The Obama $3.6 Trillion Budget And His "Tax Increases On The Rich"

This entire debate should be summed up as "In pursuit of one's hatred for a certain class of people, THE MASSES of supporters got taken for a ride".

Let me understand this (and this IS NOT ABOUT BUSH or OBAMA!!):

The record $2,000 billion budget of 2008 was a shameful record as the federal budget crossed this threshold for the first time.

A mere one year later and this same entity proposes a $3,600 billion budget!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Many of the critics of $2 trillion are cheering the $3.6 trillion as a "change in the right direction for our country". Nancy Pelosi says "This budget is a better reflection of our national moral consciousness".

The key means by which some seek to deflect due criticism on out of control spending is to:

1. Focus on the tax increases upon the Rich
2. Focus on the closure of corporate tax loopholes
3. Focus on the reduction in spending in Iraq

This all sounds good......until you deal with THE NUMBERS rather than the rhetoric which fall in line with your own biases.


The Wall Street Journal does an excellent job in focusing in on the illusion of the wealthiest 2% of Americans. Even if they suffered a 100% tax - this does not cover the spending increases proposed in this new budget.

People forget that FDR had a 62% marginal income tax on the wealthiest Americans and this STILL did not cure poverty not pay for the government expenditures at the time.

The 2% Illusion
Take everything they earn, and it still won't be enough.

Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and "the wealthiest 2%." Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That's about 7% of all returns; the data aren't broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% -- about 1.65 million filers making above $388,806 -- paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.

Note that federal income taxes are already "progressive" with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He'd also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won't come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.

But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.

Iraq War spending will be slashed from about $160 billion per year to about $75 billion in 2009 but then shoot back up to $130 billion in 2010 as the troops withdraw. Some of this spending will be shifted over to Afghanistan so this is not a 100% recovery of this budgetary spending.


What have I been warning about for a long time? INCREASING ENTITLEMENT SPENDING!!
Where as in 2008 the big 3 entitlement programs consumed $1,000 billion of our federal budget.......this has grown to over $1,450 billion in this budget proposal.

The lack of credibility in certain matters that some people show is stunning.
This is not a "Liberal/Conservative" war but instead a question of the solvency of America.