Fool Me Twice (22 page)

The Demos think tank envisions extending unemployment compensation as a kind of “stimulus” spending. The Act for the 99% would increase spending by extending the Federal Emergency Unemployment Compensation (EUC) program through 2012.
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In an overview of Obama's September 2011 jobs bill, Demos wrote: “By further extending these benefits, the president's plan would not only sustain a lifeline for unemployed workers,
but continue one of the most powerful forms of stimulus available to policymakers.”
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For Demos, the bottom line is redistributing wealth by addressing “economic insecurity and inequality” and tax hikes for the wealthy.
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Meanwhile, the progressive think tank—John Podesta's Center for American Progress—the clamor has been for higher tax rates for quite some time.
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CAP's John Irons was lamenting in April 2007, before Obama's presidency, and the Reid-Pelosi Congress, that “concerns about the federal government's massive fiscal deficit will make it hard for Congress to maintain [the] current level of government services and even harder for them to follow a progressive agenda.”

Nothing as trivial as a massive federal deficit bothers this president, even running for reelection, nor certainly going on to a possible second term. And in truth, it matters little whether the federal government lives strictly within its means. The real catastrophe would come when progressives lack the money to implement their über-expensive agenda.

Back in April 2011, when President Obama delivered his so-called fiscal plan, he did not even offer a budget. Dan Mitchell, of the Center for Freedom and Prosperity Foundation, was among those who identified Obama's speech as a “set of talking points” for the “opening salvo” of his reelection campaign.

And it's clear that a central theme of his campaign will be class warfare … Obama, for all intents and purposes, has taken the moderately left-wing proposal crafted by his Fiscal Commission and moved it significantly in the wrong direction by adding class-warfare tax policy. As such, he is close to the left end of the line, which represents “Statism.”
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Mitchell later borrowed a term from the president's rhetorical playbook, and pegged Obama as a “stubborn clinger”—“stubbornly clinging to his ideological agenda of bigger government and class warfare…. Wasteful
programs magically become ‘investments' for growth, and higher tax rates get turned into ‘shared sacrifice,'” he noted.

Interestingly, we already know what eventually happens with this approach. Europe's welfare states are now dealing with the wreckage of Obamanomics-type policies and the results are not pretty.
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Mitchell further elaborated on the president's new class warfare strategy. In April 2011, while speaking in Annandale, Virginia, Obama had come out for “lifting the cap on income on which the Social Security payroll tax is applied.” (During the 2008 presidential campaign, Obama ran on a plan to “raise the ‘tax max' by somewhere between two to eight percentage points for the top 3% of earners.”
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) To put these numbers into perspective: during 2011, there was a maximum amount of income subject to the payroll tax—about $107,000. But, Mitchell writes, “it appears that President Obama wants to radically change this system so that it is based on a class-warfare model.”

Andrew G. Biggs, of the American Enterprise Institute, explains how the seemingly small measure of hiking the Social Security tax ceiling would very much increase the overall burden on Americans. It “should be seen in the context of other tax increases that are already in the works,” Biggs explained. The top federal income tax rate is 35 percent, plus 2.9 percent Medicare tax, and a “typical state income tax rate of around 5.5 percent,” equaling an “all-in top marginal tax rate on earned income” at around 43 percent (or as high as 49 percent in some higher-tax states).

At the time, the Obama administration was planning for a top income tax rate of 40.8 percent and an increased Medicare tax rate on high earners of 3.8 percent as of 2013 (due to ObamaCare). If state income tax rates would not change, remaining constant at around 6 percent, the “top marginal tax rate will rise under current plans to 51 percent, with a maximum in high-tax states such as Hawaii and Oregon of around 56 percent,” according to Biggs.

If the ceiling on Social Security payroll taxes were to be eliminated, about 24 percent of households “would be affected by higher taxes over their lifetimes,” Biggs wrote. “Total maximum marginal tax rates on earned income would range from a low of 57 percent in states with no income tax
to a high of 68 percent in Hawaii; the population-weighted average top rate would be almost 63 percent.”
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An April 2011
Wall Street Journal
editorial on Obama's “max tax” was equally damning:

President Obama's deficit pitch is that if only a fraction of the highest income Americans were “asked to pay a little bit more” the fiscal seas would part—but all those little bits are starting to pile up. Speaking Tuesday in Annandale, Virginia, Mr. Obama came out for lifting the cap on income on which the Social Security payroll tax is applied.

Currently, the employer and employee each pay 6.2% up to $106,800, a level that rises with inflation each year. Mr. Obama didn't hint at specifics, though he did run in 2008 on a plan to raise the “tax max” by somewhere between two to eight percentage points for the top 3% of earners. But whatever he means, let's underscore what a dramatic departure from current tax policy Mr. Obama is so casually floating.

For starters, if the White House wants to lift the cap for high earners but doesn't upcap benefits for a corresponding increase, it would change Social Security from a quasi-insurance program, in which there is at least some connection between the taxes paid on wages in return for benefits, into a welfare transfer program.
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The
WSJ
editorial also cited a paper by Andrew Biggs:

Biggs calculates that this and other tax increases Mr. Obama favors would bring the top marginal rate to somewhere between 57% and 68% when factoring in state taxes. Tax levels like these haven't been seen since the 1970s.
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Dan Mitchell believes Obama is “cleverly avoiding specifics, largely because the potential tax hike could be enormous.” The above focuses mostly on the “employee” side of the payroll tax; the “employer” share of the tax is also 6.2 percent. So an increase in marginal tax rates “for affected workers could be as high as 12.4 percentage points.”
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For now, Republicans in Congress are keeping things in check.

In his 2012 State of the Union address, Obama offered his tax plans, “with scant detail,” the Associated Press reported. Obama “used the word ‘fair' seven times to describe tax increases aimed at groups the Occupy movement has branded as the ‘one percent' of Americans who are doing extremely well while the rest of society struggles,” the AP wrote. AP also reported at the end of January 2012 that Democrats “immediately made clear that there [would] be Senate votes this year on the subject.”
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In particular, Sen. Charles Schumer (D-NY) told the AP he was “relishing a push on ‘some kind of Romney rule, I mean Buffett rule.'” Obama has “embraced a Buffett rule, named for billionaire Warren Buffett, who has cited the inequity of laws that let him pay a lower tax rate than his secretary,” the AP noted:

Obama's tax proposals could “also be read as an opening gambit in what looms as a titanic partisan struggle to be waged after the November elections, perhaps in a lame duck session of Congress in December.”

James Pethokoukis of AEI did a little fact-checking on Obama's SOTU charges:

we need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes…. We don't begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich…. Tax reform should follow the Buffett rule: If you make more than a million dollars a year, you should not pay less than 30 percent in taxes.

“Are wealthier Americans really not paying their fair share?” Pethokoukis asked before addressing the president's allegations of inequity:

• The top 1 percent pays 37 percent of federal income taxes (and in 2009 earned 16.9 percent of adjusted gross income). The taxable
income of those in the 35 percent bracket was taxed at 49 percent, and Federal income tax revenues would be just $78 billion higher.

• The top 0.1 percent pays 17.1 percent of taxes and earns 7.8 percent of adjusted gross income.

• The average income tax rate for the top 1 percent is 24 percent (while the bottom 50 percent pay just 1.85 percent and only 2.3 percent of income taxes).

• If you took half of the annual income from every person making between $1 million and $10 million, it would only decrease the nation's debt by 1 percent.

• If you took every dollar from everyone making more than $10 million per year, it would only reduce the nation's deficit by 12 percent and the national debt by 2 percent.

• The IRS will give out roughly $110 billion in “refundable” tax credits this year to households that paid zero income taxes.

• In order to get the deficit to 2 percent by 2020—using Obama's budget baseline—it would take a 91 percent top rate by taxing just the rich.

Never mind that Obama and the progressive Democrats had run the national debt, by February 2012, up to $15.4 trillion and mounting—quickly. Statistically speaking, there is no way to make all of this add up—even using a very high-end, government-subsidized calculator.

Writing in late January 2012 in
The Hill
, Bernie Becker reported, “Some Democrats suggest their party will not move away from the new strategy in 2013, when real policymaking is expected to pick up steam, since eliminating tax breaks could be politically painful.”
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Both the occupant of the White House and the composition of the next Congress will decide in which direction America goes. If Obama is reelected and Democrats control the money, the path is clear.

O
N THE SECOND
anniversary of ObamaCare—“his signature legislative accomplishment”—the president made no mention of it in public. Just three days before the U.S. Supreme Court was to begin its hearing of oral arguments on the constitutionality of the law (March 26, 2012) Obama would not offer a “vigorous public defense of the law, holding events or even making public remarks in the lead-up to the Supreme Court case,” according to senior administration officials.
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The president's men and women were being less than completely honest. While it is true that Obama himself would not address the persistently unpopular measure, a well-orchestrated plan by high-profile Democratic operatives working in conjunction with the White House had already been launched to save ObamaCare. Under no circumstances would progressives and their fellow travelers ever give up on enacting single-payer health care legislation controlled by the federal government. Ensuring ObamaCare is implemented will be a signature policy effort for a second Obama term regardless of the Supreme Court decision.

The second day of the Supreme Court's review turned out to be surprisingly vigorous. But as former Clinton advisor Dick Morris pointed out on the Fox News Channel, even were ObamaCare to be struck down by the high court—or only the individual mandate be deemed unlawful—Obama
and progressives had readied their rejoinder with a “single-payer option.” In other words, an unconstitutional mandate that would have forced Americans to buy a product—health insurance—would be superseded by a tax on all Americans, similar to those levied as Social Security and Medicare taxes.
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The Center for American Progress, with very close ties to the White House, is the most important of dozens of progressive think tanks, as we mention in our other chapters. CAP has declared the individual mandate an “essential pillar of comprehensive health care reform,” though what progressive groups like CAP really mean by “reform” is socialized medicine (i.e., mandatory, government-controlled, single-payer health insurance).
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In a May 2008 report, CAP explained that socialized medicine is a “concept that has been embraced, demonized, and misunderstood since the early 20th century in the United States.” While the U.S. has “stood by and watched the entire industrialized world turn to varying forms of government-supported health care systems for all their citizens,” in the U.S., CAP's experts wrote, “similar policy changes” have been blocked because of fear.
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According to CAP, the U.S. version of Medicare is “best characterized as a single-payer system.”

The government provides Medicare to all citizens over the age of 65 (with various exemptions and exceptions) using public funding that reimburses public and private providers of medical services. Medicare is financed through general tax revenues, a 2.9 percent dedicated payroll tax split evenly between employers and workers, and monthly beneficiary premiums.
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What CAP neglected to mention is that Medicare, as it currently operates, has not eliminated private insurers, nor is it truly a single-payer plan. Medicare participants may purchase private insurance, known as Medigap, to take advantage of employer-based plans. Or they may opt into buying Medicare Parts C and/or D (i.e., the Medicare Advantage and Prescription Drug plans, respectively). Medicare Parts C and D are private plans, though contracted through the government's Medicare program, meaning that health care professionals are “paid with government funds that are allocated to private insurance providers.”
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