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Republicans Fear the Deficit but Fear Taxing the Rich to Decrease the Deficit Even More

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from CSM:

Americans aren't paying nearly enough federal taxes to afford the government they have. To bring the budget closer to balance, Congress will have to raise taxes, cut spending, or both.

In recent decades, federal tax revenues usually have totaled about 18 percent of gross domestic product, the nation's total output of goods and services. They got up to 21 percent when President Clinton balanced the budget. This year, after the Bush tax cuts and a deep recession, they are only about 14 percent of GDP.

"No wonder we are broke," says Robert McIntyre, director of the liberal think tank Citizens for Tax Justice. "We need a tax increase. Revenues are ridiculously low." ...

The Republicans' stated remedy would be budget cuts.

That's a bit ironic, because under President Bush, total federal outlays rose more than 6 percent a year in fiscal years 2002 through 2004, making him one of the biggest spending presidents ever. ...

Where to cut? One place to look is defense.

Mr. Obama proposes spending $708 billion on the military (including the wars) in fiscal 2011, making it the biggest military budget since World War II. That sum ... is 33 percent higher than the budget at the peak of the Vietnam War and 23 percent higher than that at the peak of the cold war under President Reagan, even after adjusting for inflation.

Another potential source for slashing the budget is what Washington calls "tax expenditures." These are special tax breaks that cost the United States Treasury an estimated $1 trillion a year. Some of the biggest breaks are also the most popular, such as income tax deductions for property taxes and for interest on home mortgages. ...

Obama wants to let the Bush tax cuts expire for those making more than $250,000 a year, thereby protecting 80 percent of the cuts. McIntyre suggests setting the expiry level at $150,000, raising an extra $3.5 trillion over 10 years.

If Congress doesn't act, and soon, the deficit promises to be more than $1 trillion a year for the next decade.