In Wednesday’s press conference, President Obama made many outrageous claims regarding the steps necessary to address the budget deficit and our national debt. In contrast to the class warfare distraction that Obama offered, here’s the truth–and consequences that would result if Congress adopted the president’s recommendations:
· President Obama’s class warfare in lieu of real solutions: “The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners.”
o TRUTH: Again, in order to understand what Obama is really saying a translation is necessary. When he speaks of “millionaires and billionaires,” he’s actually talking about individuals making $200,000 or more ($250,000 for married couples). Ending the so-called “tax breaks for oil companies” include changing rules that permit these companies to deduct business expenses (including exploration costs) from their taxable income, something other types of businesses in America are allowed to do. Finally, eliminating the “tax cut for corporate jet owners” would just change the rules allowing accelerated depreciation for corporate jet purchases that was part of Obama’s own stimulus package. The combined amount of these tax hikes would raise less than 1% of the projected 10 year deficit.
o CONSEQUENCES: Obama has failed to address our nation’s economic problems, and he employs class warfare as a smokescreen to obfuscate his deplorable lack of leadership. Punishing wealthy Americans, a few people in specific business industries, and those who own corporate jets will nothing to address our debt problem. Our country does not have a revenue problem, it has a spending problem. Any tax increases will only compound the economic problems we are facing, and would slow what little growth the economy is experiencing.
· President Obama singling out a minority of American taxpayers: “You can’t reduce the deficit to the levels that it needs to be reduced without having some revenue in the mix. . . And the revenue we’re talking about isn’t coming out of the pockets of middle-class families that are struggling. It’s coming out of folks who are doing extraordinarily well and are enjoying the lowest tax rates since before I was born.”
o TRUTH: The top 1% of taxpayers (those making over $380,000 each year) already pay 38% of all income taxes, and the top 5% of taxpayers (those making over $159,000) pay 59% of the taxes. The bottom 50% of taxpayers pay only 3% of total income taxes. Even if the government taxed 100% of income over $100,000, it would not cover the deficit for even one year.
o CONSEQUENCES: Any tax increases on the wealthy would affect the middle class. Wealthy Americans create jobs: the less money they have to invest, the fewer private sector jobs are created for low and middle income Americans. Furthermore, there is no mathematical way the federal government can close the deficit by only taxing the wealthiest Americans. Class warfare does nothing to address our financial problems. If we continue our current levels of spending, it is only a matter of time before Obama will call for tax hikes that affect the middle class, too. (And don’t forget—tax rates for all Americans will rise automatically on January 1, 2013.)
· President Obama’s erroneous stance on tax credits and tax deductions: “We’re going to have to tackle spending in the tax code.”
o TRUTH: Apparently, President Obama believes that every dollar you do not pay to the Treasury in taxes is a form of government spending, which is why he calls tax credits and tax deductions “spending in the tax code.” In reality, Obama is saying that he wants to increase taxes.
o CONSEQUENCES: The only way to explain Obama’s conclusion that the government spending includes income excluded from taxation is that Obama believes that the government owns all the money in the country. This completely wrongheaded belief will only leads to more and more spending to fuel an ever-expanding government. We cannot tax our way out of our fiscal crisis; actual spending levels and the size of government must be reduced.
· President Obama’s argument for increasing the debt ceiling: “[T]here’s no reason why we can’t get this done now. We know what the options are out there . . . We’ve identified what spending cuts are possible. We’ve identified what defense cuts are possible. We’ve identified what health care cuts are possible. We’ve identified what loopholes in the tax code can be closed that would also raise revenue. We’ve identified what the options are. And the question now is are we going to step up and get this done.”
o TRUTH: Obama has offered no leadership and identified no specific options to fix our government spending crisis. The only form of federal spending he has ever expressed a real willingness to cut is defense outlays. This leaves around 80% of the federal budget that Obama has yet to address. As stated above, when Obama says “loop holes in the tax code” that can be closed, what he really means is that American taxpayers will get to keep less of their own money.
o CONSEQUENCES: According to the Wall Street Journal, the deficit is worse than we think. If we simply raise the debt ceiling without demanding drastic cuts in current levels of spending coupled with long term changes in how future budgets are crafted, our country is headed for economic disaster.
It is going to take all Americans standing together to get our country back on the right track. Urge your congressmen and Senators to stand strong, and demand that any increases in the debt limit be offset by budget cuts, not tax increases. Join IWV and 85 other organizations by signing the Cut, Cap, & Balance petition, pledging to contact your Congressmen and Senators in the US House and Senate, and urging them oppose any increases in the debt limit unless the following three conditions have been met: there are substantial CUTS in spending, an enforceable spending CAP is in place, and Congress passes a BALANCED BUDGET amendment with spending limitations and supermajority requirement for tax increases.