“I’m Gonna Raise Some Taxes” — Joe Biden’s Hollow Threat
Author: Greg Valliere
March 6, 2023
“I’M GONNA RAISE SOME TAXES,” Biden vowed last week but in truth virtually none of his proposed tax hikes will win enactment. The conservative House is likely to kill Biden’s proposed tax hikes on individuals — including a minimum tax on wealth — and a corporate hike that would raise the top rate to 28% from 21% now also has little chance.
YET BIDEN WILL ANNOUNCE THAT HIS PLAN will reduce the deficit and keep Social Security and Medicare solvent because of tax hikes that have no chance of enactment. Meanwhile, Medicare’s hospital insurance fund is forecast to begin running out of money by 2028.
DEMOCRATS ARE NERVOUS that they are on the wrong side of the crime debate and now will be left to defend Biden’s tax hikes. So they will push hard for the Republicans to unveil their budget plan, asking what the GOP would do. It could be late spring before their budget is out.
MUST READING: An editorial in the weekend Wall Street Journal has this to say about takes: Recent Internal Revenue Service data show that the the top 1 percent of earners paid 42.3% of the country’s taxes in 2020. The top 5% of earners paid 62.7% of taxes. There are several more examples — who pays how much — in this eye-opening editorial.
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THE BIG STORY FOR MARKETS THIS WEEK will be Fed Chairman Jerome Powell’s testimony before Congress on Tuesday and Wednesday. He won’t know what this Friday’s jobs report will show, but it’s a pretty safe bet that Powell will not relent from his hawkish stance.
THE ECONOMY MAY NOT BE RED-HOT but it’s plenty warm, with weekly unemployment claims data confirming that the labor market is still uncomfortably tight for the Fed. Two more 25 basis point rate hikes are virtually certain, and a third hike is increasingly likely this summer.
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THE 2024 FIELD NARROWS: Primaries are still about a year away, but the field already has shrunk. Former Maryland Gov. Larry Hogan, the highly respected Republican moderate, said yesterday that he won’t run, which will consolidate the moderate lane to Liz Cheney and Washington Beltway favorite Chris Sununu.
OUR EARLY THIKING IS THAT THE FIELD WILL NARROW TO Trump; Ron DeSantis; a moderate (probably Sununu); and one establishment candidate (either Nikki Haley or Glenn Youngkin). DeSantis, now trailing Trump in most polls, has gotten a wake-up call and will campaign aggressively this spring.
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TIK-TOK BYE-BYE? Congress can’t agree on much, but there’s a growing consensus to enact strict curbs on foreign technology, which would probably ban Tik-Tok. Biden may propose this in his budget, and a bill has already passed in the House; there’s bipartisan support for a measure in the Senate. The overwhelming, antipathy in Washington toward China shows no sign of easing.
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