\n\nIf a country runs a deficit (as a percentage of GDP) that is equal to its growth rate, the debt level will remain constant. This year U.S. GDP will be a little less than $16 trillion, and its historical growth rate is 3.25%. That works out to what we might call a \u00e2\u0080\u009csafe\u00e2\u0080\u009d deficit of $520 billion, or even $600 billion if you allow for a little inflation. Last year, however, the U.S. deficit was $1.1 trillion -- or roughly $500 billion too much.
\nThat gap could be closed by ending all tax cuts, tax breaks and stimulus payments for everyone, according to the Tax Policy Center.\u00c2\u00a0But two-thirds of the burden would fall on the middle class -- something both political parties want to avoid. All the proposed tax increases on the wealthy, however, even combined with the end of the payroll-tax cut, would raise only $295 billion. So unless there were spending cuts twice as big as the ones currently scheduled, the deficit would still be too large.
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So if raising taxes on the rich nets you $295 billion on a deficit of $1100 billion, what's the point? It's like spending $11,000/year too much, and getting a job that only pays you $2950 for the year. I submit that raising taxes on the rich is not a plan to actually close the deficit hole; it is instead a ploy to encourage you to vote for them what's raising the taxes. Via Investment Advice as the U.S. Approaches a Fiscal Cliff | TIME.com.
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