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Fiscal Cliff: Fairness Defined

President Obama (D-IL) and Senate Majority Leader Harry Reid (D-NV), are determined to raise taxes on the wealthiest 2% of Americans, as part of their class warfare agenda. Speaker Boehner should stand strong and restrain government by insisting that the existing tax rates be extended and the level already-agreed cuts remain. 

Holding taxes the same, and dealing with the budget in an orderly process is a step toward economic fairness.

I wrote previously that Speaker Boehner should leverage the end-of-year crisis to repeal Obamacare or get some other concession, and that we should not raise taxes. There is another path, though not as beneficial as Obamacare repeal or a balanced budget, and that is to keep existing tax rates where they are for everyone.  This method doesn’t require breaking pledges, either. 

If the consequences for Obama’s policies are even worse this term than last and we slide back into a depression, eventually people will tire and no longer support these types of big tax, big government ways. Let them own it, versus Americans perceiving failed concessions from Republicans. 

Republican negotiators should push that advantage to try to strike some kind of a deal to avoid the recession.

Don’t be fooled by those who say government spending in and of itself helps the economy. The effects of government spending — building roads and airports, for example — can be positive, but only if they are actually of economic use. Builing a railroad no one uses or a bridge to nowhere merely serves as money pits. 

By way of review of the fiscal cliff, and to explain what I propose:

  • Keep tax rates where they are: all of them
  • The Alternative Minimum Tax can be left as it is for now, but will have to be addressed in the next Congress
  • Payroll taxes should return to normal, to help put Social Security on a more secure footing. If needed, extend the lower rates to help negotiations proceed.
  • Unemployment benefit extensions should expire, and go back to the usual 13 weeks
  • Spending cuts, half from defense: It is senseless to let these go through as they are, without regard to the function — either civilian or military — that they serve.  Cuts should be made to the government services of least value to the public, not simply across the board. But cuts must be made.
  • Doc Fix, avoiding Medicare cuts: deal with this as a separate issue
  • Debt ceiling: Speaker Boehner should refuse to raise the debt ceiling unless either Obamacare is repealed or the Senate passes a Balanced Budget Amendment and a 5-year statutory guide to a balanced budget is established.

As FreedomWorks president Matt Kibbe wrote in Forbes, on the sequestration,

Congress made a promise to the American people to produce those savings. Now, some members of Congress are concerned the sequester’s defense savings are too deep. But that’s not a good reason to “call the whole sequester off.” Rather, it’s a reason to come up with a new mix of defense and non-defense savings by Jan. 1. The overall level of savings is a promise to taxpayers that must be kept.

What President Obama wants is to punish the wealthy and keep his momentum from the election. He wants economic fairness, and I say we should give it to him, though not in the form he expects: keep the tax rates as they are for everyone.

Over at The Right Sphere, RB Pundit says to tell President Obama that he should craft a bill, and Republicans in the House will pass it. Conservatives would then hold the liberals accountable for everything in it.

The first trouble is the amount of awful junk Democrats would put into such a bill: everything from public sector union pension increases and blue state bailouts to high speed rail.  The second issue is that it’s not possible to hold Congressional Democrats responsible for anything they do. 

Jim Pethokoukis shows 3 charts that illustrate just what’s happened to the tax code since 1979:  lower income tax rates have gone down much faster than those for upper income earners. 

The tax rates are fine as they are, and should be kept as they are for everyone. The defense and other cuts need to be aligned with the mission of each program or department being cut.

All I’m proposing, in a word, is fairness.