RUSH: Charles Krauthammer has a column on this deal today, on the tax deal, and it essentially says many of the things that we’ve been pointing out here all week about this deal regarding whether or not this is a stimulus, how Obama keeps calling it a stimulus. We’ve been asking the question, ‘Where is the stimulus in this bill?’ There isn’t any. There’s no stimulus in keeping tax rates the same. But looked at from Obama’s perspective, what does he consider stimulus? Spending. The Porkulus bill, $787 billion, $800 billion, that was stimulus. Never mind that it hasn’t worked. Well, this thing has a lot of new spending in it. Now they’re adding ethanol subsidies and who knows what else is being tacked on that we don’t know about.
We’ve got unemployment extension for 13 months. Now, we know for an absolute fact that unemployment has cost $320 billion over the last three years. Even our news media had to report that. It’s not some fantasy number like how much extending the tax rate’s gonna cost, which is, again, nothing. Extending the tax rate’s gonna cost nobody anything. Well, actually that’s not true. Extending the tax rate is not gonna fix business. It’s gonna lead to more unemployment, and so will the continuation and expansion of unemployment benefits. There’s gonna be more spending there because more people are gonna stay out of work. If you’re gonna pay ’em to that’s the normal human reaction. So there’s nothing stimulative here in the way you and I think stimulus.
Now, Krauthammer’s piece, a lot of people are raving about it. Let me read to you the first paragraph: ‘Barack Obama won the great tax-cut showdown of 2010 — and House Democrats don’t have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years — which just happen to be the two years of the run-up to the next presidential election. This is a defeat?’
So he calls this the biggest stimulus in American history. Let me show you how this leads to confusion. Jonah Goldberg, who we love here at the EIB Network, great, great book on liberal fascism, Jonah Goldberg has a post at The Corner talking about Krauthammer’s piece. ‘I take a back seat to no man in my admiration of Charles Krauthammer, but could someone around here take a look at his math? Because I’m a little confused. … For instance, White House and GOP talking points notwithstanding, keeping tax rates where they are is not a stimulus.’ He’s right about that. ‘It might have a stimulating effect by reducing uncertainty etc. Indeed, I think that’s the case.’ I disagree there. I don’t think two years is gonna take away any uncertainty ’cause Obama is promising to jack ’em back up in two years. He’s made that something he sounds like he’ll fall on the sword for. So there is no stimulus here. Business is not gonna say, ‘Well, okay, we’ll start making some plans, at least for two years because then the tax rates are gonna go back up.’ Obama’s promising to do that is not gonna end any kind of uncertainty.
But, anyway, Goldberg says: ‘How does maintaining the status quo (and raising the estate tax from its current level) pump new money into the economy?’ He’s right. It doesn’t. Hang with me on this. ‘Also, I understand that for deficit accounting, many people buy into the idea that tax cuts are indistinguishable from spending increases. But that seems like a separate argument from whether or not this deal provides a second, even bigger, stimulus. Obviously some things in the tax deal are stimulative, like the payroll tax cut (which I think should have been split between employers and employees). But I’d just like to see a break out of how Charles gets to $1 trillion in new stimulus spending.’ See, the confusion here is Krauthammer calling it a stimulus muddles his point, and Goldberg illustrates this. What I think Krauthammer means is stimulus in the sense that Obama means stimulus, spending. As Goldberg reads the column he thinks the stimulus is actual economic activity stimulus, which there is none. That’s really Krauthammer’s point, that this is just more of the same for Obama that’s already failed. And the part in it that looks attractive to Republicans is tax rates are not gonna go up.
Now we move to the Morning Bell at the Heritage Foundation. The headline to their piece here is: ‘There is No Tax Deal — On Wednesday, Vice President Joe Biden reportedly told House Democrats that the tax deal cut with Republicans was a ‘take it or leave it’ proposition that could not be changed. But by last night, after fierce opposition from his leftist base, President Barack Obama was singing a different tune, telling NPR: ‘My sense is there are going to be discussions between both House and Senate leadership about all the final elements of the package. Keep in mind we didn’t actually write a bill.” Yeah, they didn’t actually write a bill. They didn’t have a health care bill for who knows how long. The last time we had one of these emerge, ‘We gotta do this before Congress leaves. We gotta do this before the end of the year.’ That’s how we got TARP. That’s how we got the end of the McCain campaign. That’s how we got all that, he comes off the campaign to deal with the economic disaster, and (raspberry), there goes Obama on his way to victory.
‘Well now Senate Majority Leader Harry Reid (D–NV) has submitted a bill, and it is clear that negotiations are still very much open … at least for the left. Politico reports that in order to buy the votes of Senators Maria Cantwell (D–WA) and Barbara Boxer (D–CA), Reid added cash subsidies for wind and solar corporations that were originally part of Obama’s first failed stimulus,’ that he didn’t get. So in a deal that is supposedly about tax cuts for the rich, we have added ethanol subsidies to please Harkin and Charles Grassley. And now, in order to get the votes of Maria Cantwell of Washington, Barbara Boxer of California, we have added cash payments for wind and solar corporations that were originally part of Obama’s first failed stimulus, and then Harkin, Democrat, Iowa, was also able to trade his vote for more ethanol subsidies. That’s how they got his vote.
‘Other ‘sweeteners’ added to buy leftist Senate votes include subsidies for energy-efficient appliances and mass-transit benefits for employees. And the legislation can only get worse. Yesterday House Democrats voted to oppose the Obama tax deal, with Speaker Nancy Pelosi (D–CA) telling Politico: ‘In the caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written. We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote.’ And by ‘improve the proposal,’ Speaker Pelosi can only mean higher taxes and higher spending.’ Look, they’re leaving power. They’re taking the occasion of this last piece of legislation and their budget resolution, by the way, these two pieces of legislation to pack as much of their spending agenda as they can before the Republican cavalry arrives, and going right along with them is the Republican leadership. Sorry to have to say it. But right along with them is the Republican leadership. Ethanol subsidies, wind and solar corporation cash payments in exchange for tax rates staying the same for two years.
During an election campaign Obama promises to raise them back up. It probably isn’t a trillion dollars of new spending like Krauthammer says. The spending involved unemployment benefits. They would calculate as costs to the government the 2% tax rate. They would also include cost to the government the fact that tax increases on income are not happening. That’s how you get to the trillion-dollar figure. Remember, the Democrats are saying, ‘Many economists have noted that keeping the income tax rates the same will cost the government $700 billion.’ The only way you can say that is if you were convinced you were gonna get the rates going up. That’s the only way you can say it’s gonna cost the government, it’s a typical baseline budgeting. The rates have never gone up yet. It was only a possibility. They went ahead and counted on it. Now all of a sudden they’re not gonna do it, so they claim the government’s getting short-changed $700 billion. That’s how you get to all these things that add up to a trillion dollars in spending or government costs or what have you, while Obama is sitting around calling it a stimulus. You gotta keep in mind what an Obama stimulus is. It’s nothing more than Keynesian economics. It’s more and more spending.
‘The deal originally cut by Republicans had some good economic policy in it, but it also had a lot of harmful provisions. The temporary two-year nature of the arrangement did not provide the long-term certainty that businesses need to make long-term investment plans that create substantial economic growth and jobs. Allowing the death tax to return, even at a lower rate, did not give small businesses the relief that a permanent repeal would provide. Finally, the original deal provided a costly $57 billion 13-month extension of unemployment benefits that was not paid for. This extraneous spending should have been stripped out of what should be a clean tax bill; instead, the left is only adding more spending and subsidies into it.
‘This fall, President Obama campaigned around the country promising to raise taxes on America’s job creators. By contrast, conservatives across the country campaigned on promises not to allow the left to raise taxes on anyone on January 1st,’ and to get a handle on spending. ‘The American people chose the conservative position in what even President Obama himself described as a ‘shellacking.’ The tax bill introduced by Reid is not what conservatives promised they would fight for during the elections. And the legislation will only get worse as more and more liberal votes are bought off with more and more deficit spending,’ as the Democrats tried to get everything they can before they lose control of the House. And why should we go along with that?
Why should we make all these deals when we don’t run the show? How can this be a stimulus when public sector unions are getting bailed out? That’s part of this as well, the mass-transit unions. ‘Taxes should not be raised on the American people. Congress and the President would do well by the American people to jettison all the other side issues from this debate and focus first and foremost on preventing tax hikes.’ If it were just a bill to preserve the tax rates for two years, that would be okay. But with what that’s gonna cost and if it happens with Republican participation, then you have to ask yourself, what was the point of the election?
RUSH: No, Snerdley, I don’t know where Krauthammer gets this $1 trillion number. I’ve been trying to figure it out, but I don’t see it. But the Democrats are putting the number out, and I’ve tried to add it up. You got these earmarks, like the ethanol subsidies and that stuff attached here, and you’ve got the unemployment spending. But I don’t know where you’ve got a trillion dollars. The only way you can say is if somehow you say keeping tax rates the same is costing the government some money, and that’s even convoluted. But we’ll see. Anyway, the deal is still bad.
RUSH: I did some research here at the top of the hour. Krauthammer is calculating the $700 billion cost to the government in his figure of one trillion and reporting this big stimulus. And he says you have to. I mean if that $700 billion is government money the government’s not getting, then you gotta count it as money spent. It’s how Obama looks at it, but the point is it’s inane. The tax rates are not changing. They have been the same, and nobody said the tax rates cost the government $700 billion last year. Why all of a sudden this year? I do not understand how something that’s so simple, so logically simple has been so easily, totally, manifestly distorted. You people are probably going nuts hearing me repeat this over and over again. I apologize. But with so many smart people not getting this I somehow feel compelled here to keep drilling home the point. There aren’t any tax cuts. The rate stays the same, therefore the revenue equation changes marginally if any at all. But to say that somehow the government this year is gonna get charged $700 billion ’cause tax rates stay the same, I really need to have somebody explain that to me.
As you know, I reject the whole way of thinking, the whole premise that any of this costs government. It’s our money. It all costs us. Well, he thinks the Democrats are missing what a great deal it is for them, from their point of view, they got a slam-dunk deal and they’re missing it. And it’s apparent that they do think there are tax cuts in here. No. What’s apparent is they were so counting on the rich getting soaked and that’s not gonna happen, and that’s the source of their anger. That’s what sent ’em over the edge. They really thought it was gonna happen and Obama not going for the jugular on the rich has just sent them over the edge, it just has. That’s why all the F-bombs are being tossed out, that’s why all the disrespect.
RUSH: Now, I want to go back and make a point here about this $700 billion Krauthammer and a number of people are using, particularly the Democrats, saying that the current tax rates, keeping them the same, income tax rates, will cost the government $700 billion for two years. How can that be? It doesn’t seem possible. These tax rates have been there for ten years, it would mean these tax rates have cost the government that much every two years. That would mean that the government has lost three and a half trillion dollars over the last ten years because of the Bush tax cuts. Now, does anybody really believe this? This is a made-up number, three and a half trillion? If in two years $700 billion will be not going to the government, boohoo. So this is a patently made-up number. And it’s very close to Obama’s favorite number of $900 billion. He’s the one that made it up and a bunch of other Democrats started going along with it. But even if the three and a half trillion dollars is true, I simply reject this way of thinking, that letting people keep more of their money costs the government.
The government ought to work with what it gets after fair, proper taxation of the people. The notion that government has to come first and then the rest of us deal with what’s left over, when we are the producers, sorry. That offends my sensibilities, and it offends my tax bracket, offends my back pocket, my wallet, and my checkbook all in one. But that’s where we are. So two years, the same taxes, gonna cost the government $700 billion, my heart bleeds. And by the way, that’s just the top rate, folks, we’re just talking about the 36% rate. We’re not talking about all taxes. They’re trying to tell us that keeping a 36% bracket at 36% is gonna cost $700 billion over two years. If a 36% rate went back up to 36.9 then the figure would be zero, wouldn’t cost the government anything, which also is absurd. So that 36% rate for ten years has cost the government — that is even more ridiculous — three and a half trillion dollars.
RUSH: Leave it to Harry Reid to think about trying to change the tax deal that Senate leaders cut with Obama earlier this week. Now, this is the stuff that the folks at Heritage Foundation live for. They have been picking this thing apart, seeing somebody try to take a deal, bend it as far away from the conservative principles as possible, then try to substantiate it until he or she is busted for the absolute insanity of the idea, and wait ’til you hear a list of the pork in this bill. You can always count on the researchers at Heritage to blow the whistle on stuff like this because they got their eyes trained for such things. This is what they live and breathe for. It’s just one of the many benefits members of the Heritage Foundation get when you join, the comfort and satisfaction to know that somebody is their studying to provide you details that you’ll only find elsewhere here on this program, and sometimes I use their stuff.
Make yourself a member at Heritage. You go online to AskHeritage.org and join for any membership fee you want. You start at 25 bucks a year. It’s a great Christmas gift to give yourself or anybody else, and you’ll be in good company, more than 700,000 of us out there. AskHeritage.org is the address. You want to hear some of the stuff? First off, there is tax credit for biodiesel, a tax credit for ethanol extensions, tax credit for energy efficient homes and appliances, and tax credits for training mine rescue teams. It would allow millions of dollars worth of expensing for film and production companies doing work in the United States because a lot of them are going to Canada now with the expenses. It would allow millions of dollars for the rum trade in Puerto Rico and the Virgin Islands. It would provide incentives for investment in the District of Columbia. It would provide other benefits for the battered Gulf Coast.
Now, the ethanol subsidy, the 45 cent per gallon ethanol subsidy alone extended through 2011 was estimated to cost about $5 billion. In all, the package would cost about $855 billion, according to a preliminary congressional estimate. That does include the $700 billion it will cost the government to extend the tax … blah, blah, blah, blah. Still, folks, everybody thinks this is a bill to extend the current tax rates and beat the deadline of their expiration, which is January 31st. And at the end here: ‘Senate GOP leader Mitch McConnell has said he expects most Republicans in the Senate to support the bill. Prominent House Republicans back it, too, though some conservatives have balked over the sheer size of the package and particularly over the unemployment aid,’ which is either at $56 billion or $65 billion, but this long ago ceased being a tax bill. It’s a last minute giant magnet for the dreams of the going away Democrat majority in the House. That’s what this is. Pork. Earmarks. The stuff that was rejected in November.