A Big Victory for the Tea Party? Not if the Result is a Big Tax Hike
August 1, 2011
RUSH: I don't know that we won a budget battle. I don't know that the budget battle has been won. I'm undecided about this. I would love to support it, but there are things about it that give me pause because I still think a lot of it has been done from the context of fear, not being blamed, all concerned about a default which wasn't going to happen. And I heard yesterday, "Look, we're only one-third of the government, it's as good as we can do." And it isn't bad. There supposedly are no tax increases in this. Yet the CBO is counting on the Bush tax cuts expiring next year. The Bush tax cuts are set to expire. That's going to be a tax increase without anybody having to vote for one.
Now, it's also possible that the Bush tax cuts will be extended. Follow me on this. It is possible the Bush tax cuts will be extended, and I think it's 50-50. Obama's making a big deal about having those expire and so forth for new revenue, but if we extended the Bush tax cuts once in order to not do damage to the economy, the economy is worse, I'm just telling you the possibility -- follow me on this, now -- the possibility that the Bush tax cuts will be extended is about 50-50. If that happens, then what happens to the CBO score? The CBO score is thrown out the window. The CBO score is BS anyway. But if the Bush tax cuts are extended, the CBO is gonna score that as a major cut, which will have to be replaced. A cut in government revenue. If the Bush tax cuts are extended, that's less revenue than the government's counting on, which means that the commission will have an automatic excuse to go in and raise taxes. And if they permanently patch the Alternative Minimum Tax, you know, that's something they do annually, if there's a permanent patch to the AMT, that's another element that the CBO could say constitutes a loss of revenue to the government. And we can't have that, folks.
All of this is about raising revenue. All this is about raising the debt limit. So if there's a permanent AMT patch and if the Bush tax cuts are extended, we're looking at what the CBO would say is a two to $4 trillion shortfall, which means that this special commission can go in there, and if they want to, raise taxes to make up for it. These kinds of little things that are lurking here, we don't know how it's going to pan out. I better blow out these candles on the cake before we start a fire in here. I have made my wish. You're not supposed to tell people what the wish is. I'm not gonna tell people what the wish is. Here we go. Oh, trick candles. Yep, here they come, trick candles. Okay, Brian, I blew 'em out twice. You can come get 'em. Have you noticed, by the way, ladies and gentlemen -- (interruption) the White House isn't, the White House isn't. Have you gone to WhiteHouse.gov and read their five pages on why they're happy about this?
I have got three or four stories in this stack about how big the Tea Party won this thing, big, big Tea Party win. Now, why? Why portray this as a Tea Party win? Obama doesn't sign this. Just stick with me and this will all be made clear. This will all be made clear as the program unfolds before your eyes. Whoever came up with it, I forget who, somebody referred to this deal as a Satan sandwich, and I think it was a Democrat, Emanuel Cleaver I think referred to it as a Satan sandwich, and the Satan sandwich is in the details. Now, the stock market was supposed to rally. Once we got the deal, the stock market was supposed to, whew, big sigh of relief. Let me check, folks. The stock market, the Dow Jones Industrial Average is down 126. "Stocks Fret Over Data, Downgrade Risk." See, we're not out of the woods when it comes to the downgrade.
The debt could still be downgraded because there's really no significant cut in spending. What we have here is ten-year cuts. We have a trillion or so over ten years. Obama's getting his $2.4 trillion in spending. Now, granted, there's a second tranche that has to be authorized at the end of the year around Christmastime, but it locks in the stimulus in the baseline. It grows the baseline. The second phase, the second tranche would cut almost a trillion dollars from defense if the cuts occur. Are you aware of this, Snerdley? Yeah, that is very troublesome. The mechanism is a 50% cut in defense and a 50% cut in all the other entitlements combined. Defense is taking the major hit. There is no balanced budget in this.
Meanwhile, credit will be downgraded because this does not impact the trend of spending in any significant way -- and as for no tax increases? Uh, let me just put it this way: The commission will demand that the Bush tax cuts are matched dollar for dollar by new tax increases if they are extended. There's no way about it. If the Bush tax cuts are extended, that equals a loss of revenue to the government. Remember, we're getting this new rhetoric out of Washington: Tax cuts are spending. By the way, happy Ramadan! We really have a lot to celebrate, too. We got the budget deal done. We avoided all this catastrophe before Ramadan as well. Now, the first votes in the House are scheduled for about now, 12 noon. Why is that? Probably just a coincidence, isn't it, that the first votes in the House are scheduled while this program is going on.
I mean, it's not like they would want to try to get a vote in before the big show starts here. No! The stock market did go up a little bit but then crashed back down to earth. I think people have started reading the deal. So remember last week, last Friday talking about Plan C? It looks like we were right last week when we said we were gonna get Plan C. W nailed it. I told you. I told you that Boehner and McConnell and Obama and Reid were all talking about a separate deal, and this is what we got -- and now, guess what? It goes back to the House, doesn't it? And now guess who the pressure's on? The pressure's on the House Tea Party guys, and that's why the Tea Party guys are being praised in the press. That's why they're said to be winners.
They're trying to pressure their vote. The pressure is on the Republicans again. They thought that they'd passed this off to Dingy Harry into the Senate, and Dingy Harry said, "Ehhhh, you know what? Me and Mitch, we've been discussing this, and it looks like there's some stuff that we could work with here," and they've come up with a compromise, and now it's back to the House -- and there's some stuff in it that Tea Party people do not like. Now, the end of the Bush tax cuts, the sunset of the Bush tax cuts is locked in. The Obamacare tax increases are locked in. Together, those two items alone will mean the biggest tax increase in the history of the country.
Anybody who wants to tell you that there aren't any tax increases in this, technically they may be right. This piece of legislation does not have a specific tax increase in it, but what's slated to happen over the course of the next few months results in one. The Bush tax cuts and the Obamacare tax increases are locked in, and we know that Obamacare was not even up for grabs. Obamacare wasn't even on the table in this, and you know that there are massive tax increases in that. You note how nobody said a word about it. So the end of the Bush tax cuts, the arrival of the Obama tax increases, and we're looking at the largest tax increase in the history of the country -- and on top of that, the debt deal includes a new bipartisan committee that to look at "new revenue sources," new revenue increases.
Yet everybody's crowing about how this deal doesn't include any tax increases. The commission, this super-select commission, will demand that the Bush tax cuts are matched dollar for dollar by new tax increases if those tax cuts are by some chance extended. Now, you may think it's a long shot that the Bush tax cuts would be extended. Obama did it once for campaign purposes. If he thinks that he could do it again for campaign purposes, for the economy -- and tell his troops he's getting tax increases elsewhere -- then it's possible, and the permanent patch on the AMT. All of this, given the baseline, could be scored as a massive cut in government revenue, a huge loss of government revenue -- which, of course, is going to have to be made up.
Now, we've already cut defense $400 billion in the last two years. The media is calling this a victory in order to get the House Republicans to vote for it. I'll go through just some of the headlines of these stories: "Big Win for the Tea Party," and this is the second time that this tactic has been tried. I forget when. I think it was last March when Boehner had this massive extension of the debt ceiling and all these massive cuts that equal 500-and-some-odd billion dollars and whatever. Remember? "Boehner Big Winner! Boehner Big Winner!" Bogus. They said, "Boehner Big Winner!" in order to get everybody to go along with it. Same thing now: "Tea Party Big Winners!"
Even the UK newspapers: "Tea Party Big Winners!" It's all designed to get the Tea Party people to think, "Hey, man, hey, hey, look, the media says we won." The media knows that people in Washington... (I am a little hoarse today, folks. I didn't do much speaking over the weekend which is actually why my voice is lazy and tired.) The media knows that people who live and work in Washington crave support and praise from the media. They know it. Just like parents know that little kids love praise. So they're doling it out today.
RUSH: The Bush tax cuts. If the Bush tax cuts expire, this would mean that the CBO (Congressional Budget Office) score would assume a three- to five-trillion-dollar tax increase. Now, House members were told on their conference call last night that the CBO would rescore the deal as if the Bush tax cuts expire because they are supposed to expire. Okay, so that means a three to five trillion-dollar tax increase. Grab audio sound bite number 30. Just this morning, the White House press briefing. See, one of the selling points for the Republicans to other Republicans to go ahead and support the deal is that it will be impossible for this select commission to raise taxes. It would be impossible. Jay Carney disagrees. Jake Tapper says, "House Republicans seem to be arguing that the super committee is gonna have a difficult time doing any tax reform at all because it's gonna be scored by the CBO. The Bush tax cuts are set to expire in January of '13. Could you comment on that?"
CARNEY: I've seen that and I would simply say that the suggestion that it is impossible for the joint committee to raise tax revenue is simply not accurate. It's false. If the joint committee decides, for example, part of a balanced deal should be to eliminate tax subsidizes for oil and gas companies or corporate jets -- or if they decide to limit the value of itemized deductions for high income earners as the president has called for -- they can do that and they would raise revenue doing that. Second, nothing in the legislation that's being considered by Congress specifies at all that the committee operate under any specific baseline. Any suggestion otherwise is simply false.
RUSH: So you see? All of these presumptions that everybody's been acting on, the White House is saying, "No, you're wrong."
RUSH: Now, there's one other thing about the Bush tax cuts expiring. The CBO is using their March baseline, March of this year, as opposed to January, and because they're doing that they're assuming the Bush tax cuts expire, which means that they will not count as savings with regard to discretionary spending. So they don't count. The Bush tax cuts expiring don't give anybody any credit toward anything, other than the government more revenue, other than a tax increase.
Now, if the Bush tax cuts were extended, the CBO would say that's costing us up to $5 trillion. So $5 trillion would be added to the debt if the Bush tax cuts are extended, when everybody knows that these tax cuts generate new revenue. This is so convoluted, and I know this is hard to follow, but the assumption is the Bush tax cuts are gonna sunset. But people are asking what happens if they are extended? And this is a possibility, along with the patch, permanent patch of the Alternative Minimum Tax. They do that every year to keep more people from being affected by it. At some point they're just gonna make it permanent. I don't know why they don't just get rid of it. Well, yes, I do. They're not gonna write out the power that the AMT gives them. But the Congressional Research Service revised the total cost of permanently extending all the Bush tax cuts to over $5 trillion over the next ten years.
Now, that revised amount, which is much higher than the $2.8 trillion figure that the Congressional Research Service reported in September takes into account the cost of servicing the debt due to lost revenue and indexing the Alternative Minimum Tax. This is one of these dirty little secrets that's thrown in, sort of like a virus, a computer virus that will end up forcing this select committee to go in and raise taxes. And don't forget that's what Obama wants out of this.
RUSH: Now, the CBO, ladies and gentlemen. Let's try to make some sense out of this. The Congressional Budget Office will score the Bush tax cut continuation as an expense, because remember the way the CBO works: It is asked questions a certain way and answers questions it is asked. You can get any answer you want out of the CBO. They can only score things they are given. So if they're asked to score, "If the Bush tax cuts expire, what happens" They give you the answer. "If the Bush tax cuts are extended, what happens?" They give you the answer. Permanently extending the Bush tax cuts will "cost" $5 trillion. Now, right there we're shafted!
A tax cut, which generates revenue, is called a "cost" to the government. A benefit to the people is a cost to the government, and we can't have that. Now, let me tell you something else, folks, that concerns me here. The left wants the polls to say that this grand bipartisan bill has "gutted government spending." They're doing this in the context of talking about the Tea Party winning. No, no, no! Just stick with me on this, now. The left wants the polls to say that says grand bipartisan has "gutted government spending." It's all part of the Tea Party winning.
The left will embark on an all-out effort to declare the debt ceiling elevator deal as a huge cut in the size of government. "Government haters win," blah, blah, blah. So when the economy continues to implode -- and it will, by design -- this is a campaign year; it is a presidential election year -- they are going to portray this as a massive cut in government. You've seen it. That's why everybody's talking about it being a big win for the Tea Party. That's why Snerdley came in here and asked me how I felt today, 'cause he thinks I've scored a big victory, that this deal is a big victory 'cause all this spending is cut and there aren't any tax increases.
Well, there are no spending cuts, and there are big tax increases no matter what happens. The Bush tax cuts expire? Tax increase. If they are extended, the commission's gonna have to make up the money. Tax increase, emergency procedure, what have you. Plus we're gonna get the tax increases from Obamacare! So no matter how you slice it, taxes are going up. There hasn't been a significant cut in spending, nothing that's reducing the rate of growth of government, nothing that's making it smaller. So (and this is the point) when the economy continues to implode and the deficit keeps skyrocketing, guess what Obama gets to say in his reelection narrative? Quote: "We tried slashing government spending. I went along with it, but it didn't help. Can we all agree now, finally, that the rich will have to pay their fair share? Can we all agree now that we're going to have to raise taxes on people making $200,000 or more? We tried cutting; it hasn't worked."
That's what I fear, or see, coming down the pike as part of Obama's reelection narrative.