Obama: I've Got a Whole Bunch of Better Ways to Spend Your Money; UPDATED

Yesterday morning, former Clinton advisor George Stephanopoulos interviewed President Obama on ABC's Good Morning America. Not surprisingly the interview was, for the most part, a series of cream puff questions designed to put Obama in as positive a light as possible. However, Obama still managed to display his fundamental lack of economic understanding.Well into the interview, the topic of the enormous tax increases currently scheduled to take effect on January 1st came up. Obama, naturally, reiterated his desire to dramatically and permanently raise marginal tax rates on the most productive (i.e. those who create jobs). Obama justified this farcical policy prescription by claiming that "every economist" he's talked to says cutting marginal tax rates is the least efficient way to boost the economy before throwing in one of his obligatory class warfare red herrings:OBAMA: But what it, what every economist that I've talked to has said is that if you're gonna spend, say $95 billion, even just for two years for these tax cuts, probably the least efficient way of actually giving the economy a boost is to provide that $95 billion to millionaires and billionaires.I guess Obama now classifies small business owners generating as little as $200 thousand in income as "millionaires and billionaires". And what, exactly, does he mean by "provide"? Provided by whom? Obama? Does he seriously think that allowing people to keep their own money is the same thing as having it "provided" to them? Does he consider people who work for their money on a par with those who live on the public dole (e.g. ACORN)? Is that really his world view? A real journalist would certainly have followed up Obama's startling disclosure with these types of questions. But I digress...His claim that every economist believes that cutting marginal tax rates is not only an inefficient, but "the least efficient" way of stimulating the economy is, to put it mildly, unsupported by the research in this area. One wonders which economists he's talking to. Apparently not his own handpicked Chair of the Council of Economic Advisers, Christina Romer, whose research found that tax rate reductions resulted in a tax multiplier of three, as Harvard economist Greg Mankiw noted:In an ironic twist, one key piece comes from Christina Romer, who is now chair of Obama's Council of Economic Advisers. About six months before she took the job, Romer teamed up with her husband and fellow Berkeley economist David Romer to write a paper ("The Macroeconomic Effects of Tax Changes") that sought to measure the influence of tax policy on GDP.[...]The Romers' conclusion, which is at odds with most traditional Keynesian analysis, was that the tax multiplier was 3 ? in other words, that every dollar spent on tax cuts would boost GDP by $3. This would mean that the tax multiplier is roughly three times larger than Obama's advisors assumed it was during their policy simulations.Mankiw cites further research that completely demolishes Obama's claim that cuts in marginal tax rates are an inefficient way to boost economic growth (emphasis mine):Similarly, in recent research, Andrew Mountford (of the University of London) and Harald Uhlig (of the University of Chicago) have used sophisticated statistical techniques that try to capture the complicated relationships among economic variables over time; they conclude that a "deficit-financed tax cut is the best fiscal policy to stimulate the economy." In particular, they report that tax cuts are about four times as potent as increases in government spending.Perhaps the most compelling research on this subject is a very recent study by my colleagues Alberto Alesina and Silvia Ardagna at Harvard. They used data from the Organization for Economic Cooperation and Development to identify every major fiscal stimulus adopted by the 30 OECD countries between 1970 and 2007. Alesina and Ardagna then separated those plans that were in fact followed by robust economic growth from those that were not, and compared their characteristics. They found that the stimulus packages that appeared to be successful had cut business and income taxes, while those that evidently did not succeed had increased government spending and transfer payments.Hmmmm. Sound familiar? With all this research out there (I haven't even mentioned Arthur Laffer), how can Obama plausibly claim he can't find any economist who supports marginal tax rate reductions as an efficient way to stimulate the economy. Perhaps, as noted above, he should speak to Christina Romer, or even John Orszag. And, as noted frequently, President Reagan dug us out of a much deeper ditch with, you guessed it, marginal tax rate reductions.With all this research and evidence to the contrary, I couldn't believe that Obama, even allowing for his lack of understanding of, and hostility to, free markets can honestly think that raising marginal tax rates on those who create jobs is a good idea. There had to be something I was missing. Well, a little further into the GMA interview Obama revealed it. Stephanopoulos follows up his question about Obama's determination to raise taxes by asking him if he would veto a bill which preserved the Bush tax cuts for everyone (emphasis added):STEPHANOPOULOS: Does that mean you will veto an extension of tax cuts to the wealthy?OBAMA: What I am saying is that if we are going to add to our deficit by $35 billion, $95 billion, $100 billion, $700 billion, if that's the Republican agenda, then I've got a whole bunch of better ways to spend that money.In an unscripted moment of clarity, we have the answer. I had to read this twice to make sure he actually said it. He did...three times. I can't believe this hasn't received more attention. This is clearly another "Joe-the-Plumber" moment. As in Toledo with his "spread the wealth" statement, he has once again revealed his true ideological point of view. Whose money does he think it is? His? Only in the mind of a community organizer is allowing people to keep the money they earned somehow equivalent to government spending. Further, how is allowing people to spend their earnings according to their priorities less desirable than being forced to have it spent on Obama's priorities?I've got a whole bunch of better ways to spend that money.Translation: Obama the Magnificent knows how to spend your money better than you do, and he's going to do everything he can to confiscate it and do just that. And if you're lucky, he may deign to "provide" you with some of it. Unbelievable.November 2nd can't get here soon enough for me. 53 days and counting...Update: C4P friend Jedediah Bila believes that Obama's tendency to ignore reality, economic and otherwise, is due to his breathtakingly misplaced arrogance. This may explain in part why he thinks he's "got a whole bunch of better ways to spend" your money than you do.

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