Below Is a Snapshot of the U.S. Economy Under President Obama,
As of September 2012
23,136,000 Americans are unemployed, underemployed, or have
stopped looking for work.
12,544,000 Americans are unemployed.
8,031,000 Americans are underemployed, working part-time but
seeking full-time work.
5,033,000 workers have been unemployed for 27 weeks or longer.
1,043,000 construction jobs have been lost since President Obama
took office.
582,000 manufacturing jobs have been lost since President Obama
took office.
The unemployment rate when President Obama took office was 7.8%.
Under Obama, the country experienced 43 consecutive months of unemployment
above 8% (though the administration predicted that the January 2009 passage of
the stimulus bill would keep unemployment from ever reaching 8%, and would
reduce it to 5.4% by 2012).
The nation's labor-force participation rate is 63.5%, the lowest
level since 1981.
Had the labor-force participation rate remained steady since
President Obama took office, the official unemployment rate would now be 11.2%.
The government's official unemployment rate does not include
those unemployed individuals who have entirely given up looking for work (and
thus have dropped out of the job market); nor does it include the
underemployed—i.e., those with part-time jobs who rare seeking full-time
employment. The most significant unemployment-related statistic, known as the
U-6 figure, does factor these two important categories of individuals into the
equation. When these workers are included, the U-6 un/underemployment rate
stood at 14.7% as of September 2012.
Between January 2009 and September 2012, median gasoline prices
nationwide more than doubled, from $1.84 per gallon to $3.85 per gallon. (Note:
In 2008, Obama's energy secretary, Steven Chu, advocated steep rises in
gasoline prices as a means of coaxing Americans into being more fuel-efficient
and purchasing green energy cars: “Somehow we have to figure out how to boost
the price of gasoline to the levels in Europe”—i.e., approximately $10 per gallon.
In March 2011, Chu reiterated his support for high gasoline prices.)
Throughout the 2012 presidential campaign, President Obama has
claimed credit for “creating 4.5 million new jobs.” But “jobs created” is only
half of the equation; the other half is “jobs lost.” When both figures are
considered, the Obama presidency has overseen a net jobs gain of just 325,000.
As Washington Post Fact Checker Glenn Kessler puts it, “Obama is on track to
have the worst jobs record of any president since World War II.”
Weakest Economic Recovery Since the 1880s
In October 2012, economist John B. Taylor reported that of all
the American economic recoveries that have followed previous financial crises,
the current recovery is the weakest since the 1880s. The previous 7 recoveries
during that 130-year time span were, on average, 4 times stronger than the
Obama recovery.
In August 2013, the Weekly Standard reported: "New
estimates derived from the Census Bureau's Current Population Survey by Sentier
Research indicate that the real (inflation-adjusted) median annual household
income in America has fallen by 4.4 percent during the 'recovery,' after having
fallen by 1.8 during the recession.
During the recession, the median American household income fell by
$1,002 (from $55,480 to $54,478). During the recovery—that is, from the
officially defined end of the recession (in June 2009) to the most recent month
for which figures are available (June 2013)—the median American household
income has fallen by $2,380 (from $54,478 to $52,098). So the typical American
household is making almost $2,400 less per year (in constant 2013 dollars) than
it was four years ago, when the Obama 'recovery' began."
Between Obama's Inauguration and 2012, the Following Economic
Developments Took Place
Median household income fell from $54,983 to $50,964.
Disposable income per capita in fell from $33,229 to $32,677.
The median number of weeks of unemployment for a jobless worker
in January 2009 was 10.7. That figure reached a peak of 25.0 in June 2010. As
of August 2012, it stood at 18.0.
The number of people participating in the Supplemental Nutrition
Assistance Program (Food Stamps) in January 2009 was 31,983,716. By June 2012
it was 46,670,373.
Black Unemployment Under Obama
As of July 2012, the unemployment rate for black Americans stood
at 14.4%, compared to 7.4% for whites and 11% for Hispanics. For black youth,
ages 16-19, the unemployment rate was a staggering 39.3%—nearly double the
20.9% figure for whites in the same age group.
Obama Called President Bush's Debt “Irresponsible” and
“Unpatriotic”
During the 2008 presidential campaign, Obama derided George W.
Bush for having added, “by his lonesome,” some $4 trillion to the national debt
during his eight years as president. “That's irresponsible,” he said. “It's
unpatriotic”
Obama Pledged to Cut Annual Deficit in Half, but Instead
Presided over Record Debt
During the 2008 campaign, Obama said, “We cannot and will not
sustain deficits like these without end. Contrary to the prevailing wisdom in Washington
these past few years, we cannot simply spend as we please and defer the
consequences to the next budget, the next administration, or the next
generation. We are paying the price for these deficits right now. In 2008
alone, we paid $250 billion in interest on our debt—one in every ten taxpayer
dollars.... That's why today I'm pledging to cut the deficits we inherited by
half, by the end of my first term in office.... I refuse to leave our children
with a debt that they cannot repay. And that means taking responsibility right
now, in this administration, for getting our spending under control.”
The annual deficit in 2008, the final year of the Bush
administration, was $482 billion.
When Obama took office in January 2009, the national debt stood
at $10.6 trillion. By the time of the Democratic National Convention in
September 2012, it was $16 trillion. In short, under Obama's watch, the debt
had grown by $5.4 trillion in three years and eight months.
According to the U.S. Treasury, America's government debt
climbed by more than $1.2 trillion in fiscal year 2012, meaning that the
federal government had borrowed an additional $10,855 for each household in the
United States during the year. This brought the nation's total debt to
approximately $136,690 per household.
For every $7 in federal revenues in 2012, the government spent
$10.95.
In July 2012, the White House delivered its 10-year budget
forecast to Congress. This forecast projected $42.6 trillion in spending over
the ensuing decade, and a federal debt that would grow to $25.4 trillion by
2022 (nearly $1 trillion in additional debt, each and every year)
Treasury Secretary Geithner Acknowledges that Obama's Debt-Laden
Budget Is “Unsustainable”
On February 17, 2011, Treasury Secretary Timothy Geithner
confirmed to the Senate Budget Committee that President Obama's budget proposal
would create a “very large interest burden and unsustainable obligations over
time.” In the Budget Committee hearing, ranking Republican Senator Jeff
Sessions asked Geithner about the effect of Obama’s newly proposed budget on
the economy, specifically as it related to the increasing percentage of debt as
related to gross domestic product. Geithner’s response was a stark
contradiction of Obama's pledge that “we will not be adding more to the
national debt.” Said Geithner: “You’re absolutely right that with the
President’s plan, even if Congress were to enact it, and even if Congress were
to hold to it and reduce those deficits to 3 percent of GDP over the next five
years, we would still be left with a very large interest burden and
unsustainable obligations over time.”
The Stimulus Bill's Massive Wastefulness
Just a few days after Barack Obama was elected President, the
left-wing billionaire financier George Soros stated: “I think we need a large
stimulus package which will provide funds for state and local government to
maintain their budgets—because they are not allowed by the constitution to run
a deficit. For such a program to be successful, the federal government would
need to provide hundreds of billions of dollars. In addition, another
infrastructure program is necessary. In total, the cost would be in the 300 to
600 billion-dollar range....” Soon thereafter, as one of the first priorities
of his presidency, Obama pressured Congress to pass a monumental $787 billion
economic-stimulus bill (the American Recovery and Reinvestment Act, or AARA)
whose text was 1,071 pages long—and which few, if any, legislators in the
Democrat-dominated Congress read before voting on it.
Obama stressed the urgency of passing this bill at the earliest
possible moment, so as to forestall any further harm to the U.S. economy. But
after the bill was passed by Congress on February 13, it sat on the President’s
desk for three days before it was signed, as the Obamas were away on a family
holiday.
Hoover Institution Fellow Thomas Sowell made the following
observations about the hasty manner in which the stimulus bill was passed: “The
urgency with which [the Obama administration] has rushed through a monumental
spending bill, whose actual spending will not be completed even after 2010,
ought to set off alarm bells among those who are not in thrall to the euphoria
of Obama's presidency. The urgency was real, even if the reason given was
phony. President Obama’s chief of staff, Rahm Emanuel, let slip a valuable clue
when he said that a crisis should not go to waste, that a crisis is an opportunity
to do things that you could not do otherwise. Think about the utter cynicism of
that. During a crisis, a panicked public will let you get away with things you
couldn't get away with otherwise. A corollary of that is that you had better
act quickly while the crisis is at hand, without Congressional hearings or
public debates about what you are doing. Above all, you must act before the
economy begins to recover on its own.... That would undermine, if not destroy,
a golden opportunity to restructure the American economy in ways that would
allow politicians to micro-manage other sectors of the economy the way they
have micro-managed the housing market into disaster.”
One of the stimulus bill’s most significant provisions was its
repeal of the essentials of the Personal Responsibility and Work Opportunity
Reconciliation Act, the welfare-reform legislation passed by the Republican
Congress and signed by President Clinton in 1996, which reduced the welfare
rolls by two-thirds. Robert Rector of the Heritage Foundation, who helped write
the ’96 law, said that under the Obama plan “the federal government will pay 80
percent of cost for each new family that a state enrolls in welfare.” By
promising bonuses to states that put more people on welfare, the Obama plan
reversed the incentives created by the 1996 legislation.
According to a Heritage Foundation report, 32% of the new
stimulus bill—or an average of $6,700 in “new means-tested welfare spending”
for every poor person in the U.S.—was earmarked for social-welfare programs
(e.g., Temporary Assistance to Needy Families; Medicaid; food stamps; the
Women, Infants, and Children food program; public housing; Section 8 housing;
the Community Development Block Grant; the Social Services Block Grant; Head
Start; and the Earned Income Tax Credit).
Added the Heritage Foundation report: “But this welfare spending
is only the tip of the iceberg. The bill sets in motion another $523 billion in
new welfare spending that is hidden by budgetary gimmicks.... [T]he total
10-year extra welfare cost is likely to be $787 billion.... In the first year
after enactment of the stimulus bill, federal welfare spending will explode
upward by more than 20 percent, rising from $491 billion in FY 2008 to $601
billion in FY 2009. This one-year explosion in welfare spending is, by far, the
largest in U.S. history…. Once the hidden welfare spending in the bill is
counted, the total 10-year fiscal burden (added to the national debt) will [be]
$1.34 trillion. This amounts to $17,400 for each household paying income tax in
the U.S.”
In May 2011, university economists Timothy Conley and Bill Dupor
published an exhaustive study concluding that that AARA (i.e. the stimulus
bill) had “created/saved approximately 450 thousand state and local government
jobs and destroyed/forestalled roughly one million private sector jobs.” Added
the study: “State and local government jobs were saved because ARRA funds were
largely used to offset state revenue shortfalls and Medicaid increases rather
than boost private sector employment. The majority of destroyed/forestalled
jobs were in growth industries including health, education, professional and
business services.”
In December 2009, Obama outlined yet another set of
multibillion-dollar stimulus and jobs proposals while explaining that America
must continue to “spend our way out of this recession.”
Contrast to President Reagan
In 1981 President Ronald Reagan also inherited a severe
recession in which unemployment rose to 10.8% in November 1982. But as
economist Peter Morici notes, Reagan “put in place a very different set of
stimulus measures—emphasizing private-sector leadership.” In the fourth year of
Reagan's first term (1984), the quarterly economic growth rates were 8.5%,
7.9%, 6.9%, and 5.8%—figures that dwarf the corresponding numbers under Obama.
Printing Money out of Thin Air: “Quantitative Easing”
In September 2012, the Federal Reserve announced that it would
purchase each month some $40 billion of mortgage-backed securities bonds (in
addition to $45 billion in Treasury bonds) under a new “stimulus program” known
as QE3 (Quantitative Easing 3), and would continue to do so until the U.S.
unemployment rate was reduced to 7%. Forecasts from 52 economists for the
ultimate size of the program ranged from $250 billion to $2 trillion.
In two prior rounds of Quantitative Easing, the Federal Reserve
purchased $2.3 trillion in mortgage and government debt in an effort to push
down borrowing costs.
Quantitative Easing invariably erodes the value of the dollar
and eventually results in steep inflation.
Credit Rating Agencies Downgrade U.S. Credit Rating
Dagong Global Downgrades U.S. Credit Rating: Based in Beijing,
Dagong Global Credit Rating is a relative newcomer to the credit rating
industry. In July 2010 it published its first report on global sovereign debt
ratings, and assigned the U.S. a less-than-stellar rating of AA. In November
2010, after the Federal Reserve had launched its second round of quantitative
easing—dubbed “QE2”—in which the Fed purchased $600 billion worth of treasury
securities, Dagong, warning that QE2 would erode the value of the dollar,
downgraded the U.S. credit rating again, to A+.
Weiss Ratings Downgrades U.S. Credit Rating: Weiss Ratings is a
small credit-rating agency based in Jupiter, Florida. In April 2011
Weiss—critical of the Obama administration's inability to reduce the country's
annual budget deficit—released its first-ever ratings of the sovereign debt of
47 countries, giving the U.S. a debt rating of C, or “fair.” In mid-July 2011,
Weiss lowered that to “C-minus,” or the Standard & Poor's equivalent of one
notch above “junk” status.
Egan Jones Downgrades U.S. Credit Rating: In July 2011, the
independent credit-research firm Egan Jones (one of 10 firms the Securities and
Exchange Commission recognizes as a rating organization) downgraded the U.S.
credit rating from AAA to AA+, citing concerns over “the relatively high level
of debt and the difficulty in significantly cutting spending.”
Standard & Poor's Downgrades U.S. Credit Rating: In August
2011, Standard & Poor's, one of the big three ratings firms, downgraded the
U.S. credit rating from AAA to AA+, citing great concern over the country's
skyrocketing national debt. “It’s always possible the rating will come back,
but we don’t think it’s coming back anytime soon,” said David Beers, head of
S&P’s government debt rating unit.
Egan Jones Downgrades U.S. Credit Rating Again: On April 7,
2012, Egan Jones downgraded the U.S. credit rating for a second time, from AA+
to AA, again citing concerns over the sustainability of America's public debt.
The firm had previously reduced America from AAA to AA+ in July 2011, just
before Standard & Poor's did the same. “Without some structural changes
soon, restoring credit quality will become increasingly difficult,” Egan Jones
warned. The firm added that there was a 1.2% probability of U.S. default in the
next 12 months. It also cited the fact that America's total debt, which was
equal to its total GDP, was rising and would likely reach 112% of the GDP by 2014.
Egan Jones Downgrades U.S. Credit Rating a Third Time: On
September 14, 2012, Egan Jones downgraded its rating on U.S. government debt
for a second time in 5 months, from AA to AA-, stating that the Federal
Reserve's plans to try to stimulate the economy by purchasing mortgage bonds
would weaken the value of the dollar and cause prices for oil and other
commodities to rise.
Moody's Threatens to Downgrade U.S. Credit Rating: On September
11, 2012, Moody's Investors Service said that it would probably lower its AAA
rating on U.S. government debt unless congressional leaders could strike a
budget deal in the coming months to bring down the country's annual deficit.
“If those negotiations lead to specific policies that produce a stabilization
and then downward trend in the ratio of federal debt to GDP over the medium
term, the rating will likely be affirmed,” Moody's said in a press release. “If
those negotiations fail to produce such policies, however, Moody's would expect
to lower the rating, probably to Aa1.”
OBAMA AND TAXES
(Return to Table of Contents)
Raising Capital Gains Taxes for Purposes of “Fairness”
In an April 2008 Democratic primary debate, candidate Obama was
asked, by journalist Charlie Gibson, a question about his proposal to nearly
double the capital gains tax (from 15 percent to 28 percent). Said Gibson: “…
In each instance when the rate dropped [in the 1990s], revenues from the tax
increased. The government took in more money. And in the 1980s, when the
[capital gains] tax was increased to 28 percent, the revenues went down. So why
raise it at all, especially given the fact that 100 million people in this
country own stock and would be affected?” Obama replied that he wished to raise
the tax “for purposes of fairness.” “We saw an article today,” he explained,
“which showed that the top 50 hedge fund managers made $29 billion last year….
[T]hose who are able to work the stock market and amass huge fortunes on
capital gains are paying a lower tax rate than their secretaries. That’s not
fair.”
Low Ratings for Senator Obama's Tax Policies
The National Taxpayers Union—an organization that “seeks to reduce
government spending, cut taxes, and protect the rights of taxpayers”—gave
then-Senator Obama ratings of zero percent, 16 percent, and “F” in 2005, 2006,
and 2007, respectively.
Americans for Tax Reform—which “believes in a system in which
taxes are simpler, fairer, flatter, more visible, and lower than they are
today”—gave Obama a zero percent rating in 2005 and a 15 percent rating in
2006.
The Small Business & Entrepreneurship Council—which “works
to influence legislation and policies that help to create a favorable and
productive environment for small businesses and entrepreneurship”—gave Obama a
rating of 9 percent in 2005.
The National Federation of Independent Business—which seeks “to
impact public policy at the state and federal level and be a key business
resource for small and independent business in America”—gave Obama a rating of
12 percent in 2005-2006.
The Business-Industry Political Action Committee—which “supports
pro-business candidates who have demonstrated the skill and leadership necessary
to fuel a pro-business Congress”—rated Obama 15 percent in 2005 and 10 percent
in 2006.
Ernst & Young Says President Obama's Proposed Tax Hikes Will
Greatly Harm Economy
In July 2012, Ernst & Young—a global leader in assurance,
tax, transaction and advisory services—examined four sets of Obama tax
proposals: (a) the increase in the top two tax rates from 33% to 36% and 35% to
39.6%; (b) the reinstatement of the limitation on itemized deductions for high
earners; (c) the taxation of dividends as ordinary income; and (d) an increase
in the Medicare tax for high-income taxpayers (from 2.9% to 3.8%), and the
application of a new 3.8% tax on investment income. The Ernst & Young
report concluded that “the higher tax rates will have significant adverse economic
effects in the long-run: lowering output, employment, investment, the capital
stock, and real after-tax wages when the resulting revenue is used to finance
additional government spending.” All told, Ernst & Young estimate that
Obama's tax plan will kill 710,000 small business jobs.
Most small businesses pay their taxes using individual tax
rates; thus, If individual tax rates are raised, small business tax rates are
raised as well.
Obama's Plan for a Tax Hike Is Blocked by Senate Democrats
In July 2012, Senate Democrats blocked a vote on President
Obama’s proposal to raise taxes on those earning more than $250,000 per year.
Senate Republicans had proposed taking two immediate votes—one to extend the
Bush-era tax cuts (for all Americans) in their totality, the other to raise
taxes as per Obama’s plan. The Democrats, aware that Obama's plan was
politically toxic, refused to bring either measure to a vote.
Obama Lies About His Record on Tax Hikes
In a nationally televised February 6, 2011 interview with Bill
O'Reilly, Obama stated: “I didn’t raise taxes once. I lowered taxes over the
last two years.” The following day, Mark Levin of Americans For Tax Reform
debunked Obama's “blatantly false” statement, noting that the president had
signed into law at least two dozen tax increases. For example:
On February 4, 2009—just 16 days into his presidency—Obama
signed into law a 156% increase in the federal excise tax on tobacco, thereby
violating his “firm pledge” that no American making less than $250,000 would see
“any form of tax increase.” The median income of smokers is slightly more than
$36,000.
In March 2010, Obama signed the healthcare reform bill into law,
thereby enacting two dozen new or higher taxes (at least seven of which
violated his “firm pledge” on taxes):
* Employer Mandate Excise Tax
* Small business 1099-MISC Information Reporting
* Surtax on Investment Income
* Excise Tax on Comprehensive Health Insurance Plans
* Hike in Medicare Payroll Tax
* Medicine Cabinet Tax
* HSA Withdrawal Tax Hike
* Flexible Spending Account Cap – aka “Special Needs Kids Tax”
* Tax on Medical Device Manufacturers
* "Haircut" for Medical Itemized Deduction from 7.5%
to 10% of AGI
* Tax on Indoor Tanning Services
* Elimination of tax deduction for employer-provided retirement
Rx drug coverage
* Blue Cross/Blue Shield Tax Hike
* Excise Tax on Charitable Hospitals
* Tax on Innovator Drug Companies
* Tax on Health Insurers
* Biofuel “black liquor” tax hike
* Codification of the “economic substance doctrine”
The second part of Obama’s claim—that he had “lowered taxes over
the last two years”—rested merely upon some temporary tax relief he had signed
into law. The tax cuts he enacted—such as the temporary payroll tax
holiday—were mostly short-term and conditional. By contrast, the tax increases
Obama had signed into law were mostly permanent. Indeed, he had signed into law
$7 in permanent tax hikes for every $1 in permanent tax cuts.
Obamacare: The Biggest Tax Hike in American History
On June 28, 2012, the Supreme Court upheld the constitutionality
of Obamacare, particularly its core provision—the so-called “individual
mandate” under which most Americans would be required to buy health care
insurance with at least the minimum amount of coverage stipulated by the
federal government or pay a fine. Although the Obama administration had tried
to characterize the individual mandate as a legitimate exercise of
congressional power under the separate Commerce Clause of the Constitution, the
Court's opinion rejected that approach and opted to call the fine, imposed on
individuals who decide not to buy health insurance despite the mandate, a
tax—within the taxing authority of Congress. As Chief Justice John Roberts
wrote, that “Because the Constitution permits such a tax, it is not our role to
forbid it, or to pass upon its wisdom or fairness.”
Obamacare will force small businesses with more than 50
employees to purchase “qualifying” health insurance. If they fail to do so,
they will be required to pay a tax of up to $2,000 per employee.
In September 2012, the Congressional Budget Office released a
report estimating that 6 million people would be subject to the Obamacare
“individual mandate” tax, which would cost them approximately $7 billion in
taxes per year. According to the Washington Examiner, most of those 6 million
are in the middle class (with incomes below “$60,000 for individuals and
$123,000 for families of four). In 2008, Obama pledged that “no family making
less than $250,000 a year will see any form of tax increase—not your income
tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”
The individual mandate is just one of many new taxes imposed by
Obamacare. According to an analysis by the nonpartisan Congressional Budget
Office, Obamacare as a whole constitutes the largest tax hike in American
history—and it affects mostly people in the middle class.
Obamacare's Massive Taxes on the Middle Class
Forbes.com identifies the following 7 taxes that Obamacare will
impose on people earning less than $250,000 per year:
Individual Mandate Excise Tax: “Starting in 2014, anyone not
buying 'qualifying' health insurance must pay an income tax surtax. It goes up
each year until 2016 and beyond when a couple would pay a tax of the higher of
$1,360 or 2.5% of adjusted gross income.”
Over-The-Counter Drugs Trap: “Since Jan. 1, 2011, employees with
health savings accounts, flexible spending accounts, or health reimbursement
accounts have no longer been able to use pre-tax funds stashed in these
accounts to buy over-the-counter medicines for allergy relief and the like
without a doctor’s prescription (there’s an exception for insulin).”
Healthcare Flexible Spending Account Cap: “Starting Jan. 1,
2013, employees will face a $2,500 cap on the amount of pre-tax salary
deferrals they can make into a healthcare flexible spending account. There is
no cap under current law.”
Medical Itemized Deduction Hurdle: “Starting Jan. 1, 2013,
taxpayers who face high medical expenses will only be allowed a deduction for
expenses to the extent they exceed 10% of adjusted gross income, up from 7.5%
now. Taxpayers 65 and older can still use the old 7.5% threshold through 2016.
Health Savings Account Withdrawal Penalty: “Since Jan. 1, 2011,
taxpayers who withdraw money from health savings accounts for non-medical
expenses before age 65 face a 20% penalty, up from 10% before.”
Indoor Tanning Services Tax: “Since July 1, 2010, folks using
indoor tanning salons face a new 10% excise tax.”
Cadillac Health Insurance Plan Tax: “Starting in 2018, there
will be a new 40% excise tax on taxpayers who are covered by high-cost health
insurance plans (with premiums at or above $10,200 for a single or $27,500 for
a family). Insurers or employers who are self-insured will pay the tax, but it
is expected to trickle down to mean higher costs for consumers.
Obamacare Will Raise Self-Employment Tax Rate
The healthcare reform bill will raise self-employment tax from
2.9% in 2012 to 3.8% in 2013. This increase, coupled with the rise in the top
marginal income-tax rates described above, would raise the marginal income-tax
rate on small business profits from its current level of approximately 38%, to
about 43% in 2013. This would be devastating to small employers, most of whom
have thin profit margins. According to Fox News, “A company with $1 million in
profits facing a higher tax rate of 5 percentage points will be saddled with
another $50,000 in taxes.”
Obamacare Medical Device Tax
This 2.3% tax will take effect in 2013 and will affect companies
that manufacture devices such as prosthetic limbs, pacemakers, and operating
tables. Expected to bring in $20 billion in annual revenues, this tax will be
levied on gross sales and thus must be paid even by companies that do not earn
a profit in a given fiscal year. The medical-device industry employs 409,000
Americans in 12,000 plants nationwide; many of these incur losses for several
years before they are able to turn a profit.
Obamacare Investment Surtax
“Also taking effect in 2013,” says a Fox News report, “this tax
increase captures those few small business owners not covered by the
self-employment tax hike: owners of Subchapter-S corporations and limited
partners. These owners are currently exempt from self-employment tax, mostly
because they are investors rather than proprietors. But Obamacare sweeps them
into the IRS net too, forcing them to pay the 3.8 percentage point tax as an
'investor surtax.' This will make it far more difficult for investors to raise
money to start up small firms. An investor is going to need to see even greater
small business profit projections to overcome this higher 'hurdle rate' of
taxes. Not only does a small business owner have to give his investor a strong
return on his investment, he now has to do it with a giant tax mill around his
neck.”
Obama Proposes Death Tax Increase
As of 2012, the estate tax—or “death tax”—has a top rate of 35%
and a “standard deduction” of $5 million ($10 million in the case of a married
couple or surviving spouse). President Obama calls for raising the rate to 45%,
and reducing the exemption to $3.5 million. A Fox News report explains the
implications of this measure: “When a family business owner dies, it’s up to
the surviving family members to pay the death tax to the government. Needless
to say, many successful, job-creating small businesses simply won’t survive
this process. Such families will have little choice but to sell the business
(and lay off all the employees) in order to pay the IRS. Or they will have to
pay a small fortune to lawyers, accountants, and the life insurance industry to
avoid this fate.”
Obama's Massive “Cap & Trade” Tax Hike That Was Averted by
Congress
In a February 2009 speech to Congress, President Obama called
for the implementation of a cap-and-trade environmental/energy plan designed to
reduce carbon emissions. The cap-and-trade legislation (known officially as the
American Clean Energy and Security Act of 2009, or the Waxman-Markey bill, in
honor of its congressional sponsors) would have established an economy-wide cap
on carbon emissions and then permitted companies to buy or sell emission
“credits.”
Robert Murphy, author of The Politically Incorrect Guide to
Capitalism, explained the mechanism by which cap-and-trade would impose costs
on the American public: “Under a cap-and-trade scheme, the government sets an
absolute cap on how much carbon dioxide industries can emit in the United
States, and it enforces this cap by selling a limited number of allowances. All
of the operations (utilities, factories, etc.) covered by the law must turn in
the appropriate number of allowances based on how much carbon dioxide they
release into the atmosphere each year. The government gets its revenues from
auctioning off these allowances to the highest bidder.”
The ultimate result of cap-and-trade would be carbon rationing,
since there would be a fixed number of carbon allowances available to American
businesses as a whole. Such rationing would dramatically raise the operating
costs of many businesses, which in turn would pass those costs on to their
customers. According to the Heritage Foundation, the average American household
would incur additional costs ranging from $1,870 to $6,970 per year. An MIT
study placed the figure at $3,100. A March 2009 U.S. Treasury Department
document said “a cap and trade program could generate federal receipts on the
order of $100 to $200 billion annually.” That is the equivalent of raising
personal income taxes by approximately 15%, or $1,761 a year, per household.
In 2008, candidate Obama readily acknowledged that cap-and-trade
would impose significantly higher energy costs on Americans of all income
levels: “[U]nder my plan of a cap-and-trade system, electricity rates would
necessarily skyrocket.”
On June 26, 2009, the House of Representatives gave President
Obama what he wanted, passing a cap-and-trade bill that called for the U.S. to
cut its emissions of carbon dioxide by 83% over the next 41 years. By 2050, the
average American would be allowed the same level of emissions as was produced
by a citizen in 1867. Environmental groups celebrated, but the bill was
extremely unpopular with the American public at large. Therefore, the bill was
never passed by the Senate and did not become law, thereby preventing Obama
from imposing an enormous tax on the American people.
Thus rebuffed by Congress, Obama next sought to impose
cap-and-trade by circumventing the legislative process and imposing
cap-and-trade through edicts by his Environmental Protection Agency (EPA). In
March 2012, for example, the Obama EPA issued a final rule limiting
greenhouse-gas emissions from electric utilities to no more than 1,000 pounds
of carbon dioxide per megawatt of electricity produced—far below the 1,768
pound-average of existing coal plants. As Bonner Cohen, senior fellow with the
National Center for Public Policy Research, writes: “The rule requires future
plants to use as yet non-existent carbon capture and control technologies to
cut their emissions to the new standard. With no technology available to bring
down CO2 emissions to the new standard, EPA, in the name of combating climate
change, is effectively telling the coal industry, which produces 55 percent of
our nation’s electricity, that its days are numbered.”
Obama's Devotion to Failed “Keynesian” Economic Policies
President Obama is an adherent of what is known as Keynesian
economics, named after the early-to-mid-twentieth century economist John Maynard
Keynes. As Forbes magazine contributor Peter Ferrara explains: “The [Keynesian]
idea is that the increased government spending and deficits will increase
demand in the economy for more production, and that producers will increase
supply to meet that demand, hiring more workers and reducing unemployment in
the process. Keynesian economics arose in the 1930s in response to the
Depression. It never worked then, as the recession of 1929 extended into the
decade long Great Depression. And it never worked anywhere it’s been tried
since then, in the U.S. or abroad. By the 1970s, Keynesian policies had
produced double digit unemployment, double digit inflation, and double digit
interest rates, all at the same time, along with four successive worsening
recessions from 1969 to 1982. Keynesian monetary policy involves running up the
money supply to increase demand, with artificially lowered interest rates
promoting more spending. That is where the inflation came from.”
Ferrara then explains: “Ronald Reagan explicitly scrapped
Keynesian economics for the more modern supply side economics, which holds that
economic growth results from incentives meant to boost production. That results
from reduced tax rates, which enable producers to keep a higher proportion of
what they produce. It results from reduced regulatory costs, which also
increases the net reward for increased production. And it results from monetary
policies maintaining a strong, stable dollar, without inflation, which assures
investors that the value of their investments will not be depreciated by
inflation or a falling dollar, or threatened by repeated recessions resulting
from policy induced boom/bust cycles, as in the 1970s.... [Under Reagan]
inflation was quickly whipped, cut in half by 1982, and in half again by 1983,
never to be heard from again until recently. At the same time ... the economy
took off on a 25-year economic boom from 1982 to 2007, interrupted by just two,
short, shallow recessions, widely recognized in the economic literature, and by
the National Bureau of Economic Research, as one long boom. During the first 7
years of that boom alone, the economy grew by almost one-third, the equivalent
of adding the entire economy of West Germany, the third largest in the world at
the time, to the U.S. economy.”
Adjusting for inflation, more wealth was created in America
during that 25-year boom than in the previous 200 years combined.
From 2002-2007, the growth in the U.S. economy was the
equivalent of adding the entire economy of China to the American economy.
In light of these facts, Ferrara notes that “Obama has turned
out to be the most regressive, backward looking President in American history,
taking us back to the failed, discredited Keynesianism of the 1930s to 1970s,
as if nothing at all interesting happened from 1980 to 2007.... Obama’s first
major act in office was to pursue the unreconstructed Keynesianism of the
nearly $1 trillion so-called 'stimulus,' which we now know didn’t stimulate
anything except government spending, deficits and debt. Obama promised us at
the time that if his 'stimulus' bill passed, the unemployment rate would never
exceed 8%, and would decline to 5.8% by May of [2012]. But in reality it was
8.2% and rising in May.”
Obama articulated his devotion to Keynesian economic policies
when he stated, in December 2009, that America must continue to “spend our way
out of this recession.”
