The Obama political team does not want to raise taxes. It wants to destroy the Reagan Republican party as a credible opposition. Their model is Chicago. There, Republicans technically exist. But the Chicago Republican party is not a threat to Democrat power. Ever.
This fight is about power, not economics. If Obama cared about the size of the deficit he would not have increased spending and run up $5 trillion in debt. If he simply wanted higher taxes on “the rich” he could have voted that into law any day of 2009 or 2010 when Democrats held supermajorities in the House and Senate. Obama wants Republican fingerprints on a tax hike so he can destroy the credibility and future of the sole challenge to his party’s hold on power.
Obama believes that he can use the “fiscal cliff” to both raise taxes to fund more government spending and cripple the GOP.
Senate Democrat leader Harry Reid has focused on attacking Republicans who have signed the Taxpayer Protection Pledge to their voters committing in writing to oppose any and all net tax increases. He knows that that credible commitment has been the key to Republican congressional majorities. George H.W. Bush broke his pledge in 1990 and was defeated for re-election in 1992. In reaction, Republicans unanimously voted against the Clinton tax hikes and ran in 1994 as the party that would not raise your taxes. Republicans won the House and Senate for the first time since 1952. And by keeping their anti-tax pledge they were re-elected to hold the house and Senate for the first time since 1928.
Since establishing the Republican brand as the party that will not raise your taxes, the GOP has won the House for eight of the last ten elections. At the state level, anti-tax Republicans now control 30 governorships and hold the Governor and both houses of the legislature in 24 states.
Thanks to the tea party and Congressman Paul Ryan, the Republicans have deepened and strengthen their limited-government brand and credibility. The Ryan budget–supported by all but four Republicans in the House–would reform entitlement spending, block grant the welfare programs–saving $6 trillion over a decade–and enact tax reform that brings rates down to 25 percent for businesses and individuals. And having touched the “third rail” of American politics they strongly won re-election in 2012.
A Republican House that will not raise taxes and will vote to reform entitlements is a strong threat to a Democrat party that whines it must raise taxes because it cannot/won’t reform government programs.
Now Obama and his Treasury Secretary are proposing a version of Obama’s 2013 budget. Is this a serious budget? No. It was voted down by every single Democrat in the House on March 28, 2012 and by every single Democrat in the Senate on May 16, 2012. Now Geithner says this failed budget is Obama’s non-negotiable demand. Obama’s budget “saves” $1 trillion by not continuing to occupy Iraq and Afghanistan for another decade. It “saves” another trillion by counting savings already in law thanks to the Republican victory in the debt ceiling fight in 2011. He is selling that same horse a second time. The “savings” are phony. Worse, Obama’s budget actually increases spending by delaying the $100 billion sequester in 2013 and even adds a new stimulus program of $50 billion in 2013 alone. And Obama’s budget admits that even if he gets his tax hikes, he still plans to run up $8 trillion of debt over the next decade. Only a huge energy tax or VAT would fund Obama-sized government. Today’s tax hike is only an opening bid for more. Much more.
If Obama gets his way the top two tax rates jump from 35 percent to 39.6 percent plus the Obama surtax of 3.8 percent for a total tax rate of 43.4 percent. Be sure to add your state income tax on top of that. The capital gains tax jumped from 15 percent to 23.8 percent and the tax on dividends jumps from 15 percent to 43.4 percent. The National Federation of Independent Business says this will kill 700,000 jobs. And in addition to this “fiscal cliff” there are higher taxes passed inside Obamacare that will total another one trillion over ten years.
The Bush tax cuts created a strong economy between 2003 and 2007–after September 11 and before the Fannie Mae/Freddie Mac meltdown. Eight million jobs were created and GDP grew 14.8 percent. Losing those lower rates will kill jobs.
One notes that two years ago Obama signed legislation to extend all the Bush tax cuts for two years saying he didn’t want to damage the weak economy. The economy is still weak and taxes still harm growth.
Obama is once again overestimating his mandate and his political strength. In 2008 Obama believed his election was a mandate for stimulus spending and Obamacare. His poll numbers dropped from 70 percent approval to below 50 percent. The tea party emerged in reaction to “spend too much” and the GOP won the House. Now Obama reads his 2012 victory as a call for continuing spend-too-much and adding the massive tax hikes of Obamacare and the regulation avalanche already organized by EPA and friends. Obama 2.0—spend too much, tax too much and regulate too much — will create tea party 2.0 bigger and stronger than tea party 1.0.
Grover Norquist is president of Americans for Tax Reform and his Twitter handle is @GroverNorquist