Erskine Bowles and Judd Gregg Call for<br> Massive, $26.7 Trillion Tax Hike
The Obama Debt Commission's Democrat Co-chairman Erskine Bowles and prominent GOP Senator Judd Gregg (R-N.H.) today called for a massive, $26.7 trillion tax increase on the American people.
In an interview today with ABC News, Gregg said the following:
“Everything has to be on the table – there’s no question about that,” Sen. Judd Gregg, R-N.H., said on ABC/Washington Post’s “Top Line” today. “Erskine Bowles, one of the co-chairmen of the commission, has suggested a 75-25 split -- 75 percent of the savings being in spending, and 25 percent in revenues...
“I think it's likely that there will have to be a revenue component, but it should be significantly, dramatically -- and a 3-1 ratio is pretty dramatic -- dramatically less than the initiatives in the spending side of the ledger.”
So, Bowles wants $3 in spending cuts for every $1 in tax hikes. Gregg agrees with this ratio. If that sounds familiar, it should--it's the same ratio that President Reagan was snookered into in 1982's famous TEFRA deal. Reagan reportedly called that fake spending cuts/real tax hikes "deal" the biggest mistake of his presidency.
What's the "it" that would be solved by these tax hikes? According to the Fiscal Commission website, the charter of the Commission includes the following:
The objective of the Commission is to identify to the President policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run....the Commission shall propose recommendations to the President that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.
Bowles and Gregg can only be talking about cutting $3 in promised Social Security and Medicare benefits in exchange for $1 in tax increases. In other words, 1/4 of the unfunded liabilities of Social Security and Medicare would be paid for with tax hikes. So how big is that?
According to the 2009 Social Security and Medicare Actuaries' Report, the long-run insolvency of the Social Security and Medicare systems is $106.8 trillion (with a "t") over the infinite horizon. To close this gap with one-quarter tax hikes is, therefore, to raise taxes by $26.7 trillion. Of course, this number is undoubtedly higher since the Obama Administration is sitting on (read: hiding) the 2010 version of the report (it's nearly six months overdue).
Higher taxes are not the answer. Even if the 2001 and 2003 tax relief was made permanent, the AMT patched forever, and all other expiring tax relief was extended indefinitely, CBO has said that tax revenues will come in at their historical average. It's spending, and spending alone, which is causing any fiscal imbalance. Raising taxes will simply result in a worse fiscal picture as the politicians spend all the money and create yet more unfunded promises. Spending is 100% of the problem, and should be 100% of the solution.
Every elected GOP member of the commission has signed the Taxpayer Protection Pledge.
“It's been clear from the beginning that the purpose of this Commission was to put GOP fingerprints on a tax hike, likely a VAT," said Grover Norquist, president of Americans for Tax Reform. “Gregg seems to be giving them all ten fingers.”
“The true agenda of this commission has always been to hide the ball on a tax hike until after the November elections – hence the December reporting date. Gregg’s gaffe today tips their hand,” concluded Norquist.