Tag Archives: taxes

Budgets, Deficits, and Debt

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In his press announcement last week, President Barack Obama made a lot of…interesting…comments.  Here are some, with some editorial remarks associated.

We’ve created more than 6 million jobs in the last 35 months.

However, if our economy were undergoing the recovery he promised his stimulus spending would produce, it would have produced 8 million jobs in that time, and we wouldn’t have fewer Americans working today than at the start of that spending.  If we were undergoing a normal recovery, we’d have even more jobs “saved or created” by now.

But we’ve also seen the effects political dysfunction can have on our economic progress.  The drawn out process for resolving the fiscal cliff hurt consumer confidence.  The threat of massive automatic cuts have already started to affect business decisions.

And

Deep, indiscriminate cuts to things like education and training, energy, and national security will cost us jobs and will slow down our recovery.

True enough.  But given that, he shouldn’t have demanded such indiscriminacy in his sequester demand of 2011.  Today, he needs to get out of the way and let budgets be passed that cut spending responsibly and in a carefully targeted manner.  More, he needs actively to help this process by requiring his Party-controlled Senate to put House-passed budgets (see below) up for vote and passage.

[W]e’ve been reminded that while it’s critical for us to cut wasteful spending, we can’t just cut our way to prosperity.

As someone said repeatedly in 2008, “Yes, we can.”

He also had this riff:

Democrats and Republicans have been able to come together and cut the deficit by more than $2.5 trillion….  [A] balanced approach [of tax increases and spending cuts] have achieved $2.5 trillion in deficit reduction.  That’s more than half way toward…$4 trillion in deficit reduction…required to stabilize our debt.

And

There’s no reason why we should keep [loopholes and deductions] at a time when we’re trying to cut down on our deficit.

And

If we’re serious about paying down the deficit, the savings we achieve from tax reform should be used to pay down the deficit.

Notice that: deficit, and not debt.  Obama cares not a fig for the magnitude of our national debt—100% of our GDP today, including all of our national debt, not just the publicly held portion—and its rapid growth.  “Reducing” our deficit leaves a continuously growing debt—not stabilization.

He also was careful to include his stock demand for higher taxes as a quid pro quo for even token spending reductions:

And I still believe that we can finish the job with a balanced mix of spending cuts and tax reform.

Obama’s speech adds up to an ignorance of how a free market economy actually works that’s breathtaking in its scope.  Or a cynical disdain for free markets and the associated individual freedoms.

The WSJ noted,

House Democrats have drafted a plan to replace all of the March 1 spending cuts with a plan that calls for both tax increases and spending cuts.  The proposal, drafted by rep. Chris Van Hollen (D, MD), calls for tax increases on the wealthy, reducing tax breaks for oil and gas companies and a reduction in farm subsidies.

Notice this, too: more tax increases, especially on the hated wealthy, and the Progressives’ standard singling out of evil oil and gas producers.  Van Hollen carefully is seeking to protect “green” energy companies (I hesitate to call them producers) from a similar reduction in tax breaks or subsidies for “green” energy companies.  The Progressives—not just Obama—are busy designating winners and losers in our economy.

There are, though, some in Congress (not on the left side, alas) who do understand.  House Ways and Means Committee Chairman Dave Camp (R, MI), for instance:

Tax reform should be about making the code simpler and fairer for American families and helping employers create more jobs.  The president’s proposal is nothing more than another tax hike to pay for more Washington spending.

House Speaker John Boehner (R, OH) said before Obama’s speech,

Republicans have twice voted to replace these arbitrary cuts [Obama’s sequester] with common-sense cuts and reforms that protect our national defense.  We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes.  The president’s sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years.

Because balancing the budget—actually eliminating the deficit, not just “paying it down”—is a critical first step to reducing—paying down—our debt.  After all, the CBO says that

continuing large deficits would push the level of government debt held by the public—a commonly used measure that excludes the US Treasury bonds held in Social Security and various trust funds—to 76.3% of GDP at the end of September, the highest level since 1950.

and

[Failure to fix will cause] the gross domestic product, the value of all goods and services produced in the US, to grow by just 1.4% this year, measured from the fourth quarter of 2012 to the fourth quarter of 2013.

That’s less than last year’s 1.9% growth.  And full employment won’t be reached before 2017, the CBO says.

Are Republicans Folding Again?

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With the effective date of the Obama sequester, with its defense cuts, approaching, Republicans are starting to waver.  Congressman Tom Rooney (R, FL) of the House Armed Services Committee, for instance, now is saying he would rather compromise on taxes than allow the cuts to take effect.

If you were going to hold a gun to my head and say you had to pick one…my constituents would expect us to keep them safe.  If it takes closing [tax] loopholes to get there, I would be willing to do that.

A carefully anonymous “senior GOP aide” confirms the growing softness of the Republicans.  He’s saying that, with the cuts, Rooney’s position will gain support as more Republicans fold.

Republicans have already foldedcompromised on tax increases in the fiscal cliff negotiations just concluded.  More “compromise” means more tax increases.

How, exactly, are Americans kept safe when ever more of their money is taken by the government as taxes, Congressman Rooney?

I also have to ask: has the Republican Party become the RINO Party?

Some Remarks on Budget Negotiations

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Can the Progressives in this Congress and White House really be this…lacking in understanding?

The White House had suggested GOP willingness to let sweeping defense cuts take effect was the culprit [for the fourth quarter economic contraction just reported].

However, House Speaker John Boehner (R, OH) spokesman Brendan Buck had this:

These arbitrary, automatic cuts were a creation and demand of the White House in 2011.  Twice the House has passed legislation to replace them with common sense cuts and reforms.  If there was any uncertainty late last year about the sequester, it was because the Democratic-controlled Senate, per usual, never lifted a finger to pass a plan to replace it.

House Minority Leader Nancy Pelosi (D, CA) chimed in:

…today’s disappointing GDP report [of fourth quarter 2012 contraction] is a direct result of the economic uncertainty created by House Republicans’ strategy of obstruction and manufactured crises.

An exploding deficit, a destructive debt, stagnant and too-high unemployment, and a failed recovery from the Panic of 2008 aren’t crises at all—these are normal.  Congressman Sam Graves (R, MO), Chairman of the House Small Business Committee, noted

Is this stunt in economic growth really a surprise?  Anti-growth policies and an anti-business White House produce just that—a lack of growth[.]

Congressman Kevin Brady (R, TX), incoming Chairman of the Joint Economic Committee added

The bottom line is that America’s economy continues to struggle primarily due to President Obama’s penchant for political brinkmanship and the pervasive uncertainty caused by his focus on higher taxes, regulation and ObamaCare.

Unfortunately, yes.  And that’s to the severe detriment of our country.

Taxes and Spending

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…and how badly they’re misunderstood.  Texas Governor Rick Perry (R)

has for weeks called on the Legislature to cut taxes and continue to hold down government spending—even though Texas’ economy is booming.

The AP hasn’t a clue.  That should be “because,” not “even though” Texas’ economy is booming.  The anonymous reporter apparently thinks government owns our money, and when we have more, it should relieve us of it and spend it themselves….

Debt Ceiling Negotiations

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President Barack Obama had some thoughts on this in a press conference the other day.  Surprise—I have some thoughts on his thoughts.

Obama said this in response to a question from CBS News‘ Major Garrett on how Obama reconciles his refusal to vote to raise the debt ceiling while a Senator (the raise would be a “leadership failure”) with his current refusal, as President, to negotiate his demanded raise of the debt ceiling:

And, you know, the fact of the matter is, is that we have never seen the debt ceiling used in this fashion, where the notion was, you know what, we might default unless we get 100 percent of what we want. That hasn’t happened.

Actually, we’ve seen this repeatedly in the recent past.  Under Presidents Ronald Reagan and Bill Clinton, for instance, spending cuts (or what passed for them—reductions in the rate of growth of spending) were explicit parts of the deal to raise the ceiling.

Obama then added this:

Now, as I indicated before, I’m happy to have a conversation about how we reduce our deficits further….

There are a couple of things about this one.  One is that bit about being “happy to have a conversation.”  A conversation is an “exchange of thoughts and feelings.”  It’s not a negotiation.  Obama is willing only to engage in idle chit-chat on this subject; he’s not willing to enter into serious negotiation.

The other thing is that nonsense, “reduce our deficits further.”  As a man of Obama’s learned education knows—as his economic advisors in the White House and in his Cabinet know—a reduced deficit is still a deficit, and so it still grows our nation’s debt.  Once again, Obama is unwilling to take our debt seriously.

Obama then concluded his evasion of the original question (he never did address Garrett’s question of how Obama reconciles his Senatorial “No” with his Presidential “Raise it now” demand on the debt ceiling) with this:

But what you’ve never seen is the notion that has been presented so far at least by the Republicans that deficit reduction will only count spending cuts, that we will raise the deficit—or the debt ceiling dollar for dollar on spending cuts.  …what we’re not going to do is put ourselves in a position where in order to pay for spending that we’ve already incurred, that our two options are; we’re either going to profoundly hurt the economy, and hurt middle-class families, and hurt seniors, and hurt kids who are trying to go to college, or alternatively we’re going to blow up the economy.

The first part of that is true.  Having seen the failure of tying reduced spending growth rates to raising the debt limit, the House Republicans now are tying actual spending cuts to raising the debt ceiling.

The rest, though, is exactly what Obama is threatening.  He’s holding out for “100% of what [he] want[s],”  or he’ll blow up our economy.  He’s the one demanding a debt ceiling raise with no strings attached (he’s even called for ceding borrowing authority to him) and refusing to discuss any alternative.  He’s the one who’s said he won’t negotiate at all on the debt ceiling.

Yet, it’s his demand for continued borrowing, for continued expansion of our debt, that is profoundly hurting the economy, the middle class, seniors, the poor (who are notably absent in his “concern” for the welfare of others).   The opposition has already agreed to raise the borrowing limit.  They just want real spending cuts, also, so as to break the DC addiction to spending, and so as to reduce—or even eliminate—the need to borrow more.