Key Vote NO on H.R. 8, the “Fiscal Cliff” Tax Hikes and Sequester Postponement Bill 

Dear FreedomWorks member, 

As one of our millions of FreedomWorks members nationwide, I urge you to contact your U.S. Representative and urge him or her to vote against H.R. 8, the McConnell-Obama bill to raise taxes and postpone the promised sequester savings. 

While the floor timing and possible amendments to this legislation remain unclear, the language of the bill that passed the Senate this morning is clearly unacceptable for a number of reasons: 1) It fails to extend 2012 income tax rates for individuals earning more than $400,000 a year, thus allowing the higher rates that took effect this morning to continue. It thus embraces President Obama’s cynical “soak the rich” approach, which punishes success and divides Americans against one another, without producing any significant revenue. 2) It once again kicks the can down the road on any meaningful spending reductions, by postponing $1,200,000,000,000 ($1.2 trillion) in promised savings required under the Budget Control Act of 2011, in effect repealing those savings and cynically letting the government go on piling a mountain of debt on our children and grandchildren. 3) It increases federal spending by $330,000,000,000 ($330 billion) over ten years, according to the Congressional Budget Office, on luxuries we can’t afford, like an eleventh extension of the “temporary” unemployment benefits expansion of 2008, and various “stimulus” (i.e., special interest) tax breaks for corporate interests. To add insult to injury, the bill contains a number of earmarks, including $10,000,000 to promote farmers markets, $5,000,000 for the “National Clean Plant Network,” and $30,000,000 for a “Beginning Rancher and Farmer Development Program.” 4) It contains no meaningful spending reductions. CBO estimates the bill that passed in the Senate this morning would increase our national debt by nearly $4,000,000,000,000 ($4 trillion). That’s on top of our current, historically high national debt of more than $16,000,000,000,000 ($16 trillion). 

While the bill contains $3,600,000,000,000 ($3.6 trillion) in tax relief, compared to the tax policy that took effect this morning—relief we support—its lack of meaningful savings and its “postponement” of $1.2 trillion in promised savings make it unacceptable. This is hardly the “balanced” approach that President Obama claims to insist on, whereby every dollar of spending reductions must be accompanied by at least a dollar in tax hikes. 

Washington has an over-spending problem, not an under-taxing problem. Shifting more of the tax burden to the highest earners is not the way to get America out of our deep fiscal mire. Instead, we should be focusing on fixing our labyrinthine, corporate-subsidy-laden tax code and reforming our out-of-control spending and unsustainable entitlements. Only by making these real, substantial reforms will we be able to get our fiscal house in order and avoid another damaging debt downgrade. Congress must break its deeply ingrained habit of always kicking the can down the road. 

There is a better way to handle the so-called fiscal cliff. FreedomWorks has been urging Congress to keep its promise of $1.2 trillion in ten-year sequester savings, extend all current tax rates for one year, and get to work in 2013 on reforming taxes and entitlements. 

We oppose the bill on procedural grounds. As a matter of principle, we will never again support a back room deal that the American people have not been given ample chance to examine. Both parties promise full transparency but act in secret when no one is paying attention. 

We will never fix our fiscal problems, shrink the national debt burden, reform the tax code, modernize our broken entitlements, and balance the budget until Congress and the President commit to return to regular order. Pass a budget resolution by April 15th, as required by law. Propose legislation through the open legislative process. Pass the appropriations bills, without special interest earmarks, in the light of day. Reconcile all of this by October 1st, the beginning of the new fiscal year. Regular order, transparency, accountability. That is our New Year’s Wish. Anything less cheats the American People of what they have every right to expect from the political class. 

I urge you to call your U.S. Representative and ask him or her to vote NO on H.R. 8, the McConnell-Obama bill to raise taxes and postpone the promised sequester savings. We will count any vote on this proposal as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the FreedomFighter Award, which recognizes members of Congress with voting records that support economic freedom. 

Sincerely, 

Matt Kibbe 

President and CEO, FreedomWorks 

Key Vote NO on “Fiscal Cliff” Tax Hikes and Sequester Postponement 

Dear FreedomWorks member, 

As one of our millions of FreedomWorks members nationwide, I urge you to contact your state’s two U.S. Senators and urge them to vote against the McConnell-Obama bill to raise taxes and postpone the promised sequester savings. 

While legislative language is not yet available--Senators are apparently being asked once again to vote on a bill no one has had a chance to read--press reports from late this afternoon suggest that the legislation falls short in at least three ways: 1) It fails to extend current income tax rates for individuals earning more than $400,000 a year, thus embracing President Obama’s cynical “soak the rich” politics, which punishes success and divides Americans against one another, without producing any significant revenue. 2) It once again kicks the can down the road on any meaningful spending reductions, by postponing $1.2 trillion in promised savings required under the Budget Control Act of 2011, in effect repealing those savings and cynically letting the government go on piling a mountain of debt on our children and grandchildren. 3) It increases federal spending on luxuries we can’t afford, like an extension of already over-extended unemployment benefits and various “stimulus” (i.e., special interest) tax breaks. 

In the course of negotiating this bad bill with a lame-duck Congress, President Obama made clear that his position is to condition agreement to any spending reductions on additional tax hikes in at least a 1:1 ratio. This is outrageous. Washington has an over-spending problem, not an under-taxing problem. Raising taxes is not the way to get America out of our deep fiscal mire. Instead, we should be focusing on fixing our labyrinthine tax code and reforming our out-of-control spending and our unsustainable entitlements. Only by making these real, substantial reforms will we be able to get our fiscal house in order and avoid another damaging debt downgrade. 

There is a better way to avoid the fiscal cliff. FreedomWorks has been urging Congress to keep its promise of $1.2 trillion in ten-year sequester savings, extend all current tax rates for one year, and get to work in 2013 on reforming taxes and entitlements. 

As a matter of principle, we will never again support a back room deal that the American people have not been given ample chance to examine. Both parties promise full transparency but act in secret when no one is paying attention. 

We will never fix our fiscal problems, shrink the national debt burden, reform the tax code, modernize our broken entitlements, and balance the budget until Congress and the President commit to return to regular order. Pass a budget resolution by April 15th, as required by law. Propose legislation through the open legislative process. Pass the appropriations bills, without special interest earmarks, in the light of day. Reconcile all of this by October 1st, the beginning of the new fiscal year. Stop kicking the can down the road. That is our New Year’s Wish. Anything less cheats the American People of what they have every right to expect from the political class. 

I urge you to call your state’s two U.S. Senators and ask them to vote NO on the McConnell-Obama bill to raise taxes and postpone the promised sequester savings. We will count any vote on this proposal as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the FreedomFighter Award, which recognizes members of Congress with voting records that support economic freedom. 

Sincerely, 

Matt Kibbe 

President and CEO, FreedomWorks 

As we approach the inevitability of the fiscal cliff, taxpayers are understandably concerned. How much more will I have to pay in taxes?   Will the the economy worsen?  What will the spending cuts mean for my family? What surprises await for personal and business taxes and regulations in 2013?

First, the new taxes. Personal income taxes will be going up for everyone. As reported today by The Right Scoop,

The NY Post has created a chart of what you’ll pay in taxes next year if there is no fiscal cliff deal:

 

As you can tell, that's not chump change.

But it gets worse. There is also an onslaught of new regulations set to go into effect. As Senator Portman (R-OH) stated in an August 2012 guest column in the Wall Street Journal,

Americans are learning more about the "fiscal cliff" approaching at the beginning of next year, when tax rates for families and small businesses are set to spike and new taxes in President Obama's health care spending law take effect. But unless there's real change in Washington, we're also headed for a steep "regulatory cliff" that could compound the damage.

After three years of bureaucratic excess, the Obama administration has been quietly postponing several multibillion-dollar regulations until after the November election. Those delayed rules, together with more than 130 unfinished mandates under the 2010 Dodd-Frank financial law, could significantly increase the regulatory drag on our economy in 2013.

Now that President Obama has been reelected, this massive armada of new regulations is ready to be unleashed against businesses all across America.

The National Federation of Independent Business reports that over 4100 new regulations are set to be enacted on businesses in 2013. NFIB has compiled a list of just the 13 most expensive regulations, that together will cost the economy over $500 BILLION over four years:

National Ambient Air Quality Standards (NAAQS) for Ozone, $360,000,000,000 over 4 years - President Obama’s Letter to Speaker of the House Boehner, August 30, 2011

Boiler MACT, $9,500,000,000 capital cost and $11,600,000,000 over 4 years - Office of Management and Budget, “National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial,
and Institutional Boilers and Process Heaters; Proposed Reconsideration,” accessed 6/26/12

Cross State Air Pollution Rule, $3,200,000,000 over 4 years - EPA, “Cross-State Air Pollution Rule,” accessed 6/26/12

Federal Motor Vehicle Safety Standard No. 111, Rearview mirrors, $10,800,000,000 over 4 years -  Federal Register, “Federal Motor Vehicle Safety Standard, Rearview Mirrors; Federal Motor Vehicle Safety Standard, Low-Speed Vehicles
Phase-In Reporting Requirements,” accessed 6/26/12

National Ambient Air Quality Standards (NAAQS) for Particulate Matter, $1,560,000,000 over 4 years -  http://www.epa.gov/ttn/ecas/regdata/RIAs/PMRIACombinedFile_Bookmarked.pdf

Florida Numeric Nutrient Standards (Phase 2), $100,000,000 over 4 years - Congressional Research Service, 4/25/12, “EPA Regulations: Too Much, Too Little, or On Track,” by James McCarthy

Clean Water Act Jurisdictional Guidance and Rulemaking, $684,000,000 over 4 years - EPA, “Potential Economic Impacts and Benefits Associated with Guidance Clarifying the Scope of the Clean Water Act,” accessed 6/26/12

Non-Hazardous Solid Waste Rule (Reconsideration), $706,000,000 capital cost, $1,120,000,000 over 4 years - Office of Management and Budget, Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources:
Commercial and Industrial Solid Waste Incineration Units; Reconsideration and Proposed Amendments , accessed 6/26/12

Tier 3 Pollution Motor Vehicle Emission and Fuel Standards, $17,000,000,000 capital cost, $52,000,000,000 over 4 years - API, July 2011, “Potential Supply and Cost Impacts of Lower Sulfur, Lower RVP of Gasoline,” pg 56

Uniform Standard for Stationary Sources (Flare Rule), $460,000,000 capital cost, $384,000,000 over 4 years - EPA notice of submitting rule for publication to Federal Register on 6/1/12, pg 17, accessed 6/26/12

Utility MACT, $38,400,000,000 over 4 years - Office of Management and Budget, “National Emission Standards for Hazardous Air Pollutants From Coal- and Oil-Fired Electric Utility
Steam Generating Units and Standards of Performance for Electric Utility Steam Generating Units ,” Accessed 6/26/12

Cooling Water Intake Structures, $1,596,000,000 over 4 years - EPA, Criteria and Standards for Cooling Water Intake Structures, accessed 6/26/12)

Coal Combustion Residuals Generated by Electric Utilities, $5,896,000,000 over 4 years - EPA, “Hazardous and Solid Waste Management System: Identification and Listing of Special Wastes; Disposal of Coal Combustion Residuals
from Electric Utilities,” pg 8, accessed 6/26/12

Total Cost Over Four Years     $515,006,000,000.00

If you're so inclined, you can amuse yourself with the absurdities of the full list of new regulations here. One wonders what possible need exists for the federal government to regulate, for instance, endangered and threatened wildlife and plants in the manatee refuge in Citrus County, Florida; or to create a mandate for all new cars to have rear view cameras; or why so many new ozone regulations are being written when it's been known for at least a decade that the ozone layer has been stabilized.

So, not only are taxes going up for individuals and businesses under the Sequestration Bill; not only are new taxes being implemented under Obamacare (that medical device tax is really gonna do wonders for the economy, eh?); but we have yet another drag on our economic engine in the form of new regulations costing businesses exorbitant amounts of capital misallocated towards compliance instead of growth.

If economic indicators are correct and history repeats, it appears that 2013 will be one of the most difficult in recent memory. Hope for a robust economy has changed to decreased expectations.

If President Obama and Senator Reid were actually negotiating in good faith, then one could argue that Speaker Boehner's Plan B was an acceptable, if unpalatable, compromise.  After all, it permanently extended the current tax rates for very nearly all Americans, eliminating the annual game of chicken in Congress over whether our taxes will automatically increase. 

But the President and Senator Reid made very clear that they are not interested in compromise, and that Boehner's offer was dead on arrival in the Senate because it did not raise taxes on enough people. This is not a negotiation on President Obama's part - it is holding all Americans' incomes hostage and demanding higher income earners as the ransom.

The choice being laid out by the President is a false choice between raising taxes on everyone or just on a few.  There is another choice, which FreedomWorks has endorsed all along: extend the current tax rates for everybody.  Once we've backed away from the fiscal cliff, we can have a real debate about how to collect revenue and curb spending through real reforms.

The fiscal conservatives in the House agreed. Led by a younger core of freshmen, they lobbied Speaker Boehner to stand his ground, to negotiate from a position of strength. Instead, the Republican leadership did not even allow any votes on amendments to Plan B, and subjected dissenters to intense pressure to just follow the party line. 

They did not.

The ball is now in President Obama's court, and if he is a responsible leader he will propose a solution to the fiscal cliff that extends current tax rates, like he did in 2010.

But the heartening message from the failure of Plan B is this - the hard work of so many grassroots activists all over the country is paying off.  Thanks to the strong core of solid limited-government conservatives in the House, leadership can no longer easily lure Republicans down the road of bigger government. 

The fiscal cliff is looming, and as FreedomWorks' President Matt Kibbe pointed out, “The $16 trillion monstrosity that is our current national debt is a product of spending too much, not taxing too little.” We need a plan that includes sequestration as well as reforms to taxation and entitlements. Senator Marco Rubio took to the airwaves last night to discuss just this. 

In his interview with Sean Hannity, Rubio said “If you raise taxes on the wealthiest Americans or what he calls the wealthiest Americans, people making $250,000 or more, if you raise that by 100 percent, that doesn't solve anything. The proposal the president is standing for, it doesn't solve anything.” 

He went on to explain that increased taxation would only lead to employees seeing cuts to their benefits and compensation, or even their jobs. It would lead to people taking fewer vacations and going out to eat less. It would lead to fewer home improvement projects which hire construction workers. In short, it is not the wealthiest who would suffer the most from this higher rate of taxation. “And in return, you generate six, seven, eight days worth of government spending.” noted Rubio. Clearly, that is not the answer.

“The only solution,” Rubio pointed out “is the combination of fiscal discipline and real economic growth.”  As Kibbe said, “The deal-makers on Capitol Hill have ‘negotiated’ themselves up to $16 trillion in debt. It’s time to say ‘enough is enough." They are right. Higher taxes do not avoid financial ruin in any meaningful way. This level of spending is literally out of control, and has to be brought back to a reasonable level to get us out of our current mess. 

Dear FreedomWorks member,

As one of our millions of FreedomWorks members nationwide, I urge you to contact your Representative and urge him or her to vote against Speaker Boehner’s “Plan B” tax plan.  This bill, being offered as replacement language for H.J.Res. 66, would prevent automatic tax rate increases for most individuals, but would allow taxes to automatically increase for some higher-income Americans.

Congress ought to avert the automatic tax increases for all Americans. While the bill would be vastly better than the deal which Speaker Boehner has reportedly been discussing with President Obama, the cause of fiscal conservatism could be set back by the House passing this legislation in the current environment.

This is not the time to be negotiating about how much automatic tax hikes should be.  Raising taxes is not the way to get America out of our fiscal mess. Washington has an over-spending problem, not an under-taxing problem. Instead, we should be focusing upon fixing our labyrinthine tax code and reforming our out-of-control spending and our unsustainable entitlements.  Only by making these real, substantial reforms will we be able to get our fiscal house in order and avoid another damaging debt downgrade.

While Speaker Boehner’s “Plan B” does not, strictly speaking, contain any tax hikes, its passage will be widely interpreted by the Washington establishment and the left-wing media as a capitulation to the President’s demand for higher taxes.  That will only embolden the supporters of ever-bigger government. Republicans, especially, should take a strong stand against President Obama’s cynical politics of dividing Americans against one another.  

There is a better way to avoid the fiscal cliff.  FreedomWorks has been urging Congress to keep its promise of $1.2 trillion in ten-year sequester savings, extend all current tax rates for one year, and reform taxes and entitlements.

I urge you to call your Representative and ask him or her to vote NO on Speaker Boehner’s “Plan B” tax plan. We will count any vote on this proposal as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2012. The Economic Freedom Scorecard is used to determine eligibility for the FreedomFighter Award, which recognizes members of Congress with voting records that support economic freedom.

Sincerely,

Matt Kibbe
President and CEO, FreedomWorks

Update December 20th, 11:30 p.m. ET:

Speaker Boehner's "Plan B" tax bill died today, just hours after FreedomWorks sent Congress a letter and launched a national call to action opposing the bill.

When folks in Washington thought FreedomWorks was for the bill, they assumed it would pass. When FreedomWorks came out against the bill, it failed.

Below is the blog post that Speaker Boehner reportedly cited when trying to persuade his fellow House Republicans to support the plan. It seems that he and others in Congress assumed FreedomWorks supported the bill. A close reading, however, reveals that while I warmly praised Mr. Boehner's decision to walk away from the negotiations with President Obama, and described the Boehner Plan B bill in factual terms, I never endorsed the bill, nor did FreedomWorks.

+ + +

Good news! Yesterday, House Speaker John Boehner announced he has pulled out of the bipartisan fiscal-cliff talks with President Obama and is moving toward the approach that FreedomWorks has been urging.

The FreedomWorks Plan:

1. Lock in the promised $1.2 trillion in ten-year sequester savings.
2. Extend all current tax rates for one year (including the FICA payroll tax rate).
3. Reform taxes and entitlements to avert another debt downgrade. 

Mr. Boehner's "Plan B" is to move a bill through the House that extends permanently (not just for a year) all current income-tax rates for everyone except those earning more than $1,000,000 a year. The bill includes some other tax provisions, listed below. Amendments are also likely to be made in order. [Note: It turned out no amendments were permitted, making it impossible for conservatives to improve the bill.] The votes could come as early as tomorrow [December 20].

While not nearly as good as the FreedomWorks Plan to avert the fiscal cliff, Plan B is much better than the so-called "balanced approach" that Mr. Boehner had, until Monday, been trying to negotiate with Mr. Obama. That deal would have: raised income tax rates for those in the two highest tax brackets; called off the promised sequester savings; cut Medicare benefits without real reform; and launched another round of wasteful and unnecessary stimulus spending. We need long-term spending reduction, but the Boehner-Obama plan as described in news reports would simply be another typical Washington "higher taxes today / lower spending someday, we promise" deal that wouldn't actually solve our long-term debt problem.  Indeed, by cutting Medicare benefits without real reform, it would give the Left a convenient and powerful talking point in their efforts to stop real reform.

Thank goodness that deal is off the table. Let's keep it off, by moving to Plan B -- and then amending Plan B into the FreedomWorks Plan.

Plan B calls the Democrats' bluff. They've been loudly pressuring the Republican-controlled House to pass a bill to extend all current tax rates on households earning less than $250,000 a year. Yet now, with the Speaker publicly embracing their idea (although he would set the threshold at $1,000,000 a year instead of $250,000), the White House has issued a veto threat and Senate Majority Leader Harry Reid (D-NV) has blasted the bill as totally unaceptable. Apparently, the Democrats are willing to hold a middle-class tax cut hostage to their insistence on raising tax rates on people earning between $250,000 and $1,000,000 a year. 

The Plan B bill would prevent tax hikes for most income-tax payers in this weak economy. Let the Democrats explain their opposition to that.

Given the Democrats' opposition, Plan B is unlikely to be signed into law. But in my opinion the House should consider it anyway (and, as I said, allow amendments, so we can turn it into the FreedomWorks plan).

Details of the Bill

According to an email we've received from the House Ways and Means Committee, the Plan B bill:

• Does not raise taxes. It is a net tax cut that prevents a $4.6 trillion [ten-year] tax hike on January 1;
• Permanently extends income tax rate cuts for Americans making less than $1 million, which protects 99.81 percent of all taxpayers;
• Permanently extends the current estate and gift tax [aka the Death Tax] [Specifically, the bill taxes estates valued at $5 million and up at 35 percent, indexed for inflation, rather than letting a 55 percent tax rate kick in on January 1, 2013, applicable to all estates valued over $1 million.];
• Permanently extends section 179 expensing for small businesses ($250,000 and indexed for inflation);
• Permanently stops the Alternative Minimum Tax (AMT) from hitting more middle class families;
• Permanently extends parity for capital gains and dividend taxes, preventing dividend taxes from being taxed at the highest rates; and
• Does not include anything on the debt limit or other non-tax policy items. Remember, Speaker Boehner’s rule on the debt limit still applies: spending cuts must exceed any debt limit increase.

Based on this description, I would say the bill can fairly be described as follows: a permanent middle-class tax cut that reduces taxes by $4,000,000,000,000 ($4 trillion) over ten years and does not violate the Americans for Tax Reform (ATR) "taxpayer protection" pledge (which most congressional Republicans have signed).

Possible Amendments

The newspaper Roll Call is reporting that the House may consider some amendments:

According to House Republican aides, GOP leaders are planning to bring their “plan B” to the floor as soon as Thursday. Under that proposal, the House would vote on two amendments: One that would allow tax rates to go up on those making more than $250,000 — as Senate Democrats have called for — and one that would allow tax rates to go up on those making more than $1 million. The latter would also include extensions of the estate tax and a fix to make sure the alternative minimum tax does not hit middle-income taxpayers.

These and additional amendments should definitely be allowed. Let House members vote on tax rates, including payroll tax rates.

[Update: On 12/20, the Speaker's Office published the following notice:

The House of Representatives will vote today on two measures to shield families and small businesses from the looming “fiscal cliff” by cutting spending and protecting millions from tax hikes. These bills are:

The Spending Reduction Act of 2012 (H.R. 6684) replaces the president’s defense ‘sequester’ with common-sense spending cuts and reforms, and reduces the deficit by an additional $242 billion over the original sequester. The bill focuses on stopping waste, fraud, and abuse in federal programs, eliminating government slush funds (including an ObamaCare slush fund), and reducing waste and duplication in government bureaucracies. The House passed this bill in May but Senate Democrats never took action. Learn more about it here. [Update 12/20: The bill passed the House narrowly.]

 The Permanent Tax Relief for Families and Small Businesses Act of 2012 (H.J. Res. 66) permanently protects millions of taxpayers from President Obama’s tax rate hikes. The bill permanently extends current tax rates for everyone making less than $1 million, the $1,000 child tax credit, expensing relief for small businesses, and much more. Analysis by the nonpartisan JCT found it is a $3.9 trillion tax cut. As Speaker John Boehner said yesterday, the president can “call on Senate Democrats to pass [this] bill, or he can be responsible for the largest tax increase in American history.”  Learn more about it here. [Update 12/20: The bill was pulled from the House schedule for lack of sufficient support.]

The Rest of the Cliff

Even if Plan B does become law (without or without the aforementioned amendments), the following things will happen on January 1, 2013: 

• The sequester will kick in. It will reduce spending by an estimated $110 billion in 2013, and $1,200,000,000,000 ($1.2 trillion) over ten years.
• The Social Security portion of workers' payroll taxes (FICA) will rise by 30 percent.
• Certain expiring tax provisions (mostly of interest to corporate interests) will expire. 
• Medicare's payments to physicians for medical services will go down by about 30 percent.
• Extended unemployment insurance benefits will no longer be extended and go back to their normal, 26-week length.

Next: Debt Ceiling

Most of these "unaddressed" issues would presumably get dealt with during the next round of the Great Debt Ceiling Debate or as part of some bipartisan "grand bargain" bill, in the New Year. 

The current debt limit of $16,400,000,000,000 ($16.4 trillion) is projected to be reached in February of next year, at which time the president will have to ask Congress for another increase. Meanwhile, the 40 percent of the budget that is annually appropriated expires on April 1, 2013. So we should expect budget brinkmanship and bipartisan game-playing to continue right through the first quarter of 2013.

Better Way: The FreedomWorks Plan

What should Congress do on the Fiscal Cliff? 1) Lock in $1.2 trillion in ten-year sequester savings. 2) Extend ALL current tax rates for one year. 3) Reform taxes and entitlements to avert another debt downgrade. Questions?

P.S. From now on, every debt ceiling increase should be offset by an equivalent amount of spending reductions, in the same bill. No more kicking the can down the road!

That is all.

MORE INFORMATION

FreedomWorks to Congress: Keep Your Promise on Sequester Savings

Barack Obama is a master magician. The great ones keep your attention focused on their right hand while they pick your pocket with their left. For a lawyer who voluntarily surrendered his law license, Barack Obama has proven an exceptional ability to frame the public debate.

When presenting the administration’s “fiscal cliff” proposal to Congress, Treasury Secretary Geithner asked for three things; taxes, spending and executive authority to unilaterally raise the debt limit. In reply, House GOP “Leadership” acquiesced agreeing to cap deductions including the mortgage interest deduction effectively raising taxes. Barack Obama proposes to raise taxes to cover eight days of government spending. The Republicans countered with four. Both parties claim to be raising “revenue” and not levying taxes.

House “Leadership” claims to promote fiscal restraint while removing fiscal hawks from key leadership positions. The Democrat Senate does not pass a budget for three years while quietly incorporating the 2009 Obama “stimulus” into the spending baseline thereby enacting a permanent stimulus. By claiming that “it’s time to rip the Band-Aid off and reach a deal” or “it won’t kill the country if we raise taxes a little bit on millionaires,” Republicans are validating the virtue of these new spending levels and relinquishing their mantle as the party of low taxes and limited government.

While some have suggested Obama’s objective is to "kill” the Republican Party by forcing it to relinquish its core principles, the “tell” to Obama’s principal goal is Treasury Secretary Geithner’s proposal to “lift the debt limit to infinity.” Obama understands the only leverage fiscal conservatives have at forcing any measure of spending restraint or entitlement reform is through debt limit negotiations. Obama has not presented any spending cuts during "fiscal cliff" "negotiations" because they are not in his political interest. If Republicans agree to raise taxes, Obama forces them to go back on their pledge and achieves a political “win”. If Republicans hold firm on their principles, Obama gets massive tax hikes on everyone to pay for increased spending. Obama is buying ad time to try and force the Republicans’ hands, something conservative talk show host Mark Levin suggested Republicans do to explain the virtue of cutting spending and not raising taxes.

The only way Republicans regain the upper hand is to hold firm to their principals, articulate their position and exert their leverage at the upcoming debt limit negotiations. Capitulation will hurt the country as Obama has demonstrated an unwillingness to cut spending and proposed tax hikes will cover little current spending. Moreover, members who capitulate will pay a heavy political price as they will force conservatives into open revolt.