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Your Share Is $42,105–Enjoy!!!

April 06, 2009 By: Phred Category: Uncategorized

If you are a regular reader, you will remember that I wrote earlier that the total amount committed to the bailouts by the government equaled $8,800,000,000,000 [$8.8 trillion].

Thats a ton of money–to put it lightly.  But, unfortunately for your wallet, it didnt end there.

Bloomberg recently reported that “[t]he U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion” over the past 20 months.  “The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.”

This means that in the past 20 months, the government has committed about 90% of our country’s GDP to bailouts and “stimulus.”  [emphasis added by me] Roughly 1/3 of this money has already been spent, while the remaining 2/3 has been committed but not yet spent.

The article breaks the spending by category.  This is pretty scary stuff.  Please pass this along to your friends and family.  Also, get involved.  There are Tea Parties coming up across the country on April 15th.  The Facebook group representing the Tea Parties has over 24,000 members.  We are expecting between 5,000 and 10,000 protesters in Atlanta for next weeks event.  These protests are being held in cities, both large and small all across the country.  Here is a map listing the locations of many of them.  Join the struggle before they spend another $42,105 of your money!

Americanly Yours,

Phred Barnet

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Cigarette Taxes Burn The Poor

April 03, 2009 By: Phred Category: Uncategorized

If you arent a smoker, you might not have heard about the huge increase in cigarette taxes which took effect on April 1st.  On the first of this month, Federal excise taxes on cigarettes went up from 39 cents a pack to $1.01 per pack–an increase of 62 cents a pack.  This is an increase in the tax by about 159%.

It is not fair to target one group of people–a group who are disproportionately from the lower class and who are addicted to a a product–and tax them for the benefit of others.

From the article I linked to above:

“The rate of adult smoking in the United States is, in fact, directly related to household income, dropping in linear fashion as income rises. Overall, 21% of American adults smoke… A different way to look at this smoking-by-income data is that slightly more than half of today’s smokers (53%) earn less than $36,000 per year — making cigarette taxes highly regressive.”

Here is a chart from the CBO on what percentage of taxes are paid by what range of wage earners.  I found this about a year ago when I was looking for evidence that President Bush’s tax cuts benefited the rich way more than the poor.  It turns out that I was wrong about that, but more on that in another post.

I want you to look closely at this chart.  It will make the next couple of paragraphs make a lot more sense.  The lowest 20% of wage earners pays .8% of all federal taxes, the second 20% pays 4.1% of all taxes, the third 20% pays 9.3% of all federal taxes, the fourth 20% pays 16.9% of all federal taxes, and the top 20% pays 68.7% of all federal taxes.

This includes all income taxes, social insurance taxes, and excise taxes.

I like this chart because it allows you to look at excise taxes by themselves.  Scroll down to the bottom of the chart and they have the numbers for who pays the excise taxes in this country.  In this case, the bottom 20% pays 11.1% of excise taxes, the second 20% pays 14.4% of excise taxes, the third 20% pays 18.1% of excise taxes, the fourth 20% pays 21.9% of excise taxes, and the top 20% pays 34.1% of all excise taxes.

You can easily see that excise taxes fall much more heavily on the poor than do the average federal taxes.  In fact, you can see from the chart that the bottom 40% actually pay no income taxes and even received money back from the government, while the third 20% pays only 4.4%.  Combined, the bottom 60% of wage earners pay only .6% of federal income taxes, but pay 43.6% of all excise taxes.

The point here is that excise taxes excessively burden the poor when compared to other taxes.  As the numbers from Gallup above showed, smokers are disproportionately poor.  It sounds simple, but increasing taxes on a product used primarily by the poor amounts to an increase in the taxation of the poor.

This brings me to my next point.  Here is an article from the AP criticizing Mr. Obama for raising cigarette taxes and calling it a violation of campaign promises.

A couple of key quotes from the article:

“”I can make a firm pledge,” he [President Obama] said in Dover, N.H., on Sept. 12. “Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes. [emphasis added by me]”

“No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised,” Joe Biden said, “whether it’s their capital gains tax, their income tax, investment tax, any tax. [emphasis added by me]”

To me, the word “any” means “any.”  I dont have ANY idea why it wouldnt.

And of course, this tax was enacted in the name of the “public good.”  The money will go to fund S-Chip–a program which gives medical care to children of the poor.  I find this ironic for two reasons.  The first is that the government is essentially taxing the poor to provide their children with a service.  The second is that the government is also claiming that an increase in the tax on cigarettes will lead to a decrease in the number of smokers.  Im sure that this is a correct assumption, but the government is missing (or masking) the point here.

From the Danville Register and Bee:

“The twisted logic of this tax increase as a way to modify behavior shouldn’t go unnoticed. If higher cigarette taxes convince more people to quit smoking, won’t the S-CHIP program need a new source of federal dollars in the future? Won’t that lead to different taxes being raised to continue to cover the same number of children?”

The cigarette companies themselves realized that an increase in federal cigarette taxes would decrease the number of consumers using their products.  Can you guess how they responded?  Altria, the maker of Marlboro, increased their prices by 71 cents per pack for Marlboros, but 81 cents per pack for their menthol cigarettes (which tend to be smoked more often by the poor than other cigarettes) to cover the anticipated losses in smokers due to the new tax.  This means that those who dont quit are being forced to spend at least an additional $1.33 per pack of cigarettes.

I have a friend who supports the cigarette tax increase–he said “its about damn time smokers pay their share.”  But he is missing the point too.  Smokers pay their share–they have the same income tax rates as everyone else in the country.  They are being taxed to pay for a program that they may not use.

Our system of government is supposed to protect citizens against tyranny of the majority, and so I must reiterate my point from above:  It is not fair to target one group of people and tax them for the benefit of others.  It sets a bad precedent and only sounds good until the government decides that it wants to tax a product that you enjoy.

Americanly Yours,

Phred Barnet

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Three Articles And Some Other Stuff

April 01, 2009 By: Phred Category: Uncategorized

The poll that I put up on the right side wasnt working, so I had to take it down.  Ill most likely be writing about the tobacco tax increases on Friday.

Here are a few articles for yall to read this morning while I think about what to write on later:

A Sowell article.

A Larry Kudlow article on government intervention.

An interesting article on “freeing the job creators.”

Also, if you havent already done so, please become a fan of my site on Facebook.

Americanly Yours,

Phred Barnet

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Quotes From Dr. Thomas Sowell

March 09, 2009 By: Phred Category: Uncategorized

I have written about Dr. Thomas Sowell here before.  I think he is possibly the smartest man in the country.  I scoured the interweb and found a bunch of great quotes from him.  Enjoy.

“People who talk incessantly about “change” are often dogmatically set in their ways.  They want to change other people.”

“Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good.  In area after area – crime, education, housing, race relations – the situation has gotten worse after the bright new theories were put into operation.  The amazing thing is that this history of failure and disaster has neither discouraged the social engineers nor discredited them.”

“One of the sad signs of our times is that we have demonized those who produce, subsidized those who refuse to produce, and canonized those who complain.”

“The next time some academics tell you how important ‘diversity’ is, ask how many Republicans there are in their sociology department.”

“The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it.  The first lesson of politics is to disregard the first lesson of economics.”

“Prices are important not because money is considered paramount but because prices are a fast and effective conveyor of information through a vast society in which fragmented knowledge must be coordinated.”

“A recently reprinted memoir by Frederick Douglass has footnotes explaining what words like ‘arraigned,’ ‘curried’ and ‘exculpate’ meant, and explaining who Job was.   In other words, this man who was born a slave and never went to school educated himself to the point where his words now have to be explained to today’s expensively under-educated generation.”

“No matter how disastrously some policy has turned out, anyone who criticizes it can expect to hear: “But what would you replace it with?”  When you put out a fire, what do you replace it with?”

Capitalism knows only one color: that color is green; all else is necessarily subservient to it, hence, race, gender and ethnicity cannot be considered within it.

“Each new generation born is in effect an invasion of civilization by little barbarians, who must be civilized before it is too late.”

“If you are not prepared to use force to defend civilization, then be prepared to accept barbarism.”

“If you have always believed that everyone should play by the same rules and be judged by the same standards, that would have gotten you labeled a radical 60 years ago, a liberal 30 years ago and a racist today.”

“It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it.”

“Liberals seem to assume that, if you don’t believe in their particular political solutions, then you don’t really care about the people that they claim to want to help.”

“Mistakes can be corrected by those who pay attention to facts but dogmatism will not be corrected by those who are wedded to a vision.”

“Mystical references to society and its programs to help may warm the hearts of the gullible but what it really means is putting more power in the hands of bureaucrats.”

“Prices are important not because money is considered paramount but because prices are a fast and effective conveyor of information through a vast society in which fragmented knowledge must be coordinated.”

“Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.”

“Tariffs that save jobs in the steel industry mean higher steel prices, which in turn means fewer sales of American steel products around the world and losses of far more jobs than are saved.”

“The most basic question is not what is best, but who shall decide what is best.”

“The most fundamental fact about the ideas of the political left is that they do not work.   Therefore we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive.”

“The real goal should be reduced government spending, rather than balanced budgets achieved by ever rising tax rates to cover ever rising spending.”

“Too much of what is called “education” is little more than an expensive isolation from reality.”

“What ‘multiculturalism’ boils down to is that you can praise any culture in the world except Western culture – and you cannot blame any culture in the world except Western culture.”

“Would you bet your paycheck on a weather forecast for tomorrow?  If not, then why should this country bet billions on global warming predictions that have even less foundation?”

“The assumption that spending more of the taxpayer’s money will make things better has survived all kinds of evidence that it has made things worse.   The black family- which survived slavery, discrimination, poverty, wars and depressions- began to come apart as the federal government moved in with its well-financed programs to “help.””

“Most people who read “The Communist Manifesto” probably have no idea that it was written by a couple of young men who had never worked a day in their lives, and who nevertheless spoke boldly in the name of “the workers”.”

“Despite a voluminous and often fervent literature on “income distribution,” the cold fact is that most income is not distributed: It is earned.”

“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” [bureaucrats]

What is ominous is the ease with which some people go from saying that they don’t like something to saying that the government should forbid it.  When you go down that road, don’t expect freedom to survive very long.


Americanly Yours,

Phred Barnet

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You Can’t Ignore Numbers

February 20, 2009 By: Phred Category: Uncategorized

A year ago, America was completely different than it is now.  In the last year, the government has nationalized the banking industry, taken over the worlds largest insurer (wasting well over $100 billion in the process), and taken control of two iconic car companies.  Last week, Congress agreed to a plan that will cost nearly $800 billion.  Between actions by Congress and the Obama administration, as much as $3 trillion was pledged to government bailouts last week! This amounts to 21.7% of American GDP (US GDP is 13.7 trillion).  This new spending is more than government’s entire 2008 budget of just under $3 trillion.  Every penny of this money is being financed with debt.  This will raise the size of the national debt substantially.  Our national debt currently stands at roughly $10.7 trillion.  If we add another $3 trillion to the debt, our debt will increase by 28% and will be roughly equal to our GDP!

Of course, even Mr. Obama has admitted that there is no guarantee that these plans will work.  Even more interesting, he has said that these plans will have little effect before 2010.  This is particularly interesting because the non-partisan CBO recently estimated that the recession will supposedly be over in mid 2009 even if these “stimulus” plans werent passed, meaning that Mr. Obama’s plans wouldnt even begin working until after the economy has already started to heal itself.

But, lets pretend that Mr. Obama’s boldest predictions are correct and that this plan will create 4 million new jobs (although he says it will create or save 3-4 million jobs).  Let us also assume that each of these jobs is a high paying job of $100,000 a year and that these jobs are permanent jobs that will never go away in the future, regardless of future circumstances.  According to both H&R Block’s tax calculator and the Heritage Foundation’s much simpler tax calculator, a single person earning $100,000 pays $19,472 in Federal taxes.  So, the 4 million jobs that we are pretending this plan will create will return $77.888 billion in taxes per year to the federal government.  Excluding any interest (which will likely be a hefty sum and will go countries like China), it will take the government about 35.5 years to recoup the money!

If, however, this plan still creates 4 million jobs but these jobs pay $50,000 per year instead of $100,000, the government will collect $6,606 in taxes per person totaling $26.424 billion in taxes per year.   Under these circumstances, it will take the government 113.5 years to recoup the money!

However, I made a little Excel spreadsheet assuming that the government would have to pay 3% interest on these new loans.  This is a generous assumption, considering that the average rate on treasury bills has been much higher.  I used both of the above jobs assumptions in my calculations and found that the government will actually never be able to recoup this money if interest is factored in! Check it out for yourself.

Americanly Yours,

Phred Barnet

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