I spent much of Friday grinning.
My grin started at the gym when I picked up the Wall Street Journal to read on the stair stepper. I had heard Thursday that President Obama had release his budget plan, but details — even the broad stokes — hadn’t reached my consciousness.
But, the WSJ laid it out.
The man is proposing to keep his campaign promises.To do what we elected him to do.
Or, as the WSJ put it:
President Barack Obama signaled a historic shift in the ideological direction of the U.S. economic policy Thursday with a budget that proposed to expand government activism, raise taxes on affluent families, and draw a line under “an era of profound irresponsibility.”
…The Obama administration is seeing to reorder the federal government to provide national health care, steer energy use away from oil and gas and boost the federal role in education.
And then come the details. A $630 billion start toward national health insurance, de-privatization and expansion of student loans, and tax increases for those who can afford to contribute more because their household income is more than $250,000. And on and on and on.
The President pulled no punches in what he has submitted to Congress. The WSJ went on:
And whereas President Ronald Regan famously declared government to be problem, not the solution, Mr. Obama asserts, “government must lead.” Mr. Reagan believed tax cuts for the rich would “trickle down” to the poor, Mr. Obama’s budget argues that the view has “been discredited once and for all” and proposes a “trickle up” agenda — shifting income to poor from rich.
The reaction from the professional cynics and manipulators has been a firestorm of name calling (“socialist”) and timid damning with faint praise (“well yes, but it’s too fast”). Fivethirtyeight.com nailed it:
BREAKING: Press Corps Incredulous That Obama Budget Reflects Campaign Promises
It felt like a primal whine from rich reporters. Hasn’t Barack Obama considered that maybe John McCain’s tax policy is the right one? Does Obama not realize that the best way to be a Democrat is preserve conservative Republican tax policy? (read more)
Socialist? What? Taxpayers are supposed to just give money to banks without asking for a stake in the still-private financial corporation?
Fast? Tell that to the millions of newly jobless or newly diagnosed or newly homeless.
Yes, because of President Obama’s proposal I grinned all weekend. But, now it’s time to stop grinning.
The Republicans with their mega-nasty, mega-powerful Foxes and Rushes are already nickeling and dime-ing and nitpicking and wrapping themselves up in our flag. Left to their own devices members of Congress will hem, haw, backtrack and cut back.
We will not end the class warfare of the past 8+ years unless we tell our Senators and Representatives to pass the President’s budget as submitted. I love the outline of it, and I am willing to live with any of its imperfections in order to get the country righted. Any tweaks damn well best be tweaks and not subversions of its power.
I wrote Senator Feinstein this morning telling her that I want the President’s plan — she is a powerful “moderate” up for reelection in two years, and we need her to work for this budget. (Write Senator Feinstein yourself!)
Writing Senators Feinstein and Boxer and Speaker Pelosi (my Representative) is just the first step. We need to watch Congress and keep them focused on what we voted for in last fall. Congress is going to hear plenty from the Rupert Murdocks, the Rush Limbaughs, and the well-off advocates of the status quo.
We cannot let our country down by shirking our responsibilities and watching the politics play out without our involvement. It’s time to go to the political barricades for the change we need.
I’m of two minds about the budget proposal (as I am usually of even more minds, this is unusual!)
One problem: tax increases beyond what was proposed by the candidate; in particular, the limits on deductions, which seem unfair (mortgage interest after people have planned their budgets) and charitable deductions. The President’s spokespeople have sounded insensitive to concerns that private charities may lose a large percentage of their revenue as a result, commenting that the Government will give charities more to compensate. Which means they think private donors’ choices should be disrespected. The “blue dog” Democrats are already grumbling that this is a step too far.
There is also a lot of fuzziness about the cap-and-trade scheme being used to generate more revenue, thus becoming an additional tax (and a rather regressive one) instead of being revenue-neutral.
I would prefer to see a revamping of the tax system, with a new VAT, a simple and hard-to-game carbon tax, and reduced complexity and overhead. Instead they are just turning up the dials hoping it won’t decrease economic activity.
The business and investor class is growing restive; the President is not listening to their concerns as he promised he would. A one of the few people on your list who spent most of his life as an independent business person, I can see their point. If this is rammed through on top of the other bailouts and spending, and the economy tumbles further, the outcome will be a Clintonization of Obama — loss of Congress in the midterms and a loss of Obama’s power to do much of anything.
Mostly my mantra is going to be Voltaire’s “The perfect is the enemy of the good.”
Revamping the tax system is a fine idea,… maybe. However, I strongly dislike VAT and other consumption-based taxes because of their regressive nature. Let’s not conflate tax simplicity and a complete rework of tax structure with reforming the regressive/progressive nature of the basic tax code. They both may be admirable goals (or not). But, you can have one without the other.
Similarly, establishing a hard-to-game carbon tax (or hard-to-game any tax) sets imprecise, impossible to meet standards. It’s like saying that you would vote for a black man, but just not this black man.
To my simple mind, the country simply has to stop the transfer of wealth from the middle and lower classes to the wealthy. The exact methodology will not be perfect, but the transfer has to stop. Now.
Yes, the limits on home mortgage and charitable deductions for high income earners is something to watch and perhaps amend next year. But, I am okay with high income earners paying a bit more their mortgage. The charitable deduction has been used as a giant loophole for the rich and it needs to be curbed. Any anyway, if the truly well off people stop giving, I’d be surprised, since they are generally giving assets and not income. They’re reducing their estate more than reducing their income.
Moreover, the amount of percentage increase in these two taxes is trivial to the individual well off tax payer. They’ll get 4% less of a deduction, I believe.
Finally! Let the business and investor class get restive (and I am a very small member of those classes, so I do have some understanding of why they’re concerned). We have listened to the business and investor leaders’ wisdom for many, many years now. How’s that worked?
Moreover, President Obama has listened to that group of people. Look at who the Treasury Secretary is! The President has done some of what they want, just not “enough”. They’re restive not because they’re not listened to. They are restive because they are not able to continue dictating the financial policies of the government. If you see “their point”, then I would ask you to look again. These are the financial leaders who have already failed. They — and the country — need to step back and let another approach try to salvage their wealth.
What you might be missing is that the Goldman Sachs – NYC finance people are well represented and are getting their bailouts, but responsible small and medium-sized business and finance are not. It looks like workers and strivers in the middle and upper-middle will pay to help Big Business and Big Labor, plus some sops to carefully-constrained classes of mortgage holders, just to look like they’re doing something.
And a VAT can be un-regressive; in Canada, theirs is rebated in full to poorer people through the income tax system.
Oh, Lord! You’re not turning Joe the Plumber on me, are you?
If you are a responsible small and medium-sized business and if you are able to take more than $250,000 a year in income from that business, congratulations! And, yes, I would tax you the few extra percent of income tax since you are a high-income person.
Of course, there are elements in the recent stimulus bills and in the tax code which help you. Things like accelerated deductions, multi-year backward and forward looks at operating losses, and many other provisions which are designed to put capital into your business and money into your wallet.
But, Joe, if at the end of the day your family’s adjusted income is over $250,000 I have no problem asking you to share a very small extra portion of that success.
I think we just disagree on your categorization of “carefully constrained” and “sops” that just “look like they’re doing something.” This budget, if passed unmolested, will mark a huge difference in government strategy.