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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?


To: sandintoes who wrote (46360)10/12/2010 5:24:43 PM
From: TimF  Read Replies (2) | Respond to of 71588
 
You Can’t Tax the Rich Enough to Close the Deficit

President Obama has driven spending and deficits to historic levels in just two years since taking office. Not content to stop there, his budget for the next 10 years keeps spending at record levels and piles up unprecedented amounts of debt in the process. To partially offset his massive overspending, the President wants to raise taxes on “the rich.” His class warfare plan can take him only so far, however, since the rich don’t earn enough to make up the difference for all the spending he plans.

Obama’s current tax hike plan would raise the top two income tax rates from 33 and 35 percent to 36 and 39.6 percent, respectively. This tax hike will take effect on January 1, 2011, if he has his way and will slow the already badly struggling economy. This will keep unemployed Americans out of work longer and suppress the wages of those fortunate enough to retain their jobs. In fact, the higher tax rates Obama calls for will destroy an average of 800,000 jobs per year by the end of the decade and lower incomes by $720 billion over that same period.

Over the next 10 years, the Obama tax hikes will take almost $700 billion from taxpayers. That is only 8 percent of the nearly $9 trillion President Obama’s budget adds in debt over that same period. Low tax revenues are not the cause of the debt explosion; spending is. The Obama budget raises spending to almost 25 percent of GDP—well above its historical average of 20 percent. Tax revenue will soon exceed its historical average of 18 percent of GDP.

President Obama has repeatedly expressed a desire to sock it to the rich to cover for his profligacy, so it stands to reason he could stick them with additional tax increases to cover his gargantuan budget shortfalls. The President shows no signs he wants to reduce spending to lower the deficit, so tax hikes remain his most likely prescription. No matter how much he wants to “spread the wealth around,” if he goes the tax-the-rich route, he is in for a rude awakening.

Closing the more than $1 trillion deficit Obama’s spending would produce in 2020 by taxing only the rich would require a top income tax rate of 134 percent. Of course it is impossible to tax more than 100 percent of any taxpayer’s income. More importantly, any rate even approaching such a dangerous level would destroy the economy. Period. So even if it were mathematically possible to tax more income than the rich earn, there would be none of it left for the government to confiscate.

There is a better way. If President Obama and Congress committed to spending reductions, the deficit could be lowered to more acceptable levels without raising taxes a dime. If Congress and the President lowered spending to its historical average of 20 percent of GDP, the deficit would fall to a more manageable level, the national debt would stabilize, and an impending financial meltdown would be averted. Whether the President can let go of his soak-the-rich mentality and take this more sensible approach remains to be seen.

blog.heritage.org



To: sandintoes who wrote (46360)10/14/2010 1:47:36 AM
From: Peter Dierks2 Recommendations  Read Replies (2) | Respond to of 71588
 
The growth of government threatens freedom much more than mosque-building Muslims do.
Matt Welch from the November 2010 issue

In July, while publicizing his new book To Save America: Stopping Obama’s Secular-Socialist Machine, former House Speaker Newt Gingrich was challenged by NBC’s Matt Lauer to name federal government programs “you would be willing to cut right now to cut deficits.” After some throat clearing about his record in the 1990s, Gingrich offered up this weak sauce: “I would start and I’d go through this budget pretty dramatically and I would eliminate a great deal of federal bureaucracy. I would reform unemployment compensation. I would reform workman’s comp at the state level. I would have a very pro-jobs, very pro-savings, very pro-take-home-pay policy.”

You may recall candidate Barack Obama’s pledge to go through his budgets “line by line” to eliminate wasteful programs and enact a “net spending cut” while also lowering taxes of the middle classes and “reforming” various programs in ways that would magically reduce the deficit. We have seen how that movie played out.

The interview got worse. “Would you make cuts in Social Security and Medicare?” Lauer asked.

Gingrich: “No, no.”

The former GOP revolutionary is still able to flip the switch from foggy bureaucracy cutter to wonkishly specific policy chef when it comes to taxes. He wants to eliminate capital gains and inheritance taxes, reduce the corporate rate to 12.5 percent, and temporarily cut Social Security and Medicare taxes by 50 percent for both employers and workers. Some or all of these may be good ideas, but in the year 2010 if you’re not talking about hacking down the size of a government that every credible economist acknowledges will continue growing rapidly unless reformed, particularly via the entitlement programs that Gingrich refuses to touch, then you are not worthy of being taken seriously.

Unfortunately, Gingrich’s frivolity is not the exception on the Republican side of the aisle. In July NBC’s David Gregory put the same question to two allegedly rock-ribbed Texas conservatives, Rep. Pete Sessions and Sen. John Cornyn: “Name a painful choice that Republicans are prepared to say we have to make.”

Sessions went first: “Well, first of all, we have to make sure as we look at all we spend in Washington, D.C., with not only the entitlement spending, but also the bigger government we cannot afford anymore. We have to empower the free enterprise system.”

An exasperated Gregory tried again with Cornyn, who replied: “Well, the president has a debt commission that reports December the first, and I think we’d all like to see what they come back with.”

We’re not just talking about politicians’ fear of attaching their names to cuts in popular programs, although that’s certainly in play here. Professional Republicans, particularly in the Senate, no longer have the rhetorical reflex to reduce the size of government even by symbolic amounts.

Cornyn, for example, was a leading critic of the Obama administration’s proposal to reduce the budget of the National Aeronautics and Space Administration by $3.5 billion. Nine GOP senators opposed Obama’s plans to trim just $812 million from Washington’s massive subsidy package for agribusiness, arguing in a joint letter that “cutting farm programs in the midst of an economic downturn sends the wrong signal to rural America.”

You want to see the wrong signal, senators? Turn to page 24, where some frightening three-dimensional charts will demonstrate how the thing you ignore is going to eat you in the end. Government spending and debt, in the current, near, and long term, are swallowing up the productive capacity of America’s wealth and ingenuity. The Congressional Budget Office, the International Monetary Fund, and even the administration’s senior economic officials all agree: The course we are on is unprecedented and unsustainable.

But you wouldn’t know it from listening to Newt Gingrich and John Cornyn. As the administration’s “Recovery Summer” was turning into an Endless Bummer of economic news as lousy as it was predictable, the two men—and countless other Republicans—focused like a laser beam on the real threat to the country: American Muslims proposing to build a prayer space and community center a couple of blocks away from the site of the World Trade Center.

Cornyn, who is the chairman of the National Republican Senatorial Committee, warned that it was “unwise to build a mosque in the site where 3,000 Americans lost their lives as the result of a terrorist attack,” insisting that “this is not about freedom of religion.” (See, he was just asking, not telling, adherents of one of the world’s largest religions to refrain from exercising their property rights.) Cornyn crowed that the “Ground Zero mosque” would be a winning issue for Republicans come November. “It demonstrates that Washington, the White House, the administration, the president himself, seems to be disconnected from the mainstream of America,” Cornyn told Fox News. “I think that’s one of the reasons why people are so frustrated.”

Gingrich was considerably worse. “There should be no mosque near Ground Zero in New York so long as there are no churches or synagogues in Saudi Arabia,” he said, in one of the worst examples you’ll see of a politician trying to define American values down. “Nazis,” he also argued, with a dashing lack of accuracy, “don’t have the right to put up a sign next to the Holocaust Museum in Washington.” The building project, he explained, is “a test to see if we have the resolve to face down an ideology that aims to destroy religious liberty in America, and every other freedom we hold dear.”

Gingrich and Co. aren’t just wrong about the mosque. They’re wrong about policy priorities. They should be considered no more reliable on the pressing issue of the day, restraining the leviathan of government, than Michael Moore should be trusted with dietary advice. There’s a reason why widespread disgust at the way Obama and the Democrats are running the country has not translated into enthusiasm for the unprincipled “American values” stew of 21st-century Republicanism.

Enough already. Are you serious about understanding the problem of ever-expanding government, let alone taking concrete action to slash it before it slashes you? Then keep this issue of reason in a secure location, bust out the funny-looking glasses, and show it to any friends and loved ones interested in attacking problems that actually matter, rather than ones that make for pointless culture-war clashes in the run-up to an election. We’re not just trying to scare you with 3D charts about the coming budgepocalypse; we’re trying to arm you with very specific proposals for cutting extraneous programs that drag down the economy, butt into American lives, and self-propagate like cancer. There are uplifting tales from past victories, warning shots about future choices, and a whole lot of blood and gore. Our tongue is in our cheek, but only because the stakes are deadly serious.

Infinitely more serious, at any rate, than desiccated political husks trying to ride the great pendulum of American politics as it swings rightward. Republicans will do anything to win midterm elections except the right thing: spelling out, with both programmatic detail and philosophical conviction, how government is obstructing freedom, bankrupting the country, and impeding the great transition from top-down dictation to individual autonomy. Some day that transition will come to government. But only after we insist on it.

Matt Welch (matt.welch@reason.com) is editor in chief of reason.

reason.com