Demagogues know that when times are tough, you can’t go wrong dissing the well-off. FDR in his day called out the “malefactors of great wealth.” He never succeeded in spending his way out of the Great Depression, but he was great at getting re-elected.
Barack Obama likewise lashes out at “the rich” as he vainly thrashes about striving to create jobs and grow the economy through government manipulation. He repeatedly insists that those notorious “millionaires and billionaires” deserve to have more of their money taken to support runaway government spending.
In fact, imposing “fairness” on the rich is his key to resolving the debt ceiling crisis, to stabilizing the economy and to balancing the federal budget. In his Sept. 17 address to the nation about his latest job creation effort, he went to the well again, stating that while his bill would “cut taxes for every working family” it would “ask millionaires and billionaires” to pay their fair share for this latest scheme.
You can see why this is doomed to fail while you marvel at the use of the word “ask.” Forcing the rich (also known as “the productive” and “successful at satisfying the needs of others”) to give more to government moves funds out of wealth-creating activities and into a money pit. That never has worked before, and won’t this time either.
Interestingly, Obama doesn’t incite much resentment by publicly trashing high earners. One reason is that he gets along with them privately. He vacations and hobnobs with them. Wall Street banks are able to still award million-dollar bonuses because his government paid off their investment losses through TARP.
Crony capitalism in the form of subsidies for green jobs and other favored causes makes it worthwhile to be the administration’s friend. Meanwhile, the lucky recipients of our tax dollars support Obama lavishly with their political gifts and offerings. You didn’t really think that billion-dollar kitty for his 2012 campaign was coming from wage workers, did you?
Warren Buffett, one of the world’s wealthiest people, helps stoke the resentment of his class. He’s considered a guru by Obama and serves as an economic adviser, not exactly a highly coveted credential at this point. Still, he gets approval for claiming that his tax rates are lower than his secretary’s, with the obvious conclusion that the wealthy are undertaxed.
But the example is ludicrous, since “his” income in the main is turned over to his foundation, which is tax-exempt because it assumedly serves the common good.
The facts are also against Mr. Buffett’s wider presumptions. According to the Congressional Budget Office, middle-class families in 2007, earning between $34,000 and $50,000, paid 14.3 percent of their income on all federal taxes, while the top 1 percent paid 29.5 percent overall.
Moreover, our income tax has become decidedly more progressive over the last quarter-century, to the point where now over half of all U.S. households pay no income tax at all. Over one-third of all income taxes are paid by the top 1 percent and three-fourths by the top 10 percent.
Yes, the rich got richer, but not by avoiding taxes. The share of taxes paid by the wealthy increased more than their share of income during the infamous George W. Bush administration. According to the OECD, we have the most steeply graduated tax rates of any developed nation.
How much is enough? “We simply cannot afford these special lower rates for the wealthy,” Obama claimed in his jobs speech, mindlessly repeating the mantra. For him, it may be more than the money. In 2008, candidate Obama said he would raise the capital gains rate even if it didn’t generate more revenue “for purposes of fairness.”
Obama has lived his life in a world where the economy is fixed and the only way the poor can see justice done is if the rich are separated from their ill-gotten gains. Class envy is baked into his consciousness.
But the wealthy have their role. They provide capital, innovation and jobs. They shouldn’t have their financial losses backstopped by taxpayers, but they shouldn’t be punished either. President Obama should back off.
• East Valley resident Tom Patterson (firstname.lastname@example.org) is a retired physician and former state senator