Obama Builds His “Buffett Rule” on a Foundation of Nonsense

Buffett & ObamaPresident Obama plans to “call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers,” according to the New York Times.

Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.

Buffett made this complaint most recently last month, in an op-ed in the New York Times titled “Stop Coddling the Super-Rich.”  The sound bite you hear most often is that Buffett pays a lower tax rate than his secretary.  (Sometimes this gets distorted as “Buffett pays less tax than his secretary,” which certainly is false.)  Here’s how Buffett put it in the op-ed:

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. [Ya think?-KP] But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

The reason, of course, is that most of Buffett’s income comes from dividends and capital gains, which are taxed at what Buffett calls a “bargain rate” of 15%.  Buffett neglects to mention why investment gains are taxed at a lower rate.  It’s because this income already has been taxed at the corporate level before it ever gets to the investor.  At Commentary’s blog, John Steele Gordon does the math, and makes two good points:

It has nothing to do with fairness, it has everything to do with class warfare, for this would be nothing more nor less than a whacking great tax increase on capital gains and dividends on those who earn more than $1 million a year. In other words, they would be penalized for their success at creating wealth.

And:

Warren Buffett’s Berkshire Hathaway Corporation paid $5.6 billion in corporate taxes last year on income of $19 billion, a 29 percent rate. … Warren Buffett owns about 30 percent of Berkshire Hathaway, so he, in a very real sense, paid not just the $6[.9] million in federal taxes he claimed in his Times article, but $1.68 billion more in the form of corporate taxes.

For the “nonsense” I mention in the headline, let’s go back to Buffett’s op-ed.  In addition to ignoring the reality of corporate taxation, Buffett makes this stunningly dishonest statement:

I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.

Really, Mr. Buffett? Not even at the margins? Of course, if I’m 95% sure an investment will double in value in X years, I’ll place that bet whether the tax rate is 15% or 40%.  But how often does anybody have that level of certainty?

A venture capitalist may invest in dozens of startups, knowing that most will go bust, but willing to bet that one or two will pay off big enough to make it all worthwhile.  Are you saying tax rates are not part of the calculus at all?  Really?

Are you saying tax changes don’t affect behavior? Really?

Here’s the reality, as articulated by Rep. Paul Ryan on one of the Sunday news programs:  “Look, if you tax something more, Chris, you get less. If you tax job creators more, you get less job creation. If you tax investment more, you get less investment.” (Hat tip: The Corner.)

I am not a no-tax-hike absolutist.  The Democratic orgy of spending on the phony “stimulus” package has us deep enough in the hole that I think some tax increases are inevitable.  But spare me the pious claptrap from the Oracle of Omaha.

(White House public domain photo of Buffett and Obama, via Wikipedia)

A Bishop, a Rabbi and an Imam Walked Into a Room a Few Miles from Ground Zero…

I just came from the Episcopal Cathedral in Newark, where I helped the Web Goddess record for posterity an interfaith service marking the 10th anniversary of the terrorist attacks.  There were solemn remembrances, of course, but also proclamations of faith and hope for the future.  There was even laughter, as there should be whenever human beings of whatever faith come together in community.

I was in the balcony videotaping the entire service.  In her role as Director of Communications and Technology for the Diocese of Newark, the Web Goddess will find a variety of uses for parts of the footage (pixelage?).  Her boss, the Right Reverend Mark Beckwith, Bishop of Newark, was one of three speakers, the others being a rabbi and an imam who serve with Bishop Beckwith on an interfaith coalition.

I was too busy fiddling with the video camera to take notes on the reflections of the three clerics, all of which were grounded in the knowledge that Christians, Jews and Muslims all worship the same God.  Newark Mayor Cory Booker attended and made brief remarks, and the Star-Ledger sent a reporter, a photographer and a videographer.  [The video by Nyier Abdou was particularly well done. For A.T.I.N. groupies, there's a quick glimpse of the Web Goddess at the left at 0:24, and of me with a video camera on a tripod in the balcony at 1:04, and at 2:47.]

To me, perhaps the most moving part of the service came near the very beginning. The muezzin from a major mosque in Irvington walked to the lectern in this Episcopal church and chanted the Muslim call to worship, a hauntingly beautiful recital I had never heard in person before.

The service bulletin thoughtfully provided an English translation of the call to prayer, which begins and ends with “Allahu Akbar.”  Tragically, that phrase is associated in my mind with the hatred and anger of too many terrorist attacks. It was a blessing on this day to hear in those words an affirmation of our common humanity.

(Mr. Sabir Salaam of Masjid Waarith ud Deen in Irvington chants the Muslim call to prayer at Trinity & St. Philips Cathedral in Newark.  Photo by the Web Goddess, of course.)

Race, American Exceptionalism, and the Delicate Art of Criticizing Obama

A few weeks ago I had my virtual fingers slapped by some Facebook friends.  It happened after I clicked, for the first time ever, one of those little “Like” buttons at the bottom of an op-ed.

Here is the paragraph in the op-ed that caught my eye:

To be sure, no white candidate who had close associations with an outspoken hater of America like Jeremiah Wright and an unrepentant terrorist like Bill Ayers would have lasted a single day. But because Mr. Obama was black, and therefore entitled in the eyes of liberaldom to have hung out with protesters against various American injustices, even if they were a bit extreme, he was given a pass. And in any case, what did such ancient history matter when he was also articulate and elegant and (as he himself had said) “non-threatening,” all of which gave him a fighting chance to become the first black president and thereby to lay the curse of racism to rest?

You of course are free to agree or disagree, but I thought the paragraph did a good job of describing how a first-term Senator with a thin resume and a dodgy taste in friends was able to convince 69 million Americans that he should be elected to the most powerful office in the world.  I saw the Like button, I clicked it, and I went on to something else.

I’m not sure what I thought the Like button would do, but I soon found out.  It copied the headline and subhead of that Norman Podhoretz op-ed in the Wall Street Journal to my Facebook wall, topped by an unambiguous statement of my approval.  Thus:

Kirk Petersen likes a link:

“What Happened to Obama? Absolutely Nothing.
He is still the same anti-American leftist he was before becoming our president.”

The first response came from a civil and fair-minded friend, who pointedly asked, “What is it you like about that, Kirk?”  Other offended friends, thoughtful people one and all, weighed in, and I quickly realized I had fallen into the common trap of overlooking the rhetorical excesses of someone with whom I otherwise largely agreed.

Labeling Obama a leftist is certainly fair game, but calling him anti-American borders on calling him a traitor. Besides being unfair, it’s counterproductive. It’s the type of drive-by slur guaranteed to alienate virtually all of those 69 million Americans, some of whom might otherwise be open to a more measured critique of the Obama presidency.

So after a feeble attempt to defend my beliefs while regretting Podhoretz’s choice of words, I deleted the link and posted this instead:

Two lessons learned tonight: 1) Inflammatory language inflames people. 2) Impulsively clicking a “Like” button on an op-ed can be an insufficiently nuanced way of expressing an opinion.

Three weeks later, also in the Wall Street Journal, Shelby Steele provided the missing nuance.  It is not that Mr. Obama is anti-American, but rather that he rejects the very idea of America as the one indispensable nation.

Mr. Obama came of age in a bubble of post-’60s liberalism that conditioned him to be an adversary of American exceptionalism. In this liberalism America’s exceptional status in the world follows from a bargain with the devil—an indulgence in militarism, racism, sexism, corporate greed, and environmental disregard as the means to a broad economic, military, and even cultural supremacy in the world. And therefore America’s greatness is as much the fruit of evil as of a devotion to freedom.

Mr. Obama did not explicitly run on an anti-exceptionalism platform. Yet once he was elected it became clear that his idea of how and where to apply presidential power was shaped precisely by this brand of liberalism. There was his devotion to big government, his passion for redistribution, and his scolding and scapegoating of Wall Street—as if his mandate was somehow to overcome, or at least subdue, American capitalism itself.

Anti-exceptionalism has clearly shaped his “leading from behind” profile abroad—an offer of self-effacement to offset the presumed American evil of swaggering cowboyism. …

So, in Mr. Obama, America gained a president with ambivalence, if not some antipathy, toward the singular greatness of the nation he had been elected to lead.

In 2009, during his “global apology tour” shortly after taking office, Obama was asked if he believed in American exceptionalism.  His answer showed that either he did not understand the term, or that he was carefully pretending not to understand it:  “I believe in American exceptionalism, just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism.”  Obama thereby signaled that he rejected a belief of America’s role in the world that goes back more than 170 years, to Alexis de Tocqueville.

As Shelby writes,

Clearly Americans were looking for a new kind of exceptionalism in him (a black president would show America to have achieved near perfect social mobility). But were they also looking for—in Mr. Obama—an assault on America’s bedrock exceptionalism of military, economic and cultural pre-eminence?

American exceptionalism is, among other things, the result of a difficult rigor: the use of individual initiative as the engine of development within a society that strives to ensure individual freedom through the rule of law. Over time a society like this will become great. This is how—despite all our flagrant shortcomings and self-betrayals—America evolved into an exceptional nation.

To describe Mr. Obama’s attitude as anti-American is to caricature it.  But he does seem motivated by a vision of America as just one more unremarkable country among many.  That point of view has a constituency — but I’m not part of it.

Two lessons learned tonight: 1) Inflammatory language inflames people. 2) Impulsively clicking a “Like” button on an op-ed can be an insufficiently nuanced way of expressing an opinion.