Speaker Boehner Wins One For The Sipper

The 112th Congress just made the evil Bush tax cuts permament, and conservatives think they've lost?

People who think such things are not terribly intelligent.

Really rich people lost a little (a 13% tax increase on the backs of the top 0.3% of wage earners, who will promptly elect not to take income in the form of wages). Meanwhile the Bush tax rates are set in stone indefinitely for the remaining 99.7% of us. I say let's drink to the 2013 13% tax increase. It'll never hurt them much anyway.

Liberals voted for this. Do you understand what that means? While certain Republicans are whining loudly today that they just overturned a decades long stand against increasing tax rates and suddenly became hypocrites who can't live with themselves any longer for doing so, liberals had to cry uncle and vote in massive numbers for George Bush's tax cuts to save Obama's sorry ass. Who's the hypocrite, huh?!

The 112th Congress voted 346-175 to make the Bush tax cuts permanent, nearly 2-1, and WE LOST?! The only thing Republicans lost was their strategy of trying to link spending cuts to a tax agreement, which was not very wise. So it didn't work. Big deal. Quit whining. Declare victory. Move on. Republicans continue to hold the purse strings. So tighten them. The sequester is an opportunity. The debt ceiling is an opportunity.

I'd say it was liberals and Democrats who lost, and lost big.

Bar owner John Boehner just won one for the sipper, with a lot of help from Ol' Kentucky.

Pour me another.

Senate Passes Fiscal Compromise At 2 AM, 89-8

So reports CNBC and Reuters, here, noting that taxes go up only on the wealthy and that the sequester agreement cutting spending is post-poned for two months. I'm sure Standard and Poors is not amused.

Without agreement on spending cuts the US risks more downgrades of its debt rating, yet Democrats in particular seem not to care about that.

Separate reports indicated that taxes revert to the old Clinton era rates under the measure for individuals making $400,000 a year or more, which in 2011 included barely 0.3% of wage earners, or 586,000 people, and that new revenue expectations from the agreement amount to a laughable $60 billion per year. Expect this group to take even less ordinary income in the future, which came to barely $500 billion last year.

The expiration of the Bush tax cuts, combined with the sequestration cuts, was supposed to translate into ten times that new revenue per year, or $600 billion, a Pyrrhic victory for the president who was already gloating yesterday at an event clearly staged in advance for the purpose that he got Republicans to flip-flop on raising taxes.

If the House doesn't pass the bill today or tomorrow, that will complicate things, says the story:

"A new, informal deadline for Congress to legislate is now Wednesday when the current body expires and it is replaced by a new Congress chosen at last November's election."

If there is any virtue to the bill, it is that it makes a number of tax rates permanent, and permanently fixes the Alternative Minimum Tax.

The House would do well to take the deal, and press the spending cuts issue separately in two months on the sequestration, and again when the debt ceiling must be raised, but the extension of unemployment benefits yet again for another whole year could be a problem.

Like making the real thing, government sausage isn't pretty.

Senate Cliff Deal Settles For TEN TIMES LESS Revenue Than Cliff-Diving

As reported here:

"Before [Obama] spoke, details of the emerging deal emerged. It would raise $600 billion in revenue over the next 10 years [emphasis added] by increasing tax rates for individuals making more than $400,000 and households making above $450,000 annually, officials familiar with the talks said.  ... The Biden-McConnell negotiations appeared to offer the last hope for avoiding the fiscal cliff of $600 billion in tax increases and spending cuts that economists fear could throw the country back into recession."

$600 billion over ten years?

Notice how CNBC leaves out "per year" after "$600 billion" in that second part of the snip after the elipsis. A $600 billion annual hit to the economy would be bad indeed, but only because it would post as a bookkeeping negative. Government spending counts as GDP, and removing $600 billion annually from the pool of funds normally tallied under GDP would "book" a recession before we even got there.

Look, by letting the Bush tax rates expire we were supposed to face a tax increase generating revenues of $500 billion PER YEAR or so, plus $100 billion per year from separately agreed to sequestration cuts to defense and social spending from August 2011's debt-ceiling imbroglio. That's why this fiscal cliff was such a big deal. We were talking $600 billion per year in the case of the Bush tax cuts expiring, not $60 billion per year as the Senate has now agreed. Tax increases on the first $9,000 of income ALONE would have generated $65 billion per year by letting the Bush tax cuts expire on the lowest wage earners for the simple reason that that tax increase affects EVERYONE'S first $9,000 of income. That's how progressive taxation works. Keep going on up the income ladder with all those expiring Bush tax rates reverting to the higher Clinton rates and soon you are talking about $500-$600 billion PER YEAR in revenues. What do you think Obama and Dirty Harry Reid have been greedily eyeing after all? That they are caving to this "deal" just shows how really weak is their position, and how much power the House has in fact, if only they understood it.

Unless of course it is all an elaborate ruse, a trap for the House, which just might be conservative enough to reject the deal for its surrealism at a time when the political consensus in favor of "balance" is rearing its ugly head. In which case the political position of the conservative House will be marginalized more or less indefinitely, and the political power of the Senate enhanced.

The US Senate is clearly the most despicable institution in the federal system, if that were possible, for obscuring all this from the American people, for the way bipartisanship means liberals get to remain liberal while Republicans have to check their conservatism with the coat girl, for continuing to spend through borrowing, and especially for acting as a Super House in doing all this, trying to shove this crap down our throats just as it has already shoved the ObamaCare crap down our throats. Bills are supposed to originate in the House after all, but those which do are routinely ignored by the Senate, which thinks itself superior and possessed of a priority it does not have.

The problem clearly is the US Senate and the way it is elected, how long it serves, and the way it acts. If ever it were time to repeal the 17th Amendment, this is it.

Real Retail Sales Still Remain Below The 2006 Peak

Real retail sales still remain below the December 1, 2006 peak of $180.016 billion. The latest report of real retail sales for November 1, 2012 puts them at $178.51 billion.

Graph and data here.

We still remain in a consumption depression nearly six years since the onset despite extending the Bush tax cuts for two years beyond their original expiration date, and despite the first ever emergency reductions to the payroll tax, rolled back 32% for both 2011 and 2012 from 6.2% of each paycheck to 4.2%:

"[F]or the economy as a whole the payroll tax cut amounted to about $112 billion in 2012 – or the equivalent of at least $300 for each person in the US," reports the Christian Science Monitor, here.

Given the 100% propensity to spend everything in a paycheck, the expiration of the payroll tax cut will remove that sum from current retail spending levels. And going back to the Clinton era tax rates in less than two weeks, on January 1, 2013, will mean transferring about $235 billion annually from taxpayers to federal coffers, according the Congressional Budget Office, as discussed here.

Together that's a theoretical annual hit to spending by the American people of nearly $350 billion.

Yet Democrats cry Forward! to these tax rates of the past despite the damage they are likely to cause.

We're not going to get over the hump that way.

Rules For Radical Republicans: Bush Tax Cuts Edition

Rule 1: Power is not only what you have, but what the enemy thinks you have.

The enemy knows the Congress is a coequal branch of the government. The problem is the Republicans and the Speaker of the House do not. You actually have more power even than that. You have 30 Republican governors. Start using them.

Rule 2: Never go outside the experience of your people.

"New revenues from the rich" is the enemy's idea, not Republicans'.

Rule 3: Whenever possible, go outside the experience of the enemy.

Bush is ancient history. Time to make your own and repudiate the past. Pass something in the House which goes farther than Bush ever dreamed, and send it to the Senate to enrage the enemy.

Rule 4: Make the enemy live up to its own book of rules.

The enemy is funding gold-plated union jobs and pensions for federal and state workers at the expense of middle class Americans in the private sector who enjoy neither. It's time you reminded the middle class about that.

Rule 5: Ridicule is man's most potent weapon.

Use surrogates saying: Moochelle. Crony capitalist. Ideologue. Bolshevik. Dictator. Muslim sympathizer. Race baiter. Panetta flies cross country too much at taxpayer expense. The vice president thinks FDR talked to a television camera.

Rule 6: A good tactic is one your people enjoy.

Republicans can campaign, too. Go frequently to friendly territory and bring 2016 hopefuls with you.

Rule 7: A tactic that drags on for too long becomes a drag.

The idea of compromise became a drag a long time ago. Stop waiting for it. Go on the offensive instead.

Rule 8: Use different tactics and actions and use all events of the period.

The enemy is trying to combine everything into one event, "the fiscal cliff", which tells you they perceive they are at a disadvantage. They are. You need to keep the events separate and do things piecemeal. Raising the debt ceiling should come later, crossing the tax rates fiscal cliff should come first. Fight for spending cuts later with the debt ceiling, not now. Sequestration already gave you some spending cuts, which you should embrace.

Rule 9: The threat is more terrifying than the thing itself.

The greatest fear of the Democrats is a debt ceiling fueled government shutdown over spending cuts, but it wasn't the end of the world under Bill Clinton, and it won't be the end of the world if it happens in 2013. You actually won that in 2011. Do it again, except bigger, to satisfy the ratings agencies. Besides, it's red meat for the base.

Rule 10: Maintain a constant pressure upon the opposition.

No more appearances with the enemy, especially on the golf course. You are third in line for the presidency. Start acting like it. Visit Afghanistan to encourage the troops.

Rule 11: If you push a negative hard and deep enough, it will break through into its counterside.

The place you need to get to is the same place you were at two times when the president extended the Bush tax rates, so you should know the way. An uncompromising new insistence on tax reform and much lower tax rates might get you there. It changes the subject and focuses the argument on relieving the taxpayers. The president upped the ante. You need to see him and raise him. Aim for the moon, and you might get into orbit.

Rule 12: The price of a successful attack is a constructive alternative.

You might not get the radical tax reform, about which you must be deadly serious, but settling for making the Bush tax cuts permanent is a constructive alternative.

Rule 13: Pick the target, freeze it, personalize it, polarize it.

Focus your attention on answering the partisanship of individuals in the pundit class. Don't fire Tea Party men. Enlist them in attacking the enemy. They are good at it, and they will repay you with support later.

Why Obama And Dems Will Let Bush Tax Cuts Expire

Because in order to transform the taxpayer, first you have to destroy the taxpayer.

CNBC Adopts Overt Advocacy Against Fiscal Cliff

Their explanation is here.

And it's completely stupid, as usual from these people, for whom a recession constitutes "dire consequences" and is unthinkable.

CNBC should consider that sequestration was passed by the Congress, and that the expiration of the Bush tax cuts was passed by the Congress. So to oppose these acts of Congress instead of simply reporting them as facts constitutes advocacy, pure and simple.

CNBC. My new comedy channel.

Who's More Willing To Let Bush Tax Cuts Expire? GOP Or Dems?

Josh Barro thinks it's the Republicans, here:

Democrats cannot force Republicans’ hand unless they are more willing than Republicans to let all the Bush tax cuts expire. And they won’t be. A full expiration might well cause a new recession, which would be even more politically damaging for the Barack Obama administration than for congressional Republicans. Congress is already about as unpopular as it can become, and Republicans know they are not going to get their legislative agenda enacted in the next two years anyway. But a new recession would greatly interfere with Obama’s second-term plans.

Larry Kudlow Slanders Christ On His Radio Program

Larry Kudlow, former Democrat, member of SDS, drug addict and alcoholic, and supposedly a Jewish convert to Christianity, slandered Christ in the final hour of his radio program yesterday. That's a lot of "formers".

He did so while attacking Paul Krugman for advocating that the Bush tax cuts be allowed to expire as a remedy for the fiscal cliff, ridiculing the idea with the ever popular provincialism "for Christ's sake".

Obviously the defeat of Mitt Romney has pushed all of Kudlow's buttons at once. He began the program with a full-throated denunciation of the Pat Buchanan wing of the Republican Party and its anti-amnesty stance on illegal immigrants, saying it must be "crushed".

You can take the man out of the SDS, but you can't take the SDS out of the man.

You can not hear a podcast of Kudlow's program anytime you don't want to, here.

Neal Gabler Can't Face It That Democrats Have Betrayed Social Security

Here, for Reuters:

"There is no gainsaying that the basic purpose of the [Ryan] budget is to dismantle New Deal and Great Society programs that assist the poor and gradually remove the juice from the third rail by privatizing Social Security and essentially voucherizing Medicare. To save the country from the flood of debt, they must save us from FDR and LBJ."

The Ryan Budget isn't even the law of the land because Democrats have stopped it in the Senate. But for two years, two years!, Democrats have enthusiastically advocated and voted for reductions in the payroll tax, removing the juice from Social Security, in order to put cash into people's hands and stimulate the economy. Democrats did this in the lame duck session in December 2010, when they still had complete control of the US government: House, Senate, White House:

"In December 2010, as part of the legislation that extended the Bush tax cuts (called the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the government negotiated a temporary, one-year reduction in the FICA payroll tax. In February 2012, the tax cut was extended for another year."

Looks to me like Democrats represent the biggest threat to the sacrosanctity of Social Security.

Liberal Bizarro World Bait and Switch Tax Math

Just when I thought the headline "Payroll tax cuts rob the poor to feed the rich" meant that I was going to read a fine story by a liberal lamenting how the richest Americans, everyone making about $106,800 a year and "to infinity and beyond," don't pay Social Security taxes on all their income, I was met with this instead, that the present and proposed cuts in the payroll tax do nothing but finance the extension of the Bush tax cuts which, evidently, benefit only the rich:

Specifically, I'm talking about a new proposal to rob from Social Security to fund a continuing tax break for people who don't need Social Security — the wealthy. ...

It started back in December, when President Obama capitulated to the GOP on a budget deal by cutting the payroll tax, which funds Social Security. Advocates for the program pointed out then the shortcomings of this approach: It was targeted inefficiently and unfairly, skewing to the upper middle class and hurting lower-income families in comparison with the Making Work Pay tax credit it replaced.

Nevermind that the ten year Bush tax cut regime is responsible for the sorry state of affairs in which we presently find ourselves, with over 45 percent of the population paying nothing in federal income taxes, and a sizeable minority actually enjoying a negative tax rate whereby they receive government welfare through the tax code.

Nevermind that the latter is specifically designed as a subsidy to offset the regressivity of Social Security taxes on the poorest wage earners.

And nevermind that the future solvency of Social Security isn't really front and center in the author's mind, either.

What is Michael Hiltzik's greatest fear?

[O]nce you've cut a tax, it's ever harder to restore it.

You mean like abolishing the Bush tax cuts and thereby raising taxes on the poor by 50 percent?

I'll say.

Or how about this one?

In 2008, the top 14 million tax returns had AGIs totaling $3.8 trillion. If a liberal were really serious, he'd be advocating taxing all this income to make not just Social Security solvent, but Medicare, too. At 6.2 percent, we're talking an extra $236 billion of foregone tax revenue annually.

As tax loss expenditures go, it's the largest one I know of, by a long shot. But try getting people to focus on that one instead of my measly mortgage interest deduction, a tax loss expenditure of $88 billion.

Liberals are so caring.

Senate Votes For "Almost All" of the Bush Tax Cuts

So says TheHill.com, here:

"The package extends almost all of the Bush tax cuts . . .."

The devil is in the details, and I smell a devil.

Is Ron Paul the Republicans' Dennis Kucinich?

He was one of just three Republicans in the US House to vote with the Democrats today to send a bill to the Senate which extends the Bush tax cuts only to those making less than $250,000/$200,000.

Can't wait to hear from Dennis Ron the chapter and verse from the US Constitution which allowed him to vote Yea on a tax increase for only "wealthy" Americans.

TheHill.com reports here the independent Democrats who voted against Pelosi's class-warfare tax increase bill on the "rich":

Here are the Democrats who voted against the bill (nine of whom lost their reelection bids):

Rep. Brian Baird (Wash.)

Rep. Dan Boren (Okla.)

Rep. Kathy Dahlkemper (Pa.)

Rep. Artur Davis (Ala.)

Rep. Lloyd Doggett (Texas)

Rep. Stephanie Herseth Sandlin (S.D.) 

Rep. Ron Klein (Fla.)

Rep. Jim Matheson (Utah)

Rep. Mike McIntyre (N.C.)

Rep. Mike McMahon (N.Y.)

Rep. Jerry McNerney (Calif.)

Rep. Walt Minnick (Idaho)

Rep. Gwen Moore (Wis.)

Rep. Jim Moran (Va.) 

Rep. Collin Peterson (Minn.)

Rep. Earl Pomeroy (N.D.) 

Rep. Bobby Scott (Va.)

Rep. Gene Taylor (Miss.)

Rep. Mike Thompson (Calif.)

Rep. Pete Visclosky (Ind.)

Among the brave above who were re-elected to return next year I count Dan Boren, Lloyd Doggett, Jim Matheson, Mike McIntyre, Jerry McNerney, Gwen Moore, Jim Moran, Collin Peterson, Bobby Scott, Mike Thompson, and Pete Visclosky. 

Why couldn't the three Republicans have been more like these eleven Democrats and voted No?

Libertarians are nuts.

BUSH SUBSIDIZED THE POOREST AMERICANS AND CUT THEIR TAXES 33%

Because George Bush was a flaming socialist. The left hated him as they did not because of the Iraq war but because he out-performed them as a liberal. And if Obama lets the Bush tax cuts expire, the poorest Americans will lose their subsidies and their taxes will go up 50%, and Obama will become a conservative and all will be well with the world!

In 2000, the top 60 percent of taxpayers paid 100 percent of all income taxes.

The bottom 40 percent collectively paid no income taxes.

Lawmakers writing the 2001 tax cuts faced quite a challenge in giving the bulk of the income tax savings to a population that was already paying no income taxes.

Rather than exclude these Americans, lawmakers used the tax code to subsidize them. (Some economists would say this made that group's collective tax burden negative.)

First, lawmakers lowered the initial tax brackets from 15 percent to 10 percent and then expanded the refundable child tax credit, which, along with the refundable earned income tax credit (EITC), reduced the typical low-income tax burden to well below zero.

As a result, the US Treasury now mails tax "refunds" to a large proportion of these Americans that exceed the amounts of tax that they actually paid.

All in all, the number of tax filers with zero or negative income tax liability rose from 30 million to 40 million, or about 30 percent of all tax filers.

The remaining 70 percent of tax filers received lower income tax rates, lower investment taxes, and lower estate taxes from the 2001 legislation.

Consequently, from 2000 to 2004, the share of all individual income taxes paid by the bottom 40 percent dropped from zero percent to minus 4 percent, meaning that the average family in those quintiles received a subsidy from the IRS.

By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.

Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent's share dipped from 5.9 percent to 5.4 percent.

Clearly, the tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.


Read the rest from Brian Riedl, here.

When New Taxes Are Necessary Is Also Above Obama's Pay Grade

In an interview on February 9, 2010, President Obama says raising taxes on households earning less than $250,000 a year must be on the table of the deficit commission, but that he doesn't know if raising those taxes is a solution:

GOLDMAN: Well, if your deficit commission came back and said, as part of this overall recommendation, we would recommend raising taxes on households earning less than $250,000 a year, you would accept that as part of the overall?

OBAMA: I don’t want to prejudge the commission because the whole point of it is to make sure that all ideas are on the table and let’s see what folks can come up with.

GOLDMAN: So, even raising taxes?

OBAMA: What I can’t do is to set the thing up where a whole bunch of things are off the table because, at that point, there are going to be - some who say, we can’t look at entitlements. There are going to be some who say we can’t look at taxes, and pretty soon, you just can’t solve the problem.

So, what I want to do is to be completely agnostic, in terms of solutions. I want everybody to sit down and work off of a common base of facts.

Just eight days prior, however, he submitted a $3.8 trillion budget which was anything but agnostic about the need for tax increases on such households.

The new agnostic tone on taxes is interesting because of the dust-up over a news report, later pulled, that Obama would let the Bush tax cuts expire, which would mean huge tax increases on every American, including whopping increases of 50% on the poorest of taxpayers by letting the 10% bracket expire and shoving them into the 15% bracket.

The White House quickly jumped on that news report, and emphasized that the new budget calls for making the Bush tax cuts permanent for those making under $250,000.

The Tax Foundation subsequently pointed out that

What the article does not mention is that Obama's budget extends all of the Bush tax cuts for single returns making less than $200,000 and married returns making less than $250,000. Whatever you think of Obama's proposed budget and tax policies, this omission in an article entitled "Backdoor taxes to hit middle class" is either evidence of intentional deceit or terrible reporting.

So on February 1 Obama is intellectually certain not only that tax increases on the below $250K crowd are not needed in the current budget, but aren't going to be needed period and the Bush tax cuts should be made permanent. But nine days later he's a doubting Thomas? What happened in the interim?

Ganja, that's what.