Commentary Magazine


Topic: Keith Hennessey

The Tax Deal? “No-Brainer.”

My former White House colleague Keith Hennessey lists the terms of the tax deal, his analysis, and his recommendation.

The bottom line? “No-brainer.  Support the deal.” I concur with Keith; it is, in its totality, several steps in the right direction.

My former White House colleague Keith Hennessey lists the terms of the tax deal, his analysis, and his recommendation.

The bottom line? “No-brainer.  Support the deal.” I concur with Keith; it is, in its totality, several steps in the right direction.

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RE: A Significant Letter

I concur with Pete and the e21 authors. The e21 group not only has the benefit of Pete’s wisdom but that of a number of other key thinkers also. Keith Hennessey, formerly Assistant to the President for Economic Policy and Director of the National Economic Council under President Bush; Bill Kristol; and Andrew Laperriere, a Managing Director of International Strategy and Investment Group Inc., are on its board of advisers. And its staff and contributors includes impressive, serious economic and policy gurus. We’ll be hearing more from them in the days and weeks ahead. The group that released an open letter signed by a list of economists, business leaders, and policy wonks (including Michael Boskin, Roger Hertog, Amity Shlaes, Paul Singer, and John Taylor) is certainly going to be of critical importance in the public discussion ahead.

As the Wall Street Journal points out, this group is not alone in raising concerns about the Fed’s printing press. The e21 group has been discussing the issue with Republican office holders and potential 2012 candidates and has come on the heels of criticism of the plan both by Rep. Paul Ryan and Sarah Palin. The report explains:

“Printing money is no substitute for pro-growth fiscal policy,” said Rep. Mike Pence, an Indiana Republican who has been privy to early discussions with the group of conservatives rallying opposition to the Fed plan. He said the signatories to the letter “represent a growing chorus of Americans who know that we should be seeking to stimulate our economy with tax relief, spending restraint and regulatory reform rather than masking our fundamental problems by artificially creating inflation.”

The Fed faces potential pressure of a different sort from the left as well. Some prominent Democratic congressmen, including the current chairman of the House Financial Services Committee, have endorsed the quantitative-easing move.

If nothing else, the letter and the emergence on the scene of a group like e21 will demonstrate that Republicans are serious about weighty economic issues and focused on the long-term health of the dollar and the U.S. economy. The party of no — which really was never only about no — is getting some intellectual heft. This is good for it, but even more important for the country and the public debate.

I concur with Pete and the e21 authors. The e21 group not only has the benefit of Pete’s wisdom but that of a number of other key thinkers also. Keith Hennessey, formerly Assistant to the President for Economic Policy and Director of the National Economic Council under President Bush; Bill Kristol; and Andrew Laperriere, a Managing Director of International Strategy and Investment Group Inc., are on its board of advisers. And its staff and contributors includes impressive, serious economic and policy gurus. We’ll be hearing more from them in the days and weeks ahead. The group that released an open letter signed by a list of economists, business leaders, and policy wonks (including Michael Boskin, Roger Hertog, Amity Shlaes, Paul Singer, and John Taylor) is certainly going to be of critical importance in the public discussion ahead.

As the Wall Street Journal points out, this group is not alone in raising concerns about the Fed’s printing press. The e21 group has been discussing the issue with Republican office holders and potential 2012 candidates and has come on the heels of criticism of the plan both by Rep. Paul Ryan and Sarah Palin. The report explains:

“Printing money is no substitute for pro-growth fiscal policy,” said Rep. Mike Pence, an Indiana Republican who has been privy to early discussions with the group of conservatives rallying opposition to the Fed plan. He said the signatories to the letter “represent a growing chorus of Americans who know that we should be seeking to stimulate our economy with tax relief, spending restraint and regulatory reform rather than masking our fundamental problems by artificially creating inflation.”

The Fed faces potential pressure of a different sort from the left as well. Some prominent Democratic congressmen, including the current chairman of the House Financial Services Committee, have endorsed the quantitative-easing move.

If nothing else, the letter and the emergence on the scene of a group like e21 will demonstrate that Republicans are serious about weighty economic issues and focused on the long-term health of the dollar and the U.S. economy. The party of no — which really was never only about no — is getting some intellectual heft. This is good for it, but even more important for the country and the public debate.

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Obama vs. the Facts

My former White House colleague Keith Hennessey has an excellent post on why President Obama’s claim that we’ve had “a decade of spiraling deficits” is (like so much of what Obama claims) false. More and more we’re finding that this administration’s assertions are at war with empirical data.

My former White House colleague Keith Hennessey has an excellent post on why President Obama’s claim that we’ve had “a decade of spiraling deficits” is (like so much of what Obama claims) false. More and more we’re finding that this administration’s assertions are at war with empirical data.

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Puzzling Out the Health-Care Vote

With my friend Yuval Levin, than whom no one seems more able to maintain a grasp on the slippery thread of this business, I’ve been trying to work through just what exactly the procedure for a successful health-care vote is. It would seem to be this (and don’t blame Yuval if I get any of this wrong).

Stage 1. The House of Representatives must now pass the Senate bill, which passed in December. In so doing, it will effectively be voiding its own bill, which was passed with a 5-vote margin in early November — because none of the  goodies and bargains House members negotiated among themselves are present in the Senate bill. Specifically, there’s no “public option” in the Senate bill, as there is in the House bill; and there’s no “Stupak amendment” forbidding the use of public funds for abortion in the Senate bill. That amendment was necessary for House Democratic leaders to secure its five-vote victory in November.

Ordinarily, the House and Senate bills would go to a conference committee, which would negotiate over the differences in them, combine them into a single bill, and send that new bill back to both chambers for a final vote. This single bill would be considered a new piece of legislation, and therefore would have to be voted on again by everybody. Once that is done, the single bill would go to the president’s desk for signature.

But because of Scott Brown’s election, there are no longer 60 votes in the Senate for a health-care bill—and 60 votes are needed in the Senate to end discussion of a bill and bring it to a vote. Without 60 votes bringing the discussion to “cloture,” a bill can remain open for debate forever in the process called “filibustering.” So there can’t be a health-care bill if the Senate has to take up a new version of it, because any new version will be fillibustered by Republicans.

So the House has to vote on the Senate bill to avoid another vote in the Senate. For then there is a single piece of legislation all tied up in a bow that doesn’t have to go to committee.

So why doesn’t that just happen?

Well, if there is to be a health-care bill, it will happen. The House will have to vote through the Senate bill without changing it. That’s just the reality. But that’s only going to happen if House members are promised that some of their concerns are taken into consideration. And so there will have to be a second bill. Immediately afterward. A second bill that fixes what’s wrong with the first bill. And this is where all this talk about “reconciliation” comes in.

Stage 2. Reconciliation. The second bill will function as a series of amendments to and fixes of the first bill. Now, ordinarily, that  should kill the whole process outright, because the same problems the first bill faced should apply to a second bill in the Senate—the need for 60 votes to close debate, etc. But that wouldn’t be the case if the second bill is treated as a “reconciliation” measure. A reconciliation measure is a the only one in the Senate that bypasses the 60-vote cloture rule and allows a simple majority vote. Keith Hennessey describes it thus:

A reconciliation bill is a special type of bill.  The full name is a “budget reconciliation” bill.  It’s purpose is to combine into one bill the work of multiple committees that are changing federal spending and tax laws.  It is an incredibly powerful tool that bypasses [unlimited debate and cloture] but only for very limited purposes.  Senators, and the Senate as a whole … allow these rules to be bypassed only for a specific purpose.

The use of “reconciliation” to pass health-care measures would be unprecedented. And there are real questions about whether the parliamentarian of the Senate will be able, even bending so far over he turns himself into a pretzel, to say that a vote on (for example) stripping abortion coverage from the bill fits the legal definition of what “reconciliation” is.

But forget that for a second. Let’s assume the Senate parliamentarian is entirely pliable. A reconciliation bill will be written. What then?

Stage 3. The House takes all the heat. Ah. Here’s the rub. It appears that, in an effort to make this as easy as possible on the Senate, the House is now under pressure from the Senate and the White House to vote for the reconciliation bill before the Senate. At which point the Senate will take it up and ramrod through the second bill with 51 votes, Obama signs it, and there’s health-care.

This strategy requires the House not only to vote for a wildly unpopular bill once, but then to vote on its sequel almost immediately afterward. In other words, House members are going to be forced to cast two wildly unpopular, highly visible votes in succession, without anybody else taking the heat. And there is going to be deal-making and back-scratching and all manner of sleazy behavior to achieve it, all of which will just increase the public sense of a corrupt process that has ensnared Democrats just as corruption seemed to ensnare Republicans in 2006. All so the Senate can sneak it through. And the House has good reason not to trust that the Senate will hold to its part of the bargain. What if there is a colossal meltdown in public support just before the reconciliation vote? What if the Senate decides to change it a little and throws it all back into chaos again? What if House members were to cast two votes and there was no health care at the end of the process?

The only thing that can make this insane business tolerable or bearable for House Democrats is geniune conviction —  conviction that this is the once-in-a-lifetime chance to put the country on the glidepath to a national health-care system. That is what can make the process seem to transcend the sleazy deals and buyoffs for those who are going to have to face voters and explain themselves and their votes.

So if, in the end, this process works as the White House wants it to work, it will do so because of core Democratic and liberal beliefs. Republicans and conservatives need to understand that; the political horror faced by every Democrat who does not have an entirely safe seat can be mitigated in part by the belief that there may be enough Democrats who can live their lives proud to have brought this measure to fruition.

Thus, the best hope of derailing health care will not derive from high motives – stopping this dreadful measure before it becomes law — but rather very low motives —sheer, panicked self-preservation on the part of Democratic pols hoping against hope to hold on in spite of the looming Republican wave.

With my friend Yuval Levin, than whom no one seems more able to maintain a grasp on the slippery thread of this business, I’ve been trying to work through just what exactly the procedure for a successful health-care vote is. It would seem to be this (and don’t blame Yuval if I get any of this wrong).

Stage 1. The House of Representatives must now pass the Senate bill, which passed in December. In so doing, it will effectively be voiding its own bill, which was passed with a 5-vote margin in early November — because none of the  goodies and bargains House members negotiated among themselves are present in the Senate bill. Specifically, there’s no “public option” in the Senate bill, as there is in the House bill; and there’s no “Stupak amendment” forbidding the use of public funds for abortion in the Senate bill. That amendment was necessary for House Democratic leaders to secure its five-vote victory in November.

Ordinarily, the House and Senate bills would go to a conference committee, which would negotiate over the differences in them, combine them into a single bill, and send that new bill back to both chambers for a final vote. This single bill would be considered a new piece of legislation, and therefore would have to be voted on again by everybody. Once that is done, the single bill would go to the president’s desk for signature.

But because of Scott Brown’s election, there are no longer 60 votes in the Senate for a health-care bill—and 60 votes are needed in the Senate to end discussion of a bill and bring it to a vote. Without 60 votes bringing the discussion to “cloture,” a bill can remain open for debate forever in the process called “filibustering.” So there can’t be a health-care bill if the Senate has to take up a new version of it, because any new version will be fillibustered by Republicans.

So the House has to vote on the Senate bill to avoid another vote in the Senate. For then there is a single piece of legislation all tied up in a bow that doesn’t have to go to committee.

So why doesn’t that just happen?

Well, if there is to be a health-care bill, it will happen. The House will have to vote through the Senate bill without changing it. That’s just the reality. But that’s only going to happen if House members are promised that some of their concerns are taken into consideration. And so there will have to be a second bill. Immediately afterward. A second bill that fixes what’s wrong with the first bill. And this is where all this talk about “reconciliation” comes in.

Stage 2. Reconciliation. The second bill will function as a series of amendments to and fixes of the first bill. Now, ordinarily, that  should kill the whole process outright, because the same problems the first bill faced should apply to a second bill in the Senate—the need for 60 votes to close debate, etc. But that wouldn’t be the case if the second bill is treated as a “reconciliation” measure. A reconciliation measure is a the only one in the Senate that bypasses the 60-vote cloture rule and allows a simple majority vote. Keith Hennessey describes it thus:

A reconciliation bill is a special type of bill.  The full name is a “budget reconciliation” bill.  It’s purpose is to combine into one bill the work of multiple committees that are changing federal spending and tax laws.  It is an incredibly powerful tool that bypasses [unlimited debate and cloture] but only for very limited purposes.  Senators, and the Senate as a whole … allow these rules to be bypassed only for a specific purpose.

The use of “reconciliation” to pass health-care measures would be unprecedented. And there are real questions about whether the parliamentarian of the Senate will be able, even bending so far over he turns himself into a pretzel, to say that a vote on (for example) stripping abortion coverage from the bill fits the legal definition of what “reconciliation” is.

But forget that for a second. Let’s assume the Senate parliamentarian is entirely pliable. A reconciliation bill will be written. What then?

Stage 3. The House takes all the heat. Ah. Here’s the rub. It appears that, in an effort to make this as easy as possible on the Senate, the House is now under pressure from the Senate and the White House to vote for the reconciliation bill before the Senate. At which point the Senate will take it up and ramrod through the second bill with 51 votes, Obama signs it, and there’s health-care.

This strategy requires the House not only to vote for a wildly unpopular bill once, but then to vote on its sequel almost immediately afterward. In other words, House members are going to be forced to cast two wildly unpopular, highly visible votes in succession, without anybody else taking the heat. And there is going to be deal-making and back-scratching and all manner of sleazy behavior to achieve it, all of which will just increase the public sense of a corrupt process that has ensnared Democrats just as corruption seemed to ensnare Republicans in 2006. All so the Senate can sneak it through. And the House has good reason not to trust that the Senate will hold to its part of the bargain. What if there is a colossal meltdown in public support just before the reconciliation vote? What if the Senate decides to change it a little and throws it all back into chaos again? What if House members were to cast two votes and there was no health care at the end of the process?

The only thing that can make this insane business tolerable or bearable for House Democrats is geniune conviction —  conviction that this is the once-in-a-lifetime chance to put the country on the glidepath to a national health-care system. That is what can make the process seem to transcend the sleazy deals and buyoffs for those who are going to have to face voters and explain themselves and their votes.

So if, in the end, this process works as the White House wants it to work, it will do so because of core Democratic and liberal beliefs. Republicans and conservatives need to understand that; the political horror faced by every Democrat who does not have an entirely safe seat can be mitigated in part by the belief that there may be enough Democrats who can live their lives proud to have brought this measure to fruition.

Thus, the best hope of derailing health care will not derive from high motives – stopping this dreadful measure before it becomes law — but rather very low motives —sheer, panicked self-preservation on the part of Democratic pols hoping against hope to hold on in spite of the looming Republican wave.

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Blaming Bush for the Deficit Is Getting Old

Megan McArdle nails Obama on his “blame Bush for everything” fetish, which has become all the more frequent as Obama ducks responsibility for a budget proposal that gushes red ink:

Listening to his defenders reminds me of those people who sit around whining about how their Dad was really distant and critical. … I mean, fine, you apparently had a rotten childhood, but Dad can’t get come and get you off the couch and find you a girlfriend and a better job. Girls and employers get really creeped out if they try.

Whatever George W. Bush did or did not do, he’s no longer in office, and doesn’t have the power to do a damn thing about the budget. Obama is the one who is president with the really humongous deficits. Deficits of the size Bush ran are basically sustainable indefinitely; deficits of the size that Obama is apparently planning to run, aren’t. If he doesn’t change those plans, he will be the one who led the government into fiscal crisis, even if changing them would be [sob!] politically difficult.

This, like so much of what Obama does, seems designed to get through the moment — a speech, an interview query, or a press conference. Why aren’t you doing something about the deficit? “Bush’s fault, Bush’s fault,” he squawks like a well-trained parrot. It is, of course, a line, not an answer. As Keith Hennessey points out in assessing the “blame Bush” mantra:

President Obama does not point out that his first major policy effort was to propose and enact an $862 B stimulus law without paying for it. (CBO has upped their estimate from the previous $787 B figure.) He did inherit a huge deficit, in large part resulting from the recession and bailout costs, and he immediately made it much bigger.

And, as Hennessey explains, Obama’s proposed policies would result in a far more calamitous fiscal situation than the one he inherited, including “a budget deficit this year of 8.3% of GDP, debt/GDP increasing from 64% now [rising to] to 77% in ten years; [and] the size of government, measured by both spending and taxes, climbing to historically high shares of GDP.” Nor does Obama have any plan (other than vilifying Rep. Paul Ryan) for addressing the growth of entitlement programs.

Obama’s excuse mongering is the telltale sign of a president who lacks his own policy solutions. Voters are not, I would suggest, going to buy the buck-passing — not from lawmakers on the ballot this year or from Obama in 2012. So he better come up with an answer and not an excuse if he intends ever to get that second term. For if he lacks the wherewithal to deal with problems on his watch, surely a challenger will come along with a fiscal game plan of his or her own. And I strongly suspect that blaming George W. Bush won’t be part of that plan.

Megan McArdle nails Obama on his “blame Bush for everything” fetish, which has become all the more frequent as Obama ducks responsibility for a budget proposal that gushes red ink:

Listening to his defenders reminds me of those people who sit around whining about how their Dad was really distant and critical. … I mean, fine, you apparently had a rotten childhood, but Dad can’t get come and get you off the couch and find you a girlfriend and a better job. Girls and employers get really creeped out if they try.

Whatever George W. Bush did or did not do, he’s no longer in office, and doesn’t have the power to do a damn thing about the budget. Obama is the one who is president with the really humongous deficits. Deficits of the size Bush ran are basically sustainable indefinitely; deficits of the size that Obama is apparently planning to run, aren’t. If he doesn’t change those plans, he will be the one who led the government into fiscal crisis, even if changing them would be [sob!] politically difficult.

This, like so much of what Obama does, seems designed to get through the moment — a speech, an interview query, or a press conference. Why aren’t you doing something about the deficit? “Bush’s fault, Bush’s fault,” he squawks like a well-trained parrot. It is, of course, a line, not an answer. As Keith Hennessey points out in assessing the “blame Bush” mantra:

President Obama does not point out that his first major policy effort was to propose and enact an $862 B stimulus law without paying for it. (CBO has upped their estimate from the previous $787 B figure.) He did inherit a huge deficit, in large part resulting from the recession and bailout costs, and he immediately made it much bigger.

And, as Hennessey explains, Obama’s proposed policies would result in a far more calamitous fiscal situation than the one he inherited, including “a budget deficit this year of 8.3% of GDP, debt/GDP increasing from 64% now [rising to] to 77% in ten years; [and] the size of government, measured by both spending and taxes, climbing to historically high shares of GDP.” Nor does Obama have any plan (other than vilifying Rep. Paul Ryan) for addressing the growth of entitlement programs.

Obama’s excuse mongering is the telltale sign of a president who lacks his own policy solutions. Voters are not, I would suggest, going to buy the buck-passing — not from lawmakers on the ballot this year or from Obama in 2012. So he better come up with an answer and not an excuse if he intends ever to get that second term. For if he lacks the wherewithal to deal with problems on his watch, surely a challenger will come along with a fiscal game plan of his or her own. And I strongly suspect that blaming George W. Bush won’t be part of that plan.

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In a Weak Economy: Tax Hikes as Far as the Eye Can See

The Obama tax-hike plans would be startling in good economic times. That they have been proposed while the economy is still limping and unemployment remains at historic highs is jaw dropping. This report explains:

Taxes on high-income earners would rise by nearly $1 trillion over the next 10 years, under the budget plan put forward by President Barack Obama on Monday.

The bulk of that increase comes as tax cuts enacted under President George W. Bush expire at the end of 2010.

The top two income-tax rates, which affect people earning more than $200,000 a year, or $250,000 for married couples, will return to 36% and 39.6%, from 33% and 35% now. Under the budget plan, capital gains and dividends would be taxed at 20%, up from 15% now, for people at those income levels. . . Fund managers would see their partnership profits taxed at ordinary income rates, rather than the lower capital-gains rate, under Mr. Obama’s proposals. . .

Mr. Obama proposed reinstating the estate tax, which was repealed for one year on Jan. 1, at the levels in effect last year—or 45%, with an exemption for estate wealth under $3.5 million—and extending those rates permanently. . .

Mr. Obama would extend the Bush tax cuts, including the 15% rate on capital gains and dividends, for single taxpayers making less than $200,000 and couples earning less than $250,000. But he dropped a request to make permanent the payroll tax credit that fattened worker paychecks by $400 per person in 2010.

And there is the limit on charitable deductions, which John and I remarked upon yesterday. When you add it all up, we’re talking about $2 trillion in tax hikes through 2020. That includes some that are especially counterproductive if the aim is to improve America’s competitiveness. The Wall Street Journal editors explain:

Our favorite euphemism is the Administration’s estimate that it can get $122.2 billion in new revenue via a “reform” of the “U.S. international tax system.” Reform usually means closing some loopholes in return for lower tax rates. But this is a giant tax increase on American companies that operate overseas, and it includes no offsetting cut in the U.S. 35% corporate tax rate, which is among the highest in the world. The Administration agreed last year to drop this idea when it was seeking the help of the Business Roundtable to pass health care. But so much for that, now that the White House needs the money.

You can now fully appreciate how inconsequential is the grab bag of small-business tax credits, which Obama touted in his SOTU. Most small businesses pay taxes at the individual rates, and are going to get slammed hard by the Obama tax hikes. Indeed, most of those who hire, invest, and contribute the lion share of economic growth are going to get squeezed by the Obama budget, should it or some version of it get passed.

One marvels at the cognitive dissonance at work. The Obama team declares “jobs” to be the top priority. But job creators are getting a hefty tax hike. The Obama team declares its conviction that the private sector is the engine of recovery. But those who do the most hiring—small business—are getting whacked and money is being sucked out off the private sector and going into the public sector. (As Americans for Tax Reform spells it out, “Taxes are scheduled to rise from 14.8 percent of GDP in 2009 to 19.6 percent by 2020.”)

Nor are all these taxes helping to close the deficit. As Keith Hennessey lays it out, “the president’s own figures show deficits averaging 5.1% of GDP over the next 5 years, and 4.5% of GDP over the next ten years. They further show debt held by the public increasing from 63.6% of GDP this year to 77.2% of GDP ten years from now. I think it’s a safe assumption that CBO’s rescore of the President’s budget will be even worse.” And the reason for this, of course, is that as much as Obama is raising taxes, he’s spending even faster than we can take them in. Hennessey again:

The President is proposing significantly more spending than he proposed last year:  1.8% of GDP more in 2011, and roughly 1 percentage point more each year over time. Spending is and will continue to be way above historic averages. At its lowest point in the next decade federal spending would still be 1.7 percentage points above the 30-year historic average.  Over the next decade, President Obama proposes spending be 12% higher as a share of the economy than it has averaged over the past three decades.

This is not a recipe for economic recovery. It is a formula to retard growth, investment, and job creation. It is also, I think, a political fiasco, the exemplification of tax-and-spend policies to which the public is forcefully averse. Once again taxes and fiscal sobriety will top the list of issues in the upcoming elections. You can understand why Democrats expect a brutal political season.

The Obama tax-hike plans would be startling in good economic times. That they have been proposed while the economy is still limping and unemployment remains at historic highs is jaw dropping. This report explains:

Taxes on high-income earners would rise by nearly $1 trillion over the next 10 years, under the budget plan put forward by President Barack Obama on Monday.

The bulk of that increase comes as tax cuts enacted under President George W. Bush expire at the end of 2010.

The top two income-tax rates, which affect people earning more than $200,000 a year, or $250,000 for married couples, will return to 36% and 39.6%, from 33% and 35% now. Under the budget plan, capital gains and dividends would be taxed at 20%, up from 15% now, for people at those income levels. . . Fund managers would see their partnership profits taxed at ordinary income rates, rather than the lower capital-gains rate, under Mr. Obama’s proposals. . .

Mr. Obama proposed reinstating the estate tax, which was repealed for one year on Jan. 1, at the levels in effect last year—or 45%, with an exemption for estate wealth under $3.5 million—and extending those rates permanently. . .

Mr. Obama would extend the Bush tax cuts, including the 15% rate on capital gains and dividends, for single taxpayers making less than $200,000 and couples earning less than $250,000. But he dropped a request to make permanent the payroll tax credit that fattened worker paychecks by $400 per person in 2010.

And there is the limit on charitable deductions, which John and I remarked upon yesterday. When you add it all up, we’re talking about $2 trillion in tax hikes through 2020. That includes some that are especially counterproductive if the aim is to improve America’s competitiveness. The Wall Street Journal editors explain:

Our favorite euphemism is the Administration’s estimate that it can get $122.2 billion in new revenue via a “reform” of the “U.S. international tax system.” Reform usually means closing some loopholes in return for lower tax rates. But this is a giant tax increase on American companies that operate overseas, and it includes no offsetting cut in the U.S. 35% corporate tax rate, which is among the highest in the world. The Administration agreed last year to drop this idea when it was seeking the help of the Business Roundtable to pass health care. But so much for that, now that the White House needs the money.

You can now fully appreciate how inconsequential is the grab bag of small-business tax credits, which Obama touted in his SOTU. Most small businesses pay taxes at the individual rates, and are going to get slammed hard by the Obama tax hikes. Indeed, most of those who hire, invest, and contribute the lion share of economic growth are going to get squeezed by the Obama budget, should it or some version of it get passed.

One marvels at the cognitive dissonance at work. The Obama team declares “jobs” to be the top priority. But job creators are getting a hefty tax hike. The Obama team declares its conviction that the private sector is the engine of recovery. But those who do the most hiring—small business—are getting whacked and money is being sucked out off the private sector and going into the public sector. (As Americans for Tax Reform spells it out, “Taxes are scheduled to rise from 14.8 percent of GDP in 2009 to 19.6 percent by 2020.”)

Nor are all these taxes helping to close the deficit. As Keith Hennessey lays it out, “the president’s own figures show deficits averaging 5.1% of GDP over the next 5 years, and 4.5% of GDP over the next ten years. They further show debt held by the public increasing from 63.6% of GDP this year to 77.2% of GDP ten years from now. I think it’s a safe assumption that CBO’s rescore of the President’s budget will be even worse.” And the reason for this, of course, is that as much as Obama is raising taxes, he’s spending even faster than we can take them in. Hennessey again:

The President is proposing significantly more spending than he proposed last year:  1.8% of GDP more in 2011, and roughly 1 percentage point more each year over time. Spending is and will continue to be way above historic averages. At its lowest point in the next decade federal spending would still be 1.7 percentage points above the 30-year historic average.  Over the next decade, President Obama proposes spending be 12% higher as a share of the economy than it has averaged over the past three decades.

This is not a recipe for economic recovery. It is a formula to retard growth, investment, and job creation. It is also, I think, a political fiasco, the exemplification of tax-and-spend policies to which the public is forcefully averse. Once again taxes and fiscal sobriety will top the list of issues in the upcoming elections. You can understand why Democrats expect a brutal political season.

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Flotsam and Jetsam

Democratic governors are in trouble, too — in states like Oregon, Ohio, and Washington. It seems the recession and Obamaism have not been kind to incumbent Democrats.

Keith Hennessey on ObamaCare: “If you’re concerned about long-run budget deficits, you should not make a massive new entitlement spending commitment, exclude a multi-hundred billion spending item that is almost certain to be enacted elsewhere, bet on speculative offsets, all to achieve the unimpressive goal of reducing deficits by “a small share of the total deficits that would be likely to arise in that decade under current policies. We need massive future spending reductions to address exploding future deficits, not to redistribute resources to a new entitlement program.”

Meanwhile, the latest Rasmussen survey reports that 60 percent of voters think ObamaCare will increase the deficit. Only 9 percent say it won’t have any impact.

Charles Krauthammer observes that “all Iran sees is an obsequious president, the most accommodating and appeasement-minded since the Carter administration vis-a-vis Iran, on bended knee, begging for a yes — and all [he] gets is no. At some point, and it should be today, it should have been a year ago, three years ago in the Bush administration, accept the fact that a no is a no. … [The Obama administration] actually took the side of the dictatorship against the people in the streets, hoping that it would create an opening and an overture to the regime — and [in response] the regime has spat in our face.”

Well, yes, we imagine that this is what everyone striving to establish himself as a 2012 contender will say: “Minnesota Gov. Tim Pawlenty became the first likely GOP presidential candidate to criticize Mike Huckabee’s pardon of a suspected killer during his time as Arkansas’s governor. Pawlenty said that he would not have granted clemency to Maurice Clemmons, who was suspected of fatally shooting four police officers in Washington state on Sunday before being shot and killed by police in Seattle Tuesday morning.”

Pawlenty, perhaps explaining why he seems to be trying so hard, confesses: “Nobody knows who I am.”

A pre-speech Gallup survey: “Americans are far less approving of President Obama’s handling of the situation in Afghanistan than they have been in recent months, with 35% currently approving, down from 49% in September and 56% in July.” And more voters disapprove than approve of his performance on terrorism, the economy, health care, and creating jobs.

This is pathetic: the White House goes to war with Politico?! Next up: CNN and Vanity Fair. It seems the “purity” test — brook no heresy – is not a GOP thing but an Obami thin-skinned media thing.

Democratic governors are in trouble, too — in states like Oregon, Ohio, and Washington. It seems the recession and Obamaism have not been kind to incumbent Democrats.

Keith Hennessey on ObamaCare: “If you’re concerned about long-run budget deficits, you should not make a massive new entitlement spending commitment, exclude a multi-hundred billion spending item that is almost certain to be enacted elsewhere, bet on speculative offsets, all to achieve the unimpressive goal of reducing deficits by “a small share of the total deficits that would be likely to arise in that decade under current policies. We need massive future spending reductions to address exploding future deficits, not to redistribute resources to a new entitlement program.”

Meanwhile, the latest Rasmussen survey reports that 60 percent of voters think ObamaCare will increase the deficit. Only 9 percent say it won’t have any impact.

Charles Krauthammer observes that “all Iran sees is an obsequious president, the most accommodating and appeasement-minded since the Carter administration vis-a-vis Iran, on bended knee, begging for a yes — and all [he] gets is no. At some point, and it should be today, it should have been a year ago, three years ago in the Bush administration, accept the fact that a no is a no. … [The Obama administration] actually took the side of the dictatorship against the people in the streets, hoping that it would create an opening and an overture to the regime — and [in response] the regime has spat in our face.”

Well, yes, we imagine that this is what everyone striving to establish himself as a 2012 contender will say: “Minnesota Gov. Tim Pawlenty became the first likely GOP presidential candidate to criticize Mike Huckabee’s pardon of a suspected killer during his time as Arkansas’s governor. Pawlenty said that he would not have granted clemency to Maurice Clemmons, who was suspected of fatally shooting four police officers in Washington state on Sunday before being shot and killed by police in Seattle Tuesday morning.”

Pawlenty, perhaps explaining why he seems to be trying so hard, confesses: “Nobody knows who I am.”

A pre-speech Gallup survey: “Americans are far less approving of President Obama’s handling of the situation in Afghanistan than they have been in recent months, with 35% currently approving, down from 49% in September and 56% in July.” And more voters disapprove than approve of his performance on terrorism, the economy, health care, and creating jobs.

This is pathetic: the White House goes to war with Politico?! Next up: CNN and Vanity Fair. It seems the “purity” test — brook no heresy – is not a GOP thing but an Obami thin-skinned media thing.

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