Wes Vernon
January 22, 2009
The Obama bear market: You want stimulus? I'll show you stimulus
By Wes Vernon

Just a few hours after Barack Obama finished his inaugural address and as he was making his triumphant entry to the Oval Office of the White House, the Dow Jones Industrial Average had taken a predictable dive by 332.13 points to be exact. Next day, the yo-yo went back up, but we're a long way from recovery. Those of you with 401-Ks and retirement portfolios, beware. This is going to be a bumpy ride, and it won't be pretty.

Ersatz math

Now, let's see if I have this right: President Obama says he will cut taxes for 95% of Americans. But some 40% of Americans pay no income taxes. Only 60% at most pay income taxes. So how can you cut income taxes for "95% of Americans?" It's like adding zero plus zero and getting four. It is not doable. It is a fraud.

What he means is that he wants to send 40% of Americans a welfare check. If that's what he wants to do, he should say so. After all, he was elected by the people. So why doesn't he level with them? We're all adults here.

Where is the "loyal opposition"?

But we know that Barack Obama's snake oil won't work. That's why we have an opposition party. We do have one, don't we? Or do we?

There are reports that at a Republican "retreat" an ironic term the word went out to follow a "moderate" line i.e., don't be too confrontational, and don't forget to consider the needs of the Northeast, where conservatism is less popular than in Middle America.

This is a summary of the tone, as reported. In the absence of more details, conservatives will consider this a sellout to the remnants of the long-dormant Rockefeller wing of the GOP. Those are the Republicans who ape the Democrats offering a "more efficient" brand of socialism, with all the "reaching across the aisle" coming from a Republican Party begging for crumbs at the socialist table dominated by their betters, the Democrats.

This is the Christie Whitman GOP writ large. Christine Todd Whitman is the former Republican governor of New Jersey who almost single-handedly destroyed the once-vibrant Republican Party of that state. She accomplished that miracle by locking conservatives out of her administration, and telling them to get lost.

The GOP lost nationally in 2008 in large part because it deserted many of the ideas that led to its past successes.

On the other hand

We are still a center-right nation as reflected in polling data notwithstanding popular disaffection with Republican leaders in Washington and the resultant victory for Barack Obama.

As is often the case in good times and bad principled leadership comes from House Republicans, this time in the form of an alternative stimulus package by the Republican Study Committee. The RSC is a caucus of conservative GOP congressmen. More than 100 of the House Republicans make up its membership.

Not content to sit back and let the Democrats ram their agenda through without adequate debate, the RSC by the same token does not oppose without presenting alternatives.

A real stimulus package

The RSC has offered what it titles The Economic Recovery and Middle-Class Relief Act of 2009. ERMCA proposes to stimulate the economy without what it sees as the "trillion-dollar spending spree" being crafted by the Obama administration and congressional Democrats with acceptance by some Republicans.

Here are the highlights:

1 Give Americans a five percent across-the-board income tax cut retroactive to 2008, making the new rates permanent. Currently, income tax rates are scheduled to increase in 2011 when the Bush tax cuts expire.

2 Increase the Child Tax Credit from $1,000 to $5,000 an immediate tax cut for middle class families.

3 Make the lower 15% rate on Capital Gains permanent. This column has called for outright abolition of the Capital Gains Tax as the most destructive levy the feds impose on Americans. But the RSC proposal is a good start.

4 Repeal the Alternative Minimum (AMT) tax. Originally enacted to catch 155 wealthy people using loopholes to avoid paying any tax at all, the result is that now we have an AMT that has ensnared about 30 million middle income earners a classic case of swatting a fly with a sledgehammer.

5 Permanently repeal required distributions on retirement accounts. Currently at age 70, seniors are required to withdraw money from their IRAs and 401-Ks, and then pay taxes on them. Though suspended in 2009 (as a tax break criticized by liberals as one of the Bush tax cuts allegedly for "the rich"), the previous tax bite (at 70) is scheduled to return in 2010.

6 Make all withdrawals from IRAs tax-free and penalty-free in 2009. This could save many from foreclosure or other financial emergency.

7 Increase by 50% the tax-deduction on student loans, and boost the tax-deduction on qualified higher education expenses.

8 Allow businesses to expense and deduct on their tax returns the costs of assets (including buildings) that they purchase.

9 Slash the corporate tax rate from 35% to 25%. Let's not use pussyfoot language here. The corporate tax is a tax on consumers who pay through the nose when corporations raise their prices to cover the costs of the "corporate" tax. Cutting the corporate tax is a positive move, but better to eliminate it altogether. It aims at punishing job-providers and benefits no one.

10 End the Cap Gains tax on inflation and simplify its structure. Good, but again, better to get rid of the whole thing.

11 Impose a one percent cut in discretionary spending...a down payment on spending restraint.

And above all, 12 NO trillion dollar spending spree.

Obama's "change"

President Obama launched his presidency by entreating us as Americans in the words of Scripture to "put aside childish things." Oh! Right on! Undoubtedly that means putting aside such "childish things" as playing the class hatred card for votes, no?

Obviously, that means we no longer will tolerate berating job-creators for providing us with well, jobs. And that, of course, means no more tax policy that seeks to punish job-providers. So we can expect the new president will consider the RSC's real stimulus package, no?

The new president says, "In reaffirming the greatness of our nation, we understand that greatness is never given, it must be earned." Our path, he reminds us, "has not been a path for the fainthearted." Rather, he adds, "it has been [the path of] risk-takers, the doers, the makers of things."

Obviously, that means President Obama will consider the RSC proposals to modify the capital gains and corporate taxes, since these punitive levies punish not only the "makers of things," but millions who would benefit from the jobs the "risk-takers" provide and the products they place on the market. He will endorse the RSC ideas, no? (Why am I hearing a thundering silence here? Aren't we speaking the new president's language of "hope?")

Our new president wants us to honor the "men and women, often obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom" and often "packed up their worldly possessions and traveled across oceans in search of a new life." Now, here we have the ultimate in profundity from the new White House occupant. Obviously, he understands that those people fled the socialist incentive-robbing nations of "Old Europe" to attain the "prosperity and freedom" that enabled them to better themselves and their families without being made to think they are "selfish." As one who treasures ambition and hope, Mr. Obama will embrace the Middle America-friendly policies of the RSC, right?

In the event he means what he says, let us have a free and open debate on the RSC stimulus package. Surely, Queen Nancy (Pelosi) doesn't fear subjecting the issues to public scrutiny, right? Hello. Anybody home?

P.S. Clinton too

Well, blow me down! The liberal conversion to individualism and respect for political differences appears to be spreading.

Former President Bill Clinton now says that with Obama in the White House, "We will not go forward any more, I don't think, with the politics of division and destruction that for too long have dragged us down." Obviously, we can take that as a Clinton apology for his administration's politically-targeted IRS audits and for having unleashed a secret police on his political critics (to say nothing of lying under oath). What a marvelous Rodney King "Can't we all just get along" culture that suddenly has permeated Washington! Amazing! Ah! Love and understanding are bursting out all over.

Why even Mr. Clinton's wife and former Black Panthers attorney is to be crowned Secretary of State. The media tell us Hillary is a "moderate" nominee. I guess that means she didn't bomb the Capital.

© Wes Vernon

 

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