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RUSH: Well, my friends, it’s amazing what happens. One day of absence and it’s amazing the things that happen. I mean, they always happen when I’m here, too, don’t misunderstand. For example, “Obama Drops Plan to Raise Taxes on 529 College Savings Accounts — The Obama administration said it would drop a plan to tax so-called 529 college savings accounts, after the proposal sparked widespread criticism over its potential impact on the middle class. The move followed a public call by House Speaker John Boehner (R., Ohio) on Tuesday for the White House to withdraw its plan.”

I didn’t hear Obama do that. Why do I always do that? When I want to say “Boehner” I always say “Obama.” I’ve got some faux pas fixated in my head. I always do it. I meant “Boehner” there. Boehner called on Tuesday for Obama to withdraw the plan, but I don’t remember Boehner — well, I’m not saying he didn’t do it. All I know is I didn’t hear about this plan in any detail anywhere but here on this program. We spent two days on this program detailing this because it was flat-out outrageous what they were going to do.

I’m frankly surprised they withdrew this so soon, folks. I mean, this is not modus operandi for the Regime. I’m going to refresh your memory, because there may have been other people talking about it, don’t misunderstand. I just know that here we made a big deal out of this because it is a big deal because it came on the heels of Obama claiming that he was gonna raise taxes on the rich in order to do something about income inequality. And in the process of making the point that raising taxes on the rich does not elevate anybody else, raising taxes on the rich does not really change whatever gap there is between rich and poor — and it really doesn’t, and it never has.

All it does, it convinces people in the middle class that the rich are being punished. It convinces people in the middle class that the rich are gonna have it socked to ’em and they’re gonna pay more taxes. They’ve been conditioned to feel good about that, which is another thing I really resent about this government and the left. And that is the conditioning of people to feel successful and triumphant when other Americans are theoretically harmed by government policy. I mean, that really stinks.

So here came the Regime announcing, “We got this gap between rich and poor, this income gap, the wealthy and the middle class, it’s just too big. This is unseemly,” they said. “This is unfair,” they said. “This is outrageous.” So their proposal was to raise taxes on the rich, as though that was gonna do anything for anybody. It’s not even really going to harm the rich. Capital gains rate here and there. The rich find ways around these things always. They are gonna pay more taxes, there’s no question about it, because the rich are the ones paying the lion’s share of taxes. The top 1% are paying 40% of all government revenue now as it is. They’re gonna pay a couple of percentage points more, but it isn’t gonna elevate anybody else. But everybody else is gonna go, “Yeah, man, yeah, man you sock it to ’em.”

The government has, over the many years that I’ve been paying attention, pitted citizen against citizen in this country and created all this class envy, and it’s just unseemly. That’s what the Regime did. But after doing that, they piled on and then said that they were going to eliminate the tax advantages for people who had invested in 529 accounts.

Now, to briefly review, a 529 account is like a 401(k) or like a medical savings account. Here’s the deal the government made with you. If you take money from your salary off the top before your salary has been taxed every pay period — and there was a maximum you could take — and you put it in this 529 education savings account, that money is supposedly theoretically being stashed away for you to pay college, junior college, whatever, education expenses for your children. And like any of these plans, if you leave the money alone it grows, theoretically, and if you leave the money alone you pay no penalty on it. And, if you use the money when your child needs the money for education purposes, if you withdraw from the 529 account for that, then there’s no tax penalty.

However, if you withdraw the money prematurely before your kid gets to college age, or if you withdraw the money for any other purpose, then you would pay tax on it. That was part of the original deal. The Regime’s announcement was that they were going to change the rules in the middle of the game. They were gonna eliminate the tax exempt status of these accounts, and people were going to have to start paying income tax on the money that they had put away in these 529 accounts. These are middle-class people who had done this. It was a tax increase on the middle class, or rules change in the middle of the game, and it totally destroyed the purpose of the program.

It was not a tax on the rich. It was a tax on the middle class, after the middle class had been promised they’d get this program, benefit, whatever, tax-free. I mean, it was outrageous what it was. Folks, I don’t remember anybody else calling ’em out on this. I can’t listen to everybody else. I don’t listen to everybody else. I don’t watch everything else, so I don’t know who all made a big deal about this, but I did get a bunch of e-mails, “Hey, Rush, did you see what you caused?” because people’s perception was we made a big deal of it here on the EIB Network.

Anyway, in one or two days they pulled this back. Now, that doesn’t happen, that fast. The Regime — here, audio sound bite number 11. This is Eric Schultz. There are more kids in that press office at the White House that end up out there speaking on the microphone. You got Josh Earnest, you had Jay Carney, you got Bill Burton. I never heard of this guy, Eric Schultz, but they found him from somewhere. He’s probably the guy that cleans up the Skittles wrappers after NFL games. He walks out there and he’s talking about why Obama dropped the idea to tax money in these 529 plans from his budget proposal.

SCHULTZ: We wanted to make sure that this didn’t become a distraction to help jeopardize the rest of the plan. It was a distraction. We decided to move forward with the rest of our plan and we hope Congress moves on it shortly. We didn’t want this to become a distraction. The distraction that this was becoming. This particular piece was becoming a distraction. We didn’t want that to jeopardize the broader plan, so that’s why we announced what we did.

RUSH: Oh, so it was becoming a distraction, eh? What does that mean? It means that people found out about it. It was a distraction because Obama wasn’t gonna be able to get away with it. Obama had promised the middle class he was gonna only raise taxes on the rich, and to whatever extent that works, the middle class is out there applauding it, “Yeah, you stick it to ’em, babe. You stick it to ’em. We hate the rich.”

And then they find out from this program that, A, you know that 529 plan you put money into? Guess what, the tax-exempt status, it’s gone. You’re gonna pay income tax on that starting this year. When you file your return in April, you’re gonna have to pay tax on all that money you put in. Well, yeah, I imagine it was a distraction with all the feedback the White House was getting on this.

Anyway, the program’s been canceled, and because it became such a distraction they are not going to ask Congress to pass the 529 provision. I’m reading here from the Wall Street Journal: “The move is a setback for the president. He sought in the run-up to last weekÂ’s State of the Union address to reframe a long-running debate over the tax system by issuing a set of proposals to address middle-class anxiety over wage and income stagnation.”

Raising taxes on other people doesn’t help people that don’t get their taxes raised. It just doesn’t work that way, other than to fuel this idiotic class envy.

“To pay for his ideas, he proposed several changes to restrict use of tax-advantaged savings accounts. The administration argued that the accounts — such as the 529 accounts — disproportionately benefit higher-income families.” They don’t. Higher income families write the check for tuition. This was a direct assault on the middle class.


RUSH: Brian in Raleigh, North Carolina, we’re gonna go with you first. That’s good. Brian, thanks for the call. Great to have you on the program. Hello, sir.

CALLER: Hi. Great to be here. I have a point on the 529 thing. What you said is right on, but there’s a whole ‘nother level to get to. The reason the White House announced it is because it scored positively. It looked like revenue, because of the static scoring of the CBO. In reality, in real life, no one would ever invest in a 529 if there were no tax savings. You wouldn’t. So this is a great example of why the CBO should use dynamic scoring, and the Republicans should hammer that, because dynamic scoring will lead to smaller government. Static scoring leads to higher government.

RUSH: So who do you know in Washington that is interested in that?

CALLER: (chuckles) Nobody.

RUSH: Well, that’s why you’re not gonna get your dynamic scoring. I mean, you didn’t even need to call me. You just answered your own question. You made me look brilliant in the process, which is fine and dandy, but you didn’t need to call. “I wish Washington would do dynamic scoring, because that would show how all this stuff could make government smaller.” Ah. Why don’t they do dynamic scoring? ‘Cause they don’t believe in government getting smaller.

Dynamic scoring, what is it, after all? Okay, you propose a tax increase. All right? And you claim you’re gonna raise taxes on everybody $5. Let’s just use an easily understood example. You’re gonna raise taxes on everybody $5. So you then factor, “Okay, what is $5 from every American work, and when you add that up, look how much our budget’s gonna grow.” That’s the static way of analyzing a tax increase. But if you don’t factor dynamics?

Okay, you’re gonna ask everybody to pay five bucks additional.

Some people are going to find a way to only pay one or two or none at all, using legal and available means in the tax code. That’s the dynamic. What is dynamic? That is people exercising what? You can call it human nature; it is. It’s human nature to avoid paying what you don’t have to pay. It’s freedom. It’s freedom and liberty. Dynamic scoring attempts to understand how a free people engaging in liberty will seek to behave in ways most advancing to them.

Washington is not interested in that. They certainly don’t want to teach it. They don’t want to counsel it, so they don’t do the dynamic scoring. If they would have dynamically scored Obamacare, it would never have gotten past the first vote. A static analysis of Obamacare would show the way you hid it, ’cause it’s garbage in, garbage out, how you can keep the cost magically under $1 trillion for the first rated period by the CBO.

The trillion-dollar cost was crucial because that’s what they claim the Iraq war cost. “So we’re gonna get out of Iraq, and we’re gonna do Obamacare, and there’s a net wash, and it will cost us any more money! We’re gonna insure the 30 million uninsured. It’s utopia!” Well, it was not utopia. It was BS-topia. But the 529, clearly nobody would have done it had there not been a tax-exempt provision to it, and everybody designed the program understood that as well. What amazes me about this is the Regime caved on this within a day or two of the outrage occurring, and they don’t usually back off that fast things like this.


RUSH: This from TheHill.com: “In one of their first moves upon taking power in Congress, the Republicans instructed the Congressional Budget Office (CBO) to adopt ‘dynamic scoring’ when evaluating the budgetary impacts of new tax legislation. This is the type of issue that only a Beltway insider could love.

“But the priority that Republicans put on this move indicates the high value that politicians place on controlling the numbers attached to the assessment of public policies.” So, as it says here: “Under dynamic scoring, the CBO would estimate changes to the macroeconomy as a result of the tax change, and incorporate those changes in their estimates of the budgetary impact of the new tax policy” has been proposed. It makes all the sense in the world to do it.

But even so, the dynamic scoring is still a little bit of a guess and estimate, although there’s historical behavior as a guide that you can use. But it clearly makes far more sense than the static analysis. The static analysis is worthless! The static analysis does not take into account any human behavior or human nature whatsoever. So I might have spoken too soon. The Republicans have said they’re gonna start incorporating this in any future calculations made by the CBO.

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