"And I can make a firm pledge; under my plan no family making less than $250,000 a year will see any form of tax increase."
–Barack Obama, Sept. 12, 2008, Dover, New Hampshire
Barack Obama isn't the first politician to break a promise, torture the truth or outright lie to the American people. But, he certainly is among the most accomplished at it.
Obama made his no-new-taxes pledge over and over again four years ago as he campaigned. Not only has he repeatedly and blatantly violated it, but his policies have relentlessly assaulted poor and middle-income family budgets.
During his weekly address on Dec. 11, 2010, the President falsely implied that Republicans were willing to let the current tax rates expire (aka: the Bush Tax Cuts). Pretending to be mortified, Obama said that would cost middle-class tax payers an extra $3,000. "That's unacceptable to me," he claimed. That would be wrong because "taking money out of the pockets of working people is exactly the wrong thing to do to get our economy growing again."
Obama not only falsely represented the Republican position – as usual – he shamelessly pretended that he was The One "fighting so hard to cut middle-class taxes." Baloney!
First, the fight wasn't over whether to maintain the current tax rates, it was because Obama wanted a tax increase on higher income earners. Something the GOP rightfully refused to consider, particularly in the middle of a deep recession.
Second, if stopping government from "taking money out of the pockets of working people" was so important to Obama, he's done a miserable job of doing it. Whether the family budget is drained from government taxes, fees, penalties or failed policies doesn't make a lot of difference. Government under Barack Obama keeps costing families more and there is a whole lot less than there used to be to take care of necessities.
Let's examine the record.
Obama broke his no-new-taxes pledge 15 days after he took office when he signed legislation on Feb. 4, 2009 raising the tax on cigarettes 158 percent - 62 cents per pack. Arguably, there are good reasons to discourage smoking. But, undeniably this tax not only applies to all classes of income, it is extremely regressive and impacts the poor the hardest.
Obama claimed his health care plan would save the typical American family $2,500 on insurance premium cost. But, the latest analysis from the non-partisan Congressional Budget Office estimates a $2,400 increase – not savings – in premium expense. That's a $4,900 swing in the wrong direction for American families.
Additionally, Obama's campaign promise from 2008, cited above, to not raise taxes on middle-class families turned out to be hogwash. American's for Tax Reform and many others have chronicled the 20 new or higher taxes, fees and penalties (is there really any difference?) included in ObamaCare at a cost of more than $500 billion. Obama would have you believe that the taxes are on health care businesses, but those costs will either be passed on in higher prices or force manufacturers and providers out of business. Other taxes, he pretends, will only be imposed on the wealthy to make sure they pay their "fair share."
But, that is not true either. The following is a summary of the seven ObamaCare tax hikes that directly affect the general population of Americans as published in Forbes on June 28, 2012:
No. 1. The Individual Mandate Excise Tax. Starting in 2014, anyone not buying “qualifying” health insurance must pay an income tax surtax. It goes up each year until 2016 and beyond when a couple would pay a tax of the higher of $1,360 or 2.5% of adjusted gross income.
No. 2. The Over-The-Counter Drugs Trap. Since Jan. 1, 2011, employees with health savings accounts, flexible spending accounts or health reimbursement accounts have no longer been able to use pre-tax funds stashed in these accounts to buy over-the-counter medicines for allergy relief and the like without a doctor’s prescription (there’s an exception for insulin).
No. 3. The Healthcare Flexible Spending Account Cap. Starting Jan. 1, 2013, employees will face a $2,500 cap on the amount of pre-tax salary deferrals they can make into a healthcare flexible spending account. There is no cap under current law.
No. 4. The Medical Itemized Deduction Hurdle. Starting Jan. 1, 2013, taxpayers who face high medical expenses will only be allowed a deduction for expenses to the extent they exceed 10% of adjusted gross income, up from 7.5% now. Taxpayers 65 and older can still use the old 7.5% threshold through 2016.
No. 5. The Health Savings Account Withdrawal Penalty. Since Jan. 1, 2011, taxpayers who withdraw money from health savings accounts for non-medical expenses before age 65 face a 20% penalty, up from 10% before.
No. 6. The Indoor Tanning Services Tax. Since July 1, 2010, folks using indoor tanning salons face a new 10% excise tax.
No. 7. The Cadillac Health Insurance Plan Tax. Starting in 2018, there will be a new 40% excise tax on taxpayers who are covered by high-cost health insurance plans (with premiums at or above $10,200 for a single or $27,500 for a family). Insurers or employers who are self-insured will pay the tax, but it is expected to trickle down to mean higher costs for consumers.
And then there are the policy debacles that have cost middle and low-income families the most, sapping the family budget the same as the most punishing of taxes.
According to Census Department data, median household income has fallen $4,435 in inflation adjusted dollars since the recession began. The median level has declined every year of Obama's term, including another $777 erosion from 2010 to 2011. The current median income level of $50,054 is the lowest since 1995.
According to the Federal Reserve, family net worth has declined by 40 percent - a $41,000 evaporation of value – in Obama's first term led by the massive collapse of the housing market. While Obama didn't cause all the problems leading up to the recession, he was the one who said he knew how to fix it and lead a strong recovery.
Obama's Stimulus was supposed to turn things around, but all that he has to show for it are some bankrupt empty solar energy plants and $831 billion of new debt.
Although inflation has remained relatively tame thus far on Obama's watch, professional analysts as well as amateurs know a major day of reckoning is coming with the trillions of dollars in new debt and the expansion of the money supply by the Federal Reserve. Still, inflation – mostly driven by the increased cost of energy – has more than erased the anemic wage increases of about 1.5 percent per year since late 2009.
During Obama's non-recovery, record numbers of young adults have been forced to move back home with their parents because they can't find work. Twice as many people as normal must settle for part-time employment. The number of Americans unemployed – 12.5 million – is 495,000 greater than when Obama took office. More than 811,000 Americans are among the long-term unemployed. The percentage of Americans in the workforce is the smallest since 1981 with 8.4 million more Americans not even trying to find work. Poverty levels continue to climb and 1-in-7 Americans use food stamps.
Perhaps the most telling number that proves Obama's failure to lead: There are actually 86,000 fewer people working today in America than when Barack Obama took office even though the working age population has increased by 8.8 million people.
Confounding common-sense, particularly during a recession, Obama implemented policies that would, in his own words, cause energy prices to "necessarily skyrocket." And, they have.
Increasing energy costs work like the most regressive of taxes, punishing low and moderate income Americans the most. As of this writing, the average price at the pump for unleaded regular is $3.86 per gallon – a $2.02, or 110 percent, per gallon increase from the price when Obama took office. The Transportation Department estimates the average driver travels 13,476 miles per year. Assuming an average for all vehicles of 20 mpg, the average driver would use 674 gallons of gas per year. Thus, the $2.02 per gallon increase during Obama's term sucks an extra $1,361.48 out of that average driver's wallet.
That singular increase in gas prices to the family budget is about three times the miniscule hourly wage increase realized during Obama's first term. People like me that drive more than twice the average – or families with more than one driver – are hit that much harder.
Obama has bounced from campus to campus like a super-hero claiming he is fighting to keep student interest rates low. But, what exactly is so benevolent about a government that borrows money at well below 1.0 percent from China and then loans it back to citizen-students at "fixed interest rates from 5.74% APR to 11.85% APR," according to SallieMae. If a private bank were marking up loan rates and making profit margins like that, Obama's community organizing friends and his government regulator thugs would be at the door with pitch forks and handcuffs.
And then there is the burden of the debt. More than $5 trillion added in just four short years – a 50 percent increase – with no real end in sight. Every American, including new born babies, is burdened with a $52,000 share of the national debt – and it increased more than $15,000 on Obama's watch. Every family household has a $122,000 obligation. It's a real burden because it drives up the cost and availability of capital for individuals and small businesses. Increasingly, larger shares of all tax revenues are dedicated to just servicing interest on the debt rather than at least plausibly worthy government programs and services. With so much of our debt owned by foreign nations, our tax dollars end up strengthening other nations instead of our own. China alone gets an estimated $74 million per day in interest on the U.S. debt they have financed – enough to fund 40 percent of the second largest military in the world which is robust, growing and unfriendly.
Obama is playing his very best class-warfare politics, demonizing businesses and the wealthy while pretending he's somehow looking after lower and middle class Americans. But his demise will be the answer to the classic question posited by Ronald Reagan in the 1980 election against Jimmy Carter; "Are you better off than you were four years ago?" Obama fails the test by catastrophic proportions.
Incredibly, with the accumulation of higher taxes, anemic economic growth, job scarcity and wage stagnation, increased energy costs, higher health insurance premiums, erosion of the family budget's purchasing power, the burden of federal debt… and the best Obama can offer is, "It could have been worse" or, "It might be better next time."
Once was quite enough. It was Obama who said, "If I don't have this done in three years, then there's going to be a one term proposition." That's a promise we need to make sure he keeps.