A Raging Prairie Fire of Lies
In her Right Turn blog at The Washington Post, Jennifer Rubin reports that Republican presidential candidate Mitt Romney recently told Iowans a "prairie fire of debt is sweeping across Iowa and our nation and every day we fail to act that fire gets closer to the homes and children we love." Romney then went on to say that rather than putting out the fire, President Obama has fed it.
These statements provided material for Jim Morin, political cartoonist for The Miami Herald, whose May 17 cartoon shows Mr. Romney standing before a giant conflagration declaring: "A raging prairie fire of debt is sweeping across the land and I know how to stop it!!" In Romney's hands is a can of gasoline emblazoned with (what else?): "Bush Tax Cuts."
And so Morin becomes another dupe of the administration spreading the notion that were it not for the "Bush tax cuts for the rich" we'd have a balanced budget. But the truth is, those tax rate cuts can't even account for 10 percent of this year's estimated $1.3T deficit.
To prove this, let's take the top rate under Clinton and round it up to an even 40 percent. Such a rate would add an extra 14.2 percent in individual income tax revenue (using a static analysis). For the sake of illustration, let's round up again and say our "revenue enhancement" will be an even 15 percent.
Now, let's take the total estimated individual income tax revenue for fiscal 2012 and round that up to an even $1.2T (Table 2.1 of Historical Tables). Multiplying that by 0.15 would give us $180 billion of additional revenue. But that would mean everyone would be paying at a higher tax rate. Even mean old Republicans don't want to tax middle- and working-class folks more. So let's confine our 40 percent tax rate to the top 5 percent of taxpayers. The most that that cohort has paid in recent years is about 60 percent of total income tax revenue, which would get us to $108 billion in additional revenue, or less than 10 percent of our deficit this year.
But what kind of income does it take to get into the top 5 percent? According to the National Taxpayers Union, it took just $154,643 of "Adjusted Gross Income" (or AGI) in 2009 to get into the top 5 percent. Not even Obama wants to hike taxes on those folks. Here's the kicker: to get into the top 1 percent of taxpayers in 2009 took an AGI of only $343,927. The largest share of total income tax revenue that the top 1 percent has ever contributed is about 40 percent. Therefore, if Congress were to confine our 40 percent tax rate to the "evil" top 1 percent, they'd bring in $72 billion in additional revenue in 2012, an increase of less than 6 percent.
So the administration's official line (dutifully echoed by the mainstream media) that the deficit is due to the so-called "Bush tax cuts" -- is a crock. In "Bush's tax cuts didn't get us in this mess" at Chicago Sun-Times on May 28, Steve Huntley writes:
Conflating the housing bust and the Bush tax cuts is a way to distract the voters from the failure of the administration's nearly trillion-dollar stimulus and other policies to right the economy. Distraction is also the goal of attacking Romney's record at the equity firm Bain Capital by focusing on its few failures. The actual Bain record is one of 80 percent success in rescuing ailing firms and building new businesses, adding jobs and creating wealth for investors, millions of them in public pension funds.
America's "raging prairie fire of debt" is primarily due to the lousy economy. The economy's stagnation means less revenue for government and more spending, for unemployment benefits, food stamps, etc. As to how to fix the economy, President Obama is utterly clueless.
Jon N. Hall is a programmer/analyst from Kansas City.