The Case for Obama cont: It's the economy, stupid!

I'm going to jump directly to my case for Obama's economic plan/taxes by displaying some emails my well spoken brother, Kip and I exchanged the other day. It points out some of Obama's economic philosophy, and mine as well. It started with a funny cartoon Kip sent me...with a note.

Todd, I have attached a picture that gave me a nice chuckle. And then something unexpected crossed my mind. You. I was suddenly very curious what you would think of this. So I'm sending it to you. With a request. In a true sense of trying to broaden my understanding, I would like to get your feedback on this: Is the basis of this cartoon true or not. And why. Can't wait to hear from you. :)

-Kip

My reply...

Kip, Ha ha! That’s pretty funny. I’ll do the best I can to answer your questions.

1. Feedback?
2. Is the basis of this cartoon true or not?
3. Why?

Below is my feedback, that addresses the cartoon and why I think like I do:

I’d guess the basis of the cartoon is that democrats want to redistribute (steal) wealth from those who work hard and give it to those who don’t. This is definitely the stereotype. Like most stereotypes, there is some truth to it, but at the same time oversimplifications and of course, taking a view to its extreme-then arguing against that extreme view.

Here is my take: There is a spectrum of thought, as you know- total Communism on the very far left side and total Free Markets with no regulation at all, save perhaps John Smith’s moral imperative, on the far right.

Somewhere in between is where our capitalism has always resided. It has never been a free market or socialistic system, but has always contained elements of both. The argument isn’t and hasn’t been socialism or free markets, rather, how far do we fluctuate in the middle. Two areas of thought battle for this middle ground.

One, that economic growth is created from a strong, wealthier middle class. Because of their massive number, they have immense purchasing power. Not necessarily in the price of the items they purchase, but in the sheer quantity. These purchases spread wealth, create jobs and trickle throughout the economy. Hence, less of the tax burden should be carried by them. Only very far leftist Democrats believe in helping out those who don’t have jobs. Most want to lessen the burden on the middle class, working folks.

Two, the traditional Republican “trickle down” theory. Meaning, economic growth is created by a wealthier upper class. So you eliminate the burden that the rich pay. It is indeed very high. The top 5% pays about 60% of the taxes. So, you minimize their tax burden and their money trickles down, in the form of purchases, investments and jobs.

There are many intelligent economists on both sides. In fact, I was surprised to find that there are more Dem economists than Rep, despite the reputation. One of my favorite voices in this realm is Warren Buffet (technically not an economist, I know) - who has made the argument for a long time that trickle down, although it makes sense in theory, doesn’t really trickle down in real life. His numbers show that the behavior of the very wealthy Americans doesn’t change as their taxes go down. Also, it has been argued that with a new global world the trickle doesn’t land in the U.S. but in foreign investments and company growth. Warren also argues that as most of the top 5% get such a large portion of their income from capital gains, rather than a salary, that they end up paying much less (15% capital gains tax) than their secretaries (25-35% income tax) each year. He argues that this is currently redistribution in one direction- up!

Another one of my favorite voices, George Will, a very conservative columnist, points out the leftist economist argument- that redistribution of wealth is already what 95% of our government currently does. But again, in one direction- up! He points to an example of a few very wealthy sugar growers who get subsidies from the gov. that amount to billions of $ per year for the taxpayer. He calls it millionaire welfare.

Hence, many on the left argue that eliminating Bush’s tax cuts to the wealthy is just a way of eliminating the upward redistribution of wealth.

I argue somewhere in the middle. In theory, I think a flat or fair tax is more, well, fair. But, currently, with our debt and spending habits, I have a hard time thinking a government can or should eliminate some of its biggest revenue streams. If they can control spending, then they can work towards making taxes the same rate for everyone. I don’t see that happening, so I say tax the wealthy, and lower the taxes for the middle class.

There’s my two cents…but I’m still learning…

All that said, I still love the cartoon. :)

-t