New Ad Attacks Rep. Hill — A Democrat — Over Legacy Of Republican Policies

October 31, 2010 4:56 pm ET

The 501(c)4 Commission on Hope, Growth and Opportunity is out with a substanceless new attack ad aimed at Rep. Baron Hill (D-IN). The ad blames Hill and President Obama for the exploding national debt, despite the fact that the debt and deficit are the result of Bush-era Republican policies. In addition, the ad deceptively suggests that Hill will vote in favor of "all the taxes Pelosi can think of" — yet the Democrats' proposals on many prominent tax issues are more favorable to middle-class taxpayers and go further toward reducing the deficit than do Republican proposals.

Commission On Hope, Growth And Opportunity: "Collectible Coin"

[Voiceover:] Now you can own a piece of American history enshrining forever President Obama increasing our national debt to a staggering $13.4 trillion dollars. Clad in 24 karat fool's gold, the coin commemorates Baron Hill's votes for the Pelosi agenda an astounding 87 percent of the time. You can own this prize collectible for just your share of the national debt, plus all the taxes Pelosi can think of. Call Congressman Hill to order yours today. Todd Young has a better idea. Stop the spending and get America working again.

The Exploding Debt And Deficit Are The Result Of Bush-Era Policies And The Recession

Before Obama Took Office, The FY 2009 Deficit Was Projected At $1.2 Trillion. As reported by the Washington Times: "The Congressional Budget Office announced a projected fiscal 2009 deficit of $1.2 trillion even if Congress doesn't enact any new programs. [...] About the only person who was silent on the deficit projection was Mr. Bush, who took office facing a surplus but who saw spending balloon and the country notch the highest deficits on record." [Washington Times1/8/09, emphasis added]

CBPP: Deficit Grew By $3 TRILLION Because Of Policies Passed From 2001 To 2007. According to the Center on Budget and Policy Priorities: "Congressional Budget Office data show that the tax cuts have been the single largest contributor to the reemergence of substantial budget deficits in recent years. Legislation enacted since 2001 added about $3.0 trillion to deficits between 2001 and 2007, with nearly half of this deterioration in the budget due to the tax cuts (about a third was due to increases in security spending, and about a sixth to increases in domestic spending)." [CBPP.org, accessed 1/31/10, parentheses original]

The Bush Tax Cuts Are The Primary Driver Of Federal Budget Deficits Over The Next Decade. Below is a chart from CBPP showing the deficit impacts of war spending, financial recovery spending, the recession itself, and the Bush tax cuts:

CBPP

[CBPP.org, 6/28/10]

Public And Foreign-Held Debt Skyrocketed While Bush Was In Office. Below are two graphs prepared by the Speaker's office showing the increase of publicly and foreign-held debt during the years Bush was in office:

bushpublicdebt

bushforeigndebt

[U.S. Treasury via The Gavel, 6/11/10]

President Obama And Leading Democrats Favor Extending Tax Cuts For 97% Of Americans...

PolitiFact: Dems Consistently Say Only Tax Cuts For Wealthiest Will Be Allowed To Expire. According to the non-partisan PolitiFact.com, in their analysis of an allegation from Rep. Mike Pence that Democrats want all tax brackets to rise:

Do Democrats want every tax bracket to rise, as Pence suggests? In a word, no.

For many months, Democratic officials have consistently said that they intend to let only the tax cuts for the wealthiest individuals lapse. The cutoff they usually suggest is $200,000 for individuals and $250,000 for married couples filing jointly. President Obama campaigned on just such a plan, and we've logged those promises into our Obameter campaign promises database.

[...]

Pence is right that every tax bracket will go up if the law is not extended. Still, we think the claim that Democrats don't want to extend the law is inaccurate. While the legislative drafting is still in process, the Democratic majority in Congress has made clear that it plans to extend tax cuts for all but the top couple percentage points of the income distribution. So it's highly misleading for him to say that Democrats actually want to see all the bill's cuts expire. Indeed, Pence's comment verges on a scare tactic.

[PolitiFact.com, 7/22/10, emphasis original]

Reuters: "Two To Three Percent Of Americans" Are Affected By Democrats' Proposals. According to Reuters: "Lawmakers are mulling the renewal of tax cuts enacted in 2001 and 2003 under former president George W. Bush that expire at the end of this year. President Barack Obama and his Democratic allies in Congress want to extend the lower rates for individuals earning less than $200,000 or couples making less than $250,000. About two to three percent of Americans fit into the upper income categories." [Reuters7/21/10]

President Obama's FY2011 Budget Calls For Extending Bush Tax Cuts For Families Making Less Than $250,000 Per Year. As Market Watch reported in February: "Facing a gaping deficit but aiming to spur job creation at the same time, President Barack Obama's fiscal year 2011 budget would hit top earners, oil companies and others while giving tax breaks to small businesses to help them hire new workers. ... Obama wants tax breaks proposed by President George W. Bush to expire this year. His budget would eliminate tax breaks on those making more than $250,000 a year, a move almost certain to be opposed by Republicans and perhaps some Democrats as the economy crawls out of the recession. 'We extend middle-class tax cuts in this budget,' Obama said Monday at the White House, but 'we will not continue costly tax cuts for oil companies, investment fund managers, and those making over $250,000 a year. We just can't afford it.'" [Market Watch2/1/10]

Speaker Pelosi: High-End Tax Cuts Should End. According to The Hill: "House Speaker Nancy Pelosi (D-Calif.) on Thursday rejected extending tax cuts for the wealthiest tax bracket that are set to expire at the end of the year. Pelosi took off the table a short-term extension of those cuts floated by some lawmakers in her own party. 'No,' the speaker said at her weekly press conference when asked if the cuts for the highest bracket should be extended. 'Our position has been that we support middle-class tax cuts. ... I believe the high-end tax cuts did not create any jobs, increased the deficit and should be repealed,' she said." [The Hill7/22/10, emphasis added]

Treasury Secretary Geithner: We Will Extend Middle- And Lower-Income Provisions Of Bush Tax Cuts. According to the Wall Street Journal: "The Obama administration will allow tax cuts for the wealthiest Americans to expire on schedule, Treasury Secretary Timothy Geithner said Thursday, setting up a clash with Republicans and a small but vocal group of Democrats who want to delay the looming tax increases. Mr. Geithner said the White House would allow taxes on top earners to increase in 2011 as part of an effort to bring down the U.S. budget deficit. He said the White House plans to extend expiring tax cuts for middle- and lower-income Americans, and expects to undertake a broader revision of the tax code next year. 'We believe it is appropriate to let those tax cuts that go to the most fortunate expire,' Mr. Geithner said at a breakfast with reporters." [Wall Street Journal7/23/10, emphasis added]

New York Times: Obama Plan Leaves Much Of The Bush Tax Cuts In Place. The New York Times prepared an infographic showing where President Obama seeks to change Bush-era tax law, and where he intends to leave it unchanged:

Bush Tax Cuts

[New York Times7/25/10]

...And It Was Republicans Who Set The Stage For A Tax Increase By Writing An Expiration Date Into The Bush Tax Cuts To Hide Their True Cost

Time: Congress Wrote Tax Law To Expire After 2010 Because It Made Cuts Appear Cheaper. According to Time:

Topping the list of odd features is the "sunset" provision that repeals the entire bill at the end of 2010. Budget rules require Congress to include a sunset clause in all major tax legislation, but this sunset arrives a year early--after 10 years instead of the 11 years covered by the current budget resolution. That year was shaved off to keep the total cost of the bill under $1.35 trillion. By repealing the legislation in the 10th year, Congress saved billions of dollars. Without the repeal and a few other tricks, the cost of the full 11-year plan would balloon to more than $1.8 trillion by the end of 2011, far exceeding anything the Democrats would vote for. And the cost in the second decade would reach as much as $4 trillion. Even some conservatives on Capitol Hill are dismayed by the apparent dishonesty of the early sunset. After both parties agreed to a smaller tax cut, the conference committee pulled a fast one.

[Time6/3/01, emphasis added]

American Enterprise Institute: Reconciliation "Ploy" To Pass Bush Tax Cuts Means They Expire After 10 Years. According to Norman Ornstein, resident scholar at AEI:

It is worth repeating why we are in this particular car heading toward the cliff. When the Bush tax cuts were on the agenda at the very beginning of his presidency, Republicans in Congress and the White House made a tactical choice to avoid giving Senate Democrats the leverage that a 60-vote hurdle can provide by employing reconciliation (yes, the same tool that those who applied it then condemned roundly when it was used for health care reform this year). It was tricky to use reconciliation for tax cuts, which increased deficits when reconciliation was specifically supposed to be used for revenue-neutral or deficit-reducing programs. But the decision was made to use it for this purpose--but not to violate the proviso that the plan would increase deficits outside the budget window of 10 years.

That meant a ploy of declaring that all the tax cuts would expire entirely after 10 years, including the absurd-on-its-face provision that estate taxes would gradually decline to zero in 2010--and then be fully restored in 2011. From the day after the tax cuts were signed into law, Republicans were campaigning to extend them, in effect admitting that the policy was built around a "never mind" ruse. To be fair, there were plenty of ruses in the health care reform reconciliation, so it is not as if one party is clean--this is legislative politics. But the charges now emanating from Republicans that the Democrats are going to be responsible for a huge tax hike is, shall we say, bemusing.

[AEI.org, 7/21/10, emphasis added]

Ezra Klein: Reconciliation Maneuver Meant "Twisting A Budget Process Meant To Reduce The Deficit." According to the Washington Post's Ezra Klein:

In order to maximize the size of the cuts, Republicans had to minimize the influence of minority Democrats on the package. So they chose to run the bill through the reconciliation process. But that posed some challenges. Budget reconciliation had never been used to increase the deficit. In fact, it specifically existed to decrease the deficit. That's why one of its rules was that you couldn't use it to increase the deficit outside the budget window. Republicans realized they could take that very literally: The budget window was 10 years. So if the tax cuts expired after 10 years, they wouldn't increase the deficit outside the budget window. They'd also have the added benefit of appearing less costly in the Congressional Budget Office's estimates, as the CBO duly scored them as expiring after 10 years, which kept the long-range budget picture from exploding.

But the plan was never to have the tax cuts expire. Instead, the idea was that people would get used to the new tax rates, and no future Congress would want to allow a big tax increase, so when the time came, either Republicans in office would extend the cuts or Republicans in the minority would hammer Democrats until they extended them. And that's where we are now: Democrats control the government, so Republicans are screaming about tax increases as a way to get Democrats to extend tax cuts.

It's really hard to know where to start with this one. It's not a tax increase passed into law by Democrats. It's a reversion to old tax rates passed into law by Republicans. It's not how law is supposed to work. It's the result of twisting a budget process meant to reduce the deficit so you could use it to massively increase the deficit.

[Washington Post7/19/10, emphasis added]

Extending Bush Tax Cuts For The Wealthy Would Cost Over $700 Billion

New York Times: Extending Tax Cuts For The Rich Would Cost $700 Billion. According to the New York Times: "Most of the tax cuts that were a signature domestic initiative of George W. Bush's presidency carried an expiration date of Dec. 31, 2010, to limit the potential revenue losses; supporters assumed that they would be extended when the time came. Extending them for the next 10 years would add about $3.8 trillion to a growing national debt that is already the largest since World War II. About $700 billion of that reflects the projected costs of tax cuts for those in the top 2 percent of income-earners." [New York Times8/10/10]

Historically, Taxes Are Near Their Lowest

GOP Rep. McHenry: "Marginal Tax Rates Are The Lowest They've Been In Generations, And All We Can Talk About Is Tax Cuts." As reported by Time Magazine, North Carolina Republican Patrick McHenry said: "Marginal tax rates are the lowest they've been in generations, and all we can talk about is tax cuts... The people's desires have changed, but we're still stuck in our old issue set." [Time Magazine, 5/7/09]

Top Tax Brackets Over Time:

Tax Rates

35% In 2010: Currently, The Highest Tax Rate Is 35%. According to The Tax Foundation, the 2010 tax rate for couples making over $373,650 annually is 35%. [Tax Foundation, accessed 9/20/10]

  • 39.1% In 2001: The Highest Tax Rate Was 39.1% In 2001. According to The Tax Foundation, the 2001 tax rate for couples making over $297,350 annually was 39.1%. [Tax Foundation, accessed 4/14/09]
  • 50% In 1986: Highest Tax Rate Was 50% In 1986. According to The Tax Foundation, the 1986 tax rate for couples making over $175,250 annually was 50%. [Tax Foundation, accessed 4/14/09]
  • 70% In 1981: The Highest Tax Rate Was 70% In 1981. According to The Tax Foundation, the 1981 tax rate for couples making over $215,400 annually was 70%. [Tax Foundation, accessed 4/14/09]
  • 77% In 1964: The Highest Tax Rate Was 77% In 1964. According to The Tax Foundation, the 1964 tax rate for couples making over $400,000 annually was 77%. [Tax Foundation, accessed 4/14/09]
  • 91% In 1963: The Highest Tax Rate Was 91% In 1963.  According to The Tax Foundation, the 1961 tax rate for couples making over $400,000 annually was 91%. [Tax Foundation, accessed 4/14/09]

The Last President To Serve While The Highest Tax Bracket Below 35%: Herbert Hoover.  Herbert Hoover was the last president to serve while the nation's highest tax rate was below the 2009 rate, 35%. In 1931, during his tenure, those earning over $100,000 were taxed at 25%. [Tax Foundation, accessed 4/14/08]

Democrats — But Not Republicans — Propose Making The Child Tax Credit Permanent

The 2001 Bush Tax Cut Law Called For The Child Tax Credit To Be Cut In Half After 2010. In the "Child Tax Credit" section of their July 2010 report, the Joint Committee on Taxation described the Child Tax Credit provisions of the 2001 Bush tax cuts: "An individual may claim a tax credit for each qualifying child under the age of 17. The maximum amount of the credit per child is $1,000 through 2010, and $500 thereafter." [Joint Committee on Taxation, 7/12/10]

President Obama's Proposal Restores The Child Tax Credit To $1,000 Per Child.  According to the bipartisan Joint Committee on Taxation: "The proposal permanently extends the $1,000 child tax credit and allows the child tax credit against the individual's regular income tax and AMT. The proposal also extends the EGTRRA repeal of a prior-law provision that reduced the refundable child credit by the amount of the AMT. The proposal permanently extends the earned income formula for determining the refundable child credit, with the earned income threshold of $3,000, and stops indexation for inflation of the $3,000 earnings threshold. Finally, the proposal permanently extends the rule that the refundable portion of the child tax credit does not constitute income and shall not be treated as resources for purposes of determining eligibility or the amount or nature of benefits or assistance under any Federal program or any State or local program financed with Federal funds... For years after 2010, this proposal doubles the child tax credit (from $500 to $1,000) to provide additional tax relief to families to help offset the costs of raising a child." [Joint Committee on Taxation, 7/12/10, emphasis added]

2011 Budget Proposes To Keep Child Tax Credit. From the Tax Policy Center: "Taxpayers can claim a child tax credit (CTC) of up to $1,000 per child under age 17. The credit is reduced by 5 percent of adjusted gross income over $110,000 for married couples ($75,000 for single parents). If the credit exceeds taxes owed, taxpayers can receive some or all of the balance as a refund, known as the additional child tax credit (ACTC) or refundable CTC. The ACTC is limited to 15 percent of earnings above a threshold that is indexed to inflation; the threshold is temporarily reduced to $3,000 in 2009 and 2010, and the 2011 budget proposes to continue this practice throughout the budget window. Because the income range over which the ACTC phases in overlaps at least part of the range over which the earned income tax credit (EITC) phases out, the CTC partly offsets the high marginal tax rates associated with that phase-out." [Tax Policy Center, accessed 10/24/10, emphasis added]

Senate Republicans' Bill Would Not Make Child Tax Credit Permanent. From Citizens for Tax Justice: "Senate Republicans have introduced a bill (S. 3773) to make permanent the income tax cuts enacted during the Bush administration for all taxpayers and to repeal most of the federal tax on the estates of millionaires. This bill would not make permanent the expansions of the Child Tax Credit and Earned Income Tax Credit included in the recovery act." [Citizens for Tax Justice, 9/17/10]

Republicans Voted Against Estate Tax Relief

Permanent Estate Tax Relief For Families Act — Which No Republicans Supported — Would Have Prevented Even Larger Estate Tax Increases. From Politifact:

Unless Congress and the president act to eliminate it permanently, the estate tax won't exist at all for exactly one year -- 2010. ... At the end of 2010, the estate tax would return to its levels in the early part of the decade -- a $1 million exclusion and a 55 percent top rate -- though many expect that Congress would either act before then to set new levels or eliminate the tax entirely.

[...]

[O]n Dec. 3, 2009, Sestak voted with 225 other Democrats (and no Republicans) to pass the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009. This legislation -- which passed the House but stalled in the Senate -- would have established the top estate tax rate at 45 percent and set the exclusion rate at $3,500,000 per person or $7 million per couple. (This happens to be the Obama administration's proposal as well.) 

[Politifact.com, 8/24/10]

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