O-Tax Increase: That Didn't Take Long

Update 3: Gateway Pundit has a graph and invokes the "D" word. Hard to know what the numbers behind the numbers are. I know he doesn't believe taking the rate from 35 - 39 is a big deal. So I suspect that's a definite. What concerns me is that I think he is going to try and make a very particular result happen. Some pain early on with some relief by 2012. Managing an economy too finely can be just as bad as not managing it at all. All it takes is some unforeseen event to throw your plan totally off.

It also seems as though his idea is to pump up government investment spending while reducing private investment. Should we be surprised?

Update 2: More glorious screaming via Memorandum. I imagine one side with delight.

UPDATE: Remember - this is the guy who was talking deficits for years not long ago. My guess is he increases taxes but less than he is floating now, perhaps. That's what I meant about his playing with messaging. It's hard to know what the truth is and how ne is trying to shape the discussion before he officially announces something. More from WaPo.

... primarily by raising taxes on business and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

Well, the source is only the New York Times. Take it with a grain of salt. And the way Obama plays with messaging it's hard to figure out. But if he wants to halve the deficit within two years it'll take some doing. Change! Oh, and repeal the Bush tax cuts - that ought to get the economy all fired up!

WASHINGTON — After a string of costly bailout and stimulus measures, President Obama will set a goal this week of cutting the annual deficit at least in half by the end of his term, administration officials said. The reduction would come in large part through Iraq troop withdrawals and higher taxes on the wealthy.

The president will propose to tax the investment income of hedge fund and private equity partners at ordinary income tax rates, which are now as high as 35 percent and could return to 39.6 percent under Mr. Obama’s plans, instead of at the capital gains rate, which is 15 percent at most.

Senior Democrats in Congress joined with Republicans in 2007 to oppose that increase. But with Wall Street discredited and lucrative executive compensation a political target, the provision could prove more popular among lawmakers.

Mr. Obama will also call for letting the Bush tax cuts on income, dividends and capital gains lapse after 2010 for individuals who make more than $250,000 a year.

Comments

[mary]

It is difficult to know what definition of wealthy he is using this week. While $75,000. or $150,000 may make you wealthy in one part of the country, it may make you barely able to afford a studio apartment and transportation or a car for work in another. Instead of giving exact figures which are quite limiting, perhaps they should try to work out something more fair and equitable. Otherwise high earners in the part of the country where $150,000 is a fortune will be fine with it and those in the other part of the country where you are scraping by will be wholly resentful. It is super inequitable to "tax the rich" cause you are sort of punishing success. It seems this administration dislikes the old fashioned American dreams.

[MarkJ]

"After a string of costly bailout and stimulus measures, President Obama will set a goal this week of cutting the annual deficit at least in half by the end of his term, administration officials said. The reduction would come in large part through Iraq troop withdrawals and higher taxes on the wealthy."

Looks like Obama is making two huge bets. Namely that...

1. One or, more likely, multiple international crises up to, and including, major wars aren't going to occur on his watch.

and

2. His good-time fat-cat buddies have an infinite threshold of pain when it comes to their tax increases.

If Obama is betting on the above, then he's in really deep s***. Let's put it this way, there are a lot of people filling holes in the desert outside of Vegas who were every bit as smart as Obama and still got whacked after losing way smaller bets than the ones "His Majesty" is making.

[Mark Turner]

Bill Clinton also wanted to "tax the rich". Big political mistake for him. History repeats itself, whether you want it to or not.

With regard to funding the "stimulus", taxes were the most logical source of funds. One might also consider:

1. Other "non-tax" government fees, surcharges, etc.
2. Reallocation of money from existing government programs
3. Printing more dollars
4. Foreign exchange gains/arbitrage
5. Alchemy and magical chants

All of the above will have some degree of economic impact which may very well exacerbate the situation we are in now.

The only possible way I see Keynesian economic spending to be effective is if the spending is monitored very carefully and targeted to high economic impact, vital programs and projects...it helps if you do a cost-benefit analysis/payback analysis to identify these (I'm pretty sure that nobody actually did that, given the actual substance of the "stimulus" bill).

[Mark Turner]

...and unless the increase is only miniscule, raising taxes on business during a severe recession are an incredibly stupid idea, and they serve to "throw a wrench" into the country's wealth generating engine. Sadly, I'm becoming accustomed to incredibly stupid ideas coming out of this administration.

[bansharia]

grain of salt? are you kidding?
what taxes are in this bill are NOTHING compared to what is coming.
surely you know that or are you waiting for instapundit to say so?

[bansharia]

what exactly is obambi claiming to halve? not HIS spending just the evil BOOSH
deficit what he was left with....
http://news.yahoo.com/s/ap/20090221/ap_on_go_pr_wh/obama_budget

[bansharia]

I guess cant link to yahoo articles.
at anyrate the ONLY thing obambi is saying he will halve is what the evil BOOSH
left him he is not factoring his spending spree since he has disgraced the office of POTUS. It is another case of smoke n mirrors. Can this admin do anything at all sans blaiming Dubya? chase the red herring FISH AWN,
who will be enemy next week Volker? he has left reservation but I won't bother to post that link either. will wait for someone else that is approved do so it an be mentioned.....

[USpace]

.
Well at least the dream of Obama only getting 4 years is looking more and more like a reality. We will survive.
.
absurd thought -
God of the Universe says
demonize the rich

make them poor and the poor rich
then demonize the new rich
.

[13yankeebravo]

I think that we are going to look back on Jimmah Carter's term as good times.

[Tom]

I think $13.00 a week is a joke!!!! What does Obama think this amount is going to do to stimulate the economy!! I guess since most in congress and the house has never worked a day in there lives have no clue! I think they are so out of touch about real people and there problems they really do not care!!! Its time to clean house and get real people to represent the common people!!

[w. cowell]

Well it does not look like Obama is ging to be making much of a difference for the middle class people who make from $50,000 a year to $100,000 or less. In the long run we all are going to be paying for more taxes. Yeah it might be up to every state of how they will help with the tax break but we all know that the money each state gets will be for the politions. I think that everyone in who is a politions in every state including the White House should have a salary freeze until they can get this ecomony out of debit. I also think that Obama should hold all businesses big or small more accountable for their losses. For example: Ford,GM,Dodge, etc their top people should not have any salary increase,bonuses,trips,or get any other type of money for themselves until their company they are running is out of debit. Lets be realistic here if things we buy wheither it was food,gas,houses,cars,etc was not priced so high and taxed so much we wouldn't have half of the problems we do now. I guess it is a lot like keeping up with Jones and out doing the next person. That is called GREED!!!!!!!!!!!!!!

[mike wagenblast]

THE SKY IS FALLING!
THE SKY IS FALLING!

Fear tactics.
Political garbage.

[Randy]

It sounds like maybe Joe the plumber was right.

[Randy]

Its sounds a lot like Joe the plumber wwas maybe right.