Jay Carney, the White House Press Secretary, resorted to insults instead of information today, when asked about Paul Ryan’s new budget proposal. The Washington Examiner reports,
Carney concluded that “the budget proposed by Chairman Ryan and supported overwhelmingly already by Republicans suggests that those problems” — aggressive ignorance and diminished comprehension — “exist in the minds of the supporters of that plan.”
Instead of offering ideas and counter-points to Ryan’s proposal, we get name calling from the White House. Is it any wonder that we are now 1057 days without a budget?
Watching Meet the Press this past Sunday was a remarkable experience. Among the roundtable contributors were Peggy Noonan, Al Sharpton, and Rep. Marsha Blackburn. The show was fairly enjoyable throughout most of the program – including a very civil discussion about women.
Then right before the close of the program, moderator David Gregory asks Al Sharpton about his recreation of the old Selma to Montgomery march (1965). Sharpton launches into a tirade about how we need to do this march again because our government is trying to disenfranchise millions of people.
REV. SHARPTON: The message is that with the new voter ID laws being proposed in over 30 states, the Brennan Institute says it will disenfranchise five million people. There has been no established reason to change the laws. There’s no widespread fraud that has been in any way documented. And we do, do not believe that we should have these millions of peoples disenfranchised. This is–has a disproportionate impact on young people, seniors and minorities. And immigration laws in Alabama are horrendous and we think they violate the civil rights of people. And we sought to dramatize, not just to commemorate 47 years ago, but to continue today to fight those issues.
Incredibly, this ludicrous and partisan comment goes unanswered. David Gregory just nods along and doesn’t even respond, and neither does Peggy Noonan. Gregory switches topics and wraps up the program with a quick analysis of the upcoming primary on Tuesday, March 13.
Watching this unfold made the whole program seem like a set-up. Everything was quite civil earlier on, so when Sharpton made his outrageous remark, no one batted an eye or refuted the absurdity. It allowed the program to pretty much end with Sharpton’s statement out there to the audience.
Therefore, I was jaded enough to not even be surprised when, the following morning (Monday), the Department of Justice announced the following:
The Justice Department’s civil rights division on Monday objected to a new photo ID requirement for voters in Texas because many Hispanic voters lack state-issued identification.
Texas follows South Carolina as the second state in recent months to become embroiled in a court battle with the Justice Department over new photo ID requirements for voters.
Should I even be surprised? Sharpton’s Meet the Press commentary seemed to coincide with the announcement of government decisions effecting voters in an election year. There is absolutely no reason why we should not have fair and free elections by requiring identification at the polls. We already require IDs for so many other things that to somehow cry discrimination when it comes to IDs for our sacred electoral process is nothing more than sheer political poppycock.
President Obama made it a priority of his busy day of not producing a workable budget or cutting the deficit to be supportive of the coed student who complained about the cost of her contraception. He calls and apologizes to her for her interaction with Rush Limbaugh. But our Commander-in-Chief has yet to call the family of slain soldier from Virginia, Army Sargeant Timothy John Conrad, who died February 23, following the Koran-burning incident (which Obama apologized on behalf of America for.)
admitted to a House committee that the administration is not interested in lowering gas prices.
Chu, along with the Obama administration, regards the spike in gas prices as a feature rather than a bug. High gas prices provide an incentive for alternate energy technology, a priority for the White House, and a decrease in reliance on oil for energy.
David Harsayni wrote about this very conundrum five days ago. Now we better understand why Obama nixed the Keystone Pipeline project. As I mentioned earlier, a project of this magnitude moving forward has an immediate effect on the markets by changing the traders’ expectations of future supply. Having more oil available in the marketplace contributes to lower prices for consumers. So when the project was tabled, the markets reacted accordingly.
I guess the White House knows what’s best for us better than we do.
A major theme of Obama’s reelection campaign is centered on taxes. On the one hand, he decries the unfair “Bush tax cuts for the wealthy”, while on the other, he creates new tax credits to purportedly help the recovery. Both are emotional appeals aimed to garner votes. Such policies reveal — once again — how economically ignorant our President is.
The rates currently in effect have been in force for more than 8 years, and what is now being urged by Obama is an increase in the highest marginal rates to what they were before the “Bush tax cuts of 2003”. Obama does not know his economic history. In what way was the 2003 change even a tax cut? It really wasn’t. At most, it was a very slight reversal of the major tax increases that had been put forth in the preceding fifteen years.
To put it into perspective, the last major change to the Internal Revenue Code (IRC) was a revenue neutral change in 1986, whereby the entire Internal Revenue Code was revamped. That brought down the tax rate, eliminated deductions and reduced tax shelter type benefits. This served as a flat tax adjustment which indisputably was responsible for the strong economic growth that followed, because, at that rate, it wasn’t worth the time, energy, and expense to shelter money elsewhere. But after we made this major positive correction, our legislators went right back to business as usual with new tax laws and changes.
The new 1986 IRC set the maximum tax rate at 28%. Through the government’s inability to keep promises (which was to reduce rates in lieu of changes to deductions), both the Democrats and Republicans participated in breaking promises in the ensuing years.
We saw the rate increase from 28% to 31%, as the first President Bush broke his“read my lips” promise. Through the Clinton administration, the maximum rate went from 31% to 35% and then to 39.6%. All in all, the maximum tax rate increased 40%. Bush’s tax cuts then, were not tax cuts at all – they were simply a reduction of the 40% tax hikes, down to a more modest 25% increase in the rates, from the base set made in 1986. The margin cuts of 2003 simply eliminated the last of three successive rate increases, each of which had broken the implicit pledges made in the overhaul.
Now in recent months, there has been a renewed call to clean up the tax code that has gotten out of hand in a mere twenty-five year span. What needs to happen is similar to what happened in 1986 — lower the rates, but get rid of deductions for special interests (such as special allowances for the oil and gas industry, “green” initiatives, and other crony tax benefits). In sum, make the code shorter, simpler, and more beneficial for economic growth.
The reality is that Obama will try to get reelected by saying that the economy is still weak, so he must do something about jobs. He has proposed a plethora of new credits to purportedly help the situation, such as employment credits, business credits, etc, but they’ll only worsen the byzantine code.
Even Obama’s commissions have argued in favor of cleaning up the tax code. Why make it more convoluted with more credits? Quite simply, they sound good to the average taxpayer, who will reward his “sensibilities” with their vote. What he doesn’t tell you is that such tax credits are merely government spending run through the tax code. More spending and deficit is only going to continue to hurt our anemic recovery. Unfortunately, such a fraudulent plan only puts his own ambitions ahead of the best interests of his country.
The Wall Street Journal reported today that in Obama’s budget, the corporate tax rate on dividend taxes would triple. What kind of tax rates are we looking at? 44.8% (currently 15%).
President Obama’s 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.
Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today’s 15% rate.
Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.
To whom does this high tax rate apply? Millionaires and billionaires, of course. Remember them — the ones classified by the IRS who earn $200K/year? AKA “the wealthy”.
The WSJ goes on to show how both retirees (who received most of their income from divideds) and stock holders (the burden of extra taxes will be shared by all shareholders, regardless of income).
Of course, the real problem with such a budget item is that increasing the tax rate in order to increase tax revenue flat out doesn’t work. IRS data from 1990-2009 clearly shows that when the dividend tax rate was reduced to 15% in 2003, tax revenue skyrocketed. Someone at the White House forgot ignored the data.
Additionally, reports from the UK released today show that the newly implemented tax rate did not generate the kind of revenue it expected (it dropped). As I have written on this topic before, the reaction by Britons upper income earners is not surprising:
Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate.
One can only conclude that Obama’s dividend proposal is aimed to further drive a wedge between the “millionaires and billionaires” and the middle class. It makes it look like he’s doing something to those rich corporations. In reality, he knows that his electorate likely won’t realize how this policy would hurt many, many Americans. Let’s hope, for the sake of our economy, that such a devastating proposal will not come to fruition.
There are plenty of reasons for the high prices, and lots of reasons to expect a big price surge in the spring, said Tom Kloza, chief oil analyst for Oil Price Information Service.
“Early February crude oil prices are higher than they’ve ever been on similar calendar dates through the years, and the price of crude sets the standard for gasoline prices,” Kloza said.
In addition, several refineries have been mothballed in recent months, he said, and some of those refineries “represented the key to a smooth spring transition from winter-to-spring gasoline.” The annual change in gasoline formulas is mandated by pollution-fighting regulations.
However, one overlooked fact regarding the Keystone XL Pipeline is that its rejection by President Obama has directly affected rise of gas prices in recent weeks. Although the pipeline (and ANWR, and other major oil projects) have multi-year lead times, the very fact of a project of this magnitude moving ahead has an immediate effect on the markets by changing the traders’ expectations of future supply. Having more oil available in the marketplace contributes to lower prices for consumers. So when the project was tabled, the markets reacted accordingly.
This administration has once again shown to its hostility toward domestic oil while pandering to the environmentalist electorate. The rejection of such an important project — with the capacity to offer significant work for Americans — only hurts our economy further.
During the State of the Union, we heard President Obama talk repeatedly about fairness and taxes as he painted a picture of income inequality. The problem is that income inequality really is a myth, yet it is being perpetuated: the gap between rich and poor has never been higher.
The data used most frequently to substantiate this claim is a Congressional Budget Office (CBO) report from October 2011. However, the glaring problem with this report is that it only covers the period from 1979 to 2007 — ending right before the Great Recession. Convenient?
So in November, Ron Schmidt of the University of Rochester School of Business Administration, did an analysis of the CBO data and compared it to IRS data during the same time period — but through the year 2009, the latest year for which IRS data was available. He found something very, very different. In a reported summary,
According to IRS data, which extend through 2009, the average nominal Adjusted Gross Income (AGI) for filers with AGI of at least $500,000 declined by 17.8 percent from 2007 to 2009, and their average after-tax income declined by 19.9 percent. For those with AGI of less than $500,000, AGI declined by only 2.6 percent, and after-tax income declined by only 1.5 percent. These numbers certainly do not indicate an increase in income inequality.
In fact, there has been a marked decline in income inequality over the last decade. From 2000 to 2009, average AGI declined by 15.0 percent and average after-tax income declined by 11.0 percent for returns with AGI of at least $500,000. (Filers with an AGI of at least $500,000 represent 0.5 percent of all returns in both years, so this comparison is similar in spirit to the CBO report, which looks at the top 1 percent of households.) For all other returns, there were increases of 14.6 percent for average AGI and 17.3 percent for average after-tax income.
It revealed that income inequality is not only not at an all-time high, but also, due to the nature of economic and business cycles, it is relatively the same as it was twenty-five years ago.
The repeated calls for fairness last night reminds one of Margaret Thatcher’s famous speech in front of the House of Commons where she lambasted her opposition for suggesting that the gap between rich and poor had widened. The Prime Minister People responded that “people on all levels of income are better off than they were in 1979. The honorable gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich. That is the Liberal policy”.
Liberal policy indeed is alive and well in America today. Thankfully, income inequality is not.
Though Obama may be pretending to draw a line in the sand between himself and the Republicans, he is really drawing a line for voters: Them vs The Rich Guy (millionaires and billionaires, anyone?) Setting up the narrative in the State of the Union allows Obama to pander to the electorate during this campaign season and relentlessly go after those who have proven to be successful as a source of increased tax revenue to cover his spending problem.
“…the current vice president…talks like the sort of guy who sits right next to you on the bus even though there are plenty of empty seats — just so he can explain how squirrels aren’t mammals.”
Indeed, in many respects, he’s as close as American politics gets to a wacky sitcom character who’s a couple fries short of a Happy Meal.
