President Barack Obama announced something on Monday that is known as the Middle Class Initiatives. His proposal (led by Vice President Joe Biden) would:

1. Require companies with no retirement plans to have direct-deposit IRA's by default.
2. Tax credit for retirement savings for families making up to $85,000.
3. Increase transparency of 401(k) accounts.
4. Increase the child tax credit rate for families and raise eligibility from $85,000 to $115,000.
5. Increase and expand the child care funding.
6. Boost government spending on home care for the aging.
7. Limiting repayment percentage of student loan borrowers to ease the burden.

These are fine initiatives and makes sense to most of us, as we can feel the benefit from them. Now, why didn’t he (or Joe Biden) offer these treats last year? It is not too hard to come up with a plausible explanation: the Massachusetts election result.

WHAT HAPPENED IN MASS DOESN’T STAY IN MASS!

Just in case that it might have slipped our minds, Massachusetts is one of the most liberal and Democratic states in the United States. Ted Kennedy, a God-Father figure in the senate, championed that state for over 4 decades. It is easier to cast doubt on evolution than Massachusetts’ Democratic commitment.  Yet, it is also now a historical fact that a Republican named Scott Brown came from a huge deficit (Republican? It’s Massachusetts!) to defeat his Democrat counterpart and took the seat to replace the late Kennedy. What is a bigger slap on the face? Kennedy championed the healthcare reform and Brown campaigned to all that he will vote against it.

So as Newt Gingrich and pals are probably celebrating, the Democrats are splitting hairs trying to come up with a measure B. After all, Illinois is next. Since the middle and lower classes constitute the meat and butter of the Democratic votes, what is better than to offer treats and lure them in? Since the Republicans are still pretty far from reaching out to the poor, the Democrats only need to secure more middle class votes. Oh wait, isn't that why this is called the Middle Class Initiatives?

WHO IS PAYING FOR THE TREATS?

It is always important for us to remember that nothing is free. So where will the money come from? Perhaps with the only exceptions being #1 and #3, everything on the list involves money and resources. Those of us with a year of high school chemistry or physics can recall that you don’t create energy without using some other energy. The very same can be said about the initiatives. There really are three case scenarios: 1.) borrow from other countries, 2.) raise taxes, or 3.) cut some other programs. 

We will not hear anything about raising taxes since we are trying to stimulate the economy during the Near Depression. Cutting programs will result in more negative repercussions from the voters. Borrowing from the Chinese is not a very popular topic either since that might result in compromising our version of internet freedom of speech. 

So, where will we get the money to spend on these initiatives? Well, your guess is as good as mine.

 
(Photo: jurveston)