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
- 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.
“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.
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.