The Latest Two Deceptions From The Obama Administration

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Recently the President has made two assertions that do not stand up to the facts of reality if you do just the barest amount of research. Recall that two years ago he also publicly asserted how stupid it was to raise taxes during tough economic times.

Let’s start with his comments at a rally where he verbally asserted that taxes had to be raised on the wealthiest Americans in order to provide funding for Social Security checks for the elderly. There should be no doubt among intelligent and informed citizens that Social Security is approaching financial insolvency. Demographic changes alone will make the current financial situation untenable.

But before any American has more of their wealth confiscated by an inefficient government, maybe our inefficient government should step up and fix itself before looking to the American taxpayer, even if only the rich ones, to bail it out again:

– Money magazine reported in March, 2008 that the IRS fails to collect upwards of $200 billion a year in taxes that should have been paid but were not paid by American citizens. Fixing this problem would provide over 26% percent of the entire Social Security budget’s benefits paid out in 2010 without raising taxes. The article did not discuss how much business tax is not collected that should have been collected in addition to this $200 billion shortfall.

– Most expert sources estimate that Medicare loses at least $60 billion a year through fraud and Medicaid loses at least $30 billion a year through fraud. Together, this conservative fraud estimate of $90 billion would have accounted for over 12% of Social Security’s 2010 benefit payouts.

– Last week it was reported that over $19 billion in the Federal government’s unemployment benefits budget has been lost to fraud in the past year or so, about 10% of its overall budget. This would have accounted for about 2.5% of the 2010 Social Security benefit stream.

– The Obama administration has added about 250,000 Federal employees to the federal government payroll above the historical average of civilian employment without a corresponding increase in government efficiency or service to Americans. Rolling back this unnecessary increase in employment would save about $25 billion a year or about 3.4% of the 2010 Social Security benefit stream.

– The United States has unnecessarily continued the deployment of 140,000 troops in Europe, Japan, and South Korea at an annual cost of about $28 billion a year, or about 3.8% of 2010 benefits.

– The Washington political class hands out about $16 billion a year in government earmarks which are nothing more than thinly disguised favors that politicians give to their most important re-election campaign donors. $16 billion in annual waste is about 2.2% of 2010 benefits.

Just fixing these six areas of government waste, fraud, and inefficiency would account for over 50% of what the Social Security Administration paid out in benefits in 2010 without significant detriment to any American citizen. The only affected citizens would be the crooks that are bilking the government’s social programs and tax system to the tune of hundreds of billions of dollars a year.

Thus, the President’s first deception: we do not have to tax the rich any more to support paying Social Security checks for the elderly. Its the government, that is run by the Obama administration, that needs to tax itself more in an effort to fix the leaks of fraud throughout its operations. As the President himself said, it is not good economic policy to raise taxes during difficult economic times. It is even worse policy to do so when you do not have to.

The second deception was attempted in cahoots with Warren Buffet, who stated that the rich in this country, including himself, need to be taxed more. Buffet gave the example that on a percentage basis, he pays less in taxes than members of his staff. This was supposed to make the President look good and righteous in his call for higher taxes on the rich.

This deception is pretty easy to refute, starting with the fact that if Mr. Buffet is so upset that he is not paying enough in taxes, why hasn’t he simply wrote a check and sent it to the U.S. Treasury for the amount that he thinks he should have paid? If he feels that strongly, then actions, writing a large check to the government, would certainly back up his words.

And to take it a step further, why didn’t the President do the same thing earlier this year when he filed his taxes? His 2010 household income was in the millions of dollars, certainly putting him in the “rich” category of American citizens. What a noble gesture that would have been if he had actually taken actions based on his own “tax the rich more” obsession and written an additional check to the Treasury. However, nobility has never been an overriding trait of this administration.

But enough with these what-ifs. The Associated Press, in a September 20, 2011 article, actually looked at the reality of the situation in their article entitled: “Fact Check: Are The Rich Taxed Less Than Secretaries:”

  • Overall conclusion from the analysis: “On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much higher share of the overall taxes collected by the Federal government.”
  • The 10% of American households with the highest incomes pay more than half of all Federal taxes. (Note: this estimate and the following estimates are from the Tax Policy Center and include Federal income taxes, Federal payroll taxes, and other Federal taxes)
  • They pay more than 70% of all Federal income taxes.
  • In 2011, households making more than $1 million will pay an average of 29.1% of their income in Federal taxes
  • Households making between $50,000 and $75,000 will pay an average of 15% of their income in Federal taxes.
  • Households making between $40,000 and $50,000 will pay an average of 12.5% and households making between $20,000 and $30,000 will pay an average of 5.7%.
  • 46% of American households, mostly middle class and poorer households, pay no Federal income tax all.
  • IRS percentage estimates, which include only Federal income taxes, are in line with these estimates, with those earning over $1 million a year paying 24.4 of their earnings in Federal income taxes compared to those earning between $50,000 and $60,000 paying an average of 6.3%.

Thus, it is really hard to come away with any other conclusion that Obama is either totally ignorant of the reality or is being deceptive in his assertion that the rich pay less, on a percentage basis, than the middle class and poor. That statement could not be any further form the truth, on average.

The reason that this truth does not apply to Warren Buffet is that he does not draw a big salary, getting most of his income from lower taxed income options. He is obviously an exception to the rule, as seen by the reality of the Tax Policy Center and IRS analyses.

It is an exception that the President is deceptively trying to leverage to get his base of voters excited about the Presidential election in 2012, it has no basis in fact. That is what irritates many Americans about most politicians and this one politician in particular. He assumes that the average American is too lazy to understand the facts of the world and that we will blindly vote for someone based on what they say, no matter how wrong  and out of step with reality it is.

The rich in this country do pay more in both absolute terms and percentage terms than any other income group in the country. To assert anything differently is nothing more than a shallow, political deception.

We do not have an under taxation problem in this country, we have a government overspending and waste problem in this country. For example, if Obama got his way and made every millionaire earner in the country pay an extra $100,000 a year in Federal income taxes, the resulting $24 billion a year or so would cover less than .7% of the Federal government’s 2011 budget.

If you get really ridiculous, and had Obama bill every American earning over a million a year pay an extra $1,000,000 a year in Federal income taxes, this would only account for about 6.4% of the 2011 Federal  budget. You cannot make a significant improvement in the financial woes of the country under the mantra of taxing the rich. It is divisive class warfare that does not solve the underlying problem: government and politicians spend too much.

Do we need to reform the tax code? Absolutely, to make it fairer and simpler and less cumbersome and expensive to abide by.

Do we need to reform the Social Security system? Absolutely, including  raising the retirement age for those that can afford to wait and introducing a means test so that people like Warren Buffet would not receive Social Security payments because of their personal wealth.

Do we need to do these reforms fairly, logically, truthfully, and analytically, removed from the personal career aspirations of the political class? Absolutely, which makes it highly unlikely these steps can be attained under the Presidency of Barack Obama, deceiver in chief.
 

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