(Alexandria,VA) – After failing to reach a deal on the debt ceiling this weekend PresidentObama reiterated that an eventual compromise thatincludes 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 anapproach could mean more pain for those who pay government’s bills even asfederal programs continue their feast.
NTU Executive Vice President Pete Sepp said,“President Obama’s continued call for tax hikes obscures the real problem ofunprecedented federal outlays as far as the eye can see, and would ‘pull offthe band-aid’ only to expose an open wound.”
Sepp noted that even under a scenario assumingextension of the Bush-era tax relief laws and protections against theAlternative Minimum Tax, the Congressional Budget Office (CBO) projects thatfederal revenues will within a few years return to their 40-year historicalaverage of 18.4 percent of Gross Domestic Product (GDP). The share representingfederal expenditures, however, would take only a brief dip before hovering near(or under a more realistic scenario well exceeding) 30 percent of GDP just overtwo decades from now.
Additionally, the President’s point that taxincreases under discussion now would not take place until 2013 is of littlecomfort. It simply means that massive tax hikes (including higher rates andloss of deductions) already scheduled to phase in due to the Patient Protectionand Affordable Care Act would have company, potentially crushing an Americaneconomy still struggling to rebound.
“Word games aside, the President has yet to putforth a plan that will bring Washington’s binge spending under control and getthe budget back into shape,” said Sepp. “The ‘tax first, cut later’ approachhas a shaky past, and no amount of tax increases can keep up with liabilitiesfrom unreformed spending programs without permanently wounding the Americaneconomy.”
NTU is a founding member of the “Cut, Cap,& Balance” coalition that is urgingCongress to cut spending, implement statutory spending caps, and pass aBalanced Budget Amendment, in order to create a sound fiscal blueprint forAmerica’s future.
The 362,000-member NTU is a nonpartisan,nonprofit organization working for lower taxes, smaller government, andeconomic freedom at all levels. More information on NTU’s work is available at www.ntu.org.