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  • Debunking Orszag's Tax Hike Myths

    Former White House Office of Management and Budget Peter Orszag may have left the Obama administration this past July, but The New York Times has made sure his opinions won’t fall into obscurity. He is now a Contributing Columnist for the NYT op-ed page and his first effort is a tax-and-spend classic. We have paired some of Orszag’s op-ed statement “myths” with “facts” from JD Foster’s new paper: Obama Tax Hikes Defended by Myths and Straw Man Arguments

    Orszag: “In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether.”
    Foster: “Extending the 2001 and 2003 tax provisions is not a tax cut; failure to extend these provisions is a tax hike. Failure to extend current tax policy would impose massive tax hikes on millions of Americans. Preserving current tax policy is not a tax cut.”

    Orszag: “Over the medium term, the tax cuts are simply not affordable.”
    Foster: “The problem is spending, not revenues. The country cannot afford to let current spending levels continue. Taxes as a share of the economy will soon exceed the historical average. The current and projected unsustainable deficits are due to Obama’s spending surge, not a shortage of revenue.”

    Orszag: “Making all the tax cuts permanent would expand the deficit by more than $3 trillion over the next decade.”
    Foster: “The Obama tax hikes, while enormous in their own right, are almost inconsequential compared to the size of the unfunded spending in Social Security, Medicare, and Medicaid. Tax relief enacted a decade ago did not cause excessive entitlement spending. Tax increases today and in the future would do little to address the long-term fiscal picture.”

    Orszag also writes: “How much savings is plausible on the spending side? … The health reform act included substantial savings in Medicare and Medicaid, so there aren’t further big reductions available there in our time frame.”

    That is just plain false. Substantial savings can be found if we repeal Obamacare. As James Capretta has pointed out, repealing Obamacare would save us $4.4 trillion between now and 2030.

    Posted in Obamacare [slideshow_deploy]

    10 Responses to Debunking Orszag's Tax Hike Myths

    1. Kevin Habib says:

      I can't disagree with you and Foster more on whether there it is a tax hike or cut. How on earth can you be policy experts and have this view? Astonishing.

      Any person who actually works in economic policy knows the importance of the baseline. It is called a BASELINE for a reason. It's just depressing to see 'think tanks' are hiring people that don't even know what a baseline is.

      If no bills are passed, if no legislation is passed, the tax cuts passed 10 years ago will sunset. That means they will end. Which means the tax rates will revert back to what they were before the 10 year piece of legislation was put in place.

      it is absolutely a 'tax cut' if congress decides to extend the current policy – because if nothing is done – the rates will go back to where they were before the tax cuts were passed. Simply pathetic grasp of economic policy if you think it's not a tax cut. Shows this is driving by politics and not facts – which is the growing trend with the right over past 18 months.

      And Conn, do you know why the bill sunsets at end of this year? Because it was a requirement due to the Republicans using reconciliation (remember that term that you bashed all year?) to pass the 2001 stimulus bill. It was the first time in history of our country, reconciliation was used to add to the deficit. First time ever – and it was GOP congress and GOP President.

    2. Pingback: Must Know Headlines 9.8.2010 — ExposeTheMedia.com

    3. Lloyd Scallan (New O says:

      Peter Orszag would not have been an Obama lackey unless he believed in Obama's plan to destroy our economical system thus replace it with socialism.

      Why would anyone expect anything but a grunt from an Obama pig?

    4. Drew Page, IL says:

      Of course the problem is spending, but how do you get them to stop? When half the country or more pays no federal income taxes and many of these people are on the collecting end of government spending, who do you suppose they will vote for, someone who says stop spending, or someone who says 'hell yes, keep spending'?

      Fortunately, most people in this country are not deadbeats who think the world owes them a living. All that most people want is the opportunity to work and provide for themselves and their families. Jobs are the issue and the government can only create jobs in the public sector which require higher and higher taxes. We need jobs in the private sector that don't require higher taxes. We need lower taxes on businesses, dropping from 39% to 25% to 30%, at most. We need the government to find ways to ease regulations that impose costly administrative record keeping and procedures on business. We need a government that does not attempt to reach social goals through regulation and taxation of business. If employers choose to provide employees with health insurance, that's the employer's business, not the government's..

    5. Gordon, FL says:

      @Kevin, honestly you are arguing semantics. If today taxes are x and tomorrow they will be x+y, it is a reasonable assertion that this is a tax hike. I understand your arguement that baseline was established some time ago and that using economic jargon the repeal would be a tax cut, but this jargon denies the reality that taxes will be higher in Jan than they are today.

      @Drew, I think this is the real problem. In a way we have re-created taxation without representation. If less than 50% of the population is paying the bill while more than 50% is voting on how it's spent, in a very real way the US is denying representation to those who are paying taxes. Honestly it's my opinion that if a segmant of the population is not paying taxes because of the way our income tax is set up, than that segmant should have no say in how taxes are spent and should not be allowed to vote. In any case, this is a real problem that warrants attention.

    6. TJS, FL says:

      Semantics. Government has proven they cannot be trusted with spending and taxation. They must be limited by a constitutional amendment to 15% of GDP, or less. Stop fooling around. Steeply progressive income tax is a danger to the republic, so all people should pay at least 5%, and those over $20k should be at least 10%. Everyone must have skin in the game.

    7. Spiritof76, NH says:

      Why is there no dearth of stupidity? It must be an extension of the Second Law of Thermodynamics. Entropy, time and ignorance and stupidity are on an irreversible path. Why does it take so many turns at failure through Socialism to make a slight turn towards sanity?

    8. Lou says:

      I don't understand how Obama gets away with comments like "they want to move us backwards with failed policies". First off, Obama's policies are nothing new, they are Wilson and FDR retreads, nothing more. Second, why isn't the press asking Obama the obvious question which should be: "Moving forward to WHAT exactly, Mr President?"

    9. Ellen Chmiel, Monroe says:

      The President is NOT making tax hikes! He's allowing the Bush tax cuts on the wealthy expire. At least be honest about what you are bashing. Those cuts were disasterous.

      Now, Gov. Christie refuses to tax upper incomes more & schools must now charge $100 for a child to play sports in some districts.

    10. Bobbie says:

      Ellen Chmiel, Monroe Twp. NJ, "Those cuts were disastrous. "

      In what way? The cuts are successful for the employed today…

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