Tax Battle Update

I'm going to be out of pocket for a few days over the weekend, but here's a jam-packed update on the battle over raising/cutting taxes and the debt limit to tide you over.

Against the backdrop of 64% of small businesses -- which are responsible for something like 70-80% of all jobs in the country -- saying they will not be hiring this year and the Fed Chairman -- Obama's own man -- is still predicting little growth in the forseeable future, I suppose it should be considered a minor victory and first step that even the Democrats have conceded that spending needs to be cut, but since we live in the real world, actions speak louder than words. So how much are the Democrats proposing to cut? Let me remind you of just a few key figures first, to put things into perspective:

• Current national debt: over $14,000,000,000,000
• Current annual deficit: over $1,500,000,000,000
• Dem proposed cut: $2,000,000,000

For the record, that's .1% of the deficit. Missing a few zeros, aren't we, Democrats?

Obama is pushing for a fast deal, probably because he wants the GOP to cave before Democrats have to go home and suffer through another August of rough town hall meetings filled with angry constituents.

In response to the question of how Obama would address the 69% of Americans who oppose raising the debt ceiling again, Obama blithely suggested that they just weren't paying attention, implying that people just aren't smart enough to comprehend the full import of the issue. Then he goes on to set himself up as the only adult in the proverbial room and admonishes Congress to buck up, eat their peas, and do what needs to be done.

Obama's big economic gun, his stimulus, has been judged a complete failure by every objective measure (other than growing government and vastly expanding the national debt). But we've seen time and time again that a true liberal will never let failure or facts stand in their way. Sure enough, now the Obama administration is talking about another stimulus. I ask you in all seriousness: how much more of the Obama administration can America survive?

Unfortunately for Obama, his schtick is pretty transparent. For example, in one recent speech he directly contradicted himself in the space of 9 minutes:

During his press conference today Barack Obama told reporters that nobody’s talking about increasing taxes:

11:22 a.m. ET – @LisaDCNN: OBAMA-TAXES: Nobody has talked about increasing taxes now or next yr. We have talked about closing loopholes in 2013.

Then 9 minutes later told reporters that we need to increase revenues (taxes):

11:31 a.m. ET - “It is hard to persuade people to do hard stuff that includes trimming benefits and increasing revenues” Obama said. “Reason we have a problem now is people keep avoiding hard things.”

Hey… Somebody has to pay off his debt!
Barack Obama increased the national debt by over $3 trillion in just over 2 years.

And while we're on the subject, isn't it striking that Obama himself decried in 2009 exactly what he's proposing in 2011:

This isn't new. In fact, Democrats and tax increases are practically synonymous. The Wall Street Journal points out just a few of the tax increases that Obama has already implemented:

• Starting in 2013, the bill adds an additional 0.9% to the 2.9% Medicare tax for singles who earn more than $200,000 and couples making more than $250,000.

• For first time, the bill also applies Medicare’s 2.9% payroll tax rate to investment income, including dividends, interest income and capital gains. Added to the 0.9% payroll surcharge, that means a 3.8-percentage point tax hike on “the rich.” Oh, and these new taxes aren’t indexed for inflation, so many middle-class families will soon be considered rich and pay the surcharge as their incomes rise past $250,000 due to tax-bracket creep. Remember how the Alternative Minimum Tax was supposed to apply only to a handful of millionaires?

Taxpayer cost over 10 years: $210 billion.

• Also starting in 2013 is a 2.3% excise tax on medical device manufacturers and importers. That’s estimated to raise $20 billion.

• Already underway this year is the new annual fee on “branded” drug makers and importers, which will raise $27 billion.

• Another $15.2 billion will come from raising the floor on allowable medical deductions to 10% of adjusted gross income from 7.5%.

• Starting in 2018, the bill imposes a whopping 40% “excise tax” on high-cost health insurance plans. Though it only applies to two years in the 2010-2019 window of ObamaCare’s original budget score, this tax would still raise $32 billion—and much more in future years.

• And don’t forget a new annual fee on health insurance providers starting in 2014 and estimated to raise $60 billion. This tax, like many others on this list, will be passed along to consumers in higher health-care costs.

And that's all just in Obamacare. Don't forget the tobacco tax increase, the death tax reinstatement, and the proposal to increase the tax rates on every American, too. Tax increases are just the way Democrats roll. Don't be fooled by anything they may say to the contrary, and look at their actions instead.

Perhaps most disgustingly, Obama's latest tax increase is threatening some of the most vulnerable Americans in the process:

President Obama on Tuesday said he cannot guarantee that retirees will receive their Social Security checks August 3 if Democrats and Republicans in Washington do not reach an agreement on reducing the deficit in the coming weeks.

"I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it," Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.

Just one problem with that:

Congressman Tim Huelskamp (R-KS) pointed out that the decision to withhold checks “would be a political one” made by the President.

During this morning’s Budget Committee meeting, Congressman Huelskamp asked Stephen Goss, Chief Actuary for the Social Security Administration, to explain how the Obama administration could withhold Social Security checks to American seniors. The question was prompted by a statement by President Obama that he could not guarantee that Social Security checks would be mailed August 3, 2011, if Congress fails to increase the debt limit. Yesterday, Congressman Huelskamp issued a statement noting that it is irresponsible for the President to use seniors on Social Security as pawns to leverage his point in the debt limit negotiations.

Mr. Goss told Congressman Huelskamp: “The responsibility of the Social Security Administration per se, my boss, Commissioner Astrue, is to in fact determine how much in the way of benefit payments people are supposed to receive. We send that information actually over to the Department of the Treasury. They are the ones who actually send out the payments, whether it’s electronic funds, transfers, or check.”

Or, in other words, Obama is willing to shoot his own hostage:

Everyone is using the hostage metaphor these days regarding the debt ceiling. Barack Obama started it back in December when he called the GOP hostage takers before the GOP gave him everything he wanted.

Well, I hope the GOP noticed Barack Obama yesterday upped the ante and declared his willingness to shoot his hostages, i.e. senior citizens. Yes, if the GOP dares to hold the line on spending cuts, Barack Obama will balk, the debt limit will not be raised, and Obama will refuse to pay senior citizens. ...

The President today signaled his willingness to shoot the hostage. The GOP should do the same — show an absolute unwillingness to raise the debt ceiling without their balanced budget amendment passing out of Congress to the states.

Again and again, Congress folds to the doomsday scenarios. The Wall Street Journal again and again claims the sky will fall and the markets will crash. The suits come down from New York and paint the disaster scenario. The GOP falls in line. TARP is passed. What else will be passed?

This time, the GOP should embrace the apocalyptic future, call B.S. on the fear mongering, and shoot their debt ceiling hostage...

If only the GOP could be trusted to have that kind of spine! I'm not the only one who's skeptical of that little detail:

But let's look a little closer at the Republican response to all this. The top Reps in the House and Senate appeared to be in lockstep opposition to Obama's proposals...at first, even to the point of the normally moderate Senate Minority Leader Mitch McConnell offering a scathing rebuke to Obama and claiming that no deal is possible as long as Obama is President. But then...


McConnell offered an inexplicable proposal that triggered a firestorm from the Right:

Mitch McConnell is right now talking about making a historic capitulation. So fearful of being blamed for a default, McConnell is proposing a compromise that lets Barack Obama raise the debt ceiling without making any spending cuts at all. ...

McConnell’s idea is to make the debt ceiling automatic unless Congress, by a 2/3 vote blocks the increase. Oh yes, he put a salve on it by dressing it up in tough talk that, to quote the Wall Street Journal, “[a] ‘eal solution’ to U.S. fiscal problems isn’t possible as long as President Barack Obama remains in office.” So since no “real solution” is possible, McConnell proposes to go Pontius Pilate and wash his hands of spending, blaming Obama while doing nothing himself.

*sigh*

Here's one take on the strategy:

It sounds complicated but it’s not. This achieves two things in one fell swoop: (1) it provides a nearly foolproof mechanism to avoid default armageddon in case the two sides can’t make a deal by August 2, which will reassure markets, and (2) by investing Obama with near-unilateral power to raise the ceiling (it’s not fully unilateral because Congress could, in theory, override him with a 2/3 vote), it makes him almost wholly responsible for the debt hike, which will be a major political liability with the election around the corner and a plurality of voters still more worried about raising the ceiling than letting a default happen. After a month of shrieking from lefty legal experts about how the Fourteenth Amendment supposedly lets O ignore the ceiling, here’s McConnell calling their bluff. You want to own America’s debt problem? Enjoy.

Okay, I get that, I really do. It seems like some really good triangulation. The obvious problem, in my humble opinion, is that no triangulation is needed here. Every American with a quarter of a functioning brain understands that we have serious economic issues, that Obama is a reckless spender with nothing to show for two years of liberal spending policies except vast new amounts of debt, and that the fiscal sanity desperately needs to be restored fast.

Oh, and did I mention that the American people oppose raising the debt ceiling by a factor of 2 to 1?

You see, triangulation and fallback positions are all fine and good when you have no good options, but that's not where the Republicans in Congress currently stand. Quite the opposite: they have all the leverage! Rush Limbaugh sums it up:

About this time yesterday we quoted Senator Mitch McConnell as saying nothing substantive will ever get done in this country until Barack Obama is removed from the Oval Office. As long as Obama's in the Oval Office nothing is gonna get done. All right, fine. And I said I don't know how you walk that back. But he did. I sat here and I mean we were ladling praise out. We're just not used to hearing Republicans talk that way. ...

But you go out and make that really powerful statement, which has the added benefit of being true. We're not gonna get anything seriously accomplished as long as he's in the Oval Office, as long as he's president. Gotta be defeated. And then a few hours later after not telling anybody, you submit a plan without running it by your colleagues, and everybody is asking of me what I think of this. The number one problem I have with it has nothing to do with its substance. There's some problems I had, but it shows weakness. My gosh, we've got Obama and the Democrats predictably following every page in their playbook, knowing exactly what they're gonna do before they do it, scaring senior citizens, and the minute they come out with that, here's this proposal that basically shows panic. To me it reeked of a lack of resolve. I think Obama needed to think that these Republicans were serious about taking this to the end and now he knows that they're not. Now he knows the Republicans are not united on that concept. Now he knows that there are Republicans who'd like to do anything to avoid being blamed for this.

Look, the plan's got its positive aspects. If you want we can go through it. It's got its positive aspects. But I just don't see the need for it right now. I was shocked when this thing hit. It's got a lot of procedural rigmarole in it, but it seems to be calculated in a way -- and this is my main problem with it -- to escape responsibility. It seems like the objective here was to come up with a way that would allow the Republicans to blame Obama for once, which is a waste of time. As long as the Democrats control the media like they do, Obama is never going to be portrayed as the problem in a back-and-forth with the Republicans, I don't care what happens. The people that the Republicans care about, apparently, the media and the ruling class in Washington is never, ever going to end up blaming Obama for this, particularly the media as long as they control the press like they do. They're always gonna portray the Republicans as obstructionist and extremists no matter what they do or don't do.

You know, this is pedal to the metal time. It's time we swallowed the pill and take our medicine. Why come up with a plan that allows Obama to raise the debt ceiling three more times before he leaves office? I know it puts the onus on him and so forth, "Oh, yeah, Obama raised the debt ceiling." Why cede that kind of power just to try to illustrate to everybody that he's the big spender. Look at the public polling data. Everybody knows that Obama's the problem on this. He doesn't have majority support on anything he's doing right now and everybody knows that the media's gonna try to blame the Republicans, everybody knows this was coming down the pike. Everybody knew that the same old same old was gonna happen, meaning Republicans hate senior citizens and want them to die, and the military, Republicans really don't care, all they care about is their corporate jet guys. Come on. You know it's gonna happen, and to react this way to it out of nowhere, I don't know, depressed me.

... Obama in this deal gets two and a half trillion dollars more borrowed money in exchange for future spending cuts that will be chosen by the Democrat Senate. When I saw that Harry Reid consulted on this and liked it, and when I saw that Chuck Schumer liked it, when I saw that Durbin liked it, when I saw that Pelosi liked it, I said, whoa. Now, the plan does allow the Republicans to go on record as voting for their own cuts. It does do that. And it allows the Republicans to escape blame if those cuts never happen. It does throw all the onus on Obama. But who's gonna care, who's gonna remember in the future anyway? ... The blame game and trying to escape it is not the point. Stopping spending is the point. Stopping Obama from doing any more damage is the point, not constructing things so the party doesn't get blamed.

That's the thing that is so maddeningly infuriating to me about so many elected Republicans. They're right on this issue. Obama and the Democrats are wrong. Everyone knows that. They've had their way and it's been proven wrong beyond doubt. The American people are the gale-force winds behind the GOP on both the short-term issue of not raising the debt limit without deep tax cuts, as well as the long-term issue of reigning in reckless spending, reducing debt, and actually getting our economy on the road to genuine recovery.

And yet, these $(#@Q$(* idiots are more worried about who takes the blame just in case. It's unbelievable, and the backlash is growing fast. I also don't think that most elected Reps understand the tenuous grip they have on power right now. I firmly believe that a huge chunk of the American people are spoiling for a fight, and begging for Republicans to take that fight to Obama and the Democrats. If they fail to prove their willingness and ability to fight that fight, I think there is a very real danger that the so-called Tea Party will split from the traditional Republican party and form its own party. While that might satisfy those seeking ideological purity, it will also split the political Right, guaranteeing Democrat victory despite having every electoral advantage going into 2012.

Those are the puzzle pieces, and the stakes are the economic future of America. Some good old-fashioned grass roots pressure directed toward your Republican Senators and Representatives would go a long way toward growing their spine for them and keeping them on the right path. We'll see what happens in the coming days.