How Angry Are You?

angry.jpgOne of the most heavily reported economic stories of recent weeks was the widespread anger over bonuses paid to AIG executives. What isn’t making the news, but is probably far more significant, is a different type of anger that I am hearing from friends and clients.

Suppose, like most of my clients, you have worked hard all your life. You educated yourself and found a good job. You showed up daily and did everything you were asked and more. If you went into business, you took risks. You learned to live on less than you made and saved as much as you could.

It wasn’t easy. You went without some of the luxuries that others enjoyed. Instead, you plowed the extra back into your business or put the maximum into your IRA and 401(k) plans every year. You paid your debts and your taxes on time.

For years you have been responsible and “done the right thing.” Today, you are mostly debt free. Your retirement account has grown. You don’t consider yourself rich, but you are doing okay financially.

If this describes you, I have a hunch that you are mad as hell. And it’s no wonder.

Once, your accomplishments would have been honored by all. What you achieved was once a part of the American Dream. This type of lifestyle and behavior was regarded as exemplary.

But you are not feeling respected in that way today. Instead, you are feeling a bit beat up, like the “bad guy” in this economy. Why?

You are starting to get the sense that politicians and the media consider you far richer and more privileged thangm-with-american-flags.jpg you do. Being counted among the “rich,” it is now your “duty” to sacrifice for those who were not as fortunate as you. Unlike you, their misfortune is that they made poor money decisions. They borrowed too much, spent too much, made poor loans, or gambled on very risky investments. Now, you are told it is up to you to rescue them from their plight. You are told some of them are companies “too big to fail.” Others are individuals and companies too desperate to ignore. You must dig deep, do the patriotic thing, and spread your wealth around.

This is not the American Dream you came to believe in, where personal responsibility and freedom were rewarded and poor decisions resulted in equivalent consequences.

Instead, you are being “asked” to sacrifice in two ways. You are being asked to pay a higher percentage of your income in taxes. You are being asked to endure an increase in inflation and price increases that will serve to reduce the future purchasing power of your savings and some investments. Both will reduce the lifestyle you worked hard to provide for yourself and your family.

Because you do have a sufficient income and can live on less than you make, you have the sinking feeling you are becoming a part of the soon-to-be minority of U. S. citizens who actually pay income taxes. It may seem as if taking responsibility for yourself has been an exercise in futility.

executive-bonuses.jpgIn the long term, a few outrageous executive bonuses are a relatively minor issue. What is far more significant is the frustration and anger I am sensing from those who feel they have done everything right, only to find themselves now vilified as “the rich” and expected to solve problems they feel they did nothing to create.

To participate in a brief online survey on this topic, please click here. I’d be very interested in your feedback and will discuss the survey results in a future column.

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7 Responses to How Angry Are You?

  1. Laura Longville April 7, 2009 at 4:32 pm #

    Grat survey and I look forward to the summary

  2. Duncan Hannay-Robertson April 7, 2009 at 11:49 pm #

    The same applies here in the UK. We are all peeved too. There has been a lot of culprits including the government that loves to spend on Education and Health quango’s that don’t deliver real benefits. Six months ago they said we must continue to spend to keep the economy going when for the last decade they should have taught people to save, save and save some more. Finally everyone is saving! Often good things come out of disasters.

  3. Buck DeWeese April 10, 2009 at 7:36 am #

    Rick, you really nailed it! I am a commercial pilot who saw a 50% pay cut (yeah, I admit we were overpaid) AND total loss of retirement plan (60% of final average earnings plus $1mil cash at age 60)all due to our company going into Chapter 11. But guess what? I still have a job, so I guess it was better than going belly up. So why can’t theses $78.00 per hour unskilled, uneducated auto industry workers do the same thing, to preserve their paycheck? Bankruptcy is legalized theft, but it’s not the end of the world. There is lots to be angry about, but you can’t let it ruin your life….or what’s left of it anyway. My glass of wine is still half full. I’m just pouring out of a box instead of a bottle!

  4. Laura Treece April 10, 2009 at 1:44 pm #

    This is a really biased survey. I tried to complete it but many of the survey writer’s assumptions I do not share. So I quit.

    I have no problem with tax rates for higher earners going up. And yes, my family is included in that demographic. It is patriotic to pay taxes. If no one paid taxes, how could our nation support the military in which I proudly served? I have no problem sharing with fellow Americans who are down on their luck due to no fault of their own, and there are plenty of those. I also realize that my position is not popular in western SD.

  5. Mike Ryan April 12, 2009 at 8:44 am #

    A maximum tax increase for incomes over $250,000 of 4%. Before your readers get too angry they should reflect back to a period when the rate was at that same level, during the Reagan administration. At that time that tax rate was hailed as a watershed moment for the American taxpayer, freeing us from generations of tax and spend liberal policies. I know, I voted for Ronald Reagan twice.

    Yet today returning to the same level, following a ten year period of negative growth of the stock market and declining real earnings for most Americans, is regarded by some as the ascent of socialism and justification for armed revolt.

    I appreciate the conservative ethos but isn’t it prudent and conservative to manage your emotions and keep issues in perspective? You may start sounding like a raving liberal.

  6. Rick Kahler April 12, 2009 at 9:40 am #

    Mike, Thanks for your comment. If it were just a 4% hike in the top bracket (from 35% to 39%, representing a 13% increase) I don’t think we would be seeing this degree of anger. It is much more than that. First, when you add in the increases in the Medicaide/Medicare rate, the FICA increases, the loss of deductions, the increase is closer to 10%, or a 33% increase.

    Secondly, the increase will eventually be much larger if we are to rely on tax revenues to pay off the huge increase in our national debt due to the “lets borrow and spend our way out of this crisis” mentality in Washington. And if future taxes don’t skyrocket to those needed to pay off FDR’s similar expansion of government (the top bracket went to 63% and eventually to 90%) then they fear a resurgence of inflation, similar to what we saw in the 70’s.

    Most of my clients, and others I talk to, who are angry are much more concerned about the future consequences of the expansion of government and the loss of freedom inherent in that expansion. Their concern is much greater than a 13% increase in their taxes. Most of them would breathe a sigh of relief if they thought that was the full extent of the policy shifts and spending they see happening.

  7. Mike Ryan April 12, 2009 at 12:10 pm #

    Good points and the sort of reasoned dialogue that makes me love our democratic process. Let me respond in kind.

    First of all I encourage your clients and the others you talk to to indeed take a moment to stop and take a well needed breath. It will fill them and give them a moment to reflect on all that is great about our nation and for all they have to be grateful. Time will tell how much relief our present course will bring.

    Yes I was talking about income taxes going up for some and down for most while certainly FICA increases will hit most. Unfortunately when you overspend, as your clients well know, eventually the bills have to be paid. From this point we diverge from what is to what we may feel ought to be. Here fact, fantasy, and wishful thinking have a way of often intertwining and become difficult to discern.

    The previous administration followed a policy of cut taxes and spend which could be described as borrowing to spend our way out of a surplus. During all those years when many voiced concern about our escalating national debt and rising deficits I never once heard concern from those, like yourself so concerned about our current deficit spending, for the prospects of a loss of freedom from the expansion in deficits and debt.

    My deficit spending is a pursuit of liberty for all while yours is a threat to the freedom of all Americans. There is ample reason for concern for the implications of our deficits and our national debt. Raising taxes has an economic impact.

    Yet to frame this issue as one of fiscal responsibility and personal freedom vs. lack of fiscal responsibility and loss of freedom is an emotional leap that I consider unwarranted by historical context and counter productive to our need to work together, as well as contentious siblings may endeavor to do, to find common ground based in our common love for our nation and our equally revered individual freedoms.