Surprise!

Surprise! By now you’ve received from the state’s unemployment insurance reserve fund a special assessment invoice demanding payment – payment for a bill you never budgeted or planned for (and which you never agreed to). And guess what? You’re going to get another special assessment next year and probably the year after as well, so plan ahead when you do your 2012 budgeting.

When the Doyle administration started, the unemployment reserve fund had a balance of about $1.8 billion. During those eight years, the state ran a deficit every year except for one, in spite of a strong economy through 2007, thereby draining the reserves by 2009. The state was then forced to borrow from the federal government, which waived interest charges on the loan until this past year. This interest charge is what caused the fund to issue the special assessment.

Each business received a bill of $27 per employee; the largest bill assessed was $770,000! Most bills ranged from $150,000 to $250,000! That’s a huge additional tax on businesses looking to recover from a tough recession. Even businesses that closed or went out of business received a bill; my old campaign LLC was assessed $230 even though the LLC was dissolved a year ago! (Surprise, you can owe a tax even if you aren’t in business anymore.)

To add to your misery, the Democrats last year (as a parting gift to us all) passed a new law raising the maximum income level that is subject to the tax from $12,000 a year to $13,000 in 2012 and to $14,000 in 2013, which is equivalent to a 16.6% tax increase on top of the special assessments, so plan ahead when budgeting.
The irony in all this is that the Obama administration, while talking tough about creating jobs and lowering the payroll tax a tad, deliberately took back with one hand what it gave with the other hand through the payroll tax reduction.

Obama and the Zero Sum Game

I finally realized what’s wrong with Obama and why he just doesn’t get it. The guy has never worked in business and never managed a government department; all he’s done is advocate that capital should be taken from the producers and given to the non-producers. He believes the economy is a zero sum equation, and from his perspective, I can see why he believes that. His and his friends’ livelihoods and wealth depend on taking from others to give to themselves. They view this method of “wealth creation” as their only possible route to enhancing their own situation.

By inverse, they believe that only by impoverishing the producers of capital will Obama’s supporters be enriched. Never does it occur to them that maybe they should go out and create, produce, and sell, and that maybe by this alternative method, they would be better off. They don’t understand that the economy and wealth creation are not zero sum games, and that new wealth is created for all when each of us produces something new – a service or product or idea.

So if you think that Obama will ever change his mind and start focusing on wealth creation (by getting the government out of the way so we in the private sector can do our jobs) versus continuing to take from the producers in order to give more to government employees (and create more of them), forget it. He won’t change because he doesn’t understand how capitalism works. Lastly, what happened to that extra spending? It went poof! I predict that when Obama is out of office, hundreds of billions of dollars of fraud and waste will be uncovered.

Clarification: In my last column, when I mentioned the lack of after-school programs, I was advocating for a longer school day. The district and neighborhood centers do provide for alternative after-school programs.

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