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Friday, March 26, 2010

Arizona Iz Us

I have been trying to follow the positions of various states with budget problems. Arizona is one of them.

I found a copy of the AHCCCS letter to the governor. As a result of the health care reform bill, the budget Arizona just passed is going to have to be redone. I think this sheds a lot of light on the position of the states suing.

Can Arizona do it? Can other states do it? Coyoteblog is pondering the same subject. Huge new taxes are probably in the offing, but the problem is that both the states and the federal government need the same money. There are logical limits to all this. A regressive tax such as the VAT really is going to hurt people. However the bill just passed imposes a pretty hefty tax increase on really high income individuals and couples. You can't ratchet the top rates up much farther. After that and the proposed federal income tax raise for the top bracket next year, in many states a lot of higher earners will be paying over 50% income tax.

But those taxes don't even begin to make up the incoming deficit, so here is where the monumental pain begins. And there really isn't any way to get the taxes we need without moving into regressive taxation. See the post below. But if you do, all freakin' bets are off.

There is also a lot of anger in the country. The media would have it that it is right wing thuggism, but it's everywhere. (See CommonCts post - he has apparently been collecting links about attacks on Republicans.) Ridiculous, but there is a lot of worry and fear caused by insecurity in the country.

People are really under pressure now. Many with businesses are struggling along, and additional mandates and taxes are a deep concern. People without jobs are desperate. Unemployment crossed 12% in Florida, for example. Hard to believe that. It's about a 9% increase in just a few years. I knew Georgia was going sky-high, but Florida? California is still ahead, though. Michigan is 14.9%.

State sales taxes are already being jacked up, and if the feds add a 4~ sales tax, we'll be close to European taxation levels. But if we do, expect additional problems in taking care of the poor and the elderly. We will be shunting more and more of our population into poverty.

Of course there's anger. The federal government has undergone a shift. Previously, it took a manageable tax bite and an arguably manageable level of debt, and gave (or promised) services that people wanted.

Going forward, the government is an institution that will simply take ever-increasing resources for no immediately apparent gain to citizens over what they used to have (or used to think they had, at any rate).

This situation has deep roots, was both predictable and predicted, and much of what people thought they were entitled to was impossible all along. But it doesn't matter.

In the final calculation, people will ask themselves whether they would be better or worse off with less government, and the answer will increasingly be "better off".
Speaking of taxes...

It's time to renew my auto license. Washington State just sent me the bill.

They have tacked on a $5 optional fee to pay for state parks.

"State parks - A $5 donation to keep state parks open is included in the total fees and donations."

This is the clever part. It really is tacked on. I have to untack it should I not want to pay.

"No donation to state parks (subtract $5)"

Part of me wants to pay. Part of me doesn't. It's all about anger management now.

If I pay the $5 and they close the parks anyway then I will clearly be very angry.

If I don't pay the $5 and they keep them open then I will feel like somebody else paid on my behalf. I'll be angry with myself.

In no event will I actually be happy though. I pay plenty to our state government as it is. The state should have never gotten itself into a situation where the sales tax needs to go up. It just steadily creeps higher. This is unsustainable obviously. I'm not sure what the maximum sales tax can be, but it clearly isn't 100%. There is an upper limit somewhat less than that. Maybe a lot less.
Mark, don't worry. If they close the parks then the critters 'n plants will have a 'summer of love' w/o all the RVs running their generators all night. You can always watch the bbc earth documentary w/ sigourney weaver. It's in HD!

And then, if they close the 'libaries', teh homeless will have to find another place to bathe...

I kid, I kid. I'm just tired of the cuts always being the kids and the parks and the rest stop bathrooms. Surely, they could slow down the pension spiking and save a lot more...
European levels of Taxation and Indonesian levels of service.
I've decided to reduce my charitable giving by the amount my taxes are going up. When the phone call comes or the letter arrives asking for this years donation, the answer is to call the President. He knows what to do with my money better than I do.

While I hate to say it, I'm praying for a National Sales Tax. Let all the people who voted the dope in feel the sting. Actions have consequences.

If I could get odds, my wager is Hussein is voted out by the widest margin in the modern era.
Odd,I have had several conversations with people about the "HCR" in the last couple of days.It is remarkable how similar these are to the conversations I had with people about Real Estate in 2005-2006.These are people who get their news from the TV and consider themselves liberals and they are of the opinion that Obama has counted coup and that this is going to be wunnerful,wunnerful.Being told emphatically that I don't know WTF I am talking about is not a new experience,and neither is responding " I sure hope I'm wrong,but I doubt it" isn't either.these are people with advanced degrees and plenty of life experience who remind me again that critical thinking is not a skill most enjoy.
Tom, we can only pray that HCR doesn't work out the same way as real estate.

I understand your point. A lot of people are angsted out. They need to believe.

The need to believe doesn't treat one sick person, though.
CF. I don't know what I am going to do. I never want to be on the wrong side of life. I think I will try to shift my giving towards organizations that are caring for the sick and the needy. What terrifies me about this is that we are going to be dumping medical care for the most helpless. A titular promise to pay for health insurance doesn't necessarily get one person medical care if we are not paying the doctors enough to treat them.

As for a national sales tax - you know, we've only got a percent or two to play with. We can't raise taxes on the wealthy, plus raise taxes on the non-wealthy, and avoid depression.
Back when they talked about Social Security going insolvent, I used to think about how the Boomers were never going to vote to increase their own taxes or take a cut in services to pay for it. I figured that the sheer numbers of Boomers meant that it would never get passed.

But this struck me the other day. The Boomers have always had this naive idealism. What we have is a President raised by someone with that same stupidity and used to dealing with it. He is using lessons learned from dealing with his mom to put his agenda over on the Boomers and it is working perfectly. All he has to do is say this will provide insurance for the most needy and they buy into it, without checking the details. I'm not fighting this battle at home, since I care too much about my boyfriend. But I am terribly worried about what this means to someone already on Medicaid with no options for other insurance in the future. He just can't see beyond that "insurance for the poor" scam.
Oh, and Mark. Remember how we voted in WA state to limit auto licenses to $35 a year? They sure did find ways to get around that one. At least they aren't getting away with the hundreds they used to charge us. We need to find a way to cut funding to DNR, especially to their legal department. The lawsuit we are dealing with is ridiculous and we are having to fight it only because they have the dollars to blow on it.
Teri, to be fair, there's two types of Boomers. This is over-generalizing, but there's the type that protested Vietnam, and the type that went to Vietnam. I don't think it's a coincidence that the Tea Party protest I scouted contained a significant percentage of people sporting veteran's hats and POW-MIA flags.

(Like I said, that's a generalization--I also noticed a much smaller, but still significant, contingent of hard-core old hippies. The kind that never became yuppies.)

It's still unclear to me whether that particular segment of the Tea Partiers will support the reduction in Social Security benefits that is the obvious consequence of their preferences. It's quite likely that they would, I'm just saying I don't know yet.
Teri - I think Neil has a point about the "two types" of Boomers.

As for the voting aspect, the reality that's going to hit us within a decade is that we won't be able to keep borrowing massively. We won't be able to play the pretend game any more. So it doesn't matter how we vote; who will lend us the last 600 billion? If the Treasury doesn't have the money it can't send the checks.

At that point, Greece R Us, TSHTF, and then I think we'll see some remarkable social consequences. I think what will happen is that taxation on the older persons receiving SS will jump a lot. We can only tax the young so much.

Anyway, at that point I expect the tax rates for most investment income to go through the roof. I think we'll still be paying SS, but that older people with other resources will find their tax rates increase so much that they'll not get much out of their SS check net.

At that point, you certainly will have a lot of bitter savers. They'll be really bitter.
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