Just three days after his election, President Obama has already thrown aside compromise with Congress by demanding NO tax cuts to be continued for the wealthy. Boehner seems just as unbending in extending the Bush tax cuts for all income levels, while the country heads towards the fiscal cliff.
The president thinks he has a mandate based on Tuesday’s election to raise taxes. However, neither party received a mandate from the American people, except to possibly find a way to compromise regarding the looming fiscal disaster that is only seven weeks away.
Both parties have exactly the same control they had before the election, so there is no mandate, Mr. President. If a majority of Americans agreed only with the president’s approach, why did the balance of power remain essentially unchanged?
As a matter of fact, according to the Wall Street Journal, one exit poll question on Tuesday asked “Should taxes be raised to help cut the budget deficit?” The answer was NO by nearly 2 to 1.
After the president meets with the top four leaders of Congress at the White House next week, he plans to depart on a trip to Asia. Really, Mr. President? Don’t you think the American economy is more important than a trip to Asia with fiscal sequestration only seven weeks away?
We took it as a hopeful sign at first that Mr. Obama didn’t mention “tax rates.” That could leave some room to compromise with House Speaker John Boehner, who said this week he’ll consider more tax revenue without raising tax rates.
But later on Friday, White House spokesman Jay Carney said the President will veto any bill that includes an extension of the current tax rates for those earning more than $250,000.
Mr. Obama also demanded that House Republicans immediately pass a Senate bill extending current tax rates for lower incomes but not for everyone else, including the millions of small businesses that pay taxes at the individual rates.
If the president and Congress refuse to change their respective positions from that prior to the election, compromise is impossible. The media and political pundits have already started picking sides and pointing their fingers, while the government speeds towards their, as Senate Minority Leader Mitch McConnell calls it, the “Thelma and Louise economics” plunge off the fiscal cliff.
Congress’s Joint Tax Committee estimates that raising taxes on income over $250,000 ($200,000 if you’re single) will raise $823 billion over 10 years on a static revenue basis. That includes all revenue from increases in marginal income tax rates, capital gains, dividends, reinstating the phaseouts of deductions for the wealthy and also treating dividends as ordinary income.
That’s only $82 billion a year in extra revenue when the federal deficit in fiscal 2012 was $1.1 trillion. So even if Mr. Obama gets his way, his tax increase would only cut the deficit by about 7.5%.
Stated another way, if the president gets his way, the tax increase would only reduce the deficit for about 27 days at the rate of Obama’s overspending! It’s simply continued campaign rhetoric by the president.