Archive for Taxes

But Do They Regret the Error?

So, when Bloomberg quoted Jeff Greene as saying “”America’s lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence”—which was a bit rich from a near-billionaire—he didn’t?

Then, what did he say?

“Let me clear this up. I never said this. It was completely misquoted,” he insists.

“What I said was, ‘the global equalization of wages and technology, which is growing at an exponential pace, has killed so many millions of jobs in America and other Western economies, and it’s going to kill them at an even faster pace going forward,'” he tells CNBC.

“I said, ‘we have our work cut out if we want to build a real economy, an inclusive economy that I grew up in, that I want to see for all Americans.'” Americans don’t have to shift their expectations downward, he maintains.

That’s hardly the same thing.

But then he said this, so he can go [bleep] himself:

The entrepreneur also said he would support higher taxes on the wealthy.

“We absolutely-unfortunately for wealthy people-need to have higher taxes, and I’m certainly prepared to pay higher taxes and I hope that other wealthy people are,” he said.

Those taxes would help provide lifelong educational opportunities, which would help build a stronger middle class, he added.

Anyone who flatly argues for higher taxes—without a thought toward spending reforms, smaller government, inefficiency, corruption, and the nationalization of the individual property—is excused from the conversation. Money doesn’t belong to the government; it belongs to the people. You don’t take it away from them without a damn good reason, and boilerplate palaver about “education” and “infrastructure” is just a diversion for lifting wallets. We don’t need to spend more on education, just smarter. And Obama lost me on infrastructure when he admitted his near-trillion dollar stimulus was pi**ed away because there were no shovel-ready jobs.

How many times are we expected to fall for this nonsense? Please, tell me. It would make my life so much easier.

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NY Times Defines Merely Affluent

Anyone who has a 529 plan

This is quite an amusing article. According to the NY Times, if you have a 529 plan for your kids, you’re kinda rich and need to pay more in taxes. The the rich meanies rebelled at the suggestion, even the ones who read their newspaper! So poor old Obama had to pull it off the table.

The first rule of modern tax policy is raise taxes only on the rich. The second rule is that your family isn’t rich, even if you make a lot of money.

President Obama’s State of the Union proposal to end the tax benefits for college savings accounts ran afoul of these rules, which is why he abandoned it, under intense pressure from both political parties, within a week.

Tax-free college savings accounts, like the mortgage interest deduction and the state and local tax deduction, principally benefit people who range from affluent to wealthy. In pushing its proposal, the White House pointed to Federal Reserve data showing that 70 percent of balances in the college accounts were held by families making at least $200,000 a year. In theory, tax reform is supposed to be built around cutting back preferences like these, in order to pay for some combination of lower tax rates and tax preferences aimed at people with lower incomes.

But in practice, politicians from both parties have made a point of holding the group you might call the “merely affluent” harmless from tax increases. If you make $150,000 to $225,000, you make about two to three times the national median income for a married couple. The list of occupations that can get you into this income bracket — government official, academic, lobbyist, journalist — can sometimes make it hard for people in political circles to remember that 92 percent of American married couples make less than $200,000 a year.

They keep hammering away at this, and disdainfully mention this article by economist Megan McArdle.

…There’s a reason for that. Americans like to hear that rich people are going to be forced to pay their fair share. They would probably be considerably less excited to hear that Obama wants to tax the earnings on educational savings accounts, or that any assets they inherit from their parents would be subject to a capital gains tax. To be fair, there are generous exemptions. But there are a lot of affluent-but-hardly-wealthy folks in blue states who would be very unhappy to hear that that nice Westchester home Mom and Dad bought for $15,000 in 1952 is going to be subject to a capital gains tax — at the same time they’re suddenly paying income taxes on the capital gains and dividends in little Sally’s college account.

In some ways, this is a measure of how difficult the American fiscal picture is. Estates get what’s known as a “stepped-up basis” on assets — meaning that when you inherit a house from Mom and Dad and later sell it, you’re taxed on the difference between the value at the time you inherited it (your basis) and the value at the time you sell it. Obama proposes to use the price your parents paid as the basis, though the first $200,000 is exempted, and there’s an additional $500,000 exemption for homes.

The people this hits will be a small group, but again, it’s a group that includes a lot of fervent Obama supporters in blue states. Moreover, there’s good reason to step up the basis, because over the decades, records are lost and it can be hard to determine what price Mom and Dad paid, especially for assets that aren’t homes. Taxing the earnings on college savings accounts is even stranger, both because this hits the middle class, and because if you tax the earnings, there’s not all that much point to having the account; essentially, Obama is taxing college savings accounts in order to fund universal community college. This is scraping the bottom of the barrel, and what it tells you is that Obama has already run through most of the practical and politically palatable ways to tax the affluent.

And she makes this brilliant point:

Of course, these are never-never proposals; the new Republican Congress is not going to open its career by taxing America’s college savings. But in a way, that makes it even stranger; since you can’t get it done anyway, why bring it up?

The answer is that this gives him an imaginary revenue source he can attach to his equally imaginary plans to subsidize community college and child care. The real benefit of these proposals is that they’re complicated and hard to explain. Republicans have been understandably reluctant to attack these policies directly, and for good reason.

Heading back to the disappointment at the NY Times:

A lot of people in this category don’t think of themselves as rich, and they benefit from tax provisions like college savings accounts.

So when he first ran for president, President Obama repeatedly promised not to raise taxes on families making less than $250,000 a year. The flat thud his college proposal landed with emphasizes why that promise resonated so.

The savings plans debacle illustrates a problem for both the president and Congress: If you can’t go after tax provisions for the merely affluent, you are exempting almost everyone from tax increases. And if you can’t broaden the tax base, then you are very limited in how much you can finance tax reform.

And by reform, the NY Times means redistribute income from the middle class (they deny that the middle class is using the 529 plan, I call bs) to the poor. Because there just isn’t enough money among the rich to pay for everything that the Left wants to pay for. By the way, the comments at the end of the NY Times article are just priceless. Their readers are furious that Obama would take away their favorite tax break.

– Aggie

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Hey, You Six Million!

How do you like him now?

As many as 6 million people will have to pay a penalty under ObamaCare for going without health insurance in 2014, federal officials suggested in projections released Wednesday.

That means between 2 percent and 4 percent of all taxpayers lacked medical coverage for all or part of the year and do not qualify for an exemption under the individual mandate, according to the Treasury Department.

Another 10 to 20 percent of taxpayers — or 15 million to 30 million people — were uninsured but will qualify for an exemption from the mandate, shielding them from paying $95 or 1 percent of household income when they file their taxes.

What did we just learn the other day? That ObamaCare will end up costing $2,000,000,000,000 and still leave almost 30,000,000 uninsured? (I just busted my 0 key.)

The best-case scenario described by the CBO would result in ‘between 24 million and 27 million’ fewer Americans being uninsured in 2025, compared to the year before the Affordable Care Act took effect.

Pulling that off will cost Uncle Sam about $1.35 trillion – or $50,000 per head.

The numbers are daunting: It will take $1.993 trillion, a number that looks like $1,993,000,000,000, to provide insurance subsidies to poor and middle-class Americans, and to pay for a massive expansion of Medicaid and CHIP (Children’s Health Insurance Program) costs.

Offsetting that massive outlay will be $643 billion in new taxes, penalties and fees related to the Obamacare law.

So, all this wasn’t about controlling costs or covering the sick. It was about power. By that metric, it has been a raging success.

Who has the last laugh?

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529 Fiasco

The dumbest administration evah continues its unbroken track record of dumbness…

Here’s my favorite line of the year, so far:

Well, that must have polled badly.

I guess the middle class wasn’t too impressed with the idea of free community college in trade for losing their tax-advantaged college savings plan, huh?

The White House on Tuesday dropped its proposal to tax 529 education savings accounts, a week after President Obama floated the idea in the State of Union. This is a cut-their-losses move, but we wish the idea had rotted in the sun for a few more months. It would have been instructive to the same middle-class taxpayers Mr. Obama claims to serve.

Mr. Obama wanted to tax 529 plans to finance a more targeted college subsidy program that politicians could better control. The 529 plans put the power in the hands of parents. The political problem is that 529s have become popular with, well, the middle class; there were some 11.8 million accounts and the average balance was $20,671 as of last June.

You can see the appeal. All that juicy tax money, squirreled away in the brats’ college accounts, instead of being used for good stuff.. like maybe more money for (you’re favorite goofy program here). Because let’s face it, the only real money to be had is in all those middle-class bank accounts, in just about every neighborhood in the USA.

House Speaker John Boehner had called on Mr. Obama to withdraw the proposal, and the Ways and Means Committee was already rolling out legislation to force Democrats to go on record for the 529 tax increase. “Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision,” a White House official told the Journal, in a a classic of political rationalization.

It’s a shame there won’t be a vote, because the 529 tax increase is a rare example of the President’s policy sincerity. Liberals sooner or later must raise taxes on the middle class because taxing the rich alone can’t possibly finance all of the Democratic Party’s entitlement schemes. The middle class is where the real money is. So while taxing 529s may die for now, it’s only a matter of time before liberals are back with a carbon tax or value-added tax or something. That’s the real meaning of “middle-class economics.”

Yep. And given the fact that he did win two elections, the middle-class deserves what’s coming. And come it will, because the debt keeps growing.

– Aggie

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At Last!

Who doesn’t think they’re middle class? Bill Gates and Warren Buffett, who know they can’t get away with it, and the welfare cheats for whom stepping into the middle class would be a cut in pay—but who else?

So, Obama’s obsequious snake-oil palaver about the “middle class” in the State of the Union (seven mentions) was cynically meant to appeal to about 300 million Americans.

Just one question: what took him so long?

The plan is DOA, though we’ll address the merits anyway because it’s our job. But first observe the irony: The President has suddenly discovered that middle-class incomes have plunged on his watch, and he’s demanding that Congress address this with more of the same policies that have done so much to reduce middle-class incomes.

White House aides are saying their boss’s plan for $320 billion in new taxes on savings and investment to finance more transfer payments is a bid to be remembered as a Robin Hood. This would be accurate if our hero and his merry men had shaken down Sherwood Forest for the benefit of the Sheriff of Nottingham. Mr. Obama has spent six years trying to redistribute income, but all he’s done is make the income gap between rich and poor wider.

Untitled

For exactly how long are we to “blame Bush”? The recession officially ended in the second quarter of 2009, meaning we’re about to celebrate a sixth year of economic expansion. We should either credit Bush for the recovery (which began while Obama was still sleeping off his Inauguration hangover), or blame Obama for its feebleness. Or vice-versa, I don’t care.

The point is: how can Obama portray himself as Robin Hood when he’s been as hapless and useless as Batman’s sidekick, Robin?

Mr. Obama even wants to change the tax treatment of inherited assets and eliminate a provision known as “stepped-up basis.” When someone dies before realizing a capital gain, his heirs pay the top 40% inheritance tax rate on the value of the asset at that time, not when it was purchased. The reason the step-up basis exists is to compensate for the death tax on a lifetime of saving and investment.

Way back when, The West Wing featured an episode in which a proposed hike in the death tax was opposed by the Congressional Black Caucus. The president’s staff were incredulous until one of them realized that a generation of African Americans freed from the confines of Jim Crow had amassed estates that they wished to protect from the sticky fingers of the government. I always figured Aaron Sorkin’s show was based on actual occurrences. Now, it seems like he was tripping on peyote or mushrooms. They say a conservative is a liberal who’s been mugged by reality. A liberal must be a liberal who’s been mugged by another liberal.

Lastly, how often have we been told how smart Obama is, possessed of a first-class mind?

We beg to differ:

The President wants to double down on redistribution by nearly doubling the capital gains tax rate over its 2012 level to 28% for couples earning more than $500,000. The 2013 fiscal cliff deal boosted the top rate to 20% from 15%, plus the 3.8% ObamaCare surcharge on “unearned income.”

The White House is describing 28% as “the Reagan rate,” because that is where it stood after the Reagan-Rostenkowski tax reform of 1986. But that came in the context of reducing the top marginal rate on ordinary income to 28% from 50%. Today that is 39.6%, and even higher with surcharges.

Oh dear. How tedious this gets:

Obama getting schooled, six years ago, by Charlie Gibson of all people. With all his gray hair, maybe his memory’s going.

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Out: MD; In CPA

Whenever I want the complexities of modern health insurance explained to me, I go to H&R Block:

[M]illions of Americans who got subsidies under the law may find they are getting smaller-than-expected refunds or owe the IRS because credits they received to offset their insurance premiums were too large. As many as half of the roughly 6.8 million Americans who got subsidies may have to refund money to the government, based on one estimate by tax firm H&R Block Inc.

“The ACA is going to result in more confusion for existing clients and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” said Charles McCabe, president of Peoples Income Tax and the Income Tax School, a Richmond, Va., provider of tax preparation and education. “The whole implementation of Obamacare will be frustrating for tax preparers.”

Why should they be spared? Everyone else has to eat this fecal focaccia.

Obama got hammered in the midterm elections largely on the lies and failures of ObamaCare. The next four months are going to be beautiful.

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What Was That All About?

An occasional series here to stop and reconsider a one-time big ruckus, now forgotten—a journalistic ghost town, if you will. ObamaCare in two years’ time, for example.

Or France’s 75% tax rate:

It was supposed to force millionaires to pay tax rates of up to 75 percent: “Cuba without the sun,” as described by a critic from the banking industry. Socialist President Francois Hollande’s super tax was rejected by a court, rewritten and ultimately netted just a sliver of its projected proceeds. It ends on Wednesday and will not be renewed.

And that critic of the tax? He’s now Hollande’s economy minister, trying mightily to undo the damage to France’s image in international business circles.

The tax of 75 percent on income earned above one million euros ($1.22 million) was promoted in 2012 by the newly-elected Hollande as a symbol of a fairer policy for the middle class, a financial contribution of the wealthiest at a time of economic crisis.

But the government was never able to fully implement the measure. It was overturned by France’s highest court and rewritten as a 50 percent tax paid by employers.

Faced with a stalling economy and rising unemployment, the government reversed course in 2014 with a plan to cut payroll taxes by up to 40 billion euros ($49 billion) by 2017, hoping to boost hiring and attract more investments.

Cutting taxes to boost hiring and investment—those crazy French. When’s the next Jerry Lewis film festival, Marcel?

Où sont les taxes d’antan? Loosely translated: what was that all about?

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It’s Constitutional, Bitches

Illegal aliens? Legal, with a wave of his hand.

Fidel Castro? From villain to ally, by his say so alone.

Michael Young and Eric Garner? Misdemeanor to martyr, at his direction.

I just hope Obama shows the same mercy to these “folks”:

People without insurance are running out of time to avoid the hefty ObamaCare penalties that the IRS will be handing down in 2016.

Consumers face a Feb. 15, 2015, deadline to buy insurance, after which those without coverage could be hit with fines of $325 per adult or 2 percent of family income, whichever is higher.

And you thought the Patient Protection Affordable Care Act was about patient protection and affordable care. Sucker:

In promotional materials, H&R Block and Jackson Hewitt Tax Service say they can provide consumers relief, arguing that healthcare reform is making tax planning more difficult.

“The ACA [Affordable Care Act] has changed the landscape of both healthcare and tax,” H&R Block states online, inviting consumers to calculate their mandate penalty or receive a “tax impact analysis” when they become a client.

Jackson Hewitt urges consumers to stop by one of its locations, promising that their employees “work harder to keep up with the latest tax law changes to protect you from possible penalties — not everyone else does.”

The marketing around the healthcare law is taking flight at a time when surveys show the public remains deeply confused about the mandate.

Not the Surgeon General or the AMA—H&R-[bleeping]-Block.

Forget that $325; it’s only going to be higher. Two percent of $16,250 is $325. That’s about minimum wage; such people are sure to be subsidized. Two percent of, say, $60,000? Twelve hundred dollars—after-tax dollars.

It’s either that or jail, because it’s the law of the land. Just don’t add insult to injury:

Anne Filipic, president of the campaign-style group Enroll America, said the mandate is coming up more frequently this year.

“We will always lead our conversations with the great benefits that are available to consumers,” Filipic said in a joint interview with The Hill and The Wall Street Journal last month.

“As for the fine, that is something that we will communicate to consumers about as well. It’s about delivering the facts.”

ObamaCare has never been about the facts, you lying… I can’t say it, as Barbara Bush once demurred, but it rhymes with with witch.

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Pity The Poor Teachers

Philadelphia teachers now have to pay $140/month for health insurance

Philadelphia teachers vowed to fight a sudden move by the district Monday that cancels their union contract and forces them to start paying health premiums of as much as $140 a month.

The teachers union, with about 15,000 members, accused the state-led School Reform Commission of ratcheting up its “war on teachers.”

However, district leaders said there was nothing else to cut after years of funding woes that have prompted nearly $1 billion in cuts that includes the loss of 5,000 positions and the closure of 30 schools. Many Philadelphia schools operate without a nurse or librarian on duty.

“If the contract is blown open, what’s going to happen to things that matter to our kids, (such as) student class size?” said Anissa Weinraub, 34, a high school English teacher who has gone through several layoffs and three forced transfers in nine years. “I’m nervous about what else might be imposed.”

Both Superintendent William R. Hite and Philadelphia Federation of Teachers President Jerry Jordan, along with Mayor Michael Nutter, agreed that the problem lies in the state funding formula for education.

“The cuts by the commonwealth over the last few years have had a devastating financial impact on the school district and the quality of education,” Nutter said. “There’s no debate about that.”

Hite nonetheless backed Monday’s decision, saying the money would yield more than $50 million a year for classroom and other needs.

Philadelphia is one of those cities that likes to put it to businesses. The end game of that sort of thing will always be that businesses find another place to be. The folks left behind might not have the resources to pay taxes. And what do the teachers think that ObamaCare did to the business community? So, as you can tell, Gentle Reader, my heart is bleeding all over the keyboard. One hundred and forty dollars a month is a steal.

– Aggie

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Number 32 With a Bullet

To the head:

On Monday the Tax Foundation, which manages the widely followed State Business Tax Climate Index, will launch a new global benchmark, the International Tax Competitiveness Index. According to the foundation, the new index measures “the extent to which a country’s tax system adheres to two important principles of tax policy: competitiveness and neutrality.”

A competitive tax code is one that limits the taxation of businesses and investment. Since capital is mobile and businesses can choose where to invest, tax rates that are too high “drive investment elsewhere, leading to slower economic growth,” as the Tax Foundation puts it.

The index takes into account more than 40 tax policy variables. And the inaugural ranking puts the U.S. at 32nd out of 34 industrialized countries in the Organization for Economic Co-operation and Development (OECD).

One small correction: the authors of the study list Slovenia and Slovakia separately when everyone knows they’re the same thing. And is there really a Switzerland and a Sweden? Someone should clean that up.

Aside from that, however:

Any day now the White House and Sen. Charles Schumer (D., N.Y.) will attempt to raise taxes on business, while making the U.S. tax code even more complex. The Obama and Schumer plans to punish businesses for moving their legal domicile overseas will arrive even as a new international ranking shows that the U.S. tax burden on business is close to the worst in the industrialized world. Way to go, Washington.

With the developed world’s highest corporate tax rate at over 39% including state levies, plus a rare demand that money earned overseas should be taxed as if it were earned domestically, the U.S. is almost in a class by itself. It ranks just behind Spain and Italy, of all economic humiliations. America did beat Portugal and France, which is currently run by an avowed socialist.

The new ranking is especially timely coming amid the campaign led by Messrs. Obama and Schumer to punish companies that move their legal domicile overseas to be able to reinvest future profits in the U.S. without paying the punitive American tax rate. If they succeed, the U.S. could fall to dead last on next year’s ranking. Now there’s a second-term legacy project for the President.

And people wonder why Recovery Summer V has been no more successful than Recover Summers I-IV. (People wonder, but the media seem not to.)

But get a load of this remedy. Are you sitting down?

Rather than erecting an iron tax curtain that keeps U.S. companies from escaping, the White House and Congress should enact reform that invites more businesses to stay or move to the U.S.

OMG! You are one bad-ass newspaper, WSJ. Next you’ll be arguing for a cut in the capital gains tax rate:

A rising tide lifts all boats, but Obama warned us that the tide would stop rising if he were elected president. One promise he kept.

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A Billion Here, A Billion There… Pretty Soon We’re Talking Real Money

You believed that the government would verify the accuracy of people’s income statements? SUCKAS!!!

The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors, according to internal documents and three people familiar with the situation.

The problem means that potentially hundreds of thousands of people are receiving bigger subsidies than they deserve. They are part of a large group of Americans who listed incomes on their insurance applications that differ significantly — either too low or too high — from those on file with the Internal Revenue Service, documents show.

How many “folks” do you think are receiving payments below what they are entitled to receive? And how many are receiving too much in subsidies? The Most Incompetent Administration Evah.™

– Aggie

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Who Did ObamaCare Hurt The Most?

Interestingly, my husband and I were having this conversation this morning. I was opining that the Obama administration has hurt self-employed people, very small businesses, and construction related workers – whether they are engineers or guys running cranes. I say this is true for the entire administration, beginning with Shovel Ready Projects.

Now there is evidence that the largest class of victims of ObamaCare are some of these same “folks”.

A new study in the journal Health Affairs by Benjamin D. Sommers, a professor at the Harvard School of Public Health, provides fresh details on people who lost coverage on account of Obamacare, a group that may have totaled nearly 5 million Americans. But the majority of those people probably would have switched insurance anyway in 2014, even without the new law, according to the study. Most of them probably got new policies, so they’re covered now. And many switchers who got a new policy through one of the healthcare exchanges set up under Obamacare probably got a better deal than they would have before the law.

But there are three subsets of people whose policies were canceled and who are likely to end up as losers under Obamacare — people who are self-employed, over 35, white, or some combination of all three. People in this smaller group were far less likely to switch policies on their own, since they were generally happy with their coverage and less likely to change their employment status, one big reason people typically drop an individual policy. For this group, “cancellations related to the ACA represent an unwanted change in coverage options that may be quite disruptive,” the Health Affairs study concludes.

Yes. That is the group that was hurt the most by this administration. The beauty of it is that as they tighten their belts, refuse to spend, the “recovery” languishes. Because what goes around comes around.

Here’s one guy who makes my point:

Jim Stadler, a 50-year-old freelance writer who lives outside Charlotte, N.C., got a notice from his insurer last fall saying his family’s policy would be canceled because it didn’t meet all the new requirements under the ACA. Stadler was happy with that policy, which kept costs down and provided access to good doctors. After several fits and starts, his insurer, Blue Cross Blue Shield of North Carolina, was able to offer a similar policy — but the premium rose from $411 per month to $540, a 32% increase. “I’m giving an insurance company money I could be spending on groceries or durable goods or other things,” says Stadler. “I’m paying more, and for what, I don’t know.”

And here we find out that Obama targeted political opponents, although journalists refuse to believe it:

The biggest Obamacare losers are people who lost their insurance but are unlikely to qualify for subsidies through one of the new exchanges, which require an income of less than $47,000 for an individual or $95,000 for a family of four. So they’re the ones who lost coverage and probably have to pay more for a new policy, even if they enroll through an exchange. Some people who lost coverage report paying twice as much for a new policy, or more.

It just so happens those demographic groups hurt most by Obamacare tend to be Obama’s political opponents. Whites are more likely to say they’re Republican than Democrat, by 34% to 28%. People under 35 — one group more likely to benefit from Obamacare — lean strongly toward the Democratic party, while that edge evens out among people over 35. And among small-business owners — a big chunk of people who consider themselves self-employed— Republicans outnumber Democrats by as much as 3 to 1. Stadler, for one, voted for Obama in 2012 but has since helped promote anti-Obamacare campaigns.

They (and their journalistic lap dogs) deny the connection:

There’s no reason to think Obama and other backers of the ACA deliberately targeted Republicans when they made decisions that would determine winners and losers under the health reform law. It seems more likely Obamacare architects, thinking in broad, public-policy terms, simply failed to anticipate the firestorm that would erupt over canceled policies. To many of the law’s drafters, the ACA would bring a net improvement in healthcare coverage. And those who ended up paying more, they reasoned, would be getting better insurance.

So, in other words, this journalist is calling Obama, and they people his administration hired to do this work, idiots. They are saying it nicely, but they are saying it. And I say: If it walks like a duck and quacks like a duck…

– Aggie

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