Written on Saturday, October 13, 2012 by Nathaniel Davidson
“The president has a view … that … trickle-down government would work.”
“Middle-income Americans have seen their income come down by $4,300. This is—the economy tax.”
“It’s, frankly, not moral for my generation to keep spending massively more than we take in.”—Governor Romney
In Part 1, I outlined the consensus from both Right and Left that Governor Romney wiped the floor with President Obama in the first debate. Obama was supposed to have all the advantages in style and oratorical gifts, but on October 3, these gifts were all on Romney’s side. In Part 2, analyzing the main points of the transcript, it’s clear that Romney won on substance as well.
Romney started off with all-too real stories of people he has met who have suffered under the Obama recession. One young couple, with a new baby, have lost jobs and now their home. What could Romney do about it?
Definitely not a continuation of Obama’s class warfare demagoguery that discourages businesses from hiring. Instead, Romney summarized clearly what he wants to do:
“My plan has five basic parts. One, get us energy independent, North American energy independent. That creates about four million jobs. Number two, open up more trade, particularly in Latin America; crack down on China if and when they cheat. Number three, make sure our people have the skills they need to succeed and the best schools in the world. We’re far away from that now. Number four, get us to a balanced budget. Number five, champion small business.”
(With his great faith in big government, Obama probably prefers the “five year plans” of the ideologically identical Soviet Union.) Romney went on to point out that small businesses create most of the jobs in America. But under Obama, businessmen don’t think America is the place to open up new businesses.
Romney got straight to the point:
“The president has a view very similar to the view he had when he ran four years ago, that a bigger government, spending more, taxing more, regulating more—if you will—trickle-down government would work. That’s not the right answer for America. I’ll restore the vitality that gets America working again.”
Trickle-down government! Classic! This is exactly what Obama is doing—government tentacles are getting into more and more of our lives, especially the First-Amendment–violating Obamacare. What a contrast to the dishonest leftist straw-man of “trickle-down economics”. As the great economist Dr. Thomas Sowell shows in “Trickle Down” Theory and “Tax Cuts for the Rich” “trickle-down economics” has have never been proposed by any conservative economist. His good friend, fellow economist Dr Walter Williams, likewise says that “the term ‘trickle down theory’ is simply a tool of charlatans and political hustlers.”
“One very insightful part of Sowell’s paper is the discussion about what [1920s treasury secretary Andrew] Mellon called the ‘gesture of taxing the rich’—namely, tax-exempt securities that he tried unsuccessfully to put an end to. Tax-exempt securities and other tax breaks are valuable tools in the politics of class warfare and envy. Politicians have it both ways. They get votes by raising taxes on the wealthy—or threatening to do so—and at the same time provide the wealthy with a way out of high taxes through tax-exempt securities. This explains how President Obama can raise tens of millions of dollars in campaign contributions from Hollywood millionaires and Wall Street’s rich and powerful. ‘Tax cuts for the rich’ demagoguery is simply the height of deceit perpetrated on the gullible people and useful idiots.”
Governor Romney had his own answers, including removing some of these tax shelters while lowering overall rates. He also counterattacked, pointing out that far from being the benefactor of the middle class that Obama claims, “Under the president’s policies, middle-income Americans have been buried.” Hard to argue with that, since Obama’s hapless Vice President Joe Biden had recently tried an attack line, “How they can justify, how they can justify raising taxes on the middle class that has been buried the last four years.” Romney threw Biden’s admission right back at the President. He continued with another great phrase, the “economy tax”:
“They’re just being crushed. Middle-income Americans have seen their income come down by $4,300. This is a tax in and of itself. I’ll call it the economy tax. It’s been crushing. The same time, gasoline prices have doubled under the president, electric rates are up, food prices are up, health care costs have gone up by $2,500 a family.”
Romney also explained to the economically illiterate Obama about the key difference between tax rates and tax revenues. As Dr. Sowell’s paper documents, lower tax rates that are paid generate more revenue than high rates that are avoided. After all, when income is taxed too much, it destroys the incentive to generate income in the first place. Romney explains:
“Well, then why lower the rates? And the reason is because small business pays that individual rate. Fifty-four percent of America’s workers work in businesses that are taxed not at the corporate tax rate but at the individual tax rate. And if we lower that rate, they will be able to hire more people.”
Conversely, Romney pointed out that higher rates discourage businesses from hiring—not only was Romney a great businessman himself, but knows plenty of them:
“Now, I talked to a guy who has a very small business. He’s in the electronics business in—in St. Louis. He has four employees.
He said he and his son calculated how much they pay in taxes. Federal income tax, federal payroll tax, state income tax, state sales tax, state property tax, gasoline tax — it added up to well over 50 percent of what they earned.
And your plan is to take the tax rate on successful small businesses from 35 percent to 40 percent. The National Federation of Independent Businesses has said that will cost 700,000 jobs.”
But Obama is too wedded to his redistributionist dogma to care about basic economics. This was shown in his debate with Hillary Clinton in 2008, about another tax. In this debate, ABC moderator Charles Gibson—himself a left-winger on a leftist channel—pointed out to Obama that when capital gains tax rates were lowered, the revenues from this tax increased, and when the tax rates increased, the revenues dropped. Nevertheless, Obama persisted on increasing the tax rates in the name of “fairness”.
But, as Sowell has pointed out, higher capital gains tax discourages investment—why not earn income the safe way by a job with a guaranteed paycheck, instead of risking it in investments that might lose money?
All Obama can think of is the very taxing and spending that got us into this mess, including the Democrat Downgrade (of America’s credit rating). But Romney pointed out “it’s, frankly, not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation. And they’re going to be paying the interest and the principle all their lives.”
So Romney proposed that we must cut spending, starting with programs that fail his test: “Is the program so critical it’s worth borrowing money from China to pay for it? And if not, I’ll get rid of it. ‘Obamacare’ is on my list.”
And he joked to the PBS moderator Jim Lehrer:
“I’m sorry, Jim. I’m going to stop the subsidy to PBS. I’m going to stop other things. I like PBS. I love Big Bird. I actually like you too. But I’m not going to keep on spending money on things to borrow money from China to pay for it.”
Indeed so. With the huge number of stations out there, there is even less justification for taxpayer funding of PBS. Big Bird is so popular that private investors will be fighting each other for the rights to Sesame Street. Indeed, the excellent Senator Jim deMint pointed out, “From 2003 to 2006, Sesame Street made more than $211 million from toy and consumer product sales.” The left-leaning PolitiFact rated this as “True”. And any PBS program that is not popular should be allowed to fail.
Romney also proposed returning the good programs to the States.
There is a lot more to be said, including about Romney’s superior energy policies that would help America achieve energy independence instead of being beholden to America-hating countries. But that is the subject of Part 3.