Sunday, November 02, 2008

Pavement for the proverbial road

Senator Obama is full of good intentions. By raising taxes on those who make more than a certain amount of money--and that amount has yet to be determined, according to Joe Biden and Bill Richardson, he hopes to "spread the wealth" to encourage more consumer spending and create more jobs. He also hopes to use that tax increase to fund the many social and work programs.

There is nothing in his stated plans to balance the budget. The real lie of his plan is that it is much closer to the present administration's than the "cut spending" plan of the McCain campaign, regardless of the Democratic candidate's claim that McCain's economic plan means "four more years of the Bush policies."

Barney Frank, the Democratic senator from Delaware, and Chairman of the Senate Finance Comittee, has assured us that, with Barack Obama as President, "we (Congress) will spend as much as we need to and not worry about the deficit."

That seems very close to the Busch economic program.

It is questionable as to how Obama's tax plan would help create jobs. Income tax is assessed on gross income, so a business with an annual gross income of $250,000 paying a 39% tax rate would have its available funds reduced to $152,000. That amount would be reduced by another $30000 in FICA and Medicare taxes, Having only $132,000 for payroll, payroll taxes, business expenses, and inventory, how would that allow for job growth? Obama's plan would prevent jobs from being created.

Theoretically, the extra spending power provided by tax cuts to 55% of the working population, and the tax credits to 40% of the working population would help increase the amount of capital to small businesses. But when the government takes money, that money rarely gets back into the economy. The cost of bureaucracy alone takes the majority of the funds, and the rest is spent as subsidies to pharmaceutical, insurance, oil companies, and union contracts. That money rarely translates to more consumerism.

Whether Obama or McCain is our next president, we won't see much change in politics as usual. Government can not fix the economy, it can only make matters worse. It isn't that politicians are trying to bring down the economy--their intentions are well meant. People have come to expect the government to do something, whether it turns out for better or worse. More taxes and more money in the government take away from money that could be given to charities and community programs that can better serve those who need help. We would do better to remember "The road to Hell is paved with good intentions."

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