Democrat Party cheerleader Rep. Chris Van Hollen (D-MD)
ridicules Paul Ryan’s House Republican budget as “extremist” and
“radical.” Rep. Steve Israel (D-NY) used the Huffington
Post platform to allege that Ryan’s budget reflects “extremist
Tea Party control” of the House Republican majority.
But it is the Senate Democrat budget that is extreme and
radical, as I demonstrate below, reflecting extremist socialist
party control of the Senate Democrat majority.
Bursting Through the Long Term Postwar Consensus on
Spending and Taxes
For 60 years after World War II,
from 1948 to 2008, federal spending as a percent of GDP was
remarkably stable, hovering around an average of 20%. During that
same period, federal taxes were remarkably stable as well, hovering
around an average of 18% of GDP. With federal spending and taxes at
those levels, America was free enough to prosper during this time
as the richest nation in world history, with resulting,
unprecedented military dominance as well.
Ryan’s budget merely returns federal spending and taxes back
near those long-term postwar averages, with both federal taxes and
spending after 10 years at 19.1% of GDP, almost perfectly splitting
their long-term historical difference. It is abusive, dishonest
rhetoric to call that “extremist” or “radical.” In reality, in
returning America to those long-term postwar averages, Ryan’s
budget can only be called “traditional.”
In sharp contrast, the Senate Democrat budget proposes to
increase the current bloated levels of federal spending by $2.1
trillion a year by 2023, to $5.7 trillion in that one year alone,
which would be almost double Bush’s 2008 federal spending of $2.983
trillion at the height of the financial crisis and all the
bailouts. The Senate Democrat budget proposes to spend $46.4
trillion over the next 10 years, which would be the biggest
government spending in world history, increasing annual federal
spending over that time, compared to this year’s federal spending,
by a combined total of $10.4 trillion. That is what is extremist
and radical. Even the home of Swedish socialism is turning away
from Big Government spending, but not America’s Democrat party,
which is now the world’s leading left-wing party.
At the insistence of President Obama and Congressional
Democrats, federal taxes have been raised twice already this year.
That includes $1.1 trillion for the new Obamacare taxes that went
into effect on January 1, and $600 billion for the expiration of
the Bush tax cuts for the nation’s job creators, investors, and
successful small businesses (which socialist Democrat demagogues
call “the rich”). CBO now projects that federal revenue will double
from $2.45 trillion in 2012 to nearly $5 trillion ($4.96 trillion)
by 2023. But that is still not enough for the Senate Democrats, who
propose in their budget still another $1.6 trillion in tax
increases. That is what is extremist and radical.
What the Senate Democrat budget proposes is effectively a Big
Government breakout from the long-term postwar averages from 1948
to 2008 for both federal spending and taxes, permanently increasing
both beyond those long-term averages. Indeed, because the Senate
Democrat budget so zealously rejects any entitlement reform that
would make any meaningful long-term difference, under that budget
spending and taxes would soar well past their long-term postwar
averages after the current 10 year budget window. That is what is
extremist and radical.
Ryan’s plan balances the budget after 10 years with no further
tax increases while continuing to increase spending every year by
3.4%. Apparently, balancing the budget is extremist and radical to
today’s Democrats, but we will see in 2014 that it is not so to the
American people. After 10 years and another $1.5 trillion in tax
increases, the Senate Democrats’ own budget confesses that the
federal deficit would still be $566 billion in 2023. That would be
the highest federal deficit in American history, higher even than
the former record Bush deficit of $458 billion in 2008, except for
the four straight years so far of Obama deficits over $1
trillion.
Ryan’s Tax Reform: Another Republican Middle Class Tax
Cut
As I first reported in this column months ago,
Ryan’s budget includes very positive tax reform, proposing to
replace the current 7 tax rates in the individual income tax with
just two, 10% for families making below $100,000, and 25% for
families making over $100,000. The New York Times, which
is a Democrat Party controlled publication, misleads its readers by
saying, “[N]aturally Mr. Ryan doesn’t explain how this could happen
without raising taxes on middle- and lower-income people.”
That is a typical brain dead comment from the Times,
which reads these days like a college, Marxist, student newspaper.
So let me correct the Times. Ryan is Chairman of the House
Budget Committee. It is not his job to explain how tax rates can be
cut without raising taxes on middle and lower income people. Those
details are never in the budget documents. That is the job of House
Ways and Means Committee Chairman Dave Camp (R-MI), in whose
Committee that tax reform bill will now be written.
Now let me scoop the New York Times. When Chairman Camp
writes the tax reform legislation, it will involve another
tax cut for the middle class. The current rate of 15%, which
applies to couples making between $17,850 and $72,500, will be
reduced to 10%. The current 25% rate, which applies to couples
making between $72,500 and $146,400, will be reduced to 10% for
those making less than $100,000.
While Budget Committee Chairman Ryan has specified that the tax
reform overall will be revenue neutral, which is to be achieved by
reducing tax loopholes, deductions, and credits, even the Senate
Democrat budget recognizes that those tax preferences primarily
benefit the higher income taxpayers. Harvard economist Martin
Feldstein, who is a former chairman of the President’s Council of
Economic Advisors, explained last year in the Wall Street
Journal (a much more honest and informative paper than the
New York Times) that there are more than enough such tax
preferences that can be reduced or closed to finance tax reform as
Ryan has proposed, without raising taxes on middle class or lower
income taxpayers.
Here is the scoop. When Camp passes his tax reform bill through
his Ways and Means Committee, it will involve another, major, tax
cut for the middle class. Indeed, with the middle 20% of income
earners now paying just 2.7% of total federal income taxes, the
Camp-Ryan tax reform bill may well eliminate federal income taxes
on the middle class entirely. There you go. You read it here first.
If you read this column every week, instead of the New York
Times, you will be ahead of the curve, and much better
informed about what is happening in Washington, D.C., and what is
coming.
When that happens, the New York Times will apologize to
the American people for dishonestly misleading them when it should
have known better (as I did, with no investigative resources at
all), or there will be protests outside the Times in New
York City demanding such an apology until it is forthcoming.
Of course, the last major tax cut for the middle class
was adopted in 2001, under a Republican majority Congress, and
Republican President George W. Bush. Most Democrats voted against
that bill, though in permanently extending those middle class tax
cuts in January this year, President Obama and Congressional
Democrats tried to style themselves as great middle class tax
cutters.
Ryan’s proposed tax reform also includes revenue-neutral
corporate tax reform, proposing to reduce the top federal corporate
income tax rate from 35% to 25%, in return for closing corporate
tax loopholes. America currently suffers the highest corporate tax
rates in the world at near 40%, counting state corporate tax rates
on average, except for the socialist one party state of Cameroon.
Even the Communist Chinese feature a 25% corporate rate. The
average in the predominantly socialist Europe Union is below 25%.
Formerly Communist Russia now enjoys lower corporate rates as
well.
But today’s Democrat party is rigidly in the same camp as the
Socialist Party of Cameroon, competing for the highest corporate
tax rates in the entire world. The Senate Democrat budget proposes
no tax reform to reduce rates, calling instead for still higher
taxes on American businesses and employers, which are already
uncompetitive in today’s global economy with the current imposed
tax rates. That budget also does not propose any new tax cut for
the middle class.
The Camp-Ryan Republican tax reform bill will greatly aid in
restoring long overdue, traditional American growth and prosperity,
through lower tax rates providing incentives for increased
productive activity. That increased economic growth will
substantially reduce the deficit as well. CBO reports that every
increase in economic growth of 0.1% reduces the deficit by $314
billion over the next 10 years. Increasing the weak, real, economic
growth of around 2% over the last 2 years to a more traditional
rate of 4% during economic recovery from a recent recession would
consequently further reduce deficits by over $3 trillion over the
next 10 years.
A further boost to booming economic growth would result from
fundamental reform of monetary policy and the Fed, now championed
by Joint Economic Committee Chairman Kevin Brady (R-TX) and Rep.
Ted Poe (R-TX). Their proposed reforms would tie down Fed monetary
policy to the value of long-term stable commodities such as gold.
That would promote economic growth by assuring investors that the
return on their investments will not be depreciated by inflation or
a declining dollar. That along with regulatory relief would
complete the package for booming economic growth as enjoyed under
President Reagan.
Republicans and conservatives should use the Senate Democrat
budget as the defining statement of Democrat party policy, to rout
the Democrats in 2014, the same way they were routed in 2010.
Photo: UPI
