President Obama's Budget Heavy on Higher Taxes

President Obama's proposed budget for the fiscal year 2011 is a big fat $3.8 trillion.

Under the proposed budget, spending at Congress's discretion would decline, from $1.4trillion to $1.38 trillion. But with rising interest, Social Security, Medicare and Medicaid costs, total government spending would rise by $85 billion, to $3.76 trillion, reports WSJ.

The costs of war in Afghanistan and Iraq—budgeted as "overseas contingency operations"—are projected to increase by $46 billion over 2010-2011, above expectations contained in last year's budget.

In all, the president's budget would add $8.5 trillion to the federal debt through 2020, pushing the debt as a percentage of GDP to 77%, up from 53%. This is nosebleed levels. WSJ reports:

Kenneth Rogoff, a Harvard University economist who has studied other countries' experiences, says that level could push the U.S. toward a tipping point where interest rates could soar, the value of the dollar could plunge and the economy could face another crisis.

"We will hit a point where it comes on us very quickly, and you don't want to edge up to that point," Mr. Rogoff said. "Going beyond 80%, you're taking a real chance."

This growth in debt is despite Obama calling for higher taxes in his budget.

The budget plan calls for nearly $1 trillion in tax increases on upper-income families—largely through allowing Bush tax cuts to expire. Banks, bankers and multinational corporations would face new fees and levies. And oil companies would lose $39 billion in tax breaks, according to WSJ.

The two top income-tax brackets would rise to 36% and 39.6% from 33% and 35%. For families earning at least $250,000, capital-gains and dividend tax rates would rise to 20% from 15%.

Not even Keynesians call for tax increases during a recession. This is simply a big government budget that uses the heft of big government to step on the body of anyone who is successful and drains a little more blood to grow the government beast.