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The Obama Watch
Obama’s Taxing Deficit
The confiscatory Cuban model is not out of the question.
“The rich can pay for it all. That is Obama’s tax policy.”
That was the morning-after analysis last Thursday by Clive Crook of the “deficit-reduction” speech that President Obama delivered the day before.
The speech was “not just weak but pitiful,” said Crook, a senior editor at the Atlantic, a commentator for the Financial Times, a columnist for the National Journal and formerly the Washington correspondent and economics editor at the Economist for two decades, focusing on the interface between politics and economics.
Rather than advance any concrete solutions to our debt problem, the “speech was more notable for its militant — though ineffectual — hostility to Republican proposals than any fresh thinking of its own,” stated Crook. “It was a waste of breath.”
He’s right about the no “fresh thinking.” Obama remains ideologically stuck where he was on the day he told Joe the Plumber (Joe Wurzelbacher, an Ohio man with a goal of someday becoming richer by starting his own plumbing business) that tax hikes at the top are good because “I think when you spread the wealth around it’s good for everyone.”
The key problem with the idea that “the rich can pay for it all” (aside from the basic fact that the money we earn doesn’t belong to the government) is that there’s simply not enough money at the top to pay for all the government’s waste, fraud, ineptitude and fanciful schemes.
“According to Internal Revenue Service data, the entire taxable income of everyone earning over $100,000 in 2008 was about $1.582 trillion,” reported the Wall Street Journal on the morning after Obama’s speech. “Even if all these Americans — most of whom are far from wealthy — were taxed at 100 percent, it wouldn’t cover Mr. Obama’s deficit for this year.”
It’s true that most of those $100,000 people are “far from wealthy.” A waiter at a good restaurant in Manhattan makes $100,000 a year.
The federal government, in short, is so out of control with its waste and abuse in frittering away our trillions that we can’t even cover the red ink portion of the spending even if we become Cuba and confiscate 100 percent of all the income of everyone earning $100,000 or more — as appealing as that might be to an entire aggrieved assemblage of redistributionists, levelers, socialists, communists, totalitarians, central planners, egalitarians and those who’ve turned green via either fear or envy.
In any case, what might well be next, given the growing level of fraud and waste and the buying of votes by politicians via massive handouts, is a government grab of everything over $75,000 or $50,000. That’s when anyone with any sense in Cuba, or any cents, started dodging sharks and paddling their inner tubes toward Key West.
The trouble for us is that we’re already in Key West, and there’s nowhere to paddle to except Singapore and I don’t like radioactive fish.
Spread the tax hikes beyond Obama’s regular target of “millionaires and billionaires” and there’s still not near enough money to cover the government’s prodigious and growing levels of spending. A 50 percent across-the-board hike in income taxes at all levels, for instance, still leaves us with an estimated federal deficit of $750 billion a year — or worse, considering the added cost of all the extra tanks and troops that it would take to keep us all in line after that dramatically enhanced level of confiscation.
“Warren Buffett doesn’t need another tax cut,” proclaimed Obama, summing up his call for tax increases. Wrong — again. This isn’t about super-billionaires who are giving away their fortunes. This is about America drowning, about us being $14.6 trillion in the hole and Obama’s budgeters forecasting another $8 trillion or so in red ink over the next eight years.
About the Author
Ralph R. Reiland is the B. Kenneth Simon professor of free enterprise and an associate professor of economics at Robert Morris University in Pittsburgh.
Letter to the Editor View all comments (36) | Leave a comment
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Bill Hussein O'Stalin| 4.19.11 @ 6:21AM
The political class is preparing to lower the boom on everyone with income to pay for gross years of mismanagement and idiotic public policy in our past, and gross years of mismanagement and public policy to come.
It isn't just an Obama problem although he has taken it to new levels. The mindset in DC is not one to change course, even if that course leads to absolute disaster.
And that appears to be where we are headed. All budget plans both public and those that are being worked on in secret behind the curtain, don't really address the horrendous fallacies inherent in many government programs.
The fallacy is that the government can provide a service with central economic planning. The housing market collapsed due to central economic planning by the government, and now the government plans more central economic planning which will surely lead to more disaster.
The who situation revolves around the Washington elite of both parties thinking they are smarter then the market forces.
It is a notion easily disputed and the last few years proves indisputably that the government is not worthy of leading the train or the economy or anything.
While Bernie Madoff made off with billions, the S.E.C. was asleep at the wheel. Fannie/Freddie reported false earnings while Democratic appointees made off with millions. To this date they haven't been indicted.
Employees at the FAA are literally asleep at the wheel while excuses are being made for them, and only one out of many has been fired. He must have been white and a Republican.
What we have is misguided elitism by misguided elitists and they exist in both parties. The truth is we can no longer afford elitism.
It is clear now that the political class is paying lip service to taxing the millionaires while they clearly will be coming after anyone and anything with an income.
And both parties will be in on the feast when it occurs.
Here I quote the Wall Street Journal:
http://online.wsj.com/article/.....stpop_read
So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.
This is politically risky, however, so Mr. Obama's game has always been to pretend not to increase taxes for middle class voters while looking for sneaky ways to do it. His first budget in 2009 included a "climate revenues" section from the indirect carbon tax of cap and trade, which of course would be passed down to all consumers. Such Democratic luminaries as Nancy Pelosi have often chattered about a European-style value-added tax, or VAT, which from a liberal perspective has the virtue of applying to every level of production or service and therefore is largely hidden from the people who pay it.
oldfart| 4.19.11 @ 6:59AM
Mr. J. Bruce Ismay was President of the White Star Line and on the RMS Titantic when it hit the iceberg. Even with the damage to the bow, he wanted to keep steaming to New York - really believing that this massive ship could not sink. I am sure there were people in the Roman Empire who thought that it would last forever. There truly is an 'inside the beltway' attitude. These people just don't get it – they have gotten away with the straw hat, soft shoe and cane routine for so long they have no connection with the real world.
Mike D.| 4.19.11 @ 7:26AM
What we are witnessing is insanity running amuck.
A government destroying its own country and in fact putting its own existence first and foremost before the country's and not realizing it goes down with the ship. We've step into the bizarro world of watching death spiral denial amongst the ruling class. I never thought I would live to see such a period of absolute lunacy cover this great country like a blanket.
daddio| 4.19.11 @ 2:10PM
Isn't this the way of all governments over time. I cannot think of any that have stood the test of time. Some last more than others for a variety of reasons. But eventually, all fail. It appears our time is coming sooner rather than later. The question we should be asking ourselves, it what will we do to prepare for it?
Mike D.| 4.19.11 @ 7:31AM
Those of us who are in effect the guy in the crows nest who see it coming a mile away and are screaming for a course change and emergency action realize our shouts are falling on deaf ears to those enjoying the party going down below. Blissful ignorance, don't worry be happy.
Pat Spooner| 4.19.11 @ 6:30AM
The only way for Obama to address the deficit he and the dimocrats have created is to confiscate our accumulated savings.
Bill Hussein O'Stalin| 4.19.11 @ 6:41AM
That would only help for one year. Then the next year we would be in the same hole, only worse.
Michael Tomlinson| 4.19.11 @ 6:52AM
Confiscate Soros', Bufetts', Lewis', Gates', the Hollywood lefts' and trial lawyer's fortunes first.
Appleby| 4.19.11 @ 7:30AM
Feed everyone else to the crocodile, and hope he will eat you last?
shamus| 4.20.11 @ 7:44AM
Eat the rich.
David W| 4.19.11 @ 10:12AM
I think worse than you think. Given the likely mass protests of those who have been robbed of their life's savings and the response of Obama (by the way, if Obama is re-elected see if there is any talk of changing the rules to let the President serve for more than two terms) to crush the protests we may see actual rebellion - resulting in the rich liberals fleeing to safety in Cuba or Venezuela.
daddio| 4.19.11 @ 2:11PM
I think not a rebellion, so much as a civil war, those that have versus those that have not...
NedB| 4.19.11 @ 8:19AM
Don't give them any ideas please.
Although, during the dead duck session last winter, Harkin was talking about seizing all the 401K and IRA accounts and using that to pay for social security.
The Govermnemt| 4.19.11 @ 9:25AM
FEED ME! I"M HUNGRY!
FEED ME!
The Govermnemt| 4.19.11 @ 9:26AM
FEED ME! I"M HUNGRY!
FEED ME!
Irish22| 4.19.11 @ 6:49PM
It's being done already -- it's called Quantitative Easing II!
Michael Tomlinson| 4.19.11 @ 6:49AM
Castro has stepped down as head of the Cuban Communist party. I have the perfect replacement -- Obama and Biden. They should resign and relocate to Cuba to "help" that economy like they have ours.
Mike D.| 4.19.11 @ 7:21AM
Maybe make Raul Castro president here, at least they have started to come to grips with the fact that Communism and its economic policies don't work anywhere. I always believed that the "perpetual motion machine" monocromatic line of thinking here that the US goes on forever has been entrenched so deep here that its going to take a monumental collapse to bring reality back to the surface. For some people thats the only way reality works for them.
tsd| 4.19.11 @ 9:03AM
It seems to me the old saying "you reap what you sow" is coming around to bite us. When we let organized public education become a education system overrun with progressive socialist unions and their useful idiots, do we not expect the dumbing down of our children. Our education system spends/wastes more on games for our kids than most other country's have to send on real education. We teach fuzzy math and revisionist history to ease the next generation into thinking the mistakes of the past will somehow work the next time around. When we let our boarders unguarded and 50 million illegals came in to eat our lunch for us, where were our duly elected representatives who were supposed to protect us. When we have no real voter registration and not real checks and balances on election day at the poles, do we expect fair and honest outcomes? Our “education system” is a big problem.... anyone with a HS education should be able to do the math and know time is against us. If we do not fix the spending and debit problem in this country very soon we will fall to third world status. Could this be be a planned event? Why do so many elected officials in our country keep pushing for more spending and debt? What the hell does our President stand for? How can that even be a question, have we ever had a president unknown? Most of us are not even sure he can legally hold office? Why do we as citizens not see clear proof he can even be president? If we hit financial ruin in this country you can expect socialism and then tyranny. Who would want to go there? If you were educated in real history you may already have the answers.... if not god help us.
Mike D.| 4.19.11 @ 11:16AM
Whitewashing the history of communism was no small feat either. But they have done it in the public school system. They have done their work well on the indoctrination side.
Pecos Pete| 4.19.11 @ 10:05AM
When the federal government crumbles, what then? The leftists will totally control the government. Bankrupting the federal government is their long-term goal. Looking pretty short-term about now.
hunter| 4.19.11 @ 10:56AM
Sniff, sniff.....If it only helps one person its..Sob sob, sniff its...worth it.... Ohh hell! Thats what got us here to start with!!
hunter| 4.19.11 @ 10:57AM
P.S. Its for the children. That was another good one! Don't hear it too much now though.
Redstateboy| 4.19.11 @ 11:03AM
People better understand... the Slave Party (aka the Democrat Party) has invested Decades in cultivating Legions of dependent people and they will be the Slave Party's Storm Troopers. Major Amer. cities are over-flowing with un-educated, un-employable dolts solely dependent on Slave Party Largess and when it gets cancelled.. welcome to Watts - thank you Slave Party
Wayne | 4.19.11 @ 11:28AM
Apparently the income of Americans could easily double just by ending government regulations. So freedom and the economy are definitely bound together. A government shutdown could solve our economic problems.
Jim| 4.19.11 @ 1:03PM
You don't have to look to Cuba to get this tax model. FDR did it, but the level was $25,000 and as a result the tax revenues went way down and the burden shifted to the middle class.
CalMark| 4.19.11 @ 2:17PM
If this happens there WILL be a civil war.
And hard-working middle class types like me are really, really, REALLY mad already. I think the elites would be wiped out.
Don't start something you can't win, libs. You may live to regret it.
Oldefarte| 4.19.11 @ 2:23PM
Here's my redundently told old joke: Democrats IRS 1040 Tax Form [1] How much did you earn last year? [2] Write a check for that amount and mail it to the IRS! As Barry told Joe pre 11/2008, WEALTH REDISTRUBUTION is his playbook, or as Robin Hood facilitated, ROB FROM THE RICH [ANYONE WITH INCOME] TO GIVE TO THE POOR [ANYONE WITHOUT INCOME]!!!
Pat| 4.19.11 @ 4:15PM
Let’s take a deep breath on this fiscal insanity stuff – in truth, none of us really understand how our government finances this enterprise we call the “United States” – least of all our elected employees. Politicians are into moods not fiscal discipline – how do the voters feel, where are their emotions running and other important trivia. Obama is an ex-community organizer, a rookie world leader and his understanding of finance is limited to strong arming banks in Chicago to make bad mortgage loans to “his people”. Our legislators casually throw around billions and trillions of dollars but know nothing about basic economics. They believe M1 and M2 refer to those sleek, new Mercedes-Benz models they were viewing in the showroom last weekend when deciding how to spend their earmark money. And as to “debentures” – members of the House Banking Commission think that was a tasty seafood fusion appetizer they ordered last month in Elaine’s.
America’s real wealth is its people and our tangible production assets – “debt” is simply numbers on paper. So, let the Chinese confiscate Kansas should we eventually default, corn in vast abundance and very skillful farmers to boot. Or let them repossess the Senate Building in D. C. - among us average Americans only the hardworking tour guides would actually miss Washington’s version of a Tijuana brothel.
Our foreign lenders will eventually treat Washington like a teenage girl who ran up too many mall purchases on her credit card; they’ll limit our open credit line and force us to act responsibly. Is that so bad? If our own elected government employees won’t act with integrity, the international community will force us to live within our means – and we won’t even need to compensate them for the adult supervision.
martin j smith| 4.19.11 @ 5:03PM
In addition to the Socialists of the so called Democrat Party, the RINO LEADERS of the so called Republican party appear in on the fix--that is to fix us but good. I think it will take persistance and a long time but there is a need to build the Tea Party
Get rid of RINOS THRU PRIMARIES and take the country back. I actually believe what is needed is a
BIG MOUTH CANDIDATE who will challenge Obama and I do not see any MALE CANDIDATE BEING ABLE OR WILLING TO DO THAT.
CalMark| 4.19.11 @ 5:08PM
Too true. The GOP "men" are mostly metrosexual political hacks: Flaky Newt, Too-Smooth Mitt...
Irish22| 4.19.11 @ 7:21PM
Next "shellacking" should include tar and feathers for redistributionists of both parties!
Bob Jones| 4.19.11 @ 9:30PM
Nice article, but the statement that the federal government is out of control with "waste and abuse" is neither here nor there. Of course there is waste and abuse (that is the nature of government), but that is not the problem. The problem is that we cannot afford to pay future social security, medicare and medicaid benefits and remain a free society where people are entitled to keep most of the money they earn. Everything else is a side show, and anyone that tells you that cutting waste, making government more efficient or taxing the rich is going to solve the problem is a liar no matter what side of the aisle they come from.
Nite| 4.19.11 @ 10:03PM
Who is not only writing Obama's speeches, but advising him on his so called policies? Oh wait, that is the labor unions, other radicals and socialists. He is a joke, just like Carter.
2000LBS electric winch | 4.20.11 @ 4:18AM
Your article is nice.Thanks for your sharing,it helps me more.I will look forward to your more wonderfull articles.Have a good time.
Creative Recreation | 8.10.11 @ 10:08PM
is good