What Does $40,000 Mean to You?

Obama's pathetic $40 Social security tax cut is nothing compared to his $40,000 debt increase


Obama has been running around all day making a fool of himself as he promotes his $40 Social Security tax cut.  Yes, the tax plan that will create a new class warfare Social Security Taxable Wage limit in order to accommodate his totally unworkable two-month extension.  Obama has even set up a new web page asking people “what $40 per paycheck would mean to you.”

Republicans should respond by setting up a web page asking every taxpayer to explain how a $40,000 increase in their share of debt will affect their finances and those of their grandchildren.

You see, while the media has been focusing on Obama’s two-month Social Security tax cut, they have ignored another big story.  Our national debt has surpassed 100% of GDP.  With Q3 GDP revised downward, our economy now stands at $15.081 trillion.  Our total federal debt is over $15.14 trillion.

How much of that debt is Obama responsible for?

When Obama took office, the total federal debt stood at $10.6 trillion.  Obama’s share of the debt increase is roughly $4.5 trillion.  There are approximately $112.7 million taxpayers.  That means that the individual share of the Obama debt is about $40,000.

So while Obama is bragging about his $40 tax cut, he is obfuscating the fact that he is increasing more entitlement spending along with the package.  This will only increase the $40,000 share of debt for every taxpayer.

We know that $40,000 is not much for the commander-in-chief of all class warfare, but what does it mean for you?

Pass A Payroll Tax Cut Extension...and Only a Payroll Tax Cut Extension

“We need to stop forcing Republicans to face the grim choice between blocking a tax cut and fighting against more entitlement and deficit spending.”

There are two inexorable political realities at this point: the payroll tax cut must be extended and those who block it will incur a needless political reprisal.  To that end, Republicans must outflank the Democrats on the payroll tax cut, while dealing with the entitlement extensions in another bill.

As conservatives, we all agree that a short-term payroll tax holiday – without Social Security reform – is inane policy, both in the realm of economic growth and entitlement reform.  We should have either categorically opposed a Keynesian stimulus holiday by calling out the Democrats for their hypocrisy on Social Security, or we should have outflanked the Democrats and called for a permanent diversion of the payroll tax to private retirement accounts.  Unfortunately, the ship already sailed on that a long time ago.  As the Wall Street Journal noted,” if Republicans didn't want to extend the payroll tax cut on the merits, then they should have put together a strategy and the arguments for defeating it and explained why.”

Republican leaders already agreed to another "holiday," albeit with the condition that it be paid for.  With less than two weeks to go before its expiration and with a universal expectation that it will be extended, Republicans must pass a clean extension of the payroll tax cut.  Anything less would enable the Democrats to get to the right of Republicans on tax cutting.

Last week, Republicans secured superior leverage by becoming the first body to actually pass an extension, while the Senate was unable to pass its own bill.  However, Mitch McConnell launched a broadside on his party by agreeing to a lousy two month extension – one that is totally unworkable in the real world.  Nevertheless, its 89-10 margin of support gave Democrats all the leverage they needed.  Now House Republicans are begging Democrats to join them in a conference agreement to iron out the discrepancies between the two bodies.  But this is only playing into the narrative that Republicans are the ones who are obstructing the “only” plan to extend the tax cut.  House leaders are justified in their outrage towards the Senate, but we need to focus on current strategy.  [We can talk about canning McConnell another time.]  Their current strategy of asking for a conference will get them nowhere and will only hurt them.

This is why, for the last time, I call on House Republicans to pass a clean 12-month extension without any strings attached; no riders, reforms, offsets, and extraneous extensions attached.  That will totally put the ball back in the Democrats’ court, forcing them to support or reject the only workable extension plan.  What about the offsets and Keystone pipeline provision?

Here’s the kicker:

More Problems With Senate Extenders Package

The Senate-passed payroll tax cut extenders package was already on the ropes with House Republicans over the weekend.  The bill (HR 3630) offers a pathetic two-month extension of the payroll tax cut.  In addition, it extends long-term unemployment benefits for the ninth time, along with the annual Medicare doc fix.  The bill gutted all House-passed reforms to medicare and unemployment insurance, while offsetting the cost through phantom revenue increases generated through Freddie and Fannie.  Reliance on these fees for spending offsets will actually make it more difficult to close down these harmful entities.

Today, we are discovering two more problems with the Senate package:

1) Earlier today, Senators Brown, Heller, and Lugar blasted House Republicans for holding up the short-term deal.  “There is no reason to hold up the short-term extension while a more comprehensive deal is being worked out,”cried Heller.  Well, here is a good reason.

Aside for the obvious vices of a two-month payroll tax extension, this tenuous law will make life difficult for providers of payroll processing services.  Section 101 of the legislation establishes a new Social Security Taxable Wage limit of $18,350.  All wages in excess of $18,350 for January and February will be taxed at the old rate of 6.2%.  This provision was inserted in order to preclude those with high incomes from meeting their full payroll tax obligation during the first two months.  Such an eventuality would create a disparity in which middle-income earners, who would still incur a payroll tax liability after February, would pay a higher rate (6.2%) on the rest of their income than high-income earners would have to pay.  Many high-income earners receive large bonuses at the beginning of the year, and Democrats were not about to let them take advantage of this short-term payroll tax cut.

Now, the National Payroll Reporting Consortium (NPRC), a trade association representing payroll processing companies, is charging that this provision is untenable.  Such a drastic change would force payroll processors to implement significant changes to their program software.  In a letter sent to the chairmen of the tax-writing committees obtained by Jake Tapper, NPRC's president warns that there is not enough time to implement these changes before January.

A full 12-month extension would obviate the need for this wage limit, thereby sparing payroll processors the two-month headache.  Unfortunately, Senator Brown excoriated House Republicans for fighting the Senate bill, calling their "plan to scuttle the deal to help middle-class families" "irresponsible and wrong."  The only thing irresponsible and wrong was his vote for an inane two-month extension.

House Must Decouple Payroll Tax Cut From Broader ‘Extenders’ Package

“The Senate action was akin to grounding into a triple play for Team GOP, yet the underlying bill passed with unanimous consent.”

Over the weekend, Mitch McConnell and Senate Republicans obviated the superior leverage of House Republicans by passing a two-month extension of the payroll tax cut, along with a clean extension (no reforms and offsets) of doc fix and unemployment benefits.

In a premature capitulation, they agreed (89-10) to amend the House extenders bill by eliminating most of the spending offsets, all of the UI reforms and the policy riders, with the exception of the Keystone pipeline provision.  They will fill in the $33 billion two-month gaping budget hole with nebulous revenue increases from higher Freddie/Fannie mortgages over ten years.  To the extent that those revenues will be actualized, this deal will indeed make it harder to shut down these officious venture-socialist enterprises.  The Senate action was akin to grounding into a triple play for Team GOP, yet the underlying bill passed with unanimous consent.

Yes – we can already see the ecstatic pronouncements emanating from the McConnell Republican echo chamber.  “We got the pipeline,” they will exclaim.  But here is the problem: the ship already sailed on that.  This issue was such a political liability for Obama that, despite his rhetoric, it was a foregone conclusion he would be forced to cave on it.  He was not going to allow this to become an albatross around his neck during the election.  Accordingly, the White House is lending enthusiastic support to McConnell's Senate-passed extension.  Besides, due to loopholes in the Keystone provision, the administration is already balking at compliance with the language of the bill.

This is all about understanding your leverage; something that has been lost on GOP leaders throughout the year.  And speaking of leverage, this capitulation has totally undermined the superior leverage of House Republicans.

Until Saturday, the House was the only body that had proposed a workable solution to preempt a tax increase on every American worker.  The Democrats had been on the run for the entire week.  Sadly, in his last act of the year, McConnell, in what appears to be a unilateral move, has launched a drive-by preemptive assault on the House-passed proposal.  Was he in such a rush to get home?

Now House Republicans are incensed, and for good reason.

So This is It?

This is what we get from a new House Republican majority?

Call me naive, but from the onset of this legislative session I really expected we would witness some transformational change in the way Washington does business.  That was obviously a foolish expectation.

GOP leaders agreed last night to pass the omnibus bill with largely the same provisions as the one they introduced yesterday.  After all of the bravado and grandstanding throughout the year; after cutting a mere $352 million in non-baseline spending in FY 2011, they are prepared to cut nothing off the 2012 budget.  In fact, with the $8.6 billion in extra disaster spending, the total discretionary budget authority will surpass last year’s levels by roughly $3 billion.  Yes, we know that there are spending offsets, but they were cleverly packaged in a separate bill from the rest of the omnibus, allowing Democrats to vote them down.

What about the riders?  Democrats are bragging about the fact that they jettisoned all the major policy riders except for the block on light bulb bans.  We now have a 1200-page bill that encompasses funding for most of the federal government, yet it cannot be amended.  That leaves one option for conservatives: vote no on the entire package.

Hey, I guess we can take solace in the fact that we slowed baseline spending from what it would have been had Democrats retained control of Congress.  Then again, all these numbers only account for discretionary spending, or about one-third of the federal budget.  The other two-thirds, mandatory and entitlement spending, continues to grow out of control.

And speaking of mandatory spending, what are we getting in return for agreeing to defacto permanent super-long-term unemployment benefits?

Conservatives Must Throw Omnibus Under the Bus

“Conservatives should not let GOP leaders and Harry Reid pocket their good will on the omnibus under false pretenses that Boehner will remain strong on the extenders package.”

The bill violates GOP pledge, funds Obamacare, and paves the way for a breaching of spending caps and capitulation on extenders package

There is an important rule - one that runs counter to DC conventional wisdom – that conservatives should heed when considering support for a piece of legislation.  No legislation is better than bad legislation.  To put that in today's relevant terms, passing no spending bill or a CR is better than passing a $1.050 trillion, 1217-page Omnibus just 36 hours after its inception.

Early this morning, minutes after midnight, the House Appropriations Committee released their omnibus as a package of three bills.  They will need to violate even their interpretation of the three-day posting rule if they intend to pass it as a vehicle to avert a government shutdown Friday night.   The first bill is the main omnibus appropriations package that bundles nine approps bills at a cost of $915 billion.  This, coupled with the three approps bills already passed (via that ridiculous minibus bill) comes out to exactly $1.043 trillion in discretionary spending – the spending cap set under the Budget Control Act.  Additionally, the omnibus appropriates another $115 billion for the annual OCO (Overseas Contingency Operations) war spending and $11 billion in war funding for the State Department.  The second bill funds emergency disaster spending to a tune of $8.6 billion, while the third bill offsets that spending with further recessions from the discretionary spending totals in the main bill.

Overall, this bill totally vitiates the House budget passed by the entire conference, by appropriating an extra $24 billion in discretionary spending.  Also, the fact that they are proposing three bills gives House Democrats the ability to vote for the first two bills, but quash the third bill with the offsets, thereby consummating spending levels higher than those of 2011 ($1.052 trillion).

This entire package, which includes funding for 10 executive departments, will be voted on within the next 36 hours, in violation of two provisions of the Pledge to America; passing Omnibus bills and the 72-hour posting rule.  Jeff Flake expressed his exasperation like this:

“We’ve barely seen the bill; it’s an awful big bill to get a vote on that fast.”
“Some riders got in, some got knocked out, and I don’t even know – and I’m on the appropriations committee,” he adds. “Whenever we come to an impasse, our leadership says, we can’t shut the government down. We haven’t had the leverage in any negotiation we’ve gone into. That’s what’s frustrating to me.”

Why are Republicans unilaterally violating their own pledge?

The GOP Payroll Tax Cut/UI Extension Proposal

“will they finally hold the line on their own promises this time, or will they pass all the extensions without the reforms, riders, and spending offsets? This package must be the final offer.”

Earlier today, House Republican leaders unveiled their package deal to extend the payroll tax and unemployment benefits for another year and to continue Medicare ‘doc fix’ for another two years.

While bipartisan passage of the payroll tax cut and doc fix were a forgone conclusion, the real issues for conservatives were the UI extension and the spending cuts.  Unfortunately, they are acquiescing to another extension, albeit with some reforms.
The major reforms include mandatory drug testing and participation in reemployment services as a condition for receiving benefits.  Those receiving the 99 weeks of UI will gradually be reduced to 79, and then finally 59 weeks.  Also, states would be authorized to use some of the funds for job training programs.  The UI component of the bill falls short of transformational reform, but at least it precludes 99 weeks from becoming the standard duration of payments.

In order to ameliorate yet another welfare extension for conservative members, two more sweeteners were added: 1) A law to force Obama’s hand on the Keystone Pipeline 2) A provision that would keep illegal immigrants from receiving the refundable portion of the Child Tax Credit, by requiring that recipients provide a valid SSN.  This would save $10 billion over 10 years, according the GOP sources [more background on that issue here].  The bill also has a provision to reduce Clean Air Act regulations for industrial boilers.

The proposal, which includes the aforementioned three extensions, will cost about $200 billion.  Republicans say they will pay for it with the following reforms, many of which were adopted from the Senate Republican proposal:

Don't Conflate Super-Long Unemployment Extension With Payroll Tax Cut

The outcome of the impending payroll tax imbroglio seems to be clear.  With Republicans offering spending offsets and Democrats demanding tax increases, my safe premonition is that, for better or worse, the simple tax cut extension will pass, albeit without either "offset" plan.  Due to some divisions among conservatives, such an outcome seems to be intractable at this point.

At this point, we must focus on unemployment benefits with a unified message.  My concern is that all of the proposed GOP packages conflate the passage of the payroll tax cut with UI extension.  We all know that Democrats will abjure all Republican proposals to pay for the package, most notably, cuts to the federal workforce.  The only thing this package will do is telegraph a public message to Democrats and the voters that Republicans agree to the premise of extending unemployment benefits.

As the clock winds down toward Christmas break, and Democrats balk at spending offsets, Republicans will once again be forced to acquiesce to yet another aspect of Obama's Santa Claus stimulus package.  Worse, conservatives who want to support the tax cut will be forced to vote for a package of unprecedented UI benefits – without any offsets or structural reforms to the program.  By voting for the full package, conservatives will be going on record as supporting UI extension.  Then, the offsets will be jettisoned from the deal by Democrats, forcing conservatives into a no-win situation on the last day of the session.

At the very least, the GOP proposal for UI must be decoupled from the payroll tax bill.


Earlier this week, we laid out the case why Republicans should oppose the entire premise of a 99-week UI extension, irrespective of spending offsets.  They must make it clear to Democrats that they will not pass an extension unless consequential structural reforms are made to the program.  Any serious reform must restructure the program to resemble the insurance plan that originally characterized the program, instead of a new mandatory unfunded liability that resembles more of a European style welfare plan.  Reforms that focus on pocket change from the few millionaires or prisoners who collect UI are non-sequiturs.

Republicans should pass a standalone UI reform bill, and make it clear to Democrats that it is their bottom line.  Then they should go home.

As the program is currently constituted, it must not be extended.  Conservatives understand that we won't come away with everything from the end-of-year legislative fights.  Nonetheless, we should not walk into a trap of bundling tax cuts with the creation of a defacto permanent entitlement program.

GOP Should Launch Offensive in Payroll Tax Fight

“in typical Democrat asinine fashion, they are promulgating a defacto permanent tax cut by telegraphing to the public that it is only temporary, thereby minimizing the pro-growth effect of the tax cut.”

After decades of monstrous lies about Social Security, Democrats have finally blown the cover off their stratagem.  They have always proclaimed that our payroll taxes were held securely in a trust fund in order to purvey retirement checks for each pay roll tax contributor.  Moreover, they emphatically promised that as much as $2.6 trillion in unspent tax revenue had accrued in the trust fund.  Now, with their push for a defacto permanent payroll tax cut, they are shedding all effort to conceal their Social Security mendacity.

The fact that Democrats are attempting to permanently cut the employee’s share of the payroll tax by 50% is a clear repudiation of their first premise.  And let’s face it; the cut will be permanent, as any subsequent relapse would be deemed a tax increase.  Nonetheless, in typical Democrat asinine fashion, they are promulgating a defacto permanent tax cut by telegraphing to the public that it is only temporary, thereby minimizing the pro-growth effect of the tax cut.

Additionally, the fact that their bill calls for $185 billion in general fund transfers to Social Security helps depose the myth that there is anything left in the trust fund.  It is clear that not only is there no existing money in the trust fund, but even the revenue from the current year (which would already come up $50 billion short, even without the tax cut) is insufficient to cover Social Security costs.  In plain English, we would call that a Ponzi scheme, not a pay-as-you-go system.

Sadly, instead of using this as an opportunity to own up to their 70-year old lie, Democrats are doubling down on it.  They are insisting that, due to their tax increases and faux spending cuts, all is fine and dandy with Social Security.  “The legislation would not affect the Social Security Trust Fund by one penny, because it requires that the Social Security Trust Fund be made whole through transfers from the General Fund,” wrote Bob Casey.

What is the Endgame for the Payroll Tax Fight?

Well, it looks like the ship already sailed on extension of the payroll tax cut.  Republicans introduced their own legislation to continue the current payroll tax cut from 6.2% to 4.2% for another year.  This proposal, which would cost $119.6 billion in revenue for the remainder of FY 2012 and the first few months of FY 2013, does not include the Democrat provisions to cut the employer’s share of the payroll tax. 

Yesterday, I detailed some of my concerns from a public policy standpoint, but from a personal standpoint I’m not complaining.  Who knows if we will receive our Social Security money?  We as may as well keep the money now.  

So how will they pay for the deficits that will result from the $119 billion (additional) transfer from general revenues to Social Security?  Senator Dean Heller introduced the following plan:

•  Extend the current two-year freeze on federal employees’ salaries from 2013 through 2015 and expand it to apply to employees of the legislative branch, including members of Congress.

• Reduce the number of federal employees by 10% through attrition.  This would follow the framework of the Simpson-Bowles proposal to only allow the hiring of one new employee for every three who leave the federal workforce.

• Insert a line on every tax return for the Republican version of the “Buffet Rule,” in which rich liberals can volunteer to pay more taxes.

• Cut some benefits to those individuals with an adjusted gross income over $1 million.  They take some ideas from Senator Coburn’s report, such as cutting unemployment benefits for millionaires, and charging them higher premiums for Medicare part B and D (the parts that are not funded through payroll taxes).  They also propose closing an anomalous loophole that allows certain rich people to collect food stamps.  These latter proposals will save very little. 

Don’t Fall Into Democrats’ Payroll Tax Trap

As the original 2% payroll tax cut for employees is set to expire next month, Democrats are proposing an even bigger cut.  Earlier this week, they introduced legislation (S.1917) to cut the payroll tax to 3.1 percent for employees, and for employers on the first $5 million of their payroll.  The bill would also eliminate the payroll tax paid by employers for the last quarter of 2011 and all of 2012 on the first $50 million of a company’s increased annual wage costs.  In order to pay for it, they are proposing a “surtax on millionaires,” which applies a 3.25 percent tax on modified adjusted gross income over $1 million, or $500,000 for a married individual filing separately.

Even though this cut will discard 38% of the annual revenue for Social Security, Democrats are accusing opponents of supporting a tax increase on “working families.”  For their part, most Republicans have only voiced opposition to the tax hikes, but shied away from assailing the very premise of a temporary payroll tax cut extension.  In fact, Senator McConnell told reporters yesterday, “In all likelihood, we will agree to continue the current payroll tax relief for another year, but we believe it should be paid for.”  He has yet to divulge how they would pay for it.  Kudos to Senator Jon Kyl for uprooting the entire premise behind Democrats’ rationale by noting that this cut has not been pro-growth and it has only further endangered the future of Social Security.

Republicans must show how it is the Democrats who are treating Social Security like a Ponzi scheme by indiscriminately marauding it, while paying out the shortfall with deficit spending, in addition to tax hikes.  Payroll taxes supposedly singlehandedly fund Social Security, yet Obama and the Democrats plan to cut 38% of its revenue source with this bill, even though SS already faces a $50 billion shortfall.

Republicans should force Democrats to answer the following questions:

End All Green Corporate Handouts in 'Tax Extenders' Bill

Here's our opportunity to end corporate cronyism, eco-socialism, and market distortions in the energy sector

It's that time of year again.  The clock is ticking toward December 31, and green energy special interests are discreetly lobbying for the extension of their choice handouts, credits, and grants.  We must remain vigilant against these powerful interests.

At the end of every calendar year, Congress passes a 'tax extenders' bill to temporarily reauthorize specific tax breaks that have not been permanently written into law.  These bills have traditionally dealt with issues like the AMT patch, the R&D business credits, and universal deductions for depreciation, as well as state and local taxes.

In recent years, tax extenders have been magnets for non-universal carve-outs for green energy.  The 2010 tax extenders bill also included extension of the Bush tax cuts, the annual Medicare 'doc fix,' a payroll tax cut, and an unprecedented extension of unemployment benefits.  Most of these provisions are set to expire next month, and will consume the lion's share of the debate and media coverage.  This will give the green industry the opportunity to surreptitiously slip in their handouts as part of a grand bargain revolving around the bigger issues and legitimate, universal tax deductions.  They must be stopped.

The Anatomy of a Compromise From Hell

I just recovered from my weekend hangover celebrating our reward for raising the debt ceiling in August.  All good things are worth waiting for, and after three and a half months, we got our vote on a balanced budget amendment!  And you know what?  It was summarily defeated, even before it came to the Senate.  Oh, and 25 of the most vulnerable Democrats now have austerity-proof records to shield them next November.

Oops.

We who opposed the debt ceiling deal and the budget bills this year have been censured as intransigent rubes incapable of compromise.  While the mantra about the need for compromise is in itself quite dubious, let’s discuss the virtues of a true compromise.

As the year comes to a close, it is important to reflect upon the results of the multiple “compromise” deals.  Even purists like us support the idea of a real compromise, just not a capitulation.  A real compromise is one in which our side would gain substantive results, albeit not everything that was desired.  Moreover, the degree to which a compromise is considered a success is largely determined by the magnitude of leverage that we have going into the debate.  In the realm of politics, that leverage is most profoundly affected by public opinion and electoral reprisal.  By that measure, we should have accrued a year of supreme success.

The Supercommittee of Super Insanity

As the tumultuous year of 2011 winds down, Congress will be facing a number of crucial budget deadlines.  Aside for the supercommittee deadline to find $1.2 trillion in deficit reduction (over ten years), they must contend with the December 31 expiration of three provisions of the 2010 tax extenders deal; payroll tax cuts, unemployment benefits, and ethanol subsidies.  Now the Washington Post is reporting that the supercomittee might attempt to extend unemployment benefits and payroll tax cuts as part of the final deal.  The rubber is meeting the road, and conservatives need to mobilize rapidly.

By my count, the supercommittee's final report gives us five issues to deal with; oppose the three extensions, fight tax hikes, and push for real spending cuts (cuts that will make 2013 spending levels below 2012 levels).  Over the past year, the GOP has caved on virtually every budget battle.  They are now slated to pass every one of Harry Reid's appropriations bills – bills that allocate more funds for programs than requested by Obama; that jettison all Republican policy provisions; that expand the role of Freddie/Fannie.  Is there a single issue where GOP leaders will hold the line and coalesce around a coherent conservative policy?

Thanks to the inane and insane debt ceiling deal, which many other conservative outlets supported wholeheartedly, we are confronted with a double-edged sword.  We must either accept tax increases and nebulous spending cuts as part of the supercommittee report, or we face sequestration – a process that will kill the military and cut funding to healthcare providers, as well as the border patrol.  And guess which programs are exempt from the automatic cuts?  Yup – Social Security, Medicaid, S-Chip, Temporary Assistance for Needy Families (TANF), public housing, Food Stamps, SSI, Child Nutrition, refundable tax credits, Pell Grants, and federal employees' retirement.  Those programs easily amount to over $1.4 trillion, and when coupled (as it should be) with the inviolable veterans’ programs (roughly $140 billion), we have about 55% of the non-defense budget (roughly $2.85 trillion) off limits.

Now Boehner is offering to compound the problem by passing an extension of the payroll tax cut and 151 weeks of unpaid unemployment compensation.  How do they plan to pay for that?  With $700 billion in phony war savings, of course.

Senator Coburn: The Agony of a Pragmatic Conservative Amidst Inflexible Liberals

Senator Tom Coburn released a report, Subsidies of the Rich and Famous, detailing a list of subsidies, transfers, and “tax breaks,” that are paid to individuals with Adjusted Gross Income (AGI) of over $1 million.  The report found that millionaires have received at least $9.5 billion in “government payments” since 2003 and $113.7 billion in “tax breaks” since 2006.  Accordingly, Coburn concludes that many of these tax deductions should be eliminated, while benefits for the rich should be means-tested or reduced.

As our debt approaches $15 trillion, Coburn’s heart is undoubtedly in the right place; however, many of his proposals are misguided.  While some of the deductions enumerated in this report should be eliminated immediately, most of the savings will come from revoking universal tax deductions from those who already have the highest tax burden.  Additionally, while some of the subsidies, such as the farm and green handouts, should be abolished, most of Coburn’s savings on government benefits would come from reducing Social Security payments to the rich.  Social Security payments, unlike welfare and other subsidy programs, represent real money that was paid into the system through payroll taxes.  Any effort to deny those payments from the rich would engender further redistribution of a program that was not conceived for redistribution.  Also, it would ostensibly be a 12.4% tax increase on those high-income earners, as they would pay the tax without receiving the retirement checks.

Let’s drill through the numbers of the report.  Here is a list of government payments that Senator Coburn has identified as subsidies for the rich:

The IRS as Tax Preparers?

When conservatives and liberals advocate tax reform they are referring to radically divergent concepts.  Conservatives desire a low, flat, and universal tax code, while liberals desire reform that would result in increased revenues.  The obvious way to achieve that goal is to impose radical redistributive tax increases, such as the ones Obama has recently proposed.  However, there is a more subtle way that is beginning to percolate into the liberal mainstream.  Liberals envision a future in which the IRS would automatically pre-file your tax returns for free, sending you the bill.

Earlier this year, Tennessee Democrat Rep. Jim Cooper introduced "The Simple Return Act," a bill that, according to Cooper's assessment, would "get the IRS to do your taxes for you" using "the financial information it already receives from each taxpayer’s employer and financial institution: W-2 and 1099."  Cooper asserts that roughly 40 million Americans file tax returns that are simple enough for the IRS to pre-file.  This idea was originally floated by Obama’s former Chairman of the Council of Economic Advisers Austan Goolsbee.  In a 2006 op-ed for the New York Times, Goolsbee cited Denmark and Sweden as success stories for government-run tax preparation.

Although this bill has failed to garner any co-sponsors, there is some concern that Max Baucus, a member of the super committee, will try to push the simple tax return as part of a 'benign' means of raising revenue.  In the past, he has been a vocal advocate for finding innovative ways to close what he refers to as "the $345 billion annual tax gap," the amount of taxes owed that go unpaid each year.

Moreover, Obama has already expressed support for the concept of the IRS serving as tax filer and tax collector.  In 2007, in a speech at the Tax Policy Institute, Obama promised to establish a simple return system during his presidency.  He opined that "the government already collects wage and bank account information, so there's no reason the IRS can't send Americans free file tax forms to verify."

Well, I can think of a couple of reasons.

Maryland's Costly Green Tax Credits

We hear a lot of feigned outrage from the left concerning tax credits and deductions for upper-income earners.  Unfortunately, their antipathy for tax "loopholes" are nowhere to be seen when they are being disseminated to green special interests.

Last year, Maryland began awarding tax credits to purchasers of electric cars.  It turns out that the first few beneficiaries of the credit actually gain more in tax credits than they save in energy expenses.  Here is the report from the Washington Examiner: 

Maryland's tax incentives for electric vehicles cost the state almost twice as much as the cars saved in energy expenses last year, according to a report from the Maryland Energy Administration.
Sixty-four drivers who bought an electric vehicle in fiscal 2011 cashed in on the state's tax credit, which cost Maryland $126,387. Those drivers saved an estimated $71,300 total in petroleum costs, according to the energy agency.
The savings from the electric vehicles are ongoing, however, estimated to reduce gas purchases annually by more than $1,100 per car for at least eight years -- the expected life span of the car batteries. The tax credit, implemented on Oct. 1, 2010, provides $2,000 in savings from the state's excise tax for the purchase of a plug-in vehicle. 

And which county was the biggest beneficiary?  You guessed it; the people's republic of Montgomery County:

Of the 64 tax credits the state awarded in fiscal 2011, 39 credits worth $76,388 went to Montgomery County drivers, while the remaining 25 credits were divided among drivers in seven counties and Baltimore City.

The RSC Jobs Plan: Jobs Through Growth

One of the more positive ancillary benefits of this presidential primary season is the newfound focus on taxation, regulation, and energy production.  The prominence of the presidential election has helped jumpstart a vital discourse on long-term reforms for those three policies.

The RSC, which is the most respected conservative group within Congress, has proposed a jobs growth plan today, which seeks to achieve those reforms, albeit in a more inclusive way than some of the proposals from presidential candidates, like Rick Perry, Newt Gingrich, and Herman Cain.  It appears that they are seeking changes to the tax and regulatory system that have already received broad support within the Republican party (and some lip service from Democrats, in regard to certain provisions), and are bundling them into one package, “The Jobs Through Growth Act.”

Here are some of the major provisions of the proposal:

Martin O'Malley's War on Maryland Taxpayers

Here is a succinct article from the Daily Caller that sums up the state of affairs in Maryland, as we face a torrent of tax hikes next year:

This past July, a 50 percent increase in the state’s sales tax on liquor went into effect. The measure was rammed through by Democrat legislators and signed by O’Malley, despite opposition from small business owners and taxpayers. In its first year, it will raise $88 million in revenue on the backs of low- and middle-income Marylanders.

Now, O’Malley is pushing for a $1-per-pack cigarette tax increase. Lifestyle taxes, because they are generally not value-added — as is the case with the cigarette tax proposal — disproportionally affect the poor. O’Malley’s cigarette tax proposal would come on top of President Obama’s 61-cents-per-pack federal tobacco excise tax, which Obama signed into law in 2009.

In addition to increasing taxes on cigarettes, O’Malley wants to increase Maryland’s gas tax by 15 cents per gallon, which is expected to raise $491 million in its first year of implementation. An increase in the gas tax would disproportionately hit small business owners and working families who have to travel in order to find employment in Maryland’s weak economy.

You can read the entire article here.

Tax hikes and the impending redistricting plan will be our biggest battles during the coming months.

The CBO Has Been Occupied by OWS's Intellectual Inequality

We already are the most progressive redistributive country in the world – and that is the problem

One fundamental liberal desideratum is the achievement of equal results at the expense of equal opportunity.  Conservatives believe in implementing policies that protect our God-given rights, which provide every human being with an equal opportunity to succeed.  Liberals reject policies that foster unfettered equal opportunity because they invariably produce unequal results, being that human beings have different talents, capabilities, work ethic, and luck.  On Tuesday, the CBO decided to throw in with the left-wing affinity for highlighting income inequality and advocacy for equal outcomes – outcomes that would be dictated by our venerable federal government.

While the focus on income inequality in itself is a dubious endeavor for the CBO, their conclusions are downright scandalous.  Their most outlandish conclusion was that income inequality has increased between 1979 and 2007 due to a decrease in “government transfers” and tax cuts for the rich.  Here was their punch line:

Government Transfers and Federal Taxes Became Less Redistributive

Government transfers and federal taxes both help to even out the income distribution. Transfers boost income the most for lower-income households, while taxes claim a larger share of income as people’s income rises.
In 2007, federal taxes and transfers reduced the dispersion of income by 20 percent, but that equalizing effect was larger in 1979.

• The share of transfer payments to the lowest-income households declined.
• The overall average federal tax rate fell.

You might be scratching your head wondering how CBO can posit such a falsehood at a time when welfare spending is at an all-time high, the top 1% pay 36.7% of income taxes, even though they only earn 16.9% of AGI, and 47% pay zero income taxes.