If you were like my neighbor Bob, you woke to a gloomy November 5th 2008. The fact that we just elected Barack Obama, a big spending democrat that believes in more government, therefore more bureaucracy, and more waste as the new President of the United States. The other option on November 4th was Presidential candidate John McCain, an advocate of smaller government promised to do so by cutting taxes for all Americans. Mr. Obama, likewise promised to cut taxes, but just for the middle class and stated their will be tax hikes for the top two percent of earners.
Now neither I nor my neighbor Bob, are within the top two percent of earners. So while I felt at ease, Bob was still banging his head on the kitchen cabinet, was I missing something? Does Bob know something I do not? So I decided to do some searching - looking for bad news is such a bizarre task.
The goal was to find what affect this new president would have on my taxes, and the CBO was a great place to start. The CBO reports under current laws for the year 2009, U.S Revenues will be just under $2.2 Trillion, 15.5% of GDP for the fiscal year, whereas U.S Outlays (Expenditure) will be just under $3.9 Trillion, 27.4% of GDP. The difference of $1.7 Trillion will have to be paid for by the U.S. Taxpayer. Now there figures are alarming, let’s remember, these figures are for 2009 with the government bailouts from Wallstreet to Detroit, and less tax revenue from families and firms struggling to survive. Data from this year can prove to be an outlier; therefore information from the previous year would be necessary.
Also, Bob was in a bad mood as of November 2008, could he have foreseen the government intervention of 2009? No, he may have just looked at the data also. The previous year’s Revenue had been 17.7% of GDP and outlay had been 21% of GDP. The three percent difference translates into almost $500 Billion. The outlays of our government have exceeded the revenues received since the beginning of this decade, averaging a difference of 2 to 3 percent of GDP.
Politicians are all too aware of these figures. Yet in search of votes, politicians ignore our debt, as though the matter would correct itself. Politicians may tell us how we will pay for their agendas, but not how we will pay for past debt and unfunded obligations, such as Medicare and Social Security. We need our politicians to be frank with us, and tell us all “look, we messed up in the past and we need to pay for these debts by raising everyone’s taxes.” The American people will be more (accepting) of that frankness, than politicians trying to treat the public like children who are sheltered from information by their parents in order to “protect” their youthful minds.
So despite whoever won the presidential elections on November 4th, or which party took control of the House and Senate, Bob will have still woken up in a dismal mood, because he knew l that we all will have to pay higher taxes, whether politicians admit to it or not.