Economics, Pethokoukis

Why the Obama tax hikes have only just begun

Image Credit: Austen Hufford (Flickr) (CC BY 2.0)

Image Credit: Austen Hufford (Flickr) (CC BY 2.0)

When an economy is booming and jobs are plentiful, a “do no harm” approach to public policy will suffice. If GDP were expanding at a 4% annual rate, the unemployment rate were at 5%, and the national debt were low, then the fiscal cliff deal might be tolerable rather than terrible. While it won’t create any jobs or add to growth — just the opposite in fact — and it will only cut the national debt by a rounding-error amount, passage does avoid an across-the-board income tax hike and probable recession.

So that’s something. But good enough? Not really. Avoiding major unforced errors is necessary but insufficient when you’re way behind in the game.

But we’re not even doing that. Total taxes are going up some $220 billion this year, including both the Obama income tax hikes and the Obamacare tax hikes. Even worse, the income tax hikes raise the burden on working, saving, and investing. They make our mess of a tax code even more damaging to growth than what it was before.

Nor is Obama done pushing higher taxes. As he said on New Year’s Eve, concerning the outstanding issues of the sequester and debt ceiling:

I want to make clear that any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced, because, remember, my principle always has been let’s do things in a balanced, responsible way. And that means the revenues have to be part of the equation in turning off the sequester and eliminating these automatic spending cuts, as well as spending cuts. Now, the same is true for any future deficit agreement. Obviously we’re going to have to do more to reduce our debt and our deficit. I’m willing to do more, but it’s going to have to be balanced. We’re going to have do it in a balanced responsible way.

How much more “balance” does Obama want?

1. Well, the fiscal cliff deal is a $620 billion tax hike, according to the Congressional Budget Office. Obama’s original offer to House Speaker John Boehner called for $1.6 trillion in tax hikes, including a) $960 billion in higher tax rates and higher taxes on investment income along with b) $600 billion in additional taxes, such as limiting tax breaks for wealthier Americans.

2. In a November policy memo, White House economists thought a tax hike of around $500 billion was doable via broadening the tax base.

3. Also recall that the president’s 2013 budget called for a $300 billion corporate tax hike.

So adding it all up, it would seem the president’s second term goal is for roughly $2 trillion in new taxes. We’re only one-third of the way there.

But what leverage will Obama have to make good on his tax-hike threats? As The Wall Street Journal editorial page notes today, “The President has had unusual leverage over Republicans because he just won re-election and because taxes were going to go up even if they did nothing.”

One potential Obama bargaining chip is the sequester, particularly the $500 billion in defense cuts that many GOPers loathe. So perhaps Obama can offer to turn off the defense cuts in exchange for $500 billion from limiting tax breaks for the rich. And then maybe another $300 billion in corporate tax hikes for agreeing to change how Social Security benefits are calculated. Many scenarios are possible. What’s for sure is that Obama desires vastly higher taxes to pay for his expanded welfare state. Desires and needs them. And it’s now Democrat economic theology that tax rates could return to pre-Reagan levels without hurting growth.

Tax hikes? Obama is only just getting started.

27 thoughts on “Why the Obama tax hikes have only just begun

  1. there is no such thing as an “Obama tax hike”.

    Obama cannot hike taxes one penny.

    Only Congress can do that – with a majority vote.

      • re: ” they were Bush’s tax cuts?”

        yes.

        because:

        1. – he advocated them
        2. – Congress agreed
        3. – he signed them

        you have to have all 3 to say that a particular president owned them.

          • Love Larry’s usual “logic”: Heads, Obama wins. Tails, Bush loses.

            “re: Obama Tax Hikes

            so.. if he signs the deal if he approving tax cuts?”

            “Hmm,” says Larry, “perhaps I should simply reverse my position on a dime if Obama can get some credit…”

            But what tax cuts? Rates remained the same rather than going up on 98% of Americans.

          • glinbagla,

            “Uh, so, hmm, guess they are Obama tax hikes after all…”

            Welcome to Larry’s world. He’ll immediately and shamelessly contradict himself without hesitation if he can defend his hero Obama.

          • ” so.. if he signs the deal if he approving tax cuts?””

            yup.. approving tax cuts

            AND adding to the debt…

            and the GOP…… AGREED!

            so the GOP AGREES to increase the debt and now they’re going to stand firm on the debt limit!

            This has almost zero to do with Obama and everything to do with the dysfunctional GOP these days.

            this is why they lost the election and the moronic behavior….. continues….

            Now they’ve pissed off their own kind in NJ and NY with their idiocy.

            the GOP is downright comical these days.. we can only guess what idiocy comes next.

          • LarryG, you sir made me laugh as well as have a fit of depression. It is sad that there are so many ignorant people out there like you who think they know what they are talking about.

    • re: ” they were Bush’s tax cuts?”

      yes.

      because:

      1. – he advocated them
      2. – Congress agreed
      3. – he signed them

      you have to have all 3 to say that a particular president owned them.

      So, LarryG, using your own requirements for “owning” tax hikes/cuts, let’s apply this to Obama and the Fiscal Cliff Deal:

      1. – he (Obama) advocated them
      2. – Congress agreed
      3. – he (Obama) signed them

      Hence, Obama OWNS this tax hike on nearly 80% of Americans. (Factoring in the Payroll Tax which was not renewed in the Fiscal Cliff Deal). Thank you for supplying the perfect definition of ownership.

      • re: ” So, LarryG, using your own requirements for “owning” tax hikes/cuts, let’s apply this to Obama and the Fiscal Cliff Deal:

        1. – he (Obama) advocated them
        2. – Congress agreed
        3. – he (Obama) signed them

        Hence, Obama OWNS this tax hike on nearly 80% of Americans. (Factoring in the Payroll Tax which was not renewed in the Fiscal Cliff Deal). Thank you for supplying the perfect definition of ownership.

        Yes. Agree. Now what are the tax hikes on the 80% that he advocated for?

  2. The defense sequester cuts are not hated by the majority of the conservative base but primarily by Washington based defense hawks. Therefore it is a non starter as a bargaining chip.

  3. What surprises me is that anyone is surprised at Obama’s MO. A subsistence level of egalitarian misery is his goal via Cloward-Piven strategy with guidance from Alinsky. Why? Because his motto is; If they’re on the dole I’m in control! It’s called ‘power-lust’.

  4. “Also recall that the president’s 2013 budget called for a $300 billion corporate tax hike.”

    Actually, that’s more modest than what was just placed on the public side. What you call a “hike” could be intepreted as merely the elimination of billions of subsidies and “gimmees” to corporations that already pull down billions. The U.S. taxpayer is now subsidzing the stock buy backs of these firms.

    I just know you’ll want to put a stop to that Jim. Because that’s the kind of guy we know and love.

    • “A reduction in tax liability is not a subsidy.”

      A reduction in tax liability based on a rule you paid a Congressman to execute is a f&&&ing subsidy.

  5. No one is pushing for pre-Reagan levels, the Reagan 1983 marginal income tax would be just fine (50%), unfortunately we’re only at 39.6% after the fiscal cliff. If we went back to the marginal rates in effect for the longest period of the Reagan Presidency, we’d take close to a trillion off of the deficit.

    • No one is pushing for pre-Reagan levels, the Reagan 1983 marginal income tax would be just fine (50%), unfortunately we’re only at 39.6% after the fiscal cliff“…

      Funny how people making noises about pre-Reagan tax rates never seem to say anything about pre-Reagan spending levels…

  6. Obama has spending problem and is a serial, out of control spender! We are 16 trillion in debt, Obama has spent more than ANY PRESIDENT EVER in office. What makes anybody think believe that tax hikes are totally none more, then from OBAMA and he will continue to this is just the beggining, he does not care about the american people only his SELF! We must join together as “WE THE PEOPLE” and realize we cannot rely on government “Ask not what your country can do for you and ask what you can do for you country” jfk

    • Obama cannot spend a penny unless Congress approves it.

      When the GOP votes in FAVOR of CR’s they ARE voting FOR spending.

      the GOP could stop Obama easily if they voted against the CRs.

      that’s the truth.

      • Gingrich used Continuing Resolutions to whittle down the federal budget, for which Clinton later took credit. In theory, LarryG, you’re right. However, Obama did much of his spending during his initial two years in office, when both houses of the legislature were controlled by Democrats. This spending included the behemoth commonly referred to as Obamacare. He also eliminated the Clinton-era welfare-to-work requirements. So, yes, he deserves credit for his spending. However, if you want to blame Congress exclusively for the state of the economy, be my guest. The election of a Democratic Congress in 2006 can then be blamed for the start of the recession.

        • However, Obama did much of his spending during his initial two years in office, when both houses of the legislature were controlled by Democrats.

          ha ha ha.. Nice Try but no cigar. Remember the GOP says we HAVE (as in right now) a spending problem.

          “This spending included the behemoth commonly referred to as Obamacare. ”

          Nope. He did do the stimulus but ObamaCare has not taken effect, yet …just more propaganda..here.

          “He also eliminated the Clinton-era welfare-to-work requirements.”

          Nope. He could not do that without Congress.

          “So, yes, he deserves credit for his spending. However, if you want to blame Congress exclusively for the state of the economy, be my guest. The election of a Democratic Congress in 2006 can then be blamed for the start of the recession.”

          look at this and you’ll see where the spending came from:

          http://www.washingtonpost.com/business/economy/adding-to-the-deficit-bush-vs-obama/2012/01/31/gIQAQ0kFgQ_graphic.html

          this is the truth. The Dems are not fiscal conservatives, never claimed to be and never have a history of it so why do we expect them to be so now?

          It has been the GOP – as you pointed out – Gingrich.. and Reagan who remained true to their fiscal conservative heritage.

          But under Bush the GOP went bananas and now refuse to own what they did… and want Obama to “cut” spending but not the DOD increases the GOP voted in favor of and essentially doubled from 2000.

          we cannot balance the budget without cuts to BOTH entitlements AND National Defense. The math does not work for entitlements alone.

          Those are the facts – the harsh reality – that the GOP refuses to accept and act on.

  7. Congress needs to spend a full day playing SimCity. I believe the Democrats would be floored by how easy it is to destroy their city with confiscatory taxes. “What do you mean I’m losing revenue? I raised taxes!?!” In a market economy, in which governments are simply service providers from the corporate perspective, there is by necessity a great deal of comparison shopping going on. If the United States charges more for its services, fails to meet its service obligations (border control, for example), and has lousy customer service (such as inflammatory anti-corporate rhetoric), it makes no sense to stay with that provider. Taiwan, Latin America, and China pick up our dissatisfied corporate customers, and we lose jobs and tax revenue.

    This is only common sense. Many consumers change cable/internet providers regularly depending on which offers the best deal. The same principle applies to where businesses choose to be located. However, socialists cannot, by definition, comprehend that idea. They do not believe businesses should be free to make such decisions. It’s a bit like hiring an Amish guy to fix your computer. Not only does he not understand how it works, but he’s philosophically opposed to the whole idea.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>