There are lots of provisions that deserve detailed attention, but I always look first at the overall trends. Most specifically, I want to see what’s happening with the burden of government spending.
And you probably won’t be surprised to see that Obama isn’t imposing any fiscal restraint. He wants spending to increase more than twice as fast as needed to keep pace with inflation.
What makes these numbers so disappointing is that we learned last month that even a modest bit of spending discipline is all that’s needed to balance the budget.
By the way, you probably won’t be surprised to learn that the President also wants a $651 billion tax hike.
To avoid increasing the burden of government spending upon typical Americans, the rate at which the federal government spends money would need to be less than the combined average rate of inflation and population growth.
As you can see in Dan’s chart above, the average rate of inflation is about 2.2%. According to the U.S. Census Bureau, the average rate of population growth (the resident U.S. population plus Armed Forces members stationed outside of the U.S.) from April 2010 through January 2014 works out to be about 0.7%. That puts the combined average rate of inflation and population growth at 2.9%.
Meanwhile, President Obama wants to increase federal spending by 5.0%, which means that the burden of supporting that spending upon Americans will be increased. That, in turn, means two things: taxes need to go up and the federal government needs to borrow more money.
Keeping true to form, President Obama is seeking to directly increase the burden of that additional spending upon Americans through a $651 billion tax hike.
Coincidentally, that tax hike would appear designed to offset the “unexpectedly” $621 billion higher cost of the federal government’s expected spending for health care over the next 10 years, which is being caused by the implementation of the Affordable Care Act (aka “Obamacare”).
Just so we’re clear that the amount of President Obama’s newly proposed tax hike wasn’t arrived at by accident!
Library of Congress