When Barack Obama repeated his call to nearly double the capital gains tax rate last month, most observers wrote it off to fiscal naivety. But during last night's debate, the Democrat frontrunner let slip that his motives were more socially than economically driven. And that his reasoning was nothing short of ridiculous.
Charlie Gibson reminded Obama of a March 27th statement he made to Maria Bartiromo on CNBC's Closing Bell that he'd return the rate to the 28 percent it was under Bill Clinton. Said Gibson: [emphasis added throughout]
"It's now 15 percent. That's almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent .... And George Bush has taken it down to 15 percent.
"And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected? "
And Obama's remarkable response:
"Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair."
Wow. Democrats have typically ignored or outright denied the supply-side benefits of lower taxes -- particularly capital gains.
But with that statement, Obama betrayed first his intellectual dishonesty, then his economic idiocy. The candidate is well aware that his hypothetical hedge fund manager pays a much higher rate on wages than does his supposed secretary. And that they both pay the same rate on capital gains - yes Senator, millions of Americans of varying income, including secretaries, own stock.
Accepting the low tax / higher revenue premise by virtue of his silence, he argued that his own Marxist measure of "fairness" somehow trumps fiscal efficacy. Shocking, yes, but remember - he was, after all, declared 2007's "Most Liberal Senator" by the National Journal.
But then he threw all reason to the wind when he said he wants to:
"make sure that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools."
Of course, many would argue the "fairness" of using tax revenues to help Americans who can't afford health insurance or throwing more money into our already over-funded yet failing public school systems.
But while accepting that raising the rate would effectively lower the tax revenues necessary to provide such questionably fair public benefits, Obama favors doing so, nonetheless, as benefiting both the beneficiaries and the benefactors would be unfair.
And George H.W. Bush once called Reaganomics "Voodoo Economics?"
Bad enough his facts are out-of-touch -- twice last night he referred to the payroll tax cap of $97,000, a figure nearer last year's $97,500 than today's $102,000 - but consider both the values and logic driving his plans for the economy.
And then imagine what we might look forward to when his foreign policies are finally fleshed out.