RUSH: Let's move on to the congressional super committee. Now, I want you to have audio sound bite 20 standing by. I have to admit this is a little troubling. But I'm gonna reserve some of this because it's reported in the Drive-By State-Controlled Media. First up, the Washington Post. "Republican Super Committee Members' Tax Plan Gives Party An Identity Crisis -- Growing Republican support for raising taxes to help reduce the deficit has prompted a GOP identity crisis, sparking a clash within the party over whether to abandon its bedrock anti-tax doctrine. Tensions have mounted in recent days as two of the GOP’s most fervent anti-tax stalwarts on Capitol Hill -- Sen. Patrick J. Toomey (Pa.) and Rep. Jeb Hensarling (Tex.) -- have lobbied party colleagues behind the scenes to forgo their old allegiances and even break campaign promises by embracing hundreds of billions of dollars in tax hikes.
"The two conservative lawmakers have pushed the increases as part of their work on the bipartisan congressional 'super committee' tasked with finding at least $1.2 trillion in deficit reductions by a Thanksgiving deadline. Their plan, which also addresses entitlement spending, would generate at least $300 billion in new tax revenue..." It's what we talked about yesterday, but now the Washington Post is portraying this as these Republicans wanting to just flat-out raise taxes, and they are trying to get other Republicans in Congress to go along with it, to raise taxes. No, they want to lower rates. They're not talking about raising tax rates. They're talking about raising revenue, and the media is misrepresenting what they're doing. Here's the plan, folks -- and I'm just gonna hit you between the eyes with this.
The Republicans are offering a plan which would take away itemized deductions for anybody making over $174,400 a year. In exchange for that they would lower the top tax rate from the current 35 down to 28%. We've done this before. We did this in 1986. This was part of Reagan tax reform except the top marginal rate then was 50. Wait a minute. No. All itemized deductions for people who make the... Stick with me on this. All itemized deductions for everybody who makes $174,000 or more -- home mortgage interest, charities, all of that, gone in exchange for a lowered rate from 38, 28%. Now, we've done this before. Back in 1986, top rate was 50, took it down to 28, there was a bubble of 31 percent for few people, and we got rid of some deductions.
What everybody said back then happened: The rate would go back up but the deductions would not be reinstituted. And that has been the case. The remaining deductions that were not taken away in the '86 tax reform include charitable contributions and mortgage interest. The mortgage interest doesn't apply for people who make over a million now, the charitable donation doesn't, either. There are a lot of people at a certain income level that don't get any itemized deductions. But even a charitable contribution now, the max that you can deduct is 35% of it, whatever your tax rate is. Not a hundred percent. This would wipe all these things off the board.
So we're not talking about, like the Washington Post says, tax increases. We're talking about revenue increases, by cutting taxes, which will broaden the base. It will spur employment. This will create economic growth. This will inspire investment in the private sector, and it will create jobs, which creates more taxpayers, which is called broadening the base, and that's why lowering rates is a good thing. It generates more revenue. They are not proposing a $300 billion tax increase. The media is portraying it that way. However, wait a second. Let me give you the el kabong on this: $174,400 or above and you lose your deductions. The salary for rank-and-file members of Congress is $174,000 a year.
From the AP: "GOP Tax Plan Targets Itemized Deductions." Now again, the first story was the Washington Post. This is AP. "A GOP plan to raise taxes by $290 billion over the next decade would limit deductions for mortgage interest, charitable donations and state and local taxes as part of a deficit-reduction deal. Some workers could also see their employer-provided health benefits taxed for the first time, though aides cautioned that the plan is still fluid. The plan by Sen. Pat Toomey, R-Pa., who serves on the 12-member debt super committee, would raise revenue by limiting the tax breaks enjoyed by people who itemize their deductions, in exchange for lower overall tax rates for families at every income level."
This is a form of tax reform that has been discussed. This is not theoretically new. This is something that has been out there as a possibility. We will lower the marginal rate, get it down to 28%, and in exchange for that, bye-bye deductions. And you shouldn't be surprised by this home mortgage interest thing because I myself, El Rushbo, have warned you that it's in the crosshairs. Over the past two or three years. Ever since Obama was immaculated, it's in the crosshairs. And Obama himself has said he wants to get rid of charitable donation deductions because he wants the government providing all charity in America. When Obama first proposed getting rid of the itemized deduction for charitable contributions there was a howl out there. "Well, what's gonna happen to charitable donations?"
The percentage of people that make contributions are gonna drop significantly if there's no tax shelter accompanying the donation, which was to say that Americans' charitable donations really have nothing to do with big-heartedness and goodwill, it's all about tax deductions. Some people it's probably true to say that about. Others will give to charity for PR reasons, and they'll get their name on the side of a building or a hospital, they'll continue to do it. Or have a condom named after 'em, whatever, I mean a lot of people will do charitable things for the PR value with themselves issuing the press release. Others do charitable donations for the tax deduction aspect. But the fact that tax deductions would limit charitable contributions was fine with Obama, because the government could pick that up, taxpayers just in another form, the government doing it, and that would make every charitable organization dependent more than ever on government, which means they would have to toe the political line, whoever runs the government, if they're to get their annual donations.
So neither of these two things should surprise you. What is surprising, if these two stories are accurate, claiming Pat Toomey has come up with this. Pat Toomey, Republican, Pennsylvania, both these stories are crediting Toomey with the idea of limiting tax deductibility for mortgage interest and charitable donations for anybody who makes $174,400 or more when the average congressional rank-and-file Senate salary's 174. That means they're exempting themselves. They're not even hiding it. That's why I'm holding this back in reserve. But establishment type Republicans, there's a part of us I'm sure you have no problem, "Yeah, I'm sure they do it, Rush, this shouldn't surprise you. The RINOs, the GOP guys, shouldn't surprise you."
So again, the current salary, 2011 for rank-and-file members the House and Senate is $174,000 a year. Now, there are, like the leadership, they get more, Dingy Harry gets more, Speaker gets more, I'm just talking about the rank-and-file. Now, doing away with the mortgage deduction will do wonders for the housing industry now. Of course, most people getting loans to buy houses can't pay it off anyway. Therefore there is no concept of mortgage interest deduction. Now, the plan supposedly was dreamed up by something called the National Bureau of Economic Research which is a bunch of Harvard eggheads who changed the definition of a recession so that it could be blamed on Bush. So there's still some confusion about this. But that's where we are in the super committee, and I still think that nothing's changed. I don't think the Democrats go for it no matter what the Republicans propose.
Obama's campaign, a billion dollars invested in the theme, he's running against a do-nothing Congress. If they end up doing something here then they've gotta totally change their plans at the Obama reelection campaign. So probably what's gonna happen is some form of sequestration when this doesn't -- (interruption) Well, sequestration is just automatic spending cuts. There probably will be some defense cuts and some Medicare cuts that will just last a year and then next Congress will put some back. Whatever the super committee comes up with, by the way, is not the law of the land. The House and Senate both have to vote on this. So we're a long way from anything really happening. This is typical, they're keeping everybody on the edge of their seats with all these details just like all these deficit or debt level talks that supposedly are happening in secret with Boehner up at the White House and back and forth and so forth, just the same thing. We're being strung along here, nothing's gonna really happen.
RUSH: So, yeah, the rich keep being defined down, now to $174,400 from 250,000, then it was 200, now $174,400 a year. If you make more than that, then all your deductions are gone. I really don't think anything's gonna come of this. And here's Paul Ryan commenting on this. This is last night, he was on with Larry Kudlow. Kudlow said, "I see that super tax hikes are coming out of this super committee. That's really gonna damage the economy if we raise taxes, congressman. What is your take?"
RYAN: No, I don't -- we won't do that. We won't do super tax hikes out of this committee. If there gonna be tax policy, we're looking for tax reform, lower rates, broader base economic growth, the kind that you and I have been talking about for years. But the key deal here is we gotta get some spending cuts. The deal is at least $1.2 trillion in spending cuts to prevent the sequester, that's the goal, we've got seven days to go, we're hopeful. I mean we're gonna push this thing through to the last minute, if we have to.
RUSH: The sequester is the automatic cuts that get triggered if they don't come to a deal which is $500 billion Medicare, 500 billion defense. Those two cuts are supposed to send the fear of God into the negotiators in the super committee. The Democrats don't want any cuts in Medicare, ostensibly, the Republicans theoretically don't want any cuts in defense and they don't want to be tied or linked to those cuts and so that's supposed to inspire 'em to make a deal. I don't know what spending cuts are on the table. I mean he's talking about here the deal is at least $1.2 trillion in spending cuts to prevent the sequester. I don't know what spending cuts are being discussed. The point that he's making here, if we're not gonna have tax increases is the point that I'm making. They are not raising taxes.
This is media manipulation of words. What they are hoping to accomplish here is an increase in revenue. And see, the media is having to twist this around on purpose. Increasing taxes does not increase revenue, not every time. Sometimes it reduces revenue, because it reduces economic activity. The Republican tax plan, lower rates, let people keep more of what they earn encourages people to earn more, encourages job creation, creates more taxpayers, ergo more revenue to the Treasury, which is what everybody says they want, but the Democrats don't want that. What the Democrats want is a different definition. They want the private sector shrinking. They want it smaller and the government getting bigger. Not just in terms of money, but power.