President Obama often talks about the
need for a "balanced" approach to deficit reduction, by which he
means tax hikes in addition to spending cuts.
At the recent presidential debate, for
example, he said, "We've got to reduce our deficit, but we've got to do it
in a balanced way — asking the wealthy to pay a little bit more along with
cuts."The only problem with this approach is that the massive projected deficits
over the next 10 years aren't the result of too few taxes. They are entirely
the result of too much spending.
Here's the proof.
According to the latest budget forecast
from the Congressional Budget Office, even if every expiring tax cut were
kept in place permanently — including all the Bush tax cuts and various other
expiring cuts from last year and this year — and even if the alternative
minimum tax were permanently indexed to inflation, federal revenues would still
rise to 18.6% of GDP by 2022.
To put that figure in perspective, from
1948 and 2008, federal revenues averaged 18% of GDP. What's more, despite
countless changes to the tax code — which included raising the top rate to 90%,
then lowering it to 28%, then raising and lowering it again — revenues as a
share of GDP have rarely deviated much from that average.
So even if all the Bush tax cuts were
made permanent, federal taxes would end up slightly higher as a share of GDP
than the historic average.
Spending Ramping up the CBO report also
makes clear that it's out-of-control federal spending that's driving the
deficits. According to that report, the federal spending as a share of GDP is
on track to steadily rise over the next decade and beyond, reaching 22.3% of
GDP by 2022.
That's significantly higher than the
1948-2008 average and much higher than it's been under previous Democratic
presidents. In President Clinton's last year in office, for example, federal
spending consumed just 18.2% of GDP.
Yet while the president talks about
cutting spending as part of a balanced plan, his budget would actually
accelerate this spending trend, adding $1.1 trillion to the pile over the next
decade, according to the CBO. By 2022, federal outlays under Obama's
budget would equal almost 23% of GDP.
As a result, even though Obama wants to
raise taxes as a share of GDP to historically high levels, his plan would still
produce $6.4 trillion in deficits over the next decade.
So what if, instead, federal spending
were held to 20% of GDP, which is the goal set by Mitt Romney? In that
case, you could keep all the Bush tax cuts in place and still produce deficits
half the size of Obama's.
That approach would also be more in
sync with what the public has repeatedly told pollsters it wants.
Smaller Government Favored A Rasmussen
poll taken in May, for example, found that 64% preferred smaller government and
lower taxes. And a July IBD/TIPP poll found that just 38% favored "a
bigger government providing more services."
The only real question is how to bring
federal spending back in line.
As it stands, entitlement programs —
Medicare, Medicaid, Social Security and others — are growing faster than the
economy, which means that, left on autopilot, the federal government will chew
up an increasing share of the economy year after year.
The problem is Democrats will fiercely
attack any proposed changes to these programs. Obama-Care cuts $716 billion in
proposed Medicare spending, but uses that to pay for new spending on subsidized
insurance exchanges and other parts of the law.
If entitlement growth isn't checked,
then discretionary programs — which include such things as education, highways,
justice, the environment and national defense — would have to be cut more
deeply. Yet here, too, special-interest groups fight any cutbacks, no matter
how small. The bottom line is that unless lawmakers want to force taxes up to
levels never before seen in the U.S., they have no choice but to get serious
about cutting federal spending back down to size.
Source:
Investors Business Daily 10/18/12 Obama Spending, Not Bush Tax Cuts,
Drives Deficit, by John Merline, Read
More At IBD: http://news.investors.com/101812-629794-blame-spending-not-tax-cuts-for-deficit.aspx#ixzz29n0xPk7y
Comments:
Obama spends $1.6 trillion a year more than the government collects. If you take a close look at what the
government spends it on, it’s easy to see why this spending is wasteful,
dangerous and treasonous.
Norb Leahy, Dunwoody GA Tea Party Leader
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