fiscal cliff

Do the American People Agree with Obama?

Written by David Boaz, executive vice president at the Cato Institute. It is cross-posted with permission from Cato @ Liberty.

News reports quote President Obama, in discussing the debt ceiling and the ongoing argument over tax and spending policy in his press conference yesterday, saying:

It turns out the American people agree with me.

Do they? It’s true that a majority of respondents told pollsters that they wanted to raise taxes on someone else. And Congress did that in the “fiscal cliff” legislation.

But what about the president’s insistence on a larger government and essentially no cuts in federal spending? The election day exit polls shed some light on those questions.

51 percent of voters polled said the government is doing too many things better left to businesses and individuals—8 points higher than in the 2008 election. Only 43 percent of voters said they believe government should be doing more.

49 percent said the 2010 health care law should be repealed, with only 44 percent of voters supporting it.

And 51 percent said they prefer smaller government with fewer services, while 43 percent prefer larger government. As usual.

Rocketing Towards the True Fiscal Cliff

You mad, bro?

Now that the “fiscal cliff” deal is law, we move on to the next acts in this kabuki theater we call Congress. The fiscal cliff deal locked in most of the Bush-era tax rates permanently, raised taxes on the highest earners, allowed the payroll tax to increase on all earners (a shock to many Democrats, who thought the re-coronation of the Obamessiah exempted them from more taxes). It once again kicked the can of spending excess, specifically entitlement spending, down the road. It supposedly reduces the huge annual deficits, yet will bring in only $620 billion over ten years (enough revenue in a decade to pay HALF of THIS year’s deficit). Since entitlement spending drives our growth in debt, the fiscal cliff deal did not avert a fiscal crisis; it simply delayed it and insured that it will be much worse when it hits.

The irony is that Obama’s fiscal cliff deal theoretically demands higher taxes for “fairness,” to get the rich to carry more of the burden. However, a recent Huffington Post article quotes Professor Emmanuel Saez of UC-Berkeley, who reveals that income inequality is actually higher under Obama than it was under Bush. Or, as the writer explains, “That means the rising tide has lifted fewer boats during the Obama years — and the ones it’s lifted have been mostly yachts.” In other words, his uber-rich friends hit the jackpot even as the poor and middle class he supposedly protects suffer more.

Despite hand-wringing and breathless proclamations of impending doom, Congress and Obama showed they were completely unserious about fixing the problem, voting on the “fiscal cliff” bill without having a clue what was in it. According to Congressman Ron Paul, the bill was voted on in the House just 22-hours after the text was made available, and the Senate voted on the 154-page bill just three minutes after it was presented.

A Compact for America to Rein in Government

Written by Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute. Posted with permission from Cato @ Liberty.

In 1798, Thomas Jefferson wrote to a friend that the one thing missing from the newly minted Constitution was some kind of limit on federal debt:

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Now that Washington has kicked the can on our out-of-control spending yet again, isn’t it time to reconsider Jefferson’s wish?

It may be easier than previously thought, through an ingenious spin on the balanced budget amendment (BBA).  Compact for America, a Texas-based nonprofit advised by the Goldwater Institute’s Nick Dranias, is advancing an agreement among the states — called an “interstate compact” — to transform the constitutional amendment process into a “turn-key” operation.  That is, a single interstate compact can consolidate all the state action involved in the Article V process: the application to Congress for an amendment convention, delegate appointments and instructions, selection of the convention location and rules, and ultimate ratification.  It then consolidates all the corresponding congressional action, both the call for the convention and ratification referral, into a single omnibus concurrent resolution.

401(k) Plans Teeter on the Fiscal Cliff

Among the many tax “loopholes” on the chopping block in the fiscal cliff negotiations are the 401(k) contribution limits.  Liberals like to refer to tax deductions, deferrals, and exemptions as “spending through the tax code,” or “tax expenditures.”  Of course, there are certain tax subsidies and credits that might best be described as spending (e.g., subsidized coverage on the Obamacare exchanges).

But conservatives and libertarians recognize that private property rights are at the foundation of individual liberty, and that any just government must be dedicated to protecting the individual’s right to the fruits of his labor.  Treating a legitimate tax deduction as government spending presumes that the government has a right to those fruits by default - that we are privileged to retain any such fruits, and the government spends its funds in permitting it.  This confiscatory mindset is foreign to our founding and inconsistent with our nature.

The proposed changes to 401(k) contribution limits are a good example of the threats to economic liberty we face as the revenue hawks continue to scour the tax code for backhanded tax increases.

What is a 401(k) Plan?

The traditional 401(k) plan is a method of tax deferral.  You contribute with pre-tax dollars, the account grows tax-free, and you pay ordinary income tax on the distributions when you retire.  If your employer offers a Roth option, you can contribute with after-tax dollars, and both the gains and distributions will be tax-free.  In 2012, employees can elect to contribute up to $17,000, and the total employer/employee combined contribution limit is $50,000.

What’s Being Proposed?

Welfare Recipients Make More Than Honest Workers

welfare_state_greetings

I think I may have finally found the most bothersome, noxious piece of information of all time, thanks to the editors at Townhall.com. The emphasis in the next quote is mine:

It’s official. Taxpayers are no longer simply helping the poor, they’re subsidizing the lives of welfare recipients at a better rate than their own. The Senate Budget Committee has released a report showing households living below the poverty line and receiving welfare payments are raking in the equivalent of $168 per day in benefits which come in the form of food stamps, housing, childcare, healthcare and more. The median household income in 2011 was $50,054, totaling $137.13 per day. The worst part? Welfare payments are equivalent to making $30 per hour for 40 hours a week. The median wage for non-welfare recipients is $25 per hour but because they pay taxes, unlike welfare recipients, the wage is bumped down to $21 per hour.

When I read this, I threw up a bit.

I’m going to be honest with you and tell you a little bit about my personal life, which I don’t typically do in the pages of United Liberty. And I certainly don’t want to start a pity party over me. But here’s the facts: I currently have a paying job, but not a great one. I’m an intern in DC. I make $30 a day. Let me repeat that: I make thirty dollars a day. Yet even though I work hard, create value, and do my damndest to support myself without forcing others to support me, the average welfare recipient receives 5.6 times what I make, paid for with my tax dollars.

As USS Enterprise Retired, A Question: Why So Many Aircraft Carriers?

enterprise.jpg

Over the weekend, the USS Enterprise—the real one, not James T. Kirk’s ship—was retired in Virginia:

NORFOLK, Va. (AP) - The world’s first nuclear-powered aircraft carrier was retired from active service on Saturday, temporarily reducing the number of carriers in the U.S. fleet to 10 until 2015.

The USS Enterprise ended its notable 51-year career during a ceremony at its home port at Naval Station Norfolk, where thousands of former crew members, ship builders and their families lined a pier to bid farewell to one of the most decorated ships in the Navy.

“It’ll be a special memory. The tour yesterday was a highlight of the last 20 years of my life. I’ve missed the Enterprise since every day I walked off of it,” said Kirk McDonnell, a former interior communications electrician aboard the ship from 1983 to 1987 who now lives in Highmore, S.D.

The Enterprise was the largest ship in the world at the time it was built, earning the nickname “Big E.” It didn’t have to carry conventional fuel tanks for propulsion, allowing it to carry twice as much aircraft fuel and ordnance than conventional carriers at the time. Using nuclear reactors also allowed the ship to set speed records and stay out to sea during a deployment without ever having to refuel, one of the times ships are most vulnerable to attack.

Notice how the story says that the number of aircraft carriers is only “temporarily” reduced to 10 until 2015. That’s because they’re building more of them, and yes, the next one will be named Enterprise:

Obama makes an astoundingly unrealistic “fiscal cliff” proposal

You mad, bro?

Yesterday afternoon, details came out of a proposal that the White House had made to House Republicans over the so-called “fiscal cliff.” In the proposal, President Obama asked for $1.6 trillion in tax hikes. As you might imagine, that was far too high a price:

The White House is seeking $1.6 trillion in tax increases up front, as well as $50 billion in additional stimulus spending, as part of any “fiscal cliff” deal, Republican aides said Thursday as talks aimed at averting the economy-rattling cliff turned testy.

President Barack Obama also wants a permanent increase in the federal debt ceiling, a one-year expansion of jobless benefits and an extension of the payroll tax credit, these aides said.

The latest proposals were presented by Treasury Secretary Timothy Geithner, who visited Capitol Hill Thursday to discuss the fiscal cliff with leaders of both parties.

After Geithner’s visit, Republican House Speaker John Boehner publicly lambasted the Obama administration, saying “the White House has to get serious.”

Some spending cuts were included in the proposal, about $400 billion over 10 years — ranging from farm subsidies to postal service costs. However, the White House wants an additional $50 billion for infrastructure spending.

None of this is going to happen; nor should it happen. House Speaker John Boehner, as well as some other Republicans in both chambers, have already signaled a willingness to bend on tax revenues, a prospect met with dismay and derision amongst conservatives and libertarians (myself included).

Seven Steps to Restore Prosperity

The good news about our economy is that it hasn’t been struck down by some mysterious act of God. Acts of Government plague our nation – and acts of Government are entirely within our power to change.

Today I will not recite the dismal statistics behind the failed economic policies of this administration, nor the reasons why these policies have failed. The current Presidential campaign has plenty of that, and the fact is that every single American already knows the answer to Ronald Reagan’s simple question: “Are you better off today than you were four years ago.”

Today, I would instead like to look ahead to what the 113th Congress and the 45th President of the United States must do if we are to restore prosperity to this country.

I’d like to outline seven measures that I believe are absolutely essential to repair our economy and restore America as the most prosperous and productive nation in the world.

FIRST AND FOREMOST – IT’S THE SPENDING, STUPID.

Unless and until we dramatically reduce federal spending and the accompanying tax and debt burden, government will continue crowding out private capital and destroying job creation.

Three numbers tell the story very nicely: 39, 32 and 82. Thirty-nine percent is the rate of inflation and population growth combined over the last ten years between 2002 and 2012. Thirty-two percent is the growth rate of revenue in the same period – despite the tax cuts and the recession. Not quite keeping up with inflation and population growth, but pretty close. Eighty-two percent is the figure that’s killing us. Eighty-two percent is the growth of federal spending.

CBO issues another “fiscal cliff” warning

Back in May, the Congressional Budget Office (CBO) issued a stark warning to Congress that tax hikes scheduled to happen at the beginning of the year could trigger another recession. Since that time President Barack Obama and Senate Democrats have refused to act on extension of all current tax rates, which is the position of House Republicans. Instead, they’ve only pushed for one-year extension for individuals making $200,000 and families bringing in $250,000.

But yesterday, the CBO once again stressed that the looming tax hikes could hurt the economy if the stalemate doesn’t end:

In a fresh warning about the so-called “fiscal cliff,” the nonpartisan CBO reiterated that the U.S. economy will go into a recession next year if the Bush-era tax cuts expire and automatic spending cuts take effect. Read the CBO report.

In its latest report, the CBO predicts that the U.S. economy will grow at a 2.1% clip in 2012, but fall by 0.5% between the fourth quarter of 2012 and the fourth quarter of 2013 under the fiscal cliff scenario.

Previously, the CBO said growth would be 0.5% in 2013 under the fiscal cliff. In its new report it said the “underlying strength” of the economy is weaker.
[…]
The CBO said unemployment would jump to around 9% in the second half of 2013 from its current 8.3% if the tax increases and spending cuts play out.

Obama calls for more tax hikes even as revenues hit record high

During a speech on Monday marking the fifth anniversary of the 2008 financial crisis, which ushered in the “Great Recession,” President Barack Obama once again repeated calls for more tax revenue to flow into federal government coffers.

President Obama praised several parts of his post-recession economic agenda, including ObamaCare, financial reform, and heavier spending on infrastructure projects, and then shifted to the tax hikes that went into effect at the beginning of the year.

“We also changed a tax code that was too skewed in favor of the wealthiest Americans.  We locked in tax cuts for 98 percent of Americans,” he said. “We asked those at the top to pay a little bit more.”

“As I said before, our deficits are falling fast. The only way to make further long-term progress on deficit reduction that doesn’t slow growth is with a balanced plan that includes closing tax loopholes that benefit corporations and the wealthiest Americans at the expense of the middle class,” he added later, transitioning to tax reform. “That’s the only way to do it.”

While President Obama is pushing for higher taxes, it’s worth noting that the United States Treasury has collected a record amount of tax revenues through the first 11 months of the year, notes CNS News, which adjusted the numbers for inflation:


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