Obama brings me back

I haven’t blogged in over two months. I’ve just been too busy. However, Obama and his complete stupidity brought me back. Today in a so called “town hall meeting” sponsored by CNBC, he was speaking on repealing the Bush tax cuts.

“‘On average, millionaires would get a check of $100,000. It is an irresponsible thing for us to do. Those folks are the least likely to spend it,’ he said to applause.”

I have to thoughts on this ridiculous statement. Either he doesn’t understand economics 101 or he just can’t stand to let someone spend money he believes he should control.

There are certainly many liberals who just don’t understand economics. They think it is better for an economy to spend than to save? Does Obama spank his kids if they don’t spend 100% of their allowance? In the old days people believed that saving was good.

What does Obama think happens to saved money? Does he think all millionaires sleep on huge mattresses full of cash? Whether money is spent or saved it is put back into the system. Let’s take a minute to run through an example.

If I get $5,000 back in taxes and chose to save it, where does it go? If I put it in the bank, they will loan it out. Whoever gets the loan will spend it. They will likely spend it on something more worthwhile than junk at the mall.

I could also put the money in an eTrade account and invest it in Apple, Cisco or some other company. If I do that, where does it go? It goes to someone who owns those stocks and believes those stocks are going to fall. Once that person gets the money they will either spend it or buy another stock. They may even purchase an IPO. Initial Public Offerings are a means for companies to get cash to buy stuff. Stuff that is likely more worthwhile than junk at the mall.

No matter what, it will get spent. It still goes into the economy to drive production. Now I will admit that they money will have less velocity. It will not stimulate the economy as fast as a trip to the mall but it will still stimulate the economy.

My comments about “stuff more worthwhile than junk at the mall”, is important. What will make our country richer; the creation and subsequent purchase of bathing suit or the purchase of a hammer by a contractor? If the answer isn’t readily obvious then think about it a while.

I doubt Obama is really that stupid. He just wants to retain the money so he can hand it out to his own constituents i.e. wealth redistribution. Obama and other democrats have shown their true colors the last few months.

Here are a few quotes: “’Sen. Ben Nelson, D-Neb., Sen., Kent Conrad, D-N.D. and Sen. Joe Lieberman, a Connecticut Independent who caucuses with Democrats, have all recently said that raising taxes — even for the rich — doesn’t make sense while the economy is faltering.’

‘Rep. Harry E. Mitchell, D-Ariz., said in a letter sent Friday to House Speaker Nancy Pelosi that he wants to make the Bush era tax cuts on capital gains and estate taxes permanent.’

‘Senate Budget Chairman Kent Conrad, D-N.D., a fierce deficit hawk, said last month that he would be reluctant to let anyone’s tax cuts expire just yet.

‘In a perfect world, I would not be cutting spending or raising taxes for the next 18 months to two years’ Conrad said”

“At least 38 House Democrats have now come out publicly in favor of at least a short-term extension of current income tax rates for couples earning more than $250,000 and individuals over the $200,000 threshhold — bucking calls from Obama and Pelosi to let taxes increase on wealthier Americans. Other Democrats have indicated privately that they prefer an extension instead of allowing rates to expire for top earners, and Maryland Rep. Chris Van Hollen, who heads Democratic campaign efforts, has argued behind closed doors for taking a political issue off the table by giving a short reprieve to wealthy folks before the midterm elections.”

So in other words, these guys see tax cuts as economic stimulators. The problem is that it interferes with their redistribution plans. They are normally happy to put the economy in the back seat but since they are going to be the ones getting the blame this time around, they are willing to cut taxes.

Now Nancy Pelosi is another story. I think she actually fits in the category of stupid. The other day she said, “The tax cuts at the high end have not produced any jobs; it only increased the deficit.” She actually seems to believe that tax credits for the poor stimulate the economy yet tax cuts for the wealthy do nothing.

I think economics and wealth distribution have formed a sort of lasagna in her head. They are now impossible to separate.