Sunday, July 31, 2011
It's high time I air my thoughts about the debt ceiling debate. For the record, I am opposed to raising the debt ceiling. However, it clearly will be raised, and John Boehner- who was presented with an excellent opportunity to own the debate- has fumbled yet again (shades of the Continuing Resolution debate a few months ago).
The House of Representatives has sent two bills to the Senate on this issue. Both bills a) raise the debt ceiling, and b) exempt entitlement programs and military spending from sensible spending reductions. In other words, these bills compromise heavily with the Senate democrats. Nonetheless, the President and the Senate Majority Leader are insisting that Republicans won't compromise. The Democrats want a larger debt ceiling increase- large enough to ensure continued government spending and eliminate this debate until after the 2012 campaign. If done, this would eliminate the Tea Party's strongest position (and the President's weakest).
Boehner's actions- continued compromise with Reid, paltry attempts to appease the Tea Party caucus, lackluster speeches, etc.- are attempts to please all sides. Like Obama and Reid, he has failed to demonstrate leadership.
I have been saying for a week now, and will say again here: Boehner had a fantastic opportunity to own this debate, and blew it.
Here's what he should have done: Send the House home.
Tell the House GOP members to get on TV, and tell the truth: The House has sent two bills to the Senate. Both bills bend over backward to accomodate Democrats. Both bills raise the debt ceiling, and exempt military spending and entitlements. Keep the speeches short and spin-proof.
Then he should have put the ball in the Senate's court, by giving them three options: a) Pass Compromise Bill A; b) Pass Compromise Bill B; or c) continue to complain and let the cards fall. He should have told the American people that we have compromised as much as humanly possible, and it's time for the Democrats to do the same.
If Boehner had done this, he would have cemented his position as Speaker in the next Congress; brought leadership to this debate; obviated the Democrats' "compromise" meme; paved the way for a real budget debate; and put us a step closer to cementing Obama's defeat in 2012.
Instead, Boehner did what he does best: He snatched defeat from the jaws of victory.
Wednesday, July 13, 2011
I recently recieved this response from Robert Williams at FairTaxer to my Six Reasons The FairTax Is A Really Bad Idea post, following my response to Sen. Dick Lugar (R-IN) on Twitter on the subject. He was thoughtful enough to write a very long and detailed response, so I would like to do the same here.
Please read his post above before continuing.
1: We can't disagree that "sales taxes are often the most regressive form of taxation", because they are. The lower your income, the greater the share of your income subject to sales taxation, which is a regressive tax. Yes, FICA are other payroll taxes are regressive, but then, I never expressed any approval of them. I think that's a common problem with FairTaxers: You seem to believe that if FairTax isn't instituted, the tax code will never be changed.
I'll address the prebate separately, because it's a separate issue.
2: It's not just a viable argument, it's an historical fact. It's happened in every state which has a sales tax.
3. That presumes Congress won't make changes to the tax system, which they make every year.
4. It's an excise tax on every type of product purchased. Excise taxes are meant to apply to a particular type of good- the federal excise tax on firearms, for example (and that tax has other constitutional problems). That's clearly outside the intent of the Constitution.
5. a) Every state's sales tax code contains deductions and exemptions. Foods, for example, are taxed at a lower rate, or certain foodstuffs are exempted from taxation. b) It's sure as heck would apply to business expenses. If a business buys, for example, a vehicle for deliveries, they'd have to pay the tax, because they are the "end user". What you're describing is the purchase of components (like a pizzeria buying pizza sauce). Let's also add another undisclosed facet: State and local governments would also have to pay the tax- and become tax farms of the federal government. That's CLEARLY outside the intent of the Constitution.
6. Again, you assume that no changes would ever be made to the FairTax concept. Changes are inevitable. The "prebate" may initially be given to everyone- until a Democrat majority decides that it's a "tax break for the rich" (or some other nonsense talking point), and puts an income cap on it, or a GOP majority needs to cut spending in that area, and puts an income cap on it (like the current movement to "means test" Social Security). When the prebate becomes a grant to persons with lower incomes (because of an inevitable income cap), it becomes an entitlement program, just like EITC is.
The above also addresses your first three "other points"- i.e., the assumption that Congress would make no changes to the FairTax proposal. We know, with a high degree of historical and political certainty, that changes would be made, including changes in definitions of how prebate is calculated.
Also, EITC is paid once a year, to a small percentage of households. FairTax proposes to calculate and pay 12 times per year, to every household. That's a big difference in bureaucracy, especially in enforcement costs.
Now, for your "good points:
A. "The tax is paid at the register"- yes, and collected by the states and their political subdivisions, making them tax fiefs of the federal government (in addition to having to pay the tax themselves). This also adds costs to the states' tax departments- how would those costs be reimbursed (if at all)?
C. What you failed to mention, is that it would be extremely regressive on the middle class. Yes, it would exempt those below the poverty line, and benefit those at the top (which is a good thing, they pay too much as it is). However, this system would "pinch" those who earn between $30,000 and $200,000 with a greater total tax burden than they currently pay. That's not "We The People", it's reducing the middle class to lower-class status. Far from eliminating class warfare, it would increase class warfare- because class warfare is inevitably produced when there is no distinct middle class (i.e. it's "the rich" vs. "the poor"). It amazes me that the only FairTax response to the problem is "denial and restatement"- i.e. "No, it won't hurt the middle class. To restate, everyone would recieve a prebate...".
Unfortunately, FairTax is not as "flawless" as advertised by it's proponents. It's full of logical holes, and irrational presumptions (such as the presumption that its provisions would never be changed).
I welcome further response (in fact, I've recieved more response to my single FairTax post than all other posts I've made combined!).