Monday, 13 October 2008

THE OBAMA ECONOMIC PIPE DREAM

Ken Berwitz

Have you been wondering how Barack Obama's economic proposals - i.e. almost a trillion dollars in new spending with the money supposedly taken out of the hides of the people who produce jobs - can possibly be real?

You ain't the only one.

Here is a very clear explanation of what a ludicrous pipe dream this really is.  It comes to us from CNBC economic guru Charles Gasparino, via Ken Shepherd of www.newsbusters.org.  Shepherd is responsible for the bold print:

CNBC Reporter: Obama Suffers 'Blind Loyalty' to Economy-killing Policies

The stock market is casting a vote of "no confidence" in Barack Obama (D-Ill.) and his Republican opponent is missing an opportunity to slam the freshman senator for an economic agenda that is a rehash of the worst of Presidents Herbert Hoover and Jimmy Carter.

So argued on-air editor Charles Gasparino in an October 13 op-ed in the New York Post, where the CNBC talent mentioned that even Obama's Wall Street backers are nervously telling him to change course on his economic plans (emphases mine):

Overall, his [Obama's] plan includes some of the most lethal tax increases imaginable, including a jump in the capital-gains rate. He'd expand government spending massively, with everything from new public-works projects to increases in foreign aid to a surge in Afghanistan - plus hand out a token $500 welfare check that he calls a tax cut to everyone else.

This is clearly the wrong way to go in the wake of an economic meltdown - yet Obama, for all his talk of how willing he is to compromise, of how he'd bring people together, is sticking to his tax guns.

I know at least one top Wall Street executive, an Obama supporter from the start of his campaign, who has recently urged Obama to rethink his tax plan - and that was before last week's record losses on the Dow.

But if Obama is rethinking, he's not saying. As his running mate, Joe Biden tells us that it's patriotic to pay higher taxes, Obama remains committed to squeezing businesses even if the recession grows.

Gasparino also noted that "[t]o be fair, McCain hardly instills confidence among the Wall Streeters" he talks to but wondered why the campaign was putting more energy into the William Ayers angle "when it should be hitting Obama's blind loyalty to policies that bring together the worst elements of Herbert Hoover and Jimmy Carter."

Last week Gasparino slammed the Obama tax plan, likening it to "throwing gasoline on the fire":

"I mean, John McCain listen, say what you want about his performance but Im talking, just looking at that debate rationally could you literally add up he wanted to invade Pakistan I thought he said, he wants a surge in Afghanistan, he wants expanded health care, he wants to give a tax break to anybody under not a tax break, essentially a welfare check to anybody who makes $249,000 or less. By the way, its not a tax cut because poor people dont pay income taxes. Youre not changing the tax rates. And then he wants to tax everybody else."

Gasparino said that despite Obamas thin record, he is much more of an ideologue than McCain, based on his time as a community activist, state senator and in the U.S. Senate.

It is a great talent to be able to convince this many people that an economic plan which cannot work is okey-dokey.  Barack Obama clearly has that talent.  I congratulate him for it and wish I had it too. 

But that doesn't change the fact that the numbers don't add up.  And it doesn't change the fact that you cannot create jobs by specifically disincentivizing the people most likely to create them.

Abe Lincoln once said "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."

Barack Obama seems to be saying "If I can fool 51% of the people just one time, that will be fine"


OBAMA'S 95%-PAY-NO-HIGHER-TAXES FANTASY

Ken Berwitz

Have you spent at least a little time wondering how Barack Obama can simultaneously propose almost a trillion dollars in new spending and raise taxes only on 5% of the population? 

If so, your wonder is well founded.  This is a cynical fantasy that is designed to get votes from people who either take Mr. Obama at his word (a godawful choice given how many times he has lied to us during this campaign) or who just plain want it to be true regardless of facts or logic.

Well, the Wall Street Journal does not fit into either of the above two categories.  That being the case, it has published a devastating analysis today which takes apart the Obama fantasy.  It is must reading for people who are not so mesmerized by Saint Barack that they are immune to reality.

Here it is:

Obama's 95% Illusion

It depends on what the meaning of 'tax cut' is.

One of Barack Obama's most potent campaign claims is that he'll cut taxes for no less than 95% of "working families." He's even promising to cut taxes enough that the government's tax share of GDP will be no more than 18.2% -- which is lower than it is today.

It's a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he's also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of "tax cut."

For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase "tax credit." Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:

[Review & Outlook]

- A $500 tax credit ($1,000 a couple) to "make work pay" that phases out at income of $75,000 for individuals and $150,000 per couple.

- A $4,000 tax credit for college tuition.

- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).

- A "savings" tax credit of 50% up to $1,000.

- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.

- A child care credit of 50% up to $6,000 of expenses a year.

- A "clean car" tax credit of up to $7,000 on the purchase of certain vehicles.

Here's the political catch. All but the clean car credit would be "refundable," which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer -- a federal check -- from taxpayers to nontaxpayers. Once upon a time we called this "welfare," or in George McGovern's 1972 campaign a "Demogrant." Mr. Obama's genius is to call it a tax cut.

The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation's Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.

The total annual expenditures on refundable "tax credits" would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as "tax credits," the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.

The political left defends "refundability" on grounds that these payments help to offset the payroll tax. And that was at least plausible when the only major refundable credit was the earned-income tax credit. Taken together, however, these tax credit payments would exceed payroll levies for most low-income workers.

It is also true that John McCain proposes a refundable tax credit -- his $5,000 to help individuals buy health insurance. We've written before that we prefer a tax deduction for individual health care, rather than a credit. But the big difference with Mr. Obama is that Mr. McCain's proposal replaces the tax subsidy for employer-sponsored health insurance that individuals don't now receive if they buy on their own. It merely changes the nature of the tax subsidy; it doesn't create a new one.

There's another catch: Because Mr. Obama's tax credits are phased out as incomes rise, they impose a huge "marginal" tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income.

Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.

I hope you're not surprised to see this.  Frankly, why anyone would believe Mr. Obama's tax cut claims when he has lied to us so overtly so many times is a mystery to me.

And while we're on the subject of mysteries, let me totally concur with the end of this piece, which asks why John McCain has not aggressively exposed Mr. Obama's tax cut illusion and made mincemeat of it during the first two debates.  Is it asking too much for him to do so in the last one?

What a weak candidate John McCain is.  What bad advice he is following (whether it is his own or that of his handlers).  When does he wake up?  Next month?


THE DIFFERENCE BETWEEN R & D

Ken Berwitz

Remember Mark Foley?  He used to be a Republican house member, representing the 16th District in Florida.

Two years ago Mr. Foley gave up his house seat in disgrace because it turned out he was a gay man and was sending apparently lurid e-mails and text messages to male house pages. 

We were led to believe Mr. Foley was a pedophile.  Many (quite possibly most) people still assume this.  But in reality not one e-mail or text message was sent to a page below the age of consent.  That is why no charges were ever filed against Mr. Foley.

For his part, Foley acknowledged his actions and attributed them to a problem with alcoholism.  But he in no way used that as an excuse for his behavior, as you can see by the following excerpt from a CNN article of about a month ago:

Foley is "relieved" that no probable cause was found to charge him with a crime, his lawyer, David Roth, told reporters Friday evening. But in a statement Roth read on behalf of the former congressman, Foley added, "I however recognize that while my behavior was not illegal, it does not by any means make it proper or approriate. To the contrary, I am deeply ashamed of my conduct, which was wrong and without question inappropriate."

Foley said he takes full responsibility for his actions and apologized, particularly to the recipients of the e-mails or instant messages.

"I continue to pray for forgiveness from those I have disappointed" and emotionally harmed, Foley said in the statement.

Foley entered treatment for alcoholism on October 1, 2006, he said in his statement, and has been clean and sober since the day he resigned from Congress.

Needless to say, Democrats jumped all over this scandal and were instrumental in forcing Mr. Foley to resign his seat.  There was a lot of buzz that Democrats had the goods on Foley for a while and timed its release for maximum damage.  I do not know if this is true, but I certainly suspect it might have been.

In any event, Foley was replaced by a Democrat, Tim Mahoney.

Given the circumstances of Mahoney's election, wouldn't you think media would keep a bit of an eye out to see how his morals stacked up against Foley's? 

If so, you do not know the difference between R and D.

See, if you have an R after your name this is coverable by media.  But if you have a D after your name the rules somehow change.

If you have any doubt about this, please read the following excerpt which comes to us from today's ABC News story.  Then I think you will see the light. 

The scandal is Mahoney's.  The bold print is mine:

Congressman's $121,000 Payoff to Alleged Mistress

Tim Mahoney Elected to Remove 'Ethical Cloud' of His Disgraced Predecessor, Mark Foley

By EMMA SCHWARTZ, RHONDA SCHWARTZ, and VIC WALTER

Oct. 13, 2008

West Palm Beach Congressman Tim Mahoney (D-FL), whose predecessor resigned in the wake of a sex scandal, agreed to a $121,000 payment to a former mistress who worked on his staff and was threatening to sue him, according to current and former members of his staff who have been briefed on the settlement, which involved Mahoney and his campaign committee.

Mahoney, who is married, also promised the woman, Patricia Allen, a $50,000 a year job for two years at the agency that handles his campaign advertising, the staffers said.

A Mahoney spokesperson would not answer questions about the alleged affair or the settlement, but said Allen resigned of her own accord and "has not received any special payment from campaign funds."

Senior Democratic leaders in the House of Representatives, including Rep. Rahm Emanuel (D-IL), the chair of the Democratic Caucus, have been working with Mahoney to keep the matter from hurting his re-election campaign, the Mahoney staffers said.

A spokesperson for Emanuel denies that account, but said Emanuel did confront Mahoney "upon hearing a rumor" about an affair in 2007 and "told him he was in public life and had a responsibility to act accordingly." The spokesperson added that it was a "private conversation" that had nothing to do with Mahoney's re-election prospects.

Emanuel's spokesperson said Emanual had not had any further contacts with Mahoney on the subject and did not know the woman involved worked on Mahoney's Congressional staff until informed by ABC News.

Mahoney was elected two years ago following the abrupt resignation of his disgraced predecessor, Republican Mark Foley, whose lewd internet messages to teenage boys and Congressional pages created a national outrage.

The affair between Mahoney and Allen began, according to the current and former staffers, in 2006 when Mahoney was campaigning for Congress against Foley, promising "a world that is safer, more moral."

Got it?  Mahoney's affair has been going on for two years.  But Democrats who jumped all over Mark Foley for his sex scandal - especially Rahm Emmanuel - were "working with Mahoney to keep the matter from hurting his re-election campaign". 

Unlike Foley, Mahoney didn't fool around with e-mails or text-messages;  he was busy doing Patricia Allen while he was running against Foley on a promise of "a word that is safer, more moral".  How much more hypocritical does it get than that?

Let's also remember that Ms. Allen is not only getting a $121,000 payoff, but another $100,000 to work for the ad agency handling his campaign -- two years at $50K per. I'll just bet that's a morale boost for the agency people who haven't been sleeping with Mahoney. 

I am ashamed to do this, but I compliment ABC News for running the Mahoney story.

The shame comes from making it seem as if doing so is something especially courageous, because it isn't.  Of course ABC should be reporting the Mahoney story. 

But ABC News gets a compliment nonetheless.  Why?  Because most of the rest of media have NOT reported it.

Let me finish by asking you a question:  if Tim Mahoney's name didn't have a D after it, but had an R after it like Mark Foley's did,  is there any doubt that we'd have heard more about this sooner?

You know the answer as well as I do.


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