Obama has made repealing the Bush-era tax cuts for families making more than $250,000 a year the centerpiece of his fiscal policy. We are told ad nauseum that Bush’s tax cuts for the “rich” are a big driver of our current budget deficits. Repealing these cuts are just about the sum total of Obama’s proposals to bring down the deficit. The problem is, though, there just aren’t enough rich people around. Repealing all the Bush-era tax cuts for the wealthy would only cover about 16% of our projected deficits.
Late Friday afternoon (see what they did there), the Obama Administration released its latest revisions to its proposed budget. It projected this year’s deficit to be $1.2 trillion and the ten-year baseline of deficits to be just over $8 trillion. In other words, under current policy, the federal government is set to add another $8 trillion to the national debt.
Obama’s revised budget estimates the impact of repealing all the tax cuts for those making more than $250,000 a year. Over the next ten years, the vaunted tax hike on the “rich” will bring in a total of $1.4 trillion. Not a year. Over the next ten. Keep in mind that tax collections over the next decade will total just over $40 trillion. Heck, over the next ten years, we’ll spend more than $5 trillion just servicing the interest on our debt. Apparently shaking down the rich for more taxes doesn’t really get us very far.
Let’s set aside the economics of taking another $1.4 trillion out of the private economy. There may perhaps be philosophical reasons to support increased taxes on the wealthy, but it isn’t a serious proposal for bringing down our national debt. Even after this tax hike and some other adjustments, including overly rosy economic predictions, Obama’s revised budget brings the ten year deficit down to $6.6 trillion. So, tax hikes on the rich got us 16% of the way towards a balanced budget. What about the other 84%?
The whole “tax hike on the rich” isn’t a serious proposal to address deficits. One could argue that it may be “part” of a comprehensive plan to erase the deficit, but where are the other parts? Raising taxes on the “rich” is a campaign and propaganda tool. Its an attempt to explain away the rampant growth of government under Obama and the Democrats. It isn’t that they overspent, mind you, its that “millionaires” are getting some kind of special tax breaks. Its 16% rhetoric and 84% BS.