In economic times like these, every financial change has an impact. This year, I switched to a health care plan that isn’t costing me anything. The health care change isn’t as good as it sounds, though, and it wasn’t brought on by choice – the Affordable Care Act (aka “Obamacare) has made premiums go up, and my office had to scramble to find alternatives. If I had kept my kids on my plan, my personal premiums would have gone up by hundreds of dollars a month. Even without kids, nobody in the office was allowed to stay on the old plan, because the office contribution was too high. We had to get creative. In my case, I had to shift the kids over to my wife’s private, high-deductible HSA. Since my office covers me, I moved to a more inexpensive plan with poorer coverage. I’ll be paying way more in deductibles and about the same in premiums as I was last year. Not exactly a win.
Setting health care aside for a moment, though, President Obama made it appear that he has had a come to Jesus moment on middle class tax cuts. He told us that his Fiscal Cliff plan had to happen because it was ‘‘the only way to put our economy on a sustainable path without asking even more from the middle class”.
On December 31, 2012, He also warned:
Unless Congress acts, he said, “starting Jan. 1, every family in America will see their taxes automatically go up.”
He went on: “A typical middle-class family of four would see its income taxes go up by $2,200. That’s $2,200 out of people’s pockets. That means less money for buying groceries, less money for filling prescriptions, less money for buying diapers. It means a tougher choice between paying the rent and paying tuition. And middle-class families just can’t afford that now.”
To emphasize that these cuts are a big deal, he asked people to “tell members of Congress what a $2,000 tax hike would mean to you.”
As an official, card-carrying member of the middle class, I agree that this kind of increase is bad. Which is why I’d like to know why it’s OK that payroll taxes have gone back up – even on the middle class – courtesy of President Obama’s plan.
Have you looked at your January paystub yet? Let me tell you about mine. Even with the reduction in health care premiums, I am now making just about $120 less per month, which comes out to $1440 per year. That number is pretty damned close to that “$2,00 tax hike” Obama was warning us about. I am one of the fortunate few who is getting a little cost-of-living bump starting with my next check, so that will help a bit, but the government is still taking twice the amount of my meager raise. That means that even with the increase, I will now make less than I did before I got it. And if you’re reading this, chances are very good you’re in the same boat.
Doesn’t sound like a recession-killer to me.
With the increase, I’m losing about $700 a year. Without that little increase, the situation would have been more dire. The President wanted to know what a tax hike would mean to me, so let’s have a look at the pre-raise impact of the change, which is what most people will be dealing with:
In my family, $120 would cover my choice of:
- Over a week’s worth of groceries for our family of seven
- Three weeks worth of gas for my car
- 6 cases of diapers
- Half a month’s worth of electricity
- New clothes for two children who are outgrowing what they have
- Grooming for my tangled, betaloned hairball of a dog
- Haircuts for my wife, myself, and the three boys
- That birthday dinner I wanted to take my wife out to enjoy this month
- Our Internet, Phone, and Netflix subscriptions combined
- A whole bunch of books (we’re avid readers)
- A whole bunch of art supplies for the kids’ crafts, my sculpting hobby, and the oldest girl’s scrapbooking
- Swim lessons for the three youngest for a month
- Paint, rollers, tape, and brushes for all the rooms of the house that need to be re-painted
- Gifts for the three family members whose birthdays will be here over the next 60 days
- New onesies and supplies for the new baby who is coming in March
- Minimum payments on at least 3 credit cards
I’ll stop there. Because I could keep going all day with what I could do with an extra Benjamin and an Andrew Jackson per month. Taken on a yearly basis, it gets even better, because $1440 would more than cover my choice of:
- A new dishwasher to replace the useless thing in the kitchen that’s been sitting inert for two months
- A new, more energy efficient dryer to match the capacity of the new washer we had to get last year when the old one died
- A payoff on the new washer we had to get last year when the old one died
- A new fridge to replace the one that’s hissing and always popping open leaking cold air into the kitchen
- Repairs on the front end of my car which has had damage for a year because of a high deductible
- New tires for my car, which I’ll need very soon
- A new lawnmower and leaf blower to help me win my never-ending battle against nature
- A new computer to replace my five-year old slow-motion machine
- A new laptop for Jamie’s business to replace the 7 year old scrap-heaps she nurses along
- A whole bunch of listing signs and marketing materials for Jamie’s business
- Our HOA dues for the next 3 years
- A big chunk of school tuition
- A bedroom set for our room with actual places to keep clothes and put lamps on and such
- A living room set so we can replace the broken down, mismatched furniture in there
- Christmas for 2013, including gifts for everyone and a dinner for the extended family
- An actual vacation, which we have never taken in almost 10 years of marriage
- A nice celebration of our 10th anniversary, maybe even some alone time somewhere nice
I’ll run out of time before I run out of things competing for my money. Of course, I won’t be spending that money now because I won’t have it. And neither will anyone else, because they’re all looking at their paychecks this week asking the same questions I am. Even those of us who did get raises have less to spend than we thought we would, and in cases like mine, we still have less to spend than we did in December. That’s not exactly going to boost the economy, is it? It’s time for more belt-tightening.
People will tell you that the money that’s being taken will go to help fix Social Security, and that’s somehow a good thing. Let’s have a moment of self-honesty, shall we? If you’re a Gen Xer or younger: you’re never going to see a dime of the money you put in to that money pit. The math doesn’t work. The system is broke now, and will be nothing but a bad memory by the time we’re old enough to be eligible to get back what we paid in. You just have to kiss it goodbye, and plan to work until you kick the bucket or make really smart investments starting right now. Financial Analyst (and frighteningly accurate economic crisis seer) Peter Schiff dishes out the tough love on Social Security:
My wife and I will find ways to compensate for this. I’ll keep writing on the side. She’ll keep working, even though she’s 7 months pregnant, and she’ll continue being busy even if she has to do it with a newborn strapped to her back and little kids in tow. That’s how we roll.
But not everyone can fit more working time into a day. Some people are already working at more than capacity, and there’s no more to give. Others are sick, or underemployed, or just in general don’t have very good options for earning more income.
Taking more of our money so it can be mismanaged, spent frivolously, or redistributed by a bloated, leviathan government is not OK. I could certainly be making a worse living, but I’m not exactly what I would call “comfortable.” In our household, we don’t have much margin for error. Lots of months, we just scrape by. We often have to manage unexpected expenses using credit cards, which I hate doing. We still owe money to people who have helped us out in the past when we were in a jam. We’re working hard to dig out of that hole, and I really don’t appreciate the government throwing more dirt on the pile. And for what? To help pay for a massive piece of health care legislation that infringes religious liberty, damages businesses and non-profits, and will expedite the already fast-moving ride toward national bankruptcy? To fund a government that wants to take away our 2nd amendment rights by executive fiat? Thanks but no thanks.
I can’t believe we have four more years of this, and we’re only just getting started. I don’t know who will be running for the White House in 2016, but if things keep up at this rate, they may not have much America left to work with.
Steve Skojec is a husband, father, storyteller, writer, and podcaster who dabbles in photography, filmmaking, and graphic design. His commentary has has appeared at outlets such as The New York Times, Foreign Policy, USA Today, The Washington Post, Fox News, and The Washington Times. He lives in Arizona with his wife Jamie and their many children.
