Obama Really Wants To Sink The Economy

Obama Really Wants To Sink The Economy

That's the only explanation for this crazy proposal in the March 25, 2009 Los Angeles Times:

In the face of opposition from Congress, President Obama on Tuesday vigorously defended his proposal to scale back two popular tax breaks by limiting the ability of upper-income taxpayers to deduct home mortgage interest and gifts to charities.

Obama's proposed budget pays for a major share of his proposed healthcare overhaul by capping the value of itemized deductions to a rate of 28%, in effect making the deductions worth less than under current law to couples who make more than $250,000 per year.

1. While there are a lot of charities whose actual social benefit is not huge, there are many that do an enormous amount of good--and a lot of that money comes from people for whom a really bad year is one where they only make $250,000. I recall that McDonald's founder's widow Kroc gave some truly stupendous amount of money to the Salvation Army some years ago, and she's not alone. Bill & Melinda Gates have given a truly astonishing amount of money (okay, not so astonishing relative to their net worth) to fight AIDS in the Third World.

2. Does a person making $250,000 a year need the full house mortgage interest deduction? No, they don't. But knocking this down means that the guy who builds or buys a million dollar house (which in California is only a mini-mansion) can less afford to do so. Maybe he buys a considerably less expensive home. Reduced demand means reduced sales of existing houses, and reduced demand for building these absurd mansions--which means fewer people working on building them. You might make an argument that the house mortgage interest deduction creates an artificial demand for houses, and doesn't make much sense, but a proposal like this in a recession is a way to lengthen the weak housing market--and the weak job market.

3. This won't even reward Obama's backers--quite the opposite. Obama's big funders are going to have less money to contribute to his next campaign, while Republicans (who are overwhelmingly below the $250,000 per year figure) will be largely unaffected by such a change. Good for us, but it shows that Obama isn't even thinking like a proper Chicago politician.

There was a lot of talk before the election about what a smart guy Obama is. The more I see, the more he is beginning to look like the Affirmative Action President. A white politician with this thin of a resume of actual accomplishments, with this remarkable lack of either intelligence or cunning, would never have been seriously considered for the nomination. He got the job because of his color--not his abilities.