The White House’s FY2017 Budget: Deficits February 11, 2016Posted by geoff in News.
Yesterday we saw that the government spending was going to increase to over 22% of GDP and seemed to be continuing upward. You might well ask what that bodes for deficits. Well, it turns out that the White House is not projecting a significant increase in deficits – only about 2.5% in the future:
The only way this can be true is if they’re projecting a lot of revenue, which they are:
So their master plan will succeed if they can
steal collect 20% of economic output. Now, if we had the crazy dot-com economy of 1998-2000 where capital gains tax revenues went through the roof, that just might work out. But so far as I know, the only realistic way they can generate this is by cranking up taxes.
Which is what they plan to do, with the single biggest revenue generator being an increase in the peak capital gains tax rate from 20% to 24.2%. Of course they never factor in the negative effect on investment that will cause, which will hamper GDP growth. So in the end, the deficits will be much larger than what they forecast.