Tuesday, July 12, 2011

The Source of the Problem

President Barack Obama publicly and repeatedly blames the Republicans for the problems in reaching a deal in the debt ceiling negotiations. But the Wall Street Journal's Review and Outlook column has encapsulated the real source of the problem quite nicely, in one sentence:

President Obama demanded again yesterday that Republicans raise taxes in return for giving him the debt-limit increase he's also demanding.
As they say, "Nice of him to be so accommodating."

Obama is insisting that any package include tax hikes (euphemistically referred to as "reductions in tax expenditures"). This is Obama's obsession. How much does he want? His negotiators are demanding about $1 trillion in new taxes. And even that isn't enough to satisfy his cronies. Senate Majority Leader Harry Reid (D-NV) and Senate Budget Committee Chairman Kent Conrad (D-ND) have produced a plan calling for an additional $2 trillion in new taxes. These new taxes would be in addition to the nearly $1 trillion in additional taxes incorporated in the Obamacare bill.

There is one more small thing they're not admitting when they talk about this. These new taxes — whether $1 or $2 trillion or more — are on top of a baseline that assumes the expiration of the so-called "Bush tax cuts". Those tax rate reductions cut taxes for everyone who paid taxes, removing a whole lot more people from paying taxes at all in the process. Making them expire is already a tax increase of close to $1 trillion dollars — and Obama and his minions want another $1-2 trillion in new taxes on top of that?!?!?

Every time there's something new on this story, it just keeps getting worse!

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