Sunday, August 02, 2009

"No New Taxes" Meet Barack Obama

In the eyes of most people, including political pundits, scholars, and every day voters, the beginning of the end of the George H.W. Bush presidency began in June 1990 when he decided to raise taxes. Raising taxes is the occupational hazard of a politician. Even my favorite tax cutter, Ronald Reagan, found himself doing such near the end of his second term. For George Bush, it was absolutely fatal.

In 1988 Bush was desperately trying to make the case that he could carry the Reagan mantle. Conservatives have long been suspicious of Bush's tax cutting credentials. In 1980 Bush described Reagan's tax cut objectives as "Voodoo Economics." Many rank and file Republicans feared that the candidate of 1980 would become the President of 1989. During the 1988 Republican National Convention, Bush tried to placate those concerns with a paragraph that would at first lift up his candidacy and then later haunt his presidency. During that speech, Bush told the enthusiastic crowd: "And I'm the one who will not raise taxes. My opponent now says he'll raise them as a last resort, or a third resort. But when a politician talks like that, you know that's one resort he'll be checking into. My opponent, my opponent won't rule out raising taxes. But I will. And the Congress will push me to raise taxes and I'll say no. And they'll push, and I'll say no, and they'll push again, and I'll say, to them, ‘Read my lips: no new taxes.’ Many believed that statement both sealed the deal and cursed his presidency when he turned back on his pledge in less than two years.

Fast forward to 2008 and candidate Obama has pledged that the middle class would not see an increase in taxes. In fact, we were told that the vast majority of those making less than $250,000 would actually receive a tax cut. This was a constant theme of the Obama campaign and we were even given a nifty calculator on the Obama website so people could see how much they would save under the Obama plan. Fox News reports that is about to change: "'We will not get this economy back on track, recovery will be not strong and sustained, unless we ... can convince the American people that we're going to have the will to bring these deficits down once recovery is firmly established,' Treasury Secretary Tim Geithner said on ABC's 'This Week.' Asked point blank whether it was right to suggest it is a matter of when, not if, taxes will be raised, Geithner responded, 'It is absolutely right.'" The Associated Press went on to point out that Geithner would "not rule out tax increases for the middle class." The Administration can't afford to do such because the middle class has the vast majority of the taxable income "available."

According to Steve Moore of the Wall Street Journal, "The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes."

When Obama begins to go after this "treasure chest" of dollars, his positive polling numbers will go the exact opposite direction as the unemployment figures. The amount of days that will be left in his administration will likely become very numbered indeed.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

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