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.”31
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.32
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.”33 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.34
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.35 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.”36
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.37 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.”38
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 prov
ision 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.”39 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.”40
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.”41
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.”42
Now that’s something our coal industry-destroying president can support—and indeed, he is hyping the bill with the same propaganda flourish he’s employed for the rest of his disastrous agenda. Michaels presents two charts, one using his projections for APA climate impact by 2050 and the other by 2100. Each illustrates three different scenarios: the first assumes the APA or its equivalent is not enacted (“business as usual”), the second that it’s passed only in the U.S., and the third, that it’s passed in “Kyoto countries.” Michaels concludes, “As you can plainly see, APA does nothing, even if all the Kyoto-signatories meet its impossible mandates.”
OBAMACARE
Obama promised he would bend the cost curve down with his healthcare reform plan. He promised he would “not sign a plan that adds one dime to our deficits—either now or in the future.” Even as he signed ObamaCare in March 2010, he declared it would “lower costs for families and for businesses and for the federal government.”
We’ve already detailed in chapter six the gimmicks and deceits the administration used to secure a favorable, but ultimately fraudulent, CBO scoring for the bill. And lo and behold, we learned a month after the bill was passed that the CBO said the bill would cost an additional $115 billion due to discretionary spending that wasn’t counted in the initial scoring. Plus, a study inside his administration showed the bill was going to cost substantially more. The Centers for Medicare & Medicaid Services (CMS) issued a report finding that ObamaCare would not only fail to reduce the deficit, but the bill would actually raise spending by about 1 percent and cause healthcare costs to rise $311 billion over the next decade—and that’s without even factoring in the CBO’s $115 billion discretionary spending revelation or the other gimmicks and distortions in the administration’s accounting.
Another study following the bill’s passage estimated ObamaCare will add more than $500 billion to the deficit over the next ten years and $1.5 trillion in the following decade.43 And, as far as could be determined, none of these follow-up studies were even considering an analysis by the Center for Studying Health System Change, which found another flagrant underestimation of costs: ObamaCare doesn’t allocate nearly enough money to cover the estimated 5.6 to 7 million Americans with pre-existing medical conditions who will qualify for temporary high-risk insurance pools. According to MoneyNews.com, “The gap will force policymakers to freeze enrollment in the new pools, limit access and benefits, or increase premiums.”44
The CMS report also indicated more than 7 million seniors could lose their current Medicare coverage and as many as 15 percent of hospitals, nursing facilities, and home health agencies could be forced out of the Medicare system. Further, the funds derived from the new 3.8 percent Medicare tax (Obama’s tax on unearned income) will not be paid into the Medicare trust funds. The report might as well have directly described this provision as fraudulent advertising. It said, “Despite the title of this tax, this provision is unrelated to Medicare; in particular the revenues generated by the tax on unearned income are not allocated to the Medicare trust funds.”45 Instructively, Obama dispatched his hit-squad staff to attack CMS chief actuary Richard Foster and his findings. Both Nancy-Ann DeParle, director of the White House Office of Health Reform, and White House communications director Dan Pfeiffer criticized Foster’s analysis on the White House website, but Foster stood by his work.46
Following passage of the bill, dozens of companies have reported to the Securities and Exchange Commission—more than just the few that Henry Waxman tried to intimidate—the losses they expect to incur from ObamaCare. Companies that offer drug benefits to their retiring employees will be taxed on the federal subsidies they receive for those retirees. The U.S. Chamber of Commerce has projected that some forty large companies will sustain losses totaling $3.4 billion.47
Furthermore, about a month after the bill was signed into law, Senate Democrats debated in the health committee a bill that would confer on states the power to reject premium increases that state regulators deemed to be “unreasonable.” This could not be included in the actual ObamaCare bill due to procedural rules. The Wall Street Journal editors opined that the reason for this new proposal is that “Democrats are petrified they’ll get the blame they deserve when insurance costs inevitably spike” under ObamaCare. “So the purpose of this latest Senate bill is to have a pre-emptive political response on hand.... As Democrats are showing by trying to pass a new insurance bill, they want all U.S. health care to function like price-controlled Medicare.”48
But the real shoc
ker was that the administration had this information more than a week before Congress voted on the bill, at a time when Obama and his congressional Democrats were still maintaining what they knew to be false: that their bill would not increase the deficit. The economic report was submitted to HHS secretary Kathleen Sebelius, and she sat on it until after the House vote. Inside sources said that Sebelius’s staff refused to review the document beforehand, saying they didn’t want to influence the vote. But as the source correctly observed, that’s the entire “point of having a review like this.” Obama was not going to let anything get in the way of this bill, not least the facts concerning costs.
The analysis was performed by Medicare’s Office of the Actuary, a non-political office. An HHS staffer said, “We know a copy was sent to the White House via their legislative affairs staff and there were a number of meetings here almost right after the analysis was submitted to the secretary’s office. Everyone went into lockdown, and people here were too scared to go public with the report.”49 So despite knowing full well he was lying through his teeth, Obama declared, as he was signing the bill, that it would “lower costs for families and for businesses and for the federal government.”
Crimes Against Liberty Page 31