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Tuesday, July 27, 2010

Will Obama's Deficit Commission Call for $26.7 Trillion Tax Increase?

Obama In advance of tomorrow's fourth meeting of the National Commission on Fiscal Responsibility and Reform: Obama Commission Will Call for Trillions in Tax Hikes (Townhall), by Floyd & Mary Beth Brown:

Obama debt commission member, Republican Sen. Judd Gregg of New Hampshire, launched a scary trial balloon on ABC News. Gregg suggested the debt commission will likely recommend a massive $26.7 trillion tax increase. Here are Gregg's actual words:

"Everything has to be on the table - there's no question about that... Erskine Bowles, one of the co-chairmen of the commission, has suggested a 75-25 split -- 75 percent of the savings being in spending, and 25 percent in revenues... I think it's likely that there will have to be a revenue component, but it should be significantly, dramatically -- and a 3-1 ratio is pretty dramatic -- dramatically less than the initiatives in the spending side of the ledger."

According to an analysis by Americans for Tax Reform if Bowles wants $3 in spending cuts for every $1 in tax hikes then the tax increases will be larger than anyone expects:

Bowles and Gregg can only be talking about cutting $3 in promised Social Security and Medicare benefits in exchange for $1 in tax increases. In other words, 1/4 of the unfunded liabilities of Social Security and Medicare would be paid for with tax hikes. So how big is that? According to the 2009 Social Security and Medicare Actuaries' Report, the long-run insolvency of the Social Security and Medicare systems is $106.8 trillion (with a "t") over the infinite horizon. To close this gap with one-quarter tax hikes is, therefore, to raise taxes by $26.7 trillion.

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Comments

Paul, I can't remember if I found the following article on your site or not, but it says a lot in response to "talking about cutting $3 in promised Social Security and Medicare benefits in exchange for $1 in tax increases."

Social Security money stolen by government - Allen W. Smith, Professor of Economics, Emeritus, at Eastern Illinois University

[The] Obama deficit-reduction commission will make recommendations for budget cuts.... Social Security will be one of the big targets. The flaw...is that Social Security has not contributed...to the budget deficits or the soaring national debt. Social Security is funded exclusively by payroll taxes....

Some like to say that the government just "borrowed" the money during the time period when it was not needed to pay benefits. But borrowing implies repayment, and no provisions for repayment have been made.

The government did not enact future tax increases that would automatically kick in when the Social Security money was needed. Neither did they enact legislation that would end other spending programs once the Social Security money was needed so the money could be transferred to the trust fund.

The government spent the Social Security money, pure and simple, without making any provisions for future repayments. ....

Hey! Maybe Social Security costs can be cut if the Obama Death Panels ration medical care appropriately so that the elderly die off before collecting too much in benefits!


Posted by: Woody | Jul 27, 2010 4:01:09 PM

"Everything has to be on the table," except Federal pay cuts.

Posted by: Some Smart Alec | Jul 28, 2010 5:41:52 AM

$3 in cuts for ever $1 in tax increases...hmmm...seems I have heard that one before.

Given the players involved, it's not too hard to figure out what will happen next. As part of the deal Republicans will push for $26.7 trillion in tax increases (the deal requires them to go first). After Republicans have destroyed their standing with both their base and the American public Democrats will push for trillions of dollars in spending increases, and blame Republicans for the fiscal disaster that follows.

The fact that Judd Gregg is going along with this farce does not surprise me. The GOP is not called the Stupid Party for nothing.

Posted by: Mwalimu Daudi | Jul 28, 2010 5:50:28 AM

Exactly. THEY stole OUR MONEY we'd paid in all our working lives.

Now THEY will take more of OUR MONEY to repay the money THEY stole from US.

Prison wouldn't be good enough for all of them....including the ones who've retired with a generous pension, yet still rake in millions on K Street just because they got to know politicians while doing their public "service".

Posted by: jeanneb | Jul 28, 2010 5:52:13 AM

"I will gladly pay you Tuesday for a hamburger today"

We'll get the taxes but the promised cuts will never happen. They did it in the past and they'll do it again today without a second thought. They think us all a bunch of rubes.

Posted by: Jay | Jul 28, 2010 7:03:10 AM

Young folks--amp up your personal retirement savings now. Your government and your employer are insolvent in the longterm. Save yourself from eating dog food at age 80 by making sure you have your own retirement funded.

Then vote out any politicians who even speculate out loud about pilfering your 401K or IRAs.

Posted by: American Delight | Jul 28, 2010 7:24:33 AM

If they keep going like this and especially if they go after 401K or IRA money I think we'll have to go to tar and feathers. I mean I don't think they're scared of being voted out. It's as if they are doing it because they know they are being voted out.

Posted by: macko | Jul 28, 2010 8:24:04 AM

Jay,

That is, until our Political betters find a way (with help of their darling new laws passed) that will shanghi our 401ks, IRA's, and other responsible fiscal disipline our own Government fails to practice.

We get all rhilled up over a $2 ATM charge, but don't even foster a yawn when your own Government can watch/track your every financial transaction without even a warrant or reasonable suspicion of illegal activity. I guess we're all criminals now...

Posted by: Fred Zeppelin | Jul 28, 2010 8:27:10 AM

AD, just watch...if people privately save for their own retirement, don't be surprised if Congress, with a socialist President, either (1) says that this proves that those people are "rich," don't need S/S, and legislates them from receiving S/S payments, or (2) will just take private retirement funds and roll them into Social Security for everyone.

After all, it's not "fair" for some people to have retirement plans unless everyone has them.

It's much easier to reduce deficits if you take what isn't yours.

Posted by: Woody | Jul 28, 2010 9:30:20 AM

Here is what the Republicans should offer: Cut $26.7 Trillion in spending and call it a targeted tax hike.

Posted by: cubanbob | Jul 28, 2010 9:43:32 AM

Of course, your 401k and IRA don't get pilfered by the government. You pilfer them yourself when the Wall Street raiders put your company in play, then get you thrown out of your job, and you have to raid the 401k or IRA to stay alive long enough to worry about retirement. For this reason, private retirement will never work until permanent employment can be guaranteed. How many 401Ks got emptied out in the last three years, do you suppose? With the exception of those few who can accumulate enough money to pay all their bills for the rest of their life, one cannot escape the fate of the society as a whole. And the more people who succeed in escaping in this manner, the more dire the condition of all the rest, because, Ayn Rand notwithstanding, money is a zero-sum game.

Posted by: Jeffrey | Jul 28, 2010 10:17:26 AM

Eliminate Education Dept (budget keeps going up, scores keep going down), Energy Dept (how many kWh do they generate), Fannie/Freddie/FHA, Agriculture Dept subsidies and price supports, and that's just for starters. Paste a copy of the 10th Amendment to the forehead of every Federal Senator/Representative.

Posted by: TheOldMan | Jul 28, 2010 10:36:09 AM

Jeffery,

Permanent employment was tried under communism...it didn't work then and it won't work now.

Posted by: Burger | Jul 29, 2010 11:02:54 AM