A skilled poker player as they say, never shows his cards. Republicans seemingly haven’t heard such advice. With ‘fiscal cliff’ negotiations taking place in the media of late, they are proving to be poor poker players, poor negotiators, and all-to-willing to fold.
Several Republicans, responding weak-kneed in a kneejerk reaction to their 2012 election beating, have signaled a willingness to compromise on tax hikes, despite little indication that Democrats would make similar concessions with spending cuts. Senators Saxby Chambliss (R-GA), Lindsay Graham (R-SC), and Peter King (R-NY) have gone so far as to walk back a no-tax pledge they placed their signatures upon.
Amelia Chasse, vice-president of Hynes Communications, says that while Americans are looking for both sides to come together after the election, Republicans should not be so quick to give away the farm.
Discussing the matter on Neil Cavuto’s show late last week, Chasse opined that, “In terms of raising taxes, I think Republicans will be making a huge mistake with their constituents if they agree to any proposal that raises taxes for the sake of raising taxes”.
According to a source with knowledge of the negotiations however, Republicans are set to do just that. Their information indicates:
“We suspect that enough Republicans could support a top tax rate in the 37-38% range along with limits on deductions, which together would raise $600-800 billion over 10 years. Along with a few other revenue provisions, the total deficit reduction from revenue could reach $1 trillion.”
The 37-38% represents an increase on the current level of 35%. Chasse indicates that such a tax hike plan “would raise rates for some of the most vulnerable taxpayers in this economy – small business owners”. Furthermore, limits on deductions would have the same economic effect as raising marginal rates on upper-income taxpayers even further.
Why would Republicans agree to such a plan?
“The key to Republicans going along with this tax increase,” the source adds, “is structural reform of entitlement programs”. This would presumably involve such programs as Social Security, Medicaid, and Medicare. The wisdom being that meaningful deficit reduction can be accomplished through ‘means testing’ and raising the eligibility age.
FreedomWorks Vice President of Health Care Policy, Dean Clancy, doesn’t believe these methods will be successful.
“These two ideas are unpopular, and, while they are better than across-the-board cuts, they do not alter the underlying structural problems with the big entitlement programs or make them more voluntary for individuals.”
He adds, “If ObamaCare goes into effect, raising the Medicare retirement age will have the effect of increasing federal outlays for ObamaCare premium subsidies and for Medicaid.”
So a cave-in on tax hikes is being negotiated for the benefit of a deficit reduction plan that would likely be unsuccessful. But at least an agreement and compromise on tax rates and entitlement reforms will lead to significant cuts in the deficit, avoiding an economic calamity, right?
The real key for a fiscal cliff breakthrough, according to the source, lies with the President himself.
“If he puts major entitlement reforms on the table, a grand bargain that reduces the deficit by roughly $2-2.5 trillion over ten years is likely.”
Such a ‘grand bargain’ would fall significantly short in terms of necessary deficit reduction over the next decade.
Clancy claims, “We would need more like $8 trillion in savings over 10 years to balance the budget within 10 years.”
Chasse agrees, stating that the President’s proposals “would barely make a dent in the deficit”.
With the fiscal cliff looming in the near future, Republicans are foolishly signaling a willingness to concede on tax hikes. Such concessions – with little to no valuable reductions in spending and entitlements – indicate the party has not only lost the election battle of 2012, but they may be willing to surrender in the war on conservative fiscal values.
Cross-posted at FreedomWorks
The following is a press release from Wendy Long’s campaign:
It’s well known that Senator Gillibrand supports raising income taxes on individuals and small businesses, making over two hundred and fifty-thousand dollars, now she apparently wants to raise Social Security taxes on them too.
Gillibrand told the Poughkeepsie Journal Editorial Board that she would support raising or even eliminating the social security wage base (sswb) ensuring that middle income and small business owners especially those on Long Island, the Hudson Valley and the New York metro region will pay even higher taxes.
Gillibrand said, “One idea would be that we put in less off your first hundred thousand maybe 5 percent or 4 percent or less and then apply that to all income levels, or apply that to income levels above two hundred and fifty thousand.”
U.S. Senate candidate Wendy Long said, “Another day, another proposed tax increase from Senator Gillibrand. Many hardworking New York families look forward to that day when their Social Security payment ends and they get to take home a few more bucks of pay but Senator Gillibrand wants to make sure that day never comes for middle class and small businesses.”
Currently the Social Security wage base is set at $110,100. Gillibrand proposes to simply eliminate that cap entirely or eliminate it for those with incomes over two hundred fifty thousand dollars. Either way the impact on already burdened self employed, small businesses and middle – income taxpayers will be devastating.
Long added, “Self employed New Yorkers and small business owners who are already struggling to compete with the highest tax burden in America will be especially hard hit by this proposal. ”
To the brainwashed Obamabot, it’s just free healthcare. To the rest of the country, it’s an unaffordable monstrosity. Glad we passed it so we could see what was in it…
From the Washington Post:
President Obama’s landmark health-care initiative, long touted as a means to control costs, will actually add more than $340 billion to the nation’s budget woes over the next decade, according to a new study by a Republican member of the board that oversees Medicare financing.
The study is set to be released Tuesday by Charles Blahous, a conservative policy analyst whom Obama approved in 2010 as the GOP trustee for Medicare and Social Security. His analysis challenges the conventional wisdom that the health-care law, which calls for an expensive expansion of coverage for the uninsured beginning in 2014, will nonetheless reduce deficits by raising taxes and cutting payments to Medicare providers.
The 2010 law does generate both savings and revenue. But much of that money will flow into the Medicare hospitalization trust fund — and, under law, the money must be used to pay years of additional benefits to those who are already insured. That means those savings would not be available to pay for expanding coverage for the uninsured.
“Does the health-care act worsen the deficit? The answer, I think, is clearly that it does,” Blahous, a senior research fellow at George Mason University’s Mercatus Center, said in an interview.
Ed Morrisey at Hot Air reports on the administration’s response to the study – which is to say, they have no real response at all.
What does the administration have to say in response? An OMB official told the Washington Post (without going on the record) that Blahous was using “new math” to undermine the credibility of Obama’s reforms, in an attempt “to refight the political battles of the past.” However, this isn’t about the past at all; it’s about the future of Medicare andthe deficit. The White House response appears to fall into the Pelosiesque “we had to passit to see what’s in it” category, with the addendum of “and now it’s too late to argue about it.” We’ll see if that’s true.
Picture Dr. Evil – One billion dollars.
Seriously, the President’s budget proposal sets aside $1 billion to accurately fill out names and numbers on social security checks.
How’s that for government efficiency?
Via Big Government:
According to President Obama’s budget proposal today, his budget would continue “investment in program integrity by providing $1 billion to ensure benefits are paid to the right person and in the right amount.” Yes, you read that correctly: we are supposed to spend one thousand million dollars in order to achieve what American Express does correctly every single day (or, come to mention it, what the Dewey Decimal System did for books 100 years ago)…
What’s worse? It may actually be a legitimate cause.
Social Security fraud and waste, of course, is a very real problem. In 2008, the Social Security Administration was so negligent in keeping its information up-to-date that it paid up to $11 billion to people who weren’t disabled anymore (Social Security pays for many disabled folks, as well as the elderly). And there were still nearly 800,000 people who were trying to get access to the agency’s judges to secure the benefits they were allegedly owed. So the Obama Administration stands on solid ground when it suggests that for every dollar it spends on system maintenance, many dollars in waste and fraud may be saved.
Better plan – Send that money to my house, we’ll hire some of those CareerBuilder office workers, and everything will be taken care of.