Tax Hikes

Chart of the Day: It’s the spending, stupid

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:

Grading the Fiscal Cliff Deal: Terrible, but Could Be Worse

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.

Obama meets with congressional leaders on “fiscal cliff”

Obama meeting with congressional leaders

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.

FreedomWorks is not on board with Boehner’s “Plan B”

Yesterday, Dean Clancy, Legislative Counsel and Vice President of Health Care Policy at FreedomWorks, wrote approvingly of House Speaker John Boehner’s “Plan B.” Clancy explained, “While not nearly as good as the FreedomWorks Plan to avert the fiscal cliff, Plan B is much better than the so-called ‘balanced approach’ that Mr. Boehner had, until Monday, been trying to negotiate with Mr. Obama.

While this may have left the impression that FreedomWorks was endorsing Boehner’s proposal, alongside Americans for Tax Reform, it would seem that Clancy was just stating his opinion, describing why “Plan B” might be reasonable, not speaking for FreedomWorks as an organization. He updated his post this afternoon, noting that FreedomWorks will be opposing the plan:

After review of the Boehner Plan B legislation, pending in the House today, FreedomWorks has found it must oppose the legislation, and will be urging House members to vote NO on the bill. We will post our formal opposition letter on our site, soon.

Word is that FreedomWorks may also score the vote, which is scheduled to take place some time this evening.

House to vote on “Plan B,” Boehner aggressively whipping votes

boehner

It looks like Speaker John Boehner’s so-called “Plan B” — which would raise taxes on individuals earning more than $1 million and cut entitlement programs — is facing much skepticism from House Republicans, despite earning the approval of Grover Norquist, President of Americans for Tax Reform, and FreedomWorks.

Daniel Malloy from the Atlanta Journal-Constitution noted last night that Boehner was seen on the House floor last night whipping three conservatives from Georgia — Reps. Paul Broun, Phil Gingrey, and Tom Price. Malloy described the conversation as “pretty intense.” One would have to imagine that a similar mood exists among other conservative members of the House.

In hopes to convince conservatives to get on board with the plan, CNN explains that Republicans leaders may add spending cuts to the mix:

Apparently scrambling for votes on their alternative to a fiscal cliff deal - known as Plan B - House Republicans late Wednesday were considering expanding the scope of their tax cut extension measure to include spending cuts.

Boehner to push his “Plan B” through the House

John Boehner

Despite the White House rejecting his offer to raise tax rates on millionaires, a proposal formerly supported by many Democrats, House Speaker John Boehner is expected to move a version of his proposal through the House of Representatives:

Speaker John Boehner told his conference on Tuesday he will move to a “Plan B” in fiscal cliff talks with the White House that would raise tax rates on annual income above $1 million.

Boehner announced the plan to his conference behind closed doors after a flurry of negotiations with President Obama that showed the two sides were moving closer to a deal. Yet differences remain over spending cuts, entitlement reforms, new spending measures demanded by Obama and the president’s request for a hike to the debt limit. 
[…]
Boehner is scheduled to address the media this morning.

“For weeks, Senate Republicans — and a growing number of you — have been pushing for us to pivot to a “Plan B.” I think there’s a better way. But the White House just can’t seem to bring itself to agree to a “balanced” approach, and time is running short,” Boehner said, according to prepared remarks.

“At the same time we’re moving on “Plan B,” we’re leaving the door wide open for something better. And I have been clear about that with the president. Plan B is Plan B for a reason. It’s a less-than-ideal outcome. I’ve always believed we can do better,” he said.

White House makes a “fiscal cliff” counter-offer to House Republicans

Barack Obama

Though he has rejected House Speaker John Boehner’s offer, which included higher tax rates on millionaires and raising the debt ceiling, President Barack Obama made a counter-offer yesterday showing some movement in “fiscal cliff” talks:

The Associated Press is reporting that President Barack Obama has made a new budget offer to House Speaker, including a significant shift from a previous sticking point in their negotiations to avert the so-called fiscal cliff.

Obama’s latest counteroffer raises the threshold for tax increases up to incomes above $400,000. That’s an increase from previous demands dating all the way back to the presidential campaign, in which Obama had called for taxes on incomes above $250,000 to return to Clinton-era rates.

Reuters reported on Twitter that Obama’s plan includes $1.2 trillion in increased revenue and $1.22 trillion in reduced spending. Boehner’s office, however, pegged the numbers at $1.3 trillion in new revenue and only $930 billion in spending cuts.

Boehner willing to trade higher taxes on millionaires for entitlement cuts

boehner

Is there some movement in talks on the so-called “fiscal cliff?” It remains unclear right now, but House Speaker John Boehner made a pretty big concession on Saturday that may provide a path to a deal. According to Politico, Boehner is willing to raise tax rates on anyone earning over $1 million in exchange for significant entitlement cuts:

Speaker John Boehner has proposed allowing tax rates to rise for the wealthiest Americans if President Barack Obama agrees to major entitlement cuts, according to several sources close to the talks.

It is the first time Boehner has offered any boost in marginal tax rates for any income group, and it would represent a major concession for the Ohio Republican. Boehner suggested hiking the Bush-era tax rates for top wage earners, including those with annual incomes of $1 million or more annually, beginning Jan. 1, two sources said.

Obama and Boehner spoke by phone Friday after a lengthy face-to-face session at the White House on Thursday. The quickening pace of private conversations between the two key players in the fiscal-cliff talks shows progress is being made in the negotiations, although they are not close to a deal yet, sources said.

Boehner also wants to use a new method of calculating benefits for entitlement programs known as “chained CPI,” which would slow the growth of Medicare and other federal health programs and save hundreds of billions over the next decade.

Our Time For Choosing

Our rulers in Washington DC are fighting over the so-called “fiscal cliff” which means that at the end of the year a bunch of “spending cuts” and tax increases will take effect causing all sorts of calamities. Our wonderful representatives in Congress and our brilliant President/Messiah, Barack Obama are trying to work out a “balanced” deal to make everything alright. The “balanced” deal appears to be we raise taxes today, especially on the evil “rich”, and that we cut spending in a few years (ie. never). No one on Capitol Hill dares to suggest that instead of asking American taxpayers to pay more taxes that we actually, you know cut spending. The fiscal cliff debate is actually America’s time for choosing of whether or not we will be a country that values freedom and liberty or we will be a country subservient to the state.

Both parties proposals’ are generally the same. Higher taxes, no real spending cuts, and no real entitlement reform. The only differences are the numbers and who benefits and who loses. There is no real choice for those of us who believe in liberty and freedom. The Republican Party, which is supposed to be the party of limited government, is now actively purging fiscal conservatives from important committee positions. What are those of us who believe in liberty supposed to do?

Suderman: We need Clinton-era spending

Bill Clinton

President Barack Obama and Democrats, as well as a handfull of Republicans, are completely fixated on the raising taxes on top-income earners as part of any “fiscal cliff” deal that is eventually worked out.

The insistence is troubling because the issue at hand isn’t taxes. Sure, the recession and subsequent slow recovery has caused tax revenues to dip, but that is to be expected of any economic downturn. What has led to our current situation is Washington’s addiction to spending.

We hear President Obama and his apologists talk about Clinton-era tax rates, as if that were some sort of “holy grail.” However, Peter Suderman explains that if we’re going to get Clinton-era taxes, we should get Clinton-era spending as well:

Most of us can agree that the Clinton years, which saw growing median incomes as well as tiny deficits and steady economic growth, were economic good times, and we’d all like to see that sort of economic performance repeated. If that’s the case, then why should we limit ourselves to just replicating one tiny fragment of Clinton-era governance—higher tax rates on a fairly small number of earners? Why not replicate other aspects of Clinton’s policy mix as well?

Probably because that would entail mentioning something that Obama’s frequent invocations of the Clinton years always ignore: that Clinton’s spending levels were far, far lower than they have been for the last four years—or than President Obama has called for them to be in the years to come.

That’s true no matter how you measure it.

 
 


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