Buffett rule is a calculated distraction
Warren Buffett.
April 10th, 2012
02:47 PM ET

Buffett rule is a calculated distraction

Editor's Note: J.D. Foster is the Norman B. Ture Senior Fellow in the Economics of Fiscal Policy at The Heritage Foundation, a conservative think tank in Washington, D.C.  Curtis Dubay is a Senior Policy Analyst at The Heritage Foundation. They both blog at The Foundry, where this was originally published.

By J.D. Foster and Curtis Dubay, The Foundry

What do you do when you’re losing a debate?  Change the subject.  That’s really all you need to know to understand President Obama’s resuscitation of his infamous “Buffett Rule” that would impose a minimum 30 percent effective tax rate on businesses and families earning $1 million.

The Supreme Court gave Obamacare a nasty audition two weeks ago, leaving even staunch defenders of the law grasping for straws while the former constitutional law professor now in the White House outrageously flailed the court for doing exactly what the Constitution intends.  So what is the President’s response? Change the subject, of course.

After releasing a non-budget that completely ignored the nation’s near-term, medium-term, and long-term fiscal plight - an extraordinary trifecta not easily achieved - the President then tried to take the House Republicans to task for their proposed real solutions on all three. Nothing highlights irresponsibility like responsible behavior, and so Obama found sharp rhetoric and a frowning visage to be thin gruel when you’ve no policies of your own. Response? Change the subject.

Soaring gas prices have put enormous strains on family budgets and business plans. The President might deflect some of the resulting popular anger if he actually had an energy policy that might produce more energy. Instead, his policies have produced only more examples of why government should not be in the business of picking winners and losers (Solyndra). When your most notable policies relating to gas prices is to kill a major oil pipeline like Keystone, propose algae as an energy source and seek to raise taxes on oil companies, you’ve nowhere to hide. Response? Change the subject.

Then came last Friday’s jobs report, which was universally acknowledged as disappointing: job growth cut in half from the modest levels of previous months, and an unemployment rate that fell only because thousands of Americans just gave up looking.  If Washington had merely left the economy to heal itself, performance today would have been much stronger and unemployment markedly lower. Instead, almost everything this Administration has tried has failed noticeably, and voters have noticed. Response? Change the subject.

With nowhere else to go, Obama has fallen back to his most comfortable setting - class warfare. Now that it is painfully obvious the Buffett Rule is the President’s chief policy priority and the centerpiece of his reelection campaign, it is fair to ask, what would the policy do to address any of the nation’s problems?

The answer is - absolutely nothing.

Strengthen the economy? No, when it comes to economic growth the Buffett Rule would weaken the economy. The tax would fall most heavily on job creators like businesses that pay their taxes through the individual income tax, investors, and entrepreneurs. The higher levy would confiscate from them resources they would otherwise use to start new businesses, grow existing businesses, and hire more workers. This will slow economic growth, job creation, and wage increases.

Reduce the budget deficits? More like “budget pixie dust” in the words of House Budget Chairman Paul Ryan (R-WI). According to a recent analysis by the congressional Joint Committee on Taxation, the Buffett Rule would raise $47 billion over ten years. And that assumes no negative economic effects, which are certain to reduce the revenues gained. For perspective, during that period President Obama’s budget calls for adding $6.7 trillion to the national debt. The Buffett Rule would reduce the increase in debt in Obama’s budget by about one half of one percent.  No joke.

The Buffett Rule debate is desperate political prestidigitation. President Obama is losing the fight over Obamacare, which remains intensely unpopular. Gas prices show no sign of descending. The economy at best is muddling. And the nation is looking for answers on the budget and the President has none. The President needed a change of subject. For Obama, what better time for a distracting, divisive fight over fairness?

When a President refuses to address the issues the country cares about, they tune out.  Obama’s fairness fight is likely to fare about as well as the rest of his policies.

The views expressed in this article are solely those of J.D. Foster and Curtis Dubay.

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Topics: Economy • Politics • President Obama

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soundoff (19 Responses)
  1. gg74k

    excellent

    April 10, 2012 at 2:57 pm | Reply
  2. grenadaboy

    I guess this is an effort to be "fair and balanced". What total hogwash. The Pres. is an "all of the above" kind of negotiator. With energy and the economy and anything else. Keystone will go through when properly vetted and you can't ask seniors to give up on SS and Medicare when millionaires get a free ride, c'mon. Not to mention defense!!!!!! Give me a break, you could easily cut the DOD by 50%. Then there's Agriculture and Homeland Security, the list isn't endless but long enough.

    April 10, 2012 at 3:22 pm | Reply
  3. Dobri Bozhilov

    Only the poor pay taxes...
    http://dobrisratings.com/index.php?option=com_content&task=view&id=149533&Itemid=1

    April 10, 2012 at 4:02 pm | Reply
  4. jean alexander steffen careaga

    THIS IS GPS!!! ONLY INTELIGENT PEOPLE ARE SUPPOSE TO WRIGHT ARTICLES HERE!!! HOW DID THIS GUY GET IN?!?!?!

    April 10, 2012 at 5:20 pm | Reply
    • DealIsReal

      Only intelligent people should post responses also. I don't know what " GPS " is in the context of your response but I do know how to spell " intelligent ", " write ", and " supposed ". Try proofreading before you post. It might make your comments a little more credible.

      April 11, 2012 at 9:32 am | Reply
      • Rz

        Ouch !

        April 12, 2012 at 12:54 am |
  5. Muin

    Yeah Bush grew the .... out of U.S econmoy with 8 years of tax cut. After 8 years of unpaid war and tax cut, global economy as well as U.S economy is on life support. This whole job creator argument don't work. Figure out something new.

    April 11, 2012 at 2:11 am | Reply
  6. Josh

    That seems a very partisan article. Such sweeping statements as, "Instead, almost everything this Administration has tried has failed noticeably, and voters have noticed", is a very political statement. If an author makes such sweeping generalisations, be they conservative or liberal, I would prefer to see some economic analysis to back it up. Nothing in this article comes even close to an economic justification for this statement.

    April 11, 2012 at 4:57 am | Reply
  7. j. von hettlingen

    The Obama's administration can't bear ALL the blame for the "malaise" the authors stated above.

    April 11, 2012 at 5:38 am | Reply
    • Rz

      Quite right. There's plenty enough blame to go around and many who should hang their heads. Sad truth is that when no one has enough courage to stand up and admit fault, it is usually the system that is left to blame. BUT EVEN THAT ISN'T HAPPENING SO MUCH! not yet anyhow.....

      April 12, 2012 at 1:10 am | Reply
  8. Lee

    Good Lord! What pap comes out of organizations such as The Heritage Foundation and The Foundry! Such noble names for organizations that are intent upon destroying the very principles that their names elicit.

    April 11, 2012 at 9:02 am | Reply
  9. Rz

    If the public only knew the truth about derivatives, hedges, (to mention only a few strategies) and how it relates to taxation, the outcry would unfortunately soon be overcome with a sense of betrayal and depression. Guys like Buffett and Gates know all too well how it works, and if anyone thinks they're really the bad guys, just read up on the Bill & Melinda Gates Foundation, then go figure. Here are a couple of multi-billionaires who are not just keeping money out of the hands of a hijacked government, but actually putting it back directly towards humanitarian needs, INSTEAD OF WASTING IT ON WEAPONS OF DEATH AND DESTRUCTION !!! Most everyone agrees that taxes are necessary, but does everyone agree on how and where to utilize the proceeds ?!? Heck no ! The voters don't have a say in it at all. Nor much of anything else for that matter. The system works on the principal that the government has a blank cheque drawn on your collective bank accounts. And it's now overdraft to the tune of about 16 trillion dollars. What a mess!

    April 12, 2012 at 1:50 am | Reply
  10. Steve F

    I do not believe that the requirement for health insurance to be a big deal – we are required to have auto insurance in almost all states (I believe NH is the exception), are we not? The issue I feel is the "penalty" for not having the insurance is BS. I would not charge a penalty for it but have the individual either go without insurance or have to pay for a private policy.

    The US is falling farther and farther behind the rest of the world in regards to the cost of healthcare. (see http://blogs.ngm.com/blog_central/2009/12/the-cost-of-care.html for a chart to see the cost) Canada, United Kingdom and France have "socialized" medicine that works.

    April 13, 2012 at 11:44 am | Reply
  11. Steve F

    Sorry, forgot to add something:

    While not everyone drives a vehicle, the ones that do have to have insurance. Do we use the insurance on a regular basis? I hope not.

    Everyone will need to see a Dr sooner or later. I do not see any difference than having required health insurance and having auto insurance. If you do see a problem with it, it should go both ways – if you feel the requirement for having health insurance is wrong, then isn't having to have auto insurance wrong too?

    April 13, 2012 at 11:48 am | Reply
  12. deep blue

    President has no control over gas prices. We control only about 10% of the world's supply of oil. Our control of global oil prices is minuscule. The author ruined his credibility on that critique.

    That being said, the Buffet rule is just a distraction, just like the keystone pipeline is just a distraction by the right. The Keystone pipeline will be approved through the state department this year, just like it is legally required to. Republicans wanted to exempt the company from the rules, and President Obama said no.

    hopefully, eventually our government will get serious about real solutions instead of just scapegoating each other for the country's problems. But, for that to happen, we will need the electorate to get a little smarter and stop discriminating against the opposing political party.

    April 16, 2012 at 11:28 am | Reply
  13. Sariah

    What does this article has to do with Fiscal Polic?

    How does it impact our economy?

    April 7, 2014 at 10:40 am | Reply

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