Ask President Obama or, really, any random liberal about the deficit and their answer will make heavy use of the words “Bush,” “rich,” and “tax cuts.” The left has constructed a narrative that our fiscal house is in disarray because, a little over a decade ago, Bush enacted a “massive” tax cut for “the wealthy”. If we let these tax cuts for the rich expire at the end of the year, they argue, we will go a long way towards climbing out of our fiscal hole. This is a myth.
As Congress left on recess, House and Senate GOP lawmakers said that, if Obama wins reelection, they will have to reconsider their opposition to higher taxes on the wealthy. This is either a calculated move to fire-up the GOP base or, more likely, given what we know about the Senate GOP, a preemptive display of weakness.
Ok, so let’s say we’re going to let the Bush-era tax cuts on the “rich”–currently defined as households making more than $250,000 a year–expire. How much will the higher income tax rates bring in?
$56 Billion a year.
Our current deficit is over $1 trillion a year.
So, higher income taxes on the “rich” will solve about 5% of our deficit problem.
Part of Obama’s plan to raise taxes on the “rich” also would scale back or eliminate many deductions and credits they use to minimize their tax burden. Basically, the more you earn over a certain level, the more currently allowed deductions and credits would be reduced. What would this bring in? About $27 billion.
Eliminate “subsidies” for Big Oil? About $4 billion a year. Altogether, Obama has hobbled together some additional tax hikes on the “rich” bringing the government’s total take to just over $100 billion a year.
Ok, liberals, you’ve just identified a path to plug 10% of our annual budget hole. What else you got? Crickets. I know Obama says he plans for another $300 billion a year or so in “savings,” but these are always far out in the future and never quite seem to arrive. A large part of them is also based on very rosy economic assumptions.
Of course, even if these miraculously came to pass, you’re still only solving about 40% of the deficit problem. Again, what else you got?
The sum total of Obama’s and the left’s plan to reduce the deficit, apparently, is to go through the nation’s couch cushions looking for loose change.
Oh, and this isn’t drawn from some conservative interpretation of the numbers. These numbers come from Obama’s own plan to reduce the deficit (pgs 218-219).
Its pretty clear that letting Bush-era tax cuts for the wealthy expire is just the left’s opening bid on tax hikes. The main problem with the wealthy is that there aren’t that many of them. Obama’s current plan would cover about 8-10 cents on every deficit dollar. Where is the rest of the money going to come from?