Obama's Deficits

Obama's Deficits

Remember when Democrats used to criticize Bush and Republicans for running up huge deficits? They were right to criticize. But it spite of Obama's claims during the campaign that he was going to cut spending and deficits, he and the Democrats have introduced spending increases that create deficits that make Bush and the Republican-controlled Congress look downright responsible. (And that's saying something.) Obama's budget is going to run up a deficit in a year that is bigger than eight years of Bush.

Ah, but he can raise taxes. The February 26, 2009 Wall Street Journal points out that Obama simply can't do it without raising taxes on the middle class:

On Tuesday, he left the impression that we need merely end "tax breaks for the wealthiest 2% of Americans," and he promised that households earning less than $250,000 won't see their taxes increased by "one single dime."

This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can't possibly raise enough revenue to fund Mr. Obama's new spending ambitions.

Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and "the wealthiest 2%." Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That's about 7% of all returns; the data aren't broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% -- about 1.65 million filers making above $388,806 -- paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.

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But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

James Lindgren over at Volokh Conspiracy points out that Obama's cap-and-trade proposal aims to reduce America's carbon emissions per capita below the level we had in the 1700s. Yeah, yeah, there's all sorts of wonderful new technologies out there that will be green and efficient. Does anyone believe that these will be enough to make up even half the difference in standard of living between now and Colonial America?

It isn't for the benefit of Mexico that Attorney General Holder is talking about an assault weapon sale ban (which is actually more severe than the 1994 law, which only banned new manufacture). It is because they know that the peasants are going to rise up when Obama and friends try to take us back 300 years.