No middle class tax cut? What happened?
Obama's middle class tax cut may not survive budget. So read the ABC News headline. I was reminded of Bush Sr.’s “no new taxes” rhetoric and more of the same from his successor Bill Clinton. Is it realistic to expect Obama to hold true to his promises of a middle class tax cut? I think the evidence would point to a resounding no.
The truth is that any forthcoming “tax break” would be swallowed by the rise in costs in other areas. Simple mathematics will prove this point. Obama’s proposed spending will necessarily negate any tax cuts for the long term. Sooner or later the bill is going to come due and we are all going to pay. We shouldn’t forget this important fact; what debt our federal government incurs is paid by you and me.
Our current federal debt, or a more meaningful term public debt, stands at a staggering 11 trillion dollars. Maybe it is more meaningful to look at that number in long hand $11,042,533,971,450. That works out to about $36,314 per person. Let that sink in for a moment. At some point in the future this will be paid by tax payers, you, me and our progeny. Let me be clear, Obama is not responsible for this number. This was waiting for him when he arrived.
What does rest squarely on Obama’s shoulders is that which he has done and that which he plans to do. By conservative estimates his 2009 budget will add an additional $1.2 trillion to the debt. This does not include spending contained in the stimulus which is almost another trillion on top of that. Over the next ten years the number rises to almost 9 trillion added to the national debt.
A little perspective is helpful to grasp the enormity of spending that Obama has proposed. If you added all of the debt incurred from George Washington to George W. Bush you would still be under the amount Obama will spend in the next 5 years. Restated Obama will out spend every other president we’ve ever had combined.
You may be thinking that he is just going to raise taxes on the rich to cover all of this spending. Again a little perspective is helpful. The Gross Domestic Product (GDP) of the United States for fiscal year 2008 was $13,840,000,000,000; let’s call it $14 trillion. If you combine our current $11 trillion debt with the $9 trillion expected to result from Obama’s spending you have a nice round $20 trillion. That means if the government confiscated every single cent earned by every man, women, child and business in the United States for an entire year we would still owe about $7 trillion. Which is nearly the GDP of Germany and Japan combined.
As I stated at the beginning, tax cuts are more than unlikely, they are all but impossible in the long term. The past may be less important than the future. Republicans and Democrats alike are responsible for this fiasco. The republicans claim the have repented and have blasted Obama on his spending. Obama has responded by stating defiantly that “I suspect that some of those republican critics have a short memory, because as I recall, I’m inheriting a $1.3 trillion deficit, annual deficit, from them.” In that statement he is not wrong but it misses the point.
I think an analogy may be in order; the republicans drove the nation into a ditch with their wasteful spending. No doubt about it. The voters responded by taking the keys and handing them over to Obama. Most assumed that Obama would back the car from the precipice slowly and responsibly, as he promised to do. No one expected him to jump behind the wheel, throw the car in drive, hit the gas and go screaming off the cliff; the whole while blaming the other party for leaving the car there to start with.
If anyone doubts the numbers I have used please feel free to look them up yourself; you will find them accurate. (Some estimates vary wildly; where that was the case I tried to err on the conservative side.)