An Obama 'Rescue' Plan That Doesn't
An editorial posted on Investor's Business Daily - Monday, October 13, 2008
Election '08: On the eve of a final debate, Barack Obama unveiled an emergency "rescue" of the middle class from capitalism. The details show it to be all hype and no help.
Democratic presidential nominee Barack Obama's announcement in Toledo, Ohio, of a "middle-class rescue plan" is reminiscent of Groucho Marx's means of rescuing the drowning damsel who double-crossed him in the film "Horse Feathers."
"Throw me a lifesaver!" she shouted.
Groucho's character, buffoonish college president Quincy Adams Wagstaff, promptly produced from his pocket a roll of peppermint Lifesavers and tossed her one.
Obama's idea of letting people deplete 15% of their 401(k) investment holdings is indicative of the candidate we have come to know, who wants ordinary people to look to the government for money — and not, as has been the trend in recent years, to their investment portfolios. Encourage novice investors to get out and stay out of the stock market right after a historic decline? Only a socialist mind-set would exploit the financial crisis in such a way.
Obama's campaign likes to call the middle class "the economic engine of America." But that engine's fuel is private-sector investment, most of which, naturally, comes from those with higher incomes. This community organizer from Chicago's South Side, whose career was launched with the help of unrepentant Weather Underground terrorists Bill Ayers and Bernadine Dohrn, will not accept that.
The Illinois senator might be one of the shrewdest presidential candidates ever, but he does slip. For instance, he promises to end capital gains taxes on investments for small businesses and start-ups.
But on a campaign stop in Toledo, he couldn't assure self-employed 34-year-old plumber Joe Wurzelbacher to his face that he would get a tax cut. Poised to buy a $250,000-a-year firm, the working-class plumber of 15 years confronted Obama.
"Your new tax plan is going to tax me more, isn't it?" he asked.
Obama responded with the promise of a 50% tax credit for health care, but the senator conceded that Wurzelbacher's income taxes would indeed rise.
"It's not that I want to punish your success," Obama told him. "I just want to make sure that everybody who is behind you — that they've got a chance at success too."
Wurzelbacher, who would shoulder all the responsibility and risk of such an investment, did not look impressed. Obama then let the cat out of the bag, saying:
"I think when you spread the wealth around, it's good for everybody."
He certainly does, and his unguarded statement to a voter in a key swing state is socialist economics distilled to its simplest terms.
Eliminating small business capital gains taxes — whatever the details would be (and you can bet it would be a fraction of total private investment) — will not rescue the middle class from the job losses of a high-tax Obama administration planning to spend an extra $293 billion annually. It does, however, cunningly deaden charges that Obama is camouflaging a socialist agenda.
The other components of his so-called rescue, lovingly described by the New York Times as "proposals to spur new jobs, to give Americans penalty-free access to retirement savings to help them through the downturn, to urge a 90-day moratorium on home foreclosures and to lend money to strapped local and state governments" are worded to sound equally innocuous. But a close look tells another story.
His $3,000 income-tax credit for each new full-time employee hired by businesses is an obvious anti-outsourcing incentive likely to increase business costs, of which we can expect plenty more — of a directly punitive nature — in an Obama administration. He would replace the judgment of banks with that of the federal government regarding when or if to foreclose. And he wants the Federal Reserve and the Treasury to bail out spendthrift state and local governments.
John McCain is reportedly considering a broad, simple capital gains tax cut. An across-the-board cut would be a real middle-class rescue, focused on generating new private sector employment — the proven way of "spreading the wealth around," a concept which Obama, with his deftly disguised socialism, cannot grasp.