Real Clear Politics: Sen. Rand Paul (R-KY) says if would be better for Republicans to vote present on President Obama’s proposal to raise tax rates and allow it to pass than to go off the “fiscal cliff.” Paul says that would force Democrats to take ownership of the economy’s reaction to a tax hike.
Sen. Paul: If they surprise me and they call me up tonight and say, “what should we do?” Here’s what we should do: We should, tomorrow, in the House, vote for what we believe in. Keeping the Bush tax rates as they are for everybody permanently, and cutting spending. Significant cuts in spending and reform entitlements. I have a bill that saves social security and saves Social Security and saves Medicare by reforming them. Let’s pass some of those bills and then when the Democrats won’t accept it, then let’s vote present and let them raise the taxes in the House, and then when it comes to the Senate, the Republican senators vote no, and it becomes like ObamaCare: A Democrat juggernaut. They get what they want, but it will be bad for the economy. But, their fingerprints will be on it and ours won’t.
Cavuto: The polls say it will be the Republicans’ fingerprints on it; do you buy that?
Paul: That depends on what happens. If the Republicans all decide, let’s vote for raising the taxes half as much as Obama wants, and we still have a tax increase and Republicans are for it, it kinda ruins what we stand for. What we stand for is limited government and less taxation, so I think if we go halfway and split the difference with him, I think, then, both parties have their hands on it.
GRETA VAN SUSTEREN, FOX NEWS HOST: Senator Rand Paul says let Democrats dig their own grave. He says let Democrats raise taxes on everybody. Senator Paul is telling Republican colleagues senator to vote present on a deal, allowing Democrats to push through their tax hikes. Why would Senator Rand Paul want to take that tactic? The senator joins us. Good evening, sir.
SEN. RAND PAUL, R-KY: Good evening, Greta.
VAN SUSTEREN: Explain to me why you think that’s a good tactic.
PAUL: I think what we should do first of all is put forward what we are for. So if they are in the House, the House leadership should put something forward that extends the Bush tax cuts forever and has significant spending cuts. And I think they passed that.
The Democrats won’t accept that and were unwilling to stay by our position. Then I would say let them pass a tax increase on the upper increase folks, but let it do it with their votes, not our votes. Republicans vote present in the House. Democrats can pass the tack increase with only democrat votes and then the Democrats are the parties of high taxes and the Republicans are the party of lower taxes. And I think that’s the way it should be.
VAN SUSTEREN: Well, House is not going to go for that. Do you agree? The House isn’t going to vote for the Democrats deal.
PAUL: I’m not saying vote for the bill to raise taxes, I’m saying that we vote first on a Bill that says we will not raise the taxes, and that is our true position. That’s what we stand for. We think that you stimulate the economy by leaving more money in the economy, actually lowering taxes. That’s our philosophy. That’s who we are as Republican.
So I would pass that. The House has passed that previously. I would pass that again now, and that if we cannot get the president to negotiate from that position, and if they are going give in, don’t give in by splitting the baby. Give in by voting present, let the Democrats pass an increase in the upper tax brackets, comes over to the Senate, Republicans vote no, and it becomes a Democrat tax increase but not a Republican/Democrat tax increase, which I think is a mistake for the Republicans.
VAN SUSTEREN: Republican Senator Ron Johnson from Wisconsin says it’s not the end of the world if we go over the fiscal cliff, although there are some economists who say it could thrust us back into recession. What do you think will happen if we go over the fiscal cliff?
PAUL: I don’t think there is a cliff in the sense that all of a sudden tomorrow something dramatic happens. I think stock markets sometimes react quickly, but for the most part, whether it’s going to be a recession or not is a much more long, drawn-out process.
But I would say that it’s not a good idea to raise anyone taxes, and that the marketplace does not differentiate whether you take the money from rich people, poor people, or middle class. The marketplace says if you are going to take $800 billion, are you taking it out of the private sector, the productive sector, and are you going to give it to the nonproductive sector in Washington, basically the sector of people who are always messing up things in the marketplace? Are you going to do that? If you are going to do that, it’s a bad idea no matter whether it’s rich people, middle class, or poor. It doesn’t matter. If you take money out of the private sector, it’s a bad idea.
VAN SUSTEREN: Well, it’s not as though the taxes around going to go up on the wealthiest Americans come January 1. Maybe not to the extent the Democrats want in the income tax bracket, but certainly it’s going to go up. They will pay more in Medicare under the Obama healthcare. They will pay more on their investment income, 3.8 percent if you are a high earner. So there will be additional taxes. I realize you will pay for other things besides. Taxes are going to go up for the wealthiest Americans on January 1, just not as much as Democrats want. Would you agree?
PAUL: Yes. And here’s the question. How much is enough? When will they have enough? The thing is most people in a lot of these high tax states are already pagan excessive amount of their income. Look at companies now trying to get away from the tax collectors. Look at Google taking their money to Bermuda. Look at all the corporations who can’t stand to pay 35 percent income tax in America that won’t bring their money home. Money goes where it is welcome.
VAN SUSTEREN: Let me ask you about Google. Google managed to do tax avoidance, which is not illegal, by putting money in Bermuda and I think they saved $2 billion in tax avoid dance. What efforts are being done by the Democrats or the Republicans to discourage that type of lawful avoidance, but nonetheless a huge amount of money for a very wealthy company?
PAUL: I’m not against them doing that. In fact, I compliment them because that money stayed in the private marketplace. But I would say to folks who are doing that, don’t come to Washington and agitate for higher taxes if you are avoiding taxes. By all means, continue to legally avoid as many taxes as you can because that keeps money in the private marketplace and helps to create jobs. I’m all for that. But don’t at the same time come agitate for higher taxes, because we need lower taxes.
Countries around the world are finding out that this is a mistake. England raised their upper rate, and they got lower tax revenue. When the Bush tax cuts came into play we lowered tax rates and we got more revenue. So the main reason I’m opposed to what the president is doing is it’s not going to work, and it may give us less revenue and less economic growth. So I’m completely opposed to the president. I was before the election and I still am after the election.
VAN SUSTEREN: If you look at Google, you say you’re not opposed to that. But if you take, let’s take the category, $250,000 to $3 million a year, that category, they don’t hide their money, but they don’t avoid taxes by using Bermuda because they don’t have the structure to do that, number one. And number two is that they don’t have all these lobbyists that create these payroll tax codes so that they can do that. So there’s actually sort of a wealthy class that just is the billionaire class –
PAUL: That’s true, and it isn’t a fair tax code. The way you get a fair tax code is to lower rates and get rid of deductions so people don’t have to avoid their taxes. But I will say in Google’s defense, the corporate income tax in our country is 35 percent. In Canada it’s 15 percent. In Bermuda I think it’s nine percent. All across Europe it’s in the 20s. Money goes to where it’s welcome. Money is not welcome in the United States, or the president is trying to make it worse so money and people will flee. People will flee if you raise their taxes. They also won’t work as hard and you’ll be getting less revenue, not more, exactly the opposite of what the president wants.
VAN SUSTEREN: For years I’ve been hearing tax code reform. That’s all I’ve been hearing, and maybe we’ll get it sometime, but I’m not holding my breath. Senator, thank you, sir.
PAUL: Thank you.
TPN: “The Federal Government is like a treasure that a man discovered hidden in a field. In his excitement, he hid it again and sold everything he owned and raised as much legal or illegal campaign money to get enough money to buy the field—and to get the treasure, too!
This explanation below and above just frames perfectly what we’re up against far as our debt goes. You have a central government that has welded and cemented procedures and strategies in place to forever grow the size and scope of government. A political class that directs it, and since it is not in the best interest of the political class and their families to cut their own influence and paychecks you find them spending billions every election cycle to ‘keep” and “grow” their inheritance. As you read the news headlines these days you will see how people will resort to all kinds of violence if you dare to go near that field that has that self perpetuating treasure in it. And in reality that “treasure” is really a “flimsy white washed wall’ and when the next strong wind comes along it’s going down. So since those that are awake, know that it is a white washed wall, and we can see that their is a political class that is enriching themselves along with their supporting minions maybe we should seriously start looking back to the governments that do not have a printing press in their basements…our own states! Shouldn’t we be encouraging our states to start saying “No” to what was supposedly to be a limited referee to the “Union” of states that has now become brazenly “:Unconstitutional” and has now transformed itself back into the Symbolic Manifestation of King George and Lord North or maybe more fittingly Joseph Stalin?. …here comes another (3) $ trillion added to the political classes Inheritance….I can hear Yessss! Echoing powerfully through out Washington and reverberating through the Halls of our most “Honorable” Congress now as I hear the “Yea” votes carrying the day as we add that $3 trillion!
“Baseline budgeting” is one of those Washington terms that sounds very dry and boring. In reality, baseline budgeting is one of the most sinister ways that politicians claim to cut spending when they are actually increasing spending. The Congressional Budget Office defines the baseline as a benchmark for measuring the budgetary effects of proposed changes in federal revenue or spending, with the assumption that current budgetary policies or current services are continued without change. The baseline includes automatic adjustments for inflation and anticipated increases in program participation. Baseline, or current services, budgeting, therefore builds automatic, future spending increases into Congress’s budgetary forecasts.
Baseline budgeting tilts the budget process in favor of increased spending and taxes. For example, if an agency’s budget is projected to grow by $100 million, but only grows by $75 million, according to baseline budgeting, that agency sustained a $25 million cut. That is analogous to a person who expects to gain 100 pounds only gaining 75 pounds, and taking credit for losing 25 pounds. The federal government is the only place this absurd logic is employed.
Politicians often like to have it both ways. Baseline budgeting gives politicians an opportunity to deceive taxpayers by allowing them to claim that they are holding the line on spending while providing more services.
Baseline budgeting seems like a technicality and should not be such a hotbed of contention, but every round of budget negotiations involves baseline budgeting with both sides of the aisle complaining that the other side is using the process to mask spending increases. Baseline budgeting is an issue that truly separates the deficit hawks from the budget chickens.
Eliminating the inflated budget baseline will force Congress to justify and account for increased spending instead of hiding behind automatic increases. Through commonsense accounting, taxpayers would learn that spending in Washington is not under control. (Citizens against Government Waste)