Saturday, May 3, 2014

Washington Post on the Middle Class

Today's Washington Post tells a story that I suspect it's authors and the Post's editorial board wishes it had not told.  It's penned by Carol Morello and Scott Clement.

The article bemoans the financial difficulties of a couple earning more than $ 90,000 per year. That figure is nearly twice the average income of a typical American family.  If the article is correct, then what this suggests is that the vast majority of Americans, even those with six figure incomes, are living hand to mouth.

What the article doesn't do is tell us where the $ 90,000 goes.  Why is it that these folks, described in the article, can't make it?  The answer is not in the article, but it is obvious.  Government is the reason that these folks are suffering on $ 90,000 per year. 

A family with this level of real income, corrected for inflation, in the 1960s, lived well (very well), saved for their retirement, and were part of a happy generation of folks. 

What happened?

Big government stepped in.

Where to begin?   How about social security and medicare.  Those two items alone cost these folks nearly $ 15,000 annually.  How about property taxes?  That's probably another $4,000 to $ 5,000 annually -- who knows, the article doesn't say.  Next comes sale taxes.  That's probably another $3,000 to $ 4,000 annually.  Personal income taxes -- another $ 15,000 to $ 20,000 per year.

Add the additional income they would earn -- probably about $ 20,000 to $ 25,000 annually -- if their employers weren't required to satisfy multiple mandates and provide them with the right to sue for a blithering variety of reasons.

The gas and oil to run their cars probably costs about $ 3,000 more per year than would be the case, if the free market reigned in oil and gas production (think Keystone Project) and not constrained by a harsh and bureaucratic government.

So, big government is the most prominent source of the trauma described by Morello and Clement, although the authors are scrupulously careful to avoid laying out the family budget and where the money goes.  Instead, the authors focus on what these folks aren't able to buy as opposed to what they are actually buying......with some exceptions.  Interestingly, the family of five pays almost $ 4,000 annually on cell phones, has multiple ipads , TV sets, cable, and on and on.  They make interesting choices, I suppose, on the limited funds left after big government takes its cut.

If, as the authors suggest, a family with $ 90,000 annual income (roughly 40 times the average family income in China) can't make it in the USA these days, that is a clear statement that big government is gradually impoverishing the middle class.

This process is not over.  Watch the future of medical care in the US.  It will become unaffordable and unavailable for the kind of folks described in this article, thanks to Obamacare.  Big government is not through punishing middle America.

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