Obama: Taxing the Economy to Death
One thing should be clear about President Obama’s preposterous, job-killing proposal to raise taxes on a comatose economy that’s barely breathing, let alone fully functioning. It is dead on arrival on Capitol Hill.
Not only is it opposed by Republicans in the House, where all revenue bills must originate, but also by Senate Republicans, and enough vulnerable Democrats facing tough re-election battles in next year’s elections to keep it from being considered in the upper chamber.
Sen. Jon Tester of Montana, who faces a bruising re-election battle next year, was one of the Democrats giving the president’s tax plan the cold shoulder. “We’ll see when it gets here. It’s not something I would’ve written,” he said.
But the Obama White House knew this plan wasn’t going to fly in Congress in a difficult election cycle. Virtually all of the tax hikes in his plan were proposed by the president before, and went nowhere on Capitol Hill, even when his party controlled both houses of Congress.
Obama, with his job approval polls sinking below 40 percent this month, desperately needed a red meat issue to reenergize his party’s dispirited and disappointed base, and nothing rallies the Democrats more than mounting the class warfare attacks on “millionaires and billionaires,” as Obama did Monday.
Obama’s tax plan at this juncture in his presidency, a little more than 13 months before the presidential election, is a political gambit rather than an economic strategy, and that’s the way Republicans dismissed it this week.
Sen. Patrick J. Toomey of Pennsylvania said Obama’s plan was “defined by political posturing.”
“We do not have time to waste on political games and pushing big tax increases that will only make our economy weaker for all Americans,” he said.
There is very little, if anything, that is new in Obama’s tax plan that he hasn’t proposed before. This was “largely a repackaging of previous proposals that have gone nowhere in Congress,” reported The Washington Post Tuesday.
He calls for a new tax on millionaires aimed at income from investments and, once again, at President George W. Bush’s tax cuts, proposing that the top 35 percent tax rate be raised to nearly 40 percent.
His plan would raise taxes on private equity investment executives and the oil and gas industry, and limit itemized deductions for charitable contributions among Americans earning more than $250,000.
But the plan not only contains no tax cut incentives to spur private capital investment, business expansion and jobs. Instead, its sweeping tax increases are aimed at the very economic centers of job creation — venture capital investors, small business employers and major corporations.
Raising taxes on incomes of $200,000 a year or more will effectively hit small business employers who file their taxes as individuals. Economists say that will discourage future small business creation and new hiring.
His plan has “redistribute the wealth” written all over it, attempting to further tax the wealthy, in the midst of what most Americans believe is a continuing recession, in order to protect his favored social welfare spending programs from future budget cuts.
While Republicans have strong backing from voters for cutting spending and reducing the federal debt, Obama is playing to a perceived majority of Americans who say they support raising taxes on the wealthy, according to recent polls.
But other polls suggest that their respondents are more narrowly divided on this issue than has previously been reported.
When the Gallup Poll asked Americans in June, “Do you think our government should or should not redistribute wealth by heavy taxes on the rich?”, 49 percent answered “No, should not’ and 47 percent said “Yes, should.”
“Seven in 10 Democrats believe the government should levy taxes on the rich to redistribute wealth, while an equal proportion of Republicans believe it should not,” Gallup said. Notably, it added that “The slight majority of independents oppose this policy.”
The bottom line, says Gallup, “While a solid majority of Americans, 57 percent, believe money and wealth in the U.S. should be more evenly distributed among the people, fewer than half favor using the federal tax code to do so.”
This suggests that there are still powerful, convincing arguments against raising punishing taxes on that part of the population that drives much of the job creation in the U.S. economy. That case needs to be forcefully delivered to a much wider audience as the 2012 elections draw near.
There are many things wrong with Obama’s tax plan, but here are the big ones:
— It raises taxes on a crippled economy. It has all but stopped growing in the first two quarters of this year. Net new job growth is zero. Manufacturing has slowed. The real estate industry is in a depression. Home foreclosures spiked in August, rising 33 percent. Poverty rates have surged to disturbing levels, and the economy is on the brink of another recession.
— All of this is the result of the Obama administration’s impotent economic policies of the past three years that have been anti-growth, anti-job creation and anti-private capital investment.
— Much if not most of Obama’s latest $500 billion jobs plan is a repeat of his failed $800 billion stimulus that was a classic case of economic central planning that never works.
The Republicans need to find a way to pound this into the thinking of the American people, convincing them that higher taxes on anyone is the enemy of future economic growth and prosperity.