The left wants you to believe that we must pass the Obama tax hike because low taxes on wealthy Americans are the cause of our nation’s budget deficits. For example, Speaker Nancy Pelosi (D-CA) told Christiane Amanpour on This Week last month: “I don’t see any reason why we should renew a tax cut that only gives a tax cut to the wealthiest people in America, increases the deficit and doesn’t create jobs.” Don’t believe her.
According to the Congressional Budget Office (CBO), extending all the 2001 and 2003 tax cuts will place revenues at 18.2% of gross domestic product (GDP), which is actually above the 18% average over the past 50 years. Meanwhile, spending, which has averaged 20.3% of GDP over the past 50 years, is set to explode to 26.5% of GDP by 2020.
The fact is that rapidly increasing spending will cause 100% of rising long-term deficits. The federal government now spends $30,543 per household compared to $21,875 per household in 2000. Under President Obama’s budget, Washington is projected to spend $3,618 billion, raise $2,118 billion, and run a $1.5 trillion deficit in 2010. If the federal government managed to return to the per-household spending level of the Reagan administration, the budget would be balanced by 2012 without any tax hikes. Or just returning to the per-household spending levels that existed before the current recession would balance the budget by 2019.