During the campaign and previous rounds of talks, (NMP) Obama pushed $3 in cuts for every $1 in new taxation. Of course, just like happened with Reagan, the tax increases would come now, with the cuts down the road, which would never materialize. During the debate he pushed $2.50 cuts to $1 increases. What’s the reality?
(AEI) President Obama’s opening bid in budget talks with congressional Republicans is a reheating of his 80-page deficit reduction package from September 2011. The president calls it a “balanced” plan. Well, here it is:
Nice big graphic at the link.
Now, according to Obama’s math, his “balanced” plan cuts the projected cumulative debt by $4.4 trillion over ten years with 36% of the reduction coming from $1.6 trillion in tax increases — 80% from wealthier Americans, 20% from business. So, basically, $2 in spending cuts for each $1 in tax hikes. “Balanced.”
But once you begin to dig into the numbers, the plan doesn’t look balanced at all. As the bipartisan Committee for a Responsible Federal Budget noted back then:
The Administration claims that the plan would save about $4.4 trillion in total (including interest savings, war savings, and the costs of the jobs proposals). However … counting the war savings is counting a policy that is already in place and is thus a gimmick to be avoided. Taking out the war savings and savings from the discretionary cuts in the Budget Control Act leads to total savings of less than $2 trillion.
Of the supposed savings, then, $1.6 trillion comes from tax hikes and $577 billion comes from spending cuts, not counting saved interest. So 73% of the savings comes from taxes, 27% from spending cuts. That’s $3 of tax hikes for every $1 of spending cuts.
The cuts would never materialize, except, surely, to the military budgets (note, we do need to reduce military expenditures that are wasteful, just like with every federal agency. And surely need to reduce the horrible waste which creates surplus through the appropriations process, which needs to be reformed, which I somewhat cover in this post).
Interestingly, he also includes the cost of his “American Jobs Act” as $447 billion dollars. Another attempt at stimulus, despite all the others failing, but, he thinks it will pass this time. And actually expects $320 billion in “health savings”, despite the reality that ObamaCare will vastly increase the government’s costs.
Also, we see a reduction of $992 billion which would include disaster relief reductions.