Roland Benjamin: Ask Not What Your Country Can Do (to Make You More Productive)

Elements of Senator Obama’s economic plan described in this Washington Times editorial have the makings of a staggering economic impact. If you subscribe to the notion that individuals should earn as much as their skills, talents, and minds will permit, then you will be incredulous at the alternative Senator Obama is presenting to the household earning around the median income level (the middle class, as defined by the IRS).
The National Center for Policy Analysis put out this synopsis of the plan:

… Obama has gone hog wild over “refundable tax credits”:

  • He promises a $4,000 refundable tax credit to finance college tuition for students who spend 100 hours performing community service.
  • There will be a refundable 10 percent mortgage-interest tax credit for married couples who take the $10,900 standard deduction because their itemizable deductions (including mortgage interest) fall below that level.
  • Taxpayers will also finance a $500 refundable tax credit to augment a $1,000 savings-account deposit made by families earning up to $75,000.

In addition, Obama also promises to triple the EITC benefit for minimum-wage workers:

  • For a married couple with two children working full-time and earning the minimum wage, their refundable EITC would rise from $3,225 to $9,675.
  • He would increase their refundable child-care tax credit to $3,000 and offer a refundable $1,000 tax credit to partly offset their $1,500 Social Security taxes, which had already been more than offset by their nearly $10,000 refundable EITC.
  • If they put that $1,000 in the bank, they would get another refundable tax credit of $500.

Now consider what this means to a typical family of four assuming the following:

  • The breadwinner is capable of earning $18.25/hr with his or her skills, talents, and mind. The oldest child is about to enter her first year at a community college and can work 6 hours per week at minimum wage to offset tuition costs (or augment household income) or can choose to simply work 100 hours of community service.
  • The other child is sufficiently young to receive existing or new child tax credits.
  • At the $18.25/hr job, the breadwinner can insure the family’s health at a co-share cost of $73/week through his or her employer.
  • At higher earnings levels they are able to itemize deductions including $8,144 of mortgage interest.

Under Obama’s plan, the breadwinner has a new option for choosing an employer or career.

In other words, if the household decides to work as productively as possible while encouraging the daughter to contribute to the household income, then the family will net $206 per year more than if the breadwinner simply takes a minimum wage position. Tax dollar redistribution will close the rest of the gap to the tune of more than $25,000 via refundable credits, reduced contributions into social security, and public funded health care.
I cannot grasp how providing incentive for nearly half of the population to work at less than 40% of their productive capacity could help our economy.
This plan mutates the “Welfare Trap” into a malignant monstrosity that entices all households earning below median income to work at a significantly reduced productive capacity in order to qualify for the progressive expectations of an “enlightened” society.
In contrast, we can only hope that the American spirit, as described in this piece in the Aspen Times, will prevail:

… [among] common traits are that he isn’t looking for anything from anyone — just the promise to be able to make his own way on a level playing field.

Of course, I think the writer underestimated the “Angry” demographic by singling out one segment within this category. With a few exceptions to the broader depiction, we can all list scores of individuals who behave according to the above statement yet do not fall into the writer’s narrow demographic.
As the social safety net morphs into the predominant lifestyle, individuals fitting the above description will have a more and more diminished say on election days. In the state most likely to proceed down this path, Rhode Island could be the first to experience its consequences. The saying “Last one out, turn off the lights” comes to mind.

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16 years ago

Scary, especially considering the “most conservative” prospect “doesn’t understand economics”

16 years ago

I can only hope that McCain responds to this by pointing to Rhode Island — and its decades of Democratic dominance — as painful look at what lies ahead if the Obama Plan is implemented.

16 years ago

I would much rather have a president that knows he doesn’t understand economics than one that thinks he does, all evidence to the contrary.

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