Tax and Spend: Dems Yes, Reps No?

Jun 24, 2011 by John S

Virginia Republican, House Majority Leader Eric Cantor and Senator Jon Kyl, an Arizona Republican, have walked out of Biden lead Budget talks. They are calling for Obama to step to the plate and take the lead in negotiations.

Present Climate

The nation’s debt limit is $14.3 trillion and it has been reached. The Treasury Department claims that the debt limit must be raised by August 2 or the U.S. will face defaulting on its obligations. In nearly 800 days the Democrats have not been able to forward a budget. The sticking points are spending and taxes.

One question that needs to be publicly addressed is: what, if any, real savings is realized from the $500 billion Democrats cut from Medicare. Also Congress should look into the cost of adding approximately 3 million middle class Americans to Medicare/Medicaid under Obama Care.

Democrats

Ignoring President Kennedy’s plan that brought an increase in tax money into the Department of Treasury, Reid and other Democratic leaders what to proceed in the opposite direction, and increase taxes. With a corporate tax rate of 35% the United States has the highest tax rate among democratic nations.

Van Hollen of Maryland, a Democratic negotiator said “You can raise revenue without changing” tax rates “by eliminating some of the deductions and tax preferences,” from a Newsmax Posting. Democrats don’t just want to increase taxes on companies but they want to include the investors and job creators, the millionaires and billionaires.

Republicans

They appear to be looking at the direction of the 1921 and post World War II Congresses. However; they are not proposing the same magnitude of cuts that were successful during those Congresses. Speaker Boehner has said that Obama need to engage in talks if there is to be a chance for Congress to meet his deadline.

The Republicans want government spending cuts with no tax increases in order to increase the debt ceiling. Republicans are seeking annual spending limits with automatic cuts when caps are reached.

Business

If the democrats get their way on tax increases, the little capital that is presently available will dry up. With pension funds and unions as shareholders in larger corporations they will be pushed to save money to maintain dividends. That will cause a new wave of possible layoffs and outsourcing.

With the United States having the highest corporate tax rate in the world, according to OECD, It would make sense to move companies out of the United States. Just look at California, they are losing about 6 companies a week to other states.

Home

With higher taxes and less jobs, luxury items will have to be looked at such as cable television or satellite dishes, extra services for your cell phone, name brand items at the grocery store, new clothes, and on and on the list will go. Those cut backs with not help the economy.

Newer used cars with better mileage will be out of the picture because of the government programs a lot of those cars were destroyed. That means fewer parts and cars.

What to do

Obama new stimulus is dumping oil on the market to drive the price of crude and gas downward. That will have an immediate effect on the market; however, like “Cash for Clunkers” we will get a short term improvement and extreme higher prices down the road.

Obama is supposed to have read a book on Reagan, did he not read anything that could help America in that book. President Kennedy recycled the tax plan of President’s Harding and Coolidge and their Treasury Secretary Melon. Reagan used the same plan that had worked for the others. In the case of Kennedy the Congress was just getting started on addiction to vote buying, spending, and there was some hope. By the time of Reagan the democrats in Congress were so intoxicated on spending for votes that all his submitted balanced budgets where declared dead on departure from the White House.

This Congress needs to realize that real cuts are the only meaningful cuts. Layoffs of government employees, cuts in pay, and increased contributions to any retirement funds. Any increase in the debt ceiling should include cuts in salaries for all federal employees, including members of congress. Defunding any and all regulations that are not voted on by the Congress and cutting all federal employee positions that have been created since January 2008.

That would at least be a good start.