Well, it happened. The House passed the Senate Fiscal Cliff ‘deal’ and now tax rates will go up on those making over $400,000 and spending cuts have been kicked down the road.
So how much tax revenue did this deal raise?
“The Senate bill would raise roughly $600 billion in new revenues over 10 years, according to various estimates.”
That’s $60 billion per year so let’s see how that increased revenue compares to the total Federal spending and Federal budget deficit. Using estimated 2012 Federal Government spending and deficit estimates, I created the following graphs.
You can see that this increased tax revenue is a mere drop in the bucket of our overall budget deficit (1.6% of total spending and 4.5% of our 2012 deficit).
I’ve said this before and I’ll say this again, WE HAVE A SPENDING PROBLEM, NOT A REVENUE PROBLEM!
Here is a graph of the Federal Government outlay categories as a percent of our estimated 2012 tax revenues.
In case you don’t know, the “Pensions”, “Health Care” and “Welfare” line items are comprised of Social Security, Medicare, Medicaid, Unemployment Insurance, Welfare and Food Stamps. Now let’s see what percentage of US tax revenues is required to fund these entitlement programs.
That’s right, 90% of all the money the US government takes in from tax revenues goes to fund these programs.
Is that any way to run a country? 90% of all tax revenues will be redistributed to those who don’t work or pay taxes? If you were founding a new country, would this be the way you’d set it up? Of course not!
So we either raise taxes to get another $1.3 trillion to balance the budget or cut spending. I choose cutting spending but our Congressional leaders chose to raise taxes today. We should be revolting in the streets right now.