Sign-up to receive our free newsletter.
Obama is shrewdly characterizing the recession in a way that breeds resentment towards the wealthy, diverting dissatisfaction away from himself. Most of his recent speeches include assertions that there are a few Americans getting rich, while everyone else is suffering. “The notion that we would ask sacrifice from folks who are already struggling in order to protect folks who have never been better — never been better off — that’s not who we are,” he said in one recent speech. Obama knows that if he can direct Americans’ unhappiness over the economy towards “the rich,” he might win reelection.
The problem is this is not accurate. During recessions, it is typical for the incomes of the rich to fall faster than the middle class. Of the millionaires you know, how many of them are now struggling financially? The only Americans who appear to be getting richer are government employees. Obama uses slick accounting gimmicks to back up his claim that the rich are getting richer.
The recession has not increased income inequality. The number of millionaires in the UShas declined by 39 percent since 2007, and the so-called super rich, Americans making more than $10 million per year, has fallen by 55 percent. Even the liberal New York Times recently admitted that the rich have become poorer since Obama took office.
The most recent data from the IRS reveals that between 2007 and 2009, income of those in the 99th percentile income bracket fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. The top one percent’s income, which mostly climbed throughout the 2000s, has fallen to lower levels than in 2000. The top one percent earned only 16.9 percent of all adjusted gross income last year, down from 20 percent in 2008.
Obama wants to increase taxes on the top three percent, but they already pay more in taxes than the bottom 97 percent. The top one-tenth of the top one percent of income earners pay 17 percent of all income taxes but earn only eight percent of all income. Households making more than $1 million in income pay a whopping 29.1 percent of their income in federal taxes. Middle class households making $50,000 – $75,000 pay only 15% of their income in federal taxes.
Obama wants to raise the top marginal rate on the wealthy from 35 to 39 percent, and is considering a surtax on families making more than $1 million a year, which would push that rate above 40 percent. He has decided this rhetoric is his ticket to getting reelected and will not stop touting it. He is expected to call for higher taxes on millionaires this week by implementing the “Buffett Rule,” named after billionaire investor Warren Buffett. The Buffett Rule will require those with incomes above one million to pay a tax rate of at least 30 percent, prohibiting them from sheltering their income elsewhere or taking deductions. These are just a few of the seven ways Obama wants to increase taxes on the wealthy.
Although Obama frequently touts the so-called “separation of church and state,” he declared in February that Jesus would support increasing taxes on the rich. He explained to an audience at the National Prayer Breakfast, “For me as a Christian, it also coincides with Jesus’s teaching that for unto whom much is given, much shall be required,” quoting the Gospel of Luke. The problem with Obama’s claim is that Jesus would never heavy-handedly force people to contribute money. Jesus might scold them, but he would never instruct the government to take money from others. In fact, Jesus indicated he considered tax collectors comparable to prostitutes and other sinners, although he went out of his way to treat them fairly and included one as a disciple.
Obama says that everyone should pay their “fair share.” But what he considers a “fair share” for high income earners will only increase their bankruptcies. In 2009, the number of wealthy people filing for Chapter 11 business bankruptcy increased by a whopping 73 percent. Taxes are a significant reason why businesses file bankruptcy, and many wealthy Americans are filing personal bankruptcy due to losing their jobs. Increasing taxes on the rapidly declining number of millionaires will not fix the deficit. The math does not work. As taxes are increased, the number of millionaires will decrease even faster, so revenues will not be as high as projected.
The Bush tax cuts, which lowered the tax rate on capital gains and dividends to 15 percent for families making more than $250,000, are due to expire at the end of this year. Although Obama signed off on a two year extension in 2010, he says he will not extend them again this year. If he does not, the economy will continue its downward spiral.
Obama is trying to change Americans’ attitudes from one of optimism that they too, like Horatio Alger, can someday earn more money. He would rather Americans despair and harbor resentment against anyone who makes more money than them. This self-defeating attitude does nothing to improve the country’s economic situation but pits neighbor against neighbor. There is a reason for his class warfare; by promising Americans the impossible, he buys their vote. Americans have short memories when it comes to politics and Obama is the master at slick revisionist speeches, so many Americans will not realize later that they have been sold a bill of goods.
Removing barriers to create more millionaires will fix the deficit as well as create more jobs and revive the economy. That is hope. Pessimism about others who make more money than you is nothing more than jealousy. How sad that we have a president whose campaign strategy to win reelection is to foment jealousy among voters.