OBAMA'S PLAN FOR A DEBT-RIDDEN FUTURE
June 9, 2009
American families over the last year have lost eight percent of their net worth, and if the president has his way, they will soon be hit with more than a 100 percent increase in public debt. Moreover, the Treasury will soon have to begin repaying to Social Security more than $5 trillion in payroll tax revenues that the government had taken from the trust fund and spent for earmarks and other purposes, say Ernest Christian and Gary Robbins, of the Center for Strategic Tax Reform.
Even without the Obama surge in debt taxpayers face the prospect of 60 to 70 percent income tax rates in the future to pay for $48 trillion in unfunded liabilities under existing entitlement programs. However, the current level of private saving is grossly insufficient to make up the shortfall. In fact, Washington is doing nearly everything possible to prevent Americans from adding to their savings, say Christian and Robbins:
- In theory, the U.S. government can always pay its debts by increasing taxes, but the problem with taxes is that increases harm the economy disproportionately and quickly reduce the economy's taxpaying capacity.
- Paying off Obama's 10-year string of deficits that add up to $9.3 trillion with income tax increases of $9.3 trillion over 10 years would cost the private sector $23 trillion to $37 trillion.
- In effect, American families would over time lose an amount greater than an entire year of gross domestic product (GDP) -- a blow far more severe than the damage being done to them by the current recession.
It is irresponsible stewardship to go on a borrowing spree; the responsible alternative is for Washington to spend less, otherwise, the next Washington-created bubble to burst may be the full faith and credit of the United States, say Christian and Robbins.
Source: Ernest S. Christian and Gary A. Robbins, "Obama's Plan For A Debt-Ridden Future," Investor's Business Daily, June 5, 2009.
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