Obama only backing Gang plan because GOP on the offensive


President Obama is only backing the Gang of Six deficit-reduction proposal because Republicans are on the offensive with a plan of their own, Sen. Jim DeMint (R-S.C.) said.

“I don’t know enough about the Gang of Six proposal, but I do know the only reason the president is stepping up and saying he might support this is that Republicans are now on the offense with a plan that would increase the debt limit in a way that Moody’s and S&P would recognize as credible long-term deficit reduction,” DeMint said Tuesday on Fox Business Network.

Earlier on Tuesday, Obama voiced his support for the $3.7 trillion deficit-reduction proposal the so-called “Gang of Six” group of senators unveiled.

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Suddenly we’re using the argument that Social Security and Medicare are self-funding, and not part of our long-term fiscal problem?

I will have to take some time to process this sudden turn in the conservative argument. It’s possible that I just got whiplash.


Don’t be obtuse. And don’t try getting away with straw man arguments with me. Never once did I say that Soc Sec and Medicare were non-issues.

Do you agree or disagree that Soc Sec and Medicare get money via payroll deductions every time a paycheck is written in this country?

Do you agree or disagree that Soc Sec and Medicare have over $2T in the bank right now to meet their obligations?

I think, with job losses and an increase in early retirements, Social Security’s income is now less than program payouts.

Offhand, I don’t know about the current Medicare cash flow situation.

Presumably republicans realize that the economic situation has aggravated the cash flow problem, and that weakening the economy even further would make this still worse. I know they know that there’s no piggy bank stuffed with $2 trillion. That’s not the way the system is designed.

re: comments on cash for clunkers

Here’s the most objective study I could find. It would appear to support the views of Nan, Hard, et al regarding the long term economic impact of CfC. It doesn’t address the issue that the program gave a timely boost to an auto industry which was, at the time, flat on its back. I think it will take a decade to sort through the ultimate impact of the various components of the “stimulus.”

Regarding used auto inventory: it must be noted that the inventory which was removed was, by design, the least fuel efficient component (full disclosure: I personally took advantage of the program to junk a 1990 14 mpg Mercedes with 180K miles, in favor of a 27 mpg Mazda3, which has proven to be a wonderful car). I sort of doubt that there is much demand in today’s used car market for vehicles of this type.

But, OK, I admit that you guys were at least mostly correct on this.


– Larry Weisenthal/Huntington Beach, CA

re: Social Security. It’s my understanding SS has $2.7 trillion in T Bills, which is basically imaginary money.

Everyone knows that Reagan cut taxes, but he also raised the (regressive) payroll tax at the same time that progressive income and estate taxes were massively cut. To mollify critics, the administration agreed to put SS receipts on budget and the SS administration received T bills in the amount of the SS surplus. This last is from fuzzy memory — gotta look it up. The point is, though, that the country has a moral obligation to pay out the SS T Bills, just as it has an obligation to pay out T Bills held by China and Goldman Sachs.

– Larry Weisenthal/Huntington Beach CA


With regard to John’s #40, of course the top echelon’s share of federal tax payments have risen, but their income gains have far outstripped the relative rise in their tax contributions. This is simple math. If one segment isn’t growing, its taxes won’t grow, either. If the other segment grows, then its taxes grow, as well, and its share of taxes increases.

That isn’t my point, Larry. I know how that math works. The fact is that the rhetoric, and theme, from the Democratic party does not match up with the data. The Democrats are pushing the theme that the “rich” people’s wages are increasing, but that somehow, they aren’t paying their “fair share”, and people take that to mean that their taxes aren’t increasing in proportion to their income. That is patently false, as the data in those tables bears out, if one actually takes the time to look at it.

In contrast, the bottom 50% has had their tax burden drop at a higher rate than their income share, mainly due to all of the different tax credits that have become available over the years, but also because of the increase in income share, and tax burden, of the higher income earners.

That system is what it is, no matter what tax rates are in place, as I showed you. If the discussion is the actual income gap itself, then taxes shouldn’t be a part of the discussion, since no matter what the tax rates are, the income gap continues to widen. That in itself should be self-evident to anyone that even a tax rate hike on only the higher income earners won’t solve that problem. Which means other options should be looked at.

You can make the “business environment” more friendly by cutting taxes and cutting regulation.

I beg to differ on that. Many regulations are completely onerous to business and do nothing towards what the government claims it will do. I could list numerous examples from my own experience at the company I work for where regulation adds unnecessary cost to the company. How much more could my company do if it weren’t for that added cost?

In any event, the financial tsunami was caused by too little regulation, rather than too much regulation.

Possibly. But there are many who claim that the regulation was there, but the enforcement wasn’t, particularly when it came to Fannie and Freddie, with Democrats continually ranting that they were sound, when regulators testified to the contrary. But, I wasn’t talking about financial regulation, as I know very little about it. I was discussing onerous environmental regulations that many times make no sense, and do little of anything they are meant to do.

This really isn’t as big an issue as conservatives scream about. No one is proposing going back to pre-Reagan tax rates.

It also isn’t the issue that the liberal/progressives scream about either. As I showed you, the income gap itself will widen no matter what the tax rates, even if one was to go to pre-Reagan rates. You cannot use taxation in the current progressive tax system to alter the trajectory of income disparity. It doesn’t work.

So, what is your reason for increasing taxes? The deficit? At the last go around, it was estimated to “cost” the government around $3.4 Trillion dollars, over ten years, to keep ALL of the Bush tax cuts in place. That means that around $340 Billion dollars would have been “saved” this year. And guess what? The deficit STILL would have been over $1 Trillion. But the Democrats aren’t talking about ALL of the Bush tax cuts, are they? No, they are only talking about an amount that was estimated to “cost” the government $700 Billion over ten years, or, only $70 Billion per year. That’s like trying to pay off $10k in credit card debt in a year by skipping McD’s a once a week for the entire year. The numbers don’t add up.

But, I know that you propose going back to pre-Bush rates for everyone, and I can respect that as it spreads the “sacrifice”, or pain, across all taxpayers. Ok, let’s say we do that. The deficits were projected last year, for the next decade, to average $1 Trillion a year. That’s $10 Trillion. Those tax cuts, if rescinded, were estimated at a “cost” to the government of $3.4 Trillion. That leaves $6.6 Trillion for the decade, or, $660 Billion per year. Now what? The Democrats have proposed no specific cuts in any of their speeches on the issue. Even that “Gang of Six” plan only cuts $900 Billion from defense, and I explained my reservations about that in another topic, but basically, unless we reduce our military footprint across the world, and the obligations we undertake for certain organizations such as NATO, then that reduction in funding cuts mostly the support for the boots on the ground, or sailors on the water, or airmen in flight, and sets them up for failure by lack of proper funding. So, sure, cut the Defense budget, but also cut our obligations as well, if you want to keep the effectiveness of our military high.

But, as opposed to raising tax rates, the alternative of reforming both deductions and credits (as you proposed) is entirely sensible. The biggest difference is that you are more offended by the credits to the lower income groups, and I’m more offended by the deductions and credits to the higher income groups.

Actually, Larry, I’m not. I just think it’s disingenuous for anyone to ONLY talk of taking away the tax breaks for the higher income earners, but not anyone else. It isn’t about liberal DNA or conservative DNA. It’s about doing what is right, and not giving anyone, no matter who they are, a break that not everyone can enjoy, or participate in.

And my idea about taking away ALL tax breaks, whether they be deductions or credits, is that it removes from the board the different pawns that each political party uses in their efforts to gain more power in DC.


I think that you should actually read the bill and not use some politician’s rhetoric, that is wrong, as your talking points.

Defense spending isn’t what he made it out to be, as I pointed out above.

And the bill does not prohibit changes to SS and/or Medicare systems in order to make them more financially stable. All it does is state that they are not limited by the Direct Spending Restrictions, which is actually a good thing, as it doesn’t create a situation of defaulting on those obligations simply due to the current funding. I’d think that liberal/progressives would be in favor of such a thing.

Larry, even if CFC did remove the less desirable used cars from the market, it has helped to drive up the prices of the remaining cars.
After some halfwit forgot to stop for an emergency vehicle and destroyed my stopped car, I bought a used one. I got a car in excellent shape and have had almost no problems in the 3 years I’ve had it. Considering I did pay on the higher end of the scale, it should be running fine. Recently, I was looking at used cars from the same year and model. Despite being in worse shape and/or having significantly higher mileage, the dealers are asking the same price or more than I paid for mine! BTW, by higher miles I’m taking 40K-50k more which puts them in the 120k-130k+ range.

@Hard (#58): I’ve already admitted that you guys were probably correct in your economic assessment of the CfC program. At least your views are congruent with those of the economists I’ve read. On the other hand, the program was conceived at a time when the economy was in total free fall and the auto industry was about to be swept over Vernal Falls. The articles I’ve read just looked at the macroeconomic impact of the program, over the whole economy, and glossed over the much needed, immediate shot in the arm it gave to an industry on the brink. i.e.


In any event, I do agree that, in retrospect, the money might have been better spent on something else (or saved), but, again, at the time it was conceived it wasn’t a totally crazy idea. There are lots of ideas which look good, at the time of conception, but which don’t pass the test of time.

With regard to the issue of used cars, I’m curious about your own used car tale. Did you buy a used car which would have qualified as a “clunker” (i.e. in order to get the $4,000 junk the clunker allowance, the vehicle had to have an EPA rating of 15 mpg or less)? My point is that the used cars in demand today are not the sort of low fuel efficiency clunkers which were junked via CfC.

– Larry Weisenthal/Huntington Beach, CA


I just think it’s disingenuous for anyone to ONLY talk of taking away the tax breaks for the higher income earners, but not anyone else

I’m in total, 100% agreement with this. Shared sacrifice means just that — shared sacrifice. Everyone has a stake in this particular problem and it’s everyone’s responsibility to contribute to the solution. Repealing the Bush tax cuts would bring $2.1 trillion into the treasury. Only repealing the tax cuts for those earning over $250K would only bring in $0.7 trillion. As an aside, I’d extend the principle of shared sacrifice to national defense and bring back the draft. It’s easy to pass a tax increase which only affects others. It’s easy to fight a war which only affects others.

– Larry Weisenthal/Huntington Beach, CA

Apparently Obama wants to count almost all the cuts that were already scheduled – as if they are NEW cuts – to balance with his tax raises (on top of his already-in-the-pipeline taxes) so as to LOOK like he is taking a ”balanced approach” to this debt ceiling issue.

The Senate “Gang of Six” proposal would raise taxes by another $3.8 trillion over ten years.
Since the CBO scores relative to current law, he can make the claim that the Gang’s plan would ”only” raise taxes $2.3 Trillion.

But, if you remember, the alternative minimum tax applies to more and more taxpayers as their raises bring them up to the bottom of the level for it.
Therefore more and more people will be taxed at higher and higher rates under this Gang’s plan.
This fact is NOT included in the CBO’s scoring, btw.
But it will happen.
So, the REAL tax increase will be $3.8 Trillion over the 10 years.

And all of the cuts will be imaginary.
They are cuts that were already set to occur.


@Nan: The “Gang of Six” plan ELIMINATES the alternative minimum tax!

– Larry Weisenthal/Huntington Beach CA


The CBO figure of $3.8 trillion includes all of the tax increases that will occur if current law (including the AMT) is not changed.

Here’s how complicated it is via Napp Nazworth:

About $1 trillion would come from additional revenue generated by reforming the tax code by eliminating deductions and credits while lowering overall tax rates.

The Gang of Six proposal’s main sticking point, however, will likely be the elimination of the Alternative Minimum Tax (AMT).

Congress originally passed the AMT out of concern that wealthy taxpayers were able to take advantage of so many deductions and credits in the tax code that they were often able to pay less in taxes (as a percentage of their income) than middle-class taxpayers.
The AMT put a cap on the amount of deductions that upper class taxpayers could declare.
The problem with the AMT, though, is that it was not indexed to inflation.
So, over time, the AMT began to hit middle class taxpayers as well, causing them to pay more in taxes.

Congress, then, would pass a “fix” to the AMT so that middle class taxpayers were not effected. Congress was never able to pass a permanent fix, however, because it never had the votes. Instead, it would pass the fix once a year in a separate bill.

Since Congress always fixes the AMT, but never accounts for the fix in their budget, deficits end up larger than they budget for.
This year, the Congressional Budget Office offered two different budget scenarios.
One, the “alternative fiscal scenario”, that included the AMT fix, along with other measures that Congress usually pass but don’t account for in their budgets, such as increasing Medicare payments to doctors and extending the Bush tax cuts,
another that did not include these measures.

Eliminating the AMT altogether would, by itself, increase taxes.

The AMT elimination would not be by itself, though.
It would be part of a package that eliminates many of the deductions and credits that made the AMT necessary in the first place.

The question for many Republicans, therefore, will be whether the elimination of the AMT along with many tax deductions combined with a lowering of tax rates amounts to a net tax decrease.

The answer to that question will depend, in part, on whether these Republicans are comparing the Gang of Six proposal to an alternative in which the Bush tax cuts will expire and the AMT would stay the same. Compared to this alternative scenario, the Gang of Six proposal could be sold a net tax decrease.

Since there is NO actual Gang of Six bill for the CBO to score we are just conjecturing right now.
Let’s see the legislation.

@Nan: Here’s an excellent op-ed by Peggy Noonan, re “Gang of Six”



Don’t deep-six it because it’s flawed. Flawless isn’t going to happen.

– Larry Weisenthal/Huntington Beach, CA

Note to Peggy Noonan:

Flawless CAN happen if only the GOP had a backbone.

But then, what can one expect from another RINO. Peggy (of whom I was a big fan before she sold out in the last election) is now the “female version” of RINO David Brooks.

Larry I suggest if you want to hear a real conservative POV, tune in to Mark Levin, or listen to a few of his opening monologues this past week.

Sooner or later, we have to pay the piper and face the music, better now than later IMO. There’s pleny of money to cover the debt, the poor, the military, and other government essentials. This whole “crisis” is just another big political showdown. The reality is, we are in DEEP financial trouble which only worsens with every “compromise.”

Let the chips falls! Any pain (and there will be plenty), will be good for us, at least in the long run. Honestly, I think most reasonable Americans are ready for it.

@Pat: The “Greatest” generation was the greatest, not only because they won WWII, but because they paid for the Interstate Highway system, fought and won the Cold War, funded the NIH, started Medicare, and taxed themselves at rates sufficient to pay off the WWII war debt and pay down the debt:GDP ratio to 0.3, which is a rock-solid financial position.

You talk about “pain;” yet you aren’t willing to have your marginal tax rate increase to 39%.

– Larry Weisenthal/Huntington Beach, CA

Bernard Goldberg:

You know who doesn’t pay their fair share? The bottom 50 percent, who pay only 2.7 percent of all federal income tax collected. I know, I know. These people aren’t rich. I don’t care. They need to pay something, just so they have some skin in the game.
I’m all for helping people who are really trying to get by. I grew up in a lower-middle-class family. I got a state scholarship to go to college. But remember the kid in high school who never paid attention in class, who was too busy goofing off to do his homework, who thought school was a great big waste of time? Sure you do. We all know jerks like that. Sorry if I sound cruel, but I don’t want to help him now that he’s middle aged and can’t pay his mortgage.

You know who else I really don’t want to help? Stupid fifteen-year-old girls — or younger — who have babies figuring they can always get welfare to pay the bills. I want them to be a burden, not on the government, but on their relatives, on their neighbors, on their church — on anybody they actually know who they’ll have to look in the eye and say, “Give me money.” That’s a lot harder, and a lot more humiliating, than looking a bureaucrat in the eye and saying “Give me money.”


Obama ends his op-ed saying, “This debate offers the chance to put our economy on stronger footing, restore a sense of fairness in our country, and secure a better future for our children. I want to seize that opportunity, and ask Americans of both parties and no party to join me in that effort.”

You might first want to stop vilifying successful people, Mr. President. When you tell over-taxed Americans that they’re not paying their fair share, when you suggest that they’re the ones who are freeloading on the backs of everyone else, there’s a tendency for them — and me — to want to tell you to GO FLY A KITE!


Obama in that same Op-Ed Obama also claimed that Bill O’Reilly is for new government revenues in any debt-ceiling deal.

O’Reilly added this:

“Well, I mean, I don’t know what President Obama’s referring to when he uses my name, but we’ve been pretty consistent in telling everyone that the tax code has to be reformed. …
It’s not accurate in the sense I’m advocating tax rate hikes.
They are parsing.
They’re basically saying that many people – and the polls show this as well, 66 percent – say, yeah, if you do it the smart way, the federal government should plug some loopholes and try to raise more revenue without directly taxing Americans in the income-earning capacity.”

“Nah, he [Obama] didn’t write it. Somebody wrote it and they ran it by him.”

@Nan: You are so incensed at the thought of relatively poor people being under taxed. They aren’t the problem. They aren’t the reason that we are in a debt hole. It’s not “vilifying” “successful” people to suggest that they should pay a 39% marginal tax rate, just like it was back in the 1990s. Bring back everyone’s rates back to where they were in the 1990s. Poor people, too. Shared sacrifice.

You can’t solve the problem by raising no one’s taxes.
You can’t solve the problem by raising only rich people’s taxes.
Everyone needs to pay their fare share.

But poor people aren’t the problem. They didn’t create the financial meltdown. The financial meltdown was created by rich people, trying to get ever richer.

– Larry Weisenthal/Huntington Beach, CA