Thursday, October 23, 2008

Obama and Fairness

Senator Obama promises to bring about more "fairness," in our tax code and in life in general in this country. Obama and Biden have equated higher taxes with being "patriotic" (Biden) and "neighborliness" (Obama). In an interview, Charlie Gibson noted that historically, when capital gains taxes were raised, tax revenues from capital gains fell. Obama didn't think that was important, he maintained that he would raise capital gains for "purposes of fairness." Who cares if it hurts the country? It's more fair.

Who can be opposed to fairness? Everybody wants fairness. We just might not want to go for Obama's definition. The problem is that Obama thinks equality is the measure of fairness. If you work hard and achieve success, it's not "fair" because there are others who didn't achieve the same success. In trying to correct this "injustice" Obama then would hurt everyone in his attempt to even things out. If you watch the clip, it doesn't even bother him that raising capital gains taxes would likely lower tax revenues. It achieves the goal of fairness.

Raising the capital gains tax would cause a massive sell off, driving the stock market and other investments even lower. Wayne Huizenga, the owner of the Miami Dolphins, is desperately trying to sell the team because as he told ESPN, he is trying to avoid paying higher capital gains taxes if Obama is elected. Higher taxes on capital gains discourages investment and job growth requires investment.

Obama clearly feels that the intentions of his policies are more important than the results of his policies. Consider our current financial crisis, triggered by Democratic policies intended to help people with poor credit buy houses. Obama sees nothing wrong with how his party handled Fannie Mae and Freddie Mac, viewing the intended social goal as more important than the result: massive destruction of wealth that could trigger a global recession.

Results are more important than intentions. Freedom is more important than "fairness."


Tom said...

I'd guess people are going to blame the current financial crisis on Bush being President for the last 8 years, and the Republicans controlling Congress for 6 out of the last 8.

Then again I saw something recently trying to blame Clinton for 9/11 so I suppose anything's possible in politics.

Jon Vander Plas said...

People will blame the President, but that doesn't mean they should. Which of Bush's policies led to our current problems? Cutting taxes too much? The market usually really hates that.

Not that most people actually know who controls Congress, but I do believe the Democrats have controlled Congress for the last two years.

There's blame to go around to everyone for 9/11. Clinton did construct the legal wall between the CIA and the FBI that prevented the agencies from sharing information that would have identified the hijackers. Clinton also said, on tape, that he was offered Bin Laden on a silver platter by the Saudis, but declined to do anything about it. Clinton also deserves blame for his handling of the Black Hawk Down situation in Somalia - which Bin Laden says made him realize the U.S. was just a paper tiger and could be defeated. Hindsight is 20/20 and of course everyone wishes the Bush administration had done more, but your comment makes it sound like Clinton doesn't share in the blame.

Kyle Hommes said...

I think Bush's preoccupation with Iraq and failure to address Domestic issues had a great deal to do with the crisis. As did the almost trillion dollar deficit that he ran up this year and 5 trillion that he added to the national debt. Or maybe the lack of oversight on the economy by Bush appointees. Cutting tax and spending 2 billion a week in Iraq does not lead to a healthy economy either. And lets face it, social security and medicare have needed reforming for years, and Bush hasn't touched them.

Jon Vander Plas said...

Hasn't touched social security? Bush made reforming social security one of the major goals of his presidency but was obstructed by the Democrats who couldn't stand the idea that people could have their own, individual accounts.
Medicare? Did you miss Medicare Part D, which expanded Medicare to provide prescription coverage for seniors? And what do these issues have to do with the financial crisis?

The fact is, despite inheriting a recession from Clinton and having to deal with 9/11 and Iraq, the economy was doing just fine until this financial crisis. The financial crisis is the reason for the state of the economy. Lack of oversight? Did you forget that Bush fought to reform Fannie and Freddie but was opposed by Democrats? I'm sorry, but you can't hang this on Bush.

Cutting taxes stimulates the economy by increasing the incentive to produce and to invest. Obama thinks that reducing the incentive to produce for the most productive people and reducing the incentive to invest for the people with the most money is a good idea.

I am upset with Bush's spending - increased entitlements, more federal spending on education (No Child Left Behind), etc. You think this would be better with an Obama administration? He's not going to have the tax revenue to pay for a fraction of all his new programs.

Jon Vander Plas said...

Kyle, sorry I missed a comment you posted on a post from last week. I have now responded to your thought on the other banks using sub prime loans.

Scott Vanderleest said...

As with many policies favored by the Left, Obama looks for fairness in results as opposed to simply fairness in opportunity.

I once heard George Will say that he forbid his kids from using the word "fair" as they grew up out of fear that they would turn out to be liberals. I think we might adopt that rule in our house too.

Kyle Hommes said...

No, I think there would be more spending with an Obama administration I just think it will be smarter spending, and I think you are wrong about trickle down economics and how it helps the economy.

If I can't hang this on Bush then you can't hang it on the Democrats. I don't think an economy that favors those with money while the middle class and the poor continue to do worse is in good condition. But I guess if all that matters is how much huge companies are making, and whether or not the market is going up, maybe the market was fine. I just think there is more to the economy than production and always making money. The true test of an economy should be the welfare of the people.

Tom and Stacia said...

Do any serious economists say we were in a recession in 2000? Bush inherited a great economy with a budget surplus and is leaving an enormous mess.

Obama's budget would leave us less in debt than McCain's, if that's an important issue to you. Yet somehow I hear so many concerned about Obama's plans for massive spending. I just don't share those concerns.

Jon-you're upset with Bush's spending on entitlements and education, but neglect to mention a nunnecessary trillion dollar war or a 700 billion dollar bank bailout? Have some sense of scale man. Can you imagine the noise from conservatives if a Democratic President was in office during these times? Obama's being called a socialist for suggesting we return to Clinton-era tax rates on high income earners, for crying out loud. At least he's not trying to take over substantial portions of our financial sector.

Also, thank goodness people's social security monies aren't in the stock market right now. Just imagine the value of most people's primary source of retirement income in that scenario. Bush didn't substantively address social security-he floated a radical proposal that had little chance of resulting in real change. As I think about Bush's presidency, between 2 wars, the economy (including social security, national debt, housing crisis), and healthcare he's pretty much done terrible in all areas. He has not solved any of these problems, only made each of these situations worse and passed them on to his succesor. And that's not even considering environmental issues or torture, the latter of which could ultimately prove to be a bigger stain on the last 8 years than any other.

Jon Vander Plas said...

Scott - exactly right, thanks for the comment. I love George Will, I've been meaning to read his new book: One Man's America.

Kyle, I am talking about expanding the pie, which improves things for everyone, you are talking about shrinking the pie and taking pieces away from those who produced and giving them to people who did not. The best way to increase wages is to increase jobs. You can't redistribute your way to a better economy.

Tom, the recession technically started in March of 2001, well before any of Bush's economic policies were in place. The economic slowdown began in the fall of 2000. Did you expect Bush's mere presence to turn around a faltering economy? Bush's tax cuts helped lift the economy out of the recession that he inherited from Clinton.

Am I happy about the bailout? No, but I trust McCain to turn things back over to the private sector as soon as possible and to use the money from the sale of these assets to pay back debt instead of funding groups like ACORN and expanding government programs like the Democrats wanted. I don't trust Obama to do the same. And let's not forget that Democratic meddling in the housing market is largely responsible for making the bailout necessary.

I realize you want to make this election about the failings of President Bush. However, Bush's unpopularity doesn't make Obama's policies good for America. Raising capital gains taxes and anyone's income taxes in this economy is a terrible idea. Reducing corporate taxes is a good idea that will create jobs. Appointing Supreme Court justices that will maintain the "right" to an abortion, one of the great evils in our time, is unacceptable. In this dangerous world, we don't need a president who's own vice president admits that the world thinks is weak and we don't need the crisis that Biden says is impending if Obama is elected.

McCain's policies will make the world safer (for the born and unborn) and the economy stronger.

Kyle Hommes said...

I never said anything about redistributing wealth. I just want job creation to be fueled by small businesses and directed toward the middle and lower classes. Big Businesses don't create jobs, especially not good jobs.

You say that tax credits create an ideal situation for businesses, so if that is true for big businesses, why isn't it the same for small businesses. From what I can tell, Obama has the same strategy for growing the economy, he just wants to give the credits to small business, businesses who create jobs in America, and the renewable energy industry (which is one of things that is keeping Colorado from experiencing the same recession effects as the rest of the country). I don't want to redistribute wealth, I just want an economy that benefits all people equally, not just the rich.

Republicans talk about the liberals redistributing wealth, but look at what Palin did in Alaska. She increased taxes on oil companies, making the rest of the US suffer so that she could said checks to Alaskans, how is that not socialism. I don't want anything like that. I just want everyday people to be able to have good jobs, and big businesses are not are not doing that. All they care about is the bottom line, and paying people well and giving them good benefits isn't good for the bottom line.

Jon Vander Plas said...

If you're opposed to redistribution of wealth, don't vote for Obama.

I'm afraid you have a fundamental misunderstanding of how business works. The difference between small and big business is size. They both seek to maximize profits to a large extent. They both pay market rates for compensation to attract workers. Benefits are often part of compensation, but not always. They don't give benefits to be nice, they do it to compete for talent. Competition for workers heats up when businesses try to expand and as we know from the basic supply/demand curve, wages go up in this situation. Paying people well can be very good for the bottom line because you can attract better talent.

Big business doesn't succeed by screwing their workers. They succeed by offering goods and services that people want at good prices. They often have an advantage over small companies because of efficiencies of scale. This just means that it's often cheaper to produce big quantities of things instead of small quantities. For example, it's cheaper per unit, and more profitable to sell 5 million Xbox 360's than it is to sell 100. A national ad campaign is cheaper per customer than a local ad campaign.

As of 2005 at least, 98% of companies that employ 200 people or more offer health insurance. Only 60% of small businesses offer health insurance. Does that change your mind at all?

As far as Palin, the oil in Alaska belongs to the state of Alaska. She required the oil companies to bid competitively for the rights to the oil. That money should go to the people. Socialism would be having the government take over the oil companies and then the money would be spent on government programs. Again, if you want lower taxes on oil, don't vote for Obama.