President Obama has made a big show of the fact that his fiscal year 2014 budget supposedly cuts the debt by $1.8 trillion and cuts Social Security by adopting a new way of measuring inflation. Unfortunately, according to the Congressional Budget Office, Obama’s debt savings are only half what he claims and are achieved entirely through tax hikes. Worse his supposed Social Security cut actually raises taxes on middle class families.
Here are the facts: According to Obama’s own numbers, his budget would leave the American people with a $19.03 trillion debt burden by 2023. And according to the Congressional Budget Office, under current law our debt is scheduled to reach $19.94 trillion by that same year, a difference of $900 billion. So right off the bat, half of Obama’s claimed debt reduction turns out to be pure fiction. And, according to Obama’s own numbers, his budget would raise taxes by $1.1 trillion over the next decade. So Obama’s entire debt reduction, and more, come from higher taxes.
One of those tax hikes also doubles as Obama’s signature entitlement reform proposal: chained CPI, which is just a fancy way of saying measuring inflation. By switching to a chained CPI inflation measure, Obama cuts $127 billion in Social Security spending over then next ten years. But that new inflation measure will also bumps three-quarters of all American households, including most middle-class families, into higher income tax brackets. Obama will collect $124 billion in new taxes from Americans by adopting CPI.
In addition to borrowing and taxing more, Obama spends more too … and fast, as much as $132 billion this year and $160 billion more next year. In fact, none of Obama’s debt reduction occurs when he is in office. Under his budget, deficits would be higher every year of his presidency compared to current law.
As bad as Obama’s spending and borrowing explosions are, at least they match his Keynesian understanding of economics. The Obama recovery is still the weakest economic recovery since World War II, so Keynesians should recommend higher government borrowing and spending. But Keynesians also believe tax hikes hurt struggling economies too. So why is Obama also insisting on $1.1 trillion in new tax hikes?
Because wealth redistribution is just a higher priority for Obama than economic growth.
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