Bush Tax Cuts
The Bush Tax Cuts will expire at year end. Most reporters add, “unless Congress agrees to extend them”. There should be by now little confusion. The Bush Tax Cuts will expire at year end.
From what GOP and Democrat party members have said publicly, there is simply no grounds for any type of compromise. Even more to the point, there is no politician who dislikes granting tax reductions, so if the Bush tax cuts expire, then there is ample opportunity to reduce taxes again.
The GOP position that there should be no tax rate increases is shameful and unsupportable on the basis of historical fact. According to most economists, increasing taxes on the top 2% will have no effect upon job growth nor investment.
The GOP argues that changing the tax code deductions is a better course. While most people would agree that the tax code is far too complicated, which deductions to eliminate has little common agreement. If sweeping revisions were made, the resulting increased tax revenue would impact the discretionary income of the middle class more than the top 2%.
You might say, “so what, everyone will be effectively paying more in taxes”. So let’s look at the other half of the bargain, entilements.
The largest segment (about half) of the annual deficit comes from Medicare and Medicaid expenditures (in excess of how much is collected in wage taxes). The excess expenditures are in the range of $500 billion per year. How can the deficit be brought under control without modifying in some manner these programs?
Democrats are divided on this subject (no modifications to a little to a lot), and it is highly unlikely any agreement amongst them will be reached in the next few weeks. Any movement on entitlements must impact the discretionary income of the Middle Class greater than the top 2%. Hmmm. More taxes and more Medicare payments… I don’t predict Democrat support without the cover of the rich paying more.
So, no movement on entitlements, no movement on taxes. Plain and simple. QED, Bush Tax Cuts expire.
It is also unlikely either the President or Democrat Congressional leaders will outline their ideas until January. In January, one might anticipate Congress agreeing upon cuts in Medicare (meaning recipients would have to pay more) and Medicaid, and offsetting these increased costs with lower taxes for the Middle Class.
Hmmm, sounds like funny money.
This entry was posted on November 28, 2012 at 11:17 am and is filed under Barack Obama, Democratic Party, Politics, Republican Party. You can subscribe via RSS 2.0 feed to this post's comments.
Tags: Bush tax cuts, congress, deficit, gop, medicaid, medicare
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Regaining the Center 
November 28, 2012 at 11:26 am
I consider myself a fiscal conservative and I say let the tax rates go up in January. Then we can see that it does nothing to solve our debt problem, except take money out of the economy, and then we can see what straw man the DNC creates to hide behind next.
Unfortunately I fear most Americans are either apathetic, ignorant or both and the hypocrisy of the Democrats will go unnoticed. As long as DNC continues to promise more “free” stuff the sheeple will continue to vote for them.
I remember someone predicting this somewhere, I think his name was John.
November 28, 2012 at 11:43 am
FLPatriot, thanks for commenting.
I agree with you that raising taxes and surely increasing income taxes back to the level under Bill Clinton will not eliminate the debt. Entitlements, defense, and general federal government spending have to be reigned in. Politics (from both parties) seem to be standing in the way.
Aside from the normal special interests, there are two underlying drivers of the deficit… health care costs (for everyone) and the growing poor (minimum wage or lower)… These contributors are not tied to either taxes or government spending.
If we can not agree to return to tax levels during the “well off” Clinton years, it does not look promising the country will address the underlying issues.
November 28, 2012 at 12:07 pm
The problem right now with raising taxes is that the money is wasted. It does not help increase government support for the poor and it does not reduce the budget deficit. What it does do is take money out of the economy, which is not a good thing.
The other fact that is being ignored is that the top 2% will not be effected by an increase in earned income tax, they make their money other ways than a paycheck. The people that will see the increase are those successful small business owners, I know some that are already looking at ways to off set the loss.
If our government really cared about the economy they would reduce the burden of government on the economy first before taking any money out through taxation. But all this has been said ad nauseum, it is obvious that those in Washington don’t care about solution and all they do care about is headlines.
I’m living debt free and acting my wage, so I say let the Dems tax our economy down the toilet and then hope that enough people wake up that we can save the country before we have to sell it off to China to pay for the debt.
Sorry if I sound like I an ranting, it’s just that I don’t see a positive outcome from the actions being talked about by either party in Washington. Thank you for your time and for bringing up such an important topic.
November 28, 2012 at 12:08 pm
The other frustrating thing is I have spent time on Whitehouse.gov and can not find the specifics of the Presidents supposed tax policy he is asking congress to pass.
November 28, 2012 at 12:31 pm
FL… para 1. raising taxes must be part of any solution to the deficit and resulting debt, otherwise just cutting spending would mean implosion of Medicare (those on fixed incomes) and Medicaid (those who are too poor to afford health care insurance), and a sharp decease in defense spending, etc… The idea is more taxes and less spending…
There is also the notion that all we need to do is wait for the economy to return to the 2006 levels and tax revenues will increase… Not likely anytime soon.
para 2. I totally agree. Warren Buffet’s proposal of a minimum tax for those earning more than $1 million seems appropriate.
para 3 Maybe… but I am not sure… all the tax dollars plus $1 trillion more the government spends is going back into the economy right now. The problem is the $1 trillion we are borrowing… we are getting a free lunch (we think)…
para 4 Remember… during Bill Clinton’s years income taxes were higher and the economy was sound…
para 5 I can sense your frustrations… It is just as frustrating from my perspective. I have little faith in our elected officials and believe they are neither “tax and spend” nor “fiscal conservatives”… rather most of them are beholding to this special interest or that one.
Running such huge deficits is wrong and a sign of dysfunctional management.
Thanks again for commenting…
November 28, 2012 at 2:01 pm
Well said, and I would like to say that it is a pleasure coming across an honest thinker. I look forward to reading more from you.
Your comment on para 3 will give me something to think about, and I like it when someone offers an honest challenge that causes me to think about my position.
Lastly, Bill Clinton’s administration rode one bubble to the next, nothing sound about that.
http://www.businessinsider.com/how-bill-clintons-balanced-budget-destroyed-the-economy-2012-9
and
http://www.nypost.com/p/news/opinion/opedcolumnists/bubba_the_housing_bubble_8cUhYsqNdXVlWjflbbjiUO