RUSH: Don in Chicago. Let’s grab a quick call here. Great to have you on the program, sir. Welcome back. Hello.

CALLER: Thank you. Thank you, Rush. It’s a great honor to be the first caller of 2013. I’ll try not to disappoint. Rush, I don’t believe that this is a great deal — and, in fact, Larry Kudlow today gave it one star out of possibly three. But I think there is one victor in this whole thing, and I think he’s a guy in Texas named George W. Bush. Because for 98% of the people in the United States, George Bush’s tax cuts are now the law of the land. They will not sunset, and it’s gonna take both the House and the Senate to get anything changed. So I think there is a victor. I think we have to be optimistic, like you always say, and one step at a time.

RUSH: Well, look.

CALLER: This the best deal we could get.

RUSH: Wait, wait, wait. I’m all for optimism, but… Uh, what…? (sigh) Tell me, I need to know: Where’s the value in saying, “Bush wins, his tax rates are unchanged”?

CALLER: Well, for all these months and even years, the president has been saying that George W. Bush’s tax cuts have caused the recession.

RUSH: Right.

CALLER: They have caused the inflation, have caused all this other stuff, and now —

RUSH: Look, Bush’s “tax cuts for the rich” did that. These middle class tax cuts, these 98% you’re talking about whose tax rates are not gonna change? There’s an asterisk: “Until we get a Democrat House of Representatives.” If we get a Democrat House of Representatives, those go up. Those tax cuts are not permanent ’til the end of the world. The next Congress can change them. They can change them tomorrow if they want! They can change them in a debt limit deal. You get a Democrat House of Representatives to go along with Obama and a Democrat Senate, and those rates are going up. It’s in the cards. Nothing, nothing is safe, folks.

BREAK TRANSCRIPT

RUSH: By the way, Democrats, ladies and gentlemen, are talking about going back to pre-Reagan income tax rates, which were as high as 70%. There are Democrats talking about how the economy can withstand that. There’s a total transformation taking place here that the Republicans still do not get.

BREAK TRANSCRIPT

RUSH: We had a caller in the first hour, a nice guy. He’s like a lot of you, I assume, looking for something positive to grasp onto, which I totally understand. I am the architect of such thinking, such behavior. At the same time, it must be tempered with realism. So the Bush tax rates remain the same for 98% of the country. Fifty percent of the country is not paying income tax. What we had last week, this fiscal cliff deal?

It was nothing but a bunch of theater, folks, drama and theater, and it happens with regularity now. This is what you get with no budget. Every budget item ends up being a crisis, and every solution now is the Republicans giving away a core belief. Every solution is the Republicans giving away a core belief while admitting that that core belief was the problem. And the Republicans have been falling right in line.

So all of this tax theater last week — and that’s exactly what it was. All of this tax theater, Obama and his cheering pep rally? It’s going to generate $60 billion a year. We’re now going to have the fifth consecutive year of a trillion-dollar-plus budget deficit. And all that tax theater, all that drama, raises what amounts to a rounding error. It is insignificant in terms of dealing with the real problem. But the theatrics and the image?

Why, it’s major what Obama pulled off here in his desire and his effort to transform this country into something it was never intended to be. This was a major step forward he accomplished, under the guise and under the illusion of solving a problem. No problem’s been solved. We are simply exacerbating existing problems and creating new ones. All the while the American people are being misled and being told that we’re solving some of these things. It’s really breathtaking to watch. I wonder how many…

As I listen to the inside-the-Beltway media, including conservative media, I have to wonder how many of them don’t really understand what’s happening, either. And then, to be quite honest, in the past week I’m asking myself, “Am I really this out of touch? Am I really one of only a hundred or so people who think what I think anymore?” I really was asking myself that, because no matter where I turned, no matter what I read, no matter what I saw, I heard people saying things that, to me, made no sense.

I saw people saying things and read people writing things that bore no relationship to reality whatsoever. I’ll give you an example. I say that we keep throwing away our core beliefs in order to get to what matters. Well, what really matters, apparently, is spending. “What really matters is out-of-control spending, and that’s what we really have to get our arms around, and this tax business? Ehhh, we were never gonna win that. Let’s throw that away.

On how many other things have we said, “Yeah, throw that away. Let’s throw away our stand on immigration. Let’s throw our stand on abortion. Let’s throw away our stand on the social issues. All these things are causing us trouble, don’t you see, Mr. Limbaugh? We’ve gotta get rid of all these things we’re gonna lose on anyway and get to what matters: Spending!” I don’t know where they get this thought process that somehow we’re gonna win that.

While we lose everything else and throw everything else away and give up on everything else, we’re gonna win the spending argument? This is what I don’t understand. I’d like for it to happen, don’t misunderstand, but I don’t think our people get it. I’m all for optimism when there are things to be optimistic about. John O’Sullivan, the former editor of the National Review, points out that optimism is a state of mind; it is not a principle for governance.

Optimism is not a solution. Optimism is not a policy. It’s a state of mind. And it can be helpful. But principles and policies and solutions come from understanding and admitting what’s going wrong. Only then can you come up with effective policies to fix, solve, resolve, reverse, or what have you. Now, there’s a popular piece of conventional wisdom inside the Beltway. It goes like this: “Okay, we’ve thrown the tax debate away.

“We got the taxes off the table. They’re no longer a distraction. Obama got his measly little tax increase on the rich, and now we can get down to the real nuts and bolts of spending and the country’s fiscal future.” The inside-the-Beltway thinking is that because the Republicans, for the most part, won the fiscal cliff deal… Yes, that is the inside-the-Beltway thinking. Dawn, let me ask you a quick question.

Please be honest. I’m not trying to put you on the spot. And if you don’t know, then tell me you don’t know. Do you think — and forget what you’ve heard me say today. But when you got here today before the show started, did you think the Republicans won the fiscal cliff showdown? (interruption) You didn’t? (interruption) Brian, did you? (interruption) Both are saying now “no.”

The conventional wisdom inside the Beltway is, “Well, we might not-a won, but I’ll tell you: We did better than the Democrats did because the Democrats now have a problem, because the Democrats are now gonna be forced into talking about cutting spending.” What? Who’s gonna “force” them? The media? Republicans? Who? I’d love for it to happen, don’t misunderstand. (interruption) Why weren’t the Democrats throwing any parties?

They are secretly throwing parties over this. Obama is! He’s doing pep rallies. Obama went back to Hawaii to finish the vacation. That’s another slap in the face, by the way. He gets back on Air Force One as soon as the Republicans caved. He didn’t even sign the bill. You know what? Obama used the autopen in the White House to sign the legislation. He didn’t even personally sign it.

He didn’t really even have to come back here. He just did that for the theatrics of it all. So now the table is somehow set for us to kick butt in the spending debate that is gonna come up on the debt limit? Last I saw, Obama is demanding no debt limit whosoever. He just wants to get rid of it, wants to be able to set it himself. But apparently there are people that think now that the table is set for all kinds of spending reform, since the Republicans got all the distractions out of the way.

Like defending success, defending achievement. “We can throw that away. Don’t worry about that! Now we’ll get to what really matters.” I’m sorry, I don’t see where we ever win any of these things, and I don’t see where it’s ordained that we’ve got Obama and the Democrats over a barrel on spending, ’cause I don’t think that they care. I have been trying to point out to people that there isn’t any common ground between us and Obama.

He only wants entitlements to get bigger. He only wants government to get bigger. He doesn’t believe that there need to be any spending cuts. He talks as though he does, but he doesn’t think there need to be any spending cuts. He doesn’t think government needs to get smaller — and, frankly, neither do very many Republicans.

Listen to this. This is David Brooks in the New York Times. This is after the fiscal cliff. This is last week, maybe earlier this week. It’s already Thursday. “Ultimately we should blame the American voters,” writes Brooks. Now, remember, Brooks has been a pro-Obama guy. Brooks, the so-called conservative writer at the New York Times, he’s been in favor of all this elitist inside-the-Beltway thinking, which is that a select few really smart people should be making decisions for everybody in the country because everybody’s basically a bunch of dunderheads. Everybody’s a low-information voter. Everybody doesn’t know what they’re talking about.

You get a select few really smart people making all the decisions. Obama, crisp crease in his pants, great president, that’s the guy we’re talking about here. He says, maybe we should blame the American voters for this mess. “The average Medicare couple pays $109,000 into the program and gets $343,000 in benefits out, according to think tank the Urban Institute.” That’s $234,000 in free money.

“Many voters have decided they like spending a lot on themselves and pushing costs onto their children and grandchildren.” You think this is true? We had a call years ago on this program from a grandmother in Massachusetts. It was Carolyn in Grafton, just off the Mass Turnpike. She wanted her kids to pay higher taxes because she wanted the benefits. She didn’t care at all what the tax rate on her children and grandchildren was. It didn’t bother her a bit that they’d be paying more taxes because that meant, they got a tax cut, that meant less for her, and she was dialed in, she knew exactly what was at stake.

The point here is that the average Medicare couple, Medicare for the elderly, they know the stakes. They’re putting 109 grand into the program, they’re getting $343,000 in benefits out. That’s $234,000 in free money to them. It’s working just fine as far as they’re concerned. They’ve decided they like spending a lot on themselves. They like pushing costs onto their kids and grandkids. They’ve decided they like borrowing up to a trillion dollars a year for tax credits and disability payments and defense… The point here that Brooks is making is, “Hey, what’s everybody so upset about? Elected representatives are only giving the people of this country what they want.” And it isn’t just low-information voters, by the way. It isn’t just the poor. It isn’t just the do-nothings. It isn’t just the takers.

There’s a whole bunch of people, elderly people who’ve worked all their lives who now want to be paid for their sacrifice. It’s people now at the elderly end of the life scale as well as the young who are saying, “Gimme, gimme, gimme.” They’ve decided they like all this. They’ve found that the rationale for these deficits provides a perfect cover for permanent deficit living. They’ve made it clear that they will destroy any politician who tries to stop them from living life the way they are. Anybody that comes along and talks about cuts, anybody that comes along and talks about reforming the system, anybody that comes along and talks about doing anything to upset the current applecart is going to pay for it at the ballot box, and most members of Congress are responding, writes Brooks, to this popular will.

A large number of reactionary Democrats reject any measure to touch Medicare, or any other entitlement program. A large number of impotent Republicans talk about reducing the debt, but they’re incapable of forging a deal that balances tax increases and spending cuts. Under the current theatrics, the current setup, with the current cast of characters, all this thinking inside the Beltway, “Okay, now we’re gonna get to spending cuts. Now we’ve got the leverage.” I want to know where is the evidence that we’re gonna get any spending cuts or there’s gonna be any serious effort made on it? That whole premise just got beat in the last presidential election, for one thing.

BREAK TRANSCRIPT

RUSH: Now, that David Brooks excerpt I just shared with you about all these people who want all this stuff for nothing, the average Medicare couple contributes 109 grand to the program, takes out 300 and some odd thousand, gets $234,000 in free money, that whole Brooks column is, “Hey, the American people are getting what they want.” The vast majority of the American people want government goodies. The thing that Brooks doesn’t say, the thing that Brooks doesn’t point out is that it’s Obama who’s promoting this in his effort to transform this country into this kind of a permanent, massive and growing welfare state, which at some point will collapse onto itself. It must.

At some point, and we’re already there and we’ve been there for a long time, you run out of other people’s money. You run out. We can’t afford this now. We can’t afford the way we are administering this country now. At some point it’s all gonna collapse, and none of this theatrics that we saw last week is gonna have one iota’s worth of substance, difference in stopping it.

BREAK TRANSCRIPT

RUSH: Here’s Deborah in Muncie, Indiana, as we go back to the phones. Hello, and welcome to the EIB Network. Hi.

CALLER: Good afternoon, Rush.

RUSH: Hi.

CALLER: It’s a pleasure to talk to you.

RUSH: Thank you. Thank you very much.

CALLER: Hey, I just wanted to call and say, you’re not alone. I think there’s a whole lot of us out here that are seriously disappointed in the Republican Party. And I have been saying for the last four years, what do they really stand for? You know, they talk about raising taxes, and that’s one of our core values that you’ve been talking about today, talking about raising taxes on the wealthy. Well, I saw an economist this morning who was talking about the impact that the tax increases is going to have. And it’s not the wealthy. $38,000-a-year income earners are going to have an automatic $570 dollar a year increase in their taxes this year.

RUSH: Yeah, that comes from the payroll tax deduction going away.

CALLER: Right. Right. But then we also have an increase in the Medicare tax, and so if you’re $185,000 a year earner you’re gonna be paying out $15,000 more to the federal government. And then that doesn’t include of course your dividends and interest income and, you know, the additional 5% there and who knows who knows out of the other 22 tax increases to Obamacare what impact it’s really gonna have. Nor does it include, you know, your state and local income taxes, your sales tax, et cetera. So when they talk about tax increases on the wealthy, I’m not sure how they define wealthy. I don’t know whether they’re having a Bill Clinton moment or what.

RUSH: Well, Deborah, remember now, this is theatrics. This is not substance. So the things that you are saying, until they happen, people aren’t gonna know it. You can hear an economist on TV or me explain, okay, here’s the 3.8% surcharge on capital gains, the Obamacare tax. That is gonna add to whatever the capital gains rate is. Then there is the 0.9% increase in everybody’s income tax rate. They say the Bush tax rates are locked in. Well, hello, there’s for all intents and purposes, a 1% surcharge on income taxes now for Obamacare. There is the payroll tax deduction that’s gone away. And for a family earning $75,000 a year, that’s a $1500 tax increase.

If you are a hundred thousand dollars a year, the payroll tax deduction going away is gonna cost you over $2,000 in new taxes this year, just that one, before any Obamacare taxes hit. But nobody knows any of that yet. That hasn’t happened. It won’t happen ’til the first paycheck hits, and for some of these people it may not sink in for a while anyway. All they know is that the only people who had their taxes raised are people that make over $400,000 a year. If you make less than $400,000, you don’t have a tax increase. That’s what they’re thinking right now. They don’t know anything else, no matter who tells them what.

They’re not going to know it until it happens, and it will happen. But you strip the theatrics away, and there’s one simple reality: You can’t take this kind of money out of people’s back pockets, you can’t take this kind of money out of circulation in what we call the private sector, and have an economy that grows. The two things cannot happen simultaneously. So we’re gonna continue to be in an economic quagmire, and it’s gonna get worse.