The Obama Economic Advisory Team – A Scary Group

November 14, 2008 by  
Filed under Economics

If you want to predict what an inexperienced politician will do when suddenly elevated by voters into a position of vast power and influence, it helps to evaluate the people he has picked to advise him.  So it is with President-Elect Barack Obama.

Last week Obama held his first press conference as President-Elect.  Naturally, it was focused on the economy.  Indeed, lined up behind the podium were the many members of Obama’s economic advisory team.  As I watched this group file in, I couldn’t help but notice that one of them was quite short in stature.  Right away I knew we were in trouble.  It had to be Robert Reich, Clinton’s Secretary of Labor.

Why is Mr. ToughMoneyLove afraid of Robert Reich?  Because Reich is convinced that the wealthy have been getting a sweet deal in our economy.  That makes Reich unhappy.  He thinks the wealthy need to be punished for their success through increased taxes.

It’s not so much that Reich wants the marginal tax rates raised for everyone in the upper income categories.  I’m sure that Obama is hearing that from every member of his economic advisory group.  No – Reich is not satisfied just with taxing income at higher marginal rates.  He wants to tax net worth. 

In an opinion piece published last year, Reich was harshly criticizing Democrats and their competing presidential candidates for being timid on taxes.  He fondly remembered the 38% top marginal rate of the Clinton years (its 35% now), as well as the 90% and 70% top rates during the Eisenhower and Kennedy administrations.  But in his finger-wagging lecture to Democrats, Reich was willing to compromise at a mere 50% top marginal rate.  Thanks pal.

Then came the clincher:  The Reich “wealth tax.”  He wants to impose a tax of 0.5% of the net worth of those Americans who hold assets in excess of $5 million.  Now that tax won’t affect me and probably not many of you.  But that does not comfort me.  When was the last time that a government imposed a new tax (such as a “wealth tax”) and then left it alone?  Doesn’t happen often.  Instead, new government tax programs have a tendency to creep up, down, across, and into our bank accounts like kudzu along a Georgia highway.

I don’t want anything to do with taxing people for having done a good job of saving and investing.  What kind of government policy is that?  Do we want to encourage low net worth so that everyone can retire broke?  We already have plenty of members in that club.

Perhaps the scariest part of Reich’s views were expressed when he anticipated a negative reaction from the targets of his tax increases:

You say the rich will leave the country rather than face a marginal tax of 50 percent?  Let them, and take away their citizenship.

Great attitude, Robert.  Why don’t you start with the Clintons?   They are now loaded and no doubt anxious to redistribute their new-found net worth to your favorite charity:  the non-wealthy.

I’m still trying to get a bead on the other members of the Obama economic advisory team.  After learning that Reich was among them, I’m very afraid of what I will learn.

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4 Responses to “The Obama Economic Advisory Team – A Scary Group”
  1. Brent says:

    Wow, that is scary. I cannot for the life of me understand why people feel the need to penalize those that have lived the American Dream and done well for themselves. Why work hard to make money, let the rich people pay for the things I want.

  2. This still sounds better to me that 4 more years of bush policies!!

    Obama will bring the economy back, no doubt about that.


  3. Brian says:

    It might just be me, but it seems like the people who beleive in wealth redistribution always seem to be at either the top or bottom of the heap and rarely at the middle of the economic ladder. If Robert was really serious he would/should pay that tax of 50-70 percent. I’m also sure that a look at his tax returns would show a low contribution rate of charity giving, because his mindset is the Government is the awnser to all problems.

  4. @Brent: Unfortunately, higher taxes are coming just to pay for all of the bailouts and rescues. The question is how much the Democrats will pile on to pay for other re-distribution of wealth programs.

    @ HS – What sounds better? Higher taxes? Please.

    @Brian – Your point is a good one. Lots of the ultra-wealthy seem to reach a point where they feel guilty about what they have and then decide that everyone needs to give up wealth to compensate.

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