Tuesday, October 2, 2012

The Cost Of Obama’s Debt: $4,000 in Middle-Class Tax Increases

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Pierce Scranton

A new, nonpartisan study has just examined what would be required from taxpayers just to continue making interest payments on the increased debt President Obama is responsible for and has proposed. The study concluded that the debt President Obama is responsible for and has proposed amounts to a $4,000 tax increase each year for a middle class family. Here’s how it breaks down. The cost of servicing the debt that has already accumulated under President Obama would require $1,600 in additional taxes from a middle-class family each year. The cost of the debt he’s proposed to add over the next decade would require an additional $2,500 in taxes each year.

This study isn’t just piling the burden onto the middle class either. High-income households would pay almost 25 times that amount each year. But the pain would also have to be spread to lower-income households. A family making between $20,000 and $30,000 would see their taxes increase by $770 each year. A family making between $30,000 and $40,000 would see their taxes increase by more than $1,000 each year. This tax increase far exceeds the amount the President claims to have provided in temporary tax relief, and keep in mind that this projection uses the President’s own budget, so it already assumes that all of the President’s job-destroying tax increases have become law.

Despite promising to cut the deficit in half by the end of his first term, President Obama has presided over four consecutive years of trillion-dollar deficits. At the end of September, President Obama had added more than $5.4 trillion to the debt. You can see for yourself right here. If that weren’t enough, the President’s own budget proposes adding another $9.2 trillion over the next decade. Unless the President plans for the country to default on its debt, that’s borrowed money that we have to pay back. Based on the current population, our nation’s $16 trillion debt adds up to more than $51,000 in taxes for every man, woman and child in the country.

How does the President propose to deal with our fiscal crisis? That’s a good question. The short answer is that he doesn’t have a plan. He pretends that he’s only responsible for 10 percent of the increase (a claim that has already been discredited here, and here). His budget was rejected unanimously by Congress—414-0 in the House and 99-0 in the Senate. That’s a case study in failed leadership, not a plan for tackling one of the most pressing issues facing the country. Not a single Democrat in Congress supported his budget. And for good reason.

Under the President’s budget, the national debt would increase to $20 trillion at the end of a second Obama Administration, or 106% of GDP. To put that number into perspective, Spain’s debt-to-GDP ratio will hit 90.5% by the end of 2013. Under the President’s budget, spending actually gets larger as a share of the economy at the end of ten years going from 22.3% of GDP in 2016 to 22.6% of GDP in 2022. At the same time, the President’s stated policy is to do nothing to address the solvency of entitlement programs like Social Security that will only make matters worse.

It’s time for a new plan and Governor Romney has one that will get spending under control and gets our budget back to balance within ten years.

Pierce Scranton is the Economic Policy Director for Romney for President, Inc.

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