ObamaNomics: Buying Votes With Government Handouts

Barack Obama told Joe the Plumber he planned to hit high income earners and small business with tax increases in order to “spread the wealth.”

How will Senator Obama’s scheme “spread the wealth?”   By creating or expanding eight government entitlement schemes, that he deceptively calls “tax cuts.”  Americans will qualify for the free cash benefits either by not earning too much or by doing something that meets with President Obama’s approval.

The eight benefit programs are described below, but first let’s look at where Obama claims he will find the cash to fund them.

The table to the right compares the current, Bush tax bracket rates with the previous, Clinton rates.  The latest version of Obama’s continuously evolving economic plan is to leave the bottom four brackets unchanged and kick the top two brackets up to what they were during the Clinton Administration, in the hope of collecting more tax revenue from small businesses and high-income individuals.

Using data provided by the IRS Statistics of Income Division we project that increasing the top two rates would generate approximately $166.5 Billion in additional revenue if – and this is critical – there were no significant economic downturn and none of the small businesses or individuals in those top brackets modified their financial strategies in order to produce less taxable income.

We’ll use this number in our analysis even though it’s virtually certain that some top bracket taxpayers will respond to the higher taxes by taking more time off and/or downsizing small businesses, and that some have already been hammered by the government induced chaos in the broader economy.

So we start our analysis with the assumption that Obama’s most recent tax increase proposal will generate $166.5 Billion in additional revenue which is substantially more than is likely.

Refundable Tax Credits

The table below lists the benefit programs Obama promises to start or expand.  They are all, in the language of government, “refundable tax credits.” This means that rather than apply for a cash benefit, individuals and families simply file their tax return to automatically receive the full amount of the benefit in the form of a so-called “tax credit,” even if it exceeds their tax obligation, even if their tax obligation is $0.

Senator Obama promises that the increases in the top two tax brackets will also pay for:

  • His Gargantuan Government adminstered health insurance scheme, estimated to cost a minimum of $110 Billion per year;
  • A government run alternative energy R&D program budgeted at $15 Billion per year;
  • A massive new “infrastructure” construction program costing tens of Billions per year.

The goals of ObamaNomics are clear:

  • Buy votes,
  • Consolidate power,
  • Ensnare millions of Americans in permanent dependence on government entitlements.

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