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President Obama is making the Buffett Rule a centerpiece of his re-election campaign, even though it would do almost nothing to reign in our annual trillion dollar plus deficits. Ironically, this nation never had a trillion dollar deficit in any year in which Obama was not the President. The White House conveniently leaves that part out of it's re-election message. Here's how the White House frames the issue:
Warren Buffett pays a lower tax rate than his secretary. Meanwhile, over the last 30 years, the tax rates for middle class families have barely budged. That doesn’t reflect our values of fairness as a nation -- and that’s why the President has proposed the Buffett Rule.
The President believes we should build an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules. It’s simple: if you make more than $1 million a year, you should pay at least the same percentage of your income in taxes as middle class families do. On the other hand, if you make under $250,000 a year – like 98 percent of American families do – your taxes shouldn’t go up.
Like so much that comes out of the White House these days, most of the above is patently untrue. Let's start with the White House claim that, "over the last 30 years, the tax rates for middle class families have barely budged". That is waaay false. Republicans (the people liberals claiim 'only care about the rich') have been cutting taxes for middle class families for 30 years. As the Center For Budget And Policy Priorities reports, 'Federal Income Taxes On Middle Income Families Remain Near Historic Lows'. The chart below illustrates the point:
Sounds to me like the GOP tax cutters have been pretty interested in giving the middle class a "fair shot", by letting them keep more of their own money. These facts don't keep liberals from accusing Republicans of only caring about the rich, just as it doesn't keep liberals from accusing Republicans of "trickle down economics". How cutting taxes for the middle class can be termed "trickle down" escapes me. Liberals object because Republicans cut tax rates across the board, and that includes the rich. Republicans claim such tax cuts go to the "job creators", which causes liberals to sneer. Who is correct ? This is a pretty easy proposition to test, because we can look to see how many jobs were created since the tax cutting began thirty years ago. The rough numbers, by President, go like this - under Reagan, 16 million jobs were created. Under Bush I, 2.6 million jobs were created. Under Clinton, 20 million jobs were created. Under Bush II, 1.1 million jobs were created. Under Obama, we've lost 1.1 million jobs. Excluding Obama's presidency, that comes to about 40 million jobs created since the tax cutting started. Not bad. Hmmm. When Obama talks about the "failed policies of the past", maybe he means the past three plus years. Of note is Reagan's record. Reagan inherited a serious economic recession, just as Obama did, yet during Reagan's first term, over 5.3 million jobs were created, which stands in contrast to Obama's net job loss. Tax rates alone don't account for everything, of course, but putting more money in the hands of consumers and job creators through tax cuts, especially during hard economic times, makes sense to me. Unfortunately, Obama, being a liberal, only understands half the equation. He doesn't get the part about how cutting taxes for job creators helps, you know, create jobs. He's blinded by his class warfare mentality.
The White House says the Buffett Rule is about "fairness", and, "if you make more than $1 million a year, you should pay at least the same percentage of your income in taxes as middle class families do". Not many people would argue with that, but what the White House doesn't tell you is, the overwhelming majority of those in the $1 million and above income brackets already pay a higher tax percentage that do middle class families. From Bloomberg:
The average tax rate, including payroll taxes, for the middle 20 percent of U.S. families will be 15.9 percent in 2015, according to an estimate by the Tax Policy Center, a nonpartisan research group in Washington. Of the 217,000 households that would be affected by the Buffett rule, 4,000 will have incomes exceeding $1 million and tax rates lower than 15 percent, under slightly different measures of income and taxes by the center.
According to the nonpartisan Tax Policy Center, all Obama's hullabaloo is over a measly 4,000 high income earners who pay less in taxes than do middle class families (the White House claims there are 22,000 high earners who pay less). That's not many people to raise a fuss about, much less anything that is going to change our fiscal trajectory as a nation. But Obama doesn't just want these high earners to pay as much as the middle class families do (15.9%). He wants them to pay nearly twice as high a percentage. The Buffett Rule calls for a minimum 30% income tax rate on the $1 million and up group. I'm not sure how forcing one group of people to pay twice the tax percentage of another group can be called "fairness". My Webster's dictionary defines that as "unfairness", but whatever.
Here's more from the White House:
Next week, Congress will have the opportunity to vote on the Buffett Rule. We’ll see where every member of Congress stands. They can either protect tax breaks for millionaires and billionaires, or they can stand with middle class families across the nation. We will continue to urge Congress to join us in ensuring that the middle class gets a fair shake.
Translation: The Democrat-led Senate hopes to pass the Buffett Rule (or have the Republicans filibuster it) next week because they know it will be shot down in the Republican-led House. Republicans aren't going to vote to raise anyone's taxes, especially when unemployment is so high and the recovery is so fragile. The Democrats then hope to use this as a wedge issue in the fall elections to cast the Republicans as only caring about the rich, even though it was the Republicans who cut taxes for the middle class in the first place, and even though the Buffett Rule isn't going to make any difference in the lives of the middle class or anyone else other than those being taxed. Ain't politics grand ?
Obama's other talking point in this area is about income inequality, and how the rest of us aren't keeping up with those rich folks (as if we ever did). This is a tune Obama's been singing for years. Here he is from 2007:
"While some have prospered beyond imagination in this global economy, middle-class Americans -- as well as those working hard to become middle-class -- are seeing the American dream slip further and further away."
While there's no doubt the global economy has created challenges for America due to increased economic competition with other countries, how badly are we really doing ? Let's take a look. In 2007, the United States had the second highest median household income in the world, over $31,000. Only tiny Luxembourg did better. In 2011, the United States had the seventh highest per capita GDP in the world, over $48,000. Only a handful on tiny countries did better than us. Compare our per capita GDP to the quasi-socialist European Union model that Obama seems to favor. The EU had a per capita GPD of just over $31,000. Ours is 35% higher. If we're doing so badly, almost every other nation in the world wishes they had it so bad.
While it's true the rich have been getting richer, the rest of us have not exactly suffered, contrary to what Obama would have us believe. This is from a Brookings Institute article called 'The Myth Of The Disappearing Middle Class':
President Obama, many Democrats and editorial page writers have been working to convince the nation that it is wracked by inequality, a disappearing middle class and a lack of opportunity. The charge of growing inequality is partly correct, mostly because those at the top of the income distribution have pulled away from the rest of us. But the other charges are wrong or misleading...households near the top of the top 20 percent have achieved income gains of well above 50 percent. But the income of households between the 60th and 80th percentiles grew by 40 percent, and those in the 40th to 60th percentile grew by nearly 40 percent. In these numbers, the disappearing middle class appears pretty healthy.
What about those at the bottom, supposedly floundering? Based only on their market income, the bottom 20 percent lost about one-third of its income between 1979 and 2007. But when Burkhauser calculates the impact of government transfers, the value of health insurance not paid for by households and the decline in household size, the bottom 20 percent had about 25 percent more income in 2007 than 1979. Even the bottom is moving up.
So much for the American dream slipping away. We are actually all better off than we were thirty years ago. If this is what Obama terms the "failed policies of the past", well then, I'll have more please. Listen to the conclusions of the Brookings Institute, which is a middle-to-left-leaning thinktank:
Yes, the nation needs its safety net, but improvements in personal responsibility would have a greater and more lasting impact on poverty and opportunity. This is the message that our presidential candidates, media and educational institutions should emphasize — not the misleading focus on the lack of opportunity in America.
But that kind of talk doesn't get President Obama re-elected, does it ? Only dividing the nation against itself and demonizing the rich gets Obama re-elected.
There is one presidential administration under which American median incomes have declined by a lot...anyone want to guess that President's name ?
You got it. That President's name is Barack Obama.
New evidence suggests there’s a reason why this economic “recovery” hasn’t felt much like a recovery. Figures from the Census Bureau’s Current Population Survey, compiled by Sentier Research, show that the “recovery” has actually been harder on most Americans than the recession from which they’ve allegedly been recovering.
According to Sentier’s report, the median American household income has actually fallen during the “recovery.” Not only that, but it has fallen even more than it did during the recession. Gordon Green, former chief of the Governments Division at the U.S. Census Bureau and co-author of the report (with fellow Census veteran John Coder), says, “Real income fell by 3.2 percent during [the recession]. And during the recovery it went down by 6.7 percent.” So “income [has] declined twice as much in the recovery as in the recession itself."
Maybe it's time for Obama to start talking about the failed policies of the present.
Good old Barack. If he can't dazzle 'em with brilliance, he baffles 'em with you-know-what.