Exactly What Does ‘Paying Down The Debt’ Mean ?

John Hinderaker at Power Line posted an article yesterday about President Obama’s claim that he plans to pay down the debt in a balanced fashion–increasing taxes on the wealthy to increase revenue and reduce the deficit. Aside from the fact that it is historically proven that raising taxes does not increase revenue, there are some definite problems with that approach.

This is a picture of a concept called the Laffer Curve:

As the illustration states, 50% is not necessarily the ‘magic number’–that number could be anywhere. The best real life illustration of this principle is the migration of millionaires out of Maryland after the tax on millionaires was increased (see rightwinggranny.com). People who will be impacted by large tax increases on the upper middle class (no–they are not ‘the rich’) usually have the means to shelter their wealth from the tax man (check out the financial disclosure statements of some of the Kennedy’s running for office).

The article at Power Line shows a graph of what President Obama’s budget plan will actually do for the deficit. The graph is based on figures from the Office of Management and Budget (OMB):

As voters, we need to be aware of the consequences of another four years of President Obama’s economic policies.

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Defending The Indefensible

Fox News Sunday

Image via Wikipedia

One of the challenges for voters in any election cycle is to sort out the truth from the ‘spin.’ Since we seem to be in a never-ending election cycle right now, that is becoming a full-time job. I like Fox News. That’s probably not a surprise to anyone who reads this website regularly, but I occasionally have my problems with their reporting as well as everyone else’s. However, yesterday morning I was cheering Chris Wallace for the questions he asked David Plouffe. The transcript of the interview can be found at the Fox News Sunday website

The discussion was about President Obama’s deficit reduction plan.

In the interview David Plouffe stated:

...But absent tax reform, the president believe the right way to get our fiscal house in order is ask the wealthy to pay their fair share. But he is going to continue, as he has throughout his presidency, push to cut taxes for the middle class folks so that they obviously can weather this economy turn better, but also allows them to help the economy by being able to consume more.

 Chris Wallace replied:

 But, Mr. Plouffe, what you are talking about $200 billion in tax cuts that end in the next 15 months. You’re talking about $2 trillion in tax increases that will go on for next decade. Between his jobs plan — and I want to break this down because it’s important — between his jobs plan and cutting the deficit, the president wants $1.5 trillion in new taxes over the next decade.

Let’s put it up on the screen — letting the Bush tax cuts for the wealthy expire, $866 billion; limiting the deductions for families making $250,000 a year, $410 billion; closing loopholes and tax breaks, $300 billion. And on top of that — on top of that, $1.5 trillion, another $500 billion in new taxes to pay for Obamacare, for a total of $2 trillion.

These are the facts that need to be repeated as the President claims that he is planning to raise taxes ONLY on the ‘rich.’

Chris Wallace also pointed out in the interview:

…$1 trillion of the $1 trillion in deficit reduction the president calls for in his plan is for not continuing to fight the wars in Iran and Afghanistan. The president is cutting money that wasn’t going to be spent anyway, instead of cutting of money that was.

The President’s jobs bill is all smoke and mirrors. It needs to be soundly defeated in Congress.


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The Obama Deficit Plan In Pictures

Yesterday’s Washington Examiner posted an article explaining why President Obama’s deficit reduction plan will not work. The article included two graphs:

The main point of the article is that tax revenues at the end of the Clinton administration hit 20.6 percent of the Gross Domestic Product (GDP). The highest number for that percentage is 20.9 percent in 1944. Unfortunately, government spending will reach levels well above 20 percent in the near future. The problem is not the revenue–it’s the spending. Most Americans have figured out that it is not productive to spend more money than you take in. It’s time the government also learned that principle.

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President Obama’s Debt Reduction Plan–Just Take More From Successful Americans

A website called mrc.tv posted a short video of President Obama saying, “The last thing you want to do is raise taxes in the middle of a recession because that would suck up… take more demand out of the economy and put businesses in a further hole.” That statement was made to NBC’s Chuck Todd on August 5, 2009. What has changed?

The Associated Press reported today on the President’s plan to reduce the deficit. The plan calls for $1.5 trillion in new taxes. Wow.

The article reports:

The president’s proposal would predominantly hit upper income taxpayers but would also reduce spending in mandatory benefit programs, including Medicare and Medicaid, by $580 billion. It also counts savings of $1 trillion over 10 years from the withdrawal of troops from Iraq and Afghanistan.

This is not a realistic deficit reduction proposal. It is a plan that the President expects the Republicans in the House of Representatives to reject so that he can use their rejection as a campaign issue. Tax increases on upper income people are not, nor have they ever been, the answer to the deficit–it’s time we took a good look at government waste–Solyndra anyone?

The Tax Lawyer’s Blog reported in December 2010:

When it comes to taxes paid, an even wider discrepancy shows itself — in reverse. Compared with that 38% of taxes paid by the top 1% of earners, the bottom 50% pay just 2.7% of the taxes collected.

This is a chart from the website:

Taxing people who are successful does not create jobs. They simply hire more attorneys and accountants to avoid the taxes. In the end, the middle class will pay the price–many of these ‘high earners’ are ‘S’ corporations who will have no choice but to charge more for their products to offset the higher taxes. The President’s deficit reduction plan should be dead on arrival.


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