President Obama is about to pull off the biggest coup since a wooden horse with 30 Greek soldiers inside of it rolled into Troy.
Not only is he going to get a badly needed political boost by transforming himself overnight from a deficit increaser into a responsible, adult, deficit slasher, but he’s going to secure legislation from Congress that would raise taxes at least $2 trillion over ten years.
And Republicans are all set to go along!
The “Gang of Six” deficit reduction deal is being advertised as a $1.5 trillion tax cut. That’s how it will be sold. Well, it is on paper. But do you live on paper?
The $1.5 trillion tax cut is true only if you assume current law, which says that the Bush tax cuts are going to expire at the end of 2012 and the alternative minimum tax (AMT) will not be adjusted for inflation, as it routinely is every year, and that it will instead reach further into the middle class.
So let’s distinguish current law from current policy. Current policy is the taxes you pay now – including the Bush tax cut and an AMT that has been adjusted for inflation so that it hits fewer people.
Lets look at current law, under which taxes are already slated to go up.
Based on estimates I’ve seen from the Congressional Budget Office and the Congressional Research Service, I would put the ten year tax increase resulting from not renewing the Bush tax cuts – and letting all the rates rise – at about $2.8 trillion.
The tax increase that would occur were AMT not adjusted for inflation amounts to about $700 billion.
So adding the two together, current law states that taxes are going to increase by about $3.5 trillion. Thats what’s scheduled to happen to you.
The Gang of Six Plan estimates that it would cut taxes from current law by about $1.5 trillion. So now the current law increase would be only $2 trillion. And since that’s the new plan, that’s what you’ll get.
THIS PLAN WILL RESULT IN TAXES GOING UP BY $2 TRILLION. Is that what Republicans were sent to Washington to do???
Even House Majority Leader Eric Cantor (R-Va.), the supposed leader of the tax cutters, says he wants to take a look at this.
I assure you, between National Economic Council Director Gene Sperling, OMB Director Jack Lew, and Treasury Secretary Tim Geithner, Obama has some of the smartest liberal economists around. They know exactly what’s going on here.
My assumption is that Republicans who are falling into line behind this plan don’t. Or they expect you won’t figure it out.