NC Budget and Tax Center

Failure of Buffett Rule highlights shortcomings of House budget

Despite winning majority support in a 51-45 vote in the U.S. Senate Monday night, the so-called Buffett Rule—an Obama administration proposal to ensure that millionaires pay at least the same tax rate as middle class families—failed to pass the chamber after a determined minority used Senate procedures to prevent the proposal from receiving a straight up or down vote.

As we detailed in this space yesterday, the Buffett Rule is an important proposal restoring tax fairness and providing new revenues in support of a balanced approach to deficit reduction.    Its failure suggests a strange choice has been made in who will contribute to closing the nation’s budget shortfall.

Although the proposal would not eliminate the deficit by itself, this approach does a take a first step to closing the fiscal shortfall and does so by reaffirming the nation’s long-standing commitment to the basic American ideal of fairness.  It asks for a modest sacrifice from those who can most afford it, and whose contribution has been falling for decades.  Taxes on high earners are lower than they’ve been since the 1920s, and taxes as an overall share of the economy are lower than at any time since the Eisenhower Administration.  The top 1 percent has also seen growth in their earnings over time while those in the bottom have seen wage stagnation.  For these reasons, asking millionaires to make greater contributions as a share of their income relative to those at the bottom makes sense.

In comparison, the proposal’s failure highlights the moral and financial shortcomings of other tax policies currently under debate in the U.S. Congress, including the proposed Federal budget authored by Paul Ryan and passed by the U.S. House two weeks ago.  The Ryan Budget finances more than $9 trillion in tax cuts for people making more than $250,000 per year through trillions of dollars in unprecedented spending cuts to programs that aid the most vulnerable, including Medicaid and food stamps.

Given this contrast, the choices in deficit reduction could not be more clear.  The Buffett amendment asks those who have benefitted most from recent times of economic prosperity pay their fair share in reducing the deficit, rather than asking the most vulnerable members of our society to close the budget shortfall on their own.

 

21 Comments

  1. Frank Burns

    April 18, 2012 at 12:06 pm

    I don’t believe the public is in the mood to raise taxes until the spending side is put under control. We see continuing waste with government spending from funding ridiculous research grants to paying for people to have cell phones, to GSA spending on lavish conferences to green energy flops and on and on.

  2. Chris Lewis

    April 18, 2012 at 1:10 pm

    Frank,

    There’s 4000 +/- Americans that this would actually cause a raise in their taxes…Some of which actually do approve of the Buffett Rule.
    If you want to talk about getting the spending side under control then this is part of it. Extending the Bush Tax Cuts, tax subsidies for the oil companies, and paying for 10yrs of unnecessary wars has cost us more than 100 Solyndras. These are the places we need to make those spending cuts. We can not cut off the only leg still holding up our middle and lower classes to allow for more corporate welfare and to allow for even more cuts and breaks for the top 1%. As far as those green energy “flops” goes, that is what’s going to make us competitive again on the global market. We need to make incredible strides in the fields of science and technology because that is our only hope to secure our place in that global market. American manufacturing will never rebound to our “glory” days; we will never beat China in manufacturing because we will not allow those working conditions for our citizens and we will not destroy our environment in order to do so. In order to make those incredible strides we need to fund them. As Thomas Edison said, “We now know a thousand ways not to build a light bulb” well, we need to get through those thousand ways to get to our next “light bulb”.

  3. Frank Burns

    April 18, 2012 at 2:23 pm

    Chris,
    Pardon me if I don’t trust our government to cut spending unless they are dragged kicking and screaming and forced to cut. I think our government needs to show evidence that it can make significant spending cuts before anyone talkes about revenue increases. I’m in the middle class and I know that I would be next for receiving tax increases. It always falls on the middle class. Once we’ve made big cuts in spending, then we can talk about revenue increases. That would be the prudent way to proceed.

    As far as green energy goes, it is not cost effective without large government subsidies which we do not have. We’re are tapped out, deep in the red ink and can’t do it anymore. I think private industry has a better chance of picking the winners and losers in manufacturing. We need to get government burdens off the back of manufacturing and allow them to thrive. Government should be a partner not an adversary to business.

  4. david esmay

    April 18, 2012 at 3:56 pm

    Frank, historically republican administrations have far out spent Democratic ones, and now, after the Bush debacle, the right wants to be the party of fiscal responsibility? You are spouting the same tired old
    line every repub been harping since they tanked the economy. The repubs keep pushing tax cuts to worsen the government’s position and then try to sell spending cuts as the only solution to the budget deficit, pure bovine scatology. They propose cuts and then back away from cuts they propose, insist the deficit must be eliminated, but are not willing to raise taxes or support cuts to any major programs. Once again I’ll explain it to you, discretionary spending is not driving our current problem, IT IS THE UNFUNDED BUSH PROGRAMS,BUSH TAX CUTS, UNFUNDED WARS, UNFUNDED BUSH MEDICARE PART D,INTEREST ON DEBT, BUSH MEDICARE PART D. 96% of current spending comes from these programs and just cutting spending without raising revenue is not going to do it.

  5. Andrew

    April 18, 2012 at 4:52 pm

    Pull david’s string, and out comes the same old tired and worn arguments. You would think he would get tired of repeating the Bush Buster over and over. Man does he need some new material !

  6. Frank Burns

    April 18, 2012 at 7:09 pm

    David, Blaming Bush is not an acceptable answer. People are sick and tired of Obama doing this, he made his own bed, now he has to sleep in it. He has been the President and his policies have put us in this mess, so he will have to answer for it. Smoke screens, sleight of hand tricks will not cut it. He now has a record to run on.

  7. Alex

    April 19, 2012 at 6:47 am

    I think the reason david always reverts back to the Bush years is the failed economic policy of Obama, and the huge debt he has piled on this country in just a short three years. Basically, he doesn’t want to talk about it !

  8. david esmay

    April 19, 2012 at 10:08 am

    These are programs are the biggest expenditures, along with defense, own it.

  9. david esmay

    April 19, 2012 at 10:11 am

    @Alex, I’ll discuss anything, give me an example, outside of the stimulus package, in which the current administration has increased spending. You, but you believe if you keep saying it, it will become true. Same old conservative b.s., you like to support your facts, with facts.

  10. Ricky Leung

    April 19, 2012 at 10:16 am

    Pull Andrew, Alex and Frank’s strings, and out comes the same old tired and worn arguments. You would think they would get tired of repeating the Obama Blames over and over. Man do they need some new material !

    Andrew, Alex and Frank, Blaming Obama is not an acceptable answer. People are sick and tired of the Republicans doing this, they have made their own bed, now they have to sleep in it. The Republicans have been in control of Congress and their policies have put us in this mess, so they will have to answer for it. Smoke screens, sleight of hand tricks will not cut it.

  11. david esmay

    April 19, 2012 at 10:23 am

    The Bush administration dug the biggest hole since the great depression and the GOP wants to divorce themselves of responsibility for the train wreck their trickle down supply side b.s. caused. The last three repub administrations borrowed a spent the U.S. into oblivion with their debt financed growth. The GOP plan has always been the same, “hey, let’s piss on the American people’s back and then tell them it’s raining.”

  12. david esmay

    April 19, 2012 at 11:10 am

    @Ricky, every time Alex!, Andrew, and Frank wax poetic about the success failed GOP policies I think of Will Roger’s take on those same ideas in the 1930′s. Roger’s outlined conservative responses to the Great Depression with a simple statement, “If stupid got us into this mess, why can’t stupid get us out?”

  13. gregflynn

    April 19, 2012 at 11:24 am

    Private industry is perfectly capable of picking lemons and is probably better at it than any government. Anyone who ever got a notice that their WorldCom was officially worthless knows that. The only reason we don’t remember private sector fiascoes like Enron is because they keep getting eclipsed by bigger private sector fiascoes.

  14. david esmay

    April 19, 2012 at 11:39 am

    @Alex!,Andrew,Frank, according to the Economic Research (FRED), St. Louis Federal Reserve website, federal expenditures 2000-2011, under Bush,2000-08 federal spending rose by 1.3 Trillion, from 1.9T to 3.2 a year. Under President Obama 09-011 federal spending rose from 3.2T to 3.9T a year, 600 billion, and is now on the decline. Find a new tune.

  15. Frank Burns

    April 19, 2012 at 5:40 pm

    The cost of Obama

    http://www.weeklystandard.com/blogs/painful-cost-obama_629745.html

    Adding all of this up, deficit spending during Obama’s four years in the White House (based on his own figures) will be an estimated $5.170 trillion — or $5,170,000,000,000.00

  16. david esmay

    April 19, 2012 at 5:57 pm

    @Frank, so the best you got is a link to a neo-con opinion rag, really Frank? Bush increased deficit spending by 89%, increased the size of government 115%, and kept both wars and medicare part D off the books through creative accounting.

  17. Frank Burns

    April 19, 2012 at 6:43 pm

    David,
    Don’t shoot the messenger, even if you don’t like them, they are reporting the White House numbers.

  18. Doug

    April 20, 2012 at 7:01 am

    David is stuck in a time warp in the early 2000′s , and can’t see a president who is clueless on the economy, and is adding $ 4 billion to our debt every single day. it’s not that I blame Obama for all of the ills, but clearly he is not the person to lead us out of this mess. His focus on a few millionaires while ignoring the much bigger problems tells me he is way off track. During his 4 years in office, he will add $6.2 trillion to the national debt, and we have very little to show for it.

  19. david esmay

    April 20, 2012 at 9:53 am

    Doug, those figures cover the years from 2000-2011, hardly a time warp. The GOP leadership has no plan, other than cutting taxes on the wealthy and cutting programs directed at the poor. Like Bruce Bartlett said, ” You got your f’n tax cuts, where’s the jobs?” Their intention is to continually weaken the government’s position. Current budget deficits have been caused largely by temporary issues. The GOP’s position seems to be, our policies wrecked the economy and you’re not fixing it fast enough, therefore we must continue our failed policies. Drastically cutting spending and taxes will only protract the recovery caused by the Bush disaster. The GOP’s continued denial that their programs are driving much of the debt and deficit is disingenuous to say the least.

  20. david esmay

    April 20, 2012 at 12:35 pm

    Conservative responses to the great recession are much like the infamous line by a soldier in Ben Tre, RSV, to Peter Arnette, “We had to destroy the village in order to save it.” The GOP line is “We have to shrink the economy in order for it to grow”. That logic didn’t make sense in 1968 and doesn’t now.

  21. Frank Burns

    April 20, 2012 at 1:43 pm

    David,
    How in the world can any reasonable person state that augmenting state and local budgets stimulates the economy? Federal spending can stimulate the economy when it is used to actually produce things like tanks, aircraft carriers and space shuttles. The goal is to stimulate the private economy not make government workers comfortable.