Tags: Dorfman | Obama | budget | tax

Jeffrey Dorfman: 'Economy Facing Marginal Tax Rate of 67 Percent' Under Obama's Budget

By    |   Wednesday, 04 February 2015 12:36 PM

University of Georgia economist Jeffrey Dorfman is none too enamored with the budget President Obama proposed Monday.

Obama's budget includes a $74 billion increase in discretionary spending above the current legal baseline for spending, he writes in an article for Forbes.

In addition, the Congressional Budget Office forecasts mandatory spending will rise by $220 billion in the next fiscal year and net interest expenses by $49 billion.

"Thus, what President Obama is really proposing is a spending increase of $343 billion. That would be an increase of over 9 percent above this year's levels and would result in the first $4 trillion budget in American history," Dorfman notes.

"With economic growth running at about 3 percent, the economy is adding about $530 billion to GDP annually. If you think about that as the new income that could go to either the private sector or the government, President Obama is proposing that the government take charge of 65 percent of the new money available in the economy," he adds.

"If government is to allow the private sector to grow and continue to create jobs, it needs to slow or reverse the growth in entitlement spending."

Add in state and local government, and you have "the entire economy is facing a marginal tax rate of 67 percent."

The good news for Dorfman and those who agree with him is that hell will freeze over before Republicans in Congress approve the president's budget.

The budget represents more an attempt by Obama to set the agenda going forward than one to implement policy this year.

"This is mostly a political document designed to help Democrats in 2016," Stan Collender, a former Democratic congressional aide and now executive vice president at Qorvis MSL Group, a communications strategy firm, tells Bloomberg.

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University of Georgia economist Jeffrey Dorfman is none too enamored with the budget President Obama proposed Monday.
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Wednesday, 04 February 2015 12:36 PM
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