Stimulus II, The Buffett Rule, Class Warfare and Math
by Doug Edelman (9/21/11)
A leftist caller into a morning talk-show that is part of my daily drive was spouting the “no skin off their back” class envy line about the “Buffett Rule” and soaking the rich. Aside from simply annoying me with his ignorance, I found myself realizing that these people who buy into the Class Envy story line will not be swayed by any of the arguments of the unfairness of the excessive tax burden borne by the top income earners. They pull out their “world’s smallest violin” and play “Cry Me a River”. Their attitude is, “They can afford it.” Or, “They’ve still got plenty, AFTER taxes.”
So persuading these people must take another tack. We must convince them of two truths: 1) the so called “Buffett Rule” will hurt not only the rich, but everyone, including them; and 2) The math DOESN’T work!
The big push from the administration is that Capital Gains rates are lower than the Income Tax Rate of the middle class, so they want to raise the Capital Gains Tax Rate. Of course, there is a very good reason Capital Gains are taxed at a lower rate… but that’s not the focus here. Let’s just stick to our two primary premises!
Raising Capital Gains rates affects not only the Wealthy… but EVERYONE who has investment income! If you have an IRA, 401K, Pension, mutual fund or any other investment – it will affect you. Raising Capital Gains tax rates means your retirement fund will not have as big a nest egg for you when you retire. That’s not the fat cats being hurt… it’s YOU, or it’s your PARENTS. It’s the guy who worked hard all his life and seeks to retire and live on the fruits of his labor. The less that a middle class family can acquire toward retirement during their earning years, the more dependent they will be on Social Security or other Government Largesse… which seems to be exactly the goal of the Leftists, and exactly the cause of our economic demise!
The mantra of the Left is that no matter how much the wealthy pay, they aren’t paying their “fair share”. The upper income earners do pay the lions share, shouldering on the order of 70% of the total tax burden while half of America has NO income tax liability and a goodly portion reap a refund they didn’t pay into via refundable credits – meaning that even if they paid NOTHING IN AT ALL they can still get a “refund” (though a “refund” is a misnomer implying return of an OVER PAYMENT! Just how is contributing NOTHING an overpayment?)
According to the latest Government Figures, the earnings total of ALL people in the USA was around 7.8 Trillion Dollars a year.
Government already spends about half of that, with our 3.5+ Trillion Dollar “budget” (well, we haven’t actually PASSED a budget in over 3 years… but that’s a technicality!)
Obama and Co want to raise that level to $5 Trillion, with the Trillion and a Half NEW spending he’s proposing! So, more than 5/8th of ALL MONEY goes thru Government hands??
They scoffed when conservatives warned that the Left sought to take over the entire economy. The laughed and poo-pooed when we warned that the move toward Government Healthcare was a takeover of 1/6 of the economy. They ignored when the government “nationalized” 2/3 of our auto industry and threatened to “socialize… er… er… take over” the oil industry. But here you go! Government now passes almost half of ALL money in the economy thru it’s hands… and obama’s shooting for over 60%!
And, of course, the “wealthy” are supposed to foot the bill! Obama says that’s not “Class Warfare” but it’s “Math”!
The math doesn’t work! The “Rich” footing the bill is a concept that doesn’t FIT the bill!!
Of the 7.8 Trillion earned by ALL Americans, only 17.5% of that total, or about 1.37 Trillion was earned by those making $200K or more a year!!
So, confiscating every dollar earned by every person making 200K a year or more wouldn’t even meet our current deficit of $1.6 Trillion! In fact, since these people ALREADY PAY taxes on this money, confiscating it all would only net about $1Trillion in additional revenue! Well, ONCE anyway, as there would be no business, no jobs and no economy at all if they did implement such a confiscation!
The fact is, and always has been, that the profligate SPENDING problem in Government can’t be solved by revenue! Reagan DOUBLED revenues, yet all we hear about are the “Reagan Deficits” – more properly dubbed the Tip O’Neal deficits as Reagan’s reasonable budgets were pronounced “dead on arrival” and the O’Neal congress spent $1.84 in new spending for every dollar in new revenue Reagan’s tax cuts generated!
The irrefutable, uncomfortable truth is that Government simply spends too much!
Bush’s worst deficit with a GOP congress was in 2003, at around $420 Billion. That’s half the cost of Obama’s first failed stimulus! The 2003 tax cuts REDUCED the deficit each year thereafter until the reins of power passed to Pelosi/Reid in 2007. But the deficit was reduced to $120 Billion when that baton was passed! THAT’s the deficit Pelosi/Reid inherited! They also inherited a Triple A credit rating and a budget around 2 Trillion a year.
In their 4 years in power, the deficit ballooned to 14 or 15 times that 2006 deficit. Our spending grew from 2 Trillion to 3 and a half Trillion, and Obama would have it at 5 Trillion!
The issue is not, and never will be a matter of Government not appropriating enough money. It is, was, and ever will be the reckless spending of those who wish to buy votes, and retire before the bill comes due.
Margaret Thatcher famously stated that the problem with Socialism is that at some point you run out of other people’s money. We see that happening throughout Socialist Europe. And we have Obama, Pelosi and Reid to thankfor bringing the USA to that point now. Is it any wonder that Standard and Poor downgraded our credit? Who still has “full faith” in the credit of the USA?
Copyright © 2011 by Doug Edelman
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