Tax Cut Debate: Political Theater of The Absurd

Does anyone – even in Congress – really believe 2011 spending can’t be reduced from $3,745,000,000,000 to $3,675,000,000,000?

President Obama and Congressional leaders argue that “we can’t afford” to continue the existing income tax bracket rates for all taxpayers.

Obama insists that top bracket rates  go up even though this tax increase would specifically target the small businesses that create most of the new jobs in America.

When asked about deficits the President often blames military spending  saying that President Bush started wars without “paying for them.”

But as the chart shows most of the spending increases of the past decade were non-military increases.

Appearing on ABC’s This Week Austin Goolsbee, newly appointed Chairman of the President’s Council of Economic Advisers was asked about the wisdom of a tax cut in the middle of a deep recession:

The president has been all along, through the campaign, through the administration, quite clear on what I believe the economics is also quite clear, that borrowing $700 billion [over ten years] to extend tax cuts that average more than $100,000 a year to millionaires and even billionaires is the least effective bang for the buck we have.

What does this mean? 

First, Goolsbee wants us to believe Obama is trying to be frugal when in fact he’s the most profligate spender in human history.

Let’s assume the implied claim turned out to be accurate, that high income taxpayers, half of whom are small business owners, will pay $700 Billion less over the next ten years if their tax rates don’t go up.  That works out to $70 billion each year.  According to this President’s own budget projections he plans to:

  • Spend $3.745 Trillion in 2011, another 8% or $275 Billion increase in one year.
  • Borrow $1.5 Trillion in 2011.

Goolsbee insists that to avoid borrowing they must extract $70 billion more from the same 3% of taxpayers who already pay 50.1% of all income tax (2008 IRS data) even though half of them are the small business owners who create most of the jobs in America.  Does this mean  Obama thinks a $1.5 Trillion deficit is good but a $1.57 Trillion deficit is unacceptable?

Second, it means that spending cuts, even relatively small cuts are off the table.  Obama and the Democrats refuse to consider any cuts in spending, even adjustments in spending growth.

As the chart sh0ws, immediately upon being inaugurated Obama raised non-defense spending by 18.3%,  the largest one-year increase in 34 years.  He blamed Bush of course, but the same high level of spending continues this year.  His own budget projects increases every year for for another decade.

If Obama is really that worried about $70 billion why can’t he reduce his spending plans by $70 Billion, or about 2%?

Does anyone, even in Washington, believe 2011 spending can’t be reduced from $3,745,000,000,000 to 3,675,000,000,000?

Some of the Republicans have proposed shrinking non-defense spending back to the same as it was in 2008, saving six times as much as Obama claims his tax increase will generate. The political-media establishment will fight that sensible idea with all the sanctimonious consternation and deception they can produce.

4 Comments so far

  1. Larry Walker, Jr. on September 16th, 2010

    I concur. The media and Obama’s team are full of it on this one. We talk about it just like this every day, as being $70 billion per year, not as a ten year figure.

  2. alberta insurance on September 22nd, 2010

    Great writing! I want to see a follow up to this topic??

  3. henrich insurance houston on September 24th, 2010

    This is the BEST read that I have read all week?!?

    Sincere Regards,
    Mitch

  4. exemplar insurance on September 25th, 2010

    Karla is the greatest..