Obama's Economic Plan

In a stunning about face this week, Barack Obama announced that "I've got an economic plan that is similar to Bill Clinton's." On its face, this would mean that, if elected, Barack Obama would raise taxes on all taxpayers, support NAFTA and reduce welfare, three cornerstones of the Clinton economic legacy. This would be a serious reversal of Senator Obama's campaign promises and his stated policies. Other than a crass attempt to hitch his fate to the Clinton star, the comment highlights the serious risk to our current economic situation that is posed by Barack Obama's pledge to raise taxes on the producers of jobs and capital, increase welfare and abrogate our commitment to NAFTA. These policies create a serious probability of leading our economy into further economic dismay.

Barack Obama is wholly disingenuous in implying that his tax policy will have the same success as the Clinton policy when, in fact, the economic environment inherited by Bill Clinton was vastly different from today's economy. Obama's assertion is similar to saying that because an aspirin cures a headache it will do the same for cancer. President Clinton benefited from an economy that grew by 4.2% in the first quarter of his Presidency, the Dow was up 5.8% for the year prior to his election, total national debt was 54% of national output and information technology was in its infancy. Tax rates inherited by Clinton had been reduced by 60% under Reagan and Bush Senior since the Carter years. When President Clinton increased taxes, he simultaneously brought our national budget into balance in sixteen months. He signed NAFTA against the will of his own party.

Yesterday, the country's growth contracted by .3%, providing one-half of the technical verification of the recession being felt around the country and certain to be inherited by the next President. The Dow is down 32.5% for the year, our national debt is at nearly 70% of total GDP (after WWII national debt was 102% of GDP and America was at the beginning of its stunning economic success). Currently, unless investors are able to forcefully advance new energy technologies, there is no analog to the 1990's information revolution which can give us the necessary economic stimulus for innovation and job growth. Supporters of the Illinois Senator not only ignore the current fragile economy, but also the obvious consequences of Obama's opposition to NAFTA and his destructive economic philosophy. In fact, Senator Obama's policy of higher taxes and higher tariffs for our fragile economy at this time is exactly the wrong direction for the country.

One of the reasons that Barack Obama could well lose on Tuesday is because voters are beginning to realize that his policies will tank the economy and the markets. The stock market looks forward, not backward, and there is a direct correlation between the declining Dow and the increasing poll numbers for Barack Obama. According to the June Gallop Poll, by a margin of 87 to 13, Americans care more about improving the economy than they do about redistributing wealth.

According to his rhetoric, Barack Obama is helping working Americans. In fact, John McCain offers bigger tax breaks to the working class than Barack Obama. (The only reason you do not know this is because you have not looked at the fact that no one earning under $50,000 will pay any tax under John McCain and, on the famous "Obama Taxometer", the untruthful Obama campaign does not include the $5,000 health care tax credit that John McCain in giving to every American). Moreover, almost 75% of Americans making $100,000 have some capital gains. As the value of their investments turns negative they will suffer badly, even if Barack Obama does not raise their taxes. A declining economy is bad for everyone.

It is dishonest for Senator Obama to claim he will fix this economy by taxing the top 5%. His spending increases on programs alone amount to $300 billion per year. The dishonesty is to say that this will be paid by his tax on the top 5%. It is simply not possible. As the Obama plan makes clear, the additional taxes of the "rich" have already been committed to his "refundable tax credits". According to the Tax Policy Center, the Obama tax plan will take $70 billion from the top 5% of earners in the country and redistribute it to the 60 million Americans who pay no tax.

Senator Obama's economic philosophy will make America neither stronger nor fairer. Today, the top 1% of earners contributes 40% of the nation's $2.6 trillion tax intake and the bottom 50% pay 2.9% of our nation's total needs. This is in contrast to the 17% of total tax paid by the top filers under the Carter Administration when the top marginal rate was 70%. It has been shown that reductions in tax rates increase tax revenues because incentives to private enterprise strengthen the economy and create jobs and a larger tax base.

As he exploits the current widespread economic uncertainty in the nation and blames the richest, Barack Obama not only ignites an insidious class war, but also ignores the inconvenient fact that America's top earners have paid double in taxes since the reduction of their tax rates under George Bush. Namely, in 2003 the richest Americans paid $136 billion in taxes and after the tax cut in 2006 they paid $274 billion. Times of economic uncertainty are exactly when our government needs to cling to business and the generators of wealth and jobs, not use them as scapegoats.

Along with my Democratic "friends," I used to make fun of Republicans by saying that they lived in an "evidence-free zone." Well, I now see that it is the Democrats, swept away in the "narrative" and "transcendence" of Barack Obama, that are refusing to look at the facts about the likely consequences of electing Barack Obama. The same media outlets that failed to vet the Iraq War are now failing to vet Barack Obama. Unfortunately, they will never accept responsibility; it will be our country that takes the hit. For me, that is very sad.

John McCain may not be the most eloquent or sexiest candidate in this race, but he is the candidate who will best serve this nation for the next four years. He is reducing taxes for all Americans further than Barack Obama, cutting federal spending and encouraging free trade and energy independence as engines for domestic economic growth. More importantly, he and Sarah Palin actually have a record of taking on the vested interests and their own party (while working with Democrats) to make tough decisions. I have yet to be shown the same evidence of the junior Senator from Illinois.

Regrettably, the road kill of Obama's reckless rhetoric and policies is not the rich taxpayer, but the entire American economy. The pain will be felt mostly by those who lose their jobs in the economic downturn and are the owners of 401ks and other savings who suffer at the stock market continues to decline. Barack Obama has not been held accountable for the obvious consequences of his tax and trade philosophy and policies. If elected, it will be all Americans who will suffer.

PS. Most readers have probably not read this far into the piece, but if you have, I have one more comment.....Since speaking out about this election, I have seen the Obama response is to attack me personally, particularly on the Internet. Fine, but just to let you know, eighteen months ago my husband wrote in the Financial Times that capitalism was in retreat because of the greed on Wall Street. We have subsequently invested only in tax-free government securities. So, my opinion is not driven by my economic interests. I am driven by what I said in the New York Times in June, "I love my country more than my party" ......and it is ok with me if you hate me. xoxoxo

Related: Lynn Forester de Rothschild: Barack Obama's America

Comments

[era889094]

Your assertion that there is a relation between the rising poll numbers of Obama and the falling Dow is laughable. The recent market decline is the result of a global credit crisis amongst banks, fueled by rampant deregulation. The chickens coming home to roost, if you will. No economist is claiming that any of the market decline is due to Obama's rising poll numbers, not one. I think most voters are well aware of this credit crisis right now, and are not blaming Obama's popularity for the falling markets. That statement alone makes your entire article suspect, in my opinion.

You keep bringing up the top 1% earners argument, and here you state that under Carter those people paid 17% of the taxes, so their taxes have increased 135%. The worker to CEO pay ratio has increased over 1000% since the Carter administration, somewhere around 35:1 to 430:1. These top 1% people are still enormously wealthy, and they are not feeling the pinch of a downward economy in their daily lives. You can't dispute the fact that the disparity between the super-rich and even the upper middle class in this country has never been greater. So your implied argument of unfairness to these top 1% earners just doesn't resonate.

[Rule Of Law]

As Mark Twain said: "There's lies, damned lies, and Statistics!" And were he alive today he would add at the top of that notorious list--Economics.

[Rule Of Law]

My first response to you could be misconstrued--I agree with your numbers. They are real world. Her's, as are those of most economists who are paid by the elites to construct justifications for their world view, are twisted. How is it that the ultra-wealthy so easily forget how wealthy they are and how they got that way, when they try to make their point about how we don't deserve anything more than what we have?

[tombaker]

Another wonderful thing about the election being over?

Never again having to see this woman on tv or in print.

[slc1950]

To the point. lol

[DBJ]

I wish that were true. Something tells me that we will be hearing from her and those like her again and again because if Dems win her and her new "friends" will be there to point out all the things they think is going wrong because Dems are now in control.

[caterpol]

"....The pain will be felt mostly by those who lose their jobs in the economic downturn and are the owners of 401ks and other savings who suffer at the stock market continues to decline...­."

This has already happened. And it wasn't under Obama's watch. The very wealthy may have been insulated for the past 8 years, not so for the rest of us.

[maca]

After seeing what "trickle-down" economics have done the the country (all but destroyed it), it's astonishing that republicans still have the nerve to try and make us afraid of repealing it. Is Obama's plan perfect? No. Can ANY plan totally fix the mess in only four years? Probably not. Will I, and most of America, be voting for a plan that is the polar opposite of the one that got us into this mess? Absolutely.

[McMurdo]

There is a value used by economists called the Gini Coefficient which
serves as a measure of how wealth and income are distributed in an
economic system http://en.wikipedia.org/wiki//Gini_coefficient). The
value ranges from 0 to 100 where 0 represents where everyone has
equal wealth and income and 100 where one person has everything and
everyone else has nothing. Obviously, all real economies are somewhere
in between these two extremes.

From the wiki article, here is how the U.S. Gini Coefficient has changed
over time (US Census Bureau figures):

Year=U.S. Gini
============
1967=39.7
1968=38.6
1970=39.4
1980=40.3
1990=42.8
2000=46.2
2005=46.9
2006=47.0
2007=46.3

For purposes of comparison, here are recent Gini figures for countries
that are in the top 30 by GDP and also in the top 30 by GDP per capita
(from CIA WorldFact Database, slightly different from Census Bureau figures):

Country=Gini
==========
Sweden=23
Denmark=24
Austria=26
Norway=28
Belgium=28
Germany=28
France=28
Netherland­s=30.9
Spain=32
Canada=32.­1
Italy=33
Greece=33
China(Taiwan)=33
Switzerlan­d=33.7
United_Kingdom=34
Australia=­35.2
Japan=38.1
United_States=45

Here are the countries in the top 30 by GDP with a Gini greater than 40:

Country=Gini
===========
Russia=41
Iran=43
Turkey=43.­6
United_States=45
Mexico=46.­1
China(PRC)­=46.9
Brazil=56.­7
South_Afri­ca=57.8

This should give you some idea of where we are headed if we allow wealth
and income in the U.S. to continue to concentrate.

[good2Bhere]

An excellent point. We could end up with a large peasant class. Don't think it can't happen here in the good ol' U.S.A.

If you want anecdotal evidence of our emerging third-world status, just take a look at your local streets and highways. If you are dodging potholes on your daily commute like I am, you've got to wonder where we are headed if we can't even afford properly paved roads any longer.

End the war in Iraq responsibly, build a true coalition to help us in Afghanistan, invest in the country, develop new industries, put people to work and expand the tax base. It's a tall order, but if we are to survive the current debacle, we have to get started now.

Vote Obama/Biden on November 4th.

[mojavefog]

Lest we forget it is the Republican economic policies and ideology of the last 30 years kicked off by the fabulous Uncle Ronnie that have led us to this precipice. Your obfuscation is not so opaque...c­learly the intent is to lay the ground work of blame for Democrats who will have to work America through the slime of your greedy profit taking.

[hollywood]

With all repsect, please do not take this as an attack. Your statistics may be correct (who knows with stats these days?), but your characterization of Obama is wrong and inclines me to think you may have an agenda. O well. The game is over. Get used to the idea of President Obama and stop the meaningless hit jobs.

[blindjester]

"... voters are beginning to realize that his policies will tank the economy and the markets."

You talk as if tens of millions of Americans are delusional supply side economists like you and Grover Norquist and Phil Gramm and Bill Kristol.

Besides, it's logically impossible to "realize" a lie. All you can do is trick people into believing it.

[Ensentium]

Hail Barack, Hail Barack! Finally, I don't have to work as hard and I will be given a check! You guys have to admit. This is a great country we live in where we don't have to keep our skills up with the changing times. Where we can demand that companies give us more money and when that fails, we can take it from the stinking rich. Look, I'm tired of working my bum off for my rich boss!! I want some of his money!!!

[TaiTai]

No - you'll have to work just as hard - if you're lucky enough to escape the Bush administration with a job. But you'll get to keep more of your money. It's that simple. You're not "taking" money from some poor, little rich person - you're keeping more of YOUR money.

Pretty simple. Trickle down doesn't work.

[Viper]

The Producers of Jobs... their taxes were lowered and they produced less jobs here by 90 percent than under Clinton (who raised taxes)...T­hey did produce lots of jobs in China and India and etc.

I'm sorry but rich kids living on inheritance dont produce jobs! If just having money produced jobs, then lets have a government national lottery and create 120 new billionaires here each year instead of wasting that money in Iraq.!

THis woman is a trcikle downer... however could she have been a Democrat!


Regards

Regards

[Bitsko]

Working class schlub that I am, why would I believe anything a wealthy person has to say about this economy?

[sonofsuns]

I saw Cavuto make the same argument that the decline in the DOW is tied to the belief Obama will win. The next day (Oct. 28th), the DOW shot up about 900 points. Was it because people believe an Obama presidency will mean a more stable economy? The fact is, the DOW fluctuates for a lot of different reasons and to tie it (in a positive or negative way) to the idea that Obama might win is a weak argument.

In regards to economic policy, McCain wants to cut taxes and government spending. At the same time, he wants to stay in Iraq which costs $10 BILLION A MONTH. Sounds like the Bush policy that's put us in SERIOUS debt. On the other hand, Obama wants to raise taxes on the top 5% and end the war in Iraq (CUT SPENDING). Seems like the better plan to me. Admittedly the increase in taxes MIGHT have a negative effect on investment, but with Obama's focus on energy independence and monetary incentive to keep jobs in the U.S., it might actually have a positive effect on investment and our economy as a whole.

Face it. No one likes higher taxes, but we have to pay off this debt. Some people don't think it's fair that the rich have to pay more? Hey, I don't think it's fair I have to pay for a war that I didn't want and for mortgages that aren't mine. Join the party.

[ohnoyoudidnot!]

The "roadkill" is already piling up. The smoking gun is in Bush's hand. Don't blame Barack's "rhetoric" for a crisis that was created by the GOP and Bush.

[WgS]

Dear Ms. Forester, I agree with many of the points you raise although I come to an entirely different conclusion than you do. However, until you stop referring to American's as "tax-payers" and worse, "road-kill" you really aren't doing us much of a public service. We are human beings, complicated, fascinating, beautiful creatures who deserve to be treated and referred to as such. Some of us cannot pay taxes, yet we still vote and have an even greater stake in the outcome of this election. It has been far too convenient for the media and politicians to dismiss the most vulnerable members of our society who cannot pay taxes as irrelevant without even pausing to consider just who these people are.

These folks are physically disabled, mentally ill, women/children and veteran's of war whose continued survival may be at stake in the coming undeterminable months of recession that lie ahead. These folks are also indigenous people and immigrants who listen to all the "rhetoric" of the oh-so-vocal minority waiting for the moment when their promises match their deeds. The hard truth of the matter at this moment is that the land of opportunity has even less opportunity than it did 30 years ago. Battered and abused women and children find it even more difficult to get out the cycles of violence and poverty because even less resources are available to them for mere existence, much less for education, employment and growth.

[ajw]

I am one of the 5% who stands to take a big tax hit with Obama, and I DON'T CARE! I am willing to pay an extra 4% if it means that I can have a president that I respect, a VP who believes in evolution, and an executive branch that won't wipe it's a$$ with the constitution.

Sometimes, it's NOT about the money...

Obama 08

[lakat]

Thank you! Good form!

[DBJ]

I love you for that.

[good2Bhere]

Jolly well said.

[gemmadilemma]

Thank you for having your priorities in order...it is rather refreshing.

Incidentally, I wonder how many Americans making less than $250,000 per year (and let's be honest, the majority of Americans make significantly less than that) WOULDN'T mind paying taxes at a higher tax rate if it meant they too would be making more than $250,000?

I, for one, would. I'd rather make more and pay higher taxes ; )