It's Obozonomics ... woohoo
March 08, 2009
It's not Keynesian, it's not Adam Smith, it's not Friedman or Laffer, its not even Marxist. It's nothing more than a bunch of spending, taxation, and wealth distribution.
America welcome to Obozonomics!
Obama said of his American and Recovery Act 2009; "It's a plan that will save or create 3 to 4 million jobs over the next few years." Erin Burnett the economic illiterate reporter on CNBC tells us; “it's country friendly”.
Then on March 3, 2009 Obama opines; "I'm absolutely confident that they will work ..." speaking about his economic policies. And, Erin Burnett advises the nation; 'we all must recognize a change in our living standards.' It's comforting to know a man that never studied economics, created a job, or balanced a budget is confident of his new economic theories. I guess we should all embrace the irrelevant opinions of an economic illiterate TV reporter that advises America that our living standards must change. The truth is Obama has no idea what he is doing and Erin Burnett is a partisan hack TV reporter.
Obozonomics has minimal foundation in any known economic theory known to man. It's a mish-mash of many theories implemented in exactly the wrong way. Yet, its virtually impossible to enlighten economic neophytes about theories they would need to study for years to understand.
Ask yourself if Obozonomics is Keynesian1. Keynesian economic theory emphasizes the demand side of an economy. Socialists embraced Keynesian economics because of the ability to increase government intervention, fiscal and monetary, into the economy to mitigate the affects of economic recessions and booms. Classic Keynesians advocate increased direct government spending, purchases, and tax CUTS to input more disposable income into the system. But, the spending in Obozonomics really doesn't begin for years and it calls for tax increases on those most able to input disposable income into the economy. The increases in direct taxation and allowing the Bush tax cuts of 2001 and 2003 to expire will drive-out disposable income from the economy. Every citizen who pays taxes, those most capable of inputting disposable income into the economy, will see a dramatic rise in their tax rates. This reduces investment, savings, consumption, and stimulus.
Adam Smith wrote about taxes; “Secondly, it may obstruct the industry of the people, and discourage them from business.”2 Milton Friedman too; “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible.” Arthur Laffer3 on allowing the Bush tax cuts to expire; “If they let them all expire, it would just be an amazingly huge tax increase. And it would have a horrendously negative effect on the economy.” What actually is the Obozonomics tax policy in the current budget plans?
Table 1 below illustrates Obozonomics tax plan. Obozonomics raises the top marginal rates on earnings, dividends and capital gains, and phases out itemized deductions for high income taxpayers. ($250,000 per couple; $208,000 per individual) Obozonomics uncaps Social Security taxes, which currently are levied on the first $102,000 of earnings. The result is a remarkable reduction in work incentives for our most economically productive citizens.
The marginal tax rates will increase 41% to 62.8% from 44.6% in one year; the marginal tax rate on dividends increases 30% to 65.6% from 50.4%. These rates apply to small businesses and two earner middle-aged middle-class couples in their peak earning and investing years.
Table 1
Direct taxation of the citizens who drive the economy is counter productive to stimulating the economy. What we haven't addressed is Obozonomics plan on indirect taxation; especially the cap-and-trade plan.
The foundation of Obozonomics cap-and-trade can best be described as the creation of the mentally ill. I suspect it started as an exercise to identify and categorize mental illness among the Liberal Democrats in Congress. The treatment invokes a Global Warming hysteria and desire to destroy the very essence of our economy – efficient power. What is cap-n-trade?
The guv'mint will impose emissions standards on industries across this nation. Electric utilities, manufacturers, mines, etc, any industry that uses energy. Industries will be encouraged to purchase emissions credits from the guv'mint or on a global basis from nations with spare emissions credits. The economy across the board will be dampened by the effect of this indirect taxation curbing investment, savings, and job creation.
How does this stimulate the economy?
It's not Keynesian, it's not Adam Smith, it's not Friedman or Laffer, and it's not even Marxist.
It's Obozonomics!
1John Maynard Keynes, The General Theory of Employment, Interest and Money
2Adam Smith, The Wealth of Nations, Book V Chapter II Pt II
3Arthur Laffer, President Reagan's supply side Economist. Laffer Curve
No comments:
Post a Comment