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The Public Policy

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On federal spending also, McCain's proposed policies would be far better for the economy than Obama's. Obama is proposing vast new increases in spending, estimated by budget watchdog groups to cost well over a trillion dollars during his Presidential term, including even new entitlements like national health insurance.

McCain proposes a one-year freeze on all federal discretionary spending outside of defense and veterans benefits, and to limit overall federal spending growth to 2.4%, about one-third the annual increases since 2000. He promises to reclaim the money committed to earmarks, eliminate broken, ineffective government programs, reform procurement policies to cut wasteful defense spending, and "veto every pork-laden spending bill and make their authors famous." Through these policies, he proposes to balance the budget, not years into the future, but during his first term.

The Obama campaign has argued that their proposed overall tax plan is actually a net tax cut. But that is calculated by subtracting the actual spending on the numerous refundable tax credits from the actual tax burden imposed by the tax rate increases. Real taxes, and the highly damaging marginal tax rates, are unambiguously increased under the Obama tax plan.

The Obama campaign has also argued that their overall tax plan would leave federal taxes at only 18.2% of GDP. But this again is calculated by subtracting actual spending increases from the actual tax increases. Moreover, taxes at 18.2% of GDP would not be enough even to finance current federal spending, which is at 20.5% of GDP this year, or even more when the final numbers come in. How would Obama finance the additional trillion dollars in spending he is proposing? Such money is only going to be raised by, in fact, socking it to the middle class. Obama's tax plan is more worthy of a card shark, or an alchemist, than a Presidential candidate.

REPUBLICANS AND CONSERVATIVES should be trumpeting the fact that the results of Reaganomics over the past 30 years has been to abolish federal income taxes on the poor and the working class, and almost abolish them on the middle class. They should be emphasizing as well that another result of those tax policies is that the top 1% of income earners now pay 40% of all federal income taxes, and the top 10% now pay 71%, contrary to the foolish political propaganda of the neo-socialist class warriors. When Obama spouts that the rich need to pay their fair share, he should be asked what the heck is their fair share? 100%? 150%?

With the middle 20% of income earners now paying only 4.4% of federal income taxes, Republicans and conservatives should advocate just eliminating that tax on them, and take the credit for abolishing federal income taxes entirely for the middle class as well. That can best be done by lowering the current 25% federal income tax rate on those making $32,000 to $78,000, maybe all the way to 15%, which would lower taxes on the upper middle class as well. This would also restore wage growth for the middle class.

But the ultimate middle class tax cut is personal accounts for Social Security, which McCain also favors, but Obama does not. Personal accounts begin to replace the payroll tax, which is now the highest tax most taxpayers pay, with an engine for real, accumulated, personal family wealth. Over the long term, these personal accounts can and should replace the entire payroll tax, leaving middle income families to accumulate close to a million dollars over their lifetimes. Now that is a real, exciting, long term vision for the middle class.

But the neo-socialists don't want that, because that would liberate the workers from dependency on the Left's political machine. Their hot idea instead is to raise payroll taxes on the rich. Braindead. Can we just grow up, out of the cutting edge intellectual fads of the late 19th century?

topics:
Taxes, Trade, Health Care, Barack Obama, Economics, Business, Entitlements, Earmarks, Social Security, Law, European Union, Energy, Oil