The Cincinnati Enquirer endorsement of Sen. John McCain includes this paragraph (emphasis added):
The recent dialogue between Obama and “Joe the Plumber,” Ohio resident Joe Wurzelbacher, illustrated to voters Obama’s focus on “spreading the wealth” through taxes rather than growing the nation’s wealth by encouraging middle-class Americans to aspire upward, creating more businesses, jobs, income – and more tax revenue. “A strong government hand is needed to assure that wealth is distributed more equitably,” Obama says. That’s a zero-sum, central-control mentality.
One problem: Obama never said that.
As reported by snopes.com, a viral email has spread which takes a misleading and overly simplistic paraphrase of Obama’s words by the Wall Street Journal, and falsely attributes it to Obama.
Here is a partial transcript of the June interview on which the WSJ article was based (emphasis added):
WSJ: I wanted to talk about long-term economic growth, sort of following on your speech. I noticed that in an interesting way you use Lincoln, FDR and JFK, heroes in many ways. Maybe you can talk to me a little bit about your view of the government’s role in economic growth.
Sen. Obama: This dates back even further, to Alexander Hamilton. The strength of our economy has always been the dynamism of the private sector, but at critical junctures, particularly when we’re at a transformative time, say the shift from agricultural era to the industrial era, where you’ve got some broad-based investment that needs to be made, they’re very expensive. They’re difficult for any private investor to want to make on their own. …
I think Lincoln’s Homestead Act or the land-grant college system was a great example of opening up the West. It’s still the American people and business taking advantage of these opportunities, but you needed the government to help get them started.
Obviously, infrastructure is a classic example of these types of investments, whether it is the interstate highway system or the Internet. I think education is another example, whether it’s the creation of public schools or the GI Bill after World War II. I think now we need to be thinking about similar investments in critical areas like the ones I listed today.
WSJ: Why do you think at this particular juncture we need it now?
Sen. Obama: Partly because we’re going through a big shift from a national economy that was also dominant across the globe to a truly global economy in which we’re seeing competition from every corner. We’ve seen an additional three billion people added to capitalism, partly because of the success of the U.S. creating a working liberal economic order, but also because of technology and the rapidity with which technology is moving. You look at a place like Flint, Michigan, where the old industrial structures have been completely uprooted and we’ve got to help the residents here transition to this new economy and we’ve got to make sure that we are putting in place the kinds of structures that will allow us to compete long term.
WSJ: Some people would say with this kind of change that you’d need the opposite — less government — because in a globalized world, markets are so much more important. You seem to say that at a point when the global economy is getting so important you’d redouble …
Sen. Obama: I wouldn’t say redouble. Revitalized, I would say. Because I think the danger is always to equate size of government with effectiveness, and I don’t. It’s not clear to me that we want a larger government, but we certainly want a government that is setting more intelligent priorities and using taxpayer dollars more wisely and structuring tax policies that are conducive to long-term economic growth.
As I mentioned during the speech, there may be programs that no longer work. There’s certainly all kinds of previsions in our tax code that are antiquated and are not spurring economic growth. We’ve got offices like the patent office that are outdated to take advantage of new discoveries here in the United States. We need to retool our government so that it works with a 21st century economy and in some ways our campaign has shown what happens when you retool political campaigns to a new requirement. I think we need to do the same thing with government as well.
WSJ: What about the role of taxation? … For the most part, the way I look at your tax policy, seems to me that you look at it and say, tax policy over the past decade, and maybe even before that, has produced an outcome that has benefited people mostly at the top, and your goal is to try to redistribute it in a different fashion.
Sen. Obama: Here’s what I would say: I do believe the tax policies over the last eight years have been badly skewed towards the winners of the global economy. And I do think there is a function for tax policy in making sure that everybody benefits from globalization or at least the benefits and burdens are shared a little more easily. If, as some talk about, we’ve got a winner-take-all economy where the highly skilled, highly educated are reaping huge rewards and the unskilled or even semi-skilled are getting a much smaller share of the economy, then our tax policies can help cushion some of the blow through providing health care. So if people lose their jobs they’re not losing their health care as well. That actually makes a more flexible work force that makes workers more mobile and less resistant to change.
If we’ve got investments in education, that will make us more competitive in the long run. We’ve got to pay for that like anything else. But it would be a mistake to say I view our tax code only as a distribution question. I also think that our tax code has come to distort a lot of economic decision making so I’d like to see simplification as part of an overall tax agenda. On the corporate side, for example, one of the things I’ve asked my folks to look at is: Are there ways we can close existing loopholes in tax havens at the same time as we’re lowering overall rates? We’ve got this new problem: The biggest problem with our tax code when it comes to the business side is that we have one of the highest tax rates — corporate tax rates — on paper but our effective tax rate is one of the lowest … You know, how much you pay in taxes as a corporation a lot of times is going to depend on how good your lobbyist is, as opposed to any sound economic theories. So those distorting effects I’d like to actually remove and eliminate from our tax system, but obviously that’s a complicated and difficult task. The last time we did it was in 1986. We’re going to have to, I think, revisit that.
WSJ: Would you like to reduce the corporate tax rate?
Sen. Obama: If we could eliminate loopholes in taxes, create a level playing field, then I think there’s the possibility to reducing corporate rates.
WSJ: Have you proposed reducing corporate rates?
Sen. Obama: We’re still working with our team to take a look at that.
WSJ: When you were talking about no taxation of startups, what immediately went through my mind is well, every corporation in American is going to have a “startup” so they won’t pay capital gains.
Sen. Obama: There are always folks who are interested in gaming the system, and obviously one of the things you have to do with tax policy generally is to pin down definitions so they’re not twisted beyond recognition. But I think the basic concept — which is companies that are starting off, that have a good idea, that don’t have a lot of capital, they should be allowed to accumulate capital, reinvest profits if there are any, to the point that they stabilize — that’s something we should encourage.
WSJ: You talked about the last eight years and the question of redistribution goes way back …
Sen. Obama: Oh, there’s no doubt about it.
That’s why I say that the combination of globalization and technology and automation all weaken the position of workers. I would add an anti-union climate to that list. But all weakens the position of workers, particularly blue-collar workers, in the economy, and some of it is just historical. You know after World War II, we were in this unique position where Europe was decimated, Japan was decimated. China was off the grid because of Mao. And so we didn’t have a lot of competition out there, and now other countries are rising and automation has supplanted a lot of work that used to be done by middle-class workers.
We have drastically increased productivity since 1995, and there was the theory that if you increase productivity enough some of these problems of living standards would solve themselves. But what we’ve seen is rising productivity, rising corporate profits but flat-lining or even declining wages and incomes for the average family.
What that says is that it’s going to be important for us to pay attention to not only growing the pie, which is always critical, but also some attention to how it is sliced. I do not believe that those two things — fair distribution and robust economic growth — are mutually exclusive.
You get to a point, I think, if you have a participatory income tax, for example, where you might be discouraging work because marginal rates are so high. You might undoubtedly get to a point where the capital gain and dividend taxes are so high that they distort investment decisions and you’re weaker economically. But you know if you’ve got a sensible policy that says, we’re going to capture some of the nation’s economic growth … and reinvest it in things we know have to be done, like science and technology research or fixing our energy policy, and then that is actually going to be a spur to productivity and not an inhibitor.
As you can see from the full context, there is no “zero-sum, central-command” mentality.
There is a mentality that a tax code which redistributes wealth upwards, shortchanges the middle-class and starves public investments is harmful to the goal of broad-based economic growth — the opposite of “zero-sum.”
There is also a recognition that exorbitantly high taxes are harmful to economic growth, and certain business taxes should be cut so long as we’re closing harmful corporate tax loopholes at the same time.
The overall vision is one of effective government complementing the capitalist economy, investing in critical areas that have been neglected by markets, but certainly not attempting to “centrally control” markets — which the made-up quote “strong government hand” implies.
No question Obama supports more robust government involvement than McCain and President Bush. As you can see above, Obama has been quite explicit about it and is helping offer a clear contrast for voters to choose between.
But those conservatives who remain addicted to misinformation are unwilling to engage in a fact-based debate.
Apparently, they include the Cincinnati Enquirer editorial board, which apparently instead of reporting, gets its (mis)information from right-wing viral emails.