Government Bytes


Mr. President, the Government Grinch is Stealing a Lot More than Christmas

by Douglas Kellogg / /

Today, the President appeared in Pennsylvania as part of a new twist in his push for tax hikes on the American people: ginning up concerns over ‘holiday spending’, calling for new outlays, and contriving a fear of middle class income tax hikes highlighted by the “#my2k” social media campaign. The National Taxpayers Union (NTU) is calling this a disingenuous move from the political playbook, designed to divide America’s taxpayers.

NTU Executive Vice President Pete Sepp weighed in: “It is clear that the President’s pro tax-and-spend tour is an unfortunate move that will feature narrow claims about holiday consumer spending being reduced, even as immense budgetary challenges have taxpayers so concerned for their futures.”

The President’s claims, and those from a recent Council of Economic Advisers (CEA) report, don’t tell the whole story:

Blowing fear of middle class income tax hikes out of proportion to divide taxpayers. In his remarks the President admitted, “both parties agree we should extend the middle class tax cuts.” So why make this the focus of a campaign-style appearance? To divide taxpayers and possibly create a situation where inaction would lead to a set of tax hikes you want.

If tax uncertainty is a problem for sub-$250,000 per year income, why is it not a problem for those over $250,000? The CEA report that was released this week correctly notes tax hikes on income under $250,000 a year would have devastating economic consequences (in 2013 though); why they do not extend that logic to income above $250,000 is a mystery. In fact, according to an analysis reported in 2010 in The New York Times, 1 out of every 3 consumer dollars is spent by households earning more than $210,000! If the President is truly concerned about holiday spending, he’s leaving out a big piece of the pie.

The CEA’s own report does not particularly back up the President’s ‘holiday consumption’ concerns. Their report points to the Retail Federation’s prediction that spending would increase 4 percent this holiday season; and they place the greatest fallout from the income tax hikes in 2013.

Why wait until the last minute? Delays will affect tax filing season. Common sense dictates whatever damage uncertainty was going to inflict, it likely already has for consumer spending in 2012. However, the delay means the IRS is making contingency plans for the tax filing deadline; and assumptions about what the tax code is going to look like in 2013. This includes the assumption the AMT patch will go through; a probability the CEA does not reflect in their report.

MORE Spending?!? Tax hikes would be woefully inadequate for the task of deficit reduction the President is setting out for them, but now the President wants to make it a moving target with $50 billion in new “stimulus-style” spending. It’s true, the economy is weak, but a better solution would be NOT hiking taxes!

It’s not about your “$2k”, it’s about your “$53k” share of the national debt. Without the sequestration cuts going through, entitlement reform, and an end to constantly raising the debt ceiling, tax hikes on anyone will cause short-term economic harm. And, the lack of long-term budgetary discipline will result in more fiscal calamity and revenue grabbing in no time.

“The President seems to have become interested in aspects of supply side economics, but for only one segment of taxpayers,” said Sepp. “That’s one big reason why his claims don’t hold up under investigation – all of America’s taxpayers deserve relief from a burdensome tax code and out-of-control spending.”