published Thursday, February 17th, 2011

Budget gimmicks, tax hikes

Too-little noticed in the news of President Barack Obama's proposed 2012 budget of $3.73 trillion and his projections of deficits over the next few years is the fact that he makes very rosy assumptions about what will happen in our economy. And he wants big, destructive tax hikes.

The administration "guesstimates" that growth of our gross domestic product -- everything the United States produces in a year -- will be 3.6 percent in 2012, 4.4 percent in 2013, 4.3 percent in 2014 and 3.8 percent in 2015.

But that's unrealistic. Remember how the administration used to tout Congressional Budget Office figures suggesting that ObamaCare socialized medicine might not add too much to deficits? Well, now the president is ignoring the very same CBO because it predicts much less economic growth in the coming years than the administration forecasts.

Some private forecasters are also disputing the president's sunny predictions of rapid growth. For instance, the chief economist at Moody's Analytics estimates that U.S. economic output in 2021 will be almost $900 billion lower than the Obama administration forecasts.

The trouble is, if the growth the president predicts does not materialize, deficits over the next few years will be far greater than he acknowledges because tax revenue will still be down.

Economists also say unemployment is not going to drop as fast as the president thinks it will, creating a further drag on the economy.

It is equally troubling that the president wants to increase income taxes on "the rich," who already pay a wildly disproportionate share of federal income taxes. He seldom considers the fact that many of "the rich," whom he regularly criticizes, are simply small-business owners who provide jobs to a great many of the "non-rich."

The president also wants to reduce deductions that "the rich" can take for making contributions to charity. But that would only punish the charities that so many Americans rely on in this time of economic crisis. Will Washington increase red-ink safety-net spending yet again when many people can no longer get help from charities because so many donations have dried up?

The Obama budget plan is a vast exercise in smoke and mirrors. We can only hope that members of Congress will present a serious plan for some budget cuts -- including reform of crippling entitlement spending -- to begin to get our nation's finances in order. The president plainly has not done so.

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