Home / Congress / Payroll Taxes Rise. Consumer Confidence Plummets. Congress Is Shocked. Shocked!
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Payroll Taxes Rise. Consumer Confidence Plummets. Congress Is Shocked. Shocked!

Written by Gary North on January 30, 2013

In November, consumer confidence was measured at 71.5. Today, it is barely above 58. That is a major decline.

This month, the Social Security/FICA tax was hiked on wage-earners. They are becoming pessimistic. They should.

The politicians thought a FICA tax hike was a no-brainer. The economy had recovered. The decrease, which began in 2010, was temporary. So, Congress figured, the tax could go back up without economic repercussions. Wrong!

Consumer confidence governs consumer spending. When they start to worry, they shift from luxuries to necessities. This disrupts economic forecasts. The firms that were selling marginal goods and services get hit.  They cut back on hiring. Meanwhile, firms that get more demand do their best to hold down labor costs by adding more work on the backs of increasingly pessimistic workers.

The bloom is off the rose. There was not much of a bloom to start with.

We keep hearing about the American economy as heading into a new phase of growth. Then reality strikes. The predictions regarding the recovery were based on rising consumer confidence. Now that assumption is being called into question. If consumers go into turtle mode, what happens to the recovery?

Congress thought that the payroll tax hike would not have immediate negative economic consequences. This is now being called into question, Congress will be tempted to run a larger deficit. The $50 billion Hurricane Sandy bailout was a down payment. Keynesians love deficits. They place their faith in deficits. There will be less resistance to spending projects in Congress by the end of the fiscal year.

A trillion dollars a year adds up. The on-budget deficit will be more than a trillion dollars this year.

Congress does not care. We are on a speeding train. The trestle up ahead is on fire. Engineer Obama and the firemen in Congress do not see it, and they would not care if they did see it.

Continue Reading on www.bloomberg.com

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34 thoughts on “Payroll Taxes Rise. Consumer Confidence Plummets. Congress Is Shocked. Shocked!

  1. Why hasn't any government official or any news agency including FOX news mention the troop and military build up in cities across America. Look up… RED ALERT INTEL: troop and weapons build up across U.S. on Youtube. With big C on side of trucks. Get ready America!!!

  2. It looks like all of this applies to everywhere… except Texas where we enjoy the benefits of conservative leadership and economic policies. Our state has become so efficient that the Governor is considering giving us all a tax rebate! So, now the Democrats think they can do it better??? Where's that come from? They are presently setting up programs to blue the red in Texas by, get this, making illegals legal? Standing in lock-step with them are none other than… Republicans???

    Where's that going? Not anywhere good, my friends.

    Stay thirsty.

  3. When the people finally get enough the Dictator is ready for war with us,wanna bet?

  4. Zalman Shalom says:

    And you don't mean for tequila either. Living in theBlue State of NJ all my life is finally becoming a chore. My wife and I are getting nervous and are discussing the possibility of moving from NJ( after living here for over 60 years). WE have been looking at NC or Georgia or Texas. Besides the gun culture we love in Texas tell us about religion and historical places( we are Civil War reenactors-yeah I know, a Yankee Marine in Davey Crocketts Court ) and National Parks and tourist places

  5. Yea and all the Idiots pick Romney over Rick Perry

  6. I’m stuck in a blue state, once red until all the liberal idiots moved in and liberal politicians got voted in… I’d love to move to Texas, I just can’t give up my job.. By the way, an extra 150.00 out of my check for obamas tax hike, so much for it not affecting middle class. I’m no where near that BS 200,000 income they stated. I’m so sick of all these idiots making such reckless decision that screw us and we have to pay the price as they go on with their rich, no financial care in the world attitude .. something has to shift or we are done as America and taken over by these selfish, arrogant idiots in Washington….. If I had a voice that could be heard, I’d fire every one of those loser liberal destructive things….Just saying…

  7. Blame Blacks, illegals and Pansy A$$ Whites

  8. Arizona_Don says:

    Haven’t seen any here yet.

  9. The people picked no one. The GOP shoved Romney down our throats.

  10. No necessarily true. Look at how easily Hitler rose to power and commanded the love of the Germans.

  11. Arizona_Don says:

    There are jobs other places. We have a State income tax here but Texas is good so far. It's still red. So are we and so is northern Nevada. Tucson is Blue and Vegas is blue I personally don't go to either anymore.

  12. Texas has been enjoying the influx of many Californians for the past several years. With the influx of liberals in the state several cities (Houston ofr one) liberal idelogy has creept into the government and schools. No hope there.

  13. Texas will go the same way Colorado did. It will suffer from Californication and be taken over just as a cancer slowly takes over and kills its host. If Texans don't get it they only have to look at what CA was in the 50's and 60s and then became after that; what has happened to CO and NM; and TX is next.

    I voted with my feet. I left the U.S. May Lady Liberty RIP

  14. Just wait until the dumb liberals move out of California after they poisoned that state and get their grimy little paws on Texas

  15. The millionaires in NY & NJ got our $60 billion so that they could live in a flood zone at the beach. The rest of us paid for it.

  16. ex-ghetto Nurse says:

    True history lesson. 1970's NYC, loads of crime by usual suspects, protected by their 'activists' and apologists, and paid for by the decent folks (sound familiar?). Tax rates were rising too. Several friends of my pop were electricians and plumbers. They slowed down when the accountant son of one calculated what each could earn and remain out (under) the next highest tax bracket. Then they 'stopped'. Some were "old guys" (40 and over) and when they did work on a very reduced schedule, were paid cash. Easy to misremember to add that come april 15. Well it worked for Charlie Rangel too it seems. With less revenue, the city had to make real cuts, protests or not. Wonder if history repeats itself.

  17. The government is getting ready to stiff the one group it doesn't care about, the middle class. But just to be on the safe side they're ordering a billion+ rounds of hollow-point ammo and cases of assault weapons (designated for "personal protection") for its workforce.

  18. Ever since Lyndon Johnson raided the SS fund politicians have cried the program is going broke. So why was this tax ever reduced in the first place? At least the people paying it had a job and the "PROMISE" they would get something in return. Of all the taxes I find it hardest to declare this a tax increase only putting it back where it should have been all along. Of course I'm only one of those who paid in all our life to find we have been lied to all along. Of course my $7 cost of living increase covered things as long as we assume I only paid $3 a month for food, utilities and taxes when Obama took office.

  19. I will say this one last time in response to Mr. North's and several posters comments. The resulting increase in money being taken out of paychecks on Jan. 1, 2013 was not a tax increase. It was simply returning the FICA tax to the percentages it should have been all along. You had a year long "tax" holiday, and now it has returned to the level you should have been paying. So, why are so many of you referring to it as a tax increase? And why are so many of you complaining about it? I find Mr. North's and your attitude on this to be ludicrous and infantile.

  20. You're blinded by your own ideology. FICA taxes were raised in the 80's to build up the surplus for the coming retirement of the Boomer generation. That would have been fine, if the SS trust funds had remained off-budget as designed, to be invested and to generate a return for the workers who paid into it. But that isn't what happened: the trust fund was looted and the funds replaced with treasury bonds, which are simply promises to pay although the government counts them as assets.
    Now FICA taxes are being raised again and, mark my words, the retirement age is going to be raised too so seniors will die before they get their checks. As the money goes into the goverment coffers it is immediately spent. We've known that since the '96 deal when Clinton and the Gingrich-led Congress crowed about balancing the budget and producing a "surplus". There was no surplus: they took the money from Social Security.

    What rock have you been living under anyway?

  21. Did you know that those people making over $113,500 a year don't pay ANY social security after they make the $113,500? Taxing the rich has always been a smoke screen and a lie by Obama and the Dems ( and I guess some Republicans as well.) If they REALLY wanted to sock it to the rich they would remove the cap. This means that that person making $250,000 a year would have to pay an aditional $8,190 in social security taxes. Its all just crap!!

  22. Amazing how voters either have no b*lls or are clueless. http://www.numbersusa.com / http://www.goooh.com

  23. most Germans were NOT in support of Hitler. My grandfather spent the war in a concentration camp because he would not do experiments on people, in my mother's village, when it was spread that the nazi were coming all the kids ran home to get their youth pins and stand by the road with arms raised…..if found that you did not, you and your family 'disappeared'

  24. You are right, some did oppose Hitler. But many embraced his class warfare against the Jews and Gypsies and his commitment to the Arian race. Many were indoctrinated through his youth camps and propaganda machines. Many took the passive – "when they came for the Jews—because I was not Jewish" stance. Hitler has so enamored many Germany that even in 1958, they still defended him.

  25. Ever heard the concept of political advantage? It was one of obama's tricks to make you believe he cared about reducing taxes to help the economy. All it succeeding in doing was reducing the amount of SS paid in.
    You forgot your $7 cost of living increase also included raising the cost of your mecidare insurance to $104.90 from $90.90 each month.

  26. And the great sage presently occupying the White House says with a straight face, that we don't have a spending problem. What's astounding is that he was reelected by two groups; the uninformed and the misinformed. Perhaps Alexander Hamilton was right when he said, "The people is a beast!"

  27. Seymour Kleerly says:

    Poor Alexander had very poor grammar. Hell of a founding father though!

  28. "Meanwhile, firms that get more demand do their best to hold down labor costs by adding more work on the backs of increasingly pessimistic workers."

    Well, if they're getting more demand why are they loading more work on our backs? Because they're greedy bastards who want profit for NOTHING. They don't want to pay anybody.

  29. It is unwise of the governor of Texas to proclaim a surplus. All the states run by leftists will petition Congress to find a way to rob Texas and sent that money somewhere else — not to Texans.

  30. That's why massive immigration is unworkable. The new arrivals can't be assimilated, and just move into neighborhoods full of others like them, and then just start living exactly as they did in the place of origin they fled — only to turn their new home into a copy of what they fled.

  31. Texas Chris says:

    Texans have a lot of attitude. We don't mind outing liberals and shaming them into hiding, or fighting them int he streets in needs be.

    Remember the Alamo.

  32. Brooklyn emigrant says:

    Not so much as we'd think. This week NY papers reported new conditions for those on the (expanded) 'flood plain' areas. Houses must be raised three feet, nearly impossible to do in existing homes, costly to do in reconstructed homes. Insurance rates went up, but will go far higher for non-compliance. Read "no insurance for nearly a third of those dwellings". It's de-population via increased premiums.

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