The Weekly Winston: Fiscal Cliff Edition

Featured image Everyone supposes that supply-side economics was a purely American phenomenon, with its antecedents going back to Calvin Coolidge and his tax-cutting Treasury Secretary Andrew Mellon and ending up with the Laffer Curve.  And of course Ronald Reagan liked to quote John F. Kennedy on the wisdom of income tax rate cuts, much to the consternation of good liberals today. But in fact Churchill was part of the early supply-side revolution, »

Obama uses summit to turn up heat on republicans

Featured image At the White House on Friday, President Obama apparently told the “summoned” that he wants Harry Reid and Mitch McConnell to reach a deal on the income threshold for tax hikes along, I assume, with a few other partial “cliff” fixes. If they don’t reach a deal, Obama will have Reid call for a Senate vote on Obama’s plan to increase taxes on everyone earning $250,000 or more, plus an »

Soak the Rich?

Featured image The “fiscal cliff” drama is playing out in Washington, with Barack Obama fixated, apparently, on raising taxes on “the rich”–i.e., hard-working families, most of them with multiple income-earners. So the IRS’s recent release of tax data for 2010 is timely. The American Enterprise Institute has the numbers: According to new IRS data, the 1.35 million taxpayers that represent the highest-earning one percent of the Americans who filed federal income tax »

Is Obama over-playing his “fiscal cliff” hand?

Featured image The “fiscal cliff” consists of two elements — tax increases and spending cuts. The tax side is essentially a win-win for President Obama. Either he extracts a large amount of money for the government through across-the-board tax hikes he can blame on Republicans or he extracts a smaller amount of money from well-off Americans, thereby satisfying his emotional desire to stick it to Republicans and the well-off. The spending cuts, »


Featured image President Obama has summoned congressional leaders to a Friday summit at the White House to talk about a deal that would avert some of the “fiscal cliff” measures that are scheduled to kick in on January 1. Everyone seems to agree that there isn’t enough time to avert all of these measures. Nor are all of them necessarily to be despised. Democrats believe that cliff-imposed tax increases for high earners »

Maybe we should go over half of the “fiscal cliff”

Featured image I don’t think it’s possible to go over only half of a cliff, any more than one can kill half of a dog. But the “fiscal cliff” isn’t really a cliff; it’s a metaphor. The metaphor refers to two very different phenomena. The first is a tax hike for everyone who pays federal incomes taxes. The second half is a rather large cut in federal spending. I don’t know of »

Plan B fails; Republicans move closer to political cliff

Featured image Speaker Boehner has pulled his “Plan B” for averting the year-end “fiscal cliff” because, in the words of the Washington Post, “he fail[ed] to persuade conservative Republicans to extend tax cuts for the vast majority of Americans and let tax rates rise for millionaires.” I quote the Post’s characterization because this is how the vote will be portrayed throughout the mainstream media and how it will be perceived by most »

With a deal in sight, Boehner looks for leverage

Featured image President Obama has made a counteroffer to Speaker Boehner that puts the two men within shouting distance of a deal that Boehner could present to his caucus. But much shouting — or at least much negotiating — remains before such a deal could be finalized. With that in mind, Boehner appears to be seeking whatever incremental leverage might be had. On the dealmaking side, Obama now says he will settle »

The municipal bond tax loophole — low-hanging fiscal fruit

Featured image Peter Schweizer proposes a tax increase that will raise $124.4 billion over the next ten years. He wants to eliminate the tax-exempt interest on municipal bonds for upper income Americans and, with respect to newly issued municipal bonds, eliminate it for all Americans regardless of income. According to Schweitzer, this move would produce $124.4 billion over the next ten years. Not surprisingly, President Obama has already proposed limiting or ending »

Cliff City, Part Two

Featured image George Will’s column, which Scott discusses below, stops short of arguing that we should go over the “fiscal cliff” in order to fix the tax code. Ending the tax credit that subsidizes wind power, for example, “is not quite a sufficient reason to go over the ‘fiscal cliff,’” Will writes, “but would be a consolation for doing so.” Will urges that arguments about “the propoer scope and actual competence of »

Now They Tell Us!

Featured image Knowledgeable observers have always known that the U.S. cannot come close to balancing its budget by increasing taxes on the rich, for the simple reason that we have nowhere near enough rich people, and our rich people have nowhere near enough money. Yet for the most part, this obvious fact has been obscured in press coverage of negotiations between President Obama and Congressional Republicans. At this late date, however, the »

Deal or no deal

Featured image According to the Washington Post, “the contours of a deal to avert the ‘fiscal cliff’ are becoming increasingly clear.” That deal would consist of three elements: First, tax rates on the “wealthy” would increase, as President Obama insists they must, but by a bit less than he proposes and perhaps with a more realistic definition of who is wealthy. Some deductions would also be limited, as Republicans have proposed, in »

Taxes for Thee, but Not For Me

Featured image Liberals typically argue that marginal tax rates really don’t make that much difference to economic behavior.  So then why are so many companies rushing to pay special dividends before the first of the year, when taxes on dividends will triple?  Chief among them is the Washington Post, which just announced it will pay an early dividend: WASHINGTON (AP) — The Washington Post Co. will pay its 2013 dividends before the »

It’s Time To Stick It To the Blue States

Featured image After years of campaigning for higher taxes, it is beginning to dawn on liberal residents of blue states that the effects, for them, will not be pretty. Most of the nation’s “rich”–those earning over $250,000 a year, or, depending on President Obama’s mood, $175,000–live in the blue states. Moreover, the deductions that are likely slated for reduction or elimination, including state taxes and home mortgages, mostly benefit blue state residents. »

Why Are Republicans Losing the Tax Debate?–Part 2

Featured image Further to yesterday’s post on Why Republicans Are Losing the Tax Debate (“It’s the fairness, stupid”), let’s take account of the best argument of the Left on the matter.  In response to the data showing that tax rate reductions have shifted the income tax burden to the wealthy, the Left responds that the share of total income accruing to the richest 1 or 10 percent of Americans has soared, by »

Two Things Barack Obama Doesn’t Understand: Taxes and Mathematics

Featured image Negotiations over the “fiscal cliff,” which I wrote about here, will begin soon. President Obama has laid down a single marker: he insists that taxes on “the rich” go up; specifically, that the Bush-era marginal income tax rates be allowed to expire as scheduled under current law on January 1, to be replaced by the rates that prevailed during the Clinton administration. Obama has conveyed the strong impression that canceling »

A “balanced approach” to reducing the debt — I’m for it

Featured image President Obama ran for re-election advocating a “balanced approach” to dealing with our fiscal crisis. Now, our own John Hinderaker has proposed one — raise everyone’s taxes by letting the Bush-era tax cuts expire. You can’t get much more balanced than that. However, I don’t favor raising anyone’s taxes within the current tax code structure, and I don’t think, as a political matter, that Republicans should push for an across-the-board »