President Obama has long been telegraphing his intentions to screw over Social Security and Medicare beneficiaries, so it was no real surprise last week when he proposed "chaining" the Consumer Price Index to reduce Social Security outlays. The impact will be small initially, with the average retiree's check reduced by only about $40 the first year. Over time, however, the impact will be much more significant, and 20 years into the future, recipients can expect to earn nearly $1,000 less than they would have without the chained CPI gambit. Given that the vast majority of Americans are already positioned to enter their golden years vastly unprepared to finance the costs of old age, after three decades of stolen pensions, two decades of interest rates on savings at or near 0%, nearly one decade of slumping home values, and a stock market deflating from one bubble after another on a near continual loop, it's a highly questionable priority to intentionally reducing their purchasing power even further. Kossacks are right to be outraged at Obama about it. However, chained CPI remains a distant second place on the list of the most despicable items in Obama's budget, and there's been virtually no Kossack outrage about the most awful item in this budget or any budget.....yet another doubling of the federal cigarette tax.
Five years ago, candidate Obama ran on a platform vowing to never under any circumstance raise taxes on Americans earning under $200,000 per year. Even though just about every tobacco user in America falls into this category, one of Obama's first orders of business as President was to raise the federal cigarette tax by 159%. A few years later, Obama ran for re-election maintaining his platform to never raise taxes on working-class or middle-class Americans, but only months after re-election shanks smokers AGAIN with another 93% tax increase on the same consumer good for which the majority of its customers earn less than $30,000 per year. Clearly, he had every intention when on the campaign trail to betray the trust of more than 30 million Americans in the most brazen imaginable way, but didn't have the decency to even tell them he planned to dramatically raise their cost of living. We're talking about up to thousands of dollars per year of tax extractions from a demographic that disproportionately includes the poor, the abused, and the mentally ill, all without the dignity of a public hearing on the idea's merits while on the campaign trail only months earlier.
What kind of a coward does this?
It was darkly ironic in 2009 when Obama's first massive cigarette tax increase was directed towards the expansion of a children's health care program, effectively mortgaging the future of children's health care funding on smokers continuing to light up in robust numbers. Still, in whatever cynical way, Obama was able to artificially connect the dots between taxing an unhealthy product and paying for a health-related program. Four years later, he's no longer even hiding behind that bogus canard, proposing to hijack billions of dollars from low-income smokers to pay for....a preschool expansion. No matter how much one twists themselves into a pretzel trying, they cannot rationally explain why a preschool expansion should be paid for entirely by low-income tobacco users.
What kind of a scoundrel does this?
The entire concept of a "sin tax" is a public policy idea straight from the deepest pit of hell. It anoints government as our moral arbiter in the exact same way the left denounces James Dobson and Pat Robertson for doing on a different subset of issues. Worse yet, it puts government in a position to prey upon the personal weaknesses of the people who they are supposed to represent. Even if a "sin tax" is five cents per unit of the "sinful" good or service applied to, it's unethical. But if it's $1.95 per unit sold and more than doubling every four years, it's diabolical, concentrating an ever-larger burden of the cost of government on a single group as regressively as possible and counting on them being unable to shake the activity disingenuously denounced as "sinful".
What kind of a predator does this?
Wait, you say, aren't the real villains here the tobacco companies who have made so much money peddling death? Well let's take a look at the numbers here and see who the real predator is. The tobacco companies' average per-unit profit margin for a pack of cigarettes is 20 cents. As of today, the federal government profits $1.01 for the same pack of cigarettes, five times more than the tobacco companies. If Obama's proposed increase were to kick in, that profit margin would increase to $1.95, nearly 10 times that of the tobacco companies. And bear in mind, this is on top of the states, who pull in an average of $1.50 per pack and rising of tax-fueled profit from the sale of cigarettes as well, meaning that the average profit haul from the different branches of government for every pack of cigarettes sold would become about $3.40, which is 1,700% larger than the profit of the tobacco companies.
What kind of a monster does this?
And aside from the unconscionable ethics of the latest tobacco tax stunt, it's a financial trainwreck as well. Even as the point of diminishing returns for tobacco tax revenues is either fast approaching or has already passed, government is mortgaging an ever-larger share of its budget on them. And as I said, the states are just as big of craven tobacco tax predators as Obama, if not more so. $8 cigarettes for children's health care expansion. $9 cigarettes for preschool expansion. $10 cigarettes to pay for an underfinanced pro-sports stadium in Minnesota. $11 cigarettes to pay for new infrastructure programs in Massachusetts. Either these predatory cowards are too stupid to recognize dipping into this same revenue well over and over will only accelerate the pace at which its bled dry, or they don't care or respect their successor enough to avoid passing off a budgetary calamity to them. The higher the tax goes, the less children's health care we get, the less preschool we get, and the less infrastructure expansion we get. The ever-spiraling tobacco tax is fiscal malpractice of the highest order, every bit as financially foolish as starting two wars without paying for them.
What kind of an idiot does this?
George W. Bush did a lot of horrible things as President, but at least in terms of domestic policy, I struggle to think of anything he did that was as unconscionable as Obama proposing to levy yet another massive financial censure against the poor, the abused, and the mentally ill because of the dirty habit they have. Yet the reason I'm not even more outraged about what Obama has proposed here is that it strikes me as highly unlikely to pass the Republican House. How horrifying is it that Speaker of the House John Boehner is the only thing standing in the way of President Obama further preying upon the poor, the abused, and the mentally ill? And what does it say about the American political system that the sociopath planning to prey upon the poor, the abused, and the mentally ill with several hundred dollars per year in additional cigarette taxes was their least terrible choice in the last Presidential election?