Well, pros and cons if you’re fiscally conservative that is.

I was starting a round up of opinions on Speaker John Boehner’s debt-ceiling deal, but I’ll instead avoid the common solution of the very political class we’re discussing by not attempting to foolishly reinvent the wheel — others, such as this round up by Guy Benson, have already done it for us.

Organizations in favor: US Chamber of Commerce, Americans for Tax Reform

Organizations opposed: Club for Growth, FreedomWorks, Heritage Action

Politicians in favor: Allen West, Paul Ryan, Eric Cantor, James Lankford

Politicians opposed: Rand Paul, Jim Jordan, Jason Chaffetz, Jim DeMint, Lindsey Graham (Also, Barack Obama, Harry Reid, Nancy Pelosi, et al).

Now, that is an interesting list of strange bedfellows, is it not? It’s also quite noteworthy to see how the Obama Democrats are clearly opposing the Boehner plan. More of that, and whether or not to take it at face value, momentarily.

A few other noteworthy points and statements come from former Sen. Fred Thompson, Rep. Paul Ryan, and the editors of the WSJ. Each of them sees it as a critical first step, a way to keep momentum into the 2012 elections, and executes tangible spending cuts all without raising a single tax.

The downside is obvious — at the end of the day, no matter which plan we’re taking into account the trillion dollar savings are enacted over 10 years, which really means only hundred-billion dollar savings every year, all the while deficit spending is nonetheless occurring. In other words, as has been noted earlier this month, no matter which plan you back we’re really only talking about reducing the level of spending, not actually reducing spending. To steal another’s analogy, were you broke and bought a Toyota instead of a Mercedes, you’d still be $20-grand in the hole while Congress was congratulating you on saving $60-grand for not buying the Mercedes. It’s faux savings.

However, that doesn’t mean the better option is to go all in, here now, when controlling just one house of one branch of government, and pray when the chips fall the public blames Obama instead of the Republicans. (Fred Thompson writes a lot about the odds of that in his piece).

The alternative — failure to pass Boehner’s plan — could mean Sen. Harry Reid’s plan, which while likewise does not raise taxes, doesn’t really have tangible spending cuts — rather they’re all hypothetical lip service with vague corrections for “waste, fraud and abuse” and with undefined promises of future spending cuts combined with the natural savings via troop reductions that were already scheduled in Iraq and Afghanistan. Oh, yeah, and the gamble that the public will blame Obama instead of Republicans might detonate in the faces of the Republicans. It could work, but maybe not. Thompson strongly advises:

“Is this the best deal we could have obtained?” you might ask. I suggest that you don’t run the risk of finding out.

Having said that, I was completely leaning towards those who suggest we take Boehner plan and declare victory until I read this insight quoted in Guy Benson’s commentary. It will give you pause:

Another interesting anti-Boehner plan argument I’ve heard is that if the credit agencies are going to downgrade us anyway, any plan that passes will be blamed for its failure.  If it happens to be the Boehner plan (and its admittedly paltry cuts), President Obama can come out and pound the desk and insist that because of GOP stubbornness on “revenues,” the political system was stuck supporting a bill that didn’t solve the problem (unlike, he’ll say, his non-existent plan). [note, Benson also cites the CBO rescoring Boehner's plan as far less spending level cuts as advertised, but I would wager that they'll rewrite this and fix it by the time of vote].

Well, they don’t call it poker for nothing. It’s almost impossible to predict how this thing will go (and those who claim to know are either arrogant or lying), but even with that final strategic prediction above, I still leaning pro-Boehner because I think the odds of Republicans shooting themselves in the foot by becoming too cute by half with “what ifs” and “supposes” is greater than taking the smaller but significant victory of spending level cuts without tax increases.

Then again by morning I might change my mind…

Obama’s rhetorical floundering is the sound of a bewildered politician trying to be heard over the long, withdrawing roar of ebbing faith in a failing model of governance. From Greece to California, with manifestations in Italy, Spain, Portugal, Ireland, Illinois and elsewhere, this model is collapsing. Entangled economic and demographic forces are refuting the practice of ever-bigger government financed by an ever-smaller tax base and by imposing huge costs on voiceless future generations.

Richard Miniter, a Forbes columnist, is right: “Obama is not the new FDR, but the new Gorbachev.” Beneath the tattered, fading banner of reactionary liberalism, Obama struggles to sustain a doomed system. Democrats’ dependency agenda — swelling the ranks of government employees, multiplying government-subsidized industries, enveloping ever-more individuals in the entitlement culture — is buckling under an intractable contradiction: It is incompatible with economic growth sufficient to create enough wealth to feed the multiplying tax eaters.

– George Will.

Lately I’ve been bothered over how much conservative pundits seem to surrender ground when fiscal liberals argue to raise taxes or attack the 2003 Bush tax cuts as somehow being the cause of the current debt crisis (a ridiculous notion, as I’ll demonstrate).

The opposition generally misunderstands the economic argument, and confuses the facts. As one brilliant leader — Sen. Daniel Patrick Moynihan — once coined: you’re entitled to your own opinions, but you’re not entitled to your own facts.

Thus, the summation:

Let’s say someone makes $50k and the IRS taxes that person 0%. How many dollars in revenue will the IRS take in from that person? $0. Now let’s say that the IRS takes that same person 100%. How many dollars in revenue will the IRS take in from that person? The answer is actually also $0, because nobody would bother working — or at least not bother reporting their earnings as required by law — if another is going to take 100% from them.

What I’ve just demonstrated is that tax rates affect future spending and investment habits.

This also underscores the only two problems with the 2003 Bush tax cuts — first, they were phased in and gradually increased over a period of 10 years, rather than all at once, and second, they were built to sunset after 10 years. This means that businesses were hedging their bets on spending and investment habits because they had no control over who might control politics and taxation years ahead.

And yet despite this hedging and unrealized potential the Bush tax cuts yielded record level tax revenues from the IRS, in part because the tax cuts positively affected spending and investment behavior, the economy grew and the IRS yielded record revenue from that growth (tax revenue from 2003 to 2007 was the biggest four-year increase in U.S. history). This was no surprise to those who had studied the same occurrences — massive tax revenue increases — after tax cuts by Presidents Coolidge, Kennedy and Reagan.

This also demonstrates that there exists a perfect point, albeit difficult to locate, where you can both maximize tax revenue and simultaneously allow individuals and businesses to keep their earnings and flourish (also known as the Laffer Curve).

Thus, liberals who argue that conservative’s only solution is to cut taxes miss the point — you cut or raise taxes only to change behavior and locate that perfect happy medium, not to raise revenue in itself. Revenue is only raised as a result of a growing economy.

Conversely, once your tax rates become too high — and “too high” is relative to the state of the economic — people stop spending and investing, the economy shrinks and your tax revenues are reduced. Worse, about 75% of all businesses in the U.S., including many LLCs and corporations, are taxed under the individual income tax rather than the corporate income tax — which is why the individual income tax rate is so important.

Finally, inflation means that more people (and businesses) creep into those higher tax brackets over time. This is why the Alternative Minimum Tax, which was designed in 1970 for just 155 people, now affects 4.5 million American filers due to its failure to index for inflation. That is a gross distortion of intent.

Liberals also fail to understand that what we have is not a tax revenue problem but a spending problem.

Indeed, were we to tax those making $250,000 at 100% we would still not put a small dent into our national debt — even if you really did yield 100% from them rather than the 0% you’d yield after they hid all their earnings.

Depressing. Larry Kudlow has an honestly blunt assessment of Washington bureaucrats and finds at the end of the day, they’re going to spend your money. Even when they tell you they’re cutting spending they’re still spending.

[Paul] Ryan’s [budget] is of course a couple of trillion dollars lower than Obama’s over the next ten years. But what do they both have in common? They both go up. As in spending more, not less. As in, roughly $40 trillion to $45 trillion more. That’s a whole lot of taxpayer money, folks.

Now why is this? It’s because of something called the “current services baseline,” which includes population and inflation increases built into the budget. Entitlements have their own formulas.

So when you hear a politician tell you they’re cutting spending, they’re actually referring only to reducing the growth of spending. Rarely, if ever, do they actually reduce the level of spending.

Think of it this way: You’re out car shopping and thinking about buying a $100,000 Mercedes. That’s your target. But then you decide to forego the Mercedes and opt for a $20,000 Chevy instead. Well, guess what? Congress would score that as an $80,000 budget cut. Huh? We all know that it’s actually a $20,000 budget increase.

“If you collect that oil tax and the corporate-jet tax for the next 50 years, you will not yet have offset Obama’s deficit spending for February 2011.” — Charles Krauthammer.

Here’s Mark Steyn:

The president has a point about “tax breaks.” We have too many. And on the scale of the present tax code that’s a dagger at the heart of one of the most basic principles of free societies — equality before the law. But, of course, the president is not opposed to exemptions and exceptions and special privileges on principle: After all, he’s issued — what is it now? — over a thousand “waivers” for his own Obamacare law. If you knew who to call in Washington, maybe you got one. If you didn’t, tough.

But that’s the point. Big Government on America’s unprecedented money-no-object scale will always be profoundly wasteful (as on that Williamsburg flight), stupid (as at the TSA), and arbitrary (as in those waivers). But it’s not republican in any sense the Founders would recognize. If (like Obama) you’re a lifetime member of the government class, you can survive it. For the rest, it ought to be a source of shame to today’s Americans that this will be the first generation in U.S. history to bequeath its children the certainty of poorer, meaner lives — if not a broader decay into a fetid swamp divided between a well-connected Latin American–style elite enjoying their waivers and a vast downwardly mobile morass. On Independence Day 2011, debt-ridden America is now dependent, not on far-off kings but on global bond and currency markets, which fulfill the same role the cliff edge does in a Wile E. Coyote cartoon. At some point, Wile looks down and realizes he’s outrun solid ground. You know what happens next.

That’s all, folks!

“Anybody who suggested raising taxes on small business so the bloated government doesn’t have to shrink in size can’t get out the door fast enough.” — Doug Powers commenting on rumors the Timothy Geithner plans to resign his post as U.S. Treasury secretary.

Perhaps we should change his title to “Comrade” Geithner?

Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”

The administration’s plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per year—including businesses that file taxes the same way individuals and families do.

This often gets lost amid the Democrats perpetually vilifying “the rich” — mind you without them ever putting to a dollar amount precisely what makes someone “rich.” They would have you believe it’s corporate jet owners. The tax code, however, lumps into that figure individuals making $200k or a husband and wife — and perhaps several kids in college — making $250k.

Worse, it also hits the vast majority of American business — a whopping 75% of all U.S. business (this includes proprietorships, parterships, s-type corporations and limited-liability companies) file their taxes as individuals. Should Comrade Geithner and the Obama Democrats get their way and raise taxes even higher, one should not expect these same businesses to hire more people and in turn reduce that horrific 9+% unemployment rate over which Mr. Obama claims he’s concerned.

Concern? No president since FDR has ever won re-election with such a high unemployment rate.

“I think it’s only fair to ask an oil company or a corporate jet owner that’s doing so well to give up that tax break….I don’t think that’s real radical.” — Barack Obama, June 28, 2011.

[NRO] Obama’s most recent budget calls for adding $9.5 trillion in new debt over the next decade. If you got rid of the “accelerated depreciation” of corporate jets, Reuters economics columnist James Pethokoukis calculates, it would save a whopping .03 percent of that total. … No one queried why he talks about the need to raise taxes on “millionaires and billionaires” but the fine print of his proposals defines millionaires and billionaires as people who make $200,000 a year as individuals or $250,000 as joint-filing couples. Jay Duckson at Central Business Jets tells the Wall Street Journal that the starting price for a private jet is $10 million dollars. Annual upkeep and fuel is about $500,000. You do the math.

Here’s some sauce for the goose. Just a day prior to his press conference — in which he singled out corporate jets no less than six times — President Obama was in the Bettendorf, Iowa, Alcoa Davenport Works plant, where he praised the company for “showing us the future we can build here in eastern Iowa and across the country,” and adding, “The idea is to create jobs now, and to make sure America stays on the cutting edge of manufacturing for years to come.”

Just one problem. One of the things that Alcoa manufactures? Yep, aluminum used in corporate jets.

I’m sure that left Iowans scratching their heads and perhaps second guessing their political PACs and contributions.

USA Today analysis of government economic reports paints an even more bleak picture than anyone has previously understood.

[USA Today] The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

This gap between spending commitments and revenue last year equals more than one-third of the nation’s gross domestic product.

Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.

Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.

Corporations would be required to count these new liabilities when they are taken on — and report a big loss to shareholders. Unlike businesses, however, Congress postpones recording spending commitments until it writes a check.

The $61.6 trillion in unfunded obligations amounts to $534,000 per household. That’s more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises.

That’s a serious hole to get out of there — how many families out there not named “Soros” have half-a-mil to spare for their share of the national debt? It also underscores the impact of the viral Internet “penny” video from a couple months back, where a fellow showed a dining table of pennies lined side by side, picked just one up, cut it in half, and explained that that miniscule and pointless amount was what politicos in Washington D.C. were arguing about when the problem is that about two-thirds of his table of pennies — the debt — was from Social Security and Medicare alone.

Within this USA Today article is a quote from some left-leaning “think tank” advocate retorting that this is all just scare tactics, that we need simply “grow” our way out of the problem. Well, it’s nice to finally find a liberal acknowledge that growing the economy can reduce your taxation needs — if only they admitted that the same is true of income or corporate taxes, not just with entitlements. However, growing your economy to deal with a couple hundred billion or even a trillion is one thing, but $61 trillion? That takes more than just trying to grow the economy, that takes an economic reformation.

But that’s simply not a task that the Obama Democrats will every understand. Martin Feldman highlights two of the biggest problems:

Although Mr. Obama grudgingly agreed to continue the Bush tax cuts for 2011 and 2012, his budget this year repeated his call for higher tax rates on upper-income individuals and multinational corporations. With that higher-tax cloud hanging over them, it is not surprising that individuals and businesses do not make the entrepreneurial investments and business expansions that would cause a solid recovery.

A third problem stems from the administration’s lack of an explicit plan to deal with future budget deficits and with the exploding national debt. This creates uncertainty about future tax increases and interest rates that impedes spending by households and investment by businesses. The national debt has jumped to 69% of GDP this year, from 40% in 2008. It is projected by the Congressional Budget Office to reach more than 85% by the end of the decade, and to keep rising after that. The reality is even worse since ObamaCare alone will cost more than $1 trillion in its first 10 years.

Obama made it worse. That’s the theme Republicans must pound upon.

Having said that, I’m not even confident that beyond Paul Ryan any Republicans have the backbone to push for an economic reformation — the vast majority of them are “Democrat Lite” brand of politics, who believe that they have to spend similar to Democrats to stay in power, but not spend so much they’re running to the left of Democrats.

Just one problem: Paul Ryan isn’t running for president.

Now some good news. Former Minnesota Gov. Pawlenty, while not as economically strong as Ryan, is running and appears to have a tangible and communicative plan.

Pawlenty is calling for policies to grow the economy by 5% every year for the next ten years. This is beyond aggressive, with the WSJ commenting that although “the economy grew 4.9% on average between 1983 and 1987, and nearly 4.7% between 1996 and 1999… such long booms are rare in developed economies and we can’t recall one that lasted 10 years.”

But to Pawlenty’s credit, and unlike the vast majority of politicos, he at least provides details for how he’d achieve this.

He sketched out yesterday a Reagan-like tax reform of lower rates for individuals and businesses. The first $50,000 in individual income ($100,000 for couples) would be taxed at 10% and after that a top marginal rate of 25%. This would give a big lift to the small and medium-sized businesses that file under the individual tax code and create most new jobs. He’d also zero out taxes on capital gains, dividends and estates.

Mr. Pawlenty says that families earning under $50,000 would pay an effective income tax rate of 0%, because he would maintain tax benefits like those for mortgage interest or the child credit that use the tax code as social policy. Mr. Pawlenty is right not to buy into the liberal objection that tax reform must be revenue neutral according to scoring rules that assume no growth dividend, but minimizing tax credit carve-outs would raise revenue by making the tax code more efficient.

The Minnesotan is on firmer ground with his corporate tax overhaul, which would reduce the rate to 15% from the current 35% in return for cleaning out the warren of loopholes and special favors. Businesses will expand, enlarge their payrolls and repatriate overseas earnings. The added benefit is that most corporate welfare is dispensed through the tax code—so a flatter, simpler system will reduce political mediation of the economy and the resulting misallocation of capital. It is both a pro-growth tax policy and government reform.

Mr. Pawlenty would also limit Washington’s damage by paring the regulatory overreach that has defined the last three years and by curbing spending over time to 18% of GDP (from 24% today), which is the historical revenue average and is also crucial for economic revival.

My hope is that Pawlenty will force all the other Republican candidates to tack hard to the right on their economic policies. Pawlenty might not be Paul Ryan, but he could be good enough to beat the Obama Democrats. It’s a challenge, yes. But not too long ago the conventional wisdom was that no president could ever survive a re-election gambit facing near double-digit unemployment. So while Pawlenty has a big hill to climb, Obama’s could be worse come summer 2012.

There’s a clear demarkation economically between the Republican and Democrat parties right now. That’s a good thing if it holds, because it means the Republicans can begin to truly eradicate its image problem brought on by poor fiscal decisions in the second half of the Bush years, when Republicans foolishly thought that the key to winning elections was to adopt Democrat-Lite spending policies.

Realize too that the spending cuts only amount to a few grains of sand on a beach, but principles matter, and so does momentum.

Better still, while trying to play a page from the Clinton triangulation playbook by proposing his own cuts, Obama nonetheless sounds like every Jimmy Carter and Walter Mondale “soak the rich” Democrat. That’s not so smart in a poor economy.

In his speech Thursday night, Obama portrayed Paul Ryan’s (R, WI) detailed and published fiscal plan as just “tax cuts for millionaires and billionaires,” while in the very next breath the president promised to remove the Bush-era tax cuts for families making $250,000. (Link to full report and summary).

Now, I realize that Mr. Obama is Columbia and Harvard educated and far smarter than us simple folk, but last time I did the math couples making $250,000 in income aren’t billionaires, and aren’t even millionaires. In fact, they’re a lot closer to being middle class, or flat broke, then they are to being millionaires. So the president’s empty rhetoric is nothing more than class warfare at its ugliest and  most extreme.

These are, instead, the entrepreneurs, investors, and small business owners. And our tax code disencentivizes innovation, hiring and investing. It’s the exact opposite of what Democrats claim they want.

The saddest part of this is that even if the Democrats do get their tax increase — and even if they went far further with it by including those making far less than $250,000 — it wouldn’t make the slightest dent in our economic woes.

[Wall Street Journal] According to the Internal Revenue Service data, the entire taxable income of everyone earning over $100,000 in 2008 was about $1.582 trillion. Even if all of these Americans — most of whom are far from wealthy — were taxed at 100%, it wouldn’t cover Mr. Obama’s deficit for this year.

It’s been proven over and again that the Democrat’s static thought process only makes the country poorer because they believe that tax cuts “cost” us something when they really increase the size of the economic pie and maximizing that same low tax rate through volume. It’s the same principle that Wal Mart uses to make a fortune even though they have very low mark up on the goods they sell. But Democrats don’t think dynamically. They don’t realize — or perhaps they do and choose to engage in class warfare regardless — that they could have the best of both worlds by finding that perfect point between tax rate and revenue on the Laffer Curve.

For Democrats, it is the ultimate inconvienent truth: under Presidents Coolidge, Kennedy, Reagan and Bush tax revenues increased even though they lowered marginal tax rates — volume! We can even throw in Bill Clinton. The Taxpayer Relief Act of 1997 dropped capital gains tax rates from 28% to 20% and increased revenue from $54bn in 1996 to $84bn in 1998 (CBO). But even if you choose not to believe — to use their terminology, even if you’re a “denier” — even the most liberal of economists know you don’t attempt to raise tax rates in a bad economy.

But if that’s the hand Mr. Obama wants to play, good luck. We’ll see how that whole hopey-changey you vote for me after I raise your taxes when you were already suffering works out for ya.