Health Care Reform, Taxes, and The Housing Market
December 13th, 2009It was astonishing to hear the newly appointed president of the local Chamber of Commerce during a radio interview when asked; “are small business owners holding back from hiring because they are concerned about the potential costs of health care reform, cap and trade , and potential tax increases?” Answer; “Not at all, I see lot’s of optimism going forward.”
Perhaps we should change the name from Springfield, Illinois to Pollyanna. There certainly should be positive statements and outlook from local business leaders, however denying reality shouldn’t be included. My anecdotal experience proves the opposite of the Pollyanna claim.
Just in today’s State Journal Register is a featured article about a physicians group at The SIU School of Medicine. Bleeding red ink for several years, there is great concern Springfield may start losing doctors. One of the primary reasons is the state of Illinois not paying its Medicaid bills timely. Try six months or longer as the state has a backlog of $4.5 billion in unpaid bills to contractors and vendors.
Real estate is a supply and demand commodity, always has been, always will be, unless capitalism is replaced by a government run economy. Being gainfully employed, having acceptable credit ratings, and earning enough money to buy a home which leaves a family with sufficient disposable income is key to their decision to purchase a home.
The attack upon jobs, and disposable income are plentiful in Springfield, Illinois. The city announced a potential $8 to $12 million dollar deficit for the upcoming year, the budget director said a 23% property tax hike was needed. The mayor immediately comes out against a tax increase due to the political firestorm that followed.
The Springfield district 186 school board wants to raise over $250 million for rebuilding existing schools, and building new facilities. They haven’t decided the best way to raise the revenue. I’m sure local businesses and taxpayers will be watching.
The state of Illinois has an estimated $11 billion deficit. Both Democrat candidates for governor want to raise income taxes. The sitting governor a 50% increase in personal and business income taxes. The competitor is proposing a progressive tax to replace the current flat tax, vowing nobody earning less than $200,000 will see their taxes go up. The large Republican field of candidates are opposed to tax increases until after a serious budget evaluation to determine spending cuts first.
Now comes the Reid, Pelosi, and Obama Health Care Reform Bill claiming a crisis due to skyrocketing health care costs, and the large number of uninsured.
Investors.com of Investors Business Daily has an article posted “Making Nightmare Out Of Health Care” that should be required reading by all those interested in health care reform. To quote from the article:
make no mistake: The health care bill making its way through the House and Senate, if passed, is a disaster in the making, one that will have enormous ramifications for our basic freedoms and standard of living. Among the reasons:
• They don’t begin to cover everyone. The latest leaves 24 million of the 47 million uninsured uncovered by 2019, well after the program starts, according to the Congressional Budget Office. Still, trillions will be spent to take over 17% of our economy and pad the deficit by hundreds of billions a year. The CBO further estimates 10 million will lose their private insurance. By forcing millions of Americans into government run health plans, it will ultimately lead to a single-payer health care system.
• Medical costs will soar. Estimates range from $1 trillion to $6.25 trillion, thanks to mandates requiring you to buy insurance. Even a pared-down version would add $290 billion to the yearly deficit, CBO data show. The real budget-buster is letting 3 million Americans ages 55 to 64 buy in to Medicare, an expansion of nearly 30%. Medicare is already, by government and private estimates, as much as $100 trillion in the red in coming decades.
• Taxes will also go up. The proposed overhaul contains at last count 13 tax hikes. Democrats talk about “free” health care. In fact, as numbers from the Joint Tax Committee show, 17.8 million of us will pay lower taxes, while nearly four times as many — 68.4 million — will pay higher taxes.
“A family of four making $54,000 would pay more than $825 per month for one federally managed plan…even after a $10,100 government subsidy,” wrote Daniel Foster on NationalReview.com.
• Bureaucracy will explode.At last tally, the overhaul would create 108 new bureaucracies, ranging from an Interagency Pain Research Coordinating Committee to our favorite, the Program of Administrative Simplification. Thousands of new government workers will be needed — but think Post Office, not Mayo Clinic.
• Health outcomes will worsen. The biggest lie about government care is that it will make us healthier. Yet, a 2008 study by the British medical journal Lancet shows government-run health care systems in Germany, France, Britain and Canada have higher rates of death from breast, prostate and colon cancer than the U.S. — due largely to substandard government care.
Americans have greater access to MRI, tomography and other sophisticated diagnostics — and more lifesaving drugs. The waiting list for surgery and other treatment runs to 800,000 people in Canada and 200,000 in Britain, notes health care analyst Sally Pipes. Thousands die each year from lack of care in Europe and Canada. The U.S. has virtually no waiting lists.
End Quote. Thank you to IBD for their extensive coverage. I highly recommend Investors.com and IBD for reporting and perspectives you won’t find in the main stream media.
The impact of this version of ‘Health Care Reform’ will be devastating to the U.S. economy, and in reality is not only a government takeover of the health care industry, but is rather a tax bill. Certainly something business owners will want to wait and see what the costs will mean to their businesses. They may be optimistic according to the Chamber leader, however they want to stay in business.
The future of the housing market will be directly impacted by any tax increases from city, state, and school boards. Together these costs will gobble up families disposable incomes, causing demand for housing to fall.
As reported by IBD, if the Health Care Reform bill is passed, how much will premiums, and taxes go up that will add to the erosion of disposable incomes? The sad part is the costs will go up while the quality of care will go down, and will leave an estimated 24 million without insurance. The very reason Obama, Reid, and Pelosi have cried ’crisis’, to pass this trillions of dollars baby on the backs of taxpayers.
How will the Springfield housing market perform going forward? We won’t know until there is some certainty about tax increases, and the cost of federal legislation allowing businesses and families to be confident about their budgets. How much money will families have left to live on after governments are finished assaulting their incomes will determine their future spending habits.
You can be confident businesses and families are concerned about the costs that could be headed their way. This doesn’t even touch upon the costs for Cap and Trade, income tax increases at the federal level, potentially rising costs for gas, food, or inflation due to massive deficit spending.
Businesses with half a brain aren’t going to begin hiring in earnest until these matters are settled, and families will continue to watch their spending for the same reasons. Nothing governments are doing, or proposing to do today inspires consumer confidence.
Obama’s remaking of America looks to be rather expensive. He can’t spend your, and future generations money fast enough, or radically change the relationship between government and the goverened fast enough. The window of opportunity to radically change America for the progressives in control of congress is now. They know that will change in November of 2010.
The opinions expressed here are solely those of Fritz Pfister, or identified sources, and not those of RE/MAX Professionals Springfield, or RE/MAX International.
