Are We the American “Whos?” – Are There Any “Hortons” In Washington?

Lately, I get the nagging feeling that Americans actually believe that politicians care about THEM as people.  I do not buy it for one minute.

Have you ever had personal communications with representatives in local, state, or federal government?

Have you tried to write, email, or phone your U.S. House Representative or Senator?

Have you seen what you get when you do?

Except in rare cases, you get “boilerplate” position letters, sent by staff, who must glance briefly at incoming correspondence to see which stock reply to send.

I think we get far less than taxation without representation.  I think we get no respect at all.  I think we are the “Whos” in the Dr Seuss book “Horton Hears a Who.”

Want examples?

In January 2009, I sent emails to my Congressman, both U.S. Senators from the state of Texas, and President Obama.

“An Alternative to Foreclosure,” (see my blog in the April archives) which proposes using “Mortgage Conversion Contracts,” instead of foreclosure for viable homeowners.  The owner exchanges equity and mortgage for a market rate lease, with an option to buy.

I had several real estate and mortgage experts review the idea for legality and viability.  They thought it was a great idea.  They also suggested that it needed to be endorsed and encouraged by the Federal Government.

This approach avoids foreclosure costs, credit devastation, evictions, empty houses, damaged neighborhoods; it leaves the homeowner in the house, with undamaged credit, and an option to repurchase, if they recover.

No response.

Two and a half years later, with millions of families devastated, housing markets in shambles, a gigantic overhang of foreclosures, the headlines read, “Banks need to rent those foreclosed homes they own.”  Duhh!

Likewise, I sent emails to propose the instant stimulus of suspending FICA withholding for both employees and employers, as did John McCain in his campaign:

  • Employees take home 6% more
  • Employers reduce payroll costs by 6%
  • Employees have more to spend each month
  • Employers benefit to the extent they employ
  • Employers have less incentive to lay off staff
  • Less administrative expense for employers and government
  • Resume FICA gradually as necessary

No response.

Instead, this year, the government implemented a 2% partial suspension of FICA withholding for the employee only.  Today they make a big deal out of extending it.  What do you think the impact would have been if the government had suspended FICA two years ago, for employees, and business owners who still cannot get a loan at the bank?

What possible motive could the politicians have for ignoring real solutions to the problems we are facing today?  Could it be that politicians do not care about us at all, except at election time? Could it be that power is all they want? Do problems help politicians keep and gain power?

Apparently the denizens of Washington, DC know that all they need to do is give the illusion that they hear us, pretend they represent us, promote class warfare, use rhetoric, and vague platitudes, and we will still believe them.

Each of us needs to make sure our government knows we are here.  They need to treat us with respect and give us their attention, no matter how small we may be to them.

If you feel like a “Who,” join me in yelling as loud as you can,  “Hey Washington, WE ARE HERE!  WE ARE HERE!  WE ARE HERE!”

Enough Is Enough – Stop the Stupidity! Learn the Truth About Government Spending & Taxes

I am disgusted with the politicians in Washington.  This battling and posturing do no one any good.  The results of the recent Pyrrhic debacle showed up on world markets as doomsday.  Trying to pit Americans against one another is insidious and ugly.  I have heard enough about “millionaires should pay their fair share,” and “these measures put all the burden on the people who can least afford it.”

In plain language, cutting spending means fewer benefits from the government for people who vote.  Raising someone else’s taxes sounds very tempting, especially targeting “millionaires with their jets,” and giant, profitable, villain, oil corporations, that are using “loopholes” and “write-offs” to avoid taxes, and sending all the good jobs overseas to boot.

A lot of political rhetoric seems aimed at creating class hatred, and barriers between so-called “rich” and “poor” people.  Politicians are fond of disparaging successful Americans, implying that they are somehow dishonest, uncaring, evil, and greedy for not sharing more of their wealth with our government.  On the other side, politicians seem to say that less successful Americans would be helpless victims of the rich, if it were not for the championship, and protection of the federal government.  A fair person puts this pandering aside and looks at who is paying for the government.

Do you really know how the government spends money and who pays for it?  Well try this on.

We do not need to guess about government spending or taxes.  The IRS provides good information on their websites.  Here is the IRS chart for the 2009 budget, in billions of dollars.  In this example, the government spent 40.2% more than it collected in taxes.  The deficit for 2009, is 1.4 trillion dollars

This chart shows how much the federal government collected from each type of tax they levy.  They collected 2.3 trillion dollars.

*Source Internal Revenue Service

Only 50% of total taxes come from personal income tax.  The rest comes from other taxes.

Corporations pay taxes too.

When we pay for gasoline, telephone, internet, and cable TV, excise tax is included in the price.

When a wealthy person makes large gifts, or dies with a large estate, the government collects Gift & Estate taxes.

Who really pays taxes?

Corporations pay 29%

Corporations pay 29% of the total tax bill for the USA.  In addition to income tax, they match the amount withheld from employee paychecks for Medicare and Social Security.  They pay all of the Federal Unemployment Taxes for their employees.  Think of how much gasoline, telecommunications, airline tickets, and other excise taxed items corporations buy.

Top 1% pay 20%

Would it shock you to find out that the people in the top 1% of individual taxpayers (those making more than $340,000 in a year, including all the millionaires we hear about) pay 20% of the total.  These 1.4 million taxpayers pay an average of $332,000 per return.

Top 2-5% pay 10%

The next 2-5% of taxpayers are people who earn between $140,000 and $340,000 per year .  This 4% of taxpayers (5.6 million returns) pays 10% of all taxes, averaging $44,000 per return.

Together, the top 5%, 7 million Americans,  pay 30% of the total tax burden, more than all the corporations, put together.

Top 5-10% pay 7%

The next 7 million people earn $100,000 to 140,000.  They are 5% of all taxpayers; they pay 7% of total taxes, averaging $23,000.

Top 10-25% pay 13%

The next category includes 21 million returns – 15% of all taxpayers.  They make $60,000 to $100,000 per year and pay an average of $15,000 per return, 13% of the total tax bill.

Top 25-50% pay 14%

The next 25% of taxpayers (35 million) earn between $33,000 and $60,000 per year.  They pay 14% of the taxes, and average $9,000 per return.

The Other 50% pay 7%

The other 70 million taxpayers, make under $33,000 per year, and average $2,000 per return (mostly payroll and excise taxes).  They pay 7%.

Here is the IRS analysis of effective tax rates by income bracket:

Is This Fair?

Unfortunately, the U.S. Government does not publish its spending by taxpayer.  I imagine the proportion of benefits does not match the proportion of taxes.

  1. Numbers may not be exactly comparable.  US Government budget (fiscal) years are Oct 1 – Sep 30.  Taxes are collected based on the calendar year.
  2. Number of Returns and % Paid are 10-year averages for 1999-2008
  3. Corporations Pay the Employer portion of Employment taxes, plus unemployment taxes, and a large proportion of excise taxes.
  4. Estate & Gift Taxes were allocated to the top two income brackets.
  5. The table uses IRS 2009 revenue numbers.



The Suicide Bombers of the Tea Party

We decry the Islamic fundamentalists who kill themselves and their enemies in their fervor.  It seems that the recent actions by the ideologues of the Tea Party had the impact of political suicide bombers.  They were oblivious to the effect they created; they were surprised and undaunted when stock markets around the world plummeted to levels not seen since Obama’s election.  How did the Tea Party congress members become so dangerously naïve and callous?  The same way Islamic suicide bombers do; insulation from other ideas, constant indoctrination, dogmatic blindness, and the promise of glory.

Has anyone in Washington read our history?  In 1936-37, a waffling new president first cut taxes in a failed attempt to stimulate business, and then raised taxes to cover the resultant deficits.  The big banks, recently burned by failures and regulations that pushed them to make more loans, pulled back and kept their money in reserves, reducing the money supply and further stifling business.  The brisk recovery of 1936-37 stalled, and the economy fell back into depression.

Proponents and opponents of big government and social welfare should stop to think.  The right thing to do is not always the right thing to do right now.  The middle of a fragile, anemic economic recovery is not the time and place for reduced spending and increased taxes.

We do not need a political family feud and the resulting Pyrrhic victories.  We deserve better than that from our elected officials.

Whether you elected a stalwart, Tea Party, reactionary Republican, or a committed, progressive Democrat, pull back on the reins.  Ask them to hold back until the economy can handle the reforms we need to get back on track as a nation.  Urge them to find common ground rather than run aground.  Insist that they use that energy and intellect to build consensus, rather than political IEDs.

The Hypocrisy of Democracy

We Americans cannot see the limits on our notions of democracy, because we are Americans.  Refugees, entrepreneurs, adventurers, and others who wanted independence from the controls and conventions of the “Old World” came to the “New World,” which became America.  Associations were necessary and voluntary among the free immigrants.

Democracy was a natural form of cooperation for fiercely independent farmers, merchants, and tradesmen.  The “common good” and the “needs of the community” were limited to what individuals and families could not do alone.  Militias were ad hoc and temporary; taxes were in-kind contributions from each person’s skills and efforts.

Democracies need “constitutions.”  English common law and Christian morals provided social structure.  The members of the community enforced the standards of behavior, to the extent a person’s actions affected other members of the community; justice was local and immediate, sometimes with the mediation of accepted elders or leaders.  Exile or banishment was often the price for miscreants.  In the wilds of early America, that could be a harsh sentence.

Consenting people, with common interests, participated.  No one was forced to remain in the community (save slaves).

One critical difference was our separation of church from state (uncommon elsewhere in the world at the time).

Here are the questions:

How far would you be willing to extend democracy?  Would you be willing to include Canada, Mexico, Africa, and China in the pool of eligible voters deciding your fate?

No, we want democracy limited to “us” and “them.”  We are not interested in diluting the freedoms, privileges, and wealth we enjoy.

Americans struggled for two and a half centuries to get our system where it is.  Why smugly and selfishly promote democracy to countries that do not have the resources, experience, social or cultural context to make it work?  What do we expect from cultures without our origins of individual identity, independence, and self-sufficiency?  What do we expect from “countries” that colonial world powers whimsically created by drawing boundaries combining the lands of historical enemies?  What do we expect from people at war with each other over race, religion, or tribe?  We shall see.

Public Education, Meet YouTube

If ever there were a time when knowledge lay fallow, it is now.  We have no excuse for less than superior teaching and learning at all levels.  Do we want educated people or school systems that do not work?

How about simple & cheap?

What would it take to video every teacher, teaching every class, on every subject, at every level, in every language?  E-texts, e-quizzes, e-e-e-e-e-e.

Podcasts, YouTube, whatever.  Darwinian principles would winnow the effective classes for each type of learning, and learner.

Education could have its own websites with the “.edu” suffix.  Some sites could charge for subscriptions or specific sessions, if they felt the need.

Once knowledge is freely available, taught by stellar instructors, whenever and wherever students are ready to learn, we have a new world of learning, and no excuses.

Why Not Simple & Cheap?

The recent hullabaloo over sleeping air traffic controllers dragged mercilessly through the media, and for what?  Fingers point, careers end, and silly notions trot.

Anyone ever hear of Skype?  How hard would it be to have each air traffic controller see & hear four other controllers on a computer in the tower?  Add several loud, annoying ringtones on their cell phones, and voila, no more sleeping on the job.

And how much would it cost?  How does zero sound to you?

An Alternative to Foreclosure

One of the stressful prospects facing many American families is losing their homes through foreclosure.  The Federal government is searching for ways to prevent this from happening.  The situation is difficult to solve with conventional thinking.

  • The homes cannot be sold for the price the owners paid.
  • In some cases, the homes cannot be sold for the balance of the mortgages.
  • Many of the mortgages have adjustable rates, which have risen significantly to the point that the payments are beyond the families’ ability to pay.
  • Foreclosures depress the market values of neighborhoods.
  • Vacant homes invite unwanted elements into the neighborhood.
  • Foreclosure gives the mortgage holders the costs of the process and the burden of managing or selling the homes in a depressed market.

The homeowners want to remain in their homes, but they have limited incomes to pay for housing.  Even if the homeowners remain in their homes, they may never recover the amount of the mortgage when they sell.  Foreclosure would create financial and legal costs for everyone and destroy the credit rating of the homeowners.

The mortgage holders do not want the costs of foreclosure and they have limited abilities to manage or sell the homes.  The neighbors want their neighborhood to keep its value and safety.

What can we do?

How would it be if the homeowners could remain in their homes at a cost within their budget?  What if the mortgage owners could still receive a return on their investments?  What if the costs and stigma of foreclosure and its aftermath could be reduced?  What if the costs to the taxpayer could be reduced or eliminated?

Consider this:  A new agreement between the homeowner and the mortgage holder:  a “Mortgage Conversion Contract.”  The homeowner gives up ownership of the home in exchange for relief from the mortgage and an affordable lease of 3-5 years with an option to buy the home after that.

  • The homeowner remains in the home, without the problems of bankruptcy and with the possibility of becoming a homeowner again.
  • The mortgage holder becomes a landlord with rental income and time for the market value to recover, once the current crisis passes.
  • The Federal government could subsidize creation and implementation of a model “Mortgage Conversion Contract” to speed the process and assure fairness.
  • If the homeowners qualify, they could receive rent subsidies under existing government housing programs.

This concept could ease the stress and costs on millions of American homeowners and the holders of their mortgages. How does that sound to you?