Elections have consequences
by Sam Hanna, Jr. - posted Thursday, November 29th, 2012 @ 12:00 pm
Fresh off a resounding victory at the polls earlier this month, President Obama will hit the road later this week to make his case about why the Bush-era tax rates should be extended for everyone except individuals who make more than $250,000 annually.
The tax rates in question were ushered onto the scene during President George W. Bush's first term in office — first enacted in 2001 and broadened in 2003. They were meant to be temporary and were scheduled to expire at the end of 2010, but Obama, with his eyes focused on re-election, cut a deal with Republicans two years ago to extend the Bush-era rates through the end of this year, after the election.
Obama maintains that anyone who makes more than $250,000 annually is getting rich. Though he's dead wrong, it should not come as a surprise that someone who has never held down a meaningful job in the private sector would believe an individual who makes $250k or more per year has money to burn.
But class warfare works in American politics these days, and Republicans are boxed into a corner, with few options to pursue to avoid being blamed for raising taxes on working people. And that's exactly what will occur come Jan. 1 because hard-line Republicans in the U.S. House are reluctant to go along with any increase in taxes, including a tax hike on the so-called rich.
From a distance, it appears there are some Republicans in the Congress — Sen. Lindsay Graham of South Carolina being one of them — who are open to negotiating with Obama on the tax front as long as reforms in entitlement spending are included in the mix. Obama says he'll consider cuts in spending, but you can rest assured that this president will not touch entitlements because he knows congressional Democrats will have nothing to do with it. They just want the money, and we know why. More money allows for more spending.
Make no mistake, ushering out the Bush-era rates and returning to the tax rates that were the law of the land under President Clinton's watch in the 1990s is not something Team Obama desires. They know well the Clinton rates took a far bigger bite out of everyone's paychecks — everyone's, including working people, who have trended Democrat in the past two presidential elections.
In all, reverting back to the Clinton-era rates represents a $2.35-trillion tax increase over 10 years, or more than $200 billion annually. The average family of four would pay some $3,800 to $4,100 more each year in income taxes to Uncle Sam.
On the other hand, raising taxes just on the so-called rich, which Obama favors, would result in a roughly $800-billion to $1-trillion tax increase over the next decade, or some $80 billion to $100 billion each year.
Let's put those figures into perspective.
In October alone, the federal government recorded a $120-billion deficit. You read that right. A $120-billion deficit in one month.
Meanwhile, the federal government is on pace to post another $1-trillion deficit when the current fiscal year ends. It will mark the fourth straight year the federal government has run a $1-trillion deficit. That would help explain why the national debt now tops $16 trillion.
Looming on the horizon, or what we could describe as the elephant in the room, is the so-called "fiscal cliff." At least that's the term the ruling class in Washington calls the point at which the federal government cannot borrow any more money to pay its bills unless the Congress agrees to raise the debt ceiling, or the maximum amount of debt the government can incur. The existing debt ceiling — some $16.394 trillion — must be raised after the first of the year for the government to continue operating as it does today.
The other elephant in the room is "sequestration." That's ruling class's term for automatic cuts in spending if congressional Republicans and Team Obama, including congressional Democrats, cannot agree on taxes and that nasty debt ceiling business.
If sequestration occurs, the federal government will implement some $110 billion in budget cuts void of any input from the Congress. That's $110 billion annually supposedly over the next eight years.
Taken all together — stalemate over tax rates, a maxed out debt ceiling and sequestration — and what we have is big mess.
And the fairest course of action would entail driving the government over the "fiscal cliff," opening the door for significant cuts in spending and higher taxes for everyone. At least we all would have some skin in the game and we all would share in the pain.
After all, weren't we told elections have consequences?
Sam Hanna, Jr. is publisher of The Ouachita Citizen, and he serves in an editorial/management capacity with The Concordia Sentinel and The Franklin Sun, three newspapers owned and operated by the Hanna family. Hanna can be reached by calling (318) 805-8158 or by emailing him at email@example.com.