The Obama-Reid-Pelosi Spendathon
How are we going to pay for it? Dramatically higher taxes.


Grover Norquist

Tonight Pres. Barack Obama will deliver his first message to Congress. Obama will likely point out that the state of the union is grave, although he is less likely to admit that he, Nancy Pelosi, and Harry Reid already have done much to add to the gravity of the problem, or that their future plans will make things even worse.

Total government taxes — federal, state, and local — were 29.2 percent of GDP in 2007, the last year for which the Office of Management and Budget has data. That’s a $4 trillion boat anchor on the U.S. economy — more than $13,000 for every man, woman, and child in America. That’s $13,000 you can’t save for your child’s college education; that you can’t put into a 401(k) for your retirement; or that you don’t have to meet payroll this month in your struggling small business.

But if things are bad now, they’re only getting worse.

Thanks to the Bush-Obama-Pelosi-Reid “stimulus/bailout/pork/omnibus” bills, federal spending alone this year will be about 30 percent of GDP, according to Strategas LLP. That’s the highest level since 1945, when World War II was drawing to a close. Since then, the average has been only 20 percent of GDP, a figure that held up as recently as two years ago. Yes, since 2007, the federal government has managed to increase spending by 50 percent. And eventually, if spending is not curtailed, there will be pressure from the mainstream media and Democrats to raise taxes to “address the deficit” caused by all this new government spending.

Taxpayers, of course, are accustomed to hearing from official Washington how taxes may have to go up in the distant future to pay for the unfunded obligations of Social Security, Medicare, and Medicaid. This is a looming threat, and it makes the above numbers all the more ominous. The bailout and stimulus-spending bills will have to be “paid for” in the minds of the media and the Obama-Pelosi-Reid regime with higher taxes.

Frighteningly, a multi-trillion-dollar tax hike is already baked into the cake. On Jan. 1, 2011, just a shade over 22 months from now, several rates are scheduled to rise: The tax rate on most small-business profits will elevate from 37.9 percent to 42.5 percent. Also increasing will be the nest-egg taxes on capital gains (15 to 20 percent) and dividends (15 to 39.6 percent). And the death tax, which is set to die in a mere ten months, will come roaring back at a 55 percent rate on estates valued over $1 million.

And if we take Obama at his word during the presidential campaign, there will be an increase in the Social Security payroll tax for employees and small-business owners making $250,000 or more. This tax could go as high as 12.4 percent, up from 0 percent today. Obama also has indicated his support for a cap-and-trade (or carbon-tax) regime that will increase energy costs by hundreds of dollars a year for the typical family.

Then there are the congressional highway-bill writers who are beginning to whisper about a gasoline-tax hike. And House Ways and Means chairman Charlie Rangel (D., N.Y.) wants to “close loopholes” — i.e. “raise taxes” — on international income earned by U.S. corporations.

President Obama has stated that those making more than $250,000 a year ($200,000 if you’re single) should expect to see their taxes go up. Yet if history is any guide, we will all see a tax hike at the end of the day. Back in 1993, Pres. Bill Clinton promised to raise taxes only on top income earners, but he ended up raising the taxes of every American, beginning with all those who drive a car. This Congress already has raised taxes on cigarette smokers, who have a median income of less than $40,000 per year.

Put all this together and 2011 could be the most dismal year for U.S. taxpayers since Jimmy Carter was in office. The small-business tax rate under a worst-case scenario could exceed 50 percent. And while the stock market already (or hopefully) has anticipated tax hikes on capital gains and dividends, Congress and the president will no doubt search for even more tax hikes to pay for all their new spending, and not just on the “rich.”

Here’s but one new bottom line: The Obama-Reid-Pelosi “stimulus” package involves some $1 trillion in new spending and debt. If Democrats and the mainstream media get their way and “pay for” this with a tax hike, the cost will be more than $3,000 for every single American.

What’s to be done? Well, the good news is that while Obama, Reid, and Pelosi are working to make America poorer, less competitive, and less innovative, every single Republican in the House and almost every Republican in the Senate voted “no” on the so-called stimulus package. And the Republicans offered a pro-growth, tax-reduction alternative. So when the Obama-Reid-Pelosi spending plan makes things worse rather than better — as the stock market predicts — the American people will have the clear choice of a different path.

In the summer of 2008, President Bush and Republican and Democrat leaders all drank the Kool-Aid, and claimed that throwing money at Wall Street would help the economy. But now it’s the Republicans who oppose this strategy while the Democrats embrace it. There is an alternative.

– Grover Norquist is president of Americans for Tax Reform and author of Leave us Alone: Getting the Government’s Hands Off Our Money, Our Guns, Our Lives.


Sign up for free NRO e-mails today:

NRO Polls on LockerDome

Subscribe to National Review