Misrepresentation of Obama Economic Plan

by

McCain Attack Ads during the Olympics

John McCain has been running ads during the Olympics saying Barack Obama is a big celebrity, but “is Obama Ready to Help Your Family?  The Real Obama promises higher TAXES, more government spending, so fewer JOBS.”  Wrong, right, and wrong. 

The truth is that under the Obama plan, most families would see lower taxes, not higher taxes.  Obama proposes an $80 billion tax cut for poor and middle-class families, as well as repeal the Bush tax cuts for the richest one percent of taxpayers. His tax plan would eliminate income taxes for the 7 million senior citizens making less than $50,000 a year, establishing a universal credit for the 10 million homeowners who do not itemize their deductions — most of whom make less than $50,000 annually — and providing 150 million Americans with tax cuts of up to $1,000.

Over 95% of American families would see a tax cut under Senator Obama’s plan.  Families with incomes over $250,000 would pay more under a graduated income tax with a higher maximum rate.  Individuals with salaries over $250,000 would be subject to additional payroll taxes on their salaries over $250,000.

Same Old Allegations

McCain is repeating the tired old argument that taxes are bad and any tax increases will harm the economy.  As Robert Rubin explained “In 1993, the debate was between supporters of Clinton’s economic plan – which included revenue increases, principally an income tax increase on the top 1.2% of taxpayers and a small gas tax – and opponents who argued that tax increases of any kind would harm the economy.  Loyal supply-siders such as Jack Kemp and Paul Gigot of The Wall Street Journal argued that our economic program would harm the economy and lead to higher unemployment. Some were even more specific in their predictions.  ‘I believe this will lead to a recession next year,’ Newt Gingrich said at the time.  ‘This is the Democratic machine’s recession and each one of them will be held personally responsible.'”  [In an Uncertain World, by Robert Rubin and Jacob Weisberg, Random House, 2004.]

What actually happened was the longest period of uninterrupted economic expansion in the history the United States.  Unemployment fell from 7% to 4% by the end of President Clinton’s second term.  There was a net increase of 20 million private sector jobs.  In contrast, the Bush tax cuts and other Republican laissez-faire policies will be lucky to yield a net increase of 5 million jobs by the end of George W. Bush’s second term, far short of what was required to keep up with population growth.  http://www.nytimes.com/2008/07/07/opinion/07krugman.html?_r=1&oref=slogin

During the primary campaign, John McCain admitted to be weak on economics.  Senator McCain’s ads are showing his ignorance of economics, as well as his choice of wrong-minded supply siders to be his economic advisers.

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4 Responses to “Misrepresentation of Obama Economic Plan”

  1. Konservo Says:

    umm… is the author of this post from America?

    Although America is not 100% laissez-faire, the U.S. is still a free society with a capitalist economy. That means no one is discriminated against because he is of a certain color, religion, ethnicity, or makes a certain amount of money. I’m not rich, but I’ll be damned if I sanction government persecution of those who are.

    Remember, having money is not a crime, but stealing it is.

    As for the economic effects of taxing a nation’s private capitalist, we’ve already seen how wonderful this worked for FDR… I’m being sarcastic, of course, FDR prolonged the Great Depression in the US longer than any other leader in the world, it took WWII to get us on our feet after “The New Deal” keep us at a stand still. Why did this happen? Because that “richest 1%” of Americans was being unjustly taxed and they found that it was no longer in their interests to invest as much, hence, fewer jobs.

  2. Bur Says:

    I suppose you think that the United States would have been better off if Herbert Hoover had been reelected. Anyone who thinks that Herbert Hoover was a better president than FDR should vote for John McCain

    Fast forward to the 21st Century: As you probably know, Warren Buffet says that after the Bush tax cuts, he pays a smaller percentage of his income in taxes than does his secretary. Mr. Buffet has issued a challenge to his fellow billionaires several times over the past several years: If you are not in a similar tax-advantaged situation relative the average worker, speak up. No billionaire has taken up Buffet’s challenge.

  3. Andy Says:

    You obviously don’t know much about Warren Buffett. Of course his tax rate is a lower percentage that his secretary- because his yearly salary is only 100,000 a year. This puts him the the 4th of the 6 tax brackets (28%). Most of his wealth comes from capital gains which are taxed at a flat 15% regardless of income level. With hundreds of millions in earnings at the 15% tax level and only $100,000 taxed at the 28% level, Warren Buffett’s effective tax rate is around 16%. Thus as long as his secretary makes more than $32,000/year which puts her in the 25% tax bracket she does pay at a lower tax rate.

    The reason this is the case: Buffet makes his money from investing- investing is good for the economy and is what drives growth and job creation. Penalizing someone for investing (by using a higher tax rate) would dramatically slow economic growth and job creation.

  4. Bur Says:

    Warren Buffet has said that he raised this challenge because he believes that his taxes are too low.

    Some people, like Warren Buffet and Bill Gates, created wealth by responsible investing and entrepreneurship, respectively. However, there are also many financial engineers who created and sold mortgage backed securities, structured investment vehicles, and many fancy derivitives that were sold around the world, creating the worst worldwide financial crisis in the past 100 years. Those financial engineers and executives of failed financial companies were rewarded by stock and stock options, which most people believe they did not deserve.

    You are repeating the tired old argument that taxes are bad and any tax increases will harm the economy. As Robert Rubin explained “In 1993, the debate was between supporters of [Bill] Clinton’s economic plan – which included revenue increases, principally an income tax increase on the top 1.2% of taxpayers and a small gas tax – and opponents who argued that tax increases of any kind would harm the economy. Loyal supply-siders such as Jack Kemp and Paul Gigot of The Wall Street Journal argued that our economic program would harm the economy and lead to higher unemployment. Some were even more specific in their predictions. ‘I believe this will lead to a recession next year,’ Newt Gingrich said at the time. ‘This is the Democratic machine’s recession and each one of them will be held personally responsible.'” [In an Uncertain World, by Robert Rubin and Jacob Weisberg, Random House, 2004.]

    What actually happened was the longest period of uninterrupted economic expansion in the history the United States. Unemployment fell from 7% to 4% by the end of President Clinton’s second term. There was a net increase of 20 million private sector jobs. In contrast, the Bush tax cuts and other Republican laissez-faire policies will be lucky to yield a net increase of 4 million jobs by the end of George W. Bush’s second term, far short of what was required to keep up with population growth, and now after declines in employment in every month of 2008, we see that the end result is the highest unemployment rate in 14 years.

    The discredited Republican ideology of tax cut on top of tax cut has resulted in less economic growth than in the 1990s and a stock market level that is lower than it was when Bill Clinton left office. Wall Street will not be able to prosper in the future while Main Street continues to suffer.

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