Are You Really Better Off? Crunch the Numbers Yourself

Candidates in both parties are asking, "Are you financially better off now than you were four years ago?" What do you think? Are you?

Here are a few statistics.

-- The number of persons said to be living in poverty in January 2009 was 39.8 million. Today that number is 43.6 million.

-- The August jobs report released Sept. 7 revealed that 368,000 Americans simply gave up looking for work. That number was nearly four times larger than the 96,000 people who actually found jobs. The government also reported that the "labor force participation rate" fell to 63.5 percent — the lowest figure since September of 1981.

-- In January 2009, the national debt was $10.627 trillion. Today it is over $16 trillion. There are about 300 million Americans. Therefore, your share of the national debt in January 2009 was roughly $35,000. Today, it is roughly $53,000. But there are problems with these numbers.

First, they are impersonal. They are huge numbers, but unless you are living in poverty, or unemployed, they are just numbers to you.

Second, while they are government statistics, we hesitate to rely on them because, in the words of a great 19th-century British statesman, "figures lie, and liars figure." For you, therefore, to accurately answer the question, "Are you better off?" I think it is better to look at the more immediate things that affect your daily life.

I have formulated a series of questions, which should make it very clear whether you were better off in January 2009 than you are now.

-- What was your salary in January 2009? What is it now? What was the percentage increase (or decrease)?

-- If you are on pension, what was your monthly pension benefit in January 2009? What is it now?

-- If you are on a pension, was the Legislature or your employer looking for a way to reduce your pension in January 2009? Is it now?

-- What was your health insurance situation in January 2009? Have you lost health insurance? Has your employer reduced the share he or she paid? Increased the share you pay? If you're a state employee or retiree, is the Legislature requiring you to pay more or is it about to?

-- What was the value of your home in January 2009? What is it today? Are you current on your mortgage, or underwater?

-- Has the cost of schooling your children increased? College? Grad school?

-- Are you paying state income tax today at a rate in effect in January 2009? Or has the Legislature increased it?

-- Has your municipality increased sewer rates? Water rates?

-- Are you paying the same real estate tax you were paying in January 2009?

-- Do you have cable? Are you paying the same monthly amount you were in January 2009?

-- The average price of gasoline in January 2009 was $1.83 per gallon. What are you paying today?

-- When you go to the grocery store, are you paying more or less? Here are a few of my comparisons from my receipts:

16 oz. peanut butter (4/5/09) -- $1.47; 28 oz. peanut butter summer 2012, $4.

16 oz. strawberries (4/5/09) -- $1.77. 32 oz strawberries summer 2012 --$4.99.

1 gallon skim milk (8/15/09) -- $1.79. Summer of 2012 -- $2.99.

18 oz. Oreo Cookies (4/5/09) -- $2. 16.6 oz Oreo Cookies Summer 2012 -- $2.49

2 qt. Breyers Ice Cream (4/5/09) -- $2.50. 1.5 qt. Breyers Ice Cream Summer of 2012 -- $3.

You should be able to calculate whether you income has increased more than your expenses, or vice-versa.

If your income has increased more than your expenses, you should be in better shape financially. If not, you are probably in worse shape.

It looks to me like things are going from bad to worse. And, with the present administration, I see no meaningful plan to make things better.

The president's plan would raise taxes. Those paying a marginal tax rate of 36 percent would see their rate increase to 39.6 percent. The Heritage Foundation reports that in 2011 the federal income tax on individuals raised $1,091,500,000,000.

But for ease of understanding, assume that every taxpayer's federal income tax was raised by 3.6 percent on all income (which clearly won't be the case!). That would raise a tad less than $40 billion per year.

But when you consider that the White House's Office of Management and Budget projects that the 2012 deficit will be, $1.33 trillion, you're talking about less than 4 percent of that figure -- a drop in the bucket!

It is for that reason that I give the president's plan to tax the "rich" an extra 3.6 percent a vote of no confidence.

The simple truth is this, 50 percent of the American people paid $1.091 trillion in income tax during 2011. If each of them paid 100 percent more (rather than 3.6 percent more), it would raise an additional $1.091 trillion -- not enough to cover the projected 2012 deficit of $1.33 trillion. The president's plan is nonsense.

It's good class warfare and good politics, but the numbers simply don't work.

Posted Online: :  Sept. 19, 2012, 2:16 pm  - Quad-Cities Online

by John Donald O'Shea

Copyright 2012
John Donald O'Shea