Skip to comments.Obama RX: Bleeding an Anemic Economy with Tax Increases
Posted on 11/16/2012 8:33:59 AM PST by Kaslin
WASHINGTON - If you thought the presidential election would lead to an early break in the fiscal gridlock that now divides our government, think again.
President Obama's post-election press conference on Wednesday signaled he is digging in for a lengthy political battle to raise tax rates amid new evidence the economy is still very weak and will likely remain so for the foreseeable future if not throughout his second term.
If anything, he's taking a tougher tone with Republicans in Congress as he prepares for negotiations with House Speaker John Boehner and other House and Senate leaders on Friday. Despite Boehner's olive branch offer that he's open to new tax revenues, Obama's making no specific counter concessions of his own.
He reminded Republican leaders that he had received a "mandate" from the voters for his plan to raise taxes on higher income Americans, that "elections matter," and that he's not going to back away from the higher tax rates he's been fighting for over for the last four years.
That attitude sent tremors throughout the economy and its financial markets that he intends to play hardball this time in another attempt to raise tax rates on the top two income brackets, investors and small businesses.
"Investors are looking at the world in the wake of President Obama's reelection victory. And they don't like what they see," Washington Post economic writer Neil Irwin wrote earlier this week. Wall Street agreed.
The stock markets had already plunged since Election Day and tumbled deeper during and after Obama's press conference. The Dow Jones Industrial Average fell more than 1,000 points since Nov. 7 and the sell-off continued through Wednesday with the Dow falling to a three-month low.
America runs on capital investment but Obama wants to hike George W. Bush's 15 percent capital gains and stock dividend tax rate to over 20 percent.
That would hit ordinary middle class retirees who live off their dividends, but it would also kill capital formation and venture risk-taking needed for business expansion and that worsen the deficits, economists say.
Obama insists he wants to grow the economy, but also protect the middle class, too, from having to shoulder the burden of higher taxes needed to pay off the mounting, unprecedented $5 trillion debt he has piled up in his first term.
He reluctantly agreed to extend the Bush tax cuts at the end of 2010 because the economy was too weak. But now he says things are getting better and the economy will be able to withstand higher taxes.
But his unshakeable belief, against all reality, that we're moving "forward," going "in the right direction," or "making progress" do not hold water. It's as if he continues to live in a parallel universe of his own imagination.
Median household income, after adjusting for inflation, has been falling in each year of his presidency. Poverty is now at the highest level in decades. The jobless rate went up last month, not down, and it's expected to go up again this month. The Federal Reserve said job growth, as well as economic growth, will remain weak under his present policies.
The problems that Obama listed Wednesday in his news conference and that will make up his agenda for the next four years are the same problems he has unsuccessfully dealt with in the last four years:
An anemic, sluggish economy that's slowed to a 1.7 percent crawl; weak job creation and high unemployment skirting 8 percent; poor, educational testing scores; costly energy prices that are taxing the people whose lives he wants to improve; and an unbroken line of unprecedented, annual $1 trillion-plus deficits that threaten to engulf our country and bury every American under a mountain of crushing debt.
The U.S. Treasury Department reported Tuesday that the Obama administration began the 2013 fiscal year last month with a $120 billion deficit, saying he was on a path to his fifth consecutive trillion dollar-plus deficit.
Obama's arguments in behalf of raising income taxes on upper income Americans, employers and investors are couched in the language of class warfare: That those who earn more should bear the increased burden and pay their "fair share," not lower to middle income people. It's a very clever but ultimately dishonest argument.
The people who will be directly or indirectly hit hardest by his proposed tax increases -- in terms of jobs, incomes and economic opportunity -- will be the middle class who have suffered the most from a weakening economy.
An analysis of Obama's tax proposals by the respected accounting firm Ernst & Young said that raising the top tax rates will destroy 700,000 American jobs. "That's because many of those hit by this tax increase are small-business owners -- the very people who are the key to job creation in America," Boehner explained.
Throughout his re-election campaign, Obama repeatedly attacked the Bush tax cuts, blaming them for the economic meltdown stemming from the sub-prime home mortgage collapse, and tied them to Mitt Romney's proposals to cut taxes, saying they were the same policies that "got us into the mess last time."
Many factors led to the housing bubble and recession, but it's a stretch to blame George W. Bush's across-the-board tax cuts or future tax cuts that allow people to keep more of their own money.
Washington Post Fact Checker Glenn Kessler awarded Obama a near failing grade of "Three Pinocchios" for his preposterous claim.
During his press conference, Obama pointedly noted that voters sided with his proposals to raise taxes, though he conveniently ignored that nearly half the voters sided with Romney's five-point plan to boost economic growth and job creation through tax reform that would offset lower rates needed to spur growth.
Obama did say he would not draw "red lines" around his proposal to raise the top tax rate from 35 percent to nearly 40 percent, and he may be willing to agree with a higher rate somewhere below that, some Democrats say.
But the bleak reality we face is a job-starved, income-declining, debt-ridden, over-taxed economy, and Obama's is still proposing the economic equivalent of 18th Century bleeding.
Bundlers have to be paid by taxpayers.
The President (Obama) is an enemy of the state. He is a traitor, directly responsible for the murder of four American civil servants in Benghazi, Libya. Impeach him!!! I think it is now time to begin recalling the weakest Democrat Senators, just as Governor Scott Walker had to undergo a recall election. We need to send a message that this republic of ours in not dead yet!!! There are more then one ways to skin a cat!!! Limbaugh, Hannity, Levin, etc., what say you??? We can do it!!!
“mandate” from the voters = Free ride
The central problem that most on this forum do not understand is that the rest of America does not UNDERSTAND how this economy works. YOU have to explain how the economy works at a fundamental level every step of the way. Even this article buries the most important point about this country is run by capital — private capital not governmental redistribution. So explain how and why it is essential to keep money. Think about all its permutations and reasons and uses. Don’t just say it, EXPLAIN it!!!
Oh, yeah, I forgot: Now that the election is over and Obama won, the media can report the real state of the economy again.
I agree. We don’t stand a chance until we can take back our educational systems. They were always left leaning but now they are brainwashing these kids that socialism is good. It is hard for a politician to reverse 12-16 years of indoctrination.
Obama shares the same suppositions about the economy that led the Labour Government to drain away the remaining capital in a war-ruined Britain and distribute it among inefficient state-owned businesses and social welfare agencies. Anyone who reads Orwells 1984 sees Britain as it was in 1948, a whole national out at the heels, played out to its logical conclusion.
“He reminded Republican leaders that he had received a “mandate” from the voters for his plan “
Hey Dems, didn’t Dubya have a Mandate as well?
Or did you guys forget that?
obozo is the dr kevorkian for the economy.
I used to be dumbfounded that the medical practise of ‘bleeding’ was so prevalent for so many years.
Not any more.
An indoctrintion abetting by an upper middle class who focus on the schools only when they have kids in them. There is a class system, where the wealthier public schools provide a posh schooling for some students, where some students can do their thing unaffected by the failures of their less well off classmates inability to cope with a high school curriculum that serves only the college bound. It was not accident that vocational education went down the tubes after the civil rights revolution, when young blacks decided that work with their hands was beneath them, and at the same time that intellectual work was too white. Lots of white kids had already had similar notions and since then these have been predominant among lower class whites. The carrot of a college education is held out, with little effort demanded for a high school diploma.
Bleeding it out with leeches.
I said the following on another post:
People dont realize that every dollar sucked out of peoples wallet by the government is money taken out of the money circulation system where is can grow new wealth. New wealth development, for instance, may come from the money market which brings new capital to businesses. Someone like Facebook entrepreneur Mark Zuckerberg who is focused on building as high quality and good things as you are takes that capitol and hires more workers—more than 2000 people in his case. Each person hired is a wealth generator and each dollar of wealth generated, becomes capitol to grow new wealth.