The fiscal cliff fairyland
White House Press Secretary Jay Carney said today that the White House felt no need to respond to House Speaker John Boehner’s fiscal cliff compromise proposal because it’s just “magic beans and fairy dust.” As quoted by Fox News:
JAY CARNEY: It’s a couple sentences — it’s not a plan to say that we’re going to magically increase revenues through loophole closures and deduction caps with not a single element of specificity. So we don’t know who pays, we don’t know what we’re talking about in terms of actual legislation to increase revenues. It’s magic beans and fairy dust. The president has put forward specific proposals. Look, I acknowledge that not with any great specificity, there’s a little more meat on the bones in terms of their proposals on the spending cut side. When it comes to revenues, it doesn’t meet the test of balance or the necessary test of specificity.
Of course, President Obama hasn’t put forward any “specific proposals,” beyond his unquenchable appetite to raise taxes on his class enemies by $800 billion… no, make that $1.2 trillion… oh, what the heck, let’s say $1.6 trillion. Not a peep about the spending cuts that would make up the other half of this “balanced approach,” much less the $3 of cuts for every $1 of new taxes Barack Obama promised loudly and repeatedly during his re-election campaign.
But that’s how things work here in Fiscal Cliff Fairyland, where words have become entirely divorced from even the most tenuous connection to reality. “Balanced approach” now means “tax increases,” pure and simple; to even discuss the other side of the “balance” is considered extremely rude, and the President’s loyal munchkins think it’s rather odd that anyone would even bring it up.
Maybe Mr. Carney can help me understand something here. The new fairyland wisdom is that eliminating or capping deductions doesn’t actually raise any revenue – that’s just “magic beans and fairy dust.” But isn’t the “Buffett Rule” Obama demanded incessantly over the past couple of years just a cap on deductions? That’s the functional effect of every alternative minimum tax. You take deductions over the cap, and the AMT kicks in, short-circuiting the deductions.
And if capping deductions doesn’t increase federal revenue, then why do they have caps in the first place? That’s the kind of logical question you’re not supposed to ask in Fiscal Cliff Fairyland. And you’re not supposed to recall that once upon a time, Democrats were all about raising revenue by ending “tax breaks” and capping deductions. One of them was… Jay Carney. Here are excerpts of a Wall Street Journal piece from June 2011:
The White House argued that the deficit can’t be significantly cut without eliminating tax breaks for certain wealthy individuals and companies, while Republicans said doing so would cripple the economy.
[…] White House spokesman Jay Carney provided the most specific list so far of the tax changes Democrats want. These include a repeal of oil and gas subsidies, an acceleration of the depreciation on private jets, a limit on deductions for the wealthy, and a change in how businesses value their inventory.
[…] “Do we perpetuate a system that allows for subsidies in revenues for oil and gas, for example, or owners of corporate private jets, and then call for cuts in things like food safety or weather services?” Mr. Carney said.
Wow! That’s a lot of “magic beans” pouring out of Jay Carney, 2011 Edition! What other sorts of “fairy dust” did Democrats have in mind back then?
Democrats are proposing to increase the amount of income subject to tax, a move fiercely resisted by many businesses.
Another Democratic proposal would limit the itemized deductions that wealthier Americans can claim on their tax returns to a certain percent of their income. Depending on how strict the limit is, that could generate $300 billion more revenue over 10 years.
Democrats are also pushing to end oil company subsidies and ethanol tax breaks, though the ethanol subsidy is already scheduled to end this year.
Democratic leaders also are targeting repeal of the carried-interest break for investment-fund managers, despite repeated failures to eliminate it in recent years. The break allows managers of hedge funds, private-equity funds, venture-capital funds and some others to pay the 15% income tax rate applied to investment income, rather than higher income tax rates. This time around, in order to maximize the issue’s political appeal, Democrats are likely to target hedge-fund managers, while sparing other beneficiaries.
Funny… it sure does sound like Democrats used to think you could raise all kinds of revenue by limiting deductions. But now nothing but rate increases will do, and remembering what they said last year is strictly forbidden.
We hear a lot of calls by Democrats to “return to the Clinton tax rates,” which supposedly will bring some sort of general prosperity through higher taxation. But of course, they don’t really mean that, because they keep insisting the only want those Clinton rates on the highest income group, not for everyone. It has often been remarked that none of these Democrats are eager to return to Clinton spending levels, along with those Clinton tax rates. But it’s less commonly noted that only in one Clinton year – the last one – were government revenues actually higher than they were in 2012. According to a chart from the Heritage Foundation, the government pulled in $2.435 trillion in 2012, while reveneues remained below that level from 1992-1999. Clearly there are factors beyond the nominal tax rates at work in generating tax revenue. In fact, it’s the die-hard liberal believe that higher rates automatically generate more revenue that could more accurately be described as a belief in magical fairy tales.
I caught a snippet of Jay Carney on the radio today, saying that deficit reduction demands tax increases on “millionaires and billionaires, people making over $250,000 per year…” Well, which is it, Mr. Carney? Millionaires, billionaires, or people making over $250,000 per year? But you see, in Fiscal Cliff Fairyland, those words all mean the same thing. They’re all just interchangeable terms for people who have money that Democrats want to take.
It wouldn’t sound very good if they were compelled to consistently and accurately state that they’re hungry to raise taxes on “single people making over $200,000 per year, and married couples or small businesses making over $250,000.” It’s easier to keep the rubes bamboozled if magic phrases like “millionaire” and “billionaire” are chanted instead, even though they retain not the slightest shred of their actual meaning… any more than “spending cuts” actually mean reductions in spending, “balanced approach” means a combination of new revenue and spending cuts, the “fiscal cliff” refers to actual government insolvency, or “deficit reduction” means getting anywhere near a balanced budget, even on a ten-year timeline.