I am reprising a blog from 2-12-09. The Chicago Tribune ran an article(9-24-10) about a blog authored by Todd Henderson, a University of Chicago law professor. His wife is a doctor at the school. The blog said he can’t make it on $250,000 a year and if Obama doesn’t extend the Bush tax cuts, he will have to cut expenses which means the will fire a housekeeper and his landscape maintenance guy. Both are immigrants. He lists his expenses which include $250,000 in student loans.
The professor was vilified by peers and blog readers who said he was insensitive about the people who are trying to make it on less. It’s hard to justify Henderson’s whining. But, it still poses the argument about the wisdom of Obama taking the tax money for earmarks and causing two people to lose jobs. It does help explain why Obama’s economics don’t work.
It is eerie how closely this follows the blog about Biff and Muffy.
Thursday, February 12, 2009 at 10:28PM
This entry was written and published in this blog on May 13,2008. While the people in the entry get less sympathy from Washington than the RV workers in Elkhart, Indiana, their chance to recover may be harder. No one in this family is prepared to go down to food stamp survival level, but they may have no other choice. The stimulus package doesn’t address this family’s problems. It doesn’t address the RV industry problems either, but no one asked that question at the press conference this week. How many families in America are one pink slip away from being like this family? How many are working in a company where they have dodged the last three cut backs?
It’s 2010 and the Cabot’s declare bankruptcy’s. In 2008 Biff and Muffy and the two children Winston and Bunny had the perfect life. Biff was an investment banker and made $350,000 in 2007. Buffy was a housewife. They had a million dollar house in Winnetka, a northshore Chicago suburb. They belonged to the country club, the Sierra Club, and were involved with the PTA and the normal community groups–church, rotary, etc. The budget was a little tight. They had a cottage in Wisconsin and spent most weekends there in the summer.
The Cabot’s were enchanted by Obama. They felt like his platform for change was good for them. While their lifestyle didn’t reflect it, they felt very strongly about the green movement. As long as there wasn’t any big sacrifice to them, they wanted to do the right thing. Obama was the man to make a difference. He would do the most for the country, the poor, and the green movement.
Biff’s take home was $225,000 after deductions. Taxes took another $50,000. From the $175,000 the mortgage on the house and cottage with property tax and insurance was $75,000, leaving $100,000. Cars were his BMW and her Hummer. Car payments and insurance cost $12,000 a year. Utilities on both houses was $12,000. Club dues, vacations and other entertainment was $12,000. Household expenses including food, clothing, and the cleaning staff and landscape work was $15,000. This left roughly $50,000 for life insurance, investments, and other normal expenses.
The problems started in 2008 when the housing mortgage crunch affected Biff’s pay. He took a $25,000 hit in bonus pay in 2008. Obama’s tax increase in 2009 hit their taxes raising them to $70,000 on a lesser income. The economy took a hit from the Obama stimulus program and Biff lost another $25,000 in bonus money in 2009. Gas prices cut down on the trips to Wisconsin. Gasoline was now $10 a gallon with the carbon cap and the increased Federal gas tax. The utility bills went up 25% from the carbon cap program. They traded the Hummer for a Prius but got no relief from car payments, since Hummers were worthless. The ARM’s on both mortgages raised payments from $75,000 to $90,000. They put the cottage on the market, but no takers since too many cottages were for sale in their area.
In early 2009 Biff was laid off. The job market for investment bankers was nil. He took a job as a commissioned salesman for municipal bonds. His income went from $350,000 to $150,000. Take home went from $225,000 to $100,000. They dropped the country club, the private schools for Winston and Bunny and put the big house on the market. No takers. In early 2010, the Cabot’s filed for bankruptcy. No options. Muffy went to work as a substitute teacher. They moved to a 1,500 square foot condo. Muffy took the bus to work and Biff worked mostly from home still selling munis. Winston and Bunny were in public schools.
So what happened to the Cabot’s? There is no free lunch. If you have only so much wealth to go around in a country and you spend a big chunk of that on making the environment better, the government bigger, and to help the poor, it has to come from somewhere. And, if it doesn’t produce any results and energy costs keep going up, it takes from the country’s wealth and transfers it to other people and other countries. If government policies penalize investment in business and tax business, the economy suffers. If the economy suffers the families like the Cabot’s suffer. The more they have, the more they suffer. And, the extremely poor suffer as well, but were helped out by the government policies of Obama. Food stamps and gasoline stamps offset the two big inflationary problems. Subsidized utility costs helped. And unemployment payments went up to offset the inflation of energy and food. The very rich were impacted little.
It was ironic, the people who played a big role in putting Obama in the White House, the upwardly mobile whites, lost the most.
Almost a year ago, I had no crystal ball, but much of this is happening now. The Cabot’s have buyer remorse with their votes for President Obama. They won’t vote for a democrat ever again.
Bill Robertson | 5 Comments | Share Article
