For the first three months of 2011 President Obama demanded that Congress raise the debt ceiling without any conditions, without any spending cuts whatsoever.
In an editorial in USA Today, President Obama repeated his demand:
...people in both parties have suggested that the best way to take on our deficit is with a more balanced approach. Yes, we should make serious spending cuts. But we should also ask the wealthiest individuals and biggest corporations to pay their fair share through fundamental tax reform.
As the first chart above shows, Individual Income Tax payers have already begun to participate in “balance.” Under current law the income tax is steeply progressive. Only three percent of taxpayers earn over $200,000. This is the group President Obama calls “the wealthiest,” whom he says we should “ask” for a “fair share.”
Under current tax rates the over-$200,000 group pays 52% of the income tax revenue the IRS collects. So when revenue does go up, as it has this year, they are paying half the increase. They’re already participating in “shared sacrifice.”
The second chart shows that corporate tax revenue has more than doubled since 2009. It’s hard to deny that corporations have already begun to participate in “shared sacrifice.”
As the third chart shows, the relentless growth in government spending has not stopped. Government and the millions of people who receive support from government have not yet begun sharing in the sacrifice.
The 2011 fiscal year began on October 1, 2010. A review of spending over the first three quarters of fiscal 2011 shows several programs spending more but very few spending less than the previous year.
The last chart shows the result of government continuing to grow rather than become part of Obama’s “shared sacrifice.” The 2011 deficit will be the biggest ever. President Obama’s demand is for immediate hikes in income tax rates for which he is willing to offer an unenforceable promise that over the next ten years future Congresses will spend less than is now planned.
President Obama held yet another news conference on Thursday evening to, once again, castigate Republicans for not being willing to raise tax rates. He claimed to have offered over a trillion in “cuts” in exchange for an increase in taxes.
What the President never makes clear is that any spending “cuts” are in reality reductions in the rate of spending growth already planned for future years. He offers no spending cuts for the remainder of 2011 and sources close to the negotiations report that he has offered only $2 Billion in cuts, from almost $4 trillion in projected spending in 2012, only if Congress gives him major tax increases.
To put that offer in perspective imagine that a family earns $2,200 per month but the husband has been spending $4,000 per month by charging on credit cards. His wife wants to avoid bankruptcy and has been pleading with him to cut spending. So, he agrees to a cut: One day per month he will buy a $2 coffee instead of his usual, $4 latte, but only if the wife works a second job that brings in several hundred dollars.