President Obama released his “serious” budget plan this week in a pathetic attempt to keep up with House Budget Committee Chairman Paul Ryan (R-Wis.). Congressman Ryan released a CBO-scored, serious, and tax hike-free budget plan last week. By contrast, President Obama has introduced a sketch budget full of little more than tax increases.
At the heart of President Obama’s plan is a vigorous embrace of his “Simpson-Bowles” debt commission, which called for between $1 trillion and $3 trillion in higher taxes over the next decade. By extension, it’s also an endorsement of the behind-closed-doors tax hike efforts of Senators Tom Coburn (R-Okla.) and Saxby Chambliss (R-Ga.), along with several Senate Democrats (known as the “Gang of Six”).
This means that the lines are clearly drawn in Washington. On the one side is Congressman Ryan. He believes in detailed and serious budgets, no net tax increases, fundamental tax reform, cutting spending, and free market updates of the entitlement programs along the lines of the 1996 welfare reform. On his team are the 237 Taxpayer Protection Pledge signers in the House, and the 41 in the Senate. The entire House and Senate GOP leadership has already aligned themselves with Ryan and his plan. The 2012 Republican Presidential candidate will be running with the Taxpayer Protection Pledge in one back pocket, and the Ryan budget in the other.
The other team is captained by President Obama. It’s the team that believes in shadowy tax hike triggers, vague and unserious budgets, massive tax increases, lying about tax hikes by calling them spending cuts, raising taxes to pay for permanently higher government spending, and leaving the entitlements totally unreformed. On his team are the aforementioned Alan Simpson and Erskine Bowles, virtually all Congressional Democrats, the mainstream media, and the Republicans foolish enough to get drafted into this effort: Gang of Six co-chairs Tom Coburn and Saxby Chambliss.
The Obama plan seeks to raise taxes over the next decade by between $1 trillion and $3 trillion (it is difficult to nail this down precisely because the President provided virtually no details or numbers). Its goal is to raise the long-term tax revenue take from its historical level of 18-19 percent of the economy (the level the Ryan budget targets) to a record and unprecedented 21 percent of the economy.
This plan tries to replicate the failed budget summits of the past, calling for $3 in spending cuts (though much of this might in fact be tax hikes falsely labeled as spending cuts) for every $1 in tax hikes. President Reagan fell for this exact trick in 1982, only to see the tax hikes alone become law (he left office still waiting for the promised spending cuts). In 1990, President George H.W. Bush broke his “read my lips” pledge when he agreed to $2 in spending cut promises (never fulfilled) for every $1 in tax hikes (which became law). President Obama is hoping that he can find enough gullible Republicans to repeat this “Lucy and the football” trick for a third time. Senators Coburn and Chambliss have thus far been the only volunteers foolish enough to enlist.
As if this wasn’t bad enough, Team Obama also wants to put in place a tax hike trigger. If spending is kept high and deficits don’t come down (a safe bet), taxes will automatically go up. In the Simpson-Bowles plan, this took the form of an across-the-board “haircut” of all tax deductions and credits, including for those families making less than $250,000.
What’s really disturbing is what is left unsaid in Obama’s speech. Because he is leaving the 20 tax hikes of Obamacare in place, and because the tax increases of his January budget have been kept on the table, there are several massive and specific tax increases written between the lines of the Obama speech. He wants to raise the tax rate at which a majority of small business taxes face taxation from 35 to 39.6 percent. He wants to raise the death tax from 35 to 45 percent. He wants to raise the capital gains and dividends tax rate from 15 to 23.8 percent. The greatest hits of Obamacare (the medicine cabinet tax, the individual and employer mandate penalties, the tanning tax, etc.) are retained.
So, the battle lines are drawn. For Americans in general and conservatives in particular, it’s a time for choosing. Are you on the team of economic growth, tax reform, no tax hikes, spending cuts, and entitlement reform? Or are you on the team of economic stagnation, tax increases to pay for Obama-sized government, and entitlements that bankrupt taxpayers?
Grover Norquist is the president of Americans for Tax Reform.