Another day older and deeper in debt. Of course, that’s because you plan to spend $3.6 Trillion on budget over the next year.
WASHINGTON – President Obama laid out his first budget plan, a bold $3.6 trillion proposal that would transfer wealth from rich taxpayers to the middle class and the poor, and predicts a stunning federal deficit of $1.75 trillion this year – nearly four times last year’s record.
Obama blamed the expected federal deficit explosion on a “deep and destructive” recession and recent efforts to battle it, including the Wall Street bailout and the $787 billion stimulus plan.
Among the budget proposals, the plan would:
extend a $400 tax credit for most workers while letting expire former President George W. Bush’s tax cuts for couples making more than $250,000 a year. The budget contains almost $1 trillion in tax hikes over 10 years on individuals making more than $200,000 and couples earning more than $250,000;
close tax loopholes for the wealthy to raise $318 billion toward a down payment on Obama’s universal health care plan;
clamp down on the Pentagon budget, which would get a 4 percent boost next year, but would then get increases of 2 percent or less over the next several years;
make permanent the expanded $2,500 tax credit for college expenses;
spend more than $6 billion on cancer research at the National Institutes of Health next year, a 15 percent hike;
spend $3.9 billion to improve the nation’s sewage treatment plants and drinking water systems; and
raise $15 billion a year, beginning in 2012, from auctioning off carbon pollution permits to help develop clean-energy and renewable-energy technologies. The administration “will work expeditiously” to get Congress to approve an 83 percent reduction in global warming emissions by mid-century. There’s also more money at NASA for space-based monitoring of greenhouse gases.
After reviewing some of the comments from those intended to be taxed, as well as some of the criticisms of those taxpayers’ intelligence [as an aside, I think the liberals denouncing both the story and the interviewees are playing a little fast and loose with the assumptions, since the taxpayers displayed no misunderstanding of marginal rates, and voiced concerns solely based on principles], I got to thinking about how much money will this proposed tax hike really raise. This seems important, not only because of the size of proposed budget, but also since a common refrain from those in favor of letting the top rate snap back to 39.6% (from the current 35%) is that it will only cost those taxpayers 5 cents on the marginal dollar, which is very little to worry about much less enough to change behavior, or so the argument goes.
Before looking at the actual numbers, let’s get something straight first. While it is accurate to say that raising the top rate only costs these taxpayers a nickel per extra dollar earned, that is not all that is being proposed. These taxpayers will also be losing deductions and credits that they would otherwise have, as well as paying extra taxes on anything subject to cap-and-trade taxes, should that lovely piece of legislation be passed. Moreover, if you truly believe Obama when he says that those with incomes less than $250,000 per year will receive a tax cut, then it seems ludicrous to pretend that at least some, if not virtually all, of those taxpayers near the margin will change their working behavior so as to be in the benefit group rather than the extra-taxed one.
Nevertheless, for purposes of calculating the expected tax revenues generated under this plan, I’m going to assume that nobody changes their behavior in the slightest (i.e. everyone earns as much taxable income as possible), and that the number of taxpayers and the amount of taxes paid largely mirrors the 2006 numbers (which is the most recent data available).
According to IRS figures [xls], about 50% of all taxable income came from the $200,000 and above earners in 2006. By my calculations that came to $2.056 Trillion dollars in taxable income from 3,847,241 taxpayers (about 9% of all returns). This cohort paid approximately $522 Billion in taxes, or about 62.4% of the total $837 Billion in tax receipts. These are the people upon whom the new burden will be placed according to President Obama.
In order to figure out how much taxable income is above $200K (there is no breakout for $250K and above), I took all of the taxpayers in the $200K to infinity range (3,847,241) and multiplied it by 200,000 (= 769,448,200,000).
I then subtracted that number from the (rounded) total of taxable income for the same range (@ $2.056 Trillion), and got $1,286,551,800,000. If I thought about it correctly, then that should be the amount of taxable income above $200K.
I then took my above-$200K number and multiplied it by 5 cents, figuring that the increase in marginal rate of 4.6% would lead to about a nickel per taxable dollar earned in new revenues, if everything were to remain static.
From all of that I figured that approximately $64.3 Billion in new taxes would be raised by the new tax hike … to cover a $3.6 Trillion budget.
I sent my calculations to Dale, who became so engrossed in the matter that he put together an entire spreadsheet figuring the numbers in not one, not two, not three, but in six different ways. I realized later that asking Dale to check out my math was rather like standing on one foot and excitedly calling attention to my “skill” while in the midst of an acrobat convention.
After Dale played with the numbers [xls] for awhile, he arrived generally at the conclusion that the absolute most that could be raised was in the neighborhood of $85 Billion, and at worst around $55 Billion. On average, Dale calculated that approximately $65 Billion was the likely amount of new tax revenue that could be expected if all payers in the 2006 cohort behave exactly as they did then. Sticking with the metaphor, “Yes, Michael, that’s a decent one-legged stand you have there.”
In short, a complete klutz has a better chance of joining the Flying Wallendas than the bottom 95% of taxpayers do of getting a tax cut. Instead, they will all see a significant tax hike, whether in their marginal rates, in excise taxes, corporate taxes, fuel taxes, or other forms of indirect taxation. And as those taxes begin to mount up, and the national debt does it’s best imitation of the Challenger, people will work and produce less and less, and tax revenues will dry up.
That is the plan for our recovery. Read it and weep.
“Over the next several months the President will propose a series of legislative and enforcement measures to reduce such U.S. tax evasion and avoidance.”
Why that would be tax cheat and now Treasury Secretary Timothy Geithner.
Heck, if they could just get half the Democrats in the administration to pay their taxes, they could probably put a big dent in the deficit.
Coming to a bridge abutment near you, uh, someday:
Somehow it doesn’t surprise me that the new NRA Eagle is in the shape of an “O”. Jake Tapper reports:
President Obama announced today that his administration will begin stamping an emblem on projects funded by the economic stimulus package so that people can easily recognize the effects of the American Recovery and Reinvestment Act.
All projects will be stamped with the ARRA logo (short for the American Recovery and Reinvestment Act) and lists the recovery.gov website on the emblem.
There truly is nothing new under the sun – just uglier.
And if the new “O” hasn’t made you slightly nauseous, try the new “Transportation Investment Generating Economic Recovery”, or TIGER logo on for size.
One thing you can say for these folks, from the “Office of the President Elect” to “TIGER”, they have the trite sign deficit licked.
The scion of conservative legend Bill Buckley seems to have suddenly misplaced his rose colored glasses as well:
The strange thing is that one feels almost unpatriotic, entertaining negative thoughts about Mr. Obama’s grand plan, as if one were indulging in—call it—the audacity of nope. It is on the one hand clear that something must be done about our economic woes. But that is very different from saying that spending these vast, oceanic sums of money is the right corrective to a decade of fiscal incontinence.
One thing is certain, however: Government is getting bigger and will stay bigger. Just remember the apothegm that a government that is big enough to give you everything you want is also big enough to take it all away. And remember what de Tocqueville told us about a bureaucracy that grows so profuse that not even the most original mind can penetrate it.
If this is what the American people want, so be it, but they ought to have no illusions about the perils of this approach. Mr. Obama is proposing among everything else $1 trillion in new entitlements, and entitlement programs never go away, or in the oddly poetic bureaucratic jargon, “sunset.” He is proposing $1.4 trillion in new taxes, an appetite for which was largely was whetted by the shameful excesses of American CEO corporate culture. And finally, he has proposed $5 trillion in new debt, one-half the total accumulated national debt in all US history. All in one fell swoop.
He tells us that all this is going to work because the economy is going to be growing by 3.2 percent a year from now. Do you believe that? Would you take out a loan based on that? And in the three years following, he predicts that our economy will grow by 4 percent a year.
This is nothing if not audacious hope. If he’s right, then looking back, March 2009 will be the dawn of the Age of Stimulation, or whatever elegant phrase Niall Ferguson comes up with. If he turns out to be wrong, then it will look very different, the entrance ramp to the Road to Serfdom, perhaps, and he will reap the whirlwind that follows, along with the rest of us.
Have you ever seen such a mish-mash of contradictory thoughts?
“If this is what the American people want, so be it …”, said the modern day Pilate as he washed his hands of it all. And then the acknowledgement that these things being passed into law will never go away?
Where was he during the run-up? Eagerly lapping up the kool-aid and projecting his idea of hope and change on the blank screen Obama provided. And now he voices concern? Now he’s not sure about what seems to be planned?
What a fundamentally dishonest guy Chris Buckley is – sell the agenda knowing full well the probable outcome of its implementation and is now saying “well if this is what the American people want, they can’t complain when it takes us all to hell”. If you want to tap into an unlimited source of renewable energy, hook something up to Bill Buckley’s grave. He’s probably spinning so hard he could power NYC.
Well sort of. He tells us in his latest piece that he considers himself a “moderate-conservatitve” (what in the world is that?) and he finds the Obama budget (and agenda) waaay to “progressively liberal” for his taste.
Like David Broder, he seems to be surprised by that.
But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.
So programs are piled on top of each other and we wind up with a gargantuan $3.6 trillion budget. We end up with deficits that, when considered realistically, are $1 trillion a year and stretch as far as the eye can see. We end up with an agenda that is unexceptional in its parts but that, when taken as a whole, represents a social-engineering experiment that is entirely new.
The U.S. has never been a society riven by class resentment. Yet the Obama budget is predicated on a class divide. The president issued a read-my-lips pledge that no new burdens will fall on 95 percent of the American people. All the costs will be borne by the rich and all benefits redistributed downward.
The lesson the left learned from the Clinton era is to move boldly and unapologetically toward what they want while they have the power and popularity to do so instead of screwing around with moderation, incrementalism and governing from the center. And the Republicans only reinforced the lesson when they tip-toed around while they had power, seemingly more worried about being liked than getting things done that agreed with their principles. Well, as Brooks and the “moderates” who were fooled into thinking Obama would be another Clinton have found out, there’s nothing “centrist” to this bunch now in power.
To their horror, they find they’re getting exactly what they were told they would get and, for some reason, they’re surprised and don’t like it. But without them, this little progressive song and dance never had a chance of hitting the main stage.
Now, per Brooks, its up to the moderates to save the country.
Pardon me if I don’t hold my breath. The squishy middle save us from anything? Based on what? What principles do they rally too? As easily as they were gulled in the last election, they have little credibility when it comes to such activities. And to whom or what would they appeal? Other moderats who were as clueless as they were? Then what?
But losing the middle would be a bit of a blow to the Obama administration’s plans. Obama is presently trading off of his popularity and there seem to be more questions about his true intentions than satisfactory answers. A loss of popularity might stiffen the spines of some blue dog Dems and slow this rocket sled to hell down a bit. Of course, it seems there’s a RINO in the weeds for every blue dog that says no, so I’m not sure what real impact that would have. But hey, even the RINOs may get the message (again, not holding my breath).
I know it’s not much to hope for, but it is interesting to see the scales finally begin to fall from moderate eyes. It demonstrates the brilliance of the candidate being the projection screen and with a few key words like “hope” and “change”, conning the middle into pretending that the fantasies they’ve conjured up and projected on him would become reality. Now we pay the piper for that little screw up, don’t we?
As you might imagine, the 5% (the taxable “rich”) are trying to figure out how to become a part of the 95% (the “tax cut” rest):
President Barack Obama’s tax proposal – which promises to increasetaxes for those families with incomes of $250,000 or more — has some Americans brainstorming ways to decrease their pay, even if it’s just by a dollar.
I’m sure this comes as a horrific surprise to those who have been clapping their hands gleefully in anticipation of the “rich” finally “getting theirs”. But the “rich”, or at least some of them, may have other ideas. The following anecdote best illustrates the most important points:
Dr. Sharon Poczatek, who runs her own dental practice in Boulder, Colo., said that she too is trying to figure out ways to get out of paying the taxes proposed in Obama’s plan.
“I’ve put thought into how to get under $250,000,” said Poczatek. “It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off.”
“Generally it means being less productive,” she said.
“The motivation for a lot of people like me – dentists, entrepreneurs, lawyers – is that the more you work the more money you make,” said Poczatek. “But if I’m going to be working just to give it back to the government — it’s de-motivating and demoralizing.”
Like the probable results of the Obama plan so far?
Fewer employees (that’s jobs for those missing the point), less money (which means a tax cut instead of a tax increase), less production (scarcity), less in taxes for the government and thus less in revenue with which to meet its spending goals.
She is, of course, exactly right – working to make the government’s coffers fatter is both de-motivating and demoralizing.
So assuming that the majority of that percentage of the population now under the tax hike gun is successful in lowering their earning profile to the “tax cut” category, what alternative does that leave for a government hungry for revenue?
It can redfine “rich”.
The cycle repeats with the “new” rich going through the same type of cutting back – letting employees go, doing less work and leaving government with less anticipated revenue. The engine of commerce – the engine of prosperity and jobs – goes into reverse as each new attempt to secure the funding necessary to move the dream agenda forward is scuttled by selfish Americans not willing to work just to hand over what they earn to government.
I can’t imagine why people still wonder why I want to see the Obama agenda fail?
This is the fourth nominee by Obama that has come under scrutiny due to failure to pay taxes.
Need anymore evidence that taxes are too high, the tax code is difficult to understand and the tax system is broken? Look no further than appointees of Barack Obama.
You know I’ve been reading all the opinions being tossed around about that statement by Limbaugh, and I’ve thought about it for a while, and I just can’t find anything wrong with it.
Here’s a confession: I’d be lying out of my 3rd point of contact if I said I wanted him to succeed. That’s because “success” would mean the subversion of everything I find important into something I loathe. It would mean the supplanting of free market and capitalistic economic mechanisms with those designed by government. It would mean sanctioning and approving govenment driven market distortions. It would mean approving government picking economic winners and losers. It would mean agreeing that it is the job of government to provide health care, welfare, and retirement. And on and on we go.
So I’d be absolutely full of it if I said, with a smile, “of course I want Mr. Obama to succeed, he’s our President and no patriotic American wants to see a President fail”.
Well, except those patriotic Americans of the left during the last 8 years.
But you know, that doesn’t count. 8 years of claiming to be “in the darkness”, governed by “a loser” and an “incompetent” who was taking us down the road to “totalitarianism” and who had to be stopped wasn’t at all the same as Rush Limbaugh stating he wants Obama to fail.
That was then, this is now. Then it was patriotic dissent. Now it’s an unspeakable outrage.
Well, let me go on record here, not that it counts for much. It’s nothing personal toward Mr. Obama. He’s a nice enough guy for someone who I think has an agenda which will destroy this country and the institutions which have made us the most prosperous and powerful nation in the world. So it’s not personal. It’s political.
It’s about what he represents politically. It’s about his political agenda. And since he’s the driving force behind his political agenda it’s rather hard to separate the man from the movement, wouldn’t you say? I guess I could be real cagey about it and say, “of course I want to see Mr. Obama succeed, but I want his agenda to fail”.
Makes no sense does it?
Nor does saying, “this has nothing to do with Obama, it’s about the agenda, and I want it to fail”. That’s as false as any other statement which tries to separate Obama from his agenda. And that bears saying again – it’s “his agenda”. If Iraq was “Bush’s war”, this spending monstrosity and the plans that go with it are “Obama’s agenda”, aren’t they?
Well, unsurprisingly, I want that agenda to fail.
If you want to interpret that to mean I want Obama to fail, so be it – that’s up to you.
But don’t even try to pretend that this is something new or unique to the right after the last 8 years. And for the record, I wanted much of Bush’s agenda to fail as well – Medicare Part D, NCLB, etc.
So save your self-righteous hypocrisy about Limbaugh’s desire to see Obama fail for someone who cares. To be perfectly clear, I want to see the Obama agenda to go down in flames too. If that happens to take Obama with it – oh well.
Two major points about the budget plan the Obama administration has out there (from the Heritage Foundation):
Spending: Obama’s budget proposes $1.13 trillion in regular discretionary spending for 2010. This is a full 12% increase over the 2009 spending baseline. On top of this the Obama budget increases entitlement spending by another $700 billion. The proposed post-recession spending level of 22% of GDP has been exceeded only 8 times in the post-war era. And these numbers do not include the spending priorities of the unchecked far left in Congress.
The Chicago Tribune reports today “President Barack Obama will break a campaign pledge against congressional earmarks and sign a budget bill laden with millions in lawmakers’ pet projects … Taxpayers for Common Sense, a watchdog group, identified almost 8,600 earmarks totaling $7.7 billion.”
Deficits: The Obama budget claims to cut the deficit in half by 2012, but relies on audaciously optimistic economic forecasts that no one believes in. Adding the “stimulus” bill to a realistic budget baseline yields a projected 2010-2017 cumulative budget deficit of $8.4 trillion – 2.5 times the size of President Bush’s deficits over the same 8-year time period. Before the recession, revenues were 18 percent of GDP and spending was 20 percent. After the recession, President Obama would maintain revenues at 19 percent of GDP, and spending at 22 percent. In other words, all new tax revenues would finance new spending, rather than deficit reduction. President Obama’s structural budget deficit would exceed President Bush’s.
So you have, in the time of economic contraction and massive deficit, a 12% increase over the 2009 spending baseline in discretionary spending. 12%. And entitlement increase of $700 billion. In an 8 year time period (should he be re-elected in 2012) Obama plans to add 8.4 trillion to the debt – a full 2.5 times larger than the huge debt George Bush added. This is a phenomenal and eventually crippling level of borrowing and spending. There is no end in sight. Where the Bush administration spent 2% above the revenue, even with an increase in revenue from increased taxation, the Obama administration plans on maintaining a 3% spending gap of revenue/spending.
Untenable, unsustainable and ultimately, utterly destructive to a market economy.
A billion dollars of your tax dollars is on its way to Palestine, 300 million of it earmarked for the Gaza Strip where Hamas still rules:
U.S. Secretary of State Hillary Rodham Clinton on Monday will pledge about $300 million in U.S. humanitarian aid for the war-torn Gaza Strip, plus about $600 million in assistance to the Palestinian Authority, a U.S. official said Sunday.
State Department spokesman Robert A. Wood told reporters traveling with Clinton Sunday that she would announce the donations at an international pledging conference at this Red Sea resort. The conference is seeking money for Gaza and the Palestinian economy.
So thanks to your generosity, Hamas doesn’t have to ante up $300 million to support its own people. Yes, your subsidy will allow them to instead purchase some new munitions and rockets with which to attack Israel.
This is the same Secretary of State who recently was peddling our debt bonds to the Chinese, ostensibly so we could borrow more money to, what, fund Hama’s war on Israel?
Isn’t life ironic?