Crimes Against Liberty (45 page)

Source:
Office of Management and Budget. Budget of the United States Government, Fiscal Year 2011 (Washington, D.C.: US Government Printing Office. 2010). pp. 146-179, Table S-B.

As Brian Riedl observes, Obama might plausibly argue his $3 trillion in new taxes were necessary to balance the budget. But even if you assume no economic slowdown as a result of these taxes, his numbers don’t add up because he is planning on at least $1.6 trillion in new spending for healthcare, cap and trade, another stimulus bill, and additional education entitlements. Riedl concludes, “Simply put, surging spending is driving the budget deficits.”
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SMOTHERING SMALL BUSINESSES

The “soak the rich” strategy, though appealing to Obama’s fellow class warriors, has a proven track record of failure because it depresses the number of high-income producers—these are people, often small business owners, who benefit the economy by creating jobs. Tax economist Curtis Dubay of the Heritage Foundation testified before the House Committee on Small Business, warning that many small businesses are now struggling to survive in this strained economy. Punitive new taxes, he argued, will impede any recovery, while reducing taxes, lifting regulations, and reducing government spending would re-energize small businesses and benefit the overall economy.

But Obama plans on doing the opposite by raising the two top income tax rates. Dubay says it is a myth that only a small percentage of small businesses are affected by such a move. The “number of businesses that pay top rates,” he said, “is economically meaningless because so many small businesses represent the part-time efforts of their owners.” While 8 percent of small businesses pay the highest two tax rates, those businesses earn 72 percent of all small business income and pay 82 percent of all income taxes paid by small businesses. And those small businesses “employ most workers hired by small businesses.”

Furthermore, “It is these businesses that the economy needs to create new jobs and ramp up economic growth after the severe recession. Higher taxes would drain the businesses of cash flow, the lifeblood of any business, and would diminish the incentives to grow and add other workers. Raising rates on these successful businesses would damage the economy at any time, but doing so now when the unemployment rate is starkly elevated and the recovery just underway is stunningly foolish.” Dubay also says the resurrection of the death tax will be another major drag on small businesses, as it “will destroy jobs, and lower wages while raising little revenue.”
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OBAMA’S FORECLOSURE PREVENTION PLAN

The day after Obama signed the stimulus bill, the indefatigable spender announced his $75 billion plan ostensibly to prevent nationwide mortgage foreclosures, a situation he described as a “crisis unlike we’ve ever known.” As with ObamaCare, he billed it as an effort to bring the economy out of recession, but it was actually—like ObamaCare—another enormous wealth redistribution scheme. Declaring another urgent crisis, he proclaimed, “If we act boldly and swiftly to arrest this downward spiral, then every American will benefit.” Promises, promises.

The plan was to draw $50 billion from existing bailout money and $25 billion from government-backed entities such as Fannie Mae and Freddie Mac. It directed Fannie and Freddie to automatically approve refinancing at current rates, which was expected to give 4 to 5 million people an immediate reduction in their mortgage payments, according to an administration official. At no time did anyone in the administration explain on what law or constitutional provision they based their authority for such a sweeping move. Nor did they explain how they could force contracting parties to alter the terms of their existing contracts. They just issued the edict. Period. Obama promised the plan would “give millions of families resigned to financial ruin a chance to rebuild.” He said it would reward those who played by the rules. The ultimate goal was to save 7 to 9 million mortgages.
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One of the primary causes of the financial meltdown in the first place was the government’s mania for incentivizing and pressuring lenders to make uncreditworthy loans. But Obama, instead of belt-tightening, applied a little hair of the dog, and the housing industry got drunk all over again. In the end, Obama’s extravagant plan didn’t quite turn out as he’d predicted. The
New York Times
reported in January 2010 that the plan had “been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.”
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The program was believed to have raised false hopes among people that they could keep homes they still couldn’t afford, causing them to waste payments on inevitably failed mortgages they could have used to move into cheaper homes or apartments. Many borrowers were surprised to find that participating in the program had damaged their credit ratings.

Despite the manifest failure of the program, Obama’s tone-deaf Treasury Department insisted the program was on track and “meeting its intended goal of providing immediate relief to homeowners across the country.” It was a crass denial of responsibility for egregious recklessness that not only further damaged the nation’s fiscal condition, but harmed the very homeowners it was designed to help—just more liberalism 101. To get an idea of just how miserably the program failed, by mid-December 2009, some 759,000 homeowners had received loan modifications on a trial basis that lasted 3 to 5 months. But only 31,000 received permanent modifications. The administration maintained the temporary users were benefitting, but mortgage experts and lawyers said trial participants often ended up worse off.
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And the bad news didn’t stop there. In June 2010, it was reported that more than a third of the 1.24 million borrowers who enrolled in the mortgage bailout program had already dropped out. One major reason for this is that the Obama administration pressured banks to sign up borrowers without insisting first on proof of their income and ability to repay.
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That month CNN Money also reported that “between 65% and 75% of loans that are modified through [Obama’s] Home Affordable Modification Program but not backed by the federal government are likely to go bad, according to a report released by Fitch Ratings, a N.Y.-based credit-rating agency.”
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CAP AND TRADE

Global warming alarmists in the administration and Congress tried to foist on the nation another boondoggle called the American Clean Energy and Security Act of 2009, a.k.a. the “Waxman-Markey bill,” the “cap and trade bill,” or “cap and tax.” This bill, with its Draconian provisions, was based on the increasingly discredited view that man-made global warming will produce catastrophic, even apocalyptic consequences. But accepting the premise for purposes of argument, the salient questions are whether the bill would effect significant improvements and, even assuming it would, whether it would be worth the enormous costs it would generate. The inescapable fact is that the bill would involve colossal de facto tax increases (as documented in chapter three) and other prohibitive expenses while producing negligible results, at best.

Climate scientist Chip Knappenberger of New Hope Environmental Services has calculated that Waxman-Markey would reduce the earth’s temperature by just 0.1 to 0.2 degree Celsius by 2100. Ben Lieberman, Senior Policy Analyst for Energy and the Environment at the Heritage Foundation confirms he has seen no “decent refutation of the assertion that the temperature impact (of the bill) would be inconsequential.”

But the negative impact of the bill would not be inconsequential—it would be devastating. It would cause estimated
net
“job losses averaging 1,145,000 at any given time from 2012-2030.” Some of the jobs would be lost completely and others outsourced to China and India, two nations that have made it quite clear they will not sabotage their own economic growth as we’re proposing to do to ourselves with this bill. Projecting the bill would cause a loss in GDP of $9.4 trillion by 2035, Lieberman predicted it would increase each family of four’s share of the national debt by 26 percent, or $115,000, and this is irrespective of the other bankrupting programs of bailouts, stimulus, and ObamaCare.
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Even the liberal Brookings Institution projects the bill would reduce GDP by 1.8 percent by 2035 and 2.5 percent by 2050.

The recklessness of the bill is truly staggering. As Heritage’s Foundry blog said, “Economists from liberal think tanks and industry associations agree that Waxman-Markey will reduce income by hundreds of billions of dollars per year.” Yet Obama liberals nevertheless tout their coveted transition to a green economy as if it were actually going to be a boon to economic growth. Lieberman said, “If truth-in-advertising laws applied to politics . . . you’d have to replace the word ‘clean’ with ‘costlier’” in the phrase “clean energy economy,” and that is why “this agenda is actually very bad news for jobs and the economy.”
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If all this weren’t bad enough, the American Issues Project notes that Section 204 of the bill, called the “Building Energy Performance Labeling Program,” gives the federal government unprecedented authority over our homes. It would mandate that new homes be 30 percent more energy-efficient than under current building codes—starting the very day the bill is signed into law—and the requirement jumps to 50 percent by 2014 and continues to rise until 2030. The bill would also cover existing properties by requiring states to assess their efficiency ratings and make the results public. The ratings could lead to a number of circumstances that would allow the state to inspect a property, such as with planned renovations. Another enormously wasteful provision in the bill sets up a fund that would reward homeowners for making their properties more environmentally friendly—up to $12,200.

Also tucked into Waxman-Markey is another Obama standby: a major redistributionist scheme. The Foundry blog reported Obama is counting on $650 billion in revenues for selling carbon permits (an energy tax by another name) and only $150 billion of that will be assigned to alternate energy production. The rest will be transferred to people “who don’t pay income taxes.”
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This isn’t as much about the environment as it is about socialism.

And all this for what? As Lieberman contends, “Virtually everything one hears about global warming that sounds terrifying is not true, and what is true is not particularly terrifying. The risks of global warming are outweighed by the risks of ill-advised global warming policy like Waxman-Markey. . . . The bill would have a trivial impact on future concentrations of greenhouse gases (and) . . . it only binds the U.S., and trends in the rest of the world clearly show that emissions are rising.” It is “free markets,” argues Lieberman, “that provide us with the best way forward.”
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Just as with ObamaCare, Waxman-Markey was so problematic, even for some Democrats, that some holdouts had to be bribed with taxpayer goodies to support it—for example, Ohio Democratic congresswoman Marcy Kaptur was offered a new federal power authority, according to the
Washington Times
, “stocked with up to $3.5 billion in taxpayer money available for lending to renewable energy and economic development projects in Ohio and other Midwestern states.” Apparently unable to conjure enough of these bribes, however, the administration watched Waxman-Markey bog down in Congress.

But liberals won’t give up easily on such a transformative program. In May 2010, senators John Kerry and Joe Lieberman proposed a new version of cap and tax, The American Power Act (APA). They initially had the support of Republican senator Lindsey Graham, who thankfully retreated from his folly.

According to climate scientist Chip Knappenberger, the new bill, like its predecessors, “will have no meaningful impact on the future course of global warming.” The APA has “identical” long-term benchmarks to the Waxman-Markey bill, and while the APA relaxes Waxman-Markey’s near-term reduction target slightly from 20 percent to 17 percent below 2005 emissions levels by 2020, both bills include targets of 42 percent below by 2030 and 83 percent by 2050. Moreover, like Waxman-Markey, the “global temperature ‘savings’ of the Kerry-Lieberman bill is astoundingly small—0.043ºC (0.077ºF) by 2050 and 0.111ºC (0.200ºF) by 2100. In other words, by century’s end, reducing U.S. greenhouse gas emissions by 83% will only result in global temperatures being one-fifth of one degree Fahrenheit less than they would otherwise be”—a “scientifically meaningless reduction.”
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Similarly, the Cato Institute’s Patrick Michaels argues the APA “mandates the impossible,
will not
produce any meaningful reduction of planetary warming, and it
will
subsidize just about every form of power that is too inefficient to compete today.” The bill will allow the average American the same carbon dioxide emissions enjoyed by “the average citizen back in 1867, a mere 39 years from today.” The bill’s sponsors, he says, have “no idea how to accomplish” their goals. “Instead, they wave their magic wands for noncompetitive technologies like carbon capture and sequestration (clean coal), solar energy and windmills, and ethanol among many others.” Ultimately, Michaels says, the bill is “yet another scheme to make carbon-based energy so expensive that you won’t use it.”
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