From the failure of the current 'cap and trade' proposals to do much to either help the environment or limit cost over-runs, to the current health-reform proposals (with analysis sent by request to members of Congress here), to the long-term effects of various budget proposals, the CBO has continued to throw cold-water on Congressional and Administration claims that the stimulus, annual budget, and spending proposals will do much if anything to help the economy. Much of their analyses point to a further increase of both annual deficits as well as the national debt, and to an increase in costs. And yet, Congress and the Administration continue to hawk their proposals as benefiting the overall economy, decreasing the debt and deficit and improving the prospects of middle-America.
Now it seems that there is a serious debate within the Administration about the raising of taxes on the middle class. Timothy Geithner and Larry Summers, both of whom were heavily involved in the current economic meltdown prior to entering the Administration, have floated the idea as a necessity to reduce the deficit. While President Obama certainly doesn't want to look like he's backing out on his version of the 'read my lips pledge,' there are only three options available to he and to the Congress: cut spending (not going to happen with all the continued spending proposals), allow the debt to balloon to the point where we create long-term stagflation (which will kill any possibility of a second term), or increase income in the form of taxes. Given the ambitions and preferences of both the Congressional leadership and the President, it's pretty clear that continued tax hikes for most income levels are in store. Some increases may be hidden (as in the cap and trade package), and some may be open (after all, taxes are our 'patriotic duty' according to VP Biden, who also has declared that the stimulus is a success), but they're going to happen. Another clue: 'Everyone must sacrifice' according to President Obama.