Will Obama Raise Taxes on the Rich Back to Clinton-Era Levels? Don't Bet On It

At a White House press conference today, President Obama reiterated his campaign argument that any deficit reduction plan must include tax hikes on top earners. “We cannot afford to extend the Bush tax cuts for the wealthy,” he said.

Any lingering debate about the issue was decided by the election. “I argued for a balanced, responsible approach,” the president said. “Part of that included making sure that the wealthiest Americans pay a little bit more. I think every voter out there understood that, that was an important debate, and the majority of voters agreed with me. Not—by the way, more voters agreed with me on this issue than voted for me.”

So is it all settled? Should we expect tax rates to return to Clinton-era rates on family income earned over $250,000 at the end of the year, when the cuts originally passed under President George W. Bush are set to expire?

Don’t bet on it.

Last time the Bush tax cuts were up for debate, Obama similarly insisted that rates had to go up for high earners. They didn’t. Which is why it’s unlikely that we’ll see a return to Clinton-era rates this time around either, despite Obama’s tough rhetoric.

When this came up at the press conference, President Obama didn’t have much of a response. “Two years ago the economy was in a different situation,” he said, suggesting that the economy was still weak enough then that it couldn’t handle a tax hike at all. But is today’s economy recovering much faster? Not really. According to the Bureau of Economic Analysis, the economy grew at an annual rate of 2 percent in the third quarter of this year, following a 1.3 percent GDP increase in the second quarter of 2012. If anything, that’s slightly worse overall than in 2010, which also saw a 2 percent annual growth rate in the third quarter following second quarter growth of 1.7 percent. If keeping all of the Bush tax cuts in place was a good idea then, why is it a bad idea now? 

The other argument Obama made was that the numbers left him with no other choice. “I’ve been living with this for a couple of years now. I know the math pretty well,” he said. But raising taxes on top earners doesn’t get you very far toward zeroing out the deficit. Raising taxes back to Clinton-era rates on individual income earned over $200,000 a year and couples earning more than $250,000 nets about $1 trillion in total over the next decade. Obama has already run $1 trillion deficits every single year he’s been in office. Following the president’s most recent budget proposal, debt held by the public would increase by about $8.7 trillion over the next decade—on top of the $10.1 trillion public debt the country is already carrying. This is not exactly a "balanced, responible" plan. Nor is it much of an argument for why we'll see Clinton-era income tax rates return for high earners. We didn't in 2010, and there's no reason to think that we will this year either. 

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  • ||

    "I’ve been living with this for a couple of years now. I know the math pretty well,”

    --------

    He knows because his commie mother learned socialist arithmetic in her Marxist school. Emperor Hussein is therefore aware that 1+1=1917 GLORY BE UNTO RED OCTOBER.

  • Palin's Buttplug||

    Are you still listening to redneck AM radio?

  • ||

    No more lonely nights
    For the restless heart.
    Role the dice!
    Make a brand new start!

    When the world you know got shattered, you and me were all that mattered.
    Just one way I'm going to lose this restless heart, running away with you!

    Human again.
    I take you in my arms and hold you 'till the fear is all gone.
    And now the race is won.

    Shout it from the highest steeple.
    Let it out to all the people.
    Scream it on the loudest speaker.
    Burn it like the highest fever.

    You hit the right spot.
    No more lonely nights
    With a restless heart.
    Roll the dice!
    Make a brand new start!

  • Belgian||

    It's astonishing how in the span of a week, a 50-49 election has become a "landslide."

  • ||

    What are you talking about? It's been a landslide on MSNBC for like six months.

  • Palin's Buttplug||

    To be accurate (you know me) it was a 2.8% win for Obama. Also that is over 3 million votes.

  • Enough About Palin||

    Percentages...how do they work?

  • Randian||

    It was 50.6 to 47.8.

    Wahoo. What a landslide.

  • some guy||

    To be complete you could look at eligible voters instead of actual voters and see that "did not vote" won handily.

  • Number 2||

    "Any lingering debate about the issue was decided by the election. "

    Would that be the same election that saw control of the House of Representatives, the house of Congress in which all tax bills must originate, remain in the hands of the GOP?

    Seems that the voters sent a mixed message during the election, now doesn't it?

  • BarryD||

    Pretty much, "This is bad, but the alternative seems worse" all around...

  • Pro Libertate||

    "No, fuck you, cut spending."

  • GW||

    I still really, really like this approach.

  • Pro Libertate||

    Frankly, I think the GOP and the LP should adopt it as their official slogans. Reason, too, as free minds and free markets appear to be off the table now.

  • Killazontherun||

    They might get around too it once they get over their fascination with applying make up to the GOP. A little pink lipstick and rouge and viola! All better.

  • Killazontherun||

    get around to it too once . . .

    Just can't even --

  • ||

    According to the Bureau of Economic Analysis, the economy grew at an annual rate of 2 percent in the third quarter of this year, following a 1.3 percent GDP increase in the second quarter of 2012. If anything, that’s slightly worse overall than in 2010, which also saw a 2 percent annual growth rate in the third quarter following second quarter growth of 1.7 percent. If keeping all of the Bush tax cuts in place was a good idea then, why is it a bad idea now?

    Please follow up this type of information with a breakdown of how much of the changes in GDP are due to changes in government spending.

  • Brutus||

    That's the crux of it right there. A better gauge of GDP would factor the "G" out of the equation.

  • R C Dean||

    My prediction:

    A Grand Bargain, involving (a) cosmetic changes to deductions, (b) no changes in rates, and (c) a carbon tax.

    Spending cuts? Not one red cent will be cut. FY 2013 outlays will not be lower than FY 2012 outlays. The FY 2013 deficit will be $1TT.

    Set your wayback machines, gentlemen. I expect to be gloating a year from now.

  • Lord Humungus||

    yay, a carbon tax. That will make the economy take off.

    What are the odds for VAT?

  • sarcasmic||

    What are the odds for VAT?

    As long as the Republicans hold the House, I'd say close to zero.

    If Democrats gain control of the House and Harry continues to control the Senate, I'd put the odds at one hundred percent.

  • ||

    That would take 60 D votes in the Senate, same as Obamacare, plus D control in the House.

  • Sudden||

    They have the 60 D votes right now and Reid has been talking about blowing up the filibuster.

  • Certified Public Asskicker||

    Here's what is fascinating. Obama has acknowledged that the corporate rate needs to be cut.

    Yet, if given the chance he would jump all over a VAT.

    Luckily, as sarcasmic points out, as stupid as the Republicans are they will not go for a VAT.

  • Kwanzaa Cake||

    Isn't a carbon tax impossible to get through the Senate, to say nothing of the House?

  • R C Dean||

    Not at all, as part of a Grand Bargain on deficit-cutting and tax reform.

    The Repubs are desperate for a deal, as they know they'll be blamed if there isn't one.

    Their only line in the sand is "Don't raise rates."

    Fine. The price of not raising rates will be a carbon tax, instead. They'll take that deal, I'm sure.

  • some guy||

    I'm on board, but I think the carbon tax will instead be a transaction tax on stock markets.

  • jorgeborges||

    All these newly proposed taxes on "rich people" are the liberal equivalent to de-funding PBS.

  • Palin's Buttplug||

    Yeah, $50 billion a year is the same as the $500 million a year blown on PBS.

    Exactly the same.

  • Certified Public Asskicker||

    Come on asshole. We are talking about trillions of dollars here. Both are drops in the bucket.

  • Palin's Buttplug||

    $50 billion is 1/20th of the deficit. Granted, we are taxed out after that and need to whack some of that $3.5 trillion in spending Bush and predecessors left.

  • ||

    Shut the fuck up fucknozzel.

    FACT:

    Obama spent in four years what it took Bush eight. While I'll agree that Bush was a fucking idiot, you don't have a leg to stand on.

    Sell it somewhere else asshole.

  • Fatty Bolger||

    Shit, you almost started making sense there for a second, before going all BOOOOSH!!! on us again.

  • Randian||

    BOOOOSH BOOOOSH.

    Bush's last budget was 3.1T.

  • R C Dean||

    Indeed, and after you back out the spending in FY 2013 that was passed after Obama took office, the deficit was, if memory serves, $800BB.

    Horrible, but much better than Obama.

  • Palin's Buttplug||

    Bush failed to sign a budget for FY 08-09 which the CBO said would be $3.5 trillion in spending before Obama was sworn in.

  • some guy||

    When was the last time Obama signed a budget?

  • GILMORE||

    Budget? What budget?

  • Randian||

    Pretty damn close, PB. I want you to acknowledge one thing here and then I promise you can continue on: simply raising the tax rates on the wealthy, which is all I have heard Obama say, is not a serious step towards solving the deficit.

  • Certified Public Asskicker||

    He almost gets there right above, but then goes right back to BOOSH!

  • Palin's Buttplug||

    I admit that it (raising the top rate to 39.6%) is a woefully inadequate first step to balancing the budget.

  • Randian||

    Your beloved National Health Care would be a great place to start.

  • Certified Public Asskicker||

    Then why do you keep bringing up Bush? We agree with you, Bush was an idiot. But continuing to do the same thing does not make one better than his predecessor.

  • Sudden||

    Raising the top marginal rate to 100% would still be inadequate, not to say the reverberations it would have throughout the rest of the economy.

    Raise taxes on middle and lower incomes OR cut spending.

    Gotta do one of the other if you wanna close the deficit completely.

  • jorgeborges||

    They're the same in that both are populist scapegoats.

  • Enough About Palin||

    You're a buttplug!

  • Palin's Buttplug||

    Obama has already run $1 trillion deficits every single year he’s been in office.

    And slightly down from the $1.2 trillion he found when he was inaugurated.

    If only other .....

    Well, never mind. Bush will be defended by so called "libertarians" here until Jeebus pulls the guts out of all the libs on Judgement Day.

  • Lord Humungus||

    how are those little voices in your head? It must be ever so crowded in there.

  • Mike M.||

    Is it just me, or does Shrieking Idiot seem even more psychotic now than he was before the election?

    I thought that victory might perhaps make him a little more sane. Boy, was I wrong.

  • Certified Public Asskicker||

    Are you ignoring that 1.3 in 2011 just for fun?

  • GILMORE||

    Palin's Buttplug| 11.14.12 @ 3:54PM |#

    Obama has already run $1 trillion deficits every single year he’s been in office.

    And slightly down from the $1.2 trillion he found when he was inaugurated

    BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE BUSH WAS WORSE

    See, because that matters.

  • Palin's Buttplug||

    Never forget who ass-raped your family.

    Bush turned a surplus into a $1.2 trillion deficit.

  • Randian||

    BOOOOOSH BOOOOOOOSH

  • GILMORE||

    Yeah, and he also lowered my taxes if I recall...

  • Palin's Buttplug||

    No doubt.

    And spending went from $1.8 trillion to $3.5 trillion in his eight years.

  • Randian||

    Nope. First Bush Budget 2T. Last Bush Budget 3.1T.

    More lies from shrike.

  • R C Dean||

    Yes, Plug just can't stop blaming Bush for spending approved after Bush left office.

  • GILMORE||

    Palin's Buttplug| 11.14.12 @ 4:10PM |#

    No doubt.

    And spending went from $1.8 trillion to $3.5 trillion in his eight years

    Given your fondness for Obama you'd think this would be something to brag about.

    Its libertarians who were complaining about spending in 2000-2008 - but now you only give a shit about it because poor wittle Obama may have to PRETEND to stop (nay! slow down) the monumental Federal Wealth Destruction program for like 6 months.

  • Palin's Buttplug||

    Consider George W. Bush's eight horrendous years: The budget grew 89 percent—from $1.86 trillion to $3.52 trillion.

    http://reason.com/archives/201.....-cut-gover

  • Randian||

    Like I said, first Bush budget was 2T. Reason got that wrong. Last Bush budget was 3.1T.

  • Sudden||

    There is also the matter that ~500 billion of that final year's spending was a one-off "bank saving" bail out that turned into the O's own personal slush fund.

  • ||

    Wait, what? Well, that changes everything, then! I totally love Obama now because Bush sucked just ever so slightly more and I didn't even realize it! Hallelujah!

    (now I'm starting to understand the desire to use the phrase "I just can't even...")

  • General Butt Naked||

    Yup, thank Gawd it ain't the BooosH! years anymore.

    It was terrible before we had the peace, prosperity, and new consciousness that Dear Leader brought us!

    All hail Dear Leader!

    /shrike's mind

  • ||

    See, because that matters.

    AND...because, everybody posting here thought Bush was the greatest President EVER!

    Libertarian is just another word for Republican, right Shreek?

    Hey John, you got your monkey video handy?

  • General Butt Naked||

    There is no depth to Obama's anus that shrike's tongue won't prod, tickle and explore.

    What's that processed arugula taste like, shrike?

  • Tim||

    Elections have consequences.

  • GILMORE||

    "“Part of that included making sure that the wealthiest Americans pay a little bit more""

    The wealthiest.

    Any *household* over $200K-250K

    That's 'wealthy'.

    Also = every retiree living on an income fund. It is imperative that we reduce grannies income payments while simultaneously stimulating inflation. We don't want her getting used to that *fancy* cat-food.

    Also, it is crucial that we tack on Financial Transaction Taxes. So that the cost of running any kind of retirement fund product effectively doubles, and destroys young investors long term returns.

    See, we totally have to stick it to Wall St. Because then they can just raise their costs to consumers and pass those taxes onto us. That'll show them!

  • Certified Public Asskicker||

    Millionaires and billionaires = making over 200k.

  • Sudden||

    Technically, millionaire only refers to net worth, not income. If you're making $250k/year (assuming you manage to make it regularly for a decade instead of having an up year where you pull it in), you should be able to get your net worth up to millionaire status in 7-10 years.

  • Enough About Palin||

    "From each according to his ability, to each according to his needs"

    - Barack Obama

  • Fatty Bolger||

    Let them go up. Let them ALL go up. The Democrats have been crying about the so-called "Bush tax cuts" for a decade now, even while they vote to renew them. Let them pass a new set of "Obama tax cuts" if that's what they want.

  • Randian||

    Yup. Go Go Fiscal Cliff. Bring that shit on.

  • Kwanzaa Cake||

    Obama just said today that letting the rates go up on incomes under $200k would do too much harm to the economy. They really beleive that consumption is all that matters, and also, that jacking up rates on professionals earning, say, $300k will somehow not affect their consumption. It is incredibly incoherent, even for BO.

  • Jgalt1975||

    Fucking marginal propensity to save, how does it work?

    Do the Rich Save More? (PDF)

  • Randian||

    Suderman Alt-Text win.

  • Kwanzaa Cake||

    At this point the debt issues are so threatening that I am willing to suffer a tax hike if that's the only way to get real spending cuts. The tax hikes are the red meat Dems need to feed their dependents and class-warfare base, nothing more, but so be it.

    I think the majority of hard-core Repubs might even go for the same deal. Boehner should offer it to Obama -- you can have the Clinton tax hike on the upper-middle class, in exchange for significant cuts that take effect NOW. Then let Obama turn it down, which he will. It would lay bare his intention to use the tax hikes to (very) partially finance ever-higher spending, exposing the "balanced approach" crap for the smokescreen that it is.

  • Spoonman.||

    Agreed. Raise them. Just cut some damn spending.

  • R C Dean||

    First, we need to all agree (yeah, I'm looking at you, Republican "leaders") that it ain't a spending cut unless this year's outlays are lower than last year's outlays.

    Pinkie swears to cut spending in a few years, honest, don't count.

    Reducing the rate of growth doesn't count.

    This year < last year, or it's not a cut.

  • Kwanzaa Cake||

    Easy solution is: spending as % of GDP is back to 1999 levels. If the Clinton fiscal policy was so great, who could possibly object?

  • Tim||

    "At this point the debt issues are so threatening that I am willing to suffer a tax hike if that's the only way to get real spending cuts."

    They count on this reaction, but we never get the cuts.

  • Randian||

    You get real, immediate cuts with the Cliff.

    Embrace the Cliff.

  • ||

    That's fine. Really. It's a big win for for the fiscal hawks.

    "OK, you got your tax hikes. It's been two years. The Deficit is still 1T. YOU AND YOUR PARTY ARE FUCKING FISCAL FAILURES."

    Raise them. Rape us all. Get past this fantasy that you can tax your way out of a $1T deficit so we can really face reality.

  • Randian||

    Yep. Raise all taxes now. Hell, I'll do them one better and say the top rate should be 42% (and each rate should be raised commensurate with that one).

  • ||

    It's not your debt. It's not my debt. It's Congress' debt, and those foolish enough to have lent them money. Let them be threatened by it.

    Not going to be "willing" to have even more theft occur to fix their problem.

  • Pro Libertate||

    "No, fuck you, cut spending."

  • Mike M.||

    About the only good thing to come out of this whole fiscal cliff mess is that it has been proven beyond any shadow of a doubt that there is no such thing as a real Keynesian.

  • Ayn Random Variation||

    The problem is that even most intelligent people believe that the answer to our economic problems is to raise taxes on the "rich" (meaning - "somebody else") and increase "regulations" on businesses.

    We are doomed.

  • GILMORE||

    Yeah, I've heard, 'educated' people say things like, "Our economy will start growing again when we start taxing the rich more"

    I'll say it again = people shouldn't be allowed out of high school until they can do at least the macroeconomics section of the Series 7.

  • Jgalt1975||

    Um, hasn't Reason been saying that a major (no pun intended) reason to vote against Obama was that he was going to raise taxes? And now the critique of Obama is that he was lying and he's not going to raise taxes? Have we always been at war with Eurasia?

  • ||

    First, the point of the article is simply that the cuts aren't going to happen, not a criticism that the cuts SHOULD happen. Second, where it COULD be counted as a criticism is about his inconsistency on the topic, not that he won't increase those taxes.

  • vootann||

    Sounds like a plan dude.

    www.Privacy-Webz.tk

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