The State We're In

Take a look at where we are today:

A) Taxes are going to confiscatory rates. Examine the bill written by tax cheat Charlie Rangel, the Democrat Chairman of Ways and Means. Under his bill, the tax on any bonus paid to a New York City resident by a TARP recipient bank would be 102 percent for any family with an income above $250K.

The Wall Street Journal explained it clearly. First, the bonuses are taxed at 90%. Bonuses are also subject to the Medicare FICA tax of 1.45% (not counting the employer's portion), bringing the total federal take to 91.45%. Employees are also liable for state and local income taxes, which would not be deductible from the bonus tax. For an employee living in New York City, the state and local rates are 6.85% and 3.648%, respectively. Add it all up and the tax liability comes to 101.948%.

$250,000 may seem like a lot of money to most Americans. But in a city where public schools are a wreck, financial executives may understandably feel they have no choice but to send their children to private schools. Tuitions in New York City range between $35,000 and $45,000.

B) This year's federal deficit will be 13 percent of GDP, compared to 2-ish percent under Bush's last budget. The Congressional Budget Office says (today) that our deficit will be over 1 trillion per year for 10 years under Obama's plan. The CBO is non-partisan, but under the control of the Democrats. This is the highest deficit creation since WW2. Our public debt as a percent of GDP will rise from 40 percent (today) to 70 percent by 2012. What are we, Greece? A superpower cannot run these debt levels.

C) The finance industry, which was a US dominated industry, is being killed by President Obama. Reason: foreign banks do not have the compensation caps that Obama wants to impose... Talented people are spending their time seeking jobs with non-US banks.

John Maynard Keynes would have been appalled by the de-emphasis of infrastructure in our budget bill. And he would have howled at proposed tax increases during a recession. Supply-sider or not, low taxes are good. Controlled government spending is good. A sound currency is good. President Obama will be challenged less by incompetent Republicans than by his own hubris and wrongheaded philosophy.