Wednesday, November 14, 2012

President Demands $1.6 Trillion in New Revenue

     Remember when he was going to take Boehner's offer of $00 billion? From the accounts we've heard Boehner was willing to do that but the Tea Party types-led by Eric Cantor nixed the deal. Then Boehner falsely tried to claim the President pulled out when he himself was forced by the Tea Party to pull out.

    As Bill Kristol tells us, "elections have consequences." One consequence we see right now is that Boehner is now talking the language of "revenue." Of course, he's still trying to push the Urban Legend that revenue can be increased via "dynamic scoring" and closing undisclosed loopholes. The Obama Administration has made it very clear that they won't accept revenue through alleged higher tax revenue that will come later through higher growth.

   Mitch McConnell until now is trying to talk a defiant game. It's strange that he of all people is arguing that the President and his party have no mandate as the GOP held onto it's House majority. For one thing, they at best held on, they didn't increase it, indeed, they lost some seats. That they were at all has more to do with gerrymandering and redistricting than GOP policy ideas.

    In any case, McConnell is in the Senate: why after his failure in his own body to make the gains he had claimed he would is he worrying about the House?

    "Sen. Mitch McConnell, R-Ky., said Tuesday the party is "ready to find common ground," but "we're also not about to further weaken the economy by raising tax rates and hurting jobs."

     "When it comes to the great economic challenges of the moment, saying that you want a balanced approach is not a plan," he said. "The tedious repetition of poll-tested talking points is simply that and the longer the president uses them as a substitute for leadership, the more difficult it will be to solve our many problems."

     Read more:

     You've got to hand it to McConnell. He sure knows how to talk about the will of the voters in a dismissive way-'poll-tested talking points.'

     The President's call for the $1.6 trillion dollars in new revenue breaks out this way:

      "With a solid reelection win and expanded Democratic majorities in the Senate, he has real leverage. And as such, he’s offering a deal that’s much better for liberals, and much less favorable to Republicans. Instead of $800 billion in revenue, he’s calling for $1.6 trillion, drawn in large part from increased taxes on the wealthy. But this isn’t a new plan — it’s what’s outlined in his 2013 budget, and — by and large — it’s what he campaigned on."

      "Where would the revenue come from? The Tax Policy Center provides an analysis: $849 billion would be raised from letting the Bush tax cuts on high earners expire. $584 billion would come from limiting itemized deductions, closing a variety of loopholes and ending tax breaks for oil and gas companies. $148 billion would come from limits placed on corporate tax shifting (to lower tax countries), and $143 billion would be raised by restoring the estate tax to its 2009 levels. The remaining revenue would come from the “Buffet rule” — a new tax on millionaires — and some of this would be offset with tax reductions."

        Still Boule argues that in the long term we'll need more revenue from the middle class for the kinds of government we want:

         "To set the fiscal cliff aside for a moment, it should be said that, in the medium-term, it’s not enough to raise taxes on the wealthy. For the kind of government liberals want, a middle-class tax hike is inevitable. At the moment, the fragile recovery makes that a bad idea. But at sometime in the near future, ordinary Americans will have to start paying more as well."

         Let me say that I'm much less sure about that and it's a good thing that Boule agrees we should wait now while we still aren't out of the woods yet. I have no trouble arguing that the President has a mandate for raising taxes on the rich based on his and his party's election victory. It's a lot less clear for other income levels and in reality he didn't run on that so we certainly don't want to get into all that now.

         At some point we need a rigorous study that both quantifies just what liberals want out of government and how much revenue it will cost and just how much would necessarily fall on the middle class. Of course, I am not a believer in balanced budgets and think that we should normally have some level of deficit spending-not the high amounts we've seen under Reagan and W. Bush.

        At the least let's put one foot in front of the other.





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