The aftereffects of the Philadelphia Fiasco continues much as I expected. One of the highlights from the Philadelphia Fiasco for Republicans was Sen. Obmama's answer on capital gains taxes, which I spoke to here:
MR. GIBSON: All right. You have however said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, “I certainly would not go above what existed under Bill Clinton, which was 28 percent.” It’s now 15 percent. That’s almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent. SENATOR OBAMA: Right.Today, Larry Kudlow takes that answer apart as only he can do. Here's the part that zeroes in on Obama's chest:MR. GIBSON: And George Bush has taken it down to 15 percent.
SENATOR OBAMA: Right.
MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
SENATOR OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year, $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair. And what I want is not oppressive taxation. I want businesses to thrive and I want people to be rewarded for their success. But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don’t have it and that we’re able to invest in our infrastructure and invest in our schools. And you can’t do that for free, and you can’t take out a credit card from the Bank of China in the name of our children and our grandchildren and then say that you’re cutting taxes, which is essentially what John McCain has been talking about. And that is irresponsible.
But here's the deal: During the debate, Obama bungled his answers on tax policy, big time. Period. End of sentence. End of story. To my liberal friends in the media, all I can say is: Get over it. Your guy has a very poor grasp of basic economic principles.Larry Kudlow saying that Sen. Obama "bungled his answers on tax policy" carries some weight with financial types. The more that Sen. Obama talks about tax fairness instead of solid tax policy, the more incompetent and inexperienced Sen. Obama looks.First off, you don't raise taxes during a recession. That's a no-brainer. Second, doubling the capital-gains tax rate will affect Americans up and down the income ladder, not just rich hedge-fund managers. In addition, capital-gains tax cuts are self-financing, and they stimulate jobs and the economy. You want to raise budget revenues and spark economic growth? Cut the cap-gains tax rate. That's what history shows.
The Wall Street Journal's Steve Moore points out that in 2005, almost half of all tax returns reporting capital gains came from households with incomes under $50,000, while more than three-quarters came from households earning less than $100,000.
Obama also proposed uncapping the payroll tax, another blunder that will hit people up and down the income ladder. While Obama pledges tax hikes only for folks earning more that $200,000 a year, his tax hike on payrolls would actually slam middle-income earners. The cap on wages subject to the payroll tax is presently $102,000. By eliminating that cap Obama will be soaking veteran firemen, cops, teachers, and health-service workers, along with a variety of other occupations.
Kudlow pointing out the people who'd get hurt by Obama's tax policy certainly won't help Sen. Obama with the middle class voters he'll need to win in November. Kudlow saying that Sen. Obama "has a very poor grasp of basic economic principles" will surely be used to attack Sen. Obama as incompetent and not qualified to the next president. This paragraph isn't helpful to Sen. Obama's campaign:
In effect, Obama's economics are bad and his social circle is very limited. This is one of the many reasons why a quarter of the Hillary Democrats are telling pollsters they'll likely move to John McCain in the general election.Finally, this might be the most damaging portion:
Obama's real agenda is far-liberal left. It's an ideology that places income redistribution above economic growth. That's his real message. And it's the same one that sunk Carter, Mondale, Dukakis, Gore, and Kerry. Bill Clinton? He was a growth Democrat. So he won twice. But Obama is aligning himself with the Democratic losers. And that will make him a loser as well.When Bill Clinton ran in 1992, nobody questioned his expertise on economics. Clearly, people are questioning Sen. Obama's economic expertise. That can't bode well for him this fall.
