Posts Tagged ‘tax increases’

Remember Democrats And Media Mocking The GOP For Refusing A 10:1 Ratio Of Spending Cuts To Tax Increases? Try 41:1 The Other Way, HYPOCRITES!!!

January 4, 2013

Do you remember that one?  It provided rotting red meat for liberals for months.  Republicans are so “obstructionist” that they wouldn’t even consider $10 in spending cuts for every $1 in tax hikes.

Well, here’s the question: would liberals consider $10 in tax increases for every $1 in spending cuts?

The answer is no.

Would liberals consider $20 in tax hikes for every $1 in spending cuts?

No again.

Well, surely they would consider $30 in tax hikes for every $1 in spending cuts?

Absolutely not.  And you’re a racist to think they ought to.

Okay, how about $40 in tax increases for just $1 in spending cuts?  Would that be okay?

Well, you’re finally getting warm:

Fiscal Cliff Deal: $1 in Spending Cuts for Every $41 in Tax Increases
by Matthew Boyle
31 Dec 2012

According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.   When Presidents Ronald Reagan and George H.W. Bush increased taxes in return for spending cuts—cuts that never ultimately came—they did so at ratios of 1:3 and 1:2.   “In 1982, President Reagan was promised $3 in spending cuts for every $1 in tax hikes,” Americans for Tax Reform says of those two incidents. “The tax hikes went through, but the spending cuts did not materialize. President Reagan later said that signing onto this deal was the biggest mistake of his presidency.   “In 1990, President George H.W. Bush agreed to $2 in spending cuts for every $1 in tax hikes. The tax hikes went through, and we are still paying them today. Not a single penny of the promised spending cuts actually happened.”

That’s right, kids.  The Democrat Party is MORE THAN four times more “obstructionist” than the Republicans even by the Democrats own incredibly demagogic standard.  They insisted upon and were willing to send America off the cliff to get a 41:1 ratio of tax increases to spending cuts.

And if you are a Democrat, you are a quintessential, abject hypocrite by definition.  Because liberalism equals “hypocrisy,” and you cannot even possibly be a liberal without walking through the lie that is your life as a massive hypocrite.

Republicans have twice played this game in modern political history, with both Ronald Reagan and George H.W. Bush falling for Democrats’ promises to enact spending cuts if the Republican presidents would enact tax hikes.  And both times the Democrats proved that they were abject liars and hypocrites by breaking their words after getting what they wanted.

The bottom line is this: the liberal establishment thought it was insane that Republicans would not believe their lies again and fall into the new trap of their empty rhetoric, but 41:1 going the opposite direction – more than four times more insane by any definition of insantiy, mind you – is not insane at all.

You cannot negotiate with Democrats because history has proven over and over again that Democrats are dishonest liars.  It’s the “Lucy and the football thing” that plays out over and over again.  Only every time the Democrats yank away the football after promising that this time they’re really hold it, America gets weaker and closer to complete financial collapse.

Democrats bait and switch with rhetoric all the damn time.  The Democrat Party is the party that dishonestly says it is “investing” money rather than be honest enough to admit they’re spending it, such that I could “invest” in a Ferrari and three prostitutes for the weekend and pat myself on the back for “investing.”  Let me ask you something: if you’re completely broke, but decide to go shopping for clothes anyway, and you tell yourself that you’re going to spend $1,000 on your credit card, but instead “only” end up spending $985, did you “cut” your spending?  No, you dumbass; you went nuts and spent $985 you shouldn’t have spent; you didn’t “cut” anything.  Your debts went UP, not down, you big giant dumbass.  That’s the game Democrats play year after year with their dishonest promises of “spending cuts.”  They have NEVER cut spending in their deplorable lives; instead, they try to tell us that if they projected their out-of-control spending by 10 percent a year but they only increase their spending beyond previous spending by say 9%, that they somehow “cut” spending.

Do you know what an actual “spending cut” would look like, you who aren’t so evil and blind that you voted for Obama?   It would look like the US budget getting smaller and smaller rather than bigger and bigger.  It would look like the government NOT having trillion-plus dollar deficits every single year of Obama’s God damn America presidency, that’s what it would look like.

It wouln’t look like this, in other words.

And that doesn’t include the $500 billion financial black hole of megadeath that Democrats have imposed through their evil relationship with unions just on California alone.  If you add up the debt of blue states in unfunded liabilities being handed out to unions, and America is a headless chicken walking.

Democrats claim they’ll collect $620 billion more in revenue because of their tax hikes.  You watch; they won’t.  Because they are breathtakingly stupid people who refuse to pull their heads out of their anuses long enough to realize that when they raise tax rates on the rich, the rich raise the prices of their goods and services to recoup the losses of Marxist, class-warring Democrats and the rich shelter their money.  But every time America has cut its tax rates, we have actually INCREASED our income tax revenues – with the rich paying a higher overall share of the tax burden as they are encouraged to work harder and invest more because they are allowed to keep more of what they earn.

41:1.  From the party that mocked the other side for refusing to consider 10:1 after being repeatedly lied to by the party that just demanded 41:1 or else they’d destroy America.

Let me simply state the truth: Democrats are bad people.  They are bad people who feel entitled to other people’s money.  They are bad people who simply do not believe in any kind of personal responsibility.  They are bad people who trust in massive human government while they mock those who put their trust in God.  They are bad people who at the very least are forcing the next generation to shoulder an impossible burden while they spend that generation’s wages right now.  And ultimately, they are bad people who either want our children to starve and our old people to die of medical abandonment, or who are simply so demon-possessed and so deranged that they simply cannot consider the obvious financial consequences of their incredibly reckless and immoral actions.  Because that is what is going to happen due to their wicked policies when America collapses due to their wicked spending.

America has become a truly sick and depraved culture, and we are about to go the way of the Dodo bird.

I believe that it’s too late for America.  In voting for Obama and for Democrat Party this November, we have fatally wounded ourselves.  And while many conservatives are hoping for a “2010-style” tea party revolution in which Republicans make historic landslide gains, I believe that will be far too little, far too late.  The American people have crossed the moral threshold to vote for Romans chapter one as evil becomes good and good becomes evil.  And Democrats just proved yet again that after $222 trillion in out-of-control spending which is going up by nearly a trillion every single month, they haven’t yet even begun to spend until every single American is crushed under the wheels of their slick evil.

Why isn’t America mentioned in the Bible?  Because when it mattered the most (NOW!), you were too damned depraved and too damn wicked to do the right thing.  And by the time the Antichrist comes, we won’t be able to do anything but worship him even more than we worship Obama and take his damn mark so we can burn in hell for a trillion times a trillion-trillion-trillion millennia.

Meanwhile, Obama’s tax-cheating Treasury Secretary Tim Geithner is now the “$13.6 trillion dollar man” after spending that morally and logically insane sum in just four years of God damn America.  While Obama’s Federal Reserve has been essentially creating so many trillions of dollars out of thin air that it is way past impossible to calculate with QE1, QE2, Operation Twist and now the aptly named “QE Forever.”  What they have actually done is rob senior citizens and those who tried to save blind by stealing the value of their savings out from under their very noses.

Why does the Antichrist come according to the Book of Revelation?  You ought to know, Democrats; because you just voted to not only elect but re-elect his useful idiot.

Hal Lindsey once famously popularized the phrase, “the Great Snatch” to describe the soon-coming Rapture of all true Christian believers.  I’ve been calling it “the Great Bailout,” because I am hoping that Jesus is going to bail Christians out of the mess that secular humanist Democrats have created before we experience the consequences of their massive – and massively godless – disaster.

What are you placing your trust in?

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What I’d Do To Resolve Stalemate Between Republicans And Democrats On Taxes Targeting The Rich

November 16, 2012

We seem to be in a real fix.  Obama won reelection and seems to think he had a mandate.  In reality, Obama is the first president in American history who got reelected with a SMALLER percentage of the vote and electoral college majority than he did in 2008.  Very much like hated Republican boogeymen such as Ronald Reagan and George W. Bush, who were both reelected with larger majorities than they first got into office with.

And yes, the same electorate that gave Obama a “mandate” also reelected an overwhelmingly Republican House of Representatives and gave THEM a mandate.  If Obama has a damn mandate, then the Republican House has every damn much as big of a mandate as Obama has.

For the record, if you want to see what an actual “mandate” really looks like, click here.  Because Ronald Reagan had a mandate.

That versus Obama’s “food stamp mandate” is all you should need to know which side has had a plan to truly build an America that can increase in size and power and which side has a plan to bring America to its knees and ultimately to extinction via unsustainable welfare spending to buy off voters as jobs are destroyed.

So if Obama wants, he can have a pissing contest and insist that Republicans betray their most deeply held convictions about what creates job growth and what STYMIES job growth.  And the only people who will lose are the American people.

The simple, repeatedly historically-proven fact is this: Tax Cuts Increase Revenues; They Have ALWAYS Increased Revenues.  It is a simple fact of history that when Calvin Coolidge cut the income tax rates, we got an economic boom and increased our tax revenue by increasing economic growth.  When John F. Kennedy cut the tax rates, voilà, we got more revenue.  When Ronald Regan cut the income tax rates, we got a twenty-year trajectory of economic growth.  And yes, when George W. Bush cut the tax rates, guess what?  We got significantly higher tax revenues than we had had before Bush cut taxes.  And to this day the highest year of tax revenues was NOT in the early 1960s when the top marginal rate was 92% and we had a godawful tax revenue problem, but in 2007 under George W. Bush.

Bill Clinton increased taxes in 1993.  And the economy responded with such weakness that the American people decided to elect the largest Republican majorities that took over both the House AND the Senate in history just to show you how well the Clinton tax hike worked.  Do you want to know when Clinton got real economic growth?  After the Republicans were elected, after Clinton said “The era of big government is over” and after he signed the Republican-originated and Republican-passed Taxpayer Relief Act in 1997 which massively cut the capital gains tax rate.

Obama simply does not have the instinct to compromise that Bill Clinton did.  Which is why we have this exchange with ABC anchor Charles Gibson:

MR. GIBSON: You have however said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, “I certainly would not go above what existed under Bill Clinton, which was 28 percent.”

It’s now 15 percent. That’s almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent.

SENATOR OBAMA: Right.

MR. GIBSON: And George Bush has taken it down to 15 percent.

SENATOR OBAMA: Right.

MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

SENATOR OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.

In that exchange, Obama officially admitted, “I will not collect as much revenue by attacking the rich.  But I don’t care.”

Obama wants to target the rich, demagogue them, punish them, gin up the kind of class warfare rage that Karl Marx ginned up in his day.  And we just saw, as morally depraved as it is, it’s apparently goooood politics with an amoral American people.  The problem is that what will happen if Obama gets his way is that we’ll see LESS revenue, NOT more.  The rich will increase their rate of withdrawing money from the economy, from investment and from job creation, and instead shelter it and spend it on tax attorneys to keep as much of their money as they can.  We’ve seen this over and over again.

If you actually wanted more tax revenue, i.e., money that could actually help the poor, the smartest thing you could do would be to cut the tax rates and allow investment and business growth to increase the size of the economy and the tax base.  And the very stupidest thing you can do would be to listen to Obama.

Well, the American people are stuck on stupid.  And here’s the fix the Republicans are in: Obama will keep demagoguing and claiming that the answers to America’s prosperity are found in Marxist class warfare.  The implicit message is that the communists got it right; and the means to prosperity is to seize the wealth and redistribute it.  I mean, you can take out the words like “socialist” and “Marxist” and “communist,” but what you can’t do is describe what Obama wants to do and not realize that it’s fundamentally Marxist in approach.  Both want to seize the wealth and redistribute that wealth.  Period.  And so if the Republicans don’t give Obama his tax attack on the rich, we’ll go off the fiscal cliff and Obama – even though the fiscal cliff was HIS idea – will blame the Republicans for it.  And he will succeed, because the mainstream media is nothing more than leftist propaganda these days.  And as we fall off the cliff and into recession, Obama will keep explaining “why”: because Republicans are obstructing and protecting the rich at the expense of the rest of the people.

As completely wrong as Obama is, it his course is by far and away the easiest to demagogue.  When you realize that if all the people who got food stamps voted for Obama, there’s 75% of all the people who voted for him right there with just that, you see how politically powerful Obama’s course is.  At least until America fiscally collapses under the sheer massive weight of its debt.

So what do I propose?  Let Obama have his way.  IF.

Obama says that attacking and devouring the rich is the path to American prosperity.  Prove it, Mister President.  Tell us how much your tax increase will increase tax revenue.  Put a specific number on that claim into the version of the bill that Obama must sign.  And if tax revenues do not go up by the amount you said that they would go up, THEN YOU ARE WRONG.  No excuses.

As an example, consider what the Bush Tax Cut did:

For the record, President George Bush’s 2003 tax cuts:

raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.

These increases in tax revenue have substantially reduced the federal budget deficits. In 2004 the deficit was $413 billion, or 3.5% of gross domestic product. It narrowed to $318 billion in 2005, $248 billion in 2006 and $163 billion in 2007. That last figure is just 1.2% of GDP, which is half of the average of the past 50 years.

Lower tax rates have be so successful in spurring growth that the percentage of federal income taxes paid by the very wealthy has increased. According to the Treasury Department, the top 1% of income tax filers paid just 19% of income taxes in 1980 (when the top tax rate was 70%), and 36% in 2003, the year the Bush tax cuts took effect (when the top rate became 35%). The top 5% of income taxpayers went from 37% of taxes paid to 56%, and the top 10% from 49% to 68% of taxes paid. And the amount of taxes paid by those earning more than $1 million a year rose to $236 billion in 2005 from $132 billion in 2003, a 78% increase.

Do you notice that not only did tax revenues massively increase, but in fact the percentage of taxes paid by the rich also massively increased?

Read what even the New York Times was forced to acknowledge about the FACT that the Bush tax cuts increased revenue:

Sharp Rise in Tax Revenue to Pare U.S. Deficit By EDMUND L. ANDREWS Published: July 13, 2005

WASHINGTON, July 12 – For the first time since President Bush took office, an unexpected leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion.

A Jump in Corporate Payments On Wednesday, White House officials plan to announce that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February.

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.

The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be “significantly less than $350 billion, perhaps below $325 billion.” The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well.

You can say whatever the hell you want, liberal.  But the Bush tax cut resulted in a fifteen percent increase in tax revenue.  According even to the New York Times.

Allow me to interject here that liberal “intellectuals” are actually the stupidest people in the world.  Forrest Gump said, “Stupid is as stupid does.”  And what makes Forrest Gump an authority here is that he was a mentally retarded man who listened to the common sense wisdom of a mother who was determined to teach her son to succeed in the real world.  And the story teaches us that Forrest listened to his mother’s wisdom and lived his life according to her proverbs – and he flourished while all the “smart” people around him either lived like fools or came to embrace Forrest Gump’s wisdom.  In the same manner, liberal intellectuals are profoundly stupid people because they hate the world as it actually is and are determined to replace reality with their various “-isms” – such as communism and fascism and existentialism and postmodernism and nihilism – instead.  They refuse to see the world as it is and constantly seek to impose morally idiotic theories that are utterly false.  And that is precisely what they are doing now with their tax demagoguery.  Because “redistributionism” is every bit as stupid and unrealistic of an “-ism” as all the other “-isms” I just listed.

Getting back to point, what numbers do YOU have to “put your money where your mouth is,” Obama???  Are you prepared to make specific guarantees that your tax plan will increase revenues and increase the size of the economy such that if those numbers don’t materialize, YOU ARE PROVEN WRONG AND YOUR TAX HIKE WILL AUTOMATICALLY BE ENDED ACCORDING TO THE PROVISIONS IN THE BILL?

Republicans should force Obama to produce hard numbers predicting the revenues his tax hikes will generate by a specific time.  And also demand to know up front exactly how much Obama’s tax warfare plan will reduce the debt.  And Republicans ought to demand that if those hard numbers and dates aren’t met, that Obama’s tax warfare will automatically end and the Bush tax cuts will automatically take their place.

At the very least, that would at least give some demagoguery to the Republicans for a change.  Because if Obama says, “Well, my Marxist tax war on the rich won’t actually have very much effect even in my best case scenario,” then Republicans can rightfully ask, “Then why the hell have you spent most of the last four years harping on it, you demagogue?”  And if Obama wants to make grandiose predictions, then those predictions can and should be hard-baked into the legislation which should also include triggers to kill it if those grandiose predictions aren’t actualized.

Republicans control one-third of the government.  But Democrats clearly have the ball.  The trick is to hold Democrats RESPONSIBLE for their grandiose claims such that if those claims aren’t fulfilled, they are disgraced officially and for the permanent historical record.

Give Obama what he wants – but make him and the Democrat Party pay dearly for it if what happens isn’t what they say will happen if they get their way.

And if Obama won’t agree to these terms, well, then, simply tell Obama’s supporters that if you people want tax increases, well, you should damn-well GET your tax increases.  And you will therefore get to pay the high taxes that you hypocritically and dishonestly wanted to force on somebody else now.  Because the people who ought to be paying the highest taxes in this country are the people who say that somebody ELSE ought to pay higher taxes while they get off scott free.  So to hell with it: let EVERYBODY pay high taxes and be done with it.

And we’ll be able to find out that way that Democrats are liars and that you can’t tax your way into prosperity, too.

I write this because the tactic of fighting over every mole hill shouldn’t be our tactic any longer.  We just lost that battle, I would argue.  If the Democrats demand something like these tax hikes and promise it will fix the economy, oppose it philosophically, demand language within the legislation itself that will officially make the Democrats completely responsible for their false promises, and then let them destroy themselves and as much of America as it takes to finally realize that Democrats are a bunch of pied pipers who are leading us to our national extinction.

Obama Keeps Lying About The Economy

August 12, 2010

“Fish story.”  “Such statements hurt his credibility.”  Let’s just call it what it is: a pile of lies from a profoundly dishonest man.

JULY 21, 2010
Obama’s Economic Fish Stories
On unemployment, the president claims that the stimulus bill was several times more potent than his chief economic adviser estimates. Such statements hurt his credibility.
By MICHAEL J. BOSKIN

A president’s most valuable asset—with voters, Congress, allies and enemies—is credibility. So it is unfortunate when extreme exaggeration emanates from the White House.

All presidents wind up saying some things that make even their own economists cringe (often the brainchild of political advisers unconstrained by economic principles, facts or arithmetic). Usually, economic advisers manage to correct these problematic statements before delivery. Sometimes they get channeled into relatively harmless nonsense, such as President Gerald Ford’s “Whip Inflation Now” buttons. Other times they produce damaging policies, such as President Richard Nixon’s wage and price controls. The most illiterate statement was President Jimmy Carter’s late-1970s plea to the Federal Reserve to lower interest rates to combat high inflation, the exact opposite of what it should do. Not surprisingly, the value of the dollar collapsed.

boskin

Martin Kozlowski

President Obama says “every economist who’s looked at it says that the Recovery Act has done its job”—i.e., the stimulus bill has turned the economy around. That’s nonsense. Opinions differ widely and many leading economists believe that its impact has been small. Why? The expectation of future spending and future tax hikes to pay for the stimulus and Mr. Obama’s vast expansion of government are offsetting the direct short-run expansionary effect. That is standard in all macroeconomic theories.

So, as I and others warned in 2008, the permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times. Worse yet, all the subsidies, bailouts, regulations and mandates are forcing noncommercial decisions on the economy, which now awaits literally thousands of new diktats as a result of things like ObamaCare and the financial reform bill. The uncertainty is impeding investment and hiring.

The president does not say that economists agree that the high future taxes to finance the stimulus will hurt the economy. (The University of Chicago’s Harald Uhlig estimates $3.40 of lost output for every dollar of government spending.) Either the president is not being told of serious alternative viewpoints, or serious viewpoints are defined as only those that support his position. In either case, he is being ill-served by his staff.

Mr. Obama’s economic statements are increasingly divorced not only from competing viewpoints but from those of his own economic advisers. It is surprising how many numerically challenged pronouncements come from this most scripted and political of White Houses. One slip is eventually forgiven, but when a pattern emerges, no one believes it is an accident.

For example, on the anniversary of the stimulus bill, Mr. Obama declared, “It is largely thanks to the Recovery Act that a second Depression is no longer a possibility.” Yet his Council of Economic Advisers just estimated the stimulus bill’s effect on GDP at its trough was 1%-2%.

The most common definition of a depression is a long period in which GDP or consumption declines at least 10%. The decline in GDP in the recent recession was 3.8%, in consumption 2%. No one disputes the recession was severe, but to reach a 10% GDP decline requires tripling the administration’s estimate (three times their 2% effect) added to the actual 3.8% decline. On the alternative consumption standard, the math is even more absurd. The depression statement isn’t credible. The stimulus bill has assumed certain mystic powers in administration discourse, but revoking the laws of arithmetic shouldn’t be one of them.

The recession would have been worse if not for the Fed’s monetary policy and quantitative easing. Also important were the unmentioned automatic stabilizers—taxes falling more than income, cushioning declines in after-tax incomes and consumption—which were far larger than the spending and tax rebates in the stimulus bill. Arguing that all these policies (including injecting capital into banks, which was necessary but done poorly) may have prevented a depression is perhaps still an exaggeration but at least is within hailing distance of plausibility. On that scale, the effect of the stimulus was puny.

On his recent “Recovery Tour,” Mr. Obama boasted, “The stimulus bill prevented the unemployment rate from “getting up to . . . 15%.” But the president’s own chief economic adviser, Christina Romer, has estimated that the stimulus bill reduced peak unemployment by one percentage point—i.e., since the unemployment rate peaked at 10.1%, it prevented the unemployment rate from rising to just over 11%. So Mr. Obama claims that the stimulus bill was several times more potent than his chief economic adviser estimates.

Perhaps the most serious disconnect concerns the impending expiration of the 2001 and 2003 tax cuts, which will raise the top two income tax rates and the rates on dividends and capital gains. If these growth inhibiting tax increases occur—about $75 billion in tax increases next year, $1.4 trillion over 10 years—there will be serious economic damage.

In the most recent issue of the American Economic Review, Ms. Romer (and her husband David H. Romer) conclude that “tax increases are highly contractionary . . . tax cuts have very large and persistent positive output effects.” Their estimates imply the tax increases would depress GDP by roughly half the growth rate in this so-far-anemic recovery.

If Mr. Obama is really serious about a second stimulus, by far the best thing he can do is have Congress quickly extend the expiring Bush tax cuts, combined with real spending cuts set to take effect as the economy improves.

The president badly needs to make more realistic pronouncements. No one expects him to say his policies have failed (although most have delivered far less than claimed at large cost). A little candor about the results of experimentation in uncharted waters would go a long way. But at the very least, his staff needs to avoid putting these exaggerations on the teleprompter. It undermines confidence and raises concerns about competence. It’s doing nobody any good—not the economy and certainly not Mr. Obama.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.

Day after day after day, Obama touts slivers of good news as magnificent, while ignoring pile on top of pile of bad news.  We keep getting these tortured numbers, cherry-picked out of a a rotten mess.  And we’re constantly told the increasingly laughable narrative that Obama’s incredible leadership is what kept everything from being even worse than it is.

The funniest aspect of all is when Obama and his mouthpiece Robert Gibbs keep assuring us that no economist disagrees with their policies when their very own chief economist is on record disagreeing with Obama’s policies.

Obama mouthpiece Gibbs declares:

I’ll let Congressman Boehner unwind his eloquent argument for preserving the tax cuts for those that are quite wealthy.  I don’t think the President believes — I don’t think there’s an economist that believes there’s a stimulative effect to — or a good reason in terms of economic growth to extend those tax cuts, particularly given the choice that one has to make about the budget deficit.

Forbes Magazine demonstrates how fallacious and even dishonest Obama’s and Gibbs’ statements have been in pointing out that the:

chairman of the Council of Economic Advisers, Christina Romer, herself a Keynesian, has done research that undercuts the Keynesian view of good fiscal policy.  Some of this research is in a March 2007 paper, “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks,” co-authored with her husband, fellow University of California, Berkeley, economist David Romer.

In their article, they find that “tax increases are highly contractionary” and that tax cuts are highly expansionary.

And Forbes goes on to conclude:

“In other words, if she believes her own research, Christina Romer should be a strong critic of her new boss’s policies.”

So maybe you guys should stop making flagrantly false statements that all the economists agree with you, when in point of fact even your own economist doesn’t agree with you.  Or, at least only agrees with you by denying her own academic research for the sake of appearances.

That may be why she’s leaving the White House.  She can finally tell the truth – something that the Obama White House would never even dream of allowing her to do.

A Summary of the Government Takeover of Health Care

November 1, 2009

This is a prepared House Republican document which you can view as a PDF file here.

House Democrat Health “Reform” Legislation: Short Summary of the Government Takeover of Health Care

October 29, 2009


BACKGROUND AND EXECUTIVE SUMMARY

On October 29, 2009, Speaker Pelosi and the House Democrat leadership introduced H.R. 3962, the Affordable Health Care for America Act. The legislation combines provisions in the versions of H.R. 3200, America’s Affordable Health Choices Act, approved by the Committees on Education and Labor, Energy and Commerce, and Ways and Means, as well as other provisions negotiated behind closed doors by the Democrat leadership. The bill is expected on the floor the week of November 2, under a likely structured rule. While press reports indicate the bill will cost at least $894 billion, a CBO score is not yet available, and the following analysis will be updated as events warrant.

Buried within the contents of the 1,990 page bill—as well as a separate 13-page bill (H.R. 3961) that would increase the deficit by more than $200 billion—are details that will see a massive federal involvement in the health care of every American, including the following:

• Creation of a government-run insurance program that could cause as many as 114 million Americans to lose their current coverage;
• Abolition of the private market for individual health insurance, forcing individuals to purchase coverage in a government-run Exchange;
• Stifling insurance regulations that would raise premiums and encourage employers to drop coverage;
• Trillions of dollars in new federal spending that will exacerbate the deficit and imperil the nation’s long-term fiscal solvency;
• Taxes on all Americans—individuals who purchase insurance, individuals who do not purchase insurance, and millions of small businesses—that will kill jobs and raise health care premiums; and
• Cuts to Medicare Advantage plans that will result in higher premiums and dropped coverage for more than 10 million seniors.

SUMMARY OF KEY PROVISIONS
The Government Takeover

Creation of Exchange: The bill creates within the federal government a nationwide Health Insurance Exchange. Uninsured individuals would be eligible to purchase an Exchange plan, as would those whose existing employer coverage is deemed “insufficient” by the federal government. Once deemed eligible to enroll in the Exchange, individuals would be permitted to remain in the Exchange until becoming Medicare-eligible—a provision that would likely result in a significant movement of individuals into the bureaucrat-run Exchange over time. Employers with 25 or fewer employees would be permitted to join the Exchange in its first year, with employers with 25-50 employees permitted to join in its second year. Employers with fewer than 100 employees would be permitted to enroll in the third year, and all employers would also be eligible to join, if permitted to do so by the Commissioner. Many may note the limits on employer eligibility in the first several years are significantly higher than in H.R. 3200, thus expanding the scope of the government-run Exchange.

Exchange Benefit Standards: The bill requires the Commissioner to establish benefit standards for all plans. These onerous, bureaucrat-imposed standards would hinder the introduction of innovative models to improve enrollees’ health and wellness—and by insulating individuals from the cost of health services with restrictive cost-sharing, could raise health care costs.

Government-Run Health Plans: The bill requires the Department of Health and Human Services to establish a “public health insurance option” through the Exchange. The bill states the plan shall comply with requirements related to other Exchange plans. Empowered to collect individuals’ personal health information, with access to federal courts for enforcement actions and $2 billion in “start-up funds”—as well as 90 days’ worth of premiums as “reserves”—from the Treasury, the bill’s headings regarding a “level playing field” belie the reality of the plain text. In addition, the bill requires the Secretary to establish premium rates that can fully finance the cost of benefits and administrative costs, but there would always be the implicit backing of the federal government.

The bill provides that the government-run plan shall enlist all Medicare providers unless physicians affirmatively decide to opt-out of the program. While the Secretary will be required to “negotiate” reimbursement rates with doctors and hospitals, nothing in the bill prohibits the Secretary from using such negotiation to impose Medicare reimbursement levels on providers as part of a government-imposed “negotiation.” Should such a scenario occur, the Lewin Group has estimated that as many as 114 million individuals could lose access to their current coverage under a government-run plan—and that a government-run plan reimbursing at the rates contemplated by the legislation would actually result in a net $16,207 decrease in reimbursements per physician per year, even after accounting for the newly insured.

The bill requires the Secretary to “establish conditions of participation for health care providers” under the government-run plan—however it includes no guidance or conditions under which the Secretary must establish those conditions. Many may be concerned that the bill would allow the Secretary to prohibit doctors from participating in other health plans as a condition of participation in the government-run plan—a way to co-opt existing provider networks and subvert private health coverage.

“Low-Income” Subsidies: The bill provides subsidies only through the Exchange, again putting employer health plans at a disadvantage. Individuals with access to employer-sponsored insurance whose group premium costs exceed 12 percent of adjusted gross income would be eligible for subsidies.

The bill provides that the Commissioner may authorize State Medicaid agencies—as well as other “public entit[ies]”—to make determinations of eligibility for subsidies and exempts the subsidy regime from the five-year waiting period on federal benefits established as part of the 1996 welfare reform law (P.L. 104-193). The second provision would give individuals a strong incentive to emigrate to the United States in order to obtain subsidized health benefits without a waiting period. Despite the bill’s purported prohibition on payments to immigrants not lawfully present, and the insertion of a citizenship verification provision, some may be concerned that the provisions as drafted would not require individuals to verify their identity when confirming eligibility for subsidies—encouraging identity fraud while still permitting undocumented immigrants and other ineligible individuals from obtaining taxpayer-subsidized benefits.

Premium subsidies provided would be determined on a six-tier sliding scale, such that individuals with incomes under 133 percent of the Federal Poverty Level (FPL, $29,327 for a family of four in 2009) would be expected to pay 1.5 percent of their income, while individuals with incomes at 400 percent FPL ($88,200 for a family of four) would be expected to pay 12 percent of their income. Subsidies would be based on adjusted gross income (AGI), meaning that individuals with total incomes well in excess of the AGI threshold could qualify for subsidies.

The bill further provides for cost-sharing subsidies, such that individuals with incomes under 133 percent FPL would be covered for 97 percent of expenses, while individuals with incomes at 400 percent FPL would have a basic plan covering 70 percent (the statutory minimum). These rich benefit packages, in addition to raising subsidy costs for the federal government, would insulate plan participants from the effects of higher health spending, resulting in an increase in overall health costs—exactly the opposite of the bill’s purported purpose.

Medicaid Expansion: The bill would expand Medicaid to all individuals with incomes under 150 percent of the federal poverty level ($33,075 for a family of four). Under the bill, the bill’s expansion of Medicaid to more than 10 million individuals would be fully paid for by the federal government only through 2014—thus imposing billions in unfunded mandates on States, which would be expected to pay nearly 10 percent of the cost of the expansion beginning in 2015.

Benefits Committee: The bill establishes a new government health board called the “Health Benefits Advisory Committee” to make recommendations on minimum federal benefit standards and cost-sharing levels. The Committee would be comprised of federal employees and Presidential appointees.

The bill eliminates language in the discussion draft of H.R. 3200 stating that Committee should “ensure that essential benefits coverage does not lead to rationing of health care.” Many view this change as an admission that the bureaucrats on the Advisory Committee—and the new government-run health plan—would therefore deny access to life-saving services and treatments on cost grounds. As written, the Committee could require all Americans to obtain health insurance coverage of abortion procedures as part of the bill’s new individual mandate.

 

Funneling Patients into Government Care

Abolition of Private Insurance Market: The bill imposes new regulations on all health insurance offerings, with only limited exceptions. Existing individual market policies could remain in effect—but only so long as the carrier “does not change any of its terms and conditions, including benefits and cost-sharing” once the bill takes effect. With the exception of these grandfathered individual plans subject to numerous restrictions, insurance purchased on the individual market “may only be offered” until the Exchange comes into effect, thus abolishing the private market for individual health insurance and requiring all non-employer-based coverage to be purchased through the bureaucrat-run Exchange.

Employer coverage shall be considered exempt from the additional federal mandates, but only for a five year “grace period”—after which all the bill’s mandates shall apply. By applying new federal mandates and regulations to employer-sponsored coverage, this provision would increase health costs for businesses and their workers, encourage employers to drop existing coverage, and leave employees to access care through the government-run Exchange.

“Pay-or-Play” Mandate on Employers: The bill requires that employers offer health insurance coverage, and contribute to such coverage at least 72.5 percent of the cost of a basic individual policy—as defined by the Health Benefits Advisory Council—and at least 65 percent of the cost of a basic family policy, for full-time employees. The bill further extends the employer mandate to part-time employees, with contribution levels to be determined by the Commissioner, and mandates that any health care contribution “for which there is a corresponding reduction in the compensation of the employee” will not comply with the mandate—which would encourage them to lay off workers.

Employers must comply with the mandate by “paying” a tax of 8 percent of wages in lieu of “playing” by offering benefits that meet the criteria above. In addition, beginning in the Exchange’s second year, employers whose workers choose to purchase coverage through the Exchange would be forced to pay the 8 percent tax to finance their workers’ Exchange policy—even if they offer coverage to their workers.

The bill includes a limited exemption for small businesses from the employer mandate—those with total payroll under $500,000 annually would be exempt, and those with payrolls between $500,000 and
$750,000 would be subjected to lower tax penalties (2-6 percent, as opposed to 8 percent for firms with payrolls over $750,000). However, these limits are not indexed for inflation, and the threshold amounts would likely become increasingly irrelevant over time, meaning virtually all employers would be subjected to the 8 percent payroll tax.

The bill amends ERISA to require the Secretary of Labor to conduct regular plan audits and “conduct investigations” and audits “to discover non-compliance” with the mandate. The bill provides a further penalty of $100 per employee per day for non-compliance with the “pay-or-play” mandate—subject only to a limit of $500,000 for unintentional failures on the part of the employer.

The employer mandate would impose added costs on businesses with respect to both their payroll and administrative overhead. An economic model developed by Council of Economic Advisors Chair Christina Romer found that an employer mandate could result in the loss of up to 5.5 million jobs as employers lay off employees to avoid providing costly, government-forced health insurance.

Individual Mandate: The bill places a tax on individuals who do not purchase “acceptable health care coverage,” as defined by the bureaucratic standards in the bill. The tax would constitute 2.5 percent of adjusted gross income, up to the amount of the national average premium through the Exchange. The tax would not apply to dependent filers, non-resident aliens, individuals resident outside the United States, and those exempted on religious grounds. “Acceptable coverage” includes qualified Exchange plans, “grandfathered” individual and group health plans, Medicare and Medicaid plans, and military and veterans’ benefits.

For individuals with incomes of under $100,000, the cost of complying with the mandate would be under $2,000—raising questions of how effective the mandate will be, as paying the tax would in many cases cost less than purchasing an insurance policy. Despite, or perhaps because of, this fact, the bill language does not include an affordability exemption from the mandate; thus, if the many benefit mandates imposed raise premiums so as to make coverage less affordable for many Americans, they will have no choice but to pay an additional tax as their “penalty” for not being able to afford coverage. Then-Senator Barack Obama, pointed out in a February 2008 debate that in Massachusetts, the one State with an individual mandate, “there are people who are paying fines and still can’t afford [health insurance], so now they’re worse off than they were. They don’t have health insurance and they’re paying a fine.”

Medicare Advantage: The bill reduces Medicare Advantage (MA) payment benchmarks to levels paid by traditional Medicare—which provides less care to seniors—over a three-year period. This arbitrary adjustment would reduce access for millions of seniors to MA plans that have brought additional benefits.

The bill imposes requirements on MA plans to offer cost-sharing no greater than that provided in government-run Medicare, and imposes price controls on MA plans, limiting their ability to offer innovative benefit packages. This policy would encourage plans to keep seniors sick, rather than manage their chronic disease.

The bill also gives the Secretary blanket authority to reject “any or every bid by an MA organization,” as well as any bid by a carrier offering private Part D Medicare prescription drug coverage, giving federal bureaucrats the power to eliminate the MA program entirely—by rejecting all plan bids for nothing more than the arbitrary reason that an Administration wishes to force the 10 million beneficiaries enrolled in MA back into traditional, government-run Medicare against their will.
Tax Increases

Government-Forced Insurance Penalties: Offsetting payments to finance the government takeover of health care would include taxes on individuals not complying with the mandate to purchase coverage, as well as taxes and payments by businesses associated with the “pay-or-play” mandate.

Taxes on Small Businesses: The bill also imposes a new 5.4 percent “surtax” on individuals with incomes over incomes over $500,000 and families with incomes greater than $1 million. The tax would apply beginning in 2011. As more than half of all high-income filers are small businesses, this provision would cripple small businesses and destroy jobs during a deep recession.

Taxes on Health Plans: The bill prohibits the reimbursement of over-the-counter pharmaceuticals from Health Savings Accounts (HSAs), Medical Savings Accounts, Flexible Spending Arrangements (FSAs), and Health Reimbursement Arrangements (HRAs), and increases the penalties for non-qualified HSA withdrawals from 10 percent to 20 percent, effective in 2011. Because these savings vehicles are tax-preferred, adopting this prohibition would raise taxes by $8.2 billion over ten years, according to the Joint Committee on Taxation.

H.R. 3962 would place a cap on FSA contributions, beginning in 2012; contributions could only total $2,500 per year, subject to annual adjustments linked to the growth in general (not medical) inflation. Members may be concerned that these provisions would first raise taxes, and second—by imposing additional restrictions on health savings vehicles popular with tens of millions of Americans—undermines the promise that “If you like your current coverage, you can keep it.” At least 8 million individuals hold insurance policies eligible for HSAs, and millions more participate in FSAs. All these individuals would be subject to additional coverage restrictions—and tax increases—under this provision.

The bill also repeals the current-law tax deductibility of subsidies provided to companies offering prescription drug companies to retirees. Many may be concerned that this provision would lead to companies dropping their current coverage as a result.

Taxes on Health Products: Finally, H.R. 3962 would impose a 2.5 percent excise tax on medical devices, beginning in 2013. Many may echo the concerns of the Congressional Budget Office and other independent experts, who have confirmed that this tax would be passed on to consumers in the form of higher prices—and ultimately higher premiums.
Budgetary Gimmicks

Unpaid-For Doctor Fix: While the Democrats claim their bill is now deficit-neutral, the majority also introduced a separate piece of stand-alone legislation (H.R. 3961). The more than $200 billion cost of this legislation is not paid for, thus adding hundreds of billions of dollars in deficit spending and interest costs to the federal debt. Many may also note that the Congressional Budget Office recently analyzed similar legislation (S. 1776) as raising Medicare premiums by $70 billion.

Long-Term Care Program: The bill includes a new program for long-term care services that provides a benefit of at least $50 per day to individuals unable to perform certain functions of daily living. As the long-term care program requires individuals to contribute five years’ worth of premiums before becoming eligible for benefits, the program would find its revenue over the first ten years diverted to finance other spending in Democrats’ health care “reform.” However, the Congressional Budget Office, in analyzing similar provisions included in Section 191 of legislation considered by the Senate HELP Committee, found that “if the Secretary did not modify the program to improve its actuarial soundness, the program would add to future federal budget deficits in a large and growing fashion beginning a few years beyond the 10-year budget window.” As even Democrats such as Senate Budget Committee Chairman Kent Conrad (D-ND) have called the program a “Ponzi scheme,” many may find any legislation that relies upon such a program to maintain “deficit-neutrality” fiscally irresponsible and not credible.

Tax Increases on ‘Rich’ People Planned by Democrats Would Hit Over A Million Small Businesses

July 17, 2009

Let’s file this under the category, “Yet another stupid Democrat idea”: Let’s finance a socialized medicine plan that Americans don’t want by taxing the owners of small business who create the few jobs we’ve got left.

Tax Increase on ‘Rich’ People Planned by House Democrats Would Strike More Than a Million U.S. Small Businesses
Tuesday, July 14, 2009
By Christopher Neefus

(CNSNews.com) – More than a million small business owners and about two-thirds of the profits earned by U.S. small businesses would be hit by the income tax increase on the “rich” that House Democratic leaders want to enact to pay for the health-care reform plan President Obama wants passed this summer, a taxpayer watchdog say s.

Ryan Ellis, director of tax policy for Americans for Tax Reform, told CNSNews.com he calculated that 1.09 million of 21.5 million small business owners would see a one- to three-percent surtax on their profits in order to fund the House of Representatives’ trillion-dollar health care reform bill.

While only about five percent of small business owners would be exposed to the extra charge, Ellis says two in every three dollars of profit made by small businesses would be subject to it.

Rep. Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee, announced late Friday that Democrats want to enact  this tax increase.

The plan reportedly would include a one percent increase in the income tax rate paid by individuals earning $280,000 or more and by households earning at least $350,000. Steeper rate increases of up to three percent would be imposed on those earning $500,000 and $1 million or more. The committee hopes these income-tax rate increases will raise about $540 billion for the federal government over a decade.

Small business owners would be subject to the income-tax rate increases because many of them report the profits of their small businesses on individual tax returns. As a result, the roughly five percent who make more than $200,000 a year would be hit with the extra tax.

Ellis said the Obama administration’s claims that only a few small businesses will be affected misses the point. “(T)hat’s what the Obama guys will always tell you. It’s a small, single-digit percentage of small businesses that would be affected by this, and that’s absolutely true. It’s probably somewhere between five and 10 percent … of all small businesses.

“But if you actually look at the small business profits being reported, two-thirds of all small business profits are reported in these households.”

Indeed, IRS figures from 2006, the most recent year reported, show that $479 billion of the $707 billion in small business profits was reported by households in the top two percent of earners, those earning more than $200,000.

Republicans went on the offensive after Rangel’s Friday announcement. A spokesman for House Minority Leader John Boehner (R-Ohio) said, “In the middle of a serious recession, with unemployment nearing double digits nationwide, the last thing we need is a tax increase on small businesses, which will cost the American economy even more jobs.”

Blue Dog Democrats in the House also voiced some concern. Rep. Jason Altmire (D-Pa.) told CQ Today, “I have a concern with going outside the health care system” when discussing funding options.

“I feel like the House has moved this issue so far to the left we’ve taken ourselves out of the discussion entirely.”

But Ways and Means Committee member Rep. Allyson Schwartz (D-Pa.) told The Washington Post that “if (the bill) works right,” the high earners who pay extra taxes will also see lowered health insurance premiums.

Ellis, however, is skeptical. “If you’re a very successful company and you’re making more than a million dollars a year,” he said, then at “a three percentage point surtax, you basically have to assume that their healthcare costs will go down by 3 percent of their profits in order to even themselves out.”

“That’s just not reasonable to expect,” he told CNSNews.com. “(T)here’s not one example of where the government is going to go in and take over something and start spending money on something and then it saves money.”

Rea Hederman, assistant director of the Center for Data Analysis at the conservative Heritage Foundation, also said small business owners will not see their money back unless they force their employees to take the proposed public health care option.

“The only way they would see reductions in health care,” he said, “is if small businesses just say we’re not going to offer health care to our employees all together, and I don’t think that’s a direction that people want to go,” Hederman said.

While the surtax for small businesses may top out at three percent, Hederman said, “in percentage terms, the tax burden is jumping somewhere between four and a half to five percent, and this is going to be combined with the expiration of some of President Bush’s tax cuts.”

The health care surtax would come in addition to the scheduled expiration of the Bush tax cuts at the end of 2010, which will move the federal top rate from 35 percent to 39.6 percent.

In a statement, Thomas Hodge, president of the nonpartisan Tax Foundation, said total top rates, including federal taxes, could push past the 50 percent mark in some states.

“Combining top federal and state rates, and factoring in all deductions, the government would be taking over half of every additional dollar from high-income taxpayers in two-thirds of the states under this latest funding scheme.”

According to Hederman, “Unfortunately, right now, businesses are going to have trouble pricing in (these) cost increases.

“(So) businesses will continue to try to wring out as much efficiency as they can in the labor force, and that means cutting back hours and cutting back jobs,” he said.

A May 2009 survey performed by the National Federation of Independent Businesses, small business owners identified high taxes as the second biggest problem facing them, trailing only poor sales.

The tax increase, if enacted, would take effect in 2011.

People see the “small number” of small businesses affected by the tax and think it’s no big deal.  But think about it: there’s the difference between small businesses that are truly small and small business that are big enough to actually hire people.

When I was a kid I had a paper route.  I didn’t work directly for the newspaper; rather, I was listed as “an independent contractor.”

I had a small business.  And like the overwhelming majority of small businesses, I didn’t make a ton of money, and I certainly didn’t hire anybody.

The small businesses that are going to be the most impacted – and the most negatively impacted at that – are the ones that hire people.  And given that these small businesses are going to experience the double whammy of having to pay for Obama’s imposed health care burden even as their profits are taxed to pay for everyone else’s health care, there are going to be a lot of job losses, as surely as 1 + 1 = 2.  Only a fool, or a Democrat, would 1) raise a business’ cost while 2) reducing its profits and NOT expect that business to cut back.

The Democrats’ plan imposes an additional 8% payroll tax on businesses unless they meet the Democrats’ health care requirements.

Another (related) factor that needs to be contemplated emerges from thinking about the concern of the blue dog Democrats regarding going outside the health care system to fund the Obama health care system.  If the darn Democrat health care plan is REALLY something that will save money for the health care system, then why do you have to go outside the system to pay for it?  Why impose so much in additional taxes for something that is supposed to cost LESS? The fact of the matter is that this thing is going to cost TRILLIONS.  It will be like Medicare, with its $61.6 trillion unfunded liabilities, and which is expected to go completely bankrupt by 2015.

And a frightening corollary to that is exactly why people like me keep calling Obama’s health care grab “socialized medicine” to begin with.  Because the plan will necessarily push people into the government plan in FAR greater numbers than Democrats claim will go in.  Small business who employ most American workers, squeezed by the double whammy, will have absolutely no choice but to push their workers into the government plan.

Democrats naively argue that a government plan would not be intended to replace private health care plans, but would only reduce costs by “competition.”  They just don’t have enough functioning brain cells to understand that a government system – which does NOT have to depend upon profitability the way private systems do, and which can draw its funding by forcing even its competition to pay for it through taxation – doesn’t “compete.”  It devours.  The way Republican Rep. Mike Pence put it:

But what I heard yesterday at my town hall meeting was profound skepticism about the introduction of a government option to compete with private health insurance companies within this economy. I think most Americans know that the government competes with the private sector the way an alligator competes with a duck. It consumes it.

That, and of course, the fact that every conspiracy theory about government health care is about to come true: Democrats are openly claiming that they are going to use Obama’s health care plan as a backdoor to socialized medicine.

Bottom line: we’re going to tax our producers into non-producers in order to create a socialized medicine boondoggle that is going to be a disaster.

It is long past time we stopped listening to liberals’ Marxist class warfare messages.  The rich aren’t the bourgeoisie, and the rest of us aren’t the proletariat.  Rather than welcoming the government seizing the rich’s wealth to create one social program after another, we seriously need to start demanding that government finally get the hell out of the way and let all the people have the freedom to invest and spend as we see fit.  For it is liberty and freedom, rather than tyranny and big-government control, that made this country great.  And only returning to the fundamental principles of liberty and freedom are going to be able to get us out of the massive crisis that too much government has forced us into.

WSJ Obama Tax 3.0: When even 3 times is NOT a charm

September 10, 2008

The Wall Street Journal offered a publication-wide editorial that pointed out the fact that Barack Obama’s economic plan is now undergoing its third incarnation.

The Obama campaign has been attacking the Bush economic plan, and trying to label McCain’s economic plan for being a “third Bush term.”  But at least they have a plan; Obama now has three.

A pandering-based economic plan that shifts as the winds blow is not one that is worthy of trust.

Read The Wall Street Journal editorial:

Obama Tax 3.0
September 9, 2008; Page A24

The good news is that Barack Obama said on ABC Sunday that he might not go through with his plans to increase taxes.

The bad news is that the economy has to be mired in recession to avoid the largest tax increase in the nation’s history.

Our check of the Dow Jones Factiva database suggests that other than viewers of ABC’s “This Week,” only three or four newspapers carried an account of Senator Obama’s amended tax plan. While it’s possible that the story of a deferred tax increase could shock the media into paralysis, we take it as an encouraging sign. The education of Barack Obama continues apace.

For the record, here is what he told ABC’s George Stephanopoulos.

Mr. Stephanopoulos: “So even if we’re in a recession next January, you come into office, you’ll still go through with your tax increases?”

Senator Obama: “No, no, no, no, no. What I’ve said, George, is that even if we’re still in a recession, I’m going to go through with my tax cuts. That’s my priority.”

Mr. Stephanopoulos: “But not the increases?”

Senator Obama: “I think we’ve got to take a look and see where the economy is. The economy is weak right now. The news with Freddie Mac and Fannie Mae, I think, along with the unemployment numbers indicates that we’re fragile. I want to accelerate those tax cuts through a second stimulus package, get more money into the pockets of ordinary Americans, see if we can stabilize the housing market, and then we’re going to have to reevaluate at the beginning of the year to see what kind of hole we’re in.”
* * *

Even individuals staring down the barrel of Mr. Obama’s tax increases should not wish for an economic recession to give them a reprieve. The relevant point is that it was early last year, when the “Bush economy” was still humming, that Senator Obama first proposed pushing taxes sharply upward on “the wealthy,” while giving what he calls “tax cuts” (actually they are credits, not rate reductions) to “the middle class.”

At the time, Mr. Obama was the long shot in the Democratic Presidential sweepstakes, and it made some political sense to reassure the party’s intensely liberal primary voters with class-war boilerplate on taxes.

Under ObamaTax 1.0, he would have repealed all the Bush tax cuts, lifted the cap on wages subject to the payroll tax, put the top marginal rate up to 39.8% and raised the rate on capital gains and dividends to at least 25% from 15% now. The official campaign line was that tax rates really don’t matter to economic growth.

Summer arrived, the Clinton challenge was history and with the general election ahead came ObamaTax 2.0. It posited that the top rate on capital gains now would be 20%, described on this page August 14 by economic advisers Jason Furman and Austan Goolsbee as “almost a third lower than the rate President Reagan set in 1986.” This was progress.

Now with the big vote less than 60 days off and John McCain pounding him as a tax-raiser and pulling ahead in some polls, the Democratic nominee has decided to release ObamaTax 3.0, the most interesting upgrade so far. If the economy is still weak in January, a President Obama might defer all of the planned increases.

Several interpretations of this shift are possible, none of which reflect badly on Senator Obama’s political learning curve.

At the bloodless level of simply wishing to win, the Obama camp may have concluded that in the sprint to November it is a losing strategy to be the election’s only doctrinaire tax raiser. A tight race tends to focus political minds, and none forget Walter Mondale’s catastrophic promise in his 1984 acceptance speech: “Mr. Reagan will raise taxes, and so will I. He won’t tell you. I just did.”

Beyond this lies the economic reality of jacking up income, investment and payroll taxes on “the wealthy” amid a flat or falling economy. In the standard narrative, these taxpayers exist as fat cats atop hedge funds, banks and megacorporations. Let’s toss into the vat the top-tier managers of Fannie Mae and Freddie Mac, the Beltway’s own fat-cat sinecure.

The reality is that the creators of new jobs in the economy are more likely to be rising entrepreneurs or filers under Subchapter S, who typically pay taxes at individual rates. Hanging three or four tax millstones around their productive necks in January if the economy is weak will likely produce unimpressive growth and job numbers in the first year of the new Obama Presidency, and likely beyond. That in turn could drag down the Democrats in Congress who will get credit for voting these higher taxes into law.

Thus Mr. Obama’s unambiguous answer Sunday to whether he’d insist on his tax increases if the economy is in an official recession: “No, no, no, no, no.” It seems Mr. McCain is right that taxes do matter.

Mr. Obama’s most ardent primary supporters may not like it, but we’ll take the five “Nos” as evidence that Senator Obama may be learning the difference between liberal doctrine and sensible governance.

John Edwards’ “two Americas” is little different philosophically from Karl Marx’s “two classes” (i.e., the bourgeousie and the proletariat).  And Barack Obama is merely beating on the same old economic drum that the far left have been beating for years.

It is the wealthy who create jobs by their leadership, their investment, and yes, their hard work (If you don’t believe me, find a homeless guy and ask him to give you a job).  The simple fact of the matter is that if the wealthy lose their incentive to work and invest, the economy will tank as they withdraw from the market and shelter their assets.

According to the Congressional Budget Office figures (Historical Effective Federal Tax Rates: 1979-2005, released December 2007) on “Individual Income Taxes”:

The top         1% Pays 38.8%
The top       20% Pays 86.3%
The top       40% Pays 99.5%
The bottom 60% Pays 0.6%

The actual facts are just the opposite from what we are routinely told, aren’t they?  Let me put it in capital letters so you can see it better: THE WEALTHIEST 40% OF AMERICANS PAY 99.5% OF THE INCOME TAXES!!! And they’re not paying their fair share?  The Democrats and the media have won the case in the culture by misrepresenting the truth.

And we see a continuation of a deliberate attempt to distort the truth: every time Barack Obama claims that he will cut taxes for 95% of Americans he is lying: the overwhelming majority of the Americans Obama is describing already pay no federal taxes! You can’t divide by zero anymore in economics than you can in mathematics.

When the Bush tax cuts took effect, it threw a lot of people (in that 60% group) off the tax roles entirely, and created a new lower tax rate (people who’d been paying 15% rate paid a 10% rate, etc).  It is a flat out lie to say that the rich benefited unfairly from the Bush tax cuts.

Further, the Bush tax cuts not only increased the total revenues collected by the government, and not only increased the total taxes collected from the rich, but it also increased the actual rate of taxes that the rich paid relative to lower income classes.  And it did so by giving them an incentive to invest more, and produce more.

If I may quote from one of my previous articles:

And not only do the rich pay a higher percentage of their wealth in taxes under the lower taxes of the Bush plan, but they pay a higher ratio of their wealth in taxes than they did when the rates were higher:

for the top 5 percent and 10 percent of earners, the ratio of taxes paid compared with income earned has risen. For example, in 1980, the top 10 percent earned 32 percent of the income and paid 44 percent of the taxes—a ratio of 1.4. In 2004, this group earned more of the income (44 percent) but paid a lot more of the taxes (68 percent)—a ratio of 1.6. In other words, progressivity—in terms of share of total taxes paid—has risen. On the other hand, for the top 1 percent of earners, progressivity has declined from a ratio of 2.2 in 1980 to 1.9 in 2004.

Finally, corporations currently pay a 35% federal tax rate.  Republican Presidential hopeful John McCain wants to reduce that to 25%. Why?  Because he’s trying to make the U.S. more competitive, that’s why! The world average corporate income tax rate for industrial democracies is 24%. The 35% rate – which is the 2nd highest corporate tax rate in the world – makes the U.S. less competitive.  You want to know why jobs are going overseas?  There’s one of the big reasons.  Some of the others are the demands of American labor unions, environmental regulations, the lack of protection from frivilous lawsuits, etc.  But those issues are for another day, and will certainly not be solved by punitive tax rates that only undermine our economy and our jobs.