After victory, a reality check for Obama

November 7, 2008

diana-furchtgott-roth– Diana Furchtgott-Roth, a former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The opinions expressed are her own. —

By Diana Furchtgott-Roth

Pity President-elect Barack Obama. Today, only three days after his historic victory as the first African-American elected president, the Labor Department announced that the economy lost 240,000 jobs from payrolls in October and that the unemployment rate rose to 6.5%. This underscores the difficulties he faces in raising taxes on “the rich” to fund new spending.

Obama must recognize that his campaign promises are impossible to implement without making the economy sicker. The economy is weak and getting weaker, probably contracting now at an annual rate of 3-4 percent.

Obama’s promises include a combination of tax cuts and welfare for 95 percent of working Americans, an end to America’s foreign oil dependence, a costly healthcare plan, more education spending, and so-called pay equity for women. Much of this is supposed to be funded by levies on businesses as well as tax increases on those making over $250,000.

But, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, Obama’s tax package would cost $2.9 trillion over the decade from 2009 to 2018. That includes increasing the tax rate on capital gains from 15 percent to 20 percent, and raising the top two tax rates, 33-36 percent and 35-39.6 percent, on singles with taxable income exceeding $165,000 and married couples earning over $201,000.

The Tax Policy Center’s estimates do not include the effects of financial market chaos and the stock market decline, which has reduced taxable income. And with the economy worsening, tax increases on upper income earners would net less than the Center projected, increasing the 10-year deficit to over $3 trillion.

Here’s one small example. In 2005, the latest data available, the Internal Revenue Service recorded 3.5 million returns with $200,000 or more. About half those returns had capital gains income, which averaged $304,000, netting approximately $80 billion in taxes annually.

These revenues will be reduced by weak stock markets—as well as by disincentives to invest stemming from higher taxes. In addition, many Americans are losing jobs, meaning not only less wage and salary income to be taxed but increased government payouts for unemployment benefits.

As president, Obama will have difficulty paying for new projects such as an incremental $65 billion health care plan, a $30 billion addition to the Medicare prescription drug plan, and $37 billion in increased education and research spending—all estimates for one year.

The bill for some other proposals would go to employers, who are already struggling to survive the recession. Investments in alternative energy and electric vehicles, for instance, would be funded by requiring purchases of permits to emit carbon, estimated to raise $56 billion annually.

Obama would also require most employers to offer paid sick and maternity leave, vacation, and parental leave for school visits. Employers would be penalized for paying women less than men for “equivalent” jobs, however they are defined.

Of course, in a recession, federal deficits are desirable. The question is how to structure them to help the economy recover. By increasing taxes on upper-income earners, small businesses, and capital gains, President Obama would reduce incentives to work and invest. Additional requirements on employers would encourage them to open plants overseas, rather than in America, slowing job creation.

After the euphoria in the streets and the chants of “yes we can” have faded, the question will remain: do Obama’s promises make fiscal sense?

Diana Furchtgott-Roth can be reached at dfr@hudson.org.

92 comments

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If the over 250k tax base decreases he could just increase the percentage on those still within that tax base.

The working class has not had a reasonable increase in wages to keep pace with inflation, so I would not mind a tax on the wealthy. If only the government could find a way to restrict those benefitting from the tax increases so they become more fiscally responsible. They could start by placing restrictions on the things people can purchase with government assistance.

Posted by SF | Report as abusive

Pretty easy to go negative a couple of days after the election. But the task ahead is quite difficult, and I haven’t read anything from you in the form of suggestions that sound any better than His.

Posted by Steve | Report as abusive

Obama never had a clue on how to deliver all the promises, but then again, to win an election, all you need is promises to desparate voters. Unfortunately, not all Americans are educated enough to tell the difference, the only time they will understand is 6 months down the road when nothing was changed.

Posted by robert | Report as abusive

This article isn’t “going negative”, its a reality check. Unfortunately the expectation is so high, that when many promises get broken, the backlash may be just as extreme. The reality is that this is a global problem, it is not one persons fault (Bush, Clinton, whoever)but an extreme economic cycle. There will have to be priorities, patience and personal sacrifice. If one believes they can sit back, and wait for a President to snap his fingers while proclaiming the magic word “Change”, then they are delusional. Don’t expect anything from the government. Change comes from the people — when they work for it.

Posted by turista | Report as abusive

We’re apparently more than able to sink hundreds of billions into wars, hundreds of billions into companies that dug their own grave, yet you are afraid of $100 billion going to the most deserving of such aid? Sounds like standard trickle down economic rhetoric to me…

Posted by Justin | Report as abusive

SF: How is it fair to simply tax those that are making more money even more to pay for those that aren’t contributing to society? It would make far more sense, and would give more incentive for people to work, if everyone was taxed equally. Those that make more money would still be paying more actuall tax dollars, but in comparision they would be paying the same. Personally, I make under 25,000 a year, and that’s before taxes. Technically I would be considered right on the edge of the poverty level, but it still wouldn’t make things right for those that have worked hard to have their money forcibly taken from them and given to me. Technically, it is illegal for the government to be taking an income tax anyway, unless we are in a time of war. Which, technically, we are not officially. There is an old saying that says: Give a man a fish, and he will eat for a day, but teach a man to fish, and he will eat for a lifetime. This is the ideaology that our country needs to adopt if we are ever to fight our way out of this recession.

Posted by Jordan | Report as abusive

In this article I am having difficulty observing alternative suggestions to Obama’s proposed projects…Commentary seems to be coming from a frusturated Republican after election results but what she’s suggesting is the “follow the way US has been following in the past”. Well that’s the reason why economy is where it is today! Nobody’s suggesting to come up with the perfect picture but at least it needs to work. Question to the Commentor is: while all above are somewhat working for Canada, why not US won’t be able to implement these?

Posted by Emre | Report as abusive

In short, the perspective here is that now is not the time for increased governmental spending to fund these \”programs.\” Rather now is the time to cut back, as most Americans are also doing. Increasing taxes is bad for promoting growth in business and investing. Those in higher income brackets that would have their taxes raised significantly will not be producing from stocks this year either.

Posted by Kevin | Report as abusive

It is easy to tally the costs, and difficult to weigh the future benifits. But unless you consider the benifits arising for those costs you really haven’t provided much of an analysis.

I can’t help but think that improving the situation of 95% of Americans may have significant economic benifits. Certainly increased energy efficiency and stopping the vast outflows of money to purshase and secure energy would also be benificial. Not to mention the benifits from taking a leadership position in addressing global warming.

Posted by ML | Report as abusive

Oh no, reality….
She also didn’t run for President.

Posted by James | Report as abusive

Yes Steve, nice of them to suggest an alternative, not.
I am sure some billions can be recouped from Iraq, for a start.

Posted by bert | Report as abusive

Obama will now need to start dealing with reality, and the lofty rhetoric of his campaign.

Posted by mike | Report as abusive

Obama was elected out of pure emotion and bought his way to the White House by way of record-setting campaign spending. Critical analysis of his record reveals he is a fence-sitter, siding with prevailing popular opinion. He does not make waves but has other people do it for him (Emanuel) so he is able to keep a healthy distance from the fray.

I do not believe he sincerely supports equal pay for women and am thoroughly disappointed by the absence of women on the list of potential cabinet members.

To that, I would add that in spite of her impressive professional achievements, Michelle Obama is reduced to a magnet for fashion commentary. This year the women’s suffrage movement marks its 80th anniversary. If these events are any indication, in all this time, women have made very little progress at all. What a sad statement on our times.

Posted by Tess | Report as abusive

We should continue to lower taxes as trickle down economics guru R. Reagan told us to do.
The lower the taxes the better off we are. Eight years of Bush is the best proof of this solid (or maybe, just maybe soiled) economic approach.

Posted by ira waxmann | Report as abusive

Ah – the view from the right-wing think tank (election results still stinging?). I would guess that Obama is very aware of the current economic conditions.
\”…President Obama would reduce incentives to work and invest.\” this is a common anti-tax fallacy. Absolutely no proof of this, including any references to the Laffer curve.

Yes, it will be difficult to overcome the disastrous presidency of GW Bush.

Posted by Dave | Report as abusive

I never got hung up in the hype surrounding Obama. I admired his charisma and the intellectual power of his spoken word. I, paid strict attention to his message and found him to be all style and no substance. I knew his numbers just didn’t add up. Americans have been crying about the $1T so far on the War on terrorism, and $90B a year in Iraq we are currently spending. Then we get hit with another $825B in bailout debit. Where are we going to get another $1,000,000,000,000 for the Obama social entitlements? Now we hear that he can’t keep his promises. What politician does? I say, thank God for small favors.

Posted by Kevin Baker | Report as abusive

And McCain or any other presidential candidate would have a better hope? What a pointless article. Of course he’s not going to be able to deliver everything. He said it himself.

Posted by gaba | Report as abusive

It should not be a surprise to anyone that after just two days, there are negative comments on the promises he made to get elected……….after following this election closely for the last two years, there were at least $56million voters who were negative on his plans before and on election day. The rules of life apply to everyone……..be careful what you promise, you just might be held accountable!

Posted by Russ | Report as abusive

Who is Diana Furchtgott-Roth anyway? I am so tired of fake media “experts,” quasi-non-governmental pseudo-leadership and academic nutcases being presented as intelligent economic or political commentators. The Bailout is estimated to have robbed about $3 trillion total from middle-class America’s retirement funds. Of course, Obama may have trouble implementing a healthcare program on his first day; however, we could start by cutting Israel’s allowance to $0.00, and using the money to help our own people instead of an unstable Marxist entity in the Mideast. Then, we could end all of the wars (which we are losing anyway), thanks to poor leadership of men like Wolfowitz, who thought that Iraq was going to be a “cakewalk.” It would be a nice start …

Posted by Mary O'Brien | Report as abusive

Is there anything in this article that was not knowable a few weeks ago? Do you enjoy closing the barn door after the horse is out?

Posted by Chris | Report as abusive

This calculation doesn’t include the amount of money spent on the economy from those getting the fiscal incentives. For instance women who will get the higher pay are likely to spend it on goods and services and stimulate the economy.

This was indeed a historic period in history, without any doubts. President Obama has wonderful ideas that will hopefully get things jump-started in the right direction, but one thing that really gets to me about our country is that the majority of people here less a small number, live day in and day out in a delusional fantasy world. The Obama honeymoon celebration will be over soon and by then, more will have lost their jobs, more money lost in the economy, murder, theft, death, declassification all will still remain and even worsen. This is all an ILLUSION folks. Open your eyes to the real world and stop worrying about appearances and impressions and where your next latte will come from. There are real human beings with real families suffering real problems and either there are iron-clad solutions for this or our very being will continue to spiral. And I am in fear that a lot of this is way over president Obama\’s head.

Posted by LivingTruth | Report as abusive

I am disgusted by the ignorant. Dump Israel support? What are you, anti-Semite or just a sucker for Palestinian terrorism? Because those are from where that suggestion comes, @Mary O’Brien. You may think you are sympathetic to “everyday” Palestinians, but you simply don’t know history, most especially of how hard Israel has tried to be reasonable while under constant assault. Your suggestion would result in one thing, you ignorant apologist for terrorists and anti-Semites: an attack and slaughter on Israel. So get out of you cushy world and have a look around. The world that you live in is not the world that exists outside of your tiny little fantasy of Israeli “aggression”.

GET A BLOODY CLUE, all you “stop funding Israel” idiots, or admit you are anti-Semitic, anti-peace, and pro-Arab (at cost of the Jewish State). Call your hate what it is, don’t dress it in Palestinian sympathy. I sympathize with the plight of the Palestinians, and the Israelis generally do, also. Fact is, though, some factions of Arabs and Islamists are USING them. So, don’t buy the hype, you fools!

Posted by Jon O | Report as abusive

Here’s a reality check for you: Having lived beyond our means for years, we can no longer afford to project our interests around the world by force. The up-front cost of the Iraq and Afghanistan wars–a perpetual state of emergency–is several hundred billions of dollars each year. Veterans care and other downstream costs, already outstripping our resources, grow by leaps and bounds each year the wars continue. We must abandon these wars. Increased Iranian and jihadi influence? Six years ago, intelligent policies could have headed that off, but now, it’s just too bad. We’ll do what we can with the force of our example, but the example of force must be left to other, richer countries, or left undone. Having accepted this fact, we can afford to protect our land and get on with Obama’s objectives.

Posted by Tom in Hakalau | Report as abusive

On the homepage of Reuter’s. Who is this?
Perhaps a Fox News analyst looking for work now.

Posted by kb | Report as abusive

@Justin: Let’s hear it for trickle-down economics, without which what would we have? We would have had the continual economics of Jimmy Carter’s era? Not survivable – a disaster. I assume you were not alive during the Carter Admin, and your naivety is one of youth not indoctrination. I assume you just don’t know what the alternative would have been in the 1980s, and why trickle down can work, BUT ONLY if government and corporations aren’t feeding off of each other.

That is what led to the meltdown we see now. CRA and Fannie Mae, out in front. You want the government to be larger? Do you know who the biggest group is regarding donations over the last 20 years is? State and local workers. So ask yourself, who are you listening to? Self-interested govt workers or practical economics?

The sensible idea in trickle-down econ. is that letting the wealthy INVEST benefits the economy at large. I’ll take that any day over socialism, thanks. And socialism, a government-controlled and -run economy from top to bottom, is what we’d have had if Jimmy Carter’s ways had kept going. What’s between those two? Just bigger government. And if you think more government is indeed the answer, and not simply better oversight (you can thank a Democratic Congress for failing us, and the GOP-run one prior to it, as far as overseeing mortgages and finance biz), you are incorrect or asking for socialism. Simple.

Posted by Jon O | Report as abusive

I am leary of anyone who wants more of their money going to the government. Who in their right mind does not want to keep more of what they EARN. The government isn’t earning any of MY money, sticking their grubby hands where they don’t belong like the bailout and economy and public education and healthcare. These are all STATE concerns not the national government.

Posted by Sean | Report as abusive

Mr. Obama,
Welcome to Washington! In a surprisingly ironic moment at his first post-election news conference, our community organizer in chief demonstrated himself a poor student of history. While the consequences of tax and spend and class warfare are sitting on our country’s economic shoulders, he has the chutzpah to stand the failed Governor of Michigan and its dragging unions at his side. He seemed to have a very stuttering and stammering style without the teleprompter, too. He should have taken he middle road and called out the failed big three for their mismanagement, the Governor for her complacency, and the unions for uncompetitive business model. That would have been something to line up behind!I’m reassured he realizes that choosing the presidential dog is a “pressing issue”. I feel safer already!

We should just stop the money injection for Israel and the war in Iraq. We can’t afford that while our economy is bleeding.

Posted by White_Worker | Report as abusive

No doubt, the euphoric reaction WILL give way to reality, as it alreadys seem to be doing. His plans will not be realized, without a massive change in the economy, quickly. There is no reasonable way to trigger growth by hurting the upper percentage of incomers, because you cannot spur growth with reduced confidence in this sector. We all would love to see some wealth spread, but not at the expense of those who can produce jobs and goods, and certainly not by taking away from those who struggle each day, just remain where they are. Watch resentment set in quickly among those who may see some $$ flow to those who, in many cases, have made a conscious decision to opt out and take what the government so readily gives out.

Posted by Rick | Report as abusive

I would also say, I was very dismayed at his demeanor during his first press conf. He did not instill any confidence,and even thougn rightfully guarded, I don’t see him as much of a creative thinker on his own. God Bless his team, they will either lift us up, or bury us.

Posted by Rick | Report as abusive

I wonder how much a chief economist or fellow at the hudsons makes? Maybe this whole article is just trying to reduce her tax burdens. Why should she have to pay for people who don\’t work as hard as she does. How hard could it be? Pay for colleges with government loans then work for the government to pay off or write off those loans, then convince all the \”right\” people that taxes on the top don\’t make sense, and by the way it is immoral.

Posted by russell | Report as abusive

I am so confused with all the things people are saying. I just pray to God to pull America out of all the troubles…the useless wars, economic crises, increasing unemployment …….all of them.

Posted by M.N.Meah, Doha , Qatar | Report as abusive

He won’t be the first president to not follow through on all of his campaign promises, and he won’t be the last. George Bush Sr. said, “Read my lips, no more taxes” and Bill Clinton promised a tax cut for the middle class. Both were shot down by Greenspan.

Obama is our next president and he deserves ou support and prayers. God bless him and his cabinet.

Posted by Gary Hart | Report as abusive

have the people not realized yet that campaign promises are never held once elcetions are over? I keep hearing about record early voters and turnout, but at the same time, I was watching the news and they said ” the west coast polls are now closing and president elect obama”… that is the electorial college at work, not the voters . and the media NEVER mentioned any party but democrat and republican.. maybe if the people and electorial college vote in an American instead of a politician, we might return to our once great status….

Posted by jacque | Report as abusive

Well, Nobel laureate Paul Krugman disagrees with you, hyphenated author-person — _vide_ his column in today’s (7.xi.08) _NYT_. I realize that the are-there-no-workhouses anti-Keynesian crowd won’t buy his take — but as you and they have been disastrously wrong about pretty much every macroeconomic analytic for an entire Schumpeterian cycle, why in heaven’s name should we prefer your deployed-and-failed theories to the scarcely-tested ones of our pal from Princeton? Hmmm?

Posted by Kevin McFoy Dunn | Report as abusive

Has Ms. Roth studied the Reagan tax cuts of the 80s and the theory of “trickle down” economics? Instead of trickling down the taxes saved were invested in the stock market, fueling unprecedented growth in that sector. This created the 90s business model used by CEOs; the stock price must increase annually, no exceptions. This model became standard practice, regardless of long term corporate health. This rabid concentration on stock price pushed US jobs overseas and what Regan envisioned as an economic boost for the country started the demise of the US industrial base and led to a real re-distribution of wealth in this country. I am a staunch fiscal conservative and a proponent of a flat tax system, but honestly, can the working class be hurt much more?

Posted by Doug Hurteau | Report as abusive

Wow! The tenor of these replies and the angry, fearful, exposition is something to behold.

Change is coming, fast. We cannot expect anyone to be able to accurately predict the outcomes, except that the former American way of life and standard of living will have to make substantial adjustment.

The wealthy should be happy to make a larger contribution to the well-being of the nation. They have been getting a free pass from the government for many decades. Forget taxes. They should make a donation of their own free will. Now that would be patriotic!

The only way to fix this problem is to end taxes and replace it with control by the congress of monetary policy. Instead of the phony budget founded on phony taxes we will simply monetize all public services (print the money) and then all holders of our currency will be taxed for our national sustenance by the relative dilution of the dollar’s value.

Maybe its time to end the charade of modern economics which is in complete conflict with its own founding principals and the constitution. Let’s get the private Federal reserve out of the equation and have our representatives learn the meaning of the constitution.

Posted by Jonathan Cole | Report as abusive

Oh yeah…just what we need, more negativity. Here are more positive thoughts from one who is not suffering the pain of election loss: \”Right now, many commentators are urging Mr. Obama to think small. Some make the case on political grounds: America, they say, is still a conservative country, and voters will punish Democrats if they move to the left. Others say that the financial and economic crisis leaves no room for action on, say, health care reform.

Let’s hope that Mr. Obama has the good sense to ignore this advice\”.

Those are the words of Paul Krugman, here:
http://www.nytimes.com/2008/11/07/opinio n/07krugman.html?em

I WAS a lifelong Republican (55 yrs old), and am now OVER IT. Crooks and wimps should stand aside while they whine.

Posted by Gary in Virginia Beach, VA | Report as abusive

Senator Obama, I wouldn’t waste any time listening to the opinion of a woman who was part of the Bush administration’s smashing success of an economic policy. Heck of a job there, Ms. Furchtgott-Roth.

Posted by Sean | Report as abusive

Not to worry Furchtgott-Roth, the worst is behind us. President-elect Obama can\’t possibly do worse than 8 years of Republican policy. Obama only has talent. It takes genius to bring the entire global economy to the brink of nuclear meltdown. Leave it to the new president to put the economic Humpty Dumpty back together again and blame him if he fails. But, we will. Pity President-elect Obama? No, I would rather pity the commentators like you who can\’t come to grips with the new political reality in America. Suck it up, sweetheart.

Posted by choo-choo | Report as abusive

Jordan stated, “How is it fair to simply tax those that are making more money even more to pay for those that aren’t contributing to society? It would make far more sense, and would give more incentive for people to work, if everyone was taxed equally.”

There are three fundamental flaws in Jordan’s premise.

First, Jordan ignores local and state taxes, which are generally regressive, though they vary greatly. A progressive federal income tax, when added to the state and local taxes that all of us pay, would create an overall equal tax burden that Jordan proposes. (Unless of course you can afford to pay a lobbyist to provide some special loopholes, which is a fundamental problem in Washington DC and all state capitals).

Second, Jordan states that those who aren\’t in the highest 5% income bracket are not contributing to society. Such an extreme position, I hope, doesn’t represent the attitude of most Americans. We all know dedicated productive people who aren’t ever going to be multi-millionaires. None of us propose a government-funded life of leisure for the lazy, but entitlement programs are not the issue here. A progressive federal tax system is the most fair system for all.

Third, Jordan apparently thinks that the richest elements of society worked hard to earn their wealth. Ideally, this is true. However, trends indicate that the strongly tiered class system remains in effect. Wealth doesn\’t all trickle down to everyone; the rich of any country, under any tax policy, manage their money wisely so that it is retained in the family. This is understandable.

Yet some billionaires, Warren Buffett and Bill Gates, for example, believe that their wealth shouldn’t be blindly handed to their direct offspring to create another layer of paparazzi-attracting leisure class nobility. Refreshingly, these men have demonstrated their desire to return their fortune to society through trusts with the express goal of wealth redistribution to improve the health and education of the least fortunate. Apparently Jordan either disapproves of this goal or mistakenly believes that private industry would do a good job of ensuring a high standard of health care and education for the youth who are least able to afford it. Jordan, please show me a nation that has a lower overall personal tax rate than the USA that has both higher educational achievement and health statistics for children. When you can, then lower spending for children can be achieved and we can relax the tax rate for everyone without allowing society to decay. Until then, let us first work on making our system less wasteful and more efficient in an effort to keep up with the dozens of nations with higher health and education standards than the USA.

Posted by Jean | Report as abusive

Taking from the rich to give to the poor and then everyone will be rich and equal? That sounds like Robin Hood? The U.S. is not in never never land. People in this country get rich because they worked hard and they’re always ambitiously achieving more. Are we to punish hard workers who went to college, stayed late at work and risk their savings to start their own business and reward those part time McDonald fryer operators who burn the fries time after time even with a timer on?

Posted by Jim | Report as abusive

sounds like their are a few bitter McCain fans out in limbo. the best comment still covers all of it. look, the last four years have been a mess. Obama is about to try to work on cleaning it up. it is going to take sometime. it is not going to happen overnight. change takes time. McCain was going to face the same challenges. he had no plan, he had no reason, he was going to keep us going in the same direction. say what you want to say, the people spoke. it will take sometime and it will take all of us. no matter how much money you make, you have to change the way you are living. parents have to be parents to their children. we have to live within our means. the government has to control how they spend. everyone has to be smarter. all of this he is not ready mess and you will see garbage all of you need to get over it. right now, Obama needs us and we Obama. or you can just keep crying in you little world talking about Bush Bush and McCain and palin………

Posted by bryan | Report as abusive

Since Mr. Obama dosen’t understand anything he talks about except that he wants to rule America I am certain he dosen’t comprehend what Diana Furchtgott-Roth has written either. The certainty since December of 2007 that Obama would win the election caused investors to cash in their stocks. That’s right you Obamamaniacs!Your Savior caused the world wide economic depression he now says he wants to solve. The only way Obama can fix the problems he caused is to resign before taking office in January. And Biden, Pelosi and Reid must also resign with him.

By Diana Furchtgott-Roth

————————

Diana, you’re talking about the world as though there are absolutes. That’s a very mundane train of thought.

Obama by changing the ‘geopolitical’ situation (especially in the M.E, and namely Iran) could bring the price of crude oil down, and therefore give this economy “a real boost” CHEAP OIL!!!

Don’t worry Diana, it is obvious Obama wasn’t your choice of candidate. But don’t worry about it, “you’ll get over it”! :)

Proud to be a liberal

Posted by Jack Durbin | Report as abusive

Obama… a brilliant preident.

After the last one, “We deserve Obama America!”

GOP eat your heart out!

Posted by Jack Durbin | Report as abusive

He can pay for it by ending the Empire (5% of the worlds population and 50% of the worlds war spending). Let all democracies bare the cost of a free world.

* stop the Bush wars
* 14 aircraft carries down to 4
* no new fighter aircraft know nation is within decades of touching an F18 why do we need two new fighter?
* Bases: Rome had 36 the British empire had 39 why do we have 800
etc etc …

Posted by mike | Report as abusive

Furchtgott-Roth: “Of course, in a recession, federal deficits are desirable. The question is how to structure them to help the economy recover. By increasing taxes on upper-income earners, small businesses, and capital gains, President Obama would reduce incentives to work and invest. Additional requirements on employers would encourage them to open plants overseas, rather than in America, slowing job creation. After the euphoria in the streets and the chants of “yes we can” have faded, the question will remain: do Obama’s promises make fiscal sense?”

Routine resistance to increased taxes on the privileged class will take many forms (and has taken many forms since the beginning of time). The preceding Furchtgott-Roth quote is just one example of the same old rich person’s chorus.

These are not normal times. Therefore, such routine talk of “federal deficits” and “how to structure them” are “republican-ese code phrases” for the ever continuing Reagan/Bush x 2-era resistance to tax hikes on the wealthy privileged class. In other words, it is somehow better for America to borrow, so that the wealthy can invest and create jobs, i.e., the failed trickle-down philosophy of sharing privileged class wealth with the middle class and working class.

Much of the preceding is what we heard repeatedly from the McCain/Palin ticket. The last time I looked, the false republican message of Reagan/Bush x 2/McCain was amply REJECTED by 53% of the voting electorate and by the majority of the voting electorate in 56% of these United States and the District of Columbia.

Here’s the REAL DEAL, Mr. & Mrs. Reader: The fearful and false republican refrain about the comingling of projected across-the-board tax increases for the wealthy privileged class with IMAGINARY personal, capital gains & net profits income tax increases for the middle class & small businesses, respectively, was believed by ONLY 46% of the voters in 44% of the states…said republican song-and-dance-routine thereby receiving a mere 32% of the electoral votes nationwide.

So, I say to the critics of raising taxes on the wealthy…get off it, why don’t you. The wealthy have always been able to fend for themselves. It’s time for them to show their tax-patriotism to the flag and the country that has been so exceptionally good to them. It’s time for the privileged class of $Millionaires and “lower” privileged class of “regular” wealthy Americans to bring jobs back to America…and for the super privileged class of $Billionaires to put their fortunes at the disposal of our great nation.

It will be up to President Obama and Speaker Pelosi, as well as Majority Leader Reid, to hammer home to the democrat majority in congress (and republicans willing to listen) that all of the excuses and diversions by members of the privileged class (as well as its spokespersons) must be navigated…and very quickly. Time is running out.

America’s progressive federal income tax system that came of age out of the 16th Amendment, as well as the first tax rate schedule of February 1913 & October 1913, respectively, was turned on its head by Ronald Reagan and an obedient privileged class congress in 1981…as borrowing to pay America’s bills grew by leaps and bounds, and continued on through the subsequent presidencies of Reagan’s vice president and the latter’s son.

I don’t much care for Bill Clinton as an individual. Likewise George Bush for the same reason. Neither offered up blood-patriotism on the battlefields of SE Asia in the 1960′s and 1970′s. That is, both avoided service in the uniform of our great nation in wartime in a war zone.

Even so, at least President Clinton and the republican-controlled congress that he alternatively partnered with and fought with over a period of 6 years saw that prosperity for the privileged class lies in a large consuming middle class that absorbs the working class.

All President Reagan managed to do (besides sinking America up to its eyeballs in a quicksand of debt) was to shrink the middle class and increase the size of the working class.

The tax rate schedule that grew out of the 16th Amendment (and which was signed into law by Woodrow Wilson) intended that the privileged class pay America’s bills and minimize America’s debt. It also intended that the middle class and working class NOT be taxed…but rather that they consume with tax-free dollars.

We can’t expect that the first $66,300 and $88,400 (in today’s dollars) for single and married taxpayers, respectively, be exempt from federal income tax as originally intended in 1913. In other words, we can’t expect that the letter of the Revenue Act of 1913 be adhered to at this late date.

However, we of the 53% who voted for the Obama/Biden ticket should be able to expect that an Obama/Pelosi/Reid tax rate schedule be structured in such a way that tax reductions for the middle class and tax increases for the privileged class comply with at least the spirit of Wilson’s Revenue Act of 1913…the spirit that was dampened by Reagan’s so called Economic Recovery Tax Act of 1981 & Tax Reform Act of 1986.

It was the latter two revenue acts that started the redistribution of America’s wealth from the middle class to the privileged class, and that borrowed America’s fiscal & financial integrity to the brink of disaster…with an FY 2009 budget deficit of $1 Trillion and a national debt of $12 Trillion.

OK Jack MBA
Disabled American Veteran
oklahomajack.com

Please take notice: All right wing solumnists, pundits and spinmeisters from the Hudson Institute, the Heritage Foundation, the Hoover Instituion, American Enterprise Institute and the rest of the “conservative think tanks” that will try mightily to undermine the incoming Obama administration — we’re on to your game, we know your tactics and we understand that your biases are purely self-serving. It will not work this time!

For a terrific (albeit 10-year old) essay on how these GOP operatives and culture warriors use their influence to undermine democracy and the interests of the voter, taxpayer and the middle class, check out this article: http://www.thirdworldtraveler.com/Democr acy/ConservThinkTanks.html

Posted by Steve Bonser | Report as abusive

Wait…so you are trying to tell me that Obama’s plans are going to slow the economy? RIGHT. Lets stop a usless war thats costing how much a DAY? That will be enough to pay for Obamas plans may times over.

Next part, the rest of his plans are based upon those of:

Franklin D. Roosevelt.

If anyone cares to recall his work was the major factor in fixing the problems of the great depression.

Maybe you should consider reading a few books or maybe eve taking a basic economics class at a University before you write something like this.

Posted by Burgess | Report as abusive

We all know that the only people who know how to promote a healthy, growing economy are conservatives. Deregulate, cast a blind eye on the thieves, cut taxes on the rich and corporations, outsource jobs, build plants overseas to take advantage of slave labor, import goods made by slave labor and keep the middle class and poor where they were 25 years ago in terms of inflation adjusted income. Yes, a quarter century of conservative magic is how we got today’s vibrant economy and
I’m positive that everybody is chomping at the bit for another 25 years of it.

Posted by Ray | Report as abusive

Calm down, everybody. New president figures sure will put out some backyard fire. Every body need time to do what they really want to do. All slow down, speed limit 25 not 75 or 80. Part of home land security strategy.

Posted by A bug | Report as abusive

Warren Buffet has said his secretary pays more taxes than he does so explain to me how we would hurt the economy by raising his taxes???

Are you one of those so called \”conservatives\” that have your hand out and then grumble about a poor widow getting supplemental social security payments????

Have you ever had a major sickness in your immediate family, like a husband, son, daughter, mother, or father and do then get laid off of your job and left without insurance???

Since you obviously have not had a very big financial problem you have all the answers and do not care about finding out about those with problems not of their own making you have all the answers—in your own little world of GREED.

Posted by Carl Justus | Report as abusive

If those on the ‘right’ could have only given the Bush administration a reality check, perhaps we wouldnt’ be in so deep of a mess. Odd how the conservatives can be so forgiving of the duplicity and incompetence of Bush and his cohorts. Tell us, how much more badly would the Bush team have had to perform before you would have displayed the mistrust you show toward an as yet untested Obama. It seemed there was always enough money and urgency to funnel to their favorite causes and corporate friends, even if it means turning a budget surplus handed-down to them from the Clinton years into a huge deficit.
Before pouncing on President-elect Obama, first try doing a little soul-searching as to how we got into this mess. A little self-reflection might be too much to expect from ideologues, but it could go a long way toward re-establishing the trust of their fellow Americans who once put so much faith and trust in them.

Posted by Michael | Report as abusive

Congratulations to President-Elect Obama. Sadly, he is left with a legacy of a huge debt, over $10 trillion and rising by the minute. He has asked for sacrifices from every citizen and he said that he will try his best and everything cannot be accomplished in one term. As the comment from Justin shows, the past eight years have seriously ravaged the economy, just the money spent on the two wars in Iraq and Afghanistan could have been used to change the direction of the economy. In the midst of this severe crisis, the present Administration and an irresponsible Congress have approved the astronomical Defense budget of over $600 billion! When is the US ever going to cut its Defense budget, this sector is untouched and the US will be be pouring more and more of its resources down the drain while other countries channel their resources into more productive sectors.

Posted by Jazz4 | Report as abusive

What we need is Robin Hood. Yes. Robin Hood. So what???

These rejected elements should stop airing their outdated views in public fora. When you loose, learn to slink away. Milton Freidonomics is out at least for the near term and medium term future..at least 8 years…

The new Presidency is in possession of the exact need of the middle-class American and will address exactly that need.

AS LONG AS Obama Keep his promises, who care who pay for it, but I am not going to pay for it.

Posted by N TAM | Report as abusive

Unfortunately, history has shown that politicians of both major parties promise and deliver on gratuitous, tax cuts to win or retain office while continuing to grow and expand government without bound. This has lead to ballooning deficits and a national debt exceeding $10.5 trillion. The US citizens and federal government are equally culpable of fiscal irresponsibility. Where is the true leadership in this country? The national debt is a tragedy of monumental proportion that erodes the government’s ability to provide for its citizens. Unfortunately, the current national debt will not be paid off in our lifetime and will be a legacy that we pass on to our children (assuming it doesn’t cause the total collapse of the US government).

BTW – If previous Democratic and Republican administrations had managed their budgets appropriately, then we would have an extra $400-$500 billion today to spend on programs or initiatives of our choice instead of paying it as interest on the national debt. This is the true cost of living beyond our means for the past 50 years. It seems that a sound fiscal policy and a plan for the future would be in order, but that would require true leadership….

Posted by Drew Flechsig | Report as abusive

Diana Furchtgott-Roth, the author of this article, is a senior fellow at the Hudson Institute. The Hudson Institute is a Republican NeoCon
think tank.

Some people affiliated with The Hudson Institute, in addition to the author of this article, are Conrad Black, Robert Bork and I. Lewis “Scooter” Libby.

Posted by Sam | Report as abusive

I highly doubt anyone writing in on this forum is having trouble getting enough food. They probably have a place to stay at night too, as well as clothes. Can\’t think of anything else that I would put down as a \”need\”, not even medical help, as that is just too broad and in the end is fairly futile anyway (we all die). So what is it that people are hoping to get out of Obama being president? Somehow, they \”deserve\” something that other people have. I think many people in this election cycle have crossed the line of pure jealousy and envy. Not that they didn\’t before, but it seems more blatant to me this time than ever before. We want and do not have and so we take through force of government. There is no end to that sort of thought process.

Posted by Phil | Report as abusive

Obama and McCain agreed before the campaign that they would both accept federal matching funds. Obama made a promise to McCain – and signed a document – stating he would do so. Obama broke that campaign promise. A promise about money. In other words HE LIED. Not a good record on his rhetoric so far. Obama is full of sh_t.

Posted by Nick | Report as abusive

“What we need is Robin Hood. Yes. Robin Hood.”

Absolutely! Robin Hood robbed from a bloated and non-responsive government and gave the money back to the hard working peasants. There was no middle class since the upper class (the GOVERNMENT!) would not allow it.

Obama will be the president, but to drive business out of the country by following the lead of the government during Robin Hood’s time will do severe harm. I expect that 40 percent will get tax breaks, 55 percent will get tax credits (formerly called welfare), 0.5 percent will get just what they deserve, and 4.5 percent will have their taxes raised enough to fire or cause the firing of 15 percent of the population who rely on those with money spending and EARNING it. Why should those 4.5 percent bother to strive to earn when it makes more sense not to? Give people a reason to succeed and they will; give people the opportunity to fail without consequence and they will in greater numbers.

BUT, Keep working; the 3 people who don’t want to depend on you.

If you want real change, you need to think outside the box! The LP is FISCALLY responsible (now that IS change)

Posted by Thomas | Report as abusive

http://archive.salon.com/politics/featur e/2001/02/15/reaganomics/index.html

“Reaganomics redux
Supply-side economist Diana Furchtgott-Roth defends President Bush’s $1.6 trillion tax cut.”

- – - – - – - – - – - -
By Daryl Lindsey

Feb. 15, 2001 | WASHINGTON –”If you want to find a one-stop shop for all your answers to the Bush administration’s view on tax cuts, look no further than the American Enterprise Institute. As host to panel discussions like “Does It Really Make Sense to Pay Off the National Debt (Using the Budget Surplus),” it’s not very surprising that AEI falls on the supply-side theory of the tax cut debate. AEI conservatives like Oxford-trained economist Diana Furchtgott-Roth, argue that tax cuts focused on the upper-income brackets are the best prescription for an ailing economy because they create opportunities for investment and job creation by the individuals who are financially equipped to create new jobs or start new businesses.”

So the same people who defended Bush’s pointless tax cuts for the rich are now chiding president-elect obama for 2.9 billion dollars in new spending? This is a classic reaganite supply-sider. These people have no concern for the middle class, and their fiscally irresponsible actions have left the nation 10 trillion dollars in debt. The last two presidents to have a balanced or surplus budget were Carter and Clinton. Whenever the Democrats take power and want to spend money on infrastructure, health care, or anything else constructive, the borrow and spend republicans lambast them as “fiscally irresponsible.”

Shame on you, Diana. You’re defending a failed economic policy that didn’t work in the 1980s, that kept us from paying off the national debt, and that has little to offer for the middle class.

Posted by connor | Report as abusive

From an earlier column by Ms. Roth

“House Speaker Nancy Pelosi’s prescription for economic stimulus centers on more infrastructure spending, as well as more aid to states, Food Stamps, rebate checks, and unemployment benefits, a package that could cost up to $300 billion.
This is the Keynesian “solution” that didn’t work in the 1930s—more government spending. It’s time for new ideas.”

From today’s column: “Of course, in a recession, federal deficits are desirable. The question is how to structure them to help the economy recover.”

So are you debating yourself, Ms. Roth, or taking shots at the speaker to talk up the Republicans prior to the election? Now that the election is over, deficit spending is permitted? Of course Pelosi was attempting to gain political clout. Reagan and the supply-siders have inverted logical discussion on fiscal responsibility to the point where the democrats have to play this right-wing game of tax cuts for political purposes. These tactics have ultimately played down sensible fiscal debate in election years, and led us to a debt that Ms. Roth is not concerned with, unless a democrat is in office.

Posted by connor | Report as abusive

Diana Furchtgott-Roth economics are those of the “user pays”.
Individuals earning the minimum wage should pay for their own health care under her regime.
Perhaps she could tell us just how they should accomplish this.

In regular English preferably not economic jargon.
Plenty of old guff form Ms.Furchtgott-Roth, but not solutions.

No money for Isreal would definaely be a good start in the savings direction.
How soon we forget. Menachem Begin organized attacks against the British and Palestinians. This was considered an act of treachery at a time when Britain was experiencing difficulties in North Afrika against Rommel’s Afrika Korps. Begin was put on a ‘wanted’ list by the British for terrorist activities.
He of course became Prime Minister of Isreal.
Talk about the kettle calling the pot black!!

$700 billion for banks does not sound like lassez-faire economics, more like corporate welfare.
Money for the auto industry?
Why?
They made the decision to build gas guzzlers.
And by the way there is only one way to reduce CO2 form an internal combustion engine.
You guessed it.
Make them smaller!!
Funny nobody seem to know this except me!!!!

Tax the rich.
Lets face it if they don’t want to pay taxes all they have to do is not go to work.
It’s as simple as that.

Posted by Rory | Report as abusive

Burgess, sorry to tell you the truth, but FDR inherited a problem and with The New Deal made it worst. FDR actually prolonged the recession.

Posted by Javier | Report as abusive

Funny…

When Reagan came in he first of all brought about HUGE unemployment, broke the backs oif unions, interest rates sored, it was a disaster.

Today he is considered the Holy of Holies—

Give Obama a chance, OK? You neocon-bots had your chance to take the country apart morally, financially, politically, socially and to whack our foreign policy. Move over for a while, your medicine had bad side-effects…

Posted by Talleyrand | Report as abusive

This has to be one of the saddest, most useless and most pathetic articles I’ve ever read online. Clearly has no point to it than attack Obama after he already won. What’s going on with this country? People always dwelling on the past, can’t endure their losses without back lashes and pity attempts to bring an opponent down.

According to what Jon O said about Funding to Israel should not stop and people are “fools” for not knowing the truth and putting the blame on the Arabs. Yet in the same time Jon, you managed to insult people and call out names, instead of trying to get your point across in a civilized manner. Your behavior is the exact same of Israelis, they do not know how to send their point across without aggression, violence, killings of thousands and thousands of Palestinian women and children and peaceful men, but they come up with an excuse “terorrists” when in fact all they’re doing is taking more and more land from the Palestinians. But when the Palestinians retaliate, its called terrorism. It was the Israelis who stole the land after WWII. The “Israeli” land now is Palestinian land occupied by the Jews who flew in from Europe and across the world after WWII. The land didn’t even belong to the Jews, so how about you get your facts straight and the first thing the US should do is stop supporting Israel, it’s that policy alone that has flooded hatred towards the US for years, because everyone internationally knows the pain Israel has dumped on the region, through unlawful and terrorized actions.

The only way to go forward for the US is to cut those funds for those aggressor regimes, and focus domestically instead of spending all their ideas on how to conquor the world by breaking down trade barriers and flooding those poor nations with their corporations. Why not attempt a civilized attempt at greatness? instead of attacks and and wars and the killings of millions around the world each year.

I’m sure Obama has different ways to achieve his objections.

Posted by Timothy | Report as abusive

Another applicable term for ‘trickle down economics’ is ‘socialism for the rich’.

Posted by ralph | Report as abusive

It’s funny how right wingers just assume that a Democratic president is going to spend like George Bush did and then tack on more spending to boot. This just seems like more mudslinging after the campaign is done. GET OVER IT! What happened to “stand behind the president”? Republicans never had any problems saying that about a guy who was running this country into the ground financially. THe base line fact is that if my grandfather’s generation was the “greatest generation”, then my father’s generation (including the author of this article and the rest of the republican right) would be, bar none, be the worst generation this country has seen. They gave up their “revolution” in the sixties for disco and the suburbs, and now they find themselves in power. More conservative than, by some accounts, the idiots who ran this country into the Great Depression and used the military to stop labor riots over safe conditions. I, for one, can’t wait until the babyboomers are gone, so I don’t have to try and clean up after their mistakes anymore.

Posted by Christopher | Report as abusive

Perhaps you should have started … I am a Republican. I worked for Ronald Regan. I feel its necessary to perpetuate stifling partisanship by being a critical. I would rather use my intellect to identify obstacles that propose solutions.

Posted by Chris | Report as abusive

One source of revenue has never been mentioned: tariffs. Not only would tariffs provide a source of revenue (until 1913 we had no income tax and tariffs were the sole source of federal revenue) but they would also provide incentive to move manufacturing back to the U.S.

Our enormous trade deficit is rightly of growing concern to Americans. Since leading the global drive toward trade liberalization by signing the Global Agreement on Tariffs and Trade in 1947, America has been transformed from the weathiest nation on earth – its preeminent industrial power – into a skid row bum, literally begging the rest of the world for cash to keep us afloat. It’s a disgusting spectacle. Our cumulative trade deficit since 1976, financed by a sell-off of American assets, is now approaching $9 trillion. What will happen when those assets are depleted? Today’s recession may be just a preview of what’s to come.

Why? The American work force is the most productive on earth. Our product quality, though it may have fallen short at one time, is now on a par with the Japanese. Our workers have labored tirelessly to improve our competitiveness. Yet our deficit continues to grow. Our median wages and net worth have declined for decades. Our debt has soared.

Clearly, there is something amiss with “free trade.” The concept of free trade is rooted in Ricardo’s principle of comparative advantage. In 1817 Ricardo hypothesized that every nation benefits when it trades what it makes best for products made best by other nations. On the surface, it seems to make sense. But is it possible that this theory is flawed in some way? Is there something that Ricardo didn’t consider?

At this point, I should introduce myself. I am author of a book titled “Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America.” My theory is that, as population density rises beyond some optimum level, per capita consumption begins to decline. This occurs because, as people are forced to crowd together and conserve space, it becomes ever more impractical to own many products. Falling per capita consumption, in the face of rising productivity (per capita output, which always rises), inevitably yields rising unemployment and poverty.

This theory has huge ramifications for U.S. policy toward population management (especially immigration policy) and trade. The implications for population policy may be obvious, but why trade? It’s because these effects of an excessive population density – rising unemployment and poverty – are actually imported when we attempt to engage in free trade in manufactured goods with a nation that is much more densely populated. Our economies combine. The work of manufacturing is spread evenly across the combined labor force. But, while the more densely populated nation gets free access to a healthy market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic, irreversible trade deficit and loss of jobs, tantamount to economic suicide.

One need look no further than the U.S.’s trade data for proof of this effect. Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

Our trade deficit with China is getting all of the attention these days. But, when expressed in per capita terms, our deficit with China in manufactured goods is rather unremarkable – nineteenth on the list. Our per capita deficit with other nations such as Japan, Germany, Mexico, Korea and others (all much more densely populated than the U.S.) is worse. My point is not that our deficit with China isn’t a problem, but rather that it’s exactly what we should have expected when we suddenly applied a trade policy that was a proven failure around the world to a country with one fifth of the world’s population.

Ricardo’s principle of comparative advantage is overly simplistic and flawed because it does not take into consideration this population density effect and what happens when two nations grossly disparate in population density attempt to trade freely in manufactured goods. While free trade in natural resources and free trade in manufactured goods between nations of roughly equal population density is indeed beneficial, just as Ricardo predicts, it’s a sure-fire loser when attempting to trade freely in manufactured goods with a nation with an excessive population density.

Pete Murphy
Author, “Five Short Blasts”

Dear DF-R,

While you may be working up your talking points at Hudson, fact is, your basic concepts are faulty.

Obama’s promise: affordable health care (near-universal coverage), is an example. Were you to be right, the other 17 of the 18 most industrialized (and richest) countries in the world could not already have implemented universal health care coverage.

But the have. That includes not just countries like France and Germany, and Switzerland, but also a country like Taiwan, for example.

So America is, according to your Hudson research, so poor that it can’t afford what all other 17 countries, already can afford?

That is just patently absurd, and shows you up for the ideologue your truly are.

You lost this national debate, and you will lose the historical move to universal health care in the U.S. too.

But keep trying. And when your funds dry up at Hudson, perhaps Rupert Murdoch can use your services at Fox News Channel for an occasional commentary on the issue of how poor America is, that it can’t afford to do anything except finance a vast military and elective wars around the globe.

Talk about die-hard fanatics and ideologues!

Posted by fbla1805 | Report as abusive

Dear D F-R,

Oh, by the way, we just spent some 1.4 Trillion Dollars bailing out your good buddies on Wall Street, who’ve been distributing the wealth in form of boni at the rate of hundreds of millions per head, and many billions over the past couple of speculative years with their CDOs and Swaps. $1.4 Trillion (1,400 Billion). And you actually have the nerve to write that we don’t have the $65, $30, $37, and $56 Billion needed for health care coverage and for education and research.

$1,400 Billion for Wall Street we have, but $188 Billion for the people producing the wealth Wall Street burned up, that we don’t have. Right!

We just had a long national debate about priorities for our resources, and your argument was defeated. Further, that was not an abberation, you are just on the wrong side of history. And the other 17 industrial nations of the world prove you wrong every day of their existence.

But as I said, I’m sure Rupert Murdoch and his Fox News Channel would love to pay for your services. Send him your resume!

Posted by fbla1805 | Report as abusive

How about selling gold which is locked away Fort Knox? As it is it has no use. US not anymore a specie backed currency. US does not need gold. Sell it and raise some cash. May be even Alaska can sold back to Russia. May be Hawaii can be sold to Japan or whoever wants to buy it.

Posted by einsteinwallah | Report as abusive

Kill the American Dream! I guess people don’t realize that their ideas of increasing the taxes on the rich is only going to extinguish the American dream. Why do people from all over the world including Western Europe come here?

In case you didn’t realize, Buffet and Gates are giving more by “their” choice. Let me repeat. They are choosing to pay more. The government is not forcing them.

The increased taxes are hurting those who are trying to move up in the world. They make $600k in a boom year yet they don’t get ahead. Does that make sense? Those that have been making it consistently have found ways around taxes.

Jon O, the U.S. should have minimal interest in Israel. The 3% or so of the U.S. population that controls most of the U.S. media and much of the banking system should finance their religion’s interests themselves.

Please tell everyone what AIPAC. The most powerful lobby in the U.S.

You sound quite racist in the way you present your issue.

The Obamanites will probably be feeling quite foolish when they discover the truth.

Why are his followers so aggressive? Having a discussion is made over difficult because of their blatant attacks and regurgitation of his psalms.

Dreaming is good…but living in a dream sends you to the poor house.

I guess that is what our country is currently finding out.

We had a Democratic congress for four years. What have they aided to our current distress?

The loose money and giving loans to those who would not qualify in the real world originate from the Clinton/Greenspan era.

Yes, it was amplified by the Congress allowing the powerful banking lobby to have increased the investment limits from 12 to 1 to 40 to 1.

The gentlemen who profited from manipulating the formulas to falsely represent AAA ratings should be prosecuted.

The includes our current head of the Treasury, Hank Paulson. He made $38 million in 2006.

Anyone who thinks paying more taxes is completely lost with the realities of the world. I live in Chicago and we have the highest sales tax in the country. The city is running a tremendous deficit. Yes, it is run by Democrats.

The state of Illinois is on the brink of bankruptcy. Yes, Obama helped. Yes, this has come to be since the Democrats took over.

Anyone who believes giving the government to the Democrats is lost in a dream that will end painfully.

I believe being conservative is better.
- I should control more of my money not government. Most people are very loose with other people’s money.
- Those that work should be helped but with in reason.
- Those that are unemployed should be helped but should be required to return it or work it off. That is what the socialist countries of Europe do so our socialists should accept it.

Fight for your country not the government. Government is inherently evil.

I think Obama was the wrong choice but that is over. If he lied, I hope he is crucified (figuratively for all the racists). I never was a rah, rah, guy so I never bought into the song and dance formulated for him.

I hope he proves to be more than a great orator and brings in great people to run this country.

We are in dire straits. We will survive. The question is how much suffering will there be.

God Bless America!

Posted by Kosta | Report as abusive

When I read the political and econonmic plans of Obama, it reminds me of peronism in Argentina.
So the song DO NOT CRY FOR ME ARGENTINA, should be changed to DO NOT CRY FOR ME USA.

Posted by nergal52 | Report as abusive

Steve,

You said that you haven’t read anything from me that offers better suggestions. Could I refer you to my Reuters.com article of October 24, entitled Moving Beyond Conventional Remedies, where I presented the following four suggestions. They’re equally worthy of consideration today.

First, rather than extending the duration of unemployment benefits, Congress could give unemployed workers an additional tax-free sum, perhaps $5,000, after 13 weeks unemployment. This could be used for training, relocation, or general living expenses. If workers find another job before the end of the 26-week duration of unemployment benefits, they keep the $5,000.

This would help unemployed workers find new jobs in new industries or different parts of the country, while at the same time giving them an incentive to return to work early. Extending unemployment benefits, on the other hand, means that workers have to stay out of work longer in order to collect benefits.

Second, Congress could help the weak housing market by expanding permanent immigrant visas, or green cards, for those who promise to buy a house costing at least $300,000. At $300,000 a house, 100,000 visas could pour $30 billion into real estate markets, 200,000 visas could pour $60 billion. This influx of money would help stem deterioration in house prices, the root of the financial crisis.

Given the enormous desire abroad to get into America, the Immigration and Naturalization Service should have no trouble filling slots. Two hundred thousand visas is less than two tenths of one percent of our 155 million labor force, and skilled workers would make a valuable contribution to research and innovation.

Third, Congress could raise revenue to recapitalize the impaired banking and credit sector by selling oil and gas exploration and drilling rights. Oil companies have profits and want to drill; banks need capital.

Places to drill include the Arctic National Wildlife Refuge, the Outer Continental Shelf, and promising areas in the lower 48. As well as potentially raising $50 billion, this would exert downward pressure on energy futures and reduced dependence on foreign oil, translating into lower energy prices.

Finally, America’s markets need capital. If Congress were to set capital gains rates at zero for the next five years, America would see an influx of investment, both domestic and international, in equity and housing markets.

At the same time, Congress could make current tax rates permanent rather than having them rise on January 1, 2011, as currently scheduled. With a recession imminent, prospective tax increases would worsen incentives to work and invest.”

Diana Furchtgott-Roth

Posted by Diana Furchtgott-Roth | Report as abusive

Giving out green card for cash may not work. After coughing up $300,000 per house you may not have much money left for living during those months of unemployment these poor fellows will have to face in this job market. How about increasing quotas for H1 visas? Average H1 worker has to live somewhere. It should create a market for rented properties. And their expenditure on american goods and services could sustain *some* jobs.

The “enormous desire to get into America” is what is jacking up USD value. It is because of this USD sans any specie backing is overvalued. Repeating my comment on gold, I wanted to ask: Why specie backing was dropped? If gold as specie could not be honoured, surely a broad commodities backed currency or commercial paper was possible. You got to have a currency which is convertible to commodities. You got to have a currency which is trusted. Ancients chose gold but we need not have gold. Clearly gold backing was not sustainable for *any* currency. In our modern times commodities like Aluminium, Hydrochloric Acid, etc etc are traded. A broad based commodity backed paper money is feasible. Or, do I have too beautiful mind?

Posted by einsteinwallah | Report as abusive

DFG: “As president, Obama will have difficulty paying for new projects such as an incremental $65 billion health care plan, a $30 billion addition to the Medicare prescription drug plan, and $37 billion in increased education and research spending—all estimates for one year.”

Well, cutting the cost of the Iraq war would surely help. In FY 2007, $133 billion, in 2008 probably roughly the same. Your figures come up to $132 billion. With a fraction of the the billion left over, you could finance another think tank – one on how to end America’s Third World inequality.

Posted by Costcutter | Report as abusive

The ROOT CAUSE of America’s predicament is DEBT, pure and simple, Mr. & Mrs. Reader.

The present massive national debt of some $13 Trillion began with the Reaganomics of 1981-89…continued with the first Bush administration (1989-93)…and brought the second Bush administration of 2001-Present (along with the country) to its economic knees, e.g., the Dow Jones Industrial Average dropped precipitously from 14,000 to 7,500 within a few months, and several Wall Street firms and banks collapsed overnight. Reaganomics (accompanied by Bushonomics) is an utter & dismal failure.

Even Clintonomics failed in the sense that it did not boldly and completely eliminate the national debt by taxing the privileged class and super privileged class as intended by the Revenue Act of 1913 (i.e., by not raising the top marginal rate beyond a mere 39.6%). However, 1993-2001 gave America the heady days of prosperity and an expansion of the middle class…as well as the balancing of the budget and the halting of borrowing from the middle/working class social security trust fund to mask the budget deficit.

The second (and by far the worst) Bush administration claims ignorance of the root cause (i.e., debt), and has simply added to it by throwing more borrowed money down the black hole, i.e., the $1+ Trillion bailout of Wall Street, AIG insurance, banks, airlines, the auto industry, etc. The high profile, right-wing socio-political-economic Fox Network is scrambling to find its footing, while also dancing around the root cause. Ordinarily you would not hear from low profile wealthy folks. However, privileged class millionaires and super privileged class billionaires are coming out of the woodwork with suggestions on what to do…always with the specter of the IRS coming after their vast wealth constantly in the back of their minds (actually, right on their very heels).

Furchtgott-Roth: “…First…give unemployed workers an additional tax-free sum, perhaps $5,000…Second…200,000 visas could pour $60 billion (into real estate markets)…Two hundred thousand visas is less than two tenths of one percent of our 155 million labor force…Third…drill…the Arctic National Wildlife Refuge, the Outer Continental Shelf…raising $50 billion…Finally…set capital gains rates at zero for the next five years…At the same time…make current tax rates permanent rather than having them rise on January 1, 2011…”

From the middle/working class ditch (filled with economic storm runoff) that I’m presently standing in…and looking up at the ivory tower where the writer does her thinking…I am simply astounded to read nothing useful about treating the ROOT CAUSE of America’s domestic economic predicament, i.e., DEBT. Likewise, there is nothing about America’s unaffordable foreign military conflicts, which are part & parcel of that same root cause.

The writer’s first suggestion is a drop in anybody’s bucket. Just how far does she think that $5,000 will take an unemployed household in the watery ditch where I’m standing? The second suggestion is politically dead on arrival, when upwards of 10% of Americans are out of work, or are no longer even being counted by the federal government. The third suggestion won’t bear fruit for at least 10 years.

The writer’s final two suggestions are the traditional fallback for those think-tankers who just can’t get it out of their heads that Reaganomics has NEVER born fruit for America’s middle class…the middle class that has been shrinking (and the working class that has been growing), since Mr. Reagan was swept into office in 1980 with a mere 50.7% of the popular vote. They called that a mandate because he was rewarded with 489 electoral votes.

Mr. Reagan received 525 electoral votes in 1984, and a real mandate of 58.8% of the popular vote. That mandate sowed the bitter seeds of the watery economic ditch that middle/working class Americans are standing in up to their waists at this very instant. Why? Because that unfortunate mandate immediately produced a top marginal rate of 28%, compared to the 50% rate handed over to the wealthy by Reaganomics in 1981. Even the bottom rate for the middle/working class was increased from 11% to 15%. Thereafter, and until the present day, the national debt (except briefly during the Clinton administration) and annual budget deficits have been growing almost exponentially.

The Reaganomics solution: BORROW, borrow, borrow & borrow some more…or as Ms. Furchtgott-Roth expresses in her original article, “Of course, in a recession, federal deficits are desirable. The question is how to structure them to help the economy recover. By increasing taxes on upper-income earners, small businesses, and capital gains, President Obama would reduce incentives to work and invest. Additional requirements on employers would encourage them to open plants overseas, rather than in America, slowing job creation. After the euphoria in the streets and the chants of “yes we can” have faded, the question will remain: do Obama’s promises make fiscal sense?”

Personal income; small business net profits & capital gains profits are going to continue to be taxed. That’s the present reality for the middle class & working class (although unfortunately not within the letter or spirit of the (democrat) Wilsonian Revenue Act of 1913 that came out of the (republican) Taftonian 16th Amendment to the Constitution).

DEBT SOLUTION: A line should be drawn at $250,000 for married couples & $125,000 for singles (after personal exemptions/itemized deductions & capital gains buy-sell expenses). This line includes small business net profits and corporate net profits (after legitimate business expenses). Overseas profits should be taxed. Nonsensical loopholes should be closed. I’m addressing $250,000/$125,000 in TAXABLE income, NOT gross income…a distinction not made by Mr. Obama.

Regardless of the present 10%, 15%, 25%, 28% & 33% rates and their various and easily changeable thresholds…the AGGREGATE tax burden for individuals & small businesses below the $250,000/$125,000 line should be no more than 15% (currently 24.5%). For those Ronald Reagan fans, I bring you the symbolism of the 15% bottom rate contained in the Tax Reform Act of 1986, which eliminated the 11% bottom rate.

The present top marginal rate of 35% should be increased up to the pre-Reagan (1964-1980) top rate of 70% for every additional dollar of taxable income for individuals above the $250,000/$125,000 line and for small businesses above the $250,000 line. On the other hand, the corporate top marginal rate should be raised to at least 50% for each additional dollar in net profits over $250,000. The present 32.3% aggregate tax burden for net corporate profits below $250,000 should continue. The aggregate corporate tax burden for net profits above $250,000 is a mere 35%.

The preceding goes directly to the ROOT CAUSE of America’s fiscal and financial predicament, i.e., the astounding $1 Trillion deficit for FY 2009, and the overall $12 Trillion national debt (contributed to by the drain on the treasury caused by America’s counterinsurgency entanglements in Iraq, Afghanistan…and now northwestern Pakistan).

The letter and spirit of the Revenue Act of 1913 was that the privileged class would pay America’s bills and minimize her debt…while the middle class would consume with tax free dollars, thereby growing & prospering while shrinking the working class. A large and growing middle class creates prosperity for the privileged class.

I have absolutely no problem with the privileged class growing and prospering…BUT not while the middle class is shrinking and struggling. When only the former occurs, that is Reaganomics. When both the former and the latter occur, that is the Taftonomics derived from 1913′s 16th Amendment, and the Wilsonomics derived from the Revenue Act of 1913..

I refer you to my comments of November 8th, Mr. & Mrs. Reader.

OK Jack MBA
Disabled American Veteran
oklahomajack.com

CORRECTION: I have absolutely no problem with the privileged class growing and prospering…BUT not while the middle class is shrinking and struggling. When only the former occurs, that is Reaganomics/Bushonomics. When both the former and the latter grow & prosper, that is the Taftonomics derived from 1913’s 16th Amendment, and the Wilsonomics derived from the Revenue Act of 1913..

I refer you to my comments of November 8th, Mr. & Mrs. Reader.

OK Jack MBA
Disabled American Veteran
oklahomajack.com

You look like a parrot, and your names a mouthfull but i like you, you make allot of sense. I’m all for cutting corporate taxes and improving the value of the american investment for the sake of nationalism.

however, folks on the right are always worrying about the weatlhy being abused until they can’t do their economic function, but what about the quality of american workers? undereducated, underqualified, and under-employed unless they have a union which makes them rediculously overpaid. each of these people is a waste, a waste of human potential and economic productivity. you want to talk about “disincentives to work and invest” try surviving off three min wage jobs for 30 years knowing full well you’l never be able to go to school and improve your value as a worker because you can barely pay the rent as it is. without help from somewhere you’ll be stuck their and never live up to your potential contribution to the economy. I agree with you that we shouldn’t make it more expensive to hire americans, but shouldn’t we look to making american labor valuable to begin with while looking at its cost. (with a sneer of elitism) or better yet bring in boatloads of imagrants from latin america and elsewere, they’ll work their butt off just like my great grandfather did. the rewards of educating them are greater than the cost.

Posted by John J. | Report as abusive

All I have to say is, if Obama manages to pull this off and get America going in the right direction, I hope you doubters and Republicans come out and say you’re wrong, which most likely won’t happen. Besides, that, it’s easy to criticize when Obama hasn’t done anything yet. When he starts doing something and if fails miserably, then voice your outcry, but stop with all this speculation. The way I understand it is, Obama is just trying to jumpstart America, so the rest can be left to us to make it grow. Wants wrong with that? It wouldn’t have been a walk in the park if McCain was wearing the shoes.

Posted by Trasa | Report as abusive

To those who talk disparagingly of “TRICKLE DOWN ECONOMICS”

The last time I looked, it was only people with money and a dream who started businesses. The people who start businesses employ people to whom the success or failure of the entrepreneur means a job. Of necessity, the entrepreneur expects to make a return on his investment or takes a loss if his business does not succeed. The people he employs benefit from his success from having a job if he/she succeeds. In big corporations, the owners are stockholders, most of whom are people like you and me. So, when we stockholders are the owners, the employees of the corporations are our employees to whom we “trickle down” our success. I have not yet met a stockholder who did not want his/her stock to go up in value and give increasing returns each year. If stockholdres are greedy for more, then the trickle down to the employee is less.

Look at what happened to the steel, clothing, shoe and other manufacturing industries. The “TRICKLE UP” did not happen due to stockholders and employees and employee unions both wanting higher returns/salaries, nor will it. The stockholders are the driving force and their expectations are what caused the outsourcing.

So, without “TRICKLE DOWN”, there will not be any new jobs. Any politician, Democrat or Republican, who promises job creation would have to find a way to balance the WANTS of owners and employees against their true NEEDS.

So, please quit using “TRICKLE DOWN” economics as a dirty word.

Posted by ClementW | Report as abusive

The ‘trickle-down’ fallacy returns. I’m confused over her use of the term ‘costs’ to describe taxes; they would be costs to taxpayers, but revenue to the government. And yes, in recessions, tax revenues go down. If more people are unemployed, you earn less in income tax receipts. But increased public spending would increase employment. Buying a car directly helps employment; buying stock does not. But let’s suppose investing does indirectly help employment by lowering the cost of capital. People don’t invest to increase employment; they invest to make more money. Why would I buy GM stock (good for US employment) when I can buy gold (inflation hedge) or an expanding Chinese manufacturer (more profitable)? And if I make over $250k a year, would I stop investing because my capital gains taxes went up? Would investors suddenly start hiding money under mattresses? As for the ‘earned it’, it would be hard to make that claim if you removed everything the government did to create the environment that allowed you to earn it. Why do the unregulated portions of the economy (Savings and Loans, credit risk default swaps, hedge funds, Enron’s off-book practices) seem to fail and need bailing out, but we keep looking to the ‘magic of unregulated markets’ to fix our economic ills?

Posted by Mike | Report as abusive

Some commentators have likened Obama and his proposed policies to Robin Hood. I can’t agree, Obama is not Robin Hood — Robin Hood didn’t take from the ‘rich’ and give to the ‘poor’ — he took from the plunderers and returned to the producers — Obama’s proposals as laid out in the article would make him a robbing hood not a Robin Hood — he’s actually the Sheriff of Nottingham.
Introducing a carbon cap and trade scheme and increasing energy regulaton/taxation will simply raise the cost of energy. This is highly regressive and will impact lower income people the most. The idea of obtaining all sorts goodies by taxing the ‘rich’ won’t work — incidentally the current deflation is rapidly reducing the number of ‘rich’. Wealth is not created by printing a bunch of funny looking pieces of paper or confiscating people’s savings and labor — wealth is created by allowing men’s minds and attitudes to produce and create new ideas and technologies — this does not happen under confiscatory totalitarian regimes — this happens best in free societies where people are allowed to keep the fruits of their labor and people respect each other’s property.
Incidentally, those who have no substantive points to make, usually attack a person’s character rather than their conclusions — the author wrote a reasonable critique of Obama’s putative policies — respond to her theses — attacking her character just makes you out to be an idiot .

Posted by Canadian who's seen enough socialism | Report as abusive

Editor,

Doesn’t this say something about how opinionated this column was?

My two cents:

Those who make more money are not necessarily “more productive”. There is limit to the productive capacity of man, it may vary but there are limits. The man making millions cannot squeeze enough lemons at $100 a lemon to make his money in one year. Most of that wealth is ill gotten, piggybacking the work or productivity of others.

In a true free market that would not happen, but don’t those conservatives tell us Utopia is a dream. Well, so is true free market.

I just wanted to vent on the absurd premise of the article =(

Posted by Himanshu | Report as abusive

Diana, your ideas are unbelievably off the economic sense.

How trading green cards for houses will resolve the problem that the houses are actually overpriced? At least Poulsen figured it out and backed off the mortgage repurchase idiotism. By the way, at present there is oportunity for obtaining US citizenship in case a person contributes over 2 million capital in the economy. And many Indians become Americans :) that way; so that idea is already done, but the sale price is 2 million, not yours miserable 300 000. And, obviously even this is not enough.

Think also like this – when many many people become hungry and desperate, they don’t have other choise but to take the wealth they need. In that case, you having wealth would be better off contributing voluntarily prior that by higher then otherwise taxation. It doesn’t sound right maybe, but that is life, whoever is stronger at some point takes everything.

Posted by Ananke | Report as abusive

I am afraid that the underlying value-judgement behind Diana Furchtgott-Roth’s whole argumentation is that the globalisation agenda and the apparent sympathy that the Obama camp has for continuation of the Bush administration support for free trade is what leads her to argue as she has. She is ready to factor-in the depressing effect on fiscal revenue generation of a slowing economy, but she does not account either for the freeing of funds from a reduction in military spending or for the multiplier effect on job creation and income generation of the fiscal spending on public works. Sure enough, the fiscal deficit might be pushed to fluctuate somewhere between 6% of GDP and 7% of GDP during the initial years of the next decade and becoming steadily reduced to about 2% by 2015 and yielding a small surplus by her target date of 2018, but all this is doable with discipline, international cooperation or coopetition instead of confrontation, and technological advancements that are never factored into such projections because judged not quatifiable.

Posted by Mohamed MALLECK | Report as abusive

I actually think that her opinion is absurb about this situation because with her intelligence, she is not using any of it. There are greedy company owners who actually made their wealth using the employees’ work as their work. And they should contribute a little more for our country instead of holding back because they want a luxury life to keep and for them to not have to do the “hard-work” that they make their employee do. I believe we should try to help each other out during this financial crisis that we are going through and it’ll benefit us all. If we still have these greedy, stereotypical people with a very high income still believing that having more money will make the world go round. I want them to see how they’ll look when their greediness ends up not helping them if our country ends up in another depression, not that I hope that’ll actually happen to us, but just in theory.

Posted by Tashara | Report as abusive

[...] After victory, a reality check for Obama Reuters ,November 08, 2008 By Diana Furchtgott-Roth Pity President-elect Barack Obama. Today, only three days after his historic victory as the first African-American elected … [...]