Compromised - Rumors fly that President Bush may be willing to raise taxes

The Wall Street Journal ^ | November 26, 2006 | Lawrence B. Lindsey

[Zakeet]

During the recent off-year elections, the president repeatedly pointed to the booming economy and noted that his tax cuts were responsible. With growth strong and unemployment low despite the ending of the stock-market bubble, terrorist attacks and the war in Iraq, he had every reason to be proud. Moreover, both economic theory and the actual timing of the economic revival support his claims regarding the tax cuts.

That is why it is so odd that rumors swarm around Washington that the president may be willing to raise taxes as part of a "deal" on entitlement reform. In particular, the rumors suggest the president might be willing to get rid of the provision that caps the income level used to compute Social Security taxes and benefits. These rumors aren't without substance; last year the president would not rule out raising the cap when asked.

Doing so would raise the marginal tax rate on the entrepreneurs that Mr. Bush credits for having led the economic recovery by more than 10 percentage points. The new effective rate would be five percentage points above the level when he took office. Moreover, in 2011, the rate would go up a further 4.3 percentage points to an effective 53% marginal rate on entrepreneurial income. The president would thus be not just raising taxes on entrepreneurs to well above the levels that prevailed in the Clinton administration, but to a rate higher than that which prevailed in the Carter administration. Most of the improved incentives for entrepreneurship and work brought about under Reagan would be repealed.

Should the president do this, he doubtless would be thinking that saving Social Security would be worth the price. He would be wrong.

[Mr Ramsbotham]

Read his hips.

[Myrddin]

Eliminating the cap on social security has been bandied about as a "solution" to keeping social security solvent as th e baby boomers begin retiring and the entitlement obligations begin to exceed the collections from a diminishing workforce. If the current caps are left in place, the point of equilibrium between income and disbursement is reached in 2018. If the caps are pulled off entirely, the equilibrium year is deferred until 2024.

From my own perspective, I've been hitting the cap in mid-September for the last 5 years. That has made for bigger paychecks in the fall. Disposable income. Pull the caps and my spending habits will change accordingly. Ditto for others similarly situated. The retailers may find that "black Friday" has been erased by the greed of the government entitlement pimps.

[Uriah_lost]

Saw that coming.....lol ...there's always somebody ready to conbemn based on a RUMOR.

[Stallone]

Sadly,

I cannot believe the opportunity that the GOP and Bush have squandered.

A Republican White House, House and Senate.

With the incompetence of this administration, Bush taught a generation of Americans that:

Democrats balance budgets and Republicans squander them;
Private real property is subject to arbitrary confiscation by the state;
America is a military paper tiger willing to fight politically-correct wars;
America acknowledges that we are too unclean and pious to enter mosques harboring terrorists, and we must handle Korans with gloves to offer to detainees willing to slit our throats;
That the homeland is an unprotected cesspool with a porous border;
And worst of all, that the American media still has the power to turn elections.

Bush had the chance to change the world by confronting the enemies of freedom both foreign and domestic with skill and aplomb, and to earn the hearts and minds of his supporters.

Instead, Bush chose to confront his supporters, and make nice with America's enemies.

The worst is yet to come.

[Cobra64]

Surprised me too.

[blondee123]

"Read my lips: no new taxes" is a now-famous phrase spoken by former American president and candidate George H. W. Bush at the 1988 Republican National Convention as he accepted the nomination on August 18.

 

Once he became president, however, Bush was pressured by Democrats and some Republicans to raise taxes as a way to reduce the deficit. Bush refused many times but was making no progress with a Senate and House that was controlled by Democrats. Bush later agreed to a compromise in which he worked with Congressional Democrats to raise several taxes as part of a 1990 budget agreement. This reversal caused great controversy, especially in the more conservative wing of the Republican Party.

 

In the election itself, Democratic nominee Bill Clinton, running as a moderate, also pointed to the quotation as evidence of Bush's untrustworthiness, which contributed to Bush losing his bid for re-election.

[DB]

I didn't "bring up" these statements.

I'm just responding with my thoughts if it turns out to be true. While I certainly hope it isn't true, it isn't that hard to believe as a possibility considering how things have been going lately. Not long ago it was "unacceptable" for North Korea to obtain nukes. The same was said of Iran. It has since been accepted. All those words are meaningless now.

[blondee123]

Can you honestly say you are "happy" with the direction this administration has taken the republican/conservative party? If you can, then I guess those of us who are not, are traitors in your mind~!

[mysterio]

Doing this would be political suicide for Republicans.

[blondee123]

Doing this would be political suicide for Republicans.

Yep, we can all get ready to say "President Hillary Clinton" in 2008!

[FreeReign]

Not long ago it was "unacceptable" for North Korea to obtain nukes. The same was said of Iran. It has since been accepted. All those words are meaningless now.

It's now acceptable for N.K. and Iran to have nukes? Is this a rumor too or did I miss something?

[mysterio]

Still won't be Hillary, no matter what President Bush does. If she runs, the Republican turnout will be massive. Obama or Bayh are the players to be watching, I'm almost completely convinced of this.

[Uriah_lost]

Was all that cutting and pasting(guessing it was wiki from the links) supposed to have something to do with now, as in this decade? GHW Bush was put in an untenable position because his own unequivocal statement made him vulnerable to it. With the overwhelming assistance of the media, the looming budget crisis and possible Government shut down was painted by his opponents as entirely his fault with no mention of Democrat intransigence so he was faced with two bad choices and while I think he chose the worse option(I guess we agree on that) I'm pretty sure he would have been just as badly wounded if he had stood up to Congress and kept his pledge. I don't have a crystal ball but I'm pretty sure the die was cast when he made a definitive statement like that and the media realized that they could and would hammer him no matter which way he went. It's not pretty but it's the reality of our one sided media driven politics. At this point I just get a kick out of seeing how predictably people here come rushing out to condemn our current President based on a rumor. At least the WSJ had the decency to call it a rumor the NYT would have reported it as incontrovertible fact.

[Uriah_lost]

I guess I wasn't crystal clear before. I'm ammused by how quickly people here come out to declare the President a traitor based on the flimsiest of evidence. I can try to say it a few other ways if that isn't clear enough.

[Gator113]

I will admit that I'm not the sharpest pencil in the box, but I sure long for the days when the smart folks hung out here. There are still a few left, but some of the moronic responses to an irresponsibly and unprofessionally printed report of a RUMOR, is sickening and very disappointing.

Funny, I haven't been here all that long, but I sure miss the old days. Yes indeed, back when facts were more prevalent and important than hysterics based on nothingness.

Venting can help us all from time to time, but Bush bashing without facts makes you the fool.

[mysterio]

I think Bush will hold firm on not raising taxes. That's an issue he seems to be very strong on. This seems like an unsubstantiated rumor.

[quesney]

This would be the nail in the coffin for the GOP as far as I'm concerned. It wouldn't have a leg to stand on among free-market-oriented Libertarian-leaning Americans such as myself. I've already had enough of these people. Divided government under Clinton was better than this crap.

[blondee123]

I still don't see your answer to my question about how happy you are with the direction of this administration.

I see this President faced with an all democrat majority, just as his dad was. I will refer you to post #24. Maybe that is why we are unhappy!

And, no I did not come out of the woodwork to post this. I have been an active member of FR since the date I joined! I work hard for the republican party both locally & nationally, but refuse to support anyone who does not represent GOP/conservative values.

[blondee123]

McCain is the MSM dictating to us WHO our candidate should be. If we don't want him, we need to all get out & work hard for the republican party & take it back so it represents the "people" like it is supposed to!