The strategy of raising taxes, even on "the rich" seems to an odd one to pursue in the midst of a recession. The Obama administration would boost the top marginal tax rate from 35 percent to 39.6 percent on income, the capital gains tax from 15 percent to 20 percent, and would maintain the estate or death tax at 45 percent on estates worth more than $35 million. The Obama administration also promises more vigorous tax enforcement and will tax the incomes of hedge fund managers at the income tax rate rather than the capital gains rate.
Of course all of this means is that small businesses and other entrepreneurs are going to get soaked at a time when the economy depends on them to help raise it out of recession. It is a dubious proposition at best. Furthermore, harassment by the IRS will be stepped up. People should be ready for more audits, with all that implies.
Second, Barack Obama proposes to lower defense spending in the midst of a war. It is true that one might expect that the war in Iraq will begin to cost less as it is winding down. Barack Obama should publicly thanks his predecessor George W. Bush for not listening to Obama and executing the surge that made that possible. But at the same time, the war in Afghanistan will start ramping up, with more troops being deployed to suppress the terror campaign by the Taliban and Al Qaeda.
