Powerline reports that the enormous federal deficit, run up in part by former President Bush’s administration, but trebled already under President Obama, is going to be difficult to pay off, because taxes can’t be raised without significantly impacting the economy.
Tim Geithner and Alan Greenspan were on ABC’s This Week this morning; both talked about the need to bring down the federal deficit, which is soaring to unprecedented levels under President Obama.
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Not only is “health care reform” not sufficient to bring down the deficit, the Congressional Budget Office has bluntly said that the plans now being proposed by the Democrats will raise, not lower, the deficit. That leaves higher taxes.
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… a value-added tax would “add to the burdens that the average American already faces,” whether unfairly or not. The alternative, presumably, is higher taxes on “the rich.” But the “rich” are already paying far more than their fair share. The latest IRS figures show that the top 1 percent of taxpayers pay more in federal income taxes than the bottom 95 percent combined; click to enlarge:
That is simply ridiculous. It is questionable whether democracy can survive in a situation where a tiny minority is paying the bills for just about everyone else. This chart shows the IRS numbers in a different format; again, click to enlarge:
Top earners currently pay around double what they would pay if all income were taxed equally. The Obama administration and Congressional Democrats intend to increase those already near-confiscatory rates, but they cannot do so without both an economic and a political cost.
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Moreover, as Alan Greenspan pointed out, increasing marginal income tax rates will “significantly impact the economy.” But Greenspan’s “least worst” alternative, a value-added tax, would hit all consumers and would be, I assume, a political non-starter.
All of which means that there are stormy days ahead for the Obama administration.
There’s much more at the link. Highly recommended reading.
This highlights the incredible irresponsibility of the deficit spending in which the current administration is engaged. Their predecessors are by no means blameless, of course, but the Obama administration is spending money by the trillions of dollars – money it doesn’t have, can’t accrue from normal taxation, and yet will have to repay someday. What’s going to happen when the bill comes due?
Those of us looking forward to a relatively comfortable retirement may be in for a very nasty surprise indeed . . .
Peter
Retirement? I gave up on that one along time ago. I have spent most of my life either working jobs where the were no benifits like paid vacations or matching retirement funds. Now I am self employed. I feel sorry for those with 401K's, as the Argentine precedent grows ever closer. (yes, those private retirment accounts were nationalized by the Argentine Gov.) As we slip futher and further into economic disaster the temptation to seize those accounts here will become irresistable. They are probably one of the largest as yet untouched pool of money out there.
And if anyone thinks they are going to be somehow taxed at a lower rate when the funds are withdrawn, I have this bridge to sell you. The current administration views savers as the enemy. After all, you must have been exploiting someone if you actually had enough moeny to save a bit.