Tuesday, September 20, 2011

Obama vs. the economy in general and the wealthy in particular

In a blunt rejoinder to congressional Republicans, President Barack Obama called for $1.5 trillion in new taxes Monday, part of a total 10-year deficit reduction package totaling more than $3 trillion.

“We can’t just cut our way out of this hole,” the president said.

Sadly correct. Obama and his fans-- and even most of his opponents-- lack the necessary combination of intelligence, worldview of government, and political will to get that done.

Obama wants to cut Medicare and Medicaid by $580 billion. He wants to save $1 trillion over 10 years from the withdrawal of troops from Iraq and Afghanistan. He also "targets subsidies to farmers and benefits programs for federal employees".

Along with these, he wants to spend (and largely waste) another $447 billion in temporary tax cuts and new public works spending "as a short-term measure to stimulate the economy and create jobs". (Could he really be this much of a moron? Or is he just so cynical that he'll continue to waste money, hoping for the economy to recover despite his efforts and for people to embrace a false-cause fallacy and give him credit?)

Obama would let Bush-era tax cuts for upper income earners expire, limit deductions for wealthier filers and close loopholes, and end some corporate tax breaks.

In the WSJ, from Carol Lee and Janet Hook, we learn more detail-- that:

The largest chunk of Mr. Obama's tax package comes from limiting itemized deductions for families with more than $250,000 in yearly taxable income and individuals with more than $200,000, including those for home-mortgage interest, state and local property taxes and charitable donations. The White House says that measure would raise roughly $400 billion over 10 years. 

Far better, we'd get rid of all deductions-- except perhaps charitable contributions-- saving far more money, reducing redistribution to the wealthy, lessening tax avoidance, getting the wealthy to pay more taxes, and so on. Getting rid of the Home Mortgage Interest Deduction would save $132 billion per year. So, by itself, over a decade, that would work out to well over $1 trillion by itself!

I wish Obama would have proposed something revolutionary like that (you know, "change")-- and it's difficult to imagine that proposal being any less likely to pass than his class-warfare-oriented tax proposal.  

The funny thing: If he'd just get rid of the home mortgage interest deduction, he wouldn't have to raise tax rates at all! Or if he got rid of all income tax loopholes, he could lower tax rates and be a hero. 

I'm surprised by all of this. For all of the talk about "change", this shows a remarkable lack of creativity and vision. Why not do something extraordinary, instead of continuing to cement his legacy as the sad sequel to Jimmy Carter? He'd rather continue to jerry-rig a messed-up tax code, posture on class warfare, and do more damage to the economy-- than embrace "change" and be in the history books for something remarkable. 


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