“Hope and Change”: Rhetorically Proximate to Higher Taxes
In the waning days of the Obama Dynasty, liberals have been rolling out graph after graph purporting to offer voters ironclad proof of one crackpot Keynesian notion after another.
Last year Nancy Pelosi’s office posted a risible graph showing that President Obama had increased the debt far less than George W. Bush and all other Republican presidents over the last thirty years. It was later revealed that Pelosi’s office had mistakenly counted spending in Obama’s first year as Bush’s, and that based on debt as a percentage of GDP—the more relevant measure—Obama was the most profligate spender of the lot. Fact-checking website PolitiFact awarded the graph a “Pants on Fire” rating, and for a while we didn’t hear any more crowing about Republicans outspending Democrats.
Last week the meme was resurrected via a surprising graph showing that in his three-and-a-half years in office, Obama halted and even reversed the growth in federal deficits, whereas recent presidents—especially Bush—increased it. Within days, John Lott, Ann Coulter, and other commentators tore apart this graph by pointing out that it insanely counted all of Obama’s first-year spending as Bush’s, this time intentionally.
In addition, Bush, Obama, and Congress blew up federal spending in FY 2009 due to the banking crisis. Yet Obama continued spending at that level long after the financial panic ended, thus turning exorbitant, unprecedented spending levels into the new baseline. Rex Nutting, author of the MarketWatch piece that caused a ruckus last week, offered the typical excuse for Obama: he had to engage in wild spending to stave off a looming depression. So why didn’t Obama slash spending after the crisis was over? If Obama is such a warrior for fiscal restraint, why don’t his projected budgets to 2020 rein in federal spending to pre-2008 levels?
Since liberals can’t win arguments by presenting actual data, their newest gambit appears to be presenting “hypothetical” graphs that explain why the economy thrives under liberals and weakens under conservatives.
The latest graph floating around the Web shows how progressive taxes stimulate growth, whereas regressive or flat taxes slow it. According to the authors’ explanation, no one wants to be taxed at an exorbitant rate, so business owners will reinvest money into their companies in excess of what they need to live on, thus creating jobs. In contrast, under a lower rate, business owners sit around on their money, because they have no fear of being outrageously taxed.
There’s so much wrong with this absurd graph that it’s hard to know where to start. First of all, it completely ignores corporate taxes, which eat up reinvestment funds and keep them from being returned to the company. Instead they get diverted to pay for things like fortune tellers at federal conferences in Las Vegas.
For another thing, the graph implies that companies are taxed based on net profit, when in fact they are taxed based on total revenue. Such a policy creates a disincentive to reinvest and grow, since growth means that more of a company’s revenue will eventually be confiscated by the government no matter what the company does with it.
In addition, most companies do reinvest most of their profit, in order to stay afloat, so raising taxes merely hinders their ability to carry out that action.
Moreover, progressive tax rates reduce the incentive to go into business at all, given the likelihood that a successful businessman can soon expect to become the target of ravenous politicians.
Also, people who are ambitious enough to start businesses generally don’t sit around on their money and brag about how rich they are; they usually start more companies and get richer. At any given point in time, most rich people’s money is tied up in investments, not wound around cardboard rolls to be used as toilet paper.
Also, to the extent that companies are sitting on their money, it’s because of the regulatory uncertainty the Obama administration is sowing regarding tax rates and the health care industry.
Also, even if all of the above weren’t true, it’s still not the government’s business to tell companies how much of their income to keep and how much to reinvest.
Other than that, the graph is spot-on!
In a speech last week defending his attacks on Bain Capital, Obama implied that in his private sector career Mitt Romney was trying only to make a profit and didn’t care about creating jobs.
Newsflash for liberals: The purpose of starting a business is not to create jobs. No one invests inordinate amounts of time and risks enormous sums of capital for the privilege of someday being able to pay strangers’ salaries.
The purpose of starting a business is to make money. To make money, you need employees, but you don’t try to maximize the number of employees in your hire or their remuneration rates; in fact, you try to minimize both, while still getting the same amount of work done. (The opposite is true if you work for the federal government, in which case you try to maximize the number of employees and the size of their salaries, and minimize the amount of work they do.)
Jobs are an after-effect, a by-product of wealth creation—an important one, but not something that precedes revenue generation. I promise you, “job creation” doesn’t even make the top 100 goals an entrepreneur sets for himself when starting a new company. (It did, however, make the top 5 list for Obama’s 2009 stimulus bill, right after paying off his campaign donors, subsidizing unions, funding ACORN, and enriching incompetent solar panel companies.)
To paraphrase MSNBC’s Chris Hayes, President of the Involuntary Veterans’ Modesty Association: Democrats’ airy-fairy economic theories make me uncomfortable, because they are rhetorically proximate to skyrocketing taxes and a federal takeover of the economy.
In their desperation to get Obama reelected, Democrats have proven that they will try anything to fool Americans into accepting higher taxes, including pushing pseudo-economic rationalizations for why sky-high tax rates are Miracle-Gro for the economy.
Previously published in modified form at Red Alert Politics