Obama: Higher Taxes or the Highway

Democrats Demand More Job-Destroying Tax Hikes Despite Frail Economy Their Policies Have Made Worse

• President Obama’s speech Monday calling for a $1.5 trillion tax hike also featured a threat from the president that he would veto any plan to reduce the deficit without tax increases. Let’s remember, this is the second tax increase Obama has called for in two weeks, with a sum total of almost $2 trillion.
• This renewed focused on tax increases comes amidst growing concerns that the economy is on the verge of a recession—drawing into question the president’s own promise that he would not support raising taxes amidst a bad economy because doing so would hurt the economy.
• President Obama’s own former advisors have argued that tax increases such as those proposed by the president would have a negative impact on economic growth and job creation, yet the president is proceeding undeterred. How many jobs must be lost before Democrats learn their lesson?

BACKGROUND

President Obama’s speech Monday calling for a $1.5 trillion tax hike also featured a threat from the president that he would veto any plan to reduce the deficit without tax increases. Let’s remember, this is the second tax increase Obama has called for in two weeks, with a sum total of almost $2 trillion:

“OBAMA VOWS VETO IF DEFICIT PLAN HAS NO TAX INCREASES”: “President Obama called on Monday for Congress to adopt his ‘balanced’ plan combining entitlement cuts, tax increases and war savings to reduce the federal deficit by more than $3 trillion over the next 10 years, and said he would veto any approach that relied solely on spending reductions to address the fiscal shortfall.

” ‘I will not support any plan that puts all the burden for closing our deficit on ordinary Americans,’ he said.” (Helene Cooper, “Obama Vows Veto if Deficit Plan Has No Tax Increases,” The New York Times, 9/19/2011) 

THE PRICETAG? $1.5 TRILLION. (Helene Cooper, “Obama Vows Veto if Deficit Plan Has No Tax Increases,” The New York Times, 9/19/2011) 

LAST WEEK OBAMA OFFERED $467 BILLION IN TAX INCREASES TO PAY FOR STIMULUS 2.0: “The Obama administration is asking Congress to raise taxes by $467 billion over 10 years to pay for the President’s one-year $447 billion stimulus, which he announced during a speech Thursday before a joint session of Congress.” (Neil Munro, “Obama Asks Congress for $467-Billion Tax Increase to Fund Jobs Plan,” The Daily Caller, 9/12/2011)

This renewed focused on tax increases comes amidst growing concerns that the economy is on the verge of a recession—drawing into question the president’s own promise that he would not support raising taxes amidst a bad economy because doing so would hurt the economy:

2009: OBAMA CONCEDED THAT “THE LAST THING YOU WANT TO DO IS RAISE TAXES IN THE MIDDLE OF A RECESSSION BECAUSE THAT WOULD JUST…PUT BUSINESS FURTHER IN A HOLE”: “In August 2009, on a visit to Elkhart, Indiana to tout his stimulus plan, Obama sat down for an interview with NBC’s Chuck Todd, and was conveyed a simple request from Elkhart resident Scott Ferguson: ‘Explain how raising taxes on anyone during a deep recession is going to help with the economy.’

Obama agreed with Ferguson’s premise – raising taxes in a recession is a bad idea. ‘First of all, he’s right. Normally, you don’t raise taxes in a recession, which is why we haven’t and why we’ve instead cut taxes. So I guess what I’d say to Scott is – his economics are right. You don’t raise taxes in a recession. We haven’t raised taxes in a recession.’ …

‘So he’s absolutely right, 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 business further in a hole.'” (Stephen F. Hayes, “Obama vs. Obama,” The Weekly Standard, 7/11/2011) 

WSJ SURVEY OF ECONOMISTS: ODDS OF A RECESSION “MORE LIKELY,” NEARING ONE-IN-THREE: “Economists see a one in three chance the U.S. will slip into recession over the next twelve months and doubt any steps the Federal Reserve might take at its meeting next week can change that.” (Phil Izzo, “Economists Say That U.S. Recession Looks More Likely,” The Wall Street Journal, 9/16/2011)

THE NEW YORK TIMES: ODDS OF A RECESSION AT 50 PERCENT? “If history is a guide, the odds that the American economy is falling into a double-dip recession have risen sharply in recent weeks and may even have reached 50 percent.” (David Leonhardt, “Rising Fears of Recession,” The New York Times, 9/7/2011)

President Obama’s own former advisors have argued that tax increases such as those proposed by the president would have a negative impact on economic growth and job creation, yet the president is proceeding undeterred. How many jobs must be lost before Democrats learn their lesson?:

FMR WHITE HOUSE ECONOMIST CHRISTINA ROMER: TAX INCREASES HAVE A “HIGHLY SIGNIFICANT NEGATIVE IMPACT”: “[T]ax increases appear to have a very large, sustained, and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects… Our baseline specification implies that an exogenous tax increase of one percent of GDP lowers real GDP by almost three percent.” (Christina D. Romer and David H. Romer, “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks,”American Economic Review, June 2010)

DEMOCRAT ECONOMIST ZANDI SAID ECONOMY WAS “TOO FRAGILE” FOR TAX INCREASES LAST JULY AND THINGS HAVEN’T GOTTEN MUCH BETTER: “I would not allow those tax increases to take hold on January 1st…I think economy’s still too fragile for that.” (Remarks from Mark Zandi, PBS News Hour, 7/30/2010)