How Obama can Win ReElection

If you are going to be intellectually honest, you have to consider what your opponent thinks and believes and why. I do not want Obama to win, because I love my country too much to see it continue on the destructive path he has set for it. But if you want Obama to take that long ride back home to Chicago in January of 2013, you need to think what it would take for him win, so that you can prepare and counter his actions.
The electoral landscape is not looking good for him right now. There is a 50-50 chance that we will enter into a double dip recession and no president has ever won reelection with unemployment above 8.2% for more than 70 years. Of course, no black man has ever won the presidency before either, so that tidbit is not necessarily governing but does provide guidance to be considered. With a poor economy, Obama can continue to blame Bush, but that story is wearing quite thin. The probability of a sudden economic expansion is highly unlikely, unless there is a complete reversal of economic policies. So that aspect is not one that he is likely to emphasize, and would prefer to ignore it if at all possible. It is further unlikely that Obama has the mental agility to even grasp how ineffective his policies are, so the chances of even recognizing that they don't work means that Obama will continue on straight ahead, heedless of the facts.
Obama is striving for a billion dollar campaign goal, and that is not necessarily unreachable, although a lot of the corporate bundlers who supported him before are unlikely to continue to do so this time around because he can't please all the big donors. Obama does have the fullthroated and unquestioning support of the Mains Stream Media, but their influence is also wearing thin as people come to realize that they are not honest brokers, but rather future Press Secretary wannabes. Alternative sources of information and commentary are taking over all but the most unsophisticated voters, and they will remain steadfastly loyal to the President if for no other reason than their unthinking hatred of the Republicans.
Electorally, Obama is still popular with 16 states, and certainly has the unthinking support of the 20% of the population that call themselves liberal, and that of the African American community as well. That base, assuming they don't stay at home out of disappointment, will account for 30% of the vote so he just needs to pull in another 21%. That is going to be difficult, unless the Republicans pull another weak candidate like McCain.
All of this seems rather pessimistic for getting Obama reelected, but there are two possibilities that can allow him to slip back into the Oval Office. First, the aforementioned Republicans pick the absolute worst candidate to run against him. At the moment, the generic Republican is beating him, but once the nomination is made, you can bet that all the political organs of the Democrat party will be mobilized to demonize his opponent. Doesn't have to be fair or accurate in the attacks, but if they are valid that will certainly help.
The other road to electoral success is the same one that Clinton used: A third party candidate that strips voters away from Obamas's opponent. Like 1996's Ross Perot, the third party candidate needs to be independently wealthy, have a certain level of charisma and the organization to get his name on the ballot. Dodnald Trump would certainly fill the bill plus he has the ego to try and make it happen. But I don't think that Trump will pull enough votes away to assure Obama's reelection. There may be a better candidate in Ron Paul. While he doesn't have the money of a trump, he does have the fanatical support of his followers who would vote against Obama if there is no other choice, but will abandon the Republican if Paul runs on the Libertarian ticket.
So in the final analysis, Obama can do little to ensure his reelection. It will almost assuredly come down to a third party candidate that is strong enough to pull more than 20% of the vote. Not that it can't be done, but it sure doesn't look good.

Acknowledging the Right Thing

I have long looked at groups like National Organization for Women and others as tax exempt shills for the Democrats in that they are so blatantly one sided. Remember how NOW came to the aid of Sarah Palin? Neither do I.
But when they do the right thing, you should acknowledge it and in turn, they earn greater respect for doing the right thing.
The example today is Newsweek and their cover showing Michelle Bachmann over the title "Queen of Rage."

This is just playing into the stereotype of women being "hysterical" while men are cool, calm and collected. Just like old Barry Obama who has been having tantrums because no one listens to him anymore.
But good for NOW! (pardon the pun) for doing the right thing.

Viral Video

from Instapundit:

This Says a Lot

Why the hate by the Left? Could it be that they have run out of ideas?

Killing Zombies

Dave Budge has a post on Electric City that points out that assigning blame does nothing to solve our economic problems. I had posted a comment in that regard which led Rob Kailey of Wulfgar fame to respond. I answered parts of his comment there, but it really requires a more in depth look that would take over the post. For that reason I have moved my response to this post.
So, let's look at Rob's comments. First:

Steve, you keep supporting a zombie lie, one which must be destroyed if we are to avoid “childish reasoning”. Raising taxes on the wealthy does not create more unemployment. It never has. Not once in the nation’s history can this be shown as fact

I am not aware on any basis for his assertion, except for wishful thinking. I am sure that the same old tactic will be invoked, that I should Google the assertion for myself, but since it defies even common sense, I won't bother. Let's apply common sense to the problem though, and see if raising taxes on the rich results in higher unemployment is an invalid assertion. Suppose I own a company with 100 employees and my taxes are raised 5%. I have several options, raise prices, which makes my business less competitive, equally pass the costs onto all the employees or absorb the costs on my own. The first will probably result in less profits for the business as consumers seek other alternatives. The second would require an equal cut for the pay of all of the workers. How many of us are willing to take a pay cut at all? We become accustomed to our pay, and a cut is not acceptable. On the other hand, I could also reduce the workforce by 5%, which is the opposite of Wulfgar's hypothesis. The same applies if I absorb all the costs. If my spending power is reduced by 5%, that means I get to buy 5% less. That results in other businesses getting 5% less, and since they also are hit by the tax increase, it magnifies the impact of the tax raise, and we all lose. So that "zombie lie" is proven to be an actual problem that cannot be dismissed out of hand.
Next, Rob says:

Nor are our economic woes the fault of “entitlements”. That is simply another way to place “blame” while masking the fact that you’re doing it. I work, then I get paid. That’s the agreement between myself and my employer. If my employer finds himself without the money to pay me, that’s not my fault. I’m not “entitled” to my pay. It was an agreement, a contract. It was a deal.

I am not sure of the point of this statement. If Rob is entitled to the pay (as he should be) and there is no money to pay for it, Rob could sue to enforce the contract, but if there is no money in the business, Rob would prevail but to no ultimate end if the employer is bankrupt. If the contract is unenforceable, there is no real contract. But to ignore problem with the growth in entitlement spending is childish at best and wishful at worst. Social Security, Medicare and Medicaid along with interest on the debt already occupy more than half the total federal budge. Yes, the workers were promised the entitlements, but if there is no money to pay them, it is an unenforceable contract. The thinking on the Left seems to be "tax the rich" as a solution, but as has already been noted elsewhere, taking all of the money earned by those making a million or more will not even cover the deficit, much less the debt, and who will you tax the next year when all those taxed fail to show up for work? The rest of his comment in this paragraph seems to be a non-sequiter, so it is impossible to respond.
Rob's next point seems to be that the analogy of paying the debt to personal finance justifies raising taxes.

Since it seems to the rage among many on the right to compare governmental finance with a home budget, allow me a generalized anecdote. Every single time in my life I’ve found myself owing what I couldn’t pay, I’ve used a vast array of methods to keep afloat. I’ve done the severe austerity. I’ve not paid one bill so that I could pay another (robbing Peter to pay Paul). I’ve sold assets. I’ve borrowed on assets which only pushes the pain forward. I’ve used legal means to forestall the debt. The one thing that’s been consistent throughout is that my troubles, such as they are, have only been solved by an increase in revenue.

Applying his argument, the government should first cut spending. Hooray, a wonderful idea. No more dinners out, and yes we will need to eat Top Ramen for a long while until we get spending under control. I agree that we need to look at what we are spending money on and whether we can do without it. Cut all subsidies, corn, cotton, sugar, peanuts, milk, crop rotation, and alternative energy as well. Make them function in an open market, and if they can't survive, they don't need to be propped up either. So we are in agreement there. His next point about not paying one bill to pay another is a short term solution but only increases the problem as the bill not paid accrues interest and late fees, not to mention the failure of a moral obligation to pay just debts. So that won't work. Selling assets that you can part with is a good idea as well. For instance, Montanans receive more in federal spending than they pay in. A good part of this is because the feds own about a quarter of the state. Start selling forest service lands and you get the double benefit of cash and reduced costs to maintain it. That also seems like a good idea. He mentions borrowing on assets and correctly acknowledges that only pushes the problem forward. Just like we are doing now with our continued federal borrowing. So again we are in agreement, even though he may not have intended it. Lastly, he reports that the only way to solve the problem is to increase revenue. You can go to your employer for a raise, but if he doesn't have the money to pay for it, what are you going to do, take a second job? Is he suggesting that the US take a second job?
Because I am planning on getting on the boat real soon, I will jump to his last point: That the country needs more revenue, and on that I agree with him, just not the way that he wants to do it. If we reform taxes from being an instrument of social engineering to one of actual collection of revenue, that would be a good start. The fact that the favored GE can pay no taxes is an affront to all citizens. But if you lowered the corporate rate to 20% and removed all deductions, you would have a more cost effective basis to operate in this country which would result in the return of manufacturing and expanded revenue. The fact that keeps being denied is that tax cuts do raise revenue. From the Washington Examiner, Byron York points out the following:

As far as tax cuts are concerned, Bush did indeed cut taxes for the wealthy -- along with everybody else who paid income taxes. But does Brown remember that tax revenues actually increased in the years after the Bush tax cuts took effect?

Revenues fell in Bush's first two years because of a combination of the tech bust and the start of the tax cuts. But then things took off. After taking in $1.782 trillion in tax revenues in 2003, the government collected $1.88 trillion in 2004; $2.153 trillion in 2005; $2.406 trillion in 2006; and $2.567 trillion in 2007, according to figures compiled by the Office of Management and Budget. That's a 44 percent increase from 2003 to 2007. (Revenues slid downward a bit in 2008, and a lot in 2009, when the financial crisis sent the economy into a tailspin.) "Everybody talks about how much the Bush tax cuts 'cost,'" says one GOP strategist. "We're saying, no, they led to a huge increase in revenue."

And deficits shrank. After beginning with a Clinton-era surplus in 2001, the Bush administration ran up deficits of $158 billion in 2002; $378 billion in 2003; and $413 billion in 2004. Then, with revenues pouring in, the deficits began to fall: $318 billion in 2005; $248 billion in 2006; and $161 billion in 2007. That 2007 deficit, with the tax cuts in effect, was one-tenth of today's $1.6 trillion deficit.

The problem with the tax cuts adding to the debt, was that we cut taxes, and increased spending. Government spending goes up every year, and in the last two years has exploded. Tax cuts allow the private sector to more effectively use the money than the government.
I realize that Wulfgar is not alone in his thinking on economic matters, but the desire to believe that raising taxes is going to solve the problem is itself a "zombie lie" and it's time to kill it once and for all time.

The Macho Response

Found this awhile ago, and it does provide somewhat crude but amusing analysis. From his Tuesday bites for today:

So Jonah Goldberg’s got a nice message for the media today:

To Hell with You People

This is called The Macho Response, and we approve.

James Taranto of The Wall Street Journal also saw what’s pissed Jonah off so badly, and he says it’s liberals getting “even angrier and more desperate.”

This means we’re winning, and we approve of that as well.

And finally, Glenn Reynolds has some advice for those of you sick of the president and, presumably, his followers:

Just try to remain as graceful and generous as the Democrats did under the last Administration, if you can.

Oh man, you know – if Reynold’s is talking like that – the gate’s wide open now:

Maintain, people, maintain,…we don’t want nobody going to jail.

 

Go read the rest, it's pretty fun.

Government in Rebellion

Ed Kaitz at the American Thinker has an especially brilliant piece today. He bases the analysis on John Locke and his Second Treatise and is the best explanation for what is going on now. The reason that I picked the title for this post is that Locke was saying that since the power of government comes from the people, the government is the only one that can "rebel." and boy, is our government revolting at the moment.

A few selections from the article:

Those "being the likeliest" to destroy the social contract and deliver society back into a state of war are "they who are in power" (i.e. politicians). The reason, says Locke, is that politicians, much more than the people, will succumb to three weaknesses: "the pretense they have to authority, the temptation of force they have in their hands, and the flattery of those about them." People, in other words, naturally choose to set up a limited, divided government that protects private property in order to give the society the best chance at flourishing. Left alone, says Locke, the people have the best chance at self-preservation. Our politician-servants however who succumb to the authority, power, and flattery characteristic of political life will begin to pollute the original laissez-faire system set up to reward the rational and the industrious.

and

Locke's most famous American protégé and a genuine constitutional scholar, James Madison, argued at the end of his brilliant Federalist #10 that there were three "wicked projects" that -- in the hands an unscrupulous political faction -- could potentially inflame our Republic with a most devastating plague: "a rage for paper money, [an] abolition of debts, [and] an equal division of property."

In other words, deficit spending, bailouts, and welfare state socialism -- the three pillars of the modern Democratic Party -- were, to Madison, the likeliest and most "wicked" threats to America's self-preservation.

For Madison and Locke then, some form of economic and political terrorism would eventually destroy the Enlightenment experiment in constitutional government.

You really do need to read the whole thing.

This small group of terrorists have made it impossible to spend any money.

Biden says that like it's a bad thing. What he should have said, is that they have tried to make it impossible to spend money we don't have.

Sheesh, and people think Sarah Palin shouldn't have been VP. Idiots.

Why Doesn't Anyone Ask About This?

Interesting Problem

The problem is not how did they get in there...

it's how do you get them out.

Is Crisis Management Better Than No Management?

That seems to be the mantra of the political classes with regards to the debt ceiling extension. But as a citizen, the most aggravating thing has to be the delay in dealing with it. Ever since last year when the debt ceiling was raised $1.9 Trillion, you'd think someone would have noticed that we were spending more money than we were taking in and we would be bumping up against the debt ceiling again. But No! That would take foresight and understanding, both of which seem to exist in zero amounts in Washington.
If the Democrats get their way, they want to extend the cap by $2.4 Trillion just so we can get through the next election. After all, if the electorate is involved in the debate, they just may say "What in the Sam Hell are you thinking?" which would really harsh their mellow about spending, spending, spending.
By extending the debt limit, we aren't saving our financial situation, we are handing junkies their fix, all the while they plead that "This will be the last time, I promise." Maybe it is true that we get the government that we deserve, which makes me ask "Why does God hate us?"

Internecine Strife is Fun!

Apparently, JC of 4&20 and Wulfgar are in a spat as to the direction of the Democrat Party. As an outside observer, I see it as Wulfgar being practical (I know, hard to believe) and JC being the voice of the believers in the "One True Faith."
While I think both are too limited in their thinking, and they are too quick to disregard actual reality, it is an interesting debate. Sort of like that going on with the Tea Party at the moment: Stick with the GOP or consider them out of date and out of touch.
In any event, give them both a read, and enjoy their misery.

Sen. Tester: What's Your Plan?

All fifty-three Democrat senators have sent a letter to the Speaker of the House saying that they will reject the plan under consideration to raise the debt limit. Among them of course, our junior senator, oops, I mean the extra vote that Harry Reid has, who agrees with his party's leadership that just saying no is an effective strategy.
So, Sen. Tester, if there is no plan, or even if it is passed by the House and presented to the Senate, you are going to vote to keep the status quo? In a way, I kind of like that, since the automatic reduction in the size of government in one day will be quite dramatic. But isn't Jon in the least bit worried? About the debt limit, our credit rating, our fiscal future, or even that we could figure out that we can live with a whole lot less government?
And what is the Senate's plan? Harry Reid's smoke and mirrors is the greatest problem for our credit rating, and contains no real cuts. So, Senator Tester, what are you going to do to protect Montana families? Just go along with Harry Reid and Chuck Schumer?
If so, I am sure that you will enjoy returning to your farm in January of 2013, with lots of time to think about it.

The Left Unhinged

It has become impossible to discuss anything with the Left since November of 2010 as they wallow in their buyer's remorse about Obama. Yet somehow, they refuse to acknowledge that they are the minority of the country and have no useful political clout outside of the Mainstream Media and Hollywood. But like any wounded animal, they are still dangerous as they lash out in all directions in order to somehow hurt their tormentors.
For instance, as James Taranto notes in his Best of the Web the Left have taken to attacking Republicans in general and the Tea Party in particular. Nicholas Kristoff of the New York Times who argues that duly elected Representatives of the US House are our own "domestic terrorists and extremists" are a bigger threat to national security than China or Iran. Really? Aren't you questioning their patriotism, and isn't that verboten? And isn't it more than just a little over the top to equate Bachman and other Tea Partiers with terrorism? The hyperbole makes the argument laughably irrelevant. And it wouldn't matter except for the proliferation of what has become known as the "unsophisticated voter."
These voters are easy to identify because they take no interest in the political affairs of the country until such time as they are bused to the ballot box where they can register and vote in accordance with the guy's wishes who gave them a sandwich. They used to be evenly distributed between the two parties until the Democrats figured out that with enough of these uninformed dolts, they could actually take over the country, hence the current version of the Get Out the Vote efforts of that party. Now they are being called upon by the Leader of the Free World to intimidate Congress into spending more than it has the ability to pay.
By itself, the disparaging remarks of those who believe in fiscal discipline and limited government keeps us from having an honest debate. For instance, why is it that those advocating raising the debt limit without serious reductions in spending will still be facing the same problem anywhere from six months to a year from now? Why raise taxes on a few that will fail to close the deficit and ignore the 49% who pay no taxes? Have they no interest in solving the fiscal problem, or do they simply want to institute income redistribution, the country be damned?
Finally, I am amazed at the number of law professors who are advocating that Obama raise the debt limit on his own. As we are often reminded, Obama was a "Professor of Constitutional Law" at Chicago. I am just curious, which Constitution? Certainly not the one that he swore an oath to uphold in January of 2009. And yet these luminaries of the professorate seem to have no problems with arguing for a complete usurpation of the power of the purse by the Presidency.
I remember when Watergate was going on and thinking that it was a constitutional crisis if Nixon tried to hold onto power. If Obama tries a power grab as he is being encouraged, that my friends is a real constitutional crisis.

Why the Tax Code is Immoral

There is a false argument that taxes should be progressive. The idea is that there should be higher rates for higher earners, but no one explains why that is so. Once you question the validity of that premise, you come up with this. The untalked about point in the argument in raising the debt ceiling is that raising rates on the rich will not provide enough revenue to cover the deficit in government spending. In fact, as has been noted often enough, taxing all the billionaires and millionaires 100% of their income will only cover the deficit for one year. How many of the people hit with 100% tax be back to work the next year? And when they do, what happens to the jobs that they used to pay, or the goods they bought, who will buy them now?
No, raising taxes on only one segment of the society is not about "revenue enhancements." It's all about wealth redistribution, pure and simple. If our leaders were serious about the deficit, they would impose a flat tax, but what they really want is to reward their friends and punish their enemies.
But if you do believe in progressive tax rates, could you tell me what the maximum rate could be? And what do you think happens to people when the rate is imposed? How much of their efforts that had gone to creating wealth are now directed at tax avoidance schemes? And why is that better?

Obama Quoting Reagan

Watching the President's address, I was waiting for the balloons and confetti to start falling as soon as his speech ended, just like any other campaign event. But in reviewing his speech, his lies were growing in number to the point that he loses touch with reality in spite of his carefully focus group tested words. But it galls me that he wants to quote Reagan by saying that he would have been in favor or raising taxes. Of course, like everything this President says, it is out of context and false in it's usage. But why didn't Obama use this quote?

In a 1983 debt-ceiling debate, Reagan threatened to veto any measure that contained tax hikes. “I am unalterably opposed to Congress‘ efforts to raise taxes on individuals and businesses,” he said. His administration “did not come to Washington to raise the peoples’ taxes. We came here to restore opportunity and get this economy moving again. We do not face large deficits because Americans aren’t taxed enough. We face those deficits because the Congress still spends too much.”

Words still true as ever, and here we are more than thirty years on. Many on the Left are calling for Defense spending cuts to the point of eliminating the Defense Department all together. The only function of the government that is absolutely necessary, is the only place that they are willing to cut.
In closing, one more quote from the Gipper that seems so appropriate:

“For those who say further responsible spending reductions are not possible,” Reagan said, “they are wrong. For those who say the only choice is undermining our national security … they are wrong. For those who say more taxes will solve our deficit problems, they are wrong.”

Obama is wrong.

The Difference Between a Lie and a Mistake

The Left has always said that "Bush lied!" when it came to WMDs in Iraq. I thought that they were just trying to exploit the confused voter for their tactical advantage. But now we have actual lies coming out of the White House and crickets coming from the Leftocracy and blogosphere. From the article:

“I wanted to give you an update on the current situation around the debt ceiling,” Mr. Obama said at 6:06 p.m. OK, that wasn’t a lie — but just about everything he said after it was, and he knows it.

“I just got a call about a half-hour ago from Speaker [John A.] Boehner, who indicated that he was going to be walking away from the negotiations,” he said.

Not so: “The White House made offers during the negotiations,” said our insider, a person intimately involved in the negotiations, “and then backtracked on those offers after they got heat from Democrats on Capitol Hill. The White House, and its steadfast refusal to follow through on its rhetoric in terms of cutting spending and addressing entitlements, is the real reason that debt talks broke down.”

Mr. Boehner was more blunt in his own news conference: “The discussions we’ve had with the White House have broken down for two reasons. First, they insisted on raising taxes. … Secondly, they refused to get serious about cutting spending and making the tough choices that are facing our country on entitlement reform.”

But back to the lying liar and the lies he told Friday. “You had a bipartisan group of senators, including Republicans who are in leadership in the Senate, calling for what effectively was about $2 trillion above the Republican baseline that theyve been working off of. What we said was give us $1.2 trillion in additional revenues,” Mr. Obama said.

That, too, was a lie. “The White House had already agreed to a lower revenue number — to be generated through economic growth and a more efficient tax code — and then it tried to change the terms of the deal after taking heat from Democrats on Capitol Hill,” our insider said.

and:

But Mr. Obama, with a straight face, continued. “We then offered an additional $650 billion in cuts to entitlement programs — Medicare, Medicaid, Social Security.”

The truth: “Actually, the White House was walking back its commitments on entitlement reforms, too. They kept saying they wanted to ‘go big.’ But their actions never matched their rhetoric,” the insider said.

While the article asks if Obama is a pathological liar, I think in fairness to him, that he just doesn't have a clue what the truth looks like. And neither do the Lefties who said that Bush lied.

Extremists?

I just heard Sen. Reid's news conference where he is trying to get the Republicans to give up their listening to concerned citizens, otherwise known as the Tea Party. Reid says that because the Republicans are listening to their constituencies, they are following "extremists" in refusing to give in to Obama's demands for a raise in the spending cap.
Let's see how extremist the Tea Party really is. They believe in fiscal responsibility and limited government. No matter how I look at this, to consider that extremist is either delusional or dishonest, although in Harry Reid's case, both may be applicable. Sen. Reid is sowing what he reaped, when he put together the "deficit reduction plan" that was agreed to last December, and resulted in several millions of dollars in savings, when we had been promised billions.
For Sen. Reid, spending is more important than anything else, and when he threatens Social Security checks, he has pulled out the heavy artillery. But if Sen. Reid and President Obama believe that Social Security checks won't be going out, is that because they are more interested in funding the high speed rail boondoggles that have been proposed? What about National Endowment for the Arts, or Planned Parenthood, or ethanol, cotton, sugar, peanut and milk subsidies? Why are all those more important than getting retirees their checks? That my friends is extremist, to take money away from the elderly to support big donors in order to keep Democrats in power.
One good thing if the debt limit isn't raised - We will instantly have a balanced budget.

You Are Not as Safe as You Think

Think that the Constitution entitles you to feel secure in your home? Think again. If the police break into your home and you resist this unlawful invasion, you will be charged with resisting arrest, at least in Minnesota. From the article:

In closing arguments Wednesday morning, Sauceda’s defense attorney, Ryan Deaton, chronicled how his client was wronged by Lufkin Police when they entered his home at 111 Finley St. on a report of a black male kicking in the front door, called in by a neighbor. Sauceda, who Deaton described as having the mind of a child, then locked himself in the bathroom and refused to come out despite repeated warnings by the officers on scene.

But at least this time they actually came to the right address.
As a search of Reason's blog for cops breaking in the wrong address yields this.

Quo custodiet ipso custodes?

Dishonest Debt Debate

As we come nearer and nearer to the supposed economic Armageddon of not raising the debt ceiling, everyone is being stirred to action in support of their side. Letters to the editor are flying, but I am becoming particularly annoyed by those whose only solution is to raise the taxes on "the rich." This is the favorite topic of those on the Left and Democrats in general as a solution to the problem because it fits in with their narrative of class warfare. Even if you confiscated all the wealth of millionaires and billionaires, you would only be able to pay the deficit for one year, and the next year they would have all quit and the Treasury will receive $0 from them, and still have the deficit. Since this makes no sense at all for generating revenue, why is it that our “leaders” are proposing such a thing. My answer is that this is not about raising revenue, but social engineering. And we have sufficient evidence in support of this proposition.
For instance, the tax code is more than 70,000 pages of rules and regulations which set forth not only tax rates but exceptions. That is how General Electric was able to make $6 Billion in profits and pay no income tax. And they did it legally, because their lobbyists were able to get the government to subsidize activity for them that you and I can never get.
The progressive rate of taxation is another example of social engineering. I am always amazed and amused at people who take the notion of progressive taxes as a given. President Obama wants all of us to pay “our fair share, even millionaires and billionaires.” Now, I may not be that good at math, but the fact that he wants to raise taxes on those making $250,000 a year in addition makes me wonder what he thinks a million really is. But the idea is that people making more than you should contribute more. Well, they already do.
In 2011, Federal income tax rates were set to increase to pre-2001 levels, but the renewal of the Bush Tax Cuts left the existing tax brackets in place through 2012. Below are the resulting tax rates and income ranges for 2011:
Filing Status and Income Tax Rates 2011
Caution: Do not use these tax rate schedules to figure 2010 taxes. Use only to figure 2011 estimates.
Tax rate Married filing jointly
or qualified widow(er) Single Head of household Married filing separately
10% $0 - 17,000 $0 - 8,500 $0 - $12,150 $0 - 8,500
15% $17,000 - 69,000 $8,500 - 34,500 $12,150 - 46,250 $8,500 - 34,500
25% $69,000 - 139,350 $34,500 - 83,600 $46,250 - 119,400 $34,500 - 69,675
28% $139,350 - 212,300 $83,600 - 174,400 $119,400 - 193,350 $69,675 - 106,150
33% $212,300 - 379,150 $174,400 - 379,150 $193,350 - 379,150 $106,150 - 189,575
35% over $379,150 over $379,150 over $379,150 over $189,575
Source: http://www.irs.gov

Looking at the lowest rate, one could argue that $17,000 for a couple is pretty low for being taxed, and you would be right, unless you remember that this number considers taxable income after deductions. So say the married couple have only one earner and a child. If I remember correctly, you get a $3700 deduction per person plus an additional $1,000 for the kid. And if they are buying a house, they get to deduct the mortgage interest. Suppose that they are smart and put money into a 401k and a flex plan and give to charitable organizations, all of which is not considered to be income for the purposes of computing taxes, and pretty soon you could be looking at some real coin before deductions. Throw in the Earned Income Tax Credit and a family like the one above could easily end up paying no taxes on their income.

For the higher earners, a lot of those exceptions of the family above are not available, and the richer ones have to cope with the Alternative Minimum Tax in addition, and that’s not even taking into account that their base rates are three and a half times higher than the lower earners. Do the rich drive on roads that are three and a half times better, or are they defended by the military three and a half times as much? Why no, they’re not. So the rich are already paying more than their “fair share.”

Why then is there such a hue and cry from Obama on down for what is effectively redistribution? Well, it seems that they have arbitrarily decided that the rich have too much, and can part with it more easily. There is a certain logic to it, for example, the family that lives on $45,000 could argue that if they can make it on that, so can anyone else. But let’s just hope that that family doesn’t work in any kind of industry which produces goods that the rich would buy, since they would no longer be able to do so, and the $45K family will then be out of a job. Even if they don’t work in that industry, whatever work that they do will be affected by all the ones that are engaged in producing products that the rich buy, since when they are laid off, those people will no longer be able to purchase goods or services either. The cascading effect of unemployment will be ameliorated somewhat in that the increased tax collections will be used for the most part as unemployment insurance for all those that lost their jobs.

Maybe, that is too extreme of an example. Let’s say that someone who is working and bringing home $450,000 dollars a year is our subject next. People who earn that kind of money are doing something right, since the general rule is that you provide more in value than you cost. Let’s say that the $450K earner only produces $400K in value for the company. There is a net loss of more than $50K (don’t forget all of the supplemental costs beyond salary) and eventually the business will either have to lay them off or go bankrupt, in which case there is no longer that amount of income for the household. But if the worker is meriting their higher salary, they usually have some incentive to keep working at that job. Making them pay more in taxes, will have an impact on their incentives to keep working at that level, and if they should decide that enough is enough, and live off their investments at the level of the $45K family, the government has been shortchanged all that income when they were working for a net loss to the Treasury.

So, soaking the rich doesn’t solve our debt problems. Then what do we do? My suggestion is to return the tax code to an instrument of collecting revenue and do away with trying to use it to coerce or reward behavior. If we went to a two step flat tax, with everyone making less than $50,000 paying 10% and everyone above that paying 20%, with absolutely no deductions or tax havens or anything else, we would have a solid and steady source of income, greater employment because business will finally feel that investing is not the same as gambling.

The problem with this solution is that it doesn’t allow the government to reward or punish people, and that is why the Democrats oppose such a common sense approach and are only interested in soaking the rich. And that is why Obama will never give up on his irrational need to raise taxes in the middle of a recession.