Those seeking to understand President Obama’s new budget and what it says about the crushing disappointment Obama has been to a central mode of liberal self-congratulation need look no further than John Steele Gordon’s post from last week about the proposed “Zuckerberg tax.” John wrote about how Facebook creator Mark Zuckerberg was about to make a lot of money from his successful business, and liberals began trying to come up with a new rule that would allow the government to confiscate some of it.
John noted that “the perverse economic consequences of this would be almost without end” and wondered whether anything could “be more revelatory of the utter intellectual bankruptcy of latter-day liberalism” than the economically illiterate squawking parrot it has become. The answer is yes. While the Zuckerberg tax could be written off as one more ridiculous scheme, the president’s budget carries far more significance. And in this way, the damage to modern liberalism continues. Here’s James Pethokoukis at AEI:
Here’s pretty much all you need to know about Obamanomics: In 2011, the Obama White House suggested raising the top dividend tax rate to 20 percent from 15 percent. Keeping the dividend rate at a relatively low level, the White House said, “reduces the tax bias against equity investment and promotes a more efficient allocation of capital.” Makes sense, right? Basic economics.
Yet in his brand-new, 2013 budget, Obama calls for taxing dividends as ordinary income, essentially raising the top rate all the way to 39.6 percent. And then when you tack on the 3.8 percentage point Obamacare surtax — and an additional 1.2 percentage point itemized deduction phase-out for high-end taxpayers — the rate rises to 44.6 percent.
So apparently Obama is now in favor of a greater bias against equity investment (and in favor of debt) and promoting less efficient allocation of capital.
Liberals of late have been working round the clock to convince the country that the difference between liberalism and conservatism is that liberals follow the empirical evidence and conservatives mindlessly follow ideology. No one has done more to refute this than Obama himself. It began before he was even elected. In an April 2008 debate with Hillary Clinton, Obama made remarks that instantly became famous. Moderator Charlie Gibson asked Obama if history shows cutting capital gains taxes increases revenues and raising capital gains taxes decreases revenues–and Gibson read Obama the history of raising and cutting capital gains taxes to demonstrate this was so–would he still want to raise capital gains taxes?
“Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness,” Obama answered. That is, not only does the evidence against his plan not deter him from instituting it, but the facts were never even a part of the calculation. He was not concerned with economics or history; ideology was his only consideration.
As Pethokoukis shows, nothing has changed on that front. Obama himself refuted the economics behind his budget. He has identified the facts, stated them, and then ostentatiously ignored them in favor of ideology. No wonder the Democrats were afraid to bring the president’s budget up for a vote, and it was the GOP immediately promising to bring it to the floor. When the irrationality of your proposals embarrasses Harry Reid, you’re not doing your party any favors.