Not Enough Taxes

President Obama wants $1.6 trillion in tax hikes over the next ten years and the Republicans are offering $800 billion over that time period.  Either one sounds like a lot of money.  The President claims that our deficits and expanding debt are not because of excessive spending and massive entitlements; they are from a lack of taxation.  Though I would disagree, let us work on that assumption.  For the last four years, we have run over $1 trillion deficits.  If the problem is insufficient taxation, then the president should be calling for something around a $10 trillion tax increase over the next ten years.  His call for a mere $1.6 trillion will only reduce our yearly deficits by $160 billion a year.  Had such taxes been collected for the last 4 years, the budget deficits would still have exceeded a trillion dollars each.  So, if taxes are really the issue, they need to be raised considerably higher than the president proposes.

The Republicans claim that our deficits are a result of overspending.  The government takes in $2.4 trillion in taxes... er... revenue and spends... er... invests $3.5 trillion a year.  Of that $3.5 trillion, $727 billion is going to Medicare & Medicaid, $759 billion is going to Social Security, $652 billion is going to the military, $360 billion is going to income security (e.g. food stamps, earned income tax credits, unemployment, etc.), $258 billion is debt service (just paying the interest on that borrowed $16 trillion), $212 billion to federal pensions, and the remaining $600 billion to all those other functions of government.  Contrary to popular belief, spending on wars and the military is not the problem.  You could abolish the military and still have $500 billion deficits.  Let's even cancel the pensions and health care for veterans and that would bring us down to $300 billion deficits.  If we were to dust off the 2008 budget and just use that, our deficits would be instantly cut in half.  Really, now that the economy is 'poised' for recovery, we should be able to cut back government spending to pre-crisis levels, right?

 

One does not go into debt by a lack of income.  I have a friend who has darned near no income and yet he has considerable savings.  He understands spending within his means, meager as they are.  One goes into debt by spending too much, not earning too little.  A wise person budgets according to their income but the federal government seems to think that it can demand a raise (i.e. taxes) from the boss (i.e. taxpayers).  It might sound something like this:

 

"Gee, taxpayer, I've been spending 40% above my salary for a while now so I'm gonna need a substantial raise, okay?"

 

"No, I can't afford that right now.  Times are tough."

 

"Oh, sure you can.  Just cut the pay of the top earners and give it to me instead.  I insist."

 

Doesn't work in most cases but the government really can insist, on penalty of imprisonment.  Insist they shall and it will make hardly any difference.  The debt will continue to rise and the economy will continue to struggle.