President Barack Obama will lay out his plan for reducing the nation's deficit Wednesday, belatedly entering a fight over the nation's long-term financial future. But in addition to suggesting cuts—the current focus of debate—the White House looks set to aim its firepower on a more divisive topic: taxes.More at the link above.
In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy.
Democrats just don't believe increased taxes on the productive sectors of the economy will harm growth prospects. But the Bush tax cuts had reduced deficits by 2007, as GDP growth accelerated and unemployment declined. The far left-leaning New York Times reported in 2006, "Surprising Jump in Tax Revenues Is Curbing Deficit":
An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.
On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.
Tax revenues are climbing twice as fast as the administration predicted in February, so fast that the budget deficit could actually decline this year.
The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big increase in individual taxes on stock market profits and executive bonuses.
See also Michael Medved's piece on this from a couple of weeks ago, "Don't Blame Tax Cuts for Catastrophic Deficits."
We need to reduce spending not raise taxes. Both parties are guilty on the spending side, but only the Democrats insist in raising taxes on "high income" earners (people making not much more than my wife and I, and we're by no means "rich"). But when you have an ever-increasing government, with entitlement programs impervious to reform, the inevitable result is uncontrolled demand for new revenues. It's obscene, frankly. But progressives are obscene, not to mention their RINO enablers.
