Guest Post: White House Playbook: Arbitrary Numbers and Financially Ignorant Sloganeering

Tyler Durden's picture

Submitted by Brad Schaeffer

White House Playbook: Arbitrary Numbers and Financially Ignorant Sloganeering

President Obama this Tuesday stated his case for increased taxes on “the rich” as part of his solution to balance the deficit. “Keep in mind,” he assured the American people, “that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all.”
I have a very basic question that I am not sure anyone has pressed Mr. Obama to answer: Where did this figure of 250k, north of which one is considered by him to be among “the rich” even come from?  Its very roundness tells me that it was the result not of a detailed actuarial analysis but rather some sort of arbitrary caprice that only those completely isolated from any private sector experience can conjure up.  I almost get the feeling it was something as off-hand as: “Hey 250k sounds right to me.  Nice number.  So whattya think?”  Sure write it in there.

Consider: if you are living in Little Rock, Arkansas  and make $249,000 according to the president you are not “rich” and thus do not need to kick in more.  Yet if you live in, say, New York City and make $251,000 you are “rich” and so it’s time to ante up.  Is that how it works?  Again I ask:  what is so magical about $250,000?  Why is the cut-off  not $246,500 or $310,231?  Isn’t anyone curious about how this man creates economic policy?

Let’s look at it this way.  Someone in the New York metro area making $251,000 need only make $100,000  to garner the same standard of living in Little Rock, Arkansas.  For instance, a family of four searching for a two-bedroom apartment  in Manhattan can expect to pay anywhere from the low end of $2,100/mo in Harlem to $6,700/mo+ in Tribeca.  (That of course makes the two kiddies double up in one room).  In Little Rock you can find a comparable apartment for an average of $700/mo.  New York’s low end is three times Little Rock’s average.     (This standard of living discrpency, in fact, serves as an indictment of the unfairness of our entire messed up tax code but I digress.)

So again I ask where does this $250,000 level come from?

Am I the only one who would like to see the methodology that prompted Mr. Obama to conclude that $250k is universally “rich” across the entire landscape?  Just the very neatness of this number and the lack of any tax rate increase that takes into account zip code shows that this man still has little understanding of the way things really work.  This is the classic symptom of the ideologue + academic wonk formula.

Furthermore, as if Mr. Obama does not show enough ignorance when it comes to what numbers really mean, in the very next sentence he changes his tune and offers this:  “What we’re talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade – millionaires and billionaires – to share in the sacrifice everyone else has to make.”  So who will be targeted for higher taxes, the $250k+ crowd or the $1mm+?   Make up your mind and tell is who in Obamaland who are “the rich” exactly?  Are they people who make 250k or those who make four timesthat amount and higher?
One facet of public discourse that makes it hard for me to watch addresses like his is that once a platitude sticks, it cannot be shaken off the hand (“kinder gentler nation,” “compassionate conservatism,” “hope and change,”  etc.)  And the latest arrow drawn from the Obama class warfare quiver is the phrase “tax breaks for millionaires and billionaires” as if these two decidedly different groups are somehow one in the same.  Heck even a well-read historian hit me with this “millionaire and billionaire” phrase on Facebook today.   Let me explain something.  The difference between a millionaire and a billionaire can be summed up in this handy illustration: If you have one million dollars and you spent one dollar a second on a 24/7 cycle you would have enough to last you eleven and a half days.  If you had a billion dollars and spent it one per second, you would be dropping down George Washingtons every day, day in and day out, month in and month out, for the next thirty-one and half years before you finally exhaust your bank account.  That is what 1,000 times more really means.  The phrase “millionaires and billionaires” sounds nice because it’s catchy, indeed it rhymes, and thus fits well into the teleprompter-in-chief’s modus operandi. But to even utter millionaire and billionaire in the same breath as part of a single class is the mathematical  equivalent of comparing a foot stool to the Empire State Building…literally.

Many so-called “millionaires” are classified as such not by annual income but rather by net worth.  They are often small business owners who, though on paper are worth seven figures, cannot just sell their business and go liquid.  They also employ anywhere from 50% to 60% of the workforce depending on how you classify them.  And many, in fact, take home less than $250,000 a year in compensation at times.  The business comes first.  Conversely, many households that bring in $250k+ (especially that 4-person family crammed into that 2-bedroom Manhattan apartment) don’t have even close to a million dollar net worth.  So though the rhetoric strikes a chord in the Sherwood Forest of Obama’s core constituency, the truth is that individual household situations are much more complex and varied than Obama’s blanket ”millionaire” classification implies…and most millionaire-next-door types hardly live the lives of a billionaires.  (I mean, I doubt many of them have $99,000,000 in their passbook savings account that was shown to be the case for one East Hampton billionaire when he left his ATM receipt at the machine a month back).

So, on behalf of those who live in  the most expensive areas of the country (often because in this economy that’s where the jobs are) I want a more detailed explanation from the president as to why he thinks it will be easy for us to cut back on our spending in other areas to support an even higher tax bill, but it is impossible for the Federal government to do its own cutting so that I needn’t pay more at all.  I want to know why I am “rich” but someone making just shy of a quarter stick per annum  in inexpensive Arkansas is middle class. I want to see the formula he used for coming up with a $250,000 cut off point…if one even exists at all.  And finally, I would just like to ask does he even know the difference between a millionaire and a billionaire?  And if not, quit lumping them together.  Honestly, it looks foolish and  reeks of blatant and unapologetic class warfare.  Uniter indeed!

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Drag Racer's picture


too classic

HungrySeagull's picture

250,000 in Arkansas will buy you land to raise hay.

Eventually the Hay will get you revenue to buy more land.

At some point when you have had enough you can sell it all to be developed for a multiplier what you put in.

A few times when things got really tough, we allowed our grass to turn into a field and generated 4 Rolls of Hay several times a year. Not much, but better than nothing.

trav7777's picture

it's a high enough number so that people can be like WOW those people are RICH, FUCK THEM!!!!


thewhitelion's picture

It's also a high enough number that there are a lot more people (voters) below that number than above that number.

mynhair's picture

Takers vs. Payers


That simple.

DoChenRollingBearing's picture

"And many, in fact, take home less than $250,000 a year in compensation at times.  The business comes first."

Damn right.  Re our business in Peru, the business ALWAYS comes first.  If they have trouble paying me back on the quarterly loan payback schedule, I tell them "The company comes first!"

cosmictrainwreck's picture

with all due respect, DCRB (and others), but really.... you expect the rest of us to think your suffering hardship because you have to limp by with not even the whole 250K? Yer breaking my heart here

PS to Tobin Smith & everybody else on the fukin' band-wagon, please show me the fucking stats on why a certain income qualifies one as a "job-creator" WHAT % of $200K + actually are small bus owners & BTW how many fucking millions of stiffs did you actually hire?


cosmictrainwreck's picture

hoping the next thumbs-down passerby at least has the balls to address one of the questions

blunderdog's picture

It's not a question of amount or figures.  It's about perspective.  The type of person who pisses and moans constantly about how much of "their" money is taken away would piss and moan if they were earning $20,000, $150,000, or $200,000,000.  It's just how that person's mind works.

Similarly, there are people who earned $400,000 in 1978 and never bothered to care that they were in a 50% bracket, because they were happy with whatever total amount they got to keep and spend. 

Type A and Type B kinda stuff.  The differences are not arguable or demonstrable or reconcilable--they are foundational.

Buckaroo Banzai's picture

This number is quite carefully calculated. The upper middle class earns 250k to 500k. Since obama's goal is to crush the middle class, the strategy is to tax the upper middle, unemploy the middle middle, and use inflation against the lower middle.

snowball777's picture

Maybe Charlie Gibson's upper middle class...try 60k-90k. Learn to read a histo chart, chump.

Almost Solvent's picture

Depends on where.

60 - 90k in Manhattan is not upper middle class

60-90k in rural Lousiana is upper middle class

snowball777's picture

Perhaps, but a doorman can make that in NYC. The mayor may not in LA.

cosmictrainwreck's picture

+10 "lies, damned lies and statistics"

sun tzu's picture

$60K is not upper middle class anywhere, you dumbfuck. after taxes, you can afford an apartment and a small car.

HungrySeagull's picture

Hold it.

60K where I am can just about buy any house outright cash if waited for three years or less minus very frugal expenses.

60K don't do shit in Jersey.

blunderdog's picture

You should visit America sometime, sun tzu.  You might learn something. 

The air's cleaner than in China, too.

The Man in Room Five's picture

The upper middle class earns 250k to 500k.

And where does that number come from? Sounds made up too

sun tzu's picture

maybe he should be the next president

Raymond K Hessel's picture

I can't stand this cuntitative definition of middle class. I know I should have written quantitative but when I see people fuck up what it means to be middle class by using the median income, I call it cuntitative.

Being in the middle class has nothing to do with income or wages.

Being middle class is a combination of wealth, education, and station. 

By wealth, I mean if your net worth is positive, you own your own home outright, your funding your retirement and your kids' education with no problems. 

By education I mean you are a professional.  You are usually a doctor, lawyer, or a member of some profession that requires a commitment to education and a long apprenticeship period. 

Station I'm defining loosely here with respect to whether or not you own your company or are an employee.  Company owners are middle class. Employee not necessarily so, but not necessarily not. 

The point being you have to be able to check yes to one or a combination of the three.  Nothing here about income.

Median income is what these yahoos are talking about.  Median income hovers about the $50-80k range.  If you're gay for statistics this means something to you.  Otherwise, it's a rube.  Watch out. Stay away.  Look twice here. 

I've said it in other posts, if you are working and you need to work to pay rent/mortgage, school, etc, then you are working class. 

Most Americans are working class. 

If you don't work and get government assistance (not as a stop-gap but your're a welfare lifer) then you are Poor.

Many Americans are poor but not as many as working class.

Some are middle class and even fewer are rich.

Everyone here, including myself, are working class.  We work or we starve. It's okay.  It's not great but it's not a bad thing.  We're working as we strive to improve our lot in this world.  That's wonderful.

Stay away from this class warfare bullshit.  It means nothing except as gasoline for someone else's fire.  Use your heads and stop with this neo-marxist zoom dweebie shit. 



Middle class is not median class. 

Middle class is not median class. 

Middle class is not median class. 


There you go.  Now at least you sound like you understand statistics.


cosmictrainwreck's picture

astonishingly candid & accurate response, sir. my faith is renewed

hedgeless_horseman's picture

It seems to be the nature of our economy that small business owners both create a large percentage of the jobs and make more than $250k.  Maybe it is because they are more ready, willing, and able to work hard and take risks?

cosmictrainwreck's picture

understood. agree (sort of). but puhleeze dont play that "work hard" card; that's just too sad. you want a lesson in "work hard (for low pay)".... interview 50% of employed. I submit that the "risks" are very often extremely well-rewarded, so I don't lose sleep for those boyz. another angle is just suck everything out of the business you can, and if it fails...meh? Banko is on the corp, not me 

sun tzu's picture

Most small business owners work 6-7 days per week and over 10 hours a day. That comes out to 60-70 hours a week. Tell me why they should hand over more of their money to the government.


Let me know when you're able to open and run a successful business.

snowball777's picture

Yes on the job creation, no on the $250k per year. See links below.

blunderdog's picture

That's a bunch of nonsense.

No significant number of small business owners make over $250K.  There just aren't enough people who make more than $250K to even BEGIN to cover the number of people who are "small business owners."

Let's say as a very rough estimate that 2% of the population is making more than $250K annually.  (That's a bit high, but whatever.)  That's about 6 million people. 

There are about 21 million "non-employer" firms in the US--those are small businesses which are a single person.  There are about another 5 million "employer" firms with 1-10 employees.

6 million isn't even a quarter of those 26 million "small businesses."

Read carefully:
Innumeracy affects a higher percentage of Americans on the internet than taxes that cover voting spreads cost of ownership beyond birth-death projections.

sun tzu's picture

...and then there are those who will always bitch and moan about how others are making too  much money and aren't paying their "fair" share

Kobe Beef's picture

"Piss and Moan" , huh?

Is that Obama's 2012 campaign slogan?

Why should any American cut their budgets & pay more taxes so Washington can go pour it into the sands of Iraq, Afghanistan, Somalia & Libya?

Answer that question before seeking to belittle tax protestors.

nmewn's picture

"hoping the next thumbs-down passerby at least has the balls to address one of the questions"

Sure, be glad to.

"you expect the rest of us to think your suffering hardship because you have to limp by with not even the whole 250K? Yer breaking my heart here"

What gives you the right to say what his profit should be?

If he earns a dollar a year or a million what concern is it of yours? He's not a banker or Fannie Mae or a GM board member or in the pocket of fascists like Solyndra.

He has taken nothing from you. You, on the the other hand, desire to take something from him that you have not earned or risked capital outlay in order to earn for yourself.

You are not capable in taking it from him by yourself or even in competing against him, so you desire to do this through the force of government, so you don't have to get your dainty hands dirty or risk anything personally.

You're what is termed as a parasite.

cosmictrainwreck's picture

you are delusional, man. furthermore, you have NO FUCKING WAY to know my parasitic behaviors, pro or con

nmewn's picture

"you are delusional, man. furthermore, you have NO FUCKING WAY to know my parasitic behaviors, pro or con"

I've seen enough of your horseshit to understand what delusion is. You're off your should have stayed with blunderdogs analysis. No central planning authority would ever declare a line at 250k without knowing that is where the most money can be confiscated from. They are the target.

Not the Buffet, not the Murdoch, not the, for you its DoChen?...and you walked right into it and continue to propagate the lie.

Cry me a fucking river parasite.

snowball777's picture

If the "target" gets bigger than the broad side of barn...

StychoKiller's picture

You missed the point -- Our work or your (Big Brother's) gun(s):  Choose one, you cannot have both!  Quibbling about $250K also ignores the principles involved.

A Philosopher once ask an attractive socialite if she would sleep with him for a million dollars, she said "yes, I would."  Then he asked if she would sleep with him for $20.

She said, "No, of course not, what do you think I am, a prostitute?"  He said, "we've already established that fact, now we're just haggling over the price."

Progressive/Socialists ignore principles because in their minds, the ends justify the means.

snowball777's picture

That philosopher was socialist Bertrand Russell.

StormShadow's picture

TrainWreck, you've clearly never run a small business in your life.  It's an emotional rollercoaster.  Keep in mind that for every one successful business that makes it, nine others failed miserably and the owner lost his ass.  On a larger scale, for every one Mark Zuckerberg who makes it big there are thousands of penniless others who tried the same thing and failed.  MSM would have you believe every college dropout with computer skills and a big idea becomes a millionaire overnight.  Get real.

BarrySoetoro's picture

Being as how your questions were directed at specific individuals, it really isn't up to anyone in the "thumbs-down passerby" crowd to address either of them, but I'll hit you up on the first:

Theft is theft.  Decent people, who aren't wothless pieces of degenerate shit, generally don't condone taking something that doesn't belong to them from somebody who isn't willing to give it...capiche?


DoChenRollingBearing's picture

FYI cosmic, I make nowhere near $250,000.  It is true that we can afford to have our company pay slower than planned.  Our intention is to ADD VALUE there in Peru.  If we make money, it is because our customers CHOOSE to buy OUR products vs. our competitor.

Perhaps you have never run a company before.  Or even been a manager.  Perhaps you are a .gov employee?  An SEIU member?  A labor lobbyist?

So, have a couple of red ones on me!

cosmictrainwreck's picture

"Nothin' personal....just business" Not on you, my man. A beautiful summation by blunderdog above. FYI have had lots of jobs - none in .gov or SEIU; even worked with some fuckin' lawyers (tm). Never "run" a company but spent plenty of time doing managers' thinking for them. Recently involved with a start-up: bust ass for 3+ years and teetering on the brink (or to the moon). I am one of the original principals and stand to make way less than the CEO. My main point is there's sooooo much bullshit flung around by whichever minority to make themselves look good, they got no cred with me. Let 'em work the trenches for a while & report back. Pussies.

Still waiting for my FUCKING STATS from one of those famous "job-creators"

DoChenRollingBearing's picture

See just below re jobs, good timing cosmic.

I too had to work jobs that I did not like.  That's why I went into business!  

My first 3 companies ALL failed in one way or another (but I did not stick any creditors with any BANKRUPTCY BS).  I lost a lot of money...  And it was not until I hooked up with my Peruvian in-laws (who are the real heroes here) that I found the 4th one was the charm.  Mr. Hershey's 7th or 8th business was the first one that did not end badly for him (chocolate).

I am not trying to paint myself up as a do-gooder of any sort.

But, around here, our company is ADDING VALUE, it is ADDING CAPITAL.  That's what it is all about.

sun tzu's picture

So basically, you've never risked your capital, run a business, or made a payroll. You've never created one FUCKING JOB. You're a FUCKING PARASITE that wants to take from others who are able to do things you can't

cosmictrainwreck's picture

I have capital at risk right now, asshole. more than I can afford to lose. pray tell enlighten us as to precisely your personal contributions to the furtherance of civilization

DoChenRollingBearing's picture

I could not edit my post, but this one is also for you cosmic.

Our investment in Peru created 9 full-time jobs, 2 part-time jobs and we have 3 commission-only salesmen whom we do not CHEAT.

Our consulting accountant tells me that we are a cleaner business than average in Peru.  OK, take that for what it is worth (words over the Internet, I can understand any doubts you might have).

How many jobs have YOU created?  Or are YOU one of the almost 50% who pays NO Income Tax?  Hmm?


cosmictrainwreck's picture

dude - I understand, OK? glad for what you're doing in (and for) Peru. All I'm sayin' is this: the piss-ants that try to spin the data to show  that (by inference)  (almost) anybody at 200K up is a small business owner creating jobs is just plain bullshit, that's all. My fave is my friend the realtor (tm?) or (r?) knocking down 300K+ back in the day CREATING ZERO FUCKING JOBS. Likewise, I'd take a SWAG that good majority of "owners" suck out a mighty fine salary blah blah that sucking sound you hear is reverse-osmosis of your capital investment argument. BTW wonder what the correlation is... to wit: how much of those "investments" pay off for anybody but the investor, or stay in the economy. All I'm askin' is for the spin-doctors not to insult our intelligence (not holding my breath)

BTW - have paid way more than "my fair share" in taxes for, like, forever. No "write-offs" no loopholes no fancy deductions. One of the ones they don't talk about.....the middle

BTW, further, WTF does my tax history have to do with the argument

still waiting for those FUCKING STATS....... (for USA, not Peru)

DoChenRollingBearing's picture

I guess the war is over!

I had you read wrong, I felt you were attacking me and our company.  Them's fightin' words.  My in-laws have BUSTED THEIR ASSES to get our company to where it is today.

Yo, Peace, Love, Woodstock!  Good on you to have paid your taxes (odious as they are).


Hey, it IS possible that not many small businessmen here at ZH are going to be able to claim to having created jobs.  Regulatory uncertainty, paperwork compliance, taxes and fees and many other factors are convincing many with money that it IS JUST NOT WORTH starting a business in the USA.

Here's some red meat for any junkers:

For the reasons I mentioned above, I would NEVER EVER start a new business in the USA!

StormShadow's picture

"My fave is my friend the realtor (tm?) or (r?) knocking down 300K+ back in the day CREATING ZERO FUCKING JOBS."

And what's he doing now?  Exactly my point.  That was a transitory bubble.  In any case, he WAS creating jobs.  Need an accountant, lawyer, office staff, etc. etc. to support that kind of work.  As they added staff to handle the load they had to buy them office supplies, computers, etc.--someone mad those products.  Even if all the products were made in China you needed an importer, dock worker, truck driver, warehouse worker, FedEx driver...

A Nanny Moose's picture

My fave is my friend the realtor (tm?) or (r?) knocking down 300K+ back in the day CREATING ZERO FUCKING JOBS


His wealth is not your concern. No jobs? This is utter bullshit. The act of buying an selling houses unleashes a flurry of government mandated busy work. Even spending it on hookers and blow creates jobs.

Is the problem here that he has not created a job for you? Sounds like you suffer from envy. How would putting this money in the hands of government, help the situation?

snowball777's picture

Some food for thought, your cosmicness...

"The average small business owner reports a yearly salary of between $36,000 and $75,000 a year."

"Back then, the Tax Policy Center analyzed all taxpayers, of any income level, who report these types of business income. They found only about 2 percent of them would see tax increases if the government increased the rates on the top earners. So the vast majority of possible small business owners would not see a tax increase if the Bush tax cuts expire for those in the top incomes."

Keep in mind that they have to make $250k in profit to see an increase in their taxes...after all write-offs.

I only hired one 'stiff', but he's a really good friend of the boss. ;)

cosmictrainwreck's picture

aha! smoked out the one level head in the room with all my ranting. beautiful. Yeah, my argument is one could sure make a shit-load of money carefully concealed as "expenses" or whatever then be taxed on....hmmm... "well, Mr. CPA... how much we gonna say I made last year?" And that's just ONE twist. Then there's the "jobs" thing and the "trickle-down" thing and the..............

well at least you're keeping one stiff off the street :) keep up the good work