Without Serious Spending Cuts, the Conservative Base Will Walk Away
The good news on taxes is that for the first time in twelve years Americans have permanent tax rates for the biggest source of revenue to the federal government, the Individual Income Tax. That not only gives Americans a measure of certainty, it also puts the issue to rest -- tax rates have been dealt with.
Members of Congress who voted for the American Taxpayer Relief Act of 2012, the Fiscal Cliff deal, voted for tax cuts for 99 percent of income taxpayers. Remember, when Congress passed the deal January 1, the Bush tax rates had just expired and the Clinton tax rates had just gone into effect. So Congress was voting for tax cuts. How, then, has tax activist Grover Norquist's star in any way dimmed? It hasn't. Far from getting his comeuppance, Norquist could consider his mission accomplished and retire were he not having so much fun.
What the Fiscal Cliff deal also illustrates is the utter mendacity of Democrats who for years droned on and on about the Bush tax rates as "tax cuts for the wealthy." The vast majority of Democrats (49 in the Senate and 172 in the House) voted to make the evil Bush tax rates permanent.
The lapdog media, however, contends that the president won big in the Fiscal Cliff deal. But in a terrific article at Forbes, Ralph Benko writes:
They are missing the strategic implications.
In retrospect, at the Battle at Fiscal Cliff, Boehner took President Obama to the cleaners. He did it suavely, without histrionics. While Obama churlishly, and in a politically amateurish manner, publicly strutted about having forced the Republicans to raise tax rates on "the wealthiest Americans" Boehner, quietly, was pocketing his winnings.
Dazzled by Obama's Ozymandias-scale sneer most liberals failed to notice that Boehner quietly made 99% of the Bush tax cuts permanent.
If conservatives, libertarians, and Tea Partiers are disappointed with Speaker Boehner and think he has been giving the farm away, they should read Benko's article pronto. They'll see that the lachrymose leader of the House may well be a master strategist. And just as heartening, he has a healthy hatred of debt.
Last year Speaker Boehner offered the president more revenue by closing exemptions for top earners. The president declined the offer and held out for rate hikes. However, now that the president has succeeded in getting higher tax rates for the top 1 percent of income earners, he now wants to eliminate their exemptions, which would hike their effective tax rates. That Democrats would raise rates and then press for the elimination of exemptions was predicted. But all the president wants is just "a little bit more."
Now that Congress has dealt with revenue, they must deal with spending cuts, the first installment of which is sequestration: the automatic spending cuts due to hit March 1. Given sequestration and the extra revenue from the Fiscal Cliff deal, with just a little discipline the deficit could, this year, sink below $1 trillion.
But when it comes to spending, Democrats don't do discipline. Indeed, in the president's State of the Union address, we were treated to a veritable smorgasbord of new spending initiatives. Mr. Obama, however, assured us: "Let me repeat -- nothing I'm proposing tonight should increase our deficit by a single dime." The president also informed us that: "Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion -- mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans."
The $2.5 trillion in deficit reduction the president refers to is, obviously, a projection; something that might happen when he's out of office. But the current government has no control over spending in the "out years." The current government can't tie the hands of future officials who may be elected precisely to undo everything now being done.
Democrats don't want to cut spending. On Fox News recently, House Minority Leader Nancy Pelosi asserted that: "it is almost a false argument to say that we have a spending problem." (Perhaps that explains why the relief bill for victims of Hurricane Sandy was loaded up with pork.)
Given that Democrats don't think they have a spending problem and are likely to resist any cuts, Republicans should tell Americans that the federal deficit is on target to go below a trillion dollars for the first in four years and Democrats want to jeopardize that happy possibility by spending more and more money we don't have. Take it to the people, Mr. Boehner.
Republicans who voted against the Fiscal Cliff deal would do well to watch "Sequester Scare Tactics" from the February 15 episode of The Kudlow Report. In that six-minute segment we hear that if Republicans "flinch" on the spending cuts, "the base will walk away and the party will self-destruct."
When it comes to the debt ceiling, Republicans should use it to get more spending cuts. And the ceiling shouldn't be raised for such long time spans, either. Raise it for a month, close down the government if need be, and pocket savings from furloughed government workers. This business of giving the biggest wastrel in history and his spendthrift party a blank check for a year is no way to advance the cause of limited government.
So let the debt ceiling be a monthly affair. It's time for Speaker Boehner and House Republicans to give President Obama a case of "Ozymandias melancholia."That's what they were sent to D.C. to do -- that, and to cut spending.
Jon N. Hall is a programmer/analyst from Kansas City.