Obama's Tax Trap and the Stimulus Debacle

Its often interesting as to how many campaign pledges made by Obama are broken but one that caught my eye recently was his openness to backtrack on his pledge to not raise taxes on the middle class which i must admit despite being unfortunate is rather humorous considering obama was accusing anyone who claimed his econ agenda would require raising taxes on the middle class. Looks like the jokes on Barry this time......

Some Snippets

(my blogger acount is being really screwey so im gonnna try to copy n paste from another blog....

Here are some relevant snippets from a recent bloomberg piece

Obama ‘Agnostic’ on Deficit Cuts, Won’t Prejudge Tax Increases

Feb. 11 (Bloomberg) — President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.

Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.

“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”

and

Obama repeatedly vowed during the 2008 presidential election campaign that he would not raise taxes on individuals making less than $200,000 and households earning less than $250,000 a year. When senior White House economic adviser Lawrence H. Summers and Treasury Secretary Timothy F. Geithner suggested in August that the administration might be open to going back on that pledge, White House press secretary Robert Gibbs quickly reiterated the president’s promise.

In the interview, Obama said that putting preconditions on the agenda of a bipartisan advisory commission, which he said he would soon establish, would just undermine its purpose.

“What I can’t do is to set the thing up where a whole bunch of things are off the table,” Obama said. “Some would say we can’t look at entitlements. There are going to be some that say we can’t look at taxes, and pretty soon, you just can’t solve the problem.”

Note that he is now keeping that off the table which is a lot different than his previous vow to not raise taxes on the middle class by a single dime. Even with tax increases on the rich its important to note that the experts dont believe its possible to close the output gap by simply raising taxes on the rich which is widely favored as the piece notes

Americans’ favorite way of cutting the budget deficit is by raising taxes on the wealthy, according to the Bloomberg News poll conducted by Des Moines, Iowa-based Selzer & Co. Two-thirds of the 1,000 adults surveyed Dec. 3-7 backed that approach.

however this is impoosible to do considering you can only get so much money from the wealthy.....

Analysts say that middle-class taxes will need to be increased because the government can’t raise enough money from the wealthy alone to close the budget gap. “It’s just not possible to get the revenue you need only from this group,” saidJoel Slemrod, director of the Office of Tax Policy Research at the University of Michigan.

Going back on his campaign pledge would be fraught with risks for Obama. Former President George H.W. Bush paid a steep political price when he abandoned his 1988 campaign promise not to raise taxes, losing out in his bid for a second term toBill Clinton.

I agree with Jim Geraghty when he says this reversal came too fast

Now onto this whole stimulus affair.

We were (according to the CEA) promised that the unemployment rate wouldnt top 8 % with the stimulus despite it being close to 1% today. Now economic forecasting isn't an exact science so I think it's a bit unfair to jump all over the fact that the prediction was wildly inaccurate.

It's one thing to be inaccurate but its quite another to be completely dishonest about porkulus considering this was a terribly designed package whose purpose was not to set the stage for a fast or effective recovery.

In fact much the admins attempts to "transform" the economy via porkulus,health reform, etc are a horrible thing to do or even propose during a recession.

But Barry O being the windbag that he is decided to ride the wave of public angst to push for his so called stimulus package when more sensible proposals couldve been implemented such as increased defense spending,permanent cuts in the tax rate, and unrthdox monetary policy which even the biggest stimulus chearleader Paul Kurgman . Yes. Paul Krugman has said it is (from an economic perspective) our best option.

Now im no economist but I'd say whether you believe we are doing too much (in terms of spending and monetary policy) or too little there's really no case to be made for the type of policy that the current administration is following especially since the stimulus is not working.