Taxes — Who to Believe?

Can they still raise taxes? Well, depends on who you believe

(CNN) — As the details of the debt ceiling deal start to emerge, it’s not surprising that there’s a disagreement between the White House and Republicans on whether the deficit reduction committee can or will tackle tax reform.

However, the politics of these positions are fairly clear: Republicans want to reassure members that taxes aren’t really on the table, and Democrats want to reassure members that they are.

Here’s what’s behind the spin:

Both sides agree …

The joint committee can take up tax reform if it chooses to. The dispute is whether the deal is structured in a way that motivates the committee to do it. Keep in mind the committee’s product — if it passes Congress — would take effect in January 2013, just when the Bush tax cuts expire.

The Republicans’ position …

Republican leadership aides say the committee is unlikely to tackle tax reform because the group’s goal is deficit reduction.

• They say the Congressional Budget Office — the official scorekeepers of any budget plan — will rate the committee’s deficit reduction package based on 2013 spending levels, when Bush-era tax cuts have already expired. That means they’ll be working off a baseline with higher revenue — as much as $3.5 trillion more revenue over 10 years.

• If the president wants to reinstate tax cuts for, say, the middle class, that would count as revenue lost. A committee focused on deficit reduction doesn’t want to be in the business of losing revenue.

• So the committee would then need to find a way to offset that lost revenue — closing loopholes wouldn’t be enough. It would have to move to cuts.

• Republicans say Democrats on the committee are unlikely to want to institute even more cuts in spending.

Therefore, Congress will have to deal with the expiration of the Bush tax cuts at some time, but there’s no motivation to do it in the context of a deficit reduction committee.

The administration’s pushback …

The White House says that the committee will be motivated to take up tax reform precisely because the Bush tax cuts will soon expire. One senior White House official says the schedule is motivating.

• First, the suggestion that it is impossible for the joint committee to raise tax revenue, they say, is simply false.

• If the joint committee decides as part of a balanced deal to eliminate tax subsidies for oil and gas companies or corporate jets, or if it decides to limit the value of itemized deductions for high-income earners, then these measures would raise revenue — completely independent of any baseline assumptions. They can be part of a balanced agreement, and the president will be encouraging the committee to consider them.

• Second, nothing in the legislation, they say, specifies that the committee must operate under any specific baseline — either the one that assumes the Bush tax cuts have expired, or the one that has them in place.

• Under the terms of the statute, the joint committee could decide to use whatever baseline it wants. If the committee wants to operate under a baseline that assumed the expiration of the Bush tax cuts for high-income taxpayers, it is free to do so. Likewise, if committee members want to operate under a current policy baseline that includes the Bush tax cuts — which is what House Speaker John Boehner was relying on when he said he had agreed to $800 billion in revenue from tax reform — they are free to do so as well.

• The legislation does not preclude revenue-raising tax reform. In fact, the president will be making the case that tax reform should be part of a balanced deal coming out of the joint committee.

Could the CBO use that baseline? It really doesn’t matter. The committee could still raise revenue if it wanted to. For instance, tax reform that included closing loopholes — tax breaks for jet plane owners, oil and gas subsidies — would show up as reductions from the baseline, despite GOP claims that it would not.

The bottom line …

Depending on who you believe, revenue increases — whether they take the form of closing loopholes, ending subsidies or letting the Bush tax cuts expire — may still be on the table in the next round. One way or the other, it will probably be up to the joint committee.

The question will be whether each side has the political will to push its position to the edge six months from now.


Ending Oil Subsidies? That Would Just Make Too Much Sense…

End Big Oil Subsidies

By Carl Gibson, US Uncut
Posted on July 14, 2011, Printed on July 15, 2011

In Mario Puzo’s The Godfather, a character named Don Fanucci is known as a ruthless, greedy back hand extortionist who skims a regular “protection” fee from those who operate in his neighborhood. Fanucci even threatened to disfigure the daughter of a man who refused to pay him, or allow him to “wet his beak.”

Right now, Congress allows big oil companies to wet their beak with $4 billion per year in subsidies paid directly by  the taxpayers. These are the same oil companies who are charging us $4 per gallon at the pump, making record profits every quarter, and paying $0 in taxes. In fact, ExxonMobil, the largest oil company in the world and beneificary of these subsidies, made $19 billion in profits in 2009, and received a $156 million refund check from Uncle Sam instead of paying federal taxes.

At a time when Congressional GOP leaders like John Boehner and Eric Cantor are holding the debt ceiling hostage, demanding Medicare cuts as a ransom note, why hasn’t Congress voted to stop wastefully subsidizing these tax-dodging oil companies? Big oil doesn’t need taxpayer help– in fact, ExxonMobil posted a 53% profit increase in January 2011, amidst skyrocketing gas prices. All taxpayers get in return is more pain at the pump, as we continue to funnel billions into the coffers of the richest corporations on record.

A common-sense legislative solution, H.R. 601, would have ended all of these subsidies for 5 years, saving taxpayers an estimated $40 billion. The extra revenue could instead be used to “uncut” budgets for programs that taxpayers actually depend on. The proposed $11.2 billion in cuts to early childhood education, $4.1 billion in job training programs for the unemployed, and $4.6 billion in teacher training and after school programs could all be reversed if we simply ended the parasitic relationship between tax-dodging oil companies and the taxpayers they’re bleeding dry.

Instead, Republicans voted NO to ending these subsidies, while simultaneously asking for more harmful budget cuts and rolling back Social Security and Medicare benefits.

Why are we asking seniors to foot the bill by cutting back on their health care, instead of ending oil subsidies? Why is President Obama discussing cuts to Social Security instead of demanding Republicans stop subsidizing big oil’s greed? Why are teachers, cops and firefighters being laid off while oil companies like ExxonMobil are sucking up billions in taxpayer dollars? Why are we giving away valuable taxpayer money to companies that are charging folks an arm and a leg every time we fill up?

When a caller confronted Rep. Paul Broun (R-GA) on the Jim Bohannon show last night, he went on record stating he would be for ending energy subsidies and closing corporate tax loopholes. Its time for Congress to put our money where their mouth is, stand up for their constituents and end the bailouts for big oil. Our leaders need to have the spine to say no to Fanucci when he asks to wet his beak on the taxpayers’ dime, and demand that these tax-dodging oil companies pay their fair share just like the rest of us.

Can You Meet Me Halfway?

This is a video of President Obama at a White House press conference addressing the deficit negotiations. He acknowledges that some hard spending cuts will have to be made, but on the flip side we also need to address tax breaks and subsidies for industries such as the oil industry. I’d like to just take a moment and remind the GOP that subsidies are not part of the free market, so why are you working so hard to protect them? If these industries are in real demand, they should be able to profit and thrive without them, no? Cutting spending without increasing revenue is not a valid solution. However, if you cut spending while simultaneously increasing revenue, you reach your goal a lot faster. If you were really serious about decreasing the deficit everything would be on the table.

Bizarre Solutions to the Fiscal Crisis

The Ten Oddest Responses To The Fiscal Crisis – Retrieved through Progress News Daily

  • Emergency managers — Michigan Gov. Rick Snyder ripped authority from two towns and the Detroit public schools into the hands of individual bureaucrats.
  • Declassifying endangered animals — The federal budget passed this April gave gray wolf hunters the green light.
  • No more bargaining — Legislation passed in Wisconsin and other states busted unions under the guise of a budget crisis.
  • Lowering taxes on cigarettes — New Hampshire is the latest state to consider a measure that purports to stimulate the economy by poaching smokers from other states.
  • Banning composting on Capitol Hill – Saving taxpayers $0.003 each.
  • Signing pledges not to raise taxes – Throwing an ugly wrench into budgeting talks at both the state and federal levels.
  • Selling the wilderness — Republicans used the April budget to defund some wilderness protection programs and continue to push for additional land privatization.
  • Rejecting government money for high-speed rail — Florida rejected more than $2 billion in federal funds that ended up going to more ambitious states.
  • Threatening to withhold emergency-relief funds — Some Republicans said Joplin, MO tornado victims should only be given assistance if the government balanced its spending with funding cuts elsewhere.
  • Ending the federal mohair subsidy — Farmers brought their goats to Capitol Hill in protest, but this arbitrary-sounding $1 million annual subsidy was finally cut in the April budget.
I’m left simply scratching my head…