You may want to sit down for this, but it appears not everything said at this week’s DNC was entirely true. Bloomberg has the details:
The Deficit
The Claim: Obama said that “independent experts” agree his budget plan “would cut our deficit by $4 trillion.”
The Facts: Obama was incorrect. His budget does purport to cut the deficit by more than $4 trillion. Some of the savings are illusory, such as $700 billion that comes through an accounting gimmick related to war spending — counting as budget cuts the money that won’t be used for wars that are ending.
The deficit-reduction figure also includes more than $1 trillion in cuts in so-called discretionary spending that were already agreed to as part of a deal last year to raise the government’s debt limit. The administration’s budget “falls well short” of $4 trillion in savings, according to February analysis by the nonpartisan Committee for a Responsible Federal Budget.
It’s more important to look at where a budget leaves the federal debt over the long term. Republican vice presidential nominee Paul Ryan’s plan would leave the government with a $15.3 trillion debt in 2022, which would be about 62 percent of the nation’s economy. Obama’s plan would results in an $18.8 trillion debt in 2022, or about 76 percent of the gross domestic product.
Clinton’s Tax Rates
The Claim: Obama said he wants “the wealthiest households to pay higher taxes on incomes over $250,000 – the same rate we had when Bill Clinton was president.”
The Facts: Obama is telling only part of the story about the taxes he wants top earners to pay. Yes, he is proposing that the top marginal rate on ordinary income return to 39.6 percent, which is what it was under Clinton. At the same time, he has proposed or already enacted provisions that would make these households pay more than they did under Clinton.
The 2010 health care law included a 0.9 percent tax on the wages of top earners and a 3.8 percent tax on their unearned income, such as capital gains and dividends. Those levies, which will take effect in 2013, would raise taxes by $318 billion over the next decade, according to the Congressional Budget Office.
Furthermore, Obama has proposed capping the tax breaks received by top earners at 28 percent. That would limit their ability to deduct charitable contributions, mortgage interest and state and local taxes. They also would pay taxes on their municipal bond income and employer-sponsored health insurance, which are both now not taxed. Those proposals, in Obama’s most recent budget, would raise $584.2 billion over the next 10 years, according to the Office of Management and Budget.
Territorial Tax
The Claim: Biden said that Republican presidential candidate Mitt Romney has proposed “a new tax — it’s called a territorial tax — which the experts have looked at and they acknowledge it will create 800,000 new jobs — all of them overseas. All of them.”
The Facts: Biden overstated the case. His 800,000 jobs number is based on a study conducted by one expert, Kimberly Clausing, an economics professor at Reed College in Portland, Oregon. Her July analysis examined the effects of a “pure” territorial system under which U.S. companies would face no domestic taxes on their foreign income.
Romney hasn’t provided details on what his territorial tax system would look like. The clearest Republican proposal on the issue has come from Representative Dave Camp of Michigan, the chairman of the House Ways and Means Committee. It would exempt 95 percent of foreign income and includes provisions opposed by companies that prevent them from shifting profits outside the U.S. That’s not the pure proposal that Clausing analyzed.
[...] you can use: Politicians Lie. In Other News, Water is Wet (Anthony [...]
Point by point:
1. Fact check is false. Counting the end of war spending as a deficit cut is not an “accounting gimmick.” The federal budget baseline includes war spending. If you stop spending it, your spending numbers have gone down, reducing the deficit.
2. Fact check is false. Obama wants income tax rates to return to Clinton rates, which the “fact check” doesn’t dispute. Dividend and capital gains rates were both eviscerated by the Bush tax cuts. Even the 0.9 and 3.8 percent taxes mentioned here don’t get you past the Bush tax cuts. Those two increases will both leave dividends and capital gains rates below where Clinton set them.
3. One person, an “expert” found the result Biden attributed to “experts.” He didn’t say “all the experts” or “there’s an expert consensus.” This checks out to me. And the fundamental reasoning here is correct: if you tell US corporations that they don’t have to pay US taxes on money earned overseas, they’ll move their jobs to low-tax havens while profiting from US infrastructure and markets.
Also, Ryan’s plan is itself dishonest. He flat-out makes up his revenue numbers.
Ryan’s deficit numbers emerged from his request that the Congressional Budget Office assume a new, higher revenue baseline that he didn’t back up with specific closing of tax loopholes or specific rate increases (in fact, the cuts rates in his proposal). The revenue numbers are fiction, so the deficit numbers are fiction too.
Ryan claims that he’s going to cut taxes and then close loopholes. He doesn’t say which ones, but the biggest loopholes are: mortgage interest deduction, 401(k) deduction, health insurance deduction, charitable contributions deduction – all of these have outrageously broad and strong popular support, meaning the likely result is that the tax cuts pass, the deductions get left alone, and the deficit explodes.
The reality is that Ryan will eviscerate essential discretionary spending (the FDA, the SEC, student loans, that sort of thing), cut taxes massively and end Medicare, without cutting the deficit.