Stick to Republican Values
The Republican Party and John Boehner need to stick to the party’s fiscally conservative principles in the “fiscal cliff negotiations.” President Obama apparently believes that because he was elected he can do whatever he wants. I don’t think I need to remind John Boehner and U.S. House of Representatives that they were elected too. Instead, I believe I need to remind them that the President is not interested in solving this crisis:
- It is not about revenue from the “rich” as the President indicates.
- President Obama is even less interested in lower spending and what we have is a spending problem.
- This is about class warfare and raising tax rates to an unconscionable level on people making over $200K per year and others.
First, the President is not interested in solving this crisis. He has stated that we need a balanced approach of more revenue and less spending. We continually hear about the “Clinton Era” taxes. In 2000, President Clinton’s last year we had tax revenue of $2.0 Trillion. In President Bush’s last year, 2008, with the “Bush” tax cuts in place, revenues were $2.5 Trillion. Under President Obama, our maximum revenue year has been $2.2T with a projected $2.6T this year. Revenues will finally be higher than 4 years ago and $600B than the last year of President Clinton. As the economy grows, revenue will continue to increase. Additionally, President Obama flatly rejected the opportunity to raise more revenue by closing loopholes and leaving rates untouched. It is clearly not revenue that he is concerned with.
Second, the President has demonstrated repeatedly that he is not interested in reducing spending. In fact, his new proposal suggests another $50B in stimulus spending and “future” spending cuts. Everybody knows that future spending cuts never materialize. What we have is a spending problem! In 2000, total spending was $1.8 Trillion. In 2008, it was $2.9 Trillion under the last year of President Bush. Tax cuts were not the problem under President Bush, spending was. Under the Obama administration our lowest spending year is $3.5 Trillion and we are projected to spend $3.8 Trillion in 2012. Incredibly President Obama also wants a blank check from Congress regarding the debt limit. This is like giving the pharmacy keys to a drug addict.
Lastly, the President has showed that what he really wants is class warfare through tax increases on an individual group. The President’s proposal raises rates from 35% to 39.6% on all single earners making more than $200 thousand. In addition, he wants to lower the estate tax limit to $3.5M while raising the tax to 45%. After building a nice nest egg for a family that has been taxed multiple times already, the President thinks it is fair to take almost half of it. In addition, he wants to keep a lower payroll tax (a bad idea to begin with) for lower wage earners only. Lastly, he wants dividend to be taxed as income. Mind you, dividends are taxed at the world’s highest corporate tax rate of 39.2% before a person receives them. By the time the President is done, the U.S. Federal Government will take 76.2 % of the profits distributed to shareholders via dividends. The investor gets a whopping 23.8% for his risk.
While we’re talking rates, let’s look at what the rates will really be for a person making $200K if President Obama gets his way. Aside from higher capital gains and dividend rates, the income rate will go to 39.6%, 2.9% Medicare tax, and an additional 4.7% in Obamacare surcharges. If a person lives in California, add another 13% and you get to 60.2% income tax on every dollar you earn over $200,000. For President Obama this is about payback and redistribution. In his mind, society is entitled to the majority of what you earn.
The Republicans in the House of Representative need to recognize that President Obama wants to go over the cliff and blame the Republicans. Today, Harry Reid blocked the vote on President Obama’s proposal. The House must not negotiate with itself. They must hold the line on tax rates and more importantly demand spending cuts. Remind the American Public that it was not the tax rates of the Clinton years that brought prosperity, it was a Republican led house that kept spending under 19% of GDP compared to the 25% of GDP under the current administration.