The ‘Democrat Ticking Tax Bomb’ Canard

By
Monday, July 19, 2010 at 10:10 am

Via Morning Money, Rep. Dave Camp (R-Mich.), the ranking member on the House Ways and Means Committee, is blasting the majority party for the “Democrat tax hike” coming down the pike. Here’s a screen shot of an email his office sent out this morning:

The “Democrat tax hike” will force “every” American to pay higher taxes, the document argues, supplying the following chart as evidence.

But look through Democrats’ budget proposals. Peruse the House’s record for tax bills. By no means are Democrats proposing hiking income tax rates. Taxes are due to rise because the trillion-dollar cuts supported by the Bush administration and originated in a Republican-controlled House in 2001 and 2003 had expiry dates — expiry dates Republicans wrote in. Taxes will rise if Democrats take no action, but they are already planning to keep some, if not all, of the tax cuts for a few years, until the recovery takes stronger hold.

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31 Comments

The ‘Democrat Ticking Tax Bomb’ Canard
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Fintry3
Comment posted July 19, 2010 @ 10:37 pm

I got this crap in one of “those” emails going around, the ones that are never about Republicans.

Source of this is Ryan Ellis who works for “Americans for Tax Reform”, a Reich-wing conservative bunch of ball-lickers that think only of cutting taxes and the rest of the country be damned. Its founder – Grover Norquist!

Someone should ask Ryan Ellis if really wants to pay less in taxes and build the deficit even faster?

Better, tell Ellis what Alan Greenspan just said: “They should follow the law and let them lapse.”


Neo
Comment posted July 19, 2010 @ 11:24 pm

But President Obama ran saying that he would end the Bush tax cuts.
How dare you take away from the President, our Dear Leader, his due.


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Pingback posted July 20, 2010 @ 2:17 am

[...] They can’t get ANYTHING right (source): Rep. Dave Camp (R-Mich.), the ranking member on the House Ways and Means Committee, is blasting [...]


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Pingback posted July 20, 2010 @ 12:08 pm

[...] The 'Democrat Ticking Tax Bomb' Canard « The Washington Independent [...]


Ryan Ellis
Comment posted July 20, 2010 @ 12:23 pm

Hi. I actually am Ryan Ellis. You asked, so here's my answer:

According to the Congressional Budget Office (CBO), even if all the expiring tax relief (AMT patch, business extenders, 2001/2003 tax relief) were permanently-extended, federal tax revenues would climb up to over 18 percent of the economy by the end of the decade. This is slightly-higher than federal revenue's average level since 1970. This is with EVERYTHING extended.

Meanwhile, spending will permanently be around 25 percent of GDP as far as the eye can see. This is a record amount, and far above historical averages.

Therefore, 100 percent of the “deficit problem” is in fact an overspending problem. Spending should come down to its historical levels. Ideally, it should come down to the historical level of taxation.

We don't need tax hikes unless you want to institutionalize permanently-higher taxes and spending.


grendelkhan
Comment posted July 20, 2010 @ 6:17 pm

You're half right. The deficit since 2000 is indeed half an overspending problem. According to the Center on Budget and Policy Priorities (http://www.cbpp.org/cms/?fa=view&id=640), the Bush tax cuts and the Bush wars (now Obama's wars) each account for about forty percent of the cumulative deficit.

(Can we mention the wars? “Defense” spending tends to be magically off-limits in American political discourse, as though it were funded by outer-space money ponies.)

The specter of “permanently-higher taxes” you cite is laughable. Taxes as a proportion of personal income haven't been as low as they were in 2009 since *1950*.

The choice to make in American tax policy is easy enough to make, and reads as follows. Low taxes, functioning infrastructure at home, and an imperial military–pick any two. (If you want to pay back the national debt, pick one.) Proposals to “control spending”, especially from organizations such as Americans for Tax Reform, inevitably propose to gut infrastructure at home to keep low taxes and an imperial military. Liberals propose to, perhaps, cut taxes a little bit less than your bunch do, so that perhaps they won't have to gut Social Security and Medicare quite so badly. It's a bloody mess, and nobody will even consider striking the root of the problem.

I appreciate that you're willing to wade into the comments here, especially to reply to a guy who called you a “conservative ball-licker”, but the organization you represent relies on fundamentally dishonest talking points and is designed to lead this country towards greater inequality, perpetual war and corporatism.


joetheinformed
Comment posted July 20, 2010 @ 6:21 pm

If you expect intelligent people to believe that people making over 373K a year ACTUALLY pay 35% of their pay to taxes then you must think people in this country are dumb. People who make that kind of money have multiple ways to shelter their money to avoid paying hardly any taxes on their income. It is the middle class and poor who pay the entire percentage you present. So don't try to insult my intelligence with your hogwash.


Ryan Ellis
Comment posted July 20, 2010 @ 8:20 pm

1. The metric is total taxes/GDP, and total spending/GDP. That's the aggregate. Deficits are merely the difference between these two numbers. What's important is taxes and spending, not the difference between the two. A balanced budget with government spending at 40 percent of GDP is far worse for the economy than a deficit with government spending at 15 percent of GDP.

2. I'm not defending wars of foreign aggression. I'm just a tax geek with an opinion.

3. “Permanently higher levels of taxation” refers to taxes as a percentage of the economy. If all tax increases are allowed to happen, federal taxes will climb to over 21 percent of GDP (at or close to a record). That's the metric–not taxes as a percent of personal income (which ignores both many taxes and many sources of national income).

4. I and most conservatives pick “low taxes” and “functioning infrastructure.” Where do we sign up?

5. We're submitting dozens of substantive spending cut ideas to the Simpson-Bowles commission. None of them are especially radical, as you suggest. For example, we like Giuliani's idea of hiring only one federal employee for every two that retire over the next couple of decades. That would reduce the federal workforce gradually, by attrition, down to a more manageable size.


grendelkhan
Comment posted July 21, 2010 @ 3:24 pm

(1) Your choice of metric is suspicious. If your goal is to, as the founder of ATR put it, drown government in a bathtub, then lower taxes and lower spending are clearly good… but your claim that a larger government is inherently worse for the economy than a smaller government running ruinous deficits is utterly unsupported by anything other than your ideology.

(2) and (4) You're too modest. You're not “just a tax geek”; you're the Tax Policy Director for Americans for Tax Reform, at the center of one of the nation's most powerful lobbying groups; this aw-shucks nonsense is insulting my intelligence. ATR has a history of prioritizing military spending over everything else–consider ATR's State Legislative Advisory Project, which, in 2001, explicitly advised legislators to put military spending first in line. In 2003, ATR sent state legislatures proposed statements in support of the Iraq War, which seems rather off-topic, since the Iraq War was a gigantic piece of government spending and otherwise unrelated to taxation. Functioning infrastructure, on the other hand, is largely built by the states; for instance, our decaying water mains (slacktivist.typepad.com/slacktivist/2010/07/1-water.html) require a large amount of maintenance at this point in order to avoid further breakdowns. Assistance to the states was a significant portion of the stimulus package. ATR opposed the stimulus; ATR opposed spending on infrastructure projects there because it was, well, spending. Wars, of course, are apparently paid for with magical pony money.

(3) Didn't you bother to read the article? There are no “tax increases”. Tax cuts which were unsustainable in the first place will, if nothing happens, expire. The mess has already been made, with the wars and the tax cuts. It has to be paid for.

(5) The commission is a joke. As I pointed out earlier, the vast majority of the deficit increase since 2000 has been due to two factors: the Bush tax cuts, and our wars. Cutting the federal government in half is precisely the sort of thing that ATR has wanted to do since Reagan was in office; it has no specific relevance to the current crisis.

The “ideas” that ATR has submitted to the commission are analogous to me buying a Porsche, then, when I realize I have no money left, telling the kids that their food is too expensive–it's cat food and rainwater from now on. The problem wasn't the kids' food in the first place; I'm using my Porsche as an excuse to do something I'd wanted to do since before the crisis started. There's no reason to take it seriously.


Ryan Ellis
Comment posted July 21, 2010 @ 4:20 pm

1. Grover never said that. It's attributed to him virtually every day, but he never said that. We want the government to be reduced to the point where it stops crowding out private sector growth and wealth creation, but not below the point needed to maintain essential government services. We're nowhere near that latter point.

Also, I never said “ruinous” deficits were ok provided you had small government. I said that big government/balanced budget is worse than small government/deficit. I will gladly stipulate that a budget of 7 or 10 percent of GDP would be bad even with a small government. I just doubt that would ever happen in the real world.

2. I think if you look at ATR's position on Iraq, Afghanistan, and the War on Terror over the past decade, you will find those actions to be the exception. You're being intellectually-dishonest in saying those examples are characteristic. They are not.

Secondly, throwing money at “infrastructure” without reforming the way infrastructure works would be foolish. Unions jack up the price of labor projects through the racist Davis-Bacon law, PLAs, etc. We're not going to advocate spending (say) $100 billion on roads and bridges if we could get the same roads and bridges for $80 billion if we reformed labor law. Do you voluntarily pay extra for goods and services you need?

3. If someone's tax rate jumps 3 or 4 points next year, that's a tax hike. If their child tax credit gets cut in half, that's a tax hike. If they're suddenly in AMT, that's a tax hike. “Scheduled hike in taxes” and “new tax hike” is a distinction without a difference.

Besides, you're conveniently-ignoring all the brand new tax hikes (about 25 or so) in Obamacare. Even under your definition, these are fair game.

As far as “paid for” goes, I think I understand what you want to do. Step one: hike spending to 25 percent of GDP. Step two: lament the deficit your spending binge just created. Step three: hike taxes to 25 percent of GDP and claim to be responsible. How about cutting spending back to where it was before you gorged yourself on taxpayer dollars?

4. Letting people keep their own money is not spending. It's not the government's money, and they have no right to it. Cutting taxes is not spending. You need to keep that straight.

We're going to be submitting an expanded version of our testimony to the commission this week. It has literally dozens of ideas to bring spending back to where it was in the 1970-2007 period (circa 20 percent of GDP). Unless you're willing to deal with the fact that the Pelosi-Bush-Obama binge is a problem, you're just not a serious person.

We agree that the Commission is a joke, but I'm sure for different reasons. We think the entire exercise is a cover to give a thin veneer of bipartisanship to a massive tax hike (likely a VAT). They want GOP fingerprints on a VAT. Nonetheless, we're happy to share ideas of how to actually govern and solve the real problem here–spending.

Taxes are in that historical range, and are therefore not a problem and don't need to be raised. Spending is the problem, and it's obvious to anyone who knows math and can read CBO reports.


grendelkhan
Comment posted July 21, 2010 @ 6:10 pm

(1) It's lovely that you're on a first-name basis with Grover Norquist, but I'd consider your assertion that the quote is a fabrication a lot more convincing if it hadn't been sitting around uncontested for nearly a decade: The quote appears to originate in a 2001 profile in The Nation (thenation.com/article/grover-norquist-field-marshal-bush-plan) by Robert Dreyfuss, and has been spread quite widely since then. it would be nice if you'd apologize or link to something from ATR contesting the profile. But this is tangential; replace drowning in a bathtub with “starve the beast”, if you'd rather.

A large difference of opinion is masked under the phrase “essential services”. For instance, ATR seems to think that waging two land wars in Asia is the provision of essential services.

The current levels of deficit are widely regarded as ruinous; this is why we have the commission. Unless taxes go up *and* spending comes down at this point, the deficit will persist.

(2) What on earth do you mean when you say that those actions are the exception? I found a story which quoted Norquist as wringing his hands over the mess that Iraq had become, in 2007, when everyone short of Dick Cheney knew it had been a terrible idea. During the war fever, he was busy declaring that “the Democrats were on the wrong side of the Civil War, the Cold War and now the Iraq War”.

It's inaccurate to say that unions jack up the price of labor; rather, they apply upward pressure to counteract buyers' downward pressure on the price of labor; thus, the price of labor reached when both workers and managers have collective bargaining power is fair.

But all of this is a red herring. If ATR has a habit of advocating for cheaper infrastructure spending, rather than no infrastructure spending, I'd like to see it. As it stands, it fits very well with ATR's track record of opposing anything other than tax cuts, deregulation and wars.

(3) This is absolute nonsense. The tax cuts were sold in 2001 (and even then, they were fiscal insanity) only by including a sunset provision. If there's a tax hike, it was Bush's tax cut followed by Bush's tax hike–scheduled to, in cowardly fashion, hit only after he was safely out of office. If you didn't like it, you should have been protesting the sunset provisions back in 2001, when the groundwork was laid.

And yes, Obamacare does raise taxes. (I fail to see why counting taxes rather than enumerating the change in proportional tax burden on the individual is anything other than a cheap rhetorical strategy.) These taxes directly pay for healthcare. Despite ATR's ideological opposition to the idea, government-provided healthcare (i.e., Medicare) is cheaper and provides greater customer satisfaction than private health insurance. This would, in a saner country, lead to a single-payer system or at least a public option, but that's not where we live.

But more to the point, I think I understand what *you* want to do. Step one: hike spending to 25 percent of GDP by starting some land wars in Asia), while cutting taxes. Step two: lament the deficit. Step three: cut every other kind of service that the government provides, and try to cut taxes again.

It's ridiculous for you to claim that I've “gorged [my]self on taxpayer dollars”. Have you forgotten the very first chart I linked you to? The budget was balanced back around 2000–and the size of government was, percentage-wise, what you apparently consider quite normal. The budget was broken, and the size of government expanded, by simultaneously starting two wars (which ATR cheered on) and cutting taxes massively (which ATR backed to the hilt). Unless I've scored some of those national-security dollars (backed by unicorns and sparkles!), I haven't gotten much of anything out of the deal.

(4) That's a lovely bit of rhetoric. It's also irrelevant. The effect of spending increases and tax cuts on the deficit are identical, and that's the context I'm talking about.

Unless the first bullet point in your proposal is “shrink the military-industrial complex”, you're, as you say, “just not a serious person”. My earlier analogy holds here; someone in your position is no doubt aware of the sources of the deficit

The drunken-sailor spending binge of the 2000s was spent blowing things up in the desert. If you care about deficits, it has to be paid for; it can either be paid for by cutting services that weren't breaking the bank before 2000 and wouldn't be now without the continuing wars, by raising taxes on people who can afford to pay them, or a combination of the two.

Furthermore, your choice to use taxes as a percent of GDP rather than individual tax burden as your metric makes little sense from a practical standpoint, but since the latter measure is hitting a sixty-year low, it certainly makes sense as a rhetorical method.

This is precisely the little dance that your friend Grover wanted to perform. Cut taxes and blow money on something ridiculous which doesn't help anyone, then cry that there's no money left and, alas, we're just going to have to cut services in order to fight the deficit. It's dishonest, it's destructive, and it's disgusting.


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Pingback posted July 22, 2010 @ 2:45 pm

[...] The 'Democrat Ticking Tax Bomb' Canard « The Washington Independent [...]


On Bush Tax Cuts, an Impending Battle Between Congress and Administration North Capitol Street
Pingback posted July 26, 2010 @ 8:39 am

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Dennis
Comment posted July 26, 2010 @ 1:55 pm

Well if that's the case, why bother going through with the charade of the tax increase? Just leave it alone then.


Dennis
Comment posted July 26, 2010 @ 1:57 pm

Or better yet, stop spending.


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Pingback posted August 2, 2010 @ 7:48 pm

[...] July 19, Michigan Republican Dave Camp sent out an email blast warning of the “Democrats’ ticking tax time bomb” [...]


Botanigrrl
Comment posted August 4, 2010 @ 5:09 pm

Technical issue: Seems like that last link is linked incorrectly. The one from “are already planning” takes you to the same page as the previous “trillion-dollar cuts.”


joetheinformed
Comment posted August 4, 2010 @ 5:12 pm

To decrease their advantage. To make sure they are paying enough to keep the deficit down. You Republicans do remember the deficit, don't you? You have been crying about it for months.


joetheinformed
Comment posted August 4, 2010 @ 5:13 pm

Thats right, he did promise to end the Bush tax cuts for those making over 250K a year. And you know what, the majority of people voted for him, so that must be what the majority of people in this country want!


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Pingback posted August 6, 2010 @ 4:03 pm

[...] Lie #1: Democrats Plan Across the Board Tax Hikes on January 1st On July 19, Michigan Republican Dave Camp sent out an email blast warning of the "Democrats' ticking tax time bomb" claiming [...]


3005188
Comment posted September 7, 2011 @ 1:01 pm

3005188 beers on the wall. sck was here


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