The Insatiable Taxers Are Back

By Alexander Bolton

Democrats look for up to $1 trillion in new tax revenues this year

Democrats say they want to raise as much as $1 trillion in new revenues through tax reform later this year to balance Republican demands to slash mandatory spending.

Democratic leaders have had little time to craft a new position for their party since passing a tax deal Tuesday that will raise $620 billion in revenue over the next ten years. 

The emerging consensus, however, is that the next installment of deficit reduction should reach $2 trillion and about half of it should come from higher taxes.

This sets up tax reform as one of the biggest fights of the 113th Congress, which began on Thursday.

Republicans say tax reform should be revenue neutral. Additional revenues collected by eliminating or curbing tax breaks and deductions should be used to lower rates.

Senate Republican Leader Mitch McConnell (R-Ky.) has dismissed the possibility of negotiating additional tax increases.

“I'm in favor of doing tax reform but I think tax reform ought to be revenue neutral as it was back during the Reagan years. We've resolved this issue, look we don't have this problem because we tax too little. We have it because we spend way, way too much,” McConnell said Sunday on NBC’s “Meet the Press.”

Liberal and centrist Democrats say revenues collected through tax reform should go to deficit reduction.

“We’ve done about $2 trillion. I thought $4 trillion is the goal we should reach. I think we’re about half way there. We need another $2 trillion,” said Sen. Ben Cardin (D-Md.), a member of the Senate Finance Committee, which has jurisdiction over tax reform.

He said the $917 billion cut under the Budget Control Act passed in the summer of 2011 combined with $620 billion in revenues from Tuesday’s tax deal and interest savings adds up to about $2 trillion.

Cardin said the ratio of spending cuts to higher tax revenues “should be about even” in the next deficit-reduction deal passed by Congress.

Sen. Jon Tester, a centrist Democrat from Montana who won a close re-election in November, set out similar parameters.

He said the broad goal for deficit reduction should be in the $4 trillion to $5 trillion range and “we should strive for [a] one for one” ratio of spending cuts to additional tax revenues.

The White House also supports a 1:1 ratio of spending cuts to tax increases as Congress seeks to finish the fiscal work left unresolved by the recently completed 112th Congress.

White House officials point to last week’s fiscal-cliff agreement to “buy down” the sequester for two months. The deal delayed the implementation of automatic across-the-board spending cuts to domestic and defense programs and paid for it with $12 billion in revenues and $12 billion in spending cuts — evenly divided between defense and non-defense spending.

Administration officials view that as a template for future deficit-reduction agreements.

But Democrats in Congress are not yet unified on the issue. Sen. Tim Kaine, a Democrat who won his first term in November’s election, said the spending cut-to-tax increase ratio should be higher.

“Obviously that second half of the fiscal cliff is the tough spending decisions,” he said. “During the course of the campaign I often talked about 2-1 as a total. That would count all the spending reductions that have already been agreed to.”

“I think if you’re looking at a  70-30 ratio, somewhere in between 2 to 1 and 3 to 1 , I think that’s a reasonable position,” said newly-elected Sen. Chris Murphy (D) of Connecticut, who noted he is from a “fiscally responsible” state.
Like Kaine, Murphy said, “you could factor in the cuts already made.”

Congress agreed to cut spending by $917 billion in 2011 and to raise $620 billion in additional tax revenues last week, settling on a ratio of roughly 3 to 2 so far. 

Sen. Charles Schumer (D-N.Y.) said Friday the ratio of spending cuts to tax revenues to date has been tilted more heavily toward spending. Counting the 2011 Budget Control Act and the year-end tax deal, he argues the split is closer to $1.1 trillion in spending cuts and $600 billion in revenues — but he appears to be counting interest savings from spending cuts and not from tax increases.

The biggest question for Democrats is how much revenue is realistically available through tax reform.

Former Sen. Kent Conrad (D-N.D.), a longtime chairman of the Senate Budget Committee, argues the federal government loses $1.2 trillion a year because of various tax breaks, a large pool for lawmakers to draw from to reduce the deficit.

“Through the tax code, we spend more there than we spend through all the appropriated accounts,” he said in his Senate farewell speech.

Conrad displayed a chart on the Senate floor Wednesday showing that people in the top 1 percent of income earners collect over $250,000 in after-tax income from tax expenditures. These expenditures are defined as revenue losses due to special exclusions, exemptions or deductions from gross income.

But policy analysts say the amount Congress can raise by eliminating tax expenditures will be constrained by political realities.

President Obama’s proposal to limit the value of itemized deductions to 28 percent evoked a backlash from the real estate industry and charitable groups. The mortgage interest and charitable tax deductions are two major drains on federal revenue.

Potential future revenue from limiting exemptions and deductions for wealthy taxpayers is also limited by the personal exemption phase-out and Pease — a cap on itemized deductions — provisions of the New Year’s Day tax deal.

They account for $152 billion of the projected revenues from the deal.

Jim Kessler, senior vice president for policy at Third Way, a centrist Democratic think tank, thinks the most Democrats can get from tax reform is about $300 billion to $400 billion. He said negotiators can find an additional $100 billion in revenue by switching the chained-CPI formula for calculating cost-of-living increases for Social Security and other federal programs.

“I think you get $400 or $500 billion in new revenue because stuff [is] taken off the table,” he said. 		 

Urgent Petition

Sign the petition to stop Social Security Cuts and send a fax to every Member of Congress demanding they cut other spending, NOT SOCIAL SECURITY.
First Name

Last Name

Phone Number

Email

Recent News

Medicare Drug Program Senior Health Risk

Sunday, May 12, 2013
Source: Huffington Post
An analysis of four years of Medicare prescription records shows that some doctors and other health professionals across the country prescribe large quantities of drugs that are potentially harmful, disorienting or addictive. Federal officials have done little to detect or deter these hazardous prescribing patterns.
Read Full Story

GOP's Duffy & Gingrey Oppose Social Security Cut

Wednesday, May 8, 2013
Source: Huffington Post
Two House Republicans have told constituents they oppose proposed cuts to Social Security and veterans benefits by reducing the cost of living adjustment. President Barack Obama included the plan, known as chained CPI, in his annual budget.
Read Full Story

Diabetes Advice for the Elderly: Relax

Friday, April 26, 2013
Source: New York Times
Treatments and their risks and benefits play out differently in the elderly population. Diabetes is rarely the only ailment affecting people in their 70s and 80s; most must cope with several chronic conditions, along with their associated medications. That makes keeping blood sugar at reasonable levels a complicated business involving lots of tradeoffs.
Read Full Story

5 Common Misconceptions That Destroy Computers

Thursday, April 11, 2013
Source: Cracked.com
If you have a parent, grandparent, or child just getting into computers for the first time, do the world a favor and teach them these basic misconceptions before you end up getting the call to come over and clean the horse manure out of their processor.
Read Full Story

Salt In The Rationing Wounds

Sunday, April 21, 2013
Source: Land Destroyer Report
The US has announced that it will provide militants in Syria, now openly admitted to being Al Qaeda terrorists, with $123 million in military aid - while cancer care for seniors at home is being rationed.
Read Full Story

He Lied

Friday, April 12, 2013
Source: Huffington Post
(VIDEO) Obama vowed he would never cut Social Security.  Now he is proposing a change in the cost-of-living measure (the so-called "Chained CPI") to do just that, all the while he denies it will cut benefits for current retirees. 
Read Full Story

Oppose Tax Increases To Prevent Social Secutrity Cuts

Source: 
With Obama pushing for cuts to Medicare, Medicaid and Social Security, the best chance of stopping those spending reductions could be the GOP’s blanket opposition to higher taxes. Although GOP leaders insist that entitlement cuts should be a big part of any sweeping deficit deal, they also have been unwilling to concede to Obama’s demand for higher taxes to get them, which could be a deal killer.
Read Full Story

Obama Ready To Cut Social Security

Friday, April 5, 2013
Source: The Hill
President Obama will propose cuts next week to Social Security and other entitlements as part of a renewed effort to strike a long-term deficit-reduction deal with Republicans, the White House said Friday. Obama will embrace a plan — known as chained CPI — that would reduce cost-of-living increases for Social Security recipients through a more restrictive measure of inflation, according to officials first cited by Reuters and The New York Times.
Read Full Story

Congresswoman Mocks Senior Citizen

Wednesday, April 3, 2013
Source: Breitbart TV
At a recent Denver Post editorial board public forum on gun legislation, U.S. Rep Diana DeGette was asked by a male senor citizen how he could defend himself under the new Colorado gun laws. DeGette said, “The good news for you, you live in Denver. The Denver PD would be there within minutes. (laughing) You’d probably be dead anyway.”
Read Full Story

Cancer Clincs Turn Away Thousands Of Medicare Patients

Wednesday, April 3, 2013
Source: Washington Post
ObamaCare price controls are causing cancer clinics around the country to turn away thousands of Medicare patients while medical bureaucrats blame the sequester.  The real culprits are ObamaCare's $715 billion Medicare cuts and the rigid price-control formulas ObamaCare relies on to effect the cuts, which healthcare providers had deluded themselves into believing Congress would override with new legislation.  Blaming the sequester is a convenient dodge to hide the true effects of ObamaCare and price controls, which are putting old people out in the cold and into an early grave.  It will only get worse.
Read Full Story
Read All Recent News

Get in the Know Now
Get SSI Email Alerts

First
Last
Zip Code
*Email

Social Networks

 

Action Center