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The Tax and Spend Spectator

Tax Cuts for Your Love Life

By on 9.24.12 @ 6:09AM

Our president ridicules the Republican commitment to tax cuts, proving again how little he knows — or cares to know.

While on the tour of college campuses and late-night talk shows that serves as his campaign trail (despite seeming more appropriate for an aging rock band trying to make a few bucks off its past glory), President Barack Obama has been railing against tax cuts.

Not just criticizing tax cuts but ridiculing them. Since he knows that Americans generally prefer tax cuts to the tax hikes which he supports, he’s resorting to childish attacks on Republican policy as “tax cuts to help you lose a few extra pounds, tax cuts to improve your love live. It will improve anything according to them.”

From the “even a broken clock” files, Obama may be on to something here.

[Actually, that’s not fair to broken clocks, which are right 14 times a week, far more often than our president. To wit: President Obama doesn’t know how large our national debt is, is consoled because “a lot of it we owe it to ourselves” (as if a loan to a family member, much less a stranger, is any less of a loan just because the borrower is American) and thinks that “we don’t have to worry about it short term” (which to a politician means we don’t have to worry about it at all since he’ll be gone in a few months or a few years). And he still blames a video for the attack on our consulate in Benghazi despite nobody outside of the MSNBC studios believing such a literally incredible claim.]

Former Obama economic adviser Christina Romer authored a paper with her husband in which they argue that:

  • “(T)ax increases are highly contractionary.”
  • “(A)n exogenous tax increase of one percent of GDP lowers real GDP by roughly three percent.”
  • “(E)xogenous tax increases have a large, rapid, and highly statistically significant negative effect on output.”
  • “A tax increase is followed by a large and highly significant rise in the unemployment rate.”
  • “The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes.”
  • “The large effect stems in considerable part from a powerful negative effect of tax increases on investment.”

Looking at the charts in the Romers’ paper makes one wonder why any rational person would ever propose a tax increase. Did I mention that Christina Romer was Barack Obama’s top economic adviser for the first 20 months of his presidency?

While the Romers do not analyze the economic impact of tax cuts (perhaps not wanting to argue against their Democratic Party’s high-tax religion), it stands to reason that if the impact of tax hikes on economic growth and employment is large and dramatically negative, tax cuts should bring positive effects.

Though it seems obvious, Barack Obama doesn’t understand or doesn’t care that high taxes take our money away. To put it in terms even a Democrat can understand: “If tax rates are higher, those of us who work for a living end up with less money in our pockets.”

There is little doubt that Obama actually favors this outcome. Progressives believe government can do a better job spending your money than you can, and that they do not view economic growth or even employment as having greater value than gauzy, populist claptrap like “social justice” — code for buying the votes of the unproductive with the earnings of the productive.

Romer herself says that raising taxes on the “wealthy” (whatever that means to today’s Democrats) is a “straightforward, effective way to counter” income inequality, as if that is a proper or constitutional function of government.

So let’s get back to Obama’s petulant critiques of the Romney-Ryan proposals for initially revenue-neutral tax reform, implementing across-the-board tax rate cuts while limiting deductions and loopholes. (Even the tax-loving Christina Romer admits that “cutting back on deductions and loopholes…(is) preferable to raising marginal rates. After all, higher rates do have some disincentive effects.”)

For the employed: Whether you are fortunate enough to be able to make ends meet with one job, or whether you are one of the 6.6 million Americans who hold multiple jobs (a number that understates the many lower-income people who work unofficially in second jobs) or the millions of others who work extra, perhaps unpaid, hours just to make sure you keep your current employment, how would having more of your money remain in your pocket affect your life?

If you are now working during hours in which you might otherwise find a little time for a jog or bike ride, walking the dog, a trip to the gym, or just getting your tuchus out of your chair, then a tax cut — leaving more of your money in your pocket — could actually “help you lose a few extra pounds.”

More importantly, if you had more of your money in your bank account, you and your spouse would spend less time discussing, worrying, and perhaps even fighting about your finances. Multiple studies show that arguments about money correlate highly with divorce rates.

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About the Author

Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver’s NewsRadio 850 KOA at 11 AM on most Sundays. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.

Letter to the Editor View all comments (27) |

Pecos Pete| 9.24.12 @ 7:05AM

The Obama campaign is all about class warfare. Obama will lie and the MSM will praise him. Facts do not matter to people stuck on stupid.

Aristocat| 9.24.12 @ 7:25AM

Clinton was elected in 1992...In 1994, Republicans took over the House for the first time in over 40 years. That led to an economic recovery and helped Clinton get re-elected in 1996. The situation is different now because Obama has refused to work with the Republican House & thus the economy has remained dormant.

PolishKnight| 9.24.12 @ 2:33PM

I remember the 1996 election. Bob Dole was a candidate similar to John McCain: Both proud moderates who valued getting along with Bill Clinton and the left more than beating them. Bob Dole's wife forced everyone to wear seat belts and raised the drinking age to 21. Bob Dole, like McCain, was proud of his "maverick" approach to adopting Democrat policies.

Bob Dole ran on a boilerplate "lower taxes and keep crime down" McGruff the crime dog agenda for about a half year until he realized that he wasn't going to win. Clinton continued to pretend to be a "moderate" making himself indistinguishable from Dole except unlike Dole, Clinton was cool and hip. Then SNL and the leftist media tore Dole, who had tried to be their "friend" to shreds like they did with McCain.

Before Dole lost, he made a last gasp to address Clinton's perjury scandals but Clinton just brushed them off. Conclusion: Clinton didn't "win" so much as the Republicans blew the election. Keep in mind that GWB in Y2K wasn't that great a candidate either (after all, his father had lost re-election due to his breaking his no new taxes pledge)

Here we are, 20 years later, and we're in a different America. About 20% of the public are the anchor babies of illegals who vote Democrat for racial entitlements, plain and simple. This isn't the politics of marxism. It's the politics of South Africa.

StanAmSpec| 9.24.12 @ 3:59PM

Not defending Dole, you're right about his campaign. But the Hispanic population in the US is only 15-20% in total. I am sure that they have low voter turnout, and illegals that have some forged credentials must have microscopic voting turnouts.

Appleby| 9.24.12 @ 7:20AM

Obama is talking to people like my sister who believe their lives will be improved if other people become poor. They don't want what other people have -- they want other people NOT to have what they have now. They know that nothing the President says is going to improve their lives -- they want to see people who are now comfortable and working deprived of their jobs and losing their homes and flung out into the street. It's something I can't understand at all, but it's right there in black and white. Like Air Canada, they're not happy until you're not happy.

Nancy in NC| 9.24.12 @ 8:32AM

Obama is using the idea "misery loves company" as a campaign strategy. He seems to only understand the baser parts of humanity...jealousy and envy...to prey on the nonthinking voter. How sad we have a president who brings people down instead of lifting them up. What a long downward fall this country has achieved since Reagan.

PolishKnight| 9.24.12 @ 2:10PM

Which is why they went insane when Romney's ads observed that Obama was abolishing work for welfare requirements. That's class warfare that, gasp, doesn't benefit them! How unfair! When they bash the rich, that's ok. But when the middle class resents welfare mothers living off of them, that's out of bounds! Tee hee!

c. j. acworth| 9.24.12 @ 8:06AM

Mr. Kaminsky;
Another fine piece, but I think you made an error in your paragraph on the Clinton years. You say "... a time when tax cuts didn't hurt (and even helped!) the economy." I believe the libs say it was the Clinton tax Hikes, not cuts.

Ross Kaminsky| 9.25.12 @ 7:42AM

Thanks...good catch!

DTOM| 9.24.12 @ 8:35AM

I find the need for this article to be depressing. Doesn't anybody know anything about economics?

Keynsianism should be considered as credible as phrenology.

Wow! Has my education spoiled me!

Sheesh.

Don't Tread On Me

Von Mises Jr| 9.24.12 @ 8:58AM

Hello DTOM. If you learned Keynesian Economics or Classical that was Keynesian with formulas, then you also know that Maynard Keynes did not support tax increases in economic downturns.
Keynesian economics was about SPENDING to stimulate demand. Anecdotal evidence would indicate that Porkulus and trillion dollar deficits have brought near DEPRESSION since 2009.

Keynesian economics is called Demand-side since it is supposed to regulate demand. The theory goes that too little demand causes unemployment and low GDP growth, while too much demand causes inflation. So it is impossible to have stagflation and a Misery Index of 23 as Jimma Carter did. So goes that theory.
We are about to relearn it again if Obama is re-elected. Real U3 Unemployment is 11.5% ranges and Real Inflation (not CORE excluding food and fuel) is approaching 10% ranges. Hello Jimma Carter Malaise Phase Two.

TLP| 9.24.12 @ 8:58AM

I hate to break up this Love Fest, but, other than Copying Mr. and Ms. Romer? The rest of the Column looks pretty much like a Phone in Cut and Paste.

And, don't think I didn't notice that you gave my little Contest THE FINGER, cause I did.

That being said, (and, with you being so smart, and all) there is ONE Tax that this Clean and Articulate Magic Negro (Hat Tip - Village Idiot and LA TIMES) has no problem Cutting. FICA.

Now, why do you suppose, with Soc. Sec. on its last leg, would President You didn't build that, Shut Off the only means of Funding for Social Security?

You're a Brainiac. Why do you think he's doing it?

Better yet.

What do the Romers think?

You shoulda went to The Contest.

It even had Subtitles in Swahili, and Borneoinian, just for you.

Peppermint Tea | 9.24.12 @ 9:59AM

Tim, my 2 cents.

Remember the Dustin Hoffman movie Tootsie when things get crazy?

He had cross-dressed to get the TV Soap job as Tootsie, his "girlfriend" thought he was gay even after he slept with her, his love interest's father was making the moves on her, his love interest whom he spend time with as a woman and babysitter was now dumping him (Tootsie) because he/she had, in a moment of weakness, tried to kiss her, which was interpreted by the girl as a lesbian act. It was hilarious CHAOS!

Similarly BHO is pretending he is a Christian President while...

the Arabs burning down their countries;

the Iranian know he is weak;

Netanyahu is forcing his hand;

The unemployed have given up trying;

Wall Street can't grow

the Blacks don't like him going gay;

the Afghans thank him by murdering our soldiers

The MSM is backing off,

the Hispanics feel betrayed over Immigration Reform and George Zimmerman

etc.

Don't you wish that Barry would just go on TV like Dustin Hoffman in Tootsie and take off his wig and make-up and admit to the viewing audience:

"Yes, I'm a Communist, Anti-Colonialist, Anti-Israel, Anti-White America, and bi-sexual. Yes I want a 75% tax rate, and full government dependency!"

Hopefully it will end the same as the movie Tootsie, with Bill Murry commenting, "That is one weird hospital," and BHO unemployed.

Ross Kaminsky| 9.25.12 @ 7:44AM

I don't know anything about your contest and don't have time to think about it.

As for the article, I'm sure you understand what I think of your opinion.

Kwan| 9.24.12 @ 9:03AM

In fact Obama and the left are trying to make the subliminal argument that the rich are causing all our problems. If Obama could just nationalize the whole economy like he did health care then we wouldn't have the greedy rich taking their cut, and more money could be dished out to the suckers, saps, and morons that believe Obama's lies. It's the creation of a classless society everything being equal, in other words the Soviet Union reincarnated.

Who Knows?| 9.24.12 @ 10:22AM

Fair?

How many ways, fair?

Fair weather friend---Obama

My fair lady---Michell Obama

Podunk county fair ---DC

Fairly obvious as a thief----Obama

Fair IS foul---Obama

Fair ball---dancing with other people’s money: Obama

Who’s the fairest of them all?---Obama

Fairly certain---Obama

That’s not fair!---Obama

What does fair mean?

Fair is in the eye of the beholder.

Fair is a word, for Obama, to distract rubes while he picks their pocket.

All’s fair in love and war---no limits, eh Obama?

Who counts the votes, matters, not who votes---that’s fair: Obama

I won, fair and square---Obama.

Illusion is fairly rampant---lucky Obama

Occam's Tool| 9.24.12 @ 11:06AM

A simple approach: lower taxes, cut frou-frou: NEA, PBS. Reform entitlements.

When dealing with foreign scumbags---nation destroy, not build. Much cheaper to simply blow things off the map, like, say, Cairo.

PolishKnight| 9.24.12 @ 2:23PM

I hate to agree with the left, OT, but perhaps we should rethink aggressive military policies. With countries we're evenly matched with (say, China or Russia), things will get bloody or nuclear in a hurry so there's a MAD situation going on. With other nations who aren't in the nuclear club we can continue to bully (such as Egypt), what's the point? Blowing them up only produces worldwide dislike for the USA and undermines our security in the long run. It's no wonder that Iran wants to get a nuke because the second they have one, we'll be a LOT nicer to them! If you beat up everyone who doesn't have a baseball bat, then that provides an incentive for everyone to get a baseball bat as soon as possible!

What threat is Cairo to us? Even blown up, they can continue to train terrorists as Iran and Afghanistan has continued to do. With our PC anti-profiling strategies, we are powerless to screen them out if they board aircraft in "friendly" neutral nations such as Saudi Arabia or even Western Europe.

StanAmSpec| 9.24.12 @ 4:04PM

The threat from Cairo is the threat to Israel. It's been 40 years, but they invaded as a post-colonial Islamic dictatorship, what will they do as a Islamic Republic?

To be fair to Romney, I don't think he's looking to increase military spending as much as just not cut it. But as conservatives, we must acknowledge the Reagan principle of "the only way to reduce government is to not feed the beast" applies to all areas of government. As long as we don't return to Carter era military.

PolishKnight| 9.24.12 @ 2:17PM

Here's a way to look at the philosophy of lowering taxes:

When we look at the price of computers, or food, or other commodities which are now cheaper (after general inflation) it's not unreasonable nowadays to expect them to be cheaper overall. As technology and workplace efficiencies progress (in a good way), we expect more for less. We expect that we should get better service, per dollar, from our phone server today than 30 years ago (remember when calling out of state cost hundreds of dollars per month?)

Yet... with the left government's increasing costs is an admission that they're becoming less efficient than the private sector and they should be called on it. If everyone else in the private sector is expected to make more with less, why not them? Shouldn't they require LESS money for operations as time goes by, not more?

This also raises the question as to what inflation is. Why is the dollar weakening even if all other factors mean we should get more? The answer is the price of oil (thanks to Obama being against drilling, again, something Romney needs to pound home on) and real estate (which is a collective ponzi scheme) and finally government printing up money which is a backdoor non-progressive tax that hits the middle class and the poor hardest.

TLP| 9.24.12 @ 7:49PM

18 Comments?

Pathetic.

Ross Kaminsky| 9.25.12 @ 7:44AM

now that I agree with. i did think this would generate a little more conversation.

jdmeth| 9.24.12 @ 11:50PM

Bush 1 raises taxes, loses election, economy booms. Bush 2 cuts taxes, ten years later economy is still in the tank. The rich say an extra $5000 tax on $150000 income will ruin them but the 30% un or underemployed aren't buying it. A multi-multi millionaire candidate claiming a 14% tax rate encourages him to invest more makes you wonder how someone that clueless could make so much money.

Ross Kaminsky| 9.25.12 @ 7:47AM

First, the Bush (2) tax cuts did help the economy. The collapse at the very end of his administration was not the fault of tax cuts, though it was in substantial part the fault of government.

Second, Romney's tax rate was only so low because he gave so much to charity.

Third, taxes on capital gains are taxing money twice and three times. (First, the money that went into an investment was taxed when it was earned. Second, to the extent that cap gains comes from stocks going up, the stocks go up because their earnings went up, but their earnings were already taxed. Also, cap gains effectively taxes inflation.)

Speaking of clueless, how could you not think that a lower tax rate encourages more investment?

born conservative| 10.23.12 @ 3:07PM

conservatism---works every time!
(A Limbaugh quote)

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