"On November 29, 2012, Treasury Secretary Timothy Geithner summarized President Obama’s plan to avoid the fiscal cliff to members of the Senate and the House of Representatives. The plan called for $1.6 trillion in tax increases, but would “largely exempt Medicare and Social Security from budget cuts.” President Obama has urged in the past that the rich “pay their fair share” to reduce the deficit, meaning that tax increases on the wealthy would go toward reducing the deficit.
However, new data from the Senate Budget Committee tells a different tale about where the money from the tax increases will go.The committee found that out of the proposed $1.6 trillion in tax increases, only $400 billion will go toward reducing the deficit. The remaining $1.2 trillion will finance additional spending, including the full restoration of the budget cuts planned under the Budget Control Act of 2011, along with “$50 billion in fresh spending on the economy,” i.e., another stimulus package. The Senate Budget Committee also contends that the plan will add $8.6 trillion to the national debt over the next decade.
While it is preferable to avoid the fiscal cliff and opt for sensible cuts to federal spending, President Obama’s plan would be damaging to the economy. It is living proof of a quote by Milton Friedman: “Higher taxes never reduce the deficit. Governments spend whatever they take in and then whatever they can get away with.”
Taxing “the rich” will not solve any problems; the only way to reign in the federal deficit and cut the $16.3 trillion national debt is by first eliminating wasteful spending."
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