Fundamentally Transforming America

President Obama is off and running on his 2012 re-election campaign 19 months before the election and barely into the 3rd year of his term. Apparently, running the United States is not important enough to interfere with the most important priority in the world, namely, getting himself re-elected.

Central to Obama's campaign is is his theme of needing to raise taxes on "millionaires and billionaires" in order to reduce the budget deficit. This theme makes him appear to be concerned about the deficit even though raising taxes on the rich to rate of 100% would hardly put a dent in the deficit. In other words, he is using class warfare to demonize and scapegoat one group of society so that the majority can rally around him and thus be distracted from the very real economic problems he is ignoring. Obama demands that the rich pay "their fair share."

An article in the Washington Examiner takes a look at the question of whether or not the rich are paying their fair share of taxes. The facts are inconvenient for Obama and they reveal what his real agenda is.

First of all, in 2008 the top 1% of households with the highest incomes paid 38.6% of all income taxes and the top 10% of households paid 70% of all income taxes, while the bottom 50% of households paid just 2.7%. So, the article reasonably asks,

"what would it take for liberals to be satisfied that the rich are paying their fair share? Should the top 10 percent pay 90 percent of the taxes? Should the bottom 50 percent pay zero income taxes?"

This is the question that Obama needs to be asked. Will a tame media ask him the tough questions? Not unless there is a major turnaround from the last campaign.

Based on his own statements so far, here is what I think his strategy is. If he can get more than 50% of the population to be paying no income tax, then he has a potential majority of voters whose own self-interest appears to be (not actually is; I'll come to that point later) to vote for ever higher tax rates for "the rich" (i.e. everybody who makes more than me). Then he can turn the screws tighter and tighter on the minority who still pay income taxes.

The point here is not so much about tax policy and government revenue as it is to create a permanent voting majority for the Democratic Party. By dividing America into classes (the tax paying class v. the entitlement class) the Democrats can create a permanent voting majority consisting of a permanent entitlement class with a Manichean worldview in which the tax paying class (known as "the rich") are the forces of evil and the entitlement class (known as "the people") represent the forces of good.

Obama's problem, however, is that because America never had Europe's class divisions the idea of class warfare has never taken root in America. Upward social mobility is common in America and wave after wave of immigrants have done what socialist ideologues claim is impossible: they have risen from the working class into the middle class and made a better life for their children. So Americans are instinctively suspicious of class warfare rhetoric and they don't aspire to be part of a permanent entitlement class; they aspire to succeed in life and get ahead by hard work. This is why they know that "soaking the rich" means soaking them should they happen to attain their dreams and so they resist demagoguery.

Going back to tax rates, the Examiner article also shows that tax rates on the rich are no lower today then they were under Clinton, despite the Democratic demonizing of Bush as giving tax breaks to the rich. Why? Well, the fact is that the Bush tax rate reductions applied to all income levels, not just the higher ones. The IRS data shows that higher income Americans paid a progressively higher rate of tax than lower income Americans. The truth is that the American tax system is already one of the most genuinely progressive systems in the world.

So, if Obama is so unhappy with the current system,
it makes you wonder what he would be satisfied with.

I think the whole "tax the rich" meme is not serious policy. Obama knows that America's finances are on a collision course with reality and he knows that the Republicans are supported by the voters in wanting the deficit reduced and the debt dealt with. But he is ideologically rigid on entitlement programs and refuses to even consider scaling back the rate of growth of programs like Medicare and Medicaid, let alone cutting them. His socialist ideology makes him prefer that everybody be poorer if that is the only way to make everyone more equal in income. The "tax the rich" theme is not a solution to the problem; it is a distraction from thinking about the problem.

He was not kidding when he said a few days before the 2008 election that his goal is to fundamentally transform the United States of America.