President Obama wants $1 trillion in new taxes in order to deal with the nation’s $14.1 trillion debt crisis. Congressional Republicans told Obama that they would not allow any tax increases and that spending cuts and entitlement reform were needed to change the debt trajectory.
Before giving his budget speech on Wednesday, Obama invited Democrat and Republican congressional leaders to the White House to brief them on his new proposals, which include tax increases. After returning to Capitol Hill, the Republican House and Senate leaders responded to Obama’s tax hike proposal.
“I think the President heard us loud and clear. If we’re going to resolve our differences and do something meaningful, raising taxes will not be a part of that,” said Speaker of the House John Boehner (R.-Ohio).
“All the Republicans made it clear—and I think the Democrats understand—that we don’t believe lack of revenue is a part of the problem, so we will not be discussing raising taxes,” said Senate Minority Leader Mitch McConnell (R.-Ky.)
House Budget Committee Chairman Paul Ryan (R.-Wis.), who wrote the Republican budget that forced Obama to redo his own, attended the speech at Obama’s invitation. After getting back to Capitol Hill, Ryan said that he had thought the invitation was an “olive branch” to find mutual areas to work on debt reduction.
“Instead, what we got was a speech which was excessively partisan, dramatically inaccurate, and hopelessly inadequate to addressing our country’s pressing fiscal challenges,” said Ryan.
The congressional Republicans were most astounded that the President’s speech delivered no concrete proposals for deficit reduction, other than tax increases.
“The President delivers a speech in which the only concrete proposal was raising taxes. And that solution falls far short of dealing with the kind of crisis we’re facing in terms of the debt in this country,” said Majority Leader Eric Cantor (R.-Va.). Cantor called Obama’s tax proposals “a nonstarter.”
Obama, who signed a tax deal with Republicans at the end of the year that prevented anyone’s taxes from going up on Jan. 1, now wants to go back on his word.
“In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again,” said Obama.
However, Obama did not explain that approximately half of those whose taxes he wants to raise—those who make more than $250,000 a year—are small-business owners who file individual returns.
Ways and Means Committee Chairman Dave Camp (R.-Mich.), whose committee writes the tax code, took issue with Obama’s “over $1 trillion in new taxes, particularly the higher taxes on small businesses—which, at the rate that he suggests, is almost half of small businesses.”
“We need those small businesses paying employees, not higher taxes,” said Camp.
“Raising taxes is not what we need right now, two days before tax day, especially when we’re trying to get job creators back in the game,” said Cantor.
Obama used class warfare rhetoric to argue his point on raising taxes on higher income brackets.
“There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires,” said Obama in his criticism of the Republican plan.
Rep. Jack Kingston (R.-Ga.), who is a member of the Appropriations Committee, which determines federal spending, said Obama’s speech “sounds great, and it’s the tried and true class warfare, but it’s not a meaningful proposal.”
“When our spending as a percentage of GDP [gross domestic product] is 23% and our revenue is 18%—unless he can get 5% out of his good friend George Soros or his Hollywood buddies—you’re still going to have a deficit,” Kingston told HUMAN EVENTS.
GOP Conference Chairman Jeb Hensarling (R.-Tex.) echoed Kingston’s points about the historical pattern of government spending and revenue.
“The deficit is the symptom, spending is the disease,” said Hensarling. “In the postwar era, revenue has averaged 18.5% of GDP, temporarily down in the recession, which we believe has been exacerbated by the President’s policies. But under all the models, revenue comes back, and frankly, marginal increases beyond that point. It’s spending that goes from its historic 20% of GDP to 40% over the next generation. You would have to double taxes on the next generation.”
After Obama’s speech, the Republicans on Capitol Hill were united in their opposition to tax hikes as the way to tackle the debt crisis.
Freshman Rep. Michael Grimm (R.-N.Y.) said that Obama’s speech was “fully disappointing.”
“We need to cut spending and we need to deal with entitlements. That’s what’s making this country go broke. Taxing is not going to change things. It’s going to restrict the money supply. And it will hurt economic growth and the possibility to grow jobs,” Grimm told HUMAN EVENTS.
Ryan, who spent two months crafting a bold budget to decrease the deficit by $4 trillion, gave a succinct summary of Obama’s much-heralded debt reduction speech.
“This is not even a plan. It’s a speech. This was a plan to have a commission to have a bunch of other people come up with a plan” said Ryan. “So this wasn’t a plan. This is punting.”