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The Economy In 2013

- March 7, 2012

An Obama Win Would Mean Higher Taxes And A Delayed Recovery

OBAMA HAS “MONUMENTAL” TAX INCREASES PLANNED FOR AMERICANS IN 2013

Obama Admitted He Wants To Raise Taxes In 2013 If He Is Reelected. OBAMA: “That is a reasonable proposition. So, when you hear folks saying ‘Well, the president shouldn’t want massive job killing tax increases when the economy is this weak.’ Nobody’s looking to raise taxes right now. We’re talking about potentially 2013 and the out-years.” (President Barack Obama, Press Conference, Washington, DC, 7/11/11) 

Obama Is “Setting Up The U.S. Economy For One Of The Biggest Tax Increases In History In 2013.” “President Obama unveiled part two of his American Jobs Act on Monday, and it turns out to be another permanent increase in taxes to pay for more spending and another temporary tax cut. No surprise there. What might surprise Americans, however, is how the President is setting up the U.S. economy for one of the biggest tax increases in history in 2013.” (Editorial, “The 2013 Tax Cliff,” The Wall Street Journal, 9/14/11)

  • Obama’s Budget Would Result In “Monumental” Tax Increases. “The only thing that you can be certain will become law in this budget if Mr. Obama is re-elected is the monumental tax increase. His plan would raise tax rates across the board on anyone or any business owners making more than $200,000 for individuals and $250,000 for couples. These are the 3% of taxpayers that Mr. Obama says aren't paying their fair share, though that 3% pays more in income tax than the rest of the other 97%.” (Editorial, “The Amazing Obama Budget,” The Wall Street Journal, 2/14/12)

Obama’s FY2013 Budget Calls For $1.9 Trillion In Higher Taxes. (“Fiscal Year 2013 Budget Of The U.S. Government,” OMB, 2/13/12)

  • “This Budget Has $1.9 Trillion In Tax Increases/Revenue Raisers And It Still A) Adds $6.7 Trillion In New Debt From 2013 To 2022, And B) Has Debt As A Share Of GDP Rising From 74.2 Percent This Year To 76.5 Percent In 2022. Wow.” (James Pethokoukis, “A Load Of Econmic Nonsense From Geithner,”The American’s “The Enterprise,” 2/15/12)

Obama’s FY2013 Tax Increase Brings The Federal Tax Revenue “To Its Second Highest Level Since World War Two,” Not A “Modest Tax Increase.” “President Obama is not proposing ‘modest’ tax increases. His $1.7 trillion tax hike would take federal tax revenue (as a share of output) to its second highest level since World War Two. Only once, outside of WWII, was revenue higher. And that was in 2000, when money was flooding into federal coffers due to capital gains from the final days of the Internet stock bubble.” (James Pethokoukis, “A Load Of Econmic Nonsense From Geithner,” The American’s “The Enterprise,” 2/15/12)

In 2013, Obama Will Increase Hike Taxes By $3.6 Trillion Over The Next Ten Years “And All Democrats Need To Do To Secure That Deal Is...Nothing.” “But Democrats will have their turn. On Dec. 31, 2012, three weeks before the end of President Barack Obama’s current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is...nothing.” (Ezra Klein, “Democrats Will Lose Now. But They Can Win Later,” The Washington Post, 7/31/11)

Fed Chair Ben Bernanke Says The Economy Is Headed For A “Massive Fiscal Cliff” If The Bush Tax Cuts And Payroll Tax Cut Expire. “Congress risks taking the economy over a ‘massive fiscal cliff,’ Federal Reserve Chairman Ben Bernanke warned lawmakers on Wednesday. In remarks that hit Wall Street stock prices, the central bank boss suggested the economy could hit a serious roadblock if Congress allows the Bush tax rates and a payroll tax cut to expire and $1.2 trillion in spending cuts to be implemented simultaneously in January.” (Peter Schroeder, “Bernanke Warns Lawmakers Country Headed For ‘Massive Fiscal Cliff,’” The Hill’s “On The Money,” 2/29/12)

Obama Is “Intrigued By [The] Elegance” Of Raising Taxes On The Middle Class

PROMISE: In 2008, Obama Promised He Would Not Raise Any Taxes On Families Earning Less Than $250,000 A Year. “I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” (Senator Barack Obama, Remarks In Dover, NH, 8/12/08)

BROKEN: PolitiFact Rates Obama’s Tax Pledge As “Promise Broken.” “We were willing to give President Barack Obama a Compromise rating on this promise when a new cigarette tax went into effect. But the latest health care bill includes more broad-based taxes that are pushing us toward Promise Broken.” (Angie Drobnic Holan, “Smokers, Tanning Aficionados, The Happily Uninsured: More Taxes Coming At Ya!,” PolitiFact, 4/8/10)

NOW: Obama Has Said He Is “Agnostic” On Raising Taxes On Those Making Less Than $250,000 As Part Of A Plan To Reduce The Deficit. “President Barack Obama said he is ‘agnostic’ about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.  Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.” (Rich Miller, “Obama ‘Agnostic’ On Deficit Cuts, Won’t Prejudge Tax Increases,”Bloomberg, 2/11/10)

  • President Obama Was “Intrigued By [The] Elegance” Of Allowing All Of The Bush Tax Cuts To Expire In Order To Cut The Deficit. “In November 2009, Orszag would tout an idea that divided the economic team and inspired contempt in the political shop: extending for one or two years George W. Bush’s middle class cuts, which were scheduled to expire in 2011, then letting them lapse unless Congress found a way to offset their costs. During a meeting with Obama in the Oval Office, he casually outlined the proposal. The obvious defect was that it would be likely to break the president’s campaign pledge to oppose tax increases on the middle class. Nevertheless, Obama was intrigued by its elegance as a deficit-cutting maneuver, according to two people in the room. He also liked the idea of forcing Republicans to grapple with the costs of Bush’s policies. Only later did the politicos revolt—the vice president, for one, was apoplectic—and the president lost interest.” (Noam Scheiber, The Escape Artists,  2012, p. 154-155)
  • Obama Would Block Extension Of The Reductions, Either As A Final Act In Office “After Losing The November 2012 Election Or After Winning A Second Term.” “A White House official argued Sunday that the president had another trump card to play: the scheduled expiration of the George W. Bush tax cuts at the end of 2012. Obama would block extension of the reductions, either as a final act in office after losing the November 2012 election or after winning a second term.” (Peter Wallsten and David Nakamura, “Did Obama Capitulate – Or Is This A Cagey Move?” The Washington Post, 7/31/11)

Small Businesses Will Be Negatively Impacted When The Bush Tax Cuts Expire

“According To An NFIB Poll, 75 Percent Of Small Businesses Are Organized As Pass-Through Entities (Sole Proprietors, Partnerships, S Corps, Etc.), Meaning They Pay Taxes On Their Business Income Based On The Individual Tax Rates.” (“Keeping Tax Rates Low,” NFIB, Accessed 11/22/10)

  • According To The Joint Committee On Taxation, 750,000 Small Businesses Would Be Affected By The Expiration Of The Top Two Tax Brackets.  (The Staff Of The Joint Committee On Taxation, “Present Law And The President’s Fiscal Year 2011 Budget Proposals Related To Selected Individual Income Tax Provisions Scheduled To Expire Under The Sunset Provisions Of The Economic Growth And Tax Relief Reconciliation Act Of 2001,” Joint Committee On Taxation, 7/12/10)
  • Raising The Top Two Tax Brackets Would Impact 45 To 55 Percent Of Small Business Income. “Depending on how we define 'small business,' these higher tax rates would raise taxes on 45 to 55 percent of small business income ... So why should we pay attention to the way our tax code treats small businesses?” (Robert Carroll, "Small Business And The Personal Income Tax Rates," Tax Foundation, 10/28/08)

THE ECONOMY WILL REMAIN SLUGGISH AND OBAMA’S TAXES WILL NOT HELP

The Congressional Budget Office Says “The Economy Will Continue To Grow At A Sluggish Pace Over The Next Two Years.” “The pace of the economic recovery has been slow since the recession ended in June 2009, and the Congressional Budget Office (CBO) expects that, under current laws governing taxes and spending, the economy will continue to grow at a sluggish pace over the next two years. That pace of growth partly reflects the dampening effect on economic activity from the higher tax rates and curbs on spending scheduled to occur this year and especially next.” (“The Budget And Economic Outlook: Fiscal Years 2012-2022,”Congressional Budget Office, 1/31/12)

  • CBO: “Considerable Slack Remains In The Labor Market” And Unemployment Will Remain Above 8 Percent This Year And Next. “Considerable slack remains in the labor market, mainly as a consequence of continued weakness in demand for goods and services. In CBO’s forecast, the unemployment rate remains above 8 percent both this year and next.” (“The Budget And Economic Outlook: Fiscal Years 2012-2022,” Congressional Budget Office, 1/31/12)

The Unemployment Rate Is Expected To Remain Above 8 Percent Through 2013. “The scarcity of jobs that has kept the national unemployment rate hovering around 9% will not see much relief any time soon, the survey noted. Respondents to the study saw, on average, the unemployment rate dipping modestly to 8.8% in 2012, then to 8.4% in 2013.” (Javier David, “Philly Fed Survey Sees Middling Growth,” The Wall Street Journal’s “Real Time Economics,” 11/14/11)

Federal Reserve Chairman Ben Bernanke: “On Jan. 1, 2013, There’s Going To Be A Massive Fiscal Cliff Of Large Spending Cuts And Tax Increases.” “‘Under current law, on Jan. 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases,’ Bernanke told the House Financial Services Committee. ‘I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date. ‘All those things are hitting on the same day, basically. It’s quite a big event.’” (Peter Schroeder, “Bernanke Warns Lawmakers Country Headed For ‘Massive Fiscal Cliff,’”The Hill’s “On The Money,” 2/29/12)

  • The Washington Post’s Fact Checker: The Former Head Of Obama’s Council Of Economic Advisers, Christina Romer, Conducted A Study Which “Clearly Demonstrates That Tax Increases Have A Negative Impact On Growth.” “The study, which was published last year in the distingushed American Economic Review, attempts to distinguish the reasons why tax changes were implemented and then to determine how much of an impact resulted from the legislation. The study clearly demonstrates that tax increases have a negative impact on growth. (Glenn Kessler “Digging Into Boehner’s Anti-Tax Philosophy,” The Washington Post's "The Fact Checker,", 5/12/11)
  • CBO Director Doug Elmendorf: “I Believe That More Borrowing Is Detrimental To Our Long-Term Outlook, And I Believe That Higher Marginal Tax Rates Are Also Detrimental To The Long-Term Outlook.” (Committee on the Budget, U.S. House, Hearing 6/27/11)
  • Moody’s Says That Raising Taxes On High Earners Could Reduce Economic Growth And Cost The Nation’s Almost A Million Jobs Through Mid-2012. “This week, Moody's Economy.com said raising taxes on higher earners would reduce GDP by 0.4 percentage point in 2011, while payroll employment would be 770,000 lower by mid-2012." (John D. McKinnon, “When Businesses Enjoy Being Small,” The Wall Street Journal, 9/18/10)

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