Of course, the Democrats are rushing to dismiss the report's assumptions, methodology, and conclusions because it does not fit their tax-and-spend doctrine. White House spokeswoman, Amy Brundage posted analysis from Jason Furman of the National Economic Council which says that the report “fallaciously assumes that the tax cuts are used to finance additional spending, ignoring the benefits of what the president actually proposed, which was to use the revenue as part of a balanced plan to reduce the deficit and stabilize the debt.” Even if all of the revenues raised by this tax hike went to helping reduce the deficit, it is only estimated to raise enough to fund the deficit for about eight days...not eight days of government spending, mind you, just the deficit spending.
Furman claims that Obama's plan "includes $2.50 of spending cuts for every $1.00 of revenue." What in the history of Obama, or the Democrats...or the Republicans, for that matter...would lead anyone to believe that they won't continue to increase spending? This president has presided over the largest accumulation of national debt in the history of the country, by far. Debt has increased by more than $5 TRILLION in less than four years. This claim is eerily familiar to when the Democratically controlled Congress promised President George H. W. Bush three dollars in spending cuts for every one dollar of tax hikes. Bush famously capitulated, breaking his "read my lips, no new taxes" pledge. What he got was not spending cuts, but...you know what's coming, don't you...that's right, increased spending.
Frum says that the study "leaves out the President’s proposed new tax cuts for business hiring and investment." This is proposed, of course, and not actual, enacted tax cuts. Obama's cuts will, supposedly provide a "10 percent tax credit for business hiring and wage increases and allowing immediate write-offs of new investment through the end of 2012." So, with these cuts, Obama is trying once again to micromanage the economy. Businesses do not hire because they get tax credits for doing so; they hire when demand for their products and/or services is high enough to justify adding head count. In prolonged downturns of the economy, businesses are even more hesitant to hire, due to the uncertainties of the market. Instead, they make due with the employees they have working more and more overtime before hiring. This is why hiring is always a lagging indicator for economic recovery.
In a May article on the NPR web site, columnist Fred Barnes said there are problems with, what he calls
"Obama's phantom tax breaks." Here's what he said:
"There are three big problems here. The first is that his 17 tax cuts have had little if any impact on small businesses or the economy. Basically, they failed. Second, his new cuts are much like the earlier ones. They're temporary, narrow, and not what small business owners are asking for, which are fewer regulations and a permanent cut in the personal income tax rate or at least no hike in that rate. Third, they have no chance of being enacted in 2012."Frum continues by saying that even the Earnst & Young report acknowledges "that the short-run impact of extending the high-income tax cuts will be proportionately less than the impact of the middle-income cuts, noting that a 'disproportionate share of the tax change is likely to be channeled through savings for taxpayers facing the top tax rates as compared to other taxpayers.' As I have been prone to saying a lot lately, SO WHAT? This is just basically saying that raising taxes on the middle-income earners is also a bad idea. It does not negate the claims that there will be job loss and economic downturn.
The main reason for the job loss seems to be that a large number of small businesses file at an individual rate rather than a corporate rate. Obama claims that he will be giving "tax cuts for 97 percent of all small-business owners in America." and his proposal "isn’t about taxing job creators, this is about helping job creators.” But, the businesses under $250,000 a year are not job creators. These are mostly small, one or two person shops...consultants and freelancers. The Heritage Foundation calculated that "the average American with $250,000 or more in income can expect an average $24,888 tax increase next year under Obama’s proposed policies." Looking at Treasury Department data they determined that "1.2 million small businesses both had employees and earned more than $200,000 in 2007. So the President is putting about 1.2 million jobs—perhaps even more—at risk with this tax hike."
