Debt Ceiling Debate: “Balance” vs Confronting Reality

Before we agree to President Obama’s demand for tax increases shouldn’t we take a look at what brought us to this moment of debt crisis?

In his third debt-ceiling press conference President Obama called for a “balanced approach” or “balanced package” seven times.  By this he meant immediate tax rate increases and spending cuts to be spread out over ten years.

Now, what [deficit reduction] would require would be some shared sacrifice and a balanced approach…that millionaires and billionaires can afford to do a little bit more…

Obama knows that there are too few “millionaires and billionaires” to make a dint in his yawning deficits.  Based on IRS statistics a whopping 50% increase in revenue from millionaires and billionaires would add up to about $125 billion per year, or about 7% of this year’s deficit.

Obama talks about millionaires and billionaires, but his real goal is to raise income tax bracket rates on all income over $200,000, a policy that would diminish the after-tax resources of small businesses with the potential to create the most jobs.

Government debt reached crisis level because of a breathtaking increase in spending that began with the bank bailouts of President Bush’s final year, and continued through Obama’s first three years.

Spending in 2011 will be a stunning 40% higher than it was in 2007.

President Obama and the Democrats made sure these higher levels of spending became the new “baseline” from which spending will increase every year unless Congress acts to correct it.  The trillions of dollars in “cuts” we’re hearing about would be reductions in the rate of increase already scheduled via baseline budgeting.  Unless Congress takes more dramatic action than is now contemplated by either party future spending will not be less than 2011 spending.

But even the cuts in the rate of increase might not happen.  The current Congress cannot force a future Congress to abide by its budget plan.  Ronald Reagan agreed to a package of excise tax increases because Congress promised spending cuts that never happened.  George HW Bush broke his no-new-taxes pledge in exchange for future spending cuts that weren’t enacted.

Obama’s offer is an unenforceable promise of  reductions in the rate of growth in spending – reductions that he would most likely attempt to undo – in exchange for real tax increases that would be enacted into law immediately.  Thus his public statements are about a “big package.”  If spending cuts won’t happen anyway, why not tell us that he’s on our side, trying to get drag those recalcitrant Republicans into “the biggest deal possible”?

Toward the end of his press conference, as he answered a reporter’s question, Obama cracked opened a window to what he really thinks:

…if you are a progressive, you should be concerned about debt and deficit just as much as if you’re a conservative.   And the reason is because if the only thing we’re talking about over the next year, two years, five years, is debt and deficits, then it’s very hard to start talking about how do we make investments in community colleges so that our kids are trained, how do we actually rebuild $2 trillion worth of crumbling infrastructure.

If you care about making investments in our kids and making investments in our infrastructure and making investments in basic research, then you should want our fiscal house in order, so that every time we propose a new initiative somebody doesn’t just throw up their hands and say, “Ah, more big spending, more government.” It would be very helpful for us to be able to say to the American people, our fiscal house is in order.

Barack Obama reminds us of the TV sitcom husband who pretends to care what his wife wants and tries to manipulate her perceptions and emotions in order to deceive her into cooperating with his priority of the moment.  To Obama, deficits and the soaring debt are other people’s concerns.  Those people annoy him by talking.  Their talk is a barrier to his priority, growing government and concentrating power in Washinton.  He will promise anything he thinks will stop others from talking about deficits so he can put his “investments” back on the national agenda.

We posted this graph two weeks ago but so far the media seem not to have caught on.  The current income tax rates generated more tax revenue than any previous year since the tax began in 1917 – after adjusting for inflation.  Tax revenue declined for two years due to the recession, but it has come back up in 2011.  Income tax revenue is on track to equal the all time record high of 2007 without the destructive rate increases Obama demands.

19 Comments so far

  1. AzTex on July 19th, 2011

    Why does your graph show spending as percentage of GDP instead of in dollars? It’s deceptive. GDP is down due to the recession so naturally spending as percentage of GDP would go up.

  2. MegInMiami on July 19th, 2011

    Obama is spending this great nation into a Greece style pit of debt and poverty.

  3. BamJaya on July 19th, 2011

    Even if it isn’t enough to close the whole deficit what’s so bad about asking millionaires and billionaires to pay more?

    Why shield them from the reality everyone else is facing when they are the ones best able to sacrifice a little for the country that has made them do rich?

  4. Thousand Flowers Blooming on July 19th, 2011

    Republicans are owned by wall street millionaires. So they insist millionaires can’t afford to pay any more. The tea party crazies are just stupid.

  5. SeekingMolly on July 19th, 2011

    SeekingMolly

    The Republicans created this 35 year old mess and now they don’t want to participate in fixing it. Maybe tax revenue was higher in 2007 but it would have been a lot higher without the tax cuts for the wealthy first passed by Reagan and then made even worse by Bush.

    Republican deregulation encouraged the out-of-control Wall streeters who crashed the economy just before Obama was elected. Then Republicans and Democrats had to forces to bail them out to keep us from sinking into a depression.

    Now the same wall streeters and Republicans blame Obama for not turning round their 35 year old wreckage in 2.5 years?

  6. Sarah Livingston on July 19th, 2011

    Good people are losing their houses by the millions. I know some of them. Most of us are just barely avoiding foreclosure or bankruptcy.

    Unemployment is 16%. The economy is in the sewer. And all Obama can think of to do is try to raise taxes on small business owners. Like that’s going to help!

    If you are productive and can create a job or two this regime wants to get rid of you.

  7. MerilynJune on July 19th, 2011

    From Kos

    “Of all the Orwellian inside-out euphemisms of the Conservatives, Tea Partiers, and Republicans, perhaps none of them can match — for sheer audacity or sheer perversion of meaning — the GOP’s flag-waving crusade to protect those little people, those hard-fighting diminutive economic engines, those “Small Businesses.” They portray this battle as David versus Goliath, the weak versus the powerful, small business versus big government.”

    The teaparty idiots don’t even know they’re defending “small business” tax breaks for multi-billion dollar companies, and the Koch Brothers conglomerates!

    We’ve had these low taxes, starving us for revenue ever since Bush’s first year. Trillions in surpluses pissed away in tax cuts for people who already live like kings and don’t need any help. No jobs created. Trickle down is a hoax.

    The Definition of insanity is to keep doing the same thing even after it didn’t work for a decade!

  8. Bob Connors on July 20th, 2011

    GOP are fools that will suffer huge loss next year. Ending Medicare is not the way to bring the deficit under control. Slashing Social Security will cause another recession and throw millions more out of work due to less demand for products and services.

    Obama offered trillions in cuts and Republicans walked out of the room in a huff. They act like children while the country suffers. All they care about is their big corporate contributors.

  9. Sarah Livingston on July 20th, 2011

    Obama is a hardball pol from Chicago. Thats why he threatens to hold back Social Security checks if he doesn’t get the tax increases he wants.

    He will do anything, no matter who gets hurt, to get what he wants. That’s how they play the game here in Chicago.

  10. Ancient War Horse on July 20th, 2011

    It was easier for us to hunt down the enemy in the Mei Cong Delta of Vietnam than it is to hunt down the truth in Washington today.

    Paul Ryan is a hero who put forth a plan to save Medicare and Social security. But the media joined with the progressives in the lie that his plan would end Medicare.

    Obama wants to increase spending but the media help him spread the lie that he wants more spending cuts than the Republicans and only wants just a teensy weensy tax increase that would only hit greedy bastard millionaires and billionaires who don’t need any money.

    I see some of the posters here actually believe the dirty lies of the progressive media. I feel sorry for you.

  11. Drew on July 20th, 2011

    I bring yee truth.

    Sarah had the most insightful post in this thread. Obama is a Chicago/IL political thug. Look up his self proclaimed “political godfather” – Emil Jones. Then you will need a shower. And BTW – anyone want to wager on where the Bachman migraine story came from? Think Ax and rod.

    Azwipe –

    ” GDP is down due to the recession so naturally spending as percentage of GDP would go up.”

    Real GDP was about 14 trillion in 2007, 14.3 trillion in 2008, and is now over 15 trillion.

    Ooopsey! But thank you for showing us what buffoons occupy he left. Its always good for a laugh. In addition, thank you for demonstarting what Boomer is pointing out. Although the private sector, including the average household, has had to tighten its belt. Government? No way. Vampires don’t sleep.

    And of course we have the Liberty Works village idiot – Thousand Flowers – blathering about Wall Street……..and never stopping to think that Obama’s greatest source of campaign funds is, uh, er, Wall Street…….who he bails out. Ooops.

    And let me not be dicriminatory……we have this from MoronJune:

    “The teaparty idiots don’t even know they’re defending “small business” tax breaks for multi-billion dollar companies, and the Koch Brothers conglomerates!”

    Speaking of idiots…..anyone who doesn’t understand that tax rate increases on “the rich” would only fund the government for a few days is, well, an idiot. And so what will happen is what always happens, the tax burden will dip down until “rich” is defined as people making $100K etc. And, oh, that’s the small owner class. Duh. I think I saw something about “children.”

    And they wonder why no one is hiring.

  12. Bamjaya on July 20th, 2011

    “anyone who doesn’t understand that tax rate increases on “the rich” would only fund the government for a few days is, well, an idiot.”

    I don’t believe that. But You know what? I don’t care if it’s only a few minutes! I’m sick of the whole purpose of the Republican party being to protect the most fortunate, wealthiest, and the most secure.

    The richest pay 15% or less, while the middle class pays 7.65% for payroll tax plus 15 – 25% income tax. What’s wrong with a guy who makes $20 million paying another 10 or 15 percent? At least the same as working families pay?

    In the 50s the rich paid 90% and the economy was booming with low unemployment. Government wasn’t borrowing, there was no money crisis in Washington every other month. No government shut downs. No problem paying Social Security checks.

    My mother didn’t have to work in the 50s. My father supported the whole family on one job in a Pepsi bottling plant.

    The rich weren’t suffering. They could afford their mansions and servants and travel all over the world.

    This Reagan-Bush-Tea party obsession with keeping the rich from any discomfort or expense is what’s destroying our country.

    We’re fed up with this constant crisis in Washington!

  13. Drew on July 20th, 2011

    Bamjmumbojumbo –

    “I don’t believe that. But You know what? I don’t care if it’s only a few minutes!”

    Your public declaration of profound ignorance, and lack of embarrassment about that profound ignorance has been noted. After all, you are a liberal.

    “I’m sick of the whole purpose of the Republican party being to protect the most fortunate, wealthiest, and the most secure.”

    Of courese. Now, setting aside that Obama gets the vast majority of his campaign money from Wall Street and Big Labor……do you give a rats ass about the Average Joe, or are you just blinded by ideology?

    “The richest pay 15% or less, while the middle class pays 7.65% for payroll tax plus 15 – 25% income tax. What’s wrong with a guy who makes $20 million paying another 10 or 15 percent? At least the same as working families pay?”

    You are more ignorant than most, but that’s OK, let’s see if you are trainable. Your’s truly happens to be one of those “rich” people. I don’t pay 15%. I pay the marginal rate, because the 15% rate you cite is really only on long term capital gains, income that has previously been taxed at 36%, and not ordinary income. Further, as one who employs people, I pay TWICE the payroll tax rate, once for the employee, and once for me.

    So for your MSNBC style bogus statistics, its all bull. The “rich” pay the vast majority of the taxes already. The blood in the turnip is running low. You can pound your fist on the table all you want, but the game is over. Compared with 1950 the “rich” are paying WAY more than then. The game is over.

    Soak the rich will now only result in unemploy the Average Joe. Look at our stats. Is that what you want?

  14. Sammy1984 on July 20th, 2011

    Why don’t you progressives look at the facts? Look at the graph at the top of this article. Obama’s hopey changey spending is the problem here. Obama threw away trillions of dollars and we have nothing to show for it. NOTHING! And he charged it all so now the credit card bill is past due.

    I have a question for you liberals or progressives or whatever: Do you seriously want to tax business owners at 90%? Do you serious think someone will risk his money to open up a business and hire you if Obama is going to take 90% of what he makes and throw it down the drain? I ask this question all over the internet and no liberal ever has an answer.

  15. Sarah Livingston on July 20th, 2011

    Sammy…

    Of course they can’t answer. They don’t know how to think. they only know how to make demands. What they never figure out is the higher the tax rate on the rich the fewer rich there will be and the less they’ll make in taxable income.

    They say the rich should pay their “fair share” but they’ll never put a number on it. They only know they want more but they won’t ever say how much more because what they really want is all of it. Every dime.

  16. Alex on July 20th, 2011

    The republicans refuse to compromise before the deadline. They will have to after th country has another crash

  17. Drew on July 21st, 2011

    “compromise” – Websters: continue to tax and spend like drunken sailors

  18. Alex on July 21st, 2011

    Drew –
    Wake up. Obama proposed $4 trllion in cuts. But GOP won’t compromise with any revenue at all.

  19. Drew on July 22nd, 2011

    Alex –

    Awake and aware. Of course, you are simply incorrect. Obama looked into his teleprompter and read that he would consider cuts. But he has proposed no budget. Period. Full stop.

    I don’t know what you do for a living, or if you are 13 years old, but in the real world, until you put forth a definitive proposal, its all just smoke and mirrors. Kind of like Obama’s entire presidency.

    Leaders make real proposals. Frauds read slogans from teleprompters.