According to President Barack Obama’s 2013 budget estimate, the National Debt this year is a staggering $14 trillion dollars. The President blames his predecessor George W. Bush, saying “we cut taxes without paying for them over the last decade; we ended up instituting new programs like a prescription drug program for seniors that was not paid for; we fought two wars, we didn’t pay for them,” etc.
It’s certainly true, as Human Events has pointed out before, that Bush was profligate, outspending LBJ and proclaiming, “I’ve abandoned free-market principles to save the free-market system.” In Fiscal Year 2009, in response to the financial crisis, Bush increased spending by more than half a trillion dollars, while revenues simultaneously fell more than $400 billion, producing the first trillion-dollar deficit in history. But Obama has continued this spending spree, running trillion dollar deficits every year since, and planning to do so again this year. Yes, Bush increased the debt by an average of $750 billion per year, but Obama has increased the debt by an average of $1.4 trillion annually – about 85 percent faster than Bush – and plans to continue doing so.
In addition to Bush, the President blames this soaring debt on “the rich” for not paying their “fair share,” most recently in his news conference on Super Tuesday March 6, when he again demanded tax hikes on “billionaires” allegedly “paying a lower tax rate than their secretaries.”
In reality, the median salary of Executive Secretaries is $43,520, according to the latest figures from the U.S. Bureau of Labor Statistics. The nonpartisan Tax Policy Center calculates their effective Federal tax rate at 12.5 percent, whereas those with annual income of $1 million or more pay an effective tax rate of 29.1 percent – more than twice what Obama claims!
Obama’s Exhibit A is his campaign bundler Warren Buffett, who advocates a tax hike on the basis of some extremely dubious claims. For this, Buffett is widely lionized in the media as a great humanitarian, although there is another, largely neglected angle to the story.
The higher the tax rates on the wealthy, the more money Buffett stands to make, observes former Human Events reporter Tim Carney. But there is more to it than this: It was the Reagan tax cuts of the 1980s that fired the economic boom enabling Buffett’s rise to displace previously dominant market players; by advocating higher taxes now, Buffett is in effect pulling the ladder up after him, thus preventing newer upstarts from similarly displacing him.
If Obama is interested in the actual culprit behind the debt spike under his administration — rather than just scapegoating “the rich” — he might look to his own spending.
For example, Obama wasted $825 billion on a stimulus that will not “stimulate,” but in the long run depress GDP by up to 0.2 percent starting in 2015, according to the nonpartisan Congressional Budget Office. CBO’s baseline estimate is that GDP will average $22.5 trillion per year in 2015-19, meaning that the stimulus could reduce output by as much as $225 billion over this period. If federal tax revenue continues at its postwar average 18 percent of GDP, this decline could add another $40 billion in debt, bringing the cost of this economy-depressing program to $865 billion — more than President Bush spent on the war in Afghanistan.
Nor do things look brighter down the road. Obamacare “will not add to our deficit,” vowed the President on September 9, 2009, when he was forcing it upon unwilling American taxpayers. But a new CBO report estimates that — even after subtracting $332 billion in new taxes and $167 billion in “penalties” — by 2022, Obamacare alone will add cumulative net deficit spending of $1.25 trillion – according to the CBO, more than last year’s entire federal deficit.