What the Budget Means to You

President Barack Obama released his 2010 Fiscal Year budget yesterday, and the numbers don't look good. Here's a crossection of stats about this budget bill:

• A $3.55 trillion budget plan for 2010, with additional immediate changes that would push spending to $3.94 trillion in the current year. Total Expenditures: $7.49 trillion.
• A projected deficit of $1.75 trillion for 2010, projected to be reduced to $1.17 trillion next year and tapering to $533 billion in 2012. This would still be $78 billion more than last year's record-breaking deficit of $455 billion.
• The $1.75 trillion deficit would be 12.3% of America's GDP. This is the second highest percentage for a deficit ever behind the post WWII 21.5% in 1945.

Where will the deficit reduction after this drastic run-up come from? Here are a few sources (all are currently in the budget except for raising the maximum tax rate):

• Taxpayers in the current top tax bracket of 35 percent would see their tax deduction for every $1 given to charity drop from 35 cents to 28 cents.
• $636 billion will come from a hike in the capital gains tax, the elimination of itemized deductions and expired tax cuts for people making over $250,00 a year.
• The President has also stated his desire to raise the top tax rate to 39.6% from the current 35%, although this is not currently in the budget.
• Taxing carried interest (the primary source of income for the manager in private equity and hedge funds).
• A number of taxes and the repealing of deductions for various energy production costs, mostly related to petroleum and natural gas drilling.

What does this all mean to you? Perhaps the most shocking numbers are the simplest math. Taking into account only the $3.55 trillion for 2010, with a US population is 304,059,724, a little more than a third of which filed returns (138,893,908), here's the math for the 2010 $3.55 trillion:

• $11,833 spent per American
• $25,573 spent per taxpayer (Unfortunately, this assumes all return filers are taxpayers and not just return recipients, which is not the case. Some estimates have the amount of actual taxpayers only about 60% of that number.)

It's a lot of math, and reading this post most likely made you a bit drowsy. But it's important. We're about to embark on one of the most massive spending plans in American history at a time when our industry is faltering, credit is impossible to secure and homes continue to be forclosed upon at an alarming rate. But this budget doesn't just include money for more bailouts and partial government takeovers- more than $600 billion is earmarked for a fund that will be used to begin a changeover to universal healthcare, and the budget also anticipates revenues from a CO2 cap-and-trade program that is only in the concept phase.

This budget is not what we need. It imposes taxes or allows to expire tax cuts on industry that contributes to the GDP in important ways while socking away money for socialized medicine. Cap-and-trade is not the best way to work toward reducing industrial emissions, the rise in capital gains tax discourages profits for businesses and it doesn't seem to me that reducing the tax deduction for charitable contributions is ever a good idea.

I will not pretend to suggest that the Republicans haven't recently "found" their love for fiscal conservativism partially in opposition to President Obama's policies, nor did they protest as George W. Bush racked up deficits during his presidency. But this massive increase in the national deficit is too great a risk for too little reward and the Republicans are right to stand against it. In a era where we all should be spending less and saving more, the government should be leading by example, not exhibiting reckless spending.

The party's over, it's time to tighten the belt and we all need to stop before we spend ourselves into a depression exacerbated by increasing foreign-held debts and ask if throwing money at the problem is going to work. It's not- we need a new solution.

Sources: Reuters, ABCNews, Breitbart, Telegraph