Obama’s “Balanced Approach” Tax Hikes Are Snake oil

Mr. President, If “revenues” are the problem, How can your Government gobble up a 21% increase in income tax revenue and still run an even larger deficit?

President Obama and the Democrats insist that the government’s continuous, yawning deficits can not be closed by spending cuts alone, that “revenue!” must be part of a so-called “balanced approach.”

But just published Treasury Department data show the Bush tax cuts did not cause the government’s fiscal problems, and that the 2011 deficit is slightly greater than the 2010 deficit even though revenues from income tax rose dramatically. (continued below chart)

The Treasury Department just published it’s final report for the government’s fiscal year 2011, that ended September 30.  The chart above focuses on one part of that report, revenues from the individual income tax.

Because the President and the Democrats so incessantly blame deficits on the Bush tax cuts and demand increases in income tax rates, many Americans believe income tax revenue went down after the Bush tax cuts.  But, as the chart above shows, tax revenue was declining before the Bush tax cuts of 2003 established the current tax bracket rates, and then spiked up 47% in four years.  In 2007 more income tax revenue was collected by the IRS than any previous year ever.

Revenue went down in from 2008 to 2010 because the rich, who pay most of the income tax, were hammered by the recession.  According to latest IRS statistics available, almost half of  “Millionaires and billionaires,” the group Obama targets for a tax hike in every speech, disappeared from 2007 to 2009.

But in 2011 income tax revenue bounced back, rising by $193 billion or 21% over 2010.

Yet the 2011 deficit, at $1.3 Trillion was slightly higher than in 2010.  Why?  Revenue from other taxes went down by about 48 billion, mostly because of a temporary, one-year discount in the payroll tax.  But the deficit would still have been reduced substantially were it not for irresponsible spending increases.  While the media whine about Republican budget cuts, it turns out that the President and the Democrats won the budget fights of 2011.  Total spending increased by $145 Billion over 2010.

The Bottom Line:

The media and Republican candidates should demand that the President answer the obvious question: If his “balanced approach” is the answer, how can Government can gobble up a 21% increase in income tax revenue and still run an even larger deficit?

8 Comments so far

  1. BuckBowler on October 15th, 2011

    Obama knows, even though the Republicans don’t, that this is the worst possible time to cut deficits. Certainly, nobody wants runaway deficits. But in a depressed economy, cutting spending is ruinous.

    At this moment — with the economy hanging in the balance, The Republicans are stubbornly focused on the wrong things.

  2. AzTex on October 15th, 2011

    Interest rates are at record lows. We can borrow Trillions for 30 years at 3%. The country needs infrastructure and millions of people need jobs. Buck is right – its utterly insane to be calling for austerity when the way to more jobs is so obvious!

    I like some of this blogger’s ideas but on spending and deficits, Conservatives, including this blogger, are clueless.

    What would you do? Just let people starve when the means for them to earn their food and make this a better country at the same time is pounding on the door?

  3. JustPammy on October 15th, 2011

    “Obama knows” this is the worst time to cut deficits? If that’s what he knows why does he keep talking about deficits? Why does he say he would have cut the deficits by $4 trillion but Boehner wouldn’t agree to it?

    Obama has run up more red ink in 2.5 years than any President before in 8 years. If deficits were good for jobs this wouldn’t be the time of highest unemployment for more years than any time since World War II.

  4. […] Obama’s “Balanced Approach” Tax Hikes Are Snake oil […]

  5. Political-Bill on October 16th, 2011

    Why would Bush get credit for this? Tax revenue should go up every year in a healthy economy with a growing population.

    Bush tax cuts and deregulation wrecked our economy and brought on this cataclysmic recession.

  6. Stan-the-man on October 16th, 2011

    Are we supposed to cry for lost millionaires?

  7. Banjaya on October 16th, 2011

    There are excellent points here that seem to be over the heads of some (AzTex, Stan, Buck).

    The media and the liberals have tried their best to make us believe the lie that tax revenue cratered after the Bush tax cuts. But the truth is revenues skyrocketed!

    Now the revenues are beginning to come back after being decimated by the Barney Frank recession, and the Dems in Congress and I guess the Republicans too simply SPEND it! How can we stop this madness? No matter how much political noise is made, no matter how many times they almost shut down the governent in fights over spending they still manage to spend more and more and more every year!

    No amount of tax revenue will ever balance the budget until we get rid of all these big spenders and finally cut!

    I’m not “the rich.” I paid about $3,500 income tax so far this year. But I’m completely opposed to any tax increases on anyone. Certainly not while Obama and these spending lunatics are still in office!

    Giving Obama even a penny more tax money is like giving a jug of whiskey and the car keys to a fifteen year old boy.

  8. MayorDanny on October 17th, 2011

    You idiots want exactly the wrong thing. You’re killing our economy!

    The reason there are no jobs is no demand.

    We create jobs when we buy stuff. We need deficit spending during a deep recession to spur demand because so many people are unable to buy stuff.