Obama’s Taxing Problem
Obama is proposing raising taxes on people making over 250K/year. In many parts of the country that’s not even close to rich, but in the industrial swing states it sounds rich to the voters he’s got to collar, so let’s let that go for now.
He’s also proposing raising the capital gains tax. Sounds good to that same constituency but it’s a big mistake. Here’s what happens:
1. Capital gains tax rate rises.
2. A wave of selling prior to and in anticipation of the tax increase occurs, and new investment slows down markedly.
3. The value of 401K’s and IRA’s drop.
4. Upon seeing their monthly statements, working class voters turn on Barack, while cutting down even more on discretionary spending.
5. The spending cutbacks perpetuate the recession that Bush and McCain swear we’re not in. What a pair of Bozos.
What O should do is what he did towards the end of the primaries when he called out Hillary and McCain on their cynical calls for a gas tax holiday, which would have done nothing to ease the pain but might have fooled some of the people some of the time. He’s got to explain, in clear terms, the damage that a higher cap gains tax would do, even though, at first glance, it appears to be a gesture to the working men/women of the country. And he’s got to be big enough to reverse himself, as he’s already come out in favor of raising the cap gains bite.
O’s got to be the go to guy for the truth. If he ends up pandering, he loses some of the luster he’s earned.
End of story.
1 Comment
Additional comments powered by BackType
I was disturbed to read this morning that Barack Obama has named Jason Furman as head of his policy team on the economy. Furman served under Citigroup chair Robert Rubin in the Clinton Administration, and has headed the Hamilton Project at the Brookings Institute. Labor union officials, according to the LA Times, are “seething,” citing among other things, Furman’s cheerleading for the trade policies (NAFTA et al) which have destroyed manufacturing jobs in this country. Furman has also expressed written opposition to the union coalition seeking better wages and benefits at Wal-Mart.
I wouldn’t be particularly upset if Furman were named to the Obama team of economic advisors: after all, a real leader seeks input from many sources, not just the sycophants who tell him what he wants to hear. But for Furman to be named as HEAD of the team is much harder to understand. How can Obama explain the appointment of an anti-union, pro-NAFTA, corporate-supporting economist if he is truly planning to put people ahead of corporate profits?