You’ll Get Nothing And Like It

We’ve come a long way from the days when then-Senator Barack Obama promised C-SPAN cameras would be in the room during the health care “reform” negotiations.  Fortunately, there are still some journalists trying to get a peek behind the closed doors of the fiscal cliff negotiations.

This morning, the Wall Street Journal provides a detailed account of how the fiscal cliff talks “hit the wall.”  The entire article is a must read, but one blurb really jumps out:

At one point, according to notes taken by a participant, Mr. Boehner told the president, “I put $800 billion [in tax revenue] on the table. What do I get for that?”

“You get nothing,” the president said. “I get that for free.”

We’ve said all along that President Obama’s offers on the fiscal cliff were outrageous.  That may have been an understatement.

This morning in the Examiner, Heritage Action’s CEO Michael A. Needham explains the proper lesson from this week’s fiscal cliff “is not the unreasonable nature of conservative lawmakers, but rather the outrageousness of President Obama and his Democrat allies in Congress.”  He continues:

Republicans must learn they cannot out-gimmick the Democrats; nor can they offer up enough tax increases to appease President Obama. Remember, President Obama originally called for an $800 billion tax increase. This month, after Republicans put $800 billion in tax increases on the table, President Obama requested $1.6 trillion tax increase.

It will never, never, never be enough for the political left.  As they say: you’ll get nothing and like it.

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Fiscal Cliff Deal After Christmas?

Just because “Plan B” is no longer under consideration, it doesn’t mean a fiscal cliff deal is off the table.  In fact, some suggest that “Plan B” was being used as a negotiation tactic and a deal will be coming after Christmas.

Chris Frates of National Journal opines:

But behind the rhetoric there was a strategy at play. The plan appeared designed to move Obama toward the speaker’s position of smaller tax increases and larger spending cuts while helping conservatives wrap their heads around the idea of voting for a tax hike.   

This analysis is certainly plausible, and the idea that “Plan B” was designed to help “conservatives wrap their heads around the idea of voting for a tax hike” is something we talked about at length yesterday.  But regardless of the political calculations that were at play here, we can’t help but be reminded of that good old quote: “Sometimes the questions are complicated, and the answers are simple.”

In this case, the simple answer is that we must cut spending without raising taxes. 

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Republican Case Against Plan B

“Simply finding a segment of society that you can raise
taxes on in order to fill a stop-gap measure, it’s just not enough.”

No, that is not Heritage Action’s critique of the Plan B Tax Increase, though it would be a darn good one.  Rather, this is a critique of the Democrat’s plan to increase taxes on those deemed “rich.”  The origin of the critique was none other than House Ways and Means Chairman David Camp (R-MI).

In early August, when the House passed H.R.8 – which Heritage Action endorsed – with bipartisan support, Republicans were offering principled arguments.  Their arguments were not small or tortured; instead, they were clearly aligned with a vision of smaller government.

It could even be said Plan B’s tax hike is similar to the widely repudiated Buffett Rule, which like so many proposals failed to garner 60 votes in the Senate.  Remember, the Buffett Rule would have required all people making over $1 million to pay a minimum tax rate of 30% on any income over $1 million.  Plan B would essentially create a new tax bracket, taxing income over $1 million at 39.6% (not including the Obamacare tax increases).

On April 18, Speaker John Boehner (R-OH) dismissed the plan (sub. req’d), which received just one Republican vote in the Senate:

You know, our country is facing some serious economic and fiscal challenges, and the global challenges that we have continue to mount.  And all the American people are getting from the Obama administration are political gimmicks like the so-called Buffett rule that won’t do a thing to create jobs in our country.  Even the president has admitted that his Buffet tax is a gimmick that won’t help our economy.  (emphasis added)

A few more examples of how GOP lawmakers felt in August are below (all emphasis added):

Majority Leader Eric Cantor (R-VA): Instead of offering a plan that would spur economic growth, the minority put forward the President’s small business tax hike.  As we saw, Mr. Speaker, the only plan with bipartisan support that passed this House this week was the plan to ensure that taxes do not go up on any American.  (House Floor, August 2, 2012)

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Plan B Math = Obama’s $3 Trillion Tax Cut

Today, the House is scheduled to vote on the Plan B Tax Increase.  Roll Call reports that despite the outward displays of optimism, “Speaker John A. Boehner of Ohio struggled Wednesday to find the votes for anything that would prevent the country from going over the fiscal cliff.”  Although that’s not exactly true – Republicans passed H.R.8 on August 1 – there is certainly a lot of ridiculousness surrounding Plan B that is sure to make conservatives nervous.

Some right-leaning pundits are describing the vote today as a $4.1 trillion tax cut, when calculated over the ten-year budget window.  The logic goes something like this: if we are going to experience a $4.6 trillion tax hike on January 1, then only allowing a $500 billion tax hike means we are cutting taxes by $4.1 trillion.  All those figures are over the ten-year window, of course.

There is just one small problem.  Preventing a tax increase is not the same as cutting taxes.  President Obama embraced that logic during his reelection campaign and he was rightly rebuked for his intellectual dishonesty then.

For fun, let’s apply this intellectually dishonest approach to President Obama’s initial offer, which was outrageous.  Instead of being a $1.6 trillion tax hike, as Republicans in Congress decried, it would be a $3 trillion tax cut.  Why?  Well, if taxes were scheduled to go up by $4.6 trillion on January 1, then allowing only a $1.6 trillion tax hike means he wanted to cut taxes by $3 trillion.

See how that works?

As Heritage’s Curtis Dubay explains, it’s all a baseline game:

[A] current policy baseline would not score stopping Taxmageddon as a tax cut that increases the deficit.  It would continue to project revenue of $2.445 trillion once Congress prevented Taxmageddon, because it would have previously assumed that Congress was going to extend or (in the case of the Obamacare tax increases) stop the implementation of the policies that comprise Taxmageddon. 

Since it is not a tax cut, and therefore does not add to the deficit, neither spending reductions nor tax increases are necessary to offset, or pay for, stopping Taxmageddon when using a more rational, current policy baseline.

Americans deserve an honest debate.  They also deserve at least one political party that stands steadfast in its opposition to taking any more money from the private sector to give to the government sector.

Heritage Action Key Vote: NO on Plan B Tax Increase

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Obama’s Outrageousness

Lost in the midst of the fiscal cliff drama are President Obama’s outrageous offers.  A cursory review of his plans reveals he is fundamentally unserious about addressing our nation’s coming fiscal crisis.  This should come as no surprise, of course.  Throughout his presidency and even during his reelection campaign, President Obama spurned serious solution in favor of big-government gimmicks.

President Obama’s initial offer was, as Heritage said, “totally misguided.”  The package consisted of “at least $4 of tax increases to $1 of spending cuts.”  Funny, I don’t think Americans in swing states saw Obama for America running ads touting a $1.6 trillion tax increase.  Nor did the Obama campaign announce they’d ask for carte blanche authority to increase the nation’s debt limit.  They saved all of that for AFTER they were guaranteed another four years.

Since that initial offer, the Obama administration mostly played coy, only recently moving off their post-election positions.  While it may represent a move in the “right direction,” as Speaker Boehner’s office said, it certainly doesn’t amount to a “major concession,” which is how it was spun in the media.  USA Today described it this way:

A new proposal handed to House Speaker John Boehner on Monday drops Obama’s long-held insistence that taxes rise on individuals earning more than $200,000 and families making more than $250,000. He is now offering a new threshold of $400,000 and lowering his 10-year tax revenue goals from the $1.6 trillion he had argued for a few weeks ago. 

Obama also abandoned his demand for permanent borrowing authority. Instead, he is now asking for a new debt limit that would last two years, putting its renewal beyond the politics of a 2014 midterm election.

Simply dropping untenable policy positions is not laudable.  It may signal that the President wants to strike a deal, as opposed to hop off the ledge, but it’s not as though his solution would do anything to solve our nation’s long term fiscal problems.  As Heritage’s Patrick Knudsen reminds us, the sort of deal proposed by President Obama has never resulted in more than paper savings:

Furthermore, history shows that broad bipartisan compromises between the White House and Congress have typically just yielded higher taxes, while the promised spending restraint (except in national defense) and deficit reduction have failed to materialize.  

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