Tax Talking Points

Obama’s plan:

This has been eating at me, the difference between talking points and economic reality.  Obama has been campaigning on his tax plan: Shared sacrifice; middle class tax cuts, tax the top earners. His statements are poll tested, and it is his only chance to win.  He says, we have to do something about the deficit, and why not tax those who have prospered.  (He will not go off script again and call them people who do not deserve their success).  He will run on Clinton’s record: “Let’s go  back to Clinton’s tax rat-when the country  prospered”.  It all sounds so reasonable.  The Republican response: “This is a tax on the job creators”.  Knowing that his plan will not happen, Obama hopes this will propel him to victory in the election.

First, the election: The Democrats know that 46% of the voters would rather have a wooden stake driven into their eyes than vote for Obama.  All the polls are clear on this, and we all know it.  Has anyone met anyone that voted for McCain that is now happy that Obama was elected?  I have heard people sorry about their Obama vote, but no one who wished they had voted for Obama over McCain.  So how does Obama get to 50% plus one? He needs to get the squishy middle to vote for him.  He needs to do this with talking points.  The majority of people believe they should have a tax cut and that someone else should solve the deficit problem.  So this will be Obama’s campaign.  He knows his tax plan won’t work, because here is the reality.  His tax increases will raise enough to run the government for 8 days.  It will take more to solve the problem, but even this 8 day number is from static scoring.  Static scoring means if you raise rates and no one’s behavior changes, this will be the amount of revenue that is raised.  Problem is, behavior will change.  Those taxed will have less money to spend.  Whether they hire fewer people, invest less or spend less on themselves, their behavior will change, and we will have a recession.  But it is not just the top rates that go up.  It is also rates on dividends, cap gains, the alternate minimum tax, and the death tax. This is not what Bill Clinton did.  Clinton lowered the cap gain rate and investment soared, and the economy grew, and when Clinton did raise the top rates, the economy went into a recession—this is even though the economy was really cooking at the time.  Most people forget about the Clinton recession that Bush faced when he came into office (Probably because George W. didn’t blame Clinton for 4 years).

There are a lot of voters who just want Washington to get along.  Personally, I like gridlock, but there are voters who don’t.  They want compromise; they do not want partisan bickering.  The do not understand why the government can’t raise a few rates (as long it is not on them) and make some cuts.  Problem is, these compromises require tax rates to go up now, and cuts to be made over time.  Every serious observer knows that the cuts will never come.  Why would anyone assume they would.  Obama by executive order, is relaxing the welfare requirements, advertising for more people on food stamps.  His solution for social security: lower the FICA contribution. Democrats would rather lose a limb than to cut spending.

The Republican problem is that they need better talking points and better messages.  I am tired of people saying Obama’s tax increases fall on the job creators.  They should say: Clinton lowered the Cap gain rate and the economy boomed.  Clinton's rate on the top wage earners caused the 2000 recession. The democrats will never make the cuts they promise. The death tax will keep people from giving money to their kids.  The dividend and cap gain tax will hit every one who has a mutual fund, and the repeal of the ATM fix will hit 40% of the wage earners. Falling for the Obama tax scheme will cause a recession and if we reelect Obama we will have 4 more years of bad economic policies to stimulate the economy.  Maybe the simplest talking point is this: “We are headed into a recession, and do we expect more Obama policies to fix it?”

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