posted December 08, 2011 01:09 PM            

You know things are bad for O'Bomber when even the Washington Post is no longer drinking the O'Bomber Kool-Aid!

Obama’s Kansas speech: some suspect facts
Glenn Kessler
12/06/2011

“I mean, understand, it's not as if we haven't tried this theory. Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did they get us? The slowest job growth in half a century.”

-- President Obama, Dec. 6, 2011

Channeling his inner Teddy Roosevelt, President Obama on Tuesday gave a feisty speech in Osawatomie, Kan., that sought to rebut Republican arguments that he is waging class warfare. He argued that the issue was one of fairness for the broad middle class, drawing repeated contrasts to the presidency of George W. Bush.

We’ll leave the politics to others, but how accurate were some of his facts?

“I mean, understand, it's not as if we haven't tried this theory. Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did they get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class: things like education and infrastructure, science and technology, Medicare and Social Security.”

Inserting the words “for the wealthy” was interesting phrasing by the president, since he suggests these tax cuts were intended to benefit only the rich.

The bulk of the 2001 tax cuts were marginal rate cuts, which extended to all taxpayers, while the 2003 tax cuts included a reduction in taxes on dividends and capital gains.

But the 2001 tax cuts also included tax changes that benefited the middle class, such as a reduced marriage penalty and expanded tax credits, along with an instant tax rebate. Still, it is correct that most of the benefits of the tax cuts flowed to the wealthy (who, let’s not forget, pay the largest share of income taxes).

Obama has said repeatedly he wants to keep the Bush tax cuts for people making less than $250,000; he wants to reinstate higher tax rates only for the wealthy. (In fact, he would retain about 70 percent of the overall tax cut.) But he should not suggest that the Bush tax cuts were aimed only at the wealthy, since that is not correct.

The Bush tax cuts were certainly large. To compare tax cuts over the decades, it is best to ignore raw numbers but instead focus on the size of the tax cut as a percentage of national income. Under that measure, the John F. Kennedy tax cut of 1964 (-1.90 percent) and the Ronald Reagan tax cut of 1981 (-1.40 percent) were larger than Bush’s 2001 tax cut (-0.80 percent.) But all of Bush’s tax cuts in 2001, 2002 and 2003 combined would equal -2.00 percent.

The Bush tax cuts have been roundly criticized for being inefficient and poorly designed, but it is a stretch for Obama to blame slow job growth on the tax cuts. That are many factors that affect job growth, and it is silly to directly link the 10-year-old tax cut to today’s job growth — just as it is silly to claim that Bill Clinton’s tax increases resulted in a gain of 23 million jobs.

Obama’s claim of the “slowest job growth,” in fact, includes the loss of jobs under his administration. The White House provided as evidence a report on a New York Times blog that was based on gross domestic product data through 2010, or the first two years of Obama’s administration.

The White House also cited a Center on American Progress report on job growth through 2007, which showed monthly job growth of 68,000 jobs during the Bush business cycle. But, since the recession ended, job growth has been even more anemic under Obama — just 40,500 jobs a month, according to the Bureau of Labor Statistics.

An administration official responded that Bush only faced a traditional recession (though one affected by the Sept. 11 attacks), compared to the Great Recession. He also asserted that there is evidence that higher income disparity can affect economic growth.

Obama certainly inherited an economic mess, and we have argued he does not deserve blame for the massive loss of jobs early in his administration. But it seems odd to keep blaming poor job growth on the Bush tax cuts, especially because Obama himself pushed through a nearly $1 trillion stimulus and took other actions that have affected the economy, for better or worse.

Finally, Obama blames the Bush tax cuts for “massive deficits.” It is certainly true that the Bush tax cuts helped blow a hole in the budget. But they did not do it all by themselves. We looked at length at this issue earlier this year, assisted by new Congressional Budget Office data.

The data showed that the biggest contributor to the disappearance of projected surpluses was increased spending, which accounted for 36.5 percent of the decline in the nation’s fiscal position, followed by incorrect CBO estimates, which accounted for 28 percent. The Bush tax cuts (along with some Obama tax cuts) were responsible for just 24 percent.

Thus it is simply wrong to blame only the Bush tax cuts for the deficits now faced by the country, especially three years into another presidential term.

“Some billionaires have a tax rate as low as 1 percent — 1 percent. That is the height of unfairness.”

This is a striking statistic. But the only evidence that the White House could offer for it was a clip of a conversation on Bloomberg TV, in which correspondent Gigi Stone made this assertion during a discussion about the tax strategies that the very wealthy use to avoid paying taxes. The TV clip was promoted by the left-leaning Web site Think Progress.

Stone quoted from a Bloomberg News article last month that reported on such tax strategies, which mostly involve complicated ways to defer paying capital gains taxes. But the article never made the 1-percent claim. It also noted that the IRS had gotten more hostile to such transactions in recent years.

An administration official conceded the White House had no actual data to back up the president’s assertion, but argued that other reports showed that some of the wealthy pay little in taxes.

Frankly, when it comes to taxes, let’s not forget the legendary statement of Judge Learned Hand — as long as it is not illegal, people can try to lower their taxes as much as possible:

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."

The most recent data that we can find on the top 400 taxpayers — all billionaires — show that in 2008, 30 billionaires paid an average tax rate of between zero and 10 percent. Certainly “some” might have paid as little as 1 percent on income. But we are talking about a very tiny number. By contrast, 59 billionaires paid an average tax rate of 30 to 35 percent. And 238 faced a marginal tax rate of 35 percent and above; only 17 had a marginal rate of zero to 26 percent. (The marginal tax rate is what people pay on each additional dollar they earn.)

The average tax paid by the top 400 taxpayers was nearly $50 million. It is impossible to know the financial circumstances of the handful of billionaires who may have lowered their taxes to 1 percent, but there may be reasonable explanations. For instance, the person may be retired and generating no new income, while keeping investments in tax-deferred entities.

The president does not need to lard his case with such suspect data. There are few independent tax analysts who have much good to say about the Bush tax cuts. But it is difficult for Obama to justify blaming those tax cuts for being mostly responsible for today’s slow job growth, especially when he wants to retain a good chunk of those tax cuts.

To bolster his case about unfairness, the president is also relying on a suspect statistic about billionaires paying as little as 1 percent in taxes. Even if true, it is a clearly a rare event. Moreover, it is certainly surprising that the White House would rely on such a dubious, unverified source for a major presidential address.

posted December 08, 2011 01:15 PM            

I'm surprised that IDB can only find 5 big lies in Obama's Kansas economic speech. But 5 is a good start:

Tax cuts and deregulation have "never worked" to grow the economy. There's so much evidence to disprove this claim, it's hard to know where to start. But let's begin with the fact that countries with greater economic freedom - lower taxes, less government, sound money, free trade - consistently produce greater overall prosperity.

[...]

Bush's tax cuts on the rich only managed to produced "massive deficits" and the "slowest job growth in half a century." Budget data make clear that Obama's spending hikes, not Bush's tax cuts, produced today's massive deficits.

[...]

During the Bush years, "we had weak regulation, we had little oversight." This is patently false. Regulatory staffing climbed 42% under Bush, and regulatory spending shot up 50%, according to a Washington University in St. Louis/George Washington University study. And the number of Federal Register pages - a proxy for regulatory activity - was far higher under Bush than any previous president.

[...]

The "wealthiest Americans are paying the lowest taxes in over half a century." Fact: the federal income tax code is now more progressive than it was in 1979, according to the Congressional Budget Office. IRS data show the richest 1% paid almost 40% of federal income taxes in 2009, up from 18% back in 1980.

[...]

We can keep tax breaks for the rich in place, or make needed investments, "but we can't do both." Not true. Repealing the Bush tax cuts on the "rich" would raise only about $70 billion a year, a tiny fraction of projected deficits. With or without the Bush tax cuts, the country can't afford Obama's agenda.

It is probably too much to ask the press to point out Obama's lies this campaign season. However, Glenn Kessler at the WaPo blog Fact Checker examined the same Obama speech and gave it "3 Pinocchio's" out of a possible 4. Awarding three Pinocchio's means that there was "Significant factual error and/or obvious contradictions" in the facts presented.

posted December 09, 2011 09:09 AM            

Within the last three months, two small Midwestern towns have served as backdrops for two high-profile political speeches articulating two vastly different prescriptions for America’s woes. I’m just gonna go ahead and say it: I preferred Indianola. You? But let’s break this down anyway.

Speaking aptly in Osawatomie, home of the Kansas state mental hospital, President Obama this week trotted out his tiresome accusation that the American Dream basically ceased functioning when George W. Bush became the 43rd president 10 years ago. No matter how many years pass, no matter how many majorities and Super Majorities the Democrats may have enjoyed, Bush and the greedy 1% have stolen the American Dream in record time, with alarming efficiency, even, miraculously, when they are not in control of the government!

The bottomline of Osawatomie (and there are no surprises here): we must raise taxes on the rich, increase regulations, and spend our way to prosperity, all while demonizing half the country at every turn. Working hard no longer pays off because Bush and the “evil” Republicans cut taxes on the wealthy, fought job-killing regulations, thereby deliberately destroying the middle class, many of whom are actually employed by the wealthy, strangely. There was no mention that the average unemployment rate under President Bush was nearly half the rate as under President Obama, and the annual deficit three times less. We’re spending more to achieve less employment. Go figure!

Here’s a snippet of Obama’s speech:

My grandparents served during World War II. He was a soldier in Patton’s Army; she was a worker on a bomber assembly line. And together, they shared the optimism of a nation that triumphed over the Great Depression and over fascism. They believed in an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried — no matter who you were, no matter where you came from, no matter how you started out.

And these values gave rise to the largest middle class and the strongest economy that the world has ever known. It was here in America that the most productive workers, the most innovative companies turned out the best products on Earth. And you know what? Every American shared in that pride and in that success — from those in the executive suites to those in middle management to those on the factory floor. So you could have some confidence that if you gave it your all, you’d take enough home to raise your family and send your kids to school and have your health care covered, put a little away for retirement.

But for most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. Those at the very top grew wealthier from their incomes and their investments — wealthier than ever before. But everybody else struggled with costs that were growing and paychecks that weren’t — and too many families found themselves racking up more and more debt just to keep up.

Now, the thing I’ve never understood about class warfare is the lack of logic. To put it in terms I can understand, let’s say my neighbor decides he’s not content with his current job as a bartender at the local pub, so he enrolls in business school, gets a job as a low-level manager, works 15-hour days for five years, and goes on to become a high-fallutin’ corporate executive for the Hershey Company. And, having come up with a new formula for guilt-free chocolate that explodes worldwide sales, he is rewarded with a million-dollar salary and perks that would make Albert Pujols blush.

Meanwhile, I’m still sitting on my butt blogging all day while eking out a lower-middle-class income from the occasional freelance gig. How does my neighbor’s success harm me? Even if the government does the unTHINKABLE and cuts his tax rate, how does that harm me? Well, according to the class warriors, I’m harmed because my filthy rich hard-working executive neighbor is not sending more of his ill-gotten chocolate proceeds to Washington D.C. so government bureaucrats can use it to help me! I mean CRIMINEY, I need a green energy grant, and a scholarship to study engineering, so I can build high-speed trains, for crying out loud! Instead, the evil Republicans are allowing my neighbor to keep the majority of his money and BLOW it all right here in Hershey, P.A. as he sees FIT. Can you believe it?

I say, that’s a rotten deal, right? I mean, obviously, by not making my neighbor send more of his money to D.C., that’s causing me to sit on my butt and blog even more, and become at risk of falling out of the middle class. The more money he spends here in Hershey building the local economy, the less that is available to be spent building the D.C. economy, thereby destroying MY middle-class opportunities, dammit!

Thank you President Obama … for reminding us how INCOME INEQUALITY hurts all of us. The more someone else earns … the more I want what they have. The bigger the gap between their salary and mine, the more guilty I feel for sitting on my butt, and the more I feel obliged to rack up obscene amounts of credit card debt just to assuage my guilt. And the more my wealthy neighbor spends on lousy things like building hospital wings and orphanages, the less MY FEDERAL GOVERNMENT FAMILY has available to spend on solar panels and guns for Mexican drug lords. It’s tragic.

(Note: I just wanted to remind everyone that professional baseball players who earn $25 million per year are exempt from our INCOME INEQUALITY rage … Obviously, they EARN their money the old-fashioned way … by running around a field for six months out of the year, tossing around a ball, and spitting tobacco all over the place.)

Meanwhile, speaking of fields, in Indianola, Iowa, home to the famous Balloon Grounds, Gov. Sarah Palin delivered an entirely different address this past September. I was there in the audience with a few thousand of my closest friends. I didn’t hear any nebulous attacks on “evil” rich folks … I did hear an awful lot about actual corruption and how that creates more and more debt and government dysfunction for me AND my “evil” rich neighbor to have to pay off. We honest folks, rich and poor, are all in this together, right?

Here’s a snippet:

And what is the President’s answer to this enormous debt problem? It’s just spend more money. Only you can’t call it “spending” now. Now you got to call it “investing.” Don’t call it “spending.” Call it “investing.” It’s kind of like what happens with FEMA and some of these other bureaucratic agencies that don’t really want to refer to our centralized federal government as “government.” Now it’s called the “federal family.” Am I too old to ask to be emancipated? Never thought I’d say it, but I want a divorce.

No, the President’s answer to our debt problem is: Incur more debt. Spend more money (only call it “investing”). Make more folks even more reliant on government to supply their every need. This is the antithesis of the pioneering American spirit that empowered the individual to work, to produce, to be able to thrive and succeed with fulfillment and with pride; and that in turn built our free and hope-filled and proud country.

He wants to “Win The Future” by “investing” more of your hard-earned money in some harebrained ideas like more solar panels and really fast trains. These are things that venture capitalists will tell you are non-starters, yet he wants to do more of them. We’re flat broke, but he thinks these solar panels and really fast trains are going to magically save us. He’s shouting “all aboard Obama’s bullet train to bankruptcy.”

The only future that Barack Obama is trying to win is his own re-election, and he has shown that he’s perfectly willing to mortgage our children’s future to pay for it. And there is proof of this. Just look closely at where all that “green energy” stimulus money is “invested.” See a pattern. The President’s big campaign donors got nice returns for their “investments” in him to the tune of billions of your tax dollars in the form of “green energy” stimulus funds. The technical term for this is “pay-to-play.” Between bailouts for Wall Street cronies and stimulus projects for union bosses’ security and “green energy” giveaways, he took care of his friends. And now they’re on course to raise a billion dollars for his re-election bid so that they can do it all over again. Are you going to let them do it all over again? Are you willing to unite to do all we can to not let them do it again so we can save our country?
Governor Palin described specific problems (crony capitalism and unsustainable debt) and offered specific solutions (balanced budget, greater state autonomy, elimination of both the corporate tax rate AND corporate welfare).

President Obama simply and indiscriminately demonized anyone who happens to earn a lot of money, accusing them of not paying their “fair” share — whatever that means. He also demonized Republicans NINE times in his speech – as if he were president of only HALF a country.

Governor Palin didn’t mention either party at all — not once — except to call out both the GOP and President Obama for practicing crony capitalism and sending trillion-dollar thank you notes to campaign contributors.

It’s no small wonder that the speeches garnered completely different receptions.

Governor Palin’s speech received praise from The New York Times of all places for being “substantive “and having the potential to “bridge the political divide.”

President Obama’s speech was rated three Pinocchio’s by the Washington Post for rampant untruths.