October 26, 2009
Politics Daily Cites Tax Foundation Report on Closing the Federal Deficit with Higher Taxes
"What's So Bad About a $1.4 Trillion Deficit?"
By Joann M. Weiner
The Obama administration recently trumpeted the fact that the federal government spent only $1.4 trillion dollars more than it took in during the last fiscal year. In a joint statement issued with Peter Orszag, the director of the Office of Management and Budget, Treasury Secretary Timothy Geithner said, "This year's deficit is lower than we had projected . . . in part because we are managing to repair the financial system at a lower cost to taxpayers." Just one month earlier, the administration had forecast a $1.8 trillion deficit. That's a $400 billion shrinkage, which is definitely good news. ...
The Tax Foundation has simulated exactly how much change is needed to fund these deficits. In a report released Oct. 22, it estimates that if the administration and Congress wished to eliminate the current deficit, it would have to raise tax rates to unprecedented levels. Assuming no other changes in the tax law, the minimum tax rate would increase from 10 percent to 27.2 percent while the maximum tax rate would rise from 35 percent to 95.2 percent.
While no one believes that Congress would actually try to close the deficit in one year, these figures show in stark terms what is so bad about amassing such debt.
