by Bruce S. Thornton<\/p>\n
FrontPage Media<\/em><\/p>\n Now that Mitt Romney will be Obama\u2019s opponent in November, the Democrats are rolling out the false narrative they will use to demonize Romney and obscure four years of failed economic policies that have created the worst recovery from a recession since the Great Depression. In two recent speeches, Obama has begun heating up his class warfare rhetoric in an attempt to paint Republicans as the heartless minions of greedy capitalists who increase their wealth at the expense of everybody else.<\/p>\n On April 3, Obama went after Representative Paul Ryan and his budget, which Obama linked explicitly to Romney. Ryan\u2019s budget actually addresses the key problems of out of control government spending and rapidly metastasizing entitlement costs, the looming fiscal train-wreck that Obama and the Democrats have avoided dealing with for over 3 years. Masking this dereliction of duty, Obama in his speech instead piled up lie after lie about Ryan\u2019s budget, spicing the whole with question-begging rhetoric. Financial aid cut for 10 million college students, 1,600 fewer grants for Alzheimer\u2019s and AIDS research, clean energy technology cut by a fifth, 200,000 pre-schoolers banished from Head Start, 2 million mothers and children denied healthy food, cuts to the Department of Justice and the FBI, national parks closed, air, food, and water safety compromised, less accurate weather forecasts, more flight cancellations at airports \u2014 this whole catalogue of apocalyptic disasters is a patent lie, one worsened by the charge that Ryan\u2019s budget is \u201cthinly veiled social Darwinism\u201d designed to further enrich the already bloated 1% by ruthlessly cutting government programs. In fact, the Ryan budget increases spending from $3.6 trillion this year to almost $4.9 trillion in 2022.<\/p>\n A week later, in Boca Raton Florida Obama was at it again, beating the drum of tax \u201cfairness\u201d as he proposed imposing the \u201cBuffet Rule\u201d on those earning more than $1 million to force them to \u201cpay their fair share,\u201d which Obama puts at 30%. This idea that rich Americans are tax deadbeats was given traction by billionaire Warren Buffet, the tax-shelter king who popularized the myth that millionaires pay taxes at a lower rate than ordinary Americans because the rich pay most of their taxes at the capital-gains rate of 15%. In actual fact, asNational Review Online<\/a><\/em>\u00a0points out, Americans in the $40-$50 thousand income bracket pay an\u00a0effective rate of 3.2%<\/a>\u00a0in federal income tax, 80% of US households are taxed at a rate less than 15%, and half pay nothing at all. As for those dastardly millionaires, the rate for most of them is already 30%, while 10% pay less and another 10% pay more, according to the Congressional Research Service.<\/p>\n Worse yet, the amount of revenue the Buffet Rule would raise is $5 billion a year \u2014 \u201cor less than 0.5% of the $1.2 trillion fiscal 2012 budget deficit and over the next decade a mere 0.1% of the $45.43 trillion the federal government will spend,\u201d the\u00a0Wall Street Journal<\/em>\u00a0reports. Obviously, this is not enough revenue to \u201cstabilize our debt and deficits for the next decade,\u201d as Obama has claimed. In fact, to close the deficit in 2035, when entitlement spending will blow up the budget, tax revenues would require a surreal rate of 223% on the highest tax bracket. Nor will this Buffet Rule pittance do anything to rein in federal spending, projected to reach 50% of GDP by 2060 because of runaway entitlement costs destined to expand even further if Obamacare survives. Finally, the idea that the extra revenues generated by the Buffet Rule would be used to lower the deficit flies in the face of history, which shows that every dollar of increased revenues leads to at least $1.17 of government spending. As Milton Friedman once said, \u201cPoliticians will always spend every penny of tax raised and whatever else they can get away with.\u201d<\/p>\n Yet this is just the beginning of Obama\u2019s economic ignorance and mendacity. Increasing the capital gains tax rate, as the Buffet Rule perforce does, and letting the Bush tax cuts expire would target small businesses and lessen the investment capital needed to grow the economy and create jobs, at the same time it would fail at increasing tax revenues, which\u00a0historically<\/a>\u00a0have increased when tax rates are lowered. Consider what happened after Ronald Reagan\u2019s tax cuts. In 1981, the top 1% paid 17.58% of all federal income taxes; in 2005, this same cohort paid 39.38%. In 1981 the top 1% paid $94.84 billion (in 2005 dollars); in 2005 they paid $368.13 billion, an increase of 288%. During this same period, taxes paid by the bottom 75% went from 27.71% of all tax revenues to 14.01%. More recently, the Bush tax cuts resulted in a 44% increase in revenues from 2003-2008. \u201cThe only conclusion,\u201d Arthur Laffer concluded in 2008, \u201cone can come to is that by raising statutory tax rates on the rich as proposed by the Democrats, the effective individual income tax rate won\u2019t change, but the comprehensive household income earned by this group will fall, thus resulting in a sharp decline in tax receipts from the very highest income earners. If you want to get more tax revenues from the rich, you\u2019ve got to make the rich richer, and to make the rich richer, you\u2019ve got to lower tax rates.\u201d<\/p>\n