Congressional House Leader John Boehner(R-OH) Is Hoping The Middle-Class Cannot Do Tax Math

Congressional House Leader John Boehner(R-OH) Is Hoping The Middle-Class Cannot Do Tax Math

Countering President Obama’s plan to avert the fiscal cliff released last week, House Republicans unveiled their own plan this afternoon that is presented as a major gesture of compromise as it finally puts tax revenues on paper and with House Republicans’ endorsement.

The big question, of course, on the fiscal cliff negotiations is what happens to tax rates for the wealthiest Americans — Democrats want them to go up, Republicans want them to stay the same. Realizing that they have to offer some kind of revenue increases, Republicans have been searching for a way to do that that doesn’t actually raise tax rates and thus violate Grover Norquist’s pledge. Boehner did that today in his proposal, which keeps revenues where they are today (by extending the Bush tax cuts on the top 2 percent of Americans), but calls for the elimination of tax deductions.

Boehner does this by leaning on the Simpson-Bowles plan, which, in case you haven’t been watching “Morning Joe” or reading David Brooks, was put forward in 2010 by a deficit-reduction commission convened by President Obama and co-chaired by former Republican Sen. Alan Simpson and former Clinton Chief of Staff Erskine Bowles.

Setting a target of $800 billion in new revenue, Boehner writes in his letter to Obama, “Notably, the new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our economy.”

Boehner has one key thing very wrong, though, as others have already noted. While the entire purpose of Boehner’s tax plan is to preserve the tax breaks for the top 2 percent, the Simpson-Bowles plan begins by allowing those rates to go up by assuming the expiration of all the Bush tax cuts. It then eliminates deductions and uses the money saved to reduce all tax rates a bit. Boehner’s plan does the opposite: It assumes the extension of the Bush tax cuts and then tries to find ways to pay for them by eliminating deductions.

The problem with this approach is that it’s basically impossible to raise any significant amounts of money without hitting the middle or lower class. Capping deductions gets you closest to that goal, as the wealthy are the most likely to take advantage of deductions, but it still doesn’t quite add up.

A $50,000 deduction cap would yield about $760 billion, just shy of what Boehner is aiming for. That cap would mostly impact the rich, according to the Tax Policy Center, but not entirely. At least 4 percent percent of the increased tax burden would fall on the lower 80 percent of Americans.

That might not seem like much, but think about that this means. Essentially, Republicans are proposing a way to preserve tax cuts for the wealthy by likely increasing taxes on the middle class, even if just a little.

So conservatives do not mind raising taxes as long as they are raising taxes on sales clerks, teachers and truck drivers. Boehner seems to think Republican leadership is a contest with Paul Ryan (R-WI) to see who can be the best at pretending to be a wonk who understands numbers. His offer is a joke, What's Wrong With the Republican Fiscal Cliff Counteroffer.

Rupert Murdoch's Wacky Anti-American Fox News Pushes Conspiracy Theory That DOJ Wants To Release Gitmo Terrorists Onto U.S. Streets

It’s Not a Fiscal Cliff, It’s an Austerity Crisis

It’s Not a Fiscal Cliff, It’s an Austerity Crisis

Washington is not known for the stunning clarity with which it frames and addresses tough issues. But has there ever been a debate so mired in confusion as the one around the so-called fiscal cliff?

The trouble starts with the term “fiscal cliff,” which misstates the nature of the problem and provides no hint of how to solve it. I prefer the term “austerity crisis,” which at least describes the real issue -- too much austerity, imposed too quickly. (This has the added advantage of sidestepping an increasingly inane discussion over whether the problem is really a “cliff,” “curb,” “slope” or perhaps a “bomb.”)

Here is the crux of it: Depending on what you throw into the pot, the sum of the expiring Bush tax cuts along with currently mandated spending cuts would equal somewhere between $500 billion and $700 billion in deficit reduction in 2013. That’s more than enough fiscal contraction to throw the U.S. into recession. The tax increases alone would reduce the average family’s take-home pay by more than 6 percent. Because everyone agrees that’s a bad thing, Congress could pass a law, tomorrow, preventing it. Done.

But Congress won’t pass that law. Although the problem may be too much austerity too quickly, most everyone in Washington is insisting that the solution should encompass much, much more. In theory, this crisis should be easily resolved: If you have too much austerity, lighten the load. The reason the austerity crisis has become so messy is that the connection between the problem and its solution has been severed.

Wrong Solutions

In fact, proposed solutions inevitably include four or even five distinct categories of policy. There are proposals to address the crisis itself -- to reduce the dangerous size and speed of the scheduled deficit reduction in 2013. There are proposals to replace the scheduled deficit reduction with a different set of deficit-reducing tax increases and spending cuts, to be phased in over a longer term. There are policies to redesign the tax code or reform certain entitlements. There’s the need to raise the debt limit, as the Treasury is expected to run out of borrowing authority in February. Finally, there are policies to increase the amount of short-term stimulus and boost infrastructure investment.

So while the proximate problem is too much austerity, too quickly, the solutions being offered address an array of other concerns. Meanwhile, amid these wide-ranging proposals, the conversation in Washington tends to focus exclusively on achieving deficit reduction -- even though the economic threat we face in January is too much deficit reduction.

A more sensible approach would deal directly with the problem at hand: the austerity crisis. And that could be defused fairly simply, without doing overly much to harm the deficit. The path would involve identifying policies that pack a big stimulus punch without significantly increasing the deficit. Such “mismatched” policies abound.

The liberal Economic Policy Institute estimates that continuing the payroll-tax cut would create 1 million jobs in 2013 at a cost of about $115 billion. By contrast, maintaining the Bush tax cuts -- yes, all of them, including those on income less than $250,000 -- would create only 600,000 jobs while costing $202 billion. Adding to the appeal of the payroll- tax cut is that it’s designed to expire once the economy has strengthened. The Bush tax cuts, once renewed, will probably continue costing the Treasury year after year.

This is what the public sees - we have to make balancing the budget a top priority and we have to make massive spending cuts. You know why the public sees the fiscal "cliff" in that frame, because the media have become hand maidens for the radical Right conservatives. Conservatives do not want to admit that we have a revenue crisis, another way of saying austerity crisis - because that would point to one somewhat simple solution -raising revenue from taxes on people who have so much money they ponder how many McMansions they feel like owning or whether they should have the chauffeur wash the Mercedes seven days a week or just every week day.

Conservative Republicans Want to Rise Taxes for Low Income Americans and Lower Taxes Again for Millionaires

Conservative Republicans Want to Rise Taxes for Low Income Americans and Lower Taxes Again for Millionaires

An oft-repeated Republican talking point is that close to half of all federal income tax filers have no tax liability. Prominent Republicans often imply that these people ought to be paying federal income taxes — and that they don’t is a major cause of the budget deficit.

Last year, Senator Orrin Hatch of Utah, the ranking Republican on the tax-writing Senate Finance Committee, declared that taxes on the rich should not be raised until the poor are taxed. “I think many taxpayers are skeptical that the answer to our fiscal problems is for them to sacrifice more, when almost half of all households are not paying any income taxes,” Mr. Hatch said.

In April, Representative Eric Cantor of Virginia, the House majority leader, said it was “unfair” that 45 percent of people don’t pay any federal income taxes. Asked if he wanted to increase taxes on these people, he replied, “You’ve got to discuss that issue.”

In May, Richard Mourdock, the Republican Senate nominee in Indiana, likened the current split between taxpayers and nontaxpayers to the pre-Civil War division of the nation between slave and free. Consciously using Abraham Lincoln’s famous “house divided” terminology from 1858, Mr. Mourdock said, “When 47 percent are paying no income taxes — they do pay Social Security, but they are not paying income taxes — and 53 percent are carrying the load, we are a house divided.”

In a McClatchy-Marist College poll in early November, 71 percent of Republicans said they believed the poor should not be exempt from income taxes and only 26 percent said they thought the poor should not have to pay them.

This is ironic, because two of the measures most responsible for the rise in the number of nontaxpayers are the earned income tax credit and the child credit — both Republican initiatives. Together they account for 30 percent of the nontaxpaying population, according to the Tax Policy Center.

Once upon a time, Republicans were more concerned about the number of rich people with no income tax liability.

On Jan. 17, 1969, just days before Richard Nixon’s inauguration, the departing treasury secretary, Joseph Barr, disclosed that in 1967, 155 Americans with an income of more than $200,000 had no income tax liability, including 21 with an income above $1 million.

This was considered such a scandal that Nixon sent a tax package drafted by the Johnson administration to Congress with his endorsement. When the Tax Reform Act of 1969 was enacted, including a minimum tax to force rich people to pay something, he praised that provision.

As Nixon said in his signing statement:

    A large number of high-income persons who have paid little or no federal income taxes will now bear a fairer share of the tax burden through enactment of a minimum income tax comparable to the proposal that I submitted to the Congress, which closes the loopholes that permitted much of this tax avoidance.

Ronald Reagan defended his tax reform proposal on the grounds that it would reduce the number of nontaxpaying rich people. In a June 6, 1985, speech, he said:

    We’re going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary, and that’s crazy. It’s time we stopped it.

Among the specific measures Reagan supported to increase tax fairness was an increase in the tax on capital gains to 28 percent from 20 percent.

From Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. Bartlest is partially wrong on one point - the earned income credit - mostly aimed at low income families - was a bi-partisan effort. remember when every once in a while Washington would do something good and bi-partisan. Conservatism has become a joke. It ran up massive deficits and as Dick Cheney explained - "deficits don't matter". Then that Democratic guy became president and suddenly deficits became urgent. Only conservative busted the economy - not a good time to focus on deficits. A time when sane people would focus on rising revenue from the people that can most afford it - the very wealthy.

The knuckle draggers at Breitbarf are trying to recycle the Bill Ayers meme against Obama. Not able to find any actual damning evidence they just make things up - because having all the integrity of a cockroach is a conservative value - #Breitbart.com Bombshell Exclusive: Professor Did Not See Barack Obama at Bill Ayers’ House!

Why Do Republicans Hate America - Paul Ryan and Republicans Are Bamboozling American Public

Should The Revenue Assumptions In Ryan’s Budget Be Trusted?

During a speech at the American Enterprise Institute yesterday, House Budget Committee Chairman Paul Ryan (R-WI) said that his budget — which was released yesterday — “reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt.” But does it?

According to the official score from the non-partisan Congressional Budget Office, the House Republican budget does significantly reduce the national debt, eventually (though it increases the debt in the short-term, because the health care cuts it would implement phase in slowly, while the giant tax cuts for the rich it includes would take effect immediately). But the CBO only shows this result because it is assuming that the government will raise 19 percent of gross domestic product (GDP) in revenue.

Why is the CBO assuming that? Because Ryan’s staff told it to, without indicating how that revenue would actually be raised:

The path for revenues as a percentage of GDP was specified by Chairman Ryan’s staff. The path rises steadily from about 15 percent of GDP in 2010 to 19 percent in 2028 and remains at that level thereafter. There were no specifications of particular revenue provisions that would generate that path.

If you tell the CBO to assume a certain amount of revenue will be raised, it does, even if that revenue is wildly optimistic. Ryan did the same thing when he had the CBO score his Roadmap For America’s Future. He told the CBO to assume that the plan would raise 19 percent of GDP in revenue, and the CBO based the rest of its numbers on that assumption. But when the Tax Policy Center ran the numbers, it found the Roadmap would raise far less than Ryan said it would:

Assuming taxpayers choose their preferred tax system, revenue would average 16.1 percent of GDP between fiscal years 2011 and 2015, rising to 16.6 percent by 2020, compared with 20.2 percent under CBO’s January 2010 baseline. The fall in revenue would result primarily from the lower individual income tax rates and the exemption of capital income.

Without the level of revenue specified, Ryan’s Roadmap wouldn’t set the country on a path to reducing the debt, with debt growing to 175 percent of GDP. Are the revenue assumptions for Ryan’s 2012 budget any better? If they’re not — and we have no reason to believe they are, given Ryan’s previous performance — the radical cuts that Ryan has in mind will fail to reduce the country’s debt.

The Republican - Ryan plan is all smoke and no substance - other than destroying Medicare and robbing the poor to pay the rich - Ryan Budget Plan Produces Far Less Real Deficit Cutting than Reported. Plan’s $4.3 Trillion in Program Cuts, Offset by $4.2 Trillion in Tax Cuts, Yield Just $155 Billion in Deficit Reduction