Obama is set to severely damage our economy - and that is even if Republicans are able to minimize the damage he is set to inflict between tax increases, Obamacare, Dodd Frank, the EPA, and world record profligate spending. In the first four years under Obama, the median net worth of Americans declined 47%, with the middle class hardest hit. Obama's class warfare and redistributionist policies virtually insure that the next four years will only make our dire situation worse.
Republicans should have four goals over the next four years. One, make the economically incompetent Obama and the left own the economy. Theirs is a bankrupt ideology, and they are now at the point of bankrupting our nation. Two, don't let the left do anything else that cannot be undone by simple majority vote. Three, don't let Obama spend us into a hole so deep we become Greece. And lastly, stop Obama from ruling our nation extra-constitutionally.
In January, the Bush Tax Cuts (for the wealthy, don't you know) are set to expire and the Obamacare taxes are set to kick in. To itemize:
- 35% income tax bracket increases to 39.6%
- 33% income tax bracket increases to to 36%
- 25% income tax bracket increases to to 28%
- 28% income tax bracket increases to to 31%
- 10% income tax bracket would be eliminated
- 0% long term capital gains tax would increase to 10% for low income filers
- 15$ long term capital gains tax would increase to 20% for high income filers
- 2.9% Medicare payroll tax increases to 3.8% for people earning over $250k, and it would apply also to all investment income
- 4.2% SSI employee payroll tax increases to 6.2%
- 35% tax on estates over $5 million increases to 55% on estates over $1 million.
- The Alternative Minimum Tax, with no inflation adjustment, will now apply to 28 million taxpayers, about one in five tax payers mostly in blue states.
- Dividends, currently taxed as capital gains, would be subject to much higher tax as ordinary income.
- Health Flexible Spending Accounts limited to $2,500 per year.
- Threshold for deducting medical expenses rises from 7.5% to 10%
- Obamacare reduces payments to doctors and hospitals under Medicare by 27%, effectively gutting the program.
This is not even close to a comprehensive list. Our economy is set to tank, and the reality is that there is next to nothing Republicans can do about it - nor should they try, at least from the tax perspective. Americans knew Obama wanted to raise taxes when they voted for him. They are now getting the government they deserve - and they deserve to get it good and hard.
What Americans will soon learn is that you cannot punish business and expect the economy to grow, that no nation can tax itself to prosperity, and that taxing the rich will not improve the lot of the middle class in any respect. To the contrary, it will merely mean less money in the economy for private investment. They are hard lessons that need to be learned.
If Republicans hold the line and allow our nation to get to January 1 without anything passed legislatively to address the above, the left and the MSM, joined at the hip, will insure Republicans are blamed for all of the resulting problems. That would be catastrophic. Indeed, we are in the mess we are in large measure because the left and the MSM were able to convince people that the economic crash of four years ago, the one that THE LEFT CREATED, was the fault of some vague, unnamed Republican policies.
So what should Republicans do?
1) Pass a bill restoring the Bush era tax cuts for earners under $250,000 and send it to Obama. This will at least keep Republicans from being blamed when the economy inevitably tanks, and conversely it puts ownership of the economy squarely with Obama. There is nothing the right can do to stop any of the other tax increases, so stop trying. What we have is a spending problem; the taxes increases are just going to add to the misery. They may be the straw that breaks the proverbial camel's back, but its all the other straws we need to be worrying about at the moment.
2) Per Prof. Glen Reynolds, pass a bevy of tax increases aimed at ending sweetheart deals for far left constituencies, from Hollywood to far left foundations.
3) Draw a red line on spending. There is massive public support for across the board spending cuts. Give Obama his tax increases today, then call the President on his promise to cut spending. Require that he give the Republicans a plan to cut the deficit by 25% by the end of his term, and refuse to increase the borrowing authority until he does. That is one cliff we should go over.
4) Refuse to allow Obama to rule extra-constitutionally. For the last four years, when Obama has ruled extra-constitutionally, doing end arounds Congress, the Congress has moaned a little and done nothing. That needs to end. They need to shut down the government and go to the Supreme Court. Moreover, Republicans need to figure out how to force passage of the REINS Act - which would go a long way to redressing the Constitutional balance between the Congress, who are supposed to have ALL legislative authority, and the executive branch.
5) As to the rest of us non-elected types, per Bookworm Room, we need to take the spirit of Hanukkah to heart and start emulating the Maccabees.
Bill Kristol: A Critique of the WSJ's Advice For Congressional Republicans
Larry Kudlow at NRO: GOP's Strategic Retreat
Thomas Sowell: Capital Gains Taxes, and How Quantitative Easing Is Debasing The Value Of Our Currency
Ace of Spades: Ace doesn't agree with my strategy, which in part mirrors that of Sen. Corker
Legal Insurrection - Some Therapy From Rush For Conservatives Who Are Ready To Give Up