On Friday’s “Hannity” on the Fox News Channel, Washington Post columnist Charles Krauthammer took aim at President Barack Obama’s central economic policy push for 2012: his desire to enact the Buffett rule as a part of the U.S. tax code.
The Buffett rule, named after billionaire Warren Buffett, would essentially levy a minimum tax rate of 30 percent on individuals making more than a million dollars a year. But as Krauthammer explained, the amount of revenue it would bring in isn’t a large enough amount to solve the country’s fiscal woes.
“It’s literally incredible,” Krauthammer said. “It’s almost an embarrassment. It’s so shameless. If you were to collect the Buffett tax for the next 250 years, that’s longer than the life of this republic, you will not have covered the deficit — Obama’s deficit — for 2011. You collect it for another 250 years, so we’re now in the year 2612, and you’ve covered 2011 and 2012, and you need to cover only 498 other years of deficits.”
The underlying policy goal of putting the Buffett rule in place, he explained, is to raise the capital gains tax, Krauthammer said, and Obama has been less than up-front about that.
“This is a preposterous statement and he knows it is,” he continued. “Also on growth, it is equally deceptive. What the tax is, it’s a doubling of the capital gains tax. It’s disguised, but that’s the reason why the Buffett rates are lower, it’s the capital gains rate and it’s lower than the rate for normal income. So he doubles it.”
“The reason that’s not a good idea is because when you double the rate, you actually decrease the amount that the Treasury receives. And you decrease the growth because you are shrinking the pool of capital that is out there that people can invest and hire other people. The reason that we had an economic boom after the Kennedy tax cuts and the Reagan cuts, 20 years later, it’s precisely that they cut rates and particularly that they cut capital gains rates.”
But it’s not even about raising revenues, as the Washington Post columnist pointed out. Krauthammer reminded viewers that in 2008 Obama said he wanted to raise capital gains rate for the purposes of fairness.
“[T]hat’s the famous line where he basically says, ‘I am going to raise the rate, even if it decreases the amount of revenue,’” Krauthammer said. “This is insane. The purpose of taxation is to raise revenue and to pay for stuff the government has to do. That’s the only reason the government swipes your money.”
“And he is saying, I will raise the rates even if it decreases the amount simply because of this abstraction I have, which means I want to take the money from the rich and distribute it elsewhere and think that somehow it’s going to help the general economy. It makes no sense.”
According to Krauthammer, the gesture from Obama was less about policy and more about politics.
“And look, what’s the reason he is doing all of this?” he added. “It’s a misdirection play. It’s a way to have the shiny object. He doesn’t want to talk about what he has done. He has said — the longest over-9-percent unemployment since the Great Depression.”
“He has had the great, the slowest and most anemic recovery of any recession since the Second World War and he’s accumulated in one term, the greatest amount of debt — $5 trillion — in galactic history. So, he can’t run on that. So, instead he’s going to hold a ball over there. A shiny ball. And he’ll say, ‘look over here,’ so he doesn’t have to speak about his record, which has been an economic disaster.”