The fiscal cliff looms, while other plagues also threaten our job and economic well-being

   
By Dennis M. Mitchell, QEP, CPA

The term “middle class” is likely due for extinction. Looking at just four cost components – water, power, health costs, and taxes – what was known as the middle class will shrink dramatically.

First up is water. The numeric nutrient rules fiasco in Florida will now be unstoppable and will be replicated across the country. It will come state by state by judicial fiat just as it did in Florida. The cost of claiming to create clean, safe water and sewer and storm water handling will advance to three to four times current rates, but the actual gain in environmental quality will be below detection limits. Big bucks with no functional bang!

Second, the electric base power resource auction clearing price will move from $41 in 2008 to a now-confirmed $136 per megawatt-hour for 2016. That means inflationary pressure on all goods and services, plus oppressive stress for household power consumption, resulting in a vicious (but not unpredicted) financial blow to all Americans.  Beyond just home power consumption there is now soaring energy costs because of the Obama Administration’s war on oil, natural gas and coal and its determination to place taxes and restrictions on hydrocarbons used in transportation, electricity generation, factories and other economic activities. If you doubt my assessment, remember that the election results guaranteed the EPA request of 230,000 new regulators to handle just the carbon rules and restrictions. For reference, EPA has fewer than 20,000 employees today.

Number three, the direct cost of health will ratchet up by some two to three times 2008 rates by 2016, measured in real dollars and just Obamacare. Some may question that estimate, even as costs have  verifiably already accelerated in anticipation of the government healthcare edict. However, all of those who do pay for these inflated costs will be paying for an additional 30 million “dependents” who will get it “for free,” as advertised.  The government is in process of hiring 16,000 new IRS agents just to watch dog Obamacare regulations.
Obamacare does not make any provision for the additional doctors, nurses, medical technicians, buildings and equipment, support staff and others who will be needed to accommodate not only the 30 million additional recipients but perhaps many millions who now will have even greater incentive to risk entering this country illegally. The “free” pot of gold has grown even bigger.

Number four on the list of plagues, the tax burden on all $75,000 to $250,000 per year households will divide this country into “rich” families and communities and struggling poorer households and regions, leaving almost nothing in the middle. That is already happening, and will accelerate in the future. Do not listen to the rhetoric about taxing the wealthy. The tax code has been a  garden of mischief since 1913.  The so-called “ Bush  tax cuts repeal” is the smoke screen that will disguise the targeted increased taxes. The Obama vision of repealing tax cuts will punish the $75,000 to $250,000 with juggling not seen since the Ringling Brothers were last in town.

The tax burden has already begun increasing for 2012, with an approximately $4,000 to $8,000 per household surprise in additional taxes – right now, for filing this coming April – for households in the lower portion of that targeted middleclass range, $75,000 to 150,000. That’s because the dreaded alternative minimum tax (AMT) has already been unleashed on these so-called rich people.

They’re certainly not in the millionaire or billionaire league, but they will pay mightily. This means about 25 million additional households (approximately 70 million individuals!) will be clobbered for the 2012 filing year. This point was deliberately avoided by both sides of the aisle and by a news media, with very few exceptions, that was either too ignorant to notice or too subservient to be honest.

That roughs out to be  around $150 billion that will not be spent at Wal-Mart, the Apple Store, Delta Airlines, Ace Hardware, McDonalds, summer camp, music lessons, Disney World, Government Motors, the local flower shop, Qwik-Stop, the gym and so on.  Starting January, 2013, new tax rates ( if they are to achieve their willful goals on increasing revenues) will tack on about another   average of $4,000 per year for these same families, just as it would by having the Bush tax cuts expire. This lower middle income  group loses either way it goes. That substantial quantity  of free choice money, $250 billion/year ,will be injected into the governmental arm of  delusional stimulus  instead into the  economy desperately in need of free will.

So each ensuing year will have permanently a one-quarter trillion dollar gap in the economy. Remember, income tax is only one of the four items with harsh impact, and there are many other secondary to  these four just mentioned . After income taxes have already drained these so-called rich people, mammoth collective costs to the household for the other three items will strip the economy of market choices, jobs and prosperity.

Even a part-time job may become a coveted career, if current policies and directions are not changed quickly.

China and other U.S. competitors, as well as our cultural enemies, will be delighted. The last election again promised a redistribution of earned wealth creating a world of wealth without substance.

Dennis Mitchell is certified as a Qualified Environmental Professional (QEP) by the Institute of Professional Environmental Practice (IPEP) and is presently the chair of Ethics Committee for IPEP. He was a recipient of the Lifetime Honorary Award from the International Air & Waste Management Association in 2001. He was chair of the Climate Change Panel at the 104th International A&WMA Conference. He has been a member of Louisiana Society of CPA’s since 1985 and retired from Troy University where he taught both in both science and accounting.