Here’s President Obama’s second term sales pitch to voters concerned about federal debt and deficit levels: A $4.3 trillion debt-reduction plan that he says is composed largely of spending cuts balanced by tax hikes.
Here’s what’s he’s actually offering: a sub-$2 trillion debt reduction package that is composed almost entirely of tax hikes.
In an interview with The Des Moines Register earlier this week, President Obama described what he thought were the prospects for a big budget deal in the early part of a potential second term. “It will probably be messy,” he said. “It won’t be pleasant. But I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I’ve been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending, and work to reduce the costs of our health care programs.”
The president went on to suggest that such a deal could help the federal government start digging its way out of the deep debt hole it’s currently in. “And we can easily meet — ‘easily’ is the wrong word — we can credibly meet the target that the Bowles-Simpson Commission established of $4 trillion in deficit reduction, and even more in the out-years, and we can stabilize our deficit-to-GDP ratio in a way that is really going to be a good foundation for long-term growth.”
Here’s the thing. That $4 trillion debt plan he's offered so far? It doesn’t actually reduce deficits by $4 trillion. That’s because it’s packed with budget savings gimmicks.
The Committee for a Responsible Federal Budget (CRFB) explains: “To reach his $4.3 trillion in savings through 2021, the President’s budget counts $1.6 trillion (excluding interest) of already-enacted savings. In addition, it includes two elements which the Fiscal Commission assumed in its baseline – a drawdown of the wars ($740 billion through 2021) and the expiration of the upper-income tax cuts ($830 billion through 2021).” Overall, the CRFB analysis says, Obama’s budget “falls well short of the $4 trillion in savings claimed by the [Simpson-Bowles] Fiscal Commission.” CRFB estimates that it would save a little less than $2 trillion instead.
This isn’t a lonely opinion either. As The Washington Post's Fact Checker Glenn Kessler wrote in September, "virtually no serious budget analyst" accepts the president's $4 trillion deficit reduction figure. And when Obama’s campaign team has been asked about this, they’ve struggled to explain how their numbers actually work. That's hardly what I'd call "credible."
What about the $2 trillion in deficit reduction the plan can claim to put on the scoreboard? It comes almost entirely tax increases. As James Pethokoukis of the American Enterprise Institute shows, the plan would result in about $1.735 trillion in tax hikes — and just $230 billion in spending cuts, the vast majority of which are cuts to health care provider reimbursements of dubious long-term value.
That’s Obama’s idea of a grand bargain. Not $4 trillion in deficit reduction weighted toward spending cuts, but $2 trillion worth deficit reduction produced almost entirely by tax hikes. Maybe that’s not surprising, though, from a politician who repeatedly promised deficit reduction in his first presidential campaign and then as president continued to insist that the country was on track to cut the deficit in half even while running record high deficits.
Over the last month, Obama has made much of GOP rival Mitt Romney’s flaky tax math and the dubious reliability of his opponent’s policy plans overall. And in a Rolling Stone interview released this week, he called Romney a “bullshitter.” Takes one to know one?