Obama debt commission member, Republican Sen. Judd Gregg of New Hampshire, launched a scary trial balloon on ABC News. Gregg suggested the debt commission will likely recommend a massive $26.7 trillion tax increase. Here are Gregg’s actual words:
Everything has to be on the table – there’s no question about that… Erskine Bowles, one of the co-chairmen of the commission, has suggested a 75-25 split – 75 percent of the savings being in spending, and 25 percent in revenues… I think it’s likely that there will have to be a revenue component, but it should be significantly, dramatically – and a 3-1 ratio is pretty dramatic – dramatically less than the initiatives in the spending side of the ledger.
According to an analysis by Americans for Tax Reform if Bowles wants $3 in spending cuts for every $1 in tax hikes then the tax increases will be larger than anyone expects:
Bowles and Gregg can only be talking about cutting $3 in promised Social Security and Medicare benefits in exchange for $1 in tax increases. In other words, 1⁄4 of the unfunded liabilities of Social Security and Medicare would be paid for with tax hikes. So how big is that? According to the 2009 Social Security and Medicare Actuaries’ Report, the long-run insolvency of the Social Security and Medicare systems is $106.8 trillion (with a “t”) over the infinite horizon. To close this gap with one-quarter tax hikes is, therefore, to raise taxes by $26.7 trillion. Of course, this number is undoubtedly higher since the Obama Administration is sitting on (read: hiding) the 2010 version of the report (it’s nearly six months overdue).
On the heels of a huge tax increases included in the over-2000-page ObamaCare package, together with over-2000-page so-called “Financial Reform Package,” together with the expiration of the Bush tax cuts, Obama’s economic policies have guaranteed a double-dip recession.
Strap on your safety belts, because the anemic economic recovery of 2010 is about to become a government-induced second recession or double-dip in 2011. This outcome is baked in the cake even before any tax increases from the Obama debt commission are enacted.
If they are so greedy as to also try – by passage of a climate control bill – increases in energy taxes then this second recession will likely lead to deflation and a collapse into a government-sponsored depression. The economy cannot afford more money being redirected from investments toward government spending.
Clearly from this evidence alone it is plain to see that Obama isn’t judging his success based on a record of economic growth, but instead he is pursuing a program of economic redistribution. The administration has no focus on expanding the economic pie; instead, they are concerned with devouring every piece of the pie.
Grover Norquist, the president of Americans for Tax Reform, has been watching the Obama debt commission closely, and he concluded after hearing reports of Sen. Gregg’s comments:
It’s been clear from the beginning that the purpose of this Commission was to put GOP fingerprints on a tax hike, likely a VAT… Gregg seems to be giving them all ten fingers… The true agenda of this commission has always been to hide the ball on a tax hike until after the November elections – hence the December reporting date. Gregg’s gaffe today tips their hand.
Higher taxes are never the answer. With the economy so weak, Congress should be making the Bush tax cuts permanent. Taxes on capital formation and investment should be eliminated all together. America should be encouraging small business, individual investors and entrepreneurs to be taking risks to increase economic growth in the private sector. Instead, Obama and the socialists in Congress are embarked on a dangerous expedition to punish success. This will end badly.