Economics for Dummies… Most of which support Barack Obama

I have been torn out by some of these “Kool-Aid drinkers” who for some reason believe themselves to be experts in economics since they listened to Obama’s speeches and read a few articles misinformed members in the media. To all those who doubt my expertise in this field, I remind you, I spent four years working on a bachelors in economics at the University of Ottawa, graduating in 2006. Seeing as I am the EDUCATED expert on this subject, especially when compared to the “arm chair economists”, I will spend a little time spreading my knowledge to those with obvious learning disabilities…

Raising minimum wages – This is off the Barack Obama website…

Raise the Minimum Wage to $9.50 an Hour by 2011: Barack Obama and Joe Biden believe that people who work full time should not live in poverty. Even though the minimum wage will rise to $7.25 an hour by 2009, the minimum wage’s real purchasing power will still be below what it was in 1968. As president, Obama will further raise the minimum wage to $9.50 an hour by 2011, index it to inflation and increase the Earned Income Tax Credit to make sure that full-time workers can earn a living wage that allows them to raise their families and pay for basic needs such as food, transportation, and housing – things so many people take for granted.

So what “The One” wants to do is raise a price floor (minimum wage) to help “the middle class”. Now raising minimum wage sounds good, people get more pay, and it is against the law to give someone a lower wage. You see many students jumping on board campaigns promising this, ignoring the wide scale ramifications to the economy, ignoring the damage to businesses which hire these students. Higher wages mean higher costs, costs which affect how the businesses operate. Now for those idiots who don’t understand, and looking at the latest poll numbers there are a lot of you, let’s go through a very simple example…

Wage rate is $6 an hour, and the business in question has only $20 an hour for employees. This means, by the wage rate, this business can hire 3 workers with money left over. Now let’s say the wage rate jumps to $6.50 an hour. This is approaching an equilibrium wage rate, where labour supplied is meeting the demand for it. $19.50 isn’t the $20 demanded by the business, but that is okay, there is still additional funds left over to be reinvested. Now lets say we make the jump to $9.50, the wage rate Obama is demanding by 2011. To keep all three workers, the business would have to spend $28.50 an hour, $8.50 above the their demand, above the price their are willing to meet. What we have now is an excess of labour, meaning one worker will have to be laid off. Not only are jobs being lost, but now two workers are expected to do the work of three.

Congratulations Obama and Biden, you have just enlarged the lower class. What about this Earned Income Tax Credit he talks about? Well for that worker who has just been laid off, that means welfare. For those who don’t understand where this money will come from, I’ll let you in on the big secret… It will come from other people’s wages. The math doesn’t add up, and when Barack figures this out, he will increase taxes on those earning a living. Back to our example, let’s say that tax is $2 off the $9.50 the other two employees are earning. So instead of $6 an hour for the three workers, we now have two workers making $7.50 an hour, doing more work, while the third worker, now unemployed, is living off $4 dollars an hour, not enough to meet his/her basic needs.

Did that help anyone? No, it didn’t…

Providing affordable housing – From Barack Obama’s website…

Supports Affordable Housing Trust Fund: Obama has supported efforts to create an Affordable Housing Trust Fund to develop affordable housing in mixed-income neighborhoods.

and…

Housing: In the Illinois State Senate, Obama championed multiple pieces of legislation to help low-income families find adequate affordable housing.

Sounds good right? You’re wrong… I wrote about this previously in Grove Parc Plaza; A sign of things to come in Barack’s America, discussing one of these affordable housing projects he “championed”, Grove Parc Plaza, a slum which can’t even pass the most basic safety inspections. How did this happen? A price ceiling. Let me explain with another example…

An apartment building is opened up, charging $100 a month for rent. This $100 is broken down like this; $30 for rent, $20 for electricity, $20 for water, $20 for gas, $10 for maintenance. As long as the rent is competitive, the building owner can make a nice profit and, after a while, even open up a new apartment building, expanding housing in his area. Now a price ceiling, a cap on how much he can charge, is okay as long as it isn’t lower than the competitive market rate (where the quantity demanded meets the supply at a given price). Usually. however, it is meant to make housing more affordable for those who can’t afford it, meaning it is below the rent the building manager needs to charge to make a profit, at the very least. Let’s see how that works…

If the price ceiling is $80, well the manager might cut back on costs by letting go of the building’s maintenance worker, choosing to instead hire private repairmen to fix anything that might come up. He is still $10 short, so he will take a hit to the amount he collects for rent, meaning he most likely won’t be able to open up that new apartment complex as soon as he would hope, maybe not at all if he doesn’t believe he can make a fair profit. Now if the price ceiling is dropped lower, well now the manager can’t even afford upkeep, let alone expand housing. It isn’t just him however, other building managers can’t afford to expand housing to meet the rising demand. What does that mean? Well, instead of providing more housing, you actually prevent apartment building owners from expanding it, and those wanting to get into the housing market are scared off because they don’t see an opportunity for profit. What happens to those who do manage to find housing? See for yourself…

The “icing on the cake”, if you paid attention, is that he got campaign contributions from these “slum lords”, like Tony Rezko. Makes you think about his real reasons for supporting affordable housing legislation when he and his friends are the only ones benefiting from it…

Obama’s comprehensive tax plan – I honestly don’t know where to begin on this one, seeing how it makes less and less sense the more I hear it. I can’t see how any of this would add up but let’s start with what his website have to say and go from there…

Middle class families will see their taxes cut – and no family making less than $250,000 will see their taxes increase. The typical middle class family will receive well over $1,000 in tax relief under the Obama plan, and will pay tax rates that are 20% lower than they faced under President Reagan. According to the Tax Policy Center, the Obama plan provides three times as much tax relief for middle class families as the McCain plan.

and…

Obama’s plan will cut taxes overall, reducing revenues to below the levels that prevailed under Ronald Reagan (less than 18.2 percent of GDP). The Obama tax plan is a net tax cut – his tax relief for middle class families is larger than the revenue raised by his tax changes for families over $250,000. Coupled with his commitment to cut unnecessary spending, Obama will pay for this tax relief while bringing down the budget deficit.

After reading this I would like to say that I am a little confused. What “webpage Barack” is saying is far different than “campaign trail Barack” has been telling voters. I guess it is important not to let one “Barack” know what the other “Barack” is doing… Hypocrisy at its finest.

In an advertisement put out today by the RNC, we see this message change over, going from $250,000 a year, to $200,000 in a new Obama campaign ad, to $150,000 in a speech given by Joe Biden. As I discussed in my first article on wealth redistribution, we are starting to see a “slippery slope” on their tax cut promises. Now one could argue that this is all a mistake, various missteps on the words used by both Obama and Biden, so let’s give them the benefit of the doubt. Even ignoring this drop in the tax threshold, we have seen that he has tried to raise taxes on even the working class…

I stated this previously, and while the Obama/Biden campaign has denied it, Factcheck.org confirms (grudgingly) that Democratic FY 2009 Budget would raise income taxes on individuals making as little as $41,500, couples making as little as $83,000, which is far from the $250,000 we keep hearing about. This isn’t taking into account the repealing of Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (also known as the Bush Tax Cuts), which will raise return taxes to previous levels. With these tax cuts, we saw Americans of varying levels of incomes move to low tax brackets. For those as low as $6,000 single, $12,000 married, they moved from 15% to 10%, and for those as high as $307,050 move from 38.6-39% move to a 35% tax bracket. Following the repealing of the Bush Tax Cuts, adding the raise in income taxes thanks to the FY 2009 Budget (whatever they may be), I would imagine that we won’t see any of these “credits” he keeps talking about, not with these tax levels.

This claim about Regan era tax revenues, as a percentage of GDP, makes absolutely no sense. With all this spending, including $50 billion to “jump start the economy”, increasing revenue would be the goal, especially if he also plans to pay down the deficit, and that is what you see…

Families making more than $250,000 will pay either the same or lower tax rates than they paid in the 1990s. Obama will ask the wealthiest 2% of families to give back a portion of the tax cuts they have received over the past eight years to ensure we are restoring fairness and returning to fiscal responsibility. But no family will pay higher tax rates than they would have paid in the 1990s. In fact, dividend rates would be 39 percent lower than what President Bush proposed in his 2001 tax cut.

That doesn’t sound like Reagan tax revenue levels, sounds more like increased taxes to drive up revenues to pay for all this new spending. Asking the wealthiest 2% to give back a portion of the tax cuts? Obama the “Indian giver”? As I stated in my previous articles, if he wanted to help the middle class, he wouldn’t be so hostile towards those providing the jobs. Why not preserve all the Bush Tax Cuts? According to The Heritage Foundation, while the budget deficit increased, this was due to increased government spending, not a loss of revenue. Following the 2003 tax cuts, government revenue went up by $47 billion dollars. Why do you want to reduce revenue but increase spending? The goal is to maximize what you bring in while minimizing taxes, allowing for the economy to grow. It’s okay though, he did the math, by taxing those who make $250,000 or over… No wait, it’s $200,000 or over… Huh? You mean it is $150,000 and over now?.. Anyways, like I was saying, by taxing those who he deems “rich”, he can pay to give those making below $41,500 welfare…Before he decides to tax them too…

*****

Now he can talk about “trickle up” economics, which makes no sense (how many people do you know, making less than $41,500, intending to open up multi-billion dollar businesses?), he can discuss how he will create jobs and help the middle class,which I have shown otherwise, he can even brag about his tax plan, which will cause serious damage to the American economy, but I think it is about time many of you who support Barack Obama wake up and realize that he has been taking you for a ride. Simply put, his math doesn’t add up. No matter what he says about “closing loop holes” and “cutting wasteful spending”, it is all rhetoric, especially when he himself requested nearly a billion dollars in earmarks during his short time in the Senate.

If you want to discuss his taxes on businesses, compare those to level under President Bush, I recommend you read Senator Obama’s Four Tax Increases for People Earning Under $250k by Ned Barnett of American Thinker, a man who actually owns his own business. Barnett actually sat down and calculated it all out, check his numbers if you don’t believe me.

If after all this, if after reading my last two posts on wealth distribution, you still don’t believe me, I recommend you put the “Kool-Aid” down since you have had more than enough. He isn’t the “second coming”, he is just another politician, the “used car sales men” type, showing you a “pretty little number” while forgetting to mention that the sticker price isn’t the only cost you will be paying. By the time you add up all these “repairs”, you’re going to find yourself “hoping” you still had enough “change” to take the bus…

His economic plans will bankrupt America, not save it…

UPDATE: Hot Air and ABC News are reporting on this one… In a speech he gave to a crowd in Florida today, Obama said that those against his “spread the wealth” policies are “selfish”. I guess he is going to make sure taxes are high enough so that everyone gets a “piece of the pie” instead of “baking” a bigger economy. This isn’t just bad economic policy, this is blatant stupidity…

UPDATE: Ed Morrissey at Hot Air caught this one. Seems we are sliding further down that “slippery slope” when it comes to who does and doesn’t get a tax cut…

UPDATE: Another redefining of the “middle class”. It seems in a 2003 interview, Barack Obama stated that those making as little $70,000 were “working (class) families”. Good to know, so only those making $70,000 and under won’t be OVERLY taxed (let’s not forget the Democratic FY 2009 Budget)…

UPDATE: More economic news from Barack Obama. In an interview last January, he promised that anyone who builds coal plants will be bankrupted under his carbon tax plan. Bragging to the reporter that America should move away from such technology, killing thousands of jobs in the process. Doesn’t sound like good economics to me… Michelle Malkin has the audio, Hot Air is also has it, but it is also below for those who can’t access the link…