President Barack Obama, largely due to his upbringing and background, sincerely thinks he is leading this country in the right direction. However, hard facts powerfully indicate that he is leading us in the wrong direction.
The Obama administration has spent more in four years than the sum of all the administrations since George Washington. A conservative estimate of the federal government's unfunded liabilities for the year ended in 2011 is $87 trillion. Just to avoid accumulating more debt, Washington would have to collect $8 trillion in tax revenue, not to pay off our national debt and have reserves against unfunded liabilities, but just to avoid accumulating more debt.
Raising the tax rates on everybody in the top 2 percent will not get enough additional tax revenue to run the government for 10 days. Recent Internal Revenue Service data show that individuals earning $66,000 and more a year have a total adjusted gross income of $5.1 trillion. In 2011, corporate profit came to $1.6 trillion. If Congress simply confiscated the entire earnings of taxpayers earning more than $66,000 and all corporate profits, it wouldn't be enough to cover the $8 trillion per year growth of U.S. liabilities.
Given this unworkable picture, the message coming out of Washington, especially from our leftist politicians and the news media, is that we solve our budget problems by raising taxes on the rich is absurd. If Americans were more informed, such a message would be insulting to our intelligence.
The tragedy for our future is that there are millions of uninformed Americans who apparently buy the political appeal and treachery that our problems can be solved by taxing the rich. There are not enough "rich" people to satisfy the appetite. All the talk about how tax rates will be raised only on "the rich" hides the ugly fact that the poorest people in the country will see the value of their money decline, just like everybody else. Inflation taxes everybody, the poorest as well as the richest.
President Obama and his fellow Democrats want to talk about tax hikes on the "rich" — which will do little to reduce the deficit — while refusing to talk seriously about cutting entitlement spending. The bottom line is that raising taxes is not the answer. Rather, the answer is cutting taxes which historically stimulates the economy and increases tax revenue while cutting government expenses, including entitlements. Waiting only makes the solution that much more painful.
Benedict Frederick, Jr., PasadenaCopyright © 2015, The Baltimore Sun