President Obama reiterated his plan to raise taxes on the wealthy at a Florida Atlantic University speech on April 10 by calling for the Buffet Rule. The so-called “Buffet Rule” would require the wealthiest taxpayers in the US to pay a 30 percent income tax. Raising taxes on the wealthy (or anybody) is the wrong idea at the wrong time. Raising taxes is the wrong way to bring in revenue and a tax increase will not bring in the needed revenue to close the budget gap. Taking more money out of the economy and putting it into the hands of the government will weaken an already frail recovery. It seems that not even President Obama thinks this idea is about revenue. According to the San Francisco Chronicle, “The detailed description of the bill states, ‘Billionaire Warren Buffett and many wealthy Americans pay a lower tax rate than middle-class families do. That's just not fair. Warren Buffett knows it and President Obama wants to fix it…’” Fairness (like beauty) is in the eye of the beholder. Warren Buffet (and any other millionaire) is free to write the Treasury Department a check if they don’t believe that they are paying enough.
The republicans in the House of Representatives and the White House have been playing a game of budgetary poker for the past two years and taxpayers have been paying the price. House Budget Committee Chairman Paul Ryan’s (R-Wisc.) fiscal year (FY) 2013 budget was the next card played in this high stakes game. In FY 2012, Rep. Ryan showed his cards and went all in with spending cuts. This year Rep. Ryan continues his aggressive stance as he doubles down on tax cuts. All the meanwhile, the Senate has folded by not proposing a budget for more than 1,000 days. And, according to The Hill, Senate Majority Leader Harry Reid doesn’t even seem bothered by their lack of work. “Senate Democratic leaders on Friday said they do not intend to bring a fiscal 2013 budget up for a floor vote. ‘We do not need to bring a budget to the floor this year — it's done, we don't need to do it,’ Senate Majority Leader Harry Reid (D-Nev.) told reporters on Friday.” Rep. Ryan addresses both spending and taxes as he ups the ante on America’s fiscal future.
When President Obama released his fiscal year 2013 budget on February 13, 2012, there were many nagging questions by taxpayers. The budget predicted deficits as far as the eye could see with a feeble attempt at cutting spending (read more here). What many people didn’t see was a step backwards in transparency with the budget secretly stripping three anti-lobbying provisions from last year’s appropriations bill. One federal program ready to take full advantage is The Department of Health and Human Service’s (HHS) Prevention and Public Health Fund. The Prevention and Public Health Fund is no stranger to using taxpayer dollars to lobby for higher taxes and has already spent more than $1 billion towards “wellness programs.” The Taxpayers Protection Alliance is very concerned that tax dollars may once again be used to lobby for bigger government (read press release here).
On Wednesday February 22, 2012, the Obama Administration announced its proposal to cut the corporate tax rate from 35 percent to 28 percent. This comes less than two months before Japan cuts its corporate tax rate (on April 1, 2012) to leave the United States with the highest corporate tax rate in the world. Cutting the rate from 35 percent to 28 percent is a good start, but since 1992, the average OECD combined statutory rate has been lower than America’s and it has continued to fall. Today, it is nearly 10 percent lower (25.1 percent) than America’s 35 percent. Add in the state and local taxes that U.S.-based companies pay and the gap widens even further. The appetite for corporate tax cuts may also be supported by a wide variety of folks and not just corporate big wigs. According to The Hill, “The Hill Poll also found that 73 percent of likely voters believe corporations should pay a lower rate than the current 35 percent, as both the White House and Republicans push plans to lower rates.”
In a recent visit to a Washington Boeing plant, while touting their planes, President Obama asked Congress to continue to fund the Export-Import Bank (Ex-Im), the poster child for taxpayer-funded corporate welfare. The setting of the Boeing plant was no accident considering that Boeing has been a major recipient of Ex-Im Bank funds for years. This comes on the heels of the Obama-backed National Labor Relations Board (NLRB) trying to stop Boeing from moving its plant to South Carolina and the expiration of a tax credit for jet sales.
The release of the President’s budget this week showed a shrinking Defense budget. This economic reality has once again sparked a conversation about the controversial and expensive Medium Extended Air Defense System (MEADS). Originally conceived as the replacement to the Patriot missile system, MEADS is being jointly built by the United States, Italy, and Germany with the Americans shouldering more than 50 percent of the cost. Even though the Army doesn’t want the project, there was an additional $800 million allocated for the project through 2013 ($400 million in President Obama’s latest budget). Taxpayer groups have expressed their opposition to funding the program over the past years. Now, according to the Washington Business Journal (WBJ), “Defense officials are expressing doubts about the department's ability to meet its obligations to help fund an international missile defense system, despite President Barack Obama's support of the program in the fiscal 2013 budget proposal.”
In 2011, taxpayers sent a clear signal to all Washington politicians that politics (and especially spending) as usual just won’t be tolerated anymore. Today President Obama unveiled his FY 2013 budget with little or no recognition that he understands the frustration of taxpayers. The budget shows that taxpayers have little to be excited about, especially since the budget deficit will top $900 billion. Here is the quick and dirty. According to CNN money, “President Obama unveiled a $3.8 trillion budget request Monday that hikes taxes on the rich, spends new money on infrastructure and education, but does little to reform the entitlement programs that pose the biggest long-term threat to the federal budget. . . . The administration is proposing a series of investments focused on infrastructure, education and domestic manufacturing, including old favorites like $30 billion to modernize schools and an additional $30 billion to retain and hire teachers and first responders. One key element of that plan is a six-year proposal to spend $476 billion on surface transportation, a big increase from current levels, and much more than other proposals lawmakers are considering.”
Part of the two month extension of the payroll tax cut package late last year was a requirement that the President make a decision on the Keystone XL Pipeline. On Wednesday January 18, the White House officially announced that it will not seek to build the pipeline. According to Politico, “The State Department Wednesday will reject the Keystone XL pipeline, multiple sources following the project tell POLITICO.” The formal announcement by the State Department is expected to occur at 3 pm. The White House did leave a little bit of wiggle room. According to The Hill, “While the administration is expected to reject TransCanada Corp.’s permit application, it will allow the company to re-apply…” This could be seen as keeping the door open to the pipeline when in reality it is probably just a ploy to try and “have it both ways.” The truth is that the XL Pipeline will be good for the economy, the government, and the entire country. It is important to understand the facts about the pipeline. The proposed pipeline, which would carry roughly 700,000 barrels of oil per day from Alberta, Canada, to refineries on the Gulf Coast, would encompass 1,700 miles and cost approximately $7 billion. The pipeline would be an extension of one that became operational in 2010 (you can read TPA’s previous blog posting here).
President Obama and Defense Secretary Leon Panetta announced a new Defense strategy on January 5, 2012. The new strategy involves hundreds of billions of dollars in cuts. The mysteries in these cuts are the specifics. According to the Austin Business Journal, “President Barack Obama and Defense Secretary Leon Panetta gave few specifics about program cuts at the U.S. Department of Defense [DOD] during a briefing Thursday on DOD’s strategy…” This is problematic because as much as the Pentagon budget needs to be cut, it should be done responsibly with the Pentagon still having the ability to meet the defense needs of the country. In addition to the Defense cuts, President Obama should also require all federal agencies to do the same and come up with target cuts.
Taxpayers have been accustomed to Republicans talking about government waste and identifying where to cut out the fat. In some cases, Democrats have even given up on looking and claim that it is tough to identify where the waste, fraud, and abuse is occurring. For example, after Rep. Barney Frank (D-Mass.) announced his retirement he was interviewed by Chris Matthews on MSNBC. When asked about where government could cut, Rep. Frank responded that “People say we are going to cut out the fat as if the fat was made on the side. Yes, there`s fat, but it`s marbles. There`s inefficiency in any human activity --the waste, fraud, and abuse is so marbled throughout the government and the various bureaucracies that it is difficult to get rid of the waste.” Besides the ridiculous story of a welfare recipient owning a $1.2 million house (read here), there are plenty of examples from members of both parties about where to trim the fat.