Tuesday, April 16, 2013

Is Our Country Becoming a Federal Truck System?

As the power of the federal government continues to grow, and their mandates push further into the facets of our everyday lives, it makes me wonder, is our country becoming a federal truck system?

A “truck system” -- for those not familiar with the term -- is a barter-type situation in which an employer pays employees in “scrip” or a form of substitute currency rather than regular money.  The scrip might only be useable in turn to make purchases to or through the issuer.  The whole system is a kind of cyclical trap, where prices can be inflated to keep employees poor or indebted to the employer, forcing them to continue to work there.  In essence, it’s kind of a voluntary economic slavery of sorts.

 The truck system was referenced, and explained concisely in verse in the Merle Travis song, “Sixteen Tons”, a song later popularized by Tennessee Ernie Ford, which includes lyrics like:

“You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store”

While the government isn’t forcing us to buy products and services solely from them, sadly, I’ve almost feel like I “owe my soul” to the federal government as well as our local government due to their increasing interference -- or assistance, depending upon one’s outlook -- in certain areas of our financial lives.  And from what I’ve discovered, our situation isn’t as bad as it is for some others.

Health Care
According to a recent MSN Money article, “The nation's big health insurers say they expect premiums — or the cost for insurance coverage — to rise from 20 to 100 percent for millions of people due to changes that will occur when key provisions of the Affordable Care Act roll out in January 2014.”

Frankly, this is a terrifying revelation for our family.  Year-over-year, our insurance premiums already jumped nearly 25 percent – rising from $120 a week (for our family of four) to $150 a week.  If it increases again next year by another 20 to 100 percent, we’re looking at a premium of anywhere from $180 to $300 a week or between $9,300 and $15,600 a year.

While this sounds ridiculously expensive, both my and wife and mother-in-law -- both of whom work in the public school system here in the Chicagoland area -- know of co-workers who are working solely to provide the family health insurance and whose paychecks are negated by their deductions for insurance premiums.

Housing is yet another aspect in which many of us – knowingly or not – are in a way indebted to the federal government.  According to a recent post on Bloomberg.com:

"Central to the effort are Fannie Mae and Freddie Mac, the government-controlled companies that issued and guaranteed more than 71 percent of mortgage-backed bonds last year. Between those companies and Ginnie Mae, which guarantees loans insured by the Federal Housing Administration, the government backed nearly 97 percent of U.S. mortgages in 2009.
Government involvement has more than doubled since 2005, when the three companies accounted for about 45 percent of a $2.2 trillion market, according to Inside Mortgage Finance. Since Fannie Mae and Freddie Mac were seized by the government in 2008 after losses on mortgage investments pushed them to the brink of collapse, taxpayers have injected almost $150 billion to keep them solvent. The Treasury has promised unlimited aid."

Thankfully, our family has avoided being indebted to such government controlled financial institutions by selling our previous home after the housing bubble burst (losing nearly $100,000 in the process) and downsizing to a small condominium that we could afford to buy in cash.  Before this though, we were paying over $16,000 a year toward the mortgage on our home, nearly half of which was in interest on the loan itself. 

Still, even now and without a mortgage, we pay nearly $3,000 in property tax on this two bedroom one bathroom space.  And we pay this amount each and every year to the government even though we own our home outright, something that I understand yet still find rather strange.

Similar to the housing and health care situations, our income and sales taxes are hurting our chances of being able to put anything extra away for ourselves when it comes to savings.  With the payroll tax going up it’s another 2 percent in income that we no longer have available.  Factor in a jump of 66 percent in state income tax when Illinois recently raised their rate from 3 to 5 percent, and we’re up to 4 percent of our income that has evaporated, going to federal and state governments.  Add in another 2.25 percent for any food essentials we purchase or 8 percent for non-essential items and our income is deteriorated even further.  Add in gasoline taxes (according to an api.org report, Illinois has the sixth highest such taxes in the country), excise taxes, amusement taxes (yes, we are even taxed when just trying to enjoy life), entertainment venue taxes on sporting event tickets, vehicle taxes, utility bill taxes, and all the rest, and I’m beginning to feel like I indeed owe my soul to the “government” store.


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