Tuesday, December 14, 2010

Not Increasing Taxes is Not a Tax Cut

The so-called tax bill compromise represents a total failure by Republicans to uphold the ideas they championed in the campaign.  Charles Krauthammer rightly argues that, although this has been characterized by liberal democrats as a sell out, it is actually a profound victory for Obama. 

This bill did not "cut" taxes as has been alleged by the dems.  All it did was preserve the same tax rates in existence right now.  Only in the Obama Bizarro World could not increasing taxes be considered a tax decrease.  In fact, the bill raises the estate tax from 0% to 35% so it is actually a net tax increase.  Not only was this a tax increase, no spending was cut.  In fact, in order just to preserve this net tax increase from being an even worse tax increase, the Republicans had to agree to extend unemployment benefits to encourage people not to work and had to agree to countless billions in earmarks and pork barrel spending attached as "sweeteners."  In reality, this bill is a trillion dollar stimulus bill.  As Krauthammer says: "If Obama had asked for a second stimulus directly, he would have been laughed out of town."  Yet, he writes:
Obama is no fool. While getting Republicans to boost his own reelection chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, Tea-Party, this-time-we're-serious persona of debt-averse fiscal responsibility.

And he gets all this in return for what? For a mere two-year postponement of a mere 4.6-point increase in marginal tax rates for upper incomes. And an estate tax rate of 35 percent - it jumps insanely from zero to 55 percent on Jan. 1 - that is somewhat lower than what the Democrats wanted.
If Republicans had just said no, they could have waited a few weeks until they have a majority and proposed a bill that permanently reduces taxes while cutting spending.  This program of cutting taxes, spending, and reducing the size of government is why we elected them.  Their leaders have already begun to fail, and they haven't even been sworn in.    

5 comments:

Perplexio said...

I find it rather amusing how livid many of the liberal pundits are about this. I flip back and forth between liberal and conservative talk radio on my commutes. I listen to what the left has to say out of curiosity and because I believe the best way to argue against a liberal is to use their own way of "thinking" (if it can be called that) against them.

Generally though the liberal talk radio (usually Bill Press in the mornings and either Thom Hartmann or NorMAN GoldMAN in the afternoon/evening commutes-- depending on when I leave work) starts pissing me off so I switch back to the conservatives (usually it's local stuff like Big John & Amy on WIND/560 or Don Wade & Roma on WLS/890 in the mornings or Michael Medved in the afternoons).

Anyway-- Obama's liberal base loathes this about as much as many of us more staunch conservatives do. I think Obama was hoping for a "win/win" and instead he's get a "lose/lose." Clinton's move to the middle was a bit more successful as it was pre-Internet (well the Internet was there, it's just not near as many people were using it) and thus less polarized.

My buddy over at The Drunken Conservatives had an interesting perspective on Obama ceding the podium to Clinton during the press conference about the "compromise."

Regarding our Republican Congress, I believe Oscar Wilde said it best, "A true friend stabs you in the front."

Anonymous said...

This only proves that dishonesty doesn't get you anywhere, even republicans. By abandoning the need to stand for the hard to truth of actually and permanently reducing taxes, Bush played fast with the truth and made expiring tax rates. It was dishonest, it was stupid, and it did tremendous damage to the conservative cause.

Doug Reich said...

Anon,

I agree.

It points to the need for a consistent, principled stand on these issues. Even if you get less than you want, the principle and direction must be stressed.

In other words, you fight for reduced spending and reduced taxes because it is moral and practical. If you don't reduce all spending and eliminate taxes, fine, but at least you go on record with the right approach. You will steadily win that way, the way the left has steadily marched us toward statism.

These gimmicks like "reduce taxes, but just temporarily until they expire" in order to get them through is stupid. Politically, you are better off letting the opposition "win" so they can take the blame versus getting a half assed outcome for the wrong reason so that when it fails, you get blamed.

Doug Reich said...

Further, I want to emphasize that gimmick legislation cedes the moral high ground to the opposition. By agreeing to tax cuts that expire, you in effect say: "tax cuts are bad and so we will let them expire in the long run, this is just temporary."

The right approach is to say "tax cuts are GOOD and we will cut taxes permanently now and in the future will cut them more as we cut spending."

When you cede the moral high ground in this way, you cannot win.

Michael said...

good point Doug. the republicans should emphasize that tax cuts are an act of justice because they return the money to their rightful owners and then advocate cutting taxes together with a reduction in spending. But since they are altruists they won't do that.