We’re All Going to Pay

Despite promising taxes for no American earning less than $250,000 a year, any American who consumes energy is soon going to see an increase in their bills. In addition to raising money to pay for special pet projects of The One’s green supporters, the proposed greenhouse gas cap and emissions tax will also raise money to give tax credits to “lower and middle-income working families.” Something tells me that those tax credits won’t be enough to make up for the increase in their utility bills.

The One tells us that he’ll cut the deficit (which he is increasing substantially) by taxing the rich. The problem with his plan is that there aren’t enough rich people to tax. And his policies are going to make certain that we have less wealthy Americans every year.

Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.

Mr. Obama is of course counting on an economic recovery. And he’s also assuming along with the new liberal economic consensus that taxes don’t matter to growth or job creation. The truth, though, is that they do. Small- and medium-sized businesses are the nation’s primary employers, and lower individual tax rates have induced thousands of them to shift from filing under the corporate tax system to the individual system, often as limited liability companies or Subchapter S corporations. The Tax Foundation calculates that merely restoring the higher, Clinton-era tax rates on the top two brackets would hit 45% to 55% of small-business income, depending on how inclusively “small business” is defined. These owners will find a way to declare less taxable income.

The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can’t possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.

On that point, by the way, it’s unclear why Mr. Obama thinks his climate-change scheme won’t hit all Americans with higher taxes. Selling the right to emit greenhouse gases amounts to a steep new tax on most types of energy and, therefore, on all Americans who use energy. There’s a reason that Charlie Rangel’s Ways and Means panel, which writes tax law, is holding hearings this week on cap-and-trade regulation.

Mr. Obama is very good at portraying his agenda as nothing more than center-left pragmatism. But pragmatists don’t ignore the data. And the reality is that the only way to pay for Mr. Obama’s ambitions is to reach ever deeper into the pockets of the American middle class.

I don’t care how many times President Obama declares that his policies won’t hurt the middle and lower classes. A lie can be repeated a thousand times and it’s till a lie. No matter how many sheep happen to believe it.