Friday, April 17, 2009

Obama on Tax Day

Obama’s Tax Claims Contradict Reality
by Curtis Dubay

President Obama marked Tax Day with a speech touting his tax policies. He made several claims about how his policies will improve the economy, most of which don’t hold up under close scrutiny.

Here are a few of the more egregious examples:

President Obama claimed the tax cuts in the mis-labeled “stimulus” bill are the most progressive in history. This is true because the so-called stimulus created the Making Work Pay Credit and expanded the Child Tax Credit and the Earned Income Tax Credit. All these credits are refundable, so they send checks to tax filers who pay no income tax. This is income redistribution that does nothing to stimulate the economy.

President Obama also claimed that his tax policies cut taxes for the most number of workers ever. This is flat out false. The credits in the so-called stimulus phase out for anyone making over $95,000 ($190,000 for married filers), so a large number of workers are excluded from claiming any portion of them. The 2003 tax cuts applied to all workers because it reduced all income tax rates. It also did not limit the tax cut to earned income, as the stimulus tax cut did, and exclude income from social security and pensions. By all measures the 2003 tax rate reductions applied to more workers and taxpayers than the stimulus tax cuts.

President Obama stated that the tax cuts will boost demand and stimulate economic growth. The tax cuts will not stimulate economic growth because they are economically identical to spending. And spending does not stimulate economic growth because the money must first be borrowed or taxed out of the economy before it can be spent by the government. No new demand is created. Income is just shifted from one sector of the economy to another.

Lastly, President Obama said the tax cuts will create or save 500,000 jobs. The latest jobs figures contradict this claim. The economy shed 663,000 jobs in March. The analysis used to concoct the number of jobs created by the so-called stimulus has already been shown to be fatally flawed.

The tax cuts in the so-called stimulus will not stimulate the economy. President Obama chose to pursue tax policies that redistribute income to low-income tax filers instead of cutting tax rates to encourage economic growth. By doing so, he missed an opportunity to actually create jobs and put more money in the pockets of the people he wants to help.


vwatt said...

Tea Party? What Tea Party?

Tea Party Fallout: Independents Turned Off, Some GOPers Worried

April 17, 2009 at 12:28 PM

It's been two days now since angry conservatives hosted a series of tea parties across the country, and the fallout has some Republicans nervous.

While the anti-tax sentiment of the protests may have been sincere, the images pulled from the events have often been offensive, embarrassing, or politically problematic.

It is a development that has tripped up the GOP before. The rallies outside McCain-Palin events included some of the same bile that was seen at the tea parties: charges of fascism, terrorism and other malicious criticisms leveled at Barack Obama. And it did the Republican ticket little good in its efforts to bring moderate voters to the cause.

Not everyone sees the connection. But some Republicans and Independents do view the fallout between the tea parties and the McCain-Palin rallies in a similar way: bad for the GOP.

"It is not clear-cut that the tea-party phenomena helps the GOP, unless they have a specific measure or policy (like Prop. 13 in 1978, and income tax cuts after that) to coalesce around," said Steven Hayward, a scholar at the conservative American Enterprise Institute. "Right now it reminds me a bit of the free-floating 'angry moderates' of 1992 who fueled the Ross Perot candidacy, and that is the hazard for Republicans I think. I think the crazies at the rallies are a problem, but probably out of proportion (they always get the media attention) to the real breadth of sentiment underneath, which I think is largely authentic."

Self-professed middle-of-the-road political types were even more biting in their critiques.
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"My own sense that is I don't see anything going on that is good for Republicans," said Doug Bailey, a longtime Republican consultant who helped co-found the centrist reform movement Unity08. "I just don't get it. It may be, and I don't doubt this, that there is a large segment of the American public that can and is riled up about taxes and can be riled up about one thing or another. But a large segment, in terms of numbers, doesn't amount to a couple hundred people demonstrating in Washington or wherever. That's a non-event ... Nobody likes taxes. So, of course, I'm sympathetic myself. I might throw a tea bag myself. But the fact is, that it is particularly ineffective for the Republican Party when it is Rush Limbaugh and the likes stirring it up. That just doesn't speak to the middle."

Of course, because the series of nationwide tea parties were geared towards a specific day (Tax Day), the political ramifications of the events seem naturally limited. "Those tea parties will be long forgotten by, oh, say tomorrow," said Stu Rothenberg, of the Rothenberg Political Report. "Do you really think that next November, when people go to the polls, the April 15 tea parties will be on their minds?"

That said, plans are in place for a next wave of protests in July. More significantly, as the GOP continues to stake their future on a wave of populist anger at the government and economy (witness: Texas Gov. Rick Perry talking about secession), the likelihood only increases that the most vocal and offensive elements of that anger will come to personify the party.

Mike West said...

Everyone who thinks Congress spends our money wisely please raise your hand. OK, for those 2 people who think so, if you think we should pay more in taxes please raise your other hand. Alright for the 1 person who has both hands in the air, please bend over and touch your toes and stay in the bent over position.

Brodad Unkabuddy said...

Attendance at the Tea Parties nationwide have been estimated at 500,000+. What makes it newsworthy is that this is a grass roots movement and this is just the first of such gatherings. These are people who are sick of the idiots in Washington making things worse. It wasn't a Republican thing or a Democrat thing. It was about common sense.

Mike West said...

Good point Rick. The local story in Lexington where 1200 showed up interviewed Democrats & Republicans. There are a few Democrats who are smart enough to actually understand the movement but not many.

vwatt said...

Hey! I resemble that remark! :-)