New Proposal From Obama! Additional 10% tax of GDP!
Barry Zero recently dispatched Timmy “we don’t have a plan” Geithner, to negotiate for Zero in an effort to avoid the fiscal cliff.
The rhetoric is well known by now. Obama is pushing to raise the tax rates on couples earning more than $250,000 and individuals earning more than $200,000. He wants to bring their rates back up to 39.5%. The latest estimate is that would generate $82 billion per year. Yours truly and a few others have been saying for a very long time that this doesn’t amount to anything realistic towards fixing our deficit spending. Repubs have finally caught up and starting noting the same thing. Barry Zero made this one of his central campaign talking points. For reasons lost to posterity, no one of prominence made it a point to laugh at Barry Zero for making such a meaningless gesture a central theme and primary campaign issue …….. not the LSM, not Romney, not Fox, no one but, just a few voices in the wilderness.
It is so meaningless that now one of the more prominent advocates of the tax hike, Warren Buffett, says it’s nothing more than a morale booster for the middle class. This is probably worthy of a post itself, I’ll just say, knowing that my potential employers will have less disposable income doesn’t really fire me up. I’m not sure what increased middle-class morale is supposed to do, but this doesn’t really put an extra skip in my gait.
I think now is a good time to review what the “fiscal cliff” really is. I’ll quote from wiki…… But, I’ll enlarge and embolden a few of them.
- Expiration of the Bush tax cuts extended by President Obama in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010;
- Across-the-board spending cuts (“sequestration”) to most discretionary programs as directed by the Budget Control Act of 2011;
- Reversion of the Alternative Minimum Tax thresholds to their 2000 tax year levels;
- Expiration of measures delaying the Medicare Sustainable Growth Rate from going into effect (the “doc fix“), as extended by the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA);
- Expiration of the 2% Social Security payroll tax cut, most recently extended by MCTRJCA;
- Expiration of federal unemployment benefits, as extended by MCTRJCA and
- New taxes imposed by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.
First of all, we need to end the 2% SS payroll cut anyway. For those who don’t know, all this does is reduce the amount of Social Security you will be able to draw when you retire. The government isn’t giving you a tax cut, you are contributing less to your retirement. This speeds the impending insolvency of Social Security. The 2% payroll tax cut is estimated to be about $120 billion/yr.
Secondly, I don’t know how other states are dealing with the unemployment extension, but in the state of Kansas, this is already expired and isn’t available. Again, this is probably a bad idea, anyway. It is estimated that this would cost $30 billion in additional federal spending, but it was $44 billion for 2012.
Thirdly, does anyone really believe the Obamacare taxes won’t be imposed? We’re going to get them anyway. To avoid the “fiscal cliff” this may delay their implementation, but it won’t avoid them. The estimated tax costs to the HCER is $14 billion and the PPAC is $20 billion annually after being offset by Barry’s raping of Medicare. This totals $34 billion annually. (Note: this isn’t the total cost of Obamacare, just some taxes delayed.)
So, this “fiscal cliff” includes things that will happen anyway and things that should happen anyway. The 3 provisions emboldened total about $200 billion of the fiscal cliff. $30-$44 billion in spending cuts and $154 billion in tax increases that will happen anyway.
All total, the “fiscal cliff” is suppose to reduce federal spending by $103 billion and increase tax revenues by $399 billion and somehow total $560 billion. Let’s see what we are really trying to avoid, because as noted, the other ones we shouldn’t try to avoid or won’t be able to avoid anyway. This leaves about $60-$70 billion in spending cuts and $245 billion in tax increases. Subtract the $70 billion in cuts from the tax increases and we get $175 billion in tax increases over budget cuts.
Why did I include this lengthy morass of numbers?
Because of Timmy and Barry Zero. Timmy showed up to “negotiate” with the Repubs. Timmy’s efforts resulted in forcing Mitch McConnell to LOL. Seriously! Boehner reacted only slightly differently by telling Timmy “this is not a game!”
That’s where the Speaker is wrong. Barry, Timmy, and the rest of the Marxist Dems are playing a game, and they’re going to win if the Repubs don’t recognize what’s happening. The Repubs will lose, but most importantly, the American people will suffer severely for this political gambit.
So, what was it that made McConnell LOL and Boehner to react the way they did? The administration literally doubled down on their tax increase proposal. This is their plan. Geithner and Obama are now proposing $1.6 trillion in tax increases over 10 years or $160 billion in tax increases annually, in order to avoid $175 billion in tax increases over budget cuts.
McConnell says, Geithner showed “minimal or no interest” in spending cuts.
Back to the charts.
Two days ago, I graphed Barry Zero’s plan to deal with the budget.
That was before we knew that Zero’s plan actually includes doubling the amount of tax increases he campaigned on. I’ll graph his new plan.
Current federal spending stands at $3.8 trillion per year.
Now, some of you may state that this isn’t a fair comparison. That I should be comparing it to our deficit. Fair enough. I’ll even make the assumption that removing $160 billion of disposable income from the free economy won’t have a negative impact on our revenues, which it will. The $80 billion probably wouldn’t have had that much affect. $160 billion most definitely will. Our current debt is $16 trillion. It is estimated that our deficit spending in 2012 was $1.1 trillion, but the final numbers will be more than that. So, Zero plans to raise an additional $160 billion a year with no cuts to the budget. Let’s see what happens assuming spending won’t go up. (It most definitely will.) and that the tax increases won’t harm the economy, thus losing tax revenue. (They most definitely will.)
They like to put things in terms of 10 years. Okay, here we go!
That’s his plan! That’s it! Zero and Treasury Tool Timmy proposes additional taxes of over 10% of our GDP.
This isn’t a choice.
It is a fiscal cliff or a new fiscal cliff. Anyone pretending that we can remove 1% of our capital from the GDP and not have a negative impact on our economy is a delusional nutjob. This will have an immediate negative impact on our economy and because it does nearly nothing to reduce the debt burden, it will hock our economy moving forward.
My Advice To The Repubs.
Give it to them. Break off negotiations right now and say you’re willing to go along with this madness. Abstain in the voting or vote present. Make it a point to say you’re against this idiocy, explain why, but underscore the administrations lack of a serious approach to our problems. The longer these negotiations are drawn out the more tax proposals the administration will bring. If we accept the tax proposals, we will be plunged into a further, deeper recession. If we take the fiscal cliff, we will be plunged into a further, deeper recession. Only, the Repubs will be blamed for it. Call their bluff and let them own it. We will get a double moral boost from these people who hate Americans. Expose their hatred for Americans and let them have it.
My thanks to Dirk for pointing out my math errors.