The President released his debt reduction plan today. Based on its contents, it is clearer than ever that he is more concerned about his reelection prospects than solving the nation’s economic and fiscal woes.
President Obama again leads with his tiresome demonization of the “evil rich.” His plan notes:
“These measures include cutting tax preferences for high-income households, eliminating tax breaks for oil and gas companies, closing the carried interest loophole for investment fund managers, and eliminating benefits for those who own corporate jets.”
I am fine with the president eliminating tax breaks for oil and gas companies so long as he also does away with wasteful programs that allow the government to make investment decisions that benefit party loyalists. An egregious example of this is the $535 million Solyndra default.
However, the President’s conspicuous singling out of depreciating assets like corporate jets and carried interest from investment fund managers appears to be baseless scapegoating (more on that later). I suspect he is highlighting them only because he thinks it will play well in Peoria.
The plan seeks to reduce the deficit by a total of $3 billion from now until 2021. Of course, it claims $1.044 trillion that was already going to result from the American drawdowns in Iraq and Afghanistan. If one removes this number from the President’s plan as well as the debt service payments paid of $413 billion, one can get a better sense of the real proportion of deficit savings from spending cuts and tax increases.
The President’s plan contains $320 billion in Medicare and Medicaid cuts, as well as $257 billion in mandatory savings. It doesn’t touch Social Security, but it punishes active military personnel and military retirees who sacrificed at least twenty of the best years of their adult lives by cutting their medical benefits by at least $21.8 billion. This “savings” nets out to $130 billion after one deducts President Obama’s $447 billion jobs bill.
In contrast, the bill provides for $1.534 trillion in tax increases, which overwhelming “punish” high income households (over 81% of the revenue generated is from individual income and estate taxes). And if you believe that the government can raise this much money from only people making more than $200,000 a year, expect an unpleasant reality check should President Obama win the next election.
Unsurprisingly, the other headline terms that the wealth redistributors frequently use in their talking points are mere drops in the bucket. Eliminating special depreciation rules for corporate jets represent only 0.3% of the total proposed revenue increase. Closing the carried interest loophole for “evil” investment fund managers represents a meager 0.8%.
The bottom line is that the President’s deficit proposal consists of 8% spending cuts and 92% tax increases. Just because he put lipstick on his plan does not make it any less of a partisan pig.