Saturday, February 21, 2009

Prescription for disaster: Obama promises tax hikes in the teeth of a recession

The Washington Post reports that tax hikes are on the way. The hikes will directly impact the most productive members of the economy -- the despicable "rich" -- by extracting funds from mostly small business owners. Those funds would otherwise go towards hiring, capital investment or R&D. But perhaps government knows best.

And who are the contemptible "rich"? Probably any household earning over $120,000.

Remember when candidate Obama first defined the rich for us? It was his way of introducing the American public to the Alinsky playbook, so he set the bar high. The rich comprised households making over $250,000 a year, according to Obama.

Then Joe Biden, who slipped away from his handlers long enough to blurt out additional details, disclosed that the rich were actually folks making over $175,000.

Finally, Bill Richardson, at the time a potential member of the "Team of Tax Cheats", disclosed that the real number was $120,000.

Never mind that a household making $120,000 in, say, Manhattan is very different from one in Lincoln, Nebraska. In the city, studio apartments can run over $500,000 with rentals of $3,500 a month.

Conversely, rentals in Lincoln run about $650 a month.

Defining wealth through income alone is therefore a fruitless exercise.

Nonetheless, Obama is executing plays right out of the Alinsky punch-list, pitting classes against one another even though there are no static class structures in America.

The Tale of Page and Brin

Eleven years ago, Larry Page and Sergey Brin were students at Stanford. They were then members of Obama's oppressed "poor".

Just nine years later, Page and Brin were worth a combined $36 billion as the founders of Google.

What economic novices like Obama can't or won't understand is that wealth disparity is wonderful. It allowed Page and Brin to create, achieve, construct a company from whole cloth, employ thousands and produce hundreds of other millionaires.

Now, of course, they're among the vile rich.

Take more money from the business owners, you get less venture capital, less investment, less business growth and -- ultimately -- more malaise.

Malaise: the watchword of the Carter era

Remember the tax rates under the Carter administration?

Carter's tax rates "spread the wealth" by confiscating 70% of all earnings over $203K.

At a 70% confiscation rate, many were motivated to demand cash or barter, hide income, cheat or operate in the black-market.

Some business owners closed up shop, deciding they'd had enough. Others stopped growing their businesses because of diminishing returns.

Even if you earned only $47K, Carter wanted half.

As for the results? In 1980 Time magazine put it this way.

...inflation is not only a frightening economic problem but is rapidly becoming Carter's most dangerous political liability as well... In the past few weeks, however, a new side of inflationary psychology has begun to show itself among businessmen and investors: plain, old-fashioned fear. Executives talk of inflation rates going to 20% or more in the next few months, creating an environment in which reasonable planning is impossible. The jitters have unhinged the investment markets. As recently as mid-February, stocks were widely considered a hedge against inflation and thought to be grossly undervalued. The Dow Jones industrial average hit a high of 904 on Feb. 13. But since then it has tumbled 92 points, to 812; nine points of the decline came last week. The average is now lower than it was 16 years ago.

Sound familiar? Maybe there's some validity to the contention that the recent stock market turmoil can be termed an "Obama Panic". That is, investors anticipating a disastrous set of Carter-esque policies that send the economy into a tailspin and respond accordingly.

What were the results of Carter's "wealth-spreading" policies?

Inflation rose dramatically, nearly touching 15% by 1980.

Unemployment rose to 11% shortly thereafter. The economy didn't return to health until President Reagan spearheaded lower tax rates.

The history is clear: oppressive tax rates for the "rich" -- really, just productive business-people small and large -- are disastrous for employment.

You are among the casualties.

In October, Amil Amani at the American Thinker wrote, "Obama's economic plan is a recipe for long-lasting disaster. Keep in mind that wrecking anything, as opposed to building things, requires very little time and effort. Obama's plan is deceptively attractive, while in reality it is a huge wrecking ball that will capsize the already listing ship of our economy..."

And The Wall Street Journal: "Business Finally Fights Back - The business community is back in politics. After years of contented political gridlock, American companies are now officially horrified at what an all-Democratic Washington intends to inflict on the U.S. economy. The Chamber is throwing its extensive resources at denying the left a filibuster-proof Senate. In doing so, it has stuck its finger in the Democratic leadership's beehive, and is facing retribution..."

It is all coming to pass, right out of the Alinsky punch-list.

Of course, this is Barack Obama's first real job, so some growing pains are to be expected.

Batten down the hatches, my friends.

Hat tip: Wizbang. Thanks!

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