Few points:
1) Our national debt is set to increase some $7 trillion over the next ten years. Most of the media talk of “cuts” has to do with decreasing the amount we go into debt, not actually decreasing our debt. Nobody has done that successfully since FDR initiated our spending orgy, which has sped up and slowed down periodically in the years since. Clinton just balanced the annual budget, without making a dent in the underlying debt, and despite promises to the contrary anyone with a pulse and a positive IQ knew would be broken, Obama has of course initiated very consciously destructive massive spending, and put in place massive tax increases to be instituted after the 2012 election. This is what deceiving nihilists do: they put their little time bombs in places nobody can see them, right away.
Thus, in my understanding, an increase of “merely” $3 trillion constitutes, in an Obamaworld Republicans are largely letting him get away with, a “cut” of $4 trillion. This is farcical. Even conservative radio hosts seem unable to grasp this point.
2) The top 1% of taxpayers pay more than the bottom 95% of Americans. The top 10% of income earners pay something on the order of 60% of all taxes, and the bottom 40% or so only pay the regressive 15.2% or so taxes used to fund current Medicare, Medicaid, and Social Security benefits, which most of them will never receive. They pay no income tax at all.
3) Corporations are always double taxes. The entity itself is taxed, which makes it harder for it to create jobs, since that is money that cannot be invested in expansion. It is, on the contrary, given to unionized Federal employees, many of whom view it as their job to make business as hard as possible.
Secondly, the employees are taxed, from the CEO to the janitor. As mentioned, the janitor pays no income tax, but has, in effect, to bear the full 15.2% (I think that is right: I am adding direct contributions to what the company pays; I believe it is 6.2% of earnings for SSA, and 2.9% for Medicare/Medicaid; I don’t know what Unemployment is, but it is likely added on to that–that is a topic for another day). The CEO is taxed on his income, and everything he buys, from homes to yachts, to watches to cars.
Thus only fools argue that any corporation pays no taxes, or that reducing tax rates somehow constitutes “corporate welfare”. Welfare is when you take something from one person by force of law, and give it to someone else. What is happened with corporations is that less is being taken directly in corporate taxation, which enables business growth, and following increases in income and other taxes.
4) We pay interest on the national debt. I see different numbers, but is currently somewhere between about $250 billion and $400 trillion. Certainties are that it is going up, and that at some point the sheer size of our debt will create questions about our ability to pay, and following increases in the rate we pay to get people to finance that debt. Currently, Bernanke’s Quantitative Easing–money printing, which is gifted to member banks in the Federal Reserve System that Americans can neither control nor even monitor effectively–is what is keeping these interest rates down. We could at some point be paying a trillion in interest alone.
Since he is a liar, Obama in my understanding does not even factor interest in to his purported cuts; neither the present interest, nor any projections on what future interest is likely to be, particularly given the likelihood at some point of a downgrade.
5) There is no amount of taxation on the rich that can pay for this. They already pay a disproportionately high amount, and history is abundant evidence that increases in nominal tax rates on the “rich” do not necessarily lead to increases in actual income. Foolish people assume that the rich simply hand their money over willingly. They don’t: they move their money into tax free bonds, move it offshore, or simply leave it in the bank or gold, none of which are economically productive. Capital gains, which ignorant people want to call unearned income, is always the result of some productive economic activity, which normally consists in providing capital for some job-producing activity, whether building a house, or expanding production in something.
We could literally confiscate the combined wealth of the richest 10% of Americans, and I don’t think would pay our bills for more than a year, and the effects would lead to us turning into Cuba in short order: totalitarian, utterly impoverished, and utterly bereft of any valid reason for hope.