Diary

You Can't Tax Us Into Prosperity

President Obama’s recent call for $1.5 trillion in new taxes to solve the nation’s budget crisis is frightening on two levels.

After all, Obama himself once said in an interview that “the last thing you want to do is raise taxes in the middle of a recession.” You can see the interview with NBC’s Chuck Todd on YouTube.

So Obama’s new proposal is alarming in two ways – he is doing something that historically is known to be bad for the economy; and he is doing something that he himself once said is a bad idea.

This is unreal. But then again, this is Obama. He is a president who contradicts himself over and over and over, from speech to speech, within speeches, from action to action. Nikitas3.com has analyzed many of his speeches and found them rife with contradictions.

It is a proven historical fact that highly-taxed economies suffer stagnation. And to think about raising taxes at this time indeed is irrationality. And for Obama to push again and again for tax increases as the economy sinks is like that classic definition of “insane” – a person who does the same thing over and over again and expects a different result each time.

In the Spring of 1930, after the October 1929 stock market crash, Republican president Herbert Hoover did something that he knew would harm the economy – he signed legislation to sharply increase taxes on business. Why? Because the public and the media were clamoring for it, just as many Americans and all those on the Media Left today are clamoring for tax increases on “the wealthy” amidst an economic crisis.

Unfortunately Hoover’s tax action drew precious capital out of the private economy and was one of three legs of a policy that pushed the nation into the great depression of the 1930s. The other two were the drastic shrinking of the money supply by the Federal Reserve; and the institution of steep tariffs (taxes) on imports under the so-called Hawley-Smoot Tariff Act.

So Hoover’s mistake in raising taxes is where Obama got his argument that “the last thing you want to do is raise taxes in the middle of a recession.” But typically for Obama, it was a glib throwaway line that fit the situation that he was in at the time that he said it, which was in an interview on a factory floor in which he wanted to appear smart.

And this is classic Obama. Because in his world tomorrow will bring a new opportunity to say something else, perhaps the opposite, when it is convenient. And his friends in the Media Left will ignore what he said yesterday.

Indeed there is an old saying that “You cannot tax an economy into prosperity” and that wisdom exists for good reason – because such a plan is folly. So why is Obama doing this now even as his own media friends are openly debunking his plan and the statistics he is using to support it?

Answer: Because he sees his popularity plummeting among every group in America, even his far-left base. And so he is trying to retrieve at least his political base with this appeal to class warfare, which is at the core of all Obama policies.

Yet at the same time, this very confused president said about his tax-increase proposal, “This is not class warfare – it’s math”

But now look at what he said in the very next sentence: “The money has to come from some place. If we’re not willing to ask those who’ve done extraordinarily well to help America close the deficit… the math says everybody else has to do a whole lot more, we’ve got to put the entire burden on the middle class and the poor.”

So there is the class warfare. And there is Obama completely contradicting himself just in the space of three sentences.

What Obama ignores here is rationality. Or as Abraham Lincoln once wisely said, “You cannot help the poor by destroying the rich”.

But Obama will not regret pushing for his tax increases. Because it all is a political ploy. He will seek to demagogue the issue. He knows the Republicans will deny him those increases and he knows that he can use it as a campaign issue.

So perhaps the Republicans should go along with Obama and let Obama destroy the economy so that he will lose the White House in 2012.

But real Republicans will not do what is politically expedient. They will do what is right. And they know that if Obama is allowed to draw more and more wealth out of the private economy like Hoover did, that he will do long-term harm. Of which he already has done plenty.

Please visit my blog at www.nikitas3.com for more conservative insights.