The Public Policy

The Che Guevara Democrat Party

Under Obama-Pelosi, this isn't even George McGovern's party anymore.

By 1.18.12

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Those who contribute to, vote for, or otherwise support today's Democrat party need to catch up to the curve. These are not your father's Democrats. George McGovern would be a moderate in this party.

This is the party that rejected Hillary Clinton because she was not left enough. Instead it literally took a Marxist street agitator from the Chicago political machine and put him in the White House. Barack Obama was actually teaching the social manipulation methods of openly communist revolutionary Saul Alinsky to other Marxist revolutionaries for the radical communist front group ACORN. His weird name reflects his personal rejection of American culture. This is the person today's Democrat party wanted for President.

But it is not just him. The leader of the House Democrats is former House Speaker Nancy Pelosi, ultraleft San Francisco Democrat totem. She is virtually as far left as Obama, and her public statements make Sarah Palin seem like a Ph.D. in economics. She keeps telling us that unemployment insurance payments are the best way to restore booming economic growth and prosperity.

When the American people rebuked Pelosi's ultraleft leadership as House Speaker, turning to the Republicans for the greatest House turnover since the New Deal, House Democrats responded with their own rebuke of the people. They voted Pelosi right back in as their leader, effectively saying to the American people that they were too stupid to know what they are doing, and that Pelosi's ultraleft San Francisco values best represent the Democrat party's ideals.

The Democrats also elected as DNC Chairman the unreasoned and far left screamer and name caller Debbie Wasserman Schultz, who also makes Sarah Palin look like a rocket scientist. She touts as her achievements in the Florida legislature the Florida Residential Swimming Pools Safety Act, and state regulation of dry cleaning prices. She compiled during her career there the widely noted most liberal-left voting record of any state legislator. The Democrat party considered that the perfect qualification for party chairman.

If you think that increased government spending, deficits, and debt are the key to economic growth and prosperity, then this is the party for you. That is explicitly its economic policy, as crazy as that sounds. Democrats call it Keynesian economics. If you don't agree that increased government spending, deficits, and debt promote economic growth, then you shouldn't be voting for, contributing to, and supporting Democrats, and you shouldn't let your friends do so either.

Obama's Hugo Chavez Strategy

Our esteemed El Presidente greeted us in the new year with recess appointments of Richard Cordray as chief of the Consumer Financial Protection Bureau, and three new members of the increasingly rogue National Labor Relations Board. There was just one problem. The Congress was not in recess.

These appointments were consequently illegal, and in direct violation of the explicit text of the Constitution. As Stanford Law School Professor Michael McConnell explained in the Wall Street Journal on January 10, "It is hard to imagine a plausible constitutional basis for the appointments. The President has the power to make recess appointments only when the Senate is in recess."

McConnell further explained, "Article I, Section 5, Clause 4 [of the Constitution] requires the concurrence of the other house to any adjournment of more than three days. The Senate did not request, and the House did not agree to, any such adjournment."

The White House issued a supposed legal opinion to justify its action, claiming that the President refuses to take seriously the idea that the Senate was not in its Christmas recess after December 17. But somehow the Senate did manage to pass the President's payroll tax holiday extension on December 23. The "legal opinion" is consequently nothing more than the taunt, "So sue us."

Actually, the entire Consumer Financial Protection Bureau, yet another regulatory bureaucracy enacted in the President's notorious Dodd-Frank financial regulation bill, is transparently and undeniably unconstitutional under the Supreme Court's recent ruling in the Free Enterprise Fund case. That case involved the Public Company Accounting Oversight Board established by the Sarbanes-Oxley legislation.

The Court found that regulatory bureaucracy unconstitutional because it was an executive agency outside the direct control of the President. While the President made appointments to the Board, it was an independent agency reporting to another independent agency, the Securities and Exchange Commission. Moreover, the Board in that case determined its own budget financed by the fees it set itself on the regulated enterprises. A rogue institution outside direct public accountability and control.

But that didn't stop the President and the Democrat Congress from adopting the exact same framework for the Consumer Financial Protection Bureau in Dodd-Frank. That too is an independent body reporting to another independent body, the Federal Reserve, and even it has only limited and marginal oversight authority. Moreover, the Bureau sets its own budget as well, with fees it itself determines to assess on financial institutions, for the glory of being regulated by fools.

The response of the Obama Administration is catch us if you can. The first time Cordray's Bureau tries to enforce a regulation or fine against a bank, the action will be declared null and void because of Cordray's illegal appointment, with the entire agency struck down as unconstitutional.

But it is part of President Obama's reelection strategy for him to pose as hamstrung into taking extraordinary actions to counter recalcitrant Republicans seeking to protect Wall Street and big shot bankers from the loving Democrats just trying to protect the little guy. Most of what President Obama does and says, in fact, is calculated deception, based on fooling the little guy into supporting Democrat authoritarianism, or worse, in a second term, with calculation as to what that little guy doesn't and won't know, and what a party controlled media won't tell him.

So President Obama doesn't care about what the law says. By the time the legal system catches up with him, he will be reelected, he figures. And maybe by then he will have appointed more fellow Marxists to the Supreme Court, who don't care about what the law says either.

As McConnell added in the Journal regarding Obama's illegal appointments:

This is not the first time this administration has asserted unilateral executive power beyond past presidential practice and the seeming letter of the Constitution. Its slender justification for going to war in Libya without a congressional declaration persuaded almost no one, and its evading of the reporting requirements of the War Powers Resolution -- over the legal objection of Justice Department lawyers -- was even more brazen.

McConnell explained, "Indeed, the Obama Administration has admitted to a strategy of government by executive order when it cannot prevail through proper legislative channels."

For example, instead of seeking legislative changes to the No Child Left Behind education law passed under President Bush, it has used waiver authority to implement Obama policies that were never legislatively enacted. When even a Democrat supermajority Congress refused to pass cap and trade legislation, the President used the EPA to implement it instead, telling us ominously "there is more than one way to skin a cat." And when the Democrat supermajority Congress also refused to pass "card check" legislation, which would abolish secret ballot elections for workers to decide whether they wanted a union, the President's National Labor Relations Board announced it would impose the policy by regulation. And now the President is making illegal appointments to that Board.

And your friends and neighbors are considering whether to give this authoritarian a second term? Imagine what that would be like, with Obama never having to stand for election again. Would there even be another election?

Che's Tax Policy

Talk about calculated deception. President Obama has spent the past year telling the American people that the rich don't pay any taxes, leaving the middle class and working people to pay it all, when more nearly the opposite is true.

Even before President Obama was elected, official IRS data showed that in 2007 the top 1% of income earners paid 40.4% of all federal income taxes, almost twice their share of adjusted gross income. The top 5% paid 60.6% of all federal income taxes, while earning 37.7% of adjusted gross income. The top 10% paid 71.2% of all income taxes, while earning 48% of adjusted gross income.

By contrast, the bottom 95% of income earners paid 39.4% of all federal income taxes. That means the top 1% of income earners paid more federal income taxes than the bottom 95%!

Again, this was before the comprehensive, across the board, tax rate increases for every major federal tax central to President Obama's economic plan, which Obama has already enacted into current law to go into effect next year. He justified those soaring rate increases by saying they were necessary to ensure that the rich paid their fair share of taxes. But given the truth above, just what would be their "fair share?"

The same tax policies are found in Democrat-run states. In California, the top 1% of income earners pay 48% of all state income taxes. The top 1% of income earners in New York pay 41% of all state income taxes. The top 1% of income earners in New Jersey pay 46% of all state income taxes.

Moreover, in 2007, again before President Obama was even elected, the bottom 40% of income earners as a group paid no federal income taxes. Instead, they received net payments from the income tax system equal to 3.8% of all federal income taxes. In other words, they paid negative 3.8% of federal income taxes. The middle 20% of income earners, the actual middle class, paid 4.7% of all federal income taxes.

This is the result of Reagan Republican supply-side economics that began with Reagan and Jack Kemp in the 1970s and 1980s, continued through Newt Gingrich and his Contract With America, and further played out with the Bush tax cuts of 2001 and 2003. Reagan and his Republicans abolished federal income taxes on the poor and what liberals call the working class. Moreover, they almost abolished federal income taxes on the actual middle class (the middle 20%).

The origins of the Earned Income Tax Credit (EITC), which has done so much to reduce income tax liabilities for lower income people, can be found in Ronald Reagan's famous testimony before the Senate Finance Committee in 1972, where he proposed exempting the working poor from all Social Security and income taxes as an alternative to welfare. As President, Reagan cut federal income tax rates across the board for all taxpayers by 25%. He also indexed the tax brackets for all taxpayers to prevent inflation from pushing workers into higher tax brackets.

In the Tax Reform Act of 1986, President Reagan reduced the federal income tax rate for the middle class all the way down to 15%. That act also doubled the personal exemption, shielding more income from taxation for everybody.

Newt Gingrich's Contract With America adopted a child tax credit of $500 per child that reduced the tax liabilities of lower income people by a higher percentage than for higher income people. President Bush doubled that credit to $1,000 per child, and made it refundable so that low-income people who do not even pay $1,000 in federal income taxes could still get the full credit. Bush also adopted a new lower tax bracket for the lowest income workers of 10%, reducing their federal income tax rate by 33%. Again, he cut the top rate for the highest income workers by just 11.6%, from 39.6% to 35%.

Consequently, primarily as a result of Reagan Republican tax policies, even before President Obama was elected America actually had the most progressive tax policies in the world. When President Reagan was elected, the share of federal income taxes paid by the top 1% was 17.6%. After a quarter century of rate cuts, that share had more than doubled by 2007, as indicated above. That is because with the lower tax rates, incomes boomed along with the economy, and high income taxpayers had the incentives to pull their money out of tax shelters and invest it in the real economy, fueling the boom while increasing their reported income. That is why Jack Kemp always used to say, if you want to soak the rich, cut tax rates.

In an article last week in the Wall Street Journal, Art Laffer showed that Kemp's strategy has long been the most effective way to raise taxes paid by the rich. From 1921 to 1928, the top marginal income tax rate was slashed from 73% to 25%. Federal income taxes paid by the top 1% of income earners nearly doubled as a percent of GDP, from 0.6% to 1.1%. As a result of the Kennedy tax cuts adopted in 1964, the top income tax rate was slashed from 91% to 70%. Federal income taxes paid by the top 1% rose by 50% as a percent of GDP, from 1.3% to 1.9%.

Laffer adds in the Journal, "Since 1978, the top earned income tax rate fell to 35% from 50%, the top capital gains tax rate fell to 15% from 39.9%, and the highest dividend tax rate fell to 15% from 70%." Meanwhile, federal income taxes paid by the top 1% of income earners as a percent of GDP more than doubled from 1.5% in 1978 to 3.3% in 2007, while the bottom 95% saw their tax payments fall from 5.4% of GDP in 1978 to 3.2% in 2007.

Laffer asks why Obama sycophant Mr. Buffett would want to reverse those numbers. He could ask as well why would Mr. Obama.

The answer is neither wants to do so. Buffett is just playing for good publicity. Obama is just playing the voters to get reelected.

I would be tempted to call President Obama a liar. But I am not in such a generous mood.

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.