Earlier this afternoon, Speaker of the House Boehner sent a letter to House members, saying he was breaking off negotiations with the White House and would seek talks with the Senate on raising the debt ceiling and reducing federal spending.
Almost immediately, President Obama held a press conference to say he still wants to make a “big deal”. He has asked Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Minority Leader Nancy Pelosi and Speaker Boehner to meet him Saturday morning.
The President called the plan he had offered to Republicans “an extraordinarily fair deal”. I disagree. His plan includes only $1 trillion in discretionary spending cuts, plus $650 billion in cuts to entitlement programs. And it includes $1.2 trillion in additional revenue, achieved by closing tax loopholes and eliminating some deductions.
The spending cuts in the White House plan are ridiculously small. In the last post I pointed out that the cuts in the Gang of Six proposal would only eliminate 105.7 days of government borrowing per year. Mr. Obama’s plan would only decrease borrowing by 47 days a year. Paltry!
Federal government spending needs to be reined in significantly. $1.65 trillion is just not enough. And while the $1.2 trillion in additional revenue is money that isn’t borrowed, it just gives Congress more to spend. I did not hear any indication from the President that this revenue would go strictly to paying off the federal debt. Cutting a bit of spending and then replacing most of that money does not change the culture of excessive spending in Washington.
President Obama said that a deal with no revenue would affect “seniors, . . . services to the middle class, . . .” What services does the government provide on a regular basis to middle class Americans? My family falls into the middle class and we are lucky if we get back a bit of the income tax withheld from our paychecks!
As to the President’s claim that not raising the debt ceiling would possibly keep seniors from receiving their Social Security checks, the executive branch of government would decide how to allocate whatever monies the government has. If senior citizens do not get their checks, it would be because the President decides to use seniors for political purposes. An interesting point was made in an Associated Press article by Tom Raum, in the Reno Gazette-Journal on July 17, 2011. He wrote that many legal experts say the President cannot stop Social Security checks if there is money in the Social Security Trust Fund. (It would be interesting to see if there really is actual money in that account as Democrats claim.)
At the press conference, Mr. Obama also said that Republican plans do not ask anything of the wealthy. His rhetoric about the “rich” always makes it sound as if they pay no income taxes. It’s important to remember that as income goes up, so does the percentage paid in taxes. Those who earn over $380,000 make up the top 1% of US earners, and they pay 38% of tax revenue.
The president’s favorite phrase is “the rich need to pay their fair share”. Let’s examine that for a minute.
Fair: not exhibiting any bias, and therefore reasonable or impartial
(Impartial: not favoring one person or side over another)
Encarta ® World English Dictionary © & (P) 1998-2005 Microsoft Corporation. All rights reserved.
I get two possible tax applications of “fair” from this definition:
1. Everyone pays the same amount.
2. Everyone pays the same percentage.
The US tax code does neither of those. (I don’t think anyone would approve of the first possibility.) If we were to do as the President says and have the rich pay their fair share, the government would have to lower their tax rate!
If President Obama is truly as concerned about lowering US debt, he would not have spent so much money in the first two years of his presidency and asked for the debt ceiling to be raised three previous times. If he truly cares about the viability of Social Security – for future recipients, not just current ones who might vote for him in 2012 – he would make meaningful cuts and changes to save the program. And if he is truly worried about the debt ceiling, he would have begun talks back in April when Treasury Secretary Geithner began making the rounds of the news talk shows to speak about the issue.
This has gone on too long. Both sides need to give a little. (Maybe I should say all sides since there are moderate and Tea Party Republicans, and Democrats who want to cut spending as well as Dems who don’t.) If revenue can be raised without raising tax rates, as proposed by the Gang of Six, great. But spending cuts need to be two or three times greater, to begin weaning Congress and presidents from excessive spending.