How Buffett bluster boomerangs; or, Taxosaurus Rex

The unvarnished rhetoric coming out of the White House over the past two weeks has been just too delectable for conservative commentators.  In a recent WSJ piece, Daniel Henninger suggests that Democrats’ furious assault on Paul Ryan’s budget plan is desperate “thermonuclear” overkill.  Indeed, all the accusations of Social Darwinism and “trickle-down” economics cannot make up for Democrats’ utter lack of seriousness when it comes to the national debt.

As the White House rolled out the practically inconsequential yet politically expedient Buffett Rule this week, I was amazed at the justification given by allied economist Alan Krueger.  The Christian Science Monitor quotes:

“In addition to fairness, in fact it’s a step in the direction of economic efficiency,” said Alan Krueger, chairman of the Council of Economic Advisors. The Buffett rule allows people to “devote more effort what their focus should be, which is to their jobs and job creation … rather than restructuring their income to minimize their taxes.”

He’s alleging that the tax increases economic efficiency.  But how does government spend anyone’s money better than they themselves would?  During the global high tide of state central planning in the 1940s, F.A. Hayek explained cogently in his The Road to Serfdom who spends money best: the one who earns it.

When given other people’s money, legislators face the temptation of buying constituents’ votes with pork rather than allocating it wisely.  Then the money goes to bureaucrats, who are not careful enough with it.  Their lack of accountability flows from the political difficulty of de-funding them.  It is the original income earner who best appreciates the sweat and effort it took to get the money.  She appreciates the reality that her income might dry up tomorrow, and so will handle it more carefully than the central planners.

According to his critics, the car elevator in Mitt Romney’s mansion is a bad thing.  But he used his own money, which he only earned in the first place by benefiting others in voluntary transactions.  And the construction provided gainful employment to all sorts of craftsmen.

President Obama, meanwhile, either had to grow our debt or tax money out the economy to give us public project flops like Solyndra and the constipated stimulus weatherization projection.  Money that otherwise would have been carefully spent in private hands was squandered by legislators and bureaucrats.

Of course, not all government spending is bad; some spending is necessary.  But Krueger’s claim that a tax increases efficiency overlooks government’s great tendency towards inefficiency.

The case against the Buffetteers may be clearer when we look at that favorite magic word of progressives and liberals, “investment.”  Any public project from education to high-speed rail becomes an unmitigated good if it can be spoken in terms of investment.  But our current, low tax rates vindicate private investments as an even greater good.  This is why Buffett and Obama pay less in taxes than their secretaries.  The Monitor quotes Marco Rubio:

“What [Americans] need to understand is the reason why he may pay less than his secretary, in terms of the rate, is that she makes her money on a paycheck and he makes his money on investments,” Senator Rubio said. “We have always wanted Warren Buffett to, instead of putting that money in a coffee can, to take his money and invest it, because that created jobs.”

As much as the Buffett-minded would increase taxes on private investment earnings, they would demolish the incentive to invest and crash the stock market.  In this way the Buffett Rule boomerangs back on itself.

Class envy can’t lift up the poor, but it can bring us all down.  Let’s all move past the Buffett distraction.


Theocracy from the Left; or, Other people’s money

At the National Prayer Breakfast earlier this month, President Obama played up his Christian faith, declaring “for unto whom much is given, much shall be required.” Attempting to marshal scripture in support of his idea of fairness, he ended up inserting a theological foot into his political mouth by conflating God and government.  In this, Mr. Obama managed to betray an aloofness from mainstream churches as well as raise a troubling portent for civil libertarians.

With the words “much shall be required,” what else did the Central-Planner-in-Chief mean but to put the tax man’s moral authority on par with God’s?  Christians understand that God doesn’t compel anyone to obedience, but leaves each of us to our free will and our conscience.  By contrast, human government must compel its citizens.  Taxes are collected ultimately at the barrel of a gun.  That’s why the founders saw it as essential to limit what is “required” by the government.

During the Bush years, a handful of agitated liberals spawned a new book industry, warning of theocracy arising from the Religious Right.  If history’s any predictor, President Obama’s statement should launch a new wave of dire tomes warning against a theocracy of the Religious Left.  The social justice crowd that rallies behind Obama’s fairness push is out of touch with America’s exceptional ethos and experience: that a people, under the guidance of God and conscience, and free from a central meddler, have built for the world a Shining City on a Hill.

Besides conflating God and government, the President and his tax-the-rich allies have committed another type of unforced error in their moral reasoning.  Mr. Obama, investment wiz Warren Buffett, and retired Google exec Eric Schmidt have each, in recent times, implored that their own taxes be raised.  Their advocacy sweeps up all the fellow earners in their tax bracket, both the willing and unwilling.  How is this kind of appeal sensible?  It’s a perverse, inverted golden rule.  Like saying you personally don’t mind being bludgeoned, so it’s okay to bludgeon your peers.  It seems as if these folks are hoping your brain isn’t turned on.  Or maybe that you won’t notice theirs aren’t.  There’s a certain kind of arrogance in volunteering other people’s money.

So in a couple of ways Obama and company’s moral arguments are really lacking.  But don’t forget the facts about our nation’s recent Great Society redux.  Stephen Moore’s op-ed challenge to the White House fairness narrative provides us with a rich inventory of ways our big government has failed us to date .  Among the more salient is the mounting concentration of national wealth in the suburbs of Washington DC; the top three median income counties in the nation are clustered in the DC metro area.  Such a backslide of civilization would give any shameless, caviar-chomping commissar of Soviet-era Moscow a run for his money.  And we know that whatever part of our nation’s economic lifeblood that does not end up feeding a Falls Church jumbo mortgage tends to get lost in legislative backscratching or bureaucratic head-scratching.

Anyway you dice the tax dollar, Washington isn’t justified in its spending increases.  Given President Obama’s deficit deafness, and Democrats’ contorted fairness distractions, voters need to just say “No!” and oust the tax-grubbing big spenders this November.

%d bloggers like this: