Sen. Obama's new ad entitled "Spending Spree" attacking Sen. McCain's tax cuts as costly "spending" contains accurate figures, but is still highly misleading in some respects.
The first claim regarding the cost of his tax cuts being over $3 trillion (excluding health insurance credit) is 100 percent correct. However, Obama calls McCain's tax cuts as new spending, which is kind of odd. There are parts of McCain's plan that are similar to spending (tax expenditures), but much of the deficit-financed cost comes from reductions in tax rates.
Regarding the privatization of Social Security, McCain has not indicated in this campaign that he would support the Bush privatization plan. He did support it four years ago, but in this campaign, he has called for a panel a la Reagan/Greenspan/etc. to secure the future of Social Security (which is not in as dire straits as Medicare). When discussing this issue on ABC's This Week about a little over a month ago, McCain said that he would even consider a tax increase, which if you recall, set off a firestorm among the anti-tax community.
The last figure cited in the ad ($1.3 trillion to insurance companies) is the most misleading. It refers to John McCain's health insurance tax credit that would cost $1.3 trillion over 10 years. Well, at least the Obama campaign is now saying it is a tax cut. Biden has been on the campaign trail calling it a huge tax increase.
But the number is misleading because it only refers to the fact that under McCain's health insurance plan, the health insurance credit would go directly to health insurance companies that provide the health insurance to the individual or family. The ad doesn't tell you that the health insurance companies don't get the money unless they provide the health insurance to the individual or family.
By this line of reasoning, we could say that Obama's health care plan gives trillions of dollars to doctors, ignoring the fact that the doctors are providing a service to patients. We could also say that Obama's mortgage interest credit goes to "Wall Street" or "Big Housing" since some of it may lead to more borrowing, higher interest rates, and higher home prices. This is a question of economic incidence at its core, but Obama is assuming that where the check flows is who benefits. Others like Tax Policy Center assumed that the health insurance credit benefits the insured individual or family, even though the factor of production receives the check.
This type of misleading information is typical of the Obama campaign: pick out an industry that is less than favorable in the public light (like oil or insurance) and provide misleading information that claims McCain supports that industry with his policies that have no such intention. Don't worry...I'm sure the McCain campaign is working on a dishonest advertisement in response; and I bet it will say something to the effect of "Obama will raise your taxes."
In North Carolina, land of gasoline shortages due to state-imposed price controls, a new convention center opened this month in Raleigh. Funded by taxes on meals and hotel stays (and therefore not a tax increase, since only "they" pay the taxes not "us"), the $221 million center is already turning into a "money pit," according to the local John Locke Foundation:
"Analysis of 164 convention and meeting contracts shows that Raleigh Convention Center officials have given conventions a whopping $2.26 million in discounts for RCC room rentals," [report co-author Dr. Michael Sanera said]. More than $500,000 in discounts cover events scheduled in the next 10 months, and some discounts cover events scheduled as late as 2023.[...]
Taxpayers would be wrong to assume that the convention center could operate like a private business, Sanera said. "You might think prices for space and services would cover the operational expenses and even pay off the debt incurred to build the convention center," he said. "Unfortunately, the opposite is true. The only way for the RCC to attract users is to offer deep discounts on rooms and services and even pay large subsidies to attract conventions and meetings."
Of 68 events scheduled through June 2009, room discounts have averaged 58 percent, Sanera said. "Some groups are paying nothing or as little as $1 to rent space," he said. "This might make sense for a city organization, like the Raleigh Appearance Commission, but large corporations are getting similar deals."
Check out the full report here.
Over at the StangNet.com forums, a commenter looking at Tax Foundation data expresses surprise that marginal income tax rates once reached 91 percent. Indeed they did!
The rate had reached 94 percent during World War II, on income over $200,000 (approx. $2.49 million in today's dollars). It dropped down to 91 percent in 1946 and remained there until the Kennedy tax cuts in 1962-64. Brackets weren't inflation adjusted back then, so it still applied on income over $200,000, which by then had reached $1.41 million in today's dollars. Click here for a newsreel of President Kennedy urging passage of the tax cut.
Check out U.S. income tax rates from 1913 to today here.
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