Nevertheless, our “unserious” Commander-in-Chief put forth a deal to grab headlines rather than avert the January 1, 2013 sequestration deadline of $1.2 million in automatic spending cuts and tax increases, which include the expiration of ALL the Bush tax cuts. The president’s plan demands $1.6 trillion in tax hikes over 10 years on higher earners, which includes small business owners also known as job creators! This includes $1 trillion by ending the Bush tax cuts for the “rich,” which includes the estate tax and hitting this group again with $600 million more in tax hikes next year. Big GULP! Obama’s philosophy is “you can never tax rich too much.” They should just keep on earning and paying for Obama’s government largess.
But let’s get something straight, a married couple, who also may be small business owners and/or have kids, making $250,000, isn’t rich and they shouldn’t pay nearly 40% of their hard earned income in federal taxes. Obama wants their tax rate to go from 35% to 39.6% and leave the rates for everyone else lower. A single person’s who may be a small business owner, making $200,000 would see their rate rise from 33% to 35%. People who earn more money don’t do it by sitting on their butts all day so others can be rewarded with lower tax rates. Apparently, President Obama won’t be satisfied until higher earners are indentured servants to the state, paying 100% of their income in federal taxes.
The nation's top 10% of earners pay 70% of all federal income taxes, the top 2% pay about 50% of all federal income taxes and nearly half of Americans pay no federal income. We can see who pays their fair share.
The president’s past three budgets have topped over $3 trillion. But Obama’s problem is taxing the rich won’t put a dent in the president’s $1 trillion deficits he racks up each year and the nation’s $16 trillion of rising debt, which brings us to spending. Raising taxes on higher earners, as the president wants to do, will only yield $1 trillion over 10 years. Extending the Bush tax cuts for the middle and lower brackets, according to Bob Woodward’s The Price of Politics cost $3.2 trillion. But Obama never talks about this number.
On top of his taxation warfare, Obama wants $50 billion in more spending lard, also known as stimulus including: extending the payroll tax reduction, unemployment benefits, preventing Medicare payments to doctors from being reduced and delaying the $110 billion in sequestration defense and domestic spending cuts for one year, etc. The icing on the president’s fiscal cliff offer is his request to be given supreme power to raise America’s debt ceiling without Congressional approval. To which, I’m sure both House Speaker John Boehner and Senator McConnell laughed like hyenas. Obama seems to be channeling President Morsi, who recently elevated himself to dictator of Egypt by declaring his actions were not subject to judicial review.
Conspicuously absent from the president’s proposal was any definitive spending cuts but rather vague promises to talk next year about cutting $400 billion from entitlement programs. Social Security and Medicare are on the road to bankruptcy and entitlements combined with Defense account for more than 50% of the government’s budget each year but Obama doesn’t want to address this reality. Spending is an addiction for Obama. When America needed jobs in 2009, Obama used his super majority with a Democrat controlled Congress to pass $2 trillion Obamacare, job killing Dodd Frank Wall Street reform legislation and $800 billion stimulus, none of which has stimulated the economy toward a real recovery.
America doesn’t have a revenue problem. We have a spending problem, which as Mitt Romney said “we can’t tax our way out of this mess.” Republicans want to tackle the root of the problem, which is entitlement and tax reform, to generate more revenue. Last year, House Speaker John Boehner went through this same dance with an unserious Obama during last year’s debt ceiling negotiations. In 2011, Republicans and the president negotiated a deal of $800 billion in revenues through tax and entitlement reform that Obama walked away from, leaving the American people with the $1.2 trillion sequestration.
If lawmakers don’t stop the Bush tax cuts from expiring for all tax brackets and prevent the automatic spending cuts, the Congressional Budget Office continues to warn unemployment will rise to 9% and the country will fall into another recession. Small businesses have already started cutting back workers to avoid paying healthcare costs, as mandated by Obamacare or indicated they will pay the $2,000 fine per employee rather than comply with the healthcare law. If Mr. Obama has his way in drowning the “rich” in more taxes, small business owners, who file as individual taxpayers and fall into that category of $250,000 for married filers or $200,000 for individuals, will have another reason to lay off more workers.
Since the president seems determined not to negotiate with the opposing party and lead, as past presidents like Clinton and Reagan did, I think the Republicans need to tell Obama, “make our day” and be willing to let ALL the Bush tax cuts expire. Maybe then Obama will come to the table with an adult plan to put the country’s fiscal house back in order.
Punishing higher earners, some of which are small business owners who are job creators, with an even higher tax burden for working hard so others can get relief in the name of political gamesmanship is bad policy. Republicans need to show some balls and make the fiscal cliff “Obama’s problem,” as Speaker Boehner remarked July 12, 2011 during the first debt limit merry go round because Obama created this debt and doesn’t want to take responsibility for it.