Tax Hike Standoff

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The persistent split between Democrats and Republicans on the Bush tax cuts remained at a standstill after the President met with GOP leaders Nov. 30. An attempt at compromise was shuffled off to minor players to try to seek agreement.

Republicans want to extend all the tax reductions to help stimulate the economy. Democrats want to make the well-of pay higher taxes, contending the country can’t afford to lose revenue from taxes of the rich. That argument falls flat in the face of historical facts. Under two Democrat and two Republican Presidents—Coolidge and Kennedy and Reagan and Bush–tax reduction for the wealthy brought in more revenue, not less.

President Obama tried to snatch the spending spotlight Nov. 29 by proposing savings of $5 billion with a two-year freeze on salaries of federal workers. Unimaginable as this switcheroo from spendthrift to saver is for Obama, it follows another money decision the previous week.

Standing firmly for parsimony, Obama Nov. 16 commanded: no more federal handouts to dead people and those in the pokey. The federal government had made improper payments of $125 billion in fiscal 2010 to 89,000 deceased or imprisoned folks, according to the Office of Management and Budget, The Washington Post reported Nov. 17.

But, not to worry, agencies scouring at full throttle recovered $587 million erroneously paid to contractors and beneficiaries of federal programs, such as Medicaid and unemployment benefits. The improper payments were only $15 million higher than for the previous year.

As for the freeze on federal civilian employees’ pay, it would start Jan. 1, 2011, if Congress goes along. The pay freeze would not affect the military or those in the executive branch, or members of Congress.

The president — sounding like a Tea-partier — said that federal spending and the economy should be at the top of the agenda in meeting with Republicans. “We now have a shared responsibility to deliver for the American people on the issues that define not only these times but our future,” Obama said. And what a future, with the country’s $1.3 trillion deficit and $14 trillion debt.

The 2010 loss in 2010 could have been worse. As Office of Management and Budget Deputy Director Jeffrey Zients explained on his blog:

As part of the President’s Accountable Government Initiative, we’ve worked hard to bring down the rate of improper payments, recapture misallocated funds, and meet the President’s goal of reducing improper payments by $50 billion by the end of 2012….

For 2010, the government-wide improper payment rate declined to 5.49 percent, a decrease from 5.65 reported in 2009. This means that we prevented an additional $3.8 billion in improper payments  from being made in 2010, and are headed in the right direction[.]

Now isn’t that something to be proud about? Zients also clarified, “This is an unfortunate result of the recession and of basic math: the more that is paid out, the more paid out in error, even if the overall rate declines.” Without saying it directly Zients was confirming what sensible Americans believe deeply–that the more government spends, the more it wastes.

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  • Jobe

    How laughable is it that the president who told the opposition party that they could “ride along”, but they would have to sit in the back of the bus and not talk, the president who popped out with the famous ” I won!”, is now begging for bi-partisanship and co-operation. He now says that the country did not vote for “gridlock”. He is correct. They voted for repeal.

  • USMCSniper

    First of all, using the term the "Bush tax cuts" is misleading, when what it really is, is the "existing tax code" and the decision properly framed would be do we want to return to the massive "Clinton tax increases" or etsablish the existing tax code as permanent.