Obama’s ‘Glut the Beast’ strategy engenders class warfare

September 22, 2011

In a “Glut the Beast” strategy, President Barack Obama in a 20-minute speech in the Rose Garden at the White House on Monday, September 19, unveiled a $3 trillion deficit-reduction plan with $1.5 billion in tax hikes.

Twice before during this year President Obama’s pushed his “Glut the Beast” strategy (to spend as much as possible and then argue that the only answer to massive deficits is to increase taxes), only to have both rejected, the first time back in February when Obama’s budget submission became a non-starter in the Senate, and the second time in a speech this summer following the narrowly averted government shutdown.  Both laid out similar targeted deficit deductions and tax increases.

Obama’s second proposal this summer was panned because it lacked specificity.  Accordingly, coinciding with Obama’s Sept.19 Rose Garden speech was the release of a 80-page document laying out where Obama intended to find the savings or force reductions, effective in 2017, in overhead spending in the Medicare and Medicaid programs.

Knowing beforehand that his third attempt would be as dead in the water as his other two, Obama speech helped to further divide the country by ginning up a nasty class warfare debate.

House Speaker John A. Boehner had this to say about Obama’s Rose Garden “balanced approach” of tax cuts and targeted deficit deductions: “This administration’s insistence on raising taxes on job creators, and its reluctance to take the steps necessary to strengthen our entitlement programs, are the reasons the president and I were not able to reach an agreement previously, and it is evident today that these barriers remain.”

Where President Obama’s tough talk speech did succeed was in energizing liberal advocates and Democrats in Congress, for whom tax increases are as desirable and as patriotic as apple pie.

Praise was forthcoming from Democrats who had warily watched as Obama negotiated with Republican Majority Leader Boehner.  Senator Chuck Schumer, D-N.Y., was quick to offer this statement of approval:  “The president put down a marker today, and he did it in terms more forceful than we have seen him before.”

Only two years ago President Obama emphatically renounced raising taxes during a recession.  What changed Obama’s tune were the upcoming 2012 elections and his urgent need to shore up his base.  But has job creation been forgotten?  Didn’t Obama promise that he would focus like a laser on jobs?

The most controversial aspect of Obama’s deficit reducing plan has been dubbed the “Buffett Rule,” named after billionaire Warren Buffett who advocates raising taxes on capital gains from 15% to 35% on investment income.  It has now been revealed that Buffett’s  advocacy amounts to a case of hypocrisy. on his part.

It turns out that Buffett’s own company, Berkshire Hathaway, had every opportunity to pay more taxes over the last decade, but instead his company has been mired in a protracted legal battle with the Internal Revenue Service over a tax bill that one analyst estimates may total $1 billion

About Warren Buffett:  He is the primary shareholder and Chairman and CEO of Berkshire Hathaway, named in 2011 as the third wealthiest person in the world.

About Berkshire Hathaway:  It is a a diverse mix of more than 60 businesses – including furniture, jewelry, candy, natural gas and corporate jets.  Berkshire also owns several major insurance companies, including Geico and reinsurance giant General Re.  Reinsurance companies sell backup coverage to other insurers, spreading risk in the event of huge losses.  In 2010 Berkshire re-insured the property and casualty reserves of Swiss Re to cover billions in losses.  Having invested $2.6 billion in Swiss Re with the possibility to convert the investment into conventional Swiss Re shares in 2012, would allow Berkshire to control roughly a quarter of Swiss Re.

The above information points to a conflict of interest by Buffett as CEO of Berkshire Hathaway.  Insurance products do well when rates go up.  Consequently, Buffett’s insurance businesses would reap  financial gain.

Warren Buffett, know as the “Oracle of Omaha,” has increasingly championed Mr. Obama in a relationship the Obama campaign has embraced.  It is not surprising that Warren Buffett will be in Chicago on Oct. 27 to head a fundraiser for President Obama at $35,800 per ticket.

The “Buffett Rule” would tax those who create jobs when this nation can least afford it, along with other proposals advanced in Obama’s 9/17 speech which allow the Bush tax cuts to expire for families and small businesses earning more than $250,000 a year, while eliminating deductions, credits, and exemptions.  Completely ignored is the core problem — massive and out-of-control spending!

Within the 80-page documents are proposals that would raise security fees on air travel and ask military retirees to pay a fee when they enter Medicare.  Proposed also is that federal employees pay an additional 1.2% of their paychecks in contributions to the federal retirement system.

President Obama insists that “this (his plan) is not class warfare; it’s math. The money’s got to come from someplace.”  But what else could it be when there is a war being waged on success, as if extremely wealthy individuals were the root of our spending problems!

As Heritage Foundation Allison Fraser commented:  “. . . as if somehow hiking taxes is both fair and necessary and that it is above class welfare.  It is a tactic to stall the real reforms that our leaders in Washington must undertake now in order to avert a fiscal, economic and moral crisis.”

Steve Stanek, Research Fellow, Budget and Tax policy at Chicago’s Heartland Institute, CEO Joseph Bast, came up with this math:

“If  the federal government were to take every penny of income above $250,000 from the 2% of households that earn more than that amount, the total would be $1.4 trillion.

If  the federal government were to take every penny of net worth from the nation’s 400 billionaires — including Warren Buffett — that would total another $1.3 trillion.

Combine the two amounts and that totals $2.7 trillion, approximately $1 trillion less than needed to cover this year’s federal budget.  And once all that money is spent it’s gone.  Those billionaires would be paupers with no money to invest and hire people.”

About federal spending Heartland’s Stanek had this to say:  “Federal spending has grown from $1.8 trillion twenty years ago to $3.7 trillion his year.  The more government spends, the more it drains resources from the private sector.”

Jim Bowman, who writes and posts under Blithe Spirit, related in a post on Tuesday, Sept. 20, how the rich already pay much more in taxes:

“An analysis by the nonpartisan “Tax Policy Center” projects that for 2011, household with more than $1 million in income will have an average federal tax rate of 29.1%, compared to a rate of about 12.4% for households with income of $40,000 to $50,000.  The center counts all federal taxes, including income, payroll and estate taxes.

Internal Revenue Service data suggests a similar pattern for individual income tax, according to an analysis by the “Tax Foundation,” a nonpartisan research group.  It found that households with income between $40,000 and $50,000 have an average tax rate of about 6.8%, while household with income over $1 million have an average rate of 24.6%”

It has often been reported how the top 10% of earners in America already pay about 70% of federal income taxes, triggering reduced productivity, slower economic growth, depressed wages and salaries, and a decrease in household wealth.

A Heritage Foundation “Morning Bell” report of 9/20/2011 zeros in on reform as the necessary ingredient to reduce “this nation’s unemployment crises, a debt crisis, a spending crisis, and an entitlement crisis. An urgency exists to transform our entitlement program and overhaul our punitive, inefficient and noncompetitive tax code.”

Also related in the same Heritage report is 1) how about 25% of this nation’s gross domestic product can be attributed to our federal government and 2) how federal spending is a huge drag on the economy since all that spending is paid for by taxes and borrowing, summarily reducing the amount available for investment in the private economy.

Concerning entitlement spending, “Social Security is growing at a rate of 5.8% per year; Medicare at 6.3%; and Medicaid at 9%.  This rate of growth cannot continue.  It is obvious that the programs need to be fundamentally reformed.”

 

President Obama and the Democrats have spent nearly $5 trillion in less than 3 years to create a huge piece of the debt, yet the same want the upper level of income people, already paying more than their fair share of taxes, to pay even more.

The issue has become a moral question.  How much is a “fair share” to pay in taxes?  In the states of New York and California the well-to-do already pay more than 50%.

Just as whites were made to feel guilty if they didn’t support Obama (a black man) in 2008, might there now be an attempt to create guilt among Americans if they don’t believe in sharing the wealth?

There is nothing in the U.S. Constitution that says once you become successful because you’ve worked hard and took advantage of opportunity that you are now responsible for those who haven’t.

Yes, everyone should pay their fair share of taxes, including the bottom 50% who currently pay no taxes.

It is a sleight of hand, however, for the Obama administration to proclaim that their policies are not fashioned to reward big donors in the Pay-for-Play type of Chicago politics out of which Barack Obama “cut his teeth,” and which later elevated Obama to a false saint-like status which led to his election as president in 2008.

As if this scenario wasn’t enough, George Soros became Obama’s financial supporter and behind-the-scenes manipulation during his presidential campaign; Soros continues to be Obama’s patron, guru, and puppet master.

 

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