How's Obama Going to Raise $4.3 Trillion?
http://online.wsj.com/article/SB122480790550265061.html?mod=article-outset-box
The most troublesome tax increases in Barack Obama's plan are not those
we can already see but those sure to be announced later, after the
election is over and budget realities rear their ugly head.
The new president, whoever he is, will start out facing a budget
deficit of at least $1 trillion, possibly much more. Sen. Obama has
nonetheless promised to devote another $1.32 trillion over the next 10
years to several new or expanded refundable tax credits and a special
exemption for seniors, according to the Urban Institute and Brookings
Institution's Tax Policy Center (TPC). He calls this a middle-class tax
cut, while suggesting the middle class includes 95% of those who work.
Mr. Obama's proposed income-based health-insurance subsidies, tax
credits for tiny businesses, and expanded Medicaid eligibility would
cost another $1.63 trillion, according to the TPC. Thus his tax rebates
and health insurance subsidies alone would lift the undisclosed bill to
future taxpayers by $2.95 trillion -- roughly $295 billion a year by
2012.
But that's not all. Mr. Obama has also promised to spend more
on 176 other programs, according to an 85-page list of campaign
promises (actual quotations) compiled by the National Taxpayers Union
Foundation. The NTUF was able to produce cost estimates for only 77 of
the 176, so its estimate is low. Excluding the Obama health plan, the
NTUF estimates that Mr. Obama would raise spending by $611.5 billion
over the next five years; the 10-year total (aside from health) would
surely exceed $1.4 trillion, because spending typically grows at least
as quickly as nominal GDP.
A trillion here, a trillion there, and pretty soon you're talking about
real money. Altogether, Mr. Obama is promising at least $4.3 trillion of
increased spending and reduced tax revenue from 2009 to 2018 -- roughly
an extra $430 billion a year by 2012-2013.
How is he going to pay for it?
.
In his acceptance speech at the Democratic convention on Aug. 28,
Mr. Obama said, I've laid out how I'll pay for every dime -- by
closing corporate loopholes and tax havens. That comment refers
to $924.1 billion over 10 years from what the TPC wisely labels
unverifiable revenue raisers. To put that huge figure in perspective,
the Congressional Budget Office optimistically expects a total of
$3.7 trillion from corporate taxes over that period. In other words,
Mr. Obama is counting on increasing corporate tax collections by more
than 25% simply by closing loopholes and complaining about foreign
tax havens.
Nobody, including the Tax Policy Center, believes that is remotely
feasible. And Mr. Obama's dream of squeezing more revenue out of
corporate profits, dividends and capital gains looks increasingly
unbelievable now that profits are falling, banks have cut or eliminated
dividends, and only a few short-sellers have any capital gains left to
tax.
.
Mr. Obama has offered no clue as to how he intends to pay for his
health-insurance plans, or doubling foreign aid, or any of the other 175
programs he's promised to expand. Although he may hope to collect an
even larger share of loot from the top of the heap, the harsh reality is
that this Democrat's quest for hundreds of billions more revenue each
year would have to reach deep into the pockets of the people much lower
on the economic ladder. Even then he'd come up short.
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