Earlier today here at America’s Right, I had the chance to discuss the effect which the president’s new budget–tabled yesterday by the White House–would have on the deficit and national debt. But, subject to the stranglehold of the 24-hour day and a schedule which resembles six pounds of potatoes in a five-pound bag, I only scratched the surface of this fiscally irresponsible abomination.
This is a budget which, as Wisconsin Republican Paul Ryan–ranking member of the House Budget Committee told National Review Online yesterday, is “not like most budgets, with some tax-code tinkering and spending.” Instead, he said, “this budget is a choice,” and “we are about to make a decision whose consequences will last for generations.”
“This budget presents a choice of two futures,” Ryan said. “Don’t look at the president’s rhetoric, look at his actions. His substance implies a different reality. Not only is this budget worse than the last one, but it triples our debt within ten years, features gushers of tax increases, and relies on some partisan commission to do the heavy lifting on fiscal policy after the next election. Make no mistake: This is a budget aimed to advance the administration’s philosophy and ideology. By increasing taxes and letting the country spiral into debt, this budget is a firm step toward transforming America into a collectivist society overseen by a social-welfare state.”
What’s Ryan talking about? From a Reuters piece entitled Backdoor Taxes to Hit Middle Class, an article which has purportedly been pulled from the Web due to White House pressure:
The Obama administration’s plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.
In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year — effectively a tax hike by stealth.
While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.
The targeted tax provisions were enacted under the Bush administration’s Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.
From that Reuters piece, here are some of the effects the president’s budget will have if passed:
- The special 10 percent tax bracket will be eliminated
- The 25 percent tax bracket will revert back to 28 percent.
- The 28 percent bracket will increase to 31 percent.
- The 33 percent bracket will increase to 36 percent.
- The top-tier personal income tax rate will rise to from 35 percent to 39.6 percent.
- The tax on dividends will increase from 15 percent to 39.6 percent.
- The tax on capital gains will rise from 15 percent to 20 percent.
- The estate tax, eliminated this year, will return in 2011–and perhaps sooner–with its top rate in excess of 55 percent.
- The $250 tax credit for teachers, designed to offset the cost of classroom supplies which so many teachers pay for themselves, will be eliminated.
- The tax deduction for up to $4000 of college tuition and expenses will be eliminated.
- The first $2400 of unemployment taxes, a non-taxable amount this year, will be taxable (presumably as IRC Sec. 61 ordinary income).
Recall, if you will, that this comes from a president who campaigned on a promise to not add a single dime to the tax burden of the middle class. Sure, the threshold varied as the campaign dragged on, changing from a salary of $250,000 per year to $200,000 to even $150,000 per year in the words of Joe Biden, but the premise was the same — if you are a middle class American family, Obama promised, your taxes will not increase.
Now, we see that this promise has gone the way of his repeated promises of transparency, of putting bills online for the public to see at least 72 hour before a vote, and more. Even the elimination of the $4000 tax credit for educational expenses directly runs afoul of a campaign trail promise to preserve that credit as a way of making higher education available to all.
What else is in the budget? Consider this, from the office of House Minority Leader Rep. John Boehner:
10 Things Every American Should Know About President Obama’s Budget
WASHINGTON, FEB. 2 — Working families and small business owners understand that making government live within its means is essential to building confidence in our economy both at home and abroad. That’s why the American people have been saying to Washington: “stop spending money we don’t have.” Democrats still haven’t gotten the message and President Obama has proposed another budget that spends too much, taxes too much, and borrows too much. Majority Whip Jim Clyburn (D-SC) sums up Washington Democrats’ viewpoint best: “We are not going to save our way out of this recession. We are going to spend our way out of this recession.” How’s that approach been working out for families asking “where are the jobs?”
Here are 10 things every American should know about President Obama’s budget:
INSIDE THE NUMBERS: SPENDS TOO MUCH, TAXES TOO MUCH, AND BORROWS TOO MUCH
1. President Obama’s budget spends too much. Under President Obama’s budget, the federal government would spend a record $3.8 trillion in the fiscal year beginning October 1. This represents a nearly 30 percent increase in outlays since 2008. The President’s budget would also maintain the size of government for a second year in a row at 25 percent of Gross Domestic Product (GDP), well above historical levels of 20 percent.
2. President Obama’s budget taxes too much. The President’s budget includes more than $2 trillion in tax hikes, with a nearly 20 percent jump in the first year alone. This includes tax increases on small businesses, investors, and families earning less than $250,000 per year – a violation of the President’s campaign pledge. The last thing American families and small businesses need right now are new taxes that make it harder to save, invest, and hire.
3. President Obama’s budget borrows too much from our kids and grandkids. Under the President’s budget, the federal government will run up a record budget deficit of $1.6 trillion in fiscal year 2010. Deficits never fall below $700 billion, never fall below 3.6% of GDP, and end the decade at more than $1 trillion. The national debt would double over five years and triple by FY2019 from FY2008 levels. Paying the interest on this debt would set American taxpayers back roughly $6 trillion over the next decade.
SPENDING FREEZE A GOOD FIRST STEP, BUT WE NEED TO DO MORE – AND NOW
4. President Obama’s proposed spending freeze is a good step in the right direction, but we need to do more. Serious fiscal responsibility requires more than a few cuts here and there at the margins. Republicans have proposed adopting strict budget caps that limit federal spending on an annual basis and are enforceable by the President. These caps were a critical plank in the budget alternative Republicans proposed last year, led by Budget Committee Ranking Republican Paul Ryan, and they are notably absent from the President’s budget. Without these caps, the federal budget deficit will continue to spiral out of control.
5. President Obama’s budget green-lights more government ‘stimulus’ spending now while delaying any spending freeze. Last Friday, the President told House Republicans that delaying his proposed spending freeze represented the “consensus among people who know the economy best.” In December, Leader Boehner released a list of 222 economists who support getting runaway federal spending under control — rather than adding more ‘stimulus’ spending — in order to help create jobs and get the economy back on track.
6. President Obama turns over tough spending choices to a deficit commission “without teeth.” As the Associated Press notes, “the commission has yet to be appointed and there’s no sure path to having its recommendations considered by Congress.”
OUT-OF-TOUCH: DOUBLING DOWN ON THE TRILLION-DOLLAR ‘STIMULUS’ AND COSTLY, JOB-KILLING POLICIES
7. President Obama’s budget contains a “secret sequel” to the trillion-dollar ‘stimulus’ it concedes isn’t working as promised. A majority of Americans oppose the trillion-dollar ‘stimulus’ and nearly three in four say it has wasted taxpayer dollars. What’s worse, President Obama’s budget projects that unemployment will remain near 10 percent through the end of this year. The Obama Administration promised the trillion-dollar stimulus would create jobs ‘immediately’ and keep joblessness below eight percent.
8. President Obama’s budget fails to pivot away from costly, job-killing policies that are causing uncertainty and making matters worse. President Obama’s budget accounts for the implementation of both a government takeover of health care and a ‘cap-and-trade’ national energy tax, two job-killing bills the American people have rejected loudly and clearly. The President calls for a new national energy tax to reduce greenhouse gas emissions by 17 percent by 2020 – a proposal which CBO has estimated would increase taxes by $870 billion, a full $224 billion more than President Obama’s proposal in the FY2010 budget.
BIPARTISAN SUPPORT FOR OUR TROOPS, BIPARTISAN OPPOSITION TO IMPORTING DANGEROUS TERRORISTS
9. President Obama’s budget spends hundreds of millions of taxpayer dollars to import dangerous terrorists to U.S. soil and give them the same rights as U.S. citizens. Republicans have stood with the American people from the beginning to oppose the Obama Administration’s severely misguided plan to try the mastermind of the 9/11 attacks and his-co conspirators in civilian courts in downtown Manhattan. In recent days, more Democrats have followed suit. Yet, the President’s budget irresponsibly spends hundreds of millions of taxpayer dollars on importing dangerous terrorists to U.S. soil, housing them at a ‘Gitmo North’ facility and trying them in civilian courts.
10. President Obama’s budget ensures our troops in Iraq and Afghanistan have the resources they need to succeed in their mission. This is an area in which Republicans hope to continue finding consensus with the President.
From coast to coast, American families are tightening their belts. Our federal government should do the same. Instead, however, we have folks in the Democratic Party establishment like House Majority Whip James Clyburn (D-SC) stubbornly insisting that we still need to spend our way out of this economic downturn.
Looking at our current situation from the perspective of a guy who pinches pennies and still struggles to keep in the black each month, Clyburn’s logic boggles the mind. Clyburn and others like him insist that we need to invest [read: spend] in education, invest in social programs, invest in infrastructure in order to facilitate recovery; as a homeowner, what Clyburn, et al. are advocating more closely resembles rearranging the furniture in order to keep the house from burning down.
Clearly, what he and the other Democrats are doing is making fiscal irresponsibility the cure, regardless of the disease. If America is seeing an unprecedented time of growth, Democrats will insist that the federal government spend money on social programs in order to ensure that those who don’t contribute to the success can nonetheless enjoy it; whereas, if America is struggling through a time of economic crisis, the Democrats insist that spending money is the only way out. Spend, spend, spend. All spending, all the time.
We need to drastically cut spending, and whatever funds are still unspent from TARP and Barack Obama’s Recovery Act need to be reclaimed and spent on whittling down the budget deficit. Doing anything else would be like me getting my tax refund and, instead of paying off the $600 on my American Express card, spending that money on a new television or, worse yet, some sort of luxury which will add stress to our already stretched budget each month.
It’s just common sense. Certainly, even the Democrats recognize it as such. That they don’t act accordingly, however, puts me firmly in the camp of Paul Ryan — every action taken by this egregiously irresponsible group of people, budget and beyond, has been taken in order to perpetuate the ideology-driven policies developed for decades by the left and with the firm intention of fundamentally transforming the United States of America into a collectivist society overseen by a social-welfare state.