Alexander's Column

The Fiscal Bluff

The Jackass Caucus's 'Grecian Formula' for Economic Collapse

By Mark Alexander · Dec. 6, 2012
“The multiplication of public offices, increase of expense beyond income, growth and entailment of a public debt, are indications soliciting the employment of the pruning knife.” –Thomas Jefferson (1821)

Have you heard about this “fiscal cliff” thing – I mean have you heard ENOUGH about it?

Well, for 16 months I have dutifully avoided devoting any time and bandwidth to the tax increases and budget cuts scheduled for January 2, 2013, if Barack Hussein Obama fails to sign pre-emptive legislation. However, now that the dust has settled on Obama’s landslide 50.9 percent re-election and the status-quo reseating of Republican House and Democrat Senate majorities, it’s time to put Obama’s Budget Control Act of 2011 (BCA) “deal” into proper Patriot perspective.

In August of 2011, Obama signed this agreement into law in order to get a debt ceiling increase of $2.1 trillion. That in turn allowed him to borrow more money from the Red Chinese to fund his runaway socialist entitlement programs and bloated “stimulus spending” boondoggles – and, moreover, it allowed him to avoid default and another downgrade of U.S. credit.

In return for more spending ability, Obama agreed to caps on discretionary spending growth to “save” $950 billion over 10 years. House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid refer to those caps as “cuts.” He also agreed to establish a Joint Select Committee on Deficit Reduction (a.k.a. “super committee”) to implement another $1.5 trillion in “savings.” If, however, the super committee didn’t come to an agreement by November of 2011, Obama’s suggested sequestration trigger – automatic cuts to the budget of $1.2 trillion over the next decade – would commence on January 2, 2013. (To view mandatory versus discretionary spending, click here.)

Republicans passed the BCA hoping to slow down Obama’s “Grecian Formula” economic plan – his second-term strategy to break the back of free enterprise, crushing it under the weight of mounting taxes, regulations and debt, and ultimately, “fundamentally transforming the United States of America” into a collectivist state under the irrevocable dominance of his Socialist Democrat Party.

In his first term, Obama made significant progress toward that transformation. Much of his massive deficit spending was allocated for increased government employment. When Obama took office, federal, state and local government jobs were 33 percent of all employment. Government jobs now constitute 39 percent of all employment, and Obama wants to grow that number to more than 50 percent with additional “stimulus spending,” irrevocably socializing the American economy.

That dramatic and “fortuitous” drop in unemployment to 7.8 percent in September, which helped get Obama reelected, ticked down to 7.7 percent for November, but – I say BUT – it turns out that 73 percent of civilian jobs created in the past five months, are government jobs, according to the Bureau of Labor Statistics.

Free enterprise, one of the foundational pillars of Liberty, is the nemesis of Obama’s transformational plan, as implicit in his “you didn’t build that” condemnation of entrepreneurship and his ridiculous assertion that “The private sector is doing fine,” but we need more spending to create “public sector” jobs.

Though the super committee arrived at no agreement on budget cuts to stave off sequestration in January, the Republican House recently passed an extension of the Bush tax cuts, again. (It’s the potential expiration of those cuts that Fed Chairman Ben Bernanke warned would constitute a “massive fiscal cliff.”)

However, Obama is holding the Bush tax cut extensions hostage, calling his class warfare “tax the rich” rhetoric “a balanced, responsible approach to deficit reduction” and using it as a smoke screen to obfuscate his real agenda – avoiding the third rail of American politics, “entitlement reforms,” and any substantive spending reductions.

What Obama did not say about his tax plans, former Democratic National Committee chief, “Screamin'” Howard Dean, said for him this week: “[T]he truth is everybody needs to pay more taxes, not just the rich. [W]e’re not going to get out of this deficit problem unless we raise taxes across the board, to go back to what Bill Clinton had and his taxes.”

Heeding the advice of his former chief of staff, Rahm Emanuel, Obama will not allow this fiscal crisis to “go to waste,” assuring Republicans he will use his Leftmedia soap box to blame House Republicans for the consequences of sequestration, especially expiration of tax cuts for all Americans. However, that case might be difficult to make given that Dean, who chaired the DNC for Obama’s election (‘05-'09), has called for a return to the Clinton tax rates.

The Democrats insist that if Republicans don’t concede to Obama’s demand to raise taxes on higher incomes (meaning Obama will not sign the House-passed tax extension for all Americans), that retiring all tax bracket to the high Clinton rates and the sequestration budget cuts may put the economy back into recession. But it is Obama who has to contend with those consequences because the bill is in his court.

Sidebar: As for the Demos’ assertion that the economy is no longer in recession, I suggest they take that up with the 23 million unemployed or underemployed Americans, those who have simply given up looking for work, and the tens of millions more who are working, but haven’t received pay increases in years to keep up with inflation.

Most Americans who aren’t among those enslaved on ObamaNation Plantations understand how budgets work, and for a good illustration of what would happen if families handled finances like Obama, Click Here.

So what are Obama’s positions on debt and taxation?

You already know that Obama is a disingenuous socialist charlatan, whose constituencies overlook his colossal character flaws in return for redistributed wealth. They like it when he gives them other people’s money, but in the inimitable words of former UK Prime Minister Margaret Thatcher, “Socialist governments … always run out of other people’s money. They then start to nationalize everything.”

On the record, regarding the bloating national debt, in 2006 then-Senator Obama wagged that Clintonesque finger at President Bush, declaring: “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies. … Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”

Obama was against raising the debt ceiling and “shifting the burden of bad choices today onto the backs of our children and grandchildren” before he was for it.

In 2008, then-candidate Obama criticized Bush for adding $4 trillion to the national debt, which most Republicans and Democrats did in an effort to avoid collapse of the U.S. banking system. Obama insisted, “The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion dollars for the first 42 presidents – number 43 added $4 trillion dollars by his lonesome, so that we now have over $9 trillion dollars of debt that we are going to have to pay back – $30,000 for every man, woman and child. … That’s irresponsible. It’s unpatriotic.”

Obama was against “taking out a credit card from the Bank of China” before he was for it.

Obama would later conclude, “This rising debt is a hidden domestic enemy,” and “interest payments are a significant tax on all Americans – a debt tax that Washington doesn’t want to talk about.”

Indeed it is.

Now that Obama has added $5 trillion to our national debt in his first term, and is now bidding to double that, one might fairly deduce, “That’s irresponsible. It’s unpatriotic.”

On raising taxes, in 2009 Obama declared, “The last thing you want to do is raise taxes in the middle of a recession, because that would just suck up, take more demand out of the economy and put businesses in a further hole. … You don’t raise taxes in a recession. We haven’t raised taxes in a recession.”

Obama was against “raising taxes in the middle of a recession” before he was for it.

On limiting deductions like charitable giving to raise revenues, he insisted, “There’s very little evidence that this has a significant impact on charitable giving. I’ll tell you what has a significant impact on charitable giving, is a financial crisis and an economy that’s contracting. And so the most important thing that I can do for charitable giving is to fix the economy, to get banks lending again, to get businesses opening their doors again, to get people back to work again.”

Obama was for “limiting charitable giving” deductions before he was against it.

So what is Obama’s latest proposal?

He doubled his original $800 billion tax increase – mostly on the “two percent,” which recently doubled from the “one percent of wealthiest Americans” he used to reference. That $1.6 trillion is on top of the $1 trillion ObamaCare tax hike already on the way for all Americans. Most of Obama’s targeted “two percent” are not the rich and famous, but small business entrepreneurs operating S-Corps – like The Patriot Post – which employ 55 percent of all working Americans. (Did I mention that free enterprise is the nemesis of Obama’s “transformational plan”?)

On top of his double-down on taxes, Obama is proposing more stimulus spending, and the real non-starter – he wants to delay further talk of cuts until sometime in the future.

What a deal! He offered a fiscal bluff to avoid the fiscal cliff, but claims he is “not playing those games anymore.”

Obama’s bluff is so absurd that Harry Reid will not allow a Senate vote on it – worried that anyone on the Left will pay a political price for supporting such nonsense.

Speaker John Boehner’s response: “You can’t be serious,” which is precisely what I said of Boehner’s counteroffer, minus a redacted modifier for the word “serious.”

Of course, now that Boehner responded by offering major limitations on deductions (tantamount to a massive tax increase without calling it that), Obama has declined, saying, “If you eliminated charitable deductions, that means every … not-for-profit agency across the country would suddenly find themselves on the verge of collapse.”

There is no negotiation here. This is the behavior of a dictatorial narcissist, not a statesman. As a friend in the Senate said to me privately just before the election, “Every meeting I have had with Obama, his approach is ‘my way or highway.’”

Indeed, as I wrote in “The Right Road Forward” after the presidential election, “I can assure you that Obama will proceed as if he won every vote in America, not the razor-thin majority that reseated him.”

So where do we go from here?

Let’s start with a few words from Ronald Reagan: “Government is not a solution to our problem, government is the problem. … Government does not solve problems; it subsidizes them. Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it. … The problem is not that people are taxed too little, the problem is that government spends too much.”

Republicans are considering a “Doomsday Plan” of some sort if talks fail. That’s probably a euphemism for capitulation. Unfortunately, House and Senate Republicans are not led by the large class of “Tea Party” conservatives that arrived in 2010. They are still under the leadership of two men who have clearly contracted chronic cases of Potomac Fever after years of drinking Beltway Kool-Aid – Sen. Mitch McConnell and Speaker John Boehner. There are Republicans in the Senate who have a spine, and Republicans in the House who are sober.

Here is my recommended doomsday plan.

The House has attempted in good faith to negotiate with Obama, much as a servant negotiates with his master, and with as much success. Thus, fire the House bill to extend the Bush tax cuts at Obama’s fiscal bluff, put it in overdrive and set it on cruise control, then leave town.

Only Obama can sign legislation into law, or decline to do the same. If he fails to sign the tax extensions for all Americans, he will ultimately be responsible for the consequences.

Of course I think BO is playing to win either way, and frankly wants to go over the cliff. Then he will get military cut backs he could never get otherwise, and put his class warfare rhetoric in high gear, blaming Republicans for the tax increase on everyone, and framing the 2014 congressional elections on reducing taxes for the middle class. If the sequester and tax increases do result in a deeper economic recession, Obama can go after additional “stimulus” for his state and local public service union constituency, and do it under an emergency declaration for raising the debt ceiling.

The Jackass Caucus

In the process he will continue to add debt to the current $16 trillion, and the couple trillion dollars in cuts to growth over 10 years, which is now on the table, isn’t going to heal that fiscal hemorrhage.

Moreover – pay attention class – the real debt problem is not the $16 trillion, it’s “off-book liabilities” such as publicly issued Treasury debt, government employee pensions and retirement benefits, and unfunded liabilities including Medicare and Social Security. That debt now exceeds $86.8 trillion, or more than five times GDP.

That is the debt which the Romney-Ryan ticket proposed to address, and would be addressing right now if Romney’s Republican handlers had fully engaged grassroots Americans.

To that end, the ever-erudite Charles Krauthammer advised, “Republicans must stop acting like supplicants. If Obama so loves those Clinton rates, Republicans should say: Then go over the cliff and have them all. If you want a Grand Bargain, then deal. Otherwise, strap on your parachute, Mr. President. We’ll ride down together.”

Likewise, Tucker Carlson and Neil Patel conclude, “Congress should leap off anyway. At a full run. Face first. Yes, it’s a scary prospect. But not as scary as the alternatives.”

Newt Gingrich, who has a bit of experience as a real House Leader, advised, “House Republicans [need to] get a grip. They are the majority. They’re not the minority. They don’t need to cave in to Obama; they don’t need to form a ‘Surrender Caucus.’ So my number one bit of advice to the congressional Republicans is simple: Back out of all of this negotiating with Obama. The president is overwhelmingly dominant in the news media. [If] you start setting up the definition of success [as] finding an agreement with Obama, you just gave Obama the ability to say to you, ‘Not good enough.’”

Obama will also have to deal with the consequences of cuts.

The Department of Defense is targeted for 49.5 percent of total cuts next year – though the DoD budget amounts to only 17 percent of spending. Ironically, defense spending is actually authorized by our Constitution, whereas entitlement spending and most other discretionary spending has no basis in Rule of Law.

As for the probability that the economy will sink deeper into recession, on Obama’s watch, we already have “record spending on welfare” – households considered impoverished have grown to one in six and there are 48 million food stamp recipients, which is up 50 percent since Obama took office in 2009. Median household income declined by $4,520 (8.2 percent) during his first term, and that’s the real “Obama tax.” And ObamaCare taxes and regulations are about to kick in.

Mr. Boehner and Mr. McConnell, your response to this crisis should not be determined by media polls or campaign calculations, it must be determined solely on “your solemn oath” to uphold our Constitution and the “Rule of Law” it enshrines. Short of restoring the integrity of our Constitution by way of abiding with its limitations on the central government, we are no longer a constitutional republic. It is time Republicans conduct yourselves like Patriots and represent the best interests of your countrymen.

Boehner and McConnell, put the right offer on the table, round up your majority and leave town on an alternate route to the Obama freeway. C.S. Lewis wrote, “The safest road to Hell is the gradual one – the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts.” Obama’s road “Forward” is most assuredly a highway to Hell.

References and Resources:

If you want to earn your Ph.D. in Fiscal Cliffhanging, you can learn more from our colleagues at Heritage Foundation.

Another of my colleagues, economist Thomas Sowell, in his “Fiscal Cliff Notes,” separates fact from fiction. On Obama’s faux rhetoric about the need for tax increases, he notes that as was the case when Ronald Reagan reduced tax rates, “tax revenues went up – not down – after tax rates were cut during the Bush administration, and the budget deficit declined, year after year, after the cut in tax rates.” Obama, of course, keeps blaming these tax reductions for his runaways deficits and debt. (Indeed, this is the confusion of Obama’s own Council of Economic Advisers.)

See the U.S. Debt Clock.

Appeal_patriots_day_3

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139 Comments

michael in coral springs. Fl said:

onservatives need a better spokesman for their ideas or at least some cooperation from the media in articulating our philosophy. Its not that we want to cut spending because of OUR self interest, we want to cut spending in the interest of those who recieve gov largesse. Has any group on the receiving end of gov aid ever been benefitted? School choice, personal saving accounts for retirement, competitive health care alternatives--these things will help the poor. Public schools, public healthcare, socialized retirement saving is hurting the recipients of these services. Just think about it. If you won the lottery the first thing you would do is ween yourself from any government dependancy.

Thursday, December 6, 2012 at 1:25 PM

WP in Omaha, NE said:

Actually, given some of the responses here at the Patriot Post (the tax them hard response was the most "interesting"), I think the best thing to do is for the Republicans to sit back and give the Democrats there every little socialist desire. Encourage them even. If they want to raises taxes on the rich by 4% ask them, why not 40%? Provoke them, push them. Let them auger this whole thing into the ground and when people start getting angry ask them if they have been hurt enough yet. If the answer is no, turn the crank some more until the answer is yes. Only then will people get off their rears and do something about it.

Thursday, December 6, 2012 at 1:26 PM

John E in Homer, Alaska replied:

That is what I've been saying for awhile now, push the dems to raise tax's on the over $250,000 crowd to 60% 75% 90% and take away there deductions. Thats what they (Democrats) want to do over time anyway. Maybe then after some very hard times the people will wake up.

Thursday, December 6, 2012 at 2:03 PM

NK in Sacramento replied:

cut government!!!!!!!

Thursday, December 6, 2012 at 7:56 PM

BKlipfel in Northwest Arkansas replied:

Just remember, in 2009-2010 when Democrats had a majority in both the house and senate AND had the White House, they STILL couldn't muster the courage of their convictions and cram the leftist crap they want so bad down our throats. The Dems talk a good game, but when the rubber hit the road, they were suddenly afraid to vote their rhetoric, because they KNEW it would get them ALL voted out of office in their next elections. You NEVER go full progressive.

Friday, December 7, 2012 at 12:00 AM

greg d in colorado said:

lets all watch how a miracle will happen at the 11th hour bi partisianship will prevail. The knuckleheads will all smile and walk to the cameras and state that the people come first and we gave up our vacations because we care.A glorius deal has been reached . OK what did you do the rest of the year???. The monkeys in the senate and house that were elected the last time out should not be re elected next time. I dont think any of the politicos now seated deserve to be re elected again. Thsy are all embarressing the USA in the eyes of everyone else. shameful !!

Thursday, December 6, 2012 at 1:27 PM

NK in Sacramento replied:

I Thought they were investment bankers in their real jobs!!

Thursday, December 6, 2012 at 7:58 PM

49Bob in Montana said:

Mark and the Patriot Post trash talking McConnell and Boehner will accomplish exactly nothing. The people able to get things done are not in think tanks or opinion publications. They are boots on the ground politicians going to work every day doing their best to stop mindless left wing Democrats day in and day out. I wouldn't want to do it and can't for the life of me figure out why any Republican would stay there when they know they will take a beating not only from the left but also from petty little people on the right who think it is more important that all Republicans think exactly like them then it is to beat the crap out of Democrats. The Republican establishment showed up for the election and if the single issue or fringe elements had showed up we would have kicked the crap out of Obama and the Democrats easily. Conservative Republicans don't win election, pro choice Republicans don't win elections, second amendment Republicans don't win elections, low tax Republicans don't win elections, low regulation Republicans don't win elections, constitutional Republicans don't win elections and rinos don't win elections. It takes all of us to win elections and so long as we stand like dummies and fight one another we will get our butts kicked by the Democrats who as ignorant as they are still have enough sense to join together to defeat Republicans come the general election. We need to stop this nonsense and I mean starting yesterday it is just stupid.

Thursday, December 6, 2012 at 1:30 PM

Tyrone in Cleveland said:

Intellectually Obama is an arrogant back street organizer, emotionally he is a committed socialist, and spiritually he is a pro-Islam, anti-American, anti-Israel ideologue.
These are the only obvious "transparency" features about this individual that have come into perfect focus during the past 4 years.
He is more than a constitutional menace... the man is dangerous!

Thursday, December 6, 2012 at 1:34 PM

Klaus in Virginia said:

Raisng taxes will not make a dent in our debt. Social security needs to be reformed, one step would be to make SS payments only to those who have paid into it, and only after age 65. Get people off welfare as quickly as possible, it was accomplished in the 90's. This administration has put people on food stamps and enslaved them to government welfare. Get unions out of Government. This in itself would cut expenses by more than is even talked about. And lastly, get rid of Boehner as speaker. I would vote for Paul Ryan (my first choice would have been Allen West).
Also, to get out of this mess if it is even possible at this point, abolish EPA, IRS (go to a flat tax system), get rid of department of Energy, Education, Commerce, Labor, and reduce size of everything else. We have way too many Government employees and way too many committees in Congress overseeing all this. Basically, we are toast because none of this will ever happen. I do not believe we can survive 4 more years of this administration as America,the Republi was lost in the last election.

Thursday, December 6, 2012 at 1:34 PM

Vondell HASS in Wichita said:

There is nothing about Obama that is trustworthy, truthful, patriotic, wise, honorable, admirable, presidential for USA, law abiding. He is a Marxist, Fascist, and a want to be dictator of the world like a tyrant.

Thursday, December 6, 2012 at 1:37 PM

JWH in "The Republic of Texas" said:

Regarding the so called "Fiscal Cliff", just remember the Congress (Republicans and Democrats) passed the bill AND Obama signed it. The conclusion I have to draw is that our ruling class determined that this is the best thing for the country. If it is allowed to happen, we reduce spending (starve the beast) and increase revenue to start paying down the debt (a good thing).
If everyone is worried that this is such a bad thing for our country, WHY DID MOST OF THE SAME PEOPLE THAT VOTED FOR THIS GET RE-ELECTED?

Thursday, December 6, 2012 at 1:39 PM

harry s in cromwell ct said:

obama is leading us down the one-way road to financial disaster. We have to get off this path towards destruction. We may have some initial pain, but it could save us in the long run.

Thursday, December 6, 2012 at 1:39 PM

NK in Sacramento replied:

Stop Bloated government spending and apply the Campaign Contributions to the "DEBT" that's the solution. They have the money to buy the votes but cannot afford taxes how absurd you rich influential people and corporations are in your little world of big money..It's all about the rich ??

Thursday, December 6, 2012 at 8:16 PM

Paul in Huntingdon Valley, PA. said:

Keeping up to date with this socialist party stuff, I responded to my Congress woman Allyson's Email of voting for a tax on the upper class as, not what I, the People, stated to her in Heritage Email to her! In agreement with the article here written.

Thursday, December 6, 2012 at 1:43 PM

murf appling in germantown, TN said:

sooner or later, someone is going to have to bite the bullet. Yours truly is eligible for social security & medicare as we speak. truly, i want no part of either. never liked the idea of "mandatory contributions". do not want any party of "medicare", knowing full well, that it is placing the "Republic", that has offered an opportunity, to every citizen, that has ever lived in this nation, to succeed or fail on their own merits. it is time to tell "senior citizens", of which I am one, they are placing their children & grand children into "hock" for the rest of their lives. the numbers are now unsustainable, either we return a government of laws ("Constitution"), or we sink into the "tyranny of the majority". it is a bit of paradox, the word "democracy" is mentioned nowhere N the "Document", nor N the "Declaration", unless I am missing something. it appears the entire "democratic party" philosophy is "unconstitutional" & no one seems to focus on that idea.

murf appling
southwind h s
memphis, tn
social studies, dept.
amer govt

Thursday, December 6, 2012 at 1:45 PM

Navy CWO in Golden TX said:

Between the democrats, obama and the "Go Along to Get Along" republicrats, we are so screwed!

Thursday, December 6, 2012 at 1:46 PM

Michael Thannisch in La Porte, Texas said:

Our small church will continue whether charitable giving is tax deductible or not, and many others will too.
Mar Michael Abportus, I Bishop of La Porte, Texas.

Thursday, December 6, 2012 at 1:49 PM

John E in Homer, Alaska said:

Drop that House bill in Obama's lap and walk away. I agree 110%

Thursday, December 6, 2012 at 1:50 PM

Bill in Leawood, KS replied:

What will that accomplish? Are you interested in winning debating points or in winning? I would guess the former.

Thursday, December 6, 2012 at 4:01 PM

TheHarp in Oregon said:

When I worked in industry, I learned quickly to distrust anything done by committee. The formation of a committee to "study" or "fix" something generally meant somebody was trying to avoid taking responsibility. Committees also have an irritating propensity to devolve into circular firing squads when things go bad.

Thursday, December 6, 2012 at 2:00 PM