Friday, November 11, 2011

A SUPER OFFER REJECTED........but "Reps are doing NOTHING?"

1super(My Vet's Day post is below this, please give it a read, too)  

Pessimism is growing about the Congressional super committee on deficit reduction, so we were eager to listen yesterday when Pat Toomey called with the latest lowdown. Most notably, the Pennsylvania Senator explained why he and his five fellow Republicans have decided to put new tax revenues on the table.

The rap from Democrats has been that Republicans refuse to touch revenues, preferring only to cut spending. But Mr. Toomey explained that this week the GOP Six offered to raise revenues by $500 billion over 10 years as part of a tax reform that would lock in lower tax rates in return for giving up deductions. Democrats have rejected it, which is puzzling since it would achieve so many of their stated goals.
The GOP offer would raise about $250 billion over 10 years by using some variation of economist Martin Feldstein's proposal that no combination of deductions could exceed, say, 2% of a taxpayer's adjusted gross income. (See Mr. Feldstein's Journal op-ed, "The Tax Reform Evidence From 1986," Oct. 24.) That's a big revenue hit, especially for earners in the top tax brackets who benefit more from tax breaks. Grover Norquist of tax-pledge fame would probably not be pleased.
In return for these cuts in deductions, Mr. Toomey says the top individual tax rate would fall to 28% from 35%, with the other tax-rate brackets falling by similar proportions. The current top rates for capital gains and dividends (15%) and the estate tax (35%) would remain unchanged. The GOP negotiators agreed to the Democrat request that these tax changes be statically scored—which assumes no revenue gains from economic growth—yet they would still yield $250 billion in additional revenue over a decade even with the lower tax rates.
"It's a bitter pill to accept new statically scored revenue," says Mr. Toomey, "but I think it's justified to prevent the tax increase that's coming" in 2013. Given the history of revenue gains after marginal-rate tax cuts, the tax windfall for the Treasury would likely far exceed $250 billion over a decade.
Another $40 billion or so in new revenue would come from changing the formula for adjusting tax brackets for inflation. And $200 billion more would come from a variety of asset and spectrum sales, user fees, tax compliance and other things—all scored on a static basis by the Joint Tax Committee. Mr. Toomey says the Members have also made progress on a corporate tax reform that would cut the rate to 25% in return for eliminating deductions, though any agreement would probably have to be done in two stages to work out the details.
As for spending cuts, Democrats would only have to agree to $750 billion over 10 years. About $180 billion of that would come from changing the inflation calculation for benefits, so the other reductions would hardly be extreme. Keep in mind that any changes in ObamaCare (with its 3.8-percentage point payroll tax increase) and major reform of Medicare and Medicaid were long ago ruled out by Democrats.
Despite the modest spending cuts, the deal Mr. Toomey describes would be a big political win for all concerned. It would give the economy a major lift by taking the tax increase now scheduled for 2013 off the table, and it would show that Congress can at least make some progress toward controlling federal spending. With a ratio of $1.50 in spending cuts to $1 in tax increases, the offer is far better for Democrats than the $3 to $1 ratio that President Obama's own Simpson-Bowles deficit commission recommended.
Mr. Toomey says Democrats nonetheless rejected this offer on Tuesday night, a fact that leaves him "enormously frustrated." He says Democrats are insisting on at least $1 trillion in new revenues while refusing to allow any reduction in tax rates or to stop the tax increase that will hit in 2013. The freshman Republican now fears the talks will end with a whimper of small revenue and spending measures that will do little to help the economy or the federal fisc.
We report all this because it's news and because it illustrates the real political obstacles to more sensible economic policy in Washington. In media mythology, the only barrier to a budget deal is conservative opposition to raising taxes. But even when Republicans put $500 billion in statically scored new revenues on the table, at the risk of upsetting their political base, Democrats declare that tax reform without higher tax rates is impossible. So who are the real "ideologues" here?
Democrats must believe they can blame Republicans if the super committee fails, riding their campaign against "millionaires and billionaires" back to complete power in Washington. It's a reckless bet, but the American public may have to call it. (Z: As if the American public all reads venues which tell the above truth? :-) 

HERE is a  negative review of the above plan.  One can see easily that behind the points in the negative article are the total disagreement in philosophy that's so basic to the differences between Republicans and Democrats and what helps our economy and what doesn't.  I urge you to read both and remember that as you read.   



Z said...

Obama calls for AUSTERITY.
Why not HERE, too? WHy keep borrowing and spending?

Bob said...

The Dems are playing the game to make the Republicans look like they are refusing tax increases on the rich. It's all a game.

The frustrating thing to me is that I don't think the Dems hypocrisy will get coverage in the main stream press.

Z said...

Bob, plus, the rich CAN give more if they want.........right?
and a LOT could give a substantial amount.

Yes, of course the Dems are playing this game, this is why I had to post this....Here's an offer "rejected" that the public barely heard of with any fanfare like every time the Dems come up with something and they're all touting it on all the stations and Obama comes out wagging his finger at the naughty Republicans who hate the poor, hate jobs, and only want to help the rich! (as IF)

People believe this stuff and they vote. THAT's what this is all about.

Until both parties put down their own greed to keep their seats and start putting the country first, we're in BIG trouble.

Ducky's here said...

The response does a good job of demonstrating that Toomey's proposal is just what you'd expect, regressive.

That is going to backfire, badly. It's indicative that MacArthur was chosen to express his admiration for vets. The man who led the troops and tanks against the "bonus army" and burned their tents and dispersed them.

Well, we may be reliving the populist movement that started in the Midwest in at the turn of the century and we don't have FDR around to save capitalism once again.

If I were the right, rather than a regressive tax (IN ADDITION TO cuts in social programs) I'd think about trying to save capitalism again. Otherwise this is going to be a big world wide ugly.

cube said...

It is all a game and the MSM is complicit in it. I can't believe the GOP isn't seizing this as an opportunity to fight back.

Scotty said...

Was there anybody that expected anything else was going to come from this committee?

The many lobbyist are working overtime behind the scenes. I would be more interested in who THEY are.

Z said...

"FDR around to save capitalism once again."

Considering the really educated people who think he did less to save capitalism than most, that's hilarious!

It's ALL how we look at things, Ducky; trust me, you're wrong, too. Much of the time...according to ME and a myriad of experts on most subjects.

Scotty, my major point is that, whether we like it or not, the LIE is that the Republicans are DOING NOTHING, right? This is so awful and Obama's SO witheringly demeaning to the Reps...and, again, he's Freaking LYING

Average American said...

Z, why do you think Fox's ratings are soaring? You would be amazed at how many more people (read independents) are watching them now as compared to just a year or two ago. Americans are doing the best they can to get informed. LSM is just killing themselves and the sooner they finish the job, the better.

I tried biting my tongue, but it is all gone now so I have to say this--Ducky has a point. Ouch!! Bit it again. ANY tax overhaul will almost assuredly be regressive, BUT, that is not a negative. Earned Income Credit, Making Work Pay Credit, Child care Credit, and a few dozen other credits DO NOT, AND NEVER HAVE, BELONGED under the IRS umbrella! Just pulling that crap out of the IRS' hands will make it "look" regressive, but you can rest assured that the money will still flow from another program or programs.

Now for my own personal pet peeve. Why do capital gains, interest, dividends etc get ANY preferential treatment? Income is income is income and should be taxed the same!

Maybe I should have said all this in a post on my own blog. Now I have to come up with something else for there. Sorry for being so winded.

Scotty said...

Scotty, my major point is that, whether we like it or not, the LIE is that the Republicans are DOING NOTHING, right?

Yup, I got that point, Z. It's the same as it ever was and I had no other expectations for it all.

Republicans should have never bought into that whole, "Super Committee" idea/concept!

I certainly didn't.

Z said...

Average, you're never long winded here, please never apologize. You have something to say; that's a good thing.
I'm not sure what that means, that "any tax would be regressive"?

Scotty, I guess you're right; the minute BOTH parties are doing something together, the Republicans get screwed. They should have known. But the president has unfairly shamed them so badly, they just had to.
Remember, we're supposedly the party against clean air and water, we hate the poor, the sick, the elderly and the jobless :-) And we're doing NOTHING for any of those things! :-)

So, the R's have to go along..........sad, isn't it.

Elmers Brother said...

FDR saved capitalism? Most of what he proposed was repealed or thrown out as unconstitutional. The rest is responsible in part for our mess now, one big ponzi scheme raided by successive Congresses and rendered unsustainable.

Z said...

Elbro, exactly; well put

Scotty said...

Mark Steyn's article Deficit-Reduction Fever. gave me a chuckle.

MK said...

They want to tax your way out of the hole they've dug for you.

As many say, the left won't learn, it remains up to the public to.