Social Security Taxes

Posted by PITHOCRATES - January 14th, 2013

Economics 101

The Employer has to Write the Check to pay the Full Amount of Social Security Taxes

Social Security taxes are one of the biggest expenses businesses have.  If you look at your paycheck you will see some withholding taxes.  Included in those taxes you will see Social Security.  Or FICA (which includes both Social Security and Medicare withholding taxes).  These are your contributions for your retirement.  But you don’t pay them.

The Social Security contribution is ostensibly split into two parts.  There’s the employee contribution (those taxes withheld from your paycheck).  And the employer’s matching contribution.  But the employer pays the whole thing.  Just like employers pay for unemployment taxes, workers’ compensation insurance, disability insurance, health insurance (for the most part, some employees contribute a portion these days), life insurance, paid vacation, paid holidays, paid sick days and pension contributions (for those who still pay pensions).  All of these benefit the employee, not the employer.  Yet the employer picks up the tab for these expenses.  And Social Security is no different.

Actually, there is one difference.  All of these employer-paid expenses reduce the employer’s taxable income.  Except one.  The employee’s Social Security contribution.  The employer has to write the check to pay the full amount of these taxes.  Paying the full amount (both employer’s and employee’s contribution) reduces the amount of cash they have on hand to pay their other bills.  The full amount of these Social Security taxes influence hiring decisions.  And once they pay these taxes it’s income they’ve earned they no longer have.  But they still pay income taxes on it.  Despite the employee paying income taxes on this same income.

One of the Largest Expenses a Business has is Social Security Taxes

So the employee does not pay Social Security taxes.  It’s just another on a long list of expenses an employer has to pay.  That said the employee’s contribution does reduce his or her net pay.  When President Obama cut the employee’s Social Security tax rate 2% the employee’s net pay increased.  While the employer matching portion remained at the same rate.  Yet the check the employer wrote for Social Security taxes reflected this 2% reduction.  Because the employer pays all of these payroll taxes whether it’s unemployment, workers’ compensation or Social Security.  The following chart summarizes sample labor costs.  Both at the Obama tax cut.  And after it expired.  For an employee with a gross annual pay of $66,360 (for 47.4 weeks of work plus 4.6 weeks paid time off).

Note the 2nd largest cost after health care is Social Security.  Both the employer’s and employee’s portion add up to $9,027 (both at 6.2%).  Which is a lot of money.  If an employer has 15 employees that Social Security check they have to write totals $135,408.  Half of which does NOT reduce an employer’s taxable income.  Assuming an effective tax rate of 26% (for a small business owner filing as a subchapter S or an LLC where their business earnings flow through to their personal tax returns) that’s an additional $17,603.04 ($4,514 X 15 X 26%) of taxes the employer has to pay on income that they receive no benefit from.

Under the Obama tax cut this employee had $1,456 less withheld from his or her paycheck.  Or $52 less a week.  Or $5.60 less a workday.  Almost enough to pay for lunch.  Or enough to make you stop going out to lunch.  For the 15 employees that’s $780 pulled out of the local economy each week.  For a city with 500,000 workers that’s $26,000,000 pulled out of the city economy each week.  That’s a lot of economic activity.  That can provide a lot of jobs.  So why let the Obama tax cut expire when they have such a positive effect on the economy?

Social Security is Going Bankrupt thanks to an Aging Population

Because Social Security is going bankrupt.  And the solvency of Social Security isn’t helped when you cut the only funding mechanism for it.  The Social Security tax.  That 2% reduction in the tax rate cost the retirees some $176 billion each year.  That’s why they let the Obama tax cut expire.  $176 billion is a lot of money for a program going bankrupt.  And it’s a lot of money for a government that runs a deficit.  Which is the real reason why they wanted to let the Obama tax cut expire.

When the government needs to pay for their deficit spending the Social Security Trust Fund is just too tempting to pass up.  All those payroll taxes flowing into the Social Security Trust Fund.  Just sitting there.  Not being spent.  It’s just too much for a politician to resist.  So they raid the Trust Fund. They take that cash and spend it.  Leaving behind a bunch of IOUs.  Treasury bonds.  The kind that can’t be bought or sold.  Non-negotiable.  Which means the only way to redeem these bonds (and to repay the Social Security Trust Fund) is by raising taxes, further borrowing or reducing benefits.  Such as raising the age when you can start collecting Social Security benefits.  All of which we’ve used to try to forestall the inevitably bankruptcy of Social Security.

So Social Security is a very complex thing.  Social Security taxes are a tremendous cost burden on businesses.  And they pull a lot of spending money out of the economy.  Reducing economic activity.  Yet as much money as they pull out of the economy it’s not enough.  Social Security is still going bankrupt.  Thanks to an aging population (the number of beneficiaries is growing at a greater rate than those entering the workforce to pay for these benefits).  And even though the rate of money flowing into the Social Security Trust Fund is falling it’s still large enough for politicians to raid to pay for other out of control spending obligations.  Ensuring that Social Security will go bankrupt no matter what tax rates are.

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Class Warfare

Posted by PITHOCRATES - January 3rd, 2013

Politics 101

Over 99.5% of all Rich People ARE paying Federal Income Taxes

President Obama won reelection by denigrating Mitt Romney.  He didn’t win by running on a successful record.  He did not win by running on a plan to pull the economy out of one of the worst recoveries in history.  No.  He won it by getting people to hate Mitt Romney.  And by getting people to hate Republicans.  Who they painted as evil rich people who want nothing more than tax cuts for the rich.  And to take away birth control and abortion so only rich people can have access to them.  As well as taking welfare benefits from the poor.  It’s called class warfare.  And it can be very effective.  For it won President Obama a second term despite a horrible first term by almost any metric you measure it.  At least based on the majority of the electorate that just believed the rich aren’t paying their fair share.  So let’s just see who is paying what (see Table 3.  Number of Individual Income Tax Returns, Income, Exemptions and Deductions, Tax, and Average Tax, by Size of Adjusted Gross Income, Tax Years 2001-2010).

The above chart shows who are NOT paying any federal income tax.  Approximately 40% of all taxpayers.  Are these the evil rich people like Mitt Romney?  And those rich Republicans?  No.  Contrary to the Left, it’s not the rich.  They’re paying their taxes.  It’s the poor and the middle class not paying their fair share.  Those earning $5,000 and less pay virtually no federal income taxes.  Over 80% of those earning from $5,000 to $13,000 pay no federal income taxes.  You have to get up to those earning $25,000 or more before more than half of that income group pays any federal income taxes.

We don’t see who actually pays the majority of federal income taxes until we get into the middle class.  Where those who DON’T pay any federal income taxes rapidly drop away.  Those at the low end of the middle class taking advantage of the tax code to maximize their tax credits and deductions (mortgage interest, energy tax credit, medical and dental Expenses, child and dependent care credit, etc.) to reduce their tax bill.  While those at the higher end of the middle class are likely small business owners suffering a business loss.  Or a personal or business bankruptcy.  Approximately 0.8% of those earning $100,000 – $200,000 pay no federal income taxes.  While less than half of one percent of those earning $200,000 or more pay no federal income taxes.  Perhaps this tiny sliver of income earners are not paying their fair share.  But one thing for certain is that over 99.5% of all rich people ARE paying federal income taxes.

Those earning $1,000,000 and more account for less than 1% of Tax Exemptions and Deductions

So are the rich taking advantage of the tax code to reduce their taxable income and federal tax bill?  We hear a lot about tax loopholes.  Those perfectly legal tax credits and deductions written into law by the United States Congress.  That both those on the Left and those on the Right take advantage of.  Yet those on the Left have convinced enough of the electorate that these legal credits and deductions are tax evasion.  And that only the rich on the Right are using these to evade paying their fair share.  So who is taking the biggest advantage of the tax code to reduce their tax bill?  In 2010 this totaled about $3 trillion.  Is this why those earning $100,000 or more paid no income tax?  For those few not paying any federal income tax?  Not exactly.  (The dollar amounts in the following charts are in thousands of dollars.)

In 2010 taxpayers claimed in total about $3 trillion in exemptions and deductions.  The deficit in 2010 was about $1.3 trillion dollars.  So perhaps this is the reason why we had a deficit in 2010.  This is what the Left would have us believe.  It’s those tax loopholes that the evil rich take advantage of to avoid paying their fair share of taxes.  The only problem with this is that it’s not the rich taking advantage of these tax loopholes.  It’s the poor and middle class.

Those earning $1,000 and less account for less than 1% of these exemptions and deductions.  Those earning $1,000,000 and more also account for less than 1% of these exemptions and deductions.  It’s those earning from $1,000 to $1,000,000 that are taking advantage of these tax loopholes.  Especially those earning from $50,000 to $200,000.  The only income groups claiming 10% or more of the nearly $3 trillion in exemptions and deductions claimed.  So not only are the evil rich paying federal income taxes whatever they claim as exemptions and deductions doesn’t even come close to what the poor and middle class are claiming.

Prosperous Economic Times brought about by Tax Cuts INCREASED Tax Revenues

These numbers don’t exactly support the claim that the rich aren’t paying their fair share.  They’re paying federal income taxes.  And what tax loopholes they exploit hardly makes a dent in the amount of tax revenue the IRS collects.  Which can only mean one of two things.  Either the poor and middle class need to pay more federal income taxes.  Or the federal government is just spending too much.  Well, as we just witnessed in the fiscal cliff debate, President Obama and the Left want to raise taxes.  Blaming the record Obama deficits on the Reagan and Bush tax cuts.  Their deal includes higher income tax rates on households earning $450,000 or more.  But NO spending cuts.  Which will be a problem.

In 2010 the total adjusted gross income totaled just over $8 trillion.  Most of which came from 4 income groups.  About a trillion each from those earning from $50,000 to $75,000, from $75,000 to $100,000 and from $200,000 to $500,000.  Those earning from $100,000 to $200,000 earned in total almost $2 trillion.  Which means the new higher tax rates aren’t going to bring in much new tax revenue.  Because they aren’t taxing the people with the money.  The middle class.  And with some additional spending instead of spending cuts the deficit will only grow larger.  So this whole fiscal cliff debate was nothing but theatre.  For it wasn’t about deficit reduction.  It was about politics.

The Left wants to destroy the Republican Party.  And to do that they need to turn prosperous economic times brought about by the tax cuts of the JFK, Reagan and Bush administrations into the source of all our problems.  Yes the economy boomed, goes the argument, but at what cost?  Massive deficits.  Deficits not brought about by tax cuts.  But by spending.  For those prosperous economic times brought about by tax cuts INCREASED tax revenues.  The deficits resulted from spending increases greater than the revenue increases.  But with a successful campaign of class warfare they have revised history.  Those deficits are now the result of the rich not paying their fair share.   Which helped them increase tax rates on the rich today.  Because the Left got everyone to hate the rich.  And the Republican Party.  Even though the rich are the only ones paying their fair share.  In fact, they’re paying more than their fair share.  But the majority of the electorate doesn’t know this.  Because of that successful campaign of class warfare.

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If Bigger Stimulus puts more Money into Consumers’ Pockets so will Bigger Tax Cuts

Posted by PITHOCRATES - November 19th, 2011

Week in Review

Economists are like climatologists.  They can look at a lot of data.  And come to all the wrong conclusions (see Whatever Happened to Discipline and Hard Work? by Tyler Cowen posted 11/12/2011 on The New York Times).

The second problem is that many conservatives have become so attached to their cultural vision that they have ceded sound, technocratic reasoning to the left and center. For instance there is a common willingness among conservatives to defend the Bush tax cuts, even though the evidence does not show much of an economic payoff.

Conservatives’ own culture, and the sheer desire to validate wealth, discipline and reward through law and the tax code, may have convinced them that the tax cuts have been beneficial. Measuring the actual effects of a tax cut isn’t always their main concern, even if they sometimes cite such numbers for rhetorical purposes. They feel in their bones that antagonism toward the rich is a dead end and so don’t favor highly progressive taxes.

That rhetorical line appeals to tax-weary voters, and seems part of a core conservative vision, but it is treading on dangerous ground because it moves away from testable theory: those tax cuts have already been in place for many years, yet it remains to be seen when or if they will spur the economy.

Interesting.  The Keynesians never talk this way.  When their stimulus spending hasn’t spurred the economy you know what they say?  The stimulus wasn’t big enough.  But when we’re wallowing in a recession that doesn’t want to end in large part due to the specter of Obamacare hanging over us like the sword of Damocles what does someone on ‘our’ side say?  Doesn’t look like the Bush tax cuts are working.  They don’t blame the rash of Obama policies that have squelched this economy.  No.  They go straight to the tax cuts.

Perhaps we should think like Keynesians.  And say the reason why the Bush tax cuts aren’t working is because they’re not big enough.  Make them bigger and those savings may offset the great new costs of Obamacare.  And they might just then turn this economy around.  Because if bigger stimulus puts more money into consumers’ pockets so will bigger tax cuts.

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LESSONS LEARNED #79: “Tax cuts stimulate. Not tax hikes.” -Old Pithy

Posted by PITHOCRATES - August 18th, 2011

With Bubbles the Ride Down is never as Enjoyable as the Ride Up

Bill Clinton dealt George W. Bush a horrible hand.  Clinton enjoyed the irrational exuberance.  He rode the good side of the dot-com bubble.  Saw the treasury awash in cash.  Dot-com people cashing in their stock options and paying huge capital gains taxes.  There was so much money pouring in that projections showed a balanced budget for the first time in a long time.  As long as the people stayed irrationally exuberant.  And that damn Alan Greenspan didn’t raise interest rates.  To rain on his parade.

But he did.  The days of free money were over.  (For awhile, at least).  Because people where bidding up stock prices for companies that hadn’t produced a product or provided a service.  Money poured into these dot-coms as investors were ever hopeful that they had found the next Microsoft.  These companies hired programmers.  Colleges couldn’t graduate enough of them.  To program whatever these companies would eventually do.  But with the spigot of free money turned off these companies ran out of startup capital.  As most of these businesses had no revenue they went out of business.  By the droves.  Throwing these programmers out onto the street.

And then the great contraction.  Which follows a bubble after it is a bubble no more.  Prices fell as deflation replaced inflation.  And as prices fell, unemployment went up.  The phantom prosperity at the end of the Nineties was being corrected.  And the ride down is never as enjoyable as the ride up. 

Easy Monetary Policy and lack of Congressional Oversight of Fannie Mae and Fannie Mac

And then there was, of course, 9/11.  Which further weakened an already weakened economy.  So that’s the backstory to the economic activity of the 2000s.  A decade that began with the aftermath of one bubble bursting.  And ended with an even worse bubble bursting.  The subprime mortgage crisis.  It was a decade of government stimulus.  George W. Bush used both tax cuts (at the beginning of his presidency).  And then a more Keynesian approach (tax rebates and tax incentives) at the end of his presidency.  In other words, tax and spend.

But the subprime mortgage crisis was so devastating that the 2008 stimulus urged by Ben Bernanke (Chairman of the Federal Reserve) to ward off a possible recession failed.  The easy monetary policy and lack of Congressional oversight of Fannie Mae and Freddie Mac caused big trouble.  And put far too many people into houses who couldn’t afford them.  The housing bubble was huge.  And because Fannie and Freddie were buying these risky mortgages and repackaging them into ‘safe’ securities, the fallout went beyond the housing market.  Pension funds, IRAs and 401(k)s that bought these ‘safe’ securities lost huge swaths of wealth.  The economic fallout was vast.  And global.

And then came Barack Obama.  A Keynesian if there was ever one.  With the economy in a free fall towards a depression, he signed into law an $800 billion stimulus package.  Not surprisingly, it turned out that about 88% of that was pure pork and earmarks.  Making his ‘stimulus’ stimulate even less than the George W. Bush $152 billion stimulus package.  And worked about as well.

Home Ownership was the Key to Economic Prosperity in the U.S.

So let’s look at the numbers.  Below is a chart graphing GDP, the unemployment rate and the inflation rate for the 2000s.  GDP is in billions of 2005 dollars.

(Sources: GDP, unemployment, inflation.  *Average to date (GDP – 2 quarters, unemployment rate – 7 months and inflation – 7 months).)

You can see the fallout of the dot-com bust.  The decade opens with deflation and a rising unemployment rate.  GDP, though, was still tracking upward.  After the bush tax cuts in 2001 (Economic Growth and Tax Relief Reconciliation Act of 2001) and 2003 (Jobs and Growth Tax Relief Reconciliation Act of 2003) you can see improvement.  Unemployment peaks out and then falls.  Inflation replaces deflation.  And GDP grows at a greater rate. 

Things were looking good.  But lurking in the background was that easy credit.  And federal policies to qualify unqualified people for mortgages.  To put them into houses they couldn’t afford.  All because home ownership was the key to economic prosperity in the U.S.

Which makes the rising rate of inflation a concern.  Rising inflation (i.e., expansionary or ‘easy’ monetary policy) created the dot-com bubble.  A rising inflation rate can be bad.  But at least during this period the growth rate of GDP is greater than the growth in the inflation rate.  Which indicates real economic growth.  Accompanied by a falling unemployment rate.  All nice.  Until…

Bernanke and Company Crapped their Pants

Those people approved for mortgages they weren’t qualified for?  Guess what?  They couldn’t make their mortgage payments.  And because Fannie and Freddie bought so many of these risky mortgages, these defaults weren’t the banks’ problems.  They were the taxpayers’ problems.  And anyone who bought those ‘safe’ securities.

Long story short, Bernanke and company crapped their pants.  He urged the $152 billion Economic Stimulus Act of 2008 to ward off a possible recession.  This was a Keynesian stimulus.  Remember that summer when you got those $300 checks?  This was that stimulus.  But it didn’t stimulate anything.  People used that money to pay down debt.  Because they were crapping their pants, too.

The good times were over.  That huge housing bubble was bursting.  And nothing was going to stop it.  Certainly not more of the same (Keynesian stimulus).  GDP fell.  Unemployment rose.  Inflation became deflation.  And Bernanke stepped in and turned the printing presses on.  Desperate not to make the same mistake the Fed made during the Great Depression.  When bad Fed policy caused all of those bank runs.

An Inflation Rate Greater than the GDP Growth Rate may Return us to Stagflation

The Obama administration (all Keynesians) pushed for a massive stimulus to fix the economy.  The best and brightest in the administration, Ivy League educated economists, guaranteed that if passed they could hold the unemployment rate under 8%.  So they passed it.  And Bernanke kept printing money.  In other words, more of the same.  More of what gave us the dot-com bubble.  And more of what gave us the housing bubble.  Inflationary monetary policy.  And more government spending.

Didn’t work.  It took a year for the deflation to end.  As the market corrected prices.  And readjusted supply to match actual demand.  The unemployment rate maxed out around 10%.  And the Obama stimulus didn’t move it much from that high. 

GDP growth resumed.  However, the growth of inflation is now greater than the growth of GDP.  A very ominous sign.  Indicating that GDP growth is not real.  And will likely collapse once the ‘free money’ Fed policies end.  Or the growth of inflation coupled with high unemployment return us to the Jimmy Carter stagflation of the Seventies.

Keynesian Stimulus is the way to go if you want Deflation and Recession 

Further Keynesian stimulus may only make a bad situation worse.  And prolong this economic ‘recovery’.  These policies make bubbles.  Which are fine and dandy until they burst.  Giving us deflation and recession.  And the bigger the bubble, the greater deflation and recession that follows.

Tax cuts stimulate.  They ended the dot-com recession.  All Keynesian attempts during the 2000s have failed.  Proving again that tax and spend doesn’t work.  Easy monetary policy and government spending does not end well.  Unless you want deflation and recession.  Then the Keynesian way is the way to go.  But if you want to stimulate economic activity.  If you want real GDP growth.  Then you have to go with tax cuts.  As their track record of success shows.

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The Obama Budget: High Taxes, Reckless Spending and Lies

Posted by PITHOCRATES - April 18th, 2011

Is it how Much we Give or how Much we Could Give that Counts?

Imagine, if you would, two people standing in front of an orphanage.  There’s a donation box there.  And we can see these caring people actually count out their money before placing it in the donation box.  One counts out $20.  The other counts out $100.  Who is more generous?

Is this a trick question, you ask?  Well, yes, I guess it is.  You see, normal people, like you and me, are inclined to say the person donating the $100 is more generous.  I mean, $100 is more than $20.  $100 buys more than $20.  $100 will do more for orphans than $20.  So it sure looks like to us, the normal people, that the $100 donation is the more generous donation.  But that’s not the way government would see it.  For I left out one important piece of information.  I didn’t say how wealthy these people are.  So let’s do that now.  The $20 donation is from a UAW line worker.  The $100 donation is from a rich business owner.  Now who is more generous?

$100 will still buy more than the $20 for the orphans, but $100 is a smaller percentage of the business owner’s salary.  The $20 donation is a larger percentage of the UAW line worker’s salary.  So, people in government, and those on the Left, will say the $20 donation is the more generous donation.  Even though it will buy less for the orphans.

We Pay Tax Dollars, not Tax Rates

This is a big problem clouding the debate over ‘fair’ taxation.  Devious politicians point to tax rates and cry that the rich aren’t paying their fair share.  When, in fact, they are paying far more tax dollars than those less rich.  Even in an attack on these rich bastards shows this (see Only Little People Pay Taxes by Dave Gilson posted 4/18/2011 on Mother Jones).

Leona Helmsley’s distaste for paying taxes eventually landed her in federal prison. But the rich have little need to break the law to avoid the tax collector. As Martin A. Sullivan of Tax.com recently calculated, a New York janitor making slightly more than $33,000 a year pays an effective tax rate of nearly 25%. And the effective tax rate for a resident of the Park Avenue building named after Helmsley, earning an average of $1.2 million annually? A cool 14.7%.

And the chart following this shows the income and taxes of the Janitor and the millionaire.  And even though the millionaire pays only 14.7% in taxes, the actual tax dollars paid in income taxes is $159,515.  And how much did that janitor pay?  Just $3,168.  The cheap bastard, the millionaire, paid $156,347 more in income taxes.  That’s 4,935% more than the janitor paid in income taxes.  Yes, 14.7% is a smaller percentage than 25%, but there’s no math in the world that says the janitor paid more in income taxes than the millionaire.

There’s a difference between tax dollars and tax rates.  And tax rates don’t pay the bills.  Tax dollars do.  And the rich pay more of them by far.  Anyway saying otherwise is fostering class warfare for political purposes.  Because if it was about tax dollars to pay for federal spending, $159,515 pays for a lot more spending than $3,168. 

Low- and Middle-Income Families don’t Pay their Fair Share of Taxes

So if the rich aren’t paying their fair share of taxes, who is?  And are there others, too, not paying their fair share?  Of course, that can’t be.  Because only the rich can get away with cheating the…  Hello, what’s this?  Low- and middle-income families aren’t paying any federal income taxes?  Really?  How can that be?  Wasn’t it the rich blankity blanks that were screwing the poor?  Not the other way around (see Nearly half of US households escape fed income tax by Stephen Ohlemacher, Associated Press Writer, posted 4/7/2011 on Yahoo! Finance)?

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization…

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Really?  They’ve told us that people flipping burgers for minimum wage were poor, but even people earning $50,000 are poor?  No wonder we have so many people in poverty.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment…

In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center.

No wonder the Democrats win elections.  You know there are a lot of Democrats in that 49% not paying federal income taxes.  That makes the Democrats a modern day Robin Hood.  Stealing from the rich.  And giving to the low- and middle-income.  And when you’re on the receiving end of this bounty, you’re all for class warfare.  Screw the rich, you’ll shout.  Until, God forbid, you become rich.  Just ask Nicholas CageSinbadWesley Snipes.  Or Willie Nelson.  And anyone who won the lotto.  Or a car.  Who did not realize that their bounty came with a hefty tax obligation (there’s no tax withholding for these people.  They have to write a check for all the taxes they owe).  People are stunned to learn the amount of their money the government wants.  And that isn’t fair.  But before they were rich, that was a different story.  Then nothing was fairer than sticking it to the rich.

The Rich aren’t Rich Enough to Pay all our Taxes

If the poorest half of all Americans aren’t paying any taxes, then who, exactly, is?  I mean, if the rich aren’t paying their fair share and the poor aren’t paying anything, who does that leave (see Where the Tax Money Is posted 4/17/2011 on The Wall Street Journal)?

Consider the Internal Revenue Service’s income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the “millionaires and billionaires” Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

That’s funny.  I thought the rich weren’t paying their fair share.  And in 2008 the top 1% paid 38% of all taxes.  I don’t know, but 38% sounds like a lot more than the 0% paid by the poorest 50%.  So the rich are paying a lot.  Can they pay more?  Can they pay all of our taxes?  Well, even if you confiscate all of the top 1%’s income, no.  They can’t.  They simply aren’t rich enough.

Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That’s five times Mr. Obama’s 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion. And remember, the top 10% already pay 69% of all total income taxes, while the top 5% pay more than all of the other 95%.

The richest 10% of all Americans, including everyone making $100,000 or more, won’t do it either.  At least, they can’t fund a $4 trillion budget.  Which means there’s no way no how you can pay for government by taxing the rich.  Even if you tax them at 100%.  You see, these rich simply aren’t rich enough.  You know who is, though?  The middle class.

So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.

This is politically risky, however, so Mr. Obama’s game has always been to pretend not to increase taxes for middle class voters while looking for sneaky ways to do it…

Keep in mind that the most expensive tax deductions, in terms of lost tax revenue, go mainly to the middle class. These include the deductions for state and local tax payments (especially property taxes), mortgage interest, employer-sponsored health insurance, 401(k) contributions and charitable donations. The irony is that even as Mr. Obama says he merely wants the rich to pay a little bit more, his proposals would make the tax code less progressive than it is today.

The $100-200 thousand earners are the largest group of earners in the country.  They may each make less than each of the top 1%, but their numbers are far greater.  And it adds up.  If you drop that low end to $50 thousand and the total pot of income is close to $3 trillion dollars.  That’s a lot of money to tax.  And a lot of tax deductions to disallow.  That’s the sweet spot.  The $50-200 thousand earners.  They’re just one plump, stuffed, cash piñata.  And oh how they want to whack it open.  But how to do it?  And blame the Republicans?  That is the question that faces them.

Only the Middle Class can Fund a $4 Trillion Budget

And you do this, of course, by lying.  In his speech to offer his ‘budget’ in a response to the Ryan budget, Obama said he would cut the deficit by $4 trillion over the next 12 years.  How?  In part with $2 trillion in spending cuts.  Which aren’t exactly all spending cuts.  They’re actually tax increases.  You see, he sees tax breaks and credits as federal spending.  Because it costs government by not having that money collected as a tax.  So he will cut that ‘spending’.  By eliminating those tax breaks and credits.  Resulting in you paying higher taxes.  And that additional money the government is ‘taking back from you’ will lower the deficit.  Confused?  You should be.  This is about as devious as it gets.

And he also said he would save $1 trillion by not renewing the Bush tax cuts.  So that’s another $1 trillion in new taxes (see Obama’s $2 trillion stealth tax hike by James Pethokoukis posted 4/17/2011 on Reuters).

If you’re keeping score, what Obama is actually proposing is $1 trillion in new taxes on wealthier Americans (and small businesses) and $1 trillion in higher tax revenues by reducing tax breaks and subsidies for a total of $2 trillion in new taxes over 12 years. That means total debt reduction, not counting interest, would be $4 trillion, 50 percent of which would come from higher taxes. The econ team at Goldman Sachs ran a similar analysis and found that 56 percent of Obama savings over ten years could come from higher tax revenue.

So that’s $2 trillion in new taxes.  And where do you think that will come from?  Not the 1%, that’s for sure.  If you took all of their money it would only get you half way there.  To raise that kind of money, you have to go to the sweet spot.  The middle class.  Including those making far less than $200,000.  You have to tax everyone making $50,000 or more.  And take away their tax breaks and credits.  Where it will really hurt.  And be political suicide.  So why promise to do just that?  Simple.  He’s not. 

The Obama plan is a non-plan.  It’s just a political tool for the 2012 election.  To show that it is the Republicans that want to cut Social Security, Medicare and Medicaid.  Not him.  He’ll say he fought like a dog to save these entitlements.  Because he cares for you.  Unlike those nasty mean Republicans.  And entitlement spending will continue to grow unchecked.  Making it that much harder to save these programs down the road.  But this is what politicians do.  Kick the can down the road.  For someone else to worry about.  For by that time, many of the Democrats will be dead.  And won’t care anymore.

It’s not the Taxes, Stupid.  It’s the Spending.

There’s a difference between tax rates and tax dollars.  And it’s the tax dollars that are important, not the tax rates.  The rich may have a lower effective tax rate but they pay an awful lot in tax dollars.  And as tax dollars go, they’re paying more than anyone else.  Far more than half of all Americans.  Who pay $0.00 in federal income taxes.  If anyone is screwing anyone, it’s the lower 50% screwing the top 10%.  And the top 10% probably wouldn’t mind so much if we weren’t constantly demonizing them despite their generosity.

When you can’t pay for your spending by taxing everyone making $100,000 or more at 100%, you’re spending too much.  This is a spending problem pure and simple.  It’s not that the rich aren’t paying their fair share in taxes.  They are.  And then some.  It’s that government is just trying to buy too many votes.  If there is any greed here it is in Washington.  Their spending is out of control.  Even Standard & Poor’s Ratings Service thinks so.  They just lowered our rating from “stable” to “negative” because of the “ballooning deficit.”   Because our out of control spending threatens our future ability to service our debt.

But the Democrats have other pressing concerns on their minds.  Like winning elections.  And you win elections by spending.  Not living within your means.  And if they play it just right, the day of reckoning will come conveniently in the future.  When they’re dead.  Problem solved.  For them, at least.  Their children and grand children?  Guess they just don’t care about them.

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Obama’s Speech to cut the Deficit Appeals to Tax and Spend Liberal Base

Posted by PITHOCRATES - April 13th, 2011

Deficits are caused by Tax Breaks, not Spending

President Obama was taking some heat for not being engaged in the budget process.  So he sucked it up.  Put a plan together.  And went on television at the same time the Rush Limbaugh program aired I guess in hopes that people would be listening to Rush instead of his less than inspiring speech (see The Presidential Destroyer posted 4/14/2011 on The Wall Street Journal).

Mr. Obama did not deign to propose an alternative to rival Mr. Ryan’s plan, even as he categorically rejected all its reform ideas, repeatedly vilifying them as un-American. “Their vision is less about reducing the deficit than it is about changing the basic social compact in America,” he said, supposedly pitting “children with autism or Down’s syndrome” against “every millionaire and billionaire in our society.” The President was not attempting to join the debate Mr. Ryan has started, but to close it off just as it begins and annihilate any possibility of good-faith cooperation.

Mr. Obama then packaged his poison in the rhetoric of bipartisanship—which “starts,” he said, “by being honest about what’s causing our deficit.” The speech he chose to deliver was among the most dishonest in decades, even by modern political standards.

Attack the Republicans for being toadies of the rich in their never ending quest to kill children.  Condemn the Republican proposal as being wrong with all knowing condescension without having anything better to offer himself.  Blame the deficits on unfair tax cuts for the rich, not on the explosion in federal spending under his watch.  Same old same old.  Campaign rhetoric.  Forever the candidate.  Wholly uncomfortable in the role of president.

Mr. Obama said that the typical political proposal to rationalize Medicare’s gargantuan liabilities is that it is “just a matter of eliminating waste and abuse.” His own plan is to double down on the program’s price controls and Gosplan-like central planning. All Medicare decisions will be turned over to and routed through an unelected commission created by ObamaCare—which will supposedly ferret out “unnecessary spending.” Is that the same as “waste and abuse”?

Fifteen members will serve on the Independent Payment Advisory Board, all appointed by the President and confirmed by the Senate. If per capita costs grow by more than GDP plus 0.5%, this board would get more power, including an automatic budget sequester to enforce its rulings. So 15 Solons sitting in a room with the power of the purse will evidently find ways to control Medicare spending that no one has ever thought of before and that supposedly won’t harm seniors’ care, even as the largest cohort of the baby boom generation retires and starts to collect benefits.

Interesting.  The UK is working on revising their National Health Service (NHS), too.  Which is very similar to what Obama is proposing.  The NHS is a big centralized behemoth.  For now, at least.  You see, the British are doing the opposite of what Obama wants to do.  Because over the great many years of the NHS, they have found that the big centralized behemoth doesn’t work well.  Unless your goal is to have high costs, long waits and a rationing of health care.  And this just begs the question.  If the British couldn’t do it, why in the world would anyone believe that the Obama administration can?

Every U.S. fiscal trouble, he claimed, flows from the Bush tax cuts “for the wealthiest 2%,” conveniently passing over what he euphemistically called his own “series of emergency steps that saved millions of jobs.” Apparently that means the $814 billion stimulus that failed and a new multitrillion-dollar entitlement in ObamaCare that had nothing to do with jobs.

Under the Obama tax plan, the Bush rates would be repealed for the top brackets. Yet the “cost” of extending all the Bush rates in 2011 over 10 years was about $3.7 trillion. Some $3 trillion of that was for everything but the top brackets—and Mr. Obama says he want to extend those rates forever. According to Internal Revenue Service data, the entire taxable income of everyone earning over $100,000 in 2008 was about $1.582 trillion. Even if all these Americans—most of whom are far from wealthy—were taxed at 100%, it wouldn’t cover Mr. Obama’s deficit for this year.

The cost of the Bush tax cuts per year are $370 billion.  The Obama stimulus was $814 billion.  Clearly, just looking at this alone makes the deficit Obama’s fault, not Bush’s.  In fact, Obama added some $4.3 trillion to the national debt in his first two years in office.  That’s $2.15 trillion per year.  Which is greater than $370 billion if my math is right.  In the grand scheme of things the Bush tax cuts are chump change.  But it’ll probably do a lot more to create jobs than that $814 billion waste in spending he called stimulus.

A trillion is a big number.  Taxable income of $1.582 trillion is a lot of money (the sum of income of everyone earning over $100,000).  But it’s still less than what Obama spends.  Damn these rich people.  They’re screwing this president again.  Not only do they not pay their ‘fair’ share in taxes.  They simply don’t earn enough to pay the taxes required to support his extravagant spending.  Even if Obama confiscated all of their income.

The People’s Budget: Governing against the Will of the People

All right, no one expected anything serious today.   Obama doesn’t do that.  He only campaigns.  And there’s an election coming up.  So he sure isn’t going to do anything foolish that might hurt his reelection chances.  Like governing.  And there is a good reason why he’s not trying to get serious with the budget.  Because if people found out what he really wanted to do, no one with a job would vote for him.  Because he’s a tax and spend liberal.  And that’s what he wants to do.  But can’t.  Because of those damn independent voters.  They have jobs.  And the votes that will or will not make him a two-term president.  So he can’t afford to spook them.  Which isn’t pleasing his liberal base.  They’re getting fed up.  They want the liberal they helped to elect.

Making things even more uncomfortable for him, just under half of the House Democrats are as liberal as he is.  And they have put together a budget to counter the Ryan budget.  And it’s a liberal budget.  It shows who they really are.  And what they want to do to America (see The liberals’ plan: Gut defense and tax, tax, tax by Byron York posted 4/11/2011 on The Washington Examiner).

The “People’s Budget” is the liberals’ answer to House Budget Committee chairman Paul Ryan’s 2012 budget proposal, which is “leading us down a road to ruin,” according to caucus co-chairmen Reps. Raul Grijalva and Keith Ellison. The “People’s Budget,” Grijalva and Ellison claim, would eliminate the deficit in just 10 years (Ryan’s plan would take more than 25 years) while expanding, not cutting, Medicare, Medicaid and Social Security…

How can such fiscal miracles be accomplished? By tax increases that would make even some top Democrats gasp. Perhaps the most extraordinary is the caucus plan to raise the Social Security tax to cover nearly all of a taxpayer’s income…

The caucus would create three new individual tax brackets for the highest incomes, topping out at 47 percent. It would also raise the capital gains tax, the estate tax and corporate taxes. It would create something called a “financial crisis responsibility fee” and a “financial speculation tax.” And of course it would repeal the Bush tax cuts.

As if anyone needed reminding, the “People’s Budget” is proof that the liberal idea of budget balancing is tax, tax, tax. If you’re looking for spending cuts, you’ll find just one really big one: national defense. The liberals would end “overseas contingency operations” — the wars in Iraq and Afghanistan — starting in 2013. They would save more money by “reducing strategic capabilities, conventional forces, procurement, and research & development programs.” In other words, they would gut the United States’ ability to defend itself, today and long into the future.

Confiscatory taxes.  And more spending.  The problem with this is if you take away everyone’s wealth no one will want to create wealth.  If the government is going to provide a social utopia, why work?  Why work a 50-60 hour week just so you can pay most of your earnings in taxes?  When you can push a broom and live a comfortable life?  The Romans did just this and they had a problem.  People quit being farmers because the Roman government was taking most of their crops.  So the Romans passed laws putting a stop to this.  That’s right, if you were a farmer you stayed a farmer.  Whether you liked it or not.  And this is how you make confiscatory taxation work.  You make people work against their will.

Of course, Rome had another problem.  Citizens didn’t want to serve in the military anymore.  So they had to rely more and more on hired armies.  Which cost a lot of money.  And when they couldn’t pay them it caused problems.  The mighty Roman legions weren’t so mighty anymore.  And the empire became vulnerable to attack.  And it was.  Attacked.  And, ultimately, conquered.  But that could never happen here.  Because America has no enemies.  And is loved throughout the world.

If the liberals get their way, we may very well go the way of the Roman Empire.  And spend ourselves into oblivion.  Which is what tax and spend liberals do.

What would the liberals spend money on? The “People’s Budget” is essentially a newer and bigger stimulus bill. Grijalva and Ellison pledge to “invest $1.45 trillion in job creation, early childhood, K-12 and special education, quality child care, energy and broadband infrastructure, housing, and research and development,” along with billions more for stimuluslike road and other transportation programs.

Overall, the plan shows the gaping divide between the Progressive Caucus and the Obama White House. Back in his Chicago days, Barack Obama might easily have signed on to something like this. Now, as a president desperate for the support of independent voters in 2012, he can’t.

Yes.  If only if he was back in his good old Chicago days.  Obama would then embrace this budget.  As an activist you can do that sort of thing.  Because activists don’t solve any problems.  They just agitate.  And have fun.  Presidents can’t do that, though.  Sooner or later, they have to govern.  And when you do, you can’t govern against the will of the people.  For the people will reject you.  Especially those independent voters who have jobs.

Hating Republicans:  The Democrat Strategy

So while the Republicans try to address the unsustainable cost of entitlements, Obama and his Democrats are letting them.  While attacking them.  And this will probably carry us through the 2012 election season.  They’re trying to ‘Newt Gingrich‘ the Republicans.  Dance around in useless debate until they can get a ‘wither on a vine‘ sound bite.  Sure, the country will go further down the toilet.  But the more people hate Republicans the better their chances are at the polls.  Which is all they have.  Because their policies ain’t winning them any votes.  At least, not from the people who have jobs.

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Bush Tax Cuts, the Omnibus Spending Bill and a Little Egomania

Posted by PITHOCRATES - December 17th, 2010

A Tax Cut!  A Tax Cut!  My Kingdom for a Tax Cut!

Obama begs for help in passing his deal with the GOP to extend the Bush tax cuts (see Obama tells lawmakers not passing tax deal could end presidency, Dem says by Jordan Fabian posted 12/15/2010 on The Hill).

Obama is telling members of Congress that failure to pass the tax-cut legislation could result in the end of his presidency, Rep. Peter DeFazio (Ore.) said.

“The White House is putting on tremendous pressure, making phone calls, the president is making phone calls saying this is the end of his presidency if he doesn’t get this bad deal,” he told CNN’s Eliot Spitzer.

Which the White House denies.

“The president hasn’t said anything remotely like that and has never spoken with Mr. DeFazio about the issue,” said White House spokesman Tommy Vietor.

Besides, would the president ever sink to that level?

During the end of the healthcare debate, Obama reportedly told Democrats upset that the bill did not contain a public healthcare option that not passing it could put his presidency on the line and stall the liberal agenda for decades.

Actually, the president uses this maneuver so often that we just call it the ‘Obama’ now. 

Liberals and Alice Cooper both Love the Dead

The liberals were listening to Obama.  And with the leader of their party in a vulnerable position, they pounced.  A little tit for tat.  If he was going to screw his liberal colleagues by extending the Bush tax cuts, then the liberals wanted to get in a little screwing themselves (see Congress Moves Toward Approving Tax Cut Legislation by David M. Herszenhorn posted 12/16/2010 on the New York Times).

As the House began to take up the tax deal, it hit a procedural snag. Liberal Democrats skirmished with party leaders over a proposed vote on an amendment to tax more wealthy estates and at a higher rate than was included in a provision agreed to by the Obama administration.

The Obama presidency is saved.  It appears liberal Democrats will sign off on the compromise if they can screw rich dead people.  Figuratively, of course.  So Obama may get to put this one into the ‘win’ column thanks to a little legislative necrophilia.

Porking it up in an Omnibus Spending Bill

Knowing that no one really wanted their agenda, the Democrats did little to rock the boat before the 2010 midterm elections.  They didn’t talk about Obamacare (unless they voted against it and were proud of it).  They didn’t talk about the Obama stimulus package that ended the recession and kicked off the Summer of Recovery (back when the unemployment rate was lower than it is now).  And they sure as hell didn’t write a budget. 

With their out of control spending, the less the American people saw it in print, the better it was for them.  So with government about to shut down again, they threw together a quick 2,000ish page omnibus spending bill.  But elections have consequences.  Apparently.  And some Senators chose to represent their constituents (see Senate Dem leader drops nearly $1.3T spending bill by Andrew Taylor, The Associated Press, posted 12/16/2010 on The Washington Post).

Democrats controlling the Senate abandoned on Thursday a huge catchall spending measure combining nearly $1.3 trillion worth of unfinished budget work, including another $158 billion for military operations in Iraq and Afghanistan.

The 1,924-page bill collapsed of its own weight after an outcry from conservatives who complained it was stuffed with more than $8 billion in homestate pet projects known as earmarks.

And after we said no more earmarks at the 2010 midterm elections.  Instead of losing graciously, they’re speeding up at a yellow light before it changes.  Unfortunately for them, though, the car ahead of them didn’t.

GOP leader Mitch McConnell of Kentucky threw his weight against the bill in recent days, saying it was “unbelievable” that Democrats would try to muscle through in the days before Christmas legislation that usually takes months to debate.

“Just a few weeks after the voters told us they don’t want us rushing major pieces of complicated, costly, far-reaching legislation through Congress, we get this,” McConnell said. “This is no way to legislate.”

Unbelievable?  Why wouldn’t they want to rush this 1,924 bill through Congress?  They want it passed.  And that won’t happen if they take the time to read it.  Or debate it.  I mean, if they had done that with Obamacare Congress wouldn’t have passed it.  Nancy Pelosi said we had to pass Obamacare to find out what was in Obamacare.  And we did.  And the regret and angry debate followed after it became law.  That’s how liberal Democrats pass bills.  Sneakily.  Like the devious little bastards they are.

And how will this affect the Obama presidency?

The sinking of the bill was a setback for President Barack Obama, who supported it despite provisions to block the Pentagon from transferring Guantanamo Bay prisoners to the United States and fund a program to develop a second engine for the F-35 Joint Strike Fighter, which the administration says is a waste of money.

Poor Obama.  That’s another one for the ‘lost’ column.  There’s a word for people like him.  What is it?  Begins with an ‘L’?  It was just on the tip of my tongue.  Oh well, perhaps I’ll remember later.

Go Ahead.  Make my Day.  Shut Down the Government. 

So, what happens now?  Will government shut down (see McConnell: Dems Using “Christmas Break As An Inducement” To Pass Omnibus posted 12/16/2010 on Real Clear Politics).

Sen. Mitch McConnell (R-KY) touts his one-page continuing resolution that would “simply continue the government through February 18th.”

“I would hope that it would make sense on a bipartisan basis, this one-page continuing resolution on Feb 18th as an alternative to this 2,000-page monstrosity that spends a half a billion dollars a page,” McConnell said on the Senate floor.

Guess that’ll keep the Social Security checks going into the mail.  Not bad for a single piece of paper.  You see?  Congress can govern without raping and pillaging the American people.

Obama the Great.  His Majesty.  His Pomposity.

Win some.  Lose some.  Looking at Obama’s record, you can see that he is a man who cares deeply for what he loves most.  Obama (see When it comes to politics, Obama’s ego keeps getting in the way by Michael Gerson posted on 12/17/2010 on The Washington Post).

The tax deal is reasonable policy, supported by majorities of Republicans, Democrats and independents – an easy sell by presidential standards. And still President Obama managed to blow the politics of the thing.

Rather than explaining the economic benefits of the bill and taking quiet credit for a moment of bipartisanship, Obama launched into an assault on partners and opponents. Republicans are “hostage-takers” who worship the “Holy Grail” of trickle-down economics. Liberal opponents are “sanctimonious,” preferring their own purity to the interests of the poor. The president did not just attack the policy positions of nearly everyone in the political class. He publicly questioned their motives.

The Left and Right alike are just too stupid to know what’s best for them.  If only we would listen to Obama.  Because he’s so smart.  I mean, he won the election while being the most unqualified candidate ever to run for the presidency.  You gotta be smart to pull that off.  Or at least sound smart.

Obama is professorial, cold, condescending and just plain mean.

It is the president’s favorite rhetorical pose: the hectorer in chief. He is alternately defiant, defensive, exasperated, resentful, harsh, scolding, prickly. He is both the smartest kid in class and the schoolyard bully.

There are many problems with this mode of presidential communication, but mainly its supreme self-regard. The tax deal, in Obama’s presentation, was not about the economy or the country. It was about him. It was about the absurd concessions he was forced to make, the absurd opposition he was forced to endure, the universally insufficient deference to his wisdom.

And he’s got a great big ego.  He’s pompous and conceited.  A narcissist.  A legend in his own mind.  He thinks he’s got the Midas touch.  Anything he touches, he thinks he makes better.  Well, let’s look at some of what he’s been touching.

At this point in the Obama presidency, even Democrats must be asking: Is he really this bad at politics? The list of miscalculations grows longer. To pass the stimulus package, the administration predicts 8 percent unemployment – a prediction that became an indictment. It pledges the closing of the Guantanamo Bay prison – without a realistic plan to do so. It sends the president to secure the Chicago Olympics – and comes away empty-handed. It announces a “summer of recovery” – which becomes a source of ridicule. It unveils a Manhattan trial for Khalid Sheik Mohammed – which nearly every New York official promptly turns against. Press secretary Robert Gibbs picks fights with both conservative talk radio hosts and the “professional left” – which uniformly backfire. The president seems to endorse the Ground Zero mosque – before retreating 24 hours later. He suggests that Republicans are “enemies” of Latinos – apparently unable to distinguish between hardball and trash talk.

Genius?  Or incompetent boob?  You tell me.

I especially like the joke, “summer of recovery.”  That reminds me of the The Summer of George from Seinfeld.  They were both silly.  Come to think of it, President Obama reminds me of George Costanza.  They have a lot in common.  But I think history will be kinder to George Costanza.

Why so many unforced mistakes? The ineffectiveness of Obama’s political and communications staff may be part of the problem – and the administration is now hinting at significant White House personnel changes in the new year. But an alternative explanation was on display this week. Perhaps Democrats did not elect another Franklin Roosevelt or John Kennedy but another Woodrow Wilson – a politician sabotaged by his sense of superiority.

In the tax debate, Obama has proved a quarrelsome ally and a dismissive foe, generally dismayed by the grubby realities of politics. He doesn’t suffer fools gladly. Unfortunately, he seems to put just about everyone who disagrees with him in that category.

Like a true aristocrat, Obama just hates people that aren’t his equals.  And in his mind, he has no equals.  So he hates everyone.  Which explains a lot.  The disunity in his party.  The bitter partisanship.  And the whining.

It makes one yearn for the days when an affable Texan occupied the White House.  George W. Bush may have not spoken as well or was as pretentious as Obama, but he was a nice man.  Is.  And history will remember him kindly.  Probably even more kindly than George Costanza.

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A Closer Look at the Obama-GOP Tax Deal Seems to Favor Obama

Posted by PITHOCRATES - December 11th, 2010

The Left May Get more Deficit Spending while Making it Look Like the Right’s Fault

As details emerge, the Obama-GOP tax deal to extend the Bush tax cuts just gets worse.  There’s a whole lot of stimulus/deficit spending in that deal.  Not quite in keeping with the spirit of 2010 when the nation rejected deficit spending in a grand way.  But now it’s as if that ‘shellacking’ never happened.

There’s a lot of debate.  Some filibustering.  And a whole lot of theatre.  The far Left is acting like Obama betrayed them worse than an adulterous spouse.  While the Right appears to have already forgotten who won the midterm elections.  Because, according to Charles Krauthammer, who’s very smart, the Right caved and the Left won but are too dumb to even know (see Swindle of the Year by Charles Krauthammer posted 12/10/2010 on The National Review Online).

Barack Obama won the great tax-cut showdown of 2010 — and House Democrats don’t have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years — which just happen to be the two years of the run-up to the next presidential election. This is a defeat?

If Obama had asked for a second stimulus directly, he would have been laughed out of town. Stimulus I was so reviled that the Democrats banished the word from their lexicon throughout the 2010 campaign. And yet, despite a very weak post-election hand, Obama got the Republicans to offer to increase spending and cut taxes by $990 billion over two years — $630 billion of it above and beyond extension of the Bush tax cuts.

Business as usual.  After a repudiation of business as usual.  This reminds me of the movie Patton

Just before Patton was relieved of Third Army, he had an angry phone call with General Beetle Smith, Eisenhower’s chief of staff.  Patton wasn’t a fan of the Russians.  He thought we would fight them sooner or later.  He wanted it to be sooner, when we had the army in Europe to do it.  He said if SHAEF (Supreme Headquarters Allied Expeditionary Forces) didn’t have the guts to do it, he did.  He could get us into a war with those ‘sons of bitches’ and make it look like their fault.  Good movie.  But, alas, Patton was relieved of command soon thereafter.  He would later die from complications from a car accident.

Now Obama doesn’t remind me of Patton in the least.  For Patton was a good leader.  But it looks like Obama is going to get his deficit spending.  And he’s going to make it look like the Republicans’ fault.

If at First You don’t Succeed, Lie, Lie Again

So much for the hope and change to change the previous hope and change that changed little as hoped in Washington. 

We elected Obama because the Republicans had lost their way.  And because of the abysmal job Obama, Pelosi, Reid et al have been doing, the American people have given the Republicans a second chance.  And what do they do?  Even before they officially take power in the House of Representatives?  They’re already caving.  I guess old habits are just hard to break.

Obama is no fool. While getting Republicans to boost his own reelection chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, tea-party, this-time-we’re-serious persona of debt-averse fiscal responsibility.

And he gets all this in return for what? For a mere two-year postponement of a mere 4.6-point increase in marginal tax rates for upper incomes. And an estate-tax rate of 35 percent — it jumps insanely from zero to 55 percent on Jan. 1 — that is somewhat lower than what the Democrats wanted.

And, of course, another 13 months of unemployment benefits.  Exactly what is the liberal Left bitching about?  The only downside appears to be a 2 year delay in raising the top marginal tax rates by 4.6%.  And only confiscating a third of dead people’s wealth instead of half of it.  What a bunch of whiny cry babies.

Obama’s public exasperation with this infantile leftism is both perfectly understandable and politically adept. It is his way back to at least the appearance of centrist moderation. The only way he will get a second look from the independents who elected him in 2008 — and who abandoned the Democrats in 2010 — is by changing the prevailing (and correct) perception that he is a man of the Left.

The Left knows that they must lie to win elections.  And that’s what Obama is doing now.  He’s going to run for reelection in 2012.  It’s time to say he’s a centrist again.  Do they not see this?  Or is this all part of a great lie?  Just more theatre?

The Era of Big Government is Over?

The 2008 Democrat primary elections were pretty nasty.  Obama and Hillary Clinton took off the gloves at times.  The Clintons did not like this little usurper.  Obama.  For it was Hillary’s turn.  When she conceded to Obama, she and Bill announced their support for the Democrat candidate.  But there was a simmering hatred below the surface.

Obama offered Hillary Secretary of State as a consolation prize.  Partly to assuage the Clinton machine.  And partly for that reason given in The Godfather: Part II.  Keep your friends close.  And your enemies closer.  (That’s actually from the Sun-tzu’s The Art of War but I doubt Obama would have ever read that, what with it being a military book.)  To prevent a possible 2012 primary challenge from Hillary.

Now either it’s more theatre, or an attempt to hit his liberal base upside the head, but Obama called on the big dog.  Bill Clinton.  The man whose wife Obama dissed during the primary election and denied her her place in history.  And he supports the Obama-GOP deal (see Bill’s Back: Clinton commands stage at White House by Ben Feller, AP White House Correspondent, posted 12/10/2010 on Yahoo! Finance).

Clinton comfortably outlined how the pending package of tax cuts, business incentives and unemployment benefits would boost the economy — even though it included tax help for the wealthy that Obama had to swallow.

“There’s never a perfect bipartisan bill in the eyes of a partisan,” Clinton said. “But I really believe this will be a significant net-plus for the country.”

When he finished his pitch, Clinton played the role of humble guy, saying, “So, for whatever it’s worth, that’s what I think.”

“It’s worth a lot,” Obama insisted

Clinton was once right where Obama is.  Even worse.  He lost both houses of Congress after his first midterm elections because he went too left, too.  Then he moved to the center.  And, with the help of Dick Morris (then Democrat strategist), and a Republican Congress that checked his spending, he got reelected.  Is this a sign that Obama will follow Clinton’s lead?

Perhaps.  But Obama is a whole lot more arrogant than Clinton.  It just may not be in his nature to be politically expedient.  I mean, it just may not be in Obama’s DNA to say the era of Big Government is over.

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Republicans and Obama Compromise to Extend the Bush Tax Cuts

Posted by PITHOCRATES - December 8th, 2010

It’s not that the American People Disagree with Obama.  They’re just not Smart enough to know what’s Best for Them.

Well, problem solved.  Sort of.  For a year or so.  Then they’ll have to do it all over again.

Obama will extend the Bush tax cuts.  And it will only cost another year of unemployment benefits.  That’s good because we have all grown weary of this recession (see Obama defends tax deal, says he’s kept promises by Ben Feller, AP White House Correspondent, posted 12/7/2010 on Yahoo! News).

With fellow Democrats balking, President Barack Obama declared Tuesday that a compromise with Republicans on tax cuts was necessary to help the economy and protect recession-weary Americans. He passionately defended his record against Democrats who complain he’s breaking campaign promises.

What’s this?  Some of that bipartisanship he was talking about when Obama ran as a moderate during the 2008 presidential campaign?  Can you feel the love?  You better pinch me because I must be dreaming.

Obama cast his decision to accede to the GOP position on extending the tax cuts in stark terms.

“It’s tempting not to negotiate with hostage takers — unless the hostage gets harmed. Then, people will question the wisdom of that strategy. In this case, the hostage was the American people, and I was not willing to see them get harmed.”

He said the American people agree with his position, but “I haven’t persuaded the Republican Party.” Reflecting the newly increased Republican clout in Congress, he said: “I haven’t persuaded (Senate Republican leader) Mitch McConnell and I haven’t persuaded (House GOP leader) John Boehner.”

Now there’s the Obama we all know and…., well, know.  Who else could suffer such a categorical rejection of his polices and still think the American people agree with him?  Talk about illusions of grandeur. 

It reminds me of that line in the movie Tootsie where some aging soap opera star was lamenting about being an old has-been.  Dorothy (Dustin Hoffman) soothed his feelings by saying he wasn’t an old has-been.  He couldn’t be.  Because you had to be famous first to be a has-been.

Or that scene in that classic movie This is Spinal Tap, the fake documentary about a fake, aging rock band.  The interviewer noted they were playing smaller venues instead of arenas like in their heyday and asked if that was a reflection on their popularity.  They said ‘no’.  Their audiences weren’t getting smaller.  They were just becoming more selective.

And you can forget about pinching me.

Americans Lose Faith in the Unmanly Obama

Unhappy with this compromise, the Left is questioning Obama’s manliness (see Left sees tax surrender, says Obama reelection bid now crippled by Sam Youngman posted 12/7/2010 on The Hill).

“President Obama has shown a complete refusal to fight Republicans throughout his presidency even when the public is on his side — and millions of his former supporters are now growing disappointed and infuriated by this refusal to fight,” said Adam Green, co-founder of the Progressive Change Campaign Committee.

The public is with Obama?  Talk about a struggle with reality.  Or a very, very short memory.  If the midterm elections weren’t a rejection of Obama’s liberal agenda I don’t know what rejection is.  So, no, the public is not with Obama on this.  Only the far Left is with Obama.  That 20% of the population that the other 80% can’t stand.

“This is only a tough fight [now] because Americans have lost faith that President Obama is fighting for their economic futures,” said Jamal Simmons, a Democratic strategist and former official with the Clinton administration.

Do you think?  Things have gotten worse under Obama.  Even after he spent billions of dollars to make things better.  So, yeah, most Americans have lost faith in Obama.  If they even had any in him in the first place.

Compromise is a Four-Letter Word on the Left

Bipartisanship is all well and good.  As long as you can make the other guy be bipartisan, that is.  The Democrats aren’t happy.  Especially the leadership, who usually march in lockstep with Obama (see Obama defends tax deal while Reid seeks changes by Charles Babington, Associated Press, posted 12/7/2010 on Yahoo! News).

“It’s something that’s not done yet,” said Senate Majority Leader Harry Reid, D-Nev. “We’re going to have to do some more work,” Reid said after a closed-door meeting with Vice President Joe Biden and members of the Democratic rank-and-file.

Reid isn’t happy.  Neither is Pelosi.

Across the Capitol, House Speaker Nancy Pelosi, normally one of Obama’s staunchest allies, made plain her unhappiness, issuing a statement that contained no commitment to help pass the plan. “We will continue discussions with the president and our caucus in the days ahead.”

Yes, Reid and Pelosi are all for compromise.  As long it’s not them doing the compromising.  Typical liberals.  Never happy.  Even with the most liberal president ever to inhabit the White House.  He just isn’t liberal enough for them.

The Really Sad thing is that Pelosi got Reelected with 80% of the Vote

Furious, Pelosi vented on Twitter (see Pelosi attacks Obama-GOP tax plan as House Democrats signal fight by Russell Berman posted 12/7/2010 on The Hill).

In a post on Twitter, Pelosi said the GOP provisions in the tax proposal would add to the deficit and help the rich without creating jobs. The GOP provisions “help only wealthiest 3%, don’t create jobs & add tens of billions to deficit,” the Pelosi tweet said.

Then issued a statement.

“We will continue discussions with the president and our caucus in the days ahead,” Pelosi said. “Democratic priorities remain clear: to provide a tax cut for working families, to promote policies that produce jobs and economic growth, and to assist millions of our fellow Americans who have lost their jobs through no fault of their own.”

Nevadans barely reelected Reid.  Pelosi, on the other hand, got something like 80% of the vote.  Scary.  So that means about 80% of the people in her district agree with the political philosophy of about 20% of the country.  That screwball far Left.  The same people that supported Joseph Stalin.  And Fidel Castro.  Is it any wonder that Pelosi doesn’t have the foggiest idea about creating jobs?

Pelosi and the Democrats have been in power since 2006, 2 years before Obama’s election.  That’s 4 years of legislative control.  And things have declined during those 4 years.  So why in the world would anyone believe that she and her Democrats know anything about jobs and economic growth?  I’m sure she believes they do.  They just need more time.  Because that fifth year is always the charm.  Stalin, Mao, Castro – they all had 5 year plans.  And all the magic happens in that fifth year.  Apparently. 

Elections Have Consequences

The 2010 midterm elections were a mandate to shrink the power and scope of government.  Yet you wouldn’t know that listening to Obama, Pelosi and Reid.  Even some Republicans seem a little too eager to reach across the aisle. 

The Republicans need to acknowledge that Obama was right.  Elections have consequences.  And they won this time.  Not the Democrats.  And they need to legislate like they got a pair. 

Many feel the extension of the Bush tax cuts came at a high price.  No doubt they’re wondering what they will pay to repeal Obamacare.

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Tax and Spend and Raise Your Taxes: The Ultra-Left Liberal Agenda

Posted by PITHOCRATES - November 7th, 2010

Fiscal Extortion Responsibility:  Approve Our Millage to Raise Your Taxes or Else

Whenever the government wants to raise your taxes, they use fear.  What does the typical family in suburbia hear?  “If the city doesn’t get this millage approved, the city will have no choice but to lay off police officers and fire fighters.”  It’s never, “If we don’t get this millage approved, the city will have to cut pay and benefits of our bloated and overpaid city bureaucracy.  Or lay off some of the deadwood.”  No.  It’s always the cops and the fire fighters.  Because it’s more scary.  Mothers worry about the safety of their children.  And will do anything for them.  Even pay more taxes.  If it was anyone else talking like this, we’d call it extortion.  But when our government shakes us down for protection money, they call it fiscal responsibility.

The federal government works much in the same way.  Of course, there are no federal police officers or fire fighters protecting our communities day in and day out.  So they go for the jugular.  That third rail.  Social Security.  When the White House and Capitol Hill were staring each other off into a government shutdown in the 1990s, what did Bill Clinton do?  He threatened Social Security (see GOP to Use Debt Cap to Push Spending Cuts by Damian Paletta posted on The Wall Street Journal).

Eventually, the debt ceiling was raised, but only after a brief government shutdown and warnings from the Clinton administration that the government might temporarily stop mailing Social Security checks.

One thing not on the table was lawmaker pay and benefits.  Little old ladies would lose their Social Security checks before they would ever let that happen.  Fast forward to today.  Federal deficits and the debt have never been higher.  In the discussion of spending cuts, that discussion included the other third rail of politics.  Lawmaker pay and benefits.  There’s talk now about cutting their pay.  Of course, that will never happen.  Even though they could afford it (see Boehner under fire: First cut should be lawmakers’ salaries by Jordy Yager posted on The Hill).

Boehner is slated to receive a $30,100 pay increase next year when he becomes Speaker of the House. His annual salary will be $223,500. The base pay for House and Senate lawmakers is $174,000, while majority and minority leaders each make $193,400 per year.

And this doesn’t include any of their benefits or graft.  How does this make you feel?  These are the people that are bankrupting our country.  Destroying our jobs with their anti-business policies.  And forcing us to get by on less.  While they live the good life.  Yes, let’s cut their pay.  If we slash it by $100,000, they’d still be making more than the majority of their constituents.  Something just wrong with that.  Our servants living better than us.

President Obama:  Typical Tax and Spend Liberal Who Hates Tax Cuts

With the loss of the House in the 2010 midterm elections, President Obama’s FDR/LBJ spending has hit a snag.  Nancy Pelosi is not there to rubberstamp his ultra-left liberal agenda.  In fact, the new House leadership is talking about repealing some of that ultra-left liberal legislation to reduce that projected annual deficit of $4,125 billion (see Barack Obama Outspends George W. Bush and Ronald Reagan Combined from this same website). 

Front and center in this debate are the George W. Bush tax cuts scheduled to expire at the end of this year.  And all of a sudden, President Obama is concerned about deficit spending (see Obama calls for compromise, won’t budge on tax cuts by Kevin Cullum posted on The Hill).

“At a time when we are going to ask folks across the board to make such difficult sacrifices, I don’t see how we can afford to borrow an additional $700 billion from other countries to make all the Bush tax cuts permanent, even for the wealthiest 2 percent of Americans,” the president said. “We’d be digging ourselves into an even deeper fiscal hole and passing the burden on to our children.”

Oh, he’s concerned now.  He wasn’t with his bailouts to help fund union pensions.  Or the biggest explosion in federal spending ever.  The trillion dollar+ per annum Obamacare.  But he’s being a little devious here.  Earlier, he said that $700 billion cost of the Bush tax cuts was over ten years (see the above link to this same website).  That comes to $70 billion annually.  Compared that to his projected $4,125 billion annual deficit and he loses all credibility.  He doesn’t care about $4,125 billion in deficit spending but will put his foot down about a paltry annual $70 billion in tax savings.  Why?  He’s a tax and spend liberal.  Any spending (other than defense) is okay.  But any tax cut is simply irresponsible.

We Rejected Obama’s Ultra-Left Liberal Agenda on Tuesday

The message on Tuesday was that the people have rejected Obama’s ultra-left liberal agenda.  America is a center-right country.  That center-right is made up of conservatives, moderates and independents.  Obama, Nancy Pelosi, Harry Reid, et al, belong to that far left minority called liberal.  The clear message is that the 80% rejected the 20%.  Of course, Obama sees it differently. 

The president said that the “message was clear” from voters on Election Day, and that he was also “frustrated” by the sluggish pace of economic recovery. “You’re fed up with partisan politics and want results,” Obama said. “I do too.”

No, we’re not upset that Democrats and Republicans weren’t working together.  We were upset that the liberal Democrats used their majority in Congress to govern against the will of the people.  That is the true message.  It wasn’t the partisanship that bothered us.  It was the lack of it to stop the far-left liberal agenda that did.

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