Wednesday, June 29, 2011

Hell-bent on tax hikes won’t solve our debt problems

Obama opens up the theme of the day: blame Republicans, and when all-else fails, blame Congress (disregard their aggressive spending spree over the past 2 ½ years at ‘my, my, my’ direction), when they won’t agree to a tax hike in exchange for a debt ceiling hike.

As put in a Republican Redefined critique, “I’m certain you know what to expect herein, but just in case you’re curious or lazy and don’t feel up to watching… Republicans want to keep “tax cuts” for “millionaires, billionaires, oil companies, hedge-fund managers, and corporate jets.“ Democrats want to send your kids to college and take care of your grandma.” Right, never mind promoting class envy, breaking the bank and buying off votes to achieve the Democrats’ want, those are just semantics.

And look at how else Obama approaches this by basically saying, ‘If you guys can’t accept the Democrat desire for tax hikes, we’re gonna have to make some cancellations, starting with your summer vacation’...

(An aside for all the Bachmann naysayers, Malia is actually still 12...just a mistake not worth mentioning, right?) Now, I’ll be the first to admit that these guys are paid too much for too little service, but extortion from the top leaves a lot to be desired from our golfer-in-chief.

That same Republican Redefined piece points to a portion of a CBS News report to dissect Obama’s own admission when he says “If everybody else is willing to take on their sacred cows…” that is to say, “If Democrats are willing to take on their spending and entitlement programs…” And when Obama says that “Nobody wants to see the United States default,” T. Christopher, author of this piece, questions, “Couldn’t one make the argument that Democrats do in fact want the US Government to default on its debt if they don’t get their terms met in negotiations? If it’s blame-Republicans-day, couldn’t one also make the argument that Democrats and their stubbornness to make spending cuts or come to the table on entitlement reform are – at the very least – equally to blame?”

A National Journal piece dubs Obama’s news conference as a ‘kids vs. corporate jets’ speech, surmising that if it accomplished anything at all, “it underscored, in striking tones, his strategy for winning the debt ceiling fight with Republicans: Make it a clash of classes.” Elaborating on the ‘kids vs. corporate jets’ synopsis, Obama audaciously said, "If we do not have revenues, that means there are a bunch of kids out there who do not have college scholarships. [It] might compromise the National Weather Services. It means we might not be funding critical medical research. It means food inspection might be compromised. I've said to Republican leaders, 'You go talk to your constituents and ask them, "Are you willing to compromise your kids' safety so some corporate-jet owner can get a tax break?” ‘ “ Basically, ‘Kids, good; jets, bad; do what I say, and vote for me again!’ As Ron Fournier said in this piece, “Obama is naive only if he thinks a single news conference is going to change the political paradigm.”  But beyond naive, he's also a walking contradiction, for just a few months after Congress scolded all those auto execs for flying their corporate jets to those hearings in Washington back in '09, Congress approved tax breaks in the stimulus package, that he signed off on, to help buy those very same kind of...can you guess it?  Yes, 'corporate jets'!   Furthermore, he flies his corporate jet all over God's green world!  So now he's a contradictory hypocrite.  And let's not even get into Princess Pelosi's RETIRED flying behemoth...

Departing from Obama’s speech this morning, Lawrence Lindsey wrote a poignant WSJ article yesterday, The Deficit Is Worse Than We Think, concerning how even normalized interest rates will raise debt-service costs by nearly $5 trillion over a decade, dwarfing the ‘savings’ from any budget deal currently being negotiated. And a key provision of this assessment is that there’s no way to raise taxes high enough, even beyond what Obama and the Democrats might favor, to cover the extensive debt problem that we’re facing.

“The tax-the-rich proposals of the Obama administration raise about $700 billion, less than a fifth of the budgetary consequences of the excess economic growth projected in their forecast. The whole $700 billion collected over 10 years would not even cover the difference in interest costs in any one year at the end of the decade between current rates and the average cost of Treasury borrowing over the last 20 years.”

He goes on to explain that under the administration’s current policies and projections, debt holders should be far more concerned about a return on their principal in 10 years than any short-term bondholder’s payment, meaning that the government will assuredly keep the principal, just as they did with GM and Chrysler investors, stealing their money. Then afterwards, it’ll be your private pension plans, which they’ve had their eyes on for years now.

But before they raid our modest treasures, they currently have the debt ceiling debate to muscle through, and James Pethokoukis weighs in on precisely Why the GOP shouldn’t go wobbly on taxes when it comes to these negotiations:

"It’s up to House Speaker John Boehner now. Democrats, the media and Wall Street will be pounding him to agree to raise taxes as part of a debt ceiling deal. But now is no time for Republicans to go wobbly. Here’s why the GOP should stick to its guns until Aug. 2 – and beyond if necessary: 1. The last thing the economy needs is a tax hike. 2. Tax revenue isn’t the problem. Spending is. 3. The key to boosting tax revenue is faster economic growth."

As Pethokoukis concludes, “Bottom line: Higher taxes would hurt the economy, wouldn’t solve the debt problem and aren’t really needed anyway.”

Too bad Lindsey and Pethokoukis aren’t ranking members of Congress, huh? Perhaps their words, as well as many others, will have some resonance with our legislators, one can hope anyway. But one thing is for certain: Even if the GOP holds the line on taxes, but opt to make phony cuts, putting anything REAL off until later, inevitably, nothing will really have happened, and the slide of our decline will continue. That’s why NOW, more than ever, it’s time for a Balanced Budget Amendment, NOT higher taxes!

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