Obama’s decision will have broad effect
Assuming President Barack Obama means what he says – more than an idle concern, in view of his record for veracity – Americans are about to get a lot less for the tax dollars they send to Washington.
That cliff-drop of a loss in government services may well be felt at the local and state levels.
Before he presented his State of the Union speech, Obama made his agenda for the next three years perfectly clear. If Congress does not do what the president wants, he will do it himself, White House aides said.
He will start big. Obama will sign an executive order increasing the minimum wage that must be paid by companies with new federal contracts. The current $7.25 minimum wage will be blasted into the stratosphere, to $10.10.
Ponder for a moment what that means: Companies with federal contracts will have to pay their entry-level employees nearly 40 percent more than they do now. As any employer understands, that will affect all workers. Those making more than minimum wage will demand that 40 percent increase too.
The cost of labor, which often is most of the price tag for a federal contract, is about to explode. Unless Obama plans to increase deficit spending drastically – also not beyond the realm of possibility – Americans will get much less for a substantial amount of what the government spends.
But the impact may be felt directly in towns and cities, counties and states, even school districts, throughout the country.
Much of the grant money Washington doles out to local governments, including school systems, comes with strings attached. Much of it involves contracts which use both federal and local or state money. The logical, perhaps unavoidable, extension of Obama’s plan is for his minimum wage edict to extend to contracts local and state entities enter into using federal money.