Responding to widespread criticism of his AWOL status on the budget fight, President Obama today unveiled a fiscal plan. It already is being criticized for its class warfare approach to tax policy, but the most disturbing feature may be a provision that punishes the American people with higher taxes if politicians overspend.
Called a “debt failsafe trigger,” Obama’s scheme would automatically raise taxes if politicians spend too much. According to the talking points distributed by the White House, the automatic tax increase would take effect “if, by 2014, the projected ratio of debt-to-GDP is not stabilized and declining toward the end of the decade.”
Let’s ponder what this means. If politicians in Washington spend too much and cause more red ink, which happens on a routine basis, Obama wants a provision that automatically would raise taxes on the American people.
In other words, they play and we pay. The last thing we need is a perverse incentive for even more reckless spending from Washington.
[…] Obama’s Tax Increase Trigger: Punishing Taxpayers with Automatic Tax Hikes When Politicians Oversp…[*5] […]
[…] for “contribution rates.” I’m assuming that means automatic tax hikes, which is a horrid idea. Heck, even the study acknowledges a problem with that […]
[…] answers, but I would pick Obama’s proposed tax-increase “trigger.” Here’s some of what I wrote about that […]
true… you know what they say…Money never sleeps. Neither should you.
[…] Instead of dealing with fundamentals, Obama preached the ignorant fantasy that taxes will pay off the astronomical debt (they can’t, because the nation does not have a revenue problem — it has a spending problem). Yes, taxes and spending can be understood. […]
[…] […]
[…] Cato’s Dan Mitchell is spot-on when he argues that big spending politicians will be allowed to automatically raise taxes as an easy means to cover overspending. If politicians in Washington spend too much and cause more red ink, which happens on a routine basis, Obama wants a provision that automatically would raise taxes on the American people. […]
Seriously, how is this not a good idea? In what way is hiding spending less of an incentive than making it painfully explicit? It still amounts to raises in taxes, just at some different unspecified date.
Clearly an article with an agenda. And a rather poor one as well.
I fully support this. It’s fiscally responsible, and will hold politicians and voters accountable for overspending. I’m all for it!
[…] now! James Howe pointed Obama’s “debt failsafe trigger” out to me a few days ago. Now Dan Mitchell and Powerline have posted on […]
[…] Read more…. […]
[…] Read it. Let’s ponder what this means. If politicians in Washington spend too much and cause more red ink, which happens on a routine basis, Obama wants a provision that automatically would raise taxes on the American people. […]
[…] it is interesting in all this to find the following snippet by Dan Mitchell of the Cato Institute in relation to the President’s proposed 12-year approach to […]
[…] “The Debt Failsafe Trigger”. John at Power Line explains it using a column from Dan Mitchell: [T]he most disturbing feature [of Obama's proposal] may be a provision that punishes the American […]
MikeJones …
Just how ignorant are you ? Obviously you don’t have a 401K, TARP was 700 billion and has completely paid back by the banks that got loans (not the car companies), we’ve been overpaying teachers for decades with money we don’t have, one company spilled oil in the Gulf and paid 20 Billion so far …
One company that you know of paid no taxes and they are the best friend of Obama …
If you just want to punish people you don’t like you really need to find a different way of saying it …
I don’t like NPR, Planned ParentHood, teachers unions and public employee unions … and yes I’d like the government to spend less of my money on them … preferably zero …
[…] that’s not terribly surprising since his speech was really the opening salvo of his 2012 reelection fight. And it’s clear that a central theme of his campaign will be class […]
[…] that’s not terribly surprising since his speech was really the opening salvo of his 2012 reelection fight. And it’s clear that a central theme of his campaign will be class […]
How about we set the situation that if the debt-to-GDP is not stablized by 2014, all members of congress, elected/appointed government employees have all wealth confiscated. They can continue to work their jobs but at a maximum salary of $60,000 per year for the remainder of their lives. Any extra money will be used to pay off the debt. All freebies (housing, food, trips whatever) would be counted in that $60,000 a year. Their credit ratings would be set to 200 and must be rebuilt. None of them would be allowed to have accounts, investments or property outside the United States.
In other words, the people who screwed it up will personally suffer a “worth cap”.
OR as an alternate idea, lets change the “class warfare” dialog into “Tax the Democrats”. Tax the idiots who keep voting themselfs goodies and stupid plans.
[…] that’s not terribly surprising since his speech was really the opening salvo of his 2012 reelection fight. And it’s clear that a central theme of his campaign will be class […]
[…] Obama’s Tax Increase Trigger: Punishing Taxpayers with Automatic Tax Hikes When Politicians O… Responding to widespread criticism of his AWOL status on the budget fight, President Obama today unveiled a fiscal […] […]
[…] International Liberty – Responding to widespread criticism of his AWOL status on the budget fight, President Obama today unveiled a fiscal plan. It already is being criticized for its class warfare approach to tax policy, but the most disturbing feature may be a provision that punishes the American people with higher taxes if politicians overspend […]
[…] that’s not terribly surprising since his speech was really the opening salvo of his 2012 reelection fight. And it’s clear that a central theme of his campaign will be class […]
Remember when teachers, public employees, Planned Parenthood, NPR and PBS crashed the stock market, wiped out half of our 401Ks, took trillions in TARP money, spilled oil in the Gulf of Mexico, gave themselves billions in bonuses, and paid no taxes? Yeah, me neither.
Why not have a “spending trigger” instead, if politicians spend too much the Department of Energy is abolished. If they keep spending more than they have the Department of Education is abolished, if they still keep spending the National Labor Relations Board is abolished. There are countless things that could be “triggered” out of business, and all o them would free up our economy and ut people back to work.
For instance, the “Dept. of Energy” does nothing but PREVENT us from drilling for oil and natural gas, they try to prevent coal mining and coal burning and they try to prevent building of Nuclear Plants.
If we abolish the Dept. of Energy we get an immediate 200,000 jobs in offshore drilling and gas recovery in the shale fields in New York and Pennsylvania.
Spending reduced, jobs created, or “not prevented”.
Also, it might be good to have a mandate that all employees push for this same type of plan with their employers.
How does this sound Mr. Employer?
You hire me to set up budgets and to live within the allocated funds and still produce the end product or service that meets market needs.
If I cannot control myself and spend too much, we should set up an automatic increase for me to match this new spending out of the employers pocket.
I think we should seriously consider this with a few easy amendments.
1. the tax increase should be for everyone, no matter the income level. It should be a flat tax on income at say 2%. 2. We should call it the Obama tax for disfunctional spending.
3. It should not be withheld, but each person should have to send a check within 5 days of payday for the exact amount to the Obama lock box and can only be used for debt.
4. At each election, it shoud be mandatory that a truly independent watchdog group be established to report on the disfuntinal spending and how each dollar you have spent was used.
I hope the republicans run with this and get it into bill form and up for a vote right away. I bet even the rich would support this type of tax program and it would do wonders for our country…
[…] they are criminally insane […]
Gee thats really neat. The politicians get to raise taxes without having to vote for it.
[…] Really. He’s that much of a fool. […]
[…] Or, just one class. Trouble is, the POTUS has just one class in mind. And he wants automatic tax hikes when they (he) overspends. […]
If politicians lack the spine to actually have to vote to raise taxes when they go blowing away cash off the national credit card, I have a better idea.
If “by 2014, the projected ratio of debt-to-GDP is not stabilized and declining toward the end of the decade.”, then a randomly-selected mortgage company shall be permitted to repossess the homes owned by all Senators and Representatives (and Presidents) and sell them on the open market until the goal is reached. Priority shall be placed on homes that are outside the country, and rent-controlled properties inside the US. In the event the goal is not reached by the time all homes are sold, the repossession shall be expanded to cover vehicles, including aircraft, personal property, office budgets, cell phones, and spouses property. When Air Force One become Bicycle One, and the entire House and Senate have to walk to work from their newly-rented apartment buildings, perhaps they will start to make better decisions…
We need a much smarter electorate.
In other words, we’re boned.
Automatic tax hikes if the politicians fail to control spending? Terrible idea. The politicos will be able to spend as they wish, and when the tax hikes come they just say “I didn’t pass a tax hike, it was automatic. I couldn’t stop it”. Dems will love it of course, since they can spend all they want, without taking any heat for the resulting tax hikes. But if anybody else in this country, other than a raging tax and spend leftist, thinks this is good, they have been conned.
If you want an automatic trigger, automatically cut all spending line items by a specified %. Then prohibit any spending increase on any line item unless it is offset by a spending cut elsewhere. That attacks the real problem, runaway spending. And if the politicos dont like the spending cuts, it forces them to make some real spending priority decisions, by only allowing a spending increase on one program, if they offset with a cut elsewhere.
I wish I had an unlimited credit card with someone else’s name on it. Unfortunately, the name on the government’s credit card would be “Joe Taxpayer”
A better fail safe — instead of automatic tax increases, have an automatic spending decrease — simply cut every single budget item by the appropriate percentage.
That’s what the GOP ought to be pushing for right now. Rather than try to fight over particular programs, simply cut every budget by 10%.
I’m all for an automatic trigger that reduces Obama’s term in office by a month every time he goes golfing or on vacation.
What RYan said. Exactly. Automatic across-the-board reductions in SPENDING when a debt threshold is crossed.
Just like the rest of us have to do; I can’t go demand a raise from my boss because my adjustable rate mortgage just ratcheted up a notch.
But hey, what politician these days ever held an actual job?
It all makes sense to me. I would explain in more detail but its time for me to go out and cash a forged check so that I can go “invest” in my crack habit. And don’t waste your tears for the person whose account I am forging a check upon. By definition according to Progressive thinking the only way they could have more money than me is by exploiting me, even if I’ve never had the slightest bit of contact with them before I liberated their checks.
Screw them. After all, that’s what Progressive politics is all about–screwing someone you’ve never met and who had nothing to do with the cesspool you find yourself in.
Shared sacrifice: They do the sharing, and we do the sacrificing.
Lowering congressional salaries won’t help. Most of them are already independently wealthy. All cutting their salaries will do is ensure regular people never again run for office.
And they’re going to make plenty of money on bribes (legal or otherwise) anyway.
What we need is a policy (and/or amendment) that says we can’t spend any more than the past years’ tax revenue.
It took us a long time to get this far in debt and deficit, blame must accrue on people that have been in office longer. It would be most fair if we select for special treatment (execution by legal method of choice) the most senior members of congress in proportion to the deficit.
We now have income of 2.2 trillion, and a budget of 3.8 trillion. That is a 73% deficit (rounded).
With more congress critters like that we would have fewer congress critters like that.
Congress’s Salary should be lowered aotomatically based on the deficit.
20% deficit, 20% pay cut to salary, expenses and staff.
And to fight global warming they should only be allowed to drive or fly in solar powered cars or planes.
Shut this government down and beat the politicians into submission. It’s all they’ll understand.
It should be reversed. It shoudl trigger an automatic across the board ten percent cut in ALL programs, spare none. FOr each additional month beyond that limit that it isn’t stabilized and declining.
That ten percent shoudl include the salaries of congressmen.
I don’t have a huge problem if it is a “tax everybody” type of tax, but it won’t be. The productive affluent will be taxed in the name of the idle rich, as always.
There is a better way: decimation.
If Congress and the President over spend put their names in an (electronic) hat and hang 10% of them. Live – Pay Per View. It might even raise significant revenue. At least it would pay for the hanging. Pay Go!
[…] Dan Mitchell: Obama’s Tax Increase Trigger: Punishing Taxpayers with Automatic Tax Hikes When Politicians Oversp… […]
The guy is endless stupid. He must be on drugs.
Taxation without representation – Obama is now King George…America is doomed.
[…] The last thing we need is a perverse incentive for even more reckless spending from Washington. Obama’s Tax Increase Trigger: Punishing Taxpayers with Automatic Tax Hikes When Politicians Ov… __________________ "We do want more, and when it becomes more, we shall still want more. […]
@Mike Jones: If you confiscated all of the income of every American making more than $200K that is not already taxed, so in other words taking every dime of that whole population, then you would produce just enough revenue to cover one year’s deficit. There just aren’t enough rich people out there to steal from to pay our debts.
I’ll go for the trigger if the date is June 2012, not 2014 and if it is a surtax that hits all income taxpayers.
Out of everything that was presented, this is ALL you could pick up on…? We need viable alternatives… not more bickering!
Only in America. As they say – a people get the government they deseve.
Oh good!
This way politicians will be able to raise taxes without the pesky task of actually bringing up the issue or debating on it!
The failsafe trigger would only be useful if there were a way to publicly identify the politicians responsible for the overspend. I would love nothing more than “attack ads” that simply point out dirtbags X, Y, and Z are directly responsible for causing your taxes to increase.
Obama’s plan will not work. Top marginal tax rates are completely unrelated to revenue. Since WWII top rates have varied from 91% to 28%, and revenue ALWAYS stays between 15%-21% of GDP, and usually between 17-19%.
Every reduction in top marginal rates has resulted substantially increased revenue because it reduces the disincentive to economic growth.
If you want to increase revenue, do things that grow the economy, because raising tax rates will not help.
Yeah cause increasing the taxes of the people who received ridiculous bonuses from companies that received bailouts from the taxpayers is wrong. Taxes are being raised on 2% of Americans.
This is an excellent point.
Furthermore, the “Debt Failsafe” idea will not kick in until 2014 and the President’s promised cuts of $4 trillion are over the next 12 years. Yet, the President wants to continue to “invest” in his priorities.
Actually, that doesn’t sound so bad. If politicians are forced to pay for their spending with taxes, instead of debt and inflation then people will notice it more. Raising taxes is unpopular, so maybe with a stronger link between spending and taxes there will be a check on too much spending. I don’t understand how this would be worse than the present status quo.