Barack Obama... A man of our time

Writer John Naisbitt once said “Leadership involves finding a parade and getting in front of it.” I’m not sure that’s quite the right definition of leadership, but it certainly applies to Barack Obama. Just before his election in 2008 he said “We are five days away from fundamentally transforming the United States of America.” What he might have more accurately said was “America is fundamentally changing and I’m here to speed up the process…”

America is indeed changing, and not in a good way. How far has it changed? One need only look to the President’s response to last week’s CBO report about ObamaCare eliminating 2.5 million jobs, most of them being those of low skilled and low wage workers.  White House Press Secretary Jay Carney said: “Individuals will be empowered to make choices about their own lives and livelihoods,” and that they “would have the opportunity to pursue their dreams.”

Fantastic! So now, according to the President, because of Obamacare Americans are now free to follow their dreams without having to worry about the minor issue of financial consequences. Get ready for lots more rock bands and philosophers and actors and artists. Of course this is not exactly new. American college students have been moving away from STEM (Science, Technology, Engineering & Math) courses and into soft categories such as humanities, liberal arts and education for years. In those core areas, where American companies have tens of thousands of high paying jobs they cannot fill because American are simply not qualified, half the students receiving graduate degrees are international students. Add to that the 1/4 of the American students in STEM classes who are foreign born and you can see that Americans have been “pursuing their dreams” for decades. While following your dreams has its benefits – such as more time for partying and fewer late nights of studying – it has downsides too such as higher unemployment and or lower salaries that often come with humanities and social science degrees.

There is of course much more below the surface of the President’s new appreciation for pursuing dreams. Destroying another 2.5 million jobs (or full time equivalents) is exactly what the country needs with a Workforce Participation Rate that is at its lowest point since 1976, and which has been in a precipitous decline since he took office. Then there is the number of people who are claiming disability. It has skyrocketed in recent years – including under Obama. Since 1972 the number of Americans working has increased by 82% but the number of people claiming disability has increased by almost 500%. What’s worse is that America’s service economy of 2014 is a far safer place to work than our manufacturing economy was 40 years ago. And of course one can’t ignore the intersecting paths of food stamps and income tax. Today there are a record 47 Million Americans on food stamps while 47% of Americans pay no income taxes at all.

The parade Barack Obama has decided to jump in front of and lead is the shift from a society where the vast majority of people worked hard and supported themselves and their families to one where a significant number of Americans, if not quite yet a majority, are simply interested in what the government can take from others to give to them. At what point does the system become unsustainable? One doesn’t need a STEM degree to recognize that eventually the number of taxpayers paying into the system can’t support the rapidly growing number of people taking from it. An upside down pyramid can’t stand for long.

So Barack Obama hasn’t really transformed America. He’s simply made it chic to be a socialist. He's made redistribution cool. He's made paying taxes a fool’s errand. Like schools that award medals for participation or little leagues that ban keeping score, Barack Obama has sought to make Americans forget that success and prosperity are forged in the crucibles of hard work, investment and ingenuity and not in the halls of government. He has sought to make being on the dole just another form of pursuing one’s passion. He has sought to replace individual responsibility with government largesse as the symbol that defines our nation. Unfortunately Barack Obama is very much a man of our time. We can only hope that by the time he leaves office Americans will have recognized him for the pied piper he is, seeking to lead the nation over a cliff. 

The Democrat's "middle class tax cut" is a populist red herring

I want to make my priorities clear from the start. One: middle class families need permanent tax relief. And two: I believe we can’t afford to borrow and spend another $700 billion on permanent tax cuts for millionaires and billionaires.

That is a line from President Obama’s weekly radio address last week. He’s referring to the coming tax hikes as the Bush Tax Cuts are due to sunset on December 31st. Interestingly, the reason the sunset provision is there in the first place is because Tom Daschle, (the then Democrat leader in the Senate) threatened a filibuster without it. That phrase tells you everything you need to know about President Obama’s sincerity when he talks about putting jobs and the economy first.

On Friday the unemployment numbers came out and the rate had crept back up to 9.8% as employers added a mere 39,000 jobs in October. At the same time President Obama and the Democrats are seeking to extend unemployment benefits beyond the already unprecedented 99 week limit. Ninety-nine weeks! That is two years of receiving a government check for doing nothing. (That doesn’t’ mean that unemployed people are literally doing nothing, but by definition they are not working.) I’m not sure how long it takes to develop a bad habit, but two years is probably a pretty good start. That causes one to wonder what is the bad habit forming effect of a government check on someone who has been receiving welfare for years…

Back to the Democrat red herring. As President Obama’s words demonstrate, the Democrats are seeking to manipulate the conversation using populist rhetoric to demonize the rich. At the core of their “solution” to our financial problems is their effort to raise taxes on the “millionaires and billionaires” while giving the middle class a tax cut. Republicans are fighting this effort, suggesting that doing so will harm job growth. The GOP position is based on the fact that small businesses are the engine of the American economy and create three out of every four new jobs in the country. That’s relevant because most small businesses owners file their taxes using personal income tax returns… and those are where the taxes are going to go up. Here are the numbers for the top two tax brackets:

For those in the second highest bracket – families with income between $171,851 and $373,650 – their tax bill is going to increase by ten percent as the rate moves from 33% to 36%. For those in the highest tax bracket – families with income above $373,650 – they will see their tax bill rise by 13% as the rate jumps from 35% to 39.6%.

Democrats are quick to point out that only 3% of small business filers are subject to the two highest tax brackets. That is true. Most small businesses are sole proprietorships where the business in question is a side venture to supplement income. Think of someone who sells comic books on eBay, dabbles as a real estate agent or designs websites on the side. What is far more important however is that while only 3% of small businesses are subject to the highest tax rates, the businesses that make up that 3% represent 44% of all small business income. Let’s do a little math problem:

IF: Small business represents over 75% of all net new job creation in the Unite States;
AND IF: 3% of small businesses generate 44% of all small business income and a similar number of jobs;
AND IF: Democrats want to raise taxes on the small businesses that fall in that 3%;
THEN: Democrats want to raise taxes on companies that are expected to be responsible for 33% of all new jobs.

That simple problem tells you everything you need to know about President Obama and the Democrats. Despite their rhetoric about wanting to put people back to work, they simply don’t care about actually creating jobs and growing the American economy. If you need even more proof, consider the coming tax hike on dividends. Dividends are currently taxed at 15%. On January 1st the dividend tax rate will skyrocket to 39.6%. (Oh, and don't forget the ObamaCare 1099 fiasco that will hammer small businesses) So, not only do we have Democrats seeking a direct tax increase on the small businesses who are supposed to create one third of all new jobs, at the same time they are discouraging investment in companies that are successful enough to be able to pay dividends at all… many of whom probably have and hire employees.

President Obama and the Democrats, in using the red herring of “middle class tax cuts” to pander to their progressive base are willing to sacrifice jobs and job creation so they can further cripple capitalism and push even more Americans into the fold of government dependency. As the economy slows and jobs evaporate expect Democrats to seek to extend unemployment benefits to 129 weeks then perhaps 159 weeks and then maybe be made permanent. At the end of the day that is exactly what Democrats want… they want to take everything the rich have stolen from the poor and the middle class and simply redistribute it. That of course is a house of cards as the rich have options about where they invest their money and even where they live or start their businesses. At some point when everyone becomes a ward of the state there is no one left on the other side from whom the state can take everything to support itself that house of cards will eventually come crashing down. Hopefully 2012 will usher in some new homebuilders.