How Would Obama's Economic Plan Really Work?
In simple terms, what is required to satiate the federal government's deficit spending habit and actually pay off the national debt?
Consider this: Americans have a $14,000.00 credit card balance that has reached its limit. (This is our national debt.) We pay the minimum payment of $17.00 a month. At this rate, we will never pay down the principal. To pay down the principle, we need $50.00 per month every month on the $14,000.00 loan as long as the interest remains at 2%. At this rate, it will take 33 years to pay the debt. Any mortgage calculator will validate this payment.
The real problem is a governmental spending addiction -- that is, deficit spending, or spending money we don't have. This addiction exceeds our budget for this year by about $1,200.00. Thus, we will need to borrow $100.00 per month. Actually, an additional $150.00 per month is required to pay our national credit card debt and fund the government's deficit spending habit.
The real numbers: Congress pays $17 billion per month -- $204 billion per year -- on the $14,000-billion-dollar national debt. Fourteen "thousand billion" dollars equals 14 trillion dollars. Obama wants to borrow $100 billion per month to satiate his deficit spending habits. These are the same numbers as above -- just relate one billion dollars to one dollar.
Congress should spend at least $50 billion per month to pay off the national debt, yet Obama wants to borrow $100 billion per month to cover the deficit spending -- $150 billion per month times 12, or $1.8 trillion in new taxes annually every year for the next 33 years. These 18,000 billion dollars will be over and above every dollar of federal tax currently collected.
How much in new taxes will need to be seized from the private sector over and above every dollar currently collected? One point eight trillion dollars. What is the effect in real dollars on every American tax-paying citizen to pay the debt and the deficit spending? Increasing your federal income tax rate to 48%.
Enter the Obama economic plan: no real spending cuts -- just tax the rich!
On July 12, Obama believed that anybody making $400,000.00 a year (like he does) is able to keep hundreds of thousands of dollars in additional income that you don't need.
So let's define who in America is rich from the most up-to-date Internal Revenue Service data available.
President Obama wants to raise taxes $1.2 trillion to freeze federal deficit spending at this year's rate. America really needs to pay the national debt, requiring $600 billion a year for the next 33 years -- $1,800,000,000,000.00 annually.
The top 1% of rich income-earners already pay 38% of federal income taxes.
And 1.4 million taxpayers with total adjusted gross income of $1.7 trillion pay $392 billion in taxes.
Obama could increase taxes on wealthy Americans, like himself, making over $354,000.00 annually, confiscating 100% of their taxable income, and he would still fall $100 billion short.
The top 5% of rich income-earners pay 58.7% of federal income taxes.
Seven million taxpayers with total adjusted gross income of $2.9 trillion pay $605 billion in taxes.
Obama could increase taxes on wealthy Americans making over $159,000.00 annually, confiscating 80% of their taxable income, to spread the wealth around.
The top 10% of rich income-earners pay 70% of federal income taxes.
Fourteen million taxpayers with total adjusted gross income of $3.8 trillion pay $721 billion in taxes.
Obama could increase taxes on wealthy Americans making over $113,000.00 annually, confiscating 65% of their taxable income for social justice programs.
Finally, the top 25% of rich Americans pay 86% of federal income taxes.
Thirty-five million taxpayers with total adjusted gross income of $5.6 trillion pay $890 billion in taxes annually.
Obama would have to increase taxes on wealthy Americans making over $67,000.00 annually, confiscating 46% of their taxable income, because they can afford to pay a little more?
How does it feel to be a rich American? One of the wealthy 35 million private jet-flying, tax-paying Americans making over $67,000.00! Just like your average public-sector worker, who, under Obama's "Tax the Rich" plan, will now take home $36,000.00 per year in order to pay for the 150 million middle-class and poor Americans who can't afford to shoulder the burden of the their ever-escalating government entitlement program costs. Obama believes that any American making $400,000.00 a year has unneeded income and should pay 65%, or $260,000.00, annually in federal income taxes?
If Obama truly believed we all can pay a little more, he could put his money where his mouth is. Mr. President, save $12 billion by abolishing the IRS and instituting a national sales tax of 26% on our $15.2-trillion economy to raise the $4 trillion to run your federal social justice program. Everybody would pay their fair share of the ever-escalating costs of government entitlement programs. Add in the local sales tax, and one third of every dollar goes to government costs!
In about a week, everybody would be willing to cut government spending.
Alan Aszkler is a Reagan conservative who believes it is time to get the politicians out of politics and allow American ingenuity to restore our economy.