Rich Bastards!
The Problem With Socialism Is That Eventually You Run Out Of Other People's Money
Taxing the rich seems to be Barack Obama's favorite past time. He is a man obsessed with how much people earn and how he can confiscate that money for his own uses. If you listen to the President on a daily basis, you'll hear him spout such lies as the rich don't pay their fair share and the deficit and debt crisis can be fixed by asking those at the very top to pay just a little bit more. My personal favorite Obama whopper is when he suggests that it is just "millionaires and billionaires" who must "contribute" more when the truth is he is really talking about anyone making $250,000 or more. Anyone that spends any time within the sound of his voice (and considering how often he is on TV that's a lot of people) will hear one or another version of this tax the rich meme. The man is a certifiable fanatic when it comes to the subject of other people's money!
President Obama pushes these fictitious memes, not just because they are the only focus group tested strategies that give him the slimmest of branches to hold onto in the ideological debate over the need to deal with entitlements, but because it is his fundamental belief that all money really belongs to the "nation" and must be redistributed to make things fair. In this radical belief, he is like Michael Moore:
President Obama pushes these fictitious memes, not just because they are the only focus group tested strategies that give him the slimmest of branches to hold onto in the ideological debate over the need to deal with entitlements, but because it is his fundamental belief that all money really belongs to the "nation" and must be redistributed to make things fair. In this radical belief, he is like Michael Moore:
Ignorance on parade! Note how Moore says that all this "cash" is a national resource that is "ours" and not the property of the people who earned it. When Barack Obama says that tax hikes are really spending cuts and calls them "tax expenditures" to the ridicule of just about everyone, he is singing from the same hymnal as his ideological soul mate Michael Moore. To wit, he is taking the philosophical position that all earnings belong to the government and that the purpose of the tax code is to tell the citizens how much they'll be allowed to keep. The money that you earned that the One in his graciousness allows you to hold onto are the "expenditures" that government is showering on you in their benevolence. This is what Obama truly believes. Ridiculous, no? I am not the only one who thinks so:
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When Barack Obama calls taxes an"expenditure" of government, he is saying that We The People do not own the fruits of our labor. I know that words are fungible, but when you start talking about taxes as expenditures of the government you have crossed a major Rubicon. The truth is that the money you earn is actually yours by law until the government takes their piece. It is yours first, then it is taxed by the government. This radical idea is known as private property and every citizen's right to it is enshrined in the Constitution. Because of the President's tortured reading of our founding document, he truly believes that, whatever you have personally achieved in life, "you didn't build that" because government helped you and, thus, you didn't really earn it. All of us collectively helped you to be who you are and earn what you did so you owe a "hunk" of it back to us. Fork it over and be grateful for society's benevolence in allowing you to keep some of it. This type of collectivist mentality so often expressed by President Obama convinces me and many other Americans that he is a socialist at heart.
When Barack Obama calls taxes an"expenditure" of government, he is saying that We The People do not own the fruits of our labor. I know that words are fungible, but when you start talking about taxes as expenditures of the government you have crossed a major Rubicon. The truth is that the money you earn is actually yours by law until the government takes their piece. It is yours first, then it is taxed by the government. This radical idea is known as private property and every citizen's right to it is enshrined in the Constitution. Because of the President's tortured reading of our founding document, he truly believes that, whatever you have personally achieved in life, "you didn't build that" because government helped you and, thus, you didn't really earn it. All of us collectively helped you to be who you are and earn what you did so you owe a "hunk" of it back to us. Fork it over and be grateful for society's benevolence in allowing you to keep some of it. This type of collectivist mentality so often expressed by President Obama convinces me and many other Americans that he is a socialist at heart.
That said, the reason that Obama's primary response to the deficit problem is a knee jerk call to raise taxes isn't just the ability to exploit the poll tested resentment that some segments of America have for the "millionaires and billionaires. The real reason he wants higher taxes on the rich is because he would like to spend more, not less, and he thinks that the level of social inequities in our society demand that those who have should give more to those who have not since it is not really "their" money, but "our" money. To do otherwise, in Obama's words, would be un-American. To him, it really is a question of morality - collectivist morality. It is about fairness. In this, his words and actions make it crystal clear that the Saul Alinsky Socialist who used to teach this kind rot to young skulls full of mush when he taught law school still holds these radical views.
I know that in the President's mind he feels he is above petty emotions like selfishness. Of course, it's easier to act this way when you are already successful and rich and are guaranteed bucketloads more money in the future. But, what about those that are still trying to climb up the ladder? What about those who would use that extra $200,000 to grow their business and hire new employees? Barack Obama's answer to these ambitious and hard working individuals is that he is wiser and more selfless than they are. He will make better decisions in the name of social justice than they will acting out of their own selfish motives.
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That's what I think should trouble most Americans when they hear what their President has to say in the above passage. The One actually has the temerity to believe that he is wiser and more well meaning than the individual citizens he serves. Honestly, I have no idea where he gets the idea that a government that can't balance its books, run Amtrack or the US Postal service and wastes hundreds of billions of dollars every year on pork barrel bridges to nowhere will spend your money better than you can yourself. But, the truth is that President Obama doesn't want you to have that choice because in his mind, you don't "need" that money as much as his public union allies or whatever constituency's vote he is buying today.
You know what? The Obama family's finances are none of our business. As far as I am concerned, it doesn't matter whether Barck and Michelle do or don't "need" the extra $200,000. It is their money and they can do with it what they want. If Barack wants to set an example of selflessness from the bully pulpit of the presidency, he can donate the cash he doesn't "need" to charity. He can create a private scholarship fund to help that parent he seems so concerned about to send their kid to college. Barry can even buy Michelle that $6,000 dress she has her eye on. Again, it's no one's business but theirs what they choose to do.
However, when the President makes everyone's finances his business and feels that he has the moral authority to tell you what you need and don't need, he is also making a justification for unlimited taxation like his father before him who called for 100% taxes on everyone. Today it's those greedy billionaires, millionaires and 250k'ers. Given the nature of the debt he is racking up and the spending on social justice he feels is necessary, tomorrow it will turn out that everyone has more than they "need" and should hand over that excess cash to the government. If you really think about what the President is saying in the above piece, anyone who needs your hard earned wages more than you deserves it because we must all contribute for the benefit of the entire collective not our greedy selfish desires. Sounds a lot like Socialism to me.
It's not as if the case can be made that the current tax code isn't progressive in the extreme:
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That's what I think should trouble most Americans when they hear what their President has to say in the above passage. The One actually has the temerity to believe that he is wiser and more well meaning than the individual citizens he serves. Honestly, I have no idea where he gets the idea that a government that can't balance its books, run Amtrack or the US Postal service and wastes hundreds of billions of dollars every year on pork barrel bridges to nowhere will spend your money better than you can yourself. But, the truth is that President Obama doesn't want you to have that choice because in his mind, you don't "need" that money as much as his public union allies or whatever constituency's vote he is buying today.
You know what? The Obama family's finances are none of our business. As far as I am concerned, it doesn't matter whether Barck and Michelle do or don't "need" the extra $200,000. It is their money and they can do with it what they want. If Barack wants to set an example of selflessness from the bully pulpit of the presidency, he can donate the cash he doesn't "need" to charity. He can create a private scholarship fund to help that parent he seems so concerned about to send their kid to college. Barry can even buy Michelle that $6,000 dress she has her eye on. Again, it's no one's business but theirs what they choose to do.
However, when the President makes everyone's finances his business and feels that he has the moral authority to tell you what you need and don't need, he is also making a justification for unlimited taxation like his father before him who called for 100% taxes on everyone. Today it's those greedy billionaires, millionaires and 250k'ers. Given the nature of the debt he is racking up and the spending on social justice he feels is necessary, tomorrow it will turn out that everyone has more than they "need" and should hand over that excess cash to the government. If you really think about what the President is saying in the above piece, anyone who needs your hard earned wages more than you deserves it because we must all contribute for the benefit of the entire collective not our greedy selfish desires. Sounds a lot like Socialism to me.
It's not as if the case can be made that the current tax code isn't progressive in the extreme:
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Despite how ideologically repellant I find President Obama's philosophy on taxation to be, that is the least of my concerns. In this time of economic and fiscal crisis, what worries me the most is that President Obama gives every indication that he doesn't care about either the truth or the economic ramifications of his proposals as long as they promote his concept of what is "fair" and what is good for the Democrat party. For instance, a lot of the money that the government "redistributes" goes to rich people in the form of Medicare subsidies and Social Security cost of living adjustments. But, you don't hear Barry talking about those kinds of actual "expenditures" in the same way he talks about the tax "expenditures" given to millionaires and billionaires, do you? Of course not. That would just expose his utter hypocrisy. It would also mean that people would begin to question the very concept and, yes, the fairness of the vote buying scam he and his party rely on to win elections.
However, even this, hypocritical as it is, misses the most important point of all. Tax rates influence economic activity. At a time of anemic job growth and rampant unemployment, is it more important that some people get a subsidy to help defray the cost of college or that junior has a job to go to once he graduates? And what about the parents of this student? Is it more important that they have jobs to help pay for the cost of college or that they get an extra couple of grand from the government for a tuition they can no longer afford because they are unemployed? Economics does not occur in a vacuum. Raising taxes has consequences regardless of who is asked to "contribute" more.
President Obama himself has admitted he knows this:
Despite how ideologically repellant I find President Obama's philosophy on taxation to be, that is the least of my concerns. In this time of economic and fiscal crisis, what worries me the most is that President Obama gives every indication that he doesn't care about either the truth or the economic ramifications of his proposals as long as they promote his concept of what is "fair" and what is good for the Democrat party. For instance, a lot of the money that the government "redistributes" goes to rich people in the form of Medicare subsidies and Social Security cost of living adjustments. But, you don't hear Barry talking about those kinds of actual "expenditures" in the same way he talks about the tax "expenditures" given to millionaires and billionaires, do you? Of course not. That would just expose his utter hypocrisy. It would also mean that people would begin to question the very concept and, yes, the fairness of the vote buying scam he and his party rely on to win elections.
However, even this, hypocritical as it is, misses the most important point of all. Tax rates influence economic activity. At a time of anemic job growth and rampant unemployment, is it more important that some people get a subsidy to help defray the cost of college or that junior has a job to go to once he graduates? And what about the parents of this student? Is it more important that they have jobs to help pay for the cost of college or that they get an extra couple of grand from the government for a tuition they can no longer afford because they are unemployed? Economics does not occur in a vacuum. Raising taxes has consequences regardless of who is asked to "contribute" more.
President Obama himself has admitted he knows this:
There you have it. Tax hikes should be enacted after he is re-elected and when, as a result of the genius of his economic plan the economy would be booming and job creation would be less adversely impacted. Yet, despite the fact that the economy remains stagnant and moribund, Obama is already calling for tax hikes anyway. Which is it Barry? Does increasing taxes hurt job creation or not? If it did two or three years ago when the economy sucked why doesn't it today when the economy sucks just as bad? Hmmm?
President Obama also seems to recognize that less the government confiscates people's earnings the more they have available to spend or invest in the private sector. He even recognizes that this is good for the economy:
President Obama also seems to recognize that less the government confiscates people's earnings the more they have available to spend or invest in the private sector. He even recognizes that this is good for the economy:
However, Obama's antipathy for the "rich" is so great that he doesn't care that wealthy people might also need thingamajigs for their furnaces and that this is good for the economy too. Wealthy people also buy cars and boats. They even provide the seed capital for companies trying to grow and create jobs. Imagine that! But, Barry feels that it is more important that the tax code be "fair" than make economic sense. Middle class people buying thingamajigs is ok, but wealthy people doing so is selfish and immoral? Insane, eh?
You've heard of having ideological blinders? Well, this is Obama's. As an Alinskyite, he just cannot fully embrace the concept that in order for the golden goose to lay eggs it must be fed properly and that when you take away the feed (capital) for the sake of "fairness", the goose lays fewer eggs and impoverishes everyone as a result. Barack Obama would have watched the Maggie Thatcher clip on Socialism that leads the "F*ck The Poor" chapter and agreed with the Labourite. He'd be willing to accept less growth if the disparity between the richest and the poorest were less. Obama, like most Democrats, fundamentally believes that life is a zero sum game: when someone wins someone else loses. According to that theory, the pie is only so large and, thus, should be distributed as evenly as possible. This is just basic Socialist doctrine. The kind Barry would have learned at Columbia. Believe me, I know.
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A Supply Sider like myself, would say that if you feed the goose particularly well, she'll lay even more eggs for you to distribute so that you end up with a much larger pie. Obviously, you want to feed her not too little or too much, but just the right amount. That is the basis behind the famous Laffer curve that is the cornerstone of Supply Side economics.
You've heard of having ideological blinders? Well, this is Obama's. As an Alinskyite, he just cannot fully embrace the concept that in order for the golden goose to lay eggs it must be fed properly and that when you take away the feed (capital) for the sake of "fairness", the goose lays fewer eggs and impoverishes everyone as a result. Barack Obama would have watched the Maggie Thatcher clip on Socialism that leads the "F*ck The Poor" chapter and agreed with the Labourite. He'd be willing to accept less growth if the disparity between the richest and the poorest were less. Obama, like most Democrats, fundamentally believes that life is a zero sum game: when someone wins someone else loses. According to that theory, the pie is only so large and, thus, should be distributed as evenly as possible. This is just basic Socialist doctrine. The kind Barry would have learned at Columbia. Believe me, I know.
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A Supply Sider like myself, would say that if you feed the goose particularly well, she'll lay even more eggs for you to distribute so that you end up with a much larger pie. Obviously, you want to feed her not too little or too much, but just the right amount. That is the basis behind the famous Laffer curve that is the cornerstone of Supply Side economics.
Finding that magical mixture of feed so that the goose will produce the maximum number of golden eggs is the supply side ideal. Any other approach to the discussion of what the proper tax rate should be is self-defeating. The goal is to find the lowest possible rate that brings in the maximum revenue. Thus, it is far better to tax at 20% than 80% if the revenue raised is the same:
Therefore, the only kind of discussion on revenues that reasonable and logical people should be having in how to reduce the deficit must be solely devoted to determining what the is the optimum tax rate to bring about the maximum amount of prosperity which will in turn bring in the most money to the treasury. Discussions on taxes should have absolutely zero to do with whether one group is paying their fair share, is "sacrificing" enough or any other kind of appeal to emotions or resentments. However, because of his fundamental philosophical outlook, our President either cannot or will not enter this discussion based on a rational discussion of the best way to maximize revenue:
Forget about the fact that Senator Obama threw all those great sounding pay as you go bromides out the window the minute he became President, note that in his remark that he doesn't give a flying leap if revenues go down or up as a result of raising the capital gains tax, he wants to raise it solely for the sake of "fairness". Someone, who has this rigid moralistic point of view cannot engage in a rational debate on taxes because it is always about what is "fair" as opposed to what is most "effective". And anyone wonders why our economy has been so moribund since this left-wing ideologue took office?
Governing by emotion rather than by logic and reason usually leads to bad results and unintended consequences. Years ago, the Democrats thought they'd stick it to the rich by taxing yachts and luxury boats. They played on people's resentment and envy of all of those rich people living the good life while the rest of us were suffering. This soak the rich legislation was very popular with many Americans. That is until the US boating industry collapsed and thousands of jobs were lost. Sheepishly, the Democrats quietly revoked the tax.
But, did they learn from the lesson? Of course not. Why, just the other day the White House was asked why they wanted to target the oil companies for a tax increase. Who can object to that, right? Everyone hates the Big Oil companies. Why should they get tax subsidies? It isn't fair! That's the message that Democrats send into the Matrix and hope you will accept at its emotional face value:
Governing by emotion rather than by logic and reason usually leads to bad results and unintended consequences. Years ago, the Democrats thought they'd stick it to the rich by taxing yachts and luxury boats. They played on people's resentment and envy of all of those rich people living the good life while the rest of us were suffering. This soak the rich legislation was very popular with many Americans. That is until the US boating industry collapsed and thousands of jobs were lost. Sheepishly, the Democrats quietly revoked the tax.
But, did they learn from the lesson? Of course not. Why, just the other day the White House was asked why they wanted to target the oil companies for a tax increase. Who can object to that, right? Everyone hates the Big Oil companies. Why should they get tax subsidies? It isn't fair! That's the message that Democrats send into the Matrix and hope you will accept at its emotional face value:
There, you see! It's about fairness! Except that it isn't the Big Oil companies that recieve these $4 Billion in subsidies. Either the Obama administration is ignorant of this salient fact or they are lying on purpose just so they can score political points by attacking Exxon, Shell and BP. But, do you know who does understand that the recipients of this tax break are the small independent oil companies who are repsonsible for the risky business of domestic drilling? Why that idiot Sarah Palin:
Guess what the policy impact will be when you take away the tax incentives to drill for oil? You get fewer companies willing to make what is often a very expensive gamble. You might hit a gusher or you could hit a bunch of dry or under-performing wells. The science of oil geology is much better than it was in the Texas wildcatting days, but it is still far from perfect. It is still a very risky bet. By ending the subsidy that makes it profitable for small firms to drill here in the US, it means less domestic production, more imported oil and higher prices at the pump. These are the wages of Democrat "fairness". That is why morality and emotion have no place in any conversation about tax policy. The purpose of the tax code is not to enforce any ideologies, moral dictates or to settle a score with the rich oil companies. It is to raise revenue for the government and promote sound economic policy. Period.
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Unfortunately, the Democrat party and Barack Obama are wedded to the class warfare argument. It allows them to make the case that they are the party of the working man while Republicans only care about their rich buddies. They are the only ones who care about granny, you see? So, it would be wrong to give oil companies a subsidy if that means that granny must be thrown off the cliff. That the impact of their policies would more likely result in raising granny's gas prices while having no impact on her situation vis a vis the cliff is irrelevant. Those are just inconvenient facts.
Who cares about facts when effective media spin has nothing to do with truth, logic or evidence. Spin is all about perception. As long as the media Matrix dutifully presents Democrats as the caring defenders of the common man going to war with those evil Big Oil barons while also ommitting the evidence of the likelihood of painful unintended consequences, those on the left will always win the partisan battle. That they screw the country in so doing matters little as long as they get to maintain and increase their power.
The ultimate example of a fraudulent Democrat class warfare argument that sounds great to many people, but that is absolutely counterproductive from an economic standpoint is the Buffet Rule requiring a 30% minimum tax on all income over a million dollars. Who can forget President Obama during the 2012 State of the Union Address introducing us to Warren Buffet's secretary and explaining how old Warren paid a lower tax rate than she did. It is unfair! It is wrong! It must be changed! Better yet, righting this wrong will fix our deficit, grow our economy and stop the rising of the oceans. Hallelujah!
Sounds great doesn't it? Surely, a secretary shouldn't pay less than her boss, right? I think that most people would agree with that statement... if it were true. However, it is entirely false. First of all, the reason that Warren Buffett pays at a lower tax rate than his secretary is because most of his income comes in the form of capital gains. Money used for investments have already been taxed at least once as ordinary earned income. In addition, as the Wall Street Journal points out:
The Buffett rule is rooted in the fairy tale that taxes on the wealthy are lower than on the middle class. In fact, the Congressional Budget Office notes that the effective income tax rate of the richest 1% is about 29.5% when including all federal taxes such as the distribution of corporate taxes, or about twice the 15.1% paid by middle-class families. (See "How Much the Rich Pay," January 23, 2012.)
This is because wealthy tax filers make most of their income from investments. Such income is taxed once at the corporate rate of 35% and again when it is passed through to the individual as a capital gain or dividend at 15%, for a highest marginal tax rate of about 44.75%.
This double taxation is one reason the U.S. has long had a differential tax rate for capital gains. Another reason is because while taxpayers must pay taxes on their gains, they aren't allowed to deduct capital losses (beyond $3,000 a year) except against gains in the current year. Capital gains also aren't indexed for inflation, so a lower rate is intended to offset the effect of inflated gains.
The President is counting on the fact that most people are ignorant of this boring, green eye shade accounting gobbledygook about taxation and he knows that the mainstream media Matrix will do their best to keep them that way. Thus, using Obamanumbers old Warren pays a lower tax rate than that nice old lady who slaves away for him from sunup to sundown. I wish I could say that this was the end of Obama's dishonesty on this subject, but I can't:
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Unfortunately, the Democrat party and Barack Obama are wedded to the class warfare argument. It allows them to make the case that they are the party of the working man while Republicans only care about their rich buddies. They are the only ones who care about granny, you see? So, it would be wrong to give oil companies a subsidy if that means that granny must be thrown off the cliff. That the impact of their policies would more likely result in raising granny's gas prices while having no impact on her situation vis a vis the cliff is irrelevant. Those are just inconvenient facts.
Who cares about facts when effective media spin has nothing to do with truth, logic or evidence. Spin is all about perception. As long as the media Matrix dutifully presents Democrats as the caring defenders of the common man going to war with those evil Big Oil barons while also ommitting the evidence of the likelihood of painful unintended consequences, those on the left will always win the partisan battle. That they screw the country in so doing matters little as long as they get to maintain and increase their power.
The ultimate example of a fraudulent Democrat class warfare argument that sounds great to many people, but that is absolutely counterproductive from an economic standpoint is the Buffet Rule requiring a 30% minimum tax on all income over a million dollars. Who can forget President Obama during the 2012 State of the Union Address introducing us to Warren Buffet's secretary and explaining how old Warren paid a lower tax rate than she did. It is unfair! It is wrong! It must be changed! Better yet, righting this wrong will fix our deficit, grow our economy and stop the rising of the oceans. Hallelujah!
Sounds great doesn't it? Surely, a secretary shouldn't pay less than her boss, right? I think that most people would agree with that statement... if it were true. However, it is entirely false. First of all, the reason that Warren Buffett pays at a lower tax rate than his secretary is because most of his income comes in the form of capital gains. Money used for investments have already been taxed at least once as ordinary earned income. In addition, as the Wall Street Journal points out:
The Buffett rule is rooted in the fairy tale that taxes on the wealthy are lower than on the middle class. In fact, the Congressional Budget Office notes that the effective income tax rate of the richest 1% is about 29.5% when including all federal taxes such as the distribution of corporate taxes, or about twice the 15.1% paid by middle-class families. (See "How Much the Rich Pay," January 23, 2012.)
This is because wealthy tax filers make most of their income from investments. Such income is taxed once at the corporate rate of 35% and again when it is passed through to the individual as a capital gain or dividend at 15%, for a highest marginal tax rate of about 44.75%.
This double taxation is one reason the U.S. has long had a differential tax rate for capital gains. Another reason is because while taxpayers must pay taxes on their gains, they aren't allowed to deduct capital losses (beyond $3,000 a year) except against gains in the current year. Capital gains also aren't indexed for inflation, so a lower rate is intended to offset the effect of inflated gains.
The President is counting on the fact that most people are ignorant of this boring, green eye shade accounting gobbledygook about taxation and he knows that the mainstream media Matrix will do their best to keep them that way. Thus, using Obamanumbers old Warren pays a lower tax rate than that nice old lady who slaves away for him from sunup to sundown. I wish I could say that this was the end of Obama's dishonesty on this subject, but I can't:
Don't you just love how the Obama administration cooks to books to say that 2 + 2 = 5? But, the lies, misinformation and distortions continued. Obama was even willing to go so far as to invoke the sainted conservative Ronald Reagan to support his proposal:
Okay, Okay. Facts schmacts! This is about fairness! This is about making the rich pay their fair share so that granny doesn't get tossed into the street with her autistic grandkid! Well, actually, that isn't true either. It turns out that Obama's grand scheme that he has spent all this time and effort promoting will only raise a little more than $3 Billion/year:
To give you an idea how truly miniscule and meaningless the Buffet tax is, Ed Morrissey of Hot Air crunched some numbers:
Here are Obama’s budget-projection deficits for the next four years, from the CBO using Obama’s rose-colored glasses economic scenarios:
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Can you imagine that all this time was wasted and those lies were foisted on the American people for a pathetic result like that? Why does the President persist with this nonsense? Because for Barack Obama, the tax code is about two things: "fairness" and class warfare for partisan advantage. The Buffett rule was all about the theater of going after a fake injustice rather than the actual reality about taxation and how it works. It was also yet another way that Barack Obama and the Democrats could pretend that taxing the rich would fix all of our problems:
Here are Obama’s budget-projection deficits for the next four years, from the CBO using Obama’s rose-colored glasses economic scenarios:
- FY 2012 (current year) – $1.3 trillion
- FY 2013 – $977 billion
- FY 2014 – $702 billion
- FY 2015 – $539 billion
- FY 2016 – $529 billion
- 0.23% of the FY2012 deficit
- 0.31% of the FY2013 deficit
- 0.43% of the FY2014 deficit
- 0.56% of the FY2015 deficittol
- 0.57% of the FY2016 deficit
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Can you imagine that all this time was wasted and those lies were foisted on the American people for a pathetic result like that? Why does the President persist with this nonsense? Because for Barack Obama, the tax code is about two things: "fairness" and class warfare for partisan advantage. The Buffett rule was all about the theater of going after a fake injustice rather than the actual reality about taxation and how it works. It was also yet another way that Barack Obama and the Democrats could pretend that taxing the rich would fix all of our problems:
As Charles Krauthammer rightly observes, taxing the rich cannot solve our deficit problems. What Barack Obama and the Democrats are trying to sell the American people as an answer to our debt problem is a fairy tale:
To many people who don't watch Fox News or Rick Santelli on CNBC and are still stuck in the Matrix, the snake oil about taxes that the One is selling seems like the best and least painful medicine for what ails the nation. It would seem logical to observe how much money the "rich" have and how well off we Americans are in general and deduce that surely there is an abundance of money to be taxed (confiscated) to fix our deficit problems. Indeed, when you look around at all the McMansions, BMW's, Yachts and the other trappings of the well to do, it is easy to believe that there are literally mountains of cash that are available to be taxed from the greedy rich folk that spending need never be cut. The rich bastards will pay for it! But, the truth is very different:
Tax the rich, fry them up in a pan and eat them all you want, we still cannot pay for the amount of money we are currently spending, much less what we are projected to spend. But, what about ending the Bush Tax cuts for the wealthy? Barry and the Democrats talk about that constantly as the ultimate fix for our financial problems Surely, that will bring in enough money to at least make a major dent in the deficit, right? Nope, not even close.
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The Congressional Budget Office estimates that the projected cost to the treasury of the continuation of the Bush tax cuts over the next ten years is $3.7 trillion. This works out to 370 billion a year assuming (and its a big assumption) that raising the rates doesn't impede economic growth or cause people to shelter their money which could lower those revenue numbers dramatically. We currently have a deficit of 1.2 trillion per year... so we can barely get the deficit under a trillion by returning to Clinton rates... ah but wait... you see, three trillion of that money goes to people who make less than 250k and Obama has said he is unalterably opposed to raising taxes on these people. That wouldn't be "fair" or good for his prospects for re-election.
Therefore, we are left with $50-70 billion/year from the “rich”, which is a drop in the bucket given the size of the deficits we've been running. Even given those optimistic projections (I'd say the amount of actual revenue received by the Treasury will be half that or less as the rich do everything in their power to shelter their money) the increase in revenue is less than six percent of what is needed to balance the budget. That means that we've still got 94% of the way left to go. Therefore, to make raising taxes on the wealthy the centerpiece of a "balanced" approach to deficit reduction is totally unserious and not even to be mentioned prominently in any credible debate over how to save the country from fiscal ruin. This is Obama and the Democrat's only proposal on how to solve our short term and long term deficit and debt crisis? Give me a break.
To give you an idea of how ridiculous the arguments made by President Obama and the Democrats in Congress are when they claim that raising taxes on the wealthy will be the panacea we need to avoid having to reform entitlements, please read this article fully:
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The Congressional Budget Office estimates that the projected cost to the treasury of the continuation of the Bush tax cuts over the next ten years is $3.7 trillion. This works out to 370 billion a year assuming (and its a big assumption) that raising the rates doesn't impede economic growth or cause people to shelter their money which could lower those revenue numbers dramatically. We currently have a deficit of 1.2 trillion per year... so we can barely get the deficit under a trillion by returning to Clinton rates... ah but wait... you see, three trillion of that money goes to people who make less than 250k and Obama has said he is unalterably opposed to raising taxes on these people. That wouldn't be "fair" or good for his prospects for re-election.
Therefore, we are left with $50-70 billion/year from the “rich”, which is a drop in the bucket given the size of the deficits we've been running. Even given those optimistic projections (I'd say the amount of actual revenue received by the Treasury will be half that or less as the rich do everything in their power to shelter their money) the increase in revenue is less than six percent of what is needed to balance the budget. That means that we've still got 94% of the way left to go. Therefore, to make raising taxes on the wealthy the centerpiece of a "balanced" approach to deficit reduction is totally unserious and not even to be mentioned prominently in any credible debate over how to save the country from fiscal ruin. This is Obama and the Democrat's only proposal on how to solve our short term and long term deficit and debt crisis? Give me a break.
To give you an idea of how ridiculous the arguments made by President Obama and the Democrats in Congress are when they claim that raising taxes on the wealthy will be the panacea we need to avoid having to reform entitlements, please read this article fully:
This is the real truth about the "rich" that Obama and his Democrat buddies don't want you to know. Every single penny of every dollar earned by the wealthy fat cats will not even cover this year's deficit. No matter how they natter on and on about a "balanced" approach, even confiscating half of the income of the "super-rich" , the actual "millionaires and billionaires" that Obama drones on about every single day will reduce the debt by only eight percent. That leaves us 92% of the way left to go. So, please spare me the argument that we have a deficit problem because the rich aren't paying their fair share. We have a deficit problem because we spend too freaking much. Period.
10=====================================================================================================
The truth is that if raising taxes is the Democrats solution to our deficit and debt problem, they aren't just talking about taxing the rich. They are talking about taxing you! :
10=====================================================================================================
The truth is that if raising taxes is the Democrats solution to our deficit and debt problem, they aren't just talking about taxing the rich. They are talking about taxing you! :
So how much would taxes have to go up on the rich and the middle class to cover our deficits? More than the economy and families can bear:
11======================================================================================================
Now, that you have the facts, you know with certainty that the idea that we can put a dent in our deficit and debt problems by taxing the rich only exists in Obama's wet dreams. This is especially true when you jack up spending with Obamacare and are already imposing a tax the on the rich and employers to fund it. The only reason one would devote as much time to slamming "millionaires and billionaires" for not paying their "fair share" is to exploit envy and class warfare for partisan reasons. As a starting point to actually solving the budget mess, it is a sideshow. It is a trick from the old Democratic playbook. But, we are well past the time for games and tricks. Obama knows that if he wants to keep Medicare and Medicaid as they are currently structured, he's going to have to tax the middle class to pay for it. If you think Paul Ryan and the Republicans have had trouble with Democrat attacks on them for pushing Granny off the cliff, you just wait and see how popular the One and his party will be if they propose raising taxes on Joe Lunchbucket to the levels necessary to finance their "sacrosanct" entitlement programs.
So, you notice, Obama is not proposing that. He isn't proposing spending cuts or entitlement reform either. He is not proposing anything whatsoever that will fix the problem. He is just hoping that most American's ignorance about economics will allow him to keep pushing this fantasy that somehow if the "millionaires and billionaires" would only pay there fair share everything would be hunky dory. What kind of leadership is that? The fiscal situation I outlined in Broke is far too dire for the President to be playing partisan games as the country burns.
It is time the President told us what sort of combination of tax hikes and spending cuts actually would fix our fiscal problems and then lay out a plan to get there. Of course, Obama hasn't done that. He has solely relied on rhetoric and spin. The smartest man to ever be president has no plan but to raise taxes on the wealthy and that isn't even a starting point in this debate. If he were levelling with the American people and gave us honest and verifiable numbers as to the magnitude of the tax increases required to keep Medicare and Medicaid as they are, that would be one thing. Unfortunately for Obama, to do that would expose him to just the kind of partisan savagery that he and and his party are unleashing on the party that has actually put a plan on paper to keep our nation solvent. In other words, it requires political courage to tell the truth. Say what you want about Barry O, but he and his party have shown absolutely zero political courage in this debate. For the good of the country, it is time for President Obama to act like a leader and show some backbone. Otherwise, Medicare will end because it will go bankrupt and granny really will be pushed off the cliff!
Since Barack Obama refuses to have an honest conversation with the American people about how we can increase revenues so that they better match the level of spending necessary to save granny, we must look into the historical lessons of taxation ourselves to see if we can find an answer. The first step in that direction is to dispel some of the myths that are prevalent. Unfortunately, because our educational system and the media Matrix machine have done an abysmally poor job of giving us all the facts, many false memes are widely accepted as reality even by people who consider themselves well informed.
12======================================================================================================
For example, part of the appeal of the bashing the rich meme, is that it appears that the rich benefit disproportionally from cuts in marginal tax rates. Back when Bill Clinton was running for President, he searched for the perfect focus group tested phrase that would provide him with the necessary public support to raise taxes on the rich. Once his pollsters came up with one, all of his speeches and just about every Democrat in the country from then on parroted this new meme: making the rich pay their "fair share". But, while it sounds great, and hits the right emotional notes with some of the populace, the reality is something entirely different.
To clear up the myth that marginal tax cuts unduly benefit the rich, let's all go to a bar and do some bar stool economics:
Now, that you have the facts, you know with certainty that the idea that we can put a dent in our deficit and debt problems by taxing the rich only exists in Obama's wet dreams. This is especially true when you jack up spending with Obamacare and are already imposing a tax the on the rich and employers to fund it. The only reason one would devote as much time to slamming "millionaires and billionaires" for not paying their "fair share" is to exploit envy and class warfare for partisan reasons. As a starting point to actually solving the budget mess, it is a sideshow. It is a trick from the old Democratic playbook. But, we are well past the time for games and tricks. Obama knows that if he wants to keep Medicare and Medicaid as they are currently structured, he's going to have to tax the middle class to pay for it. If you think Paul Ryan and the Republicans have had trouble with Democrat attacks on them for pushing Granny off the cliff, you just wait and see how popular the One and his party will be if they propose raising taxes on Joe Lunchbucket to the levels necessary to finance their "sacrosanct" entitlement programs.
So, you notice, Obama is not proposing that. He isn't proposing spending cuts or entitlement reform either. He is not proposing anything whatsoever that will fix the problem. He is just hoping that most American's ignorance about economics will allow him to keep pushing this fantasy that somehow if the "millionaires and billionaires" would only pay there fair share everything would be hunky dory. What kind of leadership is that? The fiscal situation I outlined in Broke is far too dire for the President to be playing partisan games as the country burns.
It is time the President told us what sort of combination of tax hikes and spending cuts actually would fix our fiscal problems and then lay out a plan to get there. Of course, Obama hasn't done that. He has solely relied on rhetoric and spin. The smartest man to ever be president has no plan but to raise taxes on the wealthy and that isn't even a starting point in this debate. If he were levelling with the American people and gave us honest and verifiable numbers as to the magnitude of the tax increases required to keep Medicare and Medicaid as they are, that would be one thing. Unfortunately for Obama, to do that would expose him to just the kind of partisan savagery that he and and his party are unleashing on the party that has actually put a plan on paper to keep our nation solvent. In other words, it requires political courage to tell the truth. Say what you want about Barry O, but he and his party have shown absolutely zero political courage in this debate. For the good of the country, it is time for President Obama to act like a leader and show some backbone. Otherwise, Medicare will end because it will go bankrupt and granny really will be pushed off the cliff!
Since Barack Obama refuses to have an honest conversation with the American people about how we can increase revenues so that they better match the level of spending necessary to save granny, we must look into the historical lessons of taxation ourselves to see if we can find an answer. The first step in that direction is to dispel some of the myths that are prevalent. Unfortunately, because our educational system and the media Matrix machine have done an abysmally poor job of giving us all the facts, many false memes are widely accepted as reality even by people who consider themselves well informed.
12======================================================================================================
For example, part of the appeal of the bashing the rich meme, is that it appears that the rich benefit disproportionally from cuts in marginal tax rates. Back when Bill Clinton was running for President, he searched for the perfect focus group tested phrase that would provide him with the necessary public support to raise taxes on the rich. Once his pollsters came up with one, all of his speeches and just about every Democrat in the country from then on parroted this new meme: making the rich pay their "fair share". But, while it sounds great, and hits the right emotional notes with some of the populace, the reality is something entirely different.
To clear up the myth that marginal tax cuts unduly benefit the rich, let's all go to a bar and do some bar stool economics:
Like I said, Bill Clinton and his fellow Democrats constantly use many of the same arguments that caused all the drinkers to beat up the richest guy and screw themselves in the process. The rich guy got a huge "windfall" and should be punished would become the rallying cry, regardless of the fact that half of the guys were drinking for free and the rest were paying less than they had.
Of course, in the end, Bill Clinton was forced to come to the conclusion that the reality of American economics is such that the only place to go to find massive amounts of revenue is, as the Wall Street Journal article above pointed out, from the middle class. However, Clinton had a problem. You see, he had campaigned on a middle class tax cut paid for by raising taxes on the rich. Like the bar patrons above, the American people bought this redistrubutionist soak the rich idea hook line and sinker. All of the other drinkers at the American bar felt they should receive more cash from the rich guy.
However, by the time Clinton took office, the deficit was the number one priority on the public's mind (thanks to Ross Perot) and he didn't want to cut spending to fix that particular problem. Since taxing only the rich could never come up with enough cash for Bill and Hill to spend, they of course had to target that same middle class to whom he had promised a tax cut. Bummer, eh? How was he going to explain that? Well, Billy boy got in front of the cameras, bit his lip, looked at us with those lying Clinton eyes and said:
That brings us to those of you who gave the most in the 1980's. I had hoped to invest in your future by creating jobs, expanding education, reforming health care, and reducing the debt [deficit] 1 without asking more of you. And I've worked harder than I've ever worked in my life to meet that goal. But I can't because the deficit has increased so much beyond my earlier estimates and beyond even the worst official Government estimates from last year. We just have to face the fact that to make the changes our country needs, more Americans must contribute today so that all Americans can do better tomorrow.
Now, personally, I love the way he says that "more" Americans must "contribute" so that he can increase spending with his "investments". To ask someone to contribute more does sound so much better than saying that you are going to have the IRS seize more of their money in taxes, but I digress. When push came to shove and the unvarnished truth was staring him in the face, Bill Clinton had to go beyond the myths and convenient political rhetoric and deal with the actual realities and tax the middle class, because, as Willie Sutton once famously opined, that's where the money is. Would that Barry could have that kind of honest conversation with the American people if he'd rather fix the deficit by raising taxes rather than un-American cuts in spending. But, to maintain the fiction that either Medicare, Medicaid and Social Security won't have to be reformed in an "un-American" way or, alternatively, taxes raised substantially to fund them is just dishonest and intellectually indefensible.
13======================================================================================================
Speaking of William Jefferson Blythe Clinton, many people look fondly at his economic policies and think we should emulate them. This includes our President:
Of course, in the end, Bill Clinton was forced to come to the conclusion that the reality of American economics is such that the only place to go to find massive amounts of revenue is, as the Wall Street Journal article above pointed out, from the middle class. However, Clinton had a problem. You see, he had campaigned on a middle class tax cut paid for by raising taxes on the rich. Like the bar patrons above, the American people bought this redistrubutionist soak the rich idea hook line and sinker. All of the other drinkers at the American bar felt they should receive more cash from the rich guy.
However, by the time Clinton took office, the deficit was the number one priority on the public's mind (thanks to Ross Perot) and he didn't want to cut spending to fix that particular problem. Since taxing only the rich could never come up with enough cash for Bill and Hill to spend, they of course had to target that same middle class to whom he had promised a tax cut. Bummer, eh? How was he going to explain that? Well, Billy boy got in front of the cameras, bit his lip, looked at us with those lying Clinton eyes and said:
That brings us to those of you who gave the most in the 1980's. I had hoped to invest in your future by creating jobs, expanding education, reforming health care, and reducing the debt [deficit] 1 without asking more of you. And I've worked harder than I've ever worked in my life to meet that goal. But I can't because the deficit has increased so much beyond my earlier estimates and beyond even the worst official Government estimates from last year. We just have to face the fact that to make the changes our country needs, more Americans must contribute today so that all Americans can do better tomorrow.
Now, personally, I love the way he says that "more" Americans must "contribute" so that he can increase spending with his "investments". To ask someone to contribute more does sound so much better than saying that you are going to have the IRS seize more of their money in taxes, but I digress. When push came to shove and the unvarnished truth was staring him in the face, Bill Clinton had to go beyond the myths and convenient political rhetoric and deal with the actual realities and tax the middle class, because, as Willie Sutton once famously opined, that's where the money is. Would that Barry could have that kind of honest conversation with the American people if he'd rather fix the deficit by raising taxes rather than un-American cuts in spending. But, to maintain the fiction that either Medicare, Medicaid and Social Security won't have to be reformed in an "un-American" way or, alternatively, taxes raised substantially to fund them is just dishonest and intellectually indefensible.
13======================================================================================================
Speaking of William Jefferson Blythe Clinton, many people look fondly at his economic policies and think we should emulate them. This includes our President:
Many people are under the misconception that when the President said that "our plan worked", he was talking about his own abysmal economic failures. It truth, he was comparing the economic policies of W to Bill Clinton. Barack Obama, like many of our fellow citizens, seems to think that if we were to go back to the Clinton tax rates again all would be fine and dandy. My buddy "Fred" also pines for those glorious Clinton years. He wrote to me that:
I know that you feel the Clinton era was a period of unmitigated horror and evil, but the wealthy paid more taxes in those years, yet they somehow survived, even thrived. Life was pretty good. I realize that punitively high taxes can force jobs and industry overseas, but the taxes of the Clinton years were quite moderate, in my opinion, certainly compared to the extremes on both ends when you examine the past 50 or 100 years.
I don’t know where "Fred" got the idea that I think that the Clinton era was a period of unmitigated horror from an economic or budgetary point of view, especially after Hillarycare was defeated. After all, it was during this period that the Republicans retook congress after being out of power for forty years and quickly put a halt to the Clinton spending binge and lowered taxes on investment income. I'd happily agree to go back to Clinton/Gingrich tax rates in exchange for Clinton/Gingrich spending levels. You see, despite media narratives to the contrary, Tea Party folk are actually willing to compromise.
Personally, my biggest problem with Bill Clinton was that he was a man who poisoned politics for a generation by the way he was able to lie with impunity, spin a compliant media and use the power of the Matrix to demonize his opponents. His parsing of what the definition of the word is is has shown the world that truth in politics is only as relevant as what you can get away with. He made outright lying in politics mainstream to the point that no one who is successful in modern politics does anything other than read from focus group based blather and try to get away with whatever the media will let them. To hell with the truth!
Bill Clinton was instrumental in paving the way for the era of the talking point politician. This new generation of Crooks and Thieves learned that spouting bold faced lies was acceptable as long as no one in the Matrix called you out on it. In fact, in true Goebbels propaganda fashion, it is advisable to repeat the lie or the talking point over and over until everyone believes it must be true. During the debt ceiling debate, the Democrats came up with their nicely focused group attack on Republicans and Tea Party supporters as hostage takers and terrorists:
STENY HOYER: (rotunda noise) The Republicans are holding hostage the credit of the United States of America.
DEBBIE SCHULTZ: ...our Republican colleagues to hold our economy hostage.
Harry Reid: The Republican Party is holding our economy hostage.
CHUCk SCHUMER: (rotunda noise) It didn't say, "Hold America hostage."
LOUISE SLAUGHTER: ...hold the debt ceiling hostage.
SHELDON WHITEHOUSE: One party is holding the country hostage.
JOHN OLVER: The debt limit has never before been held hostage.
BARBARA LEE: Republicans are holding our economy hostage.
EARL BLUMENAUER: ...willing to take hostage the debt ceiling.
JASON ALTMIRE: Stop holding America's credit rating hostage.
ROSA DeLAURO: The Republican majority continues to hold the American economy hostage.
CHRIS VAN HOLLEN: Let's not hold the entire American economy hostage.
JOHN LARSON: ...ideological HOSTAGE situation...
LLOYD DOGGETT: The only belt they're really tightening is right around the neck of those hostages.
JAMES CLYBURN: Holding the American economy hostage.
JESSE JACKSON, JR.: This President is being treated differently!
SPEAKER PRO-TEM: (gavel banging)
JACKSON: No other President has been stuck up, shook down, or held hostage!
And the reason for all of this vitriol and abuse? The Tea Party and the Republicans dared to say that the emperor had no clothes. I would argue that the Republicans and Tea Party people were willing to go out on a political limb and showed great courage in order to try to save the country from bankruptcy. I know that some might disagree and believe that those in the Tea Party hate government so much that they took great glee in trying to destroy it. But, a fair minded individual would have to conclude that the primary reason Tea Party Republicans have been doing whatever they can to turn off the spending spigot is that they see the same things that Standard and Poor does: such spending is totally unsustainable and counterproductive over the long term.
Are these kinds of unfounded allegations any way to have a national debate? As long as the media Matrix mentions nary a negative word about these planned and slanderous accusations of "terrorism" and "hostage taking" and, in fact, promotes them with glee, then Democrats can avoid having to deal with the actual facts about entitlement spending and can continue to push this scurrilous meme of Tea Party hobgoblins with impunity regardless of the truth. Yet, at the same time, this same media elite screamed about "civillity" for weeks after Rep. Gabby Giffords was shot. And who was to blame for lack of civility then? Why Sarah Palin, Republicans and the Tea Party. Imagine that!
14=====================================================================================================
Therefore, what Bill Clinton taught politicians was how to demonize their opponents, use focus group derived phrases and repeat them over and over and over again. Thus, the narrative is not about the debt ceiling or unsustainable levels of entitlement spending, but it is reduced to toddler level arguments about who is acting childish, who is the adult in the room and who is acting like terrorists. It becomes a debate about who is the best name caller, meme creator or narrative setter rather than about the actual facts about how we can continue to borrow forty two cents out of every dollar we spend. Instead of telling the people the truth about where they stand and what they propose, everything out of a politician's mouth these days is a canned and poll tested recitation of talking points. Nowhere is this better exemplified then in this interview with the head of UK's Labour party:
I know that you feel the Clinton era was a period of unmitigated horror and evil, but the wealthy paid more taxes in those years, yet they somehow survived, even thrived. Life was pretty good. I realize that punitively high taxes can force jobs and industry overseas, but the taxes of the Clinton years were quite moderate, in my opinion, certainly compared to the extremes on both ends when you examine the past 50 or 100 years.
I don’t know where "Fred" got the idea that I think that the Clinton era was a period of unmitigated horror from an economic or budgetary point of view, especially after Hillarycare was defeated. After all, it was during this period that the Republicans retook congress after being out of power for forty years and quickly put a halt to the Clinton spending binge and lowered taxes on investment income. I'd happily agree to go back to Clinton/Gingrich tax rates in exchange for Clinton/Gingrich spending levels. You see, despite media narratives to the contrary, Tea Party folk are actually willing to compromise.
Personally, my biggest problem with Bill Clinton was that he was a man who poisoned politics for a generation by the way he was able to lie with impunity, spin a compliant media and use the power of the Matrix to demonize his opponents. His parsing of what the definition of the word is is has shown the world that truth in politics is only as relevant as what you can get away with. He made outright lying in politics mainstream to the point that no one who is successful in modern politics does anything other than read from focus group based blather and try to get away with whatever the media will let them. To hell with the truth!
Bill Clinton was instrumental in paving the way for the era of the talking point politician. This new generation of Crooks and Thieves learned that spouting bold faced lies was acceptable as long as no one in the Matrix called you out on it. In fact, in true Goebbels propaganda fashion, it is advisable to repeat the lie or the talking point over and over until everyone believes it must be true. During the debt ceiling debate, the Democrats came up with their nicely focused group attack on Republicans and Tea Party supporters as hostage takers and terrorists:
STENY HOYER: (rotunda noise) The Republicans are holding hostage the credit of the United States of America.
DEBBIE SCHULTZ: ...our Republican colleagues to hold our economy hostage.
Harry Reid: The Republican Party is holding our economy hostage.
CHUCk SCHUMER: (rotunda noise) It didn't say, "Hold America hostage."
LOUISE SLAUGHTER: ...hold the debt ceiling hostage.
SHELDON WHITEHOUSE: One party is holding the country hostage.
JOHN OLVER: The debt limit has never before been held hostage.
BARBARA LEE: Republicans are holding our economy hostage.
EARL BLUMENAUER: ...willing to take hostage the debt ceiling.
JASON ALTMIRE: Stop holding America's credit rating hostage.
ROSA DeLAURO: The Republican majority continues to hold the American economy hostage.
CHRIS VAN HOLLEN: Let's not hold the entire American economy hostage.
JOHN LARSON: ...ideological HOSTAGE situation...
LLOYD DOGGETT: The only belt they're really tightening is right around the neck of those hostages.
JAMES CLYBURN: Holding the American economy hostage.
JESSE JACKSON, JR.: This President is being treated differently!
SPEAKER PRO-TEM: (gavel banging)
JACKSON: No other President has been stuck up, shook down, or held hostage!
And the reason for all of this vitriol and abuse? The Tea Party and the Republicans dared to say that the emperor had no clothes. I would argue that the Republicans and Tea Party people were willing to go out on a political limb and showed great courage in order to try to save the country from bankruptcy. I know that some might disagree and believe that those in the Tea Party hate government so much that they took great glee in trying to destroy it. But, a fair minded individual would have to conclude that the primary reason Tea Party Republicans have been doing whatever they can to turn off the spending spigot is that they see the same things that Standard and Poor does: such spending is totally unsustainable and counterproductive over the long term.
Are these kinds of unfounded allegations any way to have a national debate? As long as the media Matrix mentions nary a negative word about these planned and slanderous accusations of "terrorism" and "hostage taking" and, in fact, promotes them with glee, then Democrats can avoid having to deal with the actual facts about entitlement spending and can continue to push this scurrilous meme of Tea Party hobgoblins with impunity regardless of the truth. Yet, at the same time, this same media elite screamed about "civillity" for weeks after Rep. Gabby Giffords was shot. And who was to blame for lack of civility then? Why Sarah Palin, Republicans and the Tea Party. Imagine that!
14=====================================================================================================
Therefore, what Bill Clinton taught politicians was how to demonize their opponents, use focus group derived phrases and repeat them over and over and over again. Thus, the narrative is not about the debt ceiling or unsustainable levels of entitlement spending, but it is reduced to toddler level arguments about who is acting childish, who is the adult in the room and who is acting like terrorists. It becomes a debate about who is the best name caller, meme creator or narrative setter rather than about the actual facts about how we can continue to borrow forty two cents out of every dollar we spend. Instead of telling the people the truth about where they stand and what they propose, everything out of a politician's mouth these days is a canned and poll tested recitation of talking points. Nowhere is this better exemplified then in this interview with the head of UK's Labour party:
Three different questions and three identical talking point answers to the word. Does this guy have the new paradigm down or what? Imagine that this clown could be the next Prime Minister of the UK! Did politicians dissemble and lie like this before Bill Clinton showed his mastery of the craft? Absolutely! However, after Clinton, it has been refined into an art form.
In the end, I didn't like Clinton because I thought then, and think now, that he is a liar, a man with no honor and a man who is totally amoral. He is as pure a Snake Oil salesman as you can get and the worst kind of role model for the country and the world. In that, he served his country poorly.
In the end, I didn't like Clinton because I thought then, and think now, that he is a liar, a man with no honor and a man who is totally amoral. He is as pure a Snake Oil salesman as you can get and the worst kind of role model for the country and the world. In that, he served his country poorly.
15=====================================================================================================
Having gotten all that leftover Clinton bile out of my system, let us get away from name calling and the other political dodges and tricks used by the Crooks and Thieves to change the subject and get back to talking about taxes and how life was pretty good with those “high” rates under Clinton. Let me reiterate, I'd gladly take Clinton/Gingrich era taxes in exchange for Clinton/Gingrich era spending levels and their promotion of the private sector. Clinton and his Goldman Sachs Treasury Secretary Robert Rubin loved Wall Street and Capitalism and deregulated the banks and investment houses with abandon and the economy flourished. During Clinton’s administration, we taxed at about 18-19% of GDP and we spent at 18-19% of GDP. Today we spend at 25% of GDP while the President goes around trashing business and regulating them to death. Obama and his party do everything in their power to keep spending levels in this historically high range. That's what that huge fight with the Republicans on the CR and the debt ceiling was all about. It was about whether we can continue to spend at 25% of GDP forever. Democrats say we can if we boost taxes on the rich and I say (and will prove) that this is pure fantasy that will lead to fiscal Armageddon.
The simple fact of the matters is that as long as actual spending isn't cut (this years budget only really got chopped by 352 million in the CR and 7 Billion in the debt deal) the spending baseline remains the same and that will keep spending on Obama's pet programs to redistribute the wealth at around the 25%/GDP level. Go read up on baseline budgeting if you haven't. It is yet another of the Crooks and Thieves most ingenius scams to keep the vote buying machine purring away. Once you understand how baseline budgeting operates to keep the spending machine in high gear, you will understand a lot more about how we got into this fiscal mess. Here is a good article which can start as a primer as to how baseline budgeting works in the real world :
Having gotten all that leftover Clinton bile out of my system, let us get away from name calling and the other political dodges and tricks used by the Crooks and Thieves to change the subject and get back to talking about taxes and how life was pretty good with those “high” rates under Clinton. Let me reiterate, I'd gladly take Clinton/Gingrich era taxes in exchange for Clinton/Gingrich era spending levels and their promotion of the private sector. Clinton and his Goldman Sachs Treasury Secretary Robert Rubin loved Wall Street and Capitalism and deregulated the banks and investment houses with abandon and the economy flourished. During Clinton’s administration, we taxed at about 18-19% of GDP and we spent at 18-19% of GDP. Today we spend at 25% of GDP while the President goes around trashing business and regulating them to death. Obama and his party do everything in their power to keep spending levels in this historically high range. That's what that huge fight with the Republicans on the CR and the debt ceiling was all about. It was about whether we can continue to spend at 25% of GDP forever. Democrats say we can if we boost taxes on the rich and I say (and will prove) that this is pure fantasy that will lead to fiscal Armageddon.
The simple fact of the matters is that as long as actual spending isn't cut (this years budget only really got chopped by 352 million in the CR and 7 Billion in the debt deal) the spending baseline remains the same and that will keep spending on Obama's pet programs to redistribute the wealth at around the 25%/GDP level. Go read up on baseline budgeting if you haven't. It is yet another of the Crooks and Thieves most ingenius scams to keep the vote buying machine purring away. Once you understand how baseline budgeting operates to keep the spending machine in high gear, you will understand a lot more about how we got into this fiscal mess. Here is a good article which can start as a primer as to how baseline budgeting works in the real world :
Baseline budgeting is how Democrats can, for example, say that a 3% increase in spending is actually a draconian cut, because the baseline was for a 5% increase. This is the reason why the Ryan budget wants to go back to 2008 spending levels (20.7%/GDP), which though still too high is at least reasonable and why I'd go further and go back to 2000 spending levels (Clinton levels!) which would actually have a prayer of balancing the budget again by the time I am ready to retire.
To talk about returning to Clinton/Gingrich tax rates without also talking about returning to Clinton/Gingrich spending rates and that administration's favorable treatment of the private sector is not to tell the whole story. Another huge factor in the rising economy of the Clinton/Gingrich years was the fact that since the country wasn't forced to borrow hundreds of billions to fund deficits, a percentage of those billions were now available for investment in the private economy. In a way, running surpluses functions in the same way as giving a tax break for private sector investment. Add that to the cuts in Capital Gains taxes passed by the Gingrich Congress and you had a great recipe for economic growth.
Barack Obama is suggesting that Bill Clinton is his model for Democrat economic policy. Yet, he spends at a rate of 25% of GDP, not 18%. He is creating massive deficits, not surpluses. He is overregulating financial institutions, not deregulating them. He excoriates wealth and success instead of encouraging them. He is talking about raising capital gains taxes, not reducing them. What part of his economic policy is in any way similar to the Clinton/Gingrich model? None that I can see.
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When it came to tax policy during the Clinton era, taxes were higher on the wealthy, but they were also higher on the middle class. Even if I were to accept that these rates were the "best" in terms of producing revenue to the Treasury, as opposed to say the W tax levels, to dismiss the salutary effects of lower government spending and the resultant surpluses is to miss much of the reasons why they were effective. To say that you want to improve the economy and increase revenue supposedly lost because of the W tax cuts, but only tax the rich back up to Clinton/Gingrich levels without both middle class tax hikes and Clinton/Gingrich level spending levels just doesn't wash as a deficit reduction strategy.
However, it does make an excellent class warfare argument. But, of course, even that argument isn't true factually. Sadly, Obama and the left seem happy to promote the myth that the rich shouldered more of the nation’s tax burden under Clinton than either under W or currently. But that is definitely not the case as the following charts show:
To talk about returning to Clinton/Gingrich tax rates without also talking about returning to Clinton/Gingrich spending rates and that administration's favorable treatment of the private sector is not to tell the whole story. Another huge factor in the rising economy of the Clinton/Gingrich years was the fact that since the country wasn't forced to borrow hundreds of billions to fund deficits, a percentage of those billions were now available for investment in the private economy. In a way, running surpluses functions in the same way as giving a tax break for private sector investment. Add that to the cuts in Capital Gains taxes passed by the Gingrich Congress and you had a great recipe for economic growth.
Barack Obama is suggesting that Bill Clinton is his model for Democrat economic policy. Yet, he spends at a rate of 25% of GDP, not 18%. He is creating massive deficits, not surpluses. He is overregulating financial institutions, not deregulating them. He excoriates wealth and success instead of encouraging them. He is talking about raising capital gains taxes, not reducing them. What part of his economic policy is in any way similar to the Clinton/Gingrich model? None that I can see.
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When it came to tax policy during the Clinton era, taxes were higher on the wealthy, but they were also higher on the middle class. Even if I were to accept that these rates were the "best" in terms of producing revenue to the Treasury, as opposed to say the W tax levels, to dismiss the salutary effects of lower government spending and the resultant surpluses is to miss much of the reasons why they were effective. To say that you want to improve the economy and increase revenue supposedly lost because of the W tax cuts, but only tax the rich back up to Clinton/Gingrich levels without both middle class tax hikes and Clinton/Gingrich level spending levels just doesn't wash as a deficit reduction strategy.
However, it does make an excellent class warfare argument. But, of course, even that argument isn't true factually. Sadly, Obama and the left seem happy to promote the myth that the rich shouldered more of the nation’s tax burden under Clinton than either under W or currently. But that is definitely not the case as the following charts show:
Note that the top earners bore a heavier burden of the funding of our country after the Bush tax cuts. Any way you look at it, from the top 1%, 5% or 10% of wage earners, they paid more of a share of the taxes under the lowered Bush rates than the exalted Clinton ones. Part of the reason was that the middle class got a huge tax break as well under Bush and millions were taken off the rolls entirely. But it is also demonstrably true that the rich tend to pay more in taxes when rates are lower. I’ll get to the reasons why this is so in the chapter Theories.
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However, I would be remiss if I didn't add something here. The tax rates for the wealthy are going to go up, to near Clinton levels... to pay for Obamacare. What the President and his Democratic allies in Congress have proposed as their "wish list" is actually a tax rate of 62%:
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However, I would be remiss if I didn't add something here. The tax rates for the wealthy are going to go up, to near Clinton levels... to pay for Obamacare. What the President and his Democratic allies in Congress have proposed as their "wish list" is actually a tax rate of 62%:
Since most small businesses are taxed as individuals, increasing taxes on top earners not only taxes job creators, but puts them at a major competitive disadvantage with businesses in more tax friendly climates. Considering that we will have the highest corporate tax rate plus super high individual tax rates if the Democrats get their way, it is no wonder that our economy is making no headway in the global marketplace. This type of tax policy is self destructive and suicidal. There is a better way:
Even my buddy "Fred"recognizes that punitively high taxes can force jobs and industry overseas or sheltered in unproductive ways from the taxman’s bite. However, Obama's proposals for huge rate hikes even beyond the Clinton days still won't increase revenues enough to fix our structural deficit problems because he won't raise the rates in the other tax brackets. Few people, even Democrats, will publicly say that they believe that it is a good idea to raise rates on small businesses in the midst of a recession or at any time really, if maximum revenue is the goal. But, as I say, Democrats have ideological blinders on when it comes to soaking every last dime from the "rich".
So, if you loved the Clinton tax rates for the wealthy, the Democrats want to one up you. But, as you can see from the above charts, just don't expect a major revenue windfall as long as you leave the middle class untouched and don't bring back taxes on those the Bush administration took off the rolls entirely. If Obama was honest, and actually put a credible deficit and debt reduction plan out that leaves out their sacred entitlement cows, everyone would actually see how much and on whom taxes would have to be raised and that would be the kiss of death for his reelection plans. Little wonder, he hasn't done so and has relied on cheap class warfare rhetoric and a compliant media to avoid having to tell the American public the truth.
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Here is another myth that Democrats and their media shills would have you believe: taxes, as a percentage of GDP and income, are the lowest they've been since the 1950's:
As far as I am concerned, this is the ultimate example of using statistics to completely distort reality. It sounds good. Some aspects of it are kind of true, but it is totally misleading. How so? Well, I'll show you. First off, the lowest tax rates on income were in 1988 when Reagan and the Democrats in Congress lowered it to 28%. The late Eighties are twenty three years ago, but they are not the 1950's. So, let's be clear, Obama is absolutely mistaken on this point.
But, what about current rates being the lowest as a percentage of GDP? Please take a look at this chart which shows government revenues as a percentage of GDP:
But, what about current rates being the lowest as a percentage of GDP? Please take a look at this chart which shows government revenues as a percentage of GDP:
Note that during this period the top marginal rate varied from a high of 92% in 1952-53 to a low of 28% 1988-90. Yet, total tax revenues as a percentage of GDP remain relatively stable during the entire sixty year period at just under 19% and income taxes revenue was just shy of 10%. Interesting, no? Just because you have high tax rates doesn't mean that people will pay it. This is called Hauser’s law. If rates are too high, folks will find a way to avoid paying it and the richer you are the better the lawyers and accountants you can hire. Part of the reason that the Kennedy and Reagan tax cuts were so successful in creating economic growth is that the lower rates made it profitable for people to take money out of nonproductive tax shelters and untaxed benefits and put them back into the productive sector again. I could write another entire book outlining how and why this works, but suffice it to say that basically revenues have remained fairly constant over time regardless of rates as the first chart shows.
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The second chart shows something I think you should at least consider the next time you ponder tax policy:
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The second chart shows something I think you should at least consider the next time you ponder tax policy:
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Kennedy Tax Cuts
Kennedy passed a huge cut in marginal tax rates in the sixties. The economy boomed. I want you to take a look at some numbers here. Tax revenue continues to go up substantially during the entire decade, even when the rates were dropped dramatically. Note that the percentage of revenues/GDP remains right around 18% for most of the decade despite the huge cut in marginal rates. Revenues to the treasury double, despite the tax cut, because the economy booms. Here is a great indication of how lowering marginal rates does not necessarily decrease, but can even increase, revenue.
Reagan Tax Cuts
Now look at the eighties... Reagan cuts taxes... you see the same thing. Taxes are cut by 25% across the board starting in 1982 and phased in and then lowered to 28% in 1988, yet revenues increase dramatically even though the percentage they take from the economy is less. This is the result of a much larger economic pie. Even a smaller slice of a larger pie results in more revenue. In 1982 (first Reagan Budget) revenues are 600 Billon in 1989 they are almost a trillion. Why? Because the GDP was going like gangbusters. Again, revenues increase even though tax rates are cut dramatically. This is true despite Reagan’s ill advised deal with the Democrats to raise taxes on Capital Gains in exchange for spending cuts that never materialized which produced less revenue for years even though the rate was higher.
G. H. W. Bush and Clinton Tax Hikes
Now check out when George HW Bush goes back in his "read my lips" promise at the behest of the Democrats who promise to cut spending in return (which again! they don't) and raises taxes in 1990 and look what happens to revenues... Do they go up as a percentage of GDP because the rates are higher? No, they go down because the country goes into recession and revenues flatten. Imagine that! Bill Clinton passes the biggest tax hike in history in 1993 and revenues only go up marginally as a percentage of GDP. However, tax revenues do start going up dramatically again after the Republicans took over congress in 1994 and started cutting cap gains taxes among others. And the results of those tax cuts? The rate percentage shoots up into the 19's and even hits an all time post war high of 20.6% in 2000.
However, the most important thing to note from this table is that once spending is brought under 19% in 1998 (because the Reagan peace dividend allowed them to cut defense dramatically)after over twenty years averaging around 22%, we begin to show the first surpluses in a generation. Given those facts, looking at the revenue numbers vs. the spending numbers over the sixty odd years of the chart and knowing that tax rates have varied dramatically during that time but revenues have remained fairly constant, is it not crystal clear that spending as a percentage of GDP might be more relevant to deficits than whatever the tax rate happens to be?
However, the most important thing to note from this table is that once spending is brought under 19% in 1998 (because the Reagan peace dividend allowed them to cut defense dramatically)after over twenty years averaging around 22%, we begin to show the first surpluses in a generation. Given those facts, looking at the revenue numbers vs. the spending numbers over the sixty odd years of the chart and knowing that tax rates have varied dramatically during that time but revenues have remained fairly constant, is it not crystal clear that spending as a percentage of GDP might be more relevant to deficits than whatever the tax rate happens to be?
W's Tax Cuts
Now as you look at the numbers of the W era, I want you to note something else. W becomes President after the dot com bust and the recession that followed and then suffered the economic hit of 9/11. His tax cuts are enacted in 2001 and 2003... what happens to revenues as a percent of GDP...they lower during the course of the first recession and then the slowing caused by 9/11 and then they steadily rise back to early Clinton and Reagan levels. By 2007, we are looking at 18.5% of GDP and revenues rise dramatically. After taking in $1.782 trillion in tax revenues in 2003, the government collected $1.88 trillion in 2004; $2.153 trillion in 2005; $2.406 trillion in 2006; and $2.567 trillion in 2007. That's a 44 percent increase from 2003 to 2007. Hmm, seems that even though W lowered tax rates, the treasury saw a windfall in revenue because of the economic expansion. If you listen to Democrats, the Bush tax cuts cost the treasury a trillion plus dollars, but that is only because they assume that the economic expansion would have happened anyway. This is specious thinking at best, but a compliant media and an economically ignorant public accept it as gospel.
Despite the government (under Republicans) spending nearly 20% on a couple of wars and a new entitlement, the deficit is steadily reduced to only 160 billion by 2007 the last budget under GOP control of Congress. Had the Republican Congress not gone on a spending binge during the decade, we'd have had surpluses again. But, that's what happens when Republicans act like drunken Democrats because they think giving away government goodies is the best way to buy votes. It might be, but it makes for lousy fiscal policy.
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Once the recession hits in full force in 2009, you see the revenue numbers plummet to 14.9% which is indeed the lowest level since 1950 as President Obama points out. So, his statement is factually true. However, that doesn't even begin to tell the full story. Let's look at that statement in light of what we see from this historical chart. Does it seem more likely to you that this drop in tax receipts/GDP is a result of the massive and crippling recession and its impact on income...particularly among the rich and the unemployed ...or more like a result of the W tax cuts and low rates as Obama asserts? In other words, are the rich paying less because of W's tax cuts or because the economy is in the toilet?
Let's go take a look at the actual data from the IRS shall we:
Despite the government (under Republicans) spending nearly 20% on a couple of wars and a new entitlement, the deficit is steadily reduced to only 160 billion by 2007 the last budget under GOP control of Congress. Had the Republican Congress not gone on a spending binge during the decade, we'd have had surpluses again. But, that's what happens when Republicans act like drunken Democrats because they think giving away government goodies is the best way to buy votes. It might be, but it makes for lousy fiscal policy.
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Once the recession hits in full force in 2009, you see the revenue numbers plummet to 14.9% which is indeed the lowest level since 1950 as President Obama points out. So, his statement is factually true. However, that doesn't even begin to tell the full story. Let's look at that statement in light of what we see from this historical chart. Does it seem more likely to you that this drop in tax receipts/GDP is a result of the massive and crippling recession and its impact on income...particularly among the rich and the unemployed ...or more like a result of the W tax cuts and low rates as Obama asserts? In other words, are the rich paying less because of W's tax cuts or because the economy is in the toilet?
Let's go take a look at the actual data from the IRS shall we:
Personally, I don't even think it's credible to argue that the lowering of taxes/GDP to their lowest rate since the 1950's is anything other than the loss of trillions of dollars worth of wealth overnight and the effect that had on income in general and the loss of income from the 20% of the workforce that is now unemployed or underemployed. However, Obama tries to make the case that it is the W tax cuts for the "millionaires and billionaires" that are the reason they are paying less to the Treasury than he thinks is "fair" or since the 1950's. However, that is clearly not what the above charts and their seventy years of evidence tell us.
Therefore, not only is Obama totally full of it when he says that the wealthy paid more under Clinton rates, he is also full of it when he says that W era tax rates cause us to have the lowest percentage of revenues/GDP since Eisenhower. The charts show clearly that once the W rates were phased in the percentages are almost identical to the early Clinton years (before the Gingrich tax cuts) when rates were higher. It was the recession that caused this huge drop in revenues/GDP. These are the facts. Barry might try to spin those facts to make it look like the rich are robbing everyone blind and not paying their fair share, but the evidence suggests that the rich have taken a massive hit in income and wealth as a result of the economic downturn. The President, therefore, is engaging in blatant and intellectually dishonest demagoguery. Perhaps, you might want to reassess what you thought you knew, based upon this evidence, eh?
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Therefore, not only is Obama totally full of it when he says that the wealthy paid more under Clinton rates, he is also full of it when he says that W era tax rates cause us to have the lowest percentage of revenues/GDP since Eisenhower. The charts show clearly that once the W rates were phased in the percentages are almost identical to the early Clinton years (before the Gingrich tax cuts) when rates were higher. It was the recession that caused this huge drop in revenues/GDP. These are the facts. Barry might try to spin those facts to make it look like the rich are robbing everyone blind and not paying their fair share, but the evidence suggests that the rich have taken a massive hit in income and wealth as a result of the economic downturn. The President, therefore, is engaging in blatant and intellectually dishonest demagoguery. Perhaps, you might want to reassess what you thought you knew, based upon this evidence, eh?
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Pelosi, Reid, Obama Spending
And here finally, is the most important chart to understand why we have the deficit problems we do today. Look at the spending numbers for 2008 the first year of the Pelosi/Reid budgets. The recession starts and revenue/GDP levels are down to 17.5% but government spending is jacked up to 20.7% from 19.6% which is a full one percent of GDP rise in spending. As a result of the new spending and the onset of the recession, we go from 160 billion in deficits to 450 billion or so in deficits. Now, look at what happens to government spending thereafter. 25% the next year, and 23-25% of GDP as far as the eye can see in Pelosi/Reid/Obama budgets as they have been passed and presented so far.
Voila! Massive deficits and increased budget baselines that project these massive deficits that are on course to bankrupt the country. Rather than a one shot of Keynesian stimulus to boost the economy, and then a plan to lower spending to match the revenue stream, they decided to institutionalize all the spending into the baseline budget. That’s what the fight over the Continuing Resolution and the debt ceiling was all about. Ryan and the GOP want to take spending back to the 2008 baseline of 20.7% of GDP and Obama/Reid/Pelosi want to keep it at the current rate of 25%. It's that simple.
The President knows that these kinds of deficits worry the American people at a very core level. All of us have done our own finances and know that you can't live on borrowed money forever. Thus, Obama knows that he must at least appear as if he is doing something about spending. But in typical, post Clinton fashion, it is all symbolism over substance. As you will recall, in his most recent State of the Union address:
The president answered Republican calls for steep budget cuts with a far more modest proposal to freeze a portion of government spending for five years.
Makes him look responsible doesn’t it? How can Republicans object to freezing spending? Well, once again, the words sound great (even Clintonian) except and until you actually examine the fact that Barry wants to freeze us at a spending level of between 23.8% and 25.3% of GDP while revenues are still only 15%. Does this not seem like a disconnect to you? When you were watching Boehner and Obama squabbling over a mere 38 billion total and 352 million actual budget cut during the Continuing Resolution debate, did the media inform you of what a joke that truly was in terms of the big picture? Of course, not. The media matrix likes the high levels of spending too! Yet, despite the insignificant numbers being debated, the Democrats still screamed bloody murder about how draconian those cuts were didn’t they?
Do those numbers I gave about current spending and current revenues surprise you? I hope they do. For someone like me, it was totally predictable. I know, from my own education in civics, that in the end it is the Congress that determines how much we will spend. It should be no surprise to anyone that when Democrats returned to power in Congress for the first time in twelve years they started to turn the spending spigot on just a bit raising spending by 1% of GDP. This, despite campaigning against the reckless W deficits. But they couldn’t go crazy on spending like they wanted as long as W was still President.
However, when they got veto proof majorities and the Presidency, you just knew they would turn on the tap full throttle. And they did. Democrats increased spending another 4% of GDP and then have done everything in their power to keep it there. That is just their nature. Now they claim that they were doing all this spending to "stimulate" the economy, but you and I both know that all that money went to their pet projects and constituencies and not much has been stimulated. How's that hope and change working out for ya? Cause after that spending binge and all that debt, that's all the country has left... change.
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Now looking into the future what does the Obama administration propose to spend:
Voila! Massive deficits and increased budget baselines that project these massive deficits that are on course to bankrupt the country. Rather than a one shot of Keynesian stimulus to boost the economy, and then a plan to lower spending to match the revenue stream, they decided to institutionalize all the spending into the baseline budget. That’s what the fight over the Continuing Resolution and the debt ceiling was all about. Ryan and the GOP want to take spending back to the 2008 baseline of 20.7% of GDP and Obama/Reid/Pelosi want to keep it at the current rate of 25%. It's that simple.
The President knows that these kinds of deficits worry the American people at a very core level. All of us have done our own finances and know that you can't live on borrowed money forever. Thus, Obama knows that he must at least appear as if he is doing something about spending. But in typical, post Clinton fashion, it is all symbolism over substance. As you will recall, in his most recent State of the Union address:
The president answered Republican calls for steep budget cuts with a far more modest proposal to freeze a portion of government spending for five years.
Makes him look responsible doesn’t it? How can Republicans object to freezing spending? Well, once again, the words sound great (even Clintonian) except and until you actually examine the fact that Barry wants to freeze us at a spending level of between 23.8% and 25.3% of GDP while revenues are still only 15%. Does this not seem like a disconnect to you? When you were watching Boehner and Obama squabbling over a mere 38 billion total and 352 million actual budget cut during the Continuing Resolution debate, did the media inform you of what a joke that truly was in terms of the big picture? Of course, not. The media matrix likes the high levels of spending too! Yet, despite the insignificant numbers being debated, the Democrats still screamed bloody murder about how draconian those cuts were didn’t they?
Do those numbers I gave about current spending and current revenues surprise you? I hope they do. For someone like me, it was totally predictable. I know, from my own education in civics, that in the end it is the Congress that determines how much we will spend. It should be no surprise to anyone that when Democrats returned to power in Congress for the first time in twelve years they started to turn the spending spigot on just a bit raising spending by 1% of GDP. This, despite campaigning against the reckless W deficits. But they couldn’t go crazy on spending like they wanted as long as W was still President.
However, when they got veto proof majorities and the Presidency, you just knew they would turn on the tap full throttle. And they did. Democrats increased spending another 4% of GDP and then have done everything in their power to keep it there. That is just their nature. Now they claim that they were doing all this spending to "stimulate" the economy, but you and I both know that all that money went to their pet projects and constituencies and not much has been stimulated. How's that hope and change working out for ya? Cause after that spending binge and all that debt, that's all the country has left... change.
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Now looking into the future what does the Obama administration propose to spend:
Now let's put aside for a moment, the idea that these are all rosy, rosy scenario numbers in which Obamacare actually saves the country billions as opposed to breaking the bank. And let's put aside the rosy revenue projections that somehow we'll get above Hauser level revenues as far as the eye can see. And let's assume that we grow at above the 3% GDP level that they predict (remember expenditures are going to occur regardless of what happens to the economy). And let's also assume that the interest rates we pay on the debt remains at historic lows. Even with all that rosiness, notice that they are projecting government spending to be well above 23% of GDP far into the future.
Lets say that we could stabilize govt. spending at the average of 23-24% of GDP per year forever like they say. Where do you see in US history that we've ever gotten 23% of GDP in tax revenue? Go on, go back a few pages and look that the historical chart. Scour that chart! NEVER! Not even during WW2. Even if you were to raise taxes on the millionaires and billionaires to 100%, you can't get that. So the truth is that no matter what the tax rates are, we are never going to be able to balance an Obama budget because at 20% of GDP you hit a brick wall as far as revenue is concerned. The worst part is that as the baby boom retires, Medicare, Medicaid and SS spending and interest on the debt total spending is going to go through the roof and we'll be talking numbers going higher, much higher, than 25% of GDP as far as the eyes can see.
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Now go back to this table that we saw earlier:
Once you understand that even with the best revenue numbers we have ever had, we are still at a minimum of 4% of GDP from being in balance. Now it becomes much clearer why the Ryan plan does what it does and why the Domenici/Rivlin plan and the Simpson/Bowles plan all do massive "reform" on entitlements. Note that even in this chart it excludes net interest effects. And we know how much of a killer that can be if they are higher than expected. Simpson/Bowles looks to bring up tax revenues with a tax increase (actually they propose a total reform of the tax code with lower rates which I could support) and spending cuts to bridge 3.6% of the difference between spending and revenues. Domenici/Rivlin also is looking for a combination of cuts, reforms and tax changes to bridge a 3.3% difference. Paul Ryan is calling for a revenue neutral reform of the tax code (which like a good supply sider he believes will increase revenues because it will encourage economic growth) in addition to a 3.5%/GDP cut in spending. All three of these proposals incorporate real spending cuts and changes in tax policies designed to boost revenues.
The Obama budget, on the other hand, is totally tilted towards tax hikes. Tax hikes historically have never brought in as much revenue as promised. The reason I have gone through these tables so exhaustively is to show you, beyond any doubt that no matter how high you hike marginal tax rates, there is only so much effect that will have. This is a historically proven fact.
Even, if tax rate increases were able to bring up revenues to say the Clinton/Gingrich height of 20.6% they are still way, way short of Obama's own spending projections. Thus, massive deficits and eventual fiscal insolvency. This cannot be denied based on the evidence. That is why he and his allies always resort to class warfare and name calling in order to change the subject.
Later on, we will discuss how tax policy impacts economic performance and whether it is better to cut marginal tax rates or pursue Keynesian pump priming to spur GDP growth in order to raise more revenue. I would argue that the historical evidence would make it appear that the Clinton/Gingrich tax and spending rates of the late nineties seem to be the best at bringing both economic growth and a large percentage of revenue/GDP. Unfortunately, each era of history has it's own economic fundamentals, tax structures and loopholes and it is difficult to compare them equally. That is why the golden elixir of the Laffer curve is so hard to define. The debate will rage on and I'd personally prefer a much lower marginal rate with a broader base and virtually zero deductions, but that's a topic for another chapter.
What is clear however, from this historical chart is that there is only so much revenue the government can collect and still maintain economic growth. The highest percentage we have ever collected during optimum economic times is still 4% of GDP short of what the current baseline is saying that we are going to need going into the future. Therefore, for Obama to even be discussing taxes only on the rich as a meaningful way to solve the problem is proof of how dishonest and unserious he has been. Even if we return to Clinton era tax rates for everyone which maxed out in its very best year at 20.6% of GDP, we haven't even begun to scratch the surface of the problem of trillions in unfunded liabilities.
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We are ALREADY $16 Trillion in debt, but to actually look at the numbers, and please do, is absolutely scary...
U.S. National Debt Clock : Real Time as of 9/16/12
The Obama budget, on the other hand, is totally tilted towards tax hikes. Tax hikes historically have never brought in as much revenue as promised. The reason I have gone through these tables so exhaustively is to show you, beyond any doubt that no matter how high you hike marginal tax rates, there is only so much effect that will have. This is a historically proven fact.
Even, if tax rate increases were able to bring up revenues to say the Clinton/Gingrich height of 20.6% they are still way, way short of Obama's own spending projections. Thus, massive deficits and eventual fiscal insolvency. This cannot be denied based on the evidence. That is why he and his allies always resort to class warfare and name calling in order to change the subject.
Later on, we will discuss how tax policy impacts economic performance and whether it is better to cut marginal tax rates or pursue Keynesian pump priming to spur GDP growth in order to raise more revenue. I would argue that the historical evidence would make it appear that the Clinton/Gingrich tax and spending rates of the late nineties seem to be the best at bringing both economic growth and a large percentage of revenue/GDP. Unfortunately, each era of history has it's own economic fundamentals, tax structures and loopholes and it is difficult to compare them equally. That is why the golden elixir of the Laffer curve is so hard to define. The debate will rage on and I'd personally prefer a much lower marginal rate with a broader base and virtually zero deductions, but that's a topic for another chapter.
What is clear however, from this historical chart is that there is only so much revenue the government can collect and still maintain economic growth. The highest percentage we have ever collected during optimum economic times is still 4% of GDP short of what the current baseline is saying that we are going to need going into the future. Therefore, for Obama to even be discussing taxes only on the rich as a meaningful way to solve the problem is proof of how dishonest and unserious he has been. Even if we return to Clinton era tax rates for everyone which maxed out in its very best year at 20.6% of GDP, we haven't even begun to scratch the surface of the problem of trillions in unfunded liabilities.
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We are ALREADY $16 Trillion in debt, but to actually look at the numbers, and please do, is absolutely scary...
U.S. National Debt Clock : Real Time as of 9/16/12
Read it all. From start to finish. Grapple with the reality of these numbers. I have for twenty five years and it is mind blowingly frightening. We are going broke. The reality of our situation is undeniable. This problem cannot even be dented on the revenue side no matter how many rich bastards you tax. So, let's face the real facts of this debate shall we? We have a spending problem, not a revenue problem. As long as spending levels are above 20-21% of GDP, there is no way that we are going to avoid bankrupting the nation and destroying the future of our kids and grandkids:
The Social Welfare State that the progressives have foisted on us for the better part of the last century is a failure. It is not just true in the US, but in Europe too, as we are seeing on a daily basis. It is unsustainable and must replaced by something that is more in tune with fiscal reality. It is high time that Democrats, Leftists and Progressives finally admit that Communism was a failure, Socialism is a failure and the Progressive entitlement states of the US and Europe are a failure. Let's finally move on past the demagoguery and have an honest debate about what we do to save our future and create a prosperous America for our kids and grandkids once again._