As expected, President Barack Obama rolled out his budget proposal for FY 2013, which, as we noted yesterday, comes with a $1.33 trillion budget deficit. As you can imagine, there is a lot to parse through it the proposal, which has been all but declared dead-on-arrival in Congress.
Some of the budget proposals are familiar. President Obama is once again pushing tax hikes on individuals earning more than $250,000 — more than the millionaires and billionaires he so frequently targets. James Pethokoukis has a run down of the tax hikes in the budget:
Obama’s new budget isn’t about economic growth or cutting debt or creating a “built to last” economy. The Obama campaign is built around the idea of reducing inequality. So in his budget, Obama takes the populist whip to the wealthy and to business:
1. The top income rate would be raised to 39.6 percent vs. 35 percent today.
2. Under the “Buffett rule,” no household making over $1 million annually would pay less than 30 percent of their income in taxes.
3. Between now the end of a second Obama term, Obama proposes $707 billion in “net deficit reduction proposals.” Of that amount, only 16 percent is spending cuts.
4. The majority of small business profits would be taxed at 39.6 percent vs. 35 percent today.
5. The capital gains rate would rise to 25.0 percent (including the Obamacare surtax and deduction phase out) from 15 percent today.
6. The double-tax on corporate profits (including dividends) would increase to 64 percent based on the statutory corporate tax rate (58 percent using the effective tax rate), easily the highest among advanced economies.
President Barack Obama made his pitch yesterday to jack up tax rates on high-income earners and bring a host of new fees that will reach across income groups — offering $3 in tax hikes for every $1 in spending cuts:
Drawing clear battle lines for next year’s elections, a combative President Barack Obama on Monday demanded that the richest Americans pay higher taxes to help cut soaring U.S. deficits by more than $3 trillion. He promised to veto any effort by congressional Republicans to cut Medicare benefits for the elderly without raising taxes as well.
“This is not class warfare. It’s math,” Obama declared, anticipating Republican criticism, which was quick in coming.
The president’s proposal, which he challenged Congress to approve, would predominantly hit upper-income taxpayers and would also target tax loopholes and subsidies used by many larger corporations. It would spare retirees from any changes in Social Security, and it would direct most of the cuts in Medicare spending to health care providers, not beneficiaries.
Benefit programs wouldn’t be unscathed. Obama’s plan would reduce spending for those, including Medicare and Medicaid, by $580 billion. But with Republicans calling for massive cuts in entitlement programs, Obama said he would veto any legislation that cut Medicare benefits without raising new revenue.
Podcast: State of the Union, Bank Fees, Spending Freeze, War on Terror, Gay Equality, Guests: Andisheh Nouraee & Jeff Scott
House Speaker John Boehner (R-OH) struck a populist tone in a very pointed response to the Obama administration’s latest delay of the employer mandate.
“Once again, the president is giving a break to corporations while individuals and families are still stuck under the mandates of his health care law. And, once again, the president is rewriting law on a whim,” Boehner said in a statement.
The employer mandate is a provision of Obamacare that originally required businesses with 50 or more full-time employees, defined as someone who works at least 30 hours a week, to offer health insurance benefits or face a punitive, $2,000 per worker tax. The administration delayed enforcement of the provision last year, citing concerns from the business community.
The administration announced late yesterday afternoon that delay will enforcement of the provision for businesses with 50 to 99 full-time employees until the beginning of 2016.
The individual mandate coerces Americans to purchase coverage or face a tax. Those who fail to purchase health insurance by March 31, 2014 will face a tax of $95 or 1% of their gross taxable income, which ever is greater. The individual mandate tax will increase to $695 or 2.5% of gross income by 2016.
Social Security faces a long-term funding shortfall of $23.1 trillion, according to the most recent report from the program’s trustees, up nearly $3 trillion from last year. Like other entitlements, the program — expected to consume 6.8% of the economy by 2038 — is in dire need of reform to ensure its fiscal sustainability.
But Leftists in Congress are in denial about the fiscal problems with Social Security. Instead of reforming the program to ensure that it’s around for future generations, they want to expand it.
In a speech from the Senate floor on Monday, Sen. Elizabeth Warren (D-MA) endorsed legislation sponsored by Sen. Tom Harkin (D-IA) to expand the fiscally shaky program and warned of, what she called, a “retirement crisis.”
“A generation ago, middle-class families were able to put away enough money during their working years to make it through their later years with dignity. On average, they saved about 11% of their take home pay while working,” Warren, who has been floated as a potential presidential candidate in 2016, told her colleagues.”
“Many paid off their homes, got rid of all their debts, and retired with strong pensions from their employers. And where pensions, savings, and investments fell short, they could rely on Social Security to make up the difference,” she said. “That was the story a generation ago, but since that time, the retirement landscape has shifted dramatically against our families.”
Much is being made of this idea called ”Libertarian Populism” and its perceived value as a winning political strategy. The problem is, few seem to know what those words really mean. As such, a range of politicians and policies have incorrectly been grafted onto specific words that have specific meanings.
I’ve silently watched as this LibPop movement(?) has unfolded; see this litany of articles at this link roundup provided by Reason Magazine. The term seems to have been coined at a book forum for Tim Carney at the Cato Institute. In its next iteration, Ross Douthat succinctly defined Libertarian Populism as:
“A strain of thought that moves from the standard grassroots conservative view of Washington as an inherently corrupt realm of special interests and self-dealing elites to a broader skepticism of ‘bigness’ in all its forms (corporate as well as governmental), that regards the Bush era as an object lesson in everything that can go wrong (at home and abroad) when conservatives set aside this skepticism, and that sees the cause of limited government as a means not only to safeguarding liberty, but to unwinding webs of privilege and rent-seeking and enabling true equality of opportunity as well.”
In case you haven’t noticed, there is a big debate about the future of the conservative movement and the Republican Party. On one side you have the status quo — those who continue to grow government and get the United States in perilous military engagements overseas — and on the other, there is a new brand of fusionism that is gaining in popularity.
Ben Domenech, editor of The Transom, has dubbed this new fusionism as “libertarian populism,” which is part of the debate over conservative reform. In a response to a recent critique by Ross Douthat, Domenech outlines the tenets of libertarian populism and explains that it presents a path for limited government advocates to sell ideas to voters:
The appeal of libertarian populism is that it refuses to cede the philosophical battle to the side of big government – and the permanence of a broken welfare/regulatory state and convoluted tax code – before the argument is even joined. Instead, libertarian populism can and should be cast in the proper light: the sober reality of our dire fiscal situation; the abject brokenness of our welfare state; tax, education and regulatory systems that retard economic opportunity, punish success, hurt the poor and middle class, and reward cronies; and a federal government that wants control over almost every aspect of our lives, from the raw milk we drink to the lightbulbs we use and the toilets we flush.
As noted yesterday, President Obama has made it clear that he intends to use Bain Capital as part of his campaign against Mitt Romney. His team no doubt hopes that they can reignite the same populist craze that put him in the White House by tearing down private equity in the process, despite the fact that he takes their money (a shocker, I know) and took economic advice from Jon Corzine, former head of MF Global.
But a new poll from Rasmussen shows that the attacks aren’t working, and may indeed hurt Obama more than it helps him:
Democrats have begun criticizing Mitt Romney’s business record, but a plurality of voters view the Republican’s business past as a positive.
A new Rasmussen Reports national telephone survey finds that 44% of Likely U.S. Voters believe that Romney’s track record in business is primarily a reason to vote for him. Thirty-three percent (33%) see his business career as chiefly a reason to vote against him. Twenty-two percent (22%) are undecided.
While the political right has a well-earned reputation for favoring military intervention abroad, the truth is that the urge to spend blood and treasure in foreign adventures extends far beyond the hawks of the Republican Party. The causes are often quite different, but the proposed solution is the same - sending American soldiers to some far-off land, whether in support of supposed American interests, or in order to fight some alleged injustice.
Enter the latest Internet meme - Joseph Kony. According to a video produced by a group called Invisible Children circulating around the Internet (I won’t link to it, but it’s easy to find), Kony is a horrific Ugandan terrorist who uses child soldiers and commits all manner of atrocities. Now, the underlying facts seem to be sound - it’s true that Kony is a terrible man. But there are serious questions about the nature of the Invisible Children charity, and the campaign they are running.
Furthermore, there are significant problems with the whole tactic. It’s a dangerous proposition to send troops and intervene in a foreign nation without deeply understanding the issues at hand. The idea that we would ever make such a decision based on a viral web video is truly scary. And, most crucially, it has yet to be shown in any way that our interests are at stake. Myself and other non-interventionists shudder at the idea of committing troops simply as an act of do-gooderism.
It is a dangerous myth that American forces can, or should, be used as world police to fight every bad guy. If there is one thing humanity has shown, it is excellent at producing monsters - and quixotic good guys who think they can stop them. If one seeks to rid the world of all villains one would need an army of millions and untold trillions of dollars that simply do not exist. We must stand strong and reject the call to take action abroad in all but the most dire circumstances, and only then as a last resort.
During his State of the Union address, President Barack Obama telegraphed his intent to wage class warfare against the rich, hoping to revive the populism that helped put him in office at the height of the financial crisis.
Obama once again pushed for the so-called “Buffett Rule” — after Warren Buffett, who pays a higher tax rate than his secretary. The rule would tax individuals making over $1 million at a higher rate, out of “fairness.”
Writing at the Wall Street Journal, economist Stephen Moore asks President Obama about “fairness,” taxes, and his economic policies that discourage success:
President Obama has frequently justified his policies—and judged their outcomes—in terms of equity, justice and fairness. That raises an obvious question: How does our existing system—and his own policy record—stack up according to those criteria?
Is it fair that the richest 1% of Americans pay nearly 40% of all federal income taxes, and the richest 10% pay two-thirds of the tax?
Is it fair that the richest 10% of Americans shoulder a higher share of their country’s income-tax burden than do the richest 10% in every other industrialized nation, including socialist Sweden?
Is it fair that American corporations pay the highest statutory corporate tax rate of all other industrialized nations but Japan, which cuts its rate on April 1?
Is it fair that President Obama sends his two daughters to elite private schools that are safer, better-run, and produce higher test scores than public schools in Washington, D.C.—but millions of other families across America are denied that free choice and forced to send their kids to rotten schools?