Last year Nancy Pelosi’s office posted a risible graph showing that President Obama had increased the debt far less than all Republican presidents over the last thirty years. It was later revealed that her office had mistakenly attributed spending in Obama’s first year to George W. Bush, and that based on debt as a percentage of GDP, Obama was the most profligate spender.
Last week the meme was resurrected via a surprising graph from MarketWatch’s Rex Nutting showing that while in office, Obama reversed the growth in federal deficits, whereas prior presidents increased it. Within days, John Lott, Ann Coulter and others pointed out that this graph – again – counted all of Obama’s first-year spending as having been spent on Bush’s watch.
Since liberals can’t win arguments by presenting actual data, their newest gambit appears to be presenting “hypothetical” graphs that explain why the economy thrives under liberals and slumps under conservatives.
The latest graph – a big hit on the Being Liberal Facebook page – purports to demonstrate how progressive taxes stimulate growth, whereas regressive taxes retard growth. According to the authors, no one wants to be taxed exorbitantly, so business owners will reinvest “excess” money into their companies, thus creating jobs. Under a lower rate, business owners sit around on their money, because they have no fear of being outrageously taxed.
There’s so much wrong with this absurd graph that it’s hard to know where to start. First of all, it completely ignores corporate taxes, which eat up reinvestment funds and keep them from being returned to the company. Instead, they get diverted to the federal government to pay for things like fortune tellers at fancy conferences in Las Vegas.
For another thing, most companies do reinvest most of their profit in order to stay afloat, so raising taxes merely hinders their ability to carry out that action.
Moreover, people who are ambitious enough to start businesses generally don’t sit around on their money and brag about how rich they are. At any given point in time, most rich people’s money is tied up in investments, not wound around cardboard rolls to be used as toilet paper.
To the extent that companies are sitting on their money, it’s because of the regulatory uncertainty that the Obama Administration’s economic policy is sowing.
Even if all of the above weren’t true, it’s still not the government’s business to tell companies how much of their income to keep and how much to reinvest.
Other than that, the graph is spot-on!
In a speech last week defending his attacks on Bain Capital, Obama implied that, in his private sector, career Mitt Romney was trying only to make a profit and didn’t care about creating jobs.
Newsflash for liberals: The purpose of starting a business is not to create jobs. No one invests inordinate amounts of time and risks enormous sums of capital for the privilege of someday being able to pay strangers’ salaries.
The purpose of starting a business is to make money. To make money, you need employees, but you don’t maximize number of employees or remuneration rates; in fact, you try to minimize both, while still getting the same amount of work done. (The opposite is true if you work for the federal government, in which case you try to maximize the number of employees and the size of their salaries, and minimize the amount of work they do.)
Jobs are an after-effect, a by-product of wealth creation. “Job creation” doesn’t even make the top 100 goals an entrepreneur sets when starting a new company—though it did make the top five list for Obama’s 2009 stimulus bill, right after paying off his campaign donors, subsidizing unions, funding ACORN and enriching incompetent solar panel companies.
To paraphrase MSNBC’s Chris Hayes, President of the Involuntary Veterans’ Modesty Association: Democrats’ airy-fairy economic theories make me uncomfortable, because they are rhetorically proximate to skyrocketing taxes and a federal takeover of the economy.
In their desperation to get Obama reelected, Democrats have proven that they will try anything to fool Americans into accepting higher taxes, including pushing pseudo-economic rationalizations for why sky-high tax rates are Miracle-Gro for the economy.