The Obama Budget
February 17, 2012
President Obama recently proposed his budget for fiscal year 2013, including outlook and projections for many years to follow. While analysts continue to look at specifics, the general diagnosis is that Americans can look forward to more and higher taxes, less international competitiveness, deflated growth and out-of-control deficits that will drive the federal government even further into debt, says the Wall Street Journal.
- Ignoring the need for greater austerity in order to control deficits, the Obama administration predicts that the current fiscal year will see spending rise by $193 billion to $3.8 trillion -- the equivalent to 24.3 percent of gross domestic product (GDP).
- This will make four straight years of spending over 24 percent of GDP -- the highest four-year span since 1946.
- Simultaneously, the White House budget office estimates that for the fourth year in a row, government revenues will not reach 16 percent of GDP, which has not happened since 1950.
- The combination of skyrocketing spending and deflated revenues leads to unprecedented deficits -- another deficit of $1.327 trillion for 2012 will be the fourth year with deficits of at least $1.29 trillion each year.
- In total, President Obama will have added $5 trillion to the publicly held debt within his first term.
Despite these trends, the proposed budget only promises fiscal responsibility in the far future while accomplishing nothing in the short-term. Most importantly for the short term, however, is a slew of tax hikes.
- The president's plan would cancel the investment tax rate reductions that have been in place since 2003, impose a new investment income tax hike of 3.8 percent, and introduce the new "Buffett rule" on the rich.
- Capital gains and dividend tax rates will be increased from 15 percent to 30 percent.
- The estate tax will climb to 45 percent from 35 percent.
The Obama administration hides the pernicious effects that these taxes will have on long-term economic growth and estimates outrageous rates of growth in the near future. All in all, the proposed budget and its deceptive estimates are nothing but a shell game for American voters.
Source: "The Amazing Obama Budget," Wall Street Journal, February 15, 2012.
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