The problem with 7% inflation

On May 22, 2020, Joe Biden, the Democrats' candidate for president, appeared on CNBC's "Squawk Box" and promised the American people, 

"Nobody making under 400,000 bucks would have their taxes raised. Period! Bingo!"

Then on Aug. 23, 2020, candidate Biden doubled down on ABC's "20/20" and pledged to every American that, 

"I will raise taxes for anybody making over $400,000. … No new taxes [for people making less than $400,000]; there would be no need for [any]."

To be perfectly honest, I don't give a fig whether Congress increases federal income taxes to 90% on billionaires, or imposes a 90% confiscatory tax on their wealth.


If a billionaire has $1 billion stashed in his savings account, or in gold bars or in stocks or bonds, and the government confiscates 90% of it, the billionaire should be able to still get on rather nicely with his remaining $100 million.


And if the billionaire is allowed to retain $100 million of his $1 billion yearly income, he'll still have a lot more money to spend than anybody I know, and will probably not need SNAP benefits and an EBT card.

But what I am concerned about is what President Biden and his progressive brain trust are doing to the poor and to those on fixed incomes.f you voted for Biden, remember his promise:

"Nobody making under 400,000 bucks would have their taxes raised. Period! Bingo!"

The progressives, who have espoused Modern Monetary Theory, claim to believe that the government can create, or print, as much money as it needs to fund whatever program it sees as being worth funding, without any adverse consequences. History has repeatedly demonstrated that so-called "economic theory" to be hogwash. 

Around 1700, John Law tried it in France. The result was the catastrophic "Mississippi Bubble." 

The Weimar Republic tried it after World War I, and it destroyed the middle and lower classes and opened the door to Adolf Hitler.

Chavez and Maduro tried it in Venezuela and turned the county into an economic basket case.


The truth of the matter is that inflation is a tax. It's a regressive tax. It is a cruel tax that hits the poor and those on fixed incomes the hardest.

To demonstrate that statement, consider that in September of 2021, the average monthly Social Security retirement benefit was $1,559. That sum included the 2021 cost of living adjustment of 1.3%.

Now, assume you were one of the people getting that $1,559 check each month during 2021.

You got 12 monthly Social Security checks during 2021. Each one equaled $1,559. But during that time the cost of goods and services increased. The Bureau of Labor Statistics advises that, "over the last 12 months, the 'all items index' increased 7.0 percent before seasonal adjustment."

By Dec. 31, 2021, your $1,559 check's purchasing power was reduced by 7%. Your $1,559 check could then buy only $1,450 worth of goods and services — if that.


Now in 2022, you will be getting a 5.8% cost of living adjustment — an additional $93 per month. So your monthly 2020 Social Security check will be about $1,692 per month. Sounds great, doesn't it?

Think again. Your 2022 $1,692 check will have a purchasing power of $1,450 + $93, or $1,543 at the beginning of 2022.

And if inflation in 2022 increases by only another 7%, your $1,692 check will purchase only $1,435 worth of goods and services by December of 2022. If, however, inflation increases to 12% for 2022, by December your $1,692 check will purchase only $1,358 worth of goods and services.


What is true for Social Security benefits, is also true for welfare benefits and wages. If your take-home wage is $2,400 per month today, by year's end, with 7% inflation, your $2,400 will buy only $2,232 worth of goods and services — if you're lucky.


It is true that inflation affects the income and wealth of a billionaire the same way. But if a billionaire has a billion dollars in the bank, and earns $100 million per year, even if his wealth and income are reduced by 7%, he is still going to come out better than you.

In truth, inflation is a regressive tax that affects everybody in the country. The super-rich, however, always seem to find a "life preserver" or two, thrown to them by their good friends in Congress. Otherwise known as "loopholes."


If you voted for President Biden and progressive policies, don't complain. You did this to yourself.

Copyright 2022, John Donald O'Shea

First Published in the Moline Dispatch and Rock Island Argus on January 24, 2022

The answer to a teacher's strike

On Jan. 4, the membership of the Chicago Teachers Union voted to "suspend in-person teaching in the Chicago Public schools." That union represents 25,000 Chicago Public School teachers and staff. And 73% of those voting, voted to close the schools. Therefore, 340,000 public school students were locked out of their schools.

Chicago Mayor Lori Lightfoot, labeled the strike, "an illegal work stoppage" and filed an unfair labor practice complaint. Chicago Public Schools and the union came to an agreement, which was narrowly ratified last week, but the schools were closed for days.

Unfortunately, Gov. J.B. Pritzker last year signed a bill passed by the Democrats in the Illinois legislature that gives the teachers union the power to use students as bargaining chips during its negotiations with the Chicago Public School Board.

According to the Illinois Policy Institute, "House Bill 2275, signed by Gov. J.B. Pritzker on April 4, repeals a portion of the Illinois Educational Labor Relations Act that limited negotiations between CPS and CTU to issues related to wages and benefits.

"Now CPS will be forced to bargain over everything, including subjects such as class schedules, hours and places of instruction.

 "The bottom line: The increased number of issues that must be resolved during bargaining increases opportunities for CTU to disagree with CPS — and escalates the union’s likelihood of going on strike."

So if the teachers union can bargain over schedules, hours and places of instruction, why can't the union strike once negotiations deadlock? If the union and the board are at loggerheads over the "place of instruction" (in school or at home), how can the strike be illegal?

But here's what a Chicago parent whose child or children are locked out of the public schools can do: Send your child to a private school, if you can afford it, or if financial assistance is available. Or you can leave Illinois and move to another state where the teachers unions don't control the Democratic mayor and governors, and run the state.

How about Arizona? Gov. Doug Ducey, a Republican, has proposed to halt a similar "power grab" by Arizona teachers unions. Ducey proposes to give every parent education-related aid in the sum of $7,000 to assist them in placing their children in any school that's open!

The governor says the state is taking "preemptive action."

In a series of online posts he said:

"We're making sure in-person learning remains an option for all Arizona families and students. 

 

"With the new 'Open for Learning Recovery Benefit Program,' if a school closes for even one day, students and families who meet the income requirements will have access to instruction that best meets their needs. 

 

"It funds up to $7,000 for needs related to approved child care, school-coordinated transportation, online tutoring and school tuition. 

 

"We will continue to work with families, public health experts and school leaders to ensure our kids can stay in the classroom and parents have a choice – always."

Former House Speaker Newt Gingrich has lauded Ducey's plan. "Governor Ducey's announcement that Arizona will give the education money to parents if their school is closed is the most creative response yet to the teachers union putting children last. Chicago should follow his lead."

In America, if you're wealthy, you can send your child to the private school of your choice. If you are poor, you don't have that option. The poor face a monopoly; the public school system monopoly specifies where your child will go to school.

When a state provides public funding to allow the parents to send their children to the school of their choice — whether public or private — that monopoly is broken.

According to the Chicago Public Education Fund, "in FY20, CPS has a total budget of $7.0 billion, excluding capital funding." [$20,588 per student].


At my old high school, Notre Dame College Prep of Niles, Ill., tuition for 2021-22 is $13,400. Alleman High School tuition for 2021-22 is $5,500, and is discounted for more than one child.

Chicago Public Schools and their unions are not revenue deprived. They are a virtual monopoly. They can strike with impunity because once they lock the school doors, most public school parents have no choice.

Ducey's plan to use revenues that would normally go to the public schools to allow the parents a choice, when the unions exercise their choice to close the schools, makes sense. Only a politician who gets major funding from such unions would object.

Ducey's plan should appeal even to the likes of Rep. Alexandria Ocasio-Cortez. She hates monopolies. She wants to give every American $1,000 a month even if they don't want to work. She voted to give convicted criminals in the state penitentiaries economic recovery checks. If she had no objection to how such money is spent, why would she object to poor parents spending free money to send their children to better schools, or at least schools with their doors open?

Copyright 2022, John Donald O'Shea

First Published in the Moline Dispatch and Rock Island Argus on January 16, 2022