Obama’s 2012 Budget: Taxes, taxes, and more taxes—and more spending too

Hawai'i Free Press

Monday, February 14, 2011

Obama’s 2012 Budget: Taxes, taxes, and more taxes—and more spending too
By Americans for Tax Reform @ 2:52 PM :: 6627 Views :: National News, Ethics

OBAMA’S BUDGET HAS NO SIGN OF FISCAL RESPONSIBILITY

From www.GOPHawaii.com

Hawaii Republican Party Chairman Jonah Kaauwai released the following state today in reaction to President Obama’s budget proposal.

Kaauwai said, “There is not one drop of fiscal responsibility in President Obama’s proposed budget, it is completely out of control. $1.6 trillion of the $3.7 trillion budget is deficit spending and money that we don’t have. 43% of this proposed budget will be borrowed money that we will be asking our children and grand children to pay for, this is completely irresponsible. To put this year’s budget deficit into context, when you compare dollars to seconds, 1 million seconds equals 12 days, 1 billion seconds equals 32 years and 1 trillion seconds equals 31,688 years. This year’s budget deficit of $1.6 trillion translated into seconds equals over 50,000 years.

The only thing to look forward to with this budget is the fact that now Majority Republicans in the House have an actual proposal to work with. I am confident that unlike the President, they will take the task of reducing the enormous cost of government seriously.”

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Rejecting Restraint: President's Budget Punts on Prudence

From Mattie Corrao, Americans for Tax Reform

With the release of his FY 2012 budget today, the President is attempting to brand reckless spending and higher taxes as fiscal reform. In reality, this is the same foolhardy budgeting we’ve seen over the past two years of the Obama Administration, with one difference: more spending.

Record overspending – the President’s budget calls for a record level of overspending, after the unprecedented growth of the previous two years. The plan calls for spending to reach $3.8 trillion this year, mounting 25.3 percent of GDP, the highest share since World War II. This pales in comparison to the ten-year outlook; the budget calls for $8.7 trillion in new spending, projecting outlays of $46 trillion over the next decade.
Digging the hole deeper - While CBO recently estimated the FY 2011 budget deficit would reach $1.5 trillion, President Obama’s budget overspends at the highest rate that country has ever witnessed, creating a $1.65 trillion deficit for FY 2011. The President has falsely alleged the budget will “reduce” the deficit by $1.1 trillion, neglecting to mention that this is less than one tenth of the overspending his budget requires in the next decade.
Increases taxes to fuel higher spending – Instead of cutting spending, the President is increasing taxes to grow government. The budget hikes taxes by $1.5 trillion over the next ten years while spending almost ten times that in the same period.
Spending “freeze” is not restraint – While House Republicans will introduce the first Continuing Resolution this week that actually cuts spending, the President’s budget hopes to scam taxpayers on the idea of a spending “freeze,” establishing the explosion in discretionary spending as the baseline for government growth in the future.
Spending the spending “cuts” – The President’s budget adopts the recommendations by Defense Secretary Gates that claim to cut Pentagon spending by $78 billion over the next five years. In fact, the spending cuts are plowed back into military budgets to cover overhead costs and allow for a full percentage point of growth over the next decade. The plan would increase Pentagon spending by $8 billion in the first fiscal year alone.
Extends and expands wasteful “stimulus” spending – after 2 years of government spending unemployment remains high and economic recovery is still illusive. However, the President’s budget assumes more of the same, allocating over $50 billion for his Administration’s Race to the Top education program that has already bloated state obligations and the White House pet project of high-speed rail, which has received billions in “stimulus” funds but done little to spur economic growth.
Ignores unsustainable entitlement spending – the President’s budget is notably silent on the explosive growth of Medicare and Social Security spending. Instead of scrutinizing these mandatory behemoths, the budget calls for $404 billion in spending beyond projected growth on these programs.

Obama's FY2012 Budget: Taxes, Taxes, and More Taxes

by Ryan Ellis, Americans for Tax Reform

President Obama released his budget this morning. Rather than focusing on Washington’s over-spending problem, the budget calls for higher taxes on families and small businesses to pay for even more government spending. Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021. By comparison, the historical average is only 18% of GDP.

Tax hike lowlights include:

Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%. This is a $709 billion/10 year tax hike
Raising the capital gains and dividends rate from 15% to 20%
Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million. This is a $98 billion/ten year tax hike
Capping the value of itemized deductions at the 28% bracket rate. This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses. A new means-tested phaseout of itemized deductions limits them even more. This is a $321 billion/ten year tax hike
New bank taxes totaling $33 billion over ten years
New international corporate tax hikes totaling $129 billion over ten years
New life insurance company taxes totaling $14 billion over ten years
Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years
Increasing unemployment payroll taxes by $15 billion over ten years
Taxing management capital gains in an investment partnership (“carried interest”) as ordinary income. This is a tax hike of $15 billion over ten years
A giveaway to the trial lawyers—not letting companies deduct the cost of punitive damages from a lawsuit settlement. This is a tax hike of $300 million over ten years
Increasing tax penalties, information reporting, and IRS information sharing. This is a ten-year tax hike of $20 billion.

Add it all together, and this budget is a ten-year, $1.5 trillion tax hike over present law. That’s $1.5 trillion taken out of the economy and spent on government instead of being used to create jobs.

The “tax relief” in the budget is mostly just an extension of present law, and also some refundable credit outlay spending in the tax code. There is virtually no new tax relief relative to present law in the President’s budget.