The Great Destroyer: Barack Obama's War on the Republic (30 page)

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Authors: David Limbaugh

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Obama also resurrected his populist anecdote that Warren Buffett’s secretary pays a higher tax rate than Buffett does. After repeating this gross distortion, he segued into his call for adopting the “Buffett rule,” which would require those making $1 million or more per year to pay at least 30 percent of their income in taxes. The
Wall Street Journal
eviscerated the proposal, declaring that “the entire Buffett Rule premise is false.”
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Similarly, Jamie Dimon, CEO of JPMorgan Chase, said he was mystified that successful people are being demonized. “I just don’t get it … . Most of us wage earners are paying 39.6 percent in taxes and another 12 percent in New York state and city taxes and we’re paying 50 percent of our income in taxes.”
30
Obama’s argument is the height of sophistry. CBO figures indicate that the top 1 percent of income earners already pay nearly 30 percent of their income in federal taxes.
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In addition, in the rare case where wealthy people pay a lower effective income tax rate, it’s a result either of lawful deductions (often charitable—not every deduction, as Obama would have you believe, is a loophole known only to silk-stocking lawyers),
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income derived from tax-free municipal bonds, or of capital gains and dividends on property they’ve acquired with money that has already been taxed.
Additionally, before the wealthy realize many of these gains, the businesses that produce them have already paid a corporate income tax rate of 35 percent (the second highest and soon to be the highest rate in the world). This means that Buffett, on much of this income, pays an effective rate of 50 percent (35 percent corporate plus 15 percent capital gains), which far exceeds what secretaries pay. Indeed, 99.4 percent of millionaires and billionaires pay far more in taxes in actual and relative terms than middle-and low-income earners, and for Obama to suggest otherwise is not only deeply deceitful but also damaging—because of the class envy he stokes—to the social fabric of this country. And if Obama is so eager for the rich to pay a 30 percent tax rate, he should accept John Boehner’s suggestion that he make a voluntary contribution to the Treasury, since he only paid a 20.5 percent tax rate on his 2011 household income of $789,674.
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A recent analysis by the Congressional Joint Committee on Taxation reports that the Buffett Rule would only raise an additional $47 billion in revenues over ten years—about one half of 1 percent of the amount Obama’s budget is projected to add to the national debt over that period of time.
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Nonetheless, if Mr. Buffett wants to pay higher income taxes (though his current battle with the IRS seems to imply otherwise), he is free to restructure his investments, expenses, and contributions to do so. Easier yet, he can just make voluntary payments to the federal Treasury.
The following chart, based on IRS data for 2009 (the most recent available figures), shows that those who earn (in terms of adjusted gross income) above $10 million paid an average of 26.3 percent of their income in federal taxes, and those who earned between $1 million and $10 million averaged over 29 percent. By contrast, those earning between $50,000 and $75,000 paid 11.6 percent.
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Source: IRS Publication 1304, Table 1.1
Adjusted Gross Income, 2009
Average Federal Income Tax Rate
$10,000 to $15,000
6.80%
$15,000 to $20,000
6.60%
$20,000 to $25,000
8.70%
$25,000 to $30,000
9.70%
$30,000 to $40,000
10.00%
$40,000 to $50,000
10.60%
$50,000 to $75,000
11.60%
$75,000 to $100,000
12.30%
$100,000 to $200,000
16.30%
$200,000 to $500,000
24.60%
$500,000 to $1,000,000
28.80%
$1,000,000 to $1,500,000
29.40%
$1,500,000 to $2,000,000
29.60%
$2,000,000 to $5,000,000
29.70%
$5,000,000 to $10,000,000
29.10%
$10,000,000 or more
26.30%
Average
17.80%
Only 1,470 households in America with earnings of $1 million or more paid no federal income tax,
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but that is surely because they took legal deductions including charitable donations. Obama, incidentally, has repeatedly called for severely curtailing the charitable deduction,
37
presumably to empower the government to play an even greater role in deciding who receives “philanthropic” redistributions.
At Osawatomie, Obama also falsely asserted that the tax cuts of 2001 and 2003 were “the most expensive tax cuts for the wealthy in history.” The Bush tax cuts were not only for the rich; they were progressive, with the lower and middle income brackets getting deeper cuts than the highest income brackets. Note that Obama did not denounce the Reagan tax cuts of the early eighties, which were not only bigger cuts, but entailed an unprogressive 25 percent cut for all income brackets; that’s because Obama can’t blame Reagan for the failure of his policies the way he blames Bush.
Numerous liberal commentators thought Obama had recovered some of his messianic magic at Osawatomie. “This was Obama’s best speech in a very, very long time, and it showed that he and his political people have finally figured out how to express the new, quasi-populist mood in this country in a way that sounds utterly majoritarian and unthreatening—and that backs the GOP into the corner of defending things that most Americans find indefensible,” raved the
Daily Beast
‘s Michael Tomasky.
38
Ron Fournier of the
National Journal
commented, “President Obama’s ‘fair shot’ address Tuesday may be remembered as one of his best, a searing and historically poignant account of the greatest challenge of the American experiment: How do we give every citizen, rich or poor, a path to the good life?”
39
Yet despite their best hopes, many liberals realized that even if Obama recaptured some of his rhetorical rhythm with his pugilistic speech, he offered no new solutions.
USA Today
admitted that “Obama’s middle-class speech falls short of a cure,”
40
and the
Washington Post
conceded, “His policy prescriptions, at least so far, don’t match the gravity of the problem he describes.”
41
BOEING: “RIDICULOUS” AND “LEGALLY FRIVOLOUS”
Having received orders for nearly a thousand 787 Dreamliner aircraft, Boeing Corporation began building a new plant in Charleston, South Carolina, to assemble the planes. The company poured millions of dollars into the facility, which was nearing completion in March 2011 when the National Labor Relations Board (NLRB) filed a complaint against Boeing alleging it had chosen to build the plant in South Carolina—a right-to-work state where employees cannot be forced to join a union or pay union dues—to retaliate against union employees in its plant in Everett, Washington.
This would be a new plant—a new investment—and no workers in Washington would lose their jobs because of it. That, apparently, was irrelevant to the Obama administration, which injected the federal government into a private business matter within a state jurisdiction, and in so doing, risked destroying job creation when it was sorely needed—all because it favors unions above American workers and the economy.
The White House tried to distance itself from the Boeing affair, attributing the decision solely to the NLRB. But South Carolina Governor Nikki Haley knew better, demanding an explanation why Obama “is allowing unelected bureaucrats to come in and do the unions’ dirty work on the backs of businesses…. It’s hurting the jobs in South Carolina and every other right-to-work state. He owes us an answer.”
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The government’s case was “ridiculous” and “legally frivolous,” said Haley, who accused the administration of “bullying” and “kick[ing] around a private company, picking and choosing where it operates.”
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Congressional Republicans weren’t buying Obama’s phony denials either, claiming the decision was a ploy to appeal to his union base.
Although the NLRB is an independent agency, Obama has helped to stack it with pro-union recess appointees, including Craig Becker, the associate general counsel of the Service Employees International Union, and acting NLRB general counsel and career NLRB attorney Lafe Solomon. “It is very important to President Obama because unions and their workers comprise a big piece of the volunteer core of the Democratic Party and a lot of money besides,” noted University of Virginia political science professor Larry Sabato. “The stronger unions are, the more workers and the more money they’re going to put into Obama’s campaign and all the Democratic campaigns.”
Numerous Senate and House Republicans wrote a letter to Obama demanding he withdraw Solomon’s nomination. They also pointed out that Obama’s militant, pro-union policies, including the Boeing incident, were contradicting his smiley-faced “win the future” campaign. “If the NLRB prevails, it will only encourage companies to make their investments in foreign nations, moving jobs and economic growth overseas,” they wrote. “America will not win the future if Washington penalizes workers in states that have discovered winning economic strategies.”
45
Senator Jim DeMint was outraged by the administration’s assault on Boeing, saying, “It’s clearly outside of the authority of this federal government to be threatening and bullying and trying to intimidate companies like Boeing who should have the freedom to locate their plants anywhere they want. It’s intimidation.”
46
After months of harassing the company and wasting untold sums of money, the NLRB dropped the case upon the request of the machinist union, which won major concessions from Boeing. Company spokesman Tim Neal declared, “We have maintained from the outset that the complaint was without merit and that the best course of action would be for it to be dropped. Today that happened. Boeing is grateful for the overwhelming support we received from across the country to vigorously contest this complaint and support the legitimate rights of businesses to make business decisions.”
But tenacious House Oversight Committee Chairman Darrell Issa, who had issued subpoenas to the NLRB for documents related to its Boeing complaint, was not going to go softly into the night. “NLRB’s decision to end its action against Boeing does not end the Oversight Committee’s investigation into the agency,” he announced. “NLRB’s record of rogue action and lack of transparency with the public and Congress in this case—and in others—has raised serious questions that remain unanswered.” Issa stated that he was pursuing the inquiry because “businesses must be free to conduct operations wherever in this country they can be most competitive.”
47
NLRB attorneys had stonewalled on the documents request, asserting they couldn’t release the papers because the matter was under judicial review. But now that the NLRB had dismissed the action, Issa said, he expected “full compliance from the NLRB.”
48
He realized that absent oversight and accountability, the administration would continue intimidating businesses on behalf of its union friends with impunity.
THE CARD CHECK AMBUSH
Where the Obama administration cannot empower unions legislatively, it is trying to do so administratively.
Congressional Democrats tried and failed to pass the “Employee Free Choice Act,” an Orwellian euphemism for a law (also called card check) that would intimidate workers into joining unions by eliminating secret ballot voting for unionization.
49
So the NLRB is trying to achieve the same result through a rule allowing for “ambush” elections. These would stack the deck in votes on union membership by giving employers only ten days to make their case to employees against forming a union.
50
Also by administrative fiat, as previously noted, the agency is considering the establishment of micro-unions, called “mini-unions,” that would balkanize companies and force employers to negotiate with numerous groups, which would both weaken their negotiating position and impose additional economic and manpower burdens.
In addition, the National Mediation Board is pursuing a rule change mandating that a vote for unionization would succeed on a simple majority of employees voting, whereas the old rule required an actual majority of all employees whether they voted or not. This change would greatly benefit Big Labor in its campaign to unionize Delta, the only remaining non-union holdout among the big airlines.
All these initiatives, as well as those documented earlier in this chapter, have helped Obama shore up his base; but they all, if put into effect, would have a chilling effect on job creation—and individual liberty.
51
“THE NEXT THING YOU KNOW, OSHA’S AT YOUR DOOR”
The NLRB circulated an internal memorandum on May 10 outlining yet another scheme that would significantly enhance the power of unions over employers. The agency was seeking to change the existing rule that allows businesses to make major business decisions, such as relocating their facilities, without having to confer with the union, provided the changes aren’t implemented for the main purpose of reducing labor costs.
Companies are not required to negotiate with unions on their business strategies, but the memo recommends changing that. Richard Siegel, the NLRB’s associate general counsel, requested in the memo that the agency’s regional directors flag business-relocation cases. The board, he said, was considering “whether to propose a new standard” in such cases to compel businesses to produce detailed economic justifications for their decisions to relocate and allow unions to bargain on them as a condition of relocating.
Disturbingly, such a goal was neither contemplated nor required by the National Labor Relations Act and is clearly an administrative overreach in pursuit of a policy goal. But, said Sherk and von Spakovsky, “the board wants business decisions made to benefit unions, not the shareholders, owners and other employees of a business, or the overall economy. The Boeing charges are evidently just a first step toward that goal.”
53
There are copious other examples of the administration tilting the playing field in favor of unions. Don Todd, a former Department of Labor chief, says the White House is intent on shaming companies into unionizing. “In a worst-case scenario, your union organizer comes to you, offers you a deal to unionize, you say, ‘no,’ and the next thing you know, OSHA’s at your door,” he explains. “Then Wage and Hour show up, and they want to publicize it. They always find something wrong— it’s like with bed-checks in boot camp in the army.” Indeed, the administration’s solicitor of labor, M. Patricia Smith, reportedly engaged in similar corporate intimidation practices when she worked at New York’s Department of Labor, where she “set up a neighborhood watch-style system for monitoring and investigating wage and hour violations by companies.”
54
The administration has also marshaled the cooperation of the EPA to swell union ranks by tightening “green” emission standards to push independent truckers into the Teamsters Union, which happened to have donated more than $2 million to Democratic candidates in the 2008 and 2010 elections. The truckers could technically still operate under the old standards because the new ones were not yet formal rules, but if the major port authorities won’t admit them unless they meet the new green standards, they would be forced to join a union unless they could somehow afford to buy new green trucks.
55
There was little doubt the union was behind these stricter standards. Teamsters president James P. Hoffa wrote in a blog for the
Huffington Post
, “Right now, my union, environmental groups and L.A. Mayor Antonio Villaraigosa are battling industry polluters to protect a truck replacement program at the Port of Los Angeles that has reduced deadly emissions by close to 80 percent.”
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