Medicare and Medicaid

Sports Memorabilia and Health Care Reform

Posted By: Michael Tasselmyer - October 25, 2012

An article published in the Bradenton Herald on Thursday highlights one of the interesting, if not unintended, consequences of the new Medicare taxes that the Patient Protection and Affordable Care Act is set to levy beginning in 2013.

Sports memorabilia enthusiasts may have noticed the recent surge of high-dollar collectibles flooding auction houses: Bobby Knight's NCAA Championship rings; Don Larsen's New York Yankees pinstripes; even Evander Holyfield's heavyweight boxing championship belts.

Perhaps not so coincidentally, these valuable items are hitting the auction market right before January 1st, when a new 3.8 percent Medicare tax on investment income will take effect for high-income individuals. As mentioned in the article:

"And starting Jan. 1, there will be a new Medicare tax on income from investments for higher-earning people. The IRS hasn't issued rules yet, so money from the sale of collectibles may be subject to the new levy. "The 3.8 percent Medicare tax would probably be the thing that immediately popped into my mind in terms of what folks may be thinking about," said David Boyle, Americas director of personal financial services for the accounting firm Ernst & Young."

Currently, income generated from collectibles held for more than a year is eligible to be taxed at a rate of 28 percent. So, if I'm a wealthy individual who bought Babe Ruth's 1920 uniform for $4.4 million and sold it a few years later for $5 million, I could owe 28 percent of the difference in capital gains taxes. With the PPACA's passage, that amount could increase by 3.8 percent beginning in 2013.

The new Medicare tax, combined with the possibility of Bush-era tax cuts expiring and the estate tax, apparently has some athletes and sports figures more closely examining the benefits of cashing in on their most sought-after mementos sooner rather than later.

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NTUF Release GOP Presidential Candidates Studies

Posted By: Jeff Dircksen - April 26, 2012

Study of GOP Candidates’ Platforms Finds Romney Proposes Double Gingrich’s Budgetary Savings; Paul’s Blueprint for Cuts Dwarfs Others’ Plans

(Alexandria, VA) – Mitt Romney’s spending cut agenda is twice as large as Newt Gingrich’s, while Ron Paul proposes double the reductions of his nearest challenger. Those are just some of the key findings of the National Taxpayers Union Foundation’s (NTUF’s) in-depth, line-by-line analysis of the 2012 GOP contenders’ federal budget proposals. NTUF has conducted studies of Presidential and Senatorial candidates’ fiscal policy platforms for more than a decade.

NTUF analyzed all of the candidates’ key proposals outlined on their websites, in their official campaign documents, and touted in speeches. By referencing these plans with equivalent bills in Congress, items in the federal budget, and a variety of other cost sources, NTUF builds a comprehensive picture of the bottom line impact of the candidates’ budget-focused proposals. Some cost estimates are based on NTUF’s BillTally system, which since 1991 has served as a resource on thousands of pieces of legislation introduced each year that could affect federal expenditures.

All told, NTUF identified 151 proposals among the four Republican Presidential office seekers with a potential impact on annual federal outlays. Ninety-four of those impacts could not be accurately determined, generally because the candidates failed to provide sufficient detail to pinpoint a cost.

2012 Republican Presidential Candidate Spending Analysis
Type of Proposal	Newt Gingrich	Ron Paul	Mitt Romney	Rick Santorum
Spending Increase	6	2	3	6
Spending Cut	6	6	11	16
Unknown Cost	27	13	28	27
TOTAL	39	21	42	49
Source: National Taxpayers Union Foundation

According to NTUF, GOP frontrunner Mitt Romney’s platform would reduce federal outlays by a net of $353.0 billion annually, Newt Gingrich’s extensive policy plans would shed $146.2 billion from the budget, and Rick Santorum had $670.6 billion in cuts on his radar prior to ending his campaign. Ron Paul seeks $1.2 trillion in yearly net reductions.

2012 Republican Presidential Candidate Spending Analysis (Dollar Amounts are in Billions)
Spending Category	Newt Gingrich	Ron Paul	Mitt Romney	Rick Santorum
Economy, Transportation & Infrastructure	-$4.565	-$4.565	-$4.3	-$4.565
Education, Science & Research	-$60.056	N/A	N/A	$0.144
Energy, Agriculture & Environment	-$40.561	-$5.953	Unknown	-$2.465
Federal Government Reform	Unknown	-$1,173.0	-$383.409	-$647.158
Health Care	-$41.155	-$40.235	-$136.098	-$42.655
Homeland Security & Law Enforcement	$0.120	Unknown	Unknown	$1.148
National Security & International Relations	$0.052	Unknown	$170.802	$30.591
Veterans	Unknown	$2.704	N/A	N/A
Miscellaneous	N/A	N/A	N/A	-$5.637
TOTAL	-$146.165	-$1,221.0	-$353.005	-$670.597
Note: Totals may not add due to rounding. Source: National Taxpayers Union Foundation

Key findings include:

Romney's plans to reform the federal government -- including proposals to limit federal spending to 20 percent of GDP and to reduce the number of government workers over time -- would save taxpayers an estimated $383.4 billion per year. The area in which Romney would propose the largest budget increase is national security with a boost of $170.8 billion. (PDF version)

Ron Paul’s single largest savings item is his multi-pronged effort to balance the budget – at $1.078 trillion in reductions, it is a stark reminder of the size of the current federal budget deficit. (PDF version)

Newt Gingrich’s moon base plans would cost at least $4 billion per year. His vision for new rocket propulsion technology could not be quantified at this time. (PDF version)

Rick Santorum’s largest individual savings item was signing off on a version of a Balanced Budget Amendment to the Constitution, which would save $519.6 billion per year. A major assumption was that Santorum would abide by the terms of the Amendment he backed, which calls for limiting total federal expenditures to 18 percent of Gross Domestic Product. (PDF version)

“The field of candidates has often changed over the past year, but their ideas for federal spending and savings will continue to be debated as the campaign season evolves,” concluded NTUF’s Director of Congressional Analysis Jeff Dircksen. “Through it all, NTUF will be monitoring the candidates’ proposals – including those of President Obama – to inform the vital national conversation about the future direction of Washington’s fiscal policy.”

Note: The detailed NTUF analyses of Mitt Romney’s, Newt Gingrich’s, Ron Paul’s and Rick Santorum’s federal budget policy platforms are available online at www.ntu.org.

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NTU Campaign Warning About Medicare Part D Rebate Scheme Draws Ire, Misinformation, from Partisan Interests

Posted By: Douglas Kellogg - December 1, 2011

It looks like a tax, smells like a tax, walks like a tax, but unfortunately Austin-American Statesman’s “PolitiFact” felt the need to reach an unfair opinion on an NTU-sponsored ad warning of a new Medicare Part D “rebate” scheme that was little more than a tax in disguise. Now, it seems local Democratic Party activists are actively using PolitiFact’s article, and some dubious assumptions and claims about NTU, in an effort to mislead their neighbors on the negative impact the Medicare Part D rebate tax would have.

First of all, key facts were left unmentioned in the PolitiFact piece. For example, the fact that the rebate program fits with the Joint Committee on Taxation’s definition of an excise tax, or that NTU provided PolitiFact with numerous references either describing the measure as a tax or demonstrating its economic harm. Convoluted policy workings of Washington bureaucrats may make reality hard to decipher: the bottom line is that no matter what you call it, a mandatory 23 percent burden is the price that real, live people will pay in many ways.

Now, Letters to the Editor are popping up in local papers, written primarily by Democratic activists. These letters range from simply relying on PolitiFact’s verdict, to incoherent rambling and strange conspiracy theories. However, some of the accusations must be cleared up: NTU has no coordination with any candidates, nor do these issue-focused advertisements imply any endorsement of individuals. Any wild claims about “front groups” are just that, and designed to distract from the details of the issue at hand.

Several months before the ad ran, NTU cautioned that a Part D “rebate” plan was among several “disastrous debt ideas” bouncing around the Supercommittee. Members of Congress had advocated this debacle before, and President Obama included a version of it in his own Supercommittee recommendations. So we felt compelled to sound the alarm in a Dallas Morning News ad and make certain citizens kept encouraging lawmakers who might be opposed to the plan.

But even though PolitiFact gave some space to NTU's case for calling this proposal a tax, and seemed to concede some of the other points we made, the staff nonetheless branded our ad “false,” claiming “Obama's urged rebate remains that--money paid in return for a purchase or action/opportunity. One would have to connect more dots to make it a tax.” Well, here are some of the many dots NTU connected that deserved more mention in the piece.

PolitiFact’s central claim: “Outside experts said they’d never heard the Medicaid rebates -- or proposed Medicare rebates -- referred to as taxes.”

Yet NTU provided plenty of such references: Joseph Antos of the American Enterprise Institute who served on the Maryland Health Services Cost Review Commission, Guy King, former Chief Actuary for Medicare and Medicaid, former CBO Director Douglas Holtz-Eakin, and Grace Marie-Turner of the Galen Institute. Antos, for example, noted that, “The so-called rebate isn’t a rebate at all. For a large number of Part D patients, it’s going to function as a tax.” Holtz-Eakin, along with Michael Ramlet, wrote, “In the end, not only will the cost of a new government rebate, like any tax, be borne somewhere else in the economy, but … seniors will also be forced to pay much higher premiums for their prescription drug plans.”

PolitiFact duly reported our contention that the "rebate" is based on a percentage of price-per-unit, a lot like the way some excise taxes on products such as certain tobacco items work. But here's the rest of the story. Calling the proposal "money paid in return for a purchase or action/opportunity," as PolitiFact does, is an inadequate explanation. That's because the rebate is levied on an ad valorem basis, not in exchange for a service. This is an important consideration: the "rebate" is on the sale of a specific product, using a specified value of the product. That is the basic definition of how an excise tax works. In fact the Joint Committee on Taxation describes an excise as such: "taxes imposed on a per unit or ad valorem (i.e., percentage of price) basis on the production, importation, or sale of a specific good or service.”

But aren’t taxes mandatory when this rebate isn’t? Not when Washington rigs the rules. As we told PolitiFact, federal and state government programs are capturing an increasingly dominant share of the prescription drug market (about 30 percent for Medicare and Medicaid, more when VA and government employee programs are added in). This has been especially true since the creation of the Medicare Part D benefit. It's one reason why we opposed the Part D program in the first place. For Congress and the White House to legislate more influence over drug-purchasing in the United States, and then say, "well, if you won't pay our latest kickback demands you can't sell in the empire we've created" is coercive.

Transparent political mud-slinging is unfortunate, but predictable when an organization seeks to shine the light of truth on a destructive policy that has been cleverly buried in a complex bureaucracy to prevent citizens from realizing that they are about to be hit with an unfair new burden. When the people implementing this destructive change are the types who profit politically by touting their uncompromising stewardship of the program, unseemly political tactics are unavoidable.

Throughout NTU's 40-plus year existence, one central part of our mission has been calling politicians to account when they create a plan that works and hurts like a tax, but refuse to call it a tax. Our effort against the 23 percent rebate is certainly not the last time we’ll be fulfilling that mission.

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Kicking Off the 2011 Election Season

Posted By: Brent Mead - October 20, 2011

Even though it is still October, the fall election season is upon us. This Saturday, Louisiana kicks off a month of elections that will close on November 19^th. In addition to the slate of candidates for local and state offices, voters in the Pelican State will also decide on five amendments to their constitution this weekend. As we do each year, NTU tracks these ballot measures in our General Election Ballot Guide in order to give taxpayers a better idea of what they are being asked to vote on.

The one measure with cause for concern is Amendment 1. From our ballot guide;

“Amendment 1 on the statewide ballot would redirect future tobacco settlement funds from the Millennium Fund to the Taylor Opportunity Program for Students (TOPS) scholarship. Additionally, the proposed amendment would permanently extend and place in the constitution a $.04 per pack cigarette tax set to expire next year.”

Generally speaking, state constitutions should be used to limit what kinds of taxation are allowed, and to set limits on the level of taxation. Rarely is the constitution used to set the specific rate. This measure would make it substantially more difficult for voters or the state legislature to reduce their tax burden in the future.

Furthermore, the Millennium Fund is Louisiana’s account to handle Tobacco Master Settlement Agreement (MSA) funds. The primary purpose of the MSA is to offset state Medicaid expenditures related to tobacco use. Amendment 1 would stop using future tobacco settlement payments for health care expenditures and redirect them to a wholly unrelated program. This gets away from the fundamental purpose of the MSA and taxpayers should be wary.

Fortunately, the remaining measures on the ballot are commendable efforts in fiscal responsibility. Amendment 2 would use one-time monies generated by natural resource development to start paying down the billions of dollars in unfunded state pension liabilities. Louisiana has roughly $9.5 billion in legacy obligations from its pre-1988 employee retirement plans. This amendment is an honest effort to meet those obligations without raising taxes. Amendment 3 creates a lockbox around the Patient Compensation Fund, so the legislature cannot raid it at will. Amendment 4, while somewhat confusing, simply sets some useful guidelines for refilling the state’s budget stabilization fund. The last measure is a technical correction.

As we say at the top of our guide, these off-year elections can too often be forgotten amidst the noise of the 2012 Presidential race, or even a classic SEC showdown. Bayou State taxpayers need to be on the lookout and hopefully NTU’s 2011 Ballot Guide can help.

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Don't Be Fooled By Obama's New Debt Deal

Posted By: - July 7, 2011

Who knew “The Who” would be such prescient political philosophers? As the media swoons over Obama’s offer to cut Medicare spending and reign in the cost of Social Security (he’s soooo bipartisan!), I can’t help but be reminded of The Who’s “Won’t Get Fooled Again.”

“Change it had to come

We knew it all along

We were liberated from the fall, that’s all

But the world looks just the same

And history ain’t changed

‘Cause the banners, they all flown in the last war

…We don’t get fooled again!”

You’ll have to pardon their syntax, I think rock legends are allowed a little leeway when it comes to grammar, but those lyrics pretty much sum up exactly how I’m feeling about Obama’s newfound willingness to address entitlements: I won't get fooled again!

According to the Washington Post,

“Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.

As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.”

First, let’s understand this “dramatic action” is probably more accurately described as “teensy weensy action.” According to the Washington Post story, the White House is now “seeking a plan that would slash more than $4 trillion in annual budget deficits over the next decade.” That sounds big, but not compared to the $46 trillion the Congressional Budget Office expects the federal government to spend over the next ten years.

Second, when it comes to Washington, never take the future for granted. As Senator DeMint told the Washington Times, “We agree we need immediate spending cuts, caps and entitlement reform, but that’s exactly what Washington did in the 90s when we were $5 trillion in debt. Now Gramm-Rudman is ignored, the entitlement reforms never materialized, and debt has exploded to over $14 trillion. Americans won’t be fooled again; they know none of these grand promises will ever happen unless we force Washington to do it with a balanced-budget amendment.”

In fact, recent history is littered with the carcasses of failed budget deals, in which spending reductions, and even entitlement reforms, are offered up in return for higher taxes. Inevitably, the result has been the same – the spending cuts never materialize, Congress loses its stomach for politically difficult reform, and the taxes stay the same.

Given that it is apparently big news that Obama has shown a willingness to cut Medicare, let’s take a glance back into history to search for parallels. Fortunately, it is not very difficult. Nearly every budget deal for the last 30 years has involved some tweaks to Medicare and Medicaid as a way to score big, but illusory, savings.

One of the most (in)famous was a 1990s deal between President Bill Clinton and Republican Congress called the Balanced Budget Act. Part of the compromise is the now infamous “doc fix” - an attempt to control the growth in Medicare spending. Except it never materialized. The law tied physician pay to increases in the economy, but since health care spending grew twice as fast as gross domestic product, the provision meant doctors faced huge pay cuts. This led to an annual ritual of complaining by the American Medical Association, Congress voiding the mandated cuts, and enormous growth in the size of the annual “doc fix” that must be dealt with.

The Obama cuts will be no different. He’s reportedly considering further reduction in payments to providers, cuts to support physician-training programs, and changes to Medicare’s prescription drug benefit. But when the politics become tough and when the lobbyists get cranking you can bet Washington will fold like a cheap suit.

The fact is, none of his proposed reforms can be guaranteed to take place beyond 2012 because there is no way to bind future Congresses; unless that is we pass a balanced budget amendment.

Until I see that, I, Like The Who, won’t be fooled again.

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Congress's Motto-Fix It in Post

Posted By: Jeff Dircksen - June 21, 2011

"We'll fix it in Post."

If that isn't already Congress's motto, it should be. An AP story out today reports that due to a little-known provision in the health care bill that a "married couple could have an annual income of about $64,000 and still get Medicaid." An additional 3 million people could qualify for Medicare in 2014, and that worries Medicare's chief actuary. Others don't seem quiet so worried. According to the story:

A spokeswoman for the Senate Finance Committee, which wrote much of the health care law, said if the situation does become a problem there's plenty of time to fix it later.

"These changes don't take effect until 2014, so we have time to review all possible cases to ensure Medicaid meets its mission of serving only the neediest Americans," said Erin Shields.

It's one thing to digitally edit out a movie gaffe or rerecord a bit on inaudible dialogue, but wouldn't it make sense to know what the legislation that you're passing does before you pass it? It sounds a bit naive I know, but isn't that better than having to keep correcting the goofs in post?

HT: Demian Brady

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Ryan's Adult Conversation a Sharp Contrast to Dem's Mediscare Tactics

Posted By: - May 27, 2011

Recently, former President Bill Clinton warned Democrats that they were “going to have to be willing to give up, maybe, some short-term political gain by whipping up fears” about Medicare.

“Whipping up fears” is the nice way to say it. Given that Democrats recently came out with a political ad depicting a Paul Ryan-esque figure literally throwing an elderly woman off of a cliff, scaring the ever-living-bejesus is probably a more apt way to describe it.

Such partisan demagoguery makes a mockery of the very real problem we face. It’s based on a calculation that emphasizes the short-term political success of their party over the long term financial well being of our program.

Fortunately, Republicans are taking a different tack. In a new video: Saving Medicare: Visualized, Ryan ignores the impulse to treat voters as children, opting instead to have an adult conversation about the unsustainable trajectory of Medicare spending and its impact on our debt. Unlike the cheap gimmick of throwing grannie off a cliff, Ryan’s video evokes fear based in reality – that without reform Medicare will bankrupt our country.

In an op-ed in today’s Wall Street Journal, Thomas Saving and John Goodman, a former Medicare trustee and the President of the National Center for Policy Analysis respectively, unveil just how unsustainable the Democrats’ vision for Medicare is. Recently, House Minority Leader Nancy Pelosi said Democrats have already “[given] the blueprint for how we strengthen Medicare in the Affordable Care Act.” But Saving and Goodman argue that any “strengthening” was nothing more than a parlor trick.

“In terms of the sheer dollars involved,” they argue, “the law’s reduction in future Medicare payments is the equivalent of raising the eligibility age for Medicare to age 68 for today's 65-year-olds, to age 71 for 55-year-olds and to age 74 for 45-year-olds. But rather than keep the system as is and raise the age of eligibility, the reform law instead tries to achieve equivalent savings by paying less to the providers of care.”

Once you leave the fantasyland of the written page, paying less to providers will have enormous real world consequences. Reduced payment rates will reduce the amount of doctors who will accept Medicare patients, making it harder for seniors to find a doctor. Once admitted, they will likely face reduced amenities, a lower level of care, and reduced treatment options.

The fact is, there is just no getting around the absolute need to reform Medicare. Democrats can continue to ignore the problem and choose to maximize their political gain by preying on the fears of older voters. But with America teetering on the edge of financial ruin, how much longer can they afford to play these games? After all, what good is winning an election, if you have to force the nation into default to do it?

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Despite Clinton's Warnings, Democrats Demagogue Medicare Reform

Posted By: - May 26, 2011

Many Democrats are wrongfully hailing the New York special election as a critical victory over Rep. Paul Ryan’s Medicare reform plan. They’re beginning to see how Medicare demagoguery and scare tactics could be a potent recipe for winning big in the 2012 elections. But at what cost?

That’s the question that former President and respected thinker Bill Clinton has apparently been asking himself. Speaking yesterday at a fiscal summit hosted by the Peter Peterson Foundation, Clinton said, “I think the Democrats are going to have to be willing to give up, maybe, some short-term political gain by whipping up fears on some of these things – if it’s a reasonable Social Security proposal, a reasonable Medicare proposal. We’ve got to deal with these things. You cannot have health care devour our economy.”

Sadly, thus far Democrats have appeared either unwilling or unable to look past the 2012 elections, regardless of the disastrous long-term consequences that might entail. Take Senate Majority Leader Harry Reid who used his time on the Senate floor to say, “The Republican plan to kill Medicare is a plan to make the rich richer and the sick sicker.”

Quotes like that seem to confirm President Clinton’s fears about his party’s misreading the New York tea leaves. In a candid conversation caught by ABC News, Clinton was overheard telling Ryan “I’m glad we won this race in New York, [but] I hope Democrats don’t use this as an excuse to do nothing.”

Nothing appears to be exactly what Democrats plan to do. When asked what her plan was for Medicare, House Minority Leader Nancy Pelosi responded, “It is a flag we’ve planted that we will protect and defend. We have a plan. It’s called Medicare.” In other words, their plan to reform Medicare, is, well, to leave it alone.

Although that may be good politics in the short-term, it would represent a financial disaster in the long-term, threatening the existence, much less the benefit levels, of the Medicare program liberals are claiming to be such stalwart advocates of. According to the 2011 Medicare Trustees’ report, the Hospital Insurance trust fund will run out in 2024, five years earlier than last projected. In addition the report argues that the Democrats’ Patient Protection and Affordable Care Act has done little to improve Medicare’s actuarial future. The report states,

“By the end of thelong-range projection period, Medicare prices . . . would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees. . . Well beforethat point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.”

Is that really the future that Democrats want to fight for tooth and nail?

After Rep. Ryan expressed how disheartened he was that the New York race would likely lead to paralysis for his plan, President Clinton said that Ryan should “give me a call.” I don’t think it’s Ryan who needs the talking to. Unfortunately, it’s the Democrats who need a talkin-to.

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Liberal Plan for Deficit? How About a 40% Tax Hike

Posted By: - April 21, 2011

Unsurprisingly, it was that last line that caused the uproar. In response, Douthat did some math and found that if the CBO’s projections come true (revenues jump from 18 to 23 percent of GDP) an average family of four’s payroll and income tax burden would jump from 15 to 25 percent. The marginal tax rate on labor income would rise from 29 percent to 38 percent. “Such unprecedented levels of taxation,” Douthat argues, “would throw up hurdles to entrepreneurship, family formation and upward mobility.”

Drum didn’t wait long before punching back. In a post from yesterday, he pointed to the fact that “The federal tax take was around 20% of GDP during the Clinton era.” Using this as a reference point he argues that letting the Bush tax cuts expire and then raising tax rates by an additional four or five GDP points wouldn’t “be wildly oppressive.”

There are numerous problems with Drum’s latest attempt to pull himself out of the intellectual hole he has dug. Most prominent among them is his odd choice of reference point. Although it is true that tax revenue did rise to 20 percent of GDP under Clinton, it is not, as Drum would have us believe, a case where policymakers can snap their fingers and have revenues soar. Tax revenues are much more closely tied to the performance of the economy than with tax rates. As Megan McArdle pithily notes, “saying ‘all we have to do is go back to the tax rates under Clinton’ is effectively saying ‘all we need is another asset price bubble that funnels a huge amount of money into the pockets of the rich.’” McArdle points out that if we exclude the height of the stock market (or, if you prefer, the dot-com) bubble, the average tax revenue take under Clinton was around 18.5 percent.

We also have to dispute Drum’s notion that a tax hike of 5-6% of GDP isn’t “wildly oppressive,” an argument much akin to the initial flash-point of this debate, his assertion that tax levels of 25 percent “just isn’t that much.” While such throw-away editorializing may work on a blog, in reality, such tax hikes would dramatically increase tax burdens for the average American.

Since World War II, the traditional demarcation line given the emergence of the modern welfare state, government revenues have hovered just around 18 percent of GDP. Much to liberal’s chagrin, even with the continuation of the Bush-era tax cuts, the United States will collect about 18 percent of GDP as the economy recovers.

So the problem is not revenues have suddenly plummeted, it’s that government spending will dramatically spike. While NTU firmly believes that we mustn’t the burden of Washington’s largesse on the backs of taxpayers and should instead find ways to curb the growth in government spending, liberals like Drum believe we should raise taxes to 25 percent of GDP. They phrase their planned tax hike smartly, saying revenues need to go up by 7 percent of GDP. But this obfuscates the reality for the average taxpayer. Using an 18 percent baseline, a 7 percent GDP increase, would mean that everyone’s taxes would have to go up by around 40 percent. And that huge revenue grab doesn’t buy us anything new, it’s solely to maintain entitlements as they are presently structured!

This online debate may go on forever. Drum even admits that “a lot of our disagreement is simply irreconcilable.” But let’s hope our representatives in Washington are not so ideologically stubborn. Let’s hope they don’t believe a 40 percent across the board tax hike “just isn’t that much.” Because it is that much. It would mean a fundamentally different life for the average American.

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Cartoon Friday

Posted By: Jeff Dircksen - April 15, 2011