Obama’s Deficit Hustle (3)

President Obama’s deficit narrative is a hoax.

In what has become his campaign stump speech he makes a series of assertions that upon scrutiny prove to be baseless and to contradict publicly available data from his own Office of Management and Budget (OMB).  He claims that during the Bush years:

…we made the [deficit] problem worse with trillions of dollars in unpaid-for tax cuts – tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.

We’ll deal with “unpaid-for tax cuts.”  But first, Obama simply ignores the elephant in the room, the enormous spending increases of the past decade.

No serious attempt to assess the cause of government’s catastrophic debt could simply ignore such breathtaking spending increases.

Obama and his supporters often talk about “paying for” tax cuts.  But they never explain how that would work.  When taxation is the source of government’s money how could it “pay for” a tax cut?  It makes even less sense when applied to the current situation because as the next chart shows, after the 2003 tax rate reductions that established the rates that are still in effect today tax revenue increased.

From 2003 to 2007 income tax revenue rose a whopping 47%!

In 2007 the current tax rates generated more revenue for the government than in any previous year since the income tax began in 1918, after adjusting for inflation.

The severe recession drove down taxable income and tax revenue for two years but it was still above the 2003 low, even after adjusting for inflation.  This year, as the economy begins to recover from recession income tax revenue is increasing and 2011 is on track to be the third highest revenue year ever – without the increases in tax rates Obama and much of the media demand.

But what about those millionaires and billionaires?From 2003 to 2007 revenue from the super rich increased 134% before declining due to the recession.  The IRS hasn’t published a breakdown by income group for 2009 or 2010 yet, but based on the totals that have been reported, it’s safe to assume that revenue from the rich remained substantially higher than it was in 2002, before the current tax rates were enacted.

One more excerpt from Obama’s speech:

To give you an idea of how much damage this caused to our national checkbook, consider this:  in the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years.

Not only is it impossible to “pay for” a tax cut, as the chart above shows the current tax rates, enacted in 2003, generated more, not less revenue – record breaking revenue.

The chart to the right shows that the Medicare prescription drug benefit is a tiny fraction of total spending – 1.7% in 2010.

Obama’s “economic analysis” is about as serious as a campaign slogan on a bumper sticker and has the same purpose, to stir the emotions of people who don’t have the time to do the research and verify the claims of politicians.

He contradicts mathematical reality with the absurd claim that the whole debt crisis was caused by the current tax rates and the Medicare prescription drug benefit only because they were both initiatives of the President Obama’s leftist base loves to hate, George W. Bush.

1 Comment so far

  1. daigoumee on April 25th, 2011

    Keep posting stuff like this i really like it