Saturday, May 19, 2007

Tim Walberg Is Wrong On Budget Plan



Congressman Tim Walberg wrote an op-ed piece for the Battle Creek Enquirer that appeared in the May 16, 2007 issue of the newspaper. He took up the issue of taxation and the Democratic budget plan for fiscal year 2008-- a plan he has repeatedly misrepresented as "the biggest tax increase in American history."

In his piece for the Enquirer, Congressman Walberg is absolutely wrong on all counts.

If you have a moment, I'd like to take you through it step by step. Walberg opens with this:

In his budget message to Congress in January of 1963, President John F. Kennedy wrote, "Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased - not a reduced - flow of revenues to the federal government."

Perhaps it's time to remind the new leadership in the U.S. House of Representatives of President Kennedy's exemplary fiscal insight imparted to Congress years ago.

Well, yes. President Kennedy did, indeed, push for a tax cut as part of his "New Frontier" program. But it's more complicated than that.

When Kennedy took office, the highest income tax rate was 91 percent, applied to the richest Americans. He felt that this rate was stunningly high, and in order to help the economy, it was cut by Kennedy to 70 percent. For purposes of comparison, the rate applied to the highest incomes today-- the very richest of the rich corporate executives-- is just 35 percent.

But that's not all. Kennedy's tax cuts were very different from those of George W. Bush or Ronald Reagan or Timothy Walberg. David Greenberg wrote a fascinating piece for Slate.com three years ago. He says:

So, was Kennedy really a forerunner to Reagan and Bush? Or are supply-siders just cynically appropriating his aura? The Republicans are right, up to a point. Kennedy did push tax cuts, and his plan, which passed in February 1964, three months after his death, did help spur economic growth. But they're wrong to see the tax reduction as a supply-side cut, like Reagan's and Bush's; it was a demand-side cut. "The Revenue Act of 1964 was aimed at the demand, rather than the supply, side of the economy," said Arthur Okun, one of Kennedy's economic advisers.

This distinction, taught in Economics 101, seldom makes it into the Washington sound-bite wars. A demand-side cut rests on the Keynesian theory that public consumption spurs economic activity. Government puts money in people's hands, as a temporary measure, so that they'll spend it. A supply-side cut sees business investment as the key to growth. Government gives money to businesses and wealthy individuals to invest, ultimately benefiting all Americans. Back in the early 1960s, tax cutting was as contentious as it is today, but it was liberal demand-siders who were calling for the cuts and generating the controversy.

In other words, the cuts Kennedy advocated were just as massive as President Bush's cuts, which Tim Walberg supports. But it's not so much the size as it is the target. Kennedy and Walberg have economic outlooks that are polar opposites.

Liberals don't think all tax cuts are bad. We just think that tax cuts ought to be directed in a way that benefits as many individual taxpayers as possible.

Of course, if Walberg is quoting Kennedy, maybe he'd be willing to support some of Kennedy's other ideas. The "New Frontier" included action on civil rights, raising the minimum wage, revitalizing cities (instead of comparing them to war zones), and other left-leaning causes.

But all that was just Congressman Walberg's introduction. Let's continue further into his op-ed piece.

In March, House leadership introduced and passed a budget proposal that represents the largest tax increase in American history, nearly $400 billion over the next five years.

First of all, no. Saying that the budget proposal passed in March "represents the largest tax increase in American history... over the next five years" is a clever way of avoiding the truth at best, and an outright lie at worst.

As I wrote before, the budget proposal Walberg refers to doesn't raise anyone's taxes. Toward the beginning of the year, Congress passes its plan for spending in the next fiscal year, and then follows that plan with specific appropriations bills. The bill passed by House Democrats says nothing about increasing or decreasing taxes. So where does Walberg get his numbers?

When a Republican-led House of Representatives passed President Bush's first term tax cuts, they included in them expiration dates-- most of them will end after 2010. The issue of whether or not they should be or will be extended was not addressed in the budget plan.

But when the budget bill made long-term projections, it assumed that the current laws would be carried out as written. That is, it assumed that the tax cuts will expire, as they were intended to, and as they will if Congress chooses not to extend them. That, by the way, would result in a federal budget surplus late next decade, after years of massive deficits.

So what does all that mean? It means that Tim Walberg says that a bill that doesn't say anything about raising taxes, and doesn't mention an issue that won't come up for three years, is, in fact, the largest tax increase in American history. Huh.

But sure, let's humor him. Suppose this really is a tax increase. What would happen? Well, Walberg tries to inform us.

A recent Heritage Foundation study

Wait! I've got to stop him right there. Let's take just a quick glance at the Heritage Foundation. It's a conservative think-tank, which focuses on publishing its findings in short papers rather than massive books, in order to appeal to members of Congress with the "briefcase test"-- if it doesn't fit in the briefcase, they won't read it.

Unfortunately, this-- combined with a decidedly conservative bias-- can lead to some inaccurate, incomplete, and misleading information. They're very close to the Bush Administration, and the money comes primarily from big corporations and rich donors. They're the folks that started TownHall.com, at which Walberg wrote an essay earlier this year. (For more information, try here, here, here, and here.)

In other words, take everything the Heritage Foundation says with a grain of salt.

But I'll let Congressman Walberg continue...

A recent Heritage Foundation study revealed this plan would raise taxes by $3,019 for each person in Michigan's 7th Congressional District.

Additionally, the Heritage study revealed this tax increase would cause 2,272 job losses in south-central Michigan and cost the 7th District's economy $207,000,000.

Right. So, each and every one of us is going to have to pay an extra $3,019? I don't know, that doesn't sound quite right. So I checked out the numbers Walberg is quoting (scroll down for Michigan). What the column actually says is "Average Tax Increase Per Taxpayer," not "for each person." The more you make, the more your taxes would go up. The less you make, the less they'd go up. So Walberg is at the very least guilty of misrepresenting the figure for political scare tactics.

By the way, it's worth noting that even the Heritage Foundation study Walberg cites admits that the Democratic budget proposal isn't actually a tax increase. It says:
Again, the budget resolution does not contain a detailed tax plan. However, the resolution also is silent on the most important tax policy change since 2001: the expiration of the tax law changes from 2001 through 2004 over the next four years. This paper presents estimates of the potential impact that allowing the Bush tax cuts to expire would have on Americans.
So who loses the most from this mythical tax increase? Well, since it would be the expiration of the Bush tax cuts, we have to look at who the biggest winners were. The Center on Budget and Policy Priorities (admittedly, using data from a progressive think tank) gives us this table:

Table 3

Distribution of Tax-Cut Benefits in 2004

(reflects tax cuts enacted since 2001)

Income Class

Average tax cut

% increase in after-tax income

% share of tax cut

Middle 20 percent

$647

2.3%

8.9%

Top one percent

$34,992

5.3%

24.2%

Over $1 million

$123,592

6.4%

15.3%

Source: Urban-Brookings Tax Policy Center

In other words, it's not ordinary, middle-class residents of Michigan's 7th District that would end up paying more, if this were actually a major tax increase. Instead, it's the very top that would pay more, the folks that can actually afford to pay more. (By the way, the CBPP analysis I got that table from does a pretty good job of explaining why the Bush tax cuts Walberg loves so much have not actually helped the economy.)

Walberg's op-ed isn't finished, though. He continues...
As I visit with manufacturers in Battle Creek, farmers in Homer and constituents at a coffee shop in Marshall, I hear the same common theme: Taxes are too high and government should get off our back so Michigan can prosper again.
I admit, I probably don't talk to nearly as many farmers in Homer or manufacturers in Battle Creek as Congressman Walberg does. Still, the folks I talk to do grumble about taxes. But that's not the big complaint they have.

In fact, nationwide, "Taxes are too high and government should get off our back" doesn't seem to be the major complaint. Here are two recent polls:

Gallup Poll. April 23-26, 2007. N=1,007 adults nationwide, drawn from Gallup's household panel, which was originally recruited through random selection methods. MoE ± 4.






.


"In your view, what one or two issues should be the top priorities for the President and Congress to deal with at this time?" Open-ended. Multiple responses accepted.






.




%



Situation in Iraq/War 66



Poor health care/Cost of health care 20



Economy in general 14



Immigration/Illegal aliens 14



Fuel/Oil prices/Energy crisis 7



Environment/Pollution 5



National security 4



Education/Poor education/Access to educ. 4



Terrorism 4



Federal deficit/Federal debt 3



Social Security 3



Other 22



Unsure 1

CBS News Poll. April 9-12, 2007. N=994 adults nationwide. MoE ± 3.





.

"What do you think is the most important problem facing this country today?" Open-ended





.



%


War in Iraq

36


Economy/Jobs

9


Immigration

5


Health care

5


Foreign policy

4


Terrorism (general)

4


Gas/Heating oil crisis

3


President Bush

3


Other

26


Unsure

5

Those were both open-ended questions, meaning that the survey reader did not offer any choices. That's important-- it means no one was led on or encouraged to mention any issues. These are the things that are important to most Americans. "High taxes" isn't on either list.

But those are national polls. Anything about Michigan? Well, this isn't exactly the same issue, but it's significant. With the current budget crisis Michigan faces, Governor Granholm wants to increase taxes, combined with cuts in spending. An EPIC/MRA poll found that 70 percent of Michigan voters supported a tax increase of some level. There is no enormous anti-tax movement in Michigan or nationwide.

You ever get the feeling that maybe, politicians like Walberg hear what they want to hear?

But Walberg has more to say.

The budget plan put forward by House leadership embraces a "spend now, reform later" mentality and is an insult to Michigan families and small-business owners.

As all of you well know, a large federal tax increase is the last thing we need in Michigan.

"Spend now, reform later"? Really? This, from the man who opposed spending reforms back in January? See, Tim Walberg says he supports fiscal discipline, but I get the feeling that's a lie. If he really supported responsible spending, he would have voted for the PAYGO rules, which state that any new spending must have some revenue source behind it-- in other words, don't spend more than you have in your wallet. Instead, Walberg voted No.

So, House leadership or a congressman that distorts the issue. Who's really insulting Michigan families?

A recent analysis by economist David Littman of the Mackinac Center compared Michigan's per capita income to the national average and revealed the state reached its lowest level in 75 years in 2005.

Times are tough in our state, and taxpayers in south-central Michigan are making difficult choices every day to ensure their family budgets are balanced. They are doing so by cutting spending and having fiscal discipline.

It's time we make these same common-sense choices on a federal level, without raising taxes.

The Mackinac Center is Michigan's Heritage Foundation, providing the data for every conservative politician's assertions. I couldn't find the Littman analysis Walberg cites, but this section may, in fact, be the most truthful of Walberg's op-ed. Times really are tough in Michigan, and no one can deny that. Cutting unnecessary spending is always part of the budget solution.

However, it's a dangerous thing for a politician to vow never to increase taxes. To anyone not blinded by conservative ideology, it's clear that there are times when it is appropriate to raise taxes.

Of course, all this would matter more if the Democratic budget plan were a tax increase, but it's not.

Next comes the part of the op-ed where Walberg leaps into legislative action, listing the steps he believes will help.

The tax relief passed by Congress from 2001 to 2004 is set to expire, and Congress needs to make tax relief permanent for hard-working American families and implement common-sense policies for the future.

We also must work to eliminate government waste, make certain taxpayer dollars go to meaningful programs and leave resources directly with the people. I support legislation that would give the president line-item veto authority to go through spending bills and eliminate pork-barrel earmarks.

Another top Congressional priority should be the passage of a balanced budget that does not raise taxes. I have co-sponsored legislation, H.J.RES.1, that would amend the U.S. Constitution to require a balanced budget each year.

By passing these common sense reforms, Congress can ease the heavy tax burden America's families already face and help get our economy moving.

I think it's pretty clear that the 2001 and 2004 Bush tax cuts don't really help "hard-working families" all that much, but I'll let it slide. Walberg's main thesis is, of course, that the budget plan ought to have included extensions of those tax cuts.

That's his belief, and, while I disagree, it's an honest disagreement. What bothers me more is the dishonest way in which he frames the issue. I find that insulting.

As far as the Balanced Budget Amendment, I'll say that I'm always hesitant to amend the Constitution, but I don't know enough about the issue to take a stance. I will say that a balanced budget would be easier to achieve with those PAYGO rules Walberg voted against.

And then, there's wasteful spending. Congressman, eliminating pork-barrel earmarks is a good start, but is there anything else you'd like to see cut? This is a serious question, and if any Walberg staffers are reading this, I'd love to get a serious response. What programs or departments would Congressman Walberg like to see eliminated? After all, with a massive deficit and even larger national debt, it'd be great if we could spend a lot less (and maybe even cut some taxes).

This week Congress is scheduled to vote on the conference version of House leadership's budget proposal.

My message to House leadership during the debate on this final proposal will be simple: Leave more resources with the hard-working people and small businesses that make our communities strong, and no more tax increases.

That version passed, 214-209. Needless to say, Congressman Tim Walberg voted No. Of course, as I've reminded you repeatedly throughout this post, no taxes were actually raised.

By making tax cuts permanent and putting our fiscal house in order, this Congress can go a long way in restoring the trust of the American people and build a better, brighter future for our country.

And that's the end of the piece.

After reading what Walberg has to say, how many of you feel like your trust has been restored?

That's all I've got tonight. Thanks for reading all the way to the end.

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Comments:
Wow, fitz! That was some entry. I just wish I could distill the entire thing into 400 words and send it in as a letter to the Telegram editor.
 
Once again, excellent work!
 
KISS, a 5 percent sales tax on goods, services, food and medicine would simplify the the process and get rid of all those pennies, just my 2 cents
 
Great post! Great insight.

Only thing I find fault with is comparing the Mackinac Center to the Heritage Foundation. They are worlds apart.

The Heritage Foundation is a group of radical ideoglogues, the Mackinac Center is a Michigan-based "think tank" dedicated to Michigan issues and have some great thinkers working in Michigan's problems. They have a far broader spectrum of interest which includes the environment, education and economic development. At best the organization could be described as Libertarian their opinions.

I don't agree with everything they preach, especially privatization. It could work in a few situations, but not everything.

The Mackinac Center is an invaluable resource which is relied upon by and benefits both parties and business leaders in Michigan. It is comprised of people dedicated to improving Michigan and is a far cry from the twisted motives and initiatives of the far-right Heritage Foundation.

The Mackinac Center is no Heritage Foundation!

Keep up the good work and keep the heat on Timmy.

Here's their website which is very interesting and has a "Michigan Votes" section which analyzes every bill in the Michigan Legislsture and tracks every votes of every Rep. and Senator.

http://www.mackinac.org/
 
Teflon Tim strikes again... He has a knack for running his mouth, saying wildy irresponsible things, and getting off clean with no repercussions.

This editorial is something we need to take him to task on. Calling that bill a tax increase is a bald-faced lie in a long line of bald-faced lies.

Teflon Tim somehow attributed his own recent comments on Detroit to U.S. soldiers when those comments were regarded by the press and public as a calculated appeal to racist factions in his voting block.

Teflon Tim claimed during his debate with Schwartz that he would absolutly vote to send troops to Israel to defend their lands if they asked us to. Then, when Joe Schwarz made his answer, Teflon Tim flip-flopped, illustrating he does not understand the middle east, relations with Israel, the use of military powers, and generally, when to shut your mouth.

Teflon Tim was quoted in a newspaper saying that Muslims are incapable of understanding democracy. He has never been taken to task for this religiously bigoted comment.

Teflon Tim has never suffered for his associations with Gary Glenn and the American Family Association. That organization is disgusting in the gay-bashing tactics they use and Walberg walks hand-in-hand with their ilk.

Teflon Tim introduced a horrible anti-immigration proposal at the republican convention this year and the mainstream news never even reported it. He has refused to discuss any immigration bill that includes "amnesty" so our farmers and employers here in the 7th will continue to suffer under silly laws which are commonly disregarded as impractical. The most ironic part of this little story is that he has co-sponsored a bill, granting amnesty to some immigrants. Granted, they are not illegal, but then again, they are also not Mexican nor are they being hunted by the Minute Men (yet) nor are their enough of them here to piss off any of Walberg's redneck, Confederate flag waving supporters. (A small, but potent block of voters he will never cross.)

Teflon Tim opposes expanding federal funding of embryonic stem cell research. If he were intellectually honest, and truly as right-to-life as he claims, he'd be out there pushing to end any federal funding of any embryonic stem cell research. But he isn't intellectually honest unless it is convenient.

Teflon Tim. I am struggling to decide if he is "provisionally principled" or if he is actually "sporadically scrupulous." He needs to get stuck with at least one of the crazy things he says or writes and this is an excellent issue. Fitzy has illustrated some good points, many more abound in Walberg's record. Lets get going.
 
"anonymous" (at 2:41) said:


Teflon Tim was quoted in a newspaper saying that Muslims are incapable of understanding democracy.


Well if Iraq is primarily a Muslim nation, (and it is), then how can Timmy possibly support Bush's victory objective, which is to democratize Iraq?

Victory equals democratic Iraq
Iraq is primarily Muslim
Muslims cannot understand democracy
Therefore, victory is impossible.

So what in hell are we still doing there, Tim?
 
Good point on Teflon Tim's lack of logical lucidity.

He is full of crap and does not know when to quit running his mouth about things he does not understand.
 
So when you pay higher taxes on the same amount of income from one year to another, that is not a tax-increase? However from 2010 to 2011, you will see higher child taxes, higher marriage taxes, higher marginal taxes (along with the abolition of the 10% tax bracket), higher taxes on dividends and capital gains, higher adoption taxes, higher alternative minimum gains taxes, and higher taxes for small business... but, hey in your world that's not a tax increase...
 
Tim is also a huge proponent of the "Fair" tax. That is a tax that adds 23% to everything we buy.

Common Sense says that will destroy the economy and make everything we buy more expensive, but since we'll all be rich because we will have no income tax it won't be a problem!

Yeah right...what color is the sky in Tim's world?
 
So when you pay higher taxes on the same amount of income from one year to another, that is not a tax-increase? However from 2010 to 2011, you will see higher child taxes, higher marriage taxes, higher marginal taxes (along with the abolition of the 10% tax bracket), higher taxes on dividends and capital gains, higher adoption taxes, higher alternative minimum gains taxes, and higher taxes for small business... but, hey in your world that's not a tax increase...

A change would take place between 2010 and 2011, as was written into the original tax cut legislation. The Democratic budget plan passed is NOT a tax increase because it doesn't even comment on tax rates. Instead, it makes projections based on the assumption that current laws will be followed.

If you want to extend the tax cuts, that's fine. You argue your side, I'll argue mine. But to call a bill that doesn't affect the tax rates AT ALL a tax increase is absurd! The "tax increase" was written into the same legislation as the tax cut.

When Tim Walberg calls this a tax increase, he's a liar. It's that simple.
 
Thanks for your LTTE in Sunday's Telegram. I'm so glad you went the extra step what with all the knowledge you have on the issue. I don't think anyone else could have written such a tightly compacted letter considering the plethora of data.
 
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