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Thursday, February 26, 2009

Republican's 2010 Playbook: Thinking Fourth Dimensionally II

It's rather remarkable that President Obama has shown himself to be every bit the radical that he appeared to be in the campaign. In fact, President Obama's entire domestic policy can be summed up by this Karl Marx quote.

From those with means to those in need

In fact, his policies are so blatantly full of income redistribution that even the sympathetic media can't pretend it is not happening.

The combined effect of the two revenue-raising proposals, on top of Mr. Obama’s existing plan to roll back the Bush-era income tax reductions on households with income exceeding $250,000 a year, would be a pronounced move to redistribute wealth by reimposing a larger share of the tax burden on corporations and the most affluent taxpayers.

The problem the Republicans CURRENTLY face is that the mood in the country favors income redistribution and the amount of spending the Obama administration is proposing is so massive that it actually becomes difficult to put into perspective. Take this Rassmussen poll for instance that shows a healthy majority favoring Obama's proposal to raise taxes. Furthermore, this Politico story illustrates just how difficult it is for Republicans to gain traction against all this spending.

A billion here, a billion there, pretty soon you’re talking about — well, pretty soon no one has a clue what you’re talking about. And as President Barack Obama prepares to unveil his 2010 budget, that’s becoming a daily headache for Republicans.

After $787 billion for a stimulus plan, $700 billion for a financial markets bailout, and $410 billion for a proposed end-of-2009 spending plan, getting folks fired up about whether the 2010 budget is $3.6 trillion rather than, say, $6.3 trillion is not just a political challenge; it’s a cognitive one.

Human beings have a hard time differentiating between millions and billions and trillions, let alone the numerical subsets thereof. To most of us, it just registers as “a whole lot.”

As the mathematician Ronald L. Graham once said, “Our brains have evolved to get us out of the rain, find where the berries are and keep us from getting killed. Our brains did not evolve to help us grasp really large numbers or to look at things in a hundred thousand dimensions.”

The Republicans need to keep their cool and think fourth dimensionally right now. (the dimension of time or toward the future) As President Obama continues his crusade for a massive expansion of government and even more massive redistribution of wealth, the Republicans must once again become the party of fiscal discipline and tax cuts.

The reason that big government spending and income redistribution are so popular right now is two fold 1)President Obama is popular now and 2) they haven't yet taken effect. So far, all we have is promises: millions of new jobs, health care for all, energy independence, etc. At some point, we will be faced with reality.

If income redistribution and big government worked, Venezuela, Cuba and Europe would all be thriving. That they aren't is proof positive that such schemes are bound for failure. President Obama now owns all of the spending and soon enough he will own the economy. Come 2010, the astronomical spending can easily be put into perspective.

Let's say our unemployment rate will be above 8%. That would mean that the President would have spent an additional $4 trillion and added an addition $2 trillion to our deficit to grow our unemployment rate by half a percent. That's quite a lot to spend in order to grow our unemployment rate.

President Obama will be judged by the performance of the economy and it is very hard to see just. It looks like we will lose in excess of half a million jobs in February and for the indefinete future. The President's plans aren't merely bold but they are very expensive. Spending this much money demands superior performance. If the unemployment rate come 2010 is more than it was when he took office, that is simply unacceptable given how much money he has spent.

That's what the Republicans will need to pounce on. The folks are currently dizzy from all the spending because it is happening all at once. At some point, people will take a step back and add it all up. It will be nearly $800 billion in stimulus. It will be $300 billion in mortgage bailouts. It will likely be an added $750 billion at least in another round of bank bailouts. There will be another $634 billion for universal health care. There's still unclear sums for auto bailouts, energy independence, and education. That's all on top of normal spending which is increasing as well. The public should demand nothing less than economic bliss for such an obscene amount of government spending.

Frankly, the Republicans can and should hold the President accountable for nothing less. The dizzying numbers will come into focus. His radical economic agenda can then be judged. If and when our unemployment rate is still above 7%, the Republicans will need to ask forcefully how much his own tax cuts contributed to it. If and when the unemployment rate is still above 7%, the Republicans must ask how much his bold agenda contributed to it. If and when the unemployment rate is still above 7%, the Republicans must ask how much out of control government spending contributed to it.

Nothing contributes more to putting tax cuts and fiscal discipline back in favor more than a few years of out of control government spending and income redistribution. That's what we will have for the next two years. The Republicans philosophy may in fact be out of favor now, but give things time, soon the public will find those concepts back in favor.


Anonymous said...

First of all, voters will have to be convinced that the Republicans actually will cut taxes and spending. That's no longer a given anymore. And with Obama showing a willingness to cut taxes for "95%" while raising everybody else's, there's no guarantee voters won't trust Obama to cut taxes the "right" way more so than the Republicans.

Second, you are essentially saying Republicans have to wait until voters are willing (or can afford) to buy what they're selling again.

mike volpe said...

No, that's not what I am saying at all. What I am saying is that Republicans need to wait for the effects of all these promises to be seen, and then pounce on the results. It's easy to get electoral traction when you promise everyone everything. It's much more dificult to deliver.

There are benefits and pitfalls to being in power and out of power. One of the benefits of being out of power is that people will be convinced you will do something simply by you saying it. Obama got elected by promising everyone everthing not because he had ever delivered on any of these promises.

As to the 95% nonsnese, rhetoric is fine but Obama will be judged on reality in 2010. The so called tax cuts for the 95% amount to $13 weekly until $400 is given back. That's it. That's reality and nothing Obama says will mean that anyone will get any more back. Furthermore, that's only for those making $75k and less.

$13 weekly out of $787 billion is quite the campaign slogan and it will work if the economy hasn't shown serious signs of recovery come november of 2010.

Anonymous said...

It might not be 95% paying less tax, but it is much much more than 50%. Those poor little rich people have to pay more. I am just weeping. Might not be able to afford that second boat.

Thank God we live in a democracy where the vote of one rich person is equal to the vote of one poor person.

Anonymous said...

It seems Obama was telling the truth when he made the campaign promises.

I am quite literally shocked!

What a wonderful President we have!

mike volpe said...

You are only shocked because you don't have any context. Bush ran on cutting taxes and reforming our education system. He passed sweeping tax cuts and then he created NCLB with Ted Kennedy. Presidents have all sorts of political capital at the beginning of their term and so much of their agenda gets passed.

It's much more important what their agenda is not that they get some of their agenda passes in the beginning of their term. Almost all Presidents get much of their agenda through at the beginning of their terms.

mike volpe said...

It isn't so much how many people get tax cuts but the size of the tax cut. It is $400 for an individual and $800 per couple if both people work. That is a tiny tax cut. It is especially tiny when it is compared to someone having up to one hundred k in a tax increase.

The reality is that the so called tax cut is so small that no one will notice it. Come November 2010, the folks aren't going to believe they got a tax cut and this rhetoric will be rather empty.

Anonymous said...

There is one thing being claimed by Republicans which doesn't mesh with the facts.

Obama is proposing to raise taxes on households earning over $250,000 by increasing the rate on the top two tax brackets and limiting deductions, starting in 2011.

Republicans and other critics, knowing they will get little mileage from defending the rich, instead are casting the plan as a tax hit on people who run industrious little companies driving job growth.

That's not likely, according to one in-depth analysis, which found that more than 95 percent of small business owners would be off the hook.

Obama does not propose higher business taxes.

But critics reason that owners of many small companies report business income on their personal tax returns instead of filing corporate taxes. That exposes their business's earnings to Obama's higher tax rates on the wealthy.
To be sure, some business owners would get caught in that net.

But for one thing, most small businesses don't create jobs. They tend to be lawyers, accountants and other professionals who earn some of their money from partnerships or otherwise organize themselves as a business entity.

As well, many small businesses with employees don't earn enough to put their owners over the threshold for the higher tax rates.

Indeed, most of them — like Joe the Plumber of presidential campaign fame — would probably get Obama's tax break for the middle class.
Obama also proposes to eliminate capital gains taxes on small businesses and make a research tax credit permanent. He would expand a provision that allows money-losing companies to get refunds from taxes paid in previous years, when the companies were profitable.

Still, Obama is not cutting taxes for 95 percent of Americans, as his supporters often say. The president himself asserted Thursday that he's giving a "a middle-class tax cut to 95 percent of hardworking families."

An independent analysis estimated that 75.5 percent of all U.S. households would get his tax credit for workers. A higher percentage of working families would get it.

_"In fact, a majority of those penalized by the proposed tax increase in this budget are small businesses." — Republican Rep. Eric Cantor of Virginia.
_"Small businesses and the entrepreneurs who lead them have been the primary drivers of job growth over the past decade. This plan would punish them with higher taxes, resulting in less government revenue, less economic growth, and fewer jobs — not more." — Bruce Josten of the U.S. Chamber of Commerce.

The U.S. has roughly 6 million businesses that employ people, and 20 million businesses without employees.
The latter group includes solo operators, professionals in partnerships and those who organize themselves as a business for tax purposes but earn little if any income from the enterprise.
Small businesses are defined as having fewer than 500 workers each.
Sizable companies within that group wouldn't be snagged by Obama's personal tax rates simply because they are too large to report income on the individual return of the owner.

Many truly small operations simply don't make enough to qualify for the tax hit.

Last year the Tax Policy Center run jointly by the Urban Institute and Brookings Institution examined the likely effects of Obama's plans to raise taxes on couples making over $250,000.

The analysis estimated that 663,000 taxpayers who report business income or losses fall in the two tax brackets whose rates would go up under Obama. Many are small businesses on paper, without workers.

Millions of other small-business owners would be clear.

mike volpe said...

Yeah, they would just be raising taxes on the most successful small businesses. I wrote about this.

Punishing the most successful punishes everyone. It also has by far the most corrosive effect.

No, infact, the distortion is by people like you that claim that punishing the most successful has no or little effect. In fact, it has a massive effect. It has a domino effect and the effect is extremely corrosive.

Garret said...

Excellent piece, Mike.

Anyone who understands Obama's programs rejects them because they will never work. And Obama counts on constant crisis and the mind-blowing numbers to escape blame until it's too late.

But the average person can learn these numbers. (We learned that electricity is dangerous, right?) They just need to be rammed home. Over and over.

We need to start now. Then, when Obama's failures become apparent, people will retain.