Phil Kerpen: Obama’s tax hikes will make deficits worse
The national debt weighs heavily on the public consciousness, and for good reason.
In 2008, the federal government added $458 billion to the national debt, at that point the largest annual deficit in history. Under President Obama, the deficit has been upwards of $1 trillion — more than twice the previous record — not once, but every year for four years running.
Americans know that we cannot continue on our present fiscal course. But, unfortunately, the concern over the debt has diverted attention from its own underlying cause, the explosion in federal spending, and allowed Obama to pretend that his proposed tax hikes are part of the solution.
Obama assures us that his budget is a “balanced approach.” There is really nothing balanced about Obama’s tax-and-spend budget, which anticipates continuing the record that has already won him the title of the biggest government spender in world history. Obama has taken federal spending up from its normal, postwar average of 20 percent of the economy up to an elevated 24.4 percent over his four years in office. His never-balancing budget anticipates spending jumping to 30 percent of the economy by 2027, 40 percent by 2040, 50 percent by 2060, and 80 percent by 2080. Obviously, that level of spending will mean steeply higher taxes and gigantic deficits as far as the eye can see.
So when Obama tries to score political points by suggesting that the deficit problem can be solved with higher taxes — just the millionaires and billionaires paying a little bit more — he is obscuring the real problem, which is out-of-control government spending. He’s obscuring it because he intends to make it much worse.
If tax increases could actually be part of a plan to eliminate the deficit and get our fiscal house in order, most Americans would support them. This fact, confirmed by polling and focus groups, has spurred the ubiquitous Democratic talking point demanding the unbalanced “balanced approach.” But in reality tax increases would not help eliminate the deficit; they will make it worse.
Congress will spend every penny they get their hands on — and then some. A study of over 60 years of data by economist Richard Vedder found that for every dollar in higher taxes Congress takes in, they spend $1.17. In other words, sending Congress more money just encourages them to spend it all and borrow even more, driving deficits higher, not lower.
And you can be certain that higher taxes will not go to deficit reduction as long as President Obama is there signing every bloated spending bill Congress puts on his desk, as he’s done for the past four years.
A recent poll from Resurgent Republic showed that a majority of Americans understand this well. Asked whether the revenue from a tax hike will go primarily to new spending or to deficit reduction, voters said new spending by a 62 to 38 margin. And 69 percent of independents know that any new tax revenue will be spent.
The exchange on this issue may well define who wins the critical first presidential debate.
To win, Mitt Romney must make clear that his opposition to tax increases is borne not of ideological rigidity but of recognition that the deficit problem is a spending problem, and raising taxes will only encourage Washington to spend even more.
PHIL KERPEN is the president of American Commitment and the author of “Democracy Denied.” He can be reached at email@example.com.