Taxes Or Growth?
By INVESTOR’S BUSINESS DAILY | Posted Tuesday, June 30, 2009 4:20 PM PT
Taxes: The White House now refuses to rule out raising taxes on the middle class. Meanwhile, a top finance official in the previous Democratic White House suggests a tax hike is all but inevitable. Are we being set up?
It sure looks that way. And if it happens, you can mark it down: The economy will slow to a crawl and may even relapse into a deep recession. This is a complete reversal of what was promised.
“In an economy like this,” President Obama said at last summer’s Democratic National Convention, “the last thing we should do is raise taxes on the middle class.” That, he said, included 95% of all families. He promised flat out that he wouldn’t raise taxes on families with income of less than $250,000.
How times have changed. On Monday, White House spokesman Robert Gibbs, asked point-blank several times if the president’s vow was still good, would say only that “we are going to let the process work its way through.”
“Process”? Middle class, watch out.
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Just look at the tab run up so far — and some of the costs that we might soon have to pay. All told, we’ll spend $13 trillion more than we’ll take in through 2019. How will we pay for it all?
The Congressional Budget Office recently estimated that U.S. taxes as a share of GDP would have to rise 49% by 2035 to pay for just the spending already budgeted. And these taxes will hit all Americans, not just the “rich.” This is a recipe for economic disaster.
“We’ll have to raise taxes soon,” wrote President Clinton’s former deputy Treasury secretary, Roger Altman, in a Wall Street Journal opinion piece this week that sounded suspiciously like a trial balloon for Democrats in Congress and the White House.
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Usually at this point in the business cycle, the U.S. is the locomotive that pulls the rest of the world out of its slump. This time, the world is looking to China to get the job done. In the U.S., the rest of the world sees only a growth-killing mix of higher taxes, soaring spending, surging debt, rising inflation and growing regulation.
We could reverse this. Instead of tax hikes, we need broad-based tax cuts for families and business. But we have to act right away. After all, why let a crisis go to waste?
