For the last six weeks, Joe Biden has been hosting “talks” on our budget crisis. As of yesterday, the shit hit the fan. GOP representatives in the talks Eric Cantor and Jon Kyl pulled out of the talks. The reason? The inability to come to an agreement on taxes. We’ll get to more on that in a minute, but the Democrats insist on raising taxes in order to come up with a deficit-reduction package of $4 trillion, which would be tied to an increase in the federal debt limit. The Republicans do not want to raise taxes. And after six weeks of this song and dance, Cantor and Kyl realized that they weren’t getting anywhere. So now the task rests in the hands of Barack Obama, John Boehner and Harry Reid. Meanwhile, Eric Cantor says that he will propose a Balanced Budget Amendment to the Constitution.
Barack Obama … it’s time to take a stand. Will you fight to increase taxes as your fellow Democrats insist, or will you recognize the effect of lower tax rates on economic behavior? I assume that wealth envy will ultimately prevail.
So what if Democrats manage to convince the Republicans (not like with a Republican-led House) that we need to end the Bush tax cuts and return to the tax rates we had under Bill Clinton. That’s no longer good enough. Why? Because our government spending has grown tremendously since the days of Clinton! Don’t they get it? This isn’t a revenue problem.
It’s a spending problem. Here are some specifics from the Washington Examiner:
In 2000, the last full-year of President Clinton’s administration, tax revenues were 20.6 percent of GDP, according to the CBO. (The White House Office of Management and Budget puts it slightly higher, at 20.9 percent, which places it in a tie with 1944 for the highest ever level in U.S. history). But the CBO’s long-term fiscal outlook released yesterday predicts that by 2035, total spending will reach a stunning 33.9 percent of GDP if lawmakers pursue their predictable course. That means even if revenues returned to the coveted pre-Bush tax cut levels, there would be a 13 percent difference.
Yet President Obama’s former OMB director Peter Orszag has written that, “a sustainable level is more like 3 percent (of GDP) or lower.” So that would put the deficits, even with Clinton-era revenues, at more than four times their sustainable levels.
Increasing taxes is a Democrat strategy to pander to wealthy envy voters. This has nothing to do with our debt or deficit and everything to do with re-election.