Viable plan is Cut, Cap and Balance; Gang plan rests on ‘revenue’

The US House of Representatives passed the Cut, Cap and Balance Act on Tuesday. The bill provides an increase in the debt limit of $2.4 trillion, according to Speaker of the House John Boehner (R-Ohio).

President Barack Obama shot the act down before a vote was taken. Why? Revenue.

The Republican Study Committee chair, Rep. Jim Jordan (Ohio), projected $111 billion in cuts through CCB in fiscal year 2012 with “firm caps on future spending.” The clincher is the balanced budget amendment required by the act.

The Heritage blog pointed out an interesting tidbit of history. In 1997 then senator Joe Biden (D-Del.) voted for a balanced budget amendment.

As speeches were made on the House floor, another effort was underway. Media has dubbed a bipartisan group hoping to craft an alternative plan as the Gang of Six. Sounds catchy, doesn't it?

The Senate gang has promised tax reform and additional “revenue.”

Daniel Horowitz in an essay at Red State said of the Gang plan, “[T]he purveyors of the plan claim that it would concurrently raise revenues by $1 trillion, accounting for over 25% of the overall magical $3.7 in deficit reduction.” Horowitz rightly said the plan uses “fuzzy math.”

Furthermore, the plan continues the socialist practice of confiscating wealth from one economic sector and handing it to another.

Horowitz wrote, “[F]or all the talk about closing loopholes, their proposal would retain…you guessed it, the Earned Income Credit and Child Tax Credit.  So after subjecting retirees to double taxation of 401(k)s and IRAs, they will retain the redistributive Earned Income Credit for many who pay little or no taxes.  How’s that for a clean, flat tax system!  Moreover, the Earned Income and Child tax credits cost the treasury $77 billion in annual revenue.”

Reports surfaced on numerous political talk shows about the Gang doing away with the home mortgage interest deduction. That is the single most valuable deduction to the middle class.

It is very difficult to trust the Gang of Six or the president at this point. President Barack Obama, who appears favorable to the Gang plan, has been handed what amounts to a very generous credit card. Americans trusted him with hundreds of billions of dollars for the Stimulus, and ever since, all we’ve heard is the need for new revenues.

What happens when those new revenues come in? Congress spends more. Heritage Backgrounder No. 928 disclosed:
 “A Joint Economic Committee report found that every dollar of higher taxes since 1947 has resulted in $1.59 of higher spending. This statistical survey is supported by recent history. Tax increases in 1982, 1984, 1987, and 1990 all were enacted for the alleged purpose of deficit reduction. In every case, however, the deficit rose the following year because lawmakers could not resist the temptation to spend the expected new revenues.”

At the moment, it is hard to pin down what the Senate gang’s bill would look like because right now it’s just a plan.

Sen. Jim DeMint told Fox Business Network on Tuesday, “I don’t know enough about the Gang of Six proposal, but I do know the only reason the president is stepping up and saying he might support this is that Republicans are now on the offense with a plan that would increase the debt limit in a way that Moody’s and S&P would recognize as credible long-term deficit reduction.”

Taxpayers should bear in mind something legacy media will not tell you. When a politician uses the term “revenue,” what he really means is taxes and he thinks you’re too stupid to figure it out. And when that same politician wants more taxes, he will use it to spend more if history is our guide.

The only viable plan at present is Cut, Cap and Balance.

(Commentary by Kay B. Day/July 20, 2011)

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