Obama Does 'Rich Man, Poor Man'
On September 25, addressing a DNC event in San Jose, California, the president recited a litany of liberal values dear to his heart: everything from increased spending on education to further subsidies for clean energy. But the main thrust of his remarks, his "particular vision of what America should be," centered on what he called "the values of shared prosperity." It is a "big, generous, optimistic" America that Obama says he represents. Who can argue with that?
That vision of America, the ideal of opportunity and hope, sounds inspiring until one considers what really Obama has in mind. Shared prosperity, as it turns out, does not mean greater prosperity for all. It means less for those who have worked hard, applied their talents, and saved, and more government benefits for those who have failed to apply themselves and have spent all that they have earned. It means that wealth will be taken by way of higher taxes from those who have sacrificed the most and labored the hardest, and redistributed to those who have squandered one opportunity after another over the course of a lifetime.
Sharing the wealth, and attacking those who refuse to share, is so much a part of Obama's political DNA that he could not resist making the case for higher taxes, even in the company of some of Silicon Valley's wealthiest citizens. Obama was speaking at the private residence of Facebook COO Sheryl Sandberg, with LinkedIn CEO Jeff Weiner, Facebook CEO Mark Zuckerberg, and other wealthy executives and entrepreneurs in attendance. The Silicon Valley crowd seemed not at all averse to sharing the wealth, though one suspects that many of them were more interested in the rewards of crony capitalism.
What Obama has in store for the rich of Mountain View, however, is not more opportunity for wealth-creation. It is much higher taxes for those who are not paying their "fair share," as he sees it. It's hard to say what a "fair share" would amount to, in his estimation, since the top 1% of earners already pay 38% of federal taxes, according to the National Taxpayers Union. Perhaps the top earners should be paying 50% or 70% of federal taxes. But to accomplish that would bankrupt even the über-rich of Silicon Valley.
There are 412 billionaires in America, entirely too many for the president's taste. Fortunately, Obama and his billionaire buddy Warren Buffett can breathe easy -- their numbers are declining fast. More billionaires now live in Moscow than in New York. The world's richest man is not an American; it is Carlos Slim Helu of Mexico. Two hundred and fifty-eight of these villains reside in Asia, double the number of five years ago. With the help of new taxes to pay for Obama's reelection, we might just be able to create more billionaires in India than in the U.S.
But it's not just billionaires who need to pay more. It's millionaires as well.
As of 2011, 27% of the world's millionaires lived in the U.S. That sounds good until you notice that 15% reside in Japan, a country with only 38% of our population. The expansion of wealth in China is even more remarkable. China, which now boasts 1,300,000 millionaires, recently overtook Japan in total GDP and is projected to overtake the U.S. by 2025.
And, yes, China does boast about the number of millionaires it has created -- something America has not done since Obama entered office. What Obama has done is berate the rich, not boast of their accomplishments. And he has done this for crass political gain.
Unfortunately, the uncertainty that Obama has created regarding wealth-creation is the primary factor behind our current economic malaise. His politics of class warfare have frightened rich individuals and corporations into being extremely cautious with their investments, and lack of new investment has resulted in economic stagnation. As long as the president continues to attack the rich, there will be no new jobs created, regardless of how many speeches he makes or how much he proposes spending on temporary jobs.
This is not the time for the president of the United States to be attacking the rich, not when our economic standing is in doubt. What's at stake is not just the fate of billionaires and millionaires, but also the fate of what Obama so patronizingly likes to call "ordinary folks." Obama wants to turn these middle-class Americans against the rich in the 2012 election, but what he doesn't tell them is that it's those same rich investors who helped create their jobs.
It takes a significant capital investment to create a thriving business -- the kind of business that creates jobs for those with no capital of their own. According to businessmart.com, the minimum investment to acquire a McDonald's franchise is $250,000 of non-borrowed money. By definition, then, it would seem that all McDonald's franchisees are wealthy individuals or have access to the accumulated wealth of others (family, friends, or whatever). But these evil rich types, as Obama would have it, create dozens of jobs at each franchise location. The same is true of every small business owner in America.
But Obama wants government to seize the profits that create permanent jobs and use them for temporary government jobs and unemployment benefits. In his June 29 news conference, President Obama insisted that businesses "could afford to pay more" in taxes. "They want to be able to do whatever they think is going to maximize their profits," he complained. This is probably the hundredth time Obama has stated that profits are unimportant, and it shows how little he knows about business. For most businesses, profit margins are extremely thin, and any increase in marginal costs threatens their survival.
Just to spell it out for our spender-in-chief, failure to "maximize profits" can and does lead to bankruptcy. It is that small margin of profit that determines whether a business will expand and hire new workers or fail and lay off existing employees. It is the wealth produced by well-run businesses that creates jobs. Every dollar that government seizes from businesses or business owners, or from investors, is a dollar that is not available for expansion. Last year, for the top 10% of earners, that was $2.8 trillion in total state, local, and federal taxes collected. How many start-ups could be funded with even a small fraction of that tax revenue?
Ideas have consequences, and Obama's campaign of class warfare has already produced damaging results. One consequence is that business owners are not willing to risk their capital in an environment in which the president is proposing ever-higher taxes and more regulation. The White House likes to point out that corporations have record amounts of cash on their books -- as much as $2 trillion according to the president, who can't seem to understand why these funds haven't been put to work to create jobs. The reason, as business leaders have been insisting for years now, is Obama himself.
Jeffrey Folks is author of many books and articles on American culture, with the most recent being Heartland of the Imagination (2011).