Bush Tax Cuts

Uncovered: John Boehner's Draft Memo to Obama on Avoiding the Fiscal Cliff

A deal to avoid a do-over of the knock-down, drag-out fight over the debt-limit increase.

|

The team of FBI agents that unearthed the emails between David Petraeus and Paula Broadwell also discovered this draft memo from Speaker of the House John Boehner to President Obama. They didn't know what to do with it, so they sent it to me.

Dear Mr. President:

Seeing that YouTube video of you choking up while thanking your campaign volunteers in Chicago reminded me of how much we have in common, even though we are from different political parties. You sometimes cry; I sometimes cry. You like golf and cigarettes; I like golf and cigarettes. You just got re-elected; I just got re-elected, too. Congratulations, partner.

I was also happy to hear your remarks when you said that the American people want cooperation and consensus, not dysfunction. It sounds like what you are interested in is a replay of the relatively cordial deal we cut in December 2010 to extend the Bush tax cuts for two more years, not a do-over of the knock-down, drag-out fight we had over the debt-limit increase in May, June, and July of 2011. That's my preference, too.

I heard you when you said over the weekend, "I will not ask students or seniors or middle-class families to pay down the entire deficit while people making over $250,000 aren't asked to pay a dime more in taxes."

So here's where we're at on that, just for the record. The Affordable Care Act—ObamaCare—applies a new 3.8 percent Medicare tax on investment income for couples earning $250,000 a year or more. That goes into effect January 1, 2013, and while I have the votes in the House to repeal it, Republicans don't have the votes in the Senate to repeal it, much less to override your veto of a repeal. So the truth is, you've already won this point—people over $250,000 are going to be asked to pay more in taxes. Not just "asked," either—they are going to owe additional taxes on non-payroll income such as dividends, capital gains, annuities, royalties, and rents that previously had not been subject to the Medicare tax. This is not "a dime," it's about $30 billion a year, according to the Congressional Budget Office.

(And since you and your new best friend Bill Clinton so often refer to the Clinton administration as the era of tax-rate perfection, let's remember that state income tax rates have soared since President Clinton left office. In Connecticut the top rate went to 6.7 percent in 2012 from 4.5 percent in 2000. In California, it's headed to 13.3 percent in 2013 from 9.3 percent in 2000. In New York state, the top income tax rate went to 8.82 percent from the 6.85 percent it was at the end of the Clinton administration. New York City applies its own income tax, which has also gone up, on top of that. If you really want to bring back the Clinton-era tax rates, go talk to those Democratic governors about rate reductions.)

But we'll go even further than the ObamaCare tax. We'll offer up something that Mitt Romney was talking about in the presidential campaign, which was limiting the value of tax deductions for upper-income taxpayers. As Greg Mankiw, the chairman of the economics department at Harvard and a Romney campaign adviser, pointed out over the weekend, capping itemized deductions at $50,000 for each filer and keeping tax rates where they are today would raise $749 billion in tax revenue over ten years, with 79.9 percent of that coming from the top one percent of taxpayers.

And if the ObamaCare Medicare tax, the increase in state income taxes, and a new limit on deductions aren't enough for you, we'll go even further in the direction of balancing the budget on the backs of the rich by doing something the Senate Republican leader, Mitch McConnell, talked about in his interview with The Wall Street Journal published this past weekend. The Journal said Mr. McConnell "wants means-testing for programs like Medicare." "Warren Buffett's always complaining about not paying enough in taxes," the Journal quoted Mr. McConnell as saying. "What really irritates me is I'm paying for his Medicare."

So those are my "gives." Let's get to the "asks." All the other rates—income, capital gains, dividends, payroll—stay the same for another four years as they were in 2012. I would go down to two years on this if you want to make the 2014 midterm elections about this issue, but I think it's better for reduction of uncertainty to go at least four years out. The one exception is the corporate tax rate, where even you've said that for international competitiveness reasons we need to bring the rate down. My people are going to be annoyed by these increases in the Medicare tax and by the ceiling on deductions. But since the corporate taxes are really paid in the end by the shareholders, a cut in the corporate tax rate would allow me to say to Republican donors that on a net basis they're coming out unscathed, while you can go to the Democratic base and say "we finally forced those rich bastards to pay more taxes—I mean 'asked people like me to pay a little more.'" It's a win-win.

Piggyback an immigration reform bill and a Hurricane Sandy supplemental on top of this piece of must-pass legislation, the same way you did student loans on ObamaCare. Every Republican will vote for the entire package and explain to their constituents that it was a vote for extending the Bush tax cuts, for entitlement reform, for corporate tax cuts, and for avoiding the defense cuts that would have been part of the sequester. Sound like a deal?

Yours,

John Boehner

I'm not endorsing this, just passing it along as a sign of the possibility of an Obama-Boehner post-election romance that has the potential to be more fruitful, policy-wise, than whatever happened between General Petraeus and Paula Broadwell.

Advertisement

NEXT: Four Police Officers Arrested for "Official Oppression"

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. As the fiscal cliff looms, here’s how to avoid another fight like last year’s dust up over the debt-limit increase.

    That’s going to be a pretty neat trick, considering that the next debt ceiling increase is coming due at basically the same exact time as the tax increases.

  2. This bozo thinks increased taxes will help the ‘recovery’:
    “Ending Bush-era tax cuts could pay off”
    http://www.sfgate.com/business…..026284.php
    He’s what the Chron serves up in the hopes readers might not think the paper’s far-pinko.

    1. Static thinkers.

      Over at The Volokh Conspiracy, most of the posters scoff at the Laffer Curve and think that commerce is static and that there is no such thing as income tax rate / revenue elasticity.

      1. It’s not that they scoff at the Laffer Curve, it’s that they don’t think we’re anywhere near the peak of it right now. Most economists who’ve looked at it estimate the peak to be around 70%.

        Fortunately, the French are apparently going to provide a rare real-world data source for us in the coming years.

        1. Tulpa (LAOL-PA)| 11.12.12 @ 6:13PM |#
          “Fortunately, the French are apparently going to provide a rare real-world data source for us in the coming years.”

          In Schumpeter’s bio, it’s claimed he was pleased with the Bolshie revolution in Russia; gave us real data on Marx’s claims.
          Others saw that as bloodthirsty, but it’s not as if he could do anything about it anyhow.

        2. Most of what I have read puts the peak somewhere around 50%.

          1. Of course, you don’t ever want to actually be at the peak. The “ROI” on those marginal dollars is terrible.

  3. I really hate Obama’s line on “asking the wealthy to pay a little more.” If you really believe in raising taxes, come out and say what you really mean: “I’m going to force people to give me more of their money at the point of gun and with threat of long jail sentences.” If you can’t say it realistic terms to the electorate, then you have no business enacting it as law.

    1. I think it’s in the sense of a restaurant “asking you to leave” if your farts exceed their frequency and rancidity standards.

    2. I hate the newsspeak too.

      But really only because its effective. If it didnt work it would be meaningless.

      Obamatons have a raging blindspot when it comes to HOW their grand ideas come into being.

      Law enforcement is just a photo op to them. A chance to pander to minority insecurities.

  4. lol, cops are jsut stupid.
    http://www.Privacy-Guyz.tk

  5. Well, Cryin’ John has already made clear that he’s prepared to roll over on the issue. And that’s a shame. The bottom line is that, even if the U.S. manages to completely avoid the fiscal cliff (not likely, since the President’s “tax the rich”, if implemented, amounts to contactionary fiscal policy) and even if Mr. Obama completely avoids the predicted regulatory uptick he promised his supporters, there’s a better than 50% chance of a recession in 2013. The Obamacare taxes, the implementation of Dodd-Frank, the European sovereign/financial circle-jerk, and the aftermath of Sandy all make this a very distinct likelihood. One would think that the logical place for Republicans to position themselves would be in opposition to the policies taking us there. Signing off on a tax hike doesn’t seem to do that.

    1. I’d say the chances are a lot better than 50% that we go into a recession again next year, even if all the “best-case scenarios” fall into line.

      We’ve had over a decade of GDP growth propped up exclusively by deficit spending, especially since His Lord and Majesty took over. They’ll do everything they can to keep playing these “extend and pretend” games, but ultimately they will likely throw up their hands and start maneuvering the media for the finger-pointing to inevitably follow.

  6. He is one of the persons who is closed to the Obama.

Please to post comments

Comments are closed.