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Tuesday, November 27, 2012

We can't tax our way out of our fiscal problems

Maybe if we had an accurate accounting of the actual liabilities that our federal government faces, people would be a lot more concerned about fixing our fiscal problems. But we don't see reported the liabilities we face in Medicare, Social Security, and pensions for federal employees. Right now we are on the hook for $86.8 trillion for those expenses, yet they're not included in projections of our national debt. Two prominent former House members, Chris Cox and Bill Archer, report the stark truth that there is no way to tax our way out of this debt.
When the accrued expenses of the government's entitlement programs are counted, it becomes clear that to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually. That is the total of the average annual accrued liabilities of just the two largest entitlement programs, plus the annual cash deficit.

Nothing like that $8 trillion amount is available for the IRS to target. According to the most recent tax data, all individuals filing tax returns in America and earning more than $66,193 per year have a total adjusted gross income of $5.1 trillion. In 2006, when corporate taxable income peaked before the recession, all corporations in the U.S. had total income for tax purposes of $1.6 trillion. That comes to $6.7 trillion available to tax from these individuals and corporations under existing tax laws.

In short, if the government confiscated the entire adjusted gross income of these American taxpayers, plus all of the corporate taxable income in the year before the recession, it wouldn't be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities. Some public officials and pundits claim we can dig our way out through tax increases on upper-income earners, or even all taxpayers. In reality, that would amount to bailing out the Pacific Ocean with a teaspoon. Only by addressing these unsustainable spending commitments can the nation's debt and deficit problems be solved.
This is scary stuff. No wonder that so few politicians want to talk about these stark facts. But unless we address the root causes of our fiscal crises instead of relying on short-term band-aids, we'll never come close to fixing our problems.

We can't even get an honest discussion of how big the problem is.

6 comments:

mark said...

No, we can't tax our way out of our fiscal problems. Is anyone saying we can?
We also can't morally cut our way out of the problem.
That's why it's time to stop defending tax loopholes as too insignificant to make a real difference while using the "well, we have to start somewhere" argument to cut certain programs.
There's a lot of dishonesty on both sides.

Paul said...

Mark,

All the Democrats are saying we can tax our way out of fiscal problems. Obama feels that if the "rich" pay there fair share all our fiscal issues will go away. The only cuts that he has discussed have been to defense (about the only part of Gov't that works). So you, as you consistently have been, are the one who is being dishonest. You and the rest of the Lib/Prog's need to grow up...

Southern Man said...

Promises that can't be kept, won't be kept. Obligations that can't be honored, won't be honored. Debt that can't be repaid, won't be repaid. The crash is inevitable. And the more we borrow to put it off, the harder that crash will be, and the longer the recovery.

Be prepared.

mark said...

Paul,
If all the dems are saying what you claim, it should be easy to give a few names and quotes. Please proceed...
You're either ignorant or lying about Obama. I've criticized him for failure to lead on this issue, but he has never said taxing the rich will solve all fiscal problems.
I agree that "lib/prog's" need to grow up, but of course, so do repubs. The issue is what ratio of cuts to revenue increases is acceptable. Romney and others once said a 10 to 1 ratio was unacceptable. Not only insane but immoral.

http://www.whitehouse.gov/omb/budget/TRS

Paul said...

Mark,
Again you refuse to face reality. Just like the rest of the Democrat party. The Lib/Progs have never discussed spending cuts...NEVER. History shows us that a lower tax rate on all (which the most recent rates have done) has always, ALWAYS, incresed revenue. We are in a mild depression right now, so how are raising the taxes on the most productive members of society going to help. Washington needs to stop spending our money. And tyou silly comment about immoral is just that. Stop killing unborn babies and you Dem's can start having a discussion about morality...

mark said...

Paul,
All the dems are saying we can only tax our way out of the problem, and you can't quote even one?

Lib/Progs have never discussed spending cuts? NEVER?

A very easy lie to disprove:

http://durbin.senate.gov/public/index.cfm/videos?ID=f5eee86f-cf42-40d7-be92-56ef9f76c3c5

Friendly advice: You might try to avoid words like "all" and "never" in your statements. You not only appear dishonest, but silly.