Reward what you want more of. Punish what you want less of.
From this truth, we can see directly that the Obama Administration and the Democrats in Congress want people to make less money, because they are still on track to let the tax cuts passed in 2001 and 2003 expire.
They know this will happen, because the Chair of Obama’s own Council of Economic Advisers has told him as such.
Christina Romer, Chair of the President’s Council of Economic Advisers and economics professor at the University of California at Berkeley, has published an article (co-authored with David Romer) in the June 2010 issue of the American Economic Review titled “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks.” Unlike her statements in her role as an Obama adviser, this article is serious academic research, published in what is generally recognized as the world’s leading academic economics journal.
In the article, the Romers divide legislated tax changes into those undertaken in response to economic conditions and those that are “exogenous,” by which they mean changes made for other reasons. The expiration of the Bush tax cuts clearly falls into the “exogenous” category, because it is the result of legislation passed years ago, before anybody could have anticipated the economic conditions under which they would expire.
What the Romers found is that exogenous tax increases, such as will occur with the expiration of the Bush tax cuts, “… are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes.”
I guess there is no better way to make more people dependent on government assistance than telling them that making more of their own income is “bad”.