The Obama Deficits are Biggest since the 1940s and Taxing the Rich can’t Pay them Down

Posted by PITHOCRATES - August 5th, 2012

Week in Review

President Obama and Vice President Biden have both said the Obama administration did not increase government spending.  In fact all of their deficits were caused by some other guy.  George W. Bush.  It wasn’t their fault.  But they knew how to get rid of those George W. Bush deficits.  All they had to do was tax the rich just a little more.  So they paid their fair share.  Well, if you examine the numbers you can see they’re not exactly telling the truth (see Federal Deficit Highest Since 1940s by Elizabeth Flock posted 8/1/2012 on U.S. News & World Report).

The federal deficit is higher than it has been since the 1940s, in the years immediately after World War II.

A new visual from the “Face the Facts USA,” a non-partisan election project from George Washington University, shows the federal deficit has risen significantly under President Barack Obama, and that the government is increasingly spending money it doesn’t have…

An ad released by the Obama campaign Tuesday sought to stave off criticism about the president’s handling of the deficit. Titled “Worried,” the ad argues that Obama was the only candidate who had a plan to reduce the deficit, by having “millionaires pay a little more” in taxes.

Have millionaires pay a little more?  All right, for the sake of argument, let’s look at some tax return data.  In 2008, the total taxable income from all tax returns (see Table 1) for everyone taxed above 28% (including ALL capital gains income) was only $2.079 trillion.  That includes capital gains income taxed at 15%, 25% and 29%.  And income taxed at 33% and 35%.  The high-end earners.  Including a lot of small business owners who are not millionaires.  So, how much additional tax revenue will the government take in if they taxed these people an additional 2%?  About $42 billion.  An additional 5%?  About $104 billion.  An additional 10%?  About $208 billion.  These are all billions with a ‘b’.  So, no, a little more from the millionaires won’t even dent a trillion dollar deficit.

Class warfare may help win an election.  But when you check the numbers it’s downright nonsensical.  The ‘rich’ people, those in the 35% bracket in 2008 earned $1.1 trillion.  The budget deficit in 2011 was $1.3 trillion.  So even if you took ALL of their income there would still be a deficit.  The spending is just too great.  And there just aren’t enough rich people to tax.  The only way we can reduce our deficit is with spending cuts.  At least, mathematically.

So the Obama campaign isn’t telling the truth when they say President Obama had a plan to reduce the deficit by getting the millionaires to pay a little more in taxes.  For even if you took all of their income the deficit would still grow.  So if that’s not a true claim then perhaps their other claim isn’t true either.  And George W. Bush isn’t still spending money 3 and a half years out of office.

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