Obama's Grand Scheme: "Hey, let's tax the RICH!". Been there, done that, doesn't work.

Look to the past to learn from it; ignore what's happened before at your own risk. Barack Obama has thrown his re-election chances to the winds it seems, charting not as Bill Clinton did after his massive butt-hurt loss of Congress in 1996 to Center, but giving in to his far-Left constituency's desire to engage class warfare: a massive scheme that ignores the fault lines in Social Security and Medicare and instead hits up 'the EVIL! rich' for more and more taxes.

Guess what? Didn't work last time it was tried. Thomas Sowell ...

Ninety years ago — in 1921 — federal income tax policies reached an absurdity that many people today seem to want to repeat. Those who believe in high taxes on "the rich" got their way. The tax rate on people in the top income bracket was 73 percent in 1921. On the other hand, the rich also got their way: They didn't actually pay those taxes.

The number of people with taxable incomes of $300,000 a year and up — equivalent to far more than a million dollars in today's money — declined from more than a thousand people in 1916 to less than three hundred in 1921. Were the rich all going broke?

It might look that way. More than four-fifths of the total taxable income earned by people making $300,000 a year and up vanished into thin air. So did the tax revenues that the government hoped to collect with high tax rates on the top incomes.

What happened was no mystery to Secretary of the Treasury Andrew Mellon. He pointed out that vast amounts of money that might have been invested in the economy were instead being invested in tax-exempt securities, such as municipal bonds.

Secretary Mellon estimated that the amount of money invested in tax-exempt securities had nearly tripled in a decade. The amount of this money that the tax collector couldn't touch was larger than the federal government's annual budget and nearly half as large as the national debt. Big bucks went into hiding.

Mellon pointed out the absurdity of this situation: "It is incredible that a system of taxation which permits a man with an income of $1,000,000 a year to pay not one cent to the support of his Government should remain unaltered."

One of Mellon's first acts as Secretary of the Treasury was to ask Congress to end tax exemptions for municipal bonds and other securities. But Congress was not about to set off a political firestorm by doing that.

Mellon's Plan B was to cut the top income tax rate, in order to lure money out of tax-exempt securities and back into the economy, where increased economic activity would generate more tax revenue for the government. Congress also resisted this, using arguments that are virtually unchanged to this day, that these would just be "tax cuts for the rich."

What makes all this history so relevant today is that the same economic assumptions and political arguments which produced the absurdities of 1921 are still going strong in 2011.

If anything, "the rich" have far more options for putting their money beyond the reach of the tax collectors today than they had back in 1921. In addition to being able to put their money into tax-exempt securities, the rich today can easily send millions — or billions — of dollars to foreign countries, with the ease of electronic transfers in a globalized economy.

In other words, the genuinely rich are likely to be the least harmed by high tax rates in the top brackets. People who are looking for jobs are likely to be the most harmed, because they cannot equally easily transfer themselves overseas to take the jobs that are being created there by American investments that are fleeing from high tax rates at home.

Small businesses — hardware stores, gas stations or restaurants for example — are likewise unable to transfer themselves overseas. So they are far more likely to be unable to escape the higher tax rates that are supposedly being imposed on "millionaires and billionaires," as President Obama puts it. Moreover, small businesses are what create most of the new jobs.

Why then are so many politicians, journalists and others so gung-ho to raise tax rates in the upper brackets?

Aside from sheer ignorance of history and economics, class warfare politics pays off in votes for politicians who can depict their opponents as defenders of the rich and themselves as looking out for working people. It is a great political game that has paid off repeatedly in state, local and federal elections.

Tax the rich, the capital leaves the country. Unionize the workers, who then demand too much from employers, the jobs leave the country. Have we not noticed the decline in our manufacturing base? To what can we attribute that, pray tell?

What about this is difficult for Democrats to fathom? Why do they insist on ignoring the fact that we operate in a global economy, and try to treat U.S. politics as if we were a closed shop, with an isolated experimental economic platform that they can tinker with at will?

The 'Evil RICH!' won't pay a dime more than they are paying right now. But the optics for the President to his LeftLibProgg base would certainly shore up that small fraction of the Bell Curve of voters; however, the remaining majority of center-right voters will treat him to a nice defeat in 2012.

Is this Barack Obama's way of throwing in the towel? Cleaving to his ideology for a last-gasp effort to CHANGE us to something we don't want to become, and can never ever become, a far-Left proto-Socialist nation that history tells us would be doomed to failure?

Let's watch this closely, mindful of history. The stupids to the Left think that Obama is moving U.S. in the right direction, unmindful of the cliff's edge to oblivion directly beneath their feets.

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"What is Business Waiting For?" asks Joe Nocera, a Person of Left-Liberal-Progressive Persuasion

In order for businesses to seriously consider the sort of framework you've proposed, hiring for hiring's sake and not for a business' proven 'short-term' best interest, the framework of Government must also change...back. Back to what, you ask? Hasn't Government always been much like this current paradigm?

No, it hasn't. Government has grown...monstrous, and social. Government has encroached into every facet, into every tiny detail of commerce and industry. Isn't that a good thing, you ask? Don't we need as much Government as possible, to ensure that every Citizen is treated equally and fairly, and succeeds in life?

No, we don't. Such thought is the problem. We cannot bake individual success into our little Republic's responsibility to it's Citizens; and it's people like you who think Government is the solution, and more of it is better, that is the problem.

A Left Liberal Progressive Government is anathema to thriving business and full employment. Mark that in stone; it's solid fact, and can't be altered, no matter how much 'social need' there is that you desire to address with Government, at the expense of your economic engine.

You've got to put this monster down; control your desire to have Government micromanage to the point that you smother growth and Capitalism. You must curtail the ever-increasing expansion of Government, so that this Republic's economic engine can again run smoothly.

You've got to appease me. Who am I, you ask?

Why, I am John Galt, and I'm not a lone figure. I'm everywhere, signing your paychecks.

Or not, as the case may be.

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AUSTERITY! AMERICA! AUSTERITY! AMERICA! AUSTERITY!!11!1!1!

Get ready for "it", here "it" comes...

In Europe, austerity is in the air, and in the headlines: "Italy Fast-Tracks Austerity Vote." "Greek Minister Urges Austerity Consensus." "Portugal To Speed Austerity Measures." "Even Queen Faces Funding Squeeze In Austerity Britain." The word has become so instantly ubiquitous that Leftie deadbeats are already opposed to it: "Austerity Protest Takes Place In Dublin." For the rentamob types, "austerity" is to this decade what "Bush" and "Iraq War" were to the last. It can't be long before grizzled old rockers are organizing some all-star Rock Against Austerity gala.

Is there any nation on the planet more deserving of AUSTERITY! than America? We've for long been bloated and disgusting, fat, spoiled, and take all of it for granted.

The problem is structural: Not enough people do not enough work for not enough of their lives. Developed nations have 30-year-old students and 50-year old retirees, and then wonder why the shrunken rump of a "working" population in between can't make the math add up.

By the way, demographically speaking, these categories – "adolescents" and "retirees" – are an invention of our own time: They didn't exist a century ago. You were a kid till 13 or so. Then you worked. Then you died. As Obama made plain in his threat to Gran'ma last week that the August checks might not go out, funding nonproductivity is now the principal purpose of the modern state. Good luck with that at a time when every appliance in your home is manufactured in Asia.

Mark Steyn gets it. Obama and the Democrats don't (yet) get it.

It'll take a downgrade from S&P's and Moody's to get their attention I'm guessing. By the time they 'get it', spoiled Americans will be in the streets, protesting a return to the reality that is normalcy: humans can't be coddled for votes, because they are inherently lazy.

There's a wake-up call coming to fat, dumb and happy Americans.

Let's call it Austerity.

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"Not enough consumin' goin' on out theya!" or, "We're Spent." or, WHO IS JOHN GALT!

An interesting opinion piece up at the New York Times today, written by one David Leonhardt.

Mr. Leonhardt offers up an explanation as to why Barack Obama has been unable to kickstart our 'spent' economy: because we, the American people, have finally stopped spending...

If you’re looking for one overarching explanation for the still-terrible job market, it is this great consumer bust. Business executives are only rational to hold back on hiring if they do not know when their customers will fully return. Consumers, for their part, are coping with a sharp loss of wealth and an uncertain future (and many have discovered that they don’t need to buy a new car or stove every few years). Both consumers and executives are easily frightened by the latest economic problem, be it rising gas prices or the debt-ceiling impasse.   ...

Now, the economic version of the law of gravity is reasserting itself. We are feeling the deferred pain from 25 years of excess, as people try to rebuild their depleted savings. This pattern is a classic one. The definitive book about financial crises has become “This Time Is Different: Eight Centuries of Financial Folly,” published in 2009 with exquisite timing, by Carmen M. Reinhart, now of the Peterson Institute for International Economics, and Kenneth S. Rogoff, of Harvard.

Surveying hundreds of years of crises around the world, Ms. Reinhart and Mr. Rogoff conclude that debt is the primary cause and that the aftermath is “deep and prolonged,” with “profound declines in output and employment.” On average, a modern financial crisis has caused the unemployment rate to rise for more than four years and by 7 percentage points. (We’re now at almost four years and 5 percentage points.) The recovery takes many years more.

THE notion that the United States needs to begin moving away from its consumer economy — toward more of an investment and production economy, with rising exports, expanding factories and more good-paying service jobs — has become so commonplace that it’s practically a cliché. It’s also true. And the consumer bust shows why. The old consumer economy is gone, and it’s not coming back.

Well, of course we've stopped spending. There's not piles of 'easy' money laying around to be blown on such things as minks and diamonds, because we're funneling much of that cash into our gas tanks. Those of us who have jobs are likely looking over our shoulders, waiting to see if there's an unemployment monster overtaking us. Those on Government dole? Why, they are out canvassing with Barack Obama's 'Organizing for America' for votes so as to keep the flow coming for as long as possible. Nothing new there.

I'm not sold on Leonhardt's notion. It's easy to see that consumer spending is down across all sectors, but when my refrigerator goes out, I'm buying a new one. Dittos for other major appliances. And those things do go out. There's more to our prolonged malaise than just consumers not buying. Perhaps we are sick of socialists ?

Give a LeftLibProgg time and they'll deconstruct themselves. Towards the end of his piece, Leonhardt's taking a shot at the Bush tax cuts. Because that money, taken from the 'evil rich', wasn't there to help Big Government do more stimulatin'. OK, then, Leonhardt, if we aren't buying enough, doing enough consumerin', why not leave that 'stolen' tax money in the hands of the 'evil rich', who spend that money? They, too, are consumers, right? If you take that money away from the 'evil rich', doesn't that affect their consumerin' ways? But Big Daddy Government knows best, right?

Show me one job that's created by taking more tax money from anyone. NOT a government-worker job, either; they don't count. Their jobs are make-work (recall the hiring of the census workers who gave the unemployment curve a little tweak last summer, a tweak that disappeared soon enough).

This...

The biggest flaw with the past stimulus was that it imagined that the old consumer economy might return. Households received large tax rebates, usually with little incentive to spend the money (the cash-for-clunkers program being the exception that proves the rule). People did spend some of these across-the-board rebates, and kept economic growth and unemployment from being even worse, but also saved a sizable portion.

A more promising approach could instead offer a tax cut to businesses — but only to those expanding their payrolls and, in the process, helping to solve the jobs crisis. Along similar lines, a budget deal could increase funding for medical research and clean energy by even more than President Obama has suggested.

A tax cut to businesses to hire...why should they? What would you have businesses hire people to do? If there's no consumin', there's no need for manufacturin', or sellin', or shelf-stockin', or broom-pushin' now is there? A businessman hires an employee to fill an immediate need. If there's not an immediate need for an employee, that employee doesn't get hired, because s/he won't do enough to earn his or her salary. We in business are not in business to pay people to stand around fingering their pockets or surfing the internet - or to make Barack Obama's re-election any easier. If an employee can't do enough for me to earn it's keep, then there's the highway.

Fund more medical research, you say? Read this nice article by Brooksie, also at the NYT, where you'll find him imploring people to stop trying to live forever, spending monies this nation needs to stay alive in pain and misery. We've thrown enough money at medical research over the decades; likely until there's massive breakthroughs in nanobot technology, traditional medical research isn't going to provide any new superhighways to health, or pay for itself. No one lives forever, sorry.

Oh, my. "Clean Energy". Well, sure! let's get started on 100 new nuclear reactors. That would mean shutting down the EPA, and enacting major tort reform, so businesses can get busy creating these necessary new nuclear plants...in my and your backyards. Every damned major metropolitan overpopulation 'burg needs a new source of grid power; nuclear energy fits the bill. Any other ideas for 'green energy' are busts, as they can't scale up to meet demand.

It might be a good thing that excessive consumption is waning; we aren't going to go back to those heady days of buy and toss, buy again and toss again.

Here's a growth industry for you: repair and refurbish. Reclaim and salvage. Let's recycle old products instead of bringing in new 'junk' from China.

The 'new' growth-business model for our future ?

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Rick Santelli, perhaps the 'father' of the Tea Party, sticks to his guns.

No compromise on spending, please. Let the damned debt ceiling force some serious CHANGE to this overspent, failing-from-entitlements nation.




I for one welcome the opportunity to reshuffle the deck. "Someone will come up $160 Billion short in August, and it won't be the bond holders". So, if you know someone who relies on Social Security, be prepared to help out when those checks stop coming.

Hold this Congress' feet to the fire, now! Force this nation to live within it's revenue intake!

NO COMPROMISE!

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TIME Magazine's new cover: "What Recovery?"

You're welcome.

h/t Business Insider , where you'll also find

20 WAYS THE ECONOMY HAS GOTTEN WORSE SINCE BARACK OBAMA BECAME PRESIDENT

By almost any measure that you can think of, the U.S. economy has gotten worse since Barack Obama became president. Unemployment is higher, the cost of food and gas are skyrocketing, the number of Americans living in poverty has spiked dramatically, the housing market is in nightmarish shape and our national debt has absolutely exploded.

Meanwhile, Barack Obama continues to prance around the country declaring that "we can live out the American dream again" and that what we are experiencing right now are simply "bumps on the road to recovery". But such mindless platitudes are of little comfort to the millions of American families that are slowly descending into poverty or the tens of millions of American families that are already there. If this is the "change" that Barack Obama was promising then he can just keep the change.

Barack Obama is proving to be one of the worst presidents in all of U.S. history.

Yep. Dirty socialists who vote for whomever offers them the mostest are killing this Republic. You know who you are.

So do we.

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New York Times' editor 'Wesley Mouch': "The Numbers Are Grim"

Of course the numbers are grim, 'Wesley'. Barack Hussein Obama, redistributionist extraordinaire, dirty socialist, economy-destroyer and likely follower of Cloward-Piven stratagems, is still in Office.

More troubling in the latest figures, consumer spending — the largest component of the economy — was especially slow. Stagnant wages and higher prices for gas and food are squeezing family budgets, while falling home equity hurts consumer confidence. That suggests more bad news to come.

When consumers are constrained, so is hiring, because without customers, employers are hard pressed to retain workers or make new hires. A recent Labor Department report showed a greater-than-expected rise in the number of people claiming jobless benefits even as private-sector economic forecasts are being revised downward — both very bad omens for continued job growth.

What does 'Wesley Mouch' recommend? Why, more taxes and govern spending, of course!

The White House has offered sounder ideas, including job retraining, plans to boost educational achievement and tax increases to help cover needed spending. But its economic team is mainly focused on negotiations to raise the debt limit, presumably parrying Republican demands for deep spending cuts that could weaken the economy further while still reaching an agreement on the necessary increase.

The grim numbers tell an unavoidable truth: The economy is not growing nearly fast enough to dent unemployment. Unfortunately, no one in Washington is pushing policies to promote stronger growth now.

Yes there is. Why, just this weekend Sarah Palin started her bus tour, leaving Washington for a cross-country campaign. If that's not 'pushing policies to promote strong growth', then what is?

Kicking Barry out of Office in 2012 is the most significant economic stimulus plan that's currently on the table.

Who is John Galt ?

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Geithner, that Obama-Sock-Puppet we have as U.S. Treasury Secretary, cries for more (Tax) money.

No. No more money, children. Get by with what you have, and no more. Do NOT raise the debt limit in August, or at any other time. Cut the hell out of programs, or face consequences that will make the Great Depression seem like a picnic in the park.

Raising taxes to support a "looter-moocher" neo-Socialist ideology-driven political party is no way to run a sustainable economy. Democrats have tacked way, way far-left; they've discovered how to attract as many moocher votes as possible, by offering Other People's Money taken from the Treasury to buy votes and Party support. Giving Democrats more money is not a correct response to what must be the task of reforming the entitlement system Democrats supercharged with LBJ's inaptly-named "Great Society" program. LBJ created an underclass of perpetual moochers who game the system. "Community Organizing" these capitalism-haters was a masterstroke of genius; but to keep this Republic intact, we MUST reverse this phenomenon, or we will wind up on the ash-heap of history, along with the rest of the nations eaten up with the cancer of socialism.

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Moving right along... Hey, Hey, Barack Obama Post-Osama; now guess what is your job?

Heh. "Self Serve". This Ramirez fellow, he's good, damned good.

Are you one of the Welfare Recipients who received an "Earned Income Tax Credit" of more than what was deducted from your paycheck in the first place?

Fair tax or flat tax.

No voting if you don’t have skin in the game. Otherwise, you’ll almost always vote for other people’s money.

Sounds good to me. No vote if you don't actually PAY taxes.

We can't afford to give dirty socialists a key to the treasury. Since we did, we're stuck with the new far-Left Democratic party, and dirty socialists like Barack (Community ORGANIZER! of MOOCHERS!) Obama.

It's coming due, this overarching debt. There was only one Osama to kill; now, and right up to the 2012 election, "It's the ECONOMY. Stupid".

h/t Theo Spark

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