Economy & Budget

With Liberals, The Taxes Just Keep Coming

When we last left the tax debate, you will recall that liberal Democrats had already weighed in with ways to spend the money that would supposedly be generated (a figure surely inflated) by canceling the Bush tax cuts. Sen. Hillary Rodham Clinton (D-N.Y.) opted to spend the money on her Hillarycare II national health plan. Sen. Barack Obama (D-Ill.) opted to fund a middle-class tax cut. John Edwards has enunciated spending schemes too numerous to mention. Note that NO ONE proposed using the money to reduce the federal deficit, supposedly a high priority of the new Democratic majority in Congress.

Carried Interest

House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) said on Bloomberg News this weekend that in the interests of “fairness and equity,” he was going to sharply increase the tax rate on so-called carried interest.

Bloomberg went on to report “Rangel said he was ‘not impressed’ with criticism by Senate Democrats such as Charles Schumer of New York and John Kerry of Massachusetts that increasing taxes on private-equity firms and hedge funds could disrupt financial markets and hurt job creation.”

Dems Are Out of Touch on Taxes

Earlier this year, The Tax Foundation released a poll about the attitudes that Americans have towards the tax code. It found that a majority of U.S. adults believe the federal tax code is complex, that the federal income taxes they pay are "too high," and that the federal tax system needs major changes or a complete overhaul. It also found that just one in 10 (10 percent) say they are willing to pay higher taxes to eliminate 2007's projected $244 billion federal budget deficit.

The American people aren’t necessarily convinced that they need more tax cuts, although they do believe that they pay too much in taxes. But they sure as heck don’t want their taxes increased.

Deficit Politics

Last week, the White House announced that the deficit for fiscal 2007 was $163 billion, or about 1.2 percent of GDP. The 40-year average is 2.4 percent. Over the last three years, the deficit has dropped about $250 billion.

We are in the middle of a fairly expensive war, probably per capita one of the most expensive wars in our nation’s history. And yet, our deficit is well below the historic average.

Free Trade and the Republican Debate

Something struck me as I watched the Republican debaters in Dearborn, Mich. No, it wasn’t the arrival of Fred Thompson to the dance. It wasn’t the strange inability of John McCain to hear Maria Bartiromo’s questions. It wasn’t the strange allure of Ron Paul’s neo-populist, neo-libertarian, neo-conspiracy-theory explanation of the carried-interest debate.

All of those points were notable. But to me, the most notable development was the drift of the Republican Party to protectionism.

The Detroit Debate

The debate today in Michigan is set against a stark backdrop of high unemployment and low economic growth. The American auto manufacturers face tough competition from abroad and a challenging legislative landscape with the Congress threatening to impose Corporate Average Fuel Economy standards that will give a distinct advantage to Asian companies. Detroit is a city run by a corrupt mayor that has become increasingly unlivable over the past four decade, beset by high crime and horrible schools.

Michigan faces the worst economy in the country. It has been run by a once popular but now besieged Democratic governor. Dearborn, where the debate will actually happen, has one of the largest Muslim populations of any city in America.

The Targeted Tax

Author's Note: The following first appeared on the Democratic Leadership Council's new Ideas Primary website. I encourage all in the Democratic Party who care about solving problems and who understand the importance of holding the progressive Democratic Center to win the general election in 2008 to check out this new site that the DLC has established to generate new ideas for governing America and solving its major problems — rather than continuing the hyper-partisan food fights for another cycle.

Most taxes levied on Americans go into the general fund — meaning the income taxes and general corporate taxes, for example, paid by individuals and corporations go into a single pot, which is then divvied up among items in the federal budget.

Calling All Conservatives

The No. 1 criticism of President Bush from conservative activists has been that he has not done enough to control the size of government, especially domestic spending. They may be late to the party, but the administration deserves support from conservatives and all those who believe in bringing some limits to federal spending as the Congress considers a potential presidential veto of the so-called SCHIP (State Children’s Health Insurance Program) extension.

How Many Times Can They Spend the Same Money?

There is a famous story about a former professional football coach, a wheeler-dealer type, who traded draft choices at warp speed. One year, however, even he went too far when he traded the same draft pick to two different teams. The NFL had to remind him that you can only trade a pick once.

Someone should repeat this story to liberal Democrats who have made promises to every spending lobby under the sun. The problem is that they’re spending the same money multiple times. 

The Real Effect of the Fed's Rate Cut

The Federal Reserve gave the market a much-needed boost and vote of confidence by lowering both the Fed Funds Rate and the Discount Rate on Tuesday. The stock market rallied as investors swooned with optimism. But how excited should consumers really be?