President Barack Obama

Though about President Barack Obama’s speech at George Washington University on April 13, 2011, this is not a full-blown critique.

First, though billed as “Remarks by the President on Fiscal Policy,” it appeared to be little more than the first speech of Mr. Obama’s 2012 reelection campaign.

Second, the speech was pretty much the same old leftist boilerplate utilizing class warfare, envy, and demonizing of Republicans and their budget proposal.  In short, the Obama proposal was to cut waste, implement healthcare price controls, and increase taxes on “the wealthy.”

Third, though I expect “spin” in campaign speeches, this was the most appalling display of lying and misrepresentation I ever witnessed in a speech by a President of the United States.  Those of you familiar with my work know I’m not prone to hyperbole.

Finally, the primary reason for this critique is language I heard for the first time.  Mr. Obama said, “The fourth step in our approach is to reduce spending in the tax code, so-called tax expenditures.”  For a fleeting second, I thought Mr. Obama was going to talk about the huge cost of tax compliance by businesses and individuals.  According to the Tax Foundation, “the IRS estimates Americans spend 6.6 billion hours per year filling out tax forms—including 1.6 billion hours on the 1040 form alone.  In 2002 Americans spent roughly $194 billion dollars on tax compliance.  That amounts to 20 cents of compliance cost for every dollar collected by the tax system.”  My naïve flight of fancy was fleeting, however.

Almost immediately I learned “spending in the tax code” and “tax expenditures” are euphemisms for provisions of the tax code Mr. Obama doesn’t like.  For example, the ability to deduct mortgage interest on your 1040 is “spending in the tax code” or a “tax expenditure” if you’re “rich.”  Further, the difference between the tax rate Mr. Obama thinks is “fair” and what you pay is also “spending in the tax code” or a “tax expenditure.”  On the other hand, the misnamed Earned Income Tax Credit (EITC), a version of welfare that actually results in “refunds” even to people who didn’t make a tax payment, is not “spending in the tax code” or a “tax expenditure.”  This is not merely wordplay by Mr. Obama; it’s indicative of how he views personal income.  Here is the logical extension of this position.  Whatever you get to keep from your gross income (wages, interest, dividends, etc.), Mr. Obama considers “spending in the tax code” or a “tax expenditure.”  In other words, the fruit of your labor belongs to the government and it’s up to the government to determine how much you get to keep.  (A variation of this is when lefties say a tax rate cut must be “paid for,” as if you keeping more of your earnings actually results in a cash transfer from the government to you.)  Unfortunately, this isn’t a new idea, even in the U.S.  During World War II, FDR actually wanted a 100% marginal tax rate!  For individuals, FDR believed no one should have an income in excess of $25,000/year after taxes.  This is about $314,000 in 2011 dollars.  The Democrat-majority Congress “compromised” on a 94% marginal rate on income over $200,000 (about $2.5 million in 2011 dollars).