Obama wraps talk to nation in sunshine and envy
by Bob Hoig, Publisher
Midlands Business Journal
Maybe the so-called Wall Street Occupiers, hibernating in urban centers around the country awaiting the word, found nourishment in President Obama’s State of the Union pep rally Tuesday evening.
There was little substance for the rest of us.
The take-away looked and sounded like a leftist politician raising the flag of class envy to gird the troops for a bitter, demagogic campaign to follow.
Obama, again, leaned on his favorite economic prop, supplied by Omaha Billionaire Warren Buffett.
Buffett asserts that he and other “millionaires and billionaires” are not paying their fair share of taxes, compared with his secretary.
Voilà, direct from the Omaha headquarters of Berkshire Hathaway, said secretary, Debbie Bosanek, appears in the chamber and her image fills the television screens.
She apparently is to be an Obama symbol for popular revolt against an oppressive tax code pressing down on the people. Except, the Obama-Buffett remedy is to raise the taxes some people pay on investments made with money they have already paid taxes on.
“Right now, Warren Buffett pays a lower tax rate than his secretary,” declared Obama.
Except, this is not true. Bosanek pays exactly the same 35 percent rate on ordinary income and 15 percent on capital gains as does Buffett.
If Buffett really wants to pay more to the government, he can start by paying himself more than a paltry $100,000 salary yearly taxed as ordinary income he says he takes to run Berkshire (BRK). The figure is ridiculously low for a man running a worldwide conglomerate with assets of $135 billion.
Capital gains have always been the pathway for Buffett and BRK. Even in that low rate arena, with which the measly $100,000 taxed as ordinary income gets Buffett to his lower average rates, earnings can be shielded in the unrecognized capital gains category or by rolling them into new ventures. Another option: Funneling billions into charitable foundations; setting up the family foundations is another.
Obama must feel he is honoring Buffett’s loyalty with the so-called “Buffett rule,” a new millennium device that enacted into law will look a lot like the widely cursed Alternate Minimum Tax from the 1970s.
The AMT, it may be remembered, was launched by righteous politicians in a similar burst of class envy as a net to catch rich people. The politicians, however, failed to index the tax for inflation. That omission ensnared growing numbers of the middle class as the years passed and now required a yearly “fix.”
Amazingly, the president spoke without mentioning his rejecting the Keystone Pipeline. He and the voters in November can count the decision as Obama’s contribution to America’s energy dependence on the explosive Middle East.
Also failing to cross his lips was the so-called Community Reinvestment Act from the Clinton era. In order to avoid the wrath of the federal government and bank regulators, banks were forced to make loans to people who could and would not ever repay them.
Obama’s sunny outlook for America Tuesday evening amounted to a seeming refusal to face 2012 realities of high and unyielding unemployment, national debt, deficits, and strangling new regulations, 80,000 pages of them in 2010 alone.
That view drew rebuttal from Indiana Gov. Mitch Daniels, who made the official Republican reply on television.
He said, “In three short years, an unprecedented explosion of spending, with borrowed money, has added trillions to an already unaffordable national debt. And yet, the president has put us on a course to make it radically worse in the years ahead.
“The federal government now spends one of every four dollars in the entire economy; it borrows one of every three dollars it spends. No nation, no entity, large or small, public or private, can thrive, or survive intact with debts as huge as ours.”
“When President Obama claims that the state of our union is anything but grave, he must know in his heart that this is not true,” Daniels said.
A very polite way of putting it, we’d say.
January 27, 2012
