White House: Obama 'Will Not Sign' a Deal Unless It Increases Taxes
(CNSNews.com) - White House Press Secretary Jay Carney said today that no matter what else happens President Barack Obama--who is the only modern president other than Franklin Roosevelt to serve in four years when federal spending topped 24 percent of GDP--will not sign a deal to avoid the so-called fiscal cliff that will arrive at the end of this year unless that deal increases taxes.
"So the President made clear that he is not wedded to every detail of his plan," said Carney. "The President has also made categorically and abundantly clear that he will not sign an extension of the Bush-era tax cuts for top earners. It’s bad economic policy and we cannot afford it. He will not sign that."
According to official calculations made by the White House Office of Management and Budget that go back to 1930, Barack Obama and Franklin Roosevelt are the only two presidents who have served in four fiscal years when federal spending exceeded 24 percent of GDP. Roosevelt did so in 1942, 1943, 1944, and 1945 (when he died in office). Obama did so in 2009, 2010, 2011 and 2012.
Since 1930, according to the White House, there has been only one year when federal tax revenues went as high as 20 percent of GDP. That was 2000, when revenues were 20.6 percent of GDP.
No matter what the federal income tax rates have been, at no time since 1930 has the federal government been able to collect as much as 21 percent of GDP in taxes.
To balance the budget at a level of spending higher than 20.6 percent of GDP would require an historically unprecedented level of taxation.
The federal government taxes away the income of Americans through a system of progressive tax rates, designed to take larger and larger shares of a person's earnings as the person make more money.
In 2000, before President George W. Bush came into office, there were five federal income-tax brackets--a 15-percent bracket, a 28-percent bracket, a 31-percent bracket, a 36-percent bracket, and a 39.6 percent bracket. Bush signed legislation creating six brackets that taxed away a lower percentage of income at progressive rates of 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent.
Additionally, the Bush legislation also reduced the tax rates on dividends and long-term capital gains, and expanded tax credits including for dependent children.
These tax cuts were set to expire in 2010, but Obama agreed to legislation to extend them to the end of this year. If they are not extended then, all tax rates will snap back to what they were in 2000 under President Clinton.
If the Bush tax rates expire and federal law snaps back to the Clinton rates, income up to $17,000 will get a 50 percent tax increase, going from 10 percent taxation to 15 percent taxation. Income between $17,800 and $60,350 will stay at the 15 percent tax rate. Income between $60,350 and $145,900 will get a 12 percent tax hike, with the rate jumping from 25 percent to 28 percent. Income in the $145,000 to $222,300 range will get an 11 percent tax hike, with the rate jumping from 28 percent to 31 percent. Income in the $222,300 to $397,000 range will get a 9 percent tax hike, with the rate climbing from 33 percent to 36 percent. And income above $397,000 will get a 13 percent tax hike, with the rate climclimbing from 35 percent to 39.6 percent.
"The president is very interested in closing loopholes and capping deductions where sensible both economically and plausible politically," said Carney, "but the fact remains that the cleanest, simplest way to achieve the kind of revenue target that’s necessary here is to go back to the Clinton-era rates for top earners--rates, by the way, that were in place during the longest period of economic growth--peacetime economic expansion in our lifetimes; rates that were in place when the rich got a lot richer and the middle class did really well, too; the rates that were in place during a period that saw deficits disappear and to be replaced by surpluses."
"The President is willing to look at anything that’s sensible and realistic and that is mathematically sound," said Carney. "But our point on rates is that they are the sensible, clean, simple way and proven way to achieve the kind of revenue target that we’ve talked about, as you’ve seen in the President’s proposal, a proposal which includes loophole closures and deduction caps, as well, but ones that are realistic."
In fiscal 2012, according to the White House, the federal government spent $3.795 trillion, the most in the history of the United States. This year, fiscal 2013, the White House estimates the federal government will increase spending to $3.803 trillion. The year after that, fiscal 2014, the White House estimates federal spending will increase to $3.883 trillion. And the year after that, fiscal 2015, the White House estimates federal spending to $4.059 trillion.