Fiscal Cliff Deal Only Whetted Obama's Appetite for More Taxes - Investors.com

Fiscal Cliff Deal Only Whetted Obama's Appetite for More Taxes - Investors.com

Taxes: Anyone who thinks the fiscal cliff deal will end President Obama's soak-the-rich campaign isn't paying attention. Even before the ink had dried on his $620 billion tax hike, Obama was talking up his desire for more.

Obama hinted at this on Sunday on "Meet the Press," when he told David Gregory that "you are not only going to cut your way to prosperity" and that "one of the fallacies" was that "deficit reduction is only a matter of cutting programs."

But as the fiscal cliff agreement looked increasingly likely, Obama started talking more specifically about additional tax hikes. On Monday, he told a White House rally that "revenues have to be part of the equation in turning off the sequester."

Translation: If Republicans want to prevent devastating defense cuts from automatically kicking in two months from now, they'll have to choke down another round of tax hikes.

And he made it clear any future deficit cuts will have to include still more new taxes. "If Republicans think that I will finish the job of deficit reduction through spending cuts alone," he said, "then they've got another thing coming."

Then, after the agreement had been signed on Tuesday, he talked about how "cutting spending has to go hand-in-hand with further reforms to our tax code" that take more money from "the wealthiest corporations and individuals."

So, after getting a deal that includes only tax hikes and no spending cuts, Obama will demand that any future spending cuts come with still more new taxes.

On policy grounds, it makes no sense.

The long-term deficit problem is entirely caused by out-of-control spending, not inadequate taxes. Revenues will soon exceed the post-World War II average of 18%, while spending is on track to reach historic highs.

And as the fiscal cliff deal shows, there aren't enough rich people to finance Obama's expansive spending ambitions. Even if revenues do come in as expected — which is highly unlikely — the $620 billion will trim projected deficits by just 7%.

Even that's being far too generous since the fiscal cliff deal also boosts federal spending by more than $332 billion, according to a Congressional Budget Office analysis. In other words, more than half the tax hikes will go to increased spending.

Politically, Obama also may find it harder to get any new tax hikes through Congress. He's already boosted them twice on the so-called rich (the first was a $500 billion hike to pay for ObamaCare).
And he's lost his best political leverage — the threat that taxes on the middle class would go up if he didn't get his way — as soon as he agreed to make the Bush tax cuts permanent.

Even Democrats might be less enthusiastic about future tax hikes that will, by definition, have to reach further down the income scale, hitting an increasing number of their well-heeled urban constituents.
At the moment, none of that seems to matter to Obama, whose unquenchable thirst for higher taxes has finally been exposed.


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