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Tuesday, September 20. 2011
President Obama's path to reducing deficits is being laughed off as playing politics with demagoguery while deficits widen. But, according to Obama, "this is not class warfare; it's math."
As the Associated Press Fact Check points out:
That doesn't include the higher charges paid by middle-class and wealthier retirees for Part B Medicare, nor the lesser amounts received by them from Social Security relative to prior incomes or contributions.
One of the areas targeted by the tax-more crowd is capital gains. There's no recognition of the extra risks involved in investing, that much of the gains represent inflation, or that much or all of the amounts invested were already taxed.
Then, there's the false assertion that the middle class suffered most during the better pre-recession period.
President Obama may be appealing to his base, largely made up of those who pay little or no taxes already, but is cementing the attitude of those who are productive who see him as further undermining and stalling economic recovery.
The International Monetary Fund just downgraded the economic outlook for the US (and Europe). Yeah, higher taxes should fix that, huh?
Tracked: Sep 20, 21:01
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"President Obama's path to reducing deficits is being laughed off as playing politics with demagoguery while deficits widen."
As an "offshore observer" up here in Canada, it seems to me that the bad news is that the only way to really tackle your deficit and debt is to tax more and spend less. Republicans will inevitably oppose the former; Democrats will inevitably oppose the latter. No joy in Mudville, indeed.
Obama's problem is that more tax revenues are more likely to be seen as "found money" for a government spending spree rather than an opportunity to beat down the outstanding balance on the old credit card.
The "found money" concept is already happening. After all, Obama issued his "jobs proposal" which is "fully paid for". How?
Well, if we're having these savings, then shouldn't they go toward reducing the deficit?
Nope. Gotta divert those savings toward 'creating jobs', deficit be damned.
Former Michigan Governor Granholm (D) was on air today speaking on how we can take the money from the 'millionaires tax' and apply it to 'creating jobs'. Ummmm....again.....what about the deficit?
The deficit is not an issue the Democrats (and some Republicans) really care about. It's a side issue, to them. In their view, you can run deficits forever because you can print money forever. Seriously. At least one Democratic congressman (and I'm sure many more) is on record saying this.
Curing the problems of a debt driven recession means getting debt under control, not letting it spiral out of control. Try telling that to the academics, though.
It's easy, from the stance of being in opposition, to assume that he is alienating a group of people who may vote for him.
I'm not convinced. Living in a region where Obama supporters dominate, and where class warfare language is rampant, I've seen a particular trend developing.
That trend is one in which Obama supporters have slowly abandoned him and his views. Not necessarily because they disagree, but because he has shown no vision and no backbone. He is not he man they had hoped for, that would literally force through the doctrinaire policies they enjoy seeing.
With recent events, and the unwillingness of Republicans to discuss the tax issue in a meaningful way, Obama is back at the table with policies he's seen rejected twice before already. Why?
Because it's giving him street cred with his former supporters who are abandoning him. He hasn't given up - he's only just now begun to fight! Rally round, this guy doesn't give up the ship!
We may think this is bad policy that would hurt him. I certainly see no redeeming qualities in what he is proposing. But there are many who are heartened. I believe Obama is starting a new meme to carry himself through the election. "Hope and Change" has become "I will bring the fight to them again and again."
The Republicans, rather than simply saying "No", would be better served to follow a different course. That course is to say "We are willing to talk about tax increases within the context of overall tax reform. We are pleased the President has taken some baby steps toward this issue, and we are not opposed to changes in the tax code which will allow our high earning individuals to pay what most feel is fair and just. But we will only have this discussion within the framework of broad tax reform to simplify and improve the tax code.
We will not reject this proposal out of hand, but will consider it as part of a larger discussion to create a code that will help the nation generate jobs, work more efficiently, and be competitive in the world market."
I know this is the actual stance of those who have rejected this plan. But it is not being properly handled by the Republican media managers. They are allowing Obama to create the discussion, and that discussion is "the wealthy don't pay enough and the Republicans don't care." It's a winning meme, if it isn't thwarted early.
I agree with you completely. We don't know what the Republicans are saying in private, but their public stance on this issue is dumb. They should give Obama what he wants. A tax on income (AGI) above $1M won't do much to reduce the deficit because it won't collect that much in tax revenues. It will target liberal Obama supporters who are inviting a Conservative challenge to be tested on their sincerity, so let's accommodate them. There aren't that many taxpayers who will be affected by it, it will do what the AMT was supposed to do but no longer does, and it won't have a huge negative impact on job formation. Instead of being cast as the Party of No, the Republicans should use the issue as a bargaining chip to get IMMEDIATE cuts in federal government spending, which will test Obama's sincerity when he says his goal is to cut budget deficits.
These are all excellent suggestions. And of course, not all Republicans need to play along--just enough to pass the increases. It could be a brilliant strategy of triangulation by the Republicans. Those "moderate" Republicans could agree, the more conservative ones could balk, but still allow it go forward, and then when the policy turned out to have predictably detrimental effects on the economy, the conservatives could say, "we told you so."
Great idea...sadly, I don't think the Republicans will do it.
I don't think they have to agree or implement anything in particular. They do need to shift the point of discussion away from 'tax the rich' to 'tax reform is necessary'.
You can cover both with tax reform. Part of the reason Obama's claim that "this isn't class warfare" is BS is related to the fact that if he was honest, he'd say he's looking for tax reform to accomplish these tasks. But he's not, he's looking to only tax the rich. Which is class warfare, not math.
Let's take this tax argument to the extreme- if the tax rates were set to 100% on the rich, would that fix our deficit and make our economy grow? If tax rates on the rich were cut to 0%, would that make our economy grow?
If spending was cut by 50%, would that make our deficits less? What if it was cut by 20%? What if the government actually spent more money- what sort of effect would that have on the deficit?
The truth is, the deficit is caused by spending, and that tax rates on the rich are a red herring intended to incite class warfare. Don't be a sucker people.
BTW, if and when the capital gains tax rate is raised, I expect the housing market to die another death. Why would anyone invest in real estate only to end up paying ordinary rates on the appreciation in value of a long-term investment property? From my own experience as the past owner of a rental property, I know that a low capital gains rate indirectly benefits renters, but when those rates are high, property owners charge higher rents, passing along their higher costs to the lower income folks who rent. If the Feds want to kill housing construction for good and prevent any near-term recovery of the real estate industry, a higher capital gains rate is certainly one way to accomplish that.
Nobody is listening to him anymore - that's what the real problem is. It has been apparent for a long time that the President and most of his Administration couldn't find their asses with both hands tied behind their backs.
They are all ideologically biased towards thinking that the American public, Joe Citizen, is basically stupid. Certainly Elizabeth Warren thought so as did Janet Neapolitano and the rest of the crew.
And despite doing their best to convince the populace they are stupid, it turned out they weren't. And they are pissed off about it.