Media Ignore a Devastating Economic Report

Donald Trump needs a united Republican Party if he hopes to win in November.  He could start the unification process by citing these recent economic data and proposing proven free market economic policies.

America’s Gross Domestic Product (GDP) grew at a  pathetic 0.5% in the first quarter 2016. 

2015-16-step-downSerious candidates for President usually express frustration with media personalities who ignore their ideas and dwell instead on “horse race” questions, like what does the candidate intend to do about his/her low rating in a recent poll of married, suburban Hispanic women over fifty in New Jersey?

Donald Trump on the other hand, loves horse race questions.  The media give Trump more air time than all the other candidates combined because almost all he talks about is the horse race.  In speeches and interviews he rambles on and on about polls, the size of the crowds at his stadium events.

Because of media obsession horse race distractions, a devastating economic report came and went at the end of April with virtually no notice. Neither Democrat Candidate expressed any concern or offered any ideas about what government could do to help restore normal GDP growth. Their “economic” policies consist of extravagant promises to the various, aggrieved identity groups the Obama campaign engendered and nurtured, combined with loathing of business owners and investors.

Genuine, free market GOP candidates could make a powerful case against Democrat’s progressive economics simply by citing the results expressed in the charts below.  Unfortunately, the media will allow no time for such discussions which they brush away as “too down in the weeds.”

This chart compares the 28 quarters of the Obama era post-recession recovery with the first 28 quarters of every previous recovery since the government began issuing quarterly GDP reports.  In each case measurement begins with the first quarter of positive GDP growth after a recession.  Obviously, the Obama “recovery” ranks tenth out of ten. GDP-through-2016-Q1

Mrs. Clinton claims that President Obama “lifted us out of recession” with his massive, “stimulus” program of deficit spending.  But the next chart debunks her claim.  Every previous recession has ended with little or no government intervention.  The chart below shows the spending increase or decrease during the first two years of each of the recessions that preceded the recoveries in the chart above.spending-increase-each-recession2

We included the second chart because the President, the Democrats and the media promised us back in 2009 that a massive spike in deficit spending would buy a “robust recovery” and put America back to work.  The President promised his so-called stimulus would “immediately jumpstart job creation and long term growth.”  The media and progressive economists were unanimous: A monster program of government borrowing and spending would result in prosperity. The stimulus package was enacted on the 23d day of his Presidency. 

Seven years later we’re still waiting for the promised jumpstart.  But American taxpayers will be paying the interest on Obama’s debt for generations.  His reckless experiment has so far generated an alarming $6.2 trillion in deficits in seven years.  U.S. Government Debt held by the public is 135% greater than it was seven years ago.

The American economy, while the most resilient in human history, struggles under the weight of decades of accumulated government intervention in the form of excessive regulation, taxation, and bureaucratic mandates, the most recent being Obamacare and the massive, Dodd-Frank financial regulation law.  These government intrusions into the private sector, and the generally anti-business, anti-investment attitude of the Obama Administration discourages and deters entrepreneurs and investors, resulting in dramatically fewer business start-ups and expansions and, of course, fewer of the jobs they create.

The manifest, easily understood failure of Obama’s textbook, big government ideas presents an historic opportunity for a Republican Presidential candidate, not only to win the election but to do so with a genuine mandate for reduction of federal taxes, regulation and intervention in the economy.

Unfortunately, the presumptive GOP nominee has ignored this opportunity and chosen instead to form a cult of personality around himself.  His “make America great again” without any policy details, is the mirror image of Obama’s meaningless “Hope and Change,” a blank screen upon which voters with varied and diverse views project their own thoughts and ideas.  Thus, at his raucous, Obama style, stadium events, each of the cheering fans believes he/she is among thousands of like-minded disciples, even though the person in the next seat may have very different views. 

Like Obama’s true believers, Trump’s fans will be disappointed if he becomes president and the promised millions of jobs don’t “come back from China” and it turns out that Trump’s idea of a “great” America is, simply, America with him as President.

Student Honors Heroes on Memorial Day

My phenomenal granddaughter, Belle, will receive her University degree, graduating Summa Cum Laude next month.  When she was in eighth grade her class visited Washington D.C.  She wrote about her impressions of the Iwo Jima Memorial.

iwojimamemarlington.JPGThe Iwo Jima Memorial has a very unique style. It is designed so that when you are driving around the monument it looks like the Marines are raising the American flag.

Around the top of the memorial are battles the Americans have fought. The earliest battle is the Revolutionary War, dating from 1775 to 1785. The most recent is Korea,  fought in 1950.

From a distance the memorial looks very small, but when you get up close to it the statue is bigger than you can imagine.

Iwo Jima is a memorial that is dedicated to all Marines who died in American history. War is a very devastating thing and it’s hard to understand that our country has to drop bombs on places so that we can keep peace.

back-of-iwojimamemorial.jpgzThere is a seal on the memorial that reads, “Uncommon valor was a common virtue,” which means Always Faithful. This is so true of the Marines, actually true of all military services, because they are always faithful to their country and to their countrymen and they give everything to keep us safe and keep our freedom strong.

This memorial is very interesting to look at and I really enjoyed it. We actually went to the memorial as it was beginning to get dark. While looking at the memorial with the sun going down behind it the sky began getting a bluish purple tint that was very pretty.

closeup-iwo-jima.jpgI think that this memorial shows all the love and dedication these soldiers have for their country and their people. It helps us realize that our country would be completely different without them.

I really can’t imagine how the world would be if soldiers never had the courage to go and fight for our country. I admire the strength and persistence that they continue to fight with even now .


Tax Trumpery: Two Faces of The Donald

Would President Trump support tax cuts or tax hikes?  Nobody knows, not even the candidate, himself.

trumpery-definition-smallSecond in our Trumpery Series.  The first is here.

Last week, Donald Trump appeared with his family on the Today Show where he responded to questions from members of the studio audience as well as from hosts Matt Lauer and Savanna Guthrie. One of the questions was about taxes:

SAVANNA GUTHRIE: Do you believe in raising taxes on the wealthy?

DONALD TRUMP: I do. I do. Including myself. I do.

Trump-vs-current-tax-brackets2But this statement directly contradicts Trump’s own tax reform plan.  Our table to the right compares current IRS tax rates on high incomes with new lower rates proposed several months ago by Mr. Donald J Trump!  His lower tax rates are still here, on his campaign website.

Astoundingly, a video of the Today Show question and answer transcribed above is also on Trump’s campaign website, here!

At Liberty Works we support tax cuts for high income taxpayers because, as the pie chart below shows, most of them are the owners of the small and medium sized businesses that create most of the new jobs in America. They expand their businesses and start new businesses by reinvesting after tax profits.  Taxing away their profits simply diminishes the seed corn of economic growth.

For nearly a century Democrats have encouraged voters to indulge the ugly and self-destructive emotions of rage and resentment against “the wealthy.”  Denouncing high income Americans has been a core Democrat Party campaign strategy.  When they won elections Democrats harmed the economy and the non-rich by using government power to express these futile emotions through the tax code.

business-ownersSo it’s discouraging to hear the “Republican front runner” join the Democrats in calling for tax hikes on the wealthy.  It’s also alarming because he appeared on TV contradicting the tax plan published on his own website!

What are we to conclude from this? Is Mr. Trump openly, blatantly pandering with different messages to different groups of voters at the same time? Does he even know what’s on his website?  Does he remember calling for reductions in tax rates?  Did someone else place a “tax plan” on his website that he didn’t even bother to read?  

And why haven’t the media called for clarification?

Regarding the candidacy of Donald Trump we are reminded of when then House Speaker Nancy Pelosi famously announced that Congress would have to pass the Obamacare legislation so that she, members of the House and Senate, and the voters could discover what was in it.  Likewise we would have to elect Donald Trump to the White House to find out what his real policy ideas and beliefs are.  Let’s not.

Insipid Trumpery (1)

trumpery-dictionaryFirst in a series. 

The word trumpery, with similar definitions, appears in every English language dictionary.

Trumpery, as practiced by Donald Trump, includes meandering, unfocused babble, frenzied repetition of  meaningless phrases and misinformation, all expressed with pompous self-admiration. Consider this exchange with Chris Matthews on MSNBC:

MATTHEWS:  OK.  You said last night on CNN you’re not going to stick to this pledge to back the [Republican] nominee.  Is that — are you sticking to that?

TRUMP:  I have not been treated properly.  People understand.  They haven’t stuck to the pledge.  I don’t want an endorsement from somebody that doesn’t feel like, oh, I love Trump.  If he wins, he’s going to be the guy.  I don’t want that endorsement, I’m not looking for that endorsement.

So when they ask me about Cruz and the endorsement, I said, no, no.  Just put — no pressure on Cruz, tell him he doesn’t have to endorse me.  Please don’t endorse me. It doesn’t matter.  The endorsements don’t mean very much.  You know, I have great endorsements, I have some phenomenal endorsements.

Wait! Trump was asked if he would decline to back someone else as nominee.  His response was that he didn’t want an endorsement from someone who doesn’t love him, or, from Ted Cruz.  AND by the way, he has “phenomenal endorsements” – but endorsements don’t mean much.

Here’s an excerpt from the April 3d Face the Nation with Host, John Dickerson.

DICKERSON: When people looked at your answer on abortion, on proliferation, they got the sense you were just winging it on foreign policy — on policy issues.

TRUMP: I’m not winging it.

DICKERSON: Have you been studying up?

TRUMP: I have. I have.

DICKERSON: You met with your foreign policy team in your hotel in Washington.  What did you ask them?

TRUMP: More than anything else, I discussed nuclear.

Wait!  The question was,  “what did you ask them”? Of course Trump doesn’t ask or listen. He talks. If he really did meet with a so-called foreign policy team, whoever that is, he did the talking.  Trump continued:

TRUMP: To me, the single biggest problem that this world has — and we will knock out ISIS fast and we will do a lot of things — but the single biggest problem that the world has is nuclear. I think, if somebody gets nuclear weapons, that is a disaster.

By what standard does Trump find nuclear “the single biggest problem”?  He didn’t say because he doesn’t ponder such abstract questions.  Nuclear weapons were used only once, 71 years ago.  Since then, millions have been killed or maimed by missiles, chemical weapons, bullets and bombs.

What did he mean by “if somebody gets nuclear”?  As Trump himself has said, several nations already have nuclear capability, including North Korea, a Communist dictatorship run by a lunatic.  In a later interview he contradicted himself by calling for even more nations to develop nuclear capability.

Of course, Trump doesn’t know who “somebody” is.  He  simply verbalizes his fleeting thoughts and emotions, in real time, the instant he experiences them.  Then the media replay those thoughts dozens of times, as if they had more meaning or validity than random grunts from the guy on the third stool down at the corner bar.

DICKERSON: Did they [the purported foreign policy team] say anything to you that you have been saying and said, you probably shouldn’t say that?

TRUMP: Not at all. In fact, many of them — and I will give you full list of the people that were there, and the list is being added on, and we have many people that are top people that want to come on board.  Many of them were surprised at my knowledge, and they were surprised at the feel that I had for it. I have a feel. I have… I will tell you what the feel is.

Remember the original question that opened this back and forth? It was, “have you been winging it?”  Trump’s claim to be speaking from “a feel” is, of course the same thing as winging it.  It’s bluffing.  It’s expressing uninformed opinions because he gets away with uninformed opinions.  Trump continued:

TRUMP: The feel is, I was asked about NATO. Now, as an entrepreneur, I have never been really asked too much about NATO. NATO is not exactly — when I’m doing deals or building buildings in Washington or New York or wherever I may be building them, but the question was asked about NATO

Knowing a little bit about NATO at the time — this was a couple of weeks ago — I said, in my opinion, NATO is obsolete. It’s many, many decades old, like now 68 years, but it’s many, many decades old. And NATO is too expensive, because we can’t afford this anymore.

This response is another indication that he has indeed been winging it. When he disparaged NATO in the CNN interview he was speaking as a candidate for President, not a deal-maker/building-builder. Yet in the ninth month of his campaign he still lacks informed opinions.  He still spoke from lack of knowledge, as if the interview was a construction site bull session, and his ignorant ideas would not be flashed around the world and thus would not matter.  With little or no thought Mr. Trump alarmed twenty seven allied nations by summarily dismissing NATO as “obsolete” because it’s old and “expensive.”

The North Atlantic Treaty Organization or NATO is a seven decades old, mutual defense treaty organization with 28 member nations, including the United States.  Why doesn’t Trump think it’s a good thing that the NATO alliance has survived seven tumultuous decades, through eight Democrat and eight Republican Administrations, and political turmoil in the other member nations?  Would he likewise dismiss our much older treaty relationships with, say England, Australia and Canada? Trump continued his response to the question about his foreign policy team:

It turned out I was right on every single subject… And people were surprised at the instinct that I had, because it turns out that we are spending too much money on NATO, and it turns out, very importantly, that it is obsolete. NATO is not talking about terrorism.

Trump’s claim that after he became informed it “turned out” he was right is further confirmation that initially he was winging it.  And who made the determination that he was right? Donald Trump, of course! Certainly nobody from the alleged foreign policy team has come forward to confirm that he’s “right” about anything.  What’s tough about foreign policy is the “right” answer is usually elusive.  Most often there is no objectively “right” assessment or course of action.

What about terrorism?  In this interview he said “NATO is not talking about terrorism.” In other interviews he said “NATO doesn’t cover terrorism.”  But this simply isn’t true. NATO forces are currently deployed in counter-terrorism operations in several places, including Afghanistan, The Horn of Africa and The Mediterranean Sea.

What about the cost of NATO? In a radio interview with host Charlie Sykes Trump bellowed:

We pay so much disproportionately more for NATO. We are getting ripped off by every country in NATO, where they pay virtually nothing, most of them. And we’re paying the majority of the costs.

NATO has a relatively small infrastructure, including its administrative and command headquarters staff that is funded by direct cash contributions from member nations.  In 2016 it’s projected to cost about $2.4 billion.  The portion of the total that each member nation contributes is equal to its national income relative to the total national income of all members.  With the largest national income America contributes 22%.  In 2016 this will be $519 Million or slightly less than one percent of our total 2016 Defense Department budget of $585 Billion.

In addition to cash contributions, each member nation pledges to spend proportionate amounts on its own military.  Only America spends in excess of its pledge every year.  Many of the other nations have fallen short in some years.  A few have fallen short every year.  This is, of course, a problem.  But it isn’t that America is being “ripped off.”  Again, we’re spending on our own military, which we would do anyway.  And Trump has never alleged that we spend too much on the military!  Just today, at a rally in New York he repeated his standard promise:

We are going to rebuild our military.  It’s totally depleted, we’re going to rebuild our military it’s going to be bigger and better than ever before!

Trump’s promised military rebuild would cost far more than our NATO pledge.  So he has offered absolutely nothing to support his allegations that NATO is obsolete, that all the other countries “pay virtually nothing” and that America is being “ripped off.”

Yes, NATO has faults that should be addressed.  But Donald Trump has given no effort to learn what the real problems are and no effort to figure out how to solve them.  Instead, he has spewed witless trumpery that risks damaging the NATO alliance for no benefit.

Urgent Campaign Issues (1)

First in a series

The Presidential Campaign has been long on personal insults and promises of loony fantasies that will never happen but short on debate of real issues that will be critically important over the next eight years. 

The rich can not be taxed enough to pay for Mrs. Clinton’s promised programs and benefits.  Forced Deportation of 12 million men women and children is simply beyond the logistical and administrative capacity of the federal government. It won’t happen.  We’ll never see the government become the healthcare provider to every citizen, even though Donald Trump and Bernie Sanders have both said they can make it happen.

Thus, we the people must demand that candidates focus on urgent matters that will have to be addressed over the next four to eight years, whether or not they wish to talk about them.

Let’s start with what is one of the most urgent problems. 

debt-chart-2015The recent growth in US government debt is obviously unsustainable.  There is no reasonable scenario under which this debt is ever paid off.  Interest on the debt is a major and rising federal expense, crowding out other priorities. 

Nobody can predict when the world’s investors will begin to balk at loaning even more to our reckless politicians.  But when the inevitable shift from investor confidence to no confidence in the US government comes, it will be sudden and without warning.  That’s how markets work.

Government borrowing isn’t always bad. But it should occur only in emergency or crisis situations, not as a routine policy that never stops.

We the people must demand that candidates propose serious, doable plans to transform annual budget deficits into annual surpluses.

Trump Thinks His Followers Are Idiots

A President’s character and integrity matters. A lot. Thus it’s a big deal when a Presidential candidate is caught in an blatant attempt to deceive his own supporters. 

trump-tweet-phony-megynIt seems that Donald Trump is still nursing a grudge against Moderator Megyn Kelly whose offense was asking him one difficult question in the first Fox News debate back in August.  When Fox News CEO Roger Ailes declined to meet his demand that Kelly not be allowed to help Moderate the Fox debate just before the Iowa caucus, Trump announced that he would not show up.

Trump was busy on Twitter during the hours leading up to debate time, attempting to discredit Fox News and Megyn Kelly.

One of his nasty tweets, shown to the right, is a combination of two major deceptions:

  1. It says Saudi Prince Al-Waleed is “the co-owner of Fox News,” a description meant to plant the perception in the mind of the reader that the Prince is an equal partner with another owner and thus participates in programming decisions. But in fact he owns about 6% of the stock in 21st Century Fox Corporation, parent company of Fox News, Fox Sports Channel, Fox Business Channel, the Fox Entertainment Network, a movie studio and several other properties.  21st Century is traded on the NASDAQ so anyone can buy shares of its stock.  But a stock holder has no authority over management of, or content produced by any of its divisions any more than an Apple stock holder decides what features will be in the next iphone.
  2. The photo, purporting to be of Megyn Kelly posing with Prince Al-Waleed, is a Photoshop Hoax.  Her image was lifted from this Hollywood Reporter web page, (reproduced below) and placed into a photo of the Prince and a woman in a burka.

The millions of voters who support Mr. Trump have legitimate grievances against President Obama and the governing establishment, including the Republicans they helped to win majorities in the House and Senate.  The Trump campaign is designed to channel their anger after the GOP has failed to acknowledge or address these grievances in any meaningful way.  He deserves credit for calling out the tyranny of political correctness and thought control inflicted upon the nation by the progressive movement and it’s media toadies.

But unfortunately, the Trump campaign quickly degenerated into a classic cult of personality.  As we explained here and here his signature campaign promises are unworkable fantasies.  Yet, if one believes the polls, his fans willingly forgive or ignore his manifest lack of honesty, integrity and realistic ideas.  We can only hope a more honorable GOP candidate emerges who can identify with these aggrieved voters and expose Trump for the fraud he is before he wins the nomination and thus awards the Presidency to the Democrats for another four years at least.


Trump’s Birther Scam Against Cruz

Nothing in the Constitution or the law supports Donald Trump’s accusation that Ted Cruz is disqualified by birth from the Presidency.Cruz-and-little-trump

After Mr. Trump spent a week casting doubt on whether Senator Ted Cruz meets the Constitution’s “natural born citizen” requirement to be President, Mr. Newton B Schwartz, a Texas attorney reacted by filing a lawsuit in Federal Court.  The suit alleges  that Senator Cruz is not a natural born citizen, and does not qualify for the office of President.   Mr Schwartz asks for an immediate Supreme Court ruling.

There is no Constitutional or legal basis to disqualify Senator Cruz from the Presidency.  This is a manufactured  “issue,” and is nothing but cynical mischief-making by Trump who’s dominant skill is driving the ignorant and manipulable media herd (including the awestruck Trump groupies at Fox News) to suddenly stampede in any direction he chooses.


The Constitution recognizes only two sources of citizenship:
  • Birth: One who is automatically a citizen at birth.
  • Naturalization: A person who is not an American citizen by birth can apply for citizenship and, after completing a process called “naturalization” become a citizen. A Naturalized citizen can not be President.
Nowhere in the Constitution is there a distinction between a “natural born” citizen by birth and some other, lower class of citizen by birth.  One is either a natural born citizen at birth or not a citizen at birth.  There is no “in between.”
The Constitution empowers Congress to enact laws setting forth the circumstances of citizenship by birth.  Under the last Congressional action in this regard, The Immigration and nationality Act of 1952 are seven categories of citizen by birth or “natural born” citizen. One of those categories is a person born outside the United States to one parent who is not a citizen and one parent who is a citizen and has lived in the US more than ten years, the exact circumstances of the birth of Ted Cruz.


Mr Schwartz’s 28 page lawsuit is a slap-dash document, littered with typos.  It’s “case” against Senator Cruz is woven into many pages of Mr. Schwartz’s irrelevant opinions on topics as diverse as abortion, the age of the earth, Japanese internment during World War II, Jewish, Christian and Muslim religious doctrines, and Donald Trump’s other “birther” campaign, against President Obama.

But, Mr. Schwartz urges the court to rule as soon as possible, hopefully before the Iowa Caucus on February 1.  And, he does go out of his way to eliminate any potential barriers to a quick, clean decision by the court.  His suit seeks no money, not even legal fees.  The only facts he presents are simple, agreed to by Cruz, and indisputable.  Cruz was born in Canada to a mother who was a citizen by virtue of having been born in Delaware and a father who was a non-citizen, Cuban immigrant.  Thus, the court would not have to sort through competing versions of the facts and could simply rule on the law. 

It remains to be seen if the Supreme Court agrees that it can and should come forth with an instant ruling.  An early ruling would certainly diminish Trump, vindicate Cruz and further elevate voter perception of this remarkable Senator from Texas.

The Last Public Appearance by Dr. King

Below are excerpts from Dr. Maritn Luther King’s last speech, given in Memphis on April 3. 1968.  The following day he was assassinated. 

First, Dr. King’s narrative of a previous attempt to take his life

I want to thank God, once more, for allowing me to be here with you.

You know, several years ago, I was in New York City autographing the first book that I had written. And while sitting there autographing books, a demented black woman came up. The only question I heard from her was, “Are you Martin Luther King?”

And I was looking down writing, and I said yes. And the next minute I felt something beating on my chest. Before I knew it I had been stabbed by this demented woman. I was rushed to Harlem Hospital. It was a dark Saturday afternoon. And that blade had gone through, and the X-rays revealed that the tip of the blade was on the edge of my aorta, the main artery. And once that’s punctured, you drown in your own blood–that’s the end of you.

It came out in the New York Times the next morning, that if I had sneezed, I would have died. Well, about four days later, they…allowed me to read some of the mail that came in, and from all over the states, and the world, kind letters came in. 

I read a few, but one of them I will never forget. I had received one from the President and the Vice-President. I’ve forgotten what those telegrams said. I’d received a visit and a letter from the Governor of New York, but I’ve forgotten what the letter said. But there was another letter that came from a little girl, a young girl who was a student at the White Plains High School.

And I looked at that letter, and I’ll never forget it. It said simply, “Dear Dr. King: I am a ninth-grade student at the Whites Plains High School.” She said, “While it should not matter, I would like to mention that I am a white girl. I read in the paper of your misfortune, and of your suffering. And I read that if you had sneezed, you would have died. And I’m simply writing you to say that I’m so happy that you didn’t sneeze.”

And I want to say tonight, I want to say that I am happy that I didn’t sneeze. Because if I had sneezed, I wouldn’t have been around here in 1960, when students all over the South started sitting-in at lunch counters. And I knew that as they were sitting in, they were really standing up for the best in the American dream. And taking the whole nation back to those great wells of democracy which were dug deep by the Founding Fathers in the Declaration of Independence and the Constitution.

If I had sneezed, I wouldn’t have been around in 1962, when Negroes in Albany, Georgia, decided to straighten their backs up. And whenever men and women straighten their backs up, they are going somewhere, because a man can’t ride your back unless it is bent.

If I had sneezed, I wouldn’t have been here in 1963, when the black people of Birmingham, Alabama, aroused the conscience of this nation, and brought into being the Civil Rights Bill.

If I had sneezed, I wouldn’t have had a chance later that year, in August, to try to tell America about a dream that I had had.

If I had sneezed, I wouldn’t have been down in Selma, Alabama, to see the great movement there.

If I had sneezed, I wouldn’t have been in Memphis to see a community rally around those brothers and sisters who are suffering. I’m so happy that I didn’t sneeze.

Next, he mentioned his flight from Atlanta to Memphis earlier that day.  The flight had been delayed by a bomb threat:

I left Atlanta this morning, and as we got started on the plane, there were six of us, the pilot said over the public address system, “We are sorry for the delay, but we have Dr. Martin Luther King on the plane. And to be sure that all of the bags were checked, and to be sure that nothing would be wrong with the plane, we had to check out everything carefully. And we’ve had the plane protected and guarded all night.”

And then I got into Memphis. And some began to say that threats, or talk about the threats that were out. What would happen to me from some of our sick white brothers?

The final paragraphs are called prophetic and indicate that Dr. King did not expect to live much longer:

Well, I don’t know what will happen now. We’ve got some difficult days ahead. But it doesn’t matter with me now. Because I’ve been to the mountaintop. And I don’t mind. Like anybody, I would like to live a long life. Longevity has its place. But I’m not concerned about that now.

I just want to do God’s will.  And He’s allowed me to go up to the mountain.  And I’ve looked over.  And I’ve seen the promised land.  I may not get there with you.  But I want you to know tonight, that we, as a people will get to the promised land. And I’m happy, tonight.  I’m not worried about anything. I’m not fearing any man.  Mine eyes have seen the glory of the coming of the Lord.

Dems’ War On The 1% Wounds The Middle Class

Our previous article used recent data from the IRS to debunk claims by Democrat party candidates that the wealthy don’t pay their “fair share” of income tax.  We also exposed some of the harm done to the middle class when Democrats encourage and nurture rage and resentment toward high income taxpayers, most of whom are small and medium sized businesses.

Several tweets and emails complained that we were ignoring the alleged benefit of increasing tax rates on the high income “one percent” – making them pay more to reduce the deficit and fund for government programs.

Well, thanks to the same IRS data we are now able to determine just how much extra tax revenue resulted from the most recent tax increase on the highest income

Try to remember all the way back to the end of 2012.  President Obama had just won reelection. He and Congressional Democrats had manufactured a crisis they called The Fiscal Cliff.  If new legislation were not enacted immediately there would be a tax rate increase on every taxpayer, from lowest income to highest.

After weeks of negotiation in Congress, Democrats got what they wanted, increases only in top bracket tax rates as shown in the table to the right.  The top tax bracket applies to income over $465,000.

When the tax increase agreement had been negotiated in Congress and was about to become law President Obama delivered a victory speech on New Years Eve 2012.  The transcript is still here on the White House web site.

Here’s an excerpt:

Little ObamaLast year in 2011, we started reducing the deficit through $1 trillion in spending cuts. Those have already taken place. The agreement being worked on right now will further reduce the deficit by asking the wealthiest…to pay higher taxes for the first time in two decades, so that would add additional hundreds of billions of dollars to deficit reduction. (emphasis added)

A White House web page, published January 2, 2013 says the agreement “cuts the deficit by $737 billion by asking the wealthiest to begin to pay their fair share.” 

So how did this work out?  Were there “additional hundreds of billions of dollars” from the one percent? 

It turns out the over-$500,000 income earners did pay $8.4 billion more in 2013 than 2012, reducing the government’s deficit by about 1%, from what would have been $687 billion down to $679 billion.  Obviously, a tiny fraction of what the President predicted.

But, there were fewer taxpayers earning over $500,000 and the share of tax revenue they provided declined slightly, from 36% to 35%.

Democrats either conceal or never learned the historical reality that higher tax rates are a disincentive, discouraging entrepreneurs and investors from taking the risks that are inherent in starting or expanding businesses and creating jobs.  Government doesn’t cover losses but if the investments, risk taking and hard work pay off the IRS participates in any profits or gains as if it were a partner.

As the table above shows, the largest increases were to capital gains tax rates.  A capital gain is the profit from selling a capital asset for more than it cost.  Capital assets include stocks, bonds, real estate and businesses.  The tax is due and payable when an asset is sold.

How did top bracket taxpayers respond to Obama’s punishing capital gains tax hikes? Remember, the gain is not “realized” and thus is not taxed until the asset is sold.

In 2012 they sold enough assets to generate $505.7 Billion in capital gains. 

In 2013 they sold enough assets to generate $336.6 billion in capital gains, a 33% reduction. 

Thus, there was no significant tax revenue increase from top bracket taxpayers, even though there was a sharp increase in top bracket tax rates.

The bottom line:

The 2013 tax hikes on “the wealthiest” produced the same results as previous attempts to victimize high income entrepreneurs and investors: 

  • The promised benefit, a flood of free money to the government, all on the backs of “the one percent” didn’t materialize.
  • The middle class suffered from lack of economic opportunity because high tax rates discourage and reduce entrepreneurial activity that creates jobs and economic opportunities.

Democrats’ Ugly War On Small Business

For nearly a century Democrats have encouraged voters to indulge the ugly and self-destructive emotions of rage and resentment against “the rich.”  Denouncing the rich has been a core Democrat Party campaign strategy.  When they won elections Democrats harmed the economy and the non-rich by using government power to express these futile emotions through the tax code.

In the 2016 Presidential race Democrats are plowing the same old ground.  There has been almost no media exposure of the Democrats’ most recent debate, but resentment and loathing of men and women who are and always have been the heroes of the American economy, was a prominent theme.

Hillary Clinton assured the audience:little-hillary-flipflop

You know, the American president has to both keep our families safe and make the economy grow in a way that helps everyone, not just those at the top…Look, I have said I want to be the president for the struggling, the striving and the successful. I want to make sure the wealthy pay their fair share, which they have not been doing.

Senator Sanders bellowed:little-sanders-cnn

First statement is, we tell the billionaire class, “they cannot have it all.” For a start, they’re going to start to pay their fair share of taxes.

Later on, when the debate topic was jobs and middle class angst, Mrs. Clinton contradicted herself:Dem 2016 Debate

I also want to create jobs and I want to be a partner with the private sector. I’m particularly keen on creating jobs in small business…I want to do more to help incentivize and create more small businesses.

After a look at the relevant numbers we’ll show how Mrs. Clinton’s promised tax increase contradicts her promise to create more jobs and more small businesses and why punishing the rich with tax hikes is more harmful to the non-rich, middle class than to the despised wealthy.

2013-fair-shareEach year the IRS publishes exhaustive tables of statistical data.  While most economic headlines are about estimates that are  usually called “studies” extrapolated from indirect sources of data, the IRS publishes accurate, precise data drawn directly from tax returns.  The most recent IRS data, just published, is from the 147 million 2013 tax returns, that were submitted in the spring of 2014.

Democrat candidates always tell us the top one percent don’t pay their “fair share.”  So let’s go to the IRS data and look at what those candidates never disclose: what share of total tax revenue the highest income taxpayers actually do pay.

The pie charts show that in 2013 a tiny fraction of taxpayers, a little less than one percent, earned over $500,000. Yet their share of taxes paid was 35%. 

Put another way, ONE out of every 136 taxpayers pays $350 of every $1,000 the IRS collects. 

The national media, captivated by Donald Trump’s campaign of childish insults and loony, impossible to implement schemes hasn’t bothered to ask Mrs. Clinton or Senator Sanders what share of taxes paid would be “fair.”  But whenever Democrat candidates have been asked their answer has always been the same:  MORE!

What do we know about these highest income earners and how do they earn their wealth?  As the chart below shows, most of them – 89% – are business owners.

These businesses are organized – in IRS speak – as “pass through entities.”  They are sole proprietorships, S-Corporations, LLCs and partnerships and do not submit business tax returns like large corporations.  Instead all business revenue, expenses and profits “pass through” to the owners’ personal tax returns.  According to census data 55% of all business employment is in pass-through

Typically, these owners keep a portion of profits for personal/family consumption and leave a portion in the business to reinvest in improvements, upgrades and expansions or to pay down debt. But both portions are combined and reported on a single tax return which does not differentiate.

Most of these 951,000 high income taxpayers are the owners of of the “middle market” businesses that create nearly all the new jobs in America.

Middle market is generally defined as a business with annual gross sales in the millions.  They’re bigger than “small businesses” with less than $1 million in sales and – typically – a dozen or fewer employees, but smaller than “big business,” the huge corporations with annual sales of tens or hundreds of billions and thousands of employees. One survey found that middle market businesses  average 367 employees.

Should the rest of us, the 99% who earn less than $500,000, be for or against taxing away more of the profits of these businesses?  Is there a downside that Democrats’ emotionally charged campaign slogans don’t disclose as they encourage us to resent these business owner taxpayers? 


These high income business builders don’t react to tax hikes by moving their families into smaller homes or buying cheaper cuts of beef.  When government shrinks their after-tax income they react with shrinking investments in start-ups and expansions that generate new jobs and raise the demand for employees which results in higher wages.    This is why Mrs. Clinton’s call for targeting these specific business owners for higher taxes directly contradicts her promise to help business create jobs.

In a rational world the government would set lower, not higher tax rates on these entrepreneurs and investors.

How about a zero or near-zero tax rate on small and middle market business owners? Nothing the government could do would juice the economy and increase the demand for employees more rapidly.  But no politician would dare suggest it because most voters have been indoctrinated in the economics of envy and resentment.

So, instead of freeing entrepreneurs and investors to do what only they can do, government tries to run the economy via subsidies of politically favored companies and restrictive regulations of out-of-favor sectors like oil and natural gas production.  For many decades Democrats have won elections by attacking entrepreneurs and investors for “greed” and promising to punish them with even higher taxes.

In our next post we’ll look at the actual results of the most recent tax hikes on “the one percent.”


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