He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School. He is author of The Obamacare Disaster, from the Heartland Institute, and President Obama's Tax Piracy, and his latest book: America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream-and How We Can Turn the Tide Before It's Too Late.
Latest posts by Peter Ferrara (see all)
- Tax Reform Would Modernize How U.S. Taxes Global Business Income - June 24, 2017
- Saving Money but Costing Lives - June 23, 2017
- A Principled Tax Reform Allows Expensing of all Business Costs - June 23, 2017
The man you see before you as your President today bears a striking resemblance to the main character in a Greek tragedy. He so reeks of hubris. Every word that drops from his lips speaks a haughty derision of the lesser beings not benighted to be a cog in his political machine. All witness Obama the Magnificent, the conqueror of America, which was the world hyperpower, but is now the Sick Man of the 21st Century, en route to terminal illness.
Middle class beware. Did you not hear four years ago Obama the Magnificent bewail that America with 4 percent of the world’s population consumes 25 percent of the world’s resources? So unfair, you know, the magic incantation of the Obama Regime. He told us that “we just can’t keep driving our SUVs, eating whatever we want, keeping our homes at 72 degrees at all times regardless of whether we live in the tundra or the desert, and keep consuming 25% of the world’s resources with just 4% of the world’s population, and expect the rest of the world to say you just go ahead we’ll be fine.”
The sloppiness in El Primo’s thinking there is revealed by the phrase “the world’s resources.” But America in reality never consumed any of the world’s production. It always only consumed 100% of America’s production (including what it traded some of that production for).
That is why previous American Presidents would have said, you got a problem with the American standard of living, you just address your complaint to the Seventh Fleet. But under Obama, America does not even have a Seventh Fleet anymore. We barely even have a First Fleet, and that is doomed to the sequester budget guillotine, on the same road as America’s formerly dominant nuclear deterrent.
So much for America’s former morally embarrassing global military dominance. And Obama has the same solution for America’s former morally embarrassing overconsumption. Reduce America with 4 percent of the world’s population to consuming just 4 percent of the world’s resources, a decline of 84 percent from its former standard of living. That would be fair, in Obama’s eyes. Richard Trumka, call your office.
The Obama Timeline to the Dustbin of History
Conservatives who want to fight back should start with Obama’s Second Inaugural Address and his 2013 State of the Union. These will be grand pronouncements of neo-Marxist principle and strategy. Books should be written unwinding them. They will be monuments to the Obama tactic of Calculated Deception, i.e., taking advantage of what he is sure a majority of Americans do not know, and what he calculates the Democrat party-controlled media won’t tell them.
But in his hubris, and self-deception, Obama will plant the seeds of his own demise in the words of those addresses. Every paean to the middle class should and will be written in stone and compared to subsequent performance. Every promise to the poor and working people will be stored for future reference as the impact of Obamanomics on the poor and working people unfolds.
At about the same time, the first shoe will drop — the 2014 Obama Budget proposal. This will outline what America’s socialist future will look like under the Grand Vision of the Great Marxist, as the numbers crunchers effectively force Obama to confess that he wants higher taxes to pay for higher spending, which is what the budget will show. Check out in particular CBO’s long-term projections of federal spending, and the national debt. They will show Obama is proposing the so-called Swedish socialism of the government taking and spending more than half of the entire GDP. (Even the Swedes have grown past Swedish socialism.)
Since the end of World War II, two-thirds of a century ago, federal spending has been remarkably stable at around 20 percent of GDP. But in his budget, Obama will propose doubling and even tripling that over the long run, as CBO’s long-term projections will show. His budget will also propose national debt spiraling well beyond even what has trashed and ruined Greece, as CBO’s projections will also show. In other words, Obama’s hubris will lead to worse than a Greek tragedy.
These will be simple indicators of the socialism that has taken over the modern Democrat party. But if you want a simple indicator of why Obama is indeed a Marxist, you can find that in what he repeatedly says about his own tax policies. In a world where, according to official IRS data, the top 1 percent of income earners pay 39 percent of all federal income taxes, three times their 13 percent share of income, and where the middle class, the middle 20 percent of income earners, pays less than 3 percent of all federal income taxes, while earning 15 percent of income, Obama wants to raise all income tax rates on “the rich,” so that they will pay what he sees as their fair share.
To a normal person, the fair share of federal income taxes for a top 1 percent earning 13 percent of income is 13 percent of the taxes. For a Marxist, the top 1 percent earning 13 percent of the income while paying only 39 percent of the income taxes is unfair because it is only fair for the top 1 percent to pay most of the income taxes by themselves.
A normal person would see that policy as social theft. But a born and bred Marxist would see that as social justice, because it is unfair for the top 1 percent of income earners to even exist. Their income and wealth is not earned in the Marxist view, but stolen from The People. So it is only fair that the people steal it back.
Don’t believe it? Then ask the Obama Administration for their explanation as to why their tax policy is fair. If they say they want everyone to pay the same tax rate, then why are they not for the flat tax? And if that is their standard of fairness, why are they not proposing tax rate cuts for “the rich”? According to the CBO, based on official IRS data, the top 1 percent pay an average federal tax rate of 29 percent, taking into account all federal taxes. The middle 20 percent of income earners, the middle class, pays an average federal tax rate of 11.1 percent. The bottom 20 percent of income earners pays an average federal tax rate of 1 percent.
Warren Buffett, call your office, which is the headquarters of the largest tax shelter in the world. The more Obama raises tax rates on the rich, the more will flee to Buffett’s tax shelter, which protects investors from precisely the capital gains taxes, and taxes on dividends, that Obama is raising the most. Buffett is laughing all the way to the bank, but if you are middle class, or poor, the joke is on you, as we will see.
The Second Shoe Drops
The second shoe to drop will be the budget proposal of House Budget Committee Chairman Paul Ryan, which will come a month later, and will be adopted by the full House. That budget will propose to maintain the long-term historical average of federal spending at 20 percent of GDP, under which America prospered as the mightiest economic engine in world history. It would eliminate most of the deficit after just a few years. As CBO’s long-term projections will show, the national debt as a percentage of GDP would stabilize, and then begin a long-term decline, avoiding the Greek tragedy.
That would be accomplished, moreover, without a single American suffering. Ryan’s pro-growth, modernizing, entitlement reforms would be better for the poor and seniors than the current, old-fashioned, outdated, tax and redistribution entitlement programs, and all of their perverse incentives, that end up hurting the poor and seniors. Find me a single American who would be a living example to the contrary.
At the same time, the Ryan budget will propose individual and corporate tax reform with sharply lower tax rates for everyone. The difference will be made up by closing tax loopholes, even without counting the resulting boost to economic growth. That economic growth would produce more tax revenue on net, which would eliminate the deficit entirely within a few years. In fact, in a thriving, grown up, completely honest country, these tax reform proposals would be scored on a dynamic basis, which would allow for even lower tax rates, producing even more booming economic growth.
As Ryan has proposed in the past, these reforms would include a 10 percent income tax rate for families earning less than $100,000 a year, and a 25 percent rate for families earning more. It would reduce the federal corporate income tax rate to 25 percent, close to the global average top marginal corporate rate. These will be wildly popular proposals.
You might say this will all make no difference. The exact same has happened each of the last two years, and it made no difference to the American people. No one noticed.
That was the fault not only of the Romney campaign, or of the Republican Party. It was the fault of the conservative movement more generally. Why did that movement not rise up, drive home the truth to the American people, and hold Obama and his Democrats accountable? We have been ringing those alarm bells right here in this column for two years. But not only has the Democrat party-controlled media failed to take notice. Most of the conservative movement has as well.
But this time more shoes will drop, shoes of reality that will do the job the conservative movement failed to do, and that Obama and his neo-Marxist Democrats will not be able to evade.
Do Not Ask for Whom the Bell Tolls
First, the Republicans themselves will get more feisty, I kid you not. A month or two after the Ryan budget goes public, House Ways and Means Chairman Dave Camp (R-MI) will have the proposed tax reforms written in legislation, scored, and introduced. His Committee will vote the proposals out to the House floor soon after that. The House will pass them.
That will demonstrate the falsehoods that have been told alleging that these Republican tax reforms “do not add up.” When that happens, conservative media, the Tea Party, and grassroots conservatives should start calling for those fake “journalists” and misleading “commentators” in the Democrat party-controlled media to resign.
Of course, Harry Reid’s Senate will ignore the House passed tax reforms, just as it will Ryan’s House-passed budget. Indeed, the Senate will continue to break the law, by failing to pass any budget at all, or even to try. This is where House Speaker John Boehner can man up, by literally suing Harry Reid for failing to obey the 1974 Budget Act, which the then Democrat-controlled Congress enacted. Indeed, Boehner, who is just about the only person who would have standing to sue, should file a class action on behalf of the American people. The case of John Boehner and the American People v. Harry Reid can ask the court to enjoin payment of all Senate salaries until the Senate complies with the law. Win or lose, the case would dramatize and drive home the point to the American people.
But that is only the beginning of the Greek tragedy that will rapidly unfold, and engulf the Obama Administration and the Democrat party. About that time America will begin to miss the Bush tax cuts, really really bad. In his hubris, Obama will maintain his non-negotiation ploy of my way or the highway over the extension of the Bush tax cuts, and the fiscal cliff, with sweeping tax rate increases for the nation’s job creators, investors, and successful small businesses, and no specific, proposed spending cuts at all. The Republicans will not take the bait, and the Bush tax cuts will expire in their entirety.
That is when the American people will recognize that Bush cut taxes for all taxpayers, including the middle class and working people, contrary to Democrat and liberal mythology propagated at such wildly overrated media institutions as the New York Times and the Washington Post. Obama and his controlled media bloodhounds will say that the resulting tax increases on the middle class are the Republicans’ fault for refusing to go along with Obama’s Marxist tax policy. But even the Republicans and the conservative movement will not be able to screw this one up. For even they will be able to retort that the Bush tax cuts were Republican tax policy enacted into law by Republicans, and it took Obama and his new Marxist Democrat party to let them expire.
The Democrat Depression
Even worse for Obama and the Democrats is what the reality of life will be like without the Bush tax cuts. All those soaring rate increases, along with Obama’s abusive regulatory policies, soaring federal spending, deficits, and debt, and the Fed’s continued mischief, will definitely drive the economy back into recession next year. So far, the Democrats’ Marxist Obamanomics has produced the worst economic recovery from a recession since the Great Depression. But for the economy to go back into recession before there has been any real recovery from the last one now four years ago will be widely recognized as the Depression 2.0.
During the Depression decade, the recovery from the first downturn was better than the recovery America has suffered under Obamanomics. But the renewed recession so soon after the first one drove unemployment back up, and wages and incomes down still further, and put the Great into the Great Depression, in the words of Amity Shlaes.
And that is what next year will bring with renewed, double-dip, recession. Unemployment will soar back into double digits, above even the prior post-Depression peak of 10.8 percent. The deficit will break new world records, soaring past $2 trillion. The national debt will spiral further out of control, bringing the lifestyle of Greece to America. Poverty will set new post-Depression records. Wages and incomes for the middle class and working people will plummet further.
Where will it all end? The same place it ended last time. Reagan gave us Peace Through Strength. Obama will give us what his idol Roosevelt gave us, War Through Weakness.
America won World War II by driving up the national debt to an all time American record of 109 percent of GDP. But Obama in his second term will have run up the national debt beyond that, even without any war, while he unilaterally disarms our nuclear deterrent, which the American people have now empowered him to do as our Commander in Chief.
I am consequently predicting that America’s foreign enemies, seeing America has trashed its defenses, and cannot even finance a war to defend itself, will be tempted beyond resistance to attack the American homeland. The result will make 9/11 look like a mere skirmish. The Great Marxist will then politically have turned into The Great Pumpkin.
Thank you, “Progressives.” You will then really have transformed America.
[First published at The American Spectator.]