Obama’s Deficit Do-Over: If At First You Don’t Succeed In Raising Taxes, Try, Try Again

April 13, 2011

Will Obama’s Latest Attempt at Addressing America’s Debt Crisis Call for New Tax Hikes on Jobs Creators and Families as the Economy Remains Weak?


As more details of Obama’s Wednesday speech leaked out Tuesday, reports continued to suggest that Obama will once again announce his support for job-destroying tax hikes on families and small businesses:


ASSOCIATED PRESS: “Obama First To Put Tax Increases On Budget Table” (Tom Raum, “Obama First To Put Tax Increases On Budget Table,” Associated Press, 4/12/11)


The Wall Street Journal: “President Barack Obama will lay out his plan for reducing the nation’s deficit Wednesday, belatedly entering a fight over the nation’s long-term financial future… [T]he White House looks set to aim its firepower on a more divisive topic: taxes.


“He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy.” (Carol Lee and Damian Paletta, “Obama Puts Taxes on Table,” Wall Street Journal, 4/11/2011)


Despite this apparent roll-out of new tax increases, White House aides and allies are insisting Obama will offer “a general approach with few details”:


PRESIDENT TO OFFER “A GENERAL APPROACH WITH FEW DETAILS”: “Letting others take the lead on complex problems has become a hallmark of the Obama presidency. … While Carney promised that the speech would offer explicit targets for reducing deficits over the long term, people briefed by the White House said they expect Obama to lay out a general approach with few details.”(Lori Montgomery and Zachary A. Goldfarb, “Obama Turns to His Bipartisan Deficit Commission’s Blueprint for Reducing Debt,” The Washington Post, 4/12/2011)


OBAMA TO “KEEP IT GENERAL”: “It’s looking less likely that President Barack Obama’s speech Wednesday will embrace a lot of specific ideas on how to cut Medicare and Medicaid — which would get him in trouble with Democrats and progressive groups anyway.


“Instead, his health care allies are expecting him to talk in more general themes, focusing on cutting wasteful health care spending rather than cutting Medicare and Medicaid benefits.” (David Nather, “Insiders: Obama Will Keep It General,” Politico, 4/12/2011)


If the President does intend to offer “general” tax increases, however, Americans deserve to know what those tax increases might be. Assuming Obama’s past attempts at budgeting are any indication, American job creators will face a huge hit under Obama’s latest tax-raising plan:


FY 2012 OBAMA BUDGET FEATURES $1.5 TRILLION IN TAX INCREASES ON SMALL BUSINESSES AND JOBS-CREATORS: “All told, the new taxes total $1.5 trillion over 10 years — ranging from new levies on small-business owners and corporations to taxes on energy and banks. Passed as is, the Obama budget would make economic stagnation and 9% unemployment the status quo.” (Editorial Board, “Obama’s Gutless Budget Proposal,” Investor’s Business Daily, 2/14/2011)


FY 2011 OBAMA PROPOSAL SOUGHT $2 TRILLION IN TAX INCREASES: “President Barack Obama’s $3.8 trillion budget for the coming fiscal year raises taxes on businesses and upper-income households by $2 trillion over 10 years and cuts spending on programs with considerable political support, but will still leave the nation with $8.5 trillion in added debt over the next decade.


“The budget plan for fiscal 2011 calls for nearly $1 trillion in tax increases…”(Jonathan Weisman, “Wealthy Face Tax Increase,” The Wall Street Journal, 1/31/2010)


FY 2010 OBAMA BUDGET INCLUDED A PLAN TO LET CURRENT TAX RATES EXPIRE: “Mr. Obama will also call for letting the Bush tax cuts on income, dividends and capital gains lapse after 2010 for individuals who make more than $250,000 a year. But while the top rate for income would rise to 39.6 percent, the top rate for capital gains and dividends would be 20 percent.”(Jackie Calmes, “Obama Planning to Slash Deficit, Despite Stimulus Spending,” The New York Times, 2/21/2009)


These types of tax increases are proven to harm small businesses and damage job creation, even though such increases would have a minimal impact on deficit reduction:


894,000 SMALL BUSINESSES TO SUFFER TAX HIKE UNDER OBAMA TAX PLAN.(Jonathan Karl, “Fact Checking the Tax-Cut Debate,” ABC News, 9/8/2010)


NATIONAL FEDERATION OF INDEPENDENT BUSINESSES: FIRMS OF 20 TO 250 EMPLOYEES MOST LIKELY TO BE HIT BY TAX INCREASE: “Bill Rys, tax counsel for the National Federation of Independent Business, said a survey of his organization found that the businesses most likely to be subject to the tax increase were those employing 20 to 250 workers.” (David Kocieniewski, “Tax Increase Would Hit Few Small Businesses,” The New York Times, 9/29/2010)


BUT OBAMA IS PUSHING AHEAD, DESPITE THE FACT THAT SMALL BUSINESSES “ACCOUNT FOR MORE THAN HALF OF ALL PRIVATE-SECTOR JOBS IN THE U.S.”: “And there are a lot of small businesses out there. Businesses organized as small businesses – also known as pass-throughs – now account for more than half of all private-sector jobs in the U.S., according to the paper.” (John D. McKinnon, “Tax Overhaul: For Small Companies As well As Big Ones,”The Wall Street Journal, 4/12/2011)


Eliminating the Bush tax cuts for the highest earners, however, will only put a small dent in the projected deficit.” (Carol Lee and Damian Paletta, “Obama Puts Taxes on Table,” The Wall Street Journal, 4/11/2011)


At least House Democrats have been quite open about the fact that their budget plan—to be released Wednesday—will include extensive tax increases. Will Obama be similarly forthright in his speech today?:


REUTERS: “Tax Hike, Defense Cuts In House Democrats’ Budget” (Andy Sullivan, “Tax Hike, Defense Cuts In House Democrats’ Budget,” Reuters, 4/12/11)