Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
Because of Obama’s class-warfare tax hike and additional tax increases by kleptocrats at the state level, many successful taxpayers will now lose more than 50 percent of any additional income they generate for the American economy.
I discuss the implications of this punitive tax policy in this CNBC interview.
Normally, this is the section where I highlight certain points I made, or bemoan the fact that I failed to mention an important fact or overlooked a key argument. Today, though, I want to address the do-taxes-impact-growth issue raised by Robert Frank.
Earlier today, President Barack Obama held the final White House press conference of his first term, using the opportunity to slam Republicans over the debt ceiling while making yet another call for more tax revenue — despite getting high tax rates on the wealthy in the “fiscal cliff” deal passed at the beginning over the year:
President Obama at a Monday press conference demanded that Congress raise the nation’s $16.4 trillion debt ceiling, saying the country is “not a deadbeat nation.”
Obama said Congress should pay the bills government has already rung up, arguing would be disastrous for the economy — which he said is showing signs of lifting off — to not raise the debt limit.
“It would be a self-inflicted wound on the economy,” he said. “To even entertain the idea of this happening … is irresponsible. It’s absurd.”
The president has insisted he will not negotiate with Republicans over raising the debt ceiling, and gave no sign of wavering on that position. Republicans are demanding steep spending cuts in exchange for raising the debt limit.
“They will not collect a ransom in exchange for not crashing the American economy,” Obama said Monday of Republicans.
“We can’t finish the job of deficit reduction through spending cuts alone,” he said. While open to “modest adjustments” to entitlement programs, Obama said, “we need more revenue through tax reform.”
In March of 2009, at a Georgia GOP county convention, Sen. Johnny Isakson gave a stump speech in which he pleaded for the help of the faithful grassroots in returning him and other Republicans to power because, as he told the assembled crowd, we had to defeat the Democrats and Barack Obama to stop the reckless, runaway spending in Washington, D.C. I turned to my wife in abject shock and asked if he’d really just said that.
Afterward, I went to him and respectfully but pointedly reminded the Senator that, when Georgia W. Bush was president and spending money like he had a golden goose, as our senator he’d voted for every one of those pork-filled, bloated budgets. Yes, Obama and the Democrats were on a drunken spending binge, but the Republicans had only been better by degree. I told him that the Republicans will never regain the trust of the American people unless they governed in a way that mirrored their conservative campaign rhetoric. I also told him the surest sign I’d seen that they had not yet learned their lesson was the fact that the Senate Republicans had re-elected the porkmeister, Mitch McConnell, as Senate Minority Leader. It is hard to take seriously a party which talks about fiscal responsibility and then elects as their leader of the upper house a man who campaigned on the amount of pork he’d brought back to Kentucky.
And now we have the re-election of John Boehner, the eternally weeping love child of George Hamilton and the Great Pumpkin, as Speaker of the House. The ONE branch of the federal government controlled by the Republicans and they re-elect the man who received the MVP Award from Team Obama; a man whose chief negotiating tactic is to fold faster than a card table in a hurricane.
This is hilarious. Some Democrats apparently took to a prominent leftist website last week to complain about their paychecks being smaller than usual, which happened due to their taxes going up under the “fiscal cliff” deal. Take a gander at the irony, folks:
With President Obama back in office and his life-saving “fiscal cliff” bill jammed through Congress, the new year has brought a surprising turn of events for his sycophantic supporters.
“What happened that my Social Security withholding’s in my paycheck just went up?” a poster wrote on the liberal site DemocraticUnderground.com. “My paycheck just went down by an amount that I don’t feel comfortable with. I guarantee this decrease is gonna’ hurt me more than the increase in income taxes will hurt those making over 400 grand. What happened?”
Shocker. Democrats who supported the president’s re-election just had NO idea that his steadfast pledge to raise taxes meant that he was really going to raise taxes. They thought he planned to just hit those filthy “1 percenters,” you know, the ones who earned fortunes through their inventiveness and hard work. They thought the free ride would continue forever.
So this week, as taxes went up for millions of Americans — which Republicans predicted throughout the campaign would happen — it was fun to watch the agoggery of the left.
“I know to expect between $93 and $94 less in my paycheck on the 15th,” wrote the ironically named “RomneyLies.”
“My boyfriend has had a lot of expenses and is feeling squeezed right now, and having his paycheck shrink really didn’t help,” wrote “DemocratToTheEnd.”
Sen. Saxby Chambliss (R-GA), facing heat for his less than fiscally conservative record, is trying his best to appease the Republican base. During a conference call with reporters last week, Chambliss echoed a familiar line that we’ve heard from Republicans since they rolled over during the “fiscal cliff” debate:
Obama has promised not to get entangled in protracted negotiations during March’s vote on raising the federal debt limit and the extension of the spending authorization like those that dragged on for weeks before the “fiscal cliff” of sweeping spending cuts and tax increases that triggered automatically at midnight Monday.
The Georgia Republican dismissed that promise.
“My message to you, Mr. President, is you’d better strap on your chin strap very tight because this junkyard dog is going to address spending cuts and entitlement reform in the debt-ceiling debate, and that’s going to be a line in the sand for us Republicans and conservatives,” Chambliss said.
Last week, Politico ran a story noting that Democrats may finally be “done hiking tax rates” after scoring a victory through raising taxes on higher-income earners in the “fiscal cliff” deal. The story quoted a couple of House Democrats, including House Ways and Means Chair Sander Levin, who said that the issue seemed to be settled for now.
But according to House Minority Leader Nancy Pelosi (D-CA), the push for higher taxes isn’t over. During an interview with Bob Schieffer yesterday on Face the Nation, Pelosi said that more revenues are needed, presumably as part of any debt ceiling deal that Republicans hope to make:
Pushing back against the Republicans’ deficit-reduction strategy, House Minority Leader Nancy Pelosi (D-Calif.) said this weekend that more tax revenues – not just spending cuts – must be a part of Congress’s effort to rein in deficits.
Pelosi said the tax hikes in the recent “fiscal-cliff” deal are a start, but don’t go far enough to generate the revenues the government needs to run the country effectively.
“In this legislation we had $620 billion, very significant … changing the high-end tax rate to 39.6 percent. But that is not enough on the revenue side,” Pelosi told CBS’s Bob Schieffer in an interview taped Friday.
Without offering many specifics, the California Democrat said she wants to scour the tax code for unnecessary loopholes and “unfair” benefits that help those – either companies or individuals – who don’t need it.
The White House and many members of Congress — Democrats and Republicans alike — are patting themselves on the back this week as they averted the so-called “fiscal cliff.” Only in Washington, DC could making nothing in the way of substantive spending and raising taxes on 77% of American households be considered as some sort of victory.
President Obama claimed that the ”fiscal cliff” deal “protects 98 percent of Americans and 97 percent of small business owners from a middle class tax hike” and that he would “continue to fight every day on behalf of the middle class.”
Of course, this isn’t reality. What the middle class needs are jobs, and the “fiscal cliff” deal, which includes higher taxes on small businesses, is expected to keep the economy from living up to its full potential:
The tax deal is also expected to result in hiring growth at last year’s pace, meaning the creation of 150,000 to 160,000 payroll jobs a month, according to Michael Gapen, senior United States economist and asset allocation strategist at Barclays.
Without the tax increases, employers would probably be adding more than 200,000 jobs a month.
Altogether, that means the economy will “create 600,000 fewer jobs in 2013 — leaving the unemployment rate 0.4 percentage point higher — than it would have if the 2012 tax policies had been kept in place,” said Mark Zandi, chief economist at Moody’s Analytics.
Since he’s been in office, President Barack Obama has constantly railed against higher-income earners and talked about the need for tax hikes. Throughout the course of the “fiscal cliff” discussion, Obama stressed the need for a “balanced approach,” meaning a combination of tax hikes and spending cuts.
However, the “fiscal cliff” deal that was passed by Congress yesterday is horribly unbalanced — cutting spending by $1 for every $41 of tax hikes — and costs upwards of $4 trillion. But Zero Hedge put out this chart this morning that really puts it all in perspective:
Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
The faux drama in Washington is finally over. The misfits in Washington reached a deal on the fiscal cliff.
Republicans and Democrats managed to come together and decide that they should get a bigger slice of what the American people earn. Gee, what a surprise.
First, the good news:
Oh, wait, there isn’t any.
Now for the bad news.
Congressional leaders from both parties are meeting with President Barack Obama this afternoon at the White House to discuss the so-called “fiscal cliff.” Reports have come out since yesterday indicating that Obama may make an offer just a few days before automatic spending cuts and tax hikes are supposed to go into effect.
Via Politico, here is the sum of Obama’s offer:
Obama is expected to make what the White House considers a scaled-back offer — one to raise taxes on income over $250,000, extend jobless benefits, delay defense and domestic cuts and patch the Alternative Minimum Tax, sources say. Raising taxes at that level is a non-starter for Republicans, who want far more in spending cuts.
In reality, there isn’t anything new to report. There doesn’t seem to be any indication that Republicans will be willing to accept Obama’s offer given that it still raises taxes on families earning more than $250,000. Some Republicans have hinted that the White House could attract support if Obama raised the income threshold to $400,000, which would protect some small business owners. There is no indication that Obama is interested in that sort of a deal or that Speaker John Boehner, who is politically wounded after last week’s failed effort, could convince House Republicans to go along with it.