During his recent speech in Ohio, President Obama made it clear his administration will soon raise taxes on those in the top marginal income tax bracket. While not surprising given the administration’s penchant for redistribution, the manner in which President Obama made his declaration brings cause for concern: “This isn’t to punish folks who are better off – it’s because we can’t afford the $700 billion price tag.” Not only will such tax-the-rich policy hamper U.S. economic growth, principally among small businesses, but the statement itself is a clear indictment of the president’s broader philosophical belief: Earned income is the Government’s, not the Peoples’.

Practically, the looming tax increase will hamper the already-struggling recovery. The wealthiest earners spend the most, especially on the margins. Their spending helps fuel demand, drive profits, and thus create jobs. This group also invests more, providing capital to companies seeking cash and driving long-term growth. But the debate over trickle-down economics has been well documented.

Perhaps more significant is the acute degree to which the tax hikes will damage small businesses. Small businesses comprise over 99% of all U.S. businesses, employing 70 million Americans, or half of the total private work force.  According to recent IRS data, an astonishing 48% of the net income of these businesses—sole proprietorships, partnerships and S corporations—went to those earning above $200,000. In other words, the tax hike will directly hit companies that drive a considerable portion of economic growth and job creation.

Significantly, a pair of studies published by economists at the National Bureau of Economic Research show exceptionally high responsiveness of sole proprietors’ business activity to tax rates. When applied to President Obama’s proposed hike, the study shows a projected 7% drop in total gross taxable revenue. Adding to this data is a study from R. Glenn Hubbard of Columbia University showing that as the progressivity of the tax code increases, entrepreneurs are further discouraged from starting new businesses. Finally, when the National Federation of Independent Business recently asked small business owners to list the most important problem they faced, a full 20% cited taxes, making it the second most named concern behind only weak sales. Perhaps this is why just 21% of economists recently surveyed by the Wall Street Journal favored the president’s decision to raise taxes on the wealthiest earners.

Beyond economic implications, it is odd that the administration expresses concern for a potential $700 billion revenue loss from extending tax cuts for top earners, but is seemingly unconcerned about the revenue loss of $2 trillion from extending tax cuts for the rest of the population. Moreover, such concern was conspicuously absent when passing the two largest fiscal budgets in U.S. history, the Cash for Clunkers program, mortgage and corporate bailouts, the wasted $800 billion stimulus, the $1 trillion healthcare bill, and massive increases in social welfare programs. With the deficit having grown 300% under its watch, the administration ought to have a difficult time claiming fiscal restraint as its driving motivation.

So, in absence of fiscal responsibility and with the economic data so exceptionally clear—falling small business revenue; increased job loss; discouraged entrepreneurs; less consumer spending—why would the administration champion such a policy? Because it believes income belongs to the government, not the people. To them, letting the tax cuts expire would be like turning away a lottery ticket.

The progressive movement, unveiled over the past 18 months, believes firmly that the potential success of the collective trumps the rights of the individual. A guided economy, redistributive tax policy, and a slew of federally dictated entitlement programs are the means by which progressives seek to accomplish an elusive social utopia. As Frank J. Goodnow, one of the founders of modern progressivism once noted, “Social expediency, rather than natural right, is thus to determine the sphere of individual freedom of action.” When the collective comes before the individual, when liberty is trumped by statism, government claims the product of your labor. If, in its great beneficence Government offers you the gift of 60% of your earned income, you ought to be thankful. Or so the story goes.

The Founding Fathers saw things quite differently. They established a Constitutionally-constrained government, centered on the idea that government should exist only where necessary. Property, earned income, and the product of private labor were the peoples’ right to keep. The people, after all, had worked for it. Government confiscation of earned wealth, they felt, should only take place with the utmost discretion and for limited, enumerated purposes.

With such clear economic implications and a marked departure from America’s original values, the Founders might have issued a clear retort to the president’s statement: “No, Mr. President, the People can’t afford the $700 billion price tag.”

-Matt Benchener is Supervisor of Newtown Township and Found of TruPolitics.net

At the age of 18, I took a job as a janitor at a local private middle school. The job paid just above minimum wage and involved extremely difficult physical labor. Worse, some might say, I was doing this menial labor for the rich kids in town. But I needed to save money for college, and this was the best job I could find. So for that summer, in the thick Pennsylvania heat, I scrubbed floors, shoveled dirt, and cleaned bathrooms. It was terrible, but it was a job—and I was thankful for it.

Looking back, I was never resentful of the students who attended that school. Their attendance meant they needed a janitor, and the steep tuition their parents paid funded my modest wages. Without that school I probably wouldn’t have had a job.

My small story demonstrates a truth that is critical to the current national debate: The economy is a rising tide that carries all ships. In other words, in a free market economy, success for some leads to opportunity for others. The entrepreneur who becomes wildly rich through the success of his venture also creates thousands of jobs for others at his company. Those jobs create income. That income is then used to purchase products throughout the economy, increase demand, and boost growth, all of which create more jobs. The cycle continues.

To make it concrete, consider the world’s richest man, Bill Gates. Did Microsoft’s success make Bill Gates wealthy? Yes—his net worth is over $50 billion. Did his company better the lives of millions? Yes—not only has Microsoft created thousands of jobs (it currently employs over 100,000 people), it has also helped lead a technology revolution that’s made business more efficient, information more accessible, and quality of life much higher. Bill Gates’ success was, in many ways, the world’s success.

Oddly enough, however, progressive policy discourages this type of prosperity. The more you make, the argument goes, the more government ought to confiscate. The U.S. already has the highest corporate tax rate in the industrialized world, and the Obama Administration is planning sharp increases in the top marginal income tax rate, despite the fact that many small businesses are organized as “individuals” and will feel the increased burden directly. If taxes can be used as disincentives (high taxes on tobacco, for example), and tax breaks as incentives (first time home-buyer tax credit; environmental product purchases etc.), why disincentivize success through exceptionally high corporate and income taxes?

Because liberal pundits and politicians see a much different world. For them, the economy is a fixed game, where the wealth of the rich increases the poverty of the poor. Rather than a rising tide, the economy is seen as a finite pie—if one person takes more, there is less for another.

This type of thinking has given rise to divisive rhetoric that forwards class warfare and demonizes industry. Proponents of this theory say they “favor the little guy,” will attack the “fat cat rich,” and call for us to “spread the wealth around.” Sound familiar? Or, consider recent comments by Howard Dean, former head of the Democratic Party: “In contradistinction to the Republicans…[Democrats] don’t believe kids ought to go to bed hungry at night.”

This, however, is an unfortunate distortion of both economic and philosophical reality. Study after study demonstrates that broad economic growth benefits everyone through technological advancements, creation of jobs, and specialization of labor (through which each worker’s value is increased). On tax policy, a recent study of 91 fiscal stimulus programs in 21 developed economies from 1970-2007 by Harvard economist Alberto Alesina found tax cuts are far more simulative than redistributive government spending. Christina Romer, in a study she conducted prior to joining the Obama Administration, found large economic multipliers from tax cuts, which she concluded “have very large and persistent positive output effects.” Tax increases, she also found, hurt growth. This of course has all been proven out through the exceptional growth in GDP and economic output following John F. Kennedy’s tax cuts in the 1960s and Ronald Reagan’s in the 1980s.

The common liberal retort is that, while the economy may grow, the rich simply get richer. But they ignore that the poor and middle class also get richer. Their relative increases may be less than that of the rich, but a better life is a better life.

Even putting considerations of liberty and property rights aside, low taxes are necessary catalysts and incentives to encourage the kind of growth that helps the whole of society. There exists, however, cognitive dissonance: The “rich” benefit directly from tax cuts; the poor benefit indirectly from resulting economic growth. Not understanding this nuance, many mistakenly throw the baby out with the bath water. They must realize there is simply no progressive utopia where the economy grows despite excessive redistributive fiscal policy.  

Conservatism believes the best way to care for the poor is through a free, open, and prosperous society where success for one leads to opportunity for another. It is a beautiful, unifying philosophy.  If you’ve ever traveled the world, you’ve witnessed the power of free, market-driven societies—someone at the current poverty line in the United States is richer than 87% of the world. China, India, and a host of emerging nations learned this lesson quickly when quality of life boomed after adopting free market principles (though they still have a long way to go).

John F. Kennedy said it best in 1963 when facing the difficult choice to cut taxes in the midst of declining federal revenues: “Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle.” The free economy is a rising tide that carries all ships, a powerful mechanism for broad prosperity, opportunity, and more importantly, unity for all.

-Matt Benchener is Supervisor of Newtown Township and Founder of TruPolitics.net

“You know, there’s a lot of talk in this country about the federal deficit. But I think we should talk more about our empathy deficit.”

-President Barack Obama

A friend of mine, after reading an article I recently wrote against universal healthcare, asked me a poignant question: “As a Christian, don’t you care about the millions of people without health insurance?” My friend was presenting me with a false choice—I supposedly had to choose between conservatism, which speaks of limited government and personal responsibility, and my faith, which speaks of love and compassion.

As a Christian, I care deeply about the plight of the poor and underprivileged.  It is reprehensible that in a nation where close to 33% are obese, that others cannot afford to eat at all; where 80% receive high-quality healthcare, that millions do not have access to the most basic of such care; where many worry where they should vacation, that others worry where they will sleep.

As a conservative, I also care deeply about the principles that have differentiated our country since its founding. Liberty is woven into the framework of our nation, and is predicated on personal responsibility, constrained government, and private property. Individuals should keep what they earn, use their wealth at their own discretion, and be free to guide their own outcomes. Where government must intervene and spend, it must do so within strict Constitutional constraints. America was founded on the pursuit, not the governmental provision of happiness—our founders recognized this as the defining line between capitalism and socialism.

So, are compassion and conservatism in opposition to one other? For many, compassion necessitates increased government intervention and support. President Obama recently passed the mortgage relief plan to help struggling homeowners, built $56 billion into the stimulus for expanded welfare programs, and proposed a government option healthcare plan to fund the uninsured. Each was wrapped carefully in rhetoric of empathy, redistribution, and duty.

Nearly every liberal thinker I’ve talked to holds similar views. Those that support universal healthcare, for example, do so because of sympathy for the uninsured. The statistics regarding inefficiency, rationing, and expanded bureaucracy are undeniable, but seemingly do not matter when juxtaposed with empathy. I am yet to hear a cogent argument in support of nationalized healthcare regarding increased quality or effectiveness—I’ve heard hundreds regarding compassion for the uninsured.

The idea of empathetic policy is admirable. Most who believe in it have honest intentions and place great faith in government. But charity should be a personal choice, and government should not legislate specific values on behalf of individual citizens.

The problem is that not all people define compassion the same way. A member of People for the Ethical Treatment of Animals (PETA) may believe that compassion means using taxpayer money to rescue abandoned animals. A member of the Association of Community Organizers for Reform Now (ACORN) may believe that compassion means providing housing and job opportunities for poor, urban African-Americans. A representative from ChoiceOne Pregnancy may believe that compassion means providing a viable alternative to abortion for unwed pregnant mothers. A representative from Planned Parenthood may believe that compassion means offering guidance, support, and assistance through the process of abortion.

This incongruity is why our founders wanted government to be limited. If government takes a citizen’s money and spends it on another’s special interest, government is simply the pass-through agent for theft and redistribution of private property.

As such, the Constitution provides the government with power to ensure certain explicit rights, and these rights are wholly separate from notions of sympathy and empathy. The rights to private property, free speech, and due process, for example, are not derived from compassion; they are derived from fundamental inalienable human rights. If liberals want to fund mortgage bailouts, welfare, and socialized medicine, they should provide Constitutional justification for the massive expansion of government. As yet, none has surfaced.

In conservatism, faith, liberty, and compassion align within Constitutional constraints. Individuals, not the government, give to those organizations or causes they support. As Christians, my wife and I choose to give a significant portion of our income to our church, which in turn provides key services to support the poor and needy in our community. Among other things, we also sponsor a child in Africa, providing the resources necessary for her to attend school, eat regularly, and receive medical attention. We give freely from our earned income without the hand of government—an expression of liberty—to care for those in need.

From a Christian perspective, Jesus never asked the Roman government to care for the poor, nor did he compel government intervention into private life. Instead, he asked that each individual, and by consequence the church, give, serve, and care for the community. Forced charity is no charity at all, and compassion should be bred of love, not compulsion.

There is a fundamental difference between charity and redistribution. Imagine a nation with a 100% tax deduction for charitable giving—perhaps there would be no need for Mr. Obama’s “change.” The intersection of conservatism and compassion is found in giving by choice, and it is perhaps the most beautiful and unifying expression of liberty we have yet seen.

-Matt Benchener is the founder of TruPolitics.net and a candidate for Newtown Township Supervisor. Learn more at www.benchener09.com

Recently married, John worked for a local manufacturing company, while Jane worked part-time at the local supermarket. In preparation for their new life together, they bought a house in Oakfield Communities, a new development in a nice part of town. The house was a bit of a stretch for them financially, but owning a home was a dream come true for the young couple.

Last November, in the midst of the stock market’s steep decline, John worried that his company might reduce overhead.  In January, when the recession accelerated, John was laid off. As the primary earner for the couple, John’s job loss posed a serious problem for the couple–how would they afford the lifestyle they had built on his income? Their home payments were expensive, and they had received health coverage through John’s company.

After two months unsuccessfully searching for a new job, John and his wife were without health insurance, and were falling behind on their home payments.

But all was not lost. The Smiths were fortunate enough to be friends with the chair of Oakfield Communities’ Homeowners Association, Barney Reid. Mr. Reid saw that the Smiths were struggling and had compassion for the newlyweds. Something had to be done to help them.

At the next monthly meeting, Mr. Reid made an impassioned plea to the association’s board: “The Smiths are great people and hard workers. John wants desperately to provide for his wife, and Jane is working long hours at the supermarket. They are victims of the recession that Wall Street gave us. John is still out there looking for a job, and if we don’t help them they might lose their home. And what if one of them gets sick? Without healthcare, it could be devastating.”

Mr. Reid’s message resonated with the members of the board. “This is a compassionate community,” they thought. “No member of Oakfield should ever be without healthcare or be at risk of losing their home. We are fortunate to have jobs, and if we all pitch in we can help out the Smiths.”

Needing to act quickly, the board drafted a letter to the community: “Effective immediately, the monthly association fee will be raised from $200 to $500. The money will go directly to the Smiths to help provide them with health coverage and allow them to keep their home.”

Members of the community were outraged. They had worked to save money and keep their jobs, and had purchased homes within their means. Yes, the Smiths’ situation was sad, but why should they be forced to pay for their healthcare and home? Didn’t they have a right to decide where their own money was spent? What incentive would John have to go back to work?

The board members were confused by the objections—they thought Oakfield residents would understand the Smiths’ plight.

But then they had an ingenious idea. There were five families in Oakfield that each earned over $250,000 per year, far more than the other families. They had more than enough money to live on and more than enough to give to the Smiths. They were, after all, rich.

So the board sent out a new letter: “Everyone in the community wants to support the Smiths, but not everyone has enough discretionary money to help out. But there is one group who does and who will gladly help. Effective immediately, the monthly association fee will be raised from $200 to $2000 for all homes with a combined income over $250,000. All other fees will remain at $200.” The idea was perfect—take from those who could afford to give and give to those in need.

But something strange happened that the board members had not expected. Over the next few weeks, they were flooded with requests for financial assistance. It turned out that the Johnsons were struggling to put their child through college, the Millers’ car had broken down, and the Richards had huge credit card debt to pay off. How would they pay for all these requests? Perhaps they could simply raise the association fees again.

——

If you lived in Oakfield, how might you have responded to the forceful redistribution of your wealth? How would you have felt if your hard work and responsibility were rewarded with payment for the indiscretion of your neighbors? The story seems unpalatable and distant, the injustice exceedingly clear.

But the troubling truth is that the story of Mr. and Mrs. Smith may soon be the story of America.  Financial, auto, and mortgage bailouts took from a few to give to the irresponsible. Historically high tax rates are close on the horizon, the price tag for increased social welfare and a universal healthcare proposal that amounts to forced charity.

We have a president and party in power that want to “spread the wealth around,” and believe that prosperity is something to be given, not pursued.  They call the poor “victims,” and wrap their policy in noble, but utopian notions of “compassion” and “fairness.” Ironically, they find justice in providing for some while taking from others.

The story of Mr. and Mrs. Smith seems remote, but government acts similarly everyday. If the country continues down the path set by the current administration, America will begin to look more and more like Oakfield Communities and less and less like the land of Liberty and Justice for All.

-Matt Benchener from TruPolitics.net

Growing up, Casey was by far the best baseball player among his friends. He was born with talent, size, and strength, and had a father who was a former professional baseball player. As a result, he had expert coaching and guidance to go along with incredible hand-eye coordination and power. When he reached high school, Casey realized his talent and skill might afford him the opportunity to pursue every child’s dream: To play professional baseball. So, he became the hardest worker on the team, lifting weights, eating right, and tirelessly working on his swing.

By the time Casey was a senior, he had already broken the county home run record, been named to the all-state team, and was being closely watched by professional scouts. Then something strange happened. Every time Casey stepped to the plate his senior year, umpires immediately called two strikes on him-before he even saw a pitch. Instead of starting with an 0-0 count like everyone else, he now started down 0-2; everyone else got three strikes, Casey only got one.

League officials and umpires had gotten together in the offseason to discuss Casey’s dominance. They decided that it was unfair to all of the other players in the league for Casey to be so much better-they had to level the playing field. Shouldn’t everyone have the opportunity to play professional baseball? Shouldn’t everyone be guaranteed the same level of success? When Casey hit a home run, weren’t the other, less talented, less privileged players suffering because of his success? In sports, after all, one person’s victory also means one person’s loss. The only way to make things fair, they determined, was to give the pitchers an advantage over Casey before he got up to bat.

As the season progressed, Casey began to complain to league officials. So they sat him down and explained their thought process: 1. He was born with more talent than the other players-that was unfair; 2. His father was an ex-major leaguer who could give him special coaching-that was unfair; 3. His parents had more money than other parents in the league, so he was able to use advanced training equipment and eat better food-that was unfair; 4. Yes he worked hard, but that hard work only enhanced his abilities beyond the other players’-that was unfair. If he really cared about his community, he wouldn’t have a problem sacrificing his success for the success of others.

League officials were happy with their work, but soon realized more needed to be done. Casey was now just an average player in the league, but what about the other good players? Not everyone was the same just yet. So, the league developed a complex statistical measurement system that ensured players below the average got an advantage (they could start with anywhere from a 1-0 to a 3-0 count), and players above the average would be treated like Casey. Of course, to support the system, they formed a Bureau of Fairness Control to oversee each test case and matchup. Now everything would be fair.

But wait, some teams were winning games and others were losing. All games now ended in a tie. And what about the players who got cut during tryouts? Now anyone who tried out would make the team, no matter their ability, work ethic, or experience. It had to be fair.

But soon, baseball lost its appeal. There was no motivation to work hard or succeed, and the competition the game was founded on had evaporated. League officials didn’t understand. Shouldn’t the players want everyone to be happy? Besides, the league was guaranteeing success for everyone. And of course, it was fair.

Casey’s story does not stray far from the foundational philosophy of many of today’s liberal thinkers. Far reaching social policies like welfare, universal healthcare, extreme progressive tax rates, and mortgage bailouts simply put up a façade of fairness and equality. They couch themselves in eloquent rhetoric like, “All Americans have a right to be healthy,” and “We have the responsibility to help those less fortunate than ourselves.”

The arguments evoke emotion and compassion, and stir up masses of people placing their faith in government as the answer. In many ways, this façade led to the election of our current President, whose philosophy of government has yielded a pork-laden stimulus and budget heavy on spending in liberal social initiatives.

But justice is not found in forceful redistribution, nor is prosperity bred from failed attempts at equality. True justice is, as our founders so masterfully stated, found in life, liberty, and the pursuit, not the forceful guarantee, of happiness.

-Matt Benchener from TruPolitics.net