It was one of Barack’s biggest campaign promise. The tax
cut credit to 95% of the nation. The other 5% would get an increase to pay for the 95% (Congressional Math, I guess). Get ready for more broken promises.
The way things look, the government will need the money.
The nonpartisan Congressional Budget Office says Obama’s proposed budget comes up short on its estimates for spending, revenues and deficits — virtually everything.
Over 10 years, the CBO says, the cumulative deficit will reach $9.3 trillion, $2.3 trillion more than expected in the White House budget. Spending would jump permanently to 23% of GDP — and possibly higher — from 20% last year, a $1.7 trillion gain over that time.
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The math is clear. In the next five years alone, Obama’s budget adds $5.7 trillion to the U.S. debt. That’s $48,000 per household. Put in perspective, servicing that debt each year will cost as much as the annual defense budget by the end of the decade.
Today, the federal government spends about $24,172 per household. That will grow to $32,463 by 2019, after adjusting for inflation — for a real spending gain of 34%. Paying for all this will take money — vast, unprecedented amounts of it. Yet, on the stump last year, Obama promised that 95% of Americans would get a tax cut under him, and that only the very wealthiest would pay more.
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From 1953 to 1982, tax rates were at their highest. As Heritage Foundation analyst Brian Riedl recently noted, during that time, the economy was in recession 21% of the time and the stock market rose 5.4% on average. This culminated in the 1970s, when inflation hit 13% and interest rates 19% under Jimmy Carter.
Since the broad-based Reagan cuts in 1982, the economy has been in recession just 10% of the time, inflation has never gone above 5%, interest rates have never been over 12%, and the stock market — even after two record drops — has averaged gains of 7% a year.
Reagan slashed taxes and simplified the code, and revenues and growth soared. That’s what works, as dozens of studies prove.
So if they’re sincere, Obama’s tax reformers have a choice: follow the tax policies of Reagan and thrive, or those of Carter and fail. To us, it’s a no-brainer.