Rich and Poor

Obama is having a terrible time with healthcare.  On Jan. 1 the media is about to notice that 5.96 million people got their insurance cancelled and less than 1 million will have signed up for insurance on the exchanges or on the open market.  In other words, there are 5 million fewer people with insurance than when Obamacare started.  That’s just the opposite of what was supposed to happen. We are going backwards.

            And so the administration pivots to Rich vs. Poor as a diversionary issue.  I keep a lot of statistics in my notebook and thought you might be interested in a few.  Here’s a table of income groups and what they pay in federal income taxes.

Group              Make                %of all taxes paid        tax as % of income    

Bottom 20%    <$15K             0.3%                            1%

Median quintile$31-44K           9.4%                            11.1%

Upper 20%      >77K               67.9%                          23.2%

(Please note: These are taxable incomes, page 2 of 1040, not Adjust Gross Income. That is, deductibles and exemptions have been taken out)

Upper 50%      >34K               96.93%                        16.1%

Upper 25%      >62K               86.0%                          18.2%

Upper 10%      >103K             70.3%                          21.3%

Upper 5%        >145K             59.7%                          23.6%

Upper 1%        >371K             38.9%                          28.9%

 

We should also say that these are IRS compilations which do not account for net taking from the system due to Earned Income Credit.  That would make the bottom 20% pay a negative % of all taxes because they are net takers. 

            A few observations.  As you go up the income ladder, an increasing amount of total income is consumed by income taxes.  Someone might say the rich get a lot deductions, loopholes, and write-offs.  Well, it evidently doesn’t do them a lot of good. They pay more of their income in taxes. When Mitt Romney said 47% of people pay no income taxes, he was referring to “net taxes” with EITC and Social Security included. What I find sad is that Pew did a poll on a group approximating that 47% and 70% of them say the rich aren’t paying their fair share. (Hmm.  Conversely, one might conclude that 70% of the 47% are Assholes.) This certainly does give credence to class warfare. 

            What this doesn’t show is how transient the income groups are.  20% of adults will have one year they make the upper 1% of income during their lifetimes.  Within 10 years only 46% of people will remain in the lower quintile.  Think of that. In ten short years, 54% of poor folks get considerably richer.   That’s why pollsters are noticing that the lower middle income groups are no longer predominantly Democrats. “Poor” is just a temporary title you have.  A sizable number of aspiring lower middle income folks always wanted a job, not a government hand-out. 

            So who are the rich?  1/3 of the upper quintile are small businessmen who have <50 employees.="" span="" style="mso-spacerun: yes;">  They also create 70% of the new jobs.  But if you have ever run a small business, you know just how fragile your finances are.  Hence if this group gets a big bill for Obamacare insurance, increased government regulations, tight bank credit, higher taxes,etc. this group of extremely savvy business planners can see their profits evaporate fast and economic recovery will stall like a ’58 Edsel with gas-line freeze-up.  That’s exactly what has happened the last 5 years.  Small business owners vote over 90% conservative.  So in some ways the vendetta which Dems have for business in general, and the animosity for “the rich” is natural enough—businessmen are not their voting block.  Another 1/3 of the upper 20% are well-paid professionals.  Salesmen who get large commissions are a big part of this.  And every year there are certain groups like farmers or geologists or auctioneers who had a significantly good year and are paying taxes on it.  Next year, they may be poor.  Finally, there are a lot of upper GS grade federal employees who make a six-figure income.   What I think is interesting about this analysis of the upper quintile is who they are not. They aren’t robber barons, Wall Street decadents, or landed gentry.  I saw some study that showed more professional athletes and entertainers than professional investors in the upper 20%.   All told, the upper quintile votes about evenly R vs. D.

            Pope Francis has a special mission to help the poor.  Rerum Novarum, a papal decree by Leo in 1891 exhorted Catholics to support unions, government social justice, and redistributionism.  While this Protestant takes very seriously his personal obligation to help the poor, I think that the evidence for government (rather than privately) accomplishing this is not just dismal, it is counterproductive.   Food stamp usage has increased from 31 to 48 million since a redistributionist federal government took over in 2009.  Medicaid enrollment has doubled.  Social Security disability has soared from 9 to 14 million.  It looks to me like we are going backwards, not forward on poverty. Somebody tell the Pope to stop hijacking government to do what Jesus told us to do ourselves!

            I ran a study on what state and federal assistance looks like for our local peronistas, since some of them tend to rent our poorer properties.  What can they afford? If you have nothing, TANF, WIC, Food stamps, Section 8, and Medicaid provides a typical Okie with about $20K of assistance annually.  As you start earning something, the TANF disappears but EITC gives you money.  At about $18,000, this runs out and at about $23K you lose food stamps and Section 8.  But basically from income zero to $23,000 income, you can count on a life of about $20,000 guaranteed through government assistance to make up whatever you don’t.  Why then work—if you don’t think you can ever make more than 23K? I’m actually quite proud of some of these folks who still would rather have a job and hold their heads high.  

            The politics then is that Obama will try to beat the drum of income inequality.  R’s should counter with economic non-growth and lack of jobs.  If you want Obamacare, vote Democrat.  If you want a job vote Republican.

Government Motors

Doggone it, I wanted to go see what was available on that new car lot everyone has been talking about.  But when I got out there you had to go through a gatehouse and sign forms.  On the form were all sorts of personal information, SS number and phone number and last year's income.  Then you handed it over to Miss Blue, a clerk so myopic she kept running into file cabinets and poles.  She just threw my form onto a table where there were hundreds of others, all people who had given their vital ID to get in.  And it was carelessly thrown in a pile that any passerby could read.  Nonetheless, as soon as I had complied she opened the back guard gate door and I was allowed to see the new cars. 

The Head Salesman was an impressive guy.  Good looking and articulate, he had that intellectual pause in his voice where his sentences are only partially stated and then comes a profound pause, as if he has really been thinking during his speech about the magnitude of his thoughts, then he rapidly spits out the rest of what he is saying.  “We can save you [pause] $2500 off anything you are paying a year now on a car.” Wow! That sounded good! “Since our base model doesn’t include an engine, that is why it is priced so ultra-low. We’ll transplant the engine with an overhaul free from your present car.”  I told him I had never heard of something like this. “Well, people often get rid of cars because they just wear a lot of miscellaneous things out.  But if there is nothing wrong mechanically, if you like your present engine, you can keep it. Period.”  Gosh, I didn’t know.  I had 180,000 miles on the old jalopy. “There are also a few quirky and unusual small details to our contract," he continued.  "You agree to pay a small 15% tax on all optional devices installed.  And we have a preferred list of mechanics that service our cars.”  Still sounded good to me. 

Then he showed me prices and I was stunned.  “These cars are over double what I had expected to pay! Even the most affordable one is $4500 in payments higher annually.”

“Not really.  You see you get a big rebate based on your need in the form of a tax credit.”

“When is that?”

“A year and a half after you buy.”

“But meantime I have to come up with the money to buy it?”

Suddenly there appeared a big electromagnetic crane over my old car sitting outside the gate.  It sucked my old flivver up to the magnet, rotated dropped it into a crusher and I watched in horror as my vehicle was destroyed. “That’s my car!” 

“Oh, just a necessary cancellation.  It was a substandard car.  Not nearly as good as the ones on our lot.”

“Yeah but I loved my old wheels! And you said I could keep my engine!”

“It was faulty and no good.  Besides you can’t keep your present mechanic anymore unless you pay a much, much higher price.”

This was unreal to me.  I got mad and said I was going to leave this car lot and sue his company.

“Then you have to pay a fine to not participate in our vehicles.”

“Which is?”

“Two and a half percent of your income.  Oh, and if you ever sell your house, you owe us 3.8% of the sale.”

“What?  What kind of car dealership is this?”

“Government Motors,” he replied. “Hey, I’m missing my golf game because of you,” he said consulting his watch.

And just at that point, I woke up.  I guess it was all a bad dream I had over the GM takeover.  Wow, that was one wacky dream!  Glad nothing like this would ever happen in real life!

Mandela and Margaret

I have some thoughts about great leaders like Mandela.  Those movement leaders who seem to transcend the veniality of people and often inspire hope are forever celebrated by their countrymen. Such is surely the case of Mandela who, though imprisoned 27 years, rose to power and then constantly warned against destroying his country by letting the African tribes take out revenge on the Afrikanners who had ruled so long. (Though some would quibble with his heroism saying he was a terrorist and that is why he was in prison) A similar saga was our own Abe Lincoln who wanted the union preserved and tried to lay the groundwork for the re-entry of southern states soon after the war was over—a forgiving gesture.  Others like Churchill and Peter the Great had their good values as well.  Did they succeed?  Was the nation not only healed but enhanced?  Did the departed leader bring some magic to the kingdom? The answer depends on which side of freedom they align.

Consider South Africa today.  It is minerally and climatically blessed and like USA, has location that is both remote enough to avoid Eurasian Wars yet strategic enough to be vital.  It was governed harshly but market-wise under the Afrikans, so Mandela had the luxury of a good start and a country that had half the gross domestic product of all of Africa.  So what is happening today?

Here’s what the British magazine,The Economist, gives as the prognosis for growth prospects and political prospects for the coming year.  “The President, Jacob Zuma, is on course for re-election in the 2014 presidential contest but will struggle to unify pragmatists in the centre and interventionists on the left of his African National Congress-led government.  An authoritarian drift will be watched with care from outside the country and meager living standards will bring some protests.  An expanding black middle class will help growth.”  (I know, British spelling! Note that the ANC was Mandela’s former Marxist leaning party which operates so much like Chinese communists that the two countries have now allied closely) The GDP per capita is $7140. (yeah, an interesting way to measure income) where it is $54,000 in USA. Well, who does this compare to? Colombia = $8070 and Iraq is at $7410.

In other words, Union S. Africa has gone backwards since Mandela.

You say, okay, wise guy, who has done better? Well, Estonia, the poorest of the Baltic States emerged from Russia’s heavy hand with a quiet determination to become very capitalist, free market, and associated with their Finnish brethren again.  $18,260 per capita, better than Latvia, Lithuania or Poland and four times greater than Ukraine, six times that of Belarus.  Countries that go free, go up.

Let me give a historical example in a fish story.  Queen Margaret of Denmark/Norway/Sweden was acclaimed queen by all three countries in the late 1300’s, and she brought rule by law, solid Christian ethic and greatly increased trade in her noble reign.  That’s good enough to celebrate her reign.  But there’s more.  Europe had an dilemma with food shortage in her times.  About 1000AD, a lot of plentiful fish were harvested from the big rivers of the continent and supplied peasants and nobles alike with meat.  There were fewer forests which the nobles now claimed for their own exclusive use.  Of course, they lorded it over the peasants and hoarded the wild boar. But hunts were also mock war games for archers and knights and all their auxillary workers and supporters. Then by the late 1200’s heavy farming and erosion silted most rivers and so did toxins from mines all over the continent.  Freshwater fish died out in large numbers, especially salmon and sturgeon, just at the time of the Black Death. Famines broke out.  But the Scandinavians knew what to do.  They went to sea and caught herring, whiting, cod, and dried the fish for shipment.  Margaret’s genius was to disallow the nobles to charge tariffs or separation taxes on the fish.  That is, she denied government regulation.  100 years after her death, half of Europe was eating Scandinavian dried and salted fish.  By 1600 Sweden became the strongest nation in Europe.  Small population but big entrepreneurs. Don’t tell me capitalism doesn’t work.

Obamacare kills an industry

The medical device tax puts a tax on Gross Profits of 15%.  Think about that.  That’s not net profit, but rather the markup.  This is guaranteed to kill just about any product that doesn’t make at least 15%, which few device projects do.  So what is happening?  Abbott Labs spun off their device manufacturing from their pharma and those jobs are now going overseas to Switzerland.  Just about every other company is doing something like this.  When it is over, Obamacare will have driven an entire industry out of the country along with the jobs. Thank the Dems who hate business.

So have you heard this story on TV?  I haven’t.  Seems the broadcasting folks all have degrees in political science and none are former business owners.  Hence it remains for the Republicans to explain in simple language what is happening in so many areas.  The “He Said, She Said” journalists don’t understand or tell it. It is imperative that we get the story out.   

Just for profit

Clarence Page begins his opinion with, “Private businesses are trying to block Obamacare on religious grounds? What do companies worship besides, perhaps, the almighty dollar?”

Stop right there and think with me.  I have started 5 businesses and only one earned a living wage.  Would anybody start a business, committing their heart and soul, life, fortune and sacred honor, only with purpose of making money?  Would you endure those lonely night worries and earnest prayers about staying out of bankruptcy just for the wise-ass notion of making a buck?  Would you go through those hundred hour weeks, the time neglecting your family, to do something you are not passionate about?  I wouldn’t.

And frankly, I don’t know another person who has started a business who didn’t have some kind of dream about serving people.  You spend hours pondering whether to take the plunge, thinking about how you might fill some niche your community needs or doing something the public doesn’t even know it needs yet.  In the end, you realize that the profiting is just a measurement for keeping score –will you be allowed to fulfill your dream or go down in flames?  Indeed, Judeo-Christian ethic holds that God seeks people out with His own dreams and calls them to an enterprise and purpose for their lives.

If you survey other businessmen and women, they tell you the same thing I have said.  If you survey folks who never started a company, they will tell you they once had a dream to do something—or wished they had had a better one.  Dreams are what make business click.  I provide a product or service that you are willing to pay me for.  You are delighted with the product/service.  I am delighted that you caught a piece of my dream, and by the way, I can afford to live off the money and continue.

Yet, to my amazement, I find a lot of crass and cynical people seem to agree with Clarence.  To me this shows the utter bankruptcy of the left’s ideals on life.  They don’t dream much nor have much appreciation for the dreams of others.  They just want to control them. To simply slog through life on the public dole is just fine.  Often they psychologically project their meager dream, to have more money and power, on all the rest of us who strive diligently and passionately to make dreams come true. Thus they claim we worship the almighty dollar instead of the Almighty who inspires our dreams.

Next time you hear someone say that business is only about profit, ask them if they have ever started a business.

the end of racism

I see the RNC had to retract a tweet that declared that Rosa Parks had ended racism.  And there arose a big howl over how racism isn’t dead.  Yada, yada, yada. In the absence of dissent, let me be the first to say that, indeed, we ought to declare racism dead.  It is being used as a victimhood play to the detriment of minorities everywhere.  But all human beings are some shade of the same color, brown. Sure, there are a few old-time racists around (under 3% according to just about every study that has been undertaken in the last 10 years), but we can ignore their yak. 

The virulent, majority racism of the old days no longer holds any sway with the vast majority of the population.   But the racism mongers ruin lives of people who struggle already. As a foster daughter of ours (who was Mex) used to say about poor-me behavior, “That won’t do you any good.” And just for the record, the Birmingham bus that Rosa Parks rode was one of the few bus lines still run by a city in the South.  All the rest had been privatized and had abolished back-of-the-bus rules since most of their customers were poor and African descent who hated such treatment.  So it was a government run bus that tried to tell Rosa where to sit. How can I make it plainer?  Southern talk? “Gubmint” tells people what to do.  Gubmint was the racist. Run by Democrats in Alabama.

Anyway, I hereby declare racism dead.  Or at the most, wiggling it’s little feet like an upended cockroach.  I attend a church that has been referred to as the world’s largest Protestant church, Lutherans.  There are more Lutherans in Africa attending each Sunday than in N. America and Europe.  So we could be called a "black church". They may be wrong about that largest title, because all the churches in China (130 million) call themselves Baptists.  In that case the world’s largest Protestant church is predominantly Han Chinese.

So here’s the strategy, perfected by Marcus and I. (Marcus was a ALCH teen who was of African descent who called us Weekend Mom and Dad.  If anyone brings up the racism blather, just say, “Ain’t all people some shade of brown? I don’t know anyone the color of snow or India ink.”  See what they say to defend themselves.  I’d love to see someone do this on MSNBC. 

Just asking questions--education funding

This began when I was assigned to listen to our superintendent plea for more funds for education last year.  Again, this year I went to the same meeting.  But this year was different.  He’s organized a task force of citizens who are whipped into a frenzy of demands that the state appropriate more money for common education.  And such a group is also a natural for the Dems to enlist against my guy, who ironically is very supportive of education.  But politics being the slogan, the short answer, that it is, this will be used to play against anyone prudent about finances. 

            The instigator of the debate has been an organization CBPP which stands for some sort of advocacy group for public policy spending, based in Washington—not in Oklahoma.  They ‘studied’ education spending and found it way too low all over the country, but in particular published a graph showing OK the worst offender, having cut education 22.8% since the recession.  This is stunning since only in one year, 2011, were funds cut by 4%, at the behest of our Governor Fallin to go easy on education.  All other agencies got a 10% ax.  State budgets must balance.  We can’t print money like Washington.  When a recession hits, state revenues plunge.  So in 2004 we had revenue/budget of $5.1Billion; 2008, $7.1B; 2010,$6.0B; by 2012 it had recovered to $6.8B.  If you are interested in this sort of thing, you can look up numbers (albeit awkwardly) on the state website http://ok.gov.  And during the same time common education budgets went from $1.75B to a high of $2.48B in 2008 to $2.36B in FY 2014 (and projected to propose $2.5B next year).  Then it is a simple matter to divide 2.36 by 1.75 and find a 35% increase over the last decade, although a 5% loss from the salad days before the R. 

            How then the 22.8% decline.  CBPP uses some hocus pocus to put in some unknown but large inflation factor and figures a 6% increase in number of students.  This stretches that 5% 2008-2014 loss into the massive “cut”. Statistics don’t lie but statisticians do. By the way, CBPP is a leftist outfit that favors handing out abortifacients to minors and hates vouchers.  And the journalist who wrote an article for them is from Los Angeles Times. 

            So again using the state website I discovered that from 2004 to 2014 Oklahoma has a 15% increase in students—a direct mirror of the census statistics that say our state is growing by 15% per decade.  So you could argue one way or another that a 35% increase in state budget does or does not take care of a 15% increase of students in the face of whatever inflation is.

            What did amaze me is what education funding is made of.  In OK it looks like this.

            $2.4B   State budget spending

            $1.1B Property tax share for schools

            $0.7B   Federal

            $0.6B   bond issues and sinking funds

            $0.8B fees,tickets, etc.

            $5.6B total

Divide this by the 673,000 estimated students and you get almost exactly what NEA estimates as $8285 spent per student.  The US Census Bureau says, “Hey! Some students drop out or move out of state.” So they convert to student-years and get $8863 per student spent.  Our leftist pals at CBPP said it was $3038 per student.  But if you divide the 673,000 into $2.4B you still get a number of about $3600.  However did they get such a low figger? Methinks they just make stuff up.

            Look at state budget again and you see there are all sorts of revenue sources. Townships in OK reserve one section for rental for support of schools.  That is part of state revenue.  Casinos were sold to the voters as a big equalizer for schools since a percentage of operation goes to schools.  A proportion of income taxes is designated for schools.  In all, 33.8% of the state budget is for common schools and total education takes slightly over 50% of the entire state budget.  If truth-in-advertizing laws governed our state budget it should be described as “education plus other items”  That’s not all.  78% of our county property taxes go for common ed.  But perhaps the most interesting one is those fees, etc.  When you go to a football game and plunk down $6 or a school play for $15, that gets accounted for in a myriad of ways by schools.  Fees charged students or all those magazine sales the band holds are also part of this.  And the Federal portion is labyrinthine with grants and subisidies.  Bottom line, we spend money on schools from a lot of places. 

            But here’s the weird thing.  Does ed spending translate into better ed?  Utah spends $7400 per student while DC spends over $29,000.  Utah gets better results.  Likewise a line-up of states in our area shows OK gets good bang for the buck—lowest spending but #30 in student achievement in USA.  Missouri and KS spend the most, about $12000 per student, and MO gets pitiful results--#42.  AR spends just a little more than OK at about $9500 but comes in #5.  What does AR know that MO doesn’t? 

            Talk to teachers and they say it is teachers being free to teach plus involved parents.

            Indeed.  Perhaps the most pitiful federal program is Headstart.  $23,000 per student (4 yr olds!) and Headstart students cannot out test peers by second grade.  This reflects the impoverished parents.  Likewise, I suspect MO has too many KC and StL ghetto inhabitants which pull the state average down. 

            Where would you go to see inspired teachers and involved parents?  I nominate our church Lutheran school in which teachers make only 80% of the market of public teachers, but are given a very free hand to teach.  When parents plunk down their own hard-earned cash, they tend to be very involved.  There may also be fewer social problems.  When a kid sees mom getting beat up by a drunk dad, it’s hard to concentrate on math at school.  At any rate, 8^th graders at our parochial school get grade 11 plus achievement every year.  Last year it was 11.6.  Of the 20 kids in the class, 6 tested “college ready” in all 4 subject areas.  Only two students didn’t test “college ready” in at least one subject.  And of the 189 K-12 students, 24 were on scholarship aid (poor parents).  I asked how much time the teachers spend doing achievement testing.  About 3 school days equivalent each year was the answer.  Public school teachers spend twice this amount and then spend a lot more time teaching the test since there is so much pressure to perform.

            So the bottom line is that we owe a round of applause for our public school teachers who have given us results in the middle with the lowest funding in our area. Over half our state moneys are spent on education and without a tax increase (unlikely) we probably won’t see massive ed spending, even if the super intends it that way.  He needs to learn to live on what the taxpayers say they have.  Spend wisely.  Is $300,000 for new football Astroturf wise when our team is 0-10? I dunno.  Just asking questions.