Anti Obama.net

CONGRATULATIONS TO BARACK OBAMA

We wish you all the success in coming years.  We will be reporting on the triumphs and failures of your Administration in the genuine hope that you are able to deliver on your promise to strengthen our nation and improve the lives of every American.

Lee Troxler

Obamanomics: A Recipe For Recession

Source: WALL STREET JOURNAL

What if I told you that a prominent global political figure in recent months has proposed: abrogating key features of his government's contracts with energy companies; unilaterally renegotiating his country's international economic treaties; dramatically raising marginal tax rates on the "rich" to levels not seen in his country in three decades (which would make them among the highest in the world); and changing his country's social insurance system into explicit welfare by severing the link between taxes and benefits?

The first name that came to mind would probably not be Barack Obama, possibly our nation's next president. Yet despite his obvious general intelligence, and uplifting and motivational eloquence, Sen. Obama reveals this startling economic illiteracy in his policy proposals and economic pronouncements. From the property rights and rule of (contract) law foundations of a successful market economy to the specifics of tax, spending, energy, regulatory and trade policy, if the proposals espoused by candidate Obama ever became law, the American economy would suffer a serious setback.

To be sure, Mr. Obama has been clouding these positions as he heads into the general election and, once elected, presidents sometimes see the world differently than when they are running. Some cite Bill Clinton's move to the economic policy center following his Hillary health-care and 1994 Congressional election debacles as a possible Obama model. But candidate Obama starts much further left on spending, taxes, trade and regulation than candidate Clinton. A move as large as Mr. Clinton's toward the center would still leave Mr. Obama on the economic left.

Also, by 1995 the country had a Republican Congress to limit President Clinton's big government agenda, whereas most political pundits predict strengthened Democratic majorities in both Houses in 2009. Because newly elected presidents usually try to implement the policies they campaigned on, Mr. Obama's proposals are worth exploring in some depth. I'll discuss taxes and trade, although the story on his other proposals is similar.

First, taxes. The table nearby demonstrates what could happen to marginal tax rates in an Obama administration. Mr. Obama would raise the top marginal rates on earnings, dividends and capital gains passed in 2001 and 2003, and phase out itemized deductions for high income taxpayers. He would uncap 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 top 35% marginal income tax rate rises to 39.6%; adding the state income tax, the Medicare tax, the effect of the deduction phase-out and Mr. Obama's new Social Security tax (of up to 12.4%) increases the total combined marginal tax rate on additional labor earnings (or small business income) from 44.6% to a whopping 62.8%. People respond to what they get to keep after tax, which the Obama plan reduces from 55.4 cents on the dollar to 37.2 cents -- a reduction of one-third in the after-tax wage!

Despite the rhetoric, that's not just on "rich" individuals. It's also on a lot of small businesses and two-earner middle-aged middle-class couples in their peak earnings years in high cost-of-living areas. (His large increase in energy taxes, not documented here, would disproportionately harm low-income Americans. And, while he says he will not raise taxes on the middle class, he'll need many more tax hikes to pay for his big increase in spending.)

On dividends the story is about as bad, with rates rising from 50.4% to 65.6%, and after-tax returns falling over 30%. Even a small response of work and investment to these lower returns means such tax rates, sooner or later, would seriously damage the economy.

On economic policy, the president proposes and Congress disposes, so presidents often wind up getting the favorite policy of powerful senators or congressmen. Thus, while Mr. Obama also proposes an alternative minimum tax (AMT) patch, he could instead wind up with the permanent abolition plan for the AMT proposed by the Ways and Means Committee Chairman Charlie Rangel (D., N.Y.) -- a 4.6% additional hike in the marginal rate with no deductibility of state income taxes. Marginal tax rates would then approach 70%, levels not seen since the 1970s and among the highest in the world. The after-tax return to work -- the take-home wage for more time or effort -- would be cut by more than 40%.

Now trade. In the primaries, Sen. Obama was famously protectionist, claiming he would rip up and renegotiate the North American Free Trade Agreement (Nafta). Since its passage (for which former President Bill Clinton ran a brave anchor leg, given opposition to trade liberalization in his party), Nafta has risen to almost mythological proportions as a metaphor for the alleged harm done by trade, globalization and the pace of technological change.

Yet since Nafta was passed (relative to the comparable period before passage), U.S. manufacturing output grew more rapidly and reached an all-time high last year; the average unemployment rate declined as employment grew 24%; real hourly compensation in the business sector grew twice as fast as before; agricultural exports destined for Canada and Mexico have grown substantially and trade among the three nations has tripled; Mexican wages have risen each year since the peso crisis of 1994; and the two binational Nafta environmental institutions have provided nearly $1 billion for 135 environmental infrastructure projects along the U.S.-Mexico border.

In short, it would be hard, on balance, for any objective person to argue that Nafta has injured the U.S. economy, reduced U.S. wages, destroyed American manufacturing, harmed our agriculture, damaged Mexican labor, failed to expand trade, or worsened the border environment. But perhaps I am not objective, since Nafta originated in meetings James Baker and I had early in the Bush 41 administration with Pepe Cordoba, chief of staff to Mexico's President Carlos Salinas.

Mr. Obama has also opposed other important free-trade agreements, including those with Colombia, South Korea and Central America. He has spoken eloquently about America's responsibility to help alleviate global poverty -- even to the point of saying it would help defeat terrorism -- but he has yet to endorse, let alone forcefully advocate, the single most potent policy for doing so: a successful completion of the Doha round of global trade liberalization. Worse yet, he wants to put restrictions into trade treaties that would damage the ability of poor countries to compete. And he seems to see no inconsistency in his desire to improve America's standing in the eyes of the rest of the world and turning his back on more than six decades of bipartisan American presidential leadership on global trade expansion. When trade rules are not being improved, nontariff barriers develop to offset the liberalization from the current rules. So no trade liberalization means creeping protectionism.

History teaches us that high taxes and protectionism are not conducive to a thriving economy, the extreme case being the higher taxes and tariffs that deepened the Great Depression. While such a policy mix would be a real change, as philosophers remind us, change is not always progress.

Mr. Boskin, professor of economics at Stanford University and senior fellow at the Hoover Institution, was chairman of the Council of Economic Advisers under President George H.W. Bush.

Obama's Social Security Plan: Tax Rich, Give To Poor

*Under Obama's plan, restaurant owners are incentivized NOT to open new restaurants says former Oklahoma state senator. Obama on raising taxes: They can afford it.*

Source: NEWSMAX

Former White House economic advisor Larry Lindsey is concerned that Democratic Presidential candidate Barack Obama's plans to reform Social Security may actually transform it into a new, federal "welfare" program.

The current top level of Social Security taxation is $102,000. Under Obama's plan, those with incomes over $250,000 will have to pay higher taxes, while taxpayers who make between $102,000 and $250,000 would be protected and not have to pay new Social Security taxes.

Essentially, Lindsey said, if Obama's plan for Social Security reform is adopted, upper income taxpayers with an income of $250,000 or above, which comprise about 3 percent of the population in the U.S., will be subsidizing the retirements of upper middle class taxpayers and middle class taxpayers.

Interestingly, this would also take overall income tax rates to a level much higher than in the 1990s, Lindsey said.

Back in the 1990s, income, and Social Security taxes totaled 40 percent of income, but under Obama the overall rate would go up to 53 percent.

"Plus you you will have state and city taxes, and that will take it up to 60 percent for some," said Lindsey. "That will make it difficult for Wall Street to attract talent in New York and New Jersey, which have city and state taxes, versus London, where taxes are just at 40 percent."

So basically only high-income taxpayers will wind up paying more if Obama is elected president in November.

What's more, even though higher income taxpayers will be taxed, they will receive no new retirement benefits from Social Security.

According to estimates from the Tax Policy Center, those groups could end up paying anywhere from several thousand of dollars to tens of thousands of dollars more to Uncle Sam than they currently do.

Obama hasn't said whether the money from wages and salaries over $250,000 would be taxed at the same rate.

"For someone making $200,000 or $250,000 today, Social Security is still going to be a major part of their retirement," said Lindsey. "It is not a welfare plan. It is 20 to 25 percent of retirement income. This is one of the New Deal programs that has had a lot of staying power."

The reason Obama reportedly picked the $250,000 level of income for more taxation is that he is targeting independent voters in the $103,000-$249,000 income bracket in battleground states, says Lindsey. Voters in that income bracket will not be taxed under Obama's plan.

"They really don't want to apply a tax at that level because there is a lot of votes there," said Lindsey. "There's a lot of voters there in New York, New Jersey, and Ohio. Politics is trumping good program design."

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This from My Fox Chicago.

"A high-income entrepreneur would see his or her federal marginal tax rate rise to 53 percent from 37.7 percent," Lindsey wrote in a June 20 Wall Street Journal op-ed column.

The marginal tax rate is what a person pays on each additional dollar earned. Lindsey wrote that Obama's plans would provide a powerful incentive for the highest-earning Americans to work less, invest less and contribute less to the economy.

Former Oklahoma Sen. Don Nickles, a Republican, agreed. A person who owns two restaurants and makes $500,000 a year would have little incentive to open a third restaurant under Obama's tax plans, and might even close one, Nickles said in an interview. "He's not going to be hiring more people," Nickles said.

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This from the Wall Street Journal in March, 2008.

Obama on tax hike: "Once people are making over $200,000," Mr. Obama says, "they can afford it."

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