Who will pay?
The Obama administration and those idiots in Congress are on a spending spree like this nation has never seen before. They are spending faster than a drunk in a liquor store. The debt they are incurring will not likely be paid back even when in our great-grandchildren retire. In fact, I fear, this spending spree may trigger a national default before sooner rather than later. (Perhaps sooner than 2020.) I have great difficulty understanding what the President might have been thinking when he said we had the responsibility “to ensure that we do not pass on to [our children] a debt that they cannot pay.” The morons in Congress enthusiastically applauded but did they hear anything? Hello? What the hell are they doing if not exactly that. It isn’t getting better either. President Obama is proposing a 2010 budget that is nearing the entire income of the wealthiest 2% – $3.5 TRILLION. That’s before earmarks! (If you, like most people, can’t even imagine what a trillion dollars really looks like, click here!)
Maybe I heard wrong. Did the President say he did not want anymore earmarks? I believe the quote was, “sacrifice some worthy priorities for which there are no dollars,” Did the House then pass a budget with 8600 earmarks ($7.7 Billion) the next day? Did Obama threaten to veto it? No, I cannot even find a story that quotes him as opposing it. Perhaps the most outrageous claim I read in the Detroit Free Press story was when House Rules Committee Chairman Louise Slaughter, D-N.Y. said this budget has nothing to do with Obama but rather, “This has to do with President Bush’s budget.” I suppose this gives them a blank check since Bush will not be around to sign it, yet somehow in their warped logic it is his budget. There is a term I’d apply to Ms. Slaughter, but I’ll stick to “idiot”, the meaning is the same.
I want to start a protest campaign. We should all fax our senators a photo of an ear with the caption, “NO MORE EARMARKS!” These people are IDIOTS! I am angry about this. The trouble is getting worse NOT better. Watching CNN yesterday I heard one interviewed Representative say earmarks were a necessary part of the stimulus package. In the vernacular of the web, OMG! Furthermore, the Justice Department is investigating likely connections between earmarks and campaign contributions. I present as evidence that the House killed a proposal by Representative Jeff Flake, R-AZ, calling on the House ethics committee to investigate such connections, by a vote of 226 to 182. I’m faxing an ear. Moving on.
If you are one of those who thinks the rich will carry the burden of this stimulus and the coming health-care system you need to put down your crack pipe, pull off the rose-colored glasses, screw the cap back on the beer bottle, and wake up to reality. Everyone wants free stuff. Everyone expects someone else to pay. There are always people out there who are overpaid and under-taxed but it is never us. We are always under-paid and overtaxed and it’s about time someone else pays “their fair share.” Well guess what? Right now, the wealthiest 1% of Americans pay 40% of all taxes paid yet they only earn 22% of all the money earned. Even if we took their entire combined income there would not be enough money to cover this year’s budget. So, if you just love Obama and can’t wait for the new national health-care system, hold on to your wallet. You thought health insurance was expensive before? Wait until you see your pay check. The best part is you likely won’t be able to opt out.
There is a very good editorial in the Wall Street Journal that I want everyone to read. I had begun to steam about this topic after I decided to see if there was enough money in the U.S. economy to fund this massive deficit and ensuing debt. When I found this wonderful editorial I decided to stop right here and reproduce it here.
Take everything they earn, and it still won’t be enough.
President Obama has laid out the most ambitious and expensive domestic agenda since LBJ, and now all he has to do is figure out how to pay for it. On Tuesday, he left the impression that we need merely end “tax breaks for the wealthiest 2% of Americans,” and he promised that households earning less than $250,000 won’t see their taxes increased by “one single dime.”
This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can’t possibly raise enough revenue to fund Mr. Obama’s new spending ambitions.
Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and “the wealthiest 2%.” Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That’s about 7% of all returns; the data aren’t broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% — about 1.65 million filers making above $388,806 — paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.
Note that federal income taxes are already “progressive” with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He’d also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won’t come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.
But let’s not stop at a 42% top rate; as a thought experiment, let’s go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That’s less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable “dime” of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.
Mr. Obama is of course counting on an economic recovery. And he’s also assuming along with the new liberal economic consensus that taxes don’t matter to growth or job creation. The truth, though, is that they do. Small- and medium-sized businesses are the nation’s primary employers, and lower individual tax rates have induced thousands of them to shift from filing under the corporate tax system to the individual system, often as limited liability companies or Subchapter S corporations. The Tax Foundation calculates that merely restoring the higher, Clinton-era tax rates on the top two brackets would hit 45% to 55% of small-business income, depending on how inclusively “small business” is defined. These owners will find a way to declare less taxable income.
The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can’t possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.
On that point, by the way, it’s unclear why Mr. Obama thinks his climate-change scheme won’t hit all Americans with higher taxes. Selling the right to emit greenhouse gases amounts to a steep new tax on most types of energy and, therefore, on all Americans who use energy. There’s a reason that Charlie Rangel’s Ways and Means panel, which writes tax law, is holding hearings this week on cap-and-trade regulation.
Mr. Obama is very good at portraying his agenda as nothing more than center-left pragmatism. But pragmatists don’t ignore the data. And the reality is that the only way to pay for Mr. Obama’s ambitions is to reach ever deeper into the pockets of the American middle class. –wsj