United Liberty

With the Senate passing his tax plan, President Barack Obama is making a push to pressure the Republican-controlled House of Representatives do to the same. Before the start of a cabinent meeting yesterday, President Obama said, “I would encourage the House of Representatives to do the right thing,” which means passing his tax proposal.

President Obama’s view of what is “right” and “wrong” is odd. From a practical perspective, the $967.6 billion in revenues expected over the next 10 years from his proposed tax hike pales in comparison to the $46.9 trillion in spending. Budget deficits will still run high, and, as a result of the tax hikes, the economy will contract, according to at least two separate studies. The affect of this will be slower job creation, if not a recession.

The other aspect is moral the moral argument. What is exactly the “right thing”? The tax burden in the United States is already high and, thanks to President Obama and Congress, budget deficits are out of control; reaching $1 trillion for the fourth straight year. Is it moral to coerce people to pay more in taxes when the government is spending so irresponsibly?

During White House press conference, ABC News reporter Jake Tapper asked Jay Carney, Obama’s press secretary, how they can make the argument that continuing current tax rates is a “giveaway” to higher-income earners. Here’s the exchange:

TAPPER: You used the word “giveaway,” and President Obama, in his statement yesterday, used the word “giveaway,” referring to the extension of the Bush — lower — the lower Bush tax cut rates for the — I guess, the top 1 or 2 percent of the country, people making over $200,000 a year or couples making 250. What do you say to a small-business owner who says, that’s not a giveaway; that’s my money, and by the way, I’m going to need some of that money in order to help pay for health care of individuals that I’m now mandated to do; it’s not giving anything away; it’s allowing me to keep my money?

CARNEY: Well, the phrasing of the question leaves out a few things, which is, one, this tax cut that the Senate passed and that the president supports would go to 97 percent of small businesses in America, 97 percent. Further, this president has cut the taxes of small businesses in America 18 times, independent of this. So he’s — his focus on assisting small businesses, which he considers the engine of economic growth in this country, the engine of job creation in this country, has been intense and will continue to be.

TAPPER: Yes, I left out people I wasn’t talking about.

CARNEY: Well, no, but I mean, your — but your question framed it around the — so you’re talking about the 3 percent here. And as we’ve noted, under the definition of small businesses that Republicans trot out when they’re insisting on these tax cuts for millionaires and billionaires means that –

TAPPER: I wasn’t talking about millionaires and billionaires.

CARNEY: No, but it means –

TAPPER: I was talking about somebody making over $200,000 a year.

CARNEY: Sure. But I mean, again, that’s 97 percent of people who file — small businesses that file taxes under the individual tax code will receive this tax cut. Many of the remaining, you know, self-described small businesses that we’re talking about, we’re talking about hedge fund managers often, and law firm partners.

And addressing those small businesses that fall in the remaining category — this tax cut goes to everybody. This is an often- misunderstood fact in reporting and, I think, just in general that giving this tax cut — extending this tax cut to 98 percent of Americans, those who make up to $250,000, means that everyone gets it, even those who make millions and billions, up to the first $250,000 of income, so that for a family — that includes everyone, OK, and including small businesses that file in this manner.

Secondly, the president — the president believes that small businesses are so important that he has dedicated a lot of energy and focus on providing tax credits and tax incentives and tax cuts to small businesses throughout his three and a half years in office.

Beyond that, he believes that extending the high-end Bush tax cuts again is something we simply cannot afford. We — you know, we’re talking about a trillion dollars over a decade. We’ve seen what happened when these tax cuts, which you may recall — you and I were covering it — were sold initially as a payback from the budget surpluses that were achieved under the Clinton administration. And then when the economy ran into trouble and those surpluses were beginning to erode, it was sold as an economic stimulus measure. And what we got was middle-class income stagnating, the slowest expansion in 50 years and an economic crisis the likes of which we haven’t seen in more than 70 years. So –

TAPPER: I’m not — the question is this: Why is it a “giveaway”? Why are you guys using — you and President Obama — using the term “giveaway” when even if you support the Senate Democrats’ bill, it’s not technically a giveaway; it is allowing people to keep the tax cut that they got in 2001 and 2002?

CARNEY: Right, but these are tax cuts that we cannot afford, that do not, by — as — by the estimates of credible, independent economists do not measurably help the economy and do not — in the way that tax cuts to working and middle-class Americans help the economy.

And you know, we have to make choices. And it is a — it is a tax cut for the wealthiest Americans that we simply can’t afford.

Carney dodges the question entirely. He goes off the trite class warfare arguments and then argues that the United States can’t afford to extend the tax cuts, an argument that is a matter of perspective more than anything else. As I explained last week, President Obama and his supporters seem to view all wealthy as being owned by the state. They just let you keep a portion. That is the only way you can honestly look at the current tax rates as a “giveaway.”

And if it is truly a matter of whether or not extending these tax cuts are “affordable,” then why doesn’t the Obama Administration just make the argument that they’re going to raise taxes to the point where they keep up with spending? Tax rates would be literally through the roof. As Bankrupting America notes, the top individual and corporate income tax rates would have to be raised to 88%. The middle class would see their tax rate jump to as high as 63%. The lowest tax rate would be 25%.

Again, affordability is a matter of perspective. If your perspective is to maintain the status quo — meaning no real cuts to spending or reforming entitlements, which is where President Obama seems to be, then tax rates will have to be raised, but not just on the evil and hated wealthy; but for everyone. If the occupant of the White House was actually willing to make across the board cuts to discretionary spending and get entitlements under control, then we could keep today’s tax rates.