Obama's Racial Spin: Don't Believe it!

In the wake of ABC's publication of extremist remarks by Senator Barack Obama's "former" Minister, the Reverend Dr. Jeremiah A. Wright, the junior Senator from Illinois attempted to distance himself from the Reverend, condemn the remarks, and repair his political positioning as the so-called "post-Racial" candidate. But, the Senator's speech is pure political spin. Here's why:

To refresh, the Reverend Wright made extremist anti-american comments during sermons at various points in time. See the wikipedia page here. The main thrust of the remarks is that United States acts like god, treats people as sub-human, and is responsible for various crimes that directly led to 9-11 terrorist attacks. The pinnacle is when the Reverend urges his flock not sing God Bless America, but "God Damn America."

Senator Obama's response is to cast the remarks in racial terms. In his speech of March 18th, Obama stated inpart:

These people are a part of me. And they are a part of America, this country that I love.

Some will see this as an attempt to justify or excuse comments that are simply inexcusable. I can assure you it is not. I suppose the politically safe thing would be to move on from this episode and just hope that it fades into the woodwork. We can dismiss Reverend Wright as a crank or a demagogue, just as some have dismissed Geraldine Ferraro, in the aftermath of her recent statements, as harboring some deep-seated racial bias.

But race is an issue that I believe this nation cannot afford to ignore right now. We would be making the same mistake that Reverend Wright made in his offending sermons about America – to simplify and stereotype and amplify the negative to the point that it distorts reality.

The fact is that the comments that have been made and the issues that have surfaced over the last few weeks reflect the complexities of race in this country that we’ve never really worked through – a part of our union that we have yet to perfect. And if we walk away now, if we simply retreat into our respective corners, we will never be able to come together and solve challenges like health care, or education, or the need to find good jobs for every American.

Understanding this reality requires a reminder of how we arrived at this point. As William Faulkner once wrote, “The past isn’t dead and buried. In fact, it isn’t even past.” We do not need to recite here the history of racial injustice in this country. But we do need to remind ourselves that so many of the disparities that exist in the African-American community today can be directly traced to inequalities passed on from an earlier generation that suffered under the brutal legacy of slavery and Jim Crow.

See the complete text of the speech here among other places.
Thus, Obama's argument is that the Reverend's comments must be viewed as part of a racial commentary on the government and the racial history of the U.S.
But, this almost totally false. In reality this is part of the standard progressive right (liberal) critique of the U.S.'s capitalist economic system and Republican form of government. The evidence of this is contained in comments, contemporaneous with those of the Reverend's, by other progressive and socialist ideologues.

Consider the following:

No doubt this is the result of injustice the U.S. practices against the weak in the world.
Sheik Ahmed Yassin, Leader of Hamas, published in the October 15th, 2001 edition of the New York Times.

During my lifetime, America has been constantly waging war against much of humanity: impoverished people mostly, in stricken places. Moreover, far from being the main perpetrators of terrorism, Islamic peoples have been its victims -- more often than not of an American fundamentalism and its proxies.
Editorial in British newspaper The Guardian as quoted in The New Republic, Oct 12, 2001 edition.

Chomsky, himself an American, refers to the United States as a "leading terrorist state," using as an example the Reagan administration's invasion of Nicaragua in the 1980s and the subsequent "devastating economic war" in that country. Though the invasion was condemned by the World Court, the United States responded by ignoring the ruling and escalating its attack on the country, killing thousands of people in the process. A review of Noam Chomsky's 9-11. As quoted in
The Daily Yomiuri (Tokyo) January 27, 2002 Sunday

And please read the column by Walter Williams of October 29, 2001 published in the Washington Times on Nov 4, 2001. Read the complete text here.

In fact, the Reverend attributes his post 9-11 comments to former Ambassador Edward Peck (see the wikipedia entry).

Yassin isn't black, neither is Chomsky, neither is Peck. This IS NOT A racial issue, it is a political ideological issue, a progessive left viewpoint writ large. Senator Obama claims to not agree with it but also claims to be a progressive. Make your own judgements of the Senator's ideological beliefs, but do not for minute buy this spin that Reverend's Wright anti-americanism is reflective of a black critique of the American experience.

How Obama Plans to Increase Unemployment

Senator Obama (D - Illinois) likes to call it Tax Relief for Working Families/The Middle Class. Let's explore:

Making Work Pay - The kind Senator from Illinois will institute a new tax credit of $500 per person/$1000 per 'working family'. The intent is to offset the FICA (social security tax) on the first $8,100 of income by eliminating income taxes. Obama claims this will eliminate the income tax for 10 million Americans. Obama would make the credit refundable if it resulted in a negative tax due.

The Junior Senator from Illinois has heard of the Earned Income Tax Credit, because he also plans to increase it. Here is what the IRS page says about the EITC:

The Earned Income Tax Credit (EITC) sometimes called the Earned Income Credit (EIC), is a refundable federal income tax credit for low-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

Hmmm.... sounds a lot like the Obama Making Work Pay plan....
Except it is a lot larger... The EITC is little complicated (hey, it is part of the United States Tax Code) but currently the max is $428 for a single/married with no children; $2833 for single with one child, and $4716 for a single/married with two children. The EITC is on a sliding scale, the max is in the range of approx. $10K to $17.4K of income. It slides toward zero as the income moves toward zero or towards the cap AGI of $39,783 for the married/single with two children. So Obama's plan would add on a kicker...

The result of this is that the marginal tax rate on the lowest income earners will increase. That is, Obama will build into the tax code an incentive to not make more money. Don't take that second job.... if you do your income will go down not up.

Obama will create a whole new group of income non-earners to fill those open 'second jobs' by unemploying millions of tax preparers/accountants. You see Obama will have the IRS send you the completed the tax form, you just need to check their work then send it back. Of course, they can't get my birthday correct (two years in a row now) so they will be able to figure my taxes correctly... no problem there....

In case the low income earner/former tax preparers do not know what to do with their free time, Obama has that covered too... a $4K college tuition tax credit. That will add to your refund and, get this, is available prior to you actually enrolling in courses.

Of course while you are busy (not?) taking classes and working 20 hours a week, your children will need to be cared for. The kindly Senator from Illinois has thought of that too. He will increase the Child Care Tax credit from 35% of eligible expenses to 50% and make the credit... you already know the answer... REFUNDABLE.

So, a married couple with two children each adult working 20 hours a week at minimum wage and taking courses at the local college will make around... $13,000 per year gross (not counting Obama's plan to raise the minimum wage). They will have pay about $975 in FICA. Their income tax withholdings will be completely refunded, they will receive tax credits of $2000 for the child tax credit, $4716 for the EITC, $1000 for Making Work Pay, $8K for tuition credit, and 50% of their Child care expenses. An expected refund of $15,716 + half the day care bill.

Thus, these individuals will suffer a net loss of income from full employment unless they find a job that pays them an after tax net of nearly $30,000. Which means finding a job that pays at least $50K.

Yeah, that's gonna happen. So Obama will increase unemployment by reducing the number of people working multiple jobs to reach full employment and by eliminating millions of jobs in the tax preparation business.

Senator, you are not the change we seek.

Honestly, this blog would fully support setting tax preparers and IRS agents free to pursue other career options by, say, implementing a flat tax with no deductions and no tax credits. This a much simpler and more straight forward approach than Obama's nightmarish web of tax credits. Obama would make the tax form so complex that the working poor, who tend to be under-educated, will need someone else to fill out for them. A flat tax would completely eliminate the need for them to perform a calculation... just send in the year-end paystub showing you made less than bar (what ever number that is... most ideas peg it around $65K) and no tax is owed.

That would be a change you could believe in.... Too Bad Obama doesn't see it that way.

Obama's Outsized Rate of Return: No Wonder He's So Popular

In a previous post here on principle and policy, I referred to Senator Obama (D _ Illinois) as a market manager. It turns out he is also a financial wizard. Read on...

First we have a quote from the Senator's speech on the Economy given in Ohio on Febraruy 24th 2008.

We can also invest in American jobs by investing in America, and rebuilding our roads and bridges. I've proposed a National Infrastructure Reinvestment Bank that will invest $60 billion over ten years. This will multiply into almost half a trillion dollars of additional infrastructure spending and generate nearly two million new jobs - many of them in the construction industry that's been hard hit by the housing crisis we're facing.

What kind of financial magic is this? If Senator Obama (D - Illinois) put $6 billion in every year for 10 years at 6%; the investment would grow to approximately $78.5 billion at the end of ten years. If Senator Obama (D - Illinois) put in $60 billion in year one at 6%, the total at the end of ten years would be around $101 billion. Even if Senator Obama (D - Illinois) invested in an index fund that earned the market's long term average return of 10% the thing would slightly more than double to $141.5 billion.
How is the Senator planning to achieve an out-sized financial bonanza wherein the Taxpayers can yield 26.57% return necessary to turn $60 billion in year one to 500 billion in year 10? More research is necessary.
This blogger found that the alleged Bank is a now a key element of Senator Obama's economic plan:

New Jobs Through a New National Infrastructure Investment: Barack Obama believes that it is critically important for the United States to rebuild its national transportation infrastructure – its highways, bridges, roads, ports, air, and train systems – to strengthen user safety, bolster our long-term competitiveness and ensure our economy continues to grow. Investing in national infrastructure is especially important in our efforts to bolster our homeland security to meet international terrorism and natural disaster threats. Additionally, a robust federal
infrastructure investment program today will help strengthen the U.S. economy and provide at least one million more U.S. jobs at a time when the housing and construction industries are slowing. Barack Obama will address the infrastructure challenge by creating a National Infrastructure Reinvestment Bank to expand and enhance, not supplant, existing federal transportation investments. This independent entity will be directed to invest in our nation’s most challenging transportation infrastructure needs. The Bank will receive an infusion of federal money, $60 billion over 10 years, to provide financing to transportation infrastructure projects across the nation. These projects will create up to two million new direct and indirect jobs per year and stimulate approximately $35 billion per year in new economic activity.

Read the entire plan here

It turns out that this is based on proposed legislation by Senator Chris Dodd (D - Connecticut). While you can read the full text of the proposed bill here. I summarize it as follows:

An independent agency of the Federal government administratively similar to the Federal Deposit Insurance Corporation (FDIC). The "Bank" would have some strange banking powers: the ability to conduct hearings, issue subpoenas, obtain information from any other federal agency simply by asking (other agencies are required to comply), accept for funding any infrastructure project with a Federal price tag of $75 million or more (the list of possibilities goes on for two pages), unilateral authority to determine the appropriate Federal share of spending for every project accepted, to act as a centralized entity to provide financing for qualified infrastructure projects; to issue general purpose infrastructure bonds, and to provide direct subsidies to qualified infrastructure projects from amounts made available from the issuance of such bonds; to issue project-based infrastructure bonds for the financing of specific qualified infrastructure projects; to provide loan guarantees to State or local governments issuing debt to finance qualified infra
structure projects, under rules prescribed by the Board, in a manner similar to that described in chapter 6 of title 23, United States Code; to issue loans, at varying interest rates, including very low interest rates, to qualified project sponsors for qualified projects; to leverage resources and stimulate public and private investment in infrastructure; and to encourage States to create additional opportunities for the financing of infrastructure projects.

WOW! Don't see too many Banks with subpoena power! The borrowing authority of this "Bank" is capped at $60 billion outstanding (the number Senator Obama used as his investment amount); one percent of which is used to fund the bank operations. Thus, this new government agency could cost $600 million the first year.

In my first examination of the bill's text I saw not one word on how the billions of new debt will be paid for. It appears to operate under the premise that the U.S. Government need not use tax money to pay for things. We can just borrow it, and when the debt comes due, we will borrow more, and when that comes due we will borrow more.

I wonder how much of the proceeds will go to fund Amtrak, the sacred of cow of the bill's sponsor Senator Chris Dodd (D - Connecticut).

So now you know how Senator Obama can turn $60 billion into a $.5 trillion using Senator Dodd's new Bank. No wonder Senator Dodd has endorsed the candidacy of Senator Obama.