The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.
The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.
But, don't expect this to slow Dems from pushing their massive health care boondoggle.
This news won't faze them one bit.
Dems today vowed to pass Obamacare with or without Republicans.
This is the kind of basic economics that Obama and the Dems don't want to acknowledge – increasing taxes actually decreases tax revenue. The reason is very simple. By taxing more dollars out of Americans' paychecks, those people have less money to spend. Since they spend less money, fewer taxes get collected in the process of sales transactions, investment dividends, etc. The whole system slows down. In contrast, when taxes go down, people have more disposable income, so they spend more money. Thus, there are more (and larger) sales transactions, investment dividends, etc., and tax revenues go up.
Oh, and when taxes go down, that encourages businesses to expand and invest, which means more jobs, which in turn means more people being gainfully employed. It's kind of hard to spend any money when one has nothing coming in, though Congress does try really, really hard to do that. And, since the unemployment rate has spiked to the highest point in 26 years under Obama's watch, there are a lot more people who aren't earning any income to be taxed at all.
Hot Air provides another little bit of analysis:
With revenues dropping and with businesses struggling, those rosy deficit projections made in the first months of the Obama administration will crash on the rocks of economic reality. That’s why Obama wanted those numbers hidden during July, when he hoped to get his ObamaCare bill passed. The AP quotes William Gale at the Tax Policy Center as noting that the lack of recovery would mean that no one’s domestic agenda stands a chance of passing, as the money won’t exist. Obama knows this and hoped to get it passed before people realized that the money already has disappeared.
It's not rocket science, it's basic economics. They just don't want it to be true because lower taxation means less control over your behavior.
There's my two cents.