#My2K bug: How Obama proved conservatives right on taxes

I’d like to thank President Obama for taking the time last week to explain why conservatives have been right about taxes all along.

Last Wednesday, Obama took his perpetual campaign to Twitter, encouraging supporters to send messages about how a middle-class tax increase would affect them. Never mind that no one is proposing a middle-class tax increase; the difference between Democrats and Republicans concerns raising taxes on couples earning more than $250,000 per year.

Even that difference concerns not whether they should go up, but by how much and which means: GOP leaders have offered to raise taxes on high earners by $800 billion over 10 years by limiting how many deductions tax filers can take. Obama wants to raise $1.6 trillion over 10 years by limiting deductions and raising tax rates.

Along the way, however, Obama conceded three of the main points the right long has made about raising taxes. And it only took him five of the 140 characters allowed for a tweet to do it.

How did he do that? Saying the average middle-class family would see its taxes rise by $2,200 if all tax rates were to revert to Clinton-era levels, Obama asked his tweeps to list the things they wouldn’t be able to buy without that money. Which he called, including the hashtag symbol frequently used on Twitter, #My2K.

“My” $2,000? Was the president really acknowledging that what we earn is our money?

More to the point, was he acknowledging — as conservatives always say — that taxpayers may have better uses for their money than the government does? Otherwise, shouldn’t he have no objection to the government taking #My2K?

If the answer to all three questions is “yes,” why should it be any different for higher-income earners?

The implication of #My2K, made explicitly by Obama at other times during the present tax debate, is that raising taxes is bad for the economy. That’s traditional conservative point about tax hikes No. 2. But, again, he only gets this one half-right.

Obama seems to believe consumption alone matters to the economy — and that consumption, or at least economically meaningful consumption, stops at $250,000 per family per year. After that point, if I’m following his logic correctly, consumption must not really matter.

What explains this? Is it some notion that dollars become less valuable to the economy as they accumulate with one person? If so, maybe we could call it the Theory of Obamativity.

Does he believe rich people just swim around in the money they earn that exceeds $250,000, Scrooge McDuck-style?

Or does he believe that when they invest, rather than spend, that has no positive impact on the economy? He sure does speak glowingly of government’s “investments.”

Strangely enough, his comment two years ago when extending all tax rates was that it was “the right thing to do for the economy.” At the time he said that, the economy had grown at an average of 2.8 percent over the previous four quarters. Today, the average for the past four quarters is down to 2.5 percent.

Finally, with #My2K, Obama seems to acknowledge the middle-class tax rates Washington is talking about extending came about as the “Bush tax cuts” — not the “Bush tax cutsfortherich,” as Obama and other Democrats are accustomed to calling them.

In fact, if Obama believes the larger economic impact of the cuts lies with the rates for the middle class, doesn’t that confirm, as conservatives have long pointed out, that the vast majority of the money stays with the middle class? (That’s “stays with,” not “goes to.” Don’t forget the “my” in #My2K.)

Now that the president agrees with us about these basic tax principles, perhaps it isn’t asking too much for him to acknowledge one thing more.

The only way federal tax revenues are going to return to their long-term historical average — as they did in the years before the 2008 financial crisis — and begin to pay for all the spending Obama wants is for the economy to get back to growing rapidly. And you won’t find many economists who believe tax increases alone will do that.

– By Kyle Wingfield

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199 comments Add your comment

Dallas

December 6th, 2012
5:47 am

Blah blah blah. Way to say the same thing the same way.

When the top needed a bailout nobody saw a problem with that…years later we’re still without and you think we give a crap about your tax rates for the next 4-8 years.

lawl

I’ll go write a cheesy article somewhere to go with this whiney one ;)

mike callahan

December 6th, 2012
5:50 am

Facts about our US Government:
(1) Government is only a paid administrative body; the termed elected administrators do not own government assets, revenues or property. All government assets and revenues are owned and controlled by American citizens who pay into the Federal income tax depository. Example of public assets: Federal interstate freeways. US capital, White House, military hardware, US aircraft carriers, and nuclear powered submarines.
(2) Government does not manufacture or design, American business invent, create and manufacture goods and services including these examples: Federal interstate freeways. US capital, White House, military hardware, US aircraft carriers, and nuclear powered submarines.
(3) Federal Funds used to support research and development are individual taxpayer funds, used by American researches, and produced by American manufactures. These funds are not patented, owned or controlled by paid elected administrators who work for the Federal government.
(4) The Continental US consist of 50 states in total land mass, 50 governors control those districts along with State representative, and 50 state supreme courts. There is only one elected administrative federal branch of government, housed mostly in a small area around the District of Columbia, consisting of a small group of elected, paid administrators who represent each state by district.
(5) All representative administrative bodies are bound by Constituted law including the federal branch. The Constitution is a compact between all States, the federal government is not a party, but the result of that compact and lacks the authority as a separate entity to define the extent of the powers delegated to it by the States. Only the individual States, as the exclusive parties to the compact between themselves, possess that power. The judiciary does not have the power to interpret Constitutional law; it has the power to scrutinize the statute being challenged to make sure it falls within the scope of the powers delegated to the federal government. Only by amendments voted by 2/3 majority, allowed by state governors, can Constitutional change or further interpret amended law. (c)
(6) The general “Federal” government cannot unite by a compact between Unions, corporations, special interest organizations, religious or political indoctrinating entities. The Federal government is the States’ government, representative only to the electorate who mandate elective provisions only.
(7) The elected and staffed Federal government cannot administer morals, rights or adjudication against the populous dominion.

Disbelief

December 6th, 2012
5:55 am

There is a problem with how the President’s brain works. He wants the gov’t to play more and more of a role in the people’s lives (socialism), yet, he wants more people to pay MORE into “the system”. He can’t do that with almost 9% unemployment. He’s created a “Welfare nation”. He is forcing the drastic change in our healthcare system, yet, no way to pay for it because of the drastic high unemployment.

He needs to get people back to work. He also needs to be realistic with those on Social Security. They PAID into the “system” that he is calling an “ENTITLEMENT”. While the COST of LIVING has dramatically increased, the “Cost of Living Allowance” of Social Security is only going up 1.7%. He is also changing how the COLA is calculated. Meaning the more things cost, the less those on Social Security will be able to “afford”. I guess it’s bread… no more water… just bread. He will kill off those on Social Security one way or another. Oh yippee.

Larry

December 6th, 2012
5:56 am

Kyle.. First of all his name is President Obama is talking about working class families who need help. The stalled economy is putting strain on working class families. Obviously people making over 250k a year have more discretionary income so paying a higher tax rate is not going to affect spending habits. Lets get real!

Moron

December 6th, 2012
5:57 am

Wingfield is an idiot. Obama this and Obama that and all blame Obama. Try putting some blame on Congress, the lobbyists, and the money driven political system. And yes folk earning more than 250k per yr can afford to be taxed more.

Road Scholar

December 6th, 2012
6:19 am

So money spent on infrastructure by the government, the same infrastructure work done by private companies, does not create jobs and assets for the American people?. Infrastructure work does not include suppliers? Laborers? Equipment providers? Those people do not eat and purchase other products?? Get real! That money can lead to more economic activity…and here it is…with a legacy of bridges and roads and.. hopefully you get the point. Remember bombs only destroy infrastructure and kill people.

Thomas Heyward Jr

December 6th, 2012
6:25 am

In reality……..that 2k will not even cover the increases in medical care thanks to Obama-care.
Not to mention the booze, tobacco, and gasoline taxes that will be part of the “compromise”.
And don’t forget about inflation.
That EBT card is worth less and less.
.
suckers.

Thomas Heyward Jr

December 6th, 2012
6:29 am

So money spent on infrastructure by the government, the same infrastructure work done by private companies, does not create jobs and assets for the American people?. Infrastructure work does not include suppliers? Laborers? Equipment providers? Those people do not eat and purchase other products?? Get real! That money can lead to more economic activity…and here it is…with a legacy of bridges and roads and.. hopefully you get the point. Remember bombs only destroy infrastructure and kill people.
.
————————————————————————————————————————————–
.
If the government ever gets into the shoe business……there are government-school educated people out there who would think that………if not for government………we would all walk around bare-footed and that absolutely no shoes can be made without government-stolen money.
.
weird.

Stephenson Billings

December 6th, 2012
6:30 am

“Obviously people making over 250k a year have more discretionary income so paying a higher tax rate is not going to affect spending habits.”

Says someone who obviously never made close to that amount of money…..

JMH

December 6th, 2012
6:30 am

Moron, your name is quite accurate. Why not just raise taxes on everyone if that solves the deficit problem we have? Do you not think you should pay a little more for the betterment of the greater good? Or do you like all the govt handouts but are just not willing to pay for them personally? If you like big govt than you should be willing to pay for it and not try to pawn it off on someone else. I personally hope everyone’s taxes get raised so everyone can feel the pain. Its just to easy to say yeah let’s talk more of what someone else has to fund this ever growing govt. Kind of sad what this president has done to pit Americans against each other based on income levels…..very sad individual he is!

Banderson

December 6th, 2012
6:31 am

You’re surprised that “strangely enough” Obama actually meant what he said about raising taxes? You’ve been hanging around the GOP too long. Obama said all along that raising taxes would hurt the economy. The questions are, a)which hurts the ecomony more – the deficit or raising taxes, and b) which hurts the economy more in the short term, raising taxes on people who will spend the money or raising taxes on those who will invest? Taking money out of the hands of the spenders has an immediate effect, whereas taking money from investments MAY hurt down the road; but, since there seems to be plenty of money in circulation (interest rates are at historic lows), there clearly is no problem with the cost of money for investments at present.

Now, I’ll be surprised if the GOP admits that cutting “entitlements” and other government spending will have an immediate damping effect on the economy. Think what will happen to companies renting apartments, selling gas, medicine, food, utilities, clothing, etc. when you cut back on those child tax credits and food stamps. For the GOP to admit that it’s going to be as painful for the economy as it is for the people getting the benefits, well, that would be progress.

Aynie Sue

December 6th, 2012
6:31 am

Way too labored an argument, Kyle! The Republicans are posturing political parasites who refuse to specify the limits on tax deductions that will bring in additional revenue; they dare not because limits are unpopular to voters and to campaign contributors.

The “my money” notion is nonsense. Money is meant to circulate. What was my money today is somebody else’s money when I spend it or pay taxes.

Nobody believes that consumption alone drives the economy; only a fool would believe that investment alone drives the economy. Consumption drives consumer demand, which in turn provides opportunities for profitable investment of capital.

A balance between consumption and investment is needed. Excessive consumption causes inflation. Inadequate consumption (due to lack of good-paying jobs) causes capital to be moved out of the country or parked in speculative financial instruments rather than invested in job-creating American industry and commerce.

Rely on basic economics and simple arithmetic. Ignore Republican political slogans and abstruse “philosophies”.

Independent voter

December 6th, 2012
6:33 am

there is a lead time effect on gov’t policy….. Anti business, pro labor union, raise taxes, bigger gov’t programs are just starting to effect employment…. the economy is just now starting to contract… GDP will go down, companies will not invest….. rich folks are doing just fine…. its those of us in the middleclass getting killed…. nobody in this administration understands small business and economics….. socialism does not work !!!!!

Independent voter

December 6th, 2012
6:42 am

no problems, lets just go on a 3 week vacation to Hawaii

JMH

December 6th, 2012
6:47 am

Anyie, wouldn’t you agree that the latter point in your argument is what is happening in this country? A lack of good paying jobs? Our economy is barely growing in this country because not enough people are working, paying taxes, and consuming goods. Taking money from me, giving it to someone else thru a transfer payment and having it spent on whatever is the same dollar that I would have spent originally. Someone made a very accurate statement last night…we don’t need higher taxes, we simply need more taxpayers. Why is that so hard to understand? We can’t keep taking more and more from a small group to pay for everyone else’s needs; how is that working so far? 16T in debt and counting and no amount of raising taxes on the rich is gonna solve that problem.

DeborahinAthens

December 6th, 2012
6:47 am

On December 4th, Jay ran a chart that shows the breathtaking disparity between corporate profits and workers’ salaries. This disparity has come about for many reasons. Technology has enabled companies to automate jobs that previously had to be done by humans–in factories, in offices, in warehouses. Companies have sent many manufacturing jobs to countries where they only have to pay workers pennies a day instead of a living wage. Corporations have slashed necessary workers to the bone, requiring the remaining workers to try to keep up with double loads. These workers, knowing the job market isn’t great, shoulder the burden and keep their mouths shut. Walmart, one of the most profitable companies around, plays the game fantastically well. I was reading that one reason they supported Obamacare is that they are going to drop most of their full time workers to part time, so the workers will qualify for the insurance offered through the exchanges. There will be government assistance for those people living below the poverty line. So, by making their workers live below the poverty line, Walmart will be able to foist off on the government taxpayers what should be part of their compensation to their workers. Yet, the corporations are trying to make the American public feel sorry for them or, worse, blackmail them into lowering the corporate tax rates. It is implied that, if we don’t lower taxes, they will leave our shores. Companies cannot exist and do business without public infrastructure paid for by taxes. Most corporations pay an effective tax rate-due to the many loopholes-
that is much lower than the 36% they screech about. Republicans repeated mantra, obviously not true, is that if we lower taxes on the upper 2%, these taxpayers will create jobs. We have seen, since 2003 when the Bush Tax Cuts became effective that this is patently not true. Job creation from 2003 to 2009 dropped like a stone. It IS a fact that if people have a livable wage and there is stability in their job situation, they will spend money. That, more than the taxes has a huge impact on the vibrancy of an economy. President Obama very correctly states that he does NOT want taxes on the lower and middle classes to go up, which will happen if our do-nothing, gutless, spineless Congress does nothing before December 31st. Boehner has offered no counter offer to President Obama’s tax proposal other than vague “we’ll close tax loopholes” . What loopholes? Boehner says he wants the President to offer cuts in entitlements. Where at the House’s recommended cuts? There has been no formal offer of cuts from Congress. Cut what? Cut where? They do not have the guts to tell the American people what is necessary to solve our problems.

nathan's political arsonist

December 6th, 2012
7:05 am

pitiful kyle, just pitiful. you are a young man with time left to do some good

nathan's political arsonist

December 6th, 2012
7:07 am

you are really grasping for any argument supporting the gop, its not working

Lynnie Gal

December 6th, 2012
7:07 am

There’s a great deal of difference between giving a person making $50K an extra $2K and a person making $800K an extra $50K. The difference is, the person making $50K will SPEND that money and create jobs with it. The person who has everything he needs–the $800K guy, will SAVE or INVEST that money, and not necessarily in this country, but maybe in the Cayman Islands like Romney does with his extra money. That is not good for the American economy and it does not create jobs. A person making $50K may actually need that $2K for housing, food, tuition, and other life expenses. I do believe a person making over $250K a year can afford food and housing for themselves. Those “job creators” who have enjoyed the lion’s share of tax cuts over the past 12 years haven’t really created those jobs, have they?

Cherokee

December 6th, 2012
7:09 am

“Never mind that no one is proposing a middle-class tax increase;”

Nonsense, Kyle. If that were true, the House would pass the bill the Senate has already passed, extending tax cuts for the middle class.

JMH

December 6th, 2012
7:11 am

Deb- Just over a year ago Obama said the same exact thing about cutting loopholes and limiting deductions in lieu of raising rates. Now his story has changed; what’s that all about? If we raise revenue in some form or fashion why does it matter? Didn’t matter to him last year!

We have two problems in this country and solving one will solve the other. Jobs, the lack of and spending too much of what we don’t have. If we had more jobs then people rely on govt less and pay more taxes; seems pretty simple to me.

Lil' Barry Bailout - OBAMAPHONE!!!

December 6th, 2012
7:12 am

Increasing taxes on small business and high earners isn’t about fixing Obozo’s deficit–it would barely make a dent in it.

No, raising taxes on a few is simply “getting even” with those who do the hard work, make the personal sacrifices, and take the risks that Obozo’s loser base won’t. Their greed for other people’s property is disgusting an un-American.

JMH

December 6th, 2012
7:17 am

So lynnie who has created jobs over the last 12 years? The poor people?
Also, someone making 250K a year is much different than someone making 800K a year and several million a year. Who decided that 250K was the right amount? Obama? Does he make the final decision on what is fair? Wow you people really are like sheep if you believe everything this guys says.

This is sad to say but I hope some of you Obama voters work for one of these “rich” small business owners who has his taxes raised (and it’s not just income taxes going up) and has to lay off workers. Who do you think will be first to go?

Lil' Barry Bailout - OBAMAPHONE!!!

December 6th, 2012
7:18 am

Republicans refuse to specify the limits on tax deductions that will bring in additional revenue
———

False. Republicans are proposing a dollar limit on deductions, not eliminating particular deductions.

Time for some new talking points, Annie Sue.

Lil' Barry Bailout - OBAMAPHONE!!!

December 6th, 2012
7:24 am

[W]ho has created jobs over the last 12 years?
—————-

Whoever it was, they created enough in the first eight of those twelve years to keep unemployment around 5%.

Aesop's Fables and other Lib Economic Theories

December 6th, 2012
7:27 am

Today federal revenue is $2.67 trillion (slightly less than “the Clinton equivalent”) and spending is $3.76 trillion, so we are spending $987 billion more than we would be if we had just increased Bill Clinton’s last budget for inflation and population growth.

Your taxes have gone up since obama took office, much more than some measly Bush tax cut rescission would bring about. Do a little research on the effects that liberal energy policy boondoggles has had on gas and food prices, a tax that hits everyone all across the economy.

Uncle Billy

December 6th, 2012
7:31 am

A very large conclusion based on a hashtag. To imply that you can discern the President’s whole line of thought by a hashtag is breathtaking even for a journalist like Kyle.–The President is proposing that the marginal rate of 33% be raised to 36% for those couples with taxable income of more than $250,000 and the 35% revert to 39.6% of those with taxable incomes of more than $388,000. The taxes on income below those amounts would remain as they are now. Also, the payroll tax rates would remain where they are now.
The problem with capping total deductions is that it would hit charitable donations very hard and the 501(c)3’s would be very distressed.

CC

December 6th, 2012
7:31 am

If you’re intelligent, you NEVER listen to what Obama says, you watch what he does. Obama has a very specific goal, and that goal is NOT in the best interests of America or Americans.

massachusetts refugee

December 6th, 2012
7:34 am

there is no one at either end of pensylvania avenue with the b@lls to make the really hard choices required to get us out of this mess. somehow congress and the ‘president’ will find a way to kick this down the road for the next congress to deal with.

DougW

December 6th, 2012
7:40 am

What a load of BS. Republicans aren’t ‘right’ on taxes, and the President never ‘agreed’ with their policies on taxes. Both of these assertions are lies. Republicans believe that lowering taxes ALWAYS is the right thing to do. They claim this is to ‘help the economy’, which is a lie both in that they know it isn’t true, and becasue it isn’t actually the reason they want lower taxes. They want lower taxes becasue less money for infrastructure and education makes it that much harder for a person born to average or below-average wealth to ever be in position to raise themselves to a higher economic standing. Republican policy overall can be summarized in the statement ‘Let the wealthy do whatever they want, and you may get a (minimum wage) job out of the deal!’ In their minds it doesn’t matter if the wealthy want to destroy the environment getting more wealth, or if they want to create illegal monopolies to gather even more power, or if they want to simply use fraud to sell worthless goods and services to the public. The magical ‘free market’ will fix all of thise problems. We don’t need to police the wealthy, only the poor. There must not be any ‘free market’ that will magically take care of mugging or robbery like there is for all white collar crimes.

GDRLA

December 6th, 2012
7:43 am

Why were tremendous deficits OK during the Bush/Cheney Circus act but not now? If the reversion to the Clinton era tax rates results in the same economic responses I say go back ASAP & let’s move on – my portfolio returned stellar results during that 6-7 years & not so much over the past 12 years now. Why after the Republicats lost the White House did deficits all of a sudden matter?

CC

December 6th, 2012
7:50 am

DougW@7:40:

Your words aptly describe your post, “What a load of BS.”

Think Again

December 6th, 2012
7:56 am

Tax the wall-street parasites. That’s the voice of America today.

CC

December 6th, 2012
7:59 am

“Most corporations pay an effective tax rate-due to the many loopholes-that is much lower than the 36% they screech about.”

Only liberals believe that companies and corporations pay ANY taxes. Taxes are projected, figured into the prices of the goods or services the companies or corporations sell and passed along to the consumer. If the taxes are too high, the company or corporation is not competitive. YOU PAY THE TAXES, DeborahinAthens .

JDW

December 6th, 2012
8:12 am

@Kyle…”Never mind that no one is proposing a middle-class tax increase”

Can’t even get past this line…is there a difference between proposing one and holding it hostage? End result is the same.

JDW

December 6th, 2012
8:16 am

@Kyle…”If the answer to all three questions is “yes,” why should it be any different for higher-income earners?”

It is because of an interesting little concept called disposable income…you see our government is underfunded. It only makes sense to ask those that can afford to do so to pay more. It is not a hard concept.

:roll:

commoncents

December 6th, 2012
8:18 am

JDW
Wouldn’t also make sense to ask our government to spend less? It’s not a hard concept…

Finn McCool (The System isn't Broken; It's Fixed)

December 6th, 2012
8:19 am

all the spending Obama wants

and what would this entail?

Finn McCool (The System isn't Broken; It's Fixed)

December 6th, 2012
8:20 am

We need a transaction tax on Wall Street transactions.

Lil' Barry Bailout - OBAMAPHONE!!!

December 6th, 2012
8:20 am

If Obozo were spending at the same level as Our President Bush, we wouldn’t be having this conversation because the deficit would be a measly $400 billion.

It’s the spending, stupid.

Finn McCool (The System isn't Broken; It's Fixed)

December 6th, 2012
8:21 am

Increasing taxes on small business

When did Obama propose this?

commoncents

December 6th, 2012
8:23 am

Finn: “Increasing taxes on small business

When did Obama propose this?”

When he suggested taxing those who make $250K more to subsidize others…

curious

December 6th, 2012
8:24 am

“So lynnie who has created jobs over the last 12 years? The poor people?”

Jobs are created by people spending money. Poor people spend all their money, usually in the community where they live.

The wealthy don’t spend their money, they invest somewhere and often off shore in order to avoid paying tax.

The real job creators are the consumers. Eliminate the consumer and any company Romney has turned around will go belly up.

JMH

December 6th, 2012
8:24 am

Doug W…I beg your pardon but Obama actually said that he would agree to limit deductions in lieu of raising rates just last year. Read this-

http://www.bloomberg.com/news/2011-09-12/carried-interest-to-help-pay-for-jobs-bill.html

John

December 6th, 2012
8:26 am

If you don’t believe Wingfield, believe a 2006 article in the New York Times.

Surprising Jump in Tax Revenues Is Curbing Deficit

WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.

More money, more spending. Bush was not a fiscal conservative.

carlosgvv

December 6th, 2012
8:27 am

Most Republicans in Congress are hinting they might just let us go over the fiscal cliff. If this happens, middle-class taxes will rise about $2200.00 dollars.

Kyle, you might want to re-think that “no one is proposing a middle-class tax increase”.

JMH

December 6th, 2012
8:27 am

The wealthy don’t spend their money? Are you crazy?
I’m barely in that “rich” category and you have obviously never met my wife!

Lil' Barry Bailout - OBAMAPHONE!!!

December 6th, 2012
8:27 am

Finn McCool (The System isn’t Broken; It’s Fixed)
Increasing taxes on small business
When did Obama propose this?
———-

Several times per day for the last two years.

Lil' Barry Bailout - OBAMAPHONE!!!

December 6th, 2012
8:29 am

carlosgvv: Most Republicans in Congress are hinting they might just let us go over the fiscal cliff.
——–

So did the Obozo administration, just yesterday. Now you know who to blame.

DownInAlbany

December 6th, 2012
8:30 am

DougW

December 6th, 2012
7:40 am

What a load of BS. Republicans aren’t ‘right’ on taxes, and the President never ‘agreed’ with their policies on taxes.

I think you need to do a little research. Back in July 2011 (?), Obama indicated that closing loopholes and adjusting deductions could accomplish the needed tax increase without adjusting the rates. He has now flip flopped on that issue.