NYC Letter: Drink The Kool-Aid: Obama Tax Cuts Redux

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Let me be absolutely clear. If you are a family making less than $250,000 a year, you will not see your taxes go up. Not your capital gains tax, not your payroll tax, not your income tax. No taxes. Your taxes will not go up.

Mr. Obama,
being perfectly clear about a $250,000 tax hike floor
SPRINGFIELD, Missouri July 30, 2008 (CNN)

So let's be clear about my tax plan... I want to provide a tax cut for 95 percent of Americans, 95 percent. If you make less than a quarter of a million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down.

Mr. Obama,
being clear about his tax plan
SECOND PRESIDENTIAL DEBATE
NASHVILLE, Tennessee October 7, 2008 (CNN)

Mr. Obama deliberately conflates two campaign messages, tax hikes for the rich, tax cuts for the middle class. This is a neat trick. The truth of Mr. Obama's tax plan requires careful parsing and cross-referencing different message stylings at different times, in different venues. Most listeners just take for granted they are in the 95 percentile because, well, it's a really big percentile.

Mr. Obama believes that the middle class ends at $249,999.99. If you stay below Mr. Obama's quarter million dollar earnings mark, you are a middle-class Joe. If you stay below Mr. Obama's $200,000 earnings mark -- Congratulations! -- you are a middle-class beneficiary of Obamanomics.

Or maybe not.

$200,000?

Obama's position in the past was that he would raise taxes on families making more than $250,000 a year and individuals making more than $200,000. But in his new ad, "Defining Moment," he seems to lower it to $200,000 for families. Mr. Obama:

Here's what I'll do as president. To deal with our current emergency I'll launch a rescue plan for the middle class That begins with a tax cut for 95 percent of working Americans. If you have a job, pay taxes and make less than $200,000 a year, you'll get a tax cut.

That seems kind of ambiguous, but the graphic on the screen says clearly:

Famlies making less than $200,000 get tax cut.

$150,000?

Joe "Hi-Q" Biden, October 27, 2008:

What we’re saying is that $87 billion tax break doesn’t need to go to people making an average of $1.4 million, it should go like it used to. It should go to middle class people — people making under $150,000 a year.

$120,000?

Bill "Et Tu" Richardson, October 31, 2008:

What Obama wants to do is, is, he is basically looking at $120,000 and under among those that in the middle class that there is a tax cut for those.

So what is it, $250,000? $200,000? $150,000? $120,000? [Pause.] The Obama campaign can reasonably argue that those between $250K and the tax-cut threshold won't have their taxes raised. That keeps them square with Mr. Obama's promise. But the Obama campaign cannot ratchet down the tax-cut ceiling, again and again, and Mr. Obama still credibly claim a tax cut for 95% of Americans. If 95% of Americans get a tax cut at the $200,000 threshold, lowering that threshold by 40% reduces those eligible for Mr. Obama's tax cut. Those newly above the lower tax-cut thresholds are moved one notch closer to a tax hike. As a practical matter it is doubtful that the Obama campaign having busted the 95% promise won't move the tax increase threshold lower also.

OBAMANOMICS: PROMISES, PROMISES
"I'm Barack Obama And I Approve This Kool-Aid"

The more telling question, is Mr. Obama's talk of a tax cut even plausible? The Congress has just authorized $700 billion in mad money for the next administration to intervene in financial markets. Atop that is $152 billion of "stimulus". Add to that the trillion dollars in new spending Mr. Obama plans and one question leaps out:

Who's paying for all this?

THE COST OF OBAMA'S PLEDGES

October 29, 2008 (CBS) - Without question, the Barack Obama infomercial served as a very slick and powerful recitation of the biggest promises he's made as a presidential candidate. But the very bigness of his ideas is the problem: he seems blind to the concept his numbers don't add up.

... Still Obama repeated his claim he can find the money to pay for every proposal.

I've offered spending cuts above and beyond their cost.

... Let's break all of this down, starting with his highly suspect, and widely discredited, claim that he can find federal "spending cuts beyond the costs" of his promises. Very few independent economists believe he has identified the savings needed to offset his remarkable list of tax credits, tax cuts and spending pledges.

Fact: The tax cuts he promises, which are mostly refundable tax credits (code for cash back), will cost $60 billion just in year one, according the National Taxpayers Union, though the Obama campaign's own estimates in July put that figure at $130 billion.

Fact: Obama's claim he will lower health care premiums by $2,500 is: 1) guesswork, which is 2) based on health care savings that might, in a perfect world, happen over 10 years - a fact Obama neatly glosses over.

Fact: Obama, when referring to savings he can make by leaving Iraq ($90 billion, according to Congressional Budget Office estimates), has spent these savings several times over, across several different promises depending on the crowd he's addressing.

Most of the time he spends the Iraq savings in the context of the roads he wants to build; sometimes it's for the teachers he wants to hire. Tonight, he riffed rhetorically on the savings, asking how many scholarships could be funded, or how many schools could be built. In the end though, presuming he really saves $90 billion, he can only spend it once.

Remember he also mentioned rebuilding the military ($7 billion per annum); his education initiative ($18 billion per annum); and his energy initiative ($15 billion per annum). He did not mention the $188 billion that he would spend on the brand new stimulus package he has proposed.

If he closes every loophole as promised, saves every dime from Iraq, raises taxes on the rich and trims the federal budget as he's promised to do "line by line," he still doesn't pay for his list.

The conceptual flaw in Mr. Obama's tax-and-spend plan is not that the rich do not pay enough taxes. The conceptual flaw is that there are just not enough rich to tax to pay for everything.

Finally, for those who are voting for Mr. Obama expecting tax relief, we would remind you that he is not the first Democrat that has come to office promising fabulous cuts.

I want to make it very clear that this middle-class tax cut, in my view, is central to any attempt we're going to make to have a short-term economic strategy and a long-term fairness strategy, which is part of getting this country going again.

Candidate Bill,
being very clear about what is central
DEMOCRATIC PRIMARY DEBATE
MANCHESTER, New Hampshire January 19, 1992 (ABC)

From New Hampshire forward, for reasons that absolutely mystified me, the press thought the most important issue in the race was the middle-class tax cut. I never did meet any voter who thought that.

President Bill,
mystified that he should make good on
the central economic precept of his campaign
PRESS CONFERENCE
LITTLE ROCK, Arkansas January 14, 1993 (CNN)

On May 27, 1993, the House adopted H.R. 2264, Omnibus Budget Reconciliation Act of 1993 in a 219-213-1 vote (D 218-38, R 0-175-1, I 1-0). June 24, the Senate adopted the bill in a 49-49-2 vote (D 49-6-1, R 0-43-1), Vice President Al Gore cast the tie-breaker. August 5, the conciliating conference report passed the House in a 218-216 vote (D 217-41, R 0-175, I 1-0). August 10, President Bill signed into law the largest tax increase in American history.

Democratic House + Democratic Senate + Democratic President =

Higher Taxes

Drink the Kool-Aid. And pay your increasing fair share.

Posted by Damian at November 2, 2008 04:30 AM