How the Obama Tax Hikes Affect You

Heritage Foundation

Yesterday, Time Magazine senior political analyst Mark Halperin wrote: “With the exception of core Obama Administration loyalists, most politically engaged elites have reached the same conclusions: the White House is in over its head, isolated, insular, arrogant and clueless about how to get along with or persuade members of Congress, the media, the business community or working-class voters.” As if to prove Halperin’s point, Vice President Joe Biden told a group of Democratic donors in Seattle Friday: “The Recovery Act didn’t do enough because we couldn’t spend enough.” At least Biden’s statement shows that the White House is coming to grips with the fact that their $862 billion economic stimulus plan failed. Last Friday’s jobs report established that fact yet again, showing a net loss of 95,000 jobs in September, a half million jobs lost since the Obama recovery began, and an unemployment rate of 9.6%. In President Obama’s two years in office, federal spending is up more than 21% and the national debt has risen by $2.9 trillion. And Biden wants the American people to believe that this administration has not spent enough? Clueless indeed. Heritage Foundation Senior Fellow J.D. Foster explains why the Obama stimulus failed:

The theory underlying Obama’s stimulus was that the economy was weak because total demand was too low. The suggested solution is then to increase demand by increasing government spending, exploding the deficit in the process.

This theory of demand manipulation through deficit spending ignores the simplest of realities: Government spending must be financed. So to finance deficit spending, government must borrow from private markets, thereby reducing private demand by the same amount as deficit spending increases public demand. In effect, the theory says that if I take a dollar from my right pocket to my left, then I’m a dollar richer. No wonder it always fails.

On top of President Obama’s failed spending policies, now the White House wants to saddle the U.S. economy with the largest tax hike in American history. Taxes on individual income, capital gains and dividends are all set to rise. As Harvard professor Greg Mankiw explained yesterday: “[D]on’t let anyone fool you into thinking that when the government taxes the rich, only the rich bear the burden.”

The Heritage Foundation Center for Data Analysis has estimated the impacts of the Obama tax hikes and found they would: 1) decrease inflation-adjusted gross domestic product (GDP) by $1.1 trillion by 2020; 2) decrease business investment by $33 billion a year; 3) decrease personal savings by $38 billion in 2011 alone; 4) decrease consumer spending by $706 billion through 2020; and 5) kill an average of 693,000 jobs a year through 2020.

The CDA has even broken down these impacts by state and congressional district. You can find the state-by-state and district-by-district results here (in the right hand column). West Virginians will see their individual income taxes rise by $1.6 billion. Nevadans will lose $2,697 per household in disposable income. And Wisconsin will lose 14,083 jobs annually. The stakes are high. Click through and find out How the Obama Tax Hikes Affect You.

Quick Hits:

* The banks bailed out by TARP are actually lending less today than they did in the depths of the financial crisis.
* States from across the country are leading the fight against Obamacare.
* U.S. city public pensions are unfunded by $574 billion, according to the Kellogg School of Management at Northwestern University and the University of Rochester.
* The Pentagon is increasingly alarmed by the harsh tone of China’s military.
* Last week the Obama administration admitted their new drilling regulations will kill jobs.