Posted on 07/13/2009 9:27:43 AM PDT by Tolik
Stimulus, stimulus and not a drop…
A “stimulus” of nearly a trillion dollars was proposed, without which we were told, unemployment would skyrocket and credit would tighten further. Six months later — unemployment having risen even higher than the administration’s forecast of what would have been the case had their stimulus package not been implemented — now the same proponents of massive borrowing demand a second stimulus to accomplish what the first ’successful’ borrowing apparently did not. If you fail, then try the same thing to fail even bigger the second time — while calling for more success to follow the earlier success?
The Larger Agenda
Note here I mean something quite different from the accustomed notion of “accomplish.” You see, I think the point was never much to build more bike paths on borrowed money or just bail out GM, but rather more to reengineer the tax code, as part of a grander vision of creating a new equality of result in America.
Soon we will all end up after each April 15 about making the same, driving the same sort of cars and using the same sort of mass transit, living in about the same sorts of houses, and having about the same sorts of “‘they’ will take care of it for me” philosophies — all overseen by brilliant, but highly ranked and exempt Platonic Guardians who suffer on our behalf as they jet and limo at breakneck speed ensuring our welfare.
Gorging “the Beast”
We are beginning to sense the debate is not about “stimulus” (politicians did not even read the various bills that they rammed through and care little about the fiscal impact from them). Rather, we are witnessing an inversion of Reagan’s sort of playing chicken, once called “starve the beast” (which I thought was a wrong notion), a philosophy of cutting taxes to cut revenue to starve the federal government’s excessive spending in the face of spiraling deficits.
Under Obama’s “gorge the beast” version, America will simply write so many bounced checks, run up such an enormous $10 trillion debt, that taxes will have to rise on “them”– and wasn’t this really the point of it all anyway: to “spread the wealth around” and “never let a crisis go to waste”? Since new programs never shrink, but, like Johnson grass, grow with impunity, and since Democrats, even more so than wasteful Republicans, don’t worry about deficits, taxes must escalate to avoid catastrophe.
The Bad Guys
Ponder a simple fact: The Obama administration is dispersing income lavishly to those who do not pay taxes and it will have to be paid for by those who do. For all the talk of that awful percentile who make over $200,000, this administration has not distinguished the hyper-rich 1% that make untold money (e.g., the Buffets, Soroses, Turners, Gateses, Kerrys, Gores, etc), from the much more demonized, larger 5% of the population whose income does not come from investments and insider influence and deal-making, but rather from providing more tangible goods and services — the family doctor, the plumbing contractor, the small lumber company owner, the car dealer, the local family-held insurance company, the airline pilot, the car-leasing firm, the patent attorney, etc.
“Their Fair Share”
Last fall we heard that this percentile was unpatriotic, did not wish to spread the wealth around, and had made off like bandits under Bush. But the fact is, to quote Mayor Gavin Newsome’s “like it or not,” they are precisely those who decide most dynamically whether to hire, fire, expand, contract, buy/sell goods, etc.
And the results of the Obama war against them are threefold: 1) in major key states, the productive minority’s state income taxes will near or exceed 10%; their federal rates will go to 40%; the abolition of caps on FICA will ensure 15% plus of most of their income will go for new Medicare and Social Security bites; and they may well be eligible for a newly proposed punitive health-care surcharge tax of 4-6%.
Add It Up
If one were to add all that up (forget rises in sales taxes, inheritance taxes, luxury taxes, etc.), then one can get to 70% of one’s income. So right this minute, the electrical contractor is thinking:
“I made $412,000 last year due to Saturday jobs, overtime, risky bidding, gambles on new equipment, and new lines of credit, but under Obama I will pay maybe $50-80,000 more of my income to the government. In other words the cost of, say, hiring two more entry-level electricians, or the cost of outfitting an entire new van with boom and equipment, or what I cleared every Saturday last year — all that will go to the government.”
Ripples of Doubt
And that means rippling throughout this key sector of the economy — even before these taxes have been enacted — are hesitation, stasis, and ultimately constriction — at first for psychological reasons, soon confirmed by the actual facts of less money. In short, very bright people will be thinking how to hide income, how to barter, how to slow down and not produce goods and services, rather than blast full speed ahead and enrich angry others.
A Certain Paranoia
2) Do not discount again the psychological element. This putative electrical contractor also knows that after handing over his profits to the new government, and delaying or ending his plans for enlargement, he will not be praised, but continually demonized (I scanned CNN, MSNBC, CBS, and NBC the other evening, and all the stories had a common theme: the “rich” (yes, you see, ACME Electric is now about the equivalent to AIG and Citibank) will have to pay their “fair share” for all sorts of “overdue” necessities: cap-and-trade, nationalized health care, education grants and freebies, and new social programs.
You Owe Us
So our electrician senses that despite his newfound, sizable contribution to the public good, he will
a) not be thanked but only further ridiculed;
b) see his money diverted from his own wise use of it, to anonymous agencies’ liberal expenditures of it: the money will not be just lost, but invested in things that will make things worse, not better, through subsidies of failed programs and the destruction of incentives;
c) see that the world under Obama is now unfair in Orwellian fashion: the Citibanks and AIGs, in Robert Rubin fashion, are so well connected to both parties that they will suffer little for their mistakes; the Ivy-League and Washington technocratic class that is to run all this is happy with its government perks and does not think new taxes and compliance apply to themselves (cf. Dodd, Rangel, Geithner, Daschle, Murtha, etc.).
You Never Needed All That Anyway
3) Finally the now chastised and ossified electrician will begin to see that his new truck, his boat, his vacation home, all these are somehow immoral in carbon, political, cultural, racial, and social terms. And he senses that others, who do not pay any income taxes (approaching 50% of the population), see themselves at war with him: the more he pays in taxes, the more others see that his compliance with such new burdens is proof of what he “really” owed all the time, and a sign that he can pay even more next round.
A Most Revolutionary Vision
Final observations: Obama brilliantly conflated the Wall Street class with the upper-tier of Main Street in Animal Farm fashion: the former gets lectured, but stays enriched through bailouts; the latter takes both the moral hit for the former’s crimes and greed and the actual hit in higher taxes.
(Nota bene: the new Democrats, in Prince Charles fashion, like the taste and culture of the hyper-rich, who care little about taxes, are sensitive behind their ramparts to the less well off, and know high-culture (think Streisand, Gates, Soros, the Georgetown/Hollywood/Silicon Valley, Upper East Side, Cambridge, Mass, set). These aristoi despise the wheeler-dealer, always on the move, uppity, wanna-get-rich scrambler that is desperately trying to get his get kid through Public U, and add a wing on his gross MacMansion, while towing his outboard up to the lake for five hours of water-skiing, without an opera, symphony, or NPR analysis on the radio).
Bottom line
This recovery cannot work, other than a brief spurt that results from trillions in printed money, because we are rewarding unproductive areas of the economy (federal money for more wind farms, federal hurdles for pumping more known natural gas or nuclear power construction; more of the community-organizing model, less of the productive small business model) and punishing the engines of the economy.
The New Culture of “Pay Up, Mister–or Else!”
For Obama to pull this off, an entire sort of new vocabulary, rhetoric, and attitude is necessary. And the model is California: the carpenter and the bricklayer are laid off, and the state snoozes; while the assistant solid waste inspector of Green Acres is on television every night (his union can afford the advertising) to weep, and claim that if he and those like him (retire at 55 with $100,000 for life) are laid off, then Dantesque things follow.
Remember the logic: the poor Californian voter who works at Starbucks or Target is angry that the grandee social worker is unnecessary and grossly overpaid at $90,000 a year, with lush retirement and benefits, and so is told that if he does not raise taxes to over 10% income and 9% sales, then firemen, police, and water workers will quit/be laid off/furlough and so he will starve, be murdered, and have no sewage.
Screw the Fool Hammering, Save the Grandee Behind the Desk — and Call it Egalitarian Morality
That is the model here in California and that is the model we are soon to see in Washington: the government worker and those who receive his largess, are kings; those who pay for them, and who work in private enterprise for far less, are, well, less than fools.
Whereas thousands are fleeing the natural paradise of California for the arid deserts of no-tax Nevada, there is no Nevada to the United States — the last hope of an otherwise depressing planet.
The Tipping Point? [Victor Davis Hanson]
NRO Corner, 07/08 03:19 PM
Reports that Representative Rangel (of recent tax-liability fame) and others are suggesting a new health-care surcharge on "top" incomes need to be put into context. The president has already assured everyone that the income tax rates will go up to about 40% on such people; but unlike the Clinton-era rates, this will also be accompanied by a lifting of the ceiling on exposure to FICA payroll taxes.
And if we were to factor in recent state income tax rate hikes that were similarly weighted, it is not hard in a state like California to see a self-employed small business person paying almost 70% of income in state, federal, payroll, and new surcharge taxes.
People are not dense, and the thought of such added exposure surely must already be making many small-business owners think carefully about investing in new equipment, hiring more employees, or expanding service, since the government, not they, now knows far better how to spend an extra 10–20% of their income.
So we can predict two reactions:
One, businesses will constrict in anticipation of owing more in taxes;
Two, they will explore new methods (not all of them productive or healthy) of hiding and shielding income.
We are living in a surreal age of $2 trillion annual deficits, in which we just casually talk about "more stimulus", "reforming health care", "fixing education", "cap-and-trade", while fighting two wars abroad — all the while "not raising taxes on 95% of Americans" — all predicated on the idea that "they" will always be willing and able to create new wealth and now hand over two-thirds and more of it to an ever-expanding government.
The only mystery will be how long will the base of Obama's support stay loyal among high-paid stockbrokers, CEOs, lawyers, financiers, academics, and journalists, who have enough money to get hit hard by new taxes, but not quite enough money not to care.
Just a partial list. More at the link: http://www.freerepublic.com/tag/victordavishanson/index
Let me know if you want in or out.
Links: FR Index of his articles: http://www.freerepublic.com/focus/keyword?k=victordavishanson
His website: http://victorhanson.com/
NRO archive: http://www.nationalreview.com/hanson/hanson-archive.asp
Pajamasmedia: http://victordavishanson.pajamasmedia.com/
...and the resulting anti-government backlash will make those Michigan Militia confabs from the 90’s look like a PTA meeting
The underlying - and false - premises are that achievement is oppression, profit greed, property theft. All of that works much better in fictional socialist manifestos than in practical application, but it does sound good, and it feels good to tell oneself that the theft is justified because the victim is evil.
That is the model here in California and that is the model we are soon to see in Washington: the government worker and those who receive his largess, are kings; those who pay for them, and who work in private enterprise for far less, are, well, less than fools.
Bingo. I've been thinking this for some time. We scrimp and save to just barely get by and have a small nest egg for retirement. All the while public employees are retiring with full pay, generous benefits and even double dipping at the public trough by retiring from one government job, then taking another one.
The rich-poor division is resembling more and more that of banana republics where the government employees have it all and everyone else is poor.
Hanson basically lays out the Cloward-Piven strategy here. I imagine he knows the name, but seems reluctant to use the term. Maybe “Cloward-Piven” is just something that the tinfoil hat brigade believes in and VDH doesn’t want to be associated with it. But, clearly, he’s watching Cloward-Piven unfold. No tinfoil required.
Atlas Shrugged Ping.
Unfortunately, I have the bad feeling that we have passed the point of solution by any sort of reasoned reform and will likely have to suffer through the entire collapse of this gigantic house of cards before the concept of sane government by rational adults can recapture the imagination of the American public at large.
I have a good idea. Instead of taxing earnings, capital gains and interest how about we tax accumulated wealth. Surely the likes of Soros, Buffett, Gore, Feinstein, Kennedy, et al don’t need all of those homes, boats, retreats and jets. That way the working stiff making 200K before taxes can pay for their kids’college tuition, home and vacation,
BTTT
mark
Where are all the hard luck stories about how bad the economy is? If we had had this mess under President Bush, reporters would be camped out in homeless shelters...
Hanson had another good one on it: President Palin’s First 100 Days. Imagine if Sarah Palin had Obama’s record
Note to self:
Read “Atlas Shrugged” for the 8th time......
Great read - ping.
needs an Ayn Rand bump...
the comments on that link are also very good, everyone should read them...
When American Plan Socialism unravels, it could all come undone rather swiftly, much like the Berlin Wall:
“And unless those days were shortened, no flesh would be saved”
Even Americans, ingenious as they are, cannot make socialism work, except in the fatally familiar way.
See tagline.
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