Thoughts on the “Fiscal Cliff”
So, Obama’s opening position in ‘negotiations’ with the GOP is by putting forth his budget – the one that was defeated 99-0 in the Senate. The one controlled by Democrats. His ask, not the $800B in tax increases over 10 years that poisoned the last negotiations. Nope, $1.6T. On top of Obamacare. Spending of course grows in this proposal, keeping projected deficits at $1T a year. Glad to see you’re taking this seriously Mr President.
I’ve been thinking the GOP is in a no win situation here. You have RINO’s like Bill Kristol running around arguing in favor of tax increases. Boehner was through two rounds of negotiation before Obama even said a word. Harry Reid and Pelosi are foaming at the mouth (more so than is normal).
Really, the President could live with Sequestration and many Democrats are arguing he should. It avoids entitlement reform, increases taxes on the wealthy, brings in a pile of more tax revenue from the middle class that he can blame on the Republicans. The GOP’s only leverage in the negotiation is the tax cuts for the middle class which the Democrats are on record as willing to let expire if they don’t get everything they want. And what they want is taxes on small business and those nasty rich people earning $250K a year or more and a blank check to borrow and spend.
An article in today’s Washington Post ( not a misprint, I was shocked myself) painted an alternative view. What if letting all the Bush tax cuts expire provides the GOP with more leverage. The author argues the public pressure to reduce taxes will be immense as millions earning below $250K get hit with AMT. Welcome to the 1% you Occupy Morons. And you thought only the wealthy benefited from those evil Bush tax cuts. Not so, here is what is in store January 1st (again, not including Obamacare):
- The 10 percent income tax bracket would disappear, so the lowest tax rate would be 15 percent.
- The employee share of the Social Security payroll tax would rise from 4.2 percent to 6.2 percent.
- An estimated 33 million taxpayers — many in high-tax blue states — would be required to pay the alternative minimum tax, up from 4 million who owed it in 2011.
- The child tax credit would be cut in half, from $1,000 today to $500, and would no longer be refundable for most.
- Tax preferences for alternative fuels, community development and other Democratic priorities would go away.
- And the expansions of the earned income tax credit and the dependent care credit would disappear as well.
Source: Washington Post Article linked below
The Democrats could be in full panic mode at that point. The GOP could actually force the democrats into REVISING the entire tax code to get the concessions they want. The author makes another interesting point. This country had their chance to vote for spending constraint and tax reductions. They opted for more deficit financed, generational wealth stealing spending and tax increases. Hey, elections have consequences.
I have said it before and I will say it 1,000 times more. We have a spending problem. We are defending Capitalism – not taxes breaks. They are promoting a Marxist dream where the ruling elite govern from on high, regulate your life and redistribute the country’s wealth. In the process, they destroy wealth and liberty. As Thomas Jefferson warned:
“The natural progress of things is for liberty to yeild, and government to gain ground.” or said differently:
“A government big enough to give you everything you need, is a government big enough to take away everything that you have….”
A few paragraphs below. Click through and read the article. Thought provoking:
Going over the fiscal cliff would help the GOP in another way: It would save Republicans from having to break their pledge not to raise taxes. If GOP leaders hold the line on taxes this fall, and the Bush tax cuts expire despite their best efforts, it would not harm their reputation as the party of low taxes. But if Republicans vote proactively to raise taxes as part of a “grand bargain,” the GOP brand would be irreparably damaged. Raising taxes and losing a fight to stop automatic tax increases are two different things.
Moreover, if the Bush tax cuts expire, the baseline for future negotiations would be reset. A bipartisan agreement would be within reach that reforms and simplifies the tax code, with a top rate lower than the Clinton rate but higher than the Bush one. Instead of Republicans being under pressure to raise taxes, Obama and the Democrats would be under pressure to reduce the top rate from the Clinton level as part of an eventual deal…
…At least going back to the Clinton rates would put more people on the tax rolls, and give more Americans a stake in constraining government spending. It would also force all Americans — including the middle class — to pay for growing government services, instead of borrowing the money from China and passing the costs on to the next generation.
Americans had a choice this November, and they voted for bigger government. Rather shielding voters from the consequences of their decisions, let them pay for it.
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