Obama Tax Hikes Will Cost Jobs

A study recently released by Earnst & Young, LLP says that if the Bush-era tax cuts for wage earners over $250,000 are allowed to expire, the country will lose 710,000 jobs while the economy declines by $200 billion.  The report's author, Robert Carroll wrote, “The higher tax rates will have significant adverse economic effects in the long run: lowering output, employment, investment, the capital stock and real after-tax wages when the resulting revenue is used to finance additional government spending.”

Of course, the Democrats are rushing to dismiss the report's assumptions, methodology, and conclusions because it does not fit their tax-and-spend doctrine.   White House spokeswoman, Amy Brundage posted analysis from Jason Furman of the National Economic Council which says that the report “fallaciously assumes that the tax cuts are used to finance additional spending, ignoring the benefits of what the president actually proposed, which was to use the revenue as part of a balanced plan to reduce the deficit and stabilize the debt.”  Even if all of the revenues raised by this tax hike went to helping reduce the deficit, it is only estimated to raise enough to fund the deficit for about eight days...not eight days of government spending, mind you, just the deficit spending.

Furman claims that Obama's plan "includes $2.50 of spending cuts for every $1.00 of revenue."  What in the history of Obama, or the Democrats...or the Republicans, for that matter...would lead anyone to believe that they won't continue to increase spending?  This president has presided over the largest accumulation of national debt in the history of the country, by far.  Debt has increased by more than $5 TRILLION in less than four years.  This claim is eerily familiar to when the Democratically controlled Congress promised President George H. W. Bush three dollars in spending cuts for every one dollar of tax hikes. Bush famously capitulated, breaking his "read my lips, no new taxes" pledge.  What he got was not spending cuts, but...you know what's coming, don't you...that's right, increased spending. 

Frum says that the study "leaves out the President’s proposed new tax cuts for business hiring and investment."  This is proposed, of course, and not actual, enacted tax cuts. Obama's cuts will, supposedly provide a "10 percent tax credit for business hiring and wage increases and allowing immediate write-offs of new investment through the end of 2012."  So, with these cuts, Obama is trying once again to micromanage the economy.  Businesses do not hire because they get tax credits for doing so; they hire when demand for their products and/or services is high enough to justify adding head count.  In prolonged downturns of the economy, businesses are even more hesitant to hire, due to the uncertainties of the market.  Instead, they make due with the employees they have working more and more overtime before hiring.  This is why hiring is always a lagging indicator for economic recovery.

In a May article on the NPR web site, columnist Fred Barnes said there are problems with, what he calls
"Obama's phantom tax breaks." Here's what he said:

"There are three big problems here. The first is that his 17 tax cuts have had little if any impact on small businesses or the economy. Basically, they failed. Second, his new cuts are much like the earlier ones. They're temporary, narrow, and not what small business owners are asking for, which are fewer regulations and a permanent cut in the personal income tax rate or at least no hike in that rate. Third, they have no chance of being enacted in 2012."

Frum continues by saying that even the Earnst & Young report acknowledges "that the short-run impact of extending the high-income tax cuts will be proportionately less than the impact of the middle-income cuts, noting that a 'disproportionate share of the tax change is likely to be channeled through savings for taxpayers facing the top tax rates as compared to other taxpayers.'  As I have been prone to saying a lot lately, SO WHAT?  This is just basically saying that raising taxes on the middle-income earners is also a bad idea.  It does not negate the claims that there will be job loss and economic downturn.

The main reason for the job loss seems to be that a large number of small businesses file at an individual rate rather than a corporate rate.  Obama claims that he will be giving "tax cuts for 97 percent of all small-business owners in America." and his proposal "isn’t about taxing job creators, this is about helping job creators.”  But, the businesses under $250,000 a year are not job creators.  These are mostly small, one or two person shops...consultants and freelancers.  The Heritage Foundation calculated that "the average American with $250,000 or more in income can expect an average $24,888 tax increase next year under Obama’s proposed policies."  Looking at Treasury Department data they determined that "1.2 million small businesses both had employees and earned more than $200,000 in 2007. So the President is putting about 1.2 million jobs—perhaps even more—at risk with this tax hike." 

Obama is a big-government socialist.  He claims that, in his words, "It is only government that can break the vicious cycle where lost jobs leads to people spending less money, which leads to even more layoffs."  He believes that not raising taxes on Americans is spending by the government.  And so far, all of his policies that are supposedly aimed at fixing the economy through big-government solutions have been complete failures.  So please excuse me if I might tend to accept the conclusions of the Earnst & Young report over anything this failed president or his minions might offer as evidence supporting their plans.   Expecting more of the same to work this time is the very definition of insanity.

Government Exploitation

In light of the ridiculous statements Obama has been making about the nature of success in this country, which I covered in my previous post, I thought I would share this video by Matt Zwonlinski, PhD on the subject of whether capitalism exploits workers.  He gives a very well reasoned and succinct coverage of the topic.

Dr. Zwonlinski concludes that while capitalists want to exploit workers, they can't very well in a free market society because of the competition for good labor.  Interaction between business and labor is voluntary and mutually agreed on.  Government, however, has the coercive power to exploit the ordinary citizens.  It is, in fact Government that poses the most danger of exploitation...and, therefore, danger to our liberty.

“The accumulation of all powers legislative, executive and judiciary in the same hands, whether of one, a few or many, and whether hereditary, self appointed, or elective, may justly be pronounced the very definition of tyranny.” – James Madison; Federalist No. 47.

Success? That's No Big Deal.

"If you got a business, you didn't build that, somebody else made that happen." ~ Barack Obama

This kind of thing has me heart sick for our country.  Not because Obama said it; I expect this kind of idiocy to come from Obama and his operatives.  What deeply saddens me is that he can say it and not be booed off the stage...that so many average Americans seem to be buying into this collectivist, anti-American drivel.  Not so long ago we were not afraid to condemn this kind of socialist rhetoric as dangerous to our very way of life...to our liberty.  Now, it resides in the White House.

Obama says, "If you were successful, somebody along the line gave you some help.  There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system we have that allowed you to thrive."  While this is all true, Obama wants us to draw the conclusion that since, as John Donne famously penned, "No man is an island, entire of itself," we should not have a problem giving more of our money, time, and freedom to the collectivist, central government.  In the mind of Obama and that of  his ilk, the government is the font of all opportunity, all provision, all wealth, and all power...but only when they are in charge of it.

Success, regardless of what Obama thinks or says, does not happen because of the goodness of government.  Taxes, fees, regulations, and bureaucratic red tape place ever-larger road blocks in the path of small business.  This makes the already difficult task of business success almost impossible.  No, success happens in spite of government, not because of it.  


Successful entrepreneurs are not necessarily the smartest, or hardest working in our society.  But they are the ones who have used the intelligence they have, worked very, very hard, taken the risks, overcome the failures, and continued to strive toward their goals. They must have the right product or service, in the right location at the right time.  They risk their own money, sweat, and family lives to get the business started, and then more than 50% go out of business in the first five years.  Many successful entrepreneurs have failed multiple times in the process of learning how to succeed.  These are costs that the average American is not willing to pay.


Obama does not have a clue as to what it truly takes to succeed in business, and he continues to show his ignorance through his policies that have given us an economy that continues to falter with dismal unemployment numbers.  How dare he lecture us on what it takes to succeed!  It is not the teacher who gives the business owner money and stands by them through the long nights of paper work and planning.  It is not the road worker or the fireman who share their anguish about how they will make the next payroll.  It is not the government bureaucrat or politician who gives them the motivation and drive to keep going, even when it seems impossible to win.  No, these business people are out there to fail or succeed all on their own.   


And what about this "unbelievable American system we have" that allows them to thrive?  How can they get their supplies or ship their goods without the roads provided by the government?  What about electricity, communications, water, sewage infrastructure?  The small businessman didn't build those, but he uses them all for his success.  This is true...SO WHAT?!  All of those things are the natural outcome of people interacting together in a society.  Everyone is doing what they can to make a living by providing products or services to his fellow man.  The carpenter frames the storefront.  The electrical worker brings power to the building. The construction worker builds the roads to bring customers to the store.  All of these people ply their trades for their own self-interest.  The store owner owes them nothing.  They have been paid in full.  This has nothing to do with government.  We do not need government's permission to do it and we do not need their interference to make it happen.  See my earlier post, Why Feed The Pig, for more on the subject of government's involvement in infrastructure.


Without people interacting in this way there is no wealth creation, and, therefore, no money for government.  Business came first...people came first.  Government is a creature of the people.  Nothing -- NOTHING --of value originates with government.  In this country, The People institute government to serve them, not to rule them.  That is the principle of republicanism.


It has not been very long ago when the majority of people in this country celebrated success.  How then, can so many people now buy into its denigration, as if it is only a matter of luck and the largess of a benevolent government?  This attitude has not come about overnight.  It is the result of years and years of continuous programming.  Over the last decades we have been fed on a  diet of  class warfare that has told us that the rich have only succeeded on the backs of the poor.  We have been lead to believe that the economy is a zero-sum game where the more the rich make, the less there is for me and you.  We have had the self esteem movement inflicted on us, which tells us that everyone is special, whether you are a doctor or a welfare bum.  Multiculturalism has also told us that all cultures are equal, whether they have brought us wealth, art, and science, or they stone their women for talking to a man, or kill each other in clashes between warlords...one's as good as the other.  All lies!


All of these things have been designed to convince us that no one is special.  We all "deserve" a trophy.  It's "only fair" that those who have more should "share" it with those who have less...after all, they were just lucky and were helped along by all the rest of us.  It is all a scheme to bring down the very idea of American exceptionalism.  If Americans believe that their system of liberty, capitalism, and "small r" republicanism is nothing special, no better than any other country's system, then "fundamentally changing America" will be much easier. And now, after more than a hundred years of Progressive (socialism in sheep's clothing) teachings and propaganda, the average American has just accepted much of socialism as facts of life.  They have been dumbed-down as citizens in that they don't know or care about how their country operates...or is supposed to operate.  They just believe that government involvement is necessary for any real success.  They can't imagine how roads or infrastructure could possibly be built without an all powerful central government.

After Obama has made moves to take control of banks, auto companies and the healthcare industry, we hear that businesses are just a product of the collective.  Why then shouldn't they be controlled by the central nexus in Washington D.C.?  It only makes sense, right?  This is the central message of socialism.  Too many are either too busy worrying about the next winner of America's Got Talent, or have just become so jaded by the whole process that they have chosen to ignore it and Hope for some good Change.

If there's any hope to save liberty in this country, we must rouse ourselves from this stupor.  We must pay attention.  We must understand the foundations of our freedom and how it is being threatened.  And then, we must act to correct the damage.  In 1790, John Curran rightly said that, "It is the common fate of the indolent to see their rights become a prey to the active. The condition upon which God hath given liberty to man is eternal vigilance.”  Are we lazy?  Are we common?  Or are we Americans?  Then, let's stand, as Americans, vigilant against threats to our liberty.

Obama Care - Still a Bad Idea

Regardless of whether the Supreme Court found it constitutional or not, I thought it was time to remind everyone of why Obama Care is still a bad idea.  The basic facts have not changed since I did a post about the Democrat's wild rush to pass this monstrosity back in July of 2009. At that time, Gallup polls indicated that 56% of likely voters believed that passing some form of healthcare reform was important.  This past week, Rasmussen reported that 53% of likely voters support repeal of Obama Care.  Gallup reports that, "Americans are more likely to say the 2010 healthcare law upheld by the Supreme Court last week will hurt the national economy (46%) rather than help it (37%), while 18% say they don't know or that it will have no effect." Which agrees with what the Congressional Budget Office said in 2009 when it reported that the Obamacare legislation would raise federal health care costs"to a significant degree" while not reducing health care costs in general.  This tells me that while people thought there were problems with the health care system, they do not believe that Obama Care is the right solution.  But, the majority of Americans have continued to say that they do not want a government takeover of health care all along.

The very basis of Obama Care were the claims made by supporters that a large number of Americans were not covered by health insurance.  Here's what I wrote then, which is still true:

The President and the Democrats trot out all of the normal, emotionally charged statistics to back their claim that we are in a health care crisis. Particularly they point to the last U.S. Census data that shows that nearly 47 million were uninsured as of the 2006 census. Taken at face value, this seems like terrible thing, but once the data is broken down you begin to see a different picture. For example, 10.2 million of this number is made up of non-citizens. 8.3 million are between 18 – 24 years old, a group that typically chooses not to spend their money on insurances. Another interesting group is the 9.2 million with household incomes of $75,000/year or above. Now that number does not seem nearly as tragic, does it.

So, the lie is revealed.  The 47 million who are tragically uninsured is really more like 19 million.  Of these, many were only temporarily uninsured do to job changes but were reported in the snapshot of the 2006 Census.  But, let's take 19 million as the number.  That is 19 million of a population 310 Million, or 6%.  Should we completely overhaul a system that is working for most Americans for 6%...a number that seems to be high to begin with?  Should we trust the central government to control one-sixth of the economy?  From my earlier  post:

What in the history of the Federal Government or the career of Barack Obama recommends them to be able to run health care any better than the private sector? I submit that, in fact, the opposite result is indicated. Government never has to compete…if they fail; they just raise taxes or print more money. More Americans (45%) trust doctors and hospitals to address the problems than either the Democrats (33%) or Republicans (10%). Beyond the trust issue, the Federal Government has long been known as a paragon of inefficiency. While large corporations can have their own level of bureaucracy, they seldom pay $2,000 for a toilet seat or hammer. Companies are responsible to their stock holders and must compete against other companies to survive…unless they are a bank or auto manufacturer, I guess. The government mostly exists to further its own size and power.

Look, we didn't want it when it was Hillary Care, and we don't want it now.  Let's repeal Obamacare.  Let's dump the largest tax increase in the history of the country.  To do that, Obama Must Go!  Elections do indeed have consequences.

Who's Money Anyway?

On Monday, President Obama called for extending the so-called Bush tax cuts for anyone making under $250 Thousand a year while letting the cuts expire for those making more than that. While everyone can agree that raising taxes on the middle class during this troubled economy, Mr. Obama continues to use one of the major tools of socialists everywhere...class warfare.

One of the most troubling parts of his speech was when he said, "The money we're spending on these tax cuts for the wealthy is a major driver of our deficit, a major contributor of our deficit, costing us a trillion dollars over the next decade."

Okay, where to start? First of all, Mr. Obama, like all statist, central planners seems to think that all money belongs to the government. He believes that letting the wealthy keep their money is spending by the government. This is in direct opposition to the principles of this country's founding. The power...and the money, for that matter...comes from the People. It is ours first and we decide how to invest it in government. It is not the other way around. When we keep more of our money, it is not spending by government.

Let's look at an example of how this kind of thinking would work in another part of society. Say you go to a car dealership to buy a new car. You want something nice, with decent gas mileage numbers, but can't afford anything too extravagant. You decide on a Ford Fusion. You go to the dealership and pick the car you want. Now, when the paperwork is being completed, the manager of the dealership comes and tells you that you make too much money to buy a Fusion. You have to buy a much more expensive Lincoln MKT. "You see," he explains, "We are behind our quota and our budget is already overspent. We can't afford to spend the difference between the Fusion and the MKT on you this month. We will have to sell you the more expensive vehicle."

Does this seem like a ridiculous example? Why, because the dealership doesn't have armed agents to force you to buy the more expensive car? Or, maybe because nobody voted? What if all of the car dealers in your area voted and decided to give themselves the power to force you to buy a more expensive car? Would it be okay then? No, huh? Okay, you're a tough customer. What if everyone in your state voted and a majority said dealerships could force people of a certain income level to buy more expensive cars than they wanted? Then it would be okay, right? I mean everybody voted and all. Okay, still not convinced? What if they told you that they were going to take part of the extra money you spend for the MKT and help someone with less means buy a Fiesta? That would be nice...you could help someone else own a car.

Well of course it is a ridiculous example. It is your money...money you earned. What do you care if the dealership has mismanaged their business and are in financial trouble? If you don't buy a car that is twice as expensive as the one you want, the difference is not spending by the dealership. It's money they never had and were never entitled to in the first place. Helping someone with a lower income than you buy a Fiesta does not make any of it more acceptable. Why would it be more acceptable, or moral, when government does it? I propose that it is not.

Secondly, the President contends that the so-called "spending on these tax cuts for the wealthy" is a "major contributor of our deficit." This also is a ridiculous assertion. As I have chronicled in several past posts, which I list below, our deficit is not caused by a lack of taxation...of revenue...but by out of control spending. Deficit is the result of spending more money than you have...deficit leads to debt. Recent estimates are that the revenue raised by the allowing the tax rates for those over $250,000 in income to return to the pre-Bush levels would fund our deficit for about eight days...eight out of 365, or about 2% of the deficit.

This president is not serious about fixing the economy. With this assertion, Obama just presumes that every bit of government spending is absolutely vital and legal. He has no plans for cutting spending...in fact, he only continues to propose new spending. He has raised the nation's debt by more than $5 TRILLION in less than four years, more than all other presidents combined. Joblessness under this administration continue to be dismal. And all he seems to have to offer are repeal the Bush tax cut for the wealthy, a move which many in his own party don't even agree with, and the largest tax hike in the history of the country through Obamacare. This is the same man who said, "The private sector is doing fine. Where we are seeing weaknesses in our economy have to do with State and local government."

What we can no longer afford to spend on are big-government solutions that have caused massive deficit and debt. We can't afford policies that kill jobs and ruin whole industries. We cannot afford to allow politicians to invest taxpayer money in business of their choosing to see those companies fail and take our money with them. What we cannot afford in this country is Obama and his like-minded Marxist, central-planning cronies. This man...this total failure of a President...must go, and we need to sweep his type of political theory out of government behind him.

Related Posts:
A Spending Problem

Are You Getting It Yet?

The Debt from Two Perspectives

The National Debt in Perspective

Follow The Money

In a discussion about money's corrupting influence on politics, I told my friend that it affects both parties, not just the Republicans.  He said, "Follow the money."  With little effort, I was able to find some very good data from OpenSecrets.org.

The following lists show the All-Time Top Donors, and the Top Individual Contributors in the 2010 election cycle and the percentage given to Democrats and Republicans.  The links on the headings will lead to more information.

All-Time Top Donors:
# 1. ActBlue - 99% Dems; 0% Rep
#2. AT&T -  43% Dem; 55% Rep
#3. AFSCME - 92% Dem, 1% Rep
#4. Nat. Assoc. Of Realtors - 45% Dem; 47% Rep
#5 NEA - 74% Dem; 5% Rep
#6. Goldman Sachs - 57% Dem; 39% Rep
#7. Service Emp. Intl - 75% Dem; 2% Rep
#8. American Assn for Justice - 88% Dem; 8% Rep
#9, IBEW - 96% Dem; 2% Rep
#10. American Fedn of Teachers - 87% Dem; 0% Rep.


Top Individual Contributors (2010 Election):
#1. Stephen Bing - 100% Dem; 0% Rep
#2. Haim & Cheryl Saban - 100% Dem; 0% Rep
#3. Fred Eychaner - 100% Dem; 0% Rep
#4. Steve & Michele Kirsch - 100% Dem; 0% Rep
#5. Bernard & Irene Schwartz - 100% Dem; 0% Rep
#6 Jon S & Joanne D Corzine - 98% Dem; 0% Rep
#7. Melvin & Brenda J. Simon - 100% Dem; 0% Rep
#8. Peter G & Georgia K Angelos - 99% Dem; 0% Rep
#9. John M. O'Quinn - 100% Dem; 0% Rep
#10. Roland E. & Dawn Arnall - 34% Dem; 66% Rep

Funny, Koch doesn't appear until #54, under a lot of heavy weight Democratic donors...though the Left would have you believe that all political evil originate from Koch Industries.

God Bless America

Nothing needs to be added.  Happy Independence Day!

President Reagan's Address to the Nation on Independence Day - 7/4/86