Posted by
Patrick Henry on Thursday, September 09, 2010 10:08:25 PM
Obama's latest "recovery" proposals contain enough supply side ideas (tax credits
and small business loans) to nearly make one believe he was ready to abandon his
failed demand side economic policies. But wait! In the same speech, Obama dug in
his heels to oppose tax cuts for the "wealthy." In other words, if Republicans would
only go along, he would grudgingly extend the (Bush) tax cuts for the middle class
(for an unspecified time). It takes no genius to see the politics involved.
For any doubters, Obama made it clear by accusing the GOP of "holding middle
class tax cuts hostage," thus casting them as defenders of the rich, a favorite
Democratic caricature of Republicans, and himself as a man of the people. In
evaluating this claim, one must first understand why Republicans want the cuts
for ALL Anericans. The "middle class" doesn't make large investments in business
as a general rule, doesn't hire or spend as much as the "rich." So if the "rich" sit
on their money because they know they have a tax bill 10% larger than their last
one coming, who is going to invest in the economy?
Let's say I own two restaurants. I employ fifty people, including myself. I pay
myself $90K per year, and everyone else gets market wage plus benefits. When
the fiscal year is done, I clear $165K over expenses. I've already paid payroll taxes,
my part of social security and healthcare for my workers. Now, Obama is going to
take my $90K salary, add it to my $165K profit and tax me at the highest level
(39.5%). So am I likely to refurbish my kitchens, buy new silverware and drapes
for my places, or run out and hire extra busboys? With what? If anything, I'm likely
to lay a couple of people off to drop my business below the minimum for having
to provide certain benefits.
So Obama's "package" includes more Porkulus spending for infrastructure, much
of which is earmarked for unions, a couple of supply side "bones" for Republicans
and an extension of the Bush tax cuts which OBAMA threatens to hold hostage
unless Republicans agree to stick it to the "rich." Obama's statement that people
making $250,000 a year are already millionaires is a flat lie. As any dummy knows,
making money is one thing, accumulating it (especially under Obama socialism) is
quite another. A family making $250,000 annually and rearing four children is
probably doing nicely. But they're likely NOT millionaires, nor are they rich. But
it's a nice lie with which to fan the flames of class warfare, at which Obama is a
master.
Obama wishes to put Republicans in a position where, in order to reject his out-
of-control spending, they must also reject partial extension of the tax cuts. Then he
can point the finger some more and talk about how Republicans hate the middle
class. Republicans, on the other hand, would like to get the full tax cuts to a stand
alone vote, forcing Obama to veto it so they can show him up as the inflexible
ideologue without human concern. So what will likely happen?
Democrats are deserting Obama daily on his tax cut position. Teaming with
Republicans they have nearly enough votes now to approve them. Democrats want
to be re-elected, even though their leader acts as though he wants to see them fired.
The rebellion may well reach critical mass before the November elections so they
can go home and argue that at least they did SOMETHING right.
Republicans will not agree to Obama's new spending demands because the ones
he already rammed through didn't work, and they have him right where they want
him. They won't go along because they don't want to, and don't have to, and Obama
will be left to stew in his own noxious Keynesian juice until after the midterms. I
hope all those predictions come true. It is the best case scenario for an economically
troubled nation.