The Idiots Did It. We’re Sequestered.

This is the low point in my time in the United States Congress. I can not tell you how ashamed I am.  

Senator Lindsay Graham, talking about the sequester. 

The Republican/Democrat game of chicken went to the next round last night when Congressional stonewalling forced President Obama to make good on his threats and sign the sequester order.

We’re sequestered. The Republican idiots and the Democratic idiots drove us over the cliff. 

What does this mean to you and me? 

I’m going to give you two replies. One will be what I’ve heard is going to happen to Oklahoma (and by derivation, to everyone else.) The second will be a more official summary. 

1. Oklahoma. What I’ve been told is that the sequester will take about .05% out of Oklahoma’s state budget. I’m expressing it in percent because that will make it easier for you to compute the effect on your state. Since so many of these things are based on population, that will be more accurate for you. I’m guessing, but I would imagine that the percentage will be similar in other states, while the numbers will (due to their higher populations) be higher. What that means in Oklahoma is several hundred million dollars which we will have to make up out of our relatively small state budget.

While that may not sound like a lot of money, (by government standards) one of the things that makes it hard to handle is that we are already well into the budget process. Coming as it does as an unplanned-for hit, it will be harder to make it up. Also, a good bit of this will ultimately be off-loaded on parts of the private sector such as the hospitals, who will have to handle the problems it creates in people’s lives out of their budgets. There will also be a hit on the economy, which will result in lower tax revenues, which could result in another round of this further down the line.

Oklahoma has fared relatively well in the recent economic downturn because we are an oil producing state and oil prices have been high. However, our tax revenues will fall if people buy less because of this sequester. 

Our military bases, such as Tinker Air Force Base, are predicting that they will have to furlough people in order to make up their part of the shortfall that they expect from the sequester. I believe other government agencies will be similarly impacted. This, of course, will also affect tax revenues and the overall economy.

I think we will see similar things all across the country, which is why I’m am detailing this here.

2. What the sequester does. 

President Obama was forced to sign the sequestration order as a result of Congress’ failure to act. This means that unless the members of Congress come back from their long weekend off with a new attitude, the sequester will take affect.

The sequester totals around $85 billion which will come out of the budget over the next 10 months. Non defense programs will be cut by 10% and defense programs will be cut by 13%.

Most government programs will be cut. Social security, Children’s health insurance, food stamps and Medicaid will not be cut. Medicare won’t be cut, but payments to providers will shrink by 2%. 

Most other government programs will feel the cut, with furloughs predicted for agencies ranging from the FAA to the Bureau of Prisons. 

It’s a little difficult to predict exactly what will happen since the President and the Republican leadership differ in what they are telling us and I think both of them are spinning things to bolster their case. Oklahoma Senator Tom Coburn says that agencies have plenty of space in their budgets to handle the cuts. From what I know of government agencies, I think he’s probably right. However, from what I know of government agencies, I doubt that they will do this. 

I expect more gamesmanship, which I expect means that agencies will not “handle” the cuts at all, and you and I will end up paying for all this. 

The worst of the sequester will not hit until April, since, by law, the government furloughs can’t start until employees have been given 30 days’ notice. If this goes on long enough for that to happen, we’ll start feeling it in all sorts of ways, including a sudden, powerful drag on the economy. For more information, go here and here.

In the meantime, as I said earlier, the president was forced to sign the sequester orders and Congress has gone off on a long weekend after a hard week of doing nothing good for the country. I’ve been through legislative fights, and I would guess they need a cooling-off period. The best thing they can do for all of us is go soak their swollen heads.

As for you and me, we have to decide for ourselves if this is how we want our government to work. We keep getting choices between bad and worse at election time. As a consequence, we’ve elected a whole Congress of party hacks who do not care enough about this country to do the nation’s business. 

I have never and I will never tell anyone to change their party. I have always, and I will always tell you that you need to demand that whichever party you are in clean up its act and stop giving us puppet people for elected officials. 

If you want to chat with your Congressional delegation about this, you can find their phone numbers and email addresses here

We elected these people. We can un-elect them. 

Fiscal Cliff Bill Will Shrink Your Paycheck

Your take home pay will be a bit less, thanks to the “Fiscal Cliff” bill that Congress passed at the first of the year.

The reason is that the reduction in Social Security taxes which Congress passed at the request of President Obama has expired. This reduction was part of the stimulus package used to keep the country from going into an economic free-fall after the housing crash and resultant lending crisis of 2008.

I’m certain that some of my Republican readers will chide me for saying this. According to them, when I criticize the Obama administration, I’m a statesman. When I criticize the Republicans, I’m a biased Democrat.

However, it is a plain fact that I never benefitted in my paycheck from any of the huge tax cuts that President Bush passed during his presidency. My take home pay did not go up. My taxes did not drop.

On the other hand, the tax cuts President Obama enacted raised my take home pay about $100/month.

I am not a subscriber to “trickle down” economics. The reason I am not is that the money doesn’t trickle down. Or if it does, it doesn’t trickle far enough to get down to me and any of the people I represent.

We’ll talk more about this later. For now, I want to draw your attention to an article from the Baptist Press which outlines some the effects that the “Fiscal Cliff” deal had on deductions for charitable giving. I’ve bolded the section which talks about social security to make it easier for you to find.

The article reads in part:

The ‘fiscal cliff’ bill & charitable giving
 

Posted on Jan 8, 2013 | by Warren Peek/Southern Baptist Foundation

NASHVILLE (BP) — After weeks of political drama, the U.S. has averted or at least delayed the so-called “fiscal cliff.”The American Taxpayer Relief Act of 2012 has been signed into law by the president after passing both houses of Congress.

Don’t you love the names of these bills? Taxpayer “relief” means that about 77 percent of U.S. households will pay higher taxes according to Bloomberg, mostly because of the expiration of the payroll tax cut. While some provisions are still set to expire, several provisions have been made permanent.

Following is a brief summary of various provisions of the act that may impact charitable giving:

Income taxes 

The 2012 ordinary income tax rates remain intact for most taxpayers. For individuals with incomes over $400,000 and joint filers over $450,000, the federal income tax rate increased from 35 percent to 39.6 percent. The dividend and capital gains rates also increased from 15 percent to 20 percent for those filers as well. For most other taxpayers, however, the capital gains rate remains at 15 percent.

Phase-out of itemized deductions and personal exemptions 

For individuals earning above $250,000 and joint filers above $300,000, itemized deductions and personal exemptions are limited. Total itemized deductions are now reduced by 3 percent. This phase-out will be watched closely, as there is still pressure to cap or phase out all itemized deductions.

Payroll taxes

The reduction of the payroll tax in Social Security is now over. Social Security will now collect 2 percent more from our paychecks. An employee earning $113,700 (the maximum amount of earnings subject to the tax), will pay an additional $2,274 in payroll taxes this year. (Read more here.)


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