We have extensively discussed the Buffett Rule before (which incidentally will achieve nothing to fix America's gaping deficit problem, but will certainly succeed in driving many wealthy people away from this country). We thought this issue was closed. Apparently it wasn't, and Obama is once again warming up the class divide wagon - remember: the number one rule in politics when electioneering is keep everyone as divided as possible - under the guise of tax reform. So here is a reminder on same simple issues of perspective, courtesy of Rick Santelli.
As a reminder, as we pointed out yesterday [5], the US just posted the largest ever March budget deficit in history of nearly $200 billion, which followed the single largest monthly budget deficit on record of $232 billion. Keep those numbers in mind, because they frame, in a very, very, very aggressive case, the bottom and top range of what the entire Buffett Rule would offset in terms of gained revenue. As rick explains, assuming one taxes an upper estimate of those eligible for the Buffett Rule (indicatively 225,000 people but realistically far less) an incremental $1 million, the offset would be $225 billion over the proposal's life. Which is not enough to even plug one month of US deficit. And that is what all the posturing is about.
Now don't get us wrong: America has a record deficit problem, and it will require both revenue and spending decisions to fix it, but in isolation, neither will make a dent, and with the government as bloated as it is, far more spending cuts will be required to match any revenue increases.
Finally, since the Treasury already funds over half of US funding needs, and the Fed is among the biggest monetizers, pardon holders, of US paper, why not just go ahead and print the money America needs? Surely all modern economic theories will agree that the once greatest country in the world can print itself into prosperity...
From Rick Santelli:
And while Rick's example is hyperbolic to the upside (in terms of benefit), here is a different more realistic perspective on things, via the Joint Committee on Taxation [6], courtesy of TaxProf [7].
[8]
Seriously, this may work... If America taxes everyone at about 1500%.
(which incidentally is not too far off: once again we remind people of the ominous reality that the BCG study [9]predicted last September: take our word for it - a one time tax on all assets is coming).