Morning Bell: The Obama Tax and Spend Threat to Economic Recovery

Conn Carroll / July 13, 2010

Remember President Barack Obama’s promise to the American people not to raise taxes? Forget about it. While the President has already raised taxes on cigarettes and tanning beds, none of that compares to what could happen in January. If you earn income, your taxes are about to go up. If Congress does not act to preserve current law, even the lowest 10 percent bracket will rise to 15 percent. Throw in tax hikes on capital gains, dividends and other tax code fixes, and the American economy is staring straight down the barrel of $3.2 trillion tax hike over the next ten years.

It doesn’t take a genius to realize that raising taxes by $3.2 trillion dollars would be an economic recovery killer. Even Sen. Evan Bayh (D-IN) admitted to CNBC yesterday: “We don’t need to raise taxes now.”

The tax raising culprit here is the expiration of the 2001 and 2003 tax cuts set to take effect on January 1, 2011. The leftist majority in Congress is refusing to extend current law because they believe that these tax cuts are the cause of our trillion dollar deficits. They are wrong. Heritage Foundation research fellow Brian Riedl explains why in today’s Wall Street Journal: With Washington set to tax $33 trillion and spend $46 trillion over the next decade, how does one determine which policies “caused” the $13 trillion deficit? [President] Obama could have just as easily singled out Social Security ($9.2 trillion over 10 years), antipoverty programs ($7 trillion), other Medicare spending ($5.4 trillion), net interest on the debt ($6.1 trillion), or nondefense discretionary spending ($7.5 trillion).” (more…)