One of the left's favorite parlor games to play on Republicans is to ask them, hypothetically, if they would accept $1 in tax hikes for something like $9 or $10 in spending cuts. The game is designed to show that Republicans have some kind of unreasonable opposition to higher taxes. Republicans, however, realize it's a trick. The tax hikes are always real, while the promised spending cuts never materialize. This year, however, the slow-moving train wreck dubbed the "fiscal cliff" offers an even worse bargain. Unless a deal is struck, the "fiscal cliff" will deliver $4.75 in tax hikes for a measly $1 in spending cuts.
The "fiscal cliff" is simply the confluence of the expiration of several tax measures and mandatory spending cuts put in place during last year's negotiations on the debt ceiling. The across-the-board spending cuts, i.e. sequestration, take effect if Obama and Congress fail to identify specific spending reductions. The media uses scary words like "draconian" and "severe" to describe the cuts, but in reality they are a paltry $109 billion a year. That's just around 3% of this fiscal year's spending. Even with this cut, federal spending will still increase next year by around $16 billion.
Meanwhile, taxes will increase $474 billion next year alone. Only about $98 billion of this is the expiration of the Bush-era tax cuts. $125 billion comes from the expiration of the payroll tax cut. $130 billion comes from the expiration of the Alternative Minimum Tax "patch." (That alone warrants its own article as a damning indictment of how our Congress works.) New ObamaCare taxes and various other measures total up to a 20% increase in taxes over this fiscal year.
Even with this massive tax increase, the government would still run a $600 billion deficit next year, far more than any by a President not named Obama.
So, the question is, now what? The fulfillment of the left's wildest dreams on taxes isn't enough to plug our fiscal hole. Assuming the CBO's projections are correct, and the tax increase doesn't spark a downturn in the economy, our government will still be increasing its debt levels.
It is far past time for Obama and Congressional leaders to get serious about the budget.
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