Every once in a while I have to just scratch my head and wonder about those who are supporting Barack Obama for President. So often it seems that those in the media who are allegedly supporting him make the case against voting for him. With allies like this there almost isn’t any need for opponents to question Obama about anything. But the real scary thing is that these alleged Obama supporters don’t even seem to appreciate that they are making the case against Obama.
Case in point is an opinion piece titled McCain’s Convenient Untruth, which was written by Sebastian Mallaby and published in the Washington Post on today. It seems that Mr. Mallaby takes issue with McCain’s economic plan, but openly acknowledges that the Obama plan will strike at the heart of innovation and potentially ruin the economy. How in the name of all that is right in the world could it be a wise move to knowingly harm innovation? Newsflash… our economy is dependent upon innovation and the path to success as a nation is to build upon new technologies and create new industries to fuel the economy. At a time when our Patent Office seems hell-bent on giving fewer and weaker rights we can hardly stand for the creation of new hurdles that will only make innovation more difficult.
Lest you think I am kidding, here is what Mallaby wrote today in the Post:
Under Obama’s plan, top earners would pay a marginal federal tax rate of maybe 46.5 percent (that includes the Medicare tax and Obama’s proposed hike in Social Security taxes), considerably more than the 37.9 percent they would pay under McCain. There’s no doubt that Obama’s higher tax rates would mean weaker incentives to work, take risks and innovate; and stronger incentives to waste time and effort on avoiding the tax man.
But those bad effects must be weighed against a good one: Higher tax rates mean a lower budget deficit. According to the Tax Policy Center, over the course of a decade Obama’s plan would result in a national debt $1.2 trillion smaller than you would get under McCain’s plan. Less government borrowing ultimately means lower interest rates and more private investment. This positive effect may well outweigh the blow to growth and jobs from weaker work incentives.
So in other words under the Obama economic plan the marginal federal tax rate would be nearly 10% higher than under the McCain plan and this would doubtlessly take away incentives to innovate and would lead to wasting time and creating more incentive to manipulate the system to avoid taxes? How could that be considered to be a positive thing by anyone? And all of this is in the name of offsetting the national debt? Give me a break! Anyone who has followed any political promises knows that promises to offset the national debt are never real and are uttered without the ability to even keep a straight face. The science of economics on the national level is no science at all, it is black magic, where numbers are manipulated to create whatever reality will get the purveyor of the numbers elected. Economic projections that relate to the debt are worse than business plan estimates because at least business plan estimates need to pass muster under the review of investors!
So because the positive effect of crippling taxes “may” outweigh the significant, clear and doubtless harm to innovation we should roll those dice and give it a whirl anyway? Why don’t we just all pony up $100, give it to Uncle Sam who can then take a trip to Vegas and put it all down on Black on the roulette table. Now that sounds like a more viable economic plan to me!
Whether or not the Obama plan will lead to harmful effects on innovation is debatable, and while I have my own opinions those can keep for another day. The important question to ask, however, is how could anyone come to the conclusion that Obama’s economic plan would doubtlessly do harm to innovation and still believe that his plan is one that should be implemented? This demonstrates a complete lack of understanding of our current economic realities, and demonstrates blissful ignorance with respect to the role that techonological advancements will play in the next boon.
If you want private investment to enter the economy you should focus on policies that do not cripple innovation. Why not try a policy or two that actually promotes innovation? I say give small businesses and start-ups that develop technology significant tax breaks. As new, exciting and perhaps revolutionary technologies are developed that will pave the road to economic success for everyone. It will lead to the creation of new jobs and the birth of new industries, so rather than handing out tax breaks to those who disproportionately do not pay the majority of the taxes why not set policies in motion that will actually benefit those who are at the bottom of the tax bracket with better and more plentiful jobs? Have we learned nothing from the old proverb about teaching a man to fish rather than giving him a fish?