United Liberty

It appears that President Barack Obama is ready to send the United States over the “fiscal cliff.” The White House has said that that Obama would veto any tax deal that comes out of Congress that doesn’t raise taxes on higher-income earners:

The White House denies its position the fiscal cliff has changed in the wake of a Washington Post story Thursday that reported President Barack Obama was ready to play hardball with Republicans.

“The president has long made clear that he would veto an extension of tax cuts for the top 2 percent of Americans, the wealthiest Americans,” White House press secretary Jay Carney told reporters traveling with Obama on Thursday. “That has been his position, as you know, for a very long time.”
[…]
Carney said that the Republican-controlled House of Representatives could act to end some of that uncertainty right now.

“If there is concern about what we can do right now to address the so-called fiscal cliff, the House ought to follow the Senate and pass an extension of tax cuts for 98 percent of the American people, the middle class,” Carney said.

As much as we poke fun at Vice President Joe Biden for the crazy stuff he says, you have to hand it to him, he’s at least straightforward with his thoughts. He’ll tell you exactly what he’s thinking, no matter how wrong or foolish he may be.

The latest example came yesterday during a campaign rally in Iowa when Biden told supporters that his boss, President Barack Obama, does want to raise taxes by $1 trillion:

You know the phrase they always use? Obama and Biden want to raise taxes by a trillion dollars. Guess what? Yes we do in one regard. We want to let that trillion dollar tax cut expire so the middle class doesn’t have to bear the burden of all that money going to the super wealthy. That’s not a tax raise, that’s called fairness where I come from.

Here’s the video:

Well, it’s not quite $1 trillion in tax revenue that would come with raising taxes on families making over $250,000 — not merely the “super wealthy.” It’s close, but estimates are between $600 to $850 billion over 10 years. Biden can talk about sequestration cuts, the $1 trillion in spending he referenced, but those aren’t hard cuts, but rather cuts in the anticipated growth of spending. The revenues are also a drop in the bucket when one looks at the bigger picture of spending and budget deficits over the next 10 years. And frankly, $1 trillion in spending cuts is nowhere near enough.

In recent days, Mitt Romney’s campaign has been pushing President Barack Obama’s record of failure on the economy. His team has even released a “presidential accountability  scorecard” highlighting Obama’s poor performance. Business owners, an occupational group with which Obama has an underwater approval rating, have taken umbrage with Obama over his “you didn’t build that” remark last month in Virginia.

The comments show a disdain for the engine of our economy, regardless of “context.” But ex-Speaker Nancy Pelosi may have one-upped Obama. During a press conference yesterday, Pelosi said that those making more than $250,000 per year don’t “get the pie sweetened for them” under President Obama’s tax hike proposal:

In her weekly press briefing, House Minority Leader Nancy Pelosi called President Barack Obama’s tax policy “very clear,” saying that couples bringing in over $250,000 per year do not “get the pie sweetened” for them under his plan.

Despite warnings that President Barack Obama’s tax plan, which would raise taxes on families making more than $250,000 a year, could have a severely negative impact on the economy, Democrats pushed the bill through the Senate yesterday afternoon:

Senate Democrats on Wednesday narrowly passed President Obama’s plan that would extend Bush-era tax rates for family income up to $250,000 a year.
[…]
By a 51-48 tally, Democrats overcame two defections to win passage of the measure, which would also raise the top rate on capital gains and dividends, as well as continue several targeted tax provisions that Democrats say help the middle class.

Earlier in the afternoon, the Senate turned aside a Republican proposal, by a mostly party-line vote of 45-54, that would have extended all current rates on income, capital gains, dividends and the estate tax, also for a year. Two Republicans, Sens. Susan Collins (Maine) and Scott Brown (Mass.), voted against both plans, and Sen. Mark Pryor (D-Ark.) voted against for the two proposals. Pryor is up for reelection in 2014.

The dramatic roll calls came as Vice President Biden presided over the tally. He was in the chamber in case his vote, as president of the Senate, was needed to break a tie.

If you’ve been following the presidential race, then you’ve no doubt heard what President Barack Obama said over the weekend during a campaign stop in Roanoke, Virginia. In promoting his plan to raise taxes on higher-income earners, Obama said, “If you’ve got a business — you didn’t build that.  Somebody else made that happen.”

As you can imagine, those comments been met with outrage, and rightfully so. They’re incredibly disrespectful to hardworking business owners, many of whom have sacrificed everything to live the American Dream. The Wall Street Journal slammed President Obama’s “burst of ideological candor”:

The Internet is awash with images of the President telling the Wright Brothers, Thomas Edison, Henry Ford, Steve Jobs and other innovators they didn’t build that. Kevin Costner’s famous line in “Field of Dreams,” as adapted for Mr. Obama: “If you build it, we’ll still say you didn’t really build it.”

Beneath the satire is the serious point that Mr. Obama’s homily is the soul of his campaign message. The President who says he wants to be transformational may be succeeding—and subordinating to government the individual enterprise and risk-taking that underlies prosperity. The question is whether this is the America that most Americans want to build.

There’s no way to get around it, folks, President Barack Obama and Senate Democrats are playing a dangerous game. Rather than go along with plans to extend current tax rates for all income earner, they’re apparently ready and willing for the economy fall off the “fiscal cliff.”

Recall that the Congressional Budget Office (CBO) warned in May that if the tax cuts expired, the economy would dip back into a recession. More recently, Citigroup noted that the economy would see a 2.9% contraction next year if only “most” the tax cuts remained in place. James Pethokoukis warned that the Citigroup study is especially concerning because the “economy will be lucky to grow 2% next year.”

Unfortunately, these concerns seem to be falling on deaf ears. Sen. Dick Durbin (D-IL) told CNN yesterday that the middle class could see a tax hike if Republicans don’t act on President Obama’s tax proposal. However, Republicans are willing to act provided that President Obama and Senate Democrats agree to extend all current tax rates, including those on the middle class.

Sadly, it seems that they’re more content to play political games with the economy, as evidence by the point-of-view from one Democrat, Sen. Patty Murray, (D-WV), via the Wall Street Journal:

With the push for tax hikes on higher-income earners in full swing, a new report from Citigroup shows that President Barack Obama’s plan is not going to avoid another recession. Via James Pethokoukis, the table below shows that even with extending the tax cuts for lower and middle class Americans, we can still expect a 2.9% contraction in the economy:

Unfortunately, the White House and Democrats in Congress aren’t interesting in deal-making. In fact, they’re threatening to let the country go over the “fiscal cliff” if they don’t get their way on taxes.

While President Barack Obama is pushing to extend current tax rates for the middle class, one thing that hasn’t been mentioned much by the media is that the measure is only temporary. That’s right, folks. It’s a one-year extention. On January 14, 2014, tax rates for the middle class will increase, as James Pethokoukis explains:

recall what liberal journalist Noam Scheiber wrote in his recent book, The Escape Artists: How Obama’s Team Fumbled the Recovery.

Scheiber reveals that in the fall of 2009, Obama’s chief congressional lobbyist hatched a plan to extend the middle-class Bush tax cuts for two years while letting the upper-income tax cuts expire on schedule.

If Congress couldn’t devise a way to pay for the $2.3 trillion extension of the middle-class cuts, they would all expire in 2015. Schiliro easily sold White House budget director Peter Orszag on the idea. “[Orszag] believed the only practical way to balance the budget was to repeal all the Bush tax cuts, not just the upper-income variety.”

Orszag then presented the plan to Obama:

Over the last four years, Americans have been told by President Barack Obama and Democrats that taxes need to be raised in order to close the budget deficit, which, for the fourth consecutive year, will exceed $1 trillion. Unless Congress acts before the end of the year, Americans may face what has been dubbed as “Taxmageddon,” which the Congressional Budget Office warns could cause another recession.

But would raising taxes really do much to close or balance the budget? In a new video from Learn Liberty, Professor Antony Davies looks the issue and shows what tax rates would be need to solve the deficit issue: