Obama Budget Raises Taxes and Doubles the National Debt
by Brian M. Riedl
Abstract: President Obama declared: "I didn't come here to pass our problems on to the next president or the next generation--I'm here to solve them." Yet rather than "solve" the runaway spending that is projected to cause historic deficits, the President's budget doubles down on it with trillions of dollars in new spending and taxes, culminating in a doubling of the national debt. Heritage Foundation economic policy expert Brian Riedl lays out how a $3 trillion tax hike and an additional $74,000 debt burden on every U.S. household will affect the country--and why Congress should reject President Obama's budget proposal.
When he released his new budget proposal on February 1, President Barack Obama asserted that the government "simply cannot continue to spend as if deficits don't have consequences; as if waste doesn't matter; as if the hard-earned tax dollars of the American people can be treated like Monopoly money; as if we can ignore this challenge for another generation."[1]
Yet the President's new budget does exactly that-- raising taxes by $3 trillion and federal spending by $1.6 trillion over the next ten years. If enacted, this budget would increase the 2010 deficit to more than $1.5 trillion, and leave a deficit of more than $1 trillion even after an assumed return to peace and prosperity. Overall, the President's budget would double the national debt over the next decade.[2]
President Obama's Budget
•Would permanently expand the federal government by 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
•Would raise taxes onall Americans by nearly $3 trillion over the next decade;
•Would raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade;
•Would borrow 42 cents for each dollar spent in 2010;
•Would run a $1.6 trillion deficit in 2010--$143 billion higher than the recession-driven 2009 deficit;
•Would leave permanent deficits that top $1 trillion as late as 2020;
•Would dump an additional $74,000 per household of debt into the laps of our children and grandchildren; and
•Would double the publicly held national debt to over $18 trillion.
Source: Heritage Foundation calculations based on U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2011 (Washington, D.C.: U.S. Government Printing Office, 2010), pp. 146-179, Tables S-1 through S-14. Also includes the cost of House-passed cap-and-trade bill, which President Obama endorsed yet excluded from his budget tables.
Before the recession began, annual federal spending totaled $24,000 per household. President Obama would hike that spending above $36,000 per household by 2020--an inflation-adjusted $12,000-per-household expansion of government. (See Chart 1.) But even these steep tax increases would not finance all of this new spending: The President's budget would lead to trillions in new debt over the next decade. Read the rest of the article and see the graphs and charts at The Heritage Foundation.
November can't get here quick enough.
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