StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Republican Bait-and-Switch on Taxes

06 Jun 2011
Posted by Bruce Bartlett
As we approach a debt crisis in early August due to Republicans’ intransigence on raising the Treasury’s borrowing limit – on May 31 every House Republican voted against an increase – they are digging in their heels on the idea that trillions of dollars of spending cuts must accompany any rise in the debt limit. Although they repeatedly proclaim that “everything is one the table,” Republicans quickly add that this does not include higher taxes.
 
Simple arithmetic, however, tells us that a budget deficit and the concomitant increase in debt can result from either higher spending or lower revenues. And indeed, lower revenues are responsible for about half the increase in debt since 2001, according to the Congressional Budget Office.
 
Since 2001, the national debt has increase $11.8 trillion. This resulted from a $6.2 trillion decline in revenues and a $5.7 trillion increase in spending. Of the revenue decline, $2.8 trillion resulted from legislated tax cuts and $3.4 trillion from economic and technical factors. On the spending side, almost all of the increase was legislated, with $2.4 trillion of it coming between 2001 and 2008.
 
Despite the significant contribution of tax cuts to the national debt, Republicans argue that higher revenues are off the table in the debt limit negotiations. In a May 16 floor speech, Sen. Jon Kyl (R-AZ), the assistant Senate minority leader, made this fact clear in no uncertain terms. Said Kyl, “When we are talking about how to get the budget better balanced, how to reduce our deficits, we should not be looking at the revenue side or the taxing side; we should be looking at the spending side.”
 
A key argument Kyl made is that it is unnecessary to raise revenues because they are already projected to rise substantially in coming years to their historical level of between 18 percent and 20 percent of the gross domestic product. As he explained:
 
CBO figures demonstrate that under any of the budgets offered…we will be back to historic average levels of tax collections in just the next few years – something on the order of 20 percent of our gross domestic product. Revenues are not the problem. They are going to be back where they have always been.
 
Indeed, if one looks at the latest CBO projections, Kyl is right. They show revenues rising from 14.8 percent of GDP this year – the lowest level since 1950 – to 16.3 percent next year, 18.8 percent in 2013 and about 20 percent of GDP thereafter.
 
What Kyl neglected to mention is that the CBO is required to assume that all laws presently on the books will be followed to the letter. Therefore, it assumes in its projections that all of the tax cuts set to expire at the end of 2011 and 2012 will be allowed to lapse permanently and on schedule – no matter how obvious it is that they will be extended. For example, the research and experimentation tax credit will expire at the end of this year. But it has expired many times in the past and always been renewed. Although there is no doubt that it will be renewed again because it has strong bipartisan support, CBO’s baseline projections presume that the research tax credit will cease to exist for good after Dec. 31.
 
More importantly, the CBO assumes that all of the Bush tax cuts will expire at the end of next year. By 2014, the end of all expiring tax provisions will raise revenues by 3.8 percent of GDP. Therefore, virtually all of the revenue increase Sen. Kyl says will take place is the result of allowing current tax cuts to expire.
 
This would be okay if Kyl and the rest of his party were prepared to commit themselves to allowing the Bush tax cuts to expire at the end of 2012 and not press for their extension or for additional tax cuts. But everyone knows that this will never happen. It is a 100 percent certainty that Republicans will demand that the Bush tax cuts be extended, just as they did when they were previously scheduled to expire at the end of 2010.
 
Furthermore, groups such as Americans for Tax Reform and the Club for Growth, which enforce party discipline on Republicans on tax issues, can be depended upon to proclaim that failure to support another extension of the Bush tax cuts will constitute the biggest tax increase in history. We know this because that is what they said last year. For example, a Nov. 30 press release from ATR was titled, “One Month to Go Until the Largest Tax Hikes in History.”
 
Thus we see that Republicans want their cake and eat it too. They want to use higher revenue projections resulting almost entirely from expiration of the Bush tax cuts to prevent any discussion of tax increases to reduce the deficit, while implying that this revenue rise comes solely from faster economic growth. As Sen. Kyl put it, “So revenues are down, but it is due to the recession that we have. We have not cut tax rates in the last few years – since 2006 – for example.”
 
According to the CBO, ending all of the tax cuts and allowing scheduled tax increases now in law to take effect would raise revenues by $5.6 trillion between 2012 and 2021, including debt service. That would go a long way toward solving our debt problem. In fact, the Center on Budget and Policy Priorities says that this action, by itself, would be sufficient to stabilize the national debt and prevent it from rising as a share of GDP.
 
It would be highly desirable if President Obama could get Republicans to agree, as part of debt limit negotiations, to commit themselves to allowing the Bush tax cuts to expire so that we will actually get the higher revenues they say makes legislated tax increases unnecessary. Unfortunately, there is almost no chance of this happening because Obama has no more desire to commit himself to a de facto middle class tax increase in 2013 than Republicans do.
 
Reprinted from the Fiscal Times (June 3, 2011)

The Republicans don't care

The Republicans don't care about the deficit. It's just an excuse to do what they always want to do. They care about lowering taxes for the rich and dismantling the social safety net that benefits the middle class and poor, including not just Medicare and Medicaid but education, childhood nutrition, any regulations that stop businesses from harming consumers, etc.

Their top priority is to defeat Obama, as Mitch McConnell explicitly said. If that means hurting the economy or employment, then, in the words of John Boehner regarding the loss of hundreds of thousands of jobs, "so be it." The GOP has come to believe that if they destroy the economy, Obama will be blamed. "Who has egg on their face if there is a sovereign debt crisis, House Republicans or the president?" asked another senior GOP lawmaker, as quoted on June 1.


I rather suspect Obama's plan

I rather suspect Obama's plan to fix the deficit is to let the Bush tax cuts to expire, in full, in 2012.

Of course he won't admit that. Instead, he will insist on keeping the tax cuts for the middle class but ending them for the rich. Republicans demand all or nothing. Gridlock results and the tax cuts expire as scheduled. Obama blames the Republicans for raising taxes on the middle class, then takes credit in his next budget for fixing the deficit. The Republicans would like to point out the inconsistency but are hoist on their own Laffer curve.


Obama and His Failed Attempts

There will be only one reason I might not vote for Obama's reelection: His idiotic, moronic attempts at playing nice with the RepubliCANTS. The RepubliCANTS can't work with Obama because when he was elected the RepubliCANTS said they were going to make his administration FAIL. Remember that, people? Yet he insists on trying to be bi-partisan when the RepubliCANTS can't keep their words about ANYTHING. They bragged that their first priority in this session of Congress was putting people back to work. They have not done ONE SINGLE THING TOWARDS TRYING TO DO ANYTHING! Yet people want to put the onus on the president for the RepubliCANT'S failures. I'm on Medicare and Social Security and fools like Rand Paul want to shred the only safety nets that seniors have. Too bad his parents apparently never married. The RepubliCANTS want to do only one thing: Get rid of the middle class in this country. Their plan is to tax the hell out of the middle class and shift ALL TAX BREAKS TOWARDS THE ULTRA WEALTHY AND THE CORPORATIONS. That is as UnAmeriican as anything I can think. It is NOT fair. I'm glad I don't have to pay taxes anymore, but I've a sneaking suspicion that if the RepubliCANTS had their way, even my piddling income from Social Security into which I paid (FICA) into for 57 years. I am angry, I am hurt and if I could, I'd make anyone voting for the GOP a criminal. Hell, Rand Paul wants people who hear any speech that he doesn't like a criminal and put them in prison! That is a libertarian? There goes the Constitution.


Republican Bait & Switch

The real problem is the Dem's are uncontrollable. Since Nancy & Harry took over we went from 2.7 B$ with a deficit of .16B$ in 2007 to 3.7B$ with a deficit of 1.48B$ in 2011. We've got to figure out how government has grown almost 36% in 5 years. It doesn't seem to be the war's that are the real culprit as we've been fighting them since 2002. You can check out various sources to see how government employment numbers have been skyrocketing since 2007, especially since Big O has come in to power. I agree that we're going to have to increase taxes at some point so we can make those that are working shoulder more of the burden of those that aren't working. But we also need to get government (Fed and State) under control as we won't have enough private sector workers to support those not employed and those employed in the Gov.


There is a moral imperative

There is a moral imperative supporting ending the Bush tax cuts to pay for Social Security and Medicare. The surpluses Clinton left for Bush were enough to pay off entire US debt by the time that the Social Security/Medicare trust funds would have to be amortized for beneficiary payments, all without having to raise taxes to pay for the amortization of those trust funds. The surplus Bush inherited was made up virtually entirely of excess payroll taxes building up the trust funds. Bush took those excess payroll tax receipts and gave them as heavily weighted tax reductions to the wealthy--who didn't create those surpluses in the first place. By doing this, Bush guaranteed that taxes would have to be raised in order to amortize the trust funds. The failure to do so simply permits the wealthy to steal the money contributed by workers for their retirement. Obviously, this would be immoral. But this is exactly what the Republicons are doing when they refuse to raise taxes.


Once again; Social Security

Once again; Social Security is not in any connected to the US budget. It is seperate, independent, and solvent. The lie is they are connected, and, as even elected officials spout their talking points, nobody bothers to remiond them (The Repugnuts) they are insane, or at least factually challenged. In some cases the factually challenged may find themselves politically challenged. How long can this nation go on being stupid. Euros and Aussies think we're insane because of our comlpulsions about sex, wieners on facebook, abortions, and some nameless dread about 'liberties'. Social Security has a 2.3 Trillion surplus. It's money jusst sitting there, taken from our weekly checks, waiting to be used. Criminals want to defraud and drain down that capital to their own bank accounts. I call them criminals, because they engage in criminal behavior; lies, fraud and deceit. And we're stupid enough to put up with it.

And, if we, the people, decide to put up with it, they'll just try again. And again, and again. Rethugs, NeoCons, Wingnuts, Teabaggers -- all of these were once Nixon Republicans? What happened to the 'Honorable Opponent' concept in legislating and compromising? And, what do we owe bigots and hipocrites, anyhow? Even staunch Republicans are veering away from these criminal fools.


GOP and Budget Wonk

Is anyone else as sick and tired of discussing how much the GOP hates our country and then tries to convince us that they have our best interests at heart? We know this already. What would manage to END this crap, not just continue talking about it? That's what I'm interested in.....ending their reign of terror. We elect Dems that we think will do the job and then find out that they've had their...er...courage removed. Or that they vote as the GOP does. What are we to do? Wait - again - for another round of voting to take place? What happens in the meantime? The GOP continues to hold our Congress and therefore our country hostage and they don't care about the little people and their problems at all. They nearly brag about that fact. As this article states: no jobs, no home, no services when you are old? "So be it" is their reply.

So, I ask again...perhaps in vain....what are we to do? I sign petitions, write letters to my congressmen and senators only to get letters in reply that tell me they could care less what I think and what I want. Now what? Wait until they do more harm to our economy? My senior years are just ahead of me and if they have their way...I'll be on my own. No help, no Social Security, nothing.

Even little things - like having the Congress live with the laws they create for us - don't get anywhere either. There has been a drive to get a law passed that says that people in the armed services will receive their base pay when they retire, just as Congress gets their pay & benefits when they retire. For life. This law has nearly no chance of passage. So why on earth would the big issues that we want changed matter to them?

TELL ME WHAT TO DO!! I'm sick of hearing the same old thing without any answers to the questions posed.


This is not about which party

This is not about which party hates America. This should be about educating the American people about what caused the current budget problems.

The tax cuts that we have been told since the 1980's will raise revenues have not done so. Pretending deficts don't matter, ala Dick Cheny, is foolish.

Republicans are at fault because they refuse to believe and/or admit their policies don't work. Democrats are at fault because they have went along with spending more money than the Government was taking in. In the end, the American people are at fault for not demanding this be stopped a long time ago.

We need to stop the arguing and begin the long process of digging out of the mess.


Keynes is really dead

What's truly frightening is the iron-bottomed consensus that the deficit has to be slashed ASAP, with the political argument reduced to a choice of root canals: whopping big spending cuts or the largest tax hike in history.

It seems like only a handful of Keynesian-minded economists (led by Paul Krugman) are arguing that deficit cutting when the output gap is huge and short-term rates are at the zero bound could be a self-defeating exercise -- as the UK already appears to be finding out.

Given that the Keynesians are being universally ignored in Washington, we'd better hope they're dead wrong -- and that there really is some magical supply-side elixir that will turn fiscal austerity into economic stimulus.


Can Debt Ceiling be challenged in Court?

14th amendment makes Debt Ceiling illegal. Why cant someone challenge that law in the Supreme Court?


Can Debt Ceiling be challenged in Court?

Why? The US Supreme Court majority is Republicans who don't recuse themselves even when their wife is an spokesperson for the Tea Party. So, don't expect them to have any concern for the low income or middle class or what is right for our country.




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