Obama’s Modest Proposals

This time last week, President Obama gave his State of the Union. It seems like a lot longer ago than that because the speech basically went unnoticed by the time the weekend came around. Reactions were mixed, but the chief criticism seems to be that the speech amounted to little more than several popular and small proposals. Krauthammer, Brooks and others were unsatisfied by the lack of grandeur that once characterized Obama’s policy oriented rhetoric.

But the reality is that any large scale mandate is out of the question at this point. It would end up being opposed by Republicans out of the spirit of turning Obama into a one term president by making him look legislatively impotent and it would work. Any large enough piece of legislation would have something in that could be labeled as unforgivably objectionable and Republicans would harp on it or they would just lie (death panels! – Politifact’s lie of the year).

Most people are tired of broad rhetoric and want a specific plan of action.

What Obama has done is exactly what he should be doing. Despite what my crush over at ABC (Amy Walter) thinks, this was Clintonian triangulation at its finest. Obama is trying to make it as difficult as possible for the GOP to claim ideological differences to bills as possible. This way, when the Republicans attempt to prevent a entirely agreeable bill (e.g., The Puppies Are Cute 2012 bill) from passing Mitch McConnell will have a hard time claiming that it is socialism or otherwise ideologically objectionable. More than anything, Obama needs to show leadership, action and progress… this comes from congress passing bills. One deal can lead to a second and a third.

So yes, he is starting this new legislative “age” with what should be relatively easy stuff.

The proposals that he has suggested are unquestionably bi-partisan and have genuine support from both sides. In fact, Rep. Jeb Hensarling (a Republican who was on the super committee) said, “Like most of the other speeches, I find myself agreeing with about 80 percent of what he says, but disagreeing with about 80 percent of what he does.” While I’m not sure about the second half of that quote, the first half, at the very least, demonstrates agreement on the broad strokes. Most notable are Obama’s long standing proposals concerning tax reform.

Klein points out in Mitch Daniel’s response he actually flat out agreed with Obama’s proposal to cut tax exemptions from the wealthy. You might be wondering how that does not count as class warfare…I don’t know either. Nonetheless, this is a great first step towards equity in the tax code and such a move would bring in an estimated non-trivial amount of 30 billion dollars a year; that’s to say nothing of what might be gained by closing loopholes for major corporations. In fact, a study concluded that if the government was able to make evasion (/avoidance) impossible top tax rates could be raised over to nearly 83% without impacting the economy. That’s probably not completely accurate (nor possible), but it suggests that the impact Obama’s “Buffett tax” on the economy is not nearly as horrible as many Republicans are suggesting.

But therein lies the slippery slope that the rich and republicans fear. What follows is the real line of thinking that prompts the banal “class warfare” and “soaking the rich” arguments: If we can practically draw the line at 30%, why not 83%? How can government possibly justify TAKING more private property when it is so disagreeably utilized today?

I addressed many these ideas in “Seven Compelling Reasons to Tax the Rich” because they are legitimate and really important questions about personal property and the social contract America wants to have with its most powerful individuals. Indeed, it is dangerous for the government to begin to think that it knows the proper amount of money for people to be earning. The government should not take a tax increase on anyone (even the rich) lightly. We should also recognize that many of the individuals whose income is above 1m do not find themselves in that income group every year. But at the very least, no matter how you earn it, those taking in astonishing sums of money should be paying at least what those taking in significantly less should be paying. We can safely draw the line there. For all 235,413 of you.

 

Comments

  1. JimC146 says:

    But at the very least, no matter how you earn it, those taking in astonishing sums of money should be paying at least what those taking in significantly less should be paying. We can safely draw the line there. For all 235,413 of you.

    Simple answer, change the capital gains tax rate for all then. Because even the 99% pays the same capital gains tax rate on investment returns.

    All this nonsense income/tax disparity garbage would be eliminated if the country went to the Fair Tax system.

  2. jay says:

    “All this nonsense income/tax disparity garbage would be eliminated if the country went to the Fair Tax system.”

    You’re going to have to explain this.

  3. JimC146 says:

    Simple. Rich would be taxed at a higher rate based on their spending. No more “Tax the rich!” chants needed. 99% can go home and start saving their whole paychecks to pay off debt. Really, it is evident once you read in depth.

    Furthermore, illegals get to participate in the tax system same as foreign visitors. Hundreds of billions would be saved on trying to enforce collection and compliance since the pool of tax payers is reduced to businesses who collect the sales tax.

    The poor get a prebate and pay only an 11% effective rate and that’s only when they buy “stuff”, i.e. TV’s, Cars, etc….

    If this went into effect now, imagine the amount of debt the middle class and poor could get paid off because we get to keep our entire paycheck!

  4. jay says:

    I’m no tax wonk, but from what I’ve read these big proposals are based on a assumptions and projections that are almost universally disputed. There just isn’t any agreement. Furthermore, the problem with any singular tax is that such a tax would be likely make government revenues even more inconsistant (from year to year) than the already are. Questions of what qualify as non-taxed “necessities” would be problematic. But, I really don’t see why a fair tax would be preferable over a vat tax.

    In any event, a massive change like this would need to be implemented slowly. That’s what most people don’t seem to get. The problem isn’t with finding a better tax system, lots of people have plenty good proposals. The real stumbling blocks are the costs and problems that come from massive changes to our tax code.

  5. JimC146 says:

    I’m no tax wonk, but from what I’ve read these big proposals are based on a assumptions and projections that are almost universally disputed.

    The FairTax.org site has many if not all the known objections and addresses them.

    The biggest gain I see in the FairTax system is that if you are in debt or something, you can suspend you spending and get your debut under control by your own design. Need to save money, great, don’t buy anything and get your whole check and save it. The way it is now, we get taxed before we get it and we get taxed when we spend it.

    Not only that there is a massive tax code that requires experts just to prepare your taxes, then massive compliance expenses in the government to make sure people are following the plethora of laws that change year to year, and then huge amounts of owed taxes still go unreported.

    Alternatively, no IRS for personal income, IRS staffing gets reduced tremendously as it now only needs to track the businesses that collect the sales tax. Companies that pay salaries don’t have to deal with collecting taxes.

    Everyone wins. Huge costs are cut out but the revenue remains. Only variable is amount of consumer spending yes, so what. Would it be a bad thing for the government to have to be frugal and reactive to cut spending when income is down? Hmmm seems familiar…

    Also, how to define a necessity, well isn’t there a model for that already in what can be purchased via food stamps and claimed on medicare?

  6. matt says:

    Would it be a bad thing for the government to have to be frugal and reactive to cut spending when income is down? Hmmm seems familiar…

    when personal income and spending are down, being forced to cut government spending is insane. the events of the past few years are a textbook example of this. state and local cutbacks added to unemployment and delayed any possible recovery.

    but that’s a feature, not a bug to idiots pushing this kind of scheme.

  7. JimC146 says:

    but that’s a feature, not a bug to idiots pushing this kind of scheme.

    So when revenue is down, government spending should just keep rolling along? Isn’t that the problem today, why our deficit is at $15 trillion?

    Government should have to react to changes in the economy.

    BTW – Matt what no false “liar” name calling? I’m disappointed.

  8. matt says:

    Isn’t that the problem today, why our deficit is at $15 trillion?

    wars and bush (and now obama) tax cuts.

    Government should have to react to changes in the economy.

    yes, but not by making things worse.

    BTW – Matt what no false “liar” name calling? I’m disappointed.

    in this case, i know you aren’t lying. you just have absolutely no idea what you’re talking about.

  9. JimC146 says:

    in this case, i know you aren’t lying. you just have absolutely no idea what you’re talking about.

    Ahh, the cornerstone of discourse, the “I’m right and you’re ignorant” principle, how progressive.

    wars and bush (and now obama) tax cuts.

    So if I were to take your approach, first I should call you a piece of crap liar or at least intellectually dishonest because surely you’re purposefully ignoring the massive bailouts, entitlement expansions, etc. to paint very narrow view as to how our deficit got here. Sure war and tax cuts contribute but not the sole reason. Also tax cuts themselves aren’t a cause, tax cuts without spending cuts is a cause.

  10. matt says:

    entitlement expansions

    thanks for proving your ignorance all in the same thread.

    http://coloradoindependent.com/wp-content/uploads/2010/09/BushDeficitChart_June2010.jpg

  11. jay says:

    Matt is entirely correct. It was Bush who supported and eventually passed medicare D.

    Even if Obama’s new healthcare program will potentially add to the deficit…we don’t REALLY know about that yet.

    The key component of Obama’s contribution to the deficit was the stimulus.

  12. JimC146 says:

    My ignorance?

    http://www.unitedexplanations.org/2011/08/09/us-debt-breakdown-2011-where-does-the-current-debt-come-from/

    Oh yeah, this isn’t titled Bush’s deficit chart, it a bi-partisan debt chart, but hey if it makes ya’ll feel better to ignore the debt racked up in the last 3+ years, I understand. It will be Bush’s sole fault until the next Republican President anyway, so it’s cool.

    Jay, how can Matt be entirely correct if he fails to mention the debt racked up since Bush left that is not a tax cut? Strange logic.

    Matt, again your short glib answers are fun and all but doesn’t make you correct. According to people who aren’t still affected by BDS, there has been plenty of other debt actually recorded since Bush left office. But I know that’s not nearly as fun as bashing Bush and calling me ignorant…you keep it up. It fills me with great joy that I fulfill your need to go on a librul rage quest on occasion.

  13. jay says:

    Obama did not expand entitlements that add to the deficit. You claimed he did.

    The entire conversation is somewhat silly. Presidents don’t define budgets by themselves, nor to they pass tax cuts, or anything else with money by themselves. We have a complicated government. Evaluations done in this way are simplistic and prove nothing.

  14. JimC146 says:

    Obama did not expand entitlements that add to the deficit. You claimed he did.

    I could get all full of rage like some on here that you’re trying to put words in my mouth. I could call you nasty names like some have done in this situation. But I’m not full of librul rage so I won’t.

    I have not claimed anything of the such. In fact, I’ve not mentioned Obama once in this thread. Matt did. You did. Not me.

    The entire conversation is somewhat silly. Presidents don’t define budgets by themselves, nor to they pass tax cuts, or anything else with money by themselves. We have a complicated government. Evaluations done in this way are simplistic and prove nothing.

    Considering the fact that I haven’t attributed squat to Obama alone in this thread or to any President, I assume you must be directing this to Matt.

    For clarity for you all, I’m tired of *any* government spending beyond what is mandated by the Constitution.

    From the link I provided,

    So, adding up the numbers we can see how financial costs ($5 trillion), social costs ($3,87 trillion), tax related costs (-not exactly costs but revenues that never took place-, $2,769 trillion), and military costs ($2,391 trillion) are the ones which explain 84% of the total US current debt.

    I know facts are hard to work around but perpetuating BDS just makes you look foolish. As a nation, it’s time to get past that and make the hard decisions. We need have real change, radical change, so far it ain’t happened, we’ve only moved closer to the brink.

  15. jay says:

    You’re right. You didn’t mention Obama, my bad. I made an assumption that was wrong based on Matt’s post.

  16. JimC146 says:

    So the WH released it’s fourth budget. With it according to the WH’s own numbers, U.S. Federal debt will have increased $5.170 trillion based on what has been spent since 2009 and what’s in store. How can this be good? I guess if $5.170 trillion additional debt is “modest” then we’re doomed…

    http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/tables.pdf

    This shows a federal government out of control and drunk with spending…

  17. The reality is the only way to decrease the budget is to increase jobs and pay. Deficit spending is important to get our economy out of the Bush Recession. The Republicans caused this and they continue to fight to keep America down. As jobs increase the deficit will decrease and as seen under Clinton, the deficit will go away.

  18. JimC146 says:

    Natalie this is just nonsensical rhetoric. BDS still? Seriously? When, oh when, does this become Obama’s Presidency? Blaming Bush was fine in 2009, getting to be a bit of a stretch in 2010, cringe worthy in 2011, but now in 2012, this is flat out absurd.

    BTW – are you aware that the Democrats took the House and Senate majorities in 2006? They held those majorities through Jan 2011? So for the first 2 years of Obama’s Presidency, Democrats had all 3 points of power.

    So instead of blaming Republicans, why not hold your elected representatives and the President I presume you voted for accountable for getting things done?

    Deficit spending is important to get us out of recession? Our National debt is $5 Trillion more than it was when Bush left office, if these policies and progressive ideas are good ideas, are you seriously telling me $5 Trillion in new debt isn’t enough?

    I think you need to seriously let go of the blame others attitude and take responsibility for yourself and task your elected representatives to do the same.