Taking a break from His busy schedule as the world’s savior and redeemer, Jesus Christ found time two weeks ago to immerse himself in United States Presidential politics, endorsing Obama’s tax plan on wealthy earners. Or at least the President believes he did. At the National Prayer Breakfast, he invoked the Christian savior in order to sell his tax reform plan to a more religious audience, saying, “For me as a Christian, it also coincides with Jesus’ teaching that for unto whom much is given, much shall be required.”

More recently, this week, in line with his increasingly partisan rhetoric, President Obama unveiled his annual budget proposal, calling for over a trillion dollars in tax increases on America’s most successful citizens. Indeed after taxing capital gains and dividends as real income, repealing the Bush tax cuts, and factoring in a 4% surtax for Obamacare, President Obama’s budget proposal would triple the tax burdens of many wealthy and middle income earners. Although President Obama now claims to be a representative of Jesus’ teachings, his new tax plans would probably make the Christian Savior quite disappointed.

President Obama contends that since Jesus Christ placed significant emphasis on charity, the Savior would favor a tax policy that institutionalizes such philanthropy by forcibly redistributing wealth from the rich to the poor. Through taxation, the President seeks to enforce mandatory charity and make wealthy Americans relinquish larger portions their income to the government regardless of their will or intention. However Jesus taught in Corinthians 9:7, “Every man according as he purposeth in his heart, so let him give; not grudgingly, or of necessity: for God loveth a cheerful giver.” When paying taxes, one determines their donation based on the mandatory payments established by the government rather than the generosity of their own being. Thus Jesus Christ would not view increased taxation as being in line with his teachings, which judge believers based on the voluntary sacrifices that they impose upon themselves for the benefit of others.

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Yesterday, White House Domestic Policy Council member Cecilia Munoz appeared on “The Bill Press Show.”  There, she explained that Congress was filled with “roadblocks,” and that the budget wasn’t going anywhere fast. But she added that “this President has shown that he’s not afraid to make administrative changes where he can when Congress doesn’t act.”  She said something similar on NPR, stating, “You’ve also heard the president say that in areas where we’re struggling to get legislation through because we don’t have the partners we need … this president is going to do what he can to move the ball forward for people even in the absence of Congressional action.”

This message was echoed by Former Attorney General Ed Meese of the Heritage Foundation, who explained that Obama had “disdain for Congress,” and that his use of “czars” brings his Administration “as close to a monarchy as since the days of George III.”

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Early last year, the Center for Freedom and Prosperity released this video, narrated by yours truly, making the case that the United States and other nations should shift from a tax-and-transfer entitlement scheme to a system of personal retirement accounts.

Some left wingers criticized the idea, saying the big drop in the stock market in 2008-2009 is proof that personal retirement accounts were too risky.

You won’t be surprised to learn, though, that they are wrong. It is true that retirement income fluctuates with a system of personal accounts, but that simply means that it is difficult to predict how much more income one would enjoy when compared to being stuck with Social Security.

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If you shake out the Obama budget in terms of bold headlines, it’s really a class-warfare, tax-the-rich budget. Layer upon layer of tax hikes are piled on successful investors, small-business owners, and corporations.

The capital-gains tax goes from 15 percent to 24 percent (including Obamacare). The dividends tax goes from 15 percent to nearly 40 percent, and that’s not including the double tax on corporate profits embodied in dividends and capital gains. The Bush tax cuts for top earners are repealed. There’s the 30 percent Buffett-rule minimum tax on millionaires. The carried-interest tax for private equity, hedge funds, and other investment partnerships goes from 15 to 39.6 percent. The estate tax jumps to 45 percent. State and local bond interest deductions are severely limited. Oil and gas companies get hit. So do banks. And there’s probably more stuff in there I haven’t read yet. (Jimmy P. lays it out nicely.) Paul Ryan’s press release calls it a $1.9 trillion tax hike, with $47 trillion in government spending over the next decade and the fourth straight year of trillion-dollar deficits.

Some kind of corporate tax reform may be released in a few weeks. But we don’t know much about it. And while it may lower the top rate, it’s going to penalize U.S. firms operating abroad by roughly $150 billion in tax hikes. All in, the Obama budget raises corporate taxes by $350 billion. Just what business does not want or need.

Former Bush economist Keith Hennessey estimates that new proposals would create a ratio of at least 1.2 dollars of tax increases for every dollar cut in spending. Most of the spending cuts would slam Medicare doctors and other health providers. Unlikely to happen. And there is no overall entitlement reform. Somehow the Obama budget is being offered as a substitute for the $1.2 trillion in spending cuts from the supercommittee. But the slam down in defense remains a huge problem.

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No separation of church and state for thee!

Far from a compromise, President Obama’s Health & Human Services is doubling down on its edict that religious organizations be compelled to provide contraceptives and abortion-inducing drugs through their health care plans.

Americans rightly recoil at the prospect of a government telling them what can and cannot be covered under their plans, but this issue has never been about “health care” or “birth control.” It has always been about controlling religious freedom and the charity sector.

In 2010, Obama promised Americans and Muslims in particular that their rights to worship as they see fit would not be infringed by his government.  In 2012, he has told Catholic Americans–25% of America–that their freedom of association will be infringed by his government.

“As a citizen, and as president, I believe that Muslims have the right to practice their religion as everyone else in this country,” Obama said. “That includes the right to build a place of worship in a community center on private property in lower Manhattan in accordance with local laws and ordinances. This is America and our commitment to religious freedom must be unshakeable.”

“I can’t impose my religious views on another,” Candidate Obama wrote in The Audacity of Hope. (251)

That is, unless you are Catholic.

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As discussed earlier this week, the most important number in Obama’s budget is that the burden of government spending will be at least $2 trillion higher in 10 years if the President’s plan is enacted.

But there are also some very unsightly warts in the revenue portion of the President’s budget. Americans for Tax Reform has a good summary of the various tax hikes, most of which are based on punitive, class-warfare ideology.

In this post, I want to focus on the President’s proposals to increase both the capital gains tax rate and the tax rate on dividends.

Most of the discussion is focusing on the big increase in tax rates for 2013, particularly when you include the 3.8 tax on investment income that was part of Obamacare. If the President is successful, the tax on capital gains will climb from 15 percent this year to 23.8 percent next year, and the tax on dividends will skyrocket from 15 percent to 43.4 percent.

But these numbers understate the true burden because they don’t include the impact of double taxation, which exists when the government cycles some income through the tax code more than one time. As this chart illustrates, this means a much higher tax burden on income that is saved and invested.

The accounting firm of Ernst and Young just produced a report looking at actual tax rates on capital gains and dividends, once other layers of tax are included. The results are very sobering. The United States already has one of the most punitive tax regimes for saving and investment.

Looking at this first chart (click to enlarge), it seems quite certain that we would have the worst system for dividends if Obama’s budget is enacted.

The good news, so to speak, is that we probably wouldn’t have the worst capital gains tax system if the President’s plan is enacted. I’m just guessing, but, based on an examination of this chart (click to enlarge), it looks like Italy (gee, what a role model) would still be higher.

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Not Until Obama's Union Friends Get Theirs First

Unlike politicians, budgets don’t lie. They reveal both the priorities and values of those who make them. Give me a household budget and I can tell you what the parents prioritize and value. The same is true for a government’s budget.

What then to make of President Barack Obama’s decision to exclude the D.C. scholarship program from his budget this year?

It can’t be the cost. At $20 million a year, it is a pittance compared to the proposed $68.9 billion a year proposed for his Department of Education. It must be something else.

Obama knows full well that his budget won’t pass muster. His last one failed to get a single vote in the Senate. This one will assuredly fail, too. Indeed, it was designed to fail so that President Obama could run against a “do-nothing” Congress. Knowing this, Obama could easily have put the D.C. voucher program in the budget. He therefore must have chosen not to.  In Obama’s previous federal aid plan, $20 million went to public schools, charters and vouchers, but in this years new budget, Obama gives millions to public and charter schools but not one penny to vouchers. Why not? Could it be that the teachers unions, who give overwhelmingly to Democrats, are committed to giving him money in what promises to be a tough election year?

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On Monday, the Ranking Member of the Senate Budget Committee Sen. Jeff Sessions blasted President Barack Obama’s $3.8 trillion 2012 budget plan as being a fiscal charade of breathtaking proportions and “one of the most spectacular fiscal cover-ups in American history.”

According to Sen. Sessions, President Obama’s claim that his plan will achieve $4 trillion in deficit reduction over ten years is utter nonsense and that the actual figure, once stripped of accounting gimmicks, is actually a paltry $273 billion.

Under this plan, we will accumulate $11 trillion in new gross debt—the $4 trillion reduction in deficit is nowhere to be found.When the gimmicks are removed, spending even rises $1.5 trillion above current projections—$47 trillion in total. Annual spending will rise by 62 percent between 2011 and 2022. There are no real reforms and the new taxes are used to fund more wasteful Washington spending. So even with almost $2 trillion in job-crushing tax hikes, the president remains incapable of reducing the deficit—he just can’t resist the temptation to spend the money.

Sen. Session’s outrage at President Obama’s disingenuous budget, which would add $1.9 trillion in new taxes, comes on the heels of Obama Chief of Staff Jack Lew’s misleading assertion that the reason the Senate has failed to pass a budget resolution is because of Republican opposition.  The Washington Post Fact-Checker gave that claim four Pinocchios for dishonesty and said Mr. Lew’s statement was comprised of “highly misleading language that blamed Republicans for the failure of the Democratic leadership.”

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Are You Now (or Will You Become) One of the 28 Million Unemployed the Administration Missed?

The table below displays unemployment rate projections in (1) President Obama’s first budget in February 2009, and (2) President Obama’s current budget, released today.

Significantly, as the Administration’s budget documents in 2009 noted, their projections then incorporated the effects of the Administration’s trillion-dollar February 2009 stimulus plan, which the President said will “save or create at least three and a half million jobs, and help to revive our economy.”  As the Administration’s current figures confirm, however, that stimulus plan has been a colossal failure, with 4.5 million more people unemployed this year than they projected in 2009.

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President Obama’s budget proposal was unveiled today, generating all sorts of conflicting statements from both parties.

Some of the assertions wrongly focus on red ink rather than the size of government. Others rely on dishonest Washington budget math, which means spending increases magically become budget cuts simply because outlays are growing at a slower rate than previously planned.

When you strip away all the misleading and inaccurate rhetoric, here’s the one set of numbers that really matters. If we believe the President’s forecasts (which may be a best-case scenario), the burden of federal spending will grow by $2 trillion between this year and 2022.

In all likelihood, the actual numbers will be worse than this forecast.

The President’s budget, for instance, projects that the burden of federal spending will expand by less than 1 percent next year. That sounds like good news since it would satisfy Mitchell’s Golden Rule.

But don’t believe it.

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The 2013 budget being released Monday will propose public works spending while seeking tax increases on the wealthy and corporations to claim progress on the federal deficit in his upcoming budget. The spending plan projects a deficit for this year of $1.3 trillion, the fourth straight year of $1 trillion-plus deficits, and $901 billion next year.

Jacob Lew, the president’s chief of staff, said the new budget would put the country on track to achieve $4 trillion in deficit reductions over the next 10 years, achieved by raising taxes on the wealthy and trimming government spending. Lew said the president’s budget would cut spending by $2.50 for every $1 it raises in new taxes.

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There simply is no other way to explain the statements of White House Chief of Staff Jacob Lew this morning on CNN’s State of the Union. Lew was asked by Candy Crawley about a recent statement by Senate Majority Leader Harry Reid indicating he would not be bringing a vote on the budget to the Senate floor.

CROWLEY: “I want to read for our viewers something that Sen. Harry Reid, the Democrat Majority Leader in the U.S. Senate, who said, ‘We do not need to bring a budget to the floor this year. It’s done, we don’t need to do it.’”

LEW: “He’s not saying that they shouldn’t pass a budget. But we also need to be honest. You can’t pass a budget in the Senate of the United States without 60 votes and you can’t get 60 votes without bipartisan support. So unless… unless Republicans are willing to work with Democrats in the Senate, Harry Reid is not going to be able to get a budget passed.”

This is patently false.

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When Ronald Reagan said that big government undermined the economy, some people dismissed his comments because of his philosophical belief in liberty.

And when I discuss my work on the economic impact of government spending, I often get the same reaction.

This is why it’s important that a growing number of establishment outfits are slowly but surely coming around to the same point of view.

• The European Central Bank published a study showing “…a significant negative effect of the size of government on growth.”
• A study by two Harvard economists found that “large adjustments in fiscal policy, if based on well-targeted spending cuts, have often led to expansions.”
• The Organization for Economic Cooperation and Development noted in recent research that welfare programs are economically destructive because they lure people into dependency because “net disposable income would increase despite putting in fewer hours.”
• A study from the International Monetary Fund concluded that “Cuts to pension and health entitlements had the most beneficial effect on economic growth.”

This is remarkable. It’s beginning to look like the entire world has figured out that there’s an inverse relationship between big government and economic performance. (more…)

“The new debate in the Republican party needs to be between conservatives and libertarians,” says Sen. Jim DeMint (R-S.C.). “A lot of the libertarian ideas that Ron Paul is talking about…should not be alien to any Republican.”

Yet right after the 2010 midterm elections, the influential Tea Party favorite proclaimed that “you can’t be a fiscal conservative and not be a social conservative,” a comment that was widely viewed as a slap at libertarians. And South Carolina’s junior senator is also a staunch pro-lifer, has favored a constitutional ban on flag burning, and is on the record saying that gays shouldn’t be allowed to teach at public schools.

More recently, DeMint has been leaning libertarian. His new book, Now or Never: Saving America from Economic Collapse, is a warning to the nation that we need radical spending cuts (including putting defense spending on the table) or else face economic oblivion. And he was instrumental in getting Tea Party Republicans elected in 2010, including the most libertarian member of the caucus, Sen. Rand Paul (R-Ky.), who also wrote the foreword to DeMint’s book.

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Is it April Fool’s Day? Has somebody in Paris hacked the website at the Organization for Economic Cooperation and Development? Have we been transported to a parallel dimension where up is down and black is white?

Please forgive all these questions. I’m trying to figure out why any organization – even a leftist bureaucracy such as the OECD – would send out a press release entitled, “Rising tax revenues: a key to economic development in Latin American countries.”

Not even Keynesians, after all, think higher taxes are a recipe for growth.

Ah, never mind. I just remembered that the OECD is a hotbed of statism, so the press release makes perfect sense. After all, the US-taxpayer-funded organization has become infamous for reflexively advocating big government.

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What’s the worst policy idea that would cause the most damage to society?

I’m tempted to say the value-added tax since our hopes of restraining the federal government will be greatly undermined if we give the buffoons in Washington a new source of revenue. Indeed, this is one of the reasons why Mitt Romney may be an ever greater long-term threat to American exceptionalism than Barack Obama.

But even though the VAT is fiscal poison, it’s not the most dangerous policy proposal.

At the top of my list is global taxation.

I wrote in 2010 about some of the awful global tax schemes being pushed by the United Nations. And I also noted that unrepentant statists such as George Soros are pimping for global taxation.

I even wrote a paper back in 2001 to explain why global taxes are such a bad idea.

The details of the tax don’t matter. It’s the principle.

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Wednesday night, the House of Representatives overwhelmingly passed H.R.3567; The Welfare Integrity Now for Children and Families Act of 2011; which makes it illegal to use an EBT card in a strip club, liquor store or casino. The concern began, shortly after welfare recipients were issued funds electronically through ATMs, when Welfare Reform passed in 1996. Since then there has been a disturbing trend of welfare not being spent on the things people think welfare should be spent on.

And I don’t understand that concern. It is the theory of most Democrats that giving money to people stimulates the economy. It should be of no concern to anyone whether that money is used to stimulate patrons of a strip club, liquor store owners, or casino magnates (who BTW are often HUGE political contributors).

The bill is almost completely futile. It won’t insure that welfare money is not spent at a strip club; it only means that the ATM at the gas station across the street from the strip club is going to see a lot more traffic.

This is just the kind of government bias, that gives legitimate business a bad name. Certainly those girls are working as hard as any SEIU employee; whose pensions were paid out of stimulus funds, while they protested in Wisconsin. Money spent on bikini wax, cover stick, and glittery lingerie will trickle down through the economy just like any other stimulus package.

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On this day last year, I posted two charts that I developed using the Minneapolis Federal Reserve Bank’s interactive website.

Those two charts showed that the current recovery was very weak compared to the boom of the early 1980s.

But perhaps that was an unfair comparison. Maybe the Reagan recovery started strong and then hit a wall. Or maybe the Obama recovery was the economic equivalent of a late bloomer.

So let’s look at the same charts, but add an extra year of data. Does it make a difference?

Meh…not so much.

Let’s start with the GDP data. The comparison is striking. Under Reagan’s policies, the economy skyrocketed.  Heck, the chart prepared by the Minneapolis Fed doesn’t even go high enough to show how well the economy performed during the 1980s.

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Bob Lutz is a good man.  A Swiss-born immigrant American success story.

He’s held big gigs at BMW and Ford.  He also worked way up the food chain at (now $85 billion bailed-out) Chrysler and General Motors (GM) – retiring as GM’s Vice Chairman in 2010.

And he has recently written a piece:

Chevy Volt And The Wrong-Headed Right

…in vociferous defense of the Chevy Volt.

You know, the more-than-$200,000 in government-subsidies-per-unit-sold Volt.

The overproduced, unprofitable, unpopular, combustible Volt.  (And January 2011’s sales were no less disappointing.)

That Chevy Volt.

Are we on the Right wrong-headed?  Let’s take Mr. Lutz’s piece piecemeal and see.

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Back in 2010, I crunched the numbers from the Congressional Budget Office and reported that the budget could be balanced in just 10 years if politicians exercised a modicum of fiscal discipline and limited annual spending increases to about 2 percent yearly.

When CBO issued new numbers early last year, I repeated the exercise and again found that the same modest level of budgetary restraint would eliminate red ink in about 10 years.

And when CBO issued their update last summer, I did the same thing and once again confirmed that deficits would disappear in a decade if politicians didn’t let the overall budget rise by faster than 2 percent each year.

Well, the new CBO 10-year forecast was released this morning. I’m going to give you three guesses about what I discovered when I looked at the numbers, and the first two don’t count.

Yes, you guessed it. As the chart illustrates (click to enlarge), balancing the budget doesn’t require any tax increases. Not does it require big spending cuts (though that would be a very good idea).

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