Mike Kueber's Blog

April 14, 2011

Obama takes a whack at the deficit by raising taxes on the rich

Yesterday, President Obama announced his plan to gain control over America’s deficit.  Part of his plan is to raise the taxes of the rich.  Not surprisingly, the NY Times editorial board and columnist Nicholas Kristof commended Obama’s plan, but they both thought a truly courageous stand would have been to increase the taxes of the middle class, too, so as to avoid draconian spending cuts.

Of course, there are counter-opinions that any tax increase is political suicide.  If you doubt that, recall that the last person who campaigned on broadly raising taxes was presidential candidate Walter Mondale, who suffered one of the most lopsided electoral defeats ever in 1984.

Obama, of course, is constrained to raising taxes only on the rich because of his famous campaign pledge against raising taxes on anyone except those who make more than $250k.  Violating that pledge would expose him to the same ridicule that Bush-41 received after breaking his “Read My Lips” promise.

Personally, I agree with the NY Times that the taxes of the middle class should be raised, but I would also raise the taxes of the lower class.  Conservatives have always loved the idea of everyone paying something, and Obama seemed to accept that concept in his speech yesterday:

  • As a country that values fairness, wealthier individuals have traditionally borne a greater share of this burden than the middle class or those less fortunate. Everybody pays, but the wealthier have borne a little more. This is not because we begrudge those who’ve done well -– we rightly celebrate their success. Instead, it’s a basic reflection of our belief that those who’ve benefited most from our way of life can afford to give back a little bit more.” 

Obama’s rhetoric makes sense, but it doesn’t reflect the fact that nearly half of American taxpayers pay no income tax.  In fact, because of the earned income tax credit, millions of Americans are refunded tax money that they never paid. 

Because of demagoguing by liberals, you might not recall that the Bush tax cuts were not solely for the rich.  Instead, his tax cuts were designed to benefit all taxpayers, with the rich to benefit proportionately less.  That same approach should be used to increase taxes.  Shared sacrifice means everyone, including poor, middle class, and rich, as well as seniors, juniors, and tweeners.

Other carps

The following are some incidental carps that I have about the Obama address yesterday:

  • Obama paid lip service to America’s fundamental faith in the free market, but the bulk of his speech revealed that he placed a higher value on the role of government:

“From our first days as a nation, we have put our faith in free markets and free enterprise as the engine of America’s wealth and prosperity. More than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government.  But there’s always been another thread running through our history -– a belief that we’re all connected, and that there are some things we can only do together, as a nation. We believe, in the words of our first Republican President, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves.”

  • Obama acted like everything was rosy until Bush-43 screwed things up.  Personally, I have no recollection of those halcyon days in 2000 when America wasn’t obsessed with the actuarial time bombs associated with Social Security or more problematically, Medicare and Medicaid:

As a result of these bipartisan efforts, America’s finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt free, and we were prepared for the retirement of the Baby Boomers.”

  • After noting earlier in his speech that no one wants their taxes increased, Obama opined that the rich actually do want their taxes increased:      

“I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. I don’t need another tax cut. Warren Buffett doesn’t need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare. Or by cutting kids from Head Start. Or by taking away college scholarships that I wouldn’t be here without and that some of you would not be here without.  And here’s the thing: I believe that most wealthy Americans would agree with me. They want to give back to their country, a country that’s done so much for them. It’s just Washington hasn’t asked them to.”

I suppose I shouldn’t have expected Obama to stake out a reasonable budgetary position like the Bowles-Simpson plan to start with.  The Ryan budget proposal obviously was unacceptable to most Americans; rather it was designed to satisfy conservatives.  Similarly, Obama’s position probably appears reasonable to liberals.  I hope there are enough pragmatists in the middle, like the “gang of six” in the Senate, who want to end the posturing and actually do something to get a handle on our deficit.

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