashion.
First on the increase your increased burden parade is the cap and trade program. Cap and trade will impose significant new taxes on the utilities that use carbon based fuels to provide energy, particularly electric. Depending upon whose estimate you use, Cap and trade will increase your energy costs by about $80 billion annually. That $80 billion translates to nearly $700 per year per US household.
Next in your increased burden parade are mortgage costs. The Obama administration is supporting the ability for judges to be able to unilaterally reduce the balances owned on mortgages. If the procedure, known as a cram down, is approved by the Senate, this will be the first time that mortgage holders will be told that they must take a reduced principle amount and not have the option of foreclosing on the property. The net result, if this is passed, is that it will put additional risk into mortgage loans. The reason that mortgage loans rates have traditionally been low relative to other types of loans, has been that the mortgagor always had the value of the home to go after if the mortgagee defaulted. With this new twist, the risk of not only not being able to foreclose but to be forced to take a write down on your loan amount, lenders will respond by increasing their rates to offset the additional risk of getting hammered in a cram down. This will be especially true for anyone who has credit that is not a+. What’s the cost of this? I have no idea. However, you can bet Barney Frank, Chris Dodd and others will be crying to high heaven about the evil mortgage lenders as they see rates that had been traditionally 1% to 1.5% above 30 year Treasuries move to 3% or better, beyond the treasuries.
Our final example today is this article from the NY Times. According to the Times, President Obama now believes that the way to solve the high cost of our medical insurance is to make us pay more for that medical insurance. President Obama has floated the idea of removing the non taxable status of the medical premiums that many Americans receive from their employer. Don’t think it’s a big deal? Think again! The NY Times article says that as much as $246 Billion, over $2,000 per year per family!
President Obama’s claim of providing tax cuts for 95% of Americans is about as genuine as some of those low cost airfares you see advertised. You know the ones that show you a price but add taxes, a fee for this, a fee for that…oh just watch the video and imagine Obama answering a low tax line:
