Say Anything Blog

Patrick Casey

At the heart of Barack Obama’s economic proposals—those that he has promised to deliver if he becomes President—is the expiration of the Bush Tax Cuts. He promises to “restore fairness to the tax code”, and provide middle class tax relief. While we can all applaud the objective of more tax relief, Obama plans on ‘paying’ for this by allowing the Bush Tax cuts to expire - a punitive measure against the ‘rich’.

Republicans, now that Lincoln Chafee is out of the Party, need a unified and strong message against such a stupid move. They were handed one earlier today in the form of an interview with the Nobel prize winning economist Robert Mundell in the Wall Street Journal: An Economist Who Matters.

Mundell, Professor of Economics at Columbia University in New York, has served as an adviser to the United Nations, the IMF, the World Bank, the European Commission, several governments in Latin America and Europe, the Federal Reserve Board, the US Treasury and the Government of Canada. He is considered to be the father of the euro - first proposing a common currency in Europe in the 70s—and won his Nobel Prize in Economic Science in 1999. His world-wide credentials are impeccable.

His interview with the Wall Street Journal’s Kyle Wingfield this morning is fascinating. For our purposes, let’s focus on what he views as the biggest threat to the world economy at the moment - allowing the Bush Tax Cuts to expire:

Back in America, there’s an election going on. There’s also been a spate of financial problems, not the least of which is a weak dollar. But Mr. Mundell says “the big issue economically . . . is what’s going to happen to taxes.”

Democratic nominee Barack Obama regularly professes disdain for the Bush tax cuts, suggesting that those growth-spurring measures may be scrapped. “If that happens,” Mr. Mundell predicts, “the U.S. will go into a big recession, a nosedive.”

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..."the most important thing that could be done with respect to tax rates now is to make the Bush tax cuts permanent. Eliminating that uncertainty would be more important than pushing for a further cut—in the income tax rates, anyway.”

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The interview is full of other interesting observations. Mundell feels that the optimum top tax rate in the United States should be 30%, and that the corporate tax rate should be 25%. He also believes that exchange rates should be fixed, much like they were fixed under Breton Woods until Nixon. He would like to see the EU and the Federal Reserve come to some sort of an agreement to keep the euro (whose idea he originated over three decades ago) between $0.90 and $1.30. Mundell also favors making the dollar the dominant currency against which all other currency would be fixed (he feels that the euro is vastly overvalued at present).

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Obama’s populist message to tax the so-called rich and cut the taxes of the middle class relies solely on age-old class envy. But his dirty little secret is that he’s smart enough to know that if the so-called ‘rich’ don’t do well, the middle class doesn’t get paid—and everyone suffers. The GOP must ask people to sit back and think for a moment. To go after the ‘rich’ in order to punish them, be it people who make $100K, $250K, or a million dollars a year, always hurts the people whose lives depend on those ‘rich’ people. Those other lives consist of the middle-class people that are directly employed by the ‘rich’, and middle-class people who are employed by the companies that the ‘rich’ buy goods or services from. And how about the elderly who rely on the income from retirement funds or stock sales to live, and to help their families? They would be hurt by Obama’s so-called “fairness” as well.

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Great stuff.  When you violate basic principles, things go wrong.  Here’s a comment I found particularly interesting:

I found another description of sins that describe the Marxist Left. I especially like the politics without principle…

Wealth without Work
Pleasure without Conscience
Science without Humanity
Knowledge without Character
Politics without Principle
Commerce without Morality
Worship without Sacrifice

Welcome to the world of Obama..

Mohandas Karamachand Gandhi

Posted by: DaveT | June 21, 2008 07:12 PM

Enough said.