The difference between President Obama’s $1.2 trillion consistent deficits and the GDP (wealth you produce) economic growth rate of 2 percent, or $300 billion, is $900 billion. That is the current rate of annual wealth destruction that is attributed to this administration.
The $900 billion amounts to $6,000 per annum wealth destruction for each taxpayer. Of this, President Obama is asking the rich to assume around $90 billion in new taxes. But notice that reduced wealth destruction occurs only if the $90 billion is used to pay down the deficit because all of us own the deficit. Paying taxes to the government does not increase your wealth.
There are two parts of GDP: 1) The money you pay in taxes and 2) the money remaining for other use. Clearly, by increasing item one, the result is a decrease in item two by the same amount. This is an easy way of understanding where we are and where we are going over the next four years.
Taxes are going to go way up in the midst of high deficits, and there is no way that your wealth can increase without some new innovation that grows GDP faster than the growth of taxes and deficits. GDP growth is what happened during President Clinton’s term with the dot.com economy. Wealth was not accumulated because of an increase in tax rates. Wealth kept equals GDP minus taxes and minus deficit.
At the end of this administration, this nation will be poorer than at the beginning because a way is not available for economic growth to overcome the annual deficit.
Seven Lakes West
More like this story