The big headline today is the latest job loss report, and the numbers are even worse than expected. More than half a million Americans lost their jobs in December, and unemployment is at 7.2%. Ouch. One analyst I heard on the news this morning said that the bleak report could swell Obama's stimulus package to $1 trillion! Let me illustrate that number: $1,000,000,000,000.
The scary thing is that it is going to get worse before it gets better. We could see 10% employment by year-end. However, in all this doom and gloom, I am personally extremely fortunate, because Aaron and I both feel secure in our jobs. In fact, we know few that have been laid off in this economic downturn, though I know there are some fearful friends out there.
It will be interesting to see how our new President will work with Congress on his stimulus package. There are already Democrats upset that Obama is proposing tax cuts instead of tax hikes in the package, and to that I have to ask: How would increasing taxes make sense under these conditions? You're telling me that you would like for me, the middle class taxpayer, to pay more, which will be used for transfer payments (welfare, unemployment) and needless pork barrel spending (wooden arrows, anyone?)? I will be most impressed with the President-Elect if he follows through with his promises by making the tax cuts, and actually cuts spending to pay for it. Tax increases do not necessarily mean increased tax revenue.
For example, in December, Aaron and I received notice from the YMCA that our monthly rates would be increasing by $3 per month in 2009. At first glance, I did not think much of it, but I did recall that our rates had increased the year prior as well. The more I thought about it, however, the more upset I became. Our new rate would have us paying $81/month for excellent cardio equipment, decent weight equipment, sup-par facilities, and a pool and classes that we never use. I pride myself in being a well-informed consumer, so I checked around, and discovered that the only other gym that would make sense for us is 24 Hour Fitness. It is a little further away from our house, but we can do the same workouts and save $372 a year. It was a no-brainer. When I told a couple of my fellow morning regulars at the Y about our switch, they began considering following suit.
The YMCA made a mistake. By increasing our membership fees 2 years in a row, they motivated me to look for a cheaper alternative. Others likely are doing the same, and I would be shocked if the increase in rates leads to increase in revenue this year. Oh, and there's more! At the YMCA, senior citizens and low income families pay reduced rates, and their rates were NOT subject to the increases. I am fine with these individuals paying reduced rates, but I am not okay with further subsidizing their payments with increases each year. Working out at a gym is not a necessity. There are plenty of sidewalks to run and walk on, and work out videos can be purchased for less than $20.
If the middle class does face a tax increase this year, dual income families will realize that they are better off having one spouse stay at home with the children than working and paying for childcare. Individuals may become less productive in order to keep their income low enough to stay in a lower tax bracket. Low productivity is never good for an economy.
Whether you are worried about losing your job or not, the bigger picture is that the policies enacted in DC over the course of the next few weeks will affect you, and may affect your children, too. The budget deficit at the end of 2009 will likely be larger than it ever has been in my parents' lifetimes. I am not even sure what is bigger than trillions (anyone?). Here's to hoping that we never find out!
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