Even Obama can’t take his budget proposal seriously
There was a while this week, after I got a look at President Barack Obama’s budget proposal, when I thought the whole crypto-socialist thing he’s been telegraphing to the country might’ve been a big act.
Looking at the numbers of this budget showed me he was going way past where I thought he would take the country — to the economy of postwar Finland. Instead, 10 years of this kind of spending and priorities would put that kind of economy in the rearview mirror and land us firmly back into a hunter-gatherer society.
It can seem pretty exciting, in a cinematic sort of way, driving hopped-up dune buggies across the post-apocalyptic wasteland, men with Mohawks fighting over tankers of gasoline and firing wrist-mounted crossbows. Think “Thunderdome.”
I realized, a little sadly, this probably wasn’t the intention. First, I doubted there are enough eyeliner and leather chaps in the country to fully realize this kind of vision. More importantly, no one with an IQ higher than their thermostat could think this fiscal nuke could get through the current Congress. Last year’s maybe, but not this one.
This proposal cannot possibly be taken seriously as an attempt to advance the interests of the United States as a nation or control our rapidly overwhelming debt, which are turning into the same thing. Some of the particulars are startling, like doubling the amount of publicly held debt, compared to 2007, and increasing government spending to over 25 percent of the entire gross domestic product of the nation.
Moreover, the budget is less fiscal restraint than taxing orgy, including hoisting the top marginal tax rate to 39.6 percent, raising the capital gains and dividend rates from 15 percent to 20 percent and imposing new taxes on corporations.
The capital gains and dividend increases are worth discussion because, to justify these tax hikes, the political left tries to vilify recipients of capital gains and dividends as “fat cats” who deserve to be put on a government-sanctioned diet.
The reality is less dramatic. Lower rates on capital gains encourages investors of all sizes to leave their money in businesses, particularly start-ups, to get a better rate if they should happen to realize a profit. It creates stability and encourages business development with the promise of higher returns for what is often a higher risk.
Dividends are basically a sort of interest payment companies pay to shareholders to encourage them to hold stock rather than sell it, which helps to put some level of certainty in their capital foundation. With less upside, investors couldn’t be blamed for pulling their money out as soon as a company hits a slow patch. If you want volatility, remove any reward for sticking with a stock through its cyclical ups and downs.
Even more troubling for the Colorado economy are massive tax increases on and repeal of favorable policies toward the energy industry and development, all while increasing the budgets of really helpful agencies like the Environmental Protection Agency — 35 percent over 2008 levels. It might prove useful to note that during the last two years, the price of gasoline has increased over 65 percent, even though there has been no appreciable shortage of oil.
The conservative magazine, The National Review, does a great job of pointing out that over the next 10 years, with this budgetary arc, the government will spend $46 trillion, add $8.7 trillion of new spending and tally up $26.3 trillion in new debt by 2021.
The tactic here is fairly clear, if you think the future is the Clinton Administration circa 1995. The president’s advisors must’ve found some old newspapers in the basement and think that by proposing an outrageous budget that doesn’t even touch entitlement programs, the new House Republican majority will be forced to make the first move on benefit packages. Then the administration can loudly decry, threaten vetoes and hope the Republicans will shut down the government or fold and give in to some crazy policies.
Unfortunately for the Obama team, that was then and this is now. The economic situation is much worse, the flow of information is no longer controlled by three networks and five newspapers, and the American public is much more savvy than 1995. Let’s just hope the Republicans realize that.
Rick Wagner offers more thoughts on politics at his blog, The War on Wrong.