In my Townhall column today – The fickle finger of fairness? – I took President Obama at his word: “No bailouts, no handouts, and no copouts.” But as seen in this week’s video, below, others (like ABC’s Jake Tapper) think Obama is practicing class warfare to distract from all his landmark legislative achievements – which are so incredibly unpopular one might question the use of the word “achievement.”
New jobs come from entrepreneurial insight into new ways of profitably producing goods; they are paid for with investments. After a bust, old ratios of prices and wages cease to work, requiring time for entrepreneurs to refigure. But capitalism’s basic scenario — savings, investment, productivity gains, trades — still applies.
Some folks prefer to short-circuit all this, simply robbing Peter to create a job for Paul.
They’re known as politicians.
President Obama proposes spending an additional $447 billion to create jobs, even though our economy is already gummed up with debilitating debt. The Cato Institute’s Dan Mitchell argues that taking money from the economy’s right pocket (taxes) and putting it in the left pocket (spending) doesn’t create economic growth or long-term employment, but, for those who happen “to be sitting in the left pocket . . . [i.e.], a state or local politician that’s getting money from the so-called stimulus,” they think “it’s a good thing.”
Congressman Jesse Jackson, Jr. (D-Illinois) says that the “only way out” of our current mess is to offer every one of the 15 million unemployed Americans a $40,000-a-year job . . . with the federal government.
Most Republican presidential candidates pitch their (quite mythical) job-creating skills, too.
The Republican presidential candidate banned by the national news media — no, not Ron Paul, the other one, former New Mexico Governor Gary Johnson — put it best. “The fact is,” he said at the only debate he was allowed to appear in, “I can unequivocally say that I did not create a single job while I was governor.”
This is Common Sense. I’m Paul Jacob.
President Barack Obama says “it’s only right that we ask everyone to pay their fair share in taxes.”
Rich folks must be wondering when their refund checks will start arriving in their mailboxes.
The current income tax is progressive, requiring those making more to pay a higher rate. Thus, those earning a million dollars pay, on average, 29 percent of their income to Uncle Sam, while those taking home $50,000 to $75,000 a year pay an average of 15 percent. This progressivity can be seen in wide angle, too: Figuring credits and exemptions, 47 percent of Americans pay no federal income tax at all. Meanwhile, the top ten percent in income pay 73 percent of all income taxes collected.
And Obama’s idea of taxing “the rich” would only make it more unfair.
But, wait, what about billionaire Warren Buffett? Doesn’t he pay a lower percentage of his income in taxes than does his secretary?
Most of Buffett’s income comes off his investments, not in salary. That’s capital gains, taxed at 15 percent. Obama decries it, but doesn’t propose any specific increase in capital gains taxes. Why? He doesn’t want the stock market to crater. As he put it two years ago, “The last thing you want to do is raise taxes in the middle of a recession.”
So, when President Obama says the rich should pay their fare share, what does he mean? Simple: “If you’re not rich, vote for me.”
This is Common Sense. I’m Paul Jacob.
In one way, President Obama has had it hard: He inherited a mess.
In another, he has had it easy: His predecessor blew it big time.
As James Bovard put it in his 2004 book, The Bush Betrayal, “George W. Bush came to the presidency promising prosperity, peace, and humility. Instead, Bush . . . spawned record federal budget deficits, launched an unnecessary war, and made America the most hated nation in the world.”
The election of Obama turned foreign opinion around, but his actual policies have proved no advance over his predecessor’s.
Bush started the bailouts; Obama bailed out more.
Bush pushed through an under-funded entitlement, Medicare Part D. Obama leveraged his political capital to take an even bigger step towards socialized medicine.
Bush understandably undertook the Afghanistan venture — but the Iraq conquest and reconstruction betrayed his promise to forswear “nation-building.” Then Obama lingered in Iraq, upped the forces in Afghanistan — long after the rationale became murky — and also attacked a number of other countries, including Libya. So much for the winner of the Nobel Peace Prize.
But when it comes to America’s misguided War on Drugs, Obama has been especially disappointing. No-one really expected much of Bush. But Obama? He said he’d reverse policy at least vis-à-vis the states that voted in medical marijuana. Yet federal agents continue targeting medical marijuana growers.
We aren’t being served well by the presidents we spend so much time thinking about.
Could it be because they don’t really think much about us?
This is Common Sense. I’m Paul Jacob.
The president and congressional leaders came to some sort of an agreement last night. It sounded a tad vague to me. Apparently, politicians still fear taking pride in identifying actual cuts.
Harvard economist Jeffrey Miron, writing last week, argues that the deals then on the table amounted to “fiddling while Rome burned.”
The only thing surprising about the above sentence, to savvy readers, might be the suggestion that “Harvard economist” is not a contradiction in terms. But hey: Judge for yourself.
“The problem with the Democratic position is that it regards redistribution, rather than economic productivity, as the prime goal of government policy,” Miron reasonably asserts. The problem with the Republicans? A “refusal to distinguish between the tax revenue that comes from higher rates and that which comes from fixing tax loopholes that inappropriately privilege certain consumption or production.”
Higher tax rates won’t work, because “the available revenue from the wealthy is far too small. And higher taxes discourage economic growth, making deficits worse.”
But Obama’s idea of closing some loopholes is not a horrible idea, Miron argues. These so-called loopholes are bad policy to begin with, integral, as they are, to bipartisan folly, favoring some folk at the expense of the rest. Picking winners — what some tart up as “industrial policy,” but most of us identify as “buying votes.”
Miron says that Medicare, though, is the biggest ongoing fiscal destabilizer. Cuts must be made there.
Those will likely be the hardest to secure.
This is Common SEnse. I’m Paul Jacob.
Cato Institute’s Chris Edwards succinctly explains that not only does Rep. Boehner’s budget plan fail to cut spending $1 trillion over the next ten years — as advertised — but it “doesn’t actually cut spending at all.”
Zilch. Spending goes up.
“Why doesn’t the House leadership propose real cuts?” asks Edwards. He means identify specific line items that can be cut back — now, as in today or this week — rather than setting optimistic and unenforceable spending caps on future congresses. This especially goes for “caps” that don’t actually cap spending, but allow it to grow by, say, $7–8 trillion over the next decade.
Boehner’s plan allows debt to continue to pile up at historically huge levels. But he’s not alone. Obama has no plan. Reid’s plan? Calling it “smoke and mirrors” gives smoke and mirrors a bad name.
The Penny Plan, introduced by Florida Rep. Connie Mack and endorsed by Kentucky Sen. Rand Paul, has some merit. It would cut the budget by one percent for six years and then cap federal government spending at 18 percent of GDP.
Yes, cutting federal spending by only one penny on each dollar (one percent) for six years, rather than increasing spending by upwards of 7 percent a year under the Congressional Budget Office’s baseline budget, would balance the budget in eight years.
But to restore balance and end the debt crisis, a penny cut has to actually be a cut.
This is Common Sense. I’m Paul Jacob.
Yesterday President Obama declared that no one is arguing for government default. But isn’t it amazing to see so many politicians work so hard to ensure that un-argued-for goal?
There are two parts to a default. The first is running up debt; the second is not paying it back. Like it or not, advocate it or not, sovereign debt repudiation comes closer as American politicians lumber on with the first part.
Of course, there are folks who think the American people should simply repudiate their government’s debt. Over at the Mises Institute, Justin Ptak provides citations from more than one economist advocating just that.
Gary North states that the day is fast approaching when the phrase “full faith and credit of the United States government” will “provoke universal laughter. . . .” He insists that “the credit rating of the United States government will be marked down from AAA to AA. It will then be marked down to A.” What’s more, he says this is a good thing: “For every notch down that it falls, the national day of deliverance draws closer.”
Paranoid? Fringe? Hopeful? No matter how you categorize such talk, it’s not crazy to think about, since the probability of default grows as the debt increases.
A default could have a beneficial effect on America’s politicians: They would be unable to finance further deficits. Reality’s cold, hard fist — that is, un-amused investors — would rein them in.
This is Common Sense. I’m Paul Jacob.
I never expected a Washington Post writer to so soundly assail a presidential stream of pro-bailout nonsense.
In a “Fact Checker” column entitled “President Obama’s phony accounting on the auto industry bailout,” Glenn Kessler concludes that a “virtually every claim” by the president in recent comments about the auto industry “needs an asterisk, just like the fine print in that too-good-to-be-true car loan.”
President Barack Obama says General Motors will rehire all workers laid off during the recession. But he’s referring to only a sliver of the 68,000 employees General Motors has dropped from its work force since 2006.
Obama says Chrysler has repaid “every dime” it got from taxpayers “during my presidency” — years ahead of schedule. But he omits four billion forked over to Chrysler during the last month of the Bush presidency! So . . . Chrysler has repaid every dime except four billion dollars. (That’s 40 billion dimes, by the way.)
And so forth. Kessler leaves the job of analyzing the wisdom of shoveling billions of taxpayer dollars into the coffers of failing firms to others. So he doesn’t observe that capital forcibly rerouted into “creating jobs” in foundering enterprises cannot be turned to more productive uses in the more successful enterprises from which the capital was grabbed. This is another fact Obama neglects.
It’s not the 2008 presidential campaign any more. Maybe the left-leaning press will no longer automatically bail out Obama when he distorts the truth?
Let’s see where we are in mid-2012.
This is Common Sense. I’m Paul Jacob.
To those who hold that government should be all things to all people at all times, the prospect of cutting back the ever-escalating level of government spending is a non-starter. Like their chief spokesman in the White House, they propose a different solution: Make “the rich” pay more.
Never mind that while President Obama talks about socking “millionaires and billionaires” who “can afford it” with higher taxes, the hikes are actually designed to wallop folks making $200,000 a year. That’s actually a tad less than a million. In many areas, such a salary hardly qualifies one as rich.
We’re supposed to ignore the fact that federal income taxes remain progressive. The richer you are, the more you pay. That’s why the top five percent of earners pay 59 percent of federal income taxes, while roughly the bottom half pay nothing at all.
“Fair” becomes slippery.
Also slippery? The real-world outcomes. Say tax rates were raised enough that deficits might be covered. What would happen?
Just recently I had dinner with a couple of millionaires. “You know, we don’t have to work,” they told me. “We already have enough money to live out the rest of our lives, so if we’re going to be punished tax-wise, we’ll simply retire.” Comfortably, in fact.
But what about those they employ? What about the enterprises and jobs they won’t create?
Maybe punishing productive folks with even higher taxes isn’t such a great idea.
This is Common Sense. I’m Paul Jacob.
During Wednesday’s big speech, just as President Obama laid into Rep. Ryan’s Medicare reform proposal, Vice President Joe Biden skirmished with the Sandman. Zzzzz.
Obama wasn’t boring, though. He had a theme.
As he saw it, the Republicans’ “pessimistic” vision is of an “America [that] can’t afford to keep the promise we’ve made for our seniors” or “invest in education or clean energy” or fix “our roads” or afford to do all the cool things done by South Korea, Brazil, and China.
He didn’t explain how it might have come to pass that our government became disabled. He barely mentioned previous budgets’ waste — on goofy projects, overpayments, duplicated efforts, and undeclared, never-ending wars. Or how government regulation and subsidy might be the reason many people cannot afford medical insurance.
Or that if the government doesn’t invest in something, it doesn’t mean that private investors aren’t investing.
But he did mention his opposition to “more than $1 trillion in new tax breaks for the wealthy.”
And then came the corker: “In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. The top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes?”
Wow. America’s wealthiest merely “saw their incomes rise”? They didn’t actually do something for their gains?
Maybe Obama was napping while others were working.
This is Common Sense. I’m Paul Jacob.