« previous | TPM CAFÉ READER POSTS HOME | next »
Contradicting independent expert analysis, Obama campaign claims he will reduce the budget deficit
How can Obama possibly reduce the budget deficit while at the same time maintaining his expensive promises?
Even considering the relief that will result from the withdrawal of troops from Iraq, independent experts estimate that the deficit will actually INCREASE as a result of either McCain's or Obama's proposals, with McCain's plan being the worst in this aspect.
Two top Obama advisers, Jason Furman and Austan Goolsbee wrote today in a WSJ op-ed:
Obama is focused on cutting taxes for middle-class families and small businesses, and investing in key areas like health, innovation and education. He would do this while cutting unnecessary spending, paying for his proposals and bringing down the budget deficit" (My emphasis).
But a study conducted in June by the independent Tax Policy Center, run by the center-left Brookings Institution, in a joint effort with the progressive Urban Institute concluded that,
"McCain's plans would cut receipts by $3.72 trillion from 2009-2018 compared with current tax law. Obama's plans would cut revenues by $2.73 trillion over the same period."I'd love to know where the spending cuts to offset these losses will come from. The Iraq War troop withdrawal would save us $80 to $90 billion a year according to Obama campaign estimates. Not enough.
Indeed, even Obama is unsure of what his advisers guarantee. He told reporters in July: "I do not make a promise that we can reduce it by 2013 because I think it is important for us to make some critical investments right now in America's families,"
Don't get me wrong. I am not saying Obama cannot reduce or balance the budget. What I'm saying is that he can do so only by breaking many of his tax/spending promises.
To the seniors and college students who expect a tax break of some sort during Obama's administration: Don't count on it.
Advertisement
Comments (7)
McCain's budget is an extra TRILLION dollars unbalanced and you warn seniors and college students about Obama?
What credibility do you expect to have with anyone? Anywhere? Anytime?
I'm done feeding you. No more.
August 14, 2008 5:51 PM | Reply | Permalink
Ripper, let me help you realize how dumb you are. Your logic goes:
McCain's plan is really bad for seniors, therefore Obama will keep his promises.
That, my friend, maes no sense at all. Your conclusion doesn't folloe from your premise. Plus My diary is not a comparison of McCain's plan vs. the Obama plan. It is an analysis of Obama's plan.
August 14, 2008 6:00 PM | Reply | Permalink
I'm not an economist, I don't play one on T.V and I didn't stay at a Holiday Inn Express, but doesn't a lot of what happens w/ the deficit depend on what is happening w/ the economy? If Obama gets in, gets us on track and the economy starts booming again, wouldn't that change the numbers?
And if an administration that doesn't have it's head stuck up where the sun don't shine got into power, couldn't about a gazillion dollars be saved just in how we spend our money?
Or am I just hopelessly naive and optimistic?
August 14, 2008 6:12 PM | Reply | Permalink
I understand your question here, and it's a fair one. To understand my answer, look at the WSJ op-ed again, and keep in mind some specific areas cited in the article.
Furman and Goolsbee specifically cite the Clinton tax plan at the beginning of the article. That tax plan provided for middle-class tax relief and tax relief for small business owners. This resulted in new jobs and more business investment. From those new jobs and investment grew new revenue sources.
It's clear that Obama understands the role that increasing disposable income for lower earners plays in kick-starting our economy. It's also clear that he understands it will be much easier to create new jobs if we encourage growth in smaller businesses (and the creation of new small businesses). Bill Clinton had a very solid grasp of how to turn a flagging economy around. Obama would be foolish to not follow that road map.
The reason I don't think Obama will come close to balancing the budget is because Clinton had the added benefit of the tech boom at its outset, which drove up many incomes (including my own). We also didn't have the military expenditures we have now. But, I believe he can reduce the deficit with his tax plan, and at least avoid running up our tab with China.
Your question is valid, though, and I think you wrote this fairly. Rec'd for those reasons.
August 14, 2008 6:37 PM | Reply | Permalink
It will certainly require increased revenues from higher incomes, not simply cutting budget, to eliminate the deficit.
The tendency has been for Congress to be optimistic about revenues after passing tax cuts, and getting deficits instead, while during belt-tightening times Congress has raised taxes and also been cautious about spending.
August 14, 2008 7:21 PM | Reply | Permalink
BTW, good discussion, with graphs, from Brad DeLong, showing that the Reagan administration's budget requests were solely responsible for 80s deficits:
http://www.j-bradford-delong.net/movable_type/archives/000432.html
August 14, 2008 7:25 PM | Reply | Permalink
Obama and McCain both compare their plans to the current tax rates, i.e. if we don't allow the Bush tax cuts to expire. From that perspective, so I've been led to believe, Obama's plan increases revenue, while McCain's decreases it, but not by as much.
You might think that analysis is bullshit, and honestly I kind of agree, but it's not so much a lie as a misleading interpretation. All sides have told much bigger lies than that by now.
OTOH, Goulsbee and Furman say "Overall, Sen. Obama's middle-class tax cuts are larger than his partial rollbacks for families earning over $250,000, making the proposal as a whole a net tax cut and reducing revenues to less than 18.2% of GDP", so maybe I'm full of crap here.
August 15, 2008 5:41 PM | Reply | Permalink
Post a Comment