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Posted on 04/14/2011 7:24:44 AM PDT by SeekAndFind
We thought tax reform meant lowering rates and broadening the base by eliminating or cutting back on various deductions, credits, and loopholes. That’s what the Bowles-Simpson commission proposed. That’s what Paul Ryan and David Camp are working on. And that’s the pro-growth model.
But President Obama unveiled a much different tax-reform vision in his much-anticipated debt speech on Wednesday. He would raise tax rates on upper-income earners and small businesses. He also would eliminate deductions and credits, or so called “tax expenditures.” The president referred to these tax-expenditure reductions as “spending cuts.” In his context, they most certainly are not. They are more tax hikes.
Basically, the president is giving successful earners and small-business filers a double tax hike. That’s what it really is.
Of course, the president’s formula of estimating higher revenues to lower the deficit is completely wrong. The reality is that higher tax rates will slow the economy, inhibit new start-up companies, penalize investors, and may very well lose revenues and increase the deficit.
In the latter part of his speech the president did mention some kind of middle-class and corporate tax reform. But he gave no specifics.
He also touted $750 billion in discretionary spending cuts, but again without any details. Most of that amount probably comes from the recent continuing resolution to avoid a budget shutdown. Since Obama is extrapolating out twelve years, who knows how this is scored.
On the entitlement front, Obama rejected Paul Ryan’s consumer-choice and competition approach to Medicare reform. Instead, he invoked the Obamacare central-planning agency called the Independent Payment Advisory Board, which is supposed to make reductions in Medicare. Medicare itself would exercise more price controls on prescription drugs, rolling back the consumer choice and competition established under George W. Bush.
In total, President Obama is claiming $4 trillion in deficit reduction over twelve years. But we’ll never see it. Interest expense savings is supposed to make up $1 trillion of that amount, while the rest will somehow come from a concoction of fewer tax deductions, higher tax rates, and $400 billion in defense-spending cuts.
In effect, the president has moved to the left. He has embraced the Democrats’ so called progressive caucus in the House by slashing defense and jacking up taxes, all while offering no serious entitlement reform. (Hat tip to Jimmy Pethokoukis for nailing this earlier in the week.)
My final point is this: President Obama’s harsh-rhetoric rejection of the Ryan budget and his new (presidential) campaign to raise taxes on the rich sets up a huge confrontation with House Republicans on the eve of the hugely important debt-limit expiration.
Sometime in mid to late May, the debt ceiling to allow the government to borrow more money is going to run out. The Treasury can move money inside government accounts to forestall a debt breakdown for another couple of months. But the potential for a major political conflict on the eve of this process sets up the worst possible outcome: Failure of the U.S. to pay the interest on its own debt.
This is unnerving to financial markets. Instead of compromise, the president decided to seek confrontation.
Caveat emptor. Investors beware.
– Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s The Kudlow Report and author of the daily web blog, Kudlow’s Money Politic$.
Moved?
HE NEVER LEFT THE LEFT!...................
He was never to the right.
But he’s abandoned any pretense of being in the center.
The economy is not going to improve before the election.
He therefore thinks a naked appeal to the anger of those down on their luck is his only hope.
He is throwing his lot in with the mobs in Madison.
He is going to make this campaign all about class warfare and advancing the Alinsky vision, even if he loses.
No, but he has succeeded in building a diving board further out over the left abyss.
Time for him to walk the plank...
We cannot afford to negotiate with his sort of thinking. The decades of incrementalism have put us where we are. It's fast approaching the straw and camel's back territory. I'm willing to concede that line may already be behind us, however.
It boils down to one simple fact. The less money the people have, the more control the government has over the people. Thus, we have the desire for higher taxes.
“The president referred to these tax-expenditure reductions as “spending cuts.” In his context, they most certainly are not. They are more tax hikes.”
I started to say that this is unbelievable, but then I remembered that this was Obama speaking.
What’s really appalling is the way the media covers for his deceptions. Can you imagine the media firestorm if a Republican president attempted this kind of doublespeak?
Amen......!
I am still amazed there can be so many stupid people in America...95% of the “journalists” who just swallow the notion, (hook, line and sinker) that RAISING TAXES in an ECONOMIC TURNDOWN is a good idea.
I mean, really, are people that IGNORANT?
This stands in stark juxtaposition to Clinton in 1995/1996 when he moved, at least tonally and to some degree legislatively, to the middle. Clinton had his centerpiece of "moderation" with the Welfare Reform Act, signed just months before his reelection. What's Obama going to have like that?
George Soros the puppet master telling Hussein it is now or never. Destroy the USA now!
What was Barry doing when the election results rolled in last November? Golf? Basketball? He is making believe that the Tea Party Revolution and the historic gains made by the republicans in the United States Congress and in state governments nationwide never happened. Had the elections furthered the entrenched liberal powers, one can only wonder what budget Obama would be proposing; perhaps a five-year plan lifted from the failed Soviet Union. Not that what he said yesterday was really that different, if one reads between the lies. (Yes, “lies.”)
The national conversation about tax and spend, deficit and surplus, revenues and interest expenses, is effectively over.
There will be no further conversation.
There is nothing left but living through the collapse of the corporatist fascist fiat currency spiral.
Anyone telling you otherwise is the enemy of your family.
When I first started following politics a decade ago as a college kid, I was aware of the aforementioned notions, but saw that there was a chance to affect change upon the system before it fell over the precipice.
The timeframe to affect change to avert the collapse has now passed us by.
It’s all over, and Paul Ryan, Boehner, Bachmann, etc are not going to change the momentum of history being written before our eyes.
Obama to America: Buy gold and silver while the dollar still has some value. Go into debt up to your ears in fix rate loans - you will be paying them back with worthless paper. Everyone who buys American debt are fools! When we can’t pay we’ll just go into bankcrupcy - what they going to do? Foreclose on the Country.
“What’s really appalling is the way the media covers for his deceptions. Can you imagine the media firestorm if a Republican president attempted this kind of doublespeak?”
To Obama and his syncophants in the media, this is 1983. Their goal is 1984.
Something like that. Their global socialist utopia is behind schedule. All this was supposed to happen a decade ago. Typical Gummint project, behind schedule and over budget.
People had best wake up, but with increasing numbers on the Great Teat (partly due to economic policy, partly due to entitlement policy), fewer people are remembering what it was like to have a job. They are pushing for the tipping point.
Sadly I have to agree. It can change but it won't because of the outright corruption at all levels. When any nation becomes Godless they collapse & it seems as if that's what D.C. is all about.
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