Squaring the Culture

"...and I will make justice the plumb line, and righteousness the level;
then hail will sweep away the refuge of lies,
and the waters will overflow the secret place."
Isaiah 28:17

02/20/2009 (6:57 pm)

Obama Transparency (Warning: NewSpeak Alert)

I just read one of the most incredible spin jobs I’ve ever encountered.

It begins with this New York Times headline: “Obama Bans Gimmicks, and Deficit Will Rise.” The article starts like this:

For his first annual budget next week, President Obama has banned four accounting gimmicks that President George W. Bush used to make deficit projections look smaller. The price of more honest bookkeeping: A budget that is $2.7 trillion deeper in the red over the next decade than it would otherwise appear, according to administration officials.

So, we know from the beginning that what we’re about to read is how the evil, dishonest Bush lied to us to make his budgets appear less out of balance, and how the honest and trustworthy Obama will now Be Strong™ and Do The Right Thing™. This Bold, Courageous Honesty™ actually explains the enormous deficits that the Obama administration will appear to create in the coming years. With me so far?

The biggest piece of this occurs in the new, more honest handling of the Alternative Minimum Tax. The Vile Bush used to project the income from the AMT based on current levels of taxation. However, the AMT was not indexed for inflation, so bracket creep would make the AMT apply to taxpayers lower and lower on the economic scale. To save the middle-class his wealthy buddies, Vile Bush would then, sometime during the following year, propose to raise the base income to which the AMT applied, and Congress, hoping to avoid taxpayer revolt, would cravenly comply. This would reduce the take from the AMT below what had been projected. Ooooo. Devious.

So, how will Honest Obama solve this evil plot? Why, he will forthrightly and boldly refuse to adjust the AMT every year. But he is So Very Honest, according to the Times, that he will not even count in his budget projections the additional $1.2 trillion dollars in revenue that this will generate over the next 10 years. We are Saved!

“The president prefers to tell the truth,” said [OMB Director Peter R. Orszag], “rather than make the numbers look better by pretending.”

Recent presidents and Congresses were complicit in the ploy involving the alternative minimum tax. While that tax was intended to hit the wealthiest taxpayers, it was not indexed for inflation. That fact and the tax breaks of the Bush years have meant that it could affect millions of middle-class taxpayers.

In case you weren’t following carefully, let me do this for you in English.

Bush (and, I’m guessing, Clinton, Bush Sr., and Reagan before him) would write a budget projecting revenue as the law existed at that moment. Later, Congress would adjust the Alternative Minimum Tax to eliminate bracket creep; this would result in less revenue at the end of the year than projected by the IRS at the beginning. The AMT was designed to prevent extremely wealthy taxpayers from avoiding all taxes by way of tax shelters, so Congress saw no reason to apply it to the middle class. Does this sound dishonest to you? No, not to me, either. You don’t write budgets anticipating the passage of legislation that has not passed yet.

So, what’s changing? Why, Obama is not going to adjust the AMT anymore. He’s going to let the AMT apply to taxpayers lower and lower on the economic scale. And oh, by the way, the government has just expanded the money supply incredibly, which is likely to send inflation through the roof. In other words, Obama is going to use the now-accelerated bracket creep to slam the middle class with a $1.2 trillion tax increase over the next 10 years, by expanding the population to which the AMT applies. And he’s bragging that he’s not going to use this in his budget projections — which he could not do anyway, since it would require an accurate prediction of future inflation effects on tax revenue. Sound honest to you? No, not to me, either.

Short version, Obama is going to use inflation to raise taxes hugely on the middle class, and he’s hiding it inside a claim to be correcting the previous President’s “dishonest” tactics.

I suppose we can blame the Times for this simply unbelievable bit of legerdemain, but the article claims to report the content of an interview with new OMB Director Peter R. Orszag, so the government is complicit in the spin.

Me, I’m wondering when Honest Obama is going to stop including moneys collected for Social Security in the government’s general revenue, the bit of dishonest accounting that produced somewhat more than half of the famed (and illusory) surpluses of the Clinton years. He genuinely intends transparent government, you know. Even though he rushed through the utterly urgent stimulus bill so quickly that no one could read it, then delayed signing it for four days. That was just an oversight (sans oversight.) And he’s not even asking for a do-over. What a Man.

We are SO screwed…

By the way, this solves a little dilemma that a commenter raised a few days ago regarding whether or not the administration actually planned to screw the Chinese by paying back the money they loaned us in inflated dollars. The Obama administration understands perfectly damn well how inflation is going to go, and the effects it will have on tax revenue and loan value.

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February 21, 2009 @ 8:13 am #

good catch, and a great post.

(Author sez: Thanks.)

February 23, 2009 @ 7:29 am #

Ah well, I figured most of the stimulus was just an excuse to be able to push through every liberal dream proposal. Now it’s to stick it to the chinese as well. Oh, and lets not forget to destabilize business through inflation making their nationalization a requirement.

I am actually hoping the Chinese say no to financing this whole boondoggle. I would think that they would figure in socio-political-economic terms that they cannot afford not to. However, they should realize that in the long run, they are going to keep getting the shaft as they are in essense being forced to pay for our socialism. Although, one could definitely make the argument that they could not afford NOW for us to go under.

February 23, 2009 @ 5:42 pm #

This is a fairly ignorant question (not dumb, just ignorant!):

I’ve been hearing about the annual AMT adjusting for what seems like decades, all ascribed to the failure of that law to index for inflation or bracket creep.

So instead of the annual AMT-panic, why don’t they just amend the law to incorporate indexing? One fix; no more annual gimmickry.

Is there some legal or accounting reason (i.e., not just political) that they don’t do this seemingly simple & perpetual fix?

Thanks. Dorothy Olson, Fort Collins, Colorado

February 23, 2009 @ 8:42 pm #


My wife and I both asked that question, and neither of us knows the answer. I think, however, that there’s nothing in the tax code that’s indexed to inflation. You’d think it would be simple to write something like that into the law, but it’s apparently never been done.

February 27, 2009 @ 9:35 pm #

Thank you for your blog!

Read my post

“Violation of the Constitution – the Central Planners of the new socialist state”

Stand up for your FREEDOM!


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