Unemployment, pay cuts, and pay freezes have hit families hard. Income has dwindled while costs have increased.

Now time for some more bad news: Net incomes will drop again if the Bush tax cuts are allowed to expire.

Who will pay?
News surrounding these tax cuts has always focused on the highest earners ($250,000 and above.). In fact, repealing the Bush tax cuts impacts all families with children.

We are facing “the largest tax hikes in the history of America” according to the group, Americans for Tax Reform, The child tax credit would be reduced from $1000 to $500 per child. Middle income earners will pay a 3% increase in taxes. Families’ earning as little as $17,000 per year, would jump from a 10% to 15% tax bracket.

Grandparents also will feel the pinch. Retirees depending on investment income can expect a large drop in their net income. Capital gains taxes increase from 15% to 20%. Dividend taxes will more than double, jumping from 15% to 39.6%.

These aren’t tiny ripples that will go unnoticed. Instead we can expect a series of tidal waves that will wreak havoc on personal income and the overall standard of living.

Find out more
Complete news coverage has been sparse in this area. I’ve heard various sound bites offering vague promises that were short on facts. I’m still waiting to hear coverage of specific, written proposals instead of campaign rhetoric.

Forbes, however, has recently put out a good article summarizing the major parts of the tax cuts as they stand.

For first hand knowledge, The Joint Committee on Taxation, a congressional body involved with tax legislation, has pdf files with updated information. I used this site to verify and research the facts. It’s not the most exciting summer read but it takes you right to the source of some of the most current and likely proposals that will make it to the floor. (Of course, this does not include proposals from members of congress not on the committee.)

A variety of proposals is likely to come to the table, including suggestions from the White House. The Wall Street Journal discusses positions taken by Speaker Pelosi and Treasury Secretary Geithner. Many lawmakers and White House officials are taking a partial position that would eliminate tax cuts for higher earners. How this will actually play out remains to be seen.

Can anything be done?
We could speculate over which party will vote to extend the tax cuts, which tax cuts will be extended – if any, and whether or not President Obama will support the extension. But it amounts to nothing but mere speculation.

Before a decision is made, doors will shut, deals will be made. With the impending November elections, our best bet is to urge our senators and representatives to extend the Bush tax cuts.

Then, pray that they listen.

As I began writing this post, my brain kept buzzing with that song He’s got the Whole World in his Hands.  A more apt title for the Obama campaign would be He’d Better Balance the Whole World in his Hands, particularly if he plans to pull off his election promises.

It’s easy to get caught up in the Obama-Biden message–or at least get caught by their message.  Let’s face  it, Senator Obama mesmerizes people.  Just look at the crowds, nodding and chanting in hypnotic agreement.  Furthermore,  Senator Obama has promised some pretty attractive things, such as providing universal health care coverage.

But I don’t think he can deliver on these promises.  Nothing personal–I don’t think anyone can.  How can the government exercise fiscal restraint while continuing to spend?  Senator Obama claims this can be done.  Here are just a few of his spending proposals:

1. Provide national health care coverage.
2. Invest in technology for alternative energy sources.
3. Provide new jobs in the energy sector.
4. Offer every American youth an opportunity to attend college upon completing community service.
5. Give temporary assistance to families for high gasoline prices.
6. Invest in rural schools and businesses.

This would all be done while lowering taxes for the middle class and providing a relief check  for those not currently paying taxes.

I have to admit, with the exception of the relief check, all of this makes me want to climb aboard the Obama-train.  Senator Obama says he can pay for all his programs (i.e. spend more,) while decreasing the deficit.  The Wall Street Journal discusses these two contradictions.

Sen. Obama has been able to win support by convincing voters he could simultaneously be a populist and a fiscal disciplinarian, that he could invest in education, energy and health care and adhere to rules that say additional spending must be more than offset by cuts or tax increases. He attacks greed and excess in Wall Street, yet reaches out to assure financial leaders he understands markets’ needs.

But if Sen. Obama wins on Tuesday and Democrats expand their congressional majority, the party in power will quickly have to reconcile these seeming contradictions into a legislative strategy.

Is there something we don’t know? I doubt it.  If he can pull this off, he is pulling a rabbit out of a hat, and I’m looking for a president grounded in reality not a magician who toys with illusions.  And the reality is that we need to cut spending if we are to reduce our national debt, which currently hovers around 10.5 trillion dollars. 

How can we possibly pay for national health care coverage,  education,  technological advances,  and even a possible surge in Afghanistan (proposed  by Obama)?  We can’t really know the full cost of these programs at this time.  But Senator Obama has given us a few details about paying for his health care proposal.  So let’s explore this.

According to the Obama-Biden campaign website (as of this writing), tax revenues will cover the the plan.

Barack Obama will pay for his $50 - $65 billion health care reform effort by rolling back the Bush tax cuts for Americans earning more than $250,000 per year and retaining the estate tax at its 2009 level.

Why would this work? We couldn’t afford national coverage before Bush instituted his tax cuts. We couldn’t afford it prior to our mounting deficit. A national health care plan could not get passed with a balanced budget during the Clinton administration. Paperless offices and preventive care have been with us for years, so how could this make a dent in offsetting the costs? Obama says he offers hope. First, no one individual, nor one administration, has the elixir to all the country’s woes. Anyone who tells you otherwise is either selling snake oil or not in touch with reality. Second, we don’t need false hope. I do believe we can accomplish change, but with the state of our economy and our deficit, it will have to happen slowly and incrementally.

The Obama health care plans is very costly. We must ask ourselves if this is the right move, or is there another alternative. In an NPR interview, health economist, Joe Antos, explains how costly and impractical the plan would be.

Antos says the biggest problem with Obama’s health plan isn’t how little it will save, but how much it will spend. One of Obama’s key promises is under his plan, everyone will be able to get a health plan at least as good as those available to members of Congress.
“If your congressman is like your average federal employee, he’s got the Blue Cross Standard Option (plan), and it costs in excess of $12,000 a year,” Antos says. “That isn’t going to happen. It can’t happen.”
Such a generous benefit package, combined with Obama’s promise to limit out-of-pocket health costs, would require enormous public subsidies. The Obama campaign itself estimates the plan could add as much as $60 billion a year to the nation’s $2 trillion health tab.
“We could be talking about 10, 15, $25,000 of subsidy for an average low-income family that is required to put in, through premiums and out-of-pocket expenses, $1,500 to $2,000,” says Antos.

On the Obama side, NPR spoke to David Cutler, a Harvard economist who helped create Obama’s health care plan.

Cutler says he knows the plan will be expensive. And he doesn’t apologize for it.

Well, I admire the guy’s honesty.

So once again, I’m asking how Obama plans to reduce spending and pay for all these programs.  Realistically, it just isn’t possible.  This doesn’t make Barack Obama a bad man. It just makes him a man.

So every night, after the kids are put to bed, and sometimes a little before I sit down in front of the television and I settle in for my healthly dose of financial ruin and political catastrophe.  In the 9:00 hour I usually flip around between Fox and CNN.  When I flip over to CNN the guy formerly known as the host of the reality game show, “The Mole”, Anderson Cooper is now the guy “keeping them honest” for CNN.  For the past two weeks he’s been running a series called, ”The 10 Most Wanted: Culprits of the Collapse“.  This of course is referring to the credit mess our country and now the world finds itself.

The Culprits of the Collapse according to Anderson are,

“..a rogue gallery of Wall Street executives, politicians, and government officials who did not do their jobs. It’s time you know their names, their faces, it’s time they be asked to account for their actions.”

These are the culprits Cooper selected:

1. (Check, but #1?) YOU!. Us, the consumer.  According to the article cheap credit “is like crack”.  We are dramatically outspending our saving habits.  This is probably true, but someone had to make the crack and sell it, yes? 
2. (CHECK!) Franklin Raines for Fannie Mae CEO.  Raines hid problems with the books at Fannie Mae so he and the other executives did not lose large personal bonuses.  Resigned after SEC investigation backed regulators claims of hiding financial problems.
3. (huh? Check.) Bear Stearns CEO James Cayne.  Well, Cooper’s report is basically a hit piece on Cayne as just being a bad guy.  There is zero information on what exactly he did other than the claim that he wasn’t paying attention, his employees didn’t like him, and he ran the company into the ground.  Nothing is reported on how exactly he ran it into said ground.  Bear Stearns should be on the list, but Cooper didn’t make the case.
4. (check.) Countrywide and Angelo Mozilo.Mozilo is former Countrywide CEO.  Countrywide was the king of sub-prime mortgage lending.  At least they were honest, saying, “They were acting in line with goals of both the Clinton and Bush administrations” to put more low income people into housing.  Claiming they were only using the tools such as sub-prime lending the government had made available to them. 
5. (check.) Beazer Homes - Home Builder and Mortgage Company.  Under investigation by the FBI, Treasury, and the US Justice Department for fraud change mortgage applications to make buyers look like they qualified. 
6. (easy scapegoat?) Alan Greenspan for Fed Chairman.  The claim here is that he kept interest rates too low, allowing banks to offer low short-term teaser rates too easily.  In my opinion, his job is to manage the money, not regulate the banks and insurers. (Chris Dodd, Barney Frank couldn’t get some time here? They ARE the oversight of the banks and insurers.)
7. (check?) Former Senator Phil Gramm.  According to the Cooper’s report, he is on the list because in 1999 he push a bill, which was passed, to allow banks and insurance companies to merge.  In 2000 he led the charge to reduce regulation on those two business units.  My trouble with this report, is a lot of their analysis relies on an economist that Cooper’s report refers to as “progressive”.  Additionally, the regulation that still existed, even after Gramm reduced it, still caught the problem.  Congress decided to ignore it.
8. (check, I think.) Chris Cox, SEC Chairman.“The Sheriff of the Stock Exchange” The claim is Cox ignored the warning signs of the coming collapse.  Cox claims he didn’t have the authority to step in.  At the very least, he’s accountable for not getting in front of every TV camera that would listen to tell the investors there is a problem.
9. (check.) Lehman Brothers and Richard Fuld.Fuld was Chairman of the Board for Lehman since 1994 until a few weeks ago. According to Cooper’s report Fuld pushed the company to continue to buy bad debt supposedly claiming people are making a “mountain out of mole hill” and “we’ll make a lot of money”. 
10. (check.) AIG and  Joe Cassano.  Cassano as head of AIG financial products division who willingly took on bad credit-default swaps and CDs. 

Anderson’s choices for the list and analysis of them are nothing more than a populist ratings piece.  There is no information or real analysis at all.  It’s thought provoking in the sense that celebrity rags provide headlines to think about while waiting in line at the grocery store.  If fact, by omission, I don’t think Mr. Keeping Them Honest was honest at all. 

Where is Christopher Dodd?  The guy who is on the record admitting he took sweetheart deals, and got loans nobody else in the country could get because he was a friend of Mozilo.  He is not so much as even mentioned in the piece by Cooper.  Dodd is THE CHAIR of the Housing, Banking, and Urban Affairs committee, and he is getting sweet heart deals from the lending company at the center of this crisis.  In my opinion he deserves more than a mention, but Cooper didn’t even give him that.

Maxine Waters was quoted in Cooper’s piece on Countrywide, like she was an authority, saying,

“Mozilo…tried to have people believe he was only after helping the poor people and minorities get into homes.” 

Cooper, again, makes no mention of Ms. Water’s role in all this.  In 2004, she endorsed Frank Raines, even after he resigned, and condemned the regulator for trying to warn the senate Fannie and Freddie have problems. 

“…under the outstanding leadership of Mr. Frank Raines, everything in the 1992 Act has worked just fine.  In fact the GSE’s have exceeded their housing goals.  What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impeded on the affordable housing mission.  A mission that has seen innovation flourish from desktop underwriting to 100% loans.”

What’s the difference between what she claimed Mozilo was doing, and what she said?  She was supporting the exact same argument for which she criticized Countrywide.  Cooper couldn’t mention this?

Where oh where is Barney Frank?  (if I didn’t think it would annoy the readers, I would have made this blink)  This guy has continued to blatantly LIE about this entire situation and his roll in it, all the while blaming everyone else. 

In the very same hearings Waters made her comment to the Fannie & Freddie regulator Frank said,

“…you seem to be saying these [problems] are in areas that could raise safe and soundness concerns.  I don’t see anything in your report that raises safety and soundness problems!” 

While he was a ranking member of the Financial Service committee the Bush Administration and then Treasury Secretary Snow went before congress to try and get more regulatory oversight on Fannie and Freddie because of their growing size.  Frank said in those hearings, “Fannie Mae and Freddie Mac are not in a crisis.”  He went on to say the government should be doing MORE to encourage low income families into home ownership.  He wasn’t done there, he went even further,

“The more people that, in my judgement, exaggerate a threat of safety and soundness, the more people conjure up the threat of serious financial loses to the Treasury, which I do not see.  I think we see entities that are fundamentally sound financially, and would withstand some of the disaster scenarios.  And even if there were a problem, the Federal government doesn’t bail them out.  The more pressure there is there, then the less I see in the terms of affordable housing.”

This guy is NOW the Chairman of the Financial Services Committee.  Anderson, couldn’t mention this either?

How about the fair housing act of 1977?  How about ACORN forcing and demonstrating against banks that would not give loans to people in low income neighborhoods?  How about a mention?

There is plenty of blame to go around here, but to not even mention some of these things is dishonest investigative journalism.  Anderson Cooper you can do better than this!

An article at CNN.com caught my attention today, “Palin Heightens Rhetoric on Abortion“.  The article refers to a quote from Senator Obama that Governor Palin has begun using on the stump, 

Palin also talked about a remark Obama made about sex education while campaigning in Johnstown in March, when he told a voter he didn’t want his daughters “punished with a baby” or “punished with an STD” if they were not educated about sex and made a mistake.

I realize this is sort of an old story, but it was new to me.  If you google Obama’s exact words, Palin is quoting him accurately according to a Media Matters transcript of his speech way back on March 29th,  

…teaching children, you know, that sex is not something casual. But it should also include — it should also include other, you know, information about contraception because, look, I’ve got two daughters — 9 years old and 6 years old. I’m going to teach them first of all about values and morals, but if they make a mistake, I don’t want them punished with a baby. I don’t want them punished with an STD at the age of 16.

You know, so, it doesn’t make sense to not give them information. You still want to teach them the morals and the values to make good decisions.

His full quote is in the context of teaching abstinence and prevention.  There are many debates around the blogosphere about whether this statement was about abortion or prevention.  To me it seems to clearly be about prevention, but it still is cause for concern even within this context. 

Words matter.  Senator Obama, a long time community activist and politician, knows how to carefully choose his words, yet he chose the words, “punished with a baby”.   The ease in which those words seemed to roll off his tongue leads me to believe he saw nothing wrong with choosing these words.  I think he believes them.  Not giving the words a second thought also indicates that he believed a majority of people in his audience agreed with that statement, and chances are they probably did. 

To me, when speaking of teen pregnancy, his use of the word “punished” isn’t of greatest concern, but that he went so far as to say, ”…with a baby”.   Obama could have simply said he didn’t want his daughters to accidentally get pregnant, but he chose the words “punished with a baby”.  I think it might have been more reasonable for Obama to say, “punished with a pregnancy”, because by getting pregnant you could make the argument the unwanted pregnancy robs teenage girls of their remaining youth, and they are forced to become responsible adults much sooner than expected.  Obviously, a more logical statement would not have referred to a baby as punishment at all.

Someone who believes in the right-to-life of a child would have never spoken of a baby as punishment. His statement illustrates how the acceptance of abortion has desensitized many people from seeing that pregnancy involves more than one life.  It involves the life of the mother, (hopefully) the life of the father, and the life of the unborn child. Each of these lives has signaficance.  Rhetoric has far reaching implications.  When babies are referred to as punishments, human life is devalued.  Senator Obama should have given greater thought to what exactly he was saying.