Wall Street is ablaze with what has been called “the biggest financial crisis since the Great Depression,” and a president with socialist tendencies is threatening to feed it a poison pill.
Through sleight of hand, Barack Obama has wheedled himself into America’s good graces, presenting himself as some kind of healer.
But Obama’s encounter with a plumber from Ohio revealed his true colors, and yielded the best summation of his financial policy to date.
Asked if he would increase taxes, Obama found it sufficient to tell “Joe the Plumber” that he wants to “spread the wealth around,” a phrase that smacks of socialism. Hence Obama’s economic promise: punish the rich to address the grievances of the lower classes.
In the most shameless example of class warfare, Obama has proposed to raise taxes in the toothsome interest of “fairness.” With that in mind, he is pitching a plan to cut taxes for a stunning 95 percent of working families. It has a pleasant ring to it, but as usual, the devil’s in the details.
In the first place, the 95 percent tax cut is statistically incoherent, given that over a third of Americans pay no income tax. How do you conjure a cut for people paying nothing to begin with?
The Democrats have invented a clever rhetorical loophole for this issue: They have boldly decided to redefine the term “tax cut” to suit their needs. Obama’s genius is to call for a string of welfare benefits under the much less reproachable banner of “refundable tax credits.” It makes things so easy when you are free to rework the English language, doesn’t it?
Here’s the truth. People will ostensibly receive these benefits even if they don’t have income-tax liability, so in essence, the government will be taking the dollars of the people who pay taxes, and redistributing them to the masses ““ and there will be about 63 million of them by 2009 ““ who have no tax burden. Who says there’s no such thing as a free lunch?
Now aside from his welfare-qua-tax credit scheme, Obama promises to beget the most prolific tax hikes on “the rich” in American history. He’s now telling people that “rich” constitutes family income of $250,000. But in 2007 he defined it very differently, reasoning that “only six percent of Americans make more than $97,000 ““ so six percent is not the middle class. It’s the upper class.”
The government already uses income tax to deflate economic disparities. The richest one percent of us earns 22 percent of the total national income but pays 40 percent of the federal income tax. The poorest 50 percent, which earns 13 percent of the income, pays less than 3 percent of the tax burden. Yes, you read that right.
The “wealthy” would bleed heavily from exposure to Obama’s tax plan, which includes increases in the income tax, Social Security tax, capital gains tax, dividend tax and estate tax.
What’s most upending is his proposal to expand the capital gains tax, which would decrease the amount people receive from selling their investments in stocks, bonds, real estate, and other assets.
Obama has ignored an abiding axiom of economics: It’s not smart to raise taxes when the economy’s in the tank, a lesson learned when misguided tax increases turned a recession into On the other hand, McCain has promised to keep taxes low for everyone, even cutting the tax on capital gains in half for a two-year period. That’s a measure for economic growth.
An Obama presidency would put a stranglehold on markets, and it’s frightening to imagine how they will react in the intervening months between Election Day and inauguration day if he is elected. It’s easy to imagine a fever pitch of selling that could cause the economy to fall pell-mell into a tizzy. Of course, the flurry of selling will be blamed on the Bush administration, but there’s no question Obama will be partially culpable.
Obama is willing to lead our economy to slaughter to get elected. But here’s the bear of it: He doesn’t really have a choice.
He won’t admit it, but he will eventually have to raise taxes on everyone, not just the top five percent. With a mind to create the biggest expansion of government since the New Deal ““ nationalizing health care, expanding Social Security, Medicare, Medicaid, etc. ““ he has to tax the heck out of us. It doesn’t cost him anything, but it costs us everything.
When this happens, which it will, things are going to get a lot worse.
While the middle class might get some temporary relief, that will be to the detriment of lower wages brought on by the tranquilizing capital gains taxes, which will force companies to cut jobs and raise prices.
Skeptics should simply look to Europe, where according to a Stanford economist, “high taxes and bloated social-welfare spending … have driven down their standard of living 30 percent relative to the United States in a little more than a generation.”
When one thinks about the significance of this election to future generations, it’s troublesome that people don’t seem to question a candidate’s policies and instead allow themselves to be romanced by rhetoric and bought by falsities.
Obama’s demagoguery might win him votes, but it will hurt him sorely in office, and cripple the free market. Look out, capitalism ““ the bell tolls for you!
E-mail Pherson at apherson@media.ucla.edu. Send general comments to viewpoint@media.ucla.edu.