GS Don Morris, Ph.D.
If you listen to the Democrats, the so-called Middle Class in America is being taken to the cleaners. Of course, it is all George Bush’s fault and the mean spirited Republican Party. After the Democratic Convention it is apparent what their economic political strategy is: wordsmith how horrible the economy is; inform the Middle Class that they are suffering while the rich continue to prosper and live the “life of Riley”; only the government can CHANGE this social inequity. Say this often enough, repeat it eloquently with emotional sound bites and people will ignore the facts and come to believe it to be true. Play to our citizens’ weaknesses (emotions) thus preparing them to accept you as their rescuer! There is power in numbers so make sure you keep throwing out the 100 million-description and it is certain your message will resonate. Never mind that the numbers (facts) do not support the message, “soon to be President Obama” is looking out for those in the middle.
Accept as fact that as an American middle class citizen you are entitled to the following: cars for each adult family member, television (preferably flat screen) in every room, a family vacation each year, dining in local restaurants each week, cable or satellite television, brand name apparel, 3 extended weekends every year, paid health plans, inexpensive public education beyond high school, and all of the latest technology from phones to entertainment devices. The key word is “entitled” and should fortune not shine upon you, then you cannot possibly be happy with what you do have. No worries, the government is on its way to save you. Do I exaggerate-I think not! If you don’t have the preceding it must be that the economy has “gone to hell in a bread basket”-this is the only possible explanation!
As an intelligent, informed voter, let’s examine the data to see “which truth” is being shared. Lets begin with whether or not you have a job. As of the beginning of September 2008, 94.3% of Americans wanting a job, have one. Comparing Mr. Bush’s years to Mr. Clinton’s (The Misery Index), we discover that the Bush plan produced less unemployment than did the Clinton plan as measured by percent unemployed1. This is an example of a poor economy? Countries around the world are envious of this rate-we should be so lucky …! I hear the “yeah buts… already. Poverty is up in the “richest country in the world”-no, another Democratic myth. The average poverty rate for all Americans for the first seven years of the Reagan terms was 14.2%. For the first seven years of Bill Clinton’s terms, it was 13.6%. Under George Bush, the average poverty rate for 2001-2007 is 12.4%. In 1981, 30% of Americans earned under $25,000 a year, and 41% earned over $50,000 per year. In 2007, 25% earned under $25,000 and 50% earned over $50,000 a year.2
“We are in a recession and I cannot make ends meet.” Notice the connection between recession and an individual’s ability to pay the bills. How often have we provided the justification and/or excuse for overspending on an economy that is in a recession? It is as though the concept of recession has the ability to control our actions therefore we are not responsible. Let’s correct the first idea-we are not in a recession-fact is The economy grew by a very respectable 3.3% in the second quarter of this year.3 It appears that the following statement was neither mentioned nor addressed at the Dem Convention “Gross domestic product, or GDP, grew at a 3.3 percent annual rate in the April-June quarter, its fastest pace in nearly a year, the Commerce Department reported Thursday. The revised reading was much better than the government's initial estimate of a 1.9 percent pace and exceeded economists' expectations for a 2.7 percent growth rate.”3 So, if one were looking for cause and effect for one’s bills, perhaps turning inward would be more helpful. There is no denying the fact that many individuals are not able to pay all of their bills. Perhaps it is time to tell the truth to some Americans-you are not guaranteed a specific lifestyle-you are provided the possibility and the opportunity to make the life you always dreamed bout-it takes hard work, perseverance and effort. Untold numbers of Americans have “lost” their way financially; rather than expecting the government to “rescue them”, they realized it was on their personal shoulders and backs to seek a new path. This has meant giving up a home, the cars, the annual vacations and the like-it meant returning to school to re-tool or moving to another line of work. You do not hear about these individuals, you do not see them protesting for more benefits-they are too busy changing their lives as they seek the possibilities provided by this country.
It is most interesting that the Democrats didn't want former President Bill Clinton to speak on the economy. Some delegates might have had the temerity to wonder: Hey, why did we experience all that prosperity in the '90s?
It certainly wasn't due to populism, or isolationism, or more government dependency, or any of the hard-left economic policies being preached nightly by speakers at the Democratic National Convention.4
No, it was capitalism — more of it, not less of it.
Perception is reality-for many of us. You are lead to believe that the difficulties you may be having are due to the poor economy here in the states. Furthermore these same people want to return to the “golden years of the 1990’s-well how many of us remember the following as shared by a popular pundit:
“ Do you know what the January '01 -- that would be the first quarter -- GDP rate was? First quarter of '01, when Bush took office, 0.49, minus 0.4.
Clinton handed off -- and we all remember this except the Drive-Bys won't remind anybody of it -- Clinton handed off an economic growth rate of -0.49% to George W. Bush, and then here came 9/11 shortly thereafter because of inadequacies of Clinton's foreign policy during his own eight years as president of the United States, and I have to listen to Biden reprise the 1992 BS that this is the worst economy he's ever seen, portraying this country as a soup line country. So trash the country, trash the economy, and then put themselves up as the people to fix it.” 5
The strength of the USA economy weathered the 911 crises and by the end of 2001, the fourth quarter GMP was 2.6%-a remarkable recovery given what had occurred on our soil. Our economy has time and again proven its resiliency and yes, today it has slowed down, as is the historical record of any nation’s economy. However, to intentionally misrepresent the status of our economy in order to put fear into Middle Class voters hoping they will vote for the Change man is unethical, immoral and obviously misleading the very public they have given an oath to serve!
I find it disingenuous for the Democrats to indicate that the Middle Class has been “fleeced” when it comes to tax relief. Again the rhetoric is not supported by the facts. I guess the Dems believe in the old adage, “don’t let the facts get in the way of the truth.”
Who does carry the tax burden? : The IRS provides the information: 6
· Top 5% of age earners pay 54.365 of federal taxes
· Top 10% of wage earners pays 65.84%
· Top 50% of wage earners pays 96.54%
Mr. Limbaugh offers an explanation: less than 3-1/2 dollars out of every $100 paid in income taxes in the United States is paid by someone in the bottom 50% of wage earners. Are the top half millionaires? Noooo, more like "thousandaires." The top 50% were those individuals or couples filing jointly who earned $29,019 and up in 2003. (The top 1% earned $295,495-plus.) Americans, who want to be continuing to improve their lives, and those who don't want to, aren't. Here are the wage earners in each category and the percentages they pay:
The top 1% pay over a third, 34.27% of all income taxes. (Up from 2003: 33.71%) The top 5% pay 54.36% of all income taxes (Up from 2002: 53.80%). The top 10% pay 65.84% (Up from 2002: 65.73%). The top 25% pay 83.88% (Down from 2002: 83.90%). The top 50% pay 96.54% (Up from 2002: 96.50%). The bottom 50%? They pay a paltry 3.46% of all income taxes (Down from 2002: 3.50%). The top 1% is paying nearly ten times the federal income taxes than the bottom 50%! And who earns what? The top 1% earns 16.77% of all income (2002: 16.12%). The top 5% earns 31.18% of all the income (2002: 30.55%). The top 10% earns 42.36% of all the income (2002: 41.77%); the top 25% earns 64.86% of all the income (2002: 64.37%), and the top 50% earns 86.01% (2002: 85.77%) of all the income.
To suggest that the Middle Class is being treated unfairly is another misrepresentation of the data. The so-called rich are basically keeping the tax revenues “afloat”-they raise over half of the entire tax income for the USA.
It is crucial that one understand who pays what taxes if you are going to make substantial changes in the tax code. It is equally important to understand how income has been impacted by the economy and its natural changes. The mantra is that the rich are getting richer and the Middle Class and all others are getting poorer. Yet another myth the Democrats are pummeling into your head. The problem is that this is not true! It is often said that statistics don’t lie, statisticians do lie! Income tax data recently released by the Internal Revenue Service seem to show the exact opposite: People in the bottom fifth of income tax filers in 1996 had their incomes increase by 91 percent by 2005.
The top one percent -- "the rich" who are supposed to be monopolizing the money, according to the left -- saw their incomes decline by a whopping 26 percent. Meanwhile, the average taxpayers' real income increased by 24 percent between 1996 and 2005.7
Certainly this information runs contrary to the numbers the media uses. Why? Primarily due to the number source used-I just gave you IRS numbers while others use Census bureau data. You might ask, “so what?”
Dr. Sowell explains: “There are wild cards in such data that need to be kept in mind when you hear income statistics thrown around -- especially when they are thrown around by people who are trying to prove something for political purposes.
One of these wild cards is that most Americans do not stay in the same income brackets throughout their lives. Millions of people move from one bracket to another in just a few years.
What that means statistically is that comparing the top income bracket with the bottom income bracket over a period of years tells you nothing about what is happening to the actual flesh-and-blood human beings who are moving between brackets during those years.
That is why the IRS data, which are for people 25 years old and older, and which follow the same individuals over time, find those in the bottom 20 percent of income-tax filers almost doubling their income in a decade. That is why they are no longer in the same bracket.
That is also why the share of income going to the bottom 20 percent bracket can be going down, as the Census Bureau data show, while the income going to the people who began the decade in that bracket is going up by large amounts.
Unfortunately, most income statistics, including those from the Census Bureau, do not follow individuals over time. The Internal Revenue Service does that and so does a study at the University of Michigan, but they are the exceptions rather than the rule.
Following trends among income brackets over the years creates the illusion of following people over time. But the only way to follow people is to follow people.
Another wild card in income statistics is that many such statistics are about households or families -- whose sizes vary over time, vary between one racial or ethnic group and another, and vary between one income bracket and another.
That is why household or family income can remain virtually unchanged for decades while per capita income is going up by very large amounts. The number of people per household and per family is declining.
Differences in the number of people per household from one ethnic group to another is why Hispanics have higher household incomes than blacks, while blacks have higher individual incomes than Hispanics.”7
This entire debate ultimately comes down to the role of government particularly when it comes to our economy. If you believe that it is time for us to abdicate our personal responsibility for our own livelihood then you agree with Mr. Obama. If you understand how our economy works, how we must individually work the economy and if you believe it is each citizen’s responsibility to earn his or her way, then you might support those who want less government intervention into our financial world. Having dreams and desires are important and I think mandatory. To believe that you are entitled to each dream without putting in the work, the effort and the perseverance required to become successful, separates you and me. I am entitled only to have the opportunity to make my way in the world-it is up to me and I must be willing to accept this responsibility and challenge.
End Notes
1. US unemployment rate: Clinton vs. Bush
2. Americas North shore Journal- http://northshorejournal.org/poverty-in-america-2008-overview
3. Yahoo finance. Spring's economic rebound unlikely to last. August 28, 2008
4. David Harsanyi, Denverpost.com, August 28,2008.
5. Rush Limbaugh radio program, August 28, 2008
6. IRS records 2005
7. Sowell, Thomas, Income confusion, Nov 21, 2007
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