House Speaker John Boehner, R-Ohio, continued his slow motion cave in to President Obama this weekend, reportedly agreeing to not only raise marginal tax rates on individuals making more than $1 million a year, but also upping his total tax hike offer to $1 trillion. So much for standing on principle.
According to Politico, Boehner would immediately hike taxes by $440 billion by allowing rates on those making more than $1 million a year to rise to 39.6 percent. He’d raise another $560 billion through ‘tax reform’ implemented by Congress next year. Boehner, reportedly, is also willing “to delay a fight over the U.S. debt limit for another year.”
However, Congress cannot simply “delay” enforcement of the debt limit. It must vote affirmatively to raise the Treasury Department’s borrowing authority, or not. In all likelihood what Boehner did offer was to double count whatever spending cuts he agreed to as part of the fiscal cliff–he had promised not to raise the debt limit unless it was matched, dollar for dollar, by spending cuts. Since Boehner is also insisting on $1 trillion in spending cuts in exchange for raising taxes, that extra trillion would, in effect, buy the federal government another years worth of borrowing authority.
But none of this really matters since the White House rejected Boehner’s $1 trillion tax hike offer anyway. They are still insisting on at least $1.4 trillion in tax hikes, new stimulus spending, and unlimited borrowing authority. Considering how things are going so far, a full Boehner cave seems increasingly likely. And what would that do to the U.S. economy?
The Heritage Foundation has crunched the numbers on Obama’s full $1.6 trillion tax hike and here is what they say it would do:
- The increased tax rates on small-business, investment, and labor income would raise the cost of capital investment, reduce hiring and small-business expansion, and reduce the incentive to work and supply labor in the U.S. economy.
- The Obama tax plan would create an average slowdown of $196 billion in real annual output, leading to nearly 1.1 million fewer private-sector jobs per year and an average of 2 billion fewer hours worked.
- After accounting for the economic effects of the Obama tax plan, the federal government would collect only 44 percent (about $700 billion) of the $1.6 trillion assumed by the President.
If Boehner hoped his concessions would bring some honest comprises to the negotiating table, reactions to his latest offer should give him pause. “If Boehner had made a revenue offer like this out of the gate, it would have been taken more seriously,” a Senate Democratic leadership aide told Politico. “Coming at this point, when so many in his own party are willing to accept the president’s full position on taxes, it’s just a half-step.”
Democrats are still insisting that Boehner “accept the president’s full position on taxes.” Is he really willing to do that to the U.S. economy?
From The Washington Examiner
Examiner Editorial: Horror in Connecticut
Hugh Hewitt: The mainstream media vultures gather
Tim Carney: Newtown stirred emotions but offered few lessons
Conn Carroll: Obama’s trickle-down economics
In Other News
The Wall Street Journal, Ratings Agencies Look Beyond Cliff: Washington might come to a deal to avoid plunging over the fiscal cliff, but that could be rehashed or undermined next year if Democrats and Republicans again clash over raising the debt limit, say analysts from Standard & Poor’s Ratings Services, Moody’s Investors Service and Fitch Ratings.
McClatchy Newspapers, The new normal? Millions wait for Congress to act: Congress is frantically trying to wrap up its 2012 session, with the fates of help for storm victims, farmers, the military, jobless workers and others highly uncertain.
The Hill, Gloomy voters say US on wrong track, kids will be poorer: Nearly 6-in-10 people (59 percent) feel the country is on the wrong track and people are deeply pessimistic about their chances for future prosperity, with 54 percent saying they believe their children will be worse off as adults than their parents.
The New York Times, For Spaniards, Having a Job No Longer Guarantees a Paycheck: With the regional and municipal governments deeply in debt, even workers like bus drivers and health care attendants, dependent on government financing for their salaries, are not always paid.
Matt Lewis says the media should be ashamed of its Connecticut coverage.
Ross Douthat on The Loss of the Innocents in Newtown, Conn.
D. J. Jaffe’s Five-Point Action Plan to Reduce Violence by the Mentally Ill.
Talking Points Memo‘s Evan McMorris-Santoro reports that the gun control protesters outside the White House Want don’t know what they want Obama to do.
David Remnick tells Obama what he must do about guns.
Think Progress lists four reasons Obama should reject Boehner’s latest offer.