[Guest post by DRJ]
Barack Obama has been compared to President John F. Kennedy for his style, cool demeanor, and oratory. Obama was endorsed by Ted, Patrick and Caroline Kennedy who compared his ability to inspire to her father’s. Like JFK, Obama calls on young Americans to embrace public service and his wife Michelle has been compared to Jackie Kennedy. Finally, Obama used JFK’s template to turn concerns about his race into a positive, just as JFK arguably turned his Catholic religion from a liability into an asset.
But it looks like Obama isn’t like JFK when it comes to taxes and foreign policy. On the latter, Time Magazine notes that during his visit to Berlin, Barack Obama “used the symbolism of the Berlin Wall to articulate the importance of destroying the barriers that separate countries and cultures.”
No doubt Obama is counting on symbolism and the limited historical knowledge of his supporters. After all, within months after it was built, President John F. Kennedy accepted the Berlin Wall as “a fact of international life” that he would not challenge with force.
As for tax cuts, JFK startled the nation when he called for permanent tax cuts that were ultimately implemented by LBJ after JFK’s death:
“In the end it was Lyndon Johnson who, after Kennedy’s 1963 assassination, pushed through the permanent tax reductions. Johnson and Congress reduced the top rate to 77 percent in 1964 and then 70 percent in 1965. In his first State of the Union address, Johnson argued for the lower permanent rates, saying “every individual American taxpayer, and every corporate taxpayer will benefit” – none of the modern anxiety about appearing to help the rich there.
Some would argue that 70 percent is so high that to call it a cut is risible. But as today, what mattered wasn’t just the rate but the direction. Today, investors generally understand that Europe, especially France, is trying to help the private sector more than before. Taxes may come down there, whereas in the United States taxes are clearly going up. This relative shift has contributed to the strength of the euro, even though Europe’s taxes are far higher than ours.
In Kennedy’s time, the dynamic was the opposite. The U.S. cuts were followed by years of strong growth, declining unemployment and a leaping stock market.”
Amity Shlaes wrote those words in February 2008 as she urged Barack Obama to adopt tax cutting policies similar to JFK’s. I’m sure she was disappointed when, just one month later, Obama pledged to almost double the top capital gains rate. In addition, Obama has endorsed $1.4 trillion (or more) in new government spending over just 5 years, most of which must be paid for with new taxes.
To illustrate the enormity of this amount, in March 2008 Senator Wayne Allard introduced a Senate budget amendment that included 111 of Obama’s 188 new spending proposals. Allard called his amendment Obama’s Spend-O-Rama and here’s an overview of how the new programs will affect the US budget:
“• This new spending, if enacted, would represent an almost 10% increase over the President’s FY 2009 budget.
• This $300 billion spending proposal would cost more than 42 states’ budgets combined (general fund expenditures).
• It is more than the United States spent last year on imported oil ($294 billion net).
• It is more than 60% larger than any one-year federal spending increase, ever.”
What does this mean for the average taxpayer?
“Obama claims to want to “balance the budget and stop spending the Social Security Surplus.” Combining that laudable goal with Obama’s massive new spending would cause the tax bills of the average taxpayer earning $62,000 to rise $5,300, or 61%. For taxpayers earning $104,000, the increase would be over $12,000, or 74%, and for the top 1%, earning over $365,000, “their income tax bill rise by an astounding $93,500 (132%)!”
Obama believes in Tax and Spend and that will leave Americans with far less Change. It’s odd, though, because the Obamas should be aware of how difficult it can be to work out from under a huge debt. After all, it was only with the help of a windfall from two book deals that the Obamas were able to pay off their large student loans.
UPDATE: By the way, the Allard Amendment – with 111 of Obama’s 188 spending proposals and the tax hikes needed to pay for them – was defeated in the Senate by a vote of 97-0. Even Barack Obama voted against it.