The US Debt Clock hit $16 Trillion in debt today.
The Census, as of July 2011, reports 311,591,917 persons living in the US.
So every person in the United States is currently on the hook for $51,349.21 of our government’s debt.
During the State of the Union, we heard President Obama talk repeatedly about fairness and taxes as he painted a picture of income inequality. The problem is that income inequality really is a myth, yet it is being perpetuated: the gap between rich and poor has never been higher.
The data used most frequently to substantiate this claim is a Congressional Budget Office (CBO) report from October 2011. However, the glaring problem with this report is that it only covers the period from 1979 to 2007 — ending right before the Great Recession. Convenient?
So in November, Ron Schmidt of the University of Rochester School of Business Administration, did an analysis of the CBO data and compared it to IRS data during the same time period — but through the year 2009, the latest year for which IRS data was available. He found something very, very different. In a reported summary,
According to IRS data, which extend through 2009, the average nominal Adjusted Gross Income (AGI) for filers with AGI of at least $500,000 declined by 17.8 percent from 2007 to 2009, and their average after-tax income declined by 19.9 percent. For those with AGI of less than $500,000, AGI declined by only 2.6 percent, and after-tax income declined by only 1.5 percent. These numbers certainly do not indicate an increase in income inequality.
In fact, there has been a marked decline in income inequality over the last decade. From 2000 to 2009, average AGI declined by 15.0 percent and average after-tax income declined by 11.0 percent for returns with AGI of at least $500,000. (Filers with an AGI of at least $500,000 represent 0.5 percent of all returns in both years, so this comparison is similar in spirit to the CBO report, which looks at the top 1 percent of households.) For all other returns, there were increases of 14.6 percent for average AGI and 17.3 percent for average after-tax income.
It revealed that income inequality is not only not at an all-time high, but also, due to the nature of economic and business cycles, it is relatively the same as it was twenty-five years ago.
The repeated calls for fairness last night reminds one of Margaret Thatcher’s famous speech in front of the House of Commons where she lambasted her opposition for suggesting that the gap between rich and poor had widened. The Prime Minister People responded that “people on all levels of income are better off than they were in 1979. The honorable gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich. That is the Liberal policy”.
Liberal policy indeed is alive and well in America today. Thankfully, income inequality is not.
Though Obama may be pretending to draw a line in the sand between himself and the Republicans, he is really drawing a line for voters: Them vs The Rich Guy (millionaires and billionaires, anyone?) Setting up the narrative in the State of the Union for the year has allowed Obama to pander to the electorate during this campaign season and relentlessly go after those who have proven to be successful as a source of increased tax revenue to cover his spending problem.
This is his solution for inequality. Fair?
UPDATE 8/11: It’s Official — Romney/Ryan. At least I came close with the Virginia angle yesterday long before the VP site and time announcement was made. I’ll take that. And I’ll take a Romney/Ryan ticket.
Governor Bob McDonnell of Virginia is Romney’s VP pick. You heard it here first! Here’s my Top 10 List why:
There you go!
UPDATE: It’s confirmed Mitt will announce at 9am in Norfolk, VA. No planes needed for transporting the elusive VP pick. Kicks off a multi-state tour, with several stops in Virginia. And, check out www.mittromney.com. See who is on the front page — it’s not Paul Ryan.
UPDATE #2: Nothing from Bob McDonnell’s Twitterfeed for 9 hours now.
UPDATE #3: Rubio, Portman, Pawlenty all ruled out. Nothing about Bob McDonnell still and it’s after 1am
UPDATE #4: Bad storms in Virginia. Not good airplane weather
After being caught by surprise on Tuesday at a press conference, Jay Carney admitted he did not know that Ohio military base — to which President Obama would be flying and landing — on August 1, would be closed due to defense cuts.
So how does the Obama crowd spin cover this gaffe? Well, they whip out their “blame the GOP” and “blame the wealthy” playbooks, of course! (AKA “paying their fair share”)
“What is holding us up right now is the Republican refusal to have the top two percent [of earners] pay their fair share,” Zients said in response to a question from Rep. Randy Forbes (R., Va.).”
At least one lawmaker rightfully called out Jeffrey Zients, director of OMB who made the remark. Rep. Mike Turner of Ohio responded in kind,
“We’re not usually in the habit of hearing such partisan comments in what is really a bipartisan committee,” Turner said. “We don’t usually hear people throw around ‘Republican’ and ‘Democrat,’ but you have, very, very well. I want to commend you on your broken record of partisanship.”
“Zients’ comments are pretty brazen in light of the $800 billion in wasted taxpayer dollars that was supposed to (but didn’t) stimulate the economy and which were, in effect, paid for by $800 billion in defense cuts,” said Gary Schmitt, resident scholar at the American Enterprise Institute. “And is he really suggesting the country’s national security be put at risk because the administration want to raise taxes (on more than the top 2 percent) in order to save PBS, Amtrak, and the Education Department?”
The possible military cuts (sequestration) would cut troops at several levels, affect medical benefits, military housing, and more. This would happen if $1.2 trillion in budget cuts are not found. As part of the “automatic trigger” put in place from the failed Super Committee last year, President Obama endorsed and signed the sequester plan.
But instead of offering alternative solutions to avoid this from happening on January 2nd, unlike the Republicans and the Ryan Plan, Obama and the Democrats have not offered another option. Resorting to the same old tired class warfare rhetoric doesn’t solve any real problems; it only makes the White House look more desperate as the campaign season limps along.
Catching up on the WSJ, I came across an opinion piece by Ben Wattenberg, who surmised that the current entitlement crisis is one of demographics; that is, our fertility rates are not able to sustain payment obligations. Though generally the WSJ and the American Enterprise Institute — of which Mr. Wattenberg is a senior fellow — are good in their analyses, this argument is patently untrue.
A few days later, the WSJ ran a letter to the editor by a Mr. Walsh, who well summed up the problem with Wattenberg assertion.
Ben J. Wattenberg’s suggestion that the funding problems with Social Security are due to demographics is demonstrably false. A properly funded program of benefits works regardless of demographics if benefit amounts are not increased above what payments can support, and accumulated funds and related investment earnings are invested wisely and not diverted to other uses.
These basic conditions are at work in the private retirement sector, governed by Erisa, where demographics have had a relatively negligible effect on current funding levels. In the case of Social Security, the former condition has been routinely violated by politicians pandering for votes, while elimination of the latter condition was seen to by Lyndon Johnson (Mr. Wattenberg’s old boss) and the Democratic House and Senate at the time. Current entitlement practices lack basic and proper accounting for costs.
In short, we’ll have deficits in 2020 not because only because spending is too much, but also because their accounting methods allow them to record the costs incurred years prior (for instance in 2003) as expenses in 2020.
What Mr. Wattenberg is really saying is that the current shift in demographics has made it more difficult to tax current earners sufficiently to pay for the overpromised benefits of current beneficiaries and to compensate for government mismanagement.
I have written before on the crisis of Social Security and its lack of basic and valid accounting practices. Entitlement reform must consist of both fiscal restraint and acceptable and professional accounting.
Shortly after the oral arguments in front of the Supreme Court this past spring– which didn’t seem to go very well at the time — Obama warned against a version of constitutional “activism”:
“And I’d just remind conservative commentators that, for years, what we have heard is, the biggest problem on the bench was judicial activism, or a lack of judicial restraint, that an unelected group of people would somehow overturn a duly constituted and passed law.”
At the time, the thought of our President attacking the third branch of government seemed a little absurd, a little whiny. Now, looking back over the past three years of his presidency, the hypocrisy is alarming. Obama has continuously engaged in “ executive activism” from the Executive Branch.
Back in March 2008, President Obama made the following claim:
“The biggest problems that we’re facing right now have to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all. And that’s what I intend to reverse when I’m president of the United States”.
In hindsight of course, we now know that Obama doesn’t mean what he says. His executive activism has increased since he lost the House in 2010, but was evident from his liberal use of Czars and quasi-autonomous agencies since the beginning of his term.
Turning the tables on his aforementioned Supreme Court remarks, which specifically questioned the power of an “unelected group of people”, it is unfathomable for Obama to have raised such concerns in light of Obama’s cadre of unelecteds.
For instance, many of Obama’s czars are neither confirmed by Congress nor accountable to the president. The “Pay Czar”, Ken Feinburg, made unilateral decisions about the compensation of private businesses — something that is certainly not within the realm of the government’s constitutional authority. Or what about the “WMD Czar”, officially titled as Special Assistant to the President and White House Coordinator for Arms Control and Weapons of Mass Destruction, Proliferation, and Terrorism? Gary Samore is unconfirmed; his job description is that of a “coordinator,” a title with vague and broad responsibilities.
Additionally, Obama has frequently made use of government agencies to impose that which failed to become law. For instance, the Environmental Protection Agency (EPA) passed limitations on emissions and implemented almost in its entirety the cap-and-trade bill that failed in Congress. Likewise, the National Relations Labor Board (NLRB) passed rules that are virtually as onerous as the card check, which failed to get through Congress.
Abroad, the term QUANGO is widely used to describe such government agencies, standing for “QUasi-Autonomous Non-Governmental Organizations”. They execute actions meant to be carried out by the legislature. Among the most offending here are the Federal Reserve, the NRLB, the EPA, and the the Federal Trade Commission. Indeed, Obama has established an “order of succession” for several agencies via Executive Order, thereby raising the level of their importance.
Obama even created a new program specifically devoted to his “activism”, which was announced last October. Obama revealed new programs to aid college students to repay their federal loans, veterans to find employment, and homeowners make their mortgage obligations. All three initiatives were without legislation. He remarked, “We can’t wait for Congress to do its job. So where they won’t act, I will. We’re going to look every single day to figure out what we can do without Congress.” Calling the offical program, “We Can’t Wait”, Obama claimed that inaction by Congress requires action from him, a clear overreach of power and presumption.
Legal criticism also mounted from Obama’s recess appointments last January. Circumventing Congressional confirmations, Obama approved the appointments on his own, whining that the “pro forma” sessions during the break – held specifically to block the ability of a recess appointment — were not legitimate. Of course, Obama was quick to forget that Senator Harry Reid was the creator of the “pro forma”, a strategy implemented by the Democrats themselves during the latter years of the Bush administration.
Earlier this summer, Obama implemented a version of the Dream Act and just announced it at a press conference. His policy is very similar to Mark Rubio’s undrafted legislation that was expected to enter Congressional debate very soon. Contrast Obama with Bush, who tried to get his somewhat unpopular ideas passed through Congress, including Social Security reform and immigration reform. The difference is that Bush didn’t skip the Constitution – and he wouldn’t have even considered such an idea. Obama, on the other hand, did precisely that.
Obama’s use of the Executive Order (EO) has also been alarming. His total count so far has been 130, and while this is in no way an extraordinary number compared to some other presidents, it’s the content of many of the EOs which gives pause. The most recent EO on July 6, 2012, allows for control over communications during a crisis, while earlier ones include subjects related to confiscation of private property and labor, national defense resources preparedness, control over food production, and more.
What happened to the Obama who (we were told) was supposed to bring everyone together? The Obama who criticized executive activism? What we have today is a President purposely making unilateral decisions to advance his own agenda. The various tactics that Obama have grossly expanded the power of the Executive Branch. The result is a sort of reckless imperialism, which will only continue to undermine the nation if he is once again elected to the Presidency.
Our taxes built that.
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
Roads and bridges? Internet? Built by capital revenue provided by taxpayers and business owners, not the faceless “government”
Without the hard work and innovation by our citizens, wealth could not have been created. That wealth provides the thriving economy and tax revenue to pay for all the functions of government (necessary and unnecessary) — be it it infrastructure, education, or technology.
Obama seems to have forgotten that part…until he needs more taxes for his deficit spending and expansive government programs. Only a self-absorbed government bureaucrat could argue that their existence justifies everyone else’s existence.
Facts are stubborn things. Yes, we built that.
From Thomas Sowell comes a great column:
Anyone who wants to study the tricks of propaganda rhetoric has a rich source of examples in the statements of President Barack Obama. On Monday, July 9th, for example, he said that Republicans “believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans, that that will somehow unleash jobs and economic growth.”
and this gem:
People over 65 years of age have far more wealth than people in their thirties and forties — but lower incomes. If Obama wants to talk about raising income taxes, let him talk about it, but claiming that he wants to tax “the wealthiest Americans” is a lie and an emotional distraction for propaganda purposes.
Sowell really dissects Obama’s distortion of wealth vs income, and how it plays right into class warfare tactics. He also points out the fallacy of the notion that raising taxes will result in higher government revenue. He is absolutely correct, and the most recent example of such a failed policy is England. Last week, I wrote about the reports which showed that upping the taxes rates this past spring in England yielded lower-than-expected revenue, which boggled the minds of such politicians who don’t understand the Laffer Curve.
And Sowell reminds us, JFK staunchly believed that higher tax rates drives money into tax shelters. This point was proven in the time leading up to the Internal Revenue Code (IRC) overhaul of 1986 — when some tax rates were more than 70%. When the IRC lowered rates to 28%, the money flowed, because it was too much work to hide the money, so to speak. I have written about this before when I picked apart Obama’s “millionaires and billionaires” rhetoric.
Obama’s only tactic is to continue to use class warfare speak in order to win. As much of the electorate is simply uninformed about the nuances of economics and with a media content to perpetuate his distortions, we must steadfastly refute his claims, as Sowell has done so well.
Alan Krueger, Chairman Of the Council of Economic Advisors, soothed Americans on his White House blog post regarding the unemployment numbers released today.
As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available
Did you know that the White House said something similar the month before?
June 2012: “Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.”
And the month before?
May 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.”
April 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.”
And so forth. Like a parrot.
March 2012: “Therefore, it is important not to read too much into any one monthly report, and it is helpful to consider each report in the
context of other data that are becoming available.”
February 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.”
January 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.”
December 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
November 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
October 2011: “The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. There is no better example than August’s jobs figure, which was initially reported at zero and in the latest revision increased to 104,000. This illustrates why the Administration always stresses it is important not to read too much into any one monthly report.”
September 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
August 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
July 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
June 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
May 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
April 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
March 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
February 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
January 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
December 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
November 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”
October 2010: “Given the volatility in monthly employment and unemployment data, it is important not to read too much into any one monthly report.”
September 2010: “Given the volatility in the monthly employment and unemployment data, it is important not to read too much into any one monthly report.”
August 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”
July 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative. It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains.”
June 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.”
May 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.”
April 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”
March 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”
January 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”
November 2009: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”
Parrots repeat the same thing over and over ad nauseum. But they can’t read. Maybe the White House figures that people won’t really read their blog too closely either. Isn’t the definition of insanity is to do the same thing over and over and expecting different results?
Just to quickly note — a thoughtful piece by Sean Trende offering an interesting take on the Robert’s decision. The article is highly recommended in its entirety. However, here’s just a taste:
The simple fact is that almost all of us pay higher taxes each year than we otherwise would on the basis of things we forgo: whether it is not buying an electric car, not installing energy-efficient windows in our house, or not having that third kid. There’s no new ground being broken here
Robert’s ruling will be dissected for years to come. Looking at it from Trende’s angle is worthwhile.