Patterico's Pontifications

11/3/2008

In An Obama Administration, How Much Larger Will The Welfare — Errr Tax Rebate Checks Be In 2010 Than They Were In 2009?

Filed under: General — WLS @ 2:52 am



Question for anyone who has studied the Obama tax “refund” plan for 95% of all Americans:

From various pieces I have read, it seems certain that Obama plans to issue US Treasury checks to nearly all workers who have an adjusted gross income of less than $50,000 if married and filing a joint return. Such taxpayers already have their entire withheld income taxes refunded to them through the Earned Income Tax Credit, but they also pay into the SS and Medicare programs through their FICA withholding and that is not currently returned to them.

The estimates I have read are that the average such worker(s) would receive under Obama’s plan is a check for around $750.

Now we’re talking about a group of citizens whose income is roughly $4,000 or less a month, before costs associated with employer-provided health care, SS, Medicare, etc., are taken out of their check. Obama’s plan would refund to them the equivalent of approximately $60 per month.

Never let it be said that I’d look a $60 a month gift horse in the mouth, but we’re talking about a monthly movie for a family of four with popcorn and candy all around. Some might pay a month’s rent with it, and use the savings on the rent to buy a ’42 inch plasma. Nothing wrong with that but it’s the same as using the refund to buy a ’42 inch plasma. Korean manufacturers will be very happy.

But what people chose to do with their money is not my interest here. My interest is the following:

Let’s say the advocacy groups for the constituents that might be putting Obama into office say to the WH in 2009:

“You know, the $750 was nice but the people who received it didn’t really live an appreciably better life in 2009 because of it. They worked the same jobs, struggled with the same gas prices, worried about the same coughs and colds of their children, and they got passed over for that promotion at work because their boss cut back on his workforce and didn’t need as many supervisors as he planned.

But you know what would really help them — let’s make the checks this year $1,500, not $750. It’s still not going to change their lives but it’ll be twice as good for them as $750 was. Who can argue with that?”

So year two of the Obama welfare — errr “Tax Rebate” plan will unfold with $1,500 checks for every taxpayer making less than $50,000 a year.

Those rich people? Well, they paid in 2009 because McCain lost — who is to say they can’t pay twice as much in 2010? — they’re rich.

For every “rich” person writing a check, there will be around 50 “poor” people receiving a check. So, the “rich” guy’s check, on average, is going to be $37,500. Many will be less and a few will be much, much more.

If it’s $1,500 the second year, double those checks — all except for those people who decided to fold up their businesses, take their money that they’ve already made and put it away in some nice tax deferred investment vehicles, and bounce back and forth among their 2-3 houses that are already paid off.

They aren’t writing any more checks without knowing the end-game.

So, Obamaniacs and Obamacons out there, what’s the end game on this Ponzi scheme? How much wealth is “enough” when you start spreading it around?

Uncle Karl didn’t provide an answer. The nice thing about “from each according to his ability, to each according to his needs” is that it has no threshold or ceiling.

Is that the way Obama plans to play it?

50 Responses to “In An Obama Administration, How Much Larger Will The Welfare — Errr Tax Rebate Checks Be In 2010 Than They Were In 2009?”

  1. Simply put – we are f*ked.

    Perfect Sense (9d1b08) — 11/3/2008 @ 3:55 am

  2. “Now, never let it be said that I’d look a $60 a month gift horse in the mouth, but we’re really talking about a monthly movie for a family of four with popcorn and candy all around.”

    Or the additional cost appearing on your monthly electric bill.

    Obama’s supporters are fools if they think he isn’t going to take with his right hand, what he gives with his left.

    Dusty (545d04) — 11/3/2008 @ 5:06 am

  3. Why isn’t there any complaint here about the huge payouts to Wall Street “Banks” to keep them “liquid”? Also, All people pay taxes. This “40 per cent don’t pay taxes” crap is just a big Republican lie being passed about. As Rushmo et al ignore, most people pay a staggering amount of payroll taxes that goes into the general fund and helps bankroll the deficits that the Bush Administration has driven sky high.

    I didn’t hear a hew and cry over the Bush “vote buys” post 9/11 and just this year earlier. The attempt to paint Obama as a communist is a bit lame doncha think?

    My point? The huge income gaps (and growing) between the upper one percent and the rest of us is what is behind much that is ailing the USA. We’ve got an income gap between the “haves” and “have nots” similar to oligarchic states of the banana republic type. Coffee plantation owners vs. peasants. Sure we’re peasants with flat screens and huge mortgages (compared to income) but the division between Fortune 500 CEOs and the workers of said companies is yet again a egregious example of oligarchic tendencies. Redistribution is necessary to give the majority of people a ‘lift’ up against a growing aristocratic wealthy class that even admits (as Mr. Gates and Mr. Buffett agree with me) that the upper one percent is getting a much better deal than in the past.

    Another point: Obama’s tax increases for the upper one percent are mild and lower than that of Reagan and past Presidents (excepting GW’s give-aways thx to 9/11) and Clinton’s tax increases to upper classes helped build the longest peacetime recovery (the mid 90s).

    Agree to disagree?

    datadave (f20aa7) — 11/3/2008 @ 5:26 am

  4. A couple of points: nobody is pointing out that at least a large portion of the stock market decline of nearly 6,000 points since Spring is due to Obamafobia. There are several trillions sitting on the sidelines and come Wednesday, IF the Democrats have their super majority, we are looking at another Carter or (Watergate) malaise market at least.

    Since June the rich have paid out nearly three trillion in “off the book taxes” through stock market losses, if this money can’t be recovered because capital is penalized for success, it won’t be 1932 (80% market collapse) but we could easily see another two thousand Dow points to the downside. That move which would represent a net half the worth of the U.S. will cost us plenty, and while we can be sure the media will blame Bush, the Republicans, and capitalism. I sense that all liberals not in the market will be happy as clams because finally it’s “their turn,” when the class they hate starts to hide, only government projects can provide any employment at all.

    I’m afraid we will all know by overseas markets tomorrow night.

    howard432 (cc8b85) — 11/3/2008 @ 5:54 am

  5. “This “40 per cent don’t pay taxes” crap is just a big Republican lie being passed about.”

    Income taxes, Datadave. The “income” part is understood in the same way “Close the door.” has the implied meaning, “You”. No lie here, just incomprehension on your part.

    “As Rushmo et al ignore, most people pay a staggering amount of payroll taxes that goes into the general fund and helps bankroll the deficits that the Bush Administration has driven sky high.”

    Payroll taxes don’t go into the General Fund. They go into the FICA which the Fed borrows. And Bush does not control the purse, the Legislative branch does, and specifically the House side. Place the blame where it belongs.

    “The attempt to paint Obama as a communist is a bit lame doncha think?”

    Barack is his own artist. No one is putting paint to canvas here. We are admiring his self-portrait. I do get a kick out of your first breath denying Obama is a Marxist, calling it “lame”, and advocating Obama’s redistribution in your next breath.

    “Redistribution is necessary to give the majority of people a ‘lift’ up against a growing aristocratic wealthy class that even admits (as Mr. Gates and Mr. Buffett agree with me) that the upper one percent is getting a much better deal than in the past.”

    Mr Gates and Mr Buffet do not agree with you that they have too much money. Neither do they think that they should have less. Otherwise they could resolve that problem themselves in a NY minute. What they think is that other people have too much money, just like you do. Their bigger sin is that they think people who have less than them have too much.

    And quit with the wealthiest 1% tripe. You could take all of their money away and it wouldn’t scratch the surface of the Obama’s redistribution needs.

    Dusty (545d04) — 11/3/2008 @ 6:12 am

  6. I don’t understand why McCain has not pounded Obama with the issue of people who do not pay taxes getting (larger) rebates. He should be shouting that from the rooftops.

    Amphipolis (fdbc48) — 11/3/2008 @ 6:52 am

  7. Apropos of a post I made last week, I don’t fault Obama as much as I do the 50+ million people who are going to vote for him.

    Obama is only doing what EVERY politician does: promise to dole out favors in order to garner enough votes to get elected, and he is smart enough to realize that there are a whole lot of people receptive to his pitch (such as the woman on the video last week shrieking with joy that Obama was going to take care of paying her bills).

    Sure, it would be nice if there were some things that politicians wouldn’t offer up to win election, but by definition, if they had high moral standards they wouldn’t be politicians, would they?

    If you want to be upset, be upset at the people who think we’d be a better country with policies such as Obama’s. Were it not for these ___stupid/silly/gullible/whatever___ folks, Obama wouldn’t be celebrating victory tomorrow night. We’re getting what we deserve.

    stevesturm (369bc6) — 11/3/2008 @ 6:55 am

  8. I don’t understand why McCain has not pounded Obama with the issue of people who do not pay taxes getting (larger) rebates. He should be shouting that from the rooftops.

    Because voters who understand and object to it are already voting for McCain. And it’s wishful thinking that McCain is going to be able to convince anybody else that this is a bad idea.

    McCain’s problem the entire time is that he has spent way too much time (1) preaching to the choir, in that he already has their votes, such as people who really care about national security, and (2) pushing issues that potential voters don’t care about, such as Ayers. McCain needed to focus on issues that mattered to people whose votes were up for the taking and he’s failed big time to do so.

    stevesturm (369bc6) — 11/3/2008 @ 7:02 am

  9. And once those checks start flowing, there is NO way to turn them off.

    “Those hateful Rethuglicans want the Poor to STARVE. Probably to reduce the traffic their Bentleys drive through from the penthouse to the country manor. Vote Democrat and your checks will keep coming forever…….”

    They already play this card every year in Flordia with SS.

    Techie (62bc5d) — 11/3/2008 @ 7:04 am

  10. The earned income credit rule not only returns every penny you paid to the federal tax system, in some cases (married with a couple of rug rats) you can get back three times what you paid in. I know people who do it and brag about it. They look at it as ripping off the rich man when in fact they are ripping off their own family members who happen to make enough to actually pay taxes. I haven’t missed a year since 1959 of actually paying federal taxes which were not returned and I’m not rich. I served as an enlisted man in the military for 22 years and you don’t get rich doing that. Now retired and on SS and I still have to pay federal taxes that I don’t get back. If I was now a working person making less than $40K per year I’d quit and take advantage of every social program in existance. Along with welfare, housing, food stamps and fuel assistance you get the best health insurance (medicaid) in the U.S., other than the one the congressional critters approved for themselves. Just slip around and do small jobs for ‘cash only’ and you end up with more spending money than a worker and you can sleep in every morning. Hundreds of thousands are doing it daily.

    Scrapiron (dda662) — 11/3/2008 @ 7:07 am

  11. You mischaracterized Earned Income Credit. It does not simply return the amount withheld (having zero tax liability results in all withholding be returned, even before EIC is determined).

    EIC is a payment (technically, a refundable credit) far exceeding what low income workers get back in withholding. If someone has two qualifying children and is in the sweet spot of the EIC curve (about $13000 earned income) they’re getting $2853 in EIC. When you add in Additional Child Tax Credit (a Republican idea – don’t ever let ’em say Bush didn’t do anything for the po’ folks) for those two kids they’re looking at a total check from the Treasury of about $4500 in addition to a return of withholding.

    I’ve taught tax courses and trained new tax preparers for years and I’d say about half of people new to doing personal income taxes are completely freaked to learn that people with low incomes are getting such gigantic checks.

    RugPony (70a12f) — 11/3/2008 @ 7:12 am

  12. stevesturm –

    Because voters who understand and object to it are already voting for McCain.

    I disagree – I think that most people do not understand this. A negative tax rate is almost unbelievable. Most people do not know that rebates go to those who do not pay any federal taxes, and that this would increase with Obama’s 95% promise. It is cleverly disguised.

    Republicans should be saying that Democrats are turning the tax code into a welfare program. That would be a winning issue. But I hear nothing.

    Maybe because McCain voted for it?

    Amphipolis (fdbc48) — 11/3/2008 @ 8:06 am

  13. See the discussion above for an example of how effective this wealth sharing is disguised.

    Earned income credit means negative tax rates. Get it?

    Amphipolis (fdbc48) — 11/3/2008 @ 8:08 am

  14. Democrats have been working on this system since LBJ. The Europeans had it figured out about ten years earlier and, consequently, are about ten years closer to economic collapse. You simply cannot take the money from the productive members of society and give it to the unproductive and expect the first group to keep producing. At one time, Sweden actually had a 105% tax bracket for income levels that were too high for the government to tolerate. They learned, surprise, surprise, that such a tax rate brought in no revenue but it did tend to depress the GDP. Sweden learned all this in the 70s. We are about to learn the same lesson.

    I would be content to allow the younger generation to learn this lesson once again but the fascist tendencies of Obama’s supporters suggest that it might not be as easy to get them out as it was to rid ourselves of Jimmy Carter.

    Mike K (2cf494) — 11/3/2008 @ 8:09 am

  15. Europe is a wonderful place to vacation. It is so very relaxed. You know, people take two hour lunches there.

    Why? Because there is no reason to work hard with such a punitive tax system.

    For example, the Denmark’s tax rate is 50 plus percent. And on top of that, they have a 25 percent “value added” sales tax.

    Alta Bob (408027) — 11/3/2008 @ 8:18 am

  16. Can someone name one legitimate reason for worrying about the ‘income gap?’

    datadave – Why, other than envy, do you care about how much money some rich people make?

    carlitos (ef1ff9) — 11/3/2008 @ 8:18 am

  17. Alta Bob,
    You have to admit, walking through the Tivoli gardens in summertime… Danish tax rates are not the first thing on your mind 🙂 I know it can’t last, but topless two hour lunches are worth some level of taxation.

    carlitos (ef1ff9) — 11/3/2008 @ 8:21 am

  18. The huge income gaps (and growing) between the upper one percent and the rest of us is what is behind much that is ailing the USA.

    BS. What’s behind much of what’s ailing the USA is people who get bent out of shape over what other people earn.

    Rob Crawford (04f50f) — 11/3/2008 @ 8:22 am

  19. BTW: my previous comment (#11) was not meant to mean that I thought Scrapiron was “mischaracterizing Earned Income Credit.” My reference was to the main post.

    In fact, scrapiron (Comment 10)is right on target. I don’t do a lot of EIC returns (maybe 10-15 a year)but the entitlement mentality of the people I have done such returns for is shocking.

    RugPony (70a12f) — 11/3/2008 @ 8:23 am

  20. The funny thing is that “share the wealth” should have been shown by example-as in the Obama campaign giving half of their money to the McCain campaign. Guess they were selfish.

    jay (e78cc3) — 11/3/2008 @ 8:24 am

  21. The Telegraph has it pretty well figured out.

    This is the dramatic equivalent of the collapse of the Soviet Union: we now know that an era has ended,” said Mr Hobsbawm, still lucid at 91.
    “It is certainly greatest crisis of capitalism since the 1930s. As Marx and Schumpeter foresaw, globalization not only destroys heritage, but is incredibly unstable. It operates through a series of crises.
    “There’ll be a much greater role for the state, one way or another. We’ve already got the state as lender of last resort, we might well return to idea of the state as employer of last resort, which is what it was under FDR. It’ll be something which orients, and even directs the private economy,” he said.

    Yup. The end of free trade, unions determining wage levels regardless of economic conditions. Where have I heard this before ?

    The Forgotten Man.

    Mike K (2cf494) — 11/3/2008 @ 8:30 am

  22. The year I got divorced (1994), I made more money than I personally had ever made in my life (about $21,000). To ensure that I had enough money to pay everything, I had worked a lot of overtime that year. I’d also managed to save money and purchase some nice things for my daughter and myself. I owned my own house, a crackerbox of 1,000 square feet, but it was plenty for 2 of us. IOW, by government standards I was “lower income,” but my lifestyle was comfortable.

    Well, guess what? When I went to do my taxes that year, I discoverd that I qualified for the Earned Income Tax Credit and received $3,000 in my return. I couldn’t believe it and tried to tell the tax preparer that they had it wrong. I didn’t need the money and I wasn’t poor! The guy looked at me like I was crazy and told me I’d “earned” it. Earned it by getting divorced? But that’s the way the EITC is presented: by being “poor” you “earn” a government check.

    Sharon (a682a8) — 11/3/2008 @ 8:36 am

  23. Carlitos,

    Maybe we have something to look forward to, although that was not my point.

    Alta Bob (408027) — 11/3/2008 @ 8:37 am

  24. I’m gonna ask The Messiah to send me lots of money and in return I’ll promise to spread it around. Seems fair to me.

    Old Coot (1ee5b7) — 11/3/2008 @ 8:43 am

  25. Who said life was fair? If we are going to have windfall profits taxes and class warfare, I think self-aggrandizing gasbag authors who reap $4 million for lying about their past and media talking heads making $4 mil or better each year who talk out their asses while drooling over O! should be heavily taxed. Maybe that could apply to those other morons who make a gazillion dollars living under capitalism while bashing it and their own country.
    Am I the only one who wants to barf every time a Michael Moore shows his ugly mug on the tube? Ditto for Olberdouche, Matthews, A.Mitchell, Rosie fire melts steel O’Donnell and assorted other dregs of society, richly rewarded for being enormous assholes.

    madmax333 (0c6cfc) — 11/3/2008 @ 8:51 am

  26. We definitely have something to look forward to. Obama doesn’t look a bit like Juan Peron but there are similarities.

    Mike K (2cf494) — 11/3/2008 @ 8:59 am

  27. Excuse me, but Election Day is tomorrow, not yesterday, when all the Sunday talk shows were on.

    Official Internet Data Office (6c7d18) — 11/3/2008 @ 9:16 am

  28. Another point: Obama’s tax increases for the upper one percent are mild and lower than that of Reagan and past Presidents (excepting GW’s give-aways thx to 9/11) and Clinton’s tax increases to upper classes helped build the longest peacetime recovery (the mid 90s).

    First, Bush’s tax cuts were pushed through Congress before 9/11. To say they were “thanks to 9/11” is an error.

    Second, Clinton inherited an economy that was in its 8th consecutive expanding quarter when he took office. At best you can say his tax cuts didn’t screw the economy up, but it’s a huge stretch to say they helped build the recovery.

    Third, the expansion of the 90s was because of private industry and had nothing to do with government.

    Fourth, the greatest growth came after the Republicans took over Congress and cut capital gains taxes.

    Fifth, if you want to give Clinton credit for the expansion of the 90s, then you must give him the blame for the dotcom bubble that caused the NASDAQ to lose some 60% of its value.

    Steverino (647a08) — 11/3/2008 @ 9:19 am

  29. Maybe those middle class voters will actually see their pay increase under Obama after seeing their wages shrink for eight straight years of Republican rule?

    No need for transfer payments then, right?

    snuffles (677ec2) — 11/3/2008 @ 9:23 am

  30. The huge income gaps (and growing) between the upper one percent and the rest of us is what is behind much that is ailing the USA.

    Why? You see this kind of drivel passed off as common knowledge all the time. Yet, I have never seen one of these Leftist explain to me why what someone else earns has any bearing on my ability to earn.

    JD (5b4781) — 11/3/2008 @ 9:29 am

  31. Why? You see this kind of drivel passed off as common knowledge all the time. Yet, I have never seen one of these Leftist explain to me why what someone else earns has any bearing on my ability to earn.

    Because of “teh fairness”, JD. They lost at dodgeball in grade school, and never forgot it.

    Mossberg500 (9fd170) — 11/3/2008 @ 9:38 am

  32. Because of “teh fairness”, JD. They lost at dodgeball in grade school, and never forgot got over it.

    I blame George Bush for my poor choice of words!

    Mossberg500 (9fd170) — 11/3/2008 @ 9:41 am

  33. Interesting that the democrats while complaining about the great wealth divide, do not want to work for that higher income, they want the government to hand it to them, like laziness has some monetary value.

    In other words they want me to work more and harder so they can reap the rewards.

    What a nice incentive for me and them, I am not going to work harder for lazy people and lazy people will have no need to get off their butts and get a better job or education.

    Change indeed, but change we don’t need.

    ML (14488c) — 11/3/2008 @ 9:42 am

  34. Because of “teh fairness”, JD. They lost at dodgeball in grade school, and never forgot got over it.

    Funny, the preview showed the strike through forgot. Oh well, life’s not fair, where’s my check.

    Mossberg500 (9fd170) — 11/3/2008 @ 9:44 am

  35. I just do not get why what someone else earns matters so much to the Left. The entire zero-sum mentality is mind-boggling.

    JD (5b4781) — 11/3/2008 @ 9:50 am

  36. So WLS – you are saying that instead of borrowing money from China etc. to fund his presidential payoff like GWB did two times, the big O is gonna make rich people pay some extra tax money to fund his payoffs? He is going to actually try and pay for his Prez payoff? Cool.
    I agree that payoff inflation is not so good (300-600-750$ when is it gonna end?) but 1500 is speculation at this time right?…. we hope???

    ML, no the Gov. isn’t paying lazy people, they are “stimulating the economy”, just coz Dems are doing it doesn’t make the effects of adding money to the economy any different. It just means that partisans who only care about the whole “Virutous Republicans are always right no matter what and Democrats are always wrong liberals no matter what” blah blah blah are going to talk about adding that money a different way.

    EdWood (c2268a) — 11/3/2008 @ 9:55 am

  37. Snuffles, you do realize that Americans do not, in fact, have rulers, don’t you? We elect people to govern.

    Rob Crawford (04f50f) — 11/3/2008 @ 9:58 am

  38. Administrator: all 84 comments for your IBD-TIP post appear to have become suddenly encrypted, or something.

    Official Internet Data Office (6c7d18) — 11/3/2008 @ 10:04 am

  39. the big O is gonna make rich people pay some extra tax money to fund his payoffs? He is going to actually try and pay for his Prez payoff? Cool.

    Except “the rich” don’t have enough money to pay for the give-aways Obama’s promising.

    Rob Crawford (04f50f) — 11/3/2008 @ 10:04 am

  40. We will all get a chance to see the results of an Obama presidency if he wins tomorrow. Some of us are predicting based on past experience with LBJ and Jimmy Carter. Others aren’t interested in history. They prefer hope.

    Mike K (2cf494) — 11/3/2008 @ 10:08 am

  41. Mike K – It’s wing and a prayer time for the Obamatards. They expect him to act completely differently from his past. Good luck with that.

    daleyrocks (60704b) — 11/3/2008 @ 10:22 am

  42. No daley,

    We just expect Obama to act completely different than Bush.

    snuffles (677ec2) — 11/3/2008 @ 10:37 am

  43. We just expect Obama to act completely different than Bush.

    I expect Obama to act exactly the way the left accuses Bush of acting.

    Rob Crawford (04f50f) — 11/3/2008 @ 10:46 am

  44. So, Baracky will raise taxes, surrender in the war, and hyper-regulate business.

    JD (5b4781) — 11/3/2008 @ 10:55 am

  45. Alright, one final time:

    “Different from Bush” just for the sake of being different from Bush IS NOT NECESSARILY A GOOD THING. Many liberals even agree that Bush has done wonderful things with giving aid to Africa, for example. Now, personally, I think Bush has done many other great things, and I think he’s been a very good president. We can disagree on some of those points, but you simply cannot be a thinking person and say “Everything Bush has done is wrong.” It’s not only an intellectually lazy statement, it’s flat-out stupid.

    Chris (6733a5) — 11/3/2008 @ 11:03 am

  46. …and stop the rise of the oceans, clean the atmosphere of pollutants, bring peace on earth, and make all of our children above average!

    Another Drew (7e15a8) — 11/3/2008 @ 11:03 am

  47. it’s flat-out stupid = snufles

    Another Drew (7e15a8) — 11/3/2008 @ 11:05 am

  48. it’s stupid ∞ = snuffles

    Mossberg500 (9fd170) — 11/3/2008 @ 11:52 am

  49. Wait a sec…you’re calling these tax rebates “welfare”?! Didn’t we all get $600 checks under the Bush administration for doing nothing? Why isn’t that referred to as “welfare”?

    And by the way, even IF McCain wins, you will all still have to pay for welfare programs and we will still have a progressive tax structure where the wealthy pay a higher portion. Boo-hoo.

    chris (67e9df) — 11/3/2008 @ 3:00 pm

  50. Chris — because the people that received $600 checks actually paid money to the gov’t in the form of income taxes.

    The recipients of checks from Obama will have paid NOTHING to the government that they are not already receiving back from their EITC.

    Obama is just writing them another check, using money he takes from other people.

    What is that if not “welfare” — it’s certainly not a “rebate.”

    WLS Shipwrecked (26b1e5) — 11/3/2008 @ 3:52 pm


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