The Immorality of Obamanomics
By Peter Ferrara on 5.2.12
Lying, stealing, and corruption are its fundaments.
The President’s economic policies are usually criticized for their practical ineffectiveness. Thinking people know that the result of the President’s 1970s retro economic policies has been the worst recovery from a recession since the Great Depression, with persistent high unemployment, declining real wages and incomes, soaring poverty, doubling gas prices, and budding inflation sure to get much worse.
Unthinking people still call national conservative talk radio shows to say the President’s economic policies can’t be faulted because the economy was doing poorly when he entered office, and so his policies enjoy unlimited time to produce any positive results. They make national fools of themselves in so demonstrating that they know nothing about the historical prosperity of their own country, and why.
But there is a much more fundamental problem. Besides not working, the policies of Obamanomics are just plain immoral.
The 99 Percent vs. The 1 Percent
Since when has it been considered just for the bottom 99 percent to say to the top 1 percent, “We can outvote you to take your money”? That is a politics of piracy and theft, with no roots in American history.
Sure the richest can be validly asked to bear proportionally more of the overall tax burden because they can do so with the least harm. But before President Obama was even elected, official IRS data shows that in 2007 the top 1 percent of income earners paid 40.4 percent of all federal income taxes, almost twice their share of adjusted gross income. The top 5 percent paid 60.6 percent of all federal income taxes, while earning 37.7 percent of adjusted gross income. The top 10 percent paid 71.2 percent of all income taxes, while earning 48 percent of adjusted gross income.
By contrast, the bottom 95 percent of income earners paid 39.4 percent of all federal income taxes. That means the top 1 percent of income earners paid more federal income taxes than the bottom 95 percent combined!
Moreover, in 2007, again before President Obama was even elected, the bottom 40 percent of income earners as a group paid no federal income taxes. Instead, they received net payments from the income tax system equal to 3.8 percent of all federal income taxes. In other words, they paid negative 3.8 percent of federal income taxes. The middle 20 percent of income earners, the actual middle class, paid 4.7 percent of all federal income taxes.
What this adds up to is that even before President Obama was elected America already maintained the most progressive income tax system in the western world, maybe the entire world. Moreover, that was the result of almost 30 years of Reagan Republican supply-side economics that began with Reagan and Jack Kemp in the 1970s and 1980s, continued through Newt Gingrich and his Contract with America, and further played out with the Bush tax cuts of 2001 and 2003. When President Reagan brought his supply-side economics to Washington in 1981, the share of federal income taxes paid by the top 1 percent was 17.6 percent. After a quarter century of rate cuts, that share had more than doubled by 2007 to 40.4 percent, as noted above. That is because with the lower tax rates, incomes boomed along with the economy, and high income taxpayers had the incentives to pull their money out of tax shelters and invest it in the real economy, fueling the boom while increasing their reported income. But so-called Progressives (we should start calling them throwbacks instead) can’t understand these dynamics of modern capitalism.
Yet, we have a President who continually barnstorms the country calling for still more tax increases on the “rich,” articulating precisely the policies of the Marxist Occupy Wall Street movement, which reflects precisely his own roots. He says that is necessary for “the rich” to pay their “fair share,” when the facts as cited above indisputably show that “the rich” already pay far more than their fair share, and did so even before President Obama was elected. America has featured politicians that lie to the public from its founding. But never have we had a President that bases his whole pitch to the American people on a Big Lie that is so unhinged from reality it is just the opposite of the truth.
Given the factual reality as described above, raising taxes even more on the 1 percent would be immoral theft, not fairness. For rabble rousers and street agitators to threaten to lead the 99 percent to so loot the 1 percent is immoral demagoguery that demeans our democracy. It is the politics of Venezuela and Argentina, not America. For President Obama to continually barnstorm the country presenting a picture of America that is the exact opposite of the truth as discussed above is immoral dishonesty.
But immorality can’t get past karma. Given the wildly disproportionate present reality, trying to raise taxes even more on the top 1 percent will counterproductively lead to less revenue rather than more, particularly by increasing tax rates on investment income such as capital gains and dividends. Indeed, such further tax rate increases will likely lead to renewed recession, which will collapse revenues across the board.
But the rich can take care of themselves. America is already suffering a capital strike and capital flight, with trillions sitting on the sidelines and fleeing overseas. Further tax rate increases will turn that into a stampede, particularly in a second Obama term.
Such tax rate increases will rather only hurt working people and the poor the most, who can’t sit out the Obama depression or flee overseas (except for illegal immigrants, who have been heading back to their homelands in droves under Obama). They are fundamentally dependent on the jobs and increased wages produced by investment, and renewed recession will mean fewer jobs and declining wages.
The resulting record numbers in poverty, record long-term unemployment, and downward spiraling real wages can themselves be considered further immoralities of Obamanomics.
Is Your Vote for Sale?
Obama campaigns as if he is certain that your vote is for sale, and all he has to do is come up with some taxpayer-financed freebies for you. First it was free contraceptives for everyone, as if your vote could be bought by a condom. Then it was cut rate student loans, which was always a fraudulent issue. It was the Democrats that provided for the interest rates to double on new student loans issued after July of this year, years ago when they had majority control of Congress. House Republicans already voted through a bill to continue the lower rates, financed by cutting government spending elsewhere. But Obama and Senate Democrats have refused to consider any House passed bill financed by reduced government spending, defining the difference between the two parties today. The Democrats demand record taxes or record borrowing to finance record spending, which is what we have got today.
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About the Author
Peter Ferrara is Senior Fellow at the Carleson Center for Public Policy, Director of Entitlement and Budget Policy for the Heartland Institute, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is the author of America’s Ticking Bankruptcy Bomb, now available from HarperCollins.