Americans are being head faked. Obama continues, Alinsky-like, to demand higher tax brackets for the rich. The GOP has said no bracket hikes. If you are like me, you are by now quite fed up with the noise. Forgetting the obvious fact that earning $250,000, which may sound like a fortune to many Americans, hardly makes one rich now or in the future. Such earnings are most often made by Americans residing in big state, urban areas like California and New York, where the total tax hit is already brutish, living expenses like real estate are off the charts, and public schools stink, mandating astro-priced private school tabs. At the end of the day, few families are accumulating any wealth in this setting. A long way from it.
The heart of the whole budget story is that America has a spending disease magnified by the historical explosion in spending under the Obama administration. I am going to stay away from a numbers haze here to ensure that you get the picture sans any fog. Over the last five decades, the growth rate in spending versus GDP tracks upward, but with an especially steep upward slope in the Obama years. Income tax revenues versus GDP, however, track in a narrow sideways pattern clustering in the mid single digits. In other words, there is no upside bias.
Thus, it’s easy to see that if one chart line tracks ever upward with accelerating momentum and the other chart line squiggles sideways with no upside bias, a heck of a gap opens up fast. And as we all recognize, that yawning gap is the budget deficit. Under the misguided leadership of Barack Obama, the gap has resulted in a trillion dollar deficit in each of the president’s four years in office. Now Obama is traveling the country wrongly proclaiming to Americans that tax brackets for “the rich” must go up, despite that the budget problem he has created for Americans is 100% a spending problem. I hope you will email your congressman my summary and demand that the focus be where it belongs—on cutting spending. Revenues are not the issue.