The election is over and President Barack Obama got his second term. If the events of the past month are any indication, Obama will only double down on his far-left policies and there’s nothing left to stop him now from going all in.
They used to say that the partial government shutdown of ‘95/’96 cost the Republicans the election in 1996. House Speaker John Boehner (R-Ohio) did everything he could to avoid one in 2011 – reluctantly agreeing to raise the debt ceiling yet again to $16.4 trillion for a measly $38.5 billion in spending cuts (or four days-worth of spending) – and the GOP still lost in 2012.
They used to say that President Bill Clinton won re-election in 1996 because he moved to the center. Obama stayed as far left as possible on taxes, spending, entitlements and scope of government, and the GOP still lost in 2012.
So much for history “lessons.”
Let’s start with the fiscal cliff hostage deman- I mean, negotiations. Almost every credible expert across the political spectrum acknowledges that in order to get our economy back on the path of solvency and sustainability, Washington needs to enact a balanced approach of revenues, spending cuts and entitlement reforms (the biggest driver of federal debt). Obama repeatedly claims to be all for a balanced approach when giving speeches, but he and his administration have pushed for anything but. In addition to demanding higher tax rates on those making over $250K (or what Democrats consider to be “rich”), he is also demanding a blank check: more spending, more stimulus (or “investment” as they like to call it), and an infinite debt ceiling. Plus no change in entitlements. That’s a “balanced approach?” Maybe if you’re on the far left.
As I have been writing about for years, the Simpson-Bowles commission’s report still provides the best blue print that’s been offered to date when it comes to a bipartisan, balanced approach to solvency and sustainability. It tackles entitlement reform, spending cuts, and pro-growth tax reform to achieve debt and deficit reduction. Obama wasn’t interested in it when it came out in 2009 and still doesn’t seem to be interested in it today. He wants to double down on the same Keynesian economic solutions that he’s implemented since Day 1: more spending, more taxes, more bureaucratic control.
Almost everyone who’s informed is in agreement that the status quo is unsustainable, except the majority of the American electorate. The Romney-Ryan ticket offered real, meaningful reforms on entitlements, spending and the tax code. Fifty-one percent instead voted to maintain the unsustainable status quo: don’t touch my entitlements, don’t cut any of my spending and just find a way for someone else to pay for it. While six out of every 10 Americans want to believe raising taxes on the rich will help maintain spending levels and entitlements as they are, the truth is it won’t even come close to doing it.
According to the non-partisan CBO, the federal government spends $9.7 billion a day. That adds up to $3.5 trillion a year. For anyone who might think revenue is the problem, last year we brought in a record $2.3 trillion in taxes (an all-time high, mind you) which still leaves a deficit of $1.2 trillion from our reckless, out of control spending levels – or about 4 months and 1 week’s worth of spending. But according to the far left, the problem is not that our spending levels are unsustainable, it’s that we’re not taxing the top income earners enough. So if we raise tax rates on those making over $250K back to the Clinton levels, that should bring in $82.5 billion in extra revenue every year – which covers 1 week’s worth of the deficit. What about the other 4 months?
Seriously, what about the other 4 months?
It’s clearly evident that raising taxes on the rich won’t even solve 10% of our spending deficits, but it’s also become clearly evident that Obama is more interested in holding the scalp of the top income earners as a political trophy for his base. Even if he’s successful in getting it, there’s another dirty little secret that the left doesn’t want you to know which will prove this policy will be more of an empty, symbolic victory than any real solution.
Countries all over the world have already tried this. In Britain, the government decided to raise the tax rate on their top income earners all the way to 50%. What the left doesn’t want you to know is that not only did Britain’s revenues plunge afterwards, but two-thirds of their millionaires disappeared. Before the tax hike, 16,000 Brits reported an income of over £1 million. After the tax hike, that number fell to 6,000.
There are two things you can incentivize the private sector to do with its money: spend it or hide it. With more government control over finance, health care and energy coupled with increasing tax rates from income to capital gains (on top of already having the highest corporate tax rate in the world), which do you think this will make the private sector do with its money?
If that weren’t bad enough, Obama also had to interject himself in state politics this week by trying to fire up his far left base – unions in this case – by telling the Michigan state government what it should and shouldn’t be doing in passing their own right-to-work legislation:
“These right-to-work laws have nothing to do with economics and everything to do with politics?” That’s rich coming from someone who’s pushing for tax hikes that have nothing to do with economic debt and deficit reduction and everything to do with political pandering.
We all remember what Wisconsin Governor Scott Walker went through in passing his “Repair the Budget” bill, which reformed collective bargaining rights so that public sector employees contribute more for their own benefits (specifically, 5.8% toward their pensions and 12% toward their health care coverage – about HALF the private sector national average). The results have seen Wisconsin turn a $3.6 billion budget deficit into a $154 million surplus, balancing its budget for the first time in 30 years.
What’s more interesting, though, is what has happened to union membership in Wisconsin since passing CBA reform. Wisconsin membership in the American Federation of State, County and Municipal Employees (AFSCME) — the state’s second-largest public sector union after the National Education Association (NEA), which represents teachers — fell to 28,745 in February 2012 from 62,818 in March 2011.
Let me repeat that: After Walker passed CBA reform, the state public sector employee union contracted by more than 50%! The Wisconsin affiliate of the NEA has declined to comment on any membership change.
A provision of the Walker law that eliminated automatic dues collection is what hurt union membership. When a public sector contract expires, the state now stops automatically collecting dues from the affected workers’ paychecks unless they choose to have those dues taken out. In many cases, the union dropped members from its rolls after it failed to get them to affirm they want dues collected. So let me get this straight; when rank-and-file public sector union members are finally presented with an opportunity (or more like given the right) to break away from their union bosses and keep more of their own paycheck, they are evidently doing so in droves.
That’s the truth about free market principled policies and private sector solutions: they simply give people the choice and freedom to do or be a part of anything they want or don’t want. They don’t force people to join unions through mandatory participation to then force them to pay dues to union bosses who then use that money to get Democratic office seekers elected to then kick back subsidies and collective bargaining power back to union bosses. Michigan is about to become the 24th state to end this cycle of greed and corruption.
But as far as Washington goes, there’s no end as far as the eye can see. The only thing standing in Obama’s way of giving the far left everything it wants is the Republican House of Representatives for at least the next two years. If you thought the $831 billion spending spree, the Dodd-Frank Act and Obamacare were unprecedented levels of wasteful spending and bureaucratic power grabs, just wait if the House goes blue in 2014.