Storified by Brian Empric· Fri, Mar 15 2013 17:14:07
“House Speaker John Boehner's confirmation that the vaunted title of H.R. 1 will go to comprehensive tax reform is notable because it wasn't assured. As the GOP has publicly waged a sequester fight, it has privately spent the past months in an intense internal debate over tax reform...”
“A simple code sounds pleasant, but getting there means tough votes on dangerous topics. Want to lose friends fast? Chop the charitable deduction, squeeze mortgages, take away that tax perk for the biggest job creator in your district. Business will howl. Voters might freak. Democrats will pounce. Indeed, the White House may turn those votes into a central plank of its campaign to take back the House.”
“To remain silent on tax reform was for the GOP to cede a signature issue, even as it gave Mr. Obama leverage in the budget fight. How long could the party hold out for the president's call for ‘reform’ without a plan of its own?”
“One: Any House bill will be ‘revenue-neutral,’ meaning money raised gets plowed back into lowering rates. Two: Any House bill will simultaneously reform both the individual and corporate codes…”
“There is a glum GOP awareness that the party's role of late has been that of responsible bearer of bad news. It has had to warn about deficits, advocate cuts, tackle entitlements. Somewhere along the way it lost its tax punch, and it has been outflanked by a president who has used class warfare to position himself as protector of the middle class.”
“There is no better way to recapture the party's core issues of taxes, the middle class and the economy” than tax reform, says one senior GOP aide. “It is the one silver bullet that hits all of those pieces.”
“A new Rasmussen Reports national telephone survey finds that 35% of Likely Voters believe the economy is at least somewhat fair to middle-class Americans, but that includes only six percent (6%) who think it’s Very Fair. Sixty-two percent (62%) think the economy is not fair to the middle class, with 20% who feel it’s Not At All Fair.”
“There's general partisan agreement when it comes to the fairness of the overall economy, but GOP voters (42%) are more likely to believe the economy is fair to middle-class Americans than Democrats (31%) and voters not affiliated with either major party (31%).”
“Sixty-nine percent (69%) of working Americans now describe themselves as middle class, the highest level in nearly four years.”
“Personal and social insurance taxes totaled just over $2.6 trillion at a seasonally adjusted annual rate, Commerce Department data out Friday (3/1/13) showed…”
“Higher taxes have acted as a steady head wind for disposable income… Real personal spending rose an ‘anemic’ 0.1%...”
“Personal income dived 3.6% in January, with disposable income down 4%.”
“The Congressional Budget Office has projected that federal tax receipts, including corporate taxes, will rise from 15.8% of GDP in fiscal 2012 to 16.9% this year… In 2014, CBO sees revenue returning to 18% of GDP, close to the historical average.”
“CFPB director and longtime Democratic politician Richard Cordray earlier this month told Bloomberg News that managing retirement savings is ‘one of the things we've been exploring ... in terms of whether and what authority we have.’”
“What business, exactly, does a U.S. government that has rung up over $16.6 trillion in red ink have giving consumers advice on how to save money?
“What can a consumer learn about frugality and responsibility from a corrupt, insatiable Washington leviathan that screams about the sky falling when just 2% in automatic spending cuts kick in?”
“What doesn't work is the government, which should be told to stuff its offer of help at managing people's money. Better to have Typhoid Mary run the Centers for Disease Control.”
“The Pew results actually show support for what official Washington would consider massive spending cuts… The problem is with the way the numbers were reported.”
“To most Americans, maintaining spending at current levels would mean spending the same amount in 2013 as we spent in 2012. However, to those experienced in the mysterious ways of Washington, maintaining spending at current levels means spending $3.5 trillion this year and $4.5 trillion in five years. To most Americans, that's a trillion dollars in spending growth.
“The Political Class, on the other hand, would consider holding spending unchanged at current levels to be a massive spending cut. Why? Because it wouldn't allow for the trillion dollar spending growth that is already built into the budget.”
“Consider the Pew numbers for roads and infrastructure projects: 38 percent want more spending, and only 17 percent favor a spending cut. But a plurality (43 percent) wants to hold infrastructure spending steady. Since the Political Class would consider holding spending steady to be a ‘cut’ in spending, 60 percent in the Pew poll favors what official Washington calls cuts.”
“Using this understanding, the Pew data shows that voters prefer what the politicians call budget cuts in 17 out of 19 programs.”
“So when politicians claim that sound polling data like the Pew study shows a lack of public support for spending cuts, they're either wrong or deliberately trying to deceive us. Voters shouldn't need a translator to understand what the Political Class is saying. But those in the Political Class bubble just don't speak plain English anymore.”
“Normally, the president’s request is the beginning of the annual budget process and Congress relies on its detailed spending information to come up with its own budget resolution.”
“House Budget Chairman Paul Ryan (R-Wis.) plans to put out his own budget — one that balances in 10 years… That budget is also slated to get a House vote before the House embarks on a two-week Easter recess March 22.
“The Senate will be putting together its own budget plan for the first time in four years this month. Under ‘no budget, no pay’ legislation enacted in January, it must pass a budget resolution by April 15 or senators' pay will be withheld.”
“[W]hile the President speaks of his deep concern for American workers and families, he fails to even submit to Congress his financial plan to help those workers and families,” Sen. Jeff Sessions (R-Ala. and ranking member of the Senate Budget Committee, @budgetgop) said in a statement.
“Under the law, the president must submit his budget request no later than the first Monday of February. Last month, the Obama Administration announced that for the fourth time in five years it would fail to meet this deadline…”
“In just one term, President Obama has missed the budget deadline more than any other president…”
“All presidents from Harding through Reagan’s first term met the statutory budget submission deadline in every year…”
“Since the statutory deadline was extended to the first Monday in February, with the exception of the first budget for a new president, this deadline has only been missed three times: Clinton FY 1998, Obama FY 2012, and Obama FY 2013.”
“Every family must balance its budget. Washington should too, and it’s time for President Obama and Senate Democrats to embrace this common-sense goal.”
Storified by Brian Empric· Wed, Mar 06 2013 19:58:04
“There’s debt denial and debt denial denial, but there is one wave of liberal truth-telling sweeping the land. We are increasingly hearing admissions that paying for the promises the federal government has made will require higher taxes on everyone, not just the rich.”
“[L]iberals who don’t need votes from the American people are still allowed to do math. To pay for the social programs they want, they will ultimately need more tax revenue from the middle class as well as high earners.”
“Since the 1980s, the two parties have had a tacit agreement. We get the Republicans’ tax rates in exchange for the Democrats’ spending programs. There were some upward adjustments of the top rates under George H.W. Bush and Bill Clinton in the early ’90s and in the fiscal cliff deal at the end of last year, but this has basically held. The price has been chronic deficits… Now those deficits are becoming unsustainable and the major entitlement programs will soon be in the red.”
“The plain fact is that big government has actually limited the political options available to the American people, leaving them with only unpleasant options. But at least we can be honest that the bill is about to come due.”
“Using GAAP-based accrual accounting, though, as typically used by private corporations, the government’s day-to-day operations were shown to have suffered a shortfall of $1.3 trillion, with an additional $5.3 trillion shortfall in the year-to-year increase of unfunded liabilities in social programs, such as in Medicare and Social Security…”
“Based on the same official GAAP numbers, the federal government’s total obligations as of September 30, 2012, stood at $85.4 trillion…”
“Suggestions that somehow the total GDP can cover the government’s deficit, debt and obligations problems are nonsense. With decades of practice and fine-tuning, the U.S. government has reached the practical limits of the net cash it can siphon out of the income-producing private sector. The system has reached that delicate balance, where the government’s raising taxes actually reduces the government’s cash receipts, where higher taxes reduce economic activity enough to reduce tax revenues.”
“Often, before a large company goes bankrupt, creditors can see the financial collapse coming and tighten up on credit, freeze credit, or move to collect a debt while there still may be time. The same thing happens at the level of sovereign states, and the global financial markets increasingly have indicated waning patience for the United States to address its longer-range solvency issues.”
“With limited tax-raising options, massive spending cuts have to be put in place and the social programs recast so as to be solvent, if there is to be any hope of restoring long-term solvency for the United States government… There is no political will apparent among those currently controlling the White House and Congress to do so.”
“In the nearly four years since Senate Democrats last passed a budget (on 4/29/2009), government spending has driven our national debt up past $16 trillion (and rising). That’s more than $52,000 for every man, woman, and child.”
“While our debt continues to grow, President Obama and Senate Democrats are demanding more tax hikes to fuel more ‘stimulus-style spending. That’s why Speaker John Boehner says we don’t need higher taxes – ‘It’s time to focus on the real problem here in Washington, and that is spending.’”
“The search for an elusive grand bargain — more taxes, fewer benefits — may be blinding us to the potential for incremental progress. The two parties fundamentally disagree over the future of our welfare state, but there may be space for common ground.”
“Both sides should agree at least to spend less money on the wealthy — via means testing. It may surprise some Americans to learn that the United States spends quite a lot on the affluent, especially through the entitlement programs at the heart of the budget fight: Social Security and Medicare… Means-testing — allocating benefits according to need — might offer both sides a way out.”
“First, give less to the wealthy rather than take more from them… Second, assess wealth based on lifetime earnings rather than on income or assets… Basing benefits on lifetime earnings… would encourage saving over time, would be far more difficult to game and, provided it was based on pre-retirement earnings, would not discourage older Americans who are able to work from continuing to do so.”
“Some on the left might complain that curtailing our entitlement programs’ universal character would undermine their social purpose and political support. But targeting benefits to those who most need them is surely better than reducing payments to providers (many of whom will drop out of Medicare), as President Obama’s 2010 law does. Some on the right might complain that such reforms would punish success. But surely rewarding achievement with government aid is no one’s idea of conservatism.”
“Liberalism has its advantages. It puts government in the driver’s seat and encourages the creation of more and more government programs that sound good and seem nice. Who could be against them?”
“If programs lifted from the liberal book of dreams are enacted, Obama and his allies will be thrilled. If conservatives—congressional Republicans in this case—block those programs, that’s fine too. Democrats can exploit GOP opposition to winsome new programs to recapture the House in 2014 and transform Washington into a liberal juggernaut for the president’s final two years.
“If you think this tactic cannot work, think again. We’ve just seen it work brilliantly in Obama’s reelection campaign. The election was less a referendum on Obama’s first term—the norm for reelections—and more a negative verdict on Mitt Romney, the challenger. The Obama team cast Romney as a heartless corporate buccaneer and made him the centerpiece of its campaign…”
“In effect, (Obama)’s accepted a slow growth, high unemployment, high tax, large debt economy, but he can’t acknowledge it for obvious reasons… Nor can he turn to the most effective tools for stirring economic growth and job creation—that is, cutting tax rates on individual income and capital gains and reducing government spending. He just raised rates on income and capital gains and wants to increase spending. Besides, Obama is loath to unleash the private sector to boost the economy. That way, government loses control.”
“For Republicans, the response may be easier than they think. It’s simple: Forget the politics and do what’s right. Obama thinks the public loves government programs and wants more, whatever the cost. If he’s right, Republicans are doomed regardless of what they do politically. If he’s wrong, a Republican comeback is slouching toward Washington.”
“Americans need to understand that Mr. Obama is threatening that if he doesn't get what he wants, he's ready to inflict maximum pain on everybody else. He won't force government agencies to shave spending on travel and conferences and excessive pay and staffing. He won't demand that agencies cut the lowest priority spending as any half-competent middle manager would… It's the old ploy to stir public support for all government spending by shutting down vital services first.”
“Mr. Obama just whacked the economy with a roughly $160 billion tax increase in 2013 that he says will do no harm, but he wants us to believe that $85 billion in spending cuts will trigger a recession… Mr. Obama has taken government spending from 21% to 24% of GDP, yet we've had the weakest economic recovery in three generations.”
“For 30 years bipartisan tax reform has meant lowering tax rates in return for closing loopholes. But having already raised rates, Mr. Obama now wants fewer loopholes for those he dislikes while keeping the higher rates. This is nothing but a grab for more revenue so he and Democrats can keep spending.”
“If Mr. Obama really wants to eliminate the sequester, Republicans are ready to negotiate. But if he won't drop his tax increase and negotiate in good faith, as he hasn't during his Presidency, then the sequester is the only way that any spending is going to be cut. The economy will be better for it.”
“The major objection most Republicans have to the coming sequestration budget cuts is that the cuts will fall disproportionately on the Department of Defense. That’s true; defense spending is about one-fifth of the federal budget but will take about half of the sequester cuts.
“But even for the Pentagon, the cuts are only to the rate of growth for the defense budget in coming years. They are not actual cuts that make spending decline…”
“[A]ssume that U.S. involvement in the war in Afghanistan does end in the next year or so, and that war spending goes down or even disappears altogether. Even in that scenario, defense spending is scheduled to increase in every year except one, even with sequestration cuts…”
Bob Woodward notes that during the campaign last fall Obama blamed Republicans in Congress for proposing and then insisting upon the sequester; however, Woodward’s reporting in his book “The Price of Politics” showed that the sequester was initiated by Jack Lew and Rob Nabors in the White House.
“What is the non-budget wonk to make of this? Who is responsible? What really happened?”
“Obama personally approved of the plan for Lew and Nabors to propose the sequester to Senate Majority Leader Harry Reid (D-Nev.). They did so at 2:30 p.m. July 27, 2011, according to interviews with two senior White House aides who were directly involved.”
“A majority of Republicans did vote for the Budget Control Act that summer, which included the sequester. Key Republican staffers said they didn’t even initially know what a sequester was — because the concept stemmed from the budget wars of the 1980s, when they were not in government.”
“Why does this matter? … First, months of White House dissembling further eroded any semblance of trust between Obama and congressional Republicans… Second, Lew testified during his confirmation hearing that the Republicans would not go along with new revenue in the portion of the deficit-reduction plan that became the sequester…”
“In fact, the final deal reached between Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) in 2011 included an agreement that there would be no tax increases in the sequester in exchange for what the president was insisting on: an agreement that the nation’s debt ceiling would be increased for 18 months, so Obama would not have to go through another such negotiation in 2012, when he was running for reelection.
“So when the president asks that a substitute for the sequester include not just spending cuts but also new revenue, he is moving the goal posts…”
“And when the Republicans opened the seventh seal of the sequester, there was a great earthquake; and the sun became black and the stars fell unto the Earth; and our nation's ability to forecast severe weather, such as drought events, hurricanes and tornados, was seriously undermined. Lo, and the children were not vaccinated, and all the beasts starved in the zoos, and the planes were grounded.”
“But if any of these cataclysms do come to pass, then they will be mostly Mr. Obama's own creation. The truth is that the sequester already gives the White House the legal flexibility to avoid doom, if a 5% cut to programs that have increased more than 17% on average over the Obama Presidency counts as doom.”
“This White House has never been fussy when a statutory text or even the Constitution interferes with its political ambitions. (See ObamaCare, immigration executive orders, recess appointments and much else.) Could it be that Mr. Obama is exaggerating the legal stringency of the sequester in a gambit to force Congress to shut it off?”
“If air traffic control and airport security really are the models of government efficiency that anyone who has ever traveled knows they are not, perhaps Homeland Security could begin by targeting some of the programs identified by Oklahoma Republican Tom Coburn this week. These include necessities such as grants for a security conference in San Diego that featured ‘zombie apocalypse training’ or funds for towns like Keene, New Hampshire (pop. 23,000) to purchase armored tank-like vehicles called Bearcats. Seriously.
“Before furloughing park rangers, maybe start with the 10% of the 75,000 Department of the Interior employees who are conserving the wilderness of Washington, D.C. Before slashing cancer research, stop funding the $130-million-a-year National Center for Complementary and Alternative Medicine that studies herbs and yoga. Cut after-school funding only after consolidating the 105 federal programs meant to encourage kids to take math and science classes.”
See also: AMERICA'S GROWTH CORRIDORS: The Key to National Revival
“Overall, these corridors account for 45% of the nation's land mass and 30% of its population. Between 2001 and 2011, job growth in the Great Plains, the Intermountain West and the Third Coast was between 7% and 8%—nearly 10 times the job growth rate for the rest of the country. Only the Southeastern industrial belt tracked close to the national average.”
“Energy, manufacturing and agriculture are playing a major role in the corridor states' revival. The resurgence of fossil fuel–based energy, notably shale oil and natural gas, is especially important…”
“Since 2000, the Intermountain West's population has grown by 20%, the Third Coast's by 14%, the long-depopulating Great Plains by over 14%, and the Southeast by 13%. Population in the rest of the U.S. has grown barely 7%...”
“The corridors' growing success is a testament to the resiliency and adaptability of the American economy. It also challenges the established coastal states and cities to reconsider their current high-tax, high-regulation climates if they would like to join the growth party.”
“A display case in the lobby of the Federal Reserve Bank (in Richmond, VA) might express humility. The case holds a 99.9 percent pure gold bar weighing 401.75 troy ounces. Minted in 1952, when the price of gold was $35 an ounce, the bar was worth about $14,000. In 1978, when this bank acquired the bar, the average price of gold was $193.40 an ounce and the bar was worth about $78,000. Today, with gold selling for around $1,600 an ounce, it is worth about $642,800. If the Federal Reserve’s primary mission is to preserve the currency as a store of value, displaying the gold bar is an almost droll declaration: ‘Mission unaccomplished.’”
“The Fed failed to cure the (Great Depression), and today’s unprecedentedly anemic recovery — approximately 3 million fewer people are working than were five years ago — has failed to cure the (Great Recession): If the workforce participation rate were as high as it was when Barack Obama was first inaugurated, the unemployment rate would be 10.8 percent.”
“Will Rogers said, ‘Be thankful we’re not getting all the government we’re paying for.’ Today we are not paying for all the government we are getting, and the political class benefiting from this practice should be thankful for the Fed’s low interest rate policy, which makes running deficits inexpensive. In addition to making big government cheap, this causes a flight of investors from interest-paying assets into equities — the rising stock market primarily benefits the wealthy — and commodities, rather than job-creating investments.
“Fed policy, which has failed so far, can also fail by succeeding. If strong economic growth begins, interest rates will rise substantially, and the cost of debt service will cause the deficit to explode.”
