PrintMay 7, 2011
Do The Math, Mr. President
President Obama is selling his FY12 Budget 2.0 that isn't a budget that emerged from his April 13 speech. His budget isn't really a budget because he hasn't actually got any numbers to back up his rhetoric.
So let's do the numbers for him. President Obama says that he wants the rich to pay "a little more" in federal income taxes. According to the IRS, using the latest numbers, for 2008, the total income tax collection was $1,031 billion. The richest one percent paid $392 billion in federal income tax, and the richest 5 percent paid $606 billion. Wow. The richest one percent are paying almost 38 percent of the income tax and the top 5 percent are already paying about 60 percent of all federal income taxes. Let's show the situation in class warrior terms.
The richest one percent paying a mere 38 percent of federal income taxes is a violation of the president's principle of shared sacrifice. These rich should pay a "little more."
What did you have in mind for "a little more," Mr. President? Five percent? That will raise about $30 billion a year on the richest five percent, and will hardly make a dent in the $1,100 billion deficit. So maybe we'd better raise the ante, and make the rich sacrifice a bit more. Heck, let's hike their taxes by 25 percent. That will get us $150 billion a year from the richest five percent. That still knocks only ten percent of the deficit.
But wait a minute. According to usgovernmentrevenue.com, the entire haul from the individual income tax in FY2012 is budgeted at $1,140 billion. So there is no way in the world that you can close the deficit, at $1,101 billion in 2012, by asking the rich to "pay a little more."
Mr. President. I think that maybe you need to work on your math. Because I am sure that you have no intention of taxing the worthy middle class to get that money. Here is a link to usgovernmentrevenue.com's briefing on the Federal Income Tax to get you started.
And of course, all this math assumes that the rich will just sit there and take it. More likely, they will put their lawyers to work and figure out how to avoid paying. Too bad about the jobs that the rich don't create for the unemployed when they are spending money on lawyers' fees.
In the end, as we know, it is Medicare that will end America as we know it. The president's plan is to save us from a Republican fate worse than death with a death panel of doctors and nurses diligently winkling out price gouging in the health care industry. No doubt they will be just as effective as the administration's latest wheeze, an oil price-gouging panel at the Justice Department.
But before that, we'll probably have a debt crisis. Naturally, at usgovernmentspending.com we have a crack team working on this.
Here's a question for the crack team at usgovernmentspending.com: What would happen to the government's interest payments if interest rates went up more than the administration estimates? Thank you Mr. President. I'm glad you asked. Here is an analysis of interest payments for the FY12 budget (the first one) from now through 2016. Underneath your estimates of interest rates is an input section that allows users of usgovernmentspending.com to make their own estimates.
Really, Mr. President? You reckon that the average interest rate on the federal debt will only go up to 2.7 percent by 2016? Has anyone in your administration looked at the possibility that the sun won't come out tomorrow? Suppose interest rates cranked up to 3 or 4 percent pretty soon. Then we'd have a trillion dollar deficit each year out through 2016, ending up with an average interest rate on the debt of 4.7 percent in 2016. And historically, 4.7 percent ain't that high.
Let's try a less extreme case, and assume that interest rates will start up in mid 2012 in order to stop a run on the dollar. Let's assume that the average interest on the debt rises about the same as in the late 1970s, when the average interest rate on the debt went from 4.6 percent in 1978, to 5.1 percent in 1979, 5.8 percent in 1980, and then stuck at around 7 percent for most of the Reagan administration. Here's an analysis assuming that the Fed has to start fighting inflation mid way through next year.
It gets us to trillion dollar deficits each year in the last two years of your second term, Mr. President.
Say, Mr. President, I've got an idea. Take a weekend out from your busy golf schedule and spend a few hours doing the brackets at usgovernmentspending.com. You might learn enough to save our nation from sovereign default. And that would save a lot of ordinary Americans from a lot of unnecessary suffering.
Christopher Chantrill is a frequent contributor to American Thinker. See his usgovernmentspending.com and also usgovernmentdebt.us. At americanmanifesto.org he is blogging and writing An American Manifesto: Life After Liberalism.
