Friday, January 12, 2007

Nancy Pelosi on Taxes: Waste, Fraud and Abuse

Speaker of the House Nancy Pelosi was on Face the Nation with Bob Schieffer last Sunday. They spoke about a few things of importance, and I'd like to address one of them here.

Mr Schieffer asked Speaker Pelosi if it would be possible to balance the budget without raising taxes. I thought her answer was pretty good:

I think you can put many thing--everything on the table and start by saying that there's $300 billion in taxes which are not collected in our country each year. Can you imagine that? You can probably start, also, with cutting waste, fraud and abuse. Congressman--well, no, Chairman Henry Waxman has taken the lead on that issue as chairman of the Government Reform Committee. Waste, fraud and abuse, collect taxes that are not collected, close corporate loopholes--you start there, you can find some money to make investments in education, which brings more money back into the Treasury than any initiative that you can name. If the president's willing to join with us in fighting waste, fraud and abuse, collecting the taxes and closing the loopholes, we can start there.

This is certainly better than the last answer she gave to this particular question. However, Mr. Schieffer didn't rest. He then asked the all important direct question, "Are you promising no new taxes for anybody?"

Speaker Pelosi's answer is...interesting.

No, I'm talking about tax cuts for many in the middle class. We've had tax cuts for small businesses to provide health insurance to their workers, R&D, making permanent and modernizing research and development tax credit for small business. We are talking about helping families with the higher education of their children. We're talking about tax credit...

SCHIEFFER: So you're talking about more tax cuts?

Rep. PELOSI: We're talking about tax cuts for the middle class. And as we review what we get from, again, collecting our taxes and reducing waste, fraud and abuse, investing in education and in initiatives which will bring money into the Treasury, it may be that tax cuts for those making over a certain amount of money--$500,000 a year--might be more important to the American people than ignoring the educational and health needs of America's children.

SCHIEFFER: So what you're talking about is you may have to raise taxes for some people in the upper income levels in order to cut taxes for some below them?

Rep PELOSI: What we're saying is Democrats propose tax cuts for middle income families.

Let's be clear that "repealing a tax cut" is the same as a tax increase. So Speaker Pelosi is advocating higher taxes for those that make over $500,000 in order to lower taxes on those that make less than $500,000. I fortunately fall into that "below" category, so that'll be nice. But what does that mean? Isn't that sort of a wealth redistribution scheme? A Robin Hood, steal from the rich to give to the poor kinda deal?

But let's be honest here. All of you other "below" category people out there, take a look at your paycheck for a minute. Look at your withholdings. You'll see state taxes, federal taxes, and then you'll see withholdings for Medicare and Social Security. I'm a poor, single-income father of three, so those first few boxes don't amount to very much. It's the last two that really hit my wallet the hardest, and I can't do anything about it. Speaker Pelosi's plan won't do anything about it either, because those things aren't included when politicians talk about "taxes". That's because in theory you and I will get all that money back when we retire. We'll get our own Social Security income and get to use Medicare for all our health needs. Or at least 80% of our health needs. The rest we'll have to cover ourselves. With our Social Security money. That is, if either one of those programs still exist by then.

My other question is is there enough "waste, fraud and abuse" to not only balance the budget, but to then invest more into education as she proposes? Of course there is! But is anyone in Congress really going to do it? I hope so, and I applaud Ms. Pelosi for at least talking about it.


Bubblehead said...

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Charles D said...

Yes Cameron, taxing the rich while giving relief to the poor is a wealth redistribution scheme - so is cutting taxes on the rich. In fact, what Pelosi is proposing is a correction to the wealth distribution scheme in place since the early 1980's that has worked all too well. From 1977 to 1999, the after-tax income of the richest 20 percent of American families increased by 43 percent, while that of the poorest 20 percent decreased 9 percent, allowing for inflation. The actual income of those living on the lowest salaries was even less than 30 years ago.

As for the payroll tax, I would support a progressive tax to support both Social Security and an expanded Medicare that would include all Americans. Instead of the current cap on payroll taxes for those making over $90,000, I would remove the cap and put in a floor. For example, why not make the first $10,000 of income exempt from SS & Medicare tax, but require the full percentage for all income above that?

Such a change in the payroll tax would act to normalize corporate compensation and reduce the huge chasm between the average worker and the CEOs. Medicare for all would relieve business of a huge burden in health care and administrative costs and would be a major stimulus to the economy.

None said...

DL, your payroll tax plan sounds similar to the ideas Barak Obama is pushing for. This welfare reform to help the working poor. Anyway, it would be difficult not be support something like that. The $90,000 cap is one of the worst ideas. If anything, SS should be taken away for high income folks.

Anonymous said...


What's Up? This is Shan and I finally made it on your blog! In light of everthing said by Mrs. Pelosi I would definately not give her kudos just because she talked about doing something about waste, fraud and abuse. How much of what are political leaders say is all talk? What is the purpose in having leaders if the promises they were elected for are never kept? Why doesn't anyone ever follow up on this stuff? We should be making sure our leaders follow up on what they say, instead of voting them in for a second term (Ex: Bush). But alas! We are the people of America! We don't need facts, just a whole lot of hocus pocus! We like what we hear or see and then we vote for it. Most of our attention spans are too short to follow up on much, so when another promise comes our way, that makes us feel good like the typical Hollywood movie story line, we latch on too it and base our voting strategies off of it. When will the American people take the time to actually make educated decisions? That's what I want to know.

Cameron said...

My question is this: Why does Nancy Pelosi or anyone else have to raise taxes on anyone in order to lower my taxes? I would rather take the Speaker at her word and find all the areas of "waste, fraud and abuse" in the federal government and use those savings to "pay for" my tax cuts.

DL and Parklife, your SS and Medicare ideas may have merit. It would certainly make the payroll tax as progressive as the income tax currently is.

Shan, welcome! Glad to have you, please comment often.

I understand your point about campaign promises never being realized, but I thought I'd go the route of applauding Speaker Pelosi's plans and highlighting them in order to raise my own expectations of what she's going to do. I think if enough people do the same, then she will be forced to keep her promises. If she deviates from what she is saying now about taxes, I will gladly call her on it. I think this is a better option than pessimism and partisanship.

Oh, and DL, one more thing. I've written a post about the progressive nature of our income tax in relation to wealth redistribution.