INVESTOR'S BUSINESS DAILY
Election '08: The Obama campaign is using Wall Street's woes as a new rationale for its massive tax increases and protectionism. The last president to take that approach helped cause the Great Depression.
According to Barack Obama's running mate, Sen. Joseph Biden, D-Del., agreeing to pay lots more taxes is patriotic. "We want to take money and put it back in the pocket of middle-class people," the Democratic vice presidential nominee told ABC's "Good Morning America." He said, "It's time to be patriotic" and "be part of the deal, time to help get America out of the rut." Not unlike Bill Clinton campaigning in 1992, Sen. Obama promises a middle-class tax cut at the expense of the rich.
But it was less than a month after his inauguration in 1993 that President Clinton, intent on so much new government "investment," gave a televised Oval Office address to the nation announcing that instead of a middle-class tax cut there would be a middle-class tax hike, "because the deficit has increased so much beyond my earlier estimates."
With Clinton expenditure plans in the 1992 campaign dwarfed now by Obama's — Obama would add more than $343 billion in annual spending according to the National Taxpayers Union — his vows of middle-class tax cuts should be scrutinized carefully.
As outlined in a Congressional Budget Office analysis last December, about 45% of total income in all households comes from those making an average of about $85,000 or less. That's about 90 million households, yet they pay only about 31% of all federal taxes.
The 23 million households making up the richest 20% already pay about 69% of total taxes; the nearly 12 million households constituting the top 10% of income earners already pay about 55% of all federal taxes.
So when it comes time for a President Obama to decide where to drill for more cash for Uncle Sam, the middle class is where he is going to find all the vast untapped resources to be; taxing the rich alone — who already pay such a large proportion of taxes already — simply won't bring in enough money.
Sen. John McCain's presidential campaign now accuses Obama of "cheerleading" for the massive bailouts on Wall Street and using recent financial turbulence to drum up popular support for higher taxes on the taxed-out upper incomes.
But that kind of reaction by Obama to troubles in the financial sector is reminiscent of President Herbert Hoover's handling of the Great Depression.
Hoover more than doubled the top marginal income tax rate and signed into law the Smoot-Hawley act, raising tariffs to record levels the summer after the 1929 stock market crash.
Sen. Obama promises, according to his economic advisers, that "The top two income-tax brackets would return to their 1990s levels of 36% and 39.6% (including the exemption and deduction phase-outs)." That is, he'll hike taxes during a weak economy.
As for the North American Free Trade Agreement, before sewing up the Democratic nomination, Obama's campaign expressed "serious concerns about the effect that the agreement would have on the American auto, beef, and rice industries, as well as the lack of labor and environmental protections in the agreement.
"Sen. Obama is also troubled that the Bush administration has not done more to help American workers who are losing their jobs as a result of the changing world economy."
That is thinly veiled protectionism, in spite of the fact that Obama has had kinder things to say about NAFTA since being assured of being his party's nominee.
The campaign currently says an Obama administration would "use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks."
His campaign Web site adds that "NAFTA and its potential were oversold to the American people," promising "to fix NAFTA so that it works for American workers."
Massive new taxes and the abandonment of global economic freedom sold as "patriotism" is not only an outrage; it's a huge danger to an economy that has enough troubles already.
© Copyright 2008 Investor's Business Daily. All Rights Reserved.
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