Not so well, it would seem.
On Tuesday, Chairman Zero said, “”Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to next budget, the next administration, or the next generation. That’s why today I’m pledging to cut the deficit we inherited by half by the end of my first term in office.”‘
By Wednesday, Chairman Zero was proposing a $600 Billion “down payment” on nationalized health care, $75 Billion to bailout deadbeats who took out mortgages they couldn’t afford, and is set to add another $750 Billion to bail out the banks.
Which is why the deficit has already tripled in the first month of Chairman Zero’s rule:
Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can’t possibly raise enough revenue to fund Mr. Obama’s new spending ambitions.
Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and “the wealthiest 2%.” Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That’s about 7% of all returns; the data aren’t broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% — about 1.65 million filers making above $388,806 — paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.
Note that federal income taxes are already “progressive” with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He’d also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won’t come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.
Either the US is going to collapse into Zimbabwe-type hyperinflation because of all the money the Fed will have to mint to cover this spending, or the definition of “rich” will have to be lowered to include anyone who isn’t Henrietta Hughes. Quite probably, both.