Budget Follies and a Socialist Agenda

President Obama defended his budget plan on national TV and his comments are summarized in a Wall Street Journal article here. This would almost be comical if it were not for the dire impacts of his erroneous logic. Consider the following passage in reference to critiques of the proposal to eliminate tax deductions for charitable contributions.

"I'm assuming that [the deduction] shouldn't be the determining factor as to whether you're giving that hundred dollars to the homeless shelter down the street," he said.

You know what they say about assuming, Mr. President. First, the deduction is not the sole reason for the contribution, to be sure. Those who give generously to charities do so for a myriad of reasons. But, we, as a society, decided long ago that we would provide some incentive for everyone to provide for the less fortunate by giving that generosity some reward of lowering tax liability. Note contributions are not a tax credit, but a deduction, so they are only beneficial at the rate at which the contributor pays taxes.

Perhaps a more disturbing (and admittedly cynical) interpretation of this proposal is that he knows it will reduce charitable contributions leading to a greater need for government intervention in the lives of low-income people. After all, if those nasty, greedy rich people are not going to be naturally generous with their money without tax loopholes, we'll just have to tax it out of them and give it to the needy via a government program.

The evidence is mounting that President Obama is either extremely naive about incentives in which case he was a very poor choice for President. Or, he is outright nefarious with his plans in which case he was a very poor choice for President. I am finding it more and more difficult to find a middle ground.

Update: Martin Feldstein of Harvard had an editorial yesterday in the Washington Post that has a good numerical example of what I am talking about. It is worth a read.