Social Networks We Use

Categories

CT Tech Junkie Feed

Video | iPhone 6 Review - Is it worth the upgrade?
Sep 20, 2014 8:26 am
The release of a new iPhone has almost become an Autumn holiday — especially for the hundreds of eager customers who more »
Hartford Entrepreneur is Crunching Numbers for the Greater Good
Sep 18, 2014 6:59 am
Data is vitally important to most nonprofits. It is a key component for seeking grant funds, gives a clear picture of...more »

Our Partners

˜

Senate Candidates Differ On Tax Policy

by Christine Stuart | Oct 4, 2012 4:46pm
(4) Comments | Commenting has expired
Posted to: Congress, Election 2012, Town News, Hartford

Christine Stuart photo

Chris Murphy

Like the presidential candidates for their respective parties, Republican Linda McMahon and Democrat Chris Murphy differ on how best to cut taxes without ballooning the federal deficit.

Gathered with a group of business owners in the north end of Hartford Thursday, Murphy talked about how he wants to keep the Bush tax cuts for middle class families, but would allow them to expire for wealthier individuals.

McMahon wants to maintain the Bush tax cuts for all income levels, but she also has a plan to cut taxes further for middle class families and pay for it with a 1 percent reduction in federal spending. Her plan excludes defense spending and Medicare from that one percent cut.

“Her tax cuts would add $4 trillion to the deficit. That’s over a decade,” Murphy said. “Her spending cuts over a decade would be about 1/10th of that amount.“

The line of attack is similar to President Barack Obama’s attack of Mitt Romney’s tax plan during their first televised debate Wednesday. Obama accused Romney of proposing a $5 trillion tax cut and not having a plan to pay for it. Romney said his tax changes are revenue neutral.

“An independent economist has scored Linda’s plan and it will reduce the deficit over 10 years,“ Todd Abrajano, McMahon’s spokesman, said. “What Chris Murphy is not talking about is he’s not factoring any potential for economic growth. That’s a big part of what this plan is about. All he’s talking about are tax cuts.”

The argument, which is similar to the argument Romney used last night, was an argument that cutting taxes will actually encourage consumers to spend money and hence spur economic activity and eventually jobs.

Abrajano says talking about just the tax cuts ignores that fact that she’s also going to reduce spending in order to pay for it.

“Bush’s tax cuts unaccompanied by spending discipline exploded the deficit and killed jobs,” Murphy said. “So it’s amazing to me that Linda McMahon looks at the Bush jobs record and wants to repeat it.”

Abrajano laughed at the comment. Since Murphy was sworn into Congress the deficit, which was $8.6 trillion in January 2007 when he took office, has ballooned to $16 trillion today, he said.

“Nothing he’s said about Linda’s position on anything is accurate. It’s getting to the point of ridiculous,” Abrajano said.

The two do agree on maintaining the payroll tax cut.

Murphy, whose tax plan is to simply extend the Bush tax cuts for the middle class, agrees with McMahon that Obama’s 2 percent temporary payroll tax cut should be extended. However, Murphy said he doesn’t know exactly how he would pay for it.

Meanwhile, McMahon’s campaign consistently claims that her plan has been vetted and scored independently by John Dunham and Associates. It has also declined to released the economic modeling it used to come up with the plan.

UConn Economist Steven Lanza said it’s unclear if McMahon’s plan cuts 1 percent from the projected federal budget. Spending is expected to increase 4 percent so is she cutting 1 percent from the 4 percent or the current budget?

Lanza estimated that if McMahon is cutting 1 percent from the current budget and protects defense spending, Medicare, and Social Security from cuts it would leave the government with “no discretionary spending,” by 2021 or 2022. All the spending would go to entitlement programs and the military, according Lanza’s “back of the envelope” analysis using numbers from the Office of Management and Budget.

In theory, without commenting directly on McMahon’s plan, Lanza said a tax cut for the middle class does help stimulate the economy. But tax cuts for the rich don’t do much to stimulate the economy in the short term, he said.

McMahon’s plan cuts middle class taxes from 25 to 15 percent. She keeps the capital gains and dividends tax at its current 15 percent rate under the Bush tax cuts.

In the short term, to get the economy growing the government needs to start spending more money and at the moment the government isn’t doing much of anything to prop up the economy, Lanza said.

Government spending on infrastructure improvements, in combination with middle class tax cuts would get the economy moving again, he said.

Fred Carstensen, another Uconn economist, has been critical of McMahon’s plan for not spending any money on infrastructure improvements which he has said will help the economy and business. He was also critical of the proposed tax cuts which he said would “savage federal revenue.“

Carstensen’s comments on the plan back in August were met with a letter-to-the-editor from John Dunham, managing partner of Dunham and Associates.

In the letter Dunham argued that parts of McMahon’s plan reduces the amount of revenue to the federal government, and some of it increases revenue.

“Eight of the components, including the elimination of about $132 billion per year in corporate tax loopholes, and $90 billion per year in corporate welfare, are designed to save the taxpayers’ money,“ Dunham wrote.

“Many of these proposals interact with each other, so that together, the 20 components of the plan would likely reduce the federal budget deficit by about $1.7 trillion over the next 9 years in nominal terms. This is not a huge amount considering that the 2012 deficit alone is estimated to be $1.1 trillion, but it does represent a big difference from the outdated and unimaginative borrow and spend economic policies of the past 12 years,” he concluded.

Tags: , , , , ,

Share this story with others.

Share | |

(4) Comments

posted by: Noteworthy | October 5, 2012  8:25am

Sometimes I wonder if Murphy’s youth and enthusiasm gets in the way of his understanding of Congress - and maybe that explains his rent and mortgage problems.

Congress has the power of the purse. While Bush should have vetoed much of the wasteful spending - Congress including Murphy, has went along and in fact, has not done anything about it. We are fighting the longest war in U.S. History, stupidly so, with no results. That’s with borrowed money. Iraq - which Democrats supported, the same. That was a Trillion dollar plus war. Trillion with a “T.” Borrowed. Part D Medicare - borrowed. It goes on and on.

Murphy would have some credibity when moaning about the spending and tax plans of others, if he actually proposed precisely how he would help balance the budget. Specify what cuts he would make; what part of the tax code he would simplify and how the finances of social security and medicare would be strengthened on a permanent basis so the nation can check it off the To Do List and know that it is solved. He’s in Congress. Murphy has a big staff and all the numbers. He’s on the inside not passing a budget and using continuing resolutions. It’s time to belly up to the bar if he wants to go back in as Senator or go get a real job.

posted by: MGKW | October 5, 2012  4:41pm

So let’s see….the Iraq war was started by the Bush, Cheney & Co., yes, we can go on and on…remember your history…$9 trillion of the 16 was caused by Bush, the Crash was caused by the free for all in the financial markets which Bush refused to regulate and caused massive damage to the economy…check your votes also, Murphy started voting against the Iraq war early on…McMahon will vote how she is told and not be an “independent minded woman”—I do not trust her considering her background which is based on loose money, loose morals and bankruptcy to escape her creditors. Why is she an improvement and why should we trust her to be financial responsible?...she was not in the past and will not be in the future.

posted by: MGKW | October 5, 2012  5:07pm

We tried supply side voo doo before and where has it taken us? More deficits and wild swings in the economy…her hands off of Medicare and defense is just a rouse to pander to older people and CT voter who are involved in the defense industry…so let’s see the UCONN economist is not being paid by anyone…who is Dunham and what is his role and relationship to McMahon’s campaign????? What a joke..I would not trust this guy…MK

posted by: ALD | October 5, 2012  10:04pm

I think the problem with Murphy is that he seems to have missed even more math classes in high school, and college than Congressional hearings since he’s been in Congress.  Not that many other current members of Congress seem to have excelled in math either.

To me the bottom line on Murphy is he knows how to send out daily e-mails asking for more money from us all to run his campaign, and that is about it. When he talks about tax policy he’s a fish out of water.  It’s time for a change. In his case the bar is set so low it’s pretty hard not to be able to do better.