President George H.W. Bush is responsible for delivering one of the most iconic statements in modern U.S. politics, one that also turned out to be his downfall four years later. While accepting the party's nomination at the 1988 Republican National Convention, Bush stated, "Read my lips: no new taxes." By the second year of his administration, he abandoned this pledge, which resulted in his second-term aspirations going down in flames. Is President Joe Biden about to have his "read my lips" moment three decades later?
A Lesson in Bidenomics 101
During a recent interview on ABC's Good Morning America with George Stephanopoulos, President Biden offered a basic summary of his tax plan.
"Anybody making more than $400,000 will see a small-to-a-significant tax increase," he said. "You make less than $400,000, you won’t see one single penny in additional federal tax.”
Within hours after the interview was aired, White House Press Secretary Jen Psaki went into damage control and had to clarify what the president meant. According to Psaki, Biden referred to families with incomes of more than $400,000 that would face tax hikes – not individuals. For now, it is unclear what President Biden's proposed tax rates will be for individual earners. She noted that the theme of the administration's plan is to push "people paying their fair share, and also focusing on corporations that may not be paying their fair share."
Officials have yet to outline an authorized package. But Liberty Nation recently reported on what ideas are being thrown around in the Oval Office that would, in theory, generate $2.1 trillion over ten years – the federal deficit was $3.1 trillion in the last fiscal year:
Reverse many of the provisions inside the Tax Cuts and Jobs Act.
Boost the corporate tax rate to 28%.
Expand the estate tax.
Increase the income tax rate for earnings of more than $400,000.
Raise the capital gains tax for individuals earning at least $1 million.
Reading the Room
Is there an appetite for higher taxes? According to a Rasmussen Reports survey, nearly two-thirds (64%) of Americans oppose higher taxes, with 82% of Republicans and 43% of Democrats against the proposal. It would be a hard sell, except to big government acolytes who think the solution to the nation's problems is giving the government more money. So, what are the odds that President Biden’s proposal would pass on Capitol Hill?
Biden told Stephanopoulos that he knows he will not have GOP backing for any tax hike. He does think, however, that he has the votes from Democrats. Does the president have unified support from his party? Not quite. While a wealth confiscation package would pass the House of Representatives, it may face more opposition in the U.S. Senate because of two people: Sen. Joe Manchin (D-WV) and Sen. Kyrsten Sinema (D-AZ).
Manchin, a moderate Democratic lawmaker, has stated that he would be open to raising taxes to pay for the enormous spending. At the same time, he has been clear that he still wants input from his Republican colleagues. Sinema is the other wildcard. Frequently resisting progressive orthodoxy, she opposed the $15 minimum wage provision that her party colleagues tried to include in the coronavirus stimulus and relief package.
Living It Up on 400k?
Can the typical American family live it up on $400,000? President Biden thinks they can, arguing that “they can afford to pay a little more.”
A modest family living within their means in Biloxi, MS could reside in luxury on $400,000. But what about these same families in major U.S. cities, such as New York, San Francisco, Oakland, Boston, and Seattle? CNBC crunched the data and found that a family of four earning $400,000 per year in a high-cost city would likely be hit hard by a tax hike. From daycare costs to car payments to groceries, it all adds up in an expensive metropolitan area. But even if they could, is it justifiable to take more of their money?
Uncle Sam: The Drunken Sailor
Only five months into the current fiscal year and the federal government is already facing a record budget hole of $1.05 trillion. Before the coronavirus pandemic, the U.S. government was spending like a drunken sailor, with federal outlays totaling $5,000 a second. Washington is the capital of the country and the capital of waste as politicians spend on everything, from gender programs in Afghanistan to examining lizards walking on treadmills to regime change wars that destabilize entire regions. But President Biden does not think the U.S. government faces a spending problem, choosing to reverse his predecessor's tepid $30 billion in cuts. Even if he successfully raised $2.1 trillion in tax revenues, that would only be enough to keep the halls of Capitol Hill open for half of the year.
Perhaps the Federal Reserve will bail out the administration with some good old-fashioned money-printing, producing the most heinous tax of them all: inflation.
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Read more from Andrew Moran.
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