Redstate

By Josh Painter Posted in 2008 — Comments (2) / Email this page » / Leave a comment »

Sen. Barack Obama may indeed be the candidate of "real change" in the 2008 presidential contest. He is doing a better job than John McCain of uniting conservatives against him - and, by default, for John McCain. Now that's real change!

Until now, Obama has been able to cruise on the carefully-crafted image his handlers have designed for him as some kind of new JFK. But on careful examination, that image crumbles. Sure, Obama is capable of the same style of soaring rhetoric in his orations that Kennedy was known for, but on substance, the comparison falls apart. JFK advocated across-the-board tax cuts, reminding the country that "a rising tide lifts all boats." Obama, in contrast, is for all sorts of tax hikes including nearly doubling the current top capital gains rate to 28%. The Wall Street Journal cites this exchange between ABC's Charlie Gibson and Sen. Obama during the April debate in Philadelphia:

Mr. Gibson also probed a little deeper, asking the candidate why he wants to increase the capital gains tax when history shows that a higher rate brings in less revenue.

"Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20%," said Mr. Gibson. "And George Bush has taken it down to 15%. 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%, 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?"

Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "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. And you can't do that for free."

But Mr. Gibson had noted that higher rates yield less revenue. So the news anchor tried again: "But history shows that when you drop the capital gains tax, the revenues go up?" Mr. Obama responded that this "might happen or it might not. It depends on what's happening on Wall Street and how business is going." And then he went on a riff about John McCain and the housing market.

This is instructive... When the tax rate has risen over the past half century, capital gains realizations have fallen and along with them tax revenue. The most recent such episode was in the early 1990s, when Mr. Obama was old enough to be paying attention. That's one reason Jack Kennedy proposed cutting the capital gains rate. And it's one reason Bill Clinton went along with a rate cut to 20% from 28% in 1997.

Either the young Illinois Senator is ignorant of this revenue data, or he doesn't really care because he's a true income redistributionist who prefers high tax rates as a matter of ideological dogma regardless of the revenue consequences. Neither one is a recommendation for President.

Obama also favors a "windfall profits" tax on the oil companies and called for such a penalty in an ad released by his campaign on the eve of April Fools day. The Tax Foundation labels it as populist rhetoric based not on economics, but nonsense:

Obama seeks to impose a tax on the windfall profits of oil companies, which he implies in the advertisement is the cause of the high prices at the pump. The fact of the matter is that it doesn't work that way. The CEO of Shell doesn't get up one morning wanting to raise gas prices and say "I'm going to screw the American consumer today so my company's shareholders will get a greater return." And then the next morning when he wants to lower prices say, "I slept well last night and feel good this morning so I'm going to lower prices for the American people even if it cost my shareholders."

The oil companies have reaped a lot of gain from the recent rise in oil prices. There is no disputing that. And a windfall profits tax in the short-run would do little to change the price of gasoline, and would push money into government's coffers. However, in the long-run, by telling the oil companies that if they have higher than average profits in any given period they will be taxed extra on those profits, then that tax affects business investment for the future. That, in turn, lowers investment in oil, raising the price at the pump, lowering wages, and lowering returns to investors.

The fact of the matter is that Obama would be more accurate if he said that his foreign policy would help lower gas prices given that recent tensions in the Middle East have played a larger role in raising the price. Unfortunately, Obama is merely engaging in nonsensical political rhetoric by targeting the current outcomes of the energy markets instead of the underlying causes.

The Senator should know better. A windfall profit tax on the oil companies was tried before, in the 1980s. Even the Congressional Research Service admits that it was a total failure:

From 1980 to 1988, the WPT may have reduced domestic oil production anywhere from 1.2% to 8.0% (320 to 1,269 million barrels). Dependence on imported oil grew from between 3% and 13%. The tax was repealed in 1988 because (1) it was an administrative burden to the Internal Revenue Service (IRS), (2) it was a compliance burden to the oil industry, (3) due to low oil prices, the tax was generating little or no revenues in 1987 and 1988, and (4) it made the United States more dependent on foreign oil. The depressed state of the U.S. oil industry after 1986 also contributed to the repeal decision.

CRS warns against the foolishness of trying to bring back the windfall profit tax:

Reinstating the windfall profit tax would reduce recent oil industry windfalls due to high crude and petroleum prices but could have several adverse economic effects.

Some people never learn. Raising taxes is without a doubt one of the hot button issues for conservatives, and Obama just can't resist pushing the button.

Ken Blackwell, Ohio's former Secretary of State, also dismisses the Obama - JFK comparison:

Some pundits are calling him the next John F. Kennedy. He’s not. He’s the next George McGovern. And it’s time people learned the facts.

Because the truth is that Mr. Obama is the single most liberal senator in the entire U.S. Senate. He is more liberal than Ted Kennedy, [socialist] Bernie Sanders, or Mrs. Clinton.

Never in my life have I seen a presidential frontrunner whose rhetoric is so far removed from his record. Walter Mondale promised to raise our taxes, and he lost. George McGovern promised military weakness, and he lost. Michael Dukakis promised a liberal domestic agenda, and he lost.

Yet Mr. Obama is promising all those things...

Some of Blackwell's other comments about the junior Senator from Illinois:

Mr. Obama is a foreign-policy novice who would put our national security at risk... His solution to everything is to have government take it over... He is pro-partial birth abortion, and promises to appoint Supreme Court justices who will rule any restriction on it unconstitutional. He espouses the abortion views of Margaret Sanger, one of the early advocates of racial cleansing. His spiritual leaders endorse homosexual marriage, and he is moving in that direction. In Illinois, he refused to vote against a statewide ban — ban — on all handguns in the state. These are radical left, Hollywood, and San Francisco values, not Middle America values.

Blackwell concludes that the real Obama is an easy target for the general election. He's right. No matter how angry conservatives may have been with John McCain, partial-birth abortion, blanket handgun bans and homosexual marriage are just the kind of issues which make them realize that there are worse things than a maverick Republican Senator, and one of them is a radical leftist Democrat Senator.

Even Rick Santorum, formerly one of McCain's harshist critics, has been so alarmed by the prospect of a "President Barack Obama" that now he's not only supporting his former nemisis, but calling for other conservatives to do the same:

Those conservatives who still question whether they can support McCain should remember this: The next president will make more than 2,700 political appointments, those who really set policy, across the bureaucracy of our government. I, for one, will sleep better at 3 a.m. if Republicans are in the cabinet and in White House positions that make so many critical decisions. The idea of "Attorney General John Edwards" and "Energy Secretary Al Gore" should cause some sleepless nights for Republicans or conservatives - and those in a U.S. manufacturing sector now struggling to stay afloat.

Here's my final argument for John McCain. He's not Barack Obama or Hillary Clinton.

Both Democrats have made their case in chief on why they should be president, and we have every reason to be concerned.

Both want to cut and run from Iraq, give the radical jihadists a victory from the jaws of defeat, and leave the Iraqi people vulnerable to chaos. Both would put in place dangerous economic policies that would make Uncle Sam look like an Orwellian Big Brother. Both would nominate liberal activist judges who would pass undemocratic laws from the bench. Both support one-size-fits-all health-care policies that have been a disaster for patients and medical industries in Canada. Good-bye, American capitalism; hello, European-style socialism.

Santorum wraps it up by citing Ronald Reagan, saying that McCain is close enough to 80 percent for government work.

You've got to hand it to the moveon Democrats. They could have played on conservative anger with McCain and nominated even liberals such as Bill Richardson or Joe Lieberman, and the anti-McCain conservatives would not have batted an eye. Instead, they chose the most liberal Senator, and with the likes of Chuck Schumer, Frank Lautenburg and Dianne Feinstein in the U.S. Senate, that's really saying something!

Looking back at the electoral votes for the past ten presidential elections, a clear pattern stands out. When a candidate who is liberal or mostly perceived as liberal runs against one perceived as either moderate or conservative, the Republican always wins:

1968: Nixon 301, Humphrey 191
1972: Nixon 520, McGovern 17
1980: Reagan 489, Carter 49
1984: Reagan 525, Mondale 13
1988: Bush I 426, Dukakis 111
2000: Bush II 271, Gore 266
2004: Bush II 286. Kerry 251

But when both candidates are perceived as moderate, the Democrat wins:

1976: Carter 297, Ford 240
1992: Clinton 370, Bush I 168
1996: Clinton 379, Dole 159

And Barack Obama is liberal... very liberal. If he's not yet perceived as such, the Republicans will make sure that there is no doubt by election day.

Advantage: McCain.

- JP