Ah, yes. We all remember this from 2003:
Bush Deficit Plan Draws Derision
WASHINGTON, Dec. 17, 2003
(AP) President Bush's goal of cutting in half a projected $500 billion federal deficit within five years is being dismissed as too timid by conservatives, unachievable by analysts and laughable by Democrats. ..
And, now, there is this :
U.S. Headed For Record Deficit In 2009
WASHINGTON, July 28, 2008
(CBS/AP) The next president will inherit a record budget deficit of
$482 billion, according to a new Bush administration estimate released Monday.
The administration said the deficit was being driven to an all-time high by the
sagging economy and the stimulus payments being made to 130 million households
in an effort to keep the country from falling into a deep recession. But the
numbers could go even higher if the economy performs worse than the White House
Of course, as usual, the Bush team is still lying. Despite a requirement in law that they include in official budget estimates the full estimated annual cost of the wars in Iraq and Afghanistan, they have omitted roughly $100 billion in war costs. And the economic assumptions are too optimistic. Which means we are really talking about an annual deficit of roughly $600 billion in the fiscal year that begins October 1. The previous record (which should be broken in the current fiscal year) is $413 billion in 2004 (Bush has four of the five biggest deficits in US history – his father has the other one). The total increase in the national debt under Bush should approach $4 TRILLION by the time he leaves office.
(It is amusing – in a sick, pathetic sort of way – to go back and look at Bush’s
Fiscal Year 2002 budget. It showed a $420 billion surplus in 2009 and cumulative surpluses of $2.4 trillion from 2002 through 2009 – a minor error of only $6 trillion! MISSION ACCOMPLISHED!)
So much for the idea that Bush’s tax cuts would pay for themselves by stimulating economic growth and the Iraq war would pay for itself with Iraqi oil.
Today, the Bush administration revised downward economic growth estimates for the years 2004-2007. They now estimate that growth was actually negative in the last three months of 2007. Jobs have declined every month so far this year.
Just for the record, here is an update in our comparison of eight years under Clinton versus nearly eight years under Bush:
Job growth under Clinton: 22.7 million jobs – 237,000 per month.
Job growth under Bush: 5.8 million jobs – 72,000 per month (and going DOWN). There has been a net loss of jobs every month so far in 2008. Bush will have the distinction as the first president since World War II to preside over an economy in which federal government employment rose more rapidly than employment in the private sector (civilian federal government employment went DOWN substantially under Clinton).
The earnings of the average American family (or "real median household income" in economic parlance) peaked in 1999 at $49,222 and has fallen since. This is the first economic expansion in this country's history when household income failed to set a new record. It will certainly decline further this year.
And how did investors do under Clinton vs. Bush?
The Dow Jones Industrial Average went up from 3253 to 10,587 under Clinton (325%). It has gone up to 11,503 under Bush (8.7%).
The S&P 500 went up from 447 to 1342 under Clinton (300%). It has gone DOWN to 1279 under Bush (-4.7%).
The NASDAQ went up from 700 to 2770 under Clinton (395%). It has gone DOWN to 2347 under Bush (-15.3%)
When Bush took office oil was $31/barrel. Now it is roughly $125/barrel. (That’s what happens when you put oil men in the White House.) It was also announced today that Exxon set another record for the all-time most profitable quarter by any corporation ever.
When Bush took office it took 93 cents to buy a Euro. Now it takes $1.56 to buy a Euro.
When Bush took office gold was around $250 an ounce. Now it is $915 an ounce.
I could go on, but you get the idea. The US economy did MUCH better under the fiscally-responsible “high tax” policies of Clinton than under the irresponsible “borrow and squander” policies of Bush.
So what do Obama and McCain plan to do about our fiscal mess?
Every day on the campaign trail, McCain and other Republicans claim Obama will increase taxes while they will cut taxes. Unfortunately, this is not true. (I say “unfortunately” because we need to get serious about our budget deficit.) Obama will also cut taxes … but by less than McCain.
First, an explanation. When talking about proposed fiscal policies, it is important to distinguish between “current law” and “current policy.” Under a “current law” baseline, all of Bush's tax cuts are assumed to expire on schedule and the Alternative Minimum Tax is expected to balloon unobstructed. This means that federal revenues will jump significantly, causing both the Obama and McCain tax plans to look like massive tax cuts. Under the “current policy” baseline, it is assumed that Congress continues to "patch" the AMT and decides to continue the Bush tax cuts indefinitely.
Because I know most people find this boring, I will keep this simple. The only credible scoring of the proposed tax policies of the two campaigns is by the non-partisan Tax Policy Center. According to their analysis (
updated as of July 23, 2008), compared with current law, McCain would cut taxes by $4.2 trillion over 10 years, while Obama would cut taxes by $2.8 trillion. Compared with current policy, McCain’s policies would result in a $600 billion loss in revenue over ten years, while Obama would increase revenue by $800 billion over the same period.
As the report notes,
The two candidates’ tax plans would have sharply different distributional effects. Senator McCain’s tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those tax cuts would be small as a share of after-tax income. In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution, while taxpayers with the highest income would see their taxes rise significantly.
Even when compared with current policy (i.e., Bush’s tax cuts), most taxpayers (all but the top 20%) would see their taxes reduced under Obama’s plans. That distributional effect can be seen in this graph:
But there are a couple of adjustments that should be noted.
The report notes that McCain has been describing his tax plans on the campaign stump differently than the formal plans that his campaign gave to the Tax Policy Center for evaluation. If you use the tax plans McCain himself describes, he would reduce revenue by nearly $7 trillion over 10 years. In other words, they believe the “official” McCain plans understates the revenue loss by $2.8 trillion.
The Tax Policy Center also believes the “official” Obama plans are unrealistic, but working in the other direction. They assume his plans will cut taxes by $367 billion less than the plans described by his advisors – they believe the actual 10 year revenue loss from Obama’s plans will only be $2.4 trillion.
So bottom line, compared with current law, McCain is proposing $7 trillion in tax cuts (at a time of record budget deficits and when the country is fighting two wars) while Obama is “only” proposing $2.4 trillion in tax cuts.
One final point: The Tax Policy Center report makes a preliminary attempt at comparing the cost of the health care plans proposed by the two candidates (as both would result in a loss of revenue):
[I]mportant details of both plans are not known, so we made assumptions that
might or might not be consistent with the final plans proposed by each campaign.
Under our assumptions, if the plans took effect in 2009, the McCain plan would
cost about $1.3 trillion over ten years and the Obama plan would cost about $1.6
trillion. Both campaigns propose measures that they believe will reduce the rate
of growth of health insurance premiums, which would reduce the cost of their new
subsidies and existing public programs. We did not evaluate the effectiveness of
those measures and did not include savings from health care cost efficiencies in
our estimates. Under our assumptions, Senator Obama’s plan would reduce the
number of uninsured Americans by about 18 million in 2009, and 34 million in
2018. Almost all children would have coverage because the law would require it,
but nearly 33 million adults would still lack coverage in 2018. Senator McCain’s
plan would have far more modest effects, reducing the number of uninsured by
just over 1 million in 2009, rising to a maximum of almost 5 million in 2013,
after which the number of uninsured would creep upward because the tax credits
grow more slowly than premiums. Both plans are highly progressive, although
Senator Obama’s plan targets subsidies more toward low- and middle-income
households and is thus significantly more progressive than Senator McCain’s
The Obama health care plan would include about $1 trillion in tax breaks over 10 years. If you include those tax cuts along with his other tax proposals, he is proposing tax cuts under both current law and under current policy. Under current law (i.e., Bush tax cuts lapse), he would be cutting taxes by around $3.4 trillion. Under current policy (i.e., Bush tax cuts continue), he would be cutting taxes by around $200 billion. In neither case, is he proposing a tax increase, let alone “the largest tax increase in history” or any of the other nonsense McCain and other Republicans are saying.
There you have it. (That wasn’t so complicated, was it?) If you want to know more, there is an almost unlimited amount of data and analysis in the report.