Simple Tax Math

The Democrats’ plan for the “Fiscal Cliff” avoidance so far includes an $800 billion tax increase over 10 years.  (They’re trying to make it more, but that’s what is on the table right now.)  Pretending that the projection above were to end up being accurate*, let’s break down what the means:

  • $800 billion / 10 years = $80 billion / year
  • 2012 budget:  $3.796 trillion
  • Amount spent per day:  $10.4 billion
  • 2012 deficit:  #1.327 trillion

So let’s say this tax increase happens.  Congratulations!  You’ve just paid for slightly over one week of the federal budget, and reduced the deficit by a whopping 6 percent.

Now what?

I’m using the 2012 numbers here, but the numbers beyond 2012 are even worse.  To put it simply, the problem is not taxes, it’s spending.  Unless the Democrats are willing to come to the table with some serious spending cuts** — as opposed to cuts “down the road” which never actually happen — then these negotiations are pointless.  We’re not avoiding the Fiscal Cliff, we’re merely slowing the approach to it while cutting the brakes at the same time.

* — They wouldn’t, of course, because the negative economic effect would offset these projections greatly, but that’s all the CBO can go on.  The Left likes to pretend that Clinton’s tax increases helped the economy because they happened to coincide with the Internet bubble, but generally speaking, taking money away from the people who directly or indirectly hire other people to do work for them is not a recipe for economic growth.

** — Granted, the Republicans’ plan is no panacea and closes the deficit a lot more slowly than we probably need to, but at least it’s an actual plan.

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