McConnell Fiscal Deal: Tax Hikes, Green Pork, Stimulus, Oh My

Monday, December 31st, 2012 and is filed under Blog, Debt, Obamacare, Taxes

Surprise surprise, they have a deal to avoid the politicians’ cliff.  Who didn’t see that coming?

Once again, just like with the debt ceiling deal in 2011, Mitch McConnell found his dance partner in Joe Biden to cut a bad deal for conservatives.

Here’s an enigmatic riddle for you: what happens when Republicans publicly obsess about the degree of tax increases they are willing to accept without a commensurate demand for spending cuts?  You get tax hikes and no spending cuts!  In fact, we will spend even more as a result of this deal.  Haven’t we seen this rodeo a gazzilion times?

As if on cue, negotiators have agreed to raise the top income tax rate from 35% to 39.6% on individuals earning more than $400,000 and married filers earning above $450,000.  They will also see their dividends and CapGains tax rates go up to 20%.  In addition, the Death Tax, which should be completely abolished, will increase from 35% to 40% on all assets above $5.12 million.  There will be a permanent AMT patch as well, as if there already wasn’t one anyway.

What about the spending side?  Here are the spending increases:

  • A $30 billion one-year extension of Medicare doc fix
  • A $30 billion one-year extension of 73 week unemployment insurance. Over the past four years, the federal government has collected roughly $192 billion in federal unemployment payroll taxes, while paying out $510 billion in benefits.  Evidently, that’s not good enough.
  • Stimulus Refundable Tax Credits:  Somehow, a 5-year extension of Obama’s stimulus refundable tax credits got inserted into the deal.  So he calls a tax cut a handout, and a handout a tax cut.  These latter three provisions alone will easily top $100 billion a year, dwarfing the $50-$60 billion in static revenue projections from the tax cuts on the rich.  So much for a balanced approach.
  • Green Energy Pork:  The irony is that while the rich earned every penny of their money, Obama refers to the current system – one in which the top 1% pay 37% of the taxes – as a handout to the rich.  Yet, this deal extends a true handout, the 2.2 cent per kilowatt/hour wind Production Tax Credit.  This is a refundable credit that can be claimed by any wind company that fails to generate a profit, of which there are many.

Of course, nothing is being done about the 5 major Obamacare tax hikes that are set to take effect this week, including the deleterious 2.3% tax on all medical devices, the millionaires’ surtax, and the 0.9% increase of the Medicare payroll tax.  It’s absolutely stupefying that Republicans couldn’t use this as a leverage point, after 16 Democrat senators, including Al Franken, wrote a letter requesting a delay in the implementation of this tax.

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Happy Debt Ceiling Day

Monday, December 31st, 2012 and is filed under Blog, Debt, Taxes

It feels like yesterday when John Boehner was bragging how he got 98% of what he desired from the deal negotiated to raise the debt ceiling in August 2011.  Yet just 17 months after Obama was granted a $2.1 trillion debt limit increase to preserve his reelection, we have breached the new ceiling.  In just 519 days, we’ve burned through $2.1 trillion in debt, for a total federal debt of $16.394 trillion.  Will Republicans grant him another lifeline through the end of his second term?

We are on the cusp of repeating the timeless mistake of raising taxes in exchange for notional spending cuts, or perhaps, not spending cuts at all.  We are also on the cusp of raising the debt limit yet again.  At the very least, we should admit that the debt deal of 2011 was a failure, so as not to repeat the same insanity.

Since we ‘solved’ our nation’s debt crisis last August, we’ve accrued over $4 billion in new debt per day, over $168 million per hour.  The amazing thing is that revenue has actually increased over the past fiscal year relative to the previous few years.  Yet we are still having this national conversation about raising taxes on a handful of millionaires, a proposition that would only net enough revenue to cover no more than 2 weeks of debt, even according to a static analysis that fails to account for economic effects of the tax increase.

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Legislative Lowdown: This Week in Washington

Monday, December 31st, 2012 and is filed under Blog, News, Taxes

Due to the Holiday weekend, we will not be sending out our weekly legislative bulletin, the Madisonian.  Nonetheless, this is a busy week.  Here is what we must prepare for.

This will be one of the most unique weeks in Washington.  For the first time in 4 decades, a previous Congress and a new Congress will operate during the same week.  Due to the eleventh hour work on the tax cliff spilling into the new year, the members of the 112th Congress are still in town, even as the new members of the 113th Congress are sworn in this Thursday.  This creates a double opportunity for politicians to stick us with bad legislation.

Tax Cliff – In the final day before the Bush tax rates are scheduled to expire, Republicans and Democrats are actually not too far apart in their respective positions, despite failing to strike a deal.  It’s amazing how they pretty much agree on all the fundamentals, even as they haggle over the minutia.  The bottom line is that they are both willing to raise taxes on upper-income earners while offering no meaningful spending cuts.  They have also agreed to let the sequester take effect for now.

Harry Reid is offering to raise the rates (income, capital gains, and dividends) on individuals earning more than $360,000 and families earning more than $450,000.  Republican senators countered with an offer to raise the threshold for individuals to $450,000 and families to $550,000.  Meanwhile, Mitch McConnell and Joe Biden are negotiating a deal which would use the threshold of $400,000 for individual filers and $450,000 for families. Republicans are still demanding that the current Death Tax rate – 35% at a $5 million exemption – be extended permanently, while Democrats want the rate to go up to 45%.  For their part, Republicans have agreed to drop their demand that Social Security benefits be adjusted to reflect a slower rate of growth as calculated by the “chained CPI.”  The emerging deal would also throw in yet another extension of the super long-term unemployment benefits without paying for them.

The irony is that none of these plans would bring in a significant amount of revenue, even for those who subscribe to the notion that we should deal with the debt problem through tax increases.  So once again, we are headed for a deal where taxes go up, spending stays the same, and the debt will continue to increase.  Remember that even the paltry sum of revenue that is projected to come into the Treasury from the tax increases is unrealistic because those estimates are not factoring in the damage to the economy created by such tax hikes.

Meanwhile, nothing is being done about the 5 major Obamacare tax hikes that are set to take effect this week, including the deleterious 2.3% tax on all medical devices, the millionaires’ surtax, and the 0.9% increase of the Medicare payroll tax.

Then there is the debt ceiling which will be breached this week, but the Treasury will enact “extraordinary measures” to maneuver some debt payments in a way that will forestall the deadline for another two months.  At present, neither party has proposed a credible plan to limit government in a way that will ensure this will be our last debt limit increase.  Conservatives must oppose any effort to raise the debt limit without such a plan.

Finally, we must remember that January 1 is not the end of the story.  It’s not a cliff.  Congress can always extend the rates retroactively, and if that is done within the first month or so, there will be only minimal disruptions to payroll.  The idea that there must be an agreement by midnight is absurd.

Farm Bill/Milk Price Controls

Conservatives successfully blocked the enactment of a new 5-year farm bill, which would have permanently locked in Obama’s food stamp spending levels and would have created new crop insurance and price support programs.  Unfortunately, proponents of the bloated farm bill have always been able to hold an archaic bogyman over those of us who seek to stymie the farm bill.  Pursuant to an insane 1949 act of Congress, if an extension of the 2008 farm bill is not passed, the government must begin imposing Soviet-style price controls on milk by decreasing supplies through massive purchases of milk, butter, cheese, and other dairy products.  Under permanent law, the USDA would begin purchasing dairy products at a rate of $38.54 per hundredweight, more than double the current price ($18 per hundredweight).  This market manipulation could double the price of milk, dairy products, and everything else up the food chain.

In a sane world, both houses of Congress would convene and repeal this inane and outdated law within a few minutes by unanimous consent.  That way we could debate a long-term farm bill without having the sword of the 1949 law brandished over our necks and forcing Congress to rush through bad legislation.

However, Congress is not sane, and they have no plans to repeal the law.  They are still trying to block the law by passing a new extension of the farm bill – yet another oblique and temporary panacea!  Last week, House leaders offered three options, including an extension of current farm programs until the end of FY 2013, along with two 30-day extensions as alternative options.  The problem with the extension is that it continues to offer direct subsidies to farmers, something that both sides have already agreed to terminate.  It also includes $850 million in dubious emergency funding, which is not offset with other savings within the fiscal year.  Furthermore, this bill contains its own version of milk price supports and dairy regulations, which were referred to as “Soviet-style” by none other than Speaker Boehner.  Finally, this bill does nothing to end the ridiculous practice of pairing food stamp spending with agriculture programs.

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Social Welfare and Conservatives

Wednesday, December 26th, 2012 and is filed under Blog, Economy, Issues

If it is true that 47 million Americans are on food stamps it is a malignant and metastasizing tumor on the American civic body. Let me clarify: it is a malignant problem for society if you value liberty and human autonomy. If you are a statist or a partisan for the party of government (GOPers not excluded) it is glad tidings of good cheer — your policies are creating new clientele for the welfare state.

If the Republican party were paying attention (we need if in 78 point font) that number would be alarming but also an invitation.

Alarming because growing dependency on government means the American electorate is metamorphosing from citizen to subject to serf. Serfs don’t have a need for limited government or republican democracy for that matter.

An invitation because of that 47 million people a good many do not want to be dependent subjects of Washington D.C. That is the group the GOP must identify and, get this, go make a case for free market, limited government policies that will lift them from poverty.  Radical, I know, but that’s where we find ourselves — in the undignified position of having to convince people to vote for us.

Let’s do some unscientific, back of the envelop sorting.

  • An estimated 5.9 million adults aged 25-34 live at home with their parents because of unemployment or underemployment. For every one of those  6 million we convert to a conservatism we’ll get two parents in the bargain just out of sheer gratitude for getting the slugs out of the house.
  • In 2012 53 percent of of all Americans under 25 with a bachelor’s degree were unemployed or underemployed. This group probably has a significant overlap with the living at home crowd. The difference is in the massive amount of student loan debt they carry. Democrats will use the carrot of debt forgiveness (based on some government designed indentured service) to keep this frustrated lot in the fold. These are future creators of culture. The GOP needs to advertise policies  that will return them to full use in the private sector. The GOP needs young, educated, professionals as allies if conservatives are to ever hope of seeing a welcoming media.
  • In this group are the truly (as opposed to relatively) poor. The type of people that use busses as the primary or sole means of transportation not because they are urban hipsters or metropolitan professionals but because they cannot afford a car. The type of people  that send their kids off to school from a homeless shelter. Do we not have a word of hope, or policy of uplift that does not feature the government, for the them?
  • There are over nine million “prime age” (30-49) parents raising at least two minor children who live on incomes below $34,000/yr. Of that number approximately six million are married. The conservative refrain of “get married, then have children and you won’t be poor” is being tested. It is not clear that conservatives are aware of this swelling demographic or that we speak to it in a meaningful way. It is bad policy and worse governance to cede people in those circumstances to a federally designed, bureaucratically administered future of dependence.

We have to be careful that our rhetoric about the relatively poor ( in terms of how many cars, televisions, electronic devices they have etc.) does not separate us from the truly poor. We also need to be determined to actively win the poor to our side. As Newt Gingrich pointed out recently, Detroit has lost half of its population and dropped from number one in income per capita to number 67 but remains a Democratic Party stronghold. The same can be said of many other large cities and soon it will be true of California’s 50 plus Electoral College votes. We cannot assume a poor economy will drive voters our way when we do not present an alternative to the status quo.

Conservatives do not stand for anyone if they do not stand for the poor or between the poor and a horizon narrowing, soul crushing state. We don’t have to sacrifice our principles to expand our base but we do need to explain them.

Author Wendell Talley


Saturday, December 22nd, 2012 and is filed under Blog, News, Press

Holy Michael Dukakis in a tank! What was Wayne LaPierre doing today? It wasn’t the press conference equivalent of the Hindenburg landing and he wasn’t drawn and quartered but it was a disaster nonetheless. Mr. LaPierre should not have been within 500 miles of a television camera for the next year. If his goal was to draw the venom from the snake so it could not strike again, well, let’s just say all he accomplished was ticking the snake off.

It has been mentioned on this blog that sending cultural aliens in front of a strident and irresponsible press is asking for trouble. The NRA should have found this lady in Dallas who took out two intruders that were attempting to rob her home. Or this lady in Fort Worth who rescued herself from a thug.

Rather, they went the traditional route and tried to talk reason to a mob. It was a predictably spectacular Bad Move and the NRA got the mouthful of hot gravel it deserved. When a lynch party is outside shouting your name don’t go out and greet them holding fifty feet of rope.

The NRA has people. According to its website it trains over 700,000 gun owners a year in firearm safety. Among them are mothers, fathers, single women and senior citizens. They are the best character witnesses the NRA could ever have. Let the good works done for ordinary Americans represent the importance of maintaining our Second Amendment freedoms. One hundred people saved by gun owners would be a more impressive front than a lone lamb before media wolves.

Wayne Lapierre is a decent man and a patriot, I’m sure. He made the obvious point that a vulgar society is more apt to produce monsters capable of the hideous carnage that has sent a nation into an emotional free fall but this was not his moment. That should have been left to the people who have had their lives and property saved by the responsible gun ownership the NRA promotes.

Conservatives should not be defending anything. We should be on offense.  For example, why doesn’t the NRA have a cable channel? If Al Gore could cobble together a studio for ranters and discontents surely the well funded NRA could televise hunting shows, gun safety shows and a reality show or two. Political lobbying, at which the NRA excels, wins votes. No doubt. What Mr. LaPierre needed today, though, was friends, not votes, and the way to get them is to engage the nasty culture he derided at his ill fated presser.

The American mind is shifting. We’re likelier to see a Harriet and Harriet spin-off than an Ozzie and Harriet remake. Individual gun ownership is embedded in American society and  the Left is busy encouraging Americans to toss it. Conservatives have to come out of our intellectual cul-de-sac and engage the new and emerging America. We need to communicate our principles in a way people can understand and in places where they hear us unfiltered by Left wing propagandists. We need the ability to make the cowards with microphones and news columns understand there will be an electoral price to be paid when they reveal their malice for America.

Author Wendell Talley

Tell Senators to Vote No on Obama’s Pork “Disaster Aid” Bill

Friday, December 21st, 2012 and is filed under Blog, Issues

After the divisive intro-movement battle in the House over taxes, here is a fight in the Senate we can all join in together.  Obama and Reid are using the disaster of Hurricane Sandy to push through a $60.4 billion package that is full of pork and special interest handouts.   Only $11.5 billion will go towards FEMA’s disaster relief fund.  CBO projects that 64% of the funds will not be spent until FY 2015.  The entire rationale of an emergency bill is that the aid money is desperately needed now.  The fact that much of the funds will not be spent for several years reveals this as a liberal stimulus bill.

Yet, they are deeming it an emergency so that the Senate does not have to find cuts to other programs to pay for this spending.

The following senators, many of whom would see their states receive some of the pork, are equivocating.  They need to hear from us.  Cloture will be held around 5 pm, and if Reid picks off 7 Republicans, this thing will pass and saddle the House with another problem.  The cost of this package is worth more than all the annual revenue from raising the marginal tax rates, dividends, and CapGains on those earning more than $250k.


Every U.S. Worker Owes $47,482 in Foreign Debt

Friday, December 21st, 2012 and is filed under Blog, Debt, News

One of the important components of our federal debt in the share of debt owned by foreign countries.  We like to view ourselves as the pride of the world, but there’s not much pride in countries like China and Mexico owning our debt.  Terence Jeffrey of CNS News reports that our foreign debt has hit a new record of $5.482 trillion, a gain of 78% since Obama took office.  Talk about “outsourcing jobs,” Barack.  Obama is outsourcing the indebtedness of our children and grandchildren to foreign countries.

Our foreign debt is now equal to more than one-third of the entire U.S. economy.  China owns $1.161 trillion of our debt, while Japan is the second largest stakeholder at $1.134 trillion.

For all the talk about the so-called fiscal cliff, nobody wants to talk about the $47,482 cliff.  That’s the amount that every single worker in this country owes to foreign countries.  Jeffrey has all the details:

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It’s all About Trust

Friday, December 21st, 2012 and is filed under Blog, Debt, Taxes

If you listen to many in the Republican intelligentsia, you will hear this accusation that conservative rebels destroyed the Republican Party.  The reality is that nothing changed after the defeat of Boehner’s plan B other than Republicans not buying into the premise of raising revenue for the federal leviathan.

Before last night’s vote, we faced two possible outcomes; either we go over the cliff (which is not even such a cliff because rates could always be extended retroactively) or Boehner was going to cave on 90% of what Obama wanted.  The same thing applies now.  Boehner was never going to stand by his plan.  And if it was worth voting for Boehner’s plan, which according to their logic represented a tax cut for 99.81%, then it was worth voting for Obama’s plan, which, by the same logic is a tax cut for 99% of taxpayers.

This all gets back to the issue of trust, not the issue of compromise.  Most of us would be willing to compromise on some level if we knew there would be some point at which Boehner would hold the line and fight for his own position.  Instead, we saw him regress from no revenues to yes revenues, albeit through capping deductions; then form no marginal rate increases to yes marginal rate increases, albeit for over $1 million in income and no debt ceiling increase.  With Obama remaining firm against this plan, and Boehner giving away the kitchen sink at a rapid pace, why should rank-and-file members have trusted him that he wouldn’t pocket their huge concession on the tax issue for a worse deal?

Well, maybe we should have trusted Boehner anyway, you might say.

But past experience is the best indicator of the future, and we’ve seen this exact same rodeo before.  Let’s review the story of the debt ceiling for the millionth time.  In 2011, Republicans had remained firm behind their Cut, Cap, Balance plan just like they did until now with H.R. 8 – full extension of the Bush tax rates.  And similar to what he tried tonight, Boehner unilaterally proposed a compromise “best we can get” bill that jettisoned Cut, Cap, and Balance (CCB), although it still had some saving grace because it forced a balanced budget amendment at least for the second tranche of the debt limit hike.

Despite the fact that we all warned that Boehner would never stand by the plan and that they’d be breaking their CCB/debt ceiling pledge for nothing, they passed his bill.  Yes, unlike this time, there weren’t enough intransigent, knucklehead, knuckle-dragging, Tea Party rubes who were willing to block it.  Even though not a single Democrat supported it, the bill passed 218-210.  They all rallied behind Boehner to “strengthen his hand” in the hopes of getting a good deal.  Well, less than 24 hours later, he announced the grand bargain, which gave Obama a $2.1 trillion blank check with no balanced budget amendment and a defense sequester trap that they are dealing with to this day.  Boehner said at the time that he got 98% of what he wanted from the deal.

Those of us with a head on our shoulders knew he had no intention of ever standing by his plan B back then.  The initial vote was merely used as a ploy to pocket the willingness of conservatives to break their pledge on the debt ceiling.  This bill last night was no different, except that the consequences of buying into Obama’s tax premise would have been much worse in the long run.  As Rep. Tim Scott said last night, “we must focus on cutting spending. If the conversation is starting with revenues, we’re having the wrong conversation.”

So you see, it’s all about trust.  Had Boehner acted in good faith and kept his @#$% on his own line last time, more of us would have supported a painful concession.  Had he stood by his deal last time, maybe we’d be willing to give in more on the tax issue, knowing that he’d fight to the death over the debt ceiling.  But he did not stand by his own plan for even one day, and that is precisely why we are facing yet another debt ceiling just 17 months later – one which he will never have the guts to engage in brinkmanship.

There’s always a need to compromise, but compromising on such important issues requires an inviolate degree of trust from the other side.  That trust is not there.  And none of the Boehner apologists who are denigrating us have given us any reason why we should have trusted him this time. It’s as if the debt ceiling fiasco never existed.

Cross-posted at

Conservative Leaders on Fiscal Cliff

Thursday, December 20th, 2012 and is filed under Videos

Action Alert: Stop the Boehner/Obama Tax Increase To Nowhere

Thursday, December 20th, 2012 and is filed under Blog, Taxes

Later this afternoon and into this evening, the House will debate and vote on John Boehner’s plan to let the tax rates go up on millionaires.  This is a plan that was originally hatched by ultra-liberals like Chuck Schumer and Nancy Pelosi.

After 20 years of fighting against tax increases and rightfully arguing that we have a spending problem, Republicans are willing to buy into the notion that we must raise revenue from new taxes.  Worse, they are doing so in return for absolutely nothing; no balanced budget, no entitlement, reform, no reductions in wasteful government.

The new tax revenue will continue to be used to feed the rapacious appetite of the federal leviathan.  Moreover, Democrats will celebrate that Republicans have agreed to their premise of breaking their ‘no new taxes’ pledge.  They will pocket this concession and demand more tax increases now and in the future.

Finally, there is the problem of Obamacare.  Republicans have agreed to allow some tax rates to go up without demanding a cancellation of the 5 new Obamacare tax hikes that are slated to take effect January 1.  That is the real fiscal cliff.

Ignoring the Obamacare taxes as part of the final deal is outrageous.

The House will vote on the procedural motion to commence debate around 2:30 PM E.S.T. and will vote on final passage of the tax bill (H.J. Res. 66) at around 7:30 PM.  We can defeat this bill with just 25-30 Republicans standing on principle.  Please call your members of Congress and ask them to vote no on Boehner’s tax bill.  Here are some wavering members that need to hear from We the People:

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