After weeks of Obama pounding the proverbial podium and telling Congress to pass his stimulus sequel (a/k/a “The American Jobs Act”), that legislation dies tonight in the Senate. The Democrat-controlled Senate, no less. The White House is already talking about what they’re going to do after the bill fails.
But one tax mechanism in the bill tells us a lot about the debate over the national debt. The left (including all those “occupiers” on Wall Street) tell us that we can fix the national debt problems by raising taxes on the rich. But, as Peter Suderman notes, Obama’s tax hike on “the rich” in his jobs bill wouldn’t have paid off even one year’s budget deficit over the course of a decade.
When Obama first announced his jobs bill, he promised that it would be fully paid for. And according to the Congressional Budget Office, it is, through a surtax on households with income over $1 million, which is projected to raise $553 billion. So the bill would fund almost half a trillion dollars in spending now with a tax on high earners over the next 10 years.
Since the bill is unlikely to pass, this doesn’t matter all that much. But the scoring of the pay-for does tell us something about the options for dealing with federal budget deficit. As ZeroHedge points out, last year’s deficit clocked in just above $1.2 trillion, or a little more than $100 billion each month. Which means that for all the president’s talk about taxing millionaires and billionaires and ensuring that they pay their fair share of any deficit reduction proposal, the special millionaire’s surtax attached to this bill wouldn’t even pay for five months of the last year’s deficit, and it would take a full decade to do it.
And keep in mind that President Obama didn’t want to spend these tax revenues on deficit reduction. He wanted to spend them on more stimulus.