Nothing New from Obama

President Obama laid out his “plan” to reduce the deficit yesterday.  As usual, absolutely nothing new was introduced by the President.  (Before you read further, you should know that I’m absolutely fuming at our President so if you’re looking for sunshine and roses, I’d recommend you stop reading this post.)

Yesterday morning I predicted Obama would put forward the same useless policies: tax the rich and pretending that the problem is lack of revenue.  Yesterday I laid out the holes in that philosophy, backing it up with facts about the reality of high taxes vs. low taxes when the goal is increased revenue.  At this point I feel like I’m beating a dead horse but it bears repeating:  Historically raising taxes lowers revenue as it causes the producers in America to have to cut back on production at the businesses they own, resulting in a reduced workforce and therefore reduced taxpayers and ultimately reduced tax revenue.  (For those of you from Palm Beach County, FL that means the rich own businesses, and when their income is taken away in the form of taxes they are likely to be forced to lay off workers.  Those now unemployed individuals are paying minimal taxes because they have no steady income.) 

The thing that infuriates me is the fact that the President believes, really, truly believes, that your money belongs to the government.  How else can you explain the President repeatedly talking about being “unable to afford $1 trillion in tax cuts for millionaires and billionaires.”  Consider the absolute ridiculousness of that statement.  The government taking less of YOUR MONEY costs the government money.  When I heard that my head nearly exploded.  To believe tax cuts costs government money would mean that money belonged to government in the first place.  It doesn’t.  Every single cent the government spends is our money. 

If you earn $30,000 per year, in reality your net pay (just excluding Federal taxes) is really $25,500.  That means government is spending $4500 OF YOUR MONEY.  That money is yours.  1/6 of your income is being spent by government.   However, when Barrack Obama talks about “we can’t afford tax cuts” he is demonstrating that he believes that the $4500 that is being deducted from your paycheck is the Government’s money.  In truth, he shows that he believes that all $30,000 of your hard-earned income belongs to the Government, and that he benevolently allows you to keep $25,500.  It’s absolutely sickening to hear that type of thinking.  Hearing Obama makes me long for the Clinton years (and Clinton frequently infuriated me). 

Furthermore, Obama’s class warfare is disgraceful.  The idea that we can make up a projected $1.3 trillion deficit by raising taxes 4.4% on individuals who make over $200,000 per year is absolutely ridiculous.  Furthermore, the fact that our supposedly “brilliant” President doesn’t know the definition of a millionaire is absolutely laughable.  No sure what I’m talking about?  How many times has Obama talked about “tax cuts for millionaires and billionaires” while wanting to raise the taxes of people who

make $200,000 per year and up.  So apparently, according to our “brilliant” President, $200,000 equals $1,000,000.  But I digress.   The Federal Government is spending $1.4 trillion more than they take in taxes and Obama’s solution is to raise taxes 4.4% on a grand total of 2% of the population.   It is mathematically preposterous.

The numbers have been published many times that the Federal Government could CONFISCATE every single cent over $1,000,000 per year and only are able to run the government for a few days, and that is ignoring the fact that absolutely nobody on Earth would work a moment longer than the time it takes to earn $1,000,000.  Obama’s proposal is utter nonsense.

Aside from the mathematical nonsense of Obama’s policies, there is the fact that so many of these “millionaires and billionaires” who make over $200,000 (it still chafes me that our President thinks people who make $200,000 annually are millionaires, can you tell?) are small business owners who file their taxes as an individual as sole proprietorships.  These people may only employ two to four people, but to the families who get paychecks from those small businesses it’s everything.  Secondly, how many hundreds of thousands of small sole proprietorships employing 2-4 people are there in this country will be hit hard by that 4.4% tax increase?  The answer is too many.  That 4.4% tax increase on a small business that nets $2,000,000 in gross profit (remember that’s total incoming dollars before cost of doing business is subtracted) equals a loss of $88,000 per year to that business.  That means that small business owner is going to have to lay off one of those 2-4 employees just to keep their business open.

Obama doesn’t want you thinking about that small business.  He wants you to think he’s raising taxes on Warren Buffet and Bill Gates.  He doesn’t want to call to mind that small business owner whose actual salary is only $150,000 per year because the cost of operating his business, which includes employing two people and paying them a salary of $40,000 per year plus medical insurance.  This business owner’s profit margin for his $2,000,000 per year risk is a very reasonable 7.5% profit.  Hardly the filthy rich person President Obama wants you to think he’s raising the taxes of, now is it?

The President is also not telling you that the top 2% of wage earners pay 50% of the tax burden.  He’s not telling you that if the government was to only spend what it takes in, and for the record that’s $2.17 Trillion, we could still handle the vast majority of non-discretionary spending with minimal trimming.  Cowboy poets would not be able to be funded by the government, nor would the Corporation for Public Broadcasting, National Public Radio, or the United Nations.  We’d have to trim back a lot of things.  We would have to means test Medicare, which we absolutely ought to do. 

In past posts I have mentioned that my grandmother, who maintains 50% of my late grandfather’s pension (and remember Papap was a supervising engineer in General Electric’s Radar Division during the Cold War) and also maintains his medical insurance until she dies.  She does not need to be on Medicare.  It’s nice, largely because several things are co-pay free for her, but believe me she would not starve if she had to pay a $20 co-pay when she goes to the doctor three times per year.  There are many senior citizens who don’t need Medicare but are on it anyway.

While they’re at it, they can stop sending people tax refunds greater than the amount of taxes they paid!  I have a friend who just completed his college degree while working part time.  He received a couple hundred dollars above the amount he paid in!  I don’t mind the fact that, due to his minimal income during that time, he was paying zero in taxes, I mean the guy probably didn’t make much more than a few thousand dollars per year, but why in Heaven’s name is he being paid more money by the government?  That my friends is an end-around form of welfare, provided to somebody who doesn’t need it, because while in college he also had student loans which were able to pay his living expenses.

The President said nothing new.  He wasted our time blowing more class warfare smoke up our rears in an attempt to satisfy his ultra-Liberal base.  His answer is to essentially set more piles of money on fire for Cowboy Poetry and subsidizing paintings of Chef Boyardee cans so that Democrats can keep buying votes.   This is what Obama calls “winning the future.”

The good news is John Boehner and the House Republicans have told Obama he can cram it up his (ears) if he thinks he’s going to raise taxes.  Unlike the recent Budget Battle, I honestly do believe the line in the sand will be drawn by the GOP.  Even Democrats are agreeing that there cannot be tax increases in a recession (yes, we are still in a recession, regardless of what the Drive-By Media will tell you).   I’ve said it so many times now but I won’t stop until it’s driven soundly into the heads of Liberals:  tax increases do not have static reactions.   Business owners will not just accept lower profits so you can tax the tar out of them.   It won’t happen.  Leave Utopia, join me in the Real World, and start recommending policies that will actually work.  (If that last remark seemed harsh, remember, I warned you, I’m ticked off today.) 

If the problem is lack of revenue, CUT TAXES.  Cut them significantly, allowing hard-working Americans to keep more of their own money.  It goes into the economy and it will grow the economy.   The people who own businesses will have new venture capital to invest into their businesses which will result in more jobs.  Even the President’s heralded “bi-partisan debt commission” recommended that the top marginal tax rate be reduced further to between 25-29% in order to boost the economy and to increase revenues.

The Democrats aren’t going to do that.  I guarantee it.  And remember, I’m the guy who told you Obama’s plan was going to be raise taxes on the rich (an hour before the media broke stories about what Obama’s speech would entail.)  If they did they’d have to lose the class warfare games they play to get elected.   They can’t buy votes by telling people to earn their own money and keep what they earn.  They can’t ensure that Cowboy Poets will vote for them.  They can’t control your life without more of your money, and isn’t that what’s most important to them?

Friends, I close with this:  We can’t afford four more years of Obama.  We can’t afford four more years of Obama in 2012.   We need to fight to ensure there is a real Conservative as the Republican Nominee, but if that fails we should support Elmer Fudd for President with Foghorn Leghorn as his running mate and a promise of Marvin the Martian for Secretary of State over Obama.  At this point I’d rather have *gags* Hillary Clinton for President than Barrack Obama.  Caligula’s horse would make a better President than we have now (he also had more years in the Senate).  I cannot stress enough how important it is for the health of this great nation that we fire Barrack Obama in 2012.  The same foolish rhetoric and the same foolish policies which have harmed America will continue to harm America if we allow Obama a second term.  To those who wonder if we can defeat Obama in 2012?  My answer:  Yes we can.

Liberal Solutions on Deficit Same as Always: Just Raise Taxes

I'm putting a time-stamp on this particular post. It was completed and published at 10:05 am on Wednesday, April 12th.

Note this is before President Obama has even given his speech on how to reduce the deficit.  This is before the media "inside info" saying Obama would propose increasing taxes.  If I'm completely wrong and this isn't what the President proposes, I'll post a retraction, but I wouldn't hold my breath for it!

Liberal Democrats are bringing up the same old solutions they have always brought up to solve the deficit crisis: raise taxes on the rich.  Raise your hands if you are surprised.  If your hand is in the air, I've got some oceanfront property in Idaho to sell you. It's the same tired rhetoric that's been used for decades.  It's never reduced deficits long term and it's never increased revenues long term.  It won't this time either.

Liberals are fond of assuming a static reaction to tax increases and tax cuts, that is assuming that individuals will not change their behaviors one iota when faced with higher taxes.  (For those of you from Palm Beach County, FL, that means individuals will continue to spend the same, continue to employ the same number of people and continue to produce the exact same amount of product with their businesses without adjusting the price of those products.)  It absolutely never happens.  In a previous post I demonstrated what really happens when taxes are raised on producers (that's people who own businesses for those of you from Palm Beach County). (1)

It's a losing proposition for America.  It's taking venture capital away from those who own businesses, which usually means less jobs at best and at worst those businesses moving overseas to another country, thus setting the tax revenue received from that business at $0 per year (instead of whatever they are paying now) in addition to all employees losing their jobs (and the government losing their tax revenue).  So if your goal is to raise new revenue, raising taxes is detrimental to that goal!

So what do you do to raise new revenue?  Believe it or not, the answer is to cut taxes!  Don't believe it?  Here's some historical evidence.  Thanks to The Heritage Foundation for these facts:

- In the 1920s, top marginal tax rates were cut from 70% to less than 25%.  Gross tax receipts increased from $719 million in 1921 to $1164 million in 1928, an increase of more than 61% in revenue.

According to then-Treasury Secretary Andrew Mellon:

The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.


- During the Great Depression, Presidents Hoover and Roosevelt combined to raise top marginal tax rates to 90%.  President Kennedy reduced taxes across the board, dropping the top marginal tax rate from 90% to 70%.  Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62% (Adjusted for inflation, a 33% increase).


According to President John F. Kennedy:

Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits.  In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.

- In the 1980s, President Reagan cut the top marginal tax rate from 70% to 24%.  Tax revenues increased from $244 billion in 1980 to $446 billion in 1989, an increase over nearly 100% (Adjusted for inflation about a 50% increase). (2)

According to then-U.S. Representative Jack Kemp (R-NY):

At some point, additional taxes so discourage the activity being taxed, such as working or investing, that they yield less revenue rather than more. There are, after all, two rates that yield the same amount of revenue: high tax rates on low production, or low rates on high production.

Note: The entirety of the previous section, save for where otherwise noted, was compiled with information from the Heritage Foundation (3)


If the goal of President Obama and the Democrats' fiscal policy is to raise revenue, history demonstrates quite clearly that they should cut taxes.  They should cut taxes to ensure higher revenue.  I have given three examples on a national level of cutting marginal income tax rates to achieve higher revenues. These are historical facts.

Look back at the quote from Treasury Secretary Andrew Mellon.  He noted that the rich would find ways, usually legal, to pay less in taxes when the rates are confiscatory. These loopholes cannot be permanently closed without reopening another, because laws are created by human beings and human beings are completely fallible. It always happens.  Democrats cannot legislate it away.

Furthermore, aside from attempting to legally sidestep paying taxes, there is absolutely zero way to force people to continue spending money at the same rate when more of their income is taken away in taxes. Go back to the original post I penned on Liberal tax policy (1).  Business owners have a particular percentage of profit that is required for them to consider it worth the financial risk of investing their money in their business. Once the profit margin becomes below that acceptable reward for the risk, those individuals will find a way to adjust their business to put the projected profits back at that acceptable reward for the risk.  This is done by either laying off employees and cutting production, raising prices, moving the production of their products to another nation where tax policy is more reasonable, or a combination of the above.

Business owners (and people in general) are simply not going to do things detrimental to their own self interests so that government can continue to spend wildly.  Nor should they be reasonably expected to do so.  No matter how often Liberal Utopians (usually Neighborhood Liberals) start telling us that the rich should be willing to do that "for the greater good," it's not going to actually happen.

Even if they were willing to just pay more, Liberals have shown over many decades that they will find a way to overspend proportionally when their tax revenues increased.  For example, under Reagan, when tax revenues were doubled, Democrats still spent $1.80 for every $1 received in tax revenue.  Think about it.  If you subscribe to the idea that the government at that point needed to have 80% more revenue to successfully operate, and they received 100% more in revenue, it should stand to reason that the government would then have a 20% surplus, right?  It didn't.  Instead, the government ended up STILL spending 180% of whatever was received in taxes, leading to higher deficits because 180% of $153 billion ($122 billion in deficits) is more than 180% of $93 billion ($74 billion in deficits).

So the deficits more than doubled even though the revenue was increased enough to more than cover the previous deficits.  Clearly the problem isn't lack of tax revenue.  As Ronald Reagan said, "We don't have trillion dollar deficits because we tax too little.  We have trillion dollar deficits because we spend too much."

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(1)  Reality Check: Liberal Tax Policy Has Not and Will Not Succeed

(2) The Reagan Tax Cuts: Lessons for Tax Reform

(3) The Historical Lessons of Lower Tax Rates