The Thinker: Rich Galen


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Mullings by Rich Galen
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Five Percent

Rich Galen

Friday November 30, 2012


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  • The good news about coming to the end of November is that we will soon embark on December meaning the clock will be clicking toward January by which time the Fiscal Cliff business will dealt with.

  • Until the long scythe of the grim reaper signals the looming end of 2012, the parties to a potential solution will spend as much time posturing in public as parleying in private.

  • I gotta tell you. I don't understand all this anyway. I know my taxes are going up next year - one way or another. My rates will rise, my deductions will fall, or both. I'm not happy about that, but I've come to accept it.

  • Let's say my family taxable income for 2013 will be a little over $250,000 - just over the magic number making us, by specific declaration of the President of these United States, wealthy.

  • Whoo. Hoo.

  • According to I could reasonable be expected to pay: "$73,696 in federal, state, local and FICA taxes." That is an effect tax rate of a little over 29 percent.

  • Ok assuming my withholding was correct I ended up with $176,300 in spendable income or about $14,700 per month.

  • That's not Warren Bufett money, but it's not peanuts.

  • Now, let's say I get hit with an overall 5 percent increase in taxes - payroll, income, and so on. If my arithmetic is correct that means an addition $3,685 over the course of the year or just north of $300 per month.

  • Nothing to sneeze at but that will still leave me with $14,300 per month on which I suspect we can scrape by so, while I might not like it, it won't make us change our habits all that much.

  • Fewer stops at Starbucks in the morning, and fewer meals at Landini's in the evening. Some jobs will be lost in Alexandria, Virginia as you multiply that by all the people who get their coffee and eat their meals at the same places I do in our relatively small community, but the Federal government will get my money.

  • That's the revenue side of the equation.

  • Let's look that the Federa spending side.

  • The Federal budget for 2013, according to the White House website, calls for expenditures of $3,803 trillion. Here's what it looks like written in numbers: $3,803,000,000,000.

  • That's just for 2013. If I'm reading the tables correctly, the number goes up each year until it reaches $5,820 billion 10 years down that can-kicking road.

  • If a five percent reduction in my spendable income will not pose a particular hardship on me, why can't a five percent cut in spending not pose a particular hardship on the Federal government?

  • Maybe they won't like it either, but they should do their part.

  • Over the course of the next 10 years total outlays are projected to be about $47 trillion.

  • Five percent of $47 trillion is $2.35 trillion - more than double the one trillion they're all falling down in a dead faint trying to save over ten years.

  • What is the federal government equivalent of Starbucks and Landini's? Fewer cars and drivers for federal employees who can take the same cabs and subway trips I do?

  • Fewer assistants to assistants' assistants so Federal employees can get a taste what private sector workers have been through - having been required to do more work with fewer people to save their jobs?

  • Stretch out the life cycle of major weapons systems? Maybe we don't have to change uniform designs, provided to enlisted personnel at government expense, every few years.

  • On the civilian side better use of broadband technology to cut employees' travel costs might be useful.

  • There are thousands of Starbucks/Landini's-type examples that would save five percent in spending - more than $2 trillion over 10 years, but would not make the Federal government miss a beat in the mundane programs we expect, nor the emergency programs we need.

  • Maybe the President can show his willingness to actually move the process forward by identifying five percent in savings in the Executive Office of the President. And perhaps the Speaker and the Senate Majority Leader might find the same level of cuts in their official budgets.

  • Nah. They wouldn't like it.

  • On the Secret Decoder Ring today: A link to that PDF file from the White House web page showing outlays for the next 10 years and a pretty amusing Mullfoto from downtown Washington, DC.

    -- END --

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