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Press Release


Obama’s Tax Hike Demand for Debt Plan Is Just More “Binge Eating”; Would Fail to Tackle Spending & Debt

July 12, 2011
By Douglas Kellogg
By Pete Sepp

(Alexandria, VA) – After failing to reach a deal on the debt ceiling this weekend President Obama reiterated that an eventual compromise that includes raising taxes would be necessary, noting, “We might as well do it now. Pull off the band-aid. Eat our peas.” Yet, according to the 362,000-member National Taxpayers Union (NTU), such an approach could mean more pain for those who pay government’s bills even as federal programs continue their feast.

NTU Executive Vice President Pete Sepp said, “President Obama’s continued call for tax hikes obscures the real problem of unprecedented federal outlays as far as the eye can see, and would ‘pull off the band-aid’ only to expose an open wound.”

Sepp noted that even under a scenario assuming extension of the Bush-era tax relief laws and protections against the Alternative Minimum Tax, the Congressional Budget Office (CBO) projects that federal revenues will within a few years return to their 40-year historical average of 18.4 percent of Gross Domestic Product (GDP). The share representing federal expenditures, however, would take only a brief dip before hovering near (or under a more realistic scenario well exceeding) 30 percent of GDP just over two decades from now.

Additionally, the President’s point that tax increases under discussion now would not take place until 2013 is of little comfort. It simply means that massive tax hikes (including higher rates and loss of deductions) already scheduled to phase in due to the Patient Protection and Affordable Care Act would have company, potentially crushing an American economy still struggling to rebound.

“Word games aside, the President has yet to put forth a plan that will bring Washington’s binge spending under control and get the budget back into shape,” said Sepp. “The ‘tax first, cut later’ approach has a shaky past, and no amount of tax increases can keep up with liabilities from unreformed spending programs without permanently wounding the American economy.”

NTU is a founding member of the “Cut, Cap, & Balance” coalition that is urging Congress to cut spending, implement statutory spending caps, and pass a Balanced Budget Amendment, in order to create a sound fiscal blueprint for America’s future. 

The 362,000-member NTU is a nonpartisan, nonprofit organization working for lower taxes, smaller government, and economic freedom at all levels. More information on NTU’s work is available at www.ntu.org.