The WSJ reported this morning that President Obama has raised the tax increase he wants in renegotiating the “fiscal cliff.” He has apparently gone from a proposed tax increase of $800 billion in last summer’s negotations to a new figure of $1.6 trillion.
The president feels his 50% to 49% victory last week, along with small Democratic pickups in both House and Senate, are a mandate from the country for his economic program, a program heavy on increased taxes and regulatory costs (Obamacare) and light on spending cuts. I don’t have to tell you how I feel about that formula.
From what I have seen lately from meeting recaps, public statements and their tone, the president is back to the hardball type of negotiating he used in passing his earliest legislation like Obamacare.
Don’t forget that all this wrangling over small cuts in various departments other than defense only addresses 19% of federal spending. It does not address the 62% of government spending represented by entitlements, i.e. transfer payments. That is what is busting our budget because have by far the fastest growth rate. Any serious long-term negotiations over spending cuts are almost wasted unless things like Medicare, Medicaid, Children’s Health, Obmacare, Social Security, food stamps, unemployment benefits and so forth are put on the table for serious reform. See the chart below from the Heritage Foundation.