In making his case for tax increases last night, President Obama described past deals in which Democrats promised spending cuts in return for tax increases, and
said:
The first time a deal passed, a predecessor of mine made the case for a balanced approach by saying this: “Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.” Those words were spoken by Ronald Reagan. But today, many Republicans in the House refuse to consider this kind of balanced approach.
Well, yes, those words were spoken by Ronald Reagan (in August of 1982) in reference to TEFRA—the Tax Equity and Fiscal Responsibility Act—which congressional Democrats promised would involve a ratio of $3 in spending cuts for every $1 in tax increases (which they said would consist only of closing loopholes). TEFRA passed later that year, and the tax increases certainly happened but, as Reagan later
put it in his autobiography, “the Democrats reneged on their pledge and we never got those cuts.”
TEFRA was one of Reagan’s great regrets about his time in the White House, and should serve as a warning to Republicans contemplating similar grand bargains. Obama’s reference to it only highlights the fact that he tried to pull off something much like TEFRA. Luckily, he appears to have failed.
Good point, Yuval. This should be the Republican mantra: remind eveyrone of Obama's attempt to use Reagan, and then show how it's really a warning against trusting Democrats on spending cuts.
Reply to this commentLinkReport AbuseCan we agree that the half of Americans who either pay ZERO federal income tax or receive money directly from the U.S. Treasury are not paying "their fair share"?
I certainly agree they should pay more. How about a minimum 5% federal income tax rate for starters?
Reply to this commentLinkReport Abusethat is the best way to expand our tax base! and no one under any circumstances should be able to get back more in a tax refund than what they paid in taxes that year. its back door hidden welfare.
Reply to this commentLinkReport AbuseA 5% National Consumption Tax on Goods and Services would solve that problem. (Accompanied by reductions of other tax rates of course).
Reply to this commentLinkReport AbuseI'm more inclined to support Teflon's suggestion of a 5% minimum income tax, and at this point, I'd be happy to support a $5 annual minimum tax.
I think you if you entertain either a consumption tax or some kind of VAT tax without absolute repeal of the current income tax scheme, then you're just going to have (in a few years) a confiscatory sales tax AND a confiscatory income tax.
Politicians - both Democrat and Republican - can't get enough of other people's money, and if you open another door for them to do just that, then they'll certainly walk through it.
Whatever happens, having 50% (or less) of the American public footing the bill entirely, while the remaining 50% (or more) pay absolutely nothing, is not sustainable. Something is going to give eventually, and I'm afraid it won't end well, for anyone.
Reply to this commentLinkReport AbuseYeah, I think a consumption tax would be viewed as nothing more than a sales tax (i.e. almost invisible). People will simply accept it as the new baseline and eventually forget it.
A minimum income tax for everyone would be noticed. It would be specific to each and every individual. It would be viewed as a bill due every April 15.
5% sounds good.
Reply to this commentLinkReport AbuseLet's not forget the wonderful phenomenon of people paying less than zero income taxes. Refunds with zero liability. Credits turning the Federal Income tax system into yet another slimy tentacle extending from the welfare beast.
Remember those news stories after the first round of GWB "stimulus/refund" checks? Trailer park Olga and her 84 kids were not getting a check...and they were the ones who "needed it the most". Cue the tears and anger. The MSM reliably failed to mention that, in addition to the inability to keep her legs shut, Olga had zero Federal Income Tax liability. Such a minor point, I know.
Reply to this commentLinkReport AbuseThe GOP response to Obama's Reagan meme:
"Yes, we remember that quite well. Democrats proposed tax increases first, then spending cuts later. The spending cuts never happened, Now, they propose exactly the same framework, and expect us to fall for that again."
"We thank the President for reminding everyone that Democrats have NEVER been serious about cutting spending, which is why they always propose cuts sometime in the distant future."
"If the President wants to rerun the scenes of 1982 or 1995, that's his problem. That gets us nowhere for 2011 and beyond."
Reply to this commentLinkReport Abuse"If the President wants to rerun the scenes of 1982 or 1995"
The economy in the years after 1983-88 and 1996-2000 grew far, far better than in other periods in the last 30 years. Your problem with that is what?
Reply to this commentLinkReport Abuse"...in spite of..."
Such a lovely phrase.
Reply to this commentLinkReport AbuseObama and Time Magazine have something in common: "Photoshop Reagan". Time Mag. literally, and Obama metaphorically, pasting together unrelated and incomplete images to make them appear as one. A half-truth presented as a whole.
When Reagan spoke, he moved the public opinion needle. When Obama speaks, it's as if the needle is being thrust into the public's eye.
Reply to this commentLinkReport AbuseThis point needs to be made more often, and more explicitly, especially by the GOP in DC. We have been duped repeatedly on promised "spending cuts". From now on, let's insist we get the cuts first, before anything else. Period.
This means we want (a) the cuts specified before anything else will be agreed, and (b) the legislation cutting spending comes BEFORE any associated legislation raising revenues. This even when the revenue-raising measures are desireable in themselves (like killing the ethanol subsidies.)
Reply to this commentLinkReport Abuse"I don't think he's coming," Maude said to her husband Steve. They'd been sitting in their car for over three hours, stuck in the ditch next to the golf course, waiting for the tow truck to arrive.
"Wait," Steve said as a vehicle came into view. "That's gotta be him!"
The tow truck sped into view and the words "Obama's Towing Service" were on it's side. Steve jumped out of the car to meet the driver.
"Thank you so much," Steve said. "I was starting to think we'd be here forever."
"Glad to be of assistance. Just let me get my things out of the back.". Obama opened the back of the truck, pulled out a bag of golf clubs and slung it over his shoulder. He turned to the man and smiled as he pulled out a card from his pocket. "Here you go. This requires you to purchase health insurance or go to jail. You're welcome." Then he proceeded toward the golf course.
"But I need a tow!" Steve's face boiled as he followed Obama onto the green. "I called you for a tow!"
"I understand your frustration," Obama said, placing a tee in the grass. "But the truth is that I didn't put the car in the ditch." He took a deep breath and slowly exhaled. "I love the smell of fresh cut grass, don't you?"
Reply to this commentLinkReport AbuseCould be the making of a classic song "Tee for Tow"
With apologies to Doris Day...
Reply to this commentLinkReport AbuseLet's reverse it. 5 trillion in Actual spending cuts in exchange for 5 trillion in unspecified tax increases to be determined and enacted at a later date.
Reply to this commentLinkReport AbuseI just want one Republican to say, "Mr. President, I knew Ronald Reagan. Ronald Reagan was a friend of mine, and you, sir, are no Ronald Reagan."
Can we have that? Just once, please?
Reply to this commentLinkReport AbuseI propose ending subclassification of tax withholding into SSN, Medicare, etc.: It perpetuates the idea that people are "paying into" these programs and thus we are obligated to support them. There should only "Federal Tax" at the bottom.
Our tax code needs to look like this:
Really Low Income: a% for income in (0,X) range
Everyone Else: b% for income in (X,infinity) range
Deductions/Exemptions: 0, zip, nada... for everything and anything.
I'll let you guys fight it out over what a,b, and X should be.
Reply to this commentLinkReport AbuseA better idea would be to have a national sales and services tax. Then whomever out there makes their money illegally would still pay into the tax coffers. Rich people that buy a yacht or private jet would pay extra for that. Middle class families that have a "typical" existance would pay about 18% on new furniture, new vehicles, etc. Basic necessities such as foodstuffs and medicine and medical equipment and supplies could be exempted. Almost the entire IRS could be eliminated! Imagine the savings just in tax collection costs (since the states could collect and send the money on to Washington).
I think it would be a vastly superior system.
Reply to this commentLinkReport AbuseI would be willing to pay more taxes if there was a way to be sure they would only go to reducing the deficit and eventually paying down the debt, not to more wasteful spending.
What about this idea: What if republicans proposed that each year, there would be a surcharge (same percentage for everyone) on your prior year's taxes large enough to equal one third (or other percentage) of the ACTUAL REDUCTION of federal spending for that year compared to the LOWEST YEAR since the law was made.
For example: If they spent $4 trillion last year and only $3.7 trillion this year, the surcharge would be set at a rate that raises $100 billion. If they spend $4.1 trillion this year, then no tax increase, and if they go back to $4 trillion the following year, that means no surcharge either - they have to get below the $4 trillion.
But if they got down to the $3.7 trillion this year, and then next year they spend $3.4 trillion, they only get another $100 billion, because it would compare to the $3.7 trillion number, not the original $4 trillion number.
Heck - given the fact that they can barely think of a way to cut $5 billion out of the $4 trillion per year, we might as well agree to the surcharge being 100% of the cuts, because it would never happen. But it would certainly pull the rug out of the "republicans just want to protect the wealthy" nonsense.
Reply to this commentLinkReport AbuseWhat is more important is that conservatives fondly remember, respect, and admire Reagan but don't deify him. He did well and the best he could. Using the same principles we can do better even than Reagan did if we apply our experiences and a grasp of the situation.
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