Economics
The Meaning of the Tax Rate Debate: American Socialism’s Hail Mary?
For the past week various pundits, commentators and politicians have been trying to wrap their mind around the tax rate compromise put together by President Obama and Republican leaders.
For awhile, I must confess, it was very confusing.
But now I understand.
The Obama-brokered tax rate compromise is American Socialism’s version of a Hail Mary Pass.
Let’s hope it is incomplete.
For non-football fans, a little explanation is in order. A Hail Mary pass is a desperation heave that is usually the last play of a football game. The team with the ball is behind by less than a touchdown and has much of the field to cover if they are to score and win the game. The time has clicked down to the final seconds, and there is time for only one more play.
The quarterback takes the snap and throws the ball as far as he can–usually into the end zone–hoping, saying a prayer (Hail Mary), that one of his teammates will out jump the defenders, catch the ball, score a touchdown and win the game.
One of the most remembered Hail Mary passes in history was Doug Flutie’s forty-eight yard toss on October 20, 1999 that allowed Boston College to defeat its arch-rival, the Miami Hurricanes
Barack Obama is now trying to do the same.
The tax compromise is American socialism’s desperate Hail Mary.
But before we describe the Obama Hail Mary strategy, let’s look at the confusing rhetoric of the past week. I’ve rarely seen such political confusion in all of my life.
Conservative Angst
When the tax compromise was first announced by the White House, many conservatives applauded the plan because it extended the current tax rates for two years. However, they didn’t like the extension of unemployment benefits and other special interests earmarks.
The Heritage Foundation was cautiously supportive at first, while echoing conservative concerns. In their first Morning Bell on the subject, they stated “The deal originally cut by Republicans had some good economic policy in it, but it also had a lot of harmful provisions. The temporary two-year nature of the arrangement did not provide the long-term certainty that businesses need to make long-term investment plans that create substantial economic growth and jobs.”
Tony Perkin’s Family Research Council was also ambivalent at first saying “Congress has had two years to deal with this ticking time bomb called tax relief–and they have less than 14 days to diffuse it. The Senate is scheduled to vote on a “compromise” tax package on Monday afternoon with both good and bad provisions. It does maintain the current tax rates, preserves the Child Tax Credit , and keeps married couples from being penalized. On the negative side, it’s all still temporary and raises the death tax by 35 percent.”
Liberal Concerns
Some liberals also accepted the bill because they thought it it was the best they could get after the November 2 election “shellacking.” Vice President Joe Biden reportedly told House Democrats that the tax deal cut with Republicans was a “take it or leave it” proposition that could not be changed.
Others hated it because the president caved on his pledge to raise taxes on “the rich.” During Democratic caucus meetings, various members were overheard cursing the president and his unwillingness to raise taxes on the wealthy and small businesses.
Vermont Senator Bernie Sanders, a committed socialist, was so livid about the compromise that he filibustered the Senate for a grueling 8 hours and 37 minutes, speaking nearly non-stop about class warfare and the blessings of national socialism.
Fidel Castro would have been proud.
Two Who Got It Right
Though at first, there was widespread confusion over the compromise, two men got it right from the beginning.
Maybe we should elect one as president and the other as VP in 2012. They seem to be the sharpest minds in the republic.
Columnist Charles Krauthammer called it the “swindle of the year,” and said from the very beginning that the only person who truly benefits from passing it is Barack Obama. “[With this deal], the President negotiated the biggest stimulus in American history, larger than his $814 billion 2009 package.”
His column in the Washington Post is worth reading.
I don’t know where Charles got his $814 billion number–some (like Sean Hannity) question it, but still believe that Krauthammer is right. I must admit, when I first heard Charles’ take I was skeptical.
Then I began to think and pray–and concluded he was correct.
Senator Jim DeMint also made headlines by becoming the first Republican politician in Washington to declare his opposition to the tax compromise. He even threatened to filibuster the deal.
In an e-mail via DeMint’s PAC Senate Conservatives Fund, DeMint laid out why he is opposed to the tax deal.
“First, I do not want to see anyone’s taxes go up and I have been fighting for years to permanently extend all the tax rates. I disagree with the President that we cannot afford to extend these rates for everyone. It’s the people’s money and we should not raise taxes on hardworking American families.”
“But this bill does much more than simply extend tax rates. For starters, it includes approximately $200 billion in new deficit spending and stimulus gimmicks… The bill also only extends rates for two years. We don’t have a temporary economy so we shouldn’t have temporary tax rates.”
“The bill also fails to extend all of the tax rates. It actually increases the death tax from its current rate of zero percent all the way up to 35 percent. One economic study shows that this tax increase alone will kill over 800,000 jobs over the next ten years.”
“Finally, the bill now includes dozens of earmarks for special interests, including ethanol subsidies, tax breaks for film and television producers, give aways for rum manufacturers, favors for auto racing track owners, and a hand out for businesses outside [the United States].”
One reason I like Jim DeMint because he lives at 133 Street–my old office on Capitol Hill.
One other former Senator and Hollywood star, Fred Thompson, also was prescient on the error of extending unemployment benefits yet another year (totalling three years).
He remarked, “With unemployment being extended another 13 months, is it maybe time to just start calling it welfare?”
Or maybe socialism.
That’s what the battle is about.
For nearly one hundred years, a portion of our society has been trying to change America from a Christian-based, freedom-oriented society to a secular-leaning socialist model. There are many forms of national socialism, but the bottom line is trust in and control of people by ever-expanding government.
Our founding fathers called it tyranny.
Its opposite is liberty. William Penn spoke for all colonial Americans when he said, “Men must be governed by God or they will be ruled by tyrants.”
He was referring to Europe at the time.
Europe has known many forms of tyrannical governments. Prior to the Reformation, kings and princes lorded it over their subjects for hundreds of years. In the 20th century Benito Mussolini and Adolph Hitler gave birth to national socialistic regimes that became cruel and oppressive. Communist Russia took socialism a step further when it seized economic control of the State through “the barrel of gun.” More recently, European states created vast welfare states under the banner of democratic socialism.
But its all the same at the core: Power comes from government, not from the people.
European nations have experienced many forms of socialism.
Different teams. Same game.
The American experiment was exceptionally different. Backed by a Christian world view that recognized the sovereignty of God and the power of Christ in the individual, our early founders and settlers established the United States on faith, character and freedom.
This was a new “team” the world had never seen before.
This team believed in freedom. Their faith produced a great nation. “Team Tyranny” was always there, trying to even up the score. but never able to get ahead.
Then came Woodrow Wilson and his secular progressive plans, next FDR and the New Deal (vast expansion of the Federal Government), and finally LBJ and the Great Society. “Team Tyranny” was gaining ground on “Team Liberty.” The battle was enjoined. America’s future had truly turned into a competitive civilizational struggle.
Jimmy Carter was socialism’s next attempt to take the lead in the game. But he was petty and inept as a leader, and freedom-loving Ronald Reagan was swept into office. His influence kept “Team Liberty” ahead in the game for another twenty years.
Then following some missteps by the Republicans who were supposed to key players on “Team Liberty,” Barack Obama was elected to national office. In two short years he took “Team Tyranny” into the lead in American life via massive government stimuli, a takeover of various businesses and the financial sector, and finally the crowning jewel–creeping socialized medicine through Obamacare.
At that point, socialism was winning the game and Bernie Sanders was no longer the lone kook.
His team was now ahead.
But then “Team Liberty” awoke through the Tea Party Movement and concerted prayer. They “scored” big in the November 2, 2010 elections and re-gained the lead for the forces of freedom. On many fronts, freedom and common sense triumphed and was preparing to add a larger national advantage on January 3, 2011 when the new 112th Congress convenes and in 2012 when a new president can be elected.
So Barack Obama, captain of “Team Tyranny,” saw the victory slipping away and let fly with his Hail Mary.
Don’t be deceived by other members of his team that are yapping and swawking. They’re just decoy receivers that are really working for the same goal. Barack Obama was throwing to other “receivers”–Independents–who he needs to score a winning touchdown.
The Compromise was all about his re-election in 2012. Without it, socialism will not be able to win the game.
Barack Obama has not changed. He’s still a socialist-of-some-type at heart. But time was running out and momentum had swung.
He desperately heaved a Hail Mary to try and get re-elected.
Let’s hope and pray that his pass is incomplete during the Lame Duck Session.
As Heritage Foundation and many others now understand, the compromise must fail.
Then “Team Liberty” can once again get the ball back on January 3, 2011 and make permanent the tax rates, begin repealing Obamacare, and soundly defeat the socialists in 2012. Next, a new generation of leaders must stop frivolous spending, balance the budget, promote faith and morality, strengthen national defenses and encourage an American spiritual awakening.
That’s the meaning of the tax rate debate.
Paychecks or Food Stamps?
Newt Gingrich continues to earn my respect and trust. He’s made some mistakes in his long political career, but at this stage in this life, he is one of the clearest voices for a return to faith, family, and freedom that exists in America.
I don’t generally think in terms or political parties, or “left” and “right.” I think terms of right and wrong, and in the coming elections it is the Republicans who have it right.
This insightful column puts the November 2 election in simple and stark terms. Though flawed and badly wounded by years of poor national stewardship, the Republican Party is being re-born through the Tea Party Movement and is returning to its Judeo-Christian principles of limited government and biblical principles of liberty. On the other side, the Democratic Party continues to lurch down the road toward socialism and moral confusion.
Newt Gingrich believes that the contrast couldn’t be clearer in 2010.
One party believes in paychecks and the other in food stamps.
What kind of America do you want? Your vote, one week from today, will take us one direction or the other.
Vote for liberty, paychecks, and the human dignity that they bring. RB
October 13, 2010
The Food Stamp Party “Doth Protest too Much”
by Newt Gingrich
There is a famous line from Hamlet: “The lady doth protest too much, methinks.”
In Shakespeare’s play, Queen Gertrude is referring to what she believes are overwrought vows from a Queen pledging fidelity to her King.
In modern times, the phrase has come to signify the tendency of a guilty party to so passionately insist on their innocence that they suggest their guilt.
Last week, we highlighted a memo I sent to candidates across the country suggesting the closing argument for the 2010 campaign be a choice between the Democratic Party of food stamps and the Republican Party of paychecks.
Watching Speaker Nancy Pelosi and other Democrats’ reaction to that memo, one couldn’t help but think “the lady doth protest too much.”
More food stamps or more paychecks? The choice for America November 2nd
The difference between the record of the Nancy Pelosi Democrats since they assumed control of Congress in 2007 and the last time Republicans took control of Congress in 1995 could not be starker.
From 1995-1999, when I was Speaker, unemployment fell from 5.6% to 4.2% and food stamp usage dropped by almost 9 million to an enrollment of a little more than 18 million Americans. That’s because we pursued a job-creating agenda of controlling spending, cutting taxes, reforming government and balancing the budget.
Compare this to the record of Speaker Pelosi, who since 2007 has presided over a rise in unemployment from 4.6% to 9.6% and an increase in the number of food stamp recipients from 26.5 million to a record 41.8 million–more than one in eight Americans.
That’s an additional 15 million Americans depending on government for nutrition, thanks to the Democrats’ job-killing agenda of higher taxes, bigger government, and more spending.
This record legitimately makes the Democrats the party of food stamps.
Meanwhile, Republicans have outlined a pro-growth, less spending, low tax, reform agenda for government similar to our program from 1995 to 1999 that resulted in less Americans on food stamps and more Americans receiving paychecks.
This legitimately makes the Republicans the party of paychecks. The food stamp party doth protest too much
Faced with the crippling reality of her record, Speaker Pelosi and the rest of the food stamp party have reacted to this accurate contrast in a way Queen Gertrude would find familiar.
Last week, Speaker Pelosi again made the absurd claim that food stamps and unemployment insurance are the best way to create jobs, rather than serve as a safety net for those who have lost their jobs. In addition, Speaker Pelosi hysterically accused me of trying to “stomp on the poor.”
Speaker Pelosi and the rest of the food stamp party are desperately trying to spin the accurate and devastating contrast between the Democratic Party of food stamps and the Republican Party of paychecks as a threat to take food stamps away from the poor and unemployed who need them.
But they ignore the actual historic record that repudiates their baseless attack. During my tenure as Speaker, we didn’t eliminate the food stamp program; we were, however, able to reduce the number of people receiving food stamps by pursuing paycheck policies instead of food stamp policies. Millions of poor and unemployed people went off food stamps as they took up jobs and work.
It may cause Speaker Pelosi a conniption to hear it, but it turns out that paycheck policies are better for the poor than food stamp policies. Far from stomping on the poor, the Republican Congress from 1995-1999 did more to help the poor by giving them jobs than the Democratic Congress has during the last four years under Speaker Pelosi.
Drawing the contrast between food stamp policies and paycheck policies is not an attack on food stamps or on those who depend on the program for nutrition. It is an attack on the job killing policies of the Democrats that have led to more Americans needing food stamps. And it is a pledge to enact job creating policies of lower taxes, smaller government and less spendingthe same formula that worked when I was Speaker, leading to more Americans with paychecks and fewer Americans with food stamps.
Don’t let the howls of protest from the food stamp party deter you. They’re just resorting to the same lies and distortions they always employ when faced with the failure of their radical left-wing agenda.
This time it’s not going to work. Americans are fed up with all the spending, all the taxing, and all the big government programs that are killing jobs. And they are going to make their voices heard on Election Day by electing job creating, “paycheck” candidates across the country.
How many “paycheck” candidates are elected is up to you.
At American Solutions, we have launched a project to bring 10 million new Americans to the polls on November 2. It’s called 10MillionVoters.com. Our website gives you easy ways to use Facebook, Twitter and other tools to maximize turnout for conservative candidates this fall. You can also recruit your friends to the effort. Click here to get started.
You can donate to specific, high value campaigns we have targeted at SolutionsPac.com. For instance, here are five key Congressional races we are highlighting this week.
The bottom line is this: there are just 20 days left until Election Day.
It’s time to win.
It’s time to win this election for every small business owner who has been crippled by the job-killing polices of this administration and Congress.
It’s time to win this election for every young American who will graduate in a few months into an increasingly bleak job market.
It’s time to win this election for every American family dependent on food stamps yearning for the independence of a paycheck.
In short, it’s time to win this election for every American.
Let’s get it done.
Your friend,
Newt Gingrich
The Most Hated Tax
The Founding Fathers of the United States were skeptical of government’s ability to tax. They understood that “the power to tax is the power to destroy” (Chief Justice John Marshall).
They themselves had been overtaxed by their British sovereigns and resisted strongly through the first “Tea Party” which dumped crates full of English tea into Boston Harbor.
There was one tax they hated the most.
The income tax.
Before we go there, let’s discuss the brief history of American taxation.
For the first fifty years of America’s history, the government operated through excise taxes, tariffs, and customs duties. Our wise leaders were loathe to add taxes to the backs of those working hard to make a living. They certainly didn’t believe in re-distribution–taking from the productive to give to others.
Thomas Jefferson spoke for a generation:
“To take from one, because it is thought his own industry and that of his father has acquired too much, in order to spare to others who (or whose fathers) have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “to guarantee to everyone a free exercise of his industry and the fruits acquired by it.”
Our Founding Fathers believed in freedom, not socialism.
The increased costs of the Revolutionary War (remember- fought against unfair and high taxes) brought a spate of sin taxes on tobacco, liquor, etc. In the 1790s some direct taxes on homes, land, slaves and estates were added–but were later repealed by Jefferson.
The Civil War brought the first income tax–3% on those making more than $800 per year. In 1894 Congress made the first attempt at a graduated income tax, but it was ruled unconstituational in 1895. It was not until 1913 that 36 States ratified the 16th Amendment giving the Federal Government the ability to fully tax income.
There has been a dizzying ascent of American taxation since that time. In 1900, the Federal Government received only 1.3 percent of national GDP. Today the tax take is nearing 20 percent of GDP–and Americans work nearly four months of the years to satisfy the voracious appetites of all levels of government.
The Founding Fathers would have hated the income tax the most because it discourages the productive, stifles entrepreneurship, and wastes resources on bloated bureaucracies. It has also become a primary tool of class warfare in our society.
And now, some individuals want to bring a state income tax to the Evergreen State. Maybe our rulers want an “ever green supply of money” for state coffers.
The Wall Street Journal recently did a fantastic article on the foolishness of the income tax. We share it below, and encourage all Washingtonians to say an emphatic NO to Initiative 1098 on November 2.
August 14, 2010 – Wall Street Journal
The Gates of Confiscation
The battle between taxpayers and government unions will define the fiscal future of the 50 states, and the newest battlefield is Washington state. That’s where a few rich taxpayers led by Bill Gates Sr. and the Service Employees International Union (SEIU) are bankrolling a November ballot measure to create the state’s first income tax.
And not just a toe-in-the-water tax. They’re diving into the deep end with a proposal that would immediately impose a 5% tax rate on income above $200,000, or $400,000 for married couples. The rate would climb to 9% on single filers making $500,000, or $1 million for couples.
No state has introduced an income tax since Connecticut nearly 20 years ago, and that state’s experience has not been happy. The top rate in Hartford began at 4.5% but has since climbed to 6.5%. Washington wants to leap over that and achieve California and New Jersey heights in one giant step. Washington would move overnight from one of the nine states with no income tax to having the eighth highest rate in the country.
Mr. Gates, a wealthy lawyer whose son is among the richest men on the planet, is pitching the proposal as a chance for 97% of the voters to pay the state’s bills by socking it to the richest 3%. What he doesn’t say is that Washington’s lack of an income tax is among its main comparative advantages in luring those top 3%, along with their businesses and jobs, into the state.
In addition to Washington, the states without an income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. Combined they had an average 18.2% growth rate in jobs over the past decade, more than twice the 8.4% job growth of the nine states with the highest income tax rates, according to a new report based on Commerce Department data by the American Legislative Exchange Council.
The liberal Seattle Times accurately describes the state’s zero income tax as “a selling point. An asset. And more than that: It’s a bonus for living here.” Even liberal Democratic Governor Christine Gregoire begins her sales pitch to prospective business investors with the reminder: “No income tax.”
That’s an especially powerful attraction on the West Coast, where California and Oregon impose a top tax rate of 10.55% and 11%, respectively. Proponents say Oregon raised its income tax last year, so Washington should get in the game. But Oregon at least has no state sales tax. Washington has close to the highest sales tax burden in the nation, varying by area but reaching as high as 10% in Seattle depending on what you buy.
To win votes, the ballot measure resorts to all sorts of trickery. Unions describe the initiative as tax “relief” because it includes a mandatory cut in the hated property tax (only by 4%) and it eliminates various unpopular fees and taxes on business. Still, the overall impact of the measure is a $1.5 billion tax increase in 2012 and $2.5 billion a year by 2016. Small business taxes are cut, but they are also hit with a whopper of a new tax: a personal income tax paid out of their profits. Over half of the tax will be paid by Washington businesses.
The biggest deception is the description of the new income tax as “an excise tax on income.” This language is cleverly designed to dodge the state’s constitutional prohibition against an income tax and the requirement that any tax be “uniform upon the same property.” Obviously a tax that hits only 3% of taxpayers and applies graduated rates is anything but uniform. Proponents claim that because the tax is withheld from worker paychecks, the money was never the property of the person who earned it. That’s like saying if someone steals your paycheck, it’s not your property.
We hope Washington voters aren’t duped by the claim that only the rich will pay this tax. After two years, the law allows the legislature by simple majority to extend the tax to nearly everyone. The revenue from the tax will finance new spending, which will soar and lead to even higher deficits in the next downturn, which will create political pressure to expand the tax to the middle class.
Income taxes are always sold as a one-time way to reduce deficits, but they always become engines of greater spending, and eventually deficits. Just ask Californians. If Mr. Gates wants the rich to finance more Washington spending to create more SEIU dues-paying jobs, he and his son can do so by donating their own fortunes.