Financial Basics aka Your Taxes Are Effectively Higher

It may come as no surprise to you, dear readers, that people these days are misinformed about basic facts as it relates to how our country is financed. This blog entry will be a simple step by step explanation of how the system works.
Unemployment:
Yesterday I had a colleague complain about the state having to pay unemployment for all the teachers that are going to be laid off. While her point was good, and well intended (it’s a shame to have money come out of the government coffers to pay for someone who is out of work as opposed to at least getting something for it), she made a clear mistake in her logic: in every paycheck, for every employee, a portion is set aside for unemployment insurance. In other words, when a person becomes unemployed, they are merely recouping what they have paid into the system. It is insurance that we are forced to buy, and like all insurance, some people end up using more than others. When it comes to unemployment insurance, I’m pretty happy (fingers crossed) not to have to use it.
Social Security and Medicare:
For the most part, the same is true of Social Security and Medicare. These are specific taxes that are taken out of each and every paycheck, and both are insurance policies. Social Security protects the individual against disability, as well as providing a retirement safety net for the elderly. Medicare is an insurance program for the elderly that we all pay into and will hopefully collect on when we reach the qualifying age. One can argue the merits of either program, but cutting funding for either and then appropriating those funds for different uses would be a bastardization of the specific taxes we pay for this insurance.
An Effective Tax Hike:
What Republicans, and unfortunately, President Obama, are currently proposing by cutting government workers and social services, amounts to a massive, across-the-board tax hike. Note that no one is proposing to lower taxes in a rate commensurate with the lower level of services we can expect from local, state, and federal government after they’ve dumped public employees. Our tax rate will remain the same. When this basic logic is applied, the conservative argument is completely nonsensical. They argue, as one idiot named Kay Bridges did in her letter to the Oregonian, that when the state hires fewer public employees, or lowers their rate of pay, she, as a business owner, can then invest more in the economy. But Kay, taxes haven’t been lowered! You still pay the same rate that you did before dummy! It’s just that now your kids get to go to school with average class sizes of 40, instead of 35 (that classes are now as large as 35 should be an outrage in and of itself). Now you get to put your own fires out instead of relying on the fire department. Now you get to wait to collect Social Security until you’re 70. I mean, it is almost crazy right? You have all these conservatives effectively shouting, “I want less services and insurance for the same amount—we want less! I don’t want a $5 footlong—I want a $5 half foot!
Thus, in sum, when government cuts services and pay for its employees, without lowering taxes at the same time, your tax equity (what you expect to receive from the government for your taxes) is lowered substantially. In other words, it is a tax hike. And this escapes the minds of most Americans because they simply believe that we’re “tightening our belts,” and “being more fiscally responsible.” This may be a wise strategy for a family of four, or a young worker, but it simply does not apply to government economic policy. So the next time someone says, “I’m glad government is tightening its belt,” correct them—don’t you mean you’re glad that the government is raising taxes?