How President Obama Shrank America’s Consumer Dollar

President Obama’s great stimulus spending and QE programs saw disposable income of average Americans reverse historic trends and stagnate or  actually decline.  There has been a huge increase in the taxes they have to pay for everything from gasoline to cell phones and property taxes. And since government is responsible for these taxes and the big states are all run by Democrats with liberal news media, these facts are seldom reported.

A December 2015 study of the American middle class done by the Pew Research center found that for the first time in over forty years the middle class no longer includes the majority of Americans.  The plain fact is, after the largest so-called stimulus government spending program in world history, conducted by President Obama and his Democratic Party, both the number of persons in the middle class and the proportion of the population shrank.

The Pew Hispanic Center May 2016 Study found that at the end of President Obama’s second term, the middle class had been shrinking in the vast majority of metropolitan areas of the US.  The importance of the metropolitan areas is that 1) 76% of all Americans live in metro areas, 2) metro areas are the areas where most jobs are located, and 3) illegal immigration is promoted in metro areas all across the nation.

While the shrinking middle class proves that government cannot raise the incomes of middle class persons in the US through stimulus spending, at the same time it shows that the increasing tax burden on the middle class eats away at their disposable income and their lack of spending hurts the local economies.

The biggest flaw in traditional measures of taxation is that the great majority of studies, including those done by the Census Bureau, primarily record state and Federal income tax burdens.  They usually do not account for such things as property taxes, motor fuel taxes, alcohol taxes, cigarette taxes, and sales taxes.  These taxes have increased at rates faster than the rates of income taxes, proving that local and state governments are placing a great demand on the incomes of local residents throughout the US.

The Tax Foundation has compiled state tax burdens per capita.  In 2016 the highest tax burden state was NJ, followed by CT, VT, NY, and IL.  The states that are dominated by the Democratic Party have the highest property taxes.  Similarly, the states with the highest per capita tax burden were such states as CT, NJ, NY.  In New York, for example, each person paid an average of $6,993 in state-local taxes.  A family of five paid close to $35,000.

Wireless phone tax burdens have increased as consumers are making less money.  The three highest tax rates are, naturally, found in IL, WA, and NY, since these states care the most about economic justice and the middle class.  As monthly subscription rates have slowly dropped due to increased cell phone provider competition, the states need to make it up by charging more.

The demand of government upon the middle-class wallet increases by the day.  The state of Illinois, which has the largest unfunded pension liability of a state, at $251 billion, and the lowest credit rating, also has not paid state vendors about $15 billion.  The interest alone on these unpaid bills amounts to $20 million per day.  And Illinois is the home of both Barack Obama and Hillary Clinton.  Barack Obama created more debt for the middle class than any president in US history, and also had the only huge QE programs: $4.2 Trillion.

Chicago illustrates how rising public pensions impact disposable income.  Today 100% of the property taxes in the city go to pensions. If these public pensioners, the great majority of whom earn higher salaries than residents, had 401K programs; the property tax revenue would only go to pay for public services.  This reveals an easy way to put a number on the amount: the property tax revenues are then equal to the extra disposable income people would have if the pensioners had 401Ks.  Since sales and other taxes are increased to fund the public services (to replace revenues that go to pensions)  then this amount is equal to the loss in disposable income.  More money would be available for small and medium size businesses and the city would grow.  Today Chicago is collapsing.

These debts not only constrain government spending but reduce the disposable incomes of American workers now and for the foreseeable future.

The great demand upon middle-class incomes comes from government.  In California, there are over 40 public servants who have salaries from one to $2.4 million per year.  And many hundreds take over $500,000 a year.  They expect comparable money to be given to them when they retire.  It’s difficult for the average working American who expects a Social Security annual retirement of $17,000 a year to understand how public workers in California can get pensions over $1,400,000 a year, and in Illinois pensions over $500,000 a year.  If working middle class residents of these states are expected to have a 401K, so should the one-percenter public servants.

The Tax Foundation also looked at the sources of state and local taxes and published a study in June 2017.  While property taxes remain the single greatest source of tax revenues, the idea that the property tax goes solely to fund public services such as police, water and sewer maintenance, street lighting, etc. is now a lie in many areas.   The Illinois Policy Institute audited all the cities of Illinois and found that in 10 of the cities including Chicago, all of the property taxes collected go only to pay public sector pensions.  This leaves a huge gap in the funding of local public services, which is why Chicago has the highest sales tax, some of the highest taxes on tobacco products, alcoholic beverages, etc.

OXFAM reported that during Obama’s terms, 95% of the wealth created went to the top 1% of the world’s wealthy.  This can be interpreted as proof that stimulus programs don’t work or, as I have argued, that the spending was never intended to stimulate the economy: only to bolster the equities values of public sector union pension plans, since they are the largest contributors to the Democratic Party’s national machine in all fifty states.  We are losing our incomes because we’ve been forced to subsidize Obama’s political party.   The debt, Fed balance sheet, and financial instability indicate there’s no end in sight. 

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