White House Playbook: Arbitrary Numbers and Financially Ignorant Sloganeering

by Brad Schaeffer      

President Obama this Tuesday stated his case for increased taxes on “the rich” as part of his solution to balance the deficit. “Keep in mind,” he assured the American people, “that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all.”

I have a very basic question that I am not sure anyone has pressed Mr. Obama to answer: Where did this figure of 250k, north of which one is considered by him to be among “the rich” even come from? Its very roundness tells me that it was the result not of a detailed actuarial analysis but rather some sort of arbitrary caprice that only those completely isolated from any private sector experience can conjure up. I almost get the feeling it was something as off-hand as: “Hey 250k sounds right to me. Nice number. So whattya think?” Sure write it in there.
Consider: if you are living in Little Rock, Arkansas and make $249,000 according to the president you are not “rich” and thus do not need to kick in more. Yet if you live in, say, New York City and make $251,000 you are “rich” and so it’s time to ante up. Is that how it works? Again I ask: what is so magical about $250,000? Why is the cut-off not $246,500 or $310,231? Isn’t anyone curious about how this man creates economic policy?
Let’s look at it this way. Someone in the New York metro area making $251,000 need only make $100,000 to garner the same standard of living in Little Rock, Arkansas. For instance, a family of four searching for a two-bedroom apartment in Manhattan can expect to pay anywhere from the low end of $2,100/mo in Harlem to $6,700/mo+ in Tribeca. (That of course makes the two kiddies double up in one room). In Little Rock you can find a comparable apartment for an average of $700/mo. New York’s low end is three times Little Rock’s average. (This standard of living discrpency, in fact, serves as an indictment of the unfairness of our entire messed up tax code but I digress.)
So again I ask where does this $250,000 level come from?

Am I the only one who would like to see the methodology that prompted Mr. Obama to conclude that $250k is universally “rich” across the entire landscape? Just the very neatness of this number and the lack of any tax rate increase that takes into account zip code shows that this man still has little understanding of the way things really work. This is the classic symptom of the ideologue + academic wonk formula.
Furthermore, as if Mr. Obama does not show enough ignorance when it comes to what numbers really mean, in the very next sentence he changes his tune and offers this: “What we’re talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade – millionaires and billionaires – to share in the sacrifice everyone else has to make.” So who will be targeted for higher taxes, the $250k+ crowd or the $1mm+? Make up your mind and tell is who in Obamaland who are “the rich” exactly? Are they people who make 250k or those who make four times that amount and higher? Read More: Big Government