One More Thing from the Debate

At the end of President Obama’s opening statement at the debate on Wednesday night, the President said something that deserves ridicule should be further examined. Don’t worry. I will try to be brief.

Now, it ultimately is going to be up to the voters, to you, which path we should take. Are we going to double down on the top-down economic policies that helped to get us into this mess, or do we embrace a new economic patriotism that says, America does best when the middle class does best? And I’m looking forward to having that debate.

There is so much wrong there. That a POTUS could say something so horribly wrong is almost enough to make a grown man cry. But I promised to try to be brief.

The President mentions “top-down economic policies that helped to get us into this mess” as if he were some how opposed to them. The thing is, he is not. He advocates almost daily for more of them. The solution to top-down economic policy failures is not more top-down economic policy. The solution is repealing most if not all top-down economic policy and getting out of the way of people making bottom-up solutions that actually work. 

President Obama mentions “a new economic patriotism” which he claims says “America does best when the middle class does best.” Do not let anyone lie to you by saying Obama is not trying to engage in class warfare. Because a foundation for economic class division and conflict is exactly what he is laying down with comments like that.

On top of which, he is also trying to establish a notion that agreeing with his economic plan is patriotic. Which means disagreeing with him would be unpatriotic. Anyone who does not see a problem with that please raise your hand so I can slap you point you to Animal Farm and the concept of the “cult of personality.”

The real problem here is that President Obama says stuff like this all the time, and people are still taking him seriously. Why? That is the part I do not get. Why is this man still a serious contender for the office? His policies are failures, and his political philosophy is pathetically uninformed and astonishingly shallow. Yes, I know, Romney is not a whole lot better, but seriously, why is Obama still getting so much support? At the national level, only Vice-President Joe Biden more regularly says stupid things. That so many people want Obama to continue being POTUS is frightening and sad.

How does that old saying go? None are so blind as those who will not see.

See? I kept it brief.

4 Responses to “One More Thing from the Debate”

  1. I’m not sure I see the problem with that statement. In the 1970’s we had stagflation – strong consumption with weak businesses. The way to solve that problem was with supply-side economics – tax cuts for the wealthy to create more investment capital, deregulation, and weakening organized labor. This is what Mitt Romney is advocating.

    Today, we are in the opposite situation. The wealthy are doing very well, and we have weak middle class consumption. The way to solve that problem is by implementing demand-side economics. Raise taxes on the wealthy to help stimulate demand, and encourage more labor organization, etc. This is what Obama is advocating.

    BTW, if raising the top tax rate is class warfare, then what is cutting the top tax rate called?

    • You say the wealthy are doing very well. Who are the wealthy? “Raise taxes on the wealthy to help stimulate demand,” you say. How does taking money away from successful people stimulate demand? And demand for what? “Encourage more labor organization,” you say. To what end?

      Some wealthy people are doing well. Some people who might be considered wealthy are struggling to keep their businesses alive.

      How much demand is enough? The government has meddled in these things for many decades now, and it has yet to get things right. Why should I believe this time they will? Every time government tries to prop things up, we end up with terrible economic downturns. Why can we not stop meddling from the government and leave the market to determine its own levels?

      Right now state and city governments are fighting with unions because the unions have brokered deals that are bankrupting the governments. Why would more unionization be a good thing?

      “BTW, if raising the top tax rate is class warfare, then what is cutting the top tax rate called?” It’s called getting out of the way. Which government should do more not less. If you are concerned about the wealthy (whoever they are) paying more, I have another post that covered that. I will repeat the relevant portion here for you.

      What is 10% of 20,000? Answer: 2000. What is 10% of 200,000? Answer: 20,000. What is 10% of 2,000,000? Answer: 200,000. And 200,000 is more than 2000. In fact is it 100 times more. So if the person making $20,000 is taxed at 10%, and the person making $2,000,000 is taxed at 10%, then the person making $2,000,000 is already paying more. Ta-da! The wealthy pay more, and the tax code remains actually fair. Problem solved.

  2. If revenues raised from a higher tax rate on the wealthiest were used on infrastructure, it would stimulate demand. If you aren’t aware that the wealthy are doing incredibly well, take a look at this:

    http://cbo.gov/publication/42729

    Most of the productivity gains of the last 30 years have gone to the “successful people”. Had those gains gone to everyone (as they did pre-1970) the middle class wouldn’t be bogged down with debt and the economy would be stronger.

    If you’ve read about the conditions that existed right before the Great Depression, they look very similar to the conditions that existed before the start of this recession – low tax rates, income inequality, high household debt levels, low union membership, etc.

    It’s all about balance. When the rich have too much of the pie, demand suffers. When they don’t have enough of the pie, businesses suffer. Right now – from an economic perspective, not a fairness perspective – they have too much. For example, which one of the following hypothetical actions would help the economy more right now?

    1. Waiving all middle class debt.
    2. Doubling the net worth of every millionaire.

    Option 1 would result in immediate demand and cause the economy to get back to potential – which would create millions of jobs.

    Option 2 would cause the stock and bond markets to become even more overvalued, but add little to demand and create very few jobs.

    Why unions? Because individuals have very little power when it comes to negotiating better pay. Unions level the playing field. As far as public sector unions are concerned, I did an analysis of public sector union compensation at the federal level a while back. It turns out that they only add 0.74% to the budget.

    http://powerlineiswrong.wordpress.com/2012/08/21/public-sector-unions-problem-or-scapegoat/

    As to your comment about a flat tax, I would support it if there was less income inequality. Since inequality is very high, I think we need a more progressive income tax. Again, not because I want to be “fair” – I’m only looking at making the economy healthier.

    • “If revenues raised from a higher tax rate on the wealthiest,” assumes a higher tax rate guarantees higher revenue and still leaves undefined who are the wealthy. “… were used on infrastructure, it would stimulate demand.” Again, demand for what? And, assuming for the sake of argument your assertion is correct, wouldn’t revenue from other sources spent on infrastructure be just as effective in stimulating demand?

      “If you aren’t aware that the wealthy are doing incredibly well…” So is it your assertion then that there are no small business owners struggling to keep their businesses operating?

      “If you’ve read about the conditions that existed right before the Great Depression, they look very similar to the conditions that existed before the start of this recession – low tax rates, income inequality, high household debt levels, low union membership, etc.” And plenty of easy credit and government meddling in the economy. Notably, for all the meddling done by Hoover and Roosevelt after 1929, the Great Depression still lasted into the 1940s. Not exactly a good advertisement for government meddling in the economy.

      “When the rich have too much of the pie, demand suffers.” Who are the rich? Too much of the pie according to whom? Demand for what? “Right now – from an economic perspective, not a fairness perspective – they have too much.” According to what criteria?

      “For example, which one of the following hypothetical actions would help the economy more right now? 1. Waiving all middle class debt. 2. Doubling the net worth of every millionaire.” Neither one would help the economy right now.

      “Option 1 would result in immediate demand and cause the economy to get back to potential – which would create millions of jobs.” Demand for what? Potential as determined by whom? Also, it would in fact create the expectation of government forgiving debt, which would contribute to more overspending, not less.

      “Why unions? Because individuals have very little power when it comes to negotiating better pay. Unions level the playing field.” Perhaps. One thing I know for sure, they make union bosses wealthy and tend to make operating efficiently very difficult. Even Rahm Emanuel knows about that now.

      “I did an analysis of public sector union compensation at the federal level…” That is nice, but does not alter the fact of multiple city and state governments facing bankruptcy in large part due to deals they made with unions.

      “As to your comment about a flat tax, I would support it if there was less income inequality. Since inequality is very high, I think we need a more progressive income tax.” What does the one have to do with the other? Why is punishing the economically successful good for the economy? Why is taking money away from the economy to waste and sometimes just lose through government bureaucracy good for the economy?

      “It’s all about balance.” Then quit having the government trying to tip the scales. Leave the market alone. It will find its own balance.

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