The United States economy is sagging under more than $14.7 trillion of debt. Unemployment exceeds 16% when the underemployed and those who have given up on looking for work are counted. And inflation as measured by the Consumer Price Index has run at an elevated rate of 3.6% for the past year. It’s no shock that consumer confidence and spending are at rock bottom levels. And it’s no surprise that President Obama is selling the same old failed policy of higher taxes and bigger government.
The President is demanding passage of his American Jobs Act (i.e., stimulus package) that would spend nearly $450 billion to ostensibly, “put Americans back to work”. Mr. Obama claims a hodge-podge collection of temporary tax cuts, short-term tax credits, and infrastructure spending will create 2 million jobs. Even if this dubious assertion comes to fruition, it amounts to about $225,000 of government spending for each new job.
Just for a moment, put aside the faulty notion that government can or should create jobs. Where is the federal government going to come up with the money for this boondoggle?
Tax Increases and Promises to Cut Spending
Obama’s answer is $1.5 trillion in tax increases coupled with supposed spending cuts that will result in $3 trillion of budget savings over 10 years. Some of the austerity measures would be minor changes to Medicare and Medicaid. There is an assortment of promises to chip away at domestic spending. The President also takes credit for $1 trillion in savings from ramping down the wars in Iraq and Afghanistan, which was already claimed as a savings mechanism for his earlier spending forays.
Notice true structural reform of the main sources of American debt — Social Security, Medicare, and Medicaid — are not on the table. For all practical purposes, the size, scope, and spending of the federal government will remain unchanged.
So here’s a recap. A lot of money will be spent to create a few jobs and government spending won’t really decrease. What an epiphany! The Obama jobs plan is just the latest ploy to raise taxes on the wealthy individuals and businesses that create jobs in the United States. Taxing “the rich” has poll-tested populist appeal.
Punishing the Job Creators
The problem is that the President’s tax increases are aimed at individuals making $200,000 and families and businesses earning $250,000. Are these the “wealthy” people and companies we want to punish?
According to an analysis of IRS data for 2009 by the nonpartisan Tax Foundation, taxpayers earning more than $200,000 accounted for 25 percent of the nation’s adjusted gross income for that year but paid 50 percent of the $866 billion in income taxes. It seems the job creators are already paying their fair share of taxes. And our current 35 percent corporate tax rate is among the highest in the developed world. It makes no sense to increase these burdens.
Obama’s Class Warfare Campaign
Engaging In truth, President Obama’s sudden interest in job creation and debt reduction is a reaction to sinking poll numbers. Class warfare tactics are intended to shore up support from his leftwing base. The President also hopes to lure back independents with the appearance that he is working hard to create jobs while obstructionist Republicans staunchly defend the portfolios of wealthy oil executives.
Good luck with all that, Mr. President. The majority of Americans is far more interested in genuine economic recovery than your political future. They want leadership, not transparent political posturing.
Only a robust, confident, and unencumbered private sector can create jobs in the pursuit of economic opportunity. Genuine government spending cuts and lower tax rates are incentives for the investment, innovation, and entrepreneurship that will stimulate real job creation and a brighter future for America.