...and here's an example of why!
You can’t hike taxes on the rich enough to balance the budget.
President Obama has called for $1.6 trillion in tax hikes over the next ten years. While that is large enough to do serious damage to the economy, it would amount to just 16% of the combined deficits that we are projected to face over that period.
In fact, the president’s proposed tax hike doesn’t even cover the $2.6 trillion in spending increases that he has called for over the next ten years.
ObamaCare alone will add $2.15 trillion in federal spending by 2022.
Worse, none of this accounts for the rapidly accumulating unfunded liabilities of Social Security and Medicare.
Washington tends to focus on our $1.1 trillion budget deficit or our $16.2 trillion national debt, but our real debt, including those unfunded liabilities, is somewhere between $78.5 and $128.2 trillion.
ONE... MORE... TIME...
...our real debt, including those unfunded liabilities [associated with Social Security and Medicare], is somewhere between $78.5 and $128.2 trillion.
[Y]ou could confiscate - not tax but confiscate - every penny belonging to every millionaire and billionaire in America, and still not have anywhere near enough money to pay for all that we owe.
Of course, even these estimates assume that hiking taxes will actually generate more revenue. It is worth noting, for instance, that Great Britain hiked its top tax rate from 40% to 50% in 2010 as part of a deficit-reduction package. The tax hike was supposed to raise an additional 2.4 billion Pounds Sterling in 2010–11, but actually brought in 5 billion [Pounds Sterling] less than was expected without the rate rise.
Not all tax cuts pay for themselves (as some Republicans mistakenly believe)...
THOUGH SOME DO!
...but there is a limit to how much taxes can be raised before they begin to create disincentives for work, saving, and investment that prove counterproductive.
For example, Veronique de Rugy, a senior research fellow at the Mercatus Center and an NRO contributor, has pointed out that revenue as a percentage of GDP has held relatively constant over the past 80 years regardless of the top marginal tax rate.
IN ANY CASE...
Arguing about what taxes should be raised is a distraction from the real issues.
That’s because we have a spending problem.
As my colleague Dan Mitchell points out, all that is necessary to balance the federal government’s budget is for government spending to grow more slowly than the economy as a whole.
In fact, the CBO predicts that even without any tax hikes, government revenue will reach 21.4% of GDP by 2022, significantly higher than its postwar average.
Why, then, will we still have a deficit?
Because spending that year is expected to exceed 22% of GDP...
(*JUST SHAKING MY HEAD*)
...compared with a post-war average of 19.8% - and just 18.3% as recently as Bill Clinton’s presidency.
According to the CBO, even if we never add another government program, federal spending will reach 46% of GDP by mid-century.
(True, some of that spending is interest on an ever-rising debt, but even if one assumes that the government had no interest expenses beyond those on the $16.2 trillion it currently owes, federal-government spending would still approach 30% of GDP by 2050.)
There is no possible way to raise taxes enough to pay for that amount of spending without wrecking the economy.
President Obama claims that his plan includes spending cuts - in fact, $3 in spending cuts for every $1 in tax hikes.
YOU KNOW HE'S LYING... YOU JUST KNOW IT...
[H]e hasn’t actually offered any details beyond smoke and mirrors.
The president’s plan, for example, includes $1 trillion in spending cuts that were already agreed to as part of the 2011 debt-ceiling deal, a neat exercise in double-counting.
FOLKS... NO DOUBT I COULD FIND EXAMPLES OF REPUBLICANS PULLING SIMILAR SHIT... BUT I OPPOSED IT THEN AND I OPPOSE IT NOW - ONLY "NOW" IS WHERE WE ARE SO "NOW" IS WHERE WE SHOULD FOCUS AS OPPOSED TO TRYING TO JUSTIFY BAD BEHAVIOR WITH OTHER BAD BEHAVIOR!
He also includes savings from not fighting a war in Iraq or Afghanistan after 2014, money that was never going to be spent in the first place.
And, finally, he includes $634 billion in savings from not having to pay interest on the phantom spending he’s cut.
More realistic estimates suggest that the president is actually proposing almost $3 in tax hikes for every $1 in spending cuts.
I CAN BELIEVE THAT...
Even those spending cuts are not real cuts, in the sense of less money being spent, but simply reductions in the baseline rate of increase.
YEP... THAT'S ANOTHER LONG-RUNNING SCAM THAT BOTH DEMOCRATS AND REPUBLICANS HAVE RUN ON THE AMERICAN PEOPLE - WITH THE COOPERATION AND INDEED AID OF THE LIBERAL MSM AND LIBERAL ACADEMIA.
And while the president’s proposed tax hikes would go into effect immediately, the spending cuts are pushed off into the dim and distant future. In fact, according to recent reports, the president actually wants new stimulus spending in the short term, to be followed by spending cuts once the economy has bounced back.
YEP... THAT'S WHAT I'VE BEEN READING...
We’ve been down this road before.
Fans of Charles Schulz’s Peanuts know that every fall Lucy promises Charlie Brown that this time she really means it when she says that she will hold that football for him to kick. Yet, somehow, every time she finds a reason to pull that football away and Charlie Brown ends up flat on his back.
In 1982, Ronald Reagan agreed to raise taxes as part of a deal that promised $3 in spending cuts for every $1 in tax hikes. By the time Reagan left office, tax receipts had indeed risen by $290 billion. But not only had spending not been cut, it had actually risen by $318 billion, an increase in spending of $1.10 for every $1 in new taxes.
(*JUST SHAKING MY HEAD*)
The result was an even bigger budget deficit than the country had before the deal passed.
Writing in his memoirs, Reagan called the tax-and-spending agreement one of the biggest domestic mistakes of his presidency, noting that “later the Democrats reneged on their pledge and we never got those cuts.”
In 1990, President George H. W. Bush approached the football, famously breaking his “read my lips, no new taxes” pledge, and agreed to a deal that promised $2 in spending cuts for every $1 in taxes.
As with Reagan, the tax hikes proved all too real, an almost $60 billion increase by 1992.
But once again, not only did the spending cuts fail to materialize, spending actually increased by $128 billion, a $2.10 increase for every $1 in tax hikes. The deficit, of course, increased as well.
FOLKS... THIS IS INDEED THE TRUE HISTORY! REMEMBER... WHETHER WE'RE TALKING DEMOCRATS OR REPUBLICAN ESTABLISHMENT, WE'RE TALKING A LEGISLATIVE BODY WHICH JUSTIFIES IT'S MEMBERS INCUMBENCY VIA SPENDING... VIA PLAYING SANTA CLAUS! SPENDING IS AN INSTITUTIONAL MANDATE!
If that seems like distant history, the 2011 deal to increase the debt limit promised $1 trillion in spending cuts, even before the upcoming sequester. Instead, spending since then has increased by $132 billion. And both Republicans and Democrats are currently scrambling to avoid the sequester’s cuts as well.
FOLKS... I SCREAMED... I YELLED... I WROTE... I EMAILED... I CALLED...
FOLKS... I BLAME THE BOEHNER REPUBLICANS FOR ALLOWING THIS! AND BY ALLOWING THIS... THEY CREATED THE REALITY WHICH LED TO OBAMA'S RE-ELECTION AND HARRY REID'S POSITION BEING STRENGTHENED IN THE SENATE.
FOLKS... IF ONLY JOHN BOEHNER WOULD DIE...
The real issue is the size of government.
As Milton Friedman used to point out, the real cost of government is what it spends, not whether that spending is paid for by debt or taxes.
Spending more than we take in is demonstrably a bad thing. But raising taxes sufficiently to support an ever-growing government is not appreciably better.
Consider this: Would we be better off with an unbalanced $1 trillion federal budget or a balanced $3.7 trillion one?
A FAIR POINT TO PONDER...
As noted above, federal spending is set to rise to 46% of GDP by 2050. When you add in state and local spending, government at all levels will be consuming more than 60% of everything produced in this country.
We cannot long remain economically productive or personally free with a government of that size.