Yesterday morning, Senate Democrats announced they were considering a plan that would replace half of sequestration’s cuts with tax hikes. While the details weren’t out at the time, it was easy to guess the plan would be a bad one.
Mid-afternoon yesterday, those concerns were verified. Via Politico:
Senate Democrats signaled broad support for a roughly $110 billion budget package — evenly divided between new tax revenues and spending cuts — to forestall the across-the-board sequester cuts due to take effect March 1.
The Senate bill contains cuts from farm subsidies and future defense spending after 2015 account for the bulk of the savings. The lion’s share of the tax revenues would come from a new 30 percent minimum tax on those with adjusted gross incomes over $1 million a year in what is dubbed the Buffett Rule for wealthy investor Warren Buffett.
The gory details:
—$27.5 billion in defense savings that begin to take effect in fiscal 2015 after the planned U.S. withdrawal from Afghanistan has been largely completed.
—$27.5 billion in net spending reductions from farm programs. About $31 billion would be saved by cutting direct cash payments to producers — a system that is widely criticized at a time of high farm income. And to win support from Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) the bill reallocates about $3.5 billion of these savings to extend farm programs left hanging by the White House and Senate Republicans in the New Year’s tax deal.
—$54 billion in tax revenues attributed to the new minimum tax on millionaires, an idea first popularized by Buffett. The calculation of adjusted gross income would allow for first subtracting charitable contributions and the 30 percent rate would reflect the average tax rate on combined income and the taxpayer’s portion of the payroll tax.
—$3 billion from two smaller tax provisions. The first would deny tax deductions for outsourcing costs — the costs of relocating a U.S. business unit to a foreign country. The second would include oil from tar sands among the petroleum products that are subject to taxes that support the oil-spill liability trust fund.
This deal is truly terrible. Here are a few reasons to tell your Senators while they are home next week why they should oppose it:
- Tax hikes are bad.
- Sequestration doesn’t actually cut any spending. It only slows the growth of certain parts of the federal budget.
- By cutting the level of spending reductions, Senate Democrats are admitting they simply want to spend more, since sequestration left the budget growing already. This deal leaves more spending in the pot.
- By cutting out part of sequestration and raising taxes, these Senators want to have their cake and eat it, too – government keeps growing and the American people lose more of their hard-earned money.
- The wealthy pay far more in taxes than middle-class and poor Americans. The top 1% of earners, for example, earn 50 times as much as the bottom 20%, on average, but pay 1,500 times as much in taxes.
- Sequestration is set to make some spending reductions this year and every year for the following nine years. This plan delays the defense cuts for two-plus years, meaning no spending reductions in that area at all in 2013 from sequestration. Considering Congress kicked the sequestration can down the road only 16 months after it worked with the President to make it law, it is clear the American people can’t count on Congress to hold true to spending reductions two years from now.
- All farm subsidies should be eliminated, so Senate Democrats get some credit for saving some of the money spent there. On the other hand, Politico’s report that it took a $3.5 billion bribe for Senator Stabenow to support the deal is disappointing, to say the least. That’s a big, taxpayer-funded bribe. A message has been left with her office requesting clarification of the details.
- The top 1% of taxpayers pay 28.9% of their income to the federal government. Jumping to 30% doesn’t do much – according to the Joint Committee on Taxation, it will raise about $47 billion over a decade.
- There is no clarification by Politico as to over what time period the farm subsidy and tax portions of the deal take place. If they are over multiple years, this shows again how unserious Senate Democrats are about even attempting to balance the federal budget.
Call your Senators. Tell them to stop trying to have their cake and eat it, too, by spending more of our money while they take more as well.