The Float

It all started with the float.  I don't think that's what they really called it.  It's just something that I call it now.  Over $300 billion every year in tax refunds.  What people didn't realize, was it was a world's stupidest savings plan.  You didn't get any interest on that money.  You pay that money in, month after month, paycheck by paycheck and they (the Feds) didn't give you anything except that equal amount of money back at the end of the year. Well, technically, April 15th of the following year. People were giving the Feds their money for, worst case over 15 MONTHS with absolutely no return on that investment. Not a penny of interest.  Now, it wasn't like, at that particular time, any 'regular person' could get much of any interest on on a savings account or anything, but at least it would be something. But the interest rates were low. Unnaturally low. They were running the money supply up to keep the interest rates low, because, it they let a real market happen, an the rates went up, they would not be able to keep up with the debt they were accruing every year. They were spending more every year than they took in and borrowing the difference. ANYWAY, the tax refunds money was an extra cushion. A slush fund, if you will that they didn't have to worry about doling back out until after Tax day every year.  And they used it to keep things running when 'glitches' would come along. It tided them over the 'rough patches'. I can't tell you how many times the word would come down from the Ivory Towers of DC that the refund checks would be delayed, for this or that reason. Complete with lots of posturing and finger-pointing to their political 'rivals'. When it came down to it, there really was not much difference between the two big party establishment. One REALLY believed in the bigger the Government the better, while the other believed in a smaller sized Big Government. They would weep and wail and gnash their teeth and rip their ash-stained clothing to rags over the 'cuts' they were making. In reality, they never really CUT anything. What they called a cut was really just a reduction in the planned INCREASE in yearly budgets than just seemed to go up and up. Year after year... Where was I? Oh Yeah! The Float. So, along comes the 'Affordable Care Act' and they start asking, no, telling, younger folks that they needed to pay more for a health care policy in order to have money in the pool to cover older people, who had more health problems, and thus used the system more. Some of these kids had never had coverage. You know what it is like at that age. You feel invincible.  The problem was the Feds hadn't thought things through. Like most things where government is concerned, especially the Feds, there was an un-intended consequence. Unlike every other time the IRS came after you for not paying your 'fair share', in this case, the Revenuers were not coming after you to throw you in the jail. If you decided you didn't want to pay for some policy you didn't want, you could pay the fine/tax for not having one. It started at less than a $100. That was WAY less than what one month's premium, let alone the whole year. But the REAL problem, like I said, was in this case, the IRS would not come after you. They couldn't garnish your wages. (Assuming you could find a job.) All they could do, legally, is take the fine out of your TAX 'Return'. A couple of really smart people, who had nothing but time on their hands, given they had a college degree, but no employment, started a web-site. People in the know, who realized the getting money back from the Feds with no interest, had been adjusting their contribution to minimize or eliminate any overpayment. So these guys put up this site that takes some simple info. i.e. what is your gross pay on each paycheck, how often do you get paid and a couple of other questions and tell you how to adjust how much you send to the Feds, so when April 15th turns up, you don't have any money coming back, so, UhOh! no money to hold back to pay the fine! Word spread like wild-fire. People who understood right away started telling their friends who 'didn't get math' that they could not only have more money in every paycheck, but also could avoid paying an insurance premium with no fine. Overnight, hundreds, then thousands of W-4s were submitted and less and less cash was coming into the Treasury. The web-site didn't save any info. people entered, it didn't need to. It just needed to know a few numbers to figure what adjustment you needed to make on your W-4. Almost immediately the monthly inflow of income went down. And as word spread, it kept getting lower and lower. Now, you could argue that, compared to the amount they were (over)spending every year, the Float was not that much. But it was about one tenth of the total. And there were times that it was the only thing keeping things going. I remember one point, in the middle of a real tax dust-up, when Apple, you know the computer company? Yeah, Apple had more ready cash than the Federal Government. Plus, having actual computer skills and tech-savvy, these guys designed a site that actually worked and didn't crash. So, on one hand, you had a government-'designed' site that was so buggy you literally COULDN'T get in to sign up, and wanted you to have LESS take-home pay.  On the other hand, you had a site that asked you a few simple questions and told you how to get MORE take-home pay AND NOT have a fine at the end of the year. Guess which one people chose to visit?  The web-site added some Google Ads and the developers were flush with cash overnight. Nothing more successful than identifying a market need and solving that problem. People will beat a path to your virtual door. But what was worse for the Feds, what caused the real changes, was how the developers formatted the final results page of their web-site.  They not only told you how to adjust what you were paying each paycheck, they put up on the screen what you were getting as take-home before and after the adjustment. AND they put right below that how it all added up over the course of a year. How much you took home before. How much you took home after. And how much you were paying in taxes to the feds. Paycheck after paycheck. And how much that added up to in taxes for the year. And people started to pay attention. Somehow, it was different than plugging it into TurboTax or whatever system they used to figure their taxes before. Maybe it was the change in mind-set of having more take-home pay. Maybe they were feeling pushed around by having to buy insurance by the Federal Government and it made them mad. One way or another, they started waking up. They looked at that screen and the amount of money they were sending to DC every year was more clear to them than it had ever been before. And that was money they didn't have as take-home pay. And they started questioning just how that money was being spent. And was that the best use of that money. And where was it going. And where did it end up.

They started waking up.

And that was what changed everything.