White House

Republicans must protect small business owners in any “fiscal cliff” deal

boehner

For the last couple of weeks, we’ve been saying that the likelihood of House Republicans caving on taxes is pretty high. House Speaker John Boehner has said that he wants tax reform, but he’s sent mixed messages. Just last year during the debt ceiling fight, Boehner was willing to trade $800 billion by eliminating tax loopholes for a broader deficit deal. More recently, Boehner submitted a counterproposal to the White House that would have cut spending, reformed entitlements, and raised tax revenue; the specifics of which were not revealed.

They are some that say that Boehner’s approach is pro-growth and will create jobs. However, whenever money is taken out of the private economy — whether through closing loopholes or raising tax rates — it is to the detriment of investment and job creation.

If by some off-chance you were hoping that House Republicans would fight to the bitter end on taxes, Byron York explains why that isn’t likely to happen (link via Doug Mataconis at Outside the Beltway):

 

Republicans will cave on the question of raising the tax rate for the highest-income Americans. The only question is whether they do so before or after the government goes over the so-called fiscal cliff.

DeMint slams House GOP “fiscal cliff” plan

Jim DeMint

As noted yesterday, House Republicans have laid out their counter-proposal to the White House as negotiations continue on the so-called “fiscal cliff.” While GOP leadership seems pretty darn impressed with their plan to raise taxes by $800 billion, Sen. Jim DeMint (R-SC) has come out strongly against it:

The comments from DeMint, co-founder of the Senate’s anti- tax Tea Party caucus, represent a strong indictment of Boehner’s plan from a fellow Republican lawmaker and highlight a divide within the party. Boehner yesterday proposed a $2.2 trillion deficit-cutting proposal that seeks $800 billion in revenue in the next decade from an overhaul of the tax code that would curb some breaks.

“Speaker Boehner’s $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more, while not reducing our $16 trillion debt by a single penny,” DeMint said in a statement. “Republicans must oppose tax increases and insist on real spending reductions that shrink the size of government and allow Americans to keep more of their hard-earned money.”

Republicans trading economic growth for tax hikes

boehner

If you’ve followed the “fiscal cliff” debate, then you know that it has kicked up a debate over taxes that Republicans should win. But rather than make the case for less taxes and for entitlement reform, House Speaker John Boehner has shown a willingness to raise tax revenues, though he refuses to support raising tax rates.

But the prospect of Republicans backing increased tax revenues has caused a substantial rift with fiscal conservatives in Congress, many of whom feel that the GOP is risking economic growth and job creation by taking more money of the economy:

In order to get one with President Barack Obama — who has refused to cut a deal until Republicans agree to increase tax rates on the wealthy — the GOP may have to go even further on taxes, a prospect that could prompt a full-scale party rebellion.

“That’s a big gulp,” Senate Minority Whip Jon Kyl (R-Ariz.) said of the $800 billion in new taxes, which did not include a tax rate increase. “As long as we’re not talking about rates, there may be a way to accomplish it.”

Asked about the concerns from conservatives, Kyl said: “They are right it would hurt job creation. Absolutely right. Well, that’s the question — what is the least, worst alternative? And I don’t know what the answer to that question is at this point.”

Republicans make a “fiscal cliff” counter-offer

boehner

Last week, the White House made their initial offer on the so-called “fiscal cliff,” asking congressional Republicans for $1.6 trillion in tax hikes coupled with a $400 billion in spending cuts over 10 years. Republicans leaders, who have been open to the idea of raising tax revenue, dismissed the unrealistic proposal out-of-hand, rightly explaining that the White House gave them something that would never pass Congress.

Yesterday, Republicans made their pitch to resolve the “fiscal cliff,” making a counter-offer that that cuts spending, reforms entitlements, and raises $800 billion in new tax revenue:

House Republican leaders on Monday made a counteroffer to President Obama in the “fiscal cliff” negotiations that would cut $2.2 trillion from the deficit with a combination of spending cuts, entitlement reforms and $800 billion in new tax revenue.

Republican officials said their 10-year plan contained more deficit reduction than the offer the White House presented last week while standing firm against Obama’s demand to increase tax rates on the wealthy.

The White House quickly panned the offer, saying it contained “nothing new” and did not “meet the test of balance.”

The Republican offer came in the form of a three-page letter to the White House signed by House Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.) and four other senior Republicans, including Rep. Paul Ryan (Wis.), the party’s just-defeated vice presidential nominee.

Democrats pull entitlements off the table in “fiscal cliff” talks

United States Capitol

During the debt ceiling debate last year, House Speaker John Boehner made a compromise on tax revenues, offering the White House $800 billion by closing tax loopholes, rather than raise tax rates. Boehner and at least some House Republican leaders saw the offer as necessary to reach a broader agreement on spending cuts. President Barack Obama played along, but eventually told Boehner, according to Bob Woodward, that he needed an additional $400 billion in tax revenue to make a deal work.

Boehner backed down and eventually all sides agreed on the sequestration deal — $1.2 trillion in automatic spending cuts over the next 10 years — that make up part of the “fiscal cliff” scenario that the White House and Congress are now trying to avoid.

The lesson for Boehner and Republicans should have taken from that particular situation is that when you show that you’re willing to compromise on a core economic principle, you’re almost always going to be asked to go another step. And now with many Republicans in Congress signaling their willingness to break their pledge not to raise taxes, provided that it is coupled with other fiscal reforms, Democrats are seizing the opportunity, according to The Hill, by raising their asking price in fiscal cliff negotiations by taking entitlements off the table:

Senate Democratic leaders signaled Tuesday they would not agree to any entitlement reforms before the end of the year that cut spending on Medicare and Medicaid beneficiaries.

Republicans have shredded their credibility in the “fiscal cliff” debate

Eric Cantor

Many Republicans are backing away from their pledge not to raise taxes on constituents as they try to work out a deal on the so-called “fiscal cliff.” During an interview on MSNBC, House Majority Leader Eric Cantor (R-VA) said, “I will tell you when I go to the constituents that have elected, re-elected me it is not about that pledge. It is really about trying to solve problems.”

The Americans for Tax Reform’s Taxpayer Protection Pledge has been much maligned in recent years, and has been a favorite target of the White House and Democrats. They’ll take shots at the pledge, claiming that Republicans are taking marching orders from Grover Norquist, president of ATR. Democrats do this to make Republicans look like they’re beholden to a special interest.

The Taxpayer Protection Pledge simply states that the candidate will “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses” and “oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” Essentially, a candidate or elected official promises not to support a net-tax hike. This pledge is not made to Grover Norquist, Americans for Tax Reform, or Republican leadership in Congress. It’s made to taxpayers inside that candidates district or state.

Raising taxes will not prevent economic problems

United States Capitol

Negotiations over the so-called “fiscal cliff” are back in full swing, but the White House and congressional leaders are no closer to an agreement on taxes and spending cuts. Just before Thanksgiving, House Speaker John Boehner told ABC News that he wants ObamaCare, President Obama’s signature domestic policy, put on the table during “fiscal cliff” negotiations. Republicans are also pushing for more transparency in the deal-making process, urging their leadership to put everything out in the open.

Boehner has been pushing the idea of pro-growth tax reform that doesn’t raise rates. That seems like a non-starter since White House and Senate Democrats have made it clear that they want to raise rates for higher-income earners. And unfortunately, some Republicans in Congress are getting anxious about a deal and are abandoning their pledge to constituents not to raise their taxes.

Raising taxes in this economy is a bad idea. Just two years ago, President Obama supported extending tax rates for another two years because he realized that the economy would struggle even more if tax rates suddenly changes. The economic climate isn’t much better today.

Michael Tanner, a senior fellow at the Cato Institute, recently explained that raising taxes on the rich isn’t going to balance the budget:

“Fiscal cliff” talks to open with a call for a $1.6 trillion tax hike

Barack Obama

During a press conference yesterday afternoon, President Barack Obama laid out some of his terms on the so-called “fiscal cliff,” making it known that he wouldn’t accept a deal with House Republicans that didn’t raise tax rates on higher-income earners. Before the press conference even took place, the White House had rejected House Speaker John Boehner’s initial offer and The Hill noted that Obama would come to the table asking Congress for “$1.6 in new revenues by targeting the wealthy and corporations.”

Boehner, who has said that the talks with the White House are “going to take awhile,” has already said that House Republicans aren’t willing to raise tax rates, which could bring the talks to an impass. During the press conference, Obama said, “I’m open to compromise and I’m open to new ideas.” But, as noted, Obama has already turned away one offer for increased revenues and isn’t likely to budge much from his position.

James Pethokoukis noted that Obama’s tax plan, which supposedly brings a “balanced approach” to the deficit, isn’t balanced (emphasis mine):

[O]nce you begin to dig into the numbers, the plan doesn’t look balanced at all. As the bipartisan Committee for a Responsible Federal Budget noted back then:

No, states aren’t going to secede

General Cartman LeeShortly after the election ended, some very angry people have created petitions at the White House to garner support for their states to secede from the United States. At first, I wasn’t even going to write anything on this because the idea is just so absurd and crazy, but some of these petitions, which have gained some media coverage, have gotten enough signatures to illicit a response from the White House.

I can’t believe I’m actually writing this post. Look, I can understand that people are upset that President Barack Obama was re-elected. They don’t see how it could have happened and they’re looking for ways to fight back; but this is exactly the wrong way to do it. Let’s take away the fact that this idea is just dumb for a few moments, and dive into the various reasons why it’s just not practical.

I realize that some of the Founding Fathers took a different view of this topic. After Thomas Jefferson won the presidential election in 1800, some northern states threatened to secede. Jefferson was indifferent. In an 1803 letter to John Breckenridge, Jefferson asked, “[I]f it should become the great interest of those nations to separate from this, if their happiness should depend on it so strongly as to induce them to go through that convulsion, why should the Atlantic States dread it?” The language here is important because our Founding Fathers looked at the states as “nations,” independent countries that joined together to form the United States.

Washington, we have a spending problem

Barack Obama

The debate over the “fiscal cliff,” particularly the tax hike for higher-income earners being push by President Barack Obama, is one that is based on an entirely false premise. The argument from Obama and Senate Democrats is that these taxpayers need to pay more to help bring the budget back to a sustainable path. However, the Wall Street Journal explains that tax revenue has been climbing and the real issue is that spending has gotten out of control under Obama:

The nearby table lays out the ugly details. The feds rolled up another $1.1 trillion deficit for the year that ended September 30, which was the biggest deficit since World War II, except for each of the previous three years. President Obama can now proudly claim the four largest deficits in modern history. As a share of GDP, the deficit fell to 7% last year, which was still above any single year of the Reagan Presidency, or any other year since Truman worked in the Oval Office.

Tax revenue kept climbing, up 6.4% for the year overall, and at $2.45 trillion it is now close to the historic high it reached in fiscal 2007 before the recession hit. Mr. Obama won’t want you to know this, but this revenue increase is occurring under the Bush tax rates that he so desperately wants to raise in the name of getting what he says is merely “a little more in taxes.” Individual income tax payments are now up $233 billion over the last two years, or 26%.
[…]
Now let’s look at outlays, which declined a bit in 2012. That small miracle was achieved thanks to a 4% fall in defense spending, a 24% fall in jobless benefits, and an 8.9% decline in Medicaid spending.


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