Wednesday, September 14, 2011

An Empty Quiver And The Tax Cliff Of 2013

Here are a pair of stories that will have a huge impact on you in the next two years regardless of how much attention you devote to politics.  This post will be a bit on the long side, but there's so much red meat in here that it is well worth your time to dig into every word.

When Obama stands up to speak, he faces a collective "Been there, done that."

Ex-president George W. Bush with accustomed candor once shrugged after the end of his eight-year presidency, "People were kind of tired of me." That ennui happens eventually with most presidents. But in the case of Barack Obama, our modern Phaethon, his fiery crash is coming after 32, not 96, months.

We can sense the national weariness with Obama in a variety of strange and unexpected ways. There is the self-pitying anguish of liberal columnists who scapegoat him for turning the public against their own leftwing agenda. The current silence of "moderate" Republicans and conservative op-ed writers who once in near ecstasy jumped ship to join Obama is deafening. A growing number of Democratic representatives and senators up for reelection do not want their partisan president to visit their districts in the runup to November 2012. Approval ratings hover around 40 percent.

Perhaps strangest of all, there is now a collective "Been there, done that" any time Barack Obama walks up to the podium to give yet another teleprompted speech. The speeches still are well delivered; he still has a way with the mannerisms and cadences. But even his critics pray for his sake that he does not come out with yet another embarrassing "Let me be perfectly clear," "Make no mistake about it," or "Let's be honest" — as he goes back to bashing either the tired Bush bogeyman or yet another strawman Satanic reactionary who, if not for Barack Obama, supposedly would expose children to mercury, neglect roads and bridges, and finally dissolve government altogether. We have all heard ad nauseam that an eight-month-old Republican-controlled Congress has stopped Obama's legislative agenda for three years.

In truth, Obama is out of arrows. His quiver is bare, because he came into office as a rhetorical president without much experience or any ideas other than growing even bigger a tired big government. And now the public realizes that both the speeches and the big spending do not work. The result is that we collectively know what the president cannot any longer say — and it proves far greater than what he can say. He is well past the point of Jerry Ford's WIN buttons or Jimmy Carter's fist-pounding malaise speech.

Obama cannot jawbone interest rates down — they are already at near-zero on passbook accounts. Obama cannot ask the EPA to shut down any more powerhouses or the NLRB to try to close any more new manufacturing plants. Obama cannot really ask for any more big borrowing programs — not after running up $5 trillion in new debt and getting little economic activity in response. The bogus vocabulary of "stimulus," "shovel-ready," and "investments" provokes laughter; it does not ensure an unemployment rate no higher than 8 percent. He cannot, with a straight face, appeal to the collective wisdom of Geithner, Goolsbee, Orszag, Romer, and Summers — or quote the predictable shrillness of Paul Krugman on the need for ever greater debt. Those academic arrows were long ago shot in vain. In truth, every classical Keynesian remedy has been tried, and we are left only with the hard work of trimming regulations, talking up business, producing more fossil fuels, and returning to budget discipline, thrift, greater productivity, and radical reform of the tax code and entitlements. What Obama might say on all that, his ideological training and shrinking base will not allow him to say — as we saw from his shunning of his own Simpson-Bowles commission.

Obama cannot give one more speech on "civility." He has done that for three years — only to violate his own directives by urging voters to "punish" our "enemies" and demonizing those who make over $200,000 as culpable "millionaires and billionaires," "fat cats," and owners of "corporate jets." To oppose Obama is to be a "hostage" taker. The nation got Obama's accustomed calls to cool the partisan invective while Jimmy Hoffa and Maxine Waters were slurring tea-party members as "son of a bitches" and telling them to "go straight to Hell" — confident that Barack Obama's collective morality does not apply to them. The result is that another appeal to "civility" would now at best earn laughter.

He cannot promise a "summer of recovery," not after chronic 9 percent unemployment, soaring food and fuel costs, a herky-jerky stock market, near-zero growth, record deficits and debt, and the downgrading of the nation's credit. Perhaps Obama could promise us relief of only a $1 trillion annual deficit, a return to 8 percent unemployment, $3-a-gallon gas, a steady GDP growth rate of 2 percent, holding the debt at $16 trillion, and opening a single new oil field.

Nor can Mr. Obama any longer call for "millions of green jobs." Valerie Jarrett, Obama's personnel adviser, cannot any longer purr out, "Oooh. Van Jones, alright! So, Van Jones. . . . We were watching him for as long as he's been active out in Oakland." Between that silliness and today, there have been just too many hundreds of millions of dollars wasted in subsidizing "green" sweetheart deals that ended in bankruptcies. More calls to buy government-produced Chevy Volts I don't think would work.

Obama cannot promise to close Guantanamo or try KSM in Manhattan. Nor can he even continue the demagogic attacks on the Bush-Cheney national-security protocols — not when he embraced and expanded them all. In 2012 his commercials will highlight killing bin Laden in Pakistan, not closing Guantanamo or ending Predator-drone attacks. And yet, neither can Obama's team speak any longer of "overseas contingency operations" and "man-caused disasters." He is between the rock and the hard place of both caricaturing and adopting the policies that work when they were alleged not to work — so he is quiet on that count too.

His address to Congress last week went nowhere. It was hyped well. It was delivered well. It was comprehensive. But Obama had nothing to say that we have not already heard from him — and that has not already failed or proved to be hypocritical.

When the quiver is empty, the archer puts his bow away. Silence, not "This is our moment," is the wisest course for Barack Obama now that the arrows are all gone.

Combine that with the following warning in the Wall Street Journal about the games Obama's playing with American taxpayers:

President Obama unveiled part two of his American Jobs Act on Monday, and it turns out to be another permanent increase in taxes to pay for more spending and another temporary tax cut. No surprise there. What might surprise Americans, however, is how the President is setting up the U.S. economy for one of the biggest tax increases in history in 2013.

Mr. Obama said last week that he wants $240 billion in new tax incentives for workers and small business, but the catch is that all of these tax breaks would expire at the end of next year. To pay for all this, White House budget director Jack Lew also proposed $467 billion in new taxes that would begin a mere 16 months from now. The tax list includes limiting deductions for those earning more than $200,000 ($250,000 for couples), limiting tax breaks for oil and gas companies, and a tax increase on carried interest earned by private equity firms. These tax increases would not be temporary.

What this means is that millions of small-business owners had better enjoy the next 16 months, because come January 2013 they are going to get hit with a giant tax bill. Let's call the expensive roll:

• First comes the new tax hikes that Mr. Obama proposed on Monday. Capping itemized deductions and exemptions for the rich would take $405 billion from the private economy for 10 years starting in 2013. Taxing carried interest would raise $18 billion, and repealing tax incentives for oil and gas production would get $41 billion.

• These increases would coincide with the expiration of the tax credits, 100% expensing provisions and payroll tax breaks in Mr. Obama's new jobs program. This would mean a tax hit of $240 billion on small business and workers. That's the downside of temporary tax breaks and other job-creation gimmicks: The incentives quickly vanish, and perhaps so do the jobs.

So even if the White House is right that its latest stimulus plan will create "millions of jobs" through 2012, by this logic a $240 billion tax hike on small businesses in 2013 would cost the economy jobs. This tax wallop would arrive when even the White House says the unemployment rate will still be 7.4%.

• January 2013 is also the same month that Mr. Obama wants the Bush-era tax rates to expire on Americans earning more than $200,000. That would raise the highest individual income tax rate to about 42%, including deduction phaseouts, from 35% today. Congress's Joint Committee on Taxation found in 2009 that $437 billion of business income would be taxed at higher tax rates under the Obama plan. And since some 4.5 million small-business owners file their annual tax returns as subchapter S firms under the individual tax code, this tax increase would often apply to the same people who Mr. Obama is targeting with his new tax credits.

The capital gains and dividend taxes would also rise to an expected 20% rate from 15% today. The 10-year hit to the private economy for all of these expiring Bush rates: about $750 billion.

• Also starting in 2013 are two of ObamaCare's biggest tax increases: an additional 0.9-percentage point levy on top of the 2.9% Medicare tax for those earning more than $200,000, and a new 2.9% surcharge on investment income, including interest income. This will further increase the top tax rate on capital gains and dividends to 23.8%, for a roughly 60% increase in investment taxes in one year.

The White House's economic logic seems to be that its new spending and temporary tax cuts will so fire up investment and hiring in the next 16 months that the economy will be growing much faster in 2013 and could thus absorb a leap off the tax cliff. But this requires its own leap of faith.

The White House also predicted a similar economic takeoff from the 2009 stimulus that was supposed to make a tax hike possible in 2011. Then last December Mr. Obama proposed new tax incentives only for 2011 because the economy was supposed to be cooking by 2012. Now it wants to extend those tax breaks so the economy will be cruising in 2013.

All of this assumes that American business owners aren't smart enough to look beyond the next few months. They can surely see the new burdens they'll face in 2013, and they aren't about to load up on new employees or take new large risks if they aren't sure what their costs will be in 16 months. They can also reasonably wonder whether Mr. Obama's tax hike will hurt the overall economy in 2013—another reason to be cautious now.

For the White House, the policy calendar is dictated above all by the political necessities of the 2012 election. Mr. Obama will take his chances on 2013 if he can cajole the private economy to create enough new jobs over the next year to win re-election, even if those jobs and growth are temporary. Business owners and workers who would prefer to prosper beyond Election Day aren't likely to share Mr. Obama's enthusiasm once they see the great tax cliff approaching. Look out below.

What's the point of all this doom and gloom?  First, to show that there are many legitimate reasons to oppose this regime from being in power one second past January of 2013.  When I question how much more of this radical liberal administration America can survive, I'm not kidding or exaggerating.  If articles like these don't bring that point home for you, nothing will.  If you're like me, though, you wonder what you can do about all this.  It's simple: take action.

Contact your elected representatives on these issues.  Tell them what you think, and justify your thoughts with real facts.  Even more importantly, don't allow people around you to skate when they throw out the empty platitudes and policies that have brought the world's largest and most powerful nation to the brink of economic disaster.  Be polite and respectful, but have your facts at hand and be confident.  Make them defend these policies and actions that have utterly and demonstrably failed.

It is this grass roots person-to-person contact and persuasion that will create the tidal wave of momentum that will sweep the self-destructive and self-loathing Obamacrats from power in the 2012 election.  Ultimately, that's what absolutely must happen if America is to be restored to the last best hope of mankind.

And that starts with you, right now.

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