Type to search

Money News Opinion Politics

Raising taxes now would likely guarantee a recession

Share

As more and more economic experts warn that a recession may be coming, the Biden administration still has its head buried deeply in the sand. Team Biden refuses to recognize the growing threat to the economy.

Despite the warnings, President Joe Biden keeps insisting a recession is “not inevitable.” At the same time, he
keeps pushing
Congress to raise taxes to pay for more spending.

Raising taxes now would be a tragic mistake. In fact, a recession would likely be inevitable if Congress increases taxes. Every time federal taxes as a percentage of GDP have increased above 19%, the U.S. economy has fallen into a recession. In our history, taxes as a percentage of GDP have risen above 19% six times — 1944, 1945, 1969, 1981, 1999, and 2000. A recession has
followed every time
. The Congressional Budget Office
projects
that federal taxes will reach 19.6% of GDP this year, making a recession all but inevitable if Congress raises taxes even higher.

Indeed, we may already be in a recession, which is defined as two consecutive quarters of negative economic growth. The economy declined 1.6% in the first quarter, and the Atlanta Federal Reserve is now projecting that the economy is barely growing at all in the second quarter. With retail sales falling and manufacturing output declining, negative growth in the second quarter is a
real possibility
.

Federal Reserve Chairman Jerome Powell told Congress last week that a recession is “certainly a possibility” as the central bank raises interest rates at the fastest pace since the 1980s to slow inflation.

Saddling the economy with another trillion dollars in tax increases would be a major economic blunder.

Bruce Thompson was a U.S. Senate aide, assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.

Washington Examiner

Political news and commentary about Congress, the president and the federal government from the Washington Examiner.

  • 1