Obamanomics strikes fear in the hearts of, well, most everyone

Club for Growth guru and Wall Street Journal contributor Stephen Moore analyzes the Obama tax plans in the Journal's Political Diary (subscription only):

In various tax proposals Mr. Obama has set the definition of rich at levels of $100,000, $200,000 and $250,000 in annual income. He has vowed, for example, to erase the Bush tax cuts not only for those who make more than $250,000, but to end the cap on Social Security taxes, which amounts to a tax hike on anyone who makes more than $100,000 in income. More recently, Austan Goolsbee, an Obama economic adviser, told me the new cap might be set at $200,000.

All of this has caused some heartburn among certain Democrats in high cost-of-living states. New York Rep. Joseph Crowley says a couple with earnings of $100,000 could be "a police officer and nurse." "In New York City," he adds, "they'd be struggling."

This is not just a rhetorical exercise. It could tell us a lot about whether Democrats can come anywhere close to paying for all their spending promises and still meet their vow to balance the budget. One problem for Senator Obama and his class-warfare crowd is that repealing the Bush tax cuts for those with earnings of more than $250,000 would raise only about $40 billion a year, according to Cato Institute economist Alan Reynolds. That would leave President Obama with a $360 billion shortfall to meet his other proposals. Either those nurses and policemen are going to have to be defined as "rich" by Team Obama, or the Democrats' pledge of balancing the budget in five years is a fantasy. Add the fact that his various spending proposals will certainly prove more costly than projected. It sounds like not just the top 2% but most of the bottom 98% had better get ready for higher taxes under an Obama administration.

Comments

[Josh]

Actually, you appear to be wrong. There is a big difference between making $100,000 a year and $250,000 a year. Only those making $250,000 would get a higher tax. Indeed, 95% of all American workers would see a drop in their taxes. That does not sound like what you have quoted in this blog. McCain's plan would add an estimated $4.5 trillion deficit to the budget, which is a lot smaller than Obama's plan. If you are going to be scared about the economics of it all, be scared of McCain's plan.

See, http://online.wsj.com/article/SB121319990210164643.html?mod=googlenews_wsj

"Sen. Obama, meanwhile, skews his tax cuts toward the lower-and middle-end of the income scale. Under his plan, taxpayers on average would get a tax cut equal to 0.3% of after-tax income in 2009, or $160. Those at the lowest end of the income scale -- making between $19,740 and $38,980 -- would benefit the most, with their after-tax income going up by 5.5% through a series of tax cuts, credits and other changes. The wealthiest Americans -- those in the top 1% of the income group -- would see their after-tax income decrease by 8.79% or $115,974."