Kudlow: A Pro-Growth Plan from the Gang of Six

Larry Kudlow has some sound advice for conservatives to hold back from trashing the plan which was the first words out of the mouths of some Senators who didn't bother to listen because they had their minds closed when they went into the briefing.

This plan lowers the tax rate for all.  It does raise capital gains by 5% which is more than offset by the lower tax rates for not only individuals but for business.  It simplifies the tax code plugging up loopholes which some emails are tax increases.  Personally think all loopholes should be closed.  The fact that loopholes have been  put in the Tax Code should be stopped.  It was a way to pay back the big donors and the Democrats especially Franks and Dodd became experts at loopholes for donors.  If closing loopholes is considered a tax increase by some then bring it on -- I consider it a tax revenue increase which is what it really is.

Every plan has its drawbacks but frankly this pro-growth plan is much more than I would have thought the Republicans could get out of Senate Democrats.  This is not a win for Obama, Democrats, or Republicans but it is a win for the American taxpayers.  With this plan, Obama is willing to sign an extension to work out all the details and stop default in its tracks which is the right thing to do.  He has been backed into a corner by a group of six who worked to get the best deal possible and actually have a budget for this year and a framework for following years.   Not having a budget in place for two years has been weighing on the financial markets and investment because they didn't have a clue where all this was going. 

That balanced budget amendment which this Country needs and was passed by the House doesn't have a chance to pass this year or next but it sure does in January 2013 and will be sitting waiting for the new Republican President to be sworn into office.  Oklahoma Legislature including one Democrat has already signed on with a letter to the Speaker say they will be glad to vote for the amendment as soon as it hits the states.  Many states have balanced budget amendments that show it works. 

This is a start to get an actual budget in place that has not happened for two years.  With Sen Conrad retiring from the Senate in 2012, he seems to be more in tune with actually getting the job done.  The fear that some Democrats had of Obama when he was sworn in seems to be much less today after they have seen him operate for over two years.  In fact, as the support for Obama among the voters has been decreasing so has the support for him by some members of Congress.  That fear he had of retaliation towards members who didn't vote the way he wanted is probably now sitting in the Office of the Mayor in Chicago.  Rahm Emanuel seemed to be the real intimidator as Obama's attack dog and now with him along with Axelrod gone from the White House, a few more centrist Dems are spreading their wings and going against this President who now has more bark than bite. 

Larry Kudlow
July 20, 2011 5:00 P.M.

A Pro-Growth Plan from the Gang of Six
It’s a stunning reversal of the Obama Democrats’ class-warfare campaign.

There are a lot of known unknowns about the new “Gang of Six” budget proposal. But conservatives should hold back from trashing it. Why? There’s a large, pro-growth tax-reform piece in the plan that would lower tax rates across-the-board. This is a stunning reversal of the Obama Democrats’ soak-the-rich, class-warfare campaign.

The best part of the Gang of Six plan is a reduction in the top personal tax rate from 35 percent to a range of 23 to 29 percent. For businesses, the rate would drop in the same manner. And the corporate tax would be territorial rather than global, thereby avoiding the double tax on foreign earnings of U.S. companies. Finally, the plan would abolish the $1.7 trillion alternative minimum tax. That’s huge. It’s another pro-growth tax reform.

In a more perfect world, the Congressional Budget Office would score the pro-growth incentives of lower marginal tax rates in terms of a tax-revenue increase. That’s the history stretching back to JFK, Reagan, and George W. Bush circa 2003.

And right now, the Gang of Six package is the first real pro-growth tax reform of all the debt-ceiling plans. It acknowledges the need for a growth element in order to solve our budget bankruptcy and limit spending, deficits, and debt. It would boost the economy and broaden the base (by reforming or limiting numerous deductions). As a result, more income would be taxed at lower rates in a rising economy, throwing off a hell of a lot more revenues than we’re getting today. Rising revenues from lower tax rates are a good thing.

Now, there are glitches in this plan that cannot be overlooked. The biggest is the harsher treatment of capital gains. In a CNBC interview on Tuesday, Sen. Tom Coburn (R., Okla.) told me that the investment tax rate would rise to 20 percent from 15 percent. This is a black mark. It’s anti-growth. Coburn, however, also told me that the tax treatment of IRAs and 401(k)s would not change in this plan. That’s good.

Excerpt: Read more at IBD

CNN Breaking News: Obama to Agree to short-term extension of debt ceiling because the "Gang of Six"

President Obama would agree to a short-term extension of the federal debt ceiling if there is agreement on a significant deficit reduction plan by Democrats and Republicans that needs more time to be passed by Congress, White House Press Secretary Jay Carney said Wednesday.

Obama has steadfastly opposed a short-term deal, going as far as to threaten to veto any legislation that contained such provisions. But Obama declared a long-term deficit-reduction plan unveiled Tuesday by the bipartisan "Gang of Six" senators consistent with his approach to solving the problem. Senate Democratic leaders say that further negotiations on that plan are needed to work out the deal and it would not get through Congress before the country reaches its debt ceiling on August 2.

Just received this email from CNN and it makes sense since progress has been made by the "Gang of Six" -- their proposal is not perfect but when has any budget proposal been perfect.  No one gets everything they want when a bill is actually read before voting.  The key is the fact that it provides a path to future budgets as well as the current one.  Finally the Senate will be able to say they have a budget.  Then a Conference Committee from the House and Senate can iron out the differences so for the first time in two years, the United States will have a real budget with cuts in spending which the companies like Moody's will be happy and our rating will stay at the top. 

Too many people want it all now, but it is not going to happen.  Republicans control the House but do not control the Senate and the White House so anything the House passes will probably not pass the Senate even when it makes sense if it has to do with the budget.  Elections have consequences, and we are still seeing those consequences.  Too many members of Congress are so quick to say "NO" because they didn't get what they wanted.  Some comments out of some Senators are frankly naive and short sighted.  Disappointed that the immediate reaction of some was "NO" like someone was going to magically give them all they wanted.  

Must admit that Michelle Bachmann following Ron Paul's lead last night to vote against the House bill on the deficit showed that she will follow Ron Paul and do what he says instead of the smart thing.  We don't need Ron Paul or his protege anywhere near the White House with his attitude on our military which he would decimate and not think twice. 

We are still having a hard time figuring out how closing loopholes is raising taxes when the tax rate goes down.  There are loopholes in the Tax Code which should have been shut a long time ago but am getting emails telling everyone to call their Senator to stop the Tax increase.  Frankly we think the Dr. Coburn proposal on the Tax Code to simplify and shutdown loopholes is a great idea.  Loopholes should not be in the Tax Code and if closing them is considered a tax increase, then tough -- they need closed.

This process has been an eye opener.  We have members of Congress on one side working diligently hour after hour to try and get a compromise to protect the credit rating of the United States with the debt ceiling deadline approaching.  Then we have the other side from both parties who automatically said "NO" to any compromise putting politics ahead of the United States. 

We shouldn't be in this place to have to raise the debt ceiling but the last four years with all the new agenda items of the Democrats and Obama on top of the growth of the deficit under Bush have pushed this Country to the limit.  We didn't get there over night and this is not going to be solved over night but we have the beginning of the first steps to get the budget of the United States under control. 

Will put my faith in Dr. Coburn any day of the week over any Senator whose first reaction is NO to anything that is a compromise!  Dr. Coburn was sent to DC by Oklahomans to represent us to try and stop runaway spending.  He was opposed in 2004 by the establishment in DC led by President Bush, Karl Rove, and others because they knew when he said something he meant it and was not going to be a rubber stamp for new programs that cost the taxpayers money. 

Oklahoma grassroots of which I am proud to be a member went to work and with the help of Toomey's Club for Growth, we made him our nominee for the general election with no run-off election even though there were three people running.  The Bush person in our primary lost it at a function and made a jerk of himself right before the primary and Dr. Tom won going away.  Grassroots spent a lot of time working for Dr. Tom in the primary making phone calls hour after hour after hour and continued that in the general election.  It worked and he won the General Election. 

Of all the elections I have worked over the years, seeing Dr. Tom win was probably the highlight because so many Republicans in DC were against him at the beginning.  Now America can see why we sent Dr. Tom to DC as he is doing what we expected -- making the hard decisions and always having a plan to make things better.  If it means working across the aisle, he will do just that if it benefits Americans. 

Dr. Coburn is honest and puts America First by not only his words but by his actions.  This is one Oklahoman who is very proud of the work Dr. Coburn has done in the Senate and look forward to more of the same from the Doctor from Muskogee, Oklahoma.
  

Coburn Rejoins Gang of Six, back from the brink?

Could we finally have a plan that will work?  With Dr. Coburn rejoining the Gang of Six, wouldn't be surprised as he always puts what is best for America first.  He is not an arrogant person but has his priorities straight.  In fact, he may be one of least arrogant people in the Senate.  We are happy to see this glimmer of hope because it is more obvious by the hour that the House Plan which we applaud will not get passed in the Senate and will be vetoed by Obama if it did pass.  We hope to see that passed in the future as we need a balanced budget to keep this from happening again. 

This debt crisis has to be a bi-partisan deal to get things worked out.  Looks like the plan could be the foundation for an agreement.  Every last member of Congress needs to keep an open mind on the proposal and ask themselves if this is better than default.  We think it is and a start on cutting the deficit.

CNN Breaking News Email, 19 Jul 2011, 12:55 (CDT):

President Obama says that deficit reduction proposal presented by bipartisan group of senators offers "potential for bipartisan consensus" for getting an agreement on raising the country’s debt ceiling and reducing the country’s long-term debt.

Obama was reacting to a plan by what had been known as the "Gang of Six" that the president said included spending cuts and "modifications" to Medicare and Social Security and increase revenue through tax reform. The U.S. will hit its debt ceiling on August 2 and Obama characterized negotiations as in "the 11th hour." The president said, "We don’t have any more time for symbolic gestures or posturing."

Some continue to hide their heads in the sand and say it makes no difference if we default and refuse to look at any plan.  Most people with common sense are not willing to take that chance as the credit of the United States and our ability to pay the bills is too important to leave to chance.  Why would anyone want to take any chance on destroying the credit of the US to score political points?  We didn't get to this situation over night and it is not going to be remedied over night.  That's a fact that people need to face. 

Both parties are responsible for the deficit but Democrats have to assume the full blame for the last two years when they were in full control of Government and the deficit grew so much more than in the past after Obama became President in January 2009.  It is an undeniable fact that the run away spending of Obama and the Democrats who firmly controlled Government in 2009-2010 put us in this position today to have raise the debt ceiling. 

If this Gang of Six plan pulls us back from the brink, then all Americans should applaud this group for having the courage to stand up to both parties and do what is right for America!


Coburn told the group that he was 'back,' which prompted a round of applause.
AP Photo Close

Coburn Rejoins Gang of Six, back from the brink?

By MANU RAJU | 7/19/11 10:17 AM EDT Updated: 7/19/11 12:16 PM EDT

The once moribund Senate “Gang of Six” regained new life Tuesday after Oklahoma Sen. Tom Coburn unexpectedly rejoined the group — and more senators are now coalescing around a new proposal that would cut the debt by as much as $3.7 trillion over the next decade.

Other top senators are also getting behind the plan, including Sen. Lamar Alexander (R-Tenn.), the No. 3 Senate Republican, who told a group of senators Tuesday he would back the Gang of Six’s proposal, sources say. The fast-moving developments mean that elements of the proposal could influence the stalled talks to raise the debt-limit before the Aug. 2 deadline.

According to a copy of the plan, obtained by POLITICO, the group would impose a two-step legislative process that would make $500 billion worth of cuts immediately followed by a second bill to create a “fast-track process” that would propose a comprehensive bill aimed at dramatically restructuring tax and spending programs. The plan calls for changes to Social Security to move on a separate track, and establishes an elaborate procedure for considering the measures on the floor.

The $500 billion in cuts would come from a range of sources, including shifting to a new consumer price index to make cost-of-living adjustments to Social Security. The plan would impose statutory spending caps through 2015, freeze congressional pay and sell unused federal property.

To enact a comprehensive deficit plan, the group calls for congressional committees to report legislation within six months that would “deliver real deficit savings in entitlement programs over 10 years,” the plan says.

It calls on the Finance Committee to permanently reform or replace Medicare’s Sustainable Growth Rate - an outdated formula aimed at determining the amount to reimburse doctors for treating Medicare patients - by $298 billion.

The Finance Committee would be instructed to deliver “real deficit savings” through simplifying the tax code and raise as much as $1 trillion. It would do this by establishing three tax brackets with rates of 8-12 percent, 14-22 percent and 23-29 percent. It would permanently repeal the $1.7 trillion Alternative Minimum Tax. And it calls for establishing a single corporate tax rate, between 23 percent and 29 percent, and to move to a competitive territorial tax system.

Excerpt:  Read more at Politico

Simplifying the tax code would be worth all the political posturing if this bill passes.  Love the idea of the new rates and other changes that will simplify filing taxes.  This is one huge plus!

Shortly members of Congress will have the opportunity to vote on this plan and the members need to ask themselves which is best for America -- default or a plan that starts cutting the deficit, makes changes to Medicare, and simplifies the tax code.  We think there is only one choice and that is to give the Gang of Six and their plan a chance.  After 2012 and with a new President, the House Plan of Cut, Cap, and Balance can become reality.  Small steps in the right direction start with the Gang of Six and their proposal and big steps come in January 2013 with the House Plan of Cut, Cap, and Balance. 

Gang of Six, back from the brink?