Tag Archives: senate majority leader harry reid

Brantley and Obama want to go after the big bad wealthy again but they happen to be the job creators

President Obama and other politicians are advocating higher taxes, with a particular emphasis on class-warfare taxes targeting the so-called rich. This Center for Freedom and Prosperity Foundation video explains why fiscal policy based on hate and envy is fundamentally misguided. For more information please visit our web page: www.freedomandprosperity.org.

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President Obama really does stick to his view that the wealthy need to rescue the rest of us on everything, but that view does not work. There are not enough rich people out there to solve our budget woes. Actually what has happened in the past when the government wants more money it starts off going after the rich, but when that does not bring in much money then the only alternative is to go after the rest of us.

Max Brantley argues on the Arkansas Times Blog that most of us are taxed too much so we must tax the rich more but that will not come close to bringing us to a balanced budget. However, it will destroy job creation.

The Millionaire Tax: Yet Another Job-Killing Tax Hike

By Curtis Dubay
October 11, 2011

Like the villain in a horror movie, the many-lived millionaire tax is once again back from the dead. Senate Majority Leader Harry Reid (D–NV) dusted off this economically frightening tax hike that has repeatedly failed to pass Congress to pay for President Obama’s jobs plan (American Jobs Act of 2011, S. 1660) after Senate Democrats rejected the tax hikes the President proposed to pay for his bill.

This is the third time in the past two years that congressional Democrats have proposed a millionaire tax. The first time it was a 5.4 percent surtax to pay for health care reform. The second time was in “the People’s Budget” released by the Congressional Progressive Caucus. It failed to garner much support either time.

If the third time is the charm for the millionaire tax to become law, the economy would suffer lasting damage and reduced international competitiveness. And American workers would bear the brunt of the pain.

Permanent Tax Hike on Job Creators

The millionaire’s tax would be a 5.6 percent surtax on incomes of married filers earning over $1 million starting on January 1, 2013. The surtax would kick in at $500,000 for individual filers, so it cannot be called a true millionaire tax. It would take the place of several tax hikes President Obama proposed to pay for his jobs plan, the biggest of which was capping the deductions of high-income earners.[1] It would raise approximately $450 billion over 10 years.

The millionaire surtax is contradictory to the stated aim of the President’s jobs plan, which is to create jobs. The tax hike would fall squarely on the very job creators that the President wants to add jobs and reduce their incentive to add new workers.

Taxpayers earning more than $1 million per year are investors and businesses that are directly responsible for creating jobs. Investors provide the capital to existing businesses and startups so they can expand and add new workers. Raising their taxes would deprive them of resources they could invest in promising businesses that are looking to add employees. Raising their tax rate would deter them from taking the risk to invest.

The President and his allies say often that only a few businesses would pay higher taxes under their soak-the-rich policies. But a recent study from President Obama’s own Treasury Department shows that 50 percent of the income earned by businesses that pay their taxes through the individual income tax code and employ workers would pay the millionaire tax.[2]

The millionaire tax is a direct blow to the pass-through businesses that employ the most workers. Higher taxes would deprive these important job creators of resources they could use to add new workers or pay their workers higher wages, and it would reduce their incentive for adding new workers. These impediments to economic growth and job creation would plague the economy permanently, while the questionable jobs policies the millionaire tax would pay for are temporary.

More Job Destruction

The millionaire surtax would also apply to capital gains and dividends. This would be yet another surtax on investment income, as Obamacare already applied an extra 3.8 percent tax. Combined with that surtax and the President’s policy of increasing the capital gains and dividends rate to 20 percent from the current 15 percent rate, the millionaire surtax would raise the total rate to 29.4 percent—a 96 percent increase over the current rate.

Higher capital gains taxes would further impede job creation because it would increase the cost of new capital for businesses looking to grow or replace worn-out capital. This would make it more expensive for businesses to buy the equipment, tools, and other things they need to employ more workers and make their current workers more productive. The end result would be fewer jobs and lower wages for American workers.

The President frequently calls his tax hike plans “tax reform.” But one of the goals of tax reform is to lower the cost of capital to improve economic growth and enhance job creation. Higher taxes on capital are opposed to the aims of true tax reform.

Highest Tax Rates in the World

The U.S. is generally regarded as a low-tax nation compared to other industrialized countries. This is one of the main factors that has allowed the U.S. economy to grow at a faster rate than other developed countries for decades and has made it the envy of the world. If the millionaire surtax becomes law, the U.S. would no longer enjoy the advantages of being a low-tax country.

After adding state and local income tax rates, the 39.6 percent top federal income tax rate long fought for by President Obama and his congressional allies, the higher Medicare surtax from Obamacare, and the new millionaire surtax, the average top marginal income tax rate in the U.S. would be 55 percent. A rate at that level would leave the average U.S. rate as the third highest among developed nations in the 30-member Organization for Economic Cooperation and Development (OECD). It would be behind only Sweden and Denmark.

Taxpayers in states with above-average top marginal income tax rates would compare even worse. In fact, taxpayers in Oregon, Hawaii, and New York would pay the highest tax rates in the developed world. Taxpayers in California, Iowa, New Jersey, Vermont, Maine, Maryland, Minnesota, Idaho, North Carolina, Wisconsin, and Ohio would pay higher rates than every developed country except Denmark.

Taxpayers in the nine states without state income taxes—and therefore with the lowest income tax rates in the U.S.—would still be taxed at a higher rate than in all but seven other developed countries. Their rates would be higher than traditional high-tax countries such as France, Germany, Italy, and Spain.

In the global race for investment and capital, the millionaire tax would make almost every other developed country more competitive than the U.S.

Real Reform

The millionaire tax would end up costing the U.S. economy more jobs than the President’s jobs plan it is supposed to pay for would ever create. It would ruin American competitiveness among other developed countries.

The President and his congressional allies are better off spending their time pursuing true tax reform, which would repair the tax base and lower marginal tax rates. That would mean dropping their class warfare policies for the good of the economy and the country.

Curtis S. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Romney wants to eliminate Capital Gains Tax for everyone except those who are real job creators

Obama: Raise Taxes, Capital Gains – “For Purposes of Fairness”

Everyone knows that if you eliminate the capital gains tax then those who are wealthy will put more money into creating jobs. However, Mitt Romney feels so guilty about being wealthy that he has proposed eliminating the capital gains for everyone except for those making over 200,000 dollars.

  • OCTOBER 21, 2011, 7:08 P.M. ET

Romney’s Guilty Republican Syndrome

A leading GOP contender defines ‘rich’ as $200,000 in income. Funny. So does President Obama.

As the GOP casts about for a response to Occupy Wall Street, at least one prominent Republican isn’t sweating it. In the war over class, Mitt Romney is already waving a white flag. And therein lies one of his chief liabilities as a Republican nominee or president.

The Occupy masses don’t have a unified message, though the Democrats embracing them aren’t making that mistake. President Obama helpfully explained that the crowds in New York and elsewhere are simply expressing their “frustrations” at unequal American society. The answer to their protests is, conveniently, his own vision for the country. If wealthier Americans and corporations are just asked to pay their “fair share,” if “we can go back to that then I think a lot of that anger, that frustration dissipates,” said the president.

Associated PressGOP Presidential candidate Mitt Romney on the trail

This is a campaign theme in the making, and one with which Mr. Obama has already had plenty of practice. Congressional Democrats, too, see the value of pivoting off Occupy Wall Street to build an election-year class-warfare argument.

Senate Majority Leader Harry Reid’s latest answer to any spending proposal is a “millionaire’s surtax,” which he intends to make Republicans vote against ad nauseam. Labor unions, liberal activist groups—all see an Occupy opportunity to refocus the blame for a faltering economy away from President Obama and to greedy, rich America.

But here’s the other big prize, from the White House’s perspective: The man they most expect to become the Republican nominee, Mitt Romney, is already running from this debate. Mr. Romney, they see, is in the full throes of Guilty Republican Syndrome.

It’s a curious illness, even if its source is clear: success. Mr. Romney is a multimillionaire, and through his own hard work. It’s a great American story, yet the Republican is paralyzed at the thought of what his opponents might do with it in a 9% unemployment economy. Democrats have already pounced on his time at Bain Capital, accusing Mr. Romney of “stripping down” companies and “laying off” employees for profit. The press has run exposés on his privileged upbringing, his “oceanfront” vacation home, his use of private jets.

Even his Republican opponents, who should know better, are lobbing anti-wealth pot shots. Herman Cain has taken to comparing his own “Main Street” business experience to Mr. Romney’s “Wall Street” past. Rick Perry is running an ad that hits Mr. Romney on his state health-care plan but ends with this bit of class: “Even the richest man can’t buy back his past.”

Having initially fought these caricatures, Mr. Romney has since begun to exhibit all the syndrome’s symptoms. He’s put forth a 59-point economic plan that eliminates the capital gains tax—but only for people who earn less than $200,000 a year. He’s declared, at a New Hampshire town hall (and at every other opportunity): “I’m not running for the rich people. Rich people can take care of themselves. They’re doing just fine.” He’s developed a form of Tourette’s that causes him to employ the term “middle class” in nearly every sentence.

Related Video

James Taranto on how Mitt Romney’s guilt as a millionaire feeds Democratic class warfare.

Mr. Romney is clearly hoping that his own passive form of class warfare will head his opponents off at the blue-collar pass. Really? The 2012 election is shaping up to be a profound choice. Mr. Obama is making no bones about his vision of higher taxes, wealth redistribution, larger government.

Mr. Romney has generally espoused the opposing view—smaller government, fewer regulations, opportunity—but only timidly. This hobbles his ability to go head to head with the president, to make the moral and philosophical case for that America. How can Mr. Romney oppose Mr. Obama’s plans to raise taxes on higher incomes, dividends and capital gains when the Republican himself diminishes the role of the “top 1%”? How can he demonstrate a principled understanding of capital and job creation when latching on to Mr. Obama’s own trademark $200,000 income cutoff?

At a town hall in Iowa Thursday, Mr. Romney took it further: “For me, one of the key criteria in looking at tax policy is to make sure that we help the people that need the help the most.”

These are the sort of statements that cause conservative voters to doubt Mr. Romney’s convictions. It also makes them doubt the ability of a President Romney to convince a Congress of the need for fundamental tax reform. If anything he owes a debt to Newt Gingrich, who in a recent debate gave him a taste of how politically and intellectually vulnerable he is on this argument, asking Mr. Romney to justify the $200,000 threshold.

Mr. Romney’s non-responsive response included five references to the “middle” class and another admonition that the “rich” are “doing just fine.” Mr. Obama can’t wait to agree, even as he shames Mr. Romney over his bank account.

Mr. Romney isn’t the first Republican to develop Guilty Syndrome, and one option would be to form a support group with, say, George H.W. Bush. A better cure might be the tonic of Ronald Reagan, who never let his own wealth get in the way of a good lower-tax argument. Reagan’s message, delivered with cheerfulness and conviction, was that he wanted everyone in American to have the opportunity to be as successful as he had been. If Mr. Romney is looking for a way to connect with an aspiring American electorate, that’s a start.

Write to kim@wsj.com

Brantley and Obama want to go after the big bad wealthy again but they happen to be the job creators

President Obama and other politicians are advocating higher taxes, with a particular emphasis on class-warfare taxes targeting the so-called rich. This Center for Freedom and Prosperity Foundation video explains why fiscal policy based on hate and envy is fundamentally misguided. For more information please visit our web page: www.freedomandprosperity.org.

_________________

President Obama really does stick to his view that the wealthy need to rescue the rest of us on everything, but that view does not work. There are not enough rich people out there to solve our budget woes. Actually what has happened in the past when the government wants more money it starts off going after the rich, but when that does not bring in much money then the only alternative is to go after the rest of us.

Max Brantley argues on the Arkansas Times Blog that most of us are taxed too much so we must tax the rich more but that will not come close to bringing us to a balanced budget. However, it will destroy job creation.

The Millionaire Tax: Yet Another Job-Killing Tax Hike

By Curtis Dubay
October 11, 2011

Like the villain in a horror movie, the many-lived millionaire tax is once again back from the dead. Senate Majority Leader Harry Reid (D–NV) dusted off this economically frightening tax hike that has repeatedly failed to pass Congress to pay for President Obama’s jobs plan (American Jobs Act of 2011, S. 1660) after Senate Democrats rejected the tax hikes the President proposed to pay for his bill.

This is the third time in the past two years that congressional Democrats have proposed a millionaire tax. The first time it was a 5.4 percent surtax to pay for health care reform. The second time was in “the People’s Budget” released by the Congressional Progressive Caucus. It failed to garner much support either time.

If the third time is the charm for the millionaire tax to become law, the economy would suffer lasting damage and reduced international competitiveness. And American workers would bear the brunt of the pain.

Permanent Tax Hike on Job Creators

The millionaire’s tax would be a 5.6 percent surtax on incomes of married filers earning over $1 million starting on January 1, 2013. The surtax would kick in at $500,000 for individual filers, so it cannot be called a true millionaire tax. It would take the place of several tax hikes President Obama proposed to pay for his jobs plan, the biggest of which was capping the deductions of high-income earners.[1] It would raise approximately $450 billion over 10 years.

The millionaire surtax is contradictory to the stated aim of the President’s jobs plan, which is to create jobs. The tax hike would fall squarely on the very job creators that the President wants to add jobs and reduce their incentive to add new workers.

Taxpayers earning more than $1 million per year are investors and businesses that are directly responsible for creating jobs. Investors provide the capital to existing businesses and startups so they can expand and add new workers. Raising their taxes would deprive them of resources they could invest in promising businesses that are looking to add employees. Raising their tax rate would deter them from taking the risk to invest.

The President and his allies say often that only a few businesses would pay higher taxes under their soak-the-rich policies. But a recent study from President Obama’s own Treasury Department shows that 50 percent of the income earned by businesses that pay their taxes through the individual income tax code and employ workers would pay the millionaire tax.[2]

The millionaire tax is a direct blow to the pass-through businesses that employ the most workers. Higher taxes would deprive these important job creators of resources they could use to add new workers or pay their workers higher wages, and it would reduce their incentive for adding new workers. These impediments to economic growth and job creation would plague the economy permanently, while the questionable jobs policies the millionaire tax would pay for are temporary.

More Job Destruction

The millionaire surtax would also apply to capital gains and dividends. This would be yet another surtax on investment income, as Obamacare already applied an extra 3.8 percent tax. Combined with that surtax and the President’s policy of increasing the capital gains and dividends rate to 20 percent from the current 15 percent rate, the millionaire surtax would raise the total rate to 29.4 percent—a 96 percent increase over the current rate.

Higher capital gains taxes would further impede job creation because it would increase the cost of new capital for businesses looking to grow or replace worn-out capital. This would make it more expensive for businesses to buy the equipment, tools, and other things they need to employ more workers and make their current workers more productive. The end result would be fewer jobs and lower wages for American workers.

The President frequently calls his tax hike plans “tax reform.” But one of the goals of tax reform is to lower the cost of capital to improve economic growth and enhance job creation. Higher taxes on capital are opposed to the aims of true tax reform.

Highest Tax Rates in the World

The U.S. is generally regarded as a low-tax nation compared to other industrialized countries. This is one of the main factors that has allowed the U.S. economy to grow at a faster rate than other developed countries for decades and has made it the envy of the world. If the millionaire surtax becomes law, the U.S. would no longer enjoy the advantages of being a low-tax country.

After adding state and local income tax rates, the 39.6 percent top federal income tax rate long fought for by President Obama and his congressional allies, the higher Medicare surtax from Obamacare, and the new millionaire surtax, the average top marginal income tax rate in the U.S. would be 55 percent. A rate at that level would leave the average U.S. rate as the third highest among developed nations in the 30-member Organization for Economic Cooperation and Development (OECD). It would be behind only Sweden and Denmark.

Taxpayers in states with above-average top marginal income tax rates would compare even worse. In fact, taxpayers in Oregon, Hawaii, and New York would pay the highest tax rates in the developed world. Taxpayers in California, Iowa, New Jersey, Vermont, Maine, Maryland, Minnesota, Idaho, North Carolina, Wisconsin, and Ohio would pay higher rates than every developed country except Denmark.

Taxpayers in the nine states without state income taxes—and therefore with the lowest income tax rates in the U.S.—would still be taxed at a higher rate than in all but seven other developed countries. Their rates would be higher than traditional high-tax countries such as France, Germany, Italy, and Spain.

In the global race for investment and capital, the millionaire tax would make almost every other developed country more competitive than the U.S.

Real Reform

The millionaire tax would end up costing the U.S. economy more jobs than the President’s jobs plan it is supposed to pay for would ever create. It would ruin American competitiveness among other developed countries.

The President and his congressional allies are better off spending their time pursuing true tax reform, which would repair the tax base and lower marginal tax rates. That would mean dropping their class warfare policies for the good of the economy and the country.

Curtis S. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Mark Pryor voted for first stimulus but silent about second

The old political playbook will not work this time around.

Bragging on Obamacare and the first stimulus in Arkansas will not do much for Pryor in 2014. In this clip above Senator Pryor praises Mike, Vic and Marion. (All three of those men bailed out and Marion and Vic were replaced by Republicans and in 2012 an election will determine the replacement for Mike Ross.) Then he goes on to praise President Obama’s leadership.

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Mark Pryor voted for the first stimulus and will not say what he thinks about the second stimulus. I have written about that before and offer the links below to those earlier posts. Also I wanted to pass along this fine article by Red Arkansas Blog.

Pryor Skulking In Shadows, Reid Blocking Bill, Obama Blaming GOP

October 5, 2011

By

Imagine the hearty laughter we had yesterday afternoon when we received an email from President Barack Obama’s campaign blaming House Republicans (and exhorting you to spam your local House Republican’s Twitter feed [if you are represented by a Democrat, you end up spamming Speaker John Boehner]) for not passing his second stimulus bill (thanks Debbie for letting us use that term!) while at roughly the same time, Mr. Obama’s chief cheerleader in the Senate, Sen. Harry Reid, blocked an effort to put Stimulus 2: Electric Boogaloo to an up-or-down vote.

Of course, Mr. Reid may have a good reason for relatively delaying the relative “right away” vote on Mr. Obama’s stimulus: he can’t herd his own caucus.

“It seems it’s a lot easier to block a Republican plan than to get the Democrats to rally around President Barack Obama. Even though Senate Majority Leader Harry Reid (D-Nev.) has repeatedly promised to call a vote on the president’s plan, he has slow-walked Obama’s jobs bill amid fractures within his caucus over how to pay for it.”

It also turns out that the Senate Democratic Whip Dick Durbin may also have a bit of a limp whip (isn’t there a pill for that?):

“Senate Majority Whip Dick Durbin (D-Ill.) said, at the moment, Democrats in Congress don’t have the votes to pass President Obama’s jobs bill”

Of course, this brings us to our own Sen. Mark Pryor who, to date, has not expressed a position on Stimulus II, despite voting for Stimulus I in 2009 that hasn’t really done a whole heckuva lot.

Given the Senate Democratic leadership being forced to delay an immediate vote while they scrounge the north side of the Capitol for votes, Mr. Pryor’s position on a bill that would increase taxes on our state’s natural gas industry (isn’t it good for jobs?) becomes very important.

Because of the importance of Mr. Pryor’s stance on Stimulus II, we are forced to wonder why our senior senator is skulking in the shadows and not speaking to it.

Is he worried about angering the increasingly liberal Democratic Party of Arkansas by not publicly supporting President Obama’s plan to raise taxes on job creators? After all, he sponsored that resolution to create National JC Penny White Sale Da… err… National Jobs Day.

PARTING SHOT

Will Sen. Pryor add an unemployed person to his office staff? How about the DPA? Who should we direct resumes to?

Related posts:

Potential Headlines: Beebe beats Pryor in 2014, Hillary beats Obama in 2012

It is my view that if the economy keeps stinking that Republicans will have a field day  in November of 2012. However, the same principle holds true that challengers to Democrats will be  very successful in Democratic primaries. In Arkansas many have longed for another Clinton in the White House. Could it happen? It is my […]

Pryor voted for Stimulus earlier but now he is concerned about our deficit

Thanks to the Arkansas Times Blog and to Arkansas Media Watch for pointing out what Senator Pryor said in his recent visit to Rogers, Arkansas: Getting the economy on track will require deep cuts to the federal budget and a fairer tax system, Sen. Mark Pryor, D-Ark., said Tuesday. National defense, Social Security and Medicare […]

Dear Senator Pryor, why not pass the Balance Budget Amendment? (Part 3 Thirsty Thursday, Open letter to Senator Pryor)

Dear Senator Pryor, Why not pass the Balanced  Budget amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion). On my blog http://www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, […]

Dear Senator Pryor, why not pass the Balanced Budget Amendment? (Part 2 Thirsty Thursday, Open letter to Senator Pryor)

Dear Senator Pryor, Why not pass the Balanced  Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion). On my blog http://www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, […]

Senator Mark Pryor in favor of debt deal: “We must continue making tough decisions to reduce our debt”

Mark Pryor voted for the Debt Deal on August 2, 2011.  He said, “We must continue making tough decisions to reduce our debt. ” However, I don’t think cutting 22 billion out of projected increases in a 3.6 trillion budget is “making the tough decision to reduce our debt.” Aug 01 2011 Statement by Senator Mark […]

Letter to Senator Mark Pryor concerning debt ceiling debate July 26, 2011

Dear Senator Pryor, The President asked us to contact those representing us in Washington and that is exactly what I am doing today. Let make a few points. First, in the past few months I have responded to your request to provide SPECIFIC SPENDING CUT SUGGESTIONS to your office. I have done so over 100 […]

Breaking down Senator Mark Pryor’s speech on debt ceiling (Part 3)

Mark Pryor’s support of the ultra liberal Obama is very clear in the video clip above. He voted for President Obama’s plan to nationalize healthcare and  Obama’s stimulus plan that wasted almost a trillion dollars. Now he is following President Obama down the path of raising taxes during the debt ceiling debate. The Arkansas Times Blog […]

Bill Clinton praises Obama
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Beebe does not get it, Lowering federal spending is the real issue, not debt ceiling

Max Brantley wrote on the Arkansas Times Blog this morning:

Is there a better voice for moderation, compromise and legislative solutions than Gov. Mike Beebe? His legislative career contains few policy monuments, but a warehouse full of settlements of pitched legislative battles.

So he’s a good spokesman against the current impasse created in Congress by Republicans like 2nd District U.S. Rep. Tim Griffin intent on holding the U.S. hostage to debilitating budget cuts and absolute protection of the wealthy from even a small increase in the lowest tax burden in half a century. Good for Beebe.

“They are apparently so entrenched that they’re ready to allow this country to default, with all of the economic consequences that that brings with it,” Beebe told reporters. “They’re up to the licklog, and they’d better sit down and figure out how they solve this problem.” 

Beebe said both sides in the debate deserve criticism, but “it sounds to me like it’s the Republican majority in the House that has just drawn a line in the sand.”

Beebe claims it the Republicans who want to default, but is the Democrats who are refusing to cut the budget in a way we can lower this 1.7 trillion deficit for this year!!!!

The huge deficits are the problem. People want the debt ceiling raised, but if the huge deficits  continue then what is the use? The article below shows how our government will have their credit rating devalued UNLESS WE STOP RUNNING UP BIG DEFICTIS EVERY YEAR!!

Dueling Debt Ceiling Proposals vs. the Rating Agencies,” by Alison Acosta Fraser, July 25, 2011 at 10:16 pm:

As the day debt ceiling of reckoning fast approaches, dueling proposals are flurrying around Washington fast and furious.  The latest two are from House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV).

Americans, and global financial markets, are watching Washington nervously for a real plan—one that will put the nation squarely on a path to solving our twin crises of spending and debt.  Without strong structural changes in spending, our debt will balloon out of control.

At stake are two issues.  The short-term is obvious – will there be an increase in the debt limit before August 3?  Despite the President and his team practically begging Wall Street to collapse, the markets and the rating agencies believe that there will be an increase and the federal government can safely avoid the chaos of prioritizing its bills in order to service the debt.  Though they warn of the consequences if this doesn’t happen, Standard & Poor’s, has stated that

…the risk of a payment default is small, though increasing…Standard and Poor’s still anticipates that lawmakers will raise the debt ceiling by the end of July to avoid those outcomes.”

The second and even more crucial issue is whether Congress will take necessary action beyond the next year to bring our debt under control over the medium and long-term.  This is where the rating agencies really voice their strong concern.    Again, Standard & Poor’s:

Congress and the Administration might also settle for a smaller increase in the debt ceiling, or they might agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”

Moody’s response is similar:

The outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.

What the rating agencies are saying is that Congress and the President must pass legislation that immediately begins to rein in deficits and bring our debt down to more acceptable levels, and either keeps it there or continues to drive it down further.

The Boehner proposal would cut $1.2 trillion in discretionary spending.  There is no assurance that these cuts will occur, but let’s assume they do.  Let’s even be generous and assume that they are – in the words of S&P– “enacted and maintained throughout the decade.”  This would cut debt held by the public from its projected $24.9 trillion in 2021 to $23.7 trillion, and when measured against the economy from 104% to 99.4%.  Certainly, this is an improvement, but it is hardly declining from today’s levels, nor would these cuts fundamentally restructure entitlements – the real driver of our deficits in the future.

Step two in the Boehner proposal would reduce deficits by an additional $1.8 trillion over ten years.  Even assuming these cuts all happen, and even assuming they were all spending cuts – a broad assumption given the President’s rhetoric surrounding tax hikes on the wealthy – this would bring publicly held debt down to 92% of GDP. Better, but not that much.  Even throwing in interest savings from deficit reduction would bring this down to 88%.  Again, not much improvement and far worse than today’s debt ratio.

The Reid proposal doesn’t move the ball forward enough either.  At best it falls somewhat short of Boehner’s $3 trillion by $800 billion ($1.2 trillion in discretionary and some confusing savings to be had from winding down operations in Iraq and Afghanistan of $1.0 trillion.)

Neither of this week’s dueling debt ceiling proposals would pass the test from Moody’s or Standard and Poor’s for a credible, firm and actionable plan that would turn the tide of our deficits to put our debt on a manageable track. And if that holds true, then a downgrade by the rating agencies could occur smack in the very election year the President is trying to scoot through.

Because spending is set to grow so significantly over the decade, the kind of onesie-twosie approach to cutting spending and increasing the debt limit is simply not adequate.  Net interest payments are projected to more than triple over the next decade. The longer Congress waits to seriously control spending, the more it will have to cut just to offset bourgeoning interest costs.  And if interest rates suddenly rise? Well, we have an even bigger problem on our hands.

And, as babyboomers flood into Social Security, Medicare and Medicaid swell in tandem, the kinds of changes necessary to rein in spending on these programs will be much more difficult.  Here again, the longer they duck the problem, the more likely a meltdown ahead.

The fact is, the only plan that could likely pass muster with Moody’s and Standard and Poor’s is House passed, Cut, Cap and Balance.  Why?  They tackle spending with firm caps that are enforceable, and before the end of the decade bring spending down to 19.9% of GDP and keep it there.  With the right spending changes it could fall, along with debt levels, from there.  Congress must act now to rein in spending and get our debt under control. It’s time for the dueling to end.

Raising debt ceiling does not solve problem, Without strong structural changes in spending, our debt will balloon out of control

Steve Brawner in his article, “Uncle Sam: Deadbeat dad?” Arkansas News Bureau, July 20, 2011 noted:

That’s no way to get out of debt. Debtors — the government, you, me — don’t stop increasing debt simply by declaring they will stop doing so. The hole will keep getting dug unless hard choices are made about reducing the right expenditures and raising the right taxes. Congress, the president, and, indeed, the American people have not yet made those choices. Until that happens, the government will keep borrowing.

The question is, will it do so responsibly, or as a deadbeat dad?

There is good news. At least we’re talking about the debt instead of ignoring it.

The huge deficits are the problem. People want the debt ceiling raised, but if the huge deficits  continue then what is the use? The article below shows how our government will have their credit rating devalued UNLESS WE STOP RUNNING UP BIG DEFICTIS EVERY YEAR!!

Dueling Debt Ceiling Proposals vs. the Rating Agencies,” by Alison Acosta Fraser, July 25, 2011 at 10:16 pm:

As the day debt ceiling of reckoning fast approaches, dueling proposals are flurrying around Washington fast and furious.  The latest two are from House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV).

Americans, and global financial markets, are watching Washington nervously for a real plan—one that will put the nation squarely on a path to solving our twin crises of spending and debt.  Without strong structural changes in spending, our debt will balloon out of control.

At stake are two issues.  The short-term is obvious – will there be an increase in the debt limit before August 3?  Despite the President and his team practically begging Wall Street to collapse, the markets and the rating agencies believe that there will be an increase and the federal government can safely avoid the chaos of prioritizing its bills in order to service the debt.  Though they warn of the consequences if this doesn’t happen, Standard & Poor’s, has stated that

…the risk of a payment default is small, though increasing…Standard and Poor’s still anticipates that lawmakers will raise the debt ceiling by the end of July to avoid those outcomes.”

The second and even more crucial issue is whether Congress will take necessary action beyond the next year to bring our debt under control over the medium and long-term.  This is where the rating agencies really voice their strong concern.    Again, Standard & Poor’s:

Congress and the Administration might also settle for a smaller increase in the debt ceiling, or they might agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”

Moody’s response is similar:

The outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.

What the rating agencies are saying is that Congress and the President must pass legislation that immediately begins to rein in deficits and bring our debt down to more acceptable levels, and either keeps it there or continues to drive it down further.

The Boehner proposal would cut $1.2 trillion in discretionary spending.  There is no assurance that these cuts will occur, but let’s assume they do.  Let’s even be generous and assume that they are – in the words of S&P– “enacted and maintained throughout the decade.”  This would cut debt held by the public from its projected $24.9 trillion in 2021 to $23.7 trillion, and when measured against the economy from 104% to 99.4%.  Certainly, this is an improvement, but it is hardly declining from today’s levels, nor would these cuts fundamentally restructure entitlements – the real driver of our deficits in the future.

Step two in the Boehner proposal would reduce deficits by an additional $1.8 trillion over ten years.  Even assuming these cuts all happen, and even assuming they were all spending cuts – a broad assumption given the President’s rhetoric surrounding tax hikes on the wealthy – this would bring publicly held debt down to 92% of GDP. Better, but not that much.  Even throwing in interest savings from deficit reduction would bring this down to 88%.  Again, not much improvement and far worse than today’s debt ratio.

The Reid proposal doesn’t move the ball forward enough either.  At best it falls somewhat short of Boehner’s $3 trillion by $800 billion ($1.2 trillion in discretionary and some confusing savings to be had from winding down operations in Iraq and Afghanistan of $1.0 trillion.)

Neither of this week’s dueling debt ceiling proposals would pass the test from Moody’s or Standard and Poor’s for a credible, firm and actionable plan that would turn the tide of our deficits to put our debt on a manageable track. And if that holds true, then a downgrade by the rating agencies could occur smack in the very election year the President is trying to scoot through.

Because spending is set to grow so significantly over the decade, the kind of onesie-twosie approach to cutting spending and increasing the debt limit is simply not adequate.  Net interest payments are projected to more than triple over the next decade. The longer Congress waits to seriously control spending, the more it will have to cut just to offset bourgeoning interest costs.  And if interest rates suddenly rise? Well, we have an even bigger problem on our hands.

And, as babyboomers flood into Social Security, Medicare and Medicaid swell in tandem, the kinds of changes necessary to rein in spending on these programs will be much more difficult.  Here again, the longer they duck the problem, the more likely a meltdown ahead.

The fact is, the only plan that could likely pass muster with Moody’s and Standard and Poor’s is House passed, Cut, Cap and Balance.  Why?  They tackle spending with firm caps that are enforceable, and before the end of the decade bring spending down to 19.9% of GDP and keep it there.  With the right spending changes it could fall, along with debt levels, from there.  Congress must act now to rein in spending and get our debt under control. It’s time for the dueling to end.

Senator Jim DeMint critical of fellow Senator Mitch Mcconnell

Uploaded by on Jul 19, 2011

Sen. Jim DeMint (R-SC) is no stranger to fights with party leadership. And he’s not holding back in his criticism of the so-called “Plan B” that’s being developed by Senate Minority Leader Mitch McConnell (R-KY) and Senate Majority Leader Harry Reid (D-NV).

“It seems to be a cover-up,” DeMint said this afternoon in an exclusive interview with Heritage. “It’s like leaving the door to the federal vault open and looking the other way and saying we had nothing to do with the robbery.”

It seems to me that the Democrats are in calling the shots. Take a look at the points that Mike Brownfield makes today:

All of the clever rhetoric and recasting of history is designed to distract from the reality on the ground. The U.S. government has racked up $14 trillion in debt. For more than 800 days, the U.S. Senate has failed to pass a budget. President Obama continues his calls for “compromise” and “shared sacrifice,” all while insisting on tax increases to fund spending—a philosophy that was roundly rejected at the polls last November. That is not a manner of governance that President Reagan would have endorsed.

It’s also a line of argument that has no grounding in reality. Last night, the U.S. House passed the Cut, Cap, and Balance plan, which would impose a cap on federal spending and allows for an increase in the debt ceiling by $2.4 trillion on the condition that the House and Senate approve a balanced budget amendment. To date, it is the only plan to raise the debt limit that has passed either chamber, and it is the only plan whose details can be seen in the light of day.

But amid the good news last night, another plan emerged from the shadows promising to answer the nation’s budget woes. Its authors are a group of U.S. Senators known as the Gang of Six, and their plan offers to 1) make unspecified spending cuts and unspecified tax increases to yield a $500 billion reduction in the federal deficit and 2) impose spending caps on discretionary spending but not on Social Security, Medicare, Medicaid, and welfare programs that are the main cause of out-of-control spending.

The Heritage Foundation’s David Addington explains how the back-room strategy behind the Gang of Six plan paves the way for a debt limit hike and why the American people lose out:

Under the Gang of Six Plan, Congress will pass some easy stuff now, but punt the hard stuff to the future, promising that Congress will pass it some time within the next six months. There’s plenty in the Gang of Six Plan for President Obama — he gets his tax hikes and, in reality, he gets to borrow lots more money. But the American people don’t really get much of anything, except the usual empty promise of action in the future.

That’s not the only plan floating around Washington this week, though. There’s the McConnell Plan and the McConnell-Reid “just borrow more” plan, neither of which does the work that the American people have elected Congress to do—get spending under control right now without raising taxes, without raising spending, and without punting tough decisions on spending down the road for future Congresses and Presidents to cope with.

That path should be one in which Congress doesn’t raise taxes, preserves our ability to protect America, and gets spending and borrowing under control before raising the debt limit. Getting there will take strong leadership and an ability to clearly communicate a message to the American people—both of which are lacking among the left in the debt limit debate today. No wonder they’re looking to Reagan for help.