Obama To Tax Middle Class for Healthcare, Reducing Deficits

Obama’s team on Sunday presented their solution to paying off some of the deficit, Obama’s new heathcare plan, the bank bailouts, cash for clunkers , etc. The plan is to tax the middle and upper class. Now taxes are not a bad thing, if used in a way to benefit society in terms of infrastructure and protection.

But to use tax money to encourage people to spend more during one of the worst economic crises in most people’s lifetimes, is a bad thing. The propping up of the old ways, the banks such as AIG who after being saved by the government retorted by rewarding their executives with multimillion dollar bonuses; General Motors, who was destined for extinction over ten years ago, being injected with money only to declare bankruptcy and liquidate assets.

Giving people $4,500 to buy a new car, with requirements that dealers cripple the old cars beyond repair by dropping thermite-like substances on the engine, is detrimental to the environment in the long term because the energy put into making new cars makes it more environmentally friendly buy used.

What happened to the free market saying “it’s time to downsize production” or “stop investing into risky securities”. It is the very fear of government induced inflation that has driven the oil price sky high, although one can argue a high oil price is good for fueling green technologies and slowing down its consumption.

Now we just need to see how much our taxes will be increased, be it income, capital gains, etc. However it has never occurred to me that raising taxes can spur economic growth, especially at a time like this. Reducing the deficit is one thing, reducing consumer spending power is another. It is like the government cannot make up its mind, should we give people money like mana from heaven to buy a new car and help the lobbyists in Detroit, or should we take money from everyone left standing in the worst recession of most people’s lifetimes? Oh well, let’s do both!

Back to what Geithner was saying:

“We will not get this economy back on track, recovery will not be strong and sustained, unless we … can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established,” Treasury Secretary Tim Geithner said on Sunday.

“Borrowing a trillion dollars from future generations of Americans and spreading it around the economy is going to have some catalytic effect in the economy in the short term, but again, it’s no substitute for fiscal discipline in Washington, D.C.,” he said.

When asked whether this means a increase in taxes, he said “You’re absolutely right.”