Free Markets, Free People


Debt Tops 12 Trillion – Can A Substantial Tax Increase Be Far Behind?

Another out of control government spending milestone tries to slip by quietly:

It’s another record-high for the U.S. National Debt which today topped the $12-trillion mark. Divided evenly among the U.S. population, it amounts to$38,974.34 for every man, woman and child.

Technically, the debt hit the new high yesterday, but it was posted on the Treasury Department website just after 3:00 p.m. ET today. The exact calculation of the debt is a 16-digit tongue-twister and red-ink tsunami: $12,031,299,186,290.07

And the 12 trillion mark was reached 8 months after reaching the 11 trillion mark – with oceans of red ink ahead as far as the eye can see according to the budgets the Obama administration has projected.

But don’t worry, Sec. of Treasury Timothy “Turbo Tax” Geithner, hero of the AIG bailout, had said they plan on getting serious about the debt. Are you feeling more assured now?

James Pethokoukas thinks he’s picked up on how they plan on doing that – or at least the trial balloon they’ve launched concerning their idea to see how well it flies. He saw this is the Wall Street Journal.

But the chairman of the president’s Council of Economic Advisers admitted that health reform and a growing economy isn’t enough to bring down the deficit. She did mention one other place that revenue could come from: letting the Bush tax cuts expire.

You say, “that’s not news, they’ve always talked about letting the Bush tax cuts expire”. No. That’s not what they’ve always talked about. They’ve talked about letting them expire on the richest of Americans. But “95% of you won’t see your taxes go up by a single dime” – remember? Pethokoukas thinks the statement by CoEA Christina Romer is talking about all of the Bush era tax cuts:

Since Obama already wants to get rid of the income and capital gains tax cuts for wealthier Americans that expire at the end of 2010, clearly what Romer is referring to is the rest of the 2001 and 2003 Bush tax cuts. Letting all the 2001 cuts — rate reductions, child tax credit marriage penalty relief — expire would raise tax revenues by $2.5 trillion through 2019. (These CBO numbers assume no negative economic feedback impact from higher taxes.) And letting the 2003 tax cuts on capital gains and dividends expire would be tantamount to a $350 billion tax increase through 2019. And none of this includes possible plans for a VAT that could raise $400 billion a year more to close the huge projected gap — maybe 7 percentage points — between spending as a percentage of GDP and revenues as a percentage of GDP.

3 trillion in raised taxes? If they can manage to get away with it – you bet. And the previous no new taxes pledge for the 95%? It will be explained away as having been overcome by events – the financial meltdown, bailout, stimulus, etc. And again, you will be reminded that government, not you, has first claim on your property as they again raid your paychecks to the tune of a cool 3 trillion over 10 years.

~McQ

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18 Responses to Debt Tops 12 Trillion – Can A Substantial Tax Increase Be Far Behind?

  • But the chairman of the president’s Council of Economic Advisers admitted that health reform and a growing economy isn’t enough to bring down the deficit. She did mention one other place that revenue could come from: letting the Bush tax cuts expire.

    And once again, notice that the talk immediately switches from the debt to the deficit.  What would we ‘gain’ from raising taxes?  A shot at lowering the national debt?  NO!  A shot at lowering the deficit, which is already three times larger than the previous high and projected to get higher next year.

    This is why our economy is headed over a cliff.  The media and politicians always talk about the deficit as a way to avoid talking about the debt.  Lowering the deficit still increases the debt!  I think that this has to be the rallying cry from libertarians, because I don’t see Democrats or Republicans making any attempt at tackling the debt.

    My god, I might actually welcome a tax increase if I knew that it was going towards debt reduction.  But increased taxes simply go towards more spending, as politicians promise that they’re “working on the deficit” as if there’s some insanely complex solution to it that doesn’t include spending less money.  Meanwhile, we have people who are excited at the prospect of government providing health care “for free”.  We’re pretty much doomed.

  • First, the federal government must stop spending our money.  All budgets should be rolled back to 2006 levels.

    Second, the federal government should eliminate all unnecessary government departments.  Anything beyond Defense (War), State, Commerce and Justice must justify its existence rationally and financially.

    Third, all pseudo-business functions should be privatized.  Amtrak, Post Office, Fannie & Freddie, FAA, NIH, Nasa, GPO, National Parks, NTSB, OSHA, TVA, FCC, NEA, NOAA, Federal Reserve, AIG, Peace Corps, AmeriCorps and GM should all be sold to private investors.

    Fourth, we demand that all federal legislation be written in plain English and no law exceed the length of the US Constitution.  Legislation must be posted on the web for ten days prior to a vote.  The reduction in paperwork will reduce Congressional staff positions from twenty to five.

    Fifth, congress should work five days per week with ten paid holidays and two weeks of paid vacation. Any votes missed, abstained or “present” should reduce his vacation by one day and his salary by 5%.

    Sixth, all campaigns are limited to six weeks prior to election and restricted to six hours of TV coverage.  The President’s State of the Union Speech should be the only address covered by one broadcast network.  All other media time should be purchased by his party’s campaign fund at commercial rates.

    Seventh, I’m still thinking about.

    • Seventh, link Congressional (and WH, too) salaries to the ratio of GDP to national debt.  They want to talk accountability, let’s talk accountability.

    • I like the way you think.

      I also like Achillea‘s idea of indexing the pay these wardheelers get to how big the debt is.

      My thought for #7:

      Some details would have to be worked out, but Congress will not be allowed to investigate or police itself.  Accusations of malfeasance or corruption by a member of Congress shall be investigated by the DoJ and go through the same justice system that applies to the rest of us with one caveat: members of Congress found guilty of any felony shall be summarily executed. 

      To whom much is given, from whom much is expected.

      • meh, don’t just index what the earn, but also index their benefits to the average in the US.
        But all this talk is academic, it aint gonna happen.
        Tear the whole thing down and start over.

  • Seventh, any program imposed on the public should be imposed on all members of the government without exception. 

    Eighth, no government function, product or service should be subject to unionization, directly or indirectly. 

    Ninth, the government must be held to the same legal standards and business practices as the general public. (E.g., I moving all of a company’s assets into a shell company before declaring bankruptcy to undermine the bond holders’ claims is a violation of the law, legislators, executives and judges should be held criminally responsible.)

    Tenth, every member of the Administration, Congress and Judiciary should be required to achieve advanced credit in American History, Political Science, Ethics and Logic AP tests annually.

    Arch Arthur

    • RE: Courses in US History, government, etc

      Can we brand the text of the 9th and 10th Amendments into their skin when they are sworn into office?  It would be faster and probably more effective as most of them demonstrate on a regular basis that they are incapable of learning anything.

  • don’t forget to stop and appreciate what a thing of beauty this is – Obama is going to be pushing the Democrats into raising taxes *just before* an election in which most of the country is already eager to pitch them out.

    This is guaranteed electoral disaster!!!  And Obama doesn’t even realize it. 

    regarding the 6 recomendations by arch:

    #’s 1 – 5 are all very good and achievable.  #6 is almost certainly unconstitutional, as the Supreme Court is poised to cut the heart out of McCain-Feingold this session.  I agree with the President’s ability to pre-empt networks, but as far as limiting campaigning, that is a fundamental freedom of speech issue.  Suppose you want to run for Congress; how is it constitutional for the government to say that you are not allowed to tell anyone about it until 6 weeks before the election?  Most people who support limits on campaigning don’t understand that these are all just trojan horse incumbent protection plans, and thus these restrictions in practice have the exact opposite effect that the people who support them wish them to have.

    I would add a different provision – I would force the US to go back to a Gold Standard for the dollar.  That alone would have avoided the massive debt that we now are accumulating.  Fiat currency is turning into a disaster for us all. 

    • Portions of #3 are also unconstitutional.  You can’t completely eliminate congressional power over the US Postal Service without a constitutional amendment.  Ditto 7.  Certainly rights written in the constitution for good reason(like legislators cannot be detained while congress is in session).

      The problem with unionization in 8 is not that it exists, it is that it you can’t get rid of it when it becomes unnecessary.  It is not just to grant a monopoly on labor for unlimited duration.  Like other government granted programs, monopolies should exist for terms of limited duration and then be subject to renewal through an additional secret ballot vote.

      9 makes absolutely no sense.  A huge amount of private business practices are designed to get around tax law and other government imposed restrictions.  The government doesn’t pay taxes in the first place (and may or may not apply those other restrictions to itself) so applying those practices to the government is often wasteful.

      10 violates civil rights law and for good reason.  You can’t force a duly elected representative to undergo testing to prove their competency.  Their competency is proven by election and reelection by the people they represent.  Otherwise you are nullifying those constituents votes using the equivalent of a poll test.

  • wws:
    I buy your Free Speech argument and accept the gold standard instead.
    Thanks,
    Arch

  • For a great, non-partisan site concerning the debt/deficit issue, I strongly suggest this site – http://www.pgpf.org/.  The president of the foundation spoke before congress on November 10, saying -
    “Our federal government also faces a federal financial sink hole that is growing at a rapid rate. At the end of fiscal 2000, the federal government had about $20.4 trillion in total liabilities, commitments and unfunded promises for Social Security and Medicare. That number rose to $56.4 trillion at the end of fiscal 2008 — a 176 percent increase in just eight years! While the final numbers won’t be in until late 2009, it is likely to be at least $63 trillion due to the record deficit in 2009, growing unfunded promises for Social Security and Medicare, and trillions in additional commitments and contingencies associated with various government bailouts and other assistance efforts. Shockingly, given this number, our total federal financial hole is about $10 trillion more than the current estimated net worth of all Americans and the gap has been growing.”
    RTWT

  • There are simply no politicians, on the left or right, who are ready to speak to the American public like adults to tell us that all the promises made–by liberals but eventually accepted by conservatives as well–cannot be kept without utterly bankrupting the nation. Republicans could now be surging in the polls if they had the guts to do so but they seem content to gain the upper hand by allowing Dems to self destruct just as they did. This might win them temporary control of government but will not solve problems or garner any lasting support. In the UK conservatives are demonstrating that straight talk really can work and the GOP should begin paying attention.

    What we need to hear:
    1. Medicare can’t be saved in in its present form unless beneficiaries are willing to pay something out of pocket or all of us are willing to pay higher taxes to support it. Without that we will need to cut benefits and purchase supplemental private policies to cover our other healthcare expenses.

    2. To save Social Security we will need to raise the age at which we begin to receive full benefits and increase taxes to support them. Our other choices are to privatize part or all of the plan and freeze benefits at some level for a certain number of recepients or to select a point certain to eliminate the program altogether and provide the money on a pretax basis that can be saved like a 401k.

    3. Medicaid likewise needs to be restructured so that it only benefits the truly needy based on income levels that are lower than those used today.

    4. We will need to raise taxes–on everyone–to pay down our debts and slash deficits. The only way to do that is by freezing spending levels and eliminating a number of government programs while dedicating all new taxes solely to debt and deficit reduction.

    With this as a beginning we would begin to really address our long-term problems while creating certainty among both individuals and businesses about what policies they could expect. Of course we would have to address the still lingering problems in the banking system as well as commercial real estate and residential housing sectors, not by attempting to prop them up but by pushing them to recognize their problems in a true sense by selling off underperforming loans and assets at steep discounts, taking writedowns, becoming renters, etc.

    The longer we delay the day or reckoning and attempt to get back to where we were, forgetting where it led us, things will only be worse once that day arrives. 

  • what rhetorical and substantive changes are neededbutattributed the defeats to local factors
    These guys don’t drink their own Kool-Aid ?
    And now they want to raise taxes .. to get independents back ?

  • No amount of lipstick is going to make this “pig” acceptable.

  • “”$38,974.34 for every man, woman and child.”"
    well it is actually a lot worse than that. Only about a third of the people in the country are actually employed, and out of that fully one quarter either made very low wages or are employed part time and might actually qualify for some benefits.
    So the number of people actually pulling the train is small and shrinking.

  • What are we at? 11?
    11. Tax day comes once a year, 2 weeks before elections are held. No withholding taxes allowed.

    • Add to that making it a flat tax — everybody pays the same percentage, so everybody feels some of the pain.  No more of this fobbing it off on ‘rich people.’

  • Save this quote for your Lefty friends …

    BURGESS: Glass-Steagall has come up this morning. If I recall, Glass- Steagall was repealed — that bill was signed by Bill Clinton…
    GEITHNER
    : You’re right about that.
    BURGESS
    : … not George Bush.
    GEITHNER
    : You’re absolutely…
    BURGESS
    : And I frankly don’t understand. If that’s such a good protection, this president’s been in office for 10 months. Where’s the signed legislation reinstating Glass-Steagall? What…
    GEITHNER
    : Actually, I would not support reinstating Glass-Steagall. And I don’t actually believe that the end of Glass-Steagall played a significant role in the cause of this crisis.