Am I Rich?

One of the topics of the recent debate between John McCain and Barack Obama at Rick Warren’s church was “how much money do you have to make to be rich?” Predictably, the candidates differed dramatically in their answers. McCain said “$5 Million,” and Obama replied “If you’re making more than $250,000, you’re doing pretty well.”

Both answers were ridiculous. In a piece from NPR’s Day to Day, available via podcast here, Jared Bernstein points out that you can’t label someone as “rich” with just an income figure. Where they live makes all the difference. He’s exactly right.

At this point, our economy and culture is most certainly NOT in a position to start disincentiving high income earners from continuing to work. Let’s say a married couple is at the $350,000 income range, living in a city where it’s fairly expensive to live. They have children, and pay a LOT for after-school childcare, both in activities and nanny services to get the children to where they need to go. For the most part (after $5000/child, anyway) they have to pay for all that with after-tax dollars. Expensive.

At some point, as taxes for this “rich” couple go up, when taxes are raised, which an Obama White House and Congress will certainly make happen, the couple will reassess, and may decide that for economic and lifestyle reasons, it makes sense to give up one job and move somewhere less expensive. The end result will be one high-earning partner out of the workforce, and more importantly, one less Social Security contributor at a time when the Boomers are starting to retire in larger and larger numbers.

Good strategy, Barack. Straight out of the Clinton early 90s playbook. Thank goodness our economic situation in this country hasn’t changed at all in the past 16 years.

But then again, maybe the Democrats’ plan is to accelerate the bankruptcy of the entitlement programs the boomer generation have been counting on all along. Remember, big government politicians rely on a dependent population for their power. Congress has their own retirement programs and don’t participate in Social Security. They can bankrupt all the entitlements they want without ever worrying about missing a check themselves.

They’re immune from a lot of the damage Obama’s plan would cause.

But are you?