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Explaining Tax Rates and Tax Cuts to Low-Information Voters

BEGIN TRANSCRIPT

RUSH: I just checked the e-mail. I just got some people telling me I don't know what I'm talking about. You know, this illustrates what we're up against. I just said that there are no tax cuts being talked about. I said what Obama and the Democrats are trying to make people believe is that there is a tax cut for the middle class waiting to happen in the new year, but the Republicans might screw it up by not agreeing to a deal. I just want to...

Folks, let me try here again. We have tax rates, whatever they are. I only know mine; I don't care about yours. Uh, no! Whoa, whoa, whoa! I take that back. Oh, no, no. I care so much about your tax rate that I'm gonna learn what they are. Ahem. The point is that whatever your tax rate is, if there is no agreement your taxes are going up, because the current rates expire on December 31st. By law, they expire.

And by law, because of the way the tax rates were achieved through reconciliation back in 2003 -- by law -- the tax rates have been temporary, essentially, for all these years. So they return to what they were before George W. Bush and the Congress cut them in 2003. So they go back up. The top rate will go back up to 39.6%. And that's what the Obama people are trying to tell you in the middle class means that you will not get a tax cut if we go over the cliff.

But if we come to a deal, you will get a tax cut. The way they're saying this is, taxes are going to go up. They're not there yet. Your rate is what it is. But if there is a deal, then your rate won't go up, and that's a tax cut, even though it stays the same. There's no tax cut here! One of two things is gonna happen. Your tax rate's gonna stay the same or it's gonna go up. In neither case is there a tax cut. I'm sorry, but there are no tax cuts.

This is the way baseline budgeting works. I'll give you an example how this works. Let's say you're gonna buy a new car, and you have allocated $50,000. That's what you're gonna spend on a car. You're going to spend $50,000 more than what you are spending now, and you're gonna spend that on a car. So you go shopping, and you find a car that you really like that costs $40,000, and you tell yourself that you just saved ten, when what you did was spend $40,000.

You haven't "saved" anything. You saved over what you expected to spend. This is how women do sales at grocery stores. Uh, uh, this is how PEOPLE justify sales at grocery stores all the time. "Well, it woulda cost X so I bought a whole lot of it, because it was on sale. I saved so much money." No, you didn't. You spent more than you intended to. On the car example, you had allocated 50, but you found something you like at 40. So you bought it and you tell yourself you saved ten.

You didn't.

You never spent the 50.

You spent 40.

So you are out $40,000.

You can tell yourself all day you saved ten grand, but it's in your head. That's the same thing that's happening here in this tax business. There are no tax cuts. All that you're looking at is your tax rate staying the same or going up, and what Obama wants you to believe is that you get a tax cut if your rate doesn't go up. And that's bogus.

BREAK TRANSCRIPT

RUSH: Paul in Miller Place, New York. I'm really glad you waited. I appreciate your patience. Hello, sir.

CALLER: How are you today? Thanks for taking my call. Merry Christmas to you.

RUSH: Same to you, sir.

CALLER: You know, with this whole debate about the fiscal cliff -- which, you know, is really a stupid phrase -- Senator Rand Paul put out a thing about voting for keeping the tax rates the same for 98% of the people or whatever it was, 99% of the people, and then allowing the Democrats to go ahead and raise taxes on whatever the low was. I agree with that, because the tax rates are low now.

What makes anybody think that when the tax rates go up they're gonna start hiring? We're seeing an anemic comeback in this country economically. It's a hundred to 125,000 people being hired per month, which is good for people being hired, but what about the 350,000 not being counted anymore? So if the Democrats think getting their way with a tax increase is such a good deal, g'head! And when it fails flat on their face, the Republicans come back and say, "I told you so."

RUSH: Yeah. I hear you.

CALLER: That's it. "I told you so!"

RUSH: Yeah.

CALLER: You got nothing, but there's nothing about no spending cuts, no nothing. Nothing. And when a budget comes out, the Department of HHS gets a dollar.

RUSH: What budget?

CALLER: Exactly. You know, Boehner controls the money. I wouldn't give anything to the EPA if they're gonna start acting irresponsibly.

RUSH: Here's the thing, though. I understand what you're saying. You're saying, "Let the Democrats have this and let them be responsible for all that happens, and then we say, 'See, we told you so,'" right? Do I understand you?

CALLER: Exactly.

RUSH: Okay. We just did that for four years!

CALLER: (silence)

RUSH: We just went through four years of wanton economic destruction, and we ran a presidential campaign on, "Do you want more of it?" and a majority of the people who voted said, "Give me more! Yes siree, bob! We want to keep going on this track." What makes us think that we can make Obama own the fiscal cliff when we can't even make him own his first four years? 

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