From Mark J. Perry:
From Kevin D. Williamson:
Every Republican tax-reform plan should be rooted in this reality: If you are going to have federal spending that is 21 percent of GDP, then you can have a.) taxes that are 21 percent of GDP; b.) deficits. There is no c.
If, on the other hand, you have a credible program for reducing spending to 17 or 18 percent of GDP, which is where taxes have been coming in, please do share it.
The problem with the Growth Fairy model of balancing budgets is that while economic growth would certainly reduce federal spending as a share of GDP if spending were kept constant, there is zero evidence that the government of these United States has the will or the inclination to enact serious spending controls when times are good (Uncork the champagne!) or when times are bad (Wicked austerity! We must have stimulus!). So even if we buy Jeb Bush’s happy talk about growth, or Donald Trump’s, the idea that spending is just going to magically sit there, inert, while the economy zips forward and the tax coffers fill up, is delusional.
There are no tax cuts when the government is running deficits, only tax deferrals.
From The Wall Street Journal:
Whether this weekend finds you blowing two feet of snow off the driveway or counting the hours until “Downton Abbey,” make time to watch the video of Dr. Ben Carson speaking to the White House prayer breakfast this week.
Seated in view to his right are Senator Jeff Sessions and President Obama. One doesn’t look happy. You know something’s coming when Dr. Carson says, “It’s not my intention to offend anyone. But it’s hard not to. The PC police are out in force everywhere.”
Dr. Carson tossed over the PC police years ago. Raised by a single mother in inner-city Detroit, he was as he tells it “a horrible student with a horrible temper.” Today he’s director of pediatric neurosurgery at Johns Hopkins and probably the most renowned specialist in his field.
Late in his talk he dropped two very un-PC ideas. The first is an unusual case for a flat tax: “What we need to do is come up with something simple. And when I pick up my Bible, you know what I see? I see the fairest individual in the universe, God, and he’s given us a system. It’s called a tithe.
“We don’t necessarily have to do 10% but it’s the principle. He didn’t say if your crops fail, don’t give me any tithe or if you have a bumper crop, give me triple tithe. So there must be something inherently fair about proportionality. You make $10 billion, you put in a billion. You make $10 you put in one. Of course you’ve got to get rid of the loopholes. Some people say, ‘Well that’s not fair because it doesn’t hurt the guy who made $10 billion as much as the guy who made 10.’ Where does it say you’ve got to hurt the guy? He just put a billion dollars in the pot. We don’t need to hurt him. It’s that kind of thinking that has resulted in 602 banks in the Cayman Islands. That money needs to be back here building our infrastructure and creating jobs.”
Not surprisingly, a practicing physician has un-PC thoughts on health care:
“Here’s my solution: When a person is born, give him a birth certificate, an electronic medical record, and a health savings account to which money can be contributed—pretax—from the time you’re born ’til the time you die. If you die, you can pass it on to your family members, and there’s nobody talking about death panels. We can make contributions for people who are indigent. Instead of sending all this money to some bureaucracy, let’s put it in their HSAs. Now they have some control over their own health care. And very quickly they’re going to learn how to be responsible.”
The Johns Hopkins neurosurgeon may not be politically correct, but he’s closer to correct than we’ve heard in years.
Drink. It. In.
From Stephen Moore:
What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with Barack Obama was this revelation: “At one point several weeks ago,” Mr. Boehner says, “the president said to me, ‘We don’t have a spending problem.’ ”
The president’s insistence that Washington doesn’t have a spending problem, Mr. Boehner says, is predicated on the belief that massive federal deficits stem from what Mr. Obama called “a health-care problem.” Mr. Boehner says that after he recovered from his astonishment—”They blame all of the fiscal woes on our health-care system”—he replied: “Clearly we have a health-care problem, which is about to get worse with ObamaCare. But, Mr. President, we have a very serious spending problem.” He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: “I’m getting tired of hearing you say that.”
Mr. Boehner confirms that at one critical juncture he asked Mr. Obama, after conceding on $800 billion in new taxes, “What am I getting?” and the president replied: “You don’t get anything for it. I’m taking that anyway.”
Why has the president been such an immovable force when it comes to cutting spending? “Two reasons,” Mr. Boehner says. “He’s so ideological himself, and he’s unwilling to take on the left wing of his own party.” That reluctance explains why Mr. Obama originally agreed with the Boehner proposal to raise the retirement age for Medicare, the speaker says, but then “pulled back. He admitted in meetings that he couldn’t sell things to his own members. But he didn’t even want to try.”
It is mind blowing to hear that the man presiding over the most profligate government in the history of the planet looks out and sees a world in which, “we don’t have a spending problem,” but it crushes me to know that over half of the country looks out and sees the same world.
Google Inc. (GOOG) avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show.
By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.
And he’s only halfway done.
Why is it hard to take seriously what President Obama says this week on the fiscal cliff and the debt? Maybe, because he has said about the opposite in the past.
“Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.” That’s what Senator Obama said when in 2006 he voted against the Bush administration’s upping the U.S. debt ceiling to $9 trillion — a quote that joins the catalogue of: “The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up the national debt from $5 trillion for the first 42 presidents — No. 43 added $4 trillion by his lonesome, so that we now have $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic,” and, of course, “Today I’m pledging to cut the deficit we inherited by half by the end of my first term in office.” Would Senator Obama have wished George Bush unilaterally to have set the debt limit without the Congress’s oversight?
In general, when Obama is outraged about something, or accuses his opponents of bad faith or questions someone’s patriotism, it is usually the case that his own past declarations are at odds with what he later asserts as unassailable fact — the above could be done with Guantanamo, renditions, tribunals, Iraq, detentions, drilling, civility, almost anything. The problem is not that Obama, like all politicians, so serially contradicts what he once declared as fact; but that he does it so emphatically and with such little concern that he is making things up as he goes along — with no real idea or worry about what he has recently just as emphatically declared as true. Thus the inflated adjectives (“unpatriotic”), and psychodramatic bluster (“I am pledging. . . ” “Americans deserve better”).
From Mark Steyn:
Previously on The Perils of Pauline:
Last year, our plucky heroine, the wholesome apple-cheeked American republic, was trapped in an express elevator hurtling out of control toward the debt ceiling. Would she crash into it? Or would she make some miraculous escape?
Yes! At the very last minute of her white-knuckle thrill ride to her rendezvous with destiny, she was rescued by Congress’s decision to set up . . . a Super Committee! Those who can, do. Those who can’t, form a committee. Those who really can’t, form a Super Committee — and then put John Kerry on it for good measure. The bipartisan Super Committee of Super Friends was supposed to find $1.2 trillion dollars of deficit reduction by last Thanksgiving, or plucky little America would wind up trussed like a turkey and carved up by “automatic sequestration.”
Sequestration sounds like castration, only more so: It would chop off everything in sight. It would be so savage in its dismemberment of poor helpless America that the Congressional Budget Office estimates that over the course of a decade the sequestration cuts would reduce the federal debt by $153 billion. Sorry, I meant to put on my Dr. Evil voice for that: ONE HUNDRED AND FIFTY THREE BILLION DOLLARS!!! Which is about what the United States government currently borrows every month. No sane person could willingly countenance brutally saving a month’s worth of debt over the course of a decade.
So now we have the latest cliffhanger: the Fiscal Cliff, below which lies a bottomless abyss of sequestration, tax-cut-extension expiries, Alternative Minimum Tax adjustments, new Obamacare taxes, the expiry of the deferment of the Medicare Sustainable Growth Rate, as well as the expiry of the deferment of the implementation of the adjustment of the correction of the extension of the reduction to the proposed increase of the Alternative Minimum Growth Sustainability Reduction Rate. They don’t call it a yawning chasm for nothing.
As America hangs by its fingernails wiggling its toesies over the vertiginous plummet to oblivion, what can save her now? An Even More Super Committee? A bipartisan agreement in which Republicans agree to cave and Democrats agree not to laugh at them too much? That could be just the kind of farsighted reach-across-the-aisle compromise that rescues the nation until next week’s thrill-packed episode when America’s strapped into the driver’s seat of a runaway Chevy Volt careering round the hairpin bends on full charge, or trapped in an abandoned subdivision overrun by foreclosure zombies.
I suppose it’s possible to take this recurring melodrama seriously, but there’s no reason to. The problem facing the United States government is that it spends over a trillion dollars a year that it doesn’t have. If you want to make that number go away, you need either to reduce spending or to increase revenue. With the best will in the world, you can’t interpret the election result as a spectacular victory for less spending. Indeed, if nothing else, the unfortunate events of November 6 should have performed the useful task of disabusing us poor conservatives that America is any kind of “center-right nation.” A few months ago, I dined with a (pardon my English) French intellectual who, apropos Mitt Romney’s stump-speech warnings that we were on a one-way ticket to Continental-sized dependency, chortled to me, “Americans love Big Government as much as Europeans. The only difference is that Americans refuse to admit it.”
My Gallic charmer is on to something. According to the most recent (2009) OECD statistics: government expenditures per person in France, $18,866.00; in the United States, $19,266.00. That’s adjusted for purchasing-power parity, and yes, no comparison is perfect, but did you ever think the difference between America and the cheese-eating surrender monkeys would come down to quibbling over the fine print? In that sense, the federal debt might be better understood as an American Self-Delusion Index, measuring the ever widening gap between the national mythology (a republic of limited government and self-reliant citizens) and the reality (a 21st-century cradle-to-grave nanny state in which, as the Democrats’ convention boasted, “government is the only thing we do together”).
Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1 percent of GDP, and tax revenues are 27.1 percent. Likewise, government spending in Norway is 46.4 percent and revenues are 41 percent — a shortfall but in the ballpark. Government spending in the United States is 42.2 percent, but revenues are 24 percent — the widest spending/taxing gulf in any major economy.
So all the agonizing over our annual trillion-plus deficits overlooks the obvious solution: Given that we’re spending like Norwegians, why don’t we just pay Norwegian tax rates?
No danger of that. If (in Milton Himmelfarb’s famous formulation) Jews earn like Episcopalians but vote like Puerto Ricans, Americans are taxed like Puerto Ricans but vote like Scandinavians. We already have a more severely redistributive taxation system than Europe in which the wealthiest 20 percent of Americans pay 70 percent of income tax while the poorest 20 percent shoulder just three-fifths of one percent. By comparison, the Norwegian tax burden is relatively equitably distributed. Yet Obama now wishes “the rich” to pay their “fair share” — presumably 80 or 90 percent. After all, as Warren Buffett pointed out in the New York Times this week, the Forbes 400 richest Americans have a combined wealth of $1.7 trillion. That sounds a lot, and once upon a time it was. But today, if you confiscated every penny the Forbes 400 have, it would be enough to cover just over one year’s federal deficit. And after that you’re back to square one. It’s not that “the rich” aren’t paying their “fair share,” it’s that America isn’t. A majority of the electorate has voted itself a size of government it’s not willing to pay for.
A couple of years back, Andrew Biggs of the American Enterprise Institute calculated that, if Washington were to increase every single tax by 30 percent, it would be enough to balance the books — in 25 years. If you were to raise taxes by 50 percent, it would be enough to fund our entitlement liabilities — just our current ones, not our future liabilities, which would require further increases. This is the scale of course correction needed.
If you don’t want that, you need to cut spending — like Harry Reid’s been doing. “Now remember, we’ve already done more than a billion dollars’ worth of cuts,” he bragged the other day. “So we need to get some credit for that.”
Wow! A billion dollars’ worth of cuts! Washington borrows $188 million every hour. So, if Reid took over five hours to negotiate those “cuts,” it was a complete waste of time. So are most of the “plans.” Any “debt-reduction plan” that doesn’t address at least $1.3 trillion a year is, in fact, a debt-increase plan.
So given that the ruling party will not permit spending cuts, what should Republicans do? If I were John Boehner, I’d say: “Clearly there’s no mandate for small government in the election results. So, if you milquetoast pantywaist sad-sack excuses for the sorriest bunch of so-called Americans who ever lived want to vote for Swede-sized statism, it’s time to pony up.”
Okay, he might want to focus-group it first. But that fundamental dishonesty is the heart of the crisis. You cannot simultaneously enjoy American-sized taxes and European-sized government. One or the other has to go.
Let them pay for it.
From Marc Thiessen:
Republicans should make clear that they are willing to live with the higher, Clinton-era rates. It will be hard for the Democrats to paint such a scenario as an economic disaster, because letting the Bush tax cuts expire simply restores the status quo during the Clinton administration. During the campaign, President Obama repeatedly told us how he wants to “go back to the income tax rates we were paying under Bill Clinton — back when our economy created nearly 23 million new jobs, the biggest budget surplus in history, and plenty of millionaires to boot.” Well if the Clinton tax rates were so great, let’s go back to all of the Clinton rates and relive the booming ’90s.
At least going back to the Clinton rates would put more people on the tax rolls, and give more Americans a stake in constraining government spending. It would also force all Americans — including the middle class — to pay for growing government services, instead of borrowing the money from China and passing the costs on to the next generation.
Americans had a choice this November, and they voted for bigger government. Rather [than] shielding voters from the consequences of their decisions, let them pay for it.