From President Obama’s press conference today:
The other option is to pass a law right now that would prevent any tax hike whatsoever on the first $250,000 of everybody’s income. And by the way, that means every American, including the wealthiest Americans, get a tax cut. It means that 98 percent of all Americans and 97 percent of all small businesses won’t see their taxes go up a single dime. (emphasis added)
I don’t usually get too upset about politics and politicians. I assume that all politicians are liars so when they do lie, it isn’t a surprise and I don’t get upset. For instance, for as long as I can remember when a politician talked about spending cuts it never meant what normal people would expect that to mean. “Spending cut” means that they are considering reducing the expected growth in spending for the following year (or decade or whatever time frame of which they are speaking). Spending still goes up just not as much as it would have. I don’t care what part of the country you are from, that isn’t a spending cut.
But now the newspeak of spending cuts has been extended to taxes. In the past, when a politician spoke about tax cuts, it usually meant a cut in the marginal rate of taxation. That was at least partially honest since there was actually a number being reduced. Of course, without knowing the details, a “tax cut” could still mean we end up paying a higher effective rate and more actual taxes, but at least it was somewhat honest. But President Obama has hit a new low. Now, a tax cut is nothing of the sort. It isn’t a reduction in the marginal rate. It isn’t a reduction in the effective rate. It isn’t a reduction of anything. Because the “Bush tax cuts” came with an expiration date, a tax cut is now a reduction in what the rate would have risen to if nothing is done to keep them the same. In other words, in actual English, no one – rich, poor or middle class – is getting a tax cut of any kind.
This focus on the upper tax brackets – by both political parties – is a distraction anyway. Even if the President gets his way and the top tax bracket reverses to the pre-Bush rate, it will not even come close to solving our budget problems. The deficit is over $1 trillion and raising taxes on the rich will only reduce that by about 10% even assuming no change in economic growth. The problem is spending, which is still rising. The deficit for October came in at $120 billion – that is one month people – up from $98 billion in 2011. Why? Tax receipts were up 13% to $184 billion but spending was up 16% to $304 billion. So reverting to pre-Bush tax rates on the wealthy will solve about one month of our deficit problem. What about the other 11 months? The President says this debate is about math but I think he might want to break out a calendar.
As I said at the beginning, I don’t usually get upset about politics but I am starting to lose my patience with these jackasses. I’m a small government type but I’ve given up on that. I’d be happy if we could just move government from huge to large but neither party has produced a plan to do even that. There are no spending cuts on the table from either side. All the “spending cuts” are of the newspeak variety that merely reduces the expected rate of spending growth. Until one party or the other starts using some Oldspeak – where a spending cut means an actual reduction in spending – we will not solve our budget problems.