Debt Commission Recommendations – “Expansion Of Government”

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Neil Cavuto on the debt commission recent recommendations….we need to show some guts:

He makes some valid points. Everyone knows we need this deficit to go down, way down, and he is asking if we are all prepared to do whats necessary?

BUT…I’m not buying it. Much of what they are recommending seem to be tax hikes and the expansion of government. Hell, they don’t even call for the repeal of ObamaCare which will GREATLY expand government

Not good.

  • By its own admission (page 11), the report calls for a ten-year net tax hike of $961 billion, nearly a $1 trillion tax increase over the decade.
  • The stated goal of the report is to raise the long-standing historical level of federal revenues from its average of 18 percent of GDP to 21 percent of GDP.  According to President Obama’s own Office of Management and Budget, federal revenues have never been this high, and their data pre-dates World War II.
  • The report deceptively calls their net tax hikes “spending in the tax code.”  There is no such thing, unless you assume the government has a right to all your money, and when they cut your taxes this is the same thing as “spending money on you.”
  • Additionally, the report calls for a tax hike “trigger” to take effect if Congress fails to enact comprehensive tax reform.  This “trigger” would take the form of a 10 percent reduction in the mortgage interest deduction, charitable contribution deductions, the exclusion for employer-provided health insurance, and a host of other tax deductions and credits. This haircut would grow over time, eventually leading to untold trillions of dollars in tax hikes.
  • The gas tax would be raised by $0.15 per gallon beginning in 2013. All this money would be spent on union-dominated “Davis Bacon” construction projects.  An American family with a 15-gallon tank who fills up weekly would see a tax hike of $117 per year.
  • There’s a stealth tax hike which involves slowing down how fast tax brackets adjust to inflation.  Over time, American families would find themselves in higher tax brackets than they otherwise would.  “Bracket creep” would begin to once again rear its ugly head.
  • Not counted in the $1 trillion tax hike is an expansion of the Social Security taxable wage base.  Under current law, only the first $106,800 in wages and net income from self-employment are taxable.  The report calls for the Social Security taxable wage base to gradually increase to nearly $150,000 (in today’s dollars) by 2050. This increases the marginal tax rate on work by 12.4 percentage points for workers in this income range.
  • Finally, the report calls for an automatic tax increase in any year that the budget is out of balance.

And when politicians who love to raise your taxes start making statements like the one below we REALLY need to take another look at these recommendations:

The Senate’s top Democrat on budgetary issues said that colleagues should be willing to “sacrifice” their political careers in order to get the U.S. on a better fiscal path.

Sen. Kent Conrad (D-N.D.), the chairman of the Senate Budget Committee, said that bringing down deficits and debt would require tough choices like the ones proposed on Wednesday by the leaders of President Obama’s fiscal commission, recommendations that have already been met with a chilly reception.

“There is no way of doing it that’s not controversial or difficult,” Conrad said on ABC’s “Good Morning America” of the panel’s recommendations. “If some of us have to sacrifice a political career to get this country back on track, then so be it.”

Be very afraid when someone like Conrad is telling Democrats to fall on the sword.

And here is Rush on his radio show (video here) on the recommendations, quoting Steve Manacek:

A lot of introductory verbiage could have come straight from the mouth of Ronald Reagan. Cut and invest to promote economic growth, cut spending we simply can’t afford wherever we find it, reform and simplify the tax code, broaden the base, lower rates, bring down the deficit.” I shared all this with you yesterday, and so on. “There are pages and pages of more or less specific proposals, some more pleasing to conservatives, others to liberals. But here’s what I don’t get about the initial reactions,” Mr. Manacek writes. “Putting aside all the minutia and all the detail the crux of the proposal comes down to two points: Capping federal government expenditures at 22% of GDP and capping revenues at 21% of GDP.

“Each of these represents a big problem. The first is on the spending side. Except for the anomalous stimulus bailout recession years of 2009 and 2011, federal government expenditures haven’t reached 21% of GDP since the collapse of the Soviet Union,” and Mr. Manacek writes here, “Except for the anomalous stimulus bailout recession years 2009 and 2011.” The whole point — if you want to really know the dirty little secret (I know I overuse that phrase) — the truth about the stimulus package was to increase the baseline on which future budgets are built. In two years, they increased the baseline around 20%, maybe even more. He’s out there saying, “shovel-ready jobs,” and then he said there aren’t any shovel-ready jobs. It was never about jobs as we know.

There weren’t any jobs that were created. We continued to lose jobs. It was rhetoric. Jobs created, jobs saved? This was about massively increasing the budget for all time. That’s what the stimulus bill was, to up the baseline. Now, those of you have been regular listeners since the early nineties know all about baseline budgeting. We spent a week explaining it to you. The baseline is simply the amount every year that every budget item is based on, whether the item is overfunded or underfunded, it doesn’t matter. So when Mr. Manacek writes here, “Except for the anomalous stimulus bailout recession years of 2009 and 2011, federal government expenditures have not reached 21% of GDP since the collapse of the Soviet Union.”

But they did with the stimulus. Permanently. The stimulus raised the baseline, and so now this debt commission comes up and says, “We’re gonna cap federal government expenditures at 22%.” But the problem is we’ve never spent 22% of GDP. Since World War II. Spending only competed 21% of GDP during the Reagan-Bush military buildup of the eighties and nineties. For virtually all of the Clinton and George W. Bush years and during all the Kennedy-Johnson-Nixon years, federal spending ranged between 18 and 20% of GDP”, and this deficit report caps it at 22%. It raises the baseline exactly what the stimulus was.

This thing is a blueprint for the expansion of government and codifying it as law, at 22%, when we’ve never spent that, up until Obama shows up. That’s one side of this. “The more important problem is on the revenue side. According to OMB figures, federal revenues have never reached 21% of GDP. That’s what they are targeted to be in this initial report that came out yesterday. In fact, only in Bill Clinton’s final year in office and during World War II did revenues even exceed 20% of GDP. During the whole time from 1960 to 2008, federal tax revenues almost always fell between 17 and 19% of GDP, only occasionally rising above 19%, chiefly in Clinton’s second term or below 17%, George W. Bush’s first term.”

Look, there’s a lot of numbers here. The bottom line is federal spending has never been as high as what this deficit commission report suggests, and federal taxes have never been as high as what this deficit commission report suggests. This is a trick, and it’s got all the Reagan language in there and it’s got all the stuff that sucks our side into saying, “Ohh, yeah, we’ll look at this.” You got the left not liking it because they don’t like the ratio of 75% spending cuts and 25% tax cuts, but there isn’t any cutting! It’s just like every year of the federal budget: There’s nothing being cut here. Taxes, spending, zilch. It’s all going up to unprecedented levels in our history and that’s the truth about this.

BREAK TRANSCRIPT

RUSH: One more reason to totally ignore the commissioner’s report yesterday on the deficit reduction panel report. They don’t even mention getting rid of health care, and if you are serious about reducing government, if you’re serious about tackling our debt, you gotta repeal it. You cannot have any element of it. They don’t even talk about it. It’s just baseless. Well, it isn’t baseless. It’s dangerous what this report does ’cause it’s a trick. It’s sucking our guys in, “Oh, wow, look, Reagan language in there, broadening the base, oh, yeah, I kinda dig the lower rates in there, I really do, love the spending to tax cut ratio.” Take your cue from the left. They hate it. They hate it, and they’re stupid. If they understood what this thing actually proposed they’d be out there trying to get it passed today.

So while Neil Cavuto makes some points, we all need to take some hits, this commissions recommendations don’t appear to be the savior some are calling it.

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@ Old Trooper 2,

#46,
“Redistribution of Wealth is counterproductive to growth of the economy.”

I’m sure you’ve heard that old saying that suggests, if you took all the money from the Producers, and gave it to Skook’s Parasites, within a year the money would have found its way back again to the Producers.

This may be an arrogant and politically incorrect statement, however, it speaks to the fact that there are Producers and there are those who have a natural tendency to leach off the system without effort.

America more than any country on Earth has historically presented an open door, literally and metaphorically, to those who wished to be Producers. This should not be allowed to change. If the scale tips, there is absolutely no coming back.

@ James Raider, printing 6 Billion Dollars of Currency is just greasing the skids! $100.00 bills coming on rolls like Toilet Paper is just plain Stupid! 😉

Then tossing it around like Mardi Gras Beads!

SKOOKUM: YES, YOU CAN Say it BETTER, than I can, AND that was my OPINION TOO
concerning the management of funds that can be increased instead of cutting during a war
completely fought but being slowed by POLITICIENS and their lack of respect for the braves,
who are the best there is in the AMERICA, they should be running the COUNTRY,
AT this time where the open border bring enemies inside to even be able to vote:
IT’S unimaginable to notice, and WITH it lack of DISCIPLINE and self restraint on
every way, and yes SPENDING without thinking of consequences, what wrong example are they showing being a leader to the young people who want to believe the leader, but only find
EMPTY suit and nothing in the core of the person except negative desire to bring AMERICA
ON HER KNEES, SLOWLY BUT SURELY.

Old Trooper 2,

#52,

You know the old saw (with some edits):
When I owe the bank $50,000, I have a problem.
When I owe the bank $5,000,000 we Both have problem.
When I owe the bank $5,000,000,000,000, theBank has a problem.

. . . .It appears that Bernanke, Geithner and Obama are completely ignoring that the TAXPAYERS are that Bank in their extravagant fairytale.

IS THERE ANY WAY THE NRW ELECTED REPUBLICANS AND CONSERVATIVES,
COULD STOP THAT?
anyone?

Tighten up those seat belts, the Bernanke-Geithner-Obama Inflation train has left the station:

Secret Walmart Survey Shows Inflation Already Here

JR, I have a mind for figures, numerical and feminine. The prices at the grocery stores are beginning their upward spiral. People are going to be feeling the pinch in time for Christmas. I sure hope the Dems increase the food stamp values to cover the hyper-inflation they are inducing, otherwise the Dems will lose their base.

It’s a good thing California can’t print its own money, they are advertising their bond issues on the radio every hour. I don’t think it would help if they advertised every five minutes, who wants to invest in a state run by profligate morons?

But then again, who wants to invest in a country run by profligate morons.

Obama and Geitner probably can’t even tell us about the Weimar Republic and ther remedy of printing vast sums of money. Oh I am sorry, Geitner is the only man who has the ability to repair this country.

Does anyone notice the left and the MSM have given up on calling the Idiot in Chief the smartest man in the world. You can only throw so much bull crap before everyone knows you are just throwing a bunch of manure. 😛

I’m doing my part to help the economy. Even though I don’t belong to any political party, I voted straight republican the last election, and I am going to follow the elections closer than I have all my life before.

“If some of us have to sacrifice a political career to get this country back on track, then so be it.”

I hope all of the democrats take the same pledge.

Skook,

“The prices at the grocery stores are beginning their upward spiral.”

Prices of natural resources from oil to copper, and on farm products are going up. Within China, the prices on all goods are rising. That will place further pressure on the cost of everything we import from Asia, and everything we consume.

. . . And incomes and job numbers will not rise to the occasion.

James Raider: hi, YOU know, now that you mention it; I made an order of grocery yesterday,
AND I usually don’t check, but I stop for a WHILE and thought that it was more EXPANSIVE
than last time, so when we notice without checking the total before, it must be true.
bye

bees,

Usually you can safely set your Price-Of-Goods-Trend gauge on fluctuations in the price of oil, . . . as a simple measure. Manufacturing and transport costs directly impact wholesale costs and therefore retail prices. NOW with the ever-creeping increases in the dollar float, we’re seeing more very visible upward influence on prices everywhere. Ever since Nixon’s disconnect of the Dollar from Gold, inflation has been on an upward march.

There is little else behind the dollar, other than an aggregate of all taxpayers’ promise to back it. Strangely, on behalf of taxpayers, the government handed off control of the dollar to an independent and privately owned body – The Fed.

Taxpayers have NO effective oversight on the most important element in their economic lives.

James Raider: hi, thank you, I think of what you mentioned, yes the price of oil is going to be very hard for the people heating with oil in our NORTH WINTER, as I heard last year too,
I’m sure they will be the first to talk about it, as THEY have to fill a full barrel at once,
or the truck driver wont deliver in small amount. bye

YOU know, there is one thing I was happy about, I found some garlic from USA,
and this is a unusual, because it always come from CHINA, they have the monopole
IN big supermarket and even local small place where they sell that garlic,
and I complained every time, so this was a good positive for me,
I also heard that the big SUPERSTORE [that’s his name” dont buy from MEXICO,
OR the least, because of what they use in their farming those product,
I beleive we start to buy from our own before any other, there is enough in AMERICA,
FOR US TO encourage the production of our favorites goods.

Simpson-Bowles: Of Bitter Pills and Strong Medicine

http://hotair.com/greenroom/archives/2010/11/12/simpson-bowles-of-bitter-pills-and-strong-medicine/

The proposal is hardly perfect, and no sane person would have expected it to be. But it has the promising attribute of ticking off pretty much everyone, as I have long predicted any real solution would do.

Some of the more strident voices on the left broke out in initial howls of “hot rage” and rending of clothing before settling down to seethe with simmering hatred. After all, the proposed plan not only reduced taxes for those evil corporations who are trying to destroy the world, but it had the temerity to mess with Social Security. And after all, as we all know, any attempt to add some sustainability to the bloated, groaning entitlement system is clearly the exact same thing as telling America’s workers to drop dead and yet another example of nefarious Republicans’ communal desire to club senior citizens like baby harp seals.

But the pain wasn’t restricted to the Left. There are some bitter pills for doctrinaire fiscal conservatives to swallow as well. While the corporate tax rate may go down, the effective capital gains rate would go up – at least for a while. Many tax deductions which affect earners across the board would disappear as the tax code – desperately in need of reform – gets stripped down a bit. And higher earners would find themselves paying into the Social Security system on a larger percentage of their incomes.

But that’s really the type of formula we should have expected. To right a ship which is floundering this badly, some pain and sacrifice will be required all across the board. I still recall a debate I had with our host, Ed Morrissey, during the run up to the 2008 elections. We were discussing some of the more “radical” proposals of Libertarian candidate Bob Barr, and Ed told me that, “nobody ever got elected arguing for an austerity platform.”

But that’s pretty much what this is, albeit a rather mild one. The question is, what will become of it? We just finished electing roughly five dozen new members of Congress, each of which ran on a promise to cut spending and enact tough fiscal reform. Now Masseurs Simpson and Bowles have served up low, hanging strike to the outside corner.

It seems to me that this is the opportunity for those claiming to care about our fiscal future to wo/man up. It’s time, as others have less artfully phrased it, to put on the man pants. (Or woman’s pant suits? This analogy is going down faster than Obama’s approval ratings.) The point is, we don’t have to accept every line item of this proposal without proper debate and adjustment, but the rudimentary formula seems to be in place. Somebody is going to have to take the political risk of fixing the entitlement system and refreshing the tax code.

Sacrifices are going to have to be made, and they’re going to hit all of us to some degree or another. If you envision an America of a more socialist nature, you’re going to have to admit that somebody has to pay for the required corrections. The most die hard capitalists will need to acknowledge that everyone, at every level of wealth, will have to pitch in to fix this. And in the end, the fault lies with all of us. You voted for the people who got us into this mess. (And if you didn’t vote, then you chose to let the rest of us choose for you, so sit down and shut up.) We’re all going to have to pay to fix this, but it’s better to swallow some strong medicine today than allow it to turn into a fatal overdose for the next generation.

Election 2010 was focused on jobs, but also on fixing the economy. The voting is over and the new members are on their way to DC to be sworn in. It’s time to get to work, and we never promised you it would be easy.

OLD TROOPER 2: hi, THIS THE closer WE can get to healing the wounded BEAST,
AND send it away, to die.
I say, SMART PEOPLE newly ELECTED will do it for AMERICANS, IN a GRACIOUS WAY:
AS GRACIOUSLY AS YOU EXPLAINED IT.
THANK YOU.

@Old Trooper 2: #64

Many changes are needed in our Federal government. Two of them apply to your comments:

(1) Enact the Fair Tax that is in congress now. It should have been called a National Sales Tax. What better way to collect taxes than to ELIMINATE all Federal taxes and have a straight percentage sales tax? No Income Tax forms to fill out.

Some people are lying when they tell us that the Fair Tax would ADD 23% to the purchase price of products. It will REPLACE all of the Federal taxes being paid now and put it in a sales tax when you buy something NEW. What you pay $100 for now, you will still pay $100 after the tax. The difference is that the store you buy it from will collect the tax and send it to the Federal government. Used items wouldn’t be taxed. The rich would pay their fair share because they would pay the same percentage tax but they will be buying more expensive items and a lot more of them.

Please read The Fair Tax Book. I am hard to convince of new stuff, but I agree with this.

(2) Take the money out of running for office. We need to have a way for politicians to run for office without paying anything. As long as it costs millions (now hundreds of millions for a Federal office) there has to be promises made in return for the money. Many of the rich get what they want because they donate to both parties. Either way, they win.

One suggestion is to have the Federal government pay for the advertising. How would it be decided how many get the money and how much they get? Another way would be to record a series of debates that are free and distributed to the media and anyone else who wants to download them. If the media showed one person’s debate, they would have to show each of the other person’s debate at an equivalent time slot.

The idea needs to be to have the politicians owe only the voters who put them in office instead of the ones who gave them money.

@ilovebeeswarzone: #65

Sorry to burst your bubble Bees, but the republicans who pledged to eliminate earmarks are already saying they can’t.

http://voices.washingtonpost.com/plum-line/2010/11/earmark_debate_another_example.html

I call these kinds of republicans “republicrats” because they have absorbed so much of the democratic agenda that you can’t tell the difference any more.

As long as a politician has to take money from someone else to get elected, they have to do what that someone says or the politician doesn’t get any more money from them. The expression, “Money talks” is more true in politics than anywhere else.

@ Smorgasbord, if We cannot Housebreak that Animal that is Gummint, We must put it on a strict diet. I concur on taxes.