This comes as a surprise to no one of course, except for an Obama administration which seems to believe that taxes can stay at more or less current levels despite their extraordinary spending binge. Instead, history suggests that if Washington wants to run historically-high deficits, then much higher taxes inevitably follow:
As Blodget says:
We don’t know about you, but we’re not excited about the apparent correlation here between massive government debt and deficits (blue and dotted blue lines) and sky-high marginal tax rates (red).
Yes, in previous eras, it appears that high taxes preceded the exploding debt and deficits. But we have this sneaking suspicion that that apparently comforting pattern will be reversed this time.
I suspect President Obama will wait to push for a massive tax increase until his lame duck term.