Unreported by the media was the misery of the men and women whose individual lives make up the tragic statistic that lowered the unemployment rate.

Here is how the Labor Department computes the unemployment percentage:

Not everyone who is without a job should be classified as “unemployed.”  Some adults, such as stay-at-home parents and college students don’t want jobs.  Thus, to be counted as “unemployed” in the monthly government survey one must be actively looking for a job.

To be counted as part of the labor force one must either have a job or qualify as “unemployed” by actively seeking a job.

There are two possible routes to a lower unemployment rate:

Route 1.  Expand Job Opportunities: Business owners and investors take risks and generate start-ups, innovations and expansions, creating enough new jobs to keep up with the average 125,000 per month growth in the working age population and to replace some of the millions of jobs lost in the recession.   Government’s role is to enhance and protect economic liberty by removing bureaucratic, regulatory barriers and reducing taxes.

OR

Route 2.  Downsize the labor force by demoralizing  job seekers: People who have lost their jobs become so discouraged they quit looking for employment and are thus no longer classified as unemployed and are no longer included in the labor force.   Government’s role is always the same: In the name of benefits to the environment or to the poor or to the middle class or to implement a politicians vision of a “new energy economy” it erects regulatory barriers and tax disincentives that block or discourage investors and small business employers.

Guess which is the Obamanomics route.

These two charts track the unemployment rate and the size of the labor force.

The upper chart shows the first 26 months of the current recovery.  The unemployment rate has declined from 10.1% to 8.5%.  But the size of the labor force is virtually unchanged, even though the working age population has grown, because millions of unemployed people have become discouraged and quit looking for jobs.

The lower chart tracks the first 25 months of the Reagan recovery of the 1980s. President Reagan inherited a sick economy and a deep recession that by most measures was worse than what President Obama inherited.  Yet, as the chart shows, there was a steep drop in the unemployment rate even as the labor force grew by 4.3 million!  People did not give up looking for jobs during the Reagan boom because there was robust growth in the economy and employers were creating hundreds of thousands of jobs every month.

Since the beginning of 2008 the working age population has grown by 7.2 million people.  Yet the labor force which is normally about two-thirds of the working age population has shrunk over the same period by 49,000.

Thus, 4.8 million men and women who should be included in the unemployment rate calculation as both in the labor force and unemployed are not counted at all because they have become t0o discouraged to look for jobs.

If those men and women were included in the unemployment rate calculation the December rate would have been 11.3%, higher than any time since 1940.

The upper, Obama chart represents despair as job growth fails to keep up with population growth and millions of working-age people drop out of the labor force.  The lower, Reagan chart is what a successful economic recovery looks like, with employers who are free to grow and expand, adding jobs at a much faster rate than the growth of the working age population.

The jobs data from the eighties confirms the success of the Reagan approach:

• Tax cuts
• Deregulation
• Allowing insolvent businesses to be liquidated in bankruptcy

The current jobs data reflects the failure of the Obama approach:

• Some tax increases have already begun and major increases that will hit small business are scheduled to begin in 12 months;
• New ObamaCare mandates and regulations that are still being written will distress employers over the next three years;
• New financial regulations are restrict bank lending to small business;
• Obama’s energy policies and environmental regulations are designed to restrict domestic production of oil, coal and natural gas, increasing the price of energy;
• Bailouts of insolvent banks and companies have benefited politically connected executives and unions at the expense of healthy businesses.

There is a potential downside that could blow up Obama’s propaganda campaign.  If the “good news” about the unemployment rate encourages several million people to come back into the labor force and seek  jobs, the number officially classified as “unemployed” will increase and the unemployment rate will tick back up as the November election approaches.

First the debt. [continued below the chart]

In 2011 Government debt grew just over $1 trillion.  The President has just notified Congress that once again, he has hit the debt ceiling and must have authorization to borrow another $1.2 Trillion.  By the end of March President Obama will have increased the debt as much in three years and two months as President Bush did in eight years.

The government’s Soaring debt is driven by an unprecedented surge in spending.  Obama and the Democratic Congress increased 2009 spending 18% over 2008, the biggest one year jump since the military build up for the Korean War in 1952.  The biggest component of the increase was the so-called “stimulus” that Obama promised would create millions of jobs and hold unemployment below 8%.  It was supposed to be temporary.  But as of 2011 this new, higher level of spending is now the “baseline” or the spending floor, upon which perpetual future spending increases will be built.  [continued below chart]As long as the existing budgeting process continues spending will grow every year from now on, mostly on auto-pilot, until we reach a Greece-style crisis and nobody in the world is willing to loan the government any more money.

Gas prices increased again in 2011, the intended effect of the Obama Administration’s various restrictions on the production of crude oil.

The long term goal is to raise the price of petroleum fuels so high that Obama’s “green” energy sources become cost competitive.  Just a month ago the President used his regulatory authority to block a the Keystone XL pipeline that would have brought Canadian crude oil to American refineries in Texas. creating tens of thousands of jobs along the way.  This month gasoline is 102% higher than it was when Obama was sworn in, January, 2009.

Recently the President told CBS News that he has been more successful than any previous President with the possible exceptions of Abraham Lincoln, Franklin Roosevelt and Lyndon Johnson.  His claim calls for  a comparison of his third year with the third year of to a truly successful President, Ronald Reagan, who like Obama inherited a deep – by most measures even worse – recession.

First, jobs.  Obama has claimed 2011 as a success in creating private sector jobs. [continued below chart]

But, as the chart shows the Reagan era produced much more robust job growth.

Economic growth took off in Reagan’s third year as his policies liberated the private sector from high taxes, inflation, record high interest rates and oppressive regulations.  The Obama strategies of attempting to diminish liberty and rule over the private sector with taxes, subsidies and bailouts for politically connected unions and companies, and a tsunami of new regulations have dragged down the economy, depressing growth.  [Continued below chart]

The GDP report for the fourth quarter of 2011 will be published on January 27 and we’ll complete the chart then.  For now, government and Wall Street economists are predicting about 3%, well below the fourth quarter of Reagan’s third year.

If you followed this week’s drama in Washington you know the House passed a bill that would extend the temporary payroll tax reduction for another year.  The Senate responded with a bill that would extend it for only two months.  Republicans finally rolled over and passed the Senate bill ensuring that we’ll endure another two months of controversy over the same issue.

Two months is better for Obama and the Democrats because the issue serves as a pretext for them to renew demands for  a permanent tax hike on “the rich,” mostly small business employers, to “pay for” the temporary payroll tax reduction.  Obama wants to divert blame for America’s continuing economic crisis from his massive deficits and bureaucratic interference in the private economy to “the rich.”

A year ago this month was the “Lame Duck Session” of Congress.  Outraged voters had just swept out the House Democrats’ 98 seat majority, replacing it with a new 43 seat Republican majority.   But last December Democrats were still in control until the new Congress began in January.  One of their final acts was a reduction in the Social Security payroll tax paid by employees from 6.2% to 4.2% temporarily, for one year.

A month ago Obama began howling that the expiration of the payroll tax discount – as required by the legislation he and the Democrats enacted when they still held commanding majorities – would be “a tax increase on hard working middle class Americans,” to be blamed on heartless Republicans. 

On Thursday Obama ramped up the theatrics and gave us a preview of his New Year strategy for diverting attention away from his manifest failures.  He stepped to the microphones to prove he identifies with the struggles of the helpless against those cruel Republican Scrooges (transcript).  His tone dripping with pious solicitude, he began:

We’ve been doing everything we can to make sure that 160 million working Americans aren’t hit with a Holiday tax increase on January First…If you’re a family making about $50,000 a year this is a tax cut that  amounts to about a thousand dollars a year.  That’s about forty bucks out of every paycheck.

So far the President’s math is correct, since most employees are paid either bi-weekly or semi-monthly.

It may be that there are some folks in the House who refuse to vote for this compromise because they don’t think forty bucks is a lot of money.  But anyone who knows what it’s like to stretch a budget knows that at the end of the week or the end of the month forty dollars can make all the difference in the world…

So on Tuesday we asked folks to tell us what it would be like to lose forty bucks every week.

Wait a minute! “Every week?”  He just changed it from $40 out of every paycheck to $40 every week! But the temporary tax cut is worth only $19 every week to his hypothetical $50,000 per year family.

You’d have to earn $104,000 a year for Obama’s Social Security tax markdown to be worth $40 every week.

Obama then quoted some of the emails from his “folks” about how they would deal with the loss of $40 per week.

Joseph from New Jersey would have to sacrifice the occasional pizza night with his daughters.  My 16 year old twins will be out of the house soon – I’ll miss this.

Richard from Rhode Island wrote to tell us that having an extra $40 in his check buys enough heating oil to keep his family warm for three nights. In his words, and I’m quoting, If someone doesn’t think that 12 gallons of heating oil is important invite them to spend three nights in an unheated home.

Pete from Wisconsin told us about driving more than 200 miles each week to keep his father in law company in a nursing home.  $40  out of his paycheck would mean that he could only make three trips instead of four.

Dinner out for  child who’s home for Christmas, a pair of shoes – these are the things that are at stake for millions of Americans.  They matter a lot.

Obviously these emails are absurd.  If you earn $104,000 and have to give up $40 per week, are you really going to have to deny your kids a pizza or a pair of shoes?  Will you shiver for three nights without heating oil?

Of course, there are some folks to whom $40 every week would be make a real difference:

• A hotel maid who works full time for $8.50 per hour
• A construction worker who has been cut back to half time work at $17 per hour
• A self employed business owner whose customers were hammered by the recession and now barely survives by depleting his savings.  He generated only $17,700 profit this year after paying his employees and the employer’s half of the payroll tax which was not reduced by the Obama payroll tax markdown.

To each of these people Obama’s temporary payroll tax cut is worth not $40 but $6.80 per week.

But much of the media have already begun to help Obama plant a false perception in the minds of uninformed voters that Republicans would deny everyone $40 per week.  (For example, see the headline here.)

Obama knows that informed voters will figure out the deception.  But he doesn’t care about informed voters.  They won’t vote for him anyway.

If the 2011 rate of job growth continues it will take until May, 2013 for the number of jobs to equal the number in January, 2009, the beginning of the Obama Administration.

President Obama and the Democrats insist that the government’s continuous, yawning deficits can not be closed by spending cuts alone, that “revenue!” must be part of a so-called “balanced approach.”

But just published Treasury Department data show the Bush tax cuts did not cause the government’s fiscal problems, and that the 2011 deficit is slightly greater than the 2010 deficit even though revenues from income tax rose dramatically. (continued below chart)

The Treasury Department just published it’s final report for the government’s fiscal year 2011, that ended September 30.  The chart above focuses on one part of that report, revenues from the individual income tax.

Because the President and the Democrats so incessantly blame deficits on the Bush tax cuts and demand increases in income tax rates, many Americans believe income tax revenue went down after the Bush tax cuts.  But, as the chart above shows, tax revenue was declining before the Bush tax cuts of 2003 established the current tax bracket rates, and then spiked up 47% in four years.  In 2007 more income tax revenue was collected by the IRS than any previous year ever.

Revenue went down in from 2008 to 2010 because the rich, who pay most of the income tax, were hammered by the recession.  According to latest IRS statistics available, almost half of  “Millionaires and billionaires,” the group Obama targets for a tax hike in every speech, disappeared from 2007 to 2009.

But in 2011 income tax revenue bounced back, rising by $193 billion or 21% over 2010.

Yet the 2011 deficit, at $1.3 Trillion was slightly higher than in 2010.  Why?  Revenue from other taxes went down by about 48 billion, mostly because of a temporary, one-year discount in the payroll tax.  But the deficit would still have been reduced substantially were it not for irresponsible spending increases.  While the media whine about Republican budget cuts, it turns out that the President and the Democrats won the budget fights of 2011.  Total spending increased by $145 Billion over 2010.

The Bottom Line:

The media and Republican candidates should demand that the President answer the obvious question: If his “balanced approach” is the answer, how can Government can gobble up a 21% increase in income tax revenue and still run an even larger deficit?

Nobody wants to punish success in America…this is the land of opportunity. That’s great. All I’m saying is that those who have done well, including me, should pay our fair share in taxes to contribute to the nation that made our success possible.

In other words, don’t accuse me of wanting to punish success even though I seek to increase the tax on success.  Obama’s effort to encourage us to resent the most successful and blame them for America’s lost prosperity may turn out to be good politics.  But it is also a negative, destructive prescription that will make our problems worse.

Everyone agrees that small business is the primary source of new jobs in America.  Most Americans would oppose tax increases on small business at the very moment when job creation is critical.

Yet Obama’s latest campaign theme, calling for “the rich” – meaning those who earn more than $200,000 – to pay their “fair share” – meaning “MORE!” – would directly target the larger of small businesses, those with the most employees and the potential to create the most new jobs.

Obama’s communication is designed to influence the great majority of voters who earn income in the form of salaries and wages and are not familiar with the way the tax code treats small businesses.

Most small businesses are organized as sole proprietorships, partnerships, Sub-chapter S corporations or LLCs.  All of these forms of ownership are required to report business sales, expenses and profits on the personal tax returns of the owners.  Thus, if a small business generates more than $200,000 in profits in a good year, the tax code enables Obama to include its owner in the category he calls “America’s most fortunate who aren’t paying their fair share,” even if the owner decides to reinvest half or more of his profits in expanding his business and hiring new employees.

The IRS publishes statistics that provide context for Obama’s “tax fairness” ideas.  As the first chart above shows, two-thirds of taxpayers earning over $200,000 – the group Obama has promised since 2008 to hit with a tax hike – are small business owners.

The second chart shows that 70% of all small business income is earned by people in the over-200,000 tax brackets.

Small businesses have always grown more by reinvesting profits than by borrowing from banks.  Thus it’s hard to conceive of a tax increase that could more directly diminish the ability of successful small businesses to expand and create jobs than Obama’s plan to target “the most fortunate” defined as anyone whose tax return shows more than $200,000 of income – even if it’s from small business profits, even if the owner plans to reinvest a large portion of those profits.

The notion that somehow “fairness” requires this group to be hit with tax hikes is absurd.  This tiny minority not only provide most of the new jobs in America each year they already pay half the income tax.

In 2009, the most recent statistics reported by the IRS, only 2.8% of taxpayers earned over $200,000 but they paid 50.2% of all income tax revenue.

One last point: Some of the over-$200,000 taxpayers make their income by exploiting political connections.  Their political advantage should be abolished by making government much smaller and less powerful.  If appropriate they should be prosecuted.  A tax increase that also punishes the honest, the industrious, the innovative, the diligent and those without political advantages is just plain stupid.

Most of the speech was about  his demand that Congress raise taxes on “millionaires and billionaires” which apparently includes anyone earning over $200,000.

In his most persuasive voice he pleaded:

This is not class warfare its math -  the money’s gong to have to come from some place.

Two minutes later he thundered:

It’s not about numbers on a ledger, not about figures on a spreadsheet…it’s about fairness.

He then finished up with his standard class warfare rhetoric, attacking “the wealthiest Americans.”

• Employers added ZERO new jobs in August.

• The statistics for June and July were revised, showing 58,000 fewer jobs than previously reported.
• The unemployment rate was unchanged at 9.1%
• If the 2011 rate of job growth continues it will take until 2016 to equal the 2007 level.  Even then, we’ll be 14 million jobs short of full employment because of population growth.

Ronald Reagan ignited an economic boom with history’s proven prosperity formula:

Less government = more jobs.

But today we’re in the third year of needless unemployment and misery because voters and the leaders they elected have ignored history and have fallen for the seductive, “progressive” promise of prosperity through expanded central government power and intervention.

Thirty two months ago President Obama inherited a deep recession, caused largely by malfeasance within two government sponsored mortgage lenders, Fannie Mae and Freddie Mac.  Obama’s advisers told him not to let a crisis go to waste, but to use it as a pretext to increase government’s size and intervention in the private economy.  He took the advice and as a result the private sector is reeling from a tsunami of new laws and regulations.  Government spending and debt has exploded.  The result is the worst job market in eight decades.

But it doesn’t have to be this way!

Like President Obama, President Reagan inherited a deep recession as he took office in 1981. By some measures it was worse than the current downturn.  The initial unemployment rate was higher and interest rates soared into double digits driving down home prices.  Reagan’s economic program, based on his commitment to liberty, was the opposite of Obama’s:

• Reduce regulation and government intervention in the economy;
• Enact sweeping tax cuts that were phased in over three years, beginning 1982.  Each of the 16 income tax bracket rates were reduced by at least 25%.  The top bracket rate was cut from 70% to 50%.  Later it was further reduced to 28%.  Tax cuts left capital in the hands of those who had earned it and were best equipped to invest in job creating enterprises;
• Release the creative and productive energies of The People from the restraints of government regulation.

The results, shown in the chart, speak for themselves. Reagan’s policies transformed what had been a decade of stagflation into an economic boom and when he ran for reelection the voters rewarded him with the largest Electoral College majority in American history.

Progressives are trying to portray President Obama as a deficit hawk and are blaming Republicans, the Tea Party, President Bush, even President Reagan whose Administration ended 24 years ago for the recent spike in government debt.

Some progressives even say there is no debt problem, that tea party Congressmen manufactured a crisis that doesn’t exist by refusing to go along with a debt ceiling increase unless there were spending cuts.

We offer these charts to set the record straight.  There is a crisis and Barack Obama, more than anyone else, is responsible for  it

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Recently, in coordination with President Obama’s renewed calls for a tax hike, the political-media establishment revived one it’s more absurd scams, “millionaires” complaining that the tax system doesn’t take enough of their income.  It’s absurd because a millionaire, indeed any taxpayer, is perfectly free to pay more than the law requires.  Nobody will stop them!

But millionaires of the “progressive” persuasion aren’t satisfied with voluntary payments.  Progressive doctrine is always to use force applied by government to impose their “good ideas” on everyone.

Millionaire Leo Hindery is Managing Partner of Intermedia Partners, a private equity firm.  He’s also a long-time political operative and Democratic party insider. He appeared on Fox News representing something called Patriotic Millionaires, a group that is seeking maximum media attention for their mission, to promote higher tax rates on incomes over $1 million per year.

We’ll comment on Mr. Hindery’s remarks but first, some observations on the website of Patriotic Millionaires.

It lists the names of 138 individuals who “now or in the past earned an income of $1,000,000 per year or more” and who have “signed the letter” to Congress asking for tax hikes.  There is no way to tell how many are “in-the-past” and thus would not have to pay the increased tax.  There is a form allowing anyone to join up and “sign the letter” without income verification.

A surprising feature of this website that purports to represent millionaires who are asking permission to hurl more millions at Obama’s government, is a request for donations!

They don’t disclose how donated money would be used, but if you click on the donate button you are transported to another website called “The Agenda Project” where a page that’s set up look like part of Patriotic Millionaires will accept your credit card number.

The Agenda Project appears to belong to author and political activist Erica Payne.  In her list of accomplishments under “about the founder” Ms. Payne boasts of having produced “a major conference” that included George Soros and Obama Czar Elizabeth Warren.

Now, Some excerpts from the Fox News interview of Mr. Hindery:

Question: Why would you want to give the government more of your hard earned money?

Mr. Hindery:

It goes back to the Premise of tax system.  We built it on the premise of progressive taxation that  those who earn more pay more…Beginning in 1986 we specifically took action to enrich the wealthy on the false premise that a wealthy person would pass that extra money down into the system.  But now am one of those people. I have everything that I need.  I don’t spend for anything.  I have no appliances I need to buy, no automobiles, no housing.  But all the women and men behind us [employees in the Fox newsroom] have things that they need to do in this very stressed economy.  So how is it that 50% of the nation’s income is earned by 3% of the taxpayers.”

According to IRS statistics for 2009. the latest year available, about 13% of taxpayers earn 50% of the income.  But more importantly, Mr. Hindery is arguing against a straw man.  The argument against tax hikes isn’t that every year high income people spend all their millions on appliances and cars.  Half of high income taxpayers are small business owners and virtually all are investors of some sort.  Their money goes “into the system” not as consumer goods purchases, but as the investment capital that starts and expands businesses, creating jobs.

Mr. Hindery doesn’t explain how a tax increase on investors and small business owners will help middle class employees who “have things they need to do.”

Question: 80% of the people disapprove of the job Congress is doing. So why would give more of your money to folks that most Americans think are mishandling it?

Mr. Hindery’s answer:

That’s the same excuse we use for offshoring of jobs, that the American population isn’t sufficiently educated, that the government isn’t sufficiently well run.  The reality is we have 29.2 million men and women who in real terms are unemployed…we have a moral as well as an economic obligation to ressusicate  this economy.

This of course is nonsense and does not answer the question.  Overseas labor is cheaper, not better educated.  Yes unemployment is tragically high.  But Mr. Hindery didn’t explain how extracting more taxes from business owners and investors would cause those business owners and investors to create more jobs.

Question: Why not start another business and create jobs that way instead of giving it to the government?

Mr. Hindery’s answer:

There are 5 million out-of-school unemployed…who can’t find their first job.  So we have a moral and economic obligation to resuscitate this economy…the only thing that works in this economy is a vibrant middle class, which we don’t have today.

Again yes, everyone agrees there are way too many unemployed people.  So again, how will higher taxes cause them to become employed?  Still no answer.

Queston: So you think higher taxes on millionaires supports that?

Mr. Hindery’s answer:

Absolutely.  What we did in Congress is we decided we would cut…But we raised no revenues.  So, let’s say we have the perfect job creation initiative in mind.  We have no money. So you can’t foreclose revenues and cut only.

So what is this “perfect job creation initiative?”  Didn’t the President and the Democrats already spend Trillions to, in Obama’s own words, “jumpstart job creation”?   Apparently, Mr. Hindery has nothing specific in mind but trusts that by taxing away more of their resources Congress could cause high income business owners and investors to create 29 million jobs.

He should have been but wasn’t asked why, if he believes he’s under-taxed, he doesn’t just shut up and write the IRS a check.

When I said, ‘Change we can believe in,’ I didn’t say, ‘Change we can believe in tomorrow.’  Not, ‘Change we can believe in next week.’ We knew this was going to take time, because we’ve got this big, messy, tough democracy.

But he did attract votes by planting the impression in the mind of gullible voters that he had a spiritual power to bring about immediate “change.”  Then, after he was elected, he sold Congress and the people with the promise that massive deficit spending would, in his words:

immediately jumpstart job creation and long term growth

Today, in the wake of the debt downgrade and the carnage wrought by his economic agenda, Obama is reduced to scolding the voters who were taken in by his campaign hype for… believing his campaign hype!

In the prologue to his second book Barack Obama wrote what would become the conceptual foundation of his Presidential campaign:

“…I am new enough on the national political scene that I serve as a blank screen on which people of vastly different political stripes project their own views.”

Candidate Obama went on to exploit this blank screen concept for maximum political gain.   He built a cult of personality around himself, with huge audience events where he delivered soaring but largely meaningless rhetoric about “hope and change.”  He encouraged supporters to project their own visions of desirable change onto his blank screen by telling the cheering throngs that the campaign was about them, not him, and by talking about “change from the bottom up.”

The key to Obama’s success was attracting  people whose vision of change was ambiguous or impossible to implement or Unconstitutional, and different from the vision of the people standing with them in the adoring crowds.   They voted for Obama because they believed he would bring their own visions to life through his Presidency.

But now, of course, most are disappointed.  It’s safe to assume that today not a single Obama voter has experienced the vision he or she projected on the blank screen.  Some expected a lot of free stuff, most expected a more streamlined, less acrimonious legislative process in Washington, leading quickly to full employment, higher wages, free healthcare and prosperity.  None of them foresaw Obama’s radical agenda awakening the tea party sleeping giant.  None anticipated a moment 33 months later when a defensive and failed President would be scolding them for believing his campaign promises that “change” would be immediate!

Since that phantasmagorical election night spectacle in Chicago’s Grant Park a an old fashioned, and ruthless, progressive, power-to-the-government agenda has played out across the blank screen.  Those who projected more secure financial future than they felt in the closing months of the Bush era are the most disappointed.  But it should be no surprise that a President with no experience in, or respect for private enterprise has not been able to fulfill his promise of millions of new jobs.

For the first three months of 2011 President Obama demanded that Congress raise the debt ceiling without any conditions, without any spending cuts whatsoever.

Then, when the polls turned against that idea he began to call for “shared sacrifice” in the form of more tax revenue tied to a debt ceiling increase. 

In an editorial in USA Today, President Obama repeated his demand:

...people in both parties have suggested that the best way to take on our deficit is with a more balanced approach. Yes, we should make serious spending cuts. But we should also ask the wealthiest individuals and biggest corporations to pay their fair share through fundamental tax reform.

As the first chart above shows, Individual Income Tax payers have already begun to participate in “balance.”  Under current law the income tax is steeply progressive.  Only three percent of taxpayers earn over $200,000. This is the group President Obama calls “the wealthiest,” whom he says we should “ask” for a “fair share.”

Under current tax rates the over-$200,000 group pays 52% of the income tax revenue the IRS collects.  So when revenue does go up, as it has this year, they are paying half the increase.  They’re already participating in “shared sacrifice.”

The second chart shows that corporate tax revenue has more than doubled since 2009.  It’s hard to deny that corporations have already begun to participate in “shared sacrifice.”

What about government spending?  Has government begun to be part of Obama’s shared sacrifice?

As the third chart shows, the relentless growth in government spending has not stopped.  Government and the millions of people who receive support from government have not yet begun sharing in the sacrifice.

The 2011 fiscal year began on October 1, 2010.  A review of spending over the first three quarters of fiscal 2011 shows several programs spending more but very few spending less than the previous year.

The last chart shows the result of government continuing to grow rather than become part of Obama’s “shared sacrifice.”  The 2011 deficit will be the biggest ever.  President Obama’s demand is for immediate hikes in income tax rates for which he is willing to offer an unenforceable promise that over the next ten years future Congresses will spend less than is now planned.

President Obama held yet another news conference on Thursday evening to, once again, castigate Republicans for not being willing to raise tax rates.  He claimed to have offered over a trillion in “cuts” in exchange for an increase in taxes.

What the President never makes clear is that any spending “cuts” are in reality reductions in the rate of spending growth already planned for future years.  He offers no spending cuts for the remainder of 2011 and sources close to the negotiations report that he has offered only $2 Billion in cuts, from almost $4 trillion in projected spending in 2012, only if Congress gives him major tax increases.

To put that offer in perspective imagine that a family earns $2,200 per month but the husband has been spending $4,000 per month by charging on credit cards.  His wife wants to avoid bankruptcy and has been pleading with him to cut spending.  So, he agrees to a cut: One day per month he will buy a $2 coffee instead of his usual, $4 latte, but only if the wife works a second job that brings in several hundred dollars.

In his third debt-ceiling press conference President Obama called for a “balanced approach” or “balanced package” seven times.  By this he meant immediate tax rate increases and spending cuts to be spread out over ten years.

Now, what [deficit reduction] would require would be some shared sacrifice and a balanced approach…that millionaires and billionaires can afford to do a little bit more…

Obama knows that there are too few “millionaires and billionaires” to make a dint in his yawning deficits.  Based on IRS statistics a whopping 50% increase in revenue from millionaires and billionaires would add up to about $125 billion per year, or about 7% of this year’s deficit.

Obama talks about millionaires and billionaires, but his real goal is to raise income tax bracket rates on all income over $200,000, a policy that would diminish the after-tax resources of small businesses with the potential to create the most jobs.

Government debt reached crisis level because of a breathtaking increase in spending that began with the bank bailouts of President Bush’s final year, and continued through Obama’s first three years.

Spending in 2011 will be a stunning 40% higher than it was in 2007.

President Obama and the Democrats made sure these higher levels of spending became the new “baseline” from which spending will increase every year unless Congress acts to correct it.  The trillions of dollars in “cuts” we’re hearing about would be reductions in the rate of increase already scheduled via baseline budgeting.  Unless Congress takes more dramatic action than is now contemplated by either party future spending will not be less than 2011 spending.

But even the cuts in the rate of increase might not happen.  The current Congress cannot force a future Congress to abide by its budget plan.  Ronald Reagan agreed to a package of excise tax increases because Congress promised spending cuts that never happened.  George HW Bush broke his no-new-taxes pledge in exchange for future spending cuts that weren’t enacted.

Obama’s offer is an unenforceable promise of  reductions in the rate of growth in spending – reductions that he would most likely attempt to undo – in exchange for real tax increases that would be enacted into law immediately.  Thus his public statements are about a “big package.”  If spending cuts won’t happen anyway, why not tell us that he’s on our side, trying to get drag those recalcitrant Republicans into “the biggest deal possible”?

Toward the end of his press conference, as he answered a reporter’s question, Obama cracked opened a window to what he really thinks:

…if you are a progressive, you should be concerned about debt and deficit just as much as if you’re a conservative.   And the reason is because if the only thing we’re talking about over the next year, two years, five years, is debt and deficits, then it’s very hard to start talking about how do we make investments in community colleges so that our kids are trained, how do we actually rebuild $2 trillion worth of crumbling infrastructure.

If you care about making investments in our kids and making investments in our infrastructure and making investments in basic research, then you should want our fiscal house in order, so that every time we propose a new initiative somebody doesn’t just throw up their hands and say, “Ah, more big spending, more government.” It would be very helpful for us to be able to say to the American people, our fiscal house is in order.

Barack Obama reminds us of the TV sitcom husband who pretends to care what his wife wants and tries to manipulate her perceptions and emotions in order to deceive her into cooperating with his priority of the moment.  To Obama, deficits and the soaring debt are other people’s concerns.  Those people annoy him by talking.  Their talk is a barrier to his priority, growing government and concentrating power in Washinton.  He will promise anything he thinks will stop others from talking about deficits so he can put his “investments” back on the national agenda.

We posted this graph two weeks ago but so far the media seem not to have caught on.  The current income tax rates generated more tax revenue than any previous year since the tax began in 1917 – after adjusting for inflation.  Tax revenue declined for two years due to the recession, but it has come back up in 2011.  Income tax revenue is on track to equal the all time record high of 2007 without the destructive rate increases Obama demands.

With the (2nd) debt ceiling deadline looming, and secret, high-level negotiations on-going, President Obama appears and reappears, playing the role of wise observer, dismayed by deficits and debt piled up by someone else, and urging those irresponsible miscreants to at long last do something about it.  Here’s a sample from his Weekend Address:

Republicans and Democrats don’t see eye to eye on a number of issues…We agree that after a decade of racking up deficits and debt, we finally need to get our fiscal house in order.

In his press conference Monday morning Obama said:

What I emphasized to congressional leaders yesterday is now is the time to deal with these issues. If not now, when?

One who had not paid attention for several years might get the impression that Barack Obama is the sober, sensible, frugal one who shares our disgust with the wild spending of others.  This is exactly the impression he wishes to plant in the minds of the uninformed.  His “decade of racking up deficits and debt” is a slightly more subtle version of it’s-Bush’s-fault.

Yes, there were deficits in seven of Bush’s eight years.   Perhaps they were justified as tax revenue declined in the wake of the the stock market crash and the 9-11 terrorist attacks.

But after falling for three years Tax revenue increased rapidly from 2004 through 2007 and with a modicum of discipline Congress could easily have produced a surpluses in 2006 and 2007.  Those deficits were a big part of the reason fiscally conservative voters sat out the 2006 election, allowing the Democrats to take over Congress in 2007.

But the spending increases and deficits during the Bush years, as irresponsible as they were, look like small change compared to the audacious spending torrent of the first three Obama years.

Obama took office in January, 2009 the fourth month of the 2009 fiscal year.  He claimed to have “inherited” the 2009 deficit but within his first thirty days in office he:

• Doubled the size of the bank bail out program begun by the Bush administration.
  
• Signed hundreds of billions of spending increases enacted by the new Democratic majority in Congress, and
  
• Jammed through his $800 billion stimulus with such urgency that the final version of the legislation had not even been printed the day Congress voted to pass it.

Four months ago President Obama submitted a proposed ten year budget so brimming with red ink the US Senate rejected it by a vote of 97 to zero.  Since then the President has failed to offer anything in writing – no spending cuts or tax increases.  Nothing.

As the chart below shows, Obama’s unprecedented deficits have driven up the total debt from levels that were manageable during the Bush years to alarming now.

Wall Street rating agencies have warned that they will have to downgrade their ratings for U.S. Treasury debt.  Predictably, progressives have called them fear mongers and agents of the rich, betraying “working” Americans, etc.  But their credibility would be in doubt if they didn’t react to what every investor on the planet knows, the US Government is accumulating debt at a rapid rate that cannot continue much longer.

Mr. Obama is right about one thing: now is the time to act.

After the Labor Department published a truly grim jobs report on Friday President Obama stepped to the microphones and made a brief statement including:

There are some things we can do, right now...Right now there are over a million construction workers out of work after the housing boom went bust, just as a lot of America needs rebuilding.  We connect the two by investing in rebuilding our roads and our bridges, our railways and our infrastructure.  And we could put back to work right now some of those construction workers who lost their jobs when the housing boom went bust.

This echoes the hype we heard for the big “stimulus” program back at the beginning of the Obama Administration. Remember all those thousands of “shovel ready projects” the President and his acolytes assured us would immediately employ millions?

Remember the White House economic report promising unemployment would not exceed 8% and that by the end of 2010 there would be 4.7 million more jobs than there were at the beginning of 2009?  Obama told us several times that the stimulus would, in his words,

immediately jumpstart job creation and long term growth.

Back in February, 2009, the day the President signed the stimulus into law, Liberty Works exploded the myth that there were infrastructure projects were “ready to go” or “shovel ready.”   We noted that the first step in a government infrastructure project is to appropriate the funds to pay for it.  Only After funding is secured the following steps begin

1. Complete the Environmental Impact Report (EIR): 6 to 24 months.
2. Respond to protests and lawsuits from so-called “environmental groups” that always attempt to derail every construction project before it gets started: months to years.
3. Complete planning and engineering and in some cases acquire land:  Months to years.
4. Conduct the convoluted government bid process to select a contractor to do the work: Up to a year.

Steps 1 – 4 cannot possibly be completed in less than 24 months and usually take a lot longer.  These steps don’t begin until Congress appropriates funds for the project because there is no money to pay for them before the appropriation.

Last fall Obama admitted in a New York Times interview that he had recently learned what millions of Americans already knew, “there is no such thing as a shovel ready project.”   At a meeting of Obama’s Council on Jobs and Competitiveness members erupted in laughter when he joked that “Shovel-ready was not as … uh .. shovel-ready as we expected.”

So why should we believe that, given another round of borrowing and spending, and even more debt there will be jobs for a million construction workers “right now?”

The Bottom Line

Obama’s guiding principle is still “don’t let a crisis go to waste.”  Use each crisis as a pretext to accomplish more of your agenda.  The current crisis is the debt ceiling deadline of August 2.  Recently he’s made several speeches about “getting our fiscal house in order.”  But his real mission continues to be relentless accumulation power in the federal government.