RUTHFULLY YOURS

JAMES TARANTO’S BEST OF THE WEB

Posted By Ruth King on March 19th, 2013

http://online.wsj.com/article/SB10001424127887323869604578368353424655998.html?mod=opinion_newsreel

It was a gaffe on the order of bitter clingers, and this time in full public view: “If you’ve got a business–you didn’t build that,” President Obama said at a July 13, 2012, campaign rally in Roanoke, Va. “Somebody else made that happen.”

The president’s defenders and sycophants rushed to rationalize it away. Look at the complete context, they said, and we did:

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business–you didn’t build that. Somebody else made that happen.

See, he meant somebody else built roads and bridges!

Of course that presupposed that the brilliant double Ivy graduate and former part-time elite law school professor lacked basic skills in grammar, logic and exposition. “That” is a singular pronoun; the plural equivalent is “those.” Along with the agreement in number, the noun “business” was proximate to the pronoun, as an antecedent should be. And even accepting the hypothesis of Obama’s hopeless incapacity for grammar, what was the owner of a construction contractor that builds roads and bridges supposed to make of the putative assertion that he did no such thing?

Obama’s vicious little riff turned out to have its origin in the work of George Lakoff, the Berkeley linguist who has written a series of books on leftist cognition and rhetoric. The best way to understand Lakoff is as the anti-Ayn Rand: As she celebrated the individual and scorned the collective, he does the converse.

“You didn’t build that” is the reductio ad absurdum of a trivial truth: Man is a social animal, and no individual accomplishment occurs in complete isolation. Creative advances depend on those that preceded them: The man who invented the car did not need to reinvent the wheel. An author’s vision may be his own, but he would be unable to express it without a common language.

That trivial truth was what the Obamabots falsely claimed the president meant by “You didn’t build that.” Specifically, they insisted he was simply saying that some degree of collective effort, often accomplished through the instruments of government, has been a necessary condition for American businessmen’s success. No one can argue with that, for as we said it is a trivial truth. But there is plenty of room for argument as to whether all these vital functions must be performed by government and especially as to whether everything the government does is vital–and indeed whether much of it is harmful instead.

Infrastructure is a convenient example for people wishing to make a general case for government. The general usefulness of roads and bridges is undisputed, and only an extreme libertarian would argue that they should never be built unless their financing, construction and operation is all purely private. (A nonextreme libertarian would argue for the benefits of privatization where practicable.)

But although government can build infrastructure, and may even be good at it, government can also delay and obstruct it. Lo and behold, that turns out to be the real agenda of Obama’s second term, according to a Bloomberg report:

President Barack Obama is preparing to tell all federal agencies for the first time that they should consider the impact on global warming before approving major projects, from pipelines to highways.

The result could be significant delays for natural gas-export facilities, ports for coal sales to Asia, and even new forest roads, industry lobbyists warn. . . .

In taking the step, Obama would be fulfilling a vow to act alone in the face of a Republican-run House of Representatives unwilling to pass measures limiting greenhouse gases. . . . Industry lobbyists say they worry that projects could be tied up in lawsuits or administrative delays.

National Review’s Stanley Kurtz notes that the directive could end up stalling the Keystone XL oil pipeline, even if the administration gives it a long-delayed green light:

In this scenario, headlines loudly proclaiming Obama’s approval of Keystone would shield him from Republican attacks. Simultaneously, the president could mollify the left by claiming credit for guidelines that effectively allowed his allies to stop the pipeline. And that would be right. Obama can publicly “approve” Keystone, while simultaneously handing the left the tool they need to put the project on semi-permanent hold. Environmentalists would take the political heat, while Obama would get off scot-free. Pretty clever.

So the reality of Obama’s governance turns out to be even worse than the repugnant declaration “You didn’t build that.” For the next 46 months, Washington will operate under the principle “Don’t even THINK of building that.”

‘Spending’: Letting You Keep Your Own Money
“The Real Spending Problem,” according to a New York Times editorial with that title, is that the government is letting you keep too much money:

Each year, the government doles out tax breaks worth $1.1 trillion. . . . Tax breaks work like spending. Giving a deduction for certain activities, like homeownership or retirement savings, is the same as writing a government check to subsidize those activities. Functionally, they mimic entitlements. Like Medicare, Medicaid and Social Security, they are available, year in and year out, in full, to all who qualify.

This is nonsense. Consider the tax deduction on home-mortgage interest (not homeownership per se). If it worked like Social Security, the government would simply pay part of your mortgage each month or send you a check to offset the cost. Instead, you get to deduct the interest from your income before paying taxes. If you have little or no income–say you’re retired and living off savings, or you have a big capital loss one year–you get no benefit.

There are good economic and individual-freedom arguments against these sorts of tax deductions and credits, but not because they constitute “spending.” A better way of looking at them is that they are the equivalent of a tax on not engaging in certain behavior. Seen through this lens, the mortgage-interest deduction is a tax on renters, and for that matter on homeowners who are debt-free.

Institute for Energy Research senior vice president Dan Kish on how President Obama may hold up the Keystone XL pipeline and other energy and infrastructure projects. Photo: Getty Images

Anyway, the Times editorialists don’t seem to have the courage of their convictions. They don’t actually call for abolishment of the popular mortgage-interest deduction or even complain about the one for charitable contributions. They identify only three tax exclusions that “are indefensible and should be ended”: the taxation of private-equity “carried interest” at the lower capital-gains rate, “nine-figure I.R.A.’s,” and ” ‘like kind’ exchanges,” which allow the avoidance of capital gains taxes if the proceeds from a sale are used to purchase similar assets.

The grand total of these is at least . . . $4.4 billion a year, a whopping 0.4% of the $1.1 trillion the Times claims the government “spends” on “tax breaks.” We base that on the figures the editorial gives for carried interest ($13.4 billion a decade) and like-kind exchanges ($3 billion a year).

As for the individual retirement accounts, the Times claims “no one knows how much tax is avoided this way.” It seems the complaint is that the assets in certain people’s accounts appreciate too quickly: “Remember Mitt Romney’s $100 million I.R.A[.]? Private equity partners apparently build up vast tax-deferred accounts by claiming that the equity interests transferred to such accounts from, say, their firms’ buyout targets are not worth much.”

The editorial doesn’t suggest how to remedy this purported problem. Presumably if the taxpayers in question are lying about the value of their assets, they can be charged with fraud. But if not, what would the Times recommend? A tax on retirement funds that appreciate too quickly?

Besides, earnings on IRAs aren’t tax-free, they’re tax-deferred. When you retire and begin drawing them down, you pay taxes on the withdrawals (and the money is taxed as ordinary income, not at the lower capital-gains rate). If you die with money still in your retirement account, your heirs are subject to the death tax. To the Times editorialists, it’s “spending” not only when the government lets you keep more of your own money, but even when you keep it only temporarily.

Comments are closed.