The Mask Comes Off
President Obama did the nation a huge service today, in two respects. First he took off the mask and told us explicitly that the "change" he wants is an explicit move towards welfare-state socialism, and, second, in doing so, he set out the major thrust of his re-election campaign. In a 55-minute speech in Osawatomie, KS, the president explicitly argued that capitalism is a failed economic system, and the main thrust of government economic policy should be the redistribution of income.
It’s darkly amusing that he makes this argument just weeks—perhaps months—before a major political and financial crisis, caused mainly by their socialist policy leanings, strikes Europe. They are just about to hit the stark reality of what happens when you run out of other people’s money to spend to finance extravagant social benefits. President Obama, it seems, is keen to rush us down the road to meet them. Not that we aren’t already pretty far down that road ourselves. The national debt is now over $15 trillion, more or less 100% of GDP, with no clear path to reducing that percentage in the near future, or even in reducing the rate of growth substantially.
President Obama apparently thinks that the solution is to take the money from "the rich" and distribute it to the rest of us. The trouble is, we could take pretty much everything the rich have, as well as all the profits of all the Fortune 500 companies, and it wouldn’t even even cover 1 year’s worth of government spending. As economist Walter William notes:
This year, Congress will spend $3.7 trillion dollars. That turns out to be about $10 billion per day. Can we prey upon the rich to cough up the money? According to IRS statistics, roughly 2 percent of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It’s not even yacht and Learjet money. All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there’s a problem because there are 224 more days left in the year.
How about corporate profits to fill the gap? Fortune 500 companies earn nearly $400 billion in profits. Since leftists think profits are little less than theft and greed, Congress might confiscate these ill-gotten gains so that they can be returned to their rightful owners. Taking corporate profits would keep the government running for another 40 days, but that along with confiscating all income above $250,000 would only get us to the end of June. Congress must search elsewhere.
According to Forbes 400, America has 400 billionaires with a combined net worth of $1.3 trillion. Congress could confiscate their stocks and bonds, and force them to sell their businesses, yachts, airplanes, mansions and jewelry. The problem is that after fleecing the rich of their income and net worth, and the Fortune 500 corporations of their profits, it would only get us to mid-August.
We could take everything the rich have, and it still wouldn’t give us a balanced budget for one year. Collecting money the next year would also be…problematic, too.
But, the president has to be—well, not admired, exactly, but recognized—for his utter inability to accept that reality. As well as his apparent ability to construct "realities" that aren’t true.
At no time during the president’s hour-long perversion of the country’s economic history did he even allude to the massive growth in government spending we’ve seen, the cronyism between government and big business that led to private profits and socialized losses, or the explosion of debt that’s grown from $1 trillion in 1980 to $15 trillion today, all of which has resulted in removing money from the productive economy, and funneling it into government priorities, rather than into private income and investment. At no time did he mention the aggressive enforcement of the Community Re-Investment Act, which essentially forced banks into making sub-prime loans—indeed, explicitly instructed banks to make such loans—that led to the mortgage bubble and, when the less credit-worthy mortgagees couldn’t pay, it’s collapse—as a prime cause of our present economic difficulties. These are failures of government, and the president calls it a failure of capitalism.
"The market will take care of everything," they tell us. If we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.
Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked.
In the president’s mind, economic freedom and capitalism don’t work. Never have. How he explains America’s ability to become the richest country the world has ever seen while operating under such a system is a complete mystery. And never mind that, to the extent the American system has failed, it is the reduction of economic freedom and the growth of government—especially over the last 50 years—that caused the failure.
But have no doubt that he believes this foolishness, even as the government-run technocracy he admires so much is literally weeks away from running the European Union’s economy straight into the ground. In a bit less than a year from now, we’ll see whether a majority of Americans believe it as well.
And if they do believe it, then the interesting question will be how they expect to pay for it.