Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“It is bad to be oppressed by a minority, but it is worse to be oppressed by a majority. For there is a reserve of latent power in the masses which, if it is called into play, the minority can seldom resist.”     Lord Acton

April 15, 2009

Debts, Deficits, Taxes, and Tea Parties

by Quincy

In watching the MSM coverage of the Tea Party protests, the following arguments are used to try and debase the factual arguments of the protests:

  1. Obama plans to lower taxes on the majority of Americans while raising them on the rich.
  2. Obama’s budget cuts the deficit in half over the next 10 years.
  3. Right now tax rates are the same as they were when Obama took office.
  4. Most Americans are OK with their taxes.

These are all true, but none invalidate the point of the protests.  The protests are not talking about current taxes, they are talking about future taxes.  Each and every dollar borrowed today is a dollar taxed out of the economy at some point within the next 30 years.  This is a simple, undeniable fact.

When trying to figure out bad our future tax burden is, one number concerns us:  The National Debt.  This number is staggering, standing at $11,176,642,012,673 at the moment I type this.  According to the CBO, Obama’s budget will increase this debt by over $1,800,000,000,000 in just the next year.   So, while Obama is correct that his budget cuts the yearly budget deficit in half by 2019, that means that his spending plan will add a mere $900,000,000,000 to the national debt that year.  If the CBO estimate holds, the debt will top $20,000,000,000,000 in 2019.  This means that between 2009-2019, the amount of money borrowed against the full faith and credit of the US taxpayer will almost have doubled.

Say it to yourself… twenty trillion dollars.  That’s the massive future tax liability for the citizens of the United States being protested today.  The anger about this future tax liability is very real among those who see it.  While the tea party movement might get co-opted by big-spending Republicans and fade away, the sentiment that started it is as genuine, grassroots, and truthful as any protest movement in American history.

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9 Comments

  1. It’s probably worse than that Quincy …. at least short term. Tax receipts have plummeted off a cliff and show no sign of rebounding any time soon. The deficit estimates for 2009 and 2010 are absurdly wrong, to say the least. The borrowing required to cover the next two years is going to be awful.

    Fortunately, I don’t expect these idiots to last much longer. The protests we saw today are the bare beginning, I suspect.

    Comment by Eric — April 15, 2009 @ 8:04 pm
  2. I have been paying the same tax rate or percentage of taxes per my income, while the national debt has more than quadrupled. This has been since 1979. I can’t see the debt doubling in ten years having that much of an effect on the average taxpayer.

    Its interesting that now the conservatives and liberterians have a cause that they will protest for. They were certainly missing in action 50 years ago.

    Comment by VRB — April 15, 2009 @ 8:18 pm
  3. VRB -

    You say:

    I have been paying the same tax rate or percentage of taxes per my income, while the national debt has more than quadrupled. This has been since 1979. I can’t see the debt doubling in ten years having that much of an effect on the average taxpayer.

    We’re coming to a tipping point where the debt level is unsustainable given total government tax intake (including SS and Medicare taxes). Between the upcoming end to Social Security surpluses, estimated now to be as soon as 2011, and the sudden misgivings expressed by the Chinese and other foreign debt holders, the borrowing ability of the Federal Government is about to be constrained.

    Once that happens, the Federal Government can only tax the money from the people or have the Federal Reserve print more, extracting wealth from the people via the “inflation tax”.

    Libertarians have been talking about the debt for a long time, but now the situation is so much more impending that some American taxpayers of are reacting more viscerally. As the fiscal situation of the Federal Government deteriorates while the Bush-Obama spending binge continues, more people will start to see the trouble we’re in.

    The next few years will not be pretty for the American taxpayer, the American tax consumer, or the economy at large.

    Comment by Quincy — April 15, 2009 @ 9:11 pm
  4. Remember that we do not just have to pay back the amount we owe, there is interest too. Pretty soon we will come to a point where we will be paying more interest than we take in in taxes, and at that point the only option will be to raise taxes.

    Comment by Peter — April 16, 2009 @ 5:15 am
  5. Regarding point 4, we’ve got a pretty good point made by a very unlikely source: Kevin Drum:

    Not bad! 49% think their income taxes are just fine or even a bit low. Except for one thing: this chart shows exactly the opposite of what it seems. Consider this: about 40-50% of Americans pay no federal income tax at all1. That’s zero dollars. I think we can safely assume that these are the people who think their taxes are about right. What this means, then, is that virtually every American who pays any income tax at all thinks they’re paying too much. There are various reasons why this might be so (a sense of unfairness regardless of amount paid, a fuzzy sense of how much they’re paying in the first place, simple bloody-mindedness, etc.) but overall it’s not exactly a testament to our collective willingness to fund the machinery of state.

    I think it’s clear… People who actually pay taxes think they’re too high.

    Comment by Brad Warbiany — April 16, 2009 @ 7:18 am
  6. I have to this day have never spent more than I take in. I save and I pay all my bills on time. The American people have for some reason felt that deficit spending for the last 30 years was OK and they themselves have been sold the idea to do it in their homes. Without raising blame since we are Americans, how is it that all of a sudden we have protests? Did no one realize that when we went from a surplus in 2000 to a deficit again which continued to this day? Why is everyone surprised? Even if we didn’t have the current financial crisis we have to pay off the deficit that existed.

    If you ship all your wealth producing capabilities offshore and you import oil and finished good so that wealth leaves the country and you sustain the economy through simple consumption of others production how do you intend to pay off a deficit?

    Sorry but the American people get what they deserve and the hard truth is what it is.

    Comment by muffler — April 16, 2009 @ 7:27 am
  7. muffler –

    Deficits and surpluses year to year don’t matter. The National Debt matters. Any budget that’s going to make a serious dent in it has to produce long-term, sustainable surpluses to retire the debt early.

    VRB is right to point out that this is a decades-long problem, not just a Bush v. Clinton v. Obama thing.

    Comment by Quincy — April 16, 2009 @ 9:26 am
  8. Quincy:

    I assume a growing national debt when I talk about deficits.

    Comment by Muffler — April 16, 2009 @ 3:09 pm
  9. Muffler -

    I’m a bit of a stickler about the difference between debt versus deficits. Politicians act as if lowering the deficit matters. Until the deficit is *ZERO*, the debt is getting worse. And it’s the debt we’re on the hook for as taxpayers, not the deficit.

    Comment by Quincy — April 16, 2009 @ 4:16 pm

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