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February 15, 2011
Obama's FY2012 Budget:Taxes, Taxes, and More Taxes and BIGGER Government!!!!!
FOX Business Network David Asman on President Obamas budget proposal and why it hints at more wasteful spending.
Obama's FY2012 Budget:Taxes, Taxes, and More Taxes
Obama released his budget this morning. Rather than focusing on Washington’s over-spending problem, the budget calls for higher taxes on families and small businesses to pay for even more government spending. Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021. By comparison, the historical average is only 18% of GDP.
Tax hike lowlights include:
•Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%. This is a $709 billion/10 year tax hike
•Raising the capital gains and dividends rate from 15% to 20%
•Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million. This is a $98 billion/ten year tax hike
•Capping the value of itemized deductions at the 28% bracket rate. This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses. A new means-tested phaseout of itemized deductions limits them even more. This is a $321 billion/ten year tax hike
•New bank taxes totaling $33 billion over ten years
•New international corporate tax hikes totaling $129 billion over ten years
•New life insurance company taxes totaling $14 billion over ten years
•Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years
•Increasing unemployment payroll taxes by $15 billion over ten years
•Taxing management capital gains in an investment partnership (“carried interest”) as ordinary income. This is a tax hike of $15 billion over ten years
•A giveaway to the trial lawyers—not letting companies deduct the cost of punitive damages from a lawsuit settlement. This is a tax hike of $300 million over ten years
•Increasing tax penalties, information reporting, and IRS information sharing. This is a ten-year tax hike of $20 billion.
Add it all together, and this budget is a ten-year, $1.5 trillion tax hike over present law. That’s $1.5 trillion taken out of the economy and spent on government instead of being used to create jobs.
The “tax relief” in the budget is mostly just an extension of present law, and also some refundable credit outlay spending in the tax code. There is virtually no new tax relief relative to present law in the President’s budget.
Geithner Quietly Tells Obama Debt-to-GDP Cost Poised to Increase to Record
Barack Obama may lose the advantage of low borrowing costs as the U.S. Treasury Department says what it pays to service the national debt is poised to triple amid record budget deficits.
Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010 with the government forecast to run cumulative deficits of more than $4 trillion through the end of 2015, according to page 23 of a 24-page presentation made to a 13-member committee of bond dealers and investors that meet quarterly with Treasury officials.
While some of the lowest borrowing costs on record have helped the economy recover from its worst financial crisis since the Great Depression, bond yields are now rising as growth resumes. Net interest expense will triple to an all-time high of $554 billion in 2015 from $185 billion in 2010, according to the Obama administration’s adjusted 2011 budget.
“It’s a slow train wreck coming and we all know it’s going to happen,” said Bret Barker, an interest-rate analyst at Los Angeles-based TCW Group Inc., which manages about $115 billion in assets. “It’s just a question of whether we want to deal with it. There are huge structural changes that have to go on with this economy.”
The amount of marketable U.S. government debt outstanding has risen to $8.96 trillion from $5.8 trillion at the end of 2008, according to the Treasury Department. Debt-service costs will climb to 82 percent of the $757 billion shortfall projected for 2016 from about 12 percent in last year’s deficit, according to the budget projections.
Forecasts of higher interest expenses raises the pressure on Obama to plan for trimming the deficit. The President, who has called for a five-year freeze on discretionary spending other than national security, sent Congress a $3.7 trillion budget today that projects the federal deficit will exceed $1 trillion for the fourth consecutive year in 2012 before falling to more “sustainable” levels by the middle of the decade.
“If government debt and deficits were actually to grow at the pace envisioned, the economic and financial effects would be severe,” Federal Reserve Chairman Ben S. Bernanke told the House Budget Committee Feb. 9. “Sustained high rates of government borrowing would both drain funds away from private investment and increase our debt to foreigners, with adverse long-run effects on U.S. output, incomes, and standards of living.”
Wild Thing's comment........
“Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021.”
This was part of the plan all along. Make things so messed up that everyone finally agrees to permanently increase the size of the federal government’s take from the productive sector of society. Ironically, instead of closing the deficit, that would just increases the base from which larger deficits will be run up next time the dems get in the driver’s seat.
In the early days of America's experiment in liberty, its Founders warned of oppressive taxation by those elected to represent the people. Under their "People's" Constitution, the people were left free, and the government was limited.
The following statement by Sir Winston Churchill, upon leaving office as Prime Minister in 1945:
"I do not believe in the power of the State to plan and enforce. No matter how numerous are the committees they set up or the ever-growing hordes of officials they employ or the severity of the punishments they inflict or threaten, they can't approach the high level of internal economic production achieved under free enterprise. Personal initiative, competitive selection, and profit motive corrected by failure and the infinite processes of good housekeeping and personal ingenuity, these constitute the life of a free society. It is this vital creative impulse that I deeply fear the doctrines and policies of the socialist government has destroyed. Nothing that they can plan and order and rush around enforcing will take its place. They have broken the main spring and until we get a new one, the watch wil not go. Set the people free. Get out of the way and let them make the best of themselves. I am sure that this policy of equalizing misery and organizing society--instead of allowing diligence, self-interest and ingenuity to produce abundance--has only to be prolonged to kill this British Island stone dead."
As government creates no wealth and has no money, the pay for every job in government must first come out of the pockets of hardworking citizens in the private sector. Ahhh, guess that's what you call "redistributing" wealth!
Posted by Wild Thing at February 15, 2011 04:50 AM
Comments
Great quote by Churchill. Thanks WT. And it seems to have come to pass. Britain no longer resembles what it was in 1945.
Posted by: Jim at February 15, 2011 09:35 AM
Who said obama moved to the center ? He's right on target to bankrupt the country, the dollar is so low the IMF wants to use something else as a reserve.
Posted by: Mark at February 15, 2011 11:42 AM
Hosni Obama all day everyday. (24/7/365) Has there been a day in the posers dictatorship that we've not seen or heard from him? Everytime I hear or see him I change the station whether its TV or radio. Fuck that SOB, get out of our lives and stay out.
Posted by: Eddie (Enemy of the State) at February 15, 2011 12:03 PM
..I agree...just.."get out of the way...". But the jerk won't till we unelect him.
Posted by: jan at February 15, 2011 05:50 PM
Thank you everyone so much!
Posted by: Wild Thing at February 16, 2011 02:34 AM
