This week I want to talk about President Obama and a basic understanding of economics. During yesterday’s press conference from the Rose Garden of the White House, President Obama used a nifty sound bite to describe his new jobs proposal. He said, “This is not class warfare, it’s math.” And then, it seems, he forgot the math and preached class warfare.
Is it math or class warfare when he says, “We shouldn’t balance the budget on the backs of the poor and the middle class. … For us to solve this problem, everybody, including the wealthiest Americans and biggest corporations, have to pay their fair share … Middle class families shouldn’t pay higher taxes than millionaires and billionaires”?
Is it math or class warfare when he says, “It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million”?
President Obama says, “Explain why somebody who’s making $50 million a year in the financial markets should be paying 15 percent on their taxes when a teacher making $50,000 a year is paying more than that.” OK, let me take a stab at that little bit of math. Fifteen percent of $50 million is $7.5 million in taxes. It’s impossible for a teacher, even a public school teacher, who makes $50,000 to pay more than $50,000, let alone 150 times that amount.
He goes on to say, “I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or teacher is class warfare.” Of course, he can reject whatever reality he wants but the fact remains that both the hedge fund manager and the plumber and the teacher are all human beings and, presumably, all Americans. So why should a hedge fund manager pay more taxes than anyone else? Just because he’s a hedge fund manager? Is that like being a drug dealer? A member of organized crime? Or, God forbid, like a smoker?
President Obama concludes, “All I’m saying is that those who have done well … should pay [their] fair share.” But what does Obama mean by “fair share”? Does he mean that someone making $50 million a year should pay 150 times more in taxes than someone making $50,000? I thought fair meant reasonably apportioned. By that standard the hedge fund manager would pay 15 percent in taxes and the teacher would pay 15 percent in taxes. That’s fair, even while the hedge fund manager pays immensely more into the pot than the teacher, but the rates would be fair.
Evidently, when Obama says “fair share” he means rich people should pay 80 percent of their incomes in taxes and teachers only 15 percent. That’s fair in la-la land.
President Obama’s big problem is that he thinks governments can create jobs and stimulate economic growth. But government can’t do those things. All it can do is redistribute wealth. That’s his plan: ask some citizens to pay a larger proportion of their money in taxes than other citizens pay. If that’s not class warfare, I don’t know what it is.
For Sutherland Institute, I’m Paul Mero.