As part of its ongoing effort to fight tax increases on the wealthy, Fox News figures have suggested that ending the Bush tax cuts for the wealthy wouldn't affect the deficit because that money would only run the government for eight and a half days. But economists agree that ending these tax cuts would raise a significant amount of revenue and that more tax revenue must be part of balanced approach to reducing the deficit.
Fox Spin: Expiration Of Bush Tax Cuts Won't Fix Deficit Because It Would Only "Run The Government For 8.5 Days"
Sean Hannity: "Letting The Bush Tax Cuts Expire" Is "Not The Answer To Tackling This Deficit." On his Fox News show, Sean Hannity called "letting the Bush tax cuts expire" a "liberal myth" and claimed it is "not the answer to tackling the 2012 deficit" because it would only fund the government "for a whopping eight and a half days":
HANNITY: Now, liberal myths, such as letting the Bush tax cuts expire, are not the answer to tackling this deficit. In fact, during the 2012 fiscal year, the federal government cost $9.7 billion to run each and every day. But the additional revenue from the Bush tax cuts expire -- well, that only amounts to $82 billion dollars a year. That means the government would be funded for a whopping eight and a half days - if, in fact, the President wins this fight. [Fox News, Hannity, 11/26/12]
Eric Bolling: "If You Go Ahead And Let The Bush Tax Cuts Expire, You Raise $83 Billion. That's About Eight Days' Worth Of Government." Co-host of Fox's The Five Eric Bolling claimed, "If you go ahead and let the Bush tax cuts expire, you raise $83 billion. That's about eight days' worth of government, eight or nine days' worth of government." [Fox News, The Five, 11/26/12]
Fox's Mike Emanuel: "Allowing Bush Tax Cuts To Expire ... Would Run The Government For 8.5 Days." Fox News correspondent Mike Emanuel claimed during a report on Fox News' Special Report that "allowing the Bush tax cuts on upper-income Americans to expire, which President Obama argued for during the campaign, would generate an average of $82.4 billion per year, and would run the government for 8.5 days." [Fox News, Special Report, 11/26/12]
Lou Dobbs: "Allowing The Bush Tax Cuts To Expire On Upper Income Americans Would ... Run The Government For Eight And A Half Days." Fox Business host Lou Dobbs said "a Congressional Budget Office's analysis shows that allowing the Bush tax cuts to expire on upper-income Americans would generate approximately $82 billion a year, or enough to run the government for eight and a half days. Eight and a half days." [Fox Business, Lou Dobbs Tonight, 11/26/12]
But Experts Say Ending Bush Tax Cuts Will Help Lower The Deficit ...
NY Times: President Obama's Proposal To Allow The Bush Tax Cuts To Expire For Wealthier Americans Would Raise $850 Billion Dollars In A Decade. The New York Times reported that "economists estimate that letting the cuts expire for people above that threshold would generate $850 billion over 10 years":
President Obama, drawing a contrast with what he called Republican trickle-down economics, called on Monday for temporarily extending the Bush-era tax cuts for people making less than $250,000 while letting the taxes of the wealthiest go up.
A one-year extension for people making under $250,000 would cost the government $150 billion in revenue, the administration estimates, an amount that would be added to the deficit. In a point of comparison, economists estimate that letting the cuts expire for people above that threshold would generate $850 billion over 10 years. [The New York Times, 7/9/12]
Robert Reich: "The Only Way America Can Reduce The Long-Term Budget Deficit ... Is By Raising Taxes On The Super Rich." In a Huffington Post blog post titled "Why We Must Raise Taxes On The Rich," former Labor Secretary Robert Reich argued that "[t]he only way America can reduce the long-term budget deficit ... is by raising taxes on the super rich":
Here's the truth: The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich. Even if we got rid of corporate welfare subsidies for big oil, big agriculture, and big Pharma -- even if we cut back on our bloated defense budget -- it wouldn't be nearly enough. [The Huffington Post, 4/4/11]
CBO: Extending The Bush Tax Cuts Would Increase Deficits By $2.6 Trillion Over 10 Years. In January 2010, the nonpartisan Congressional Budget Office estimated that extending the tax cuts enacted in 2001 and 2003 would increase deficits by $2.6 trillion between 2011-2020. [Congressional Budget Office, January 2010]
... And Economists Agree Revenue Must Be Part Of A Balanced Solution To Lowering The Deficit ...
Former Bush Economic Adviser Believes "Both Tax Increases And Spending Cuts Are Required" To Lower Deficit. From The Hill:
America has both a spending problem and a revenue problem -- too much of the former and too little of the latter. Every serious student of the federal budget, right, left and center, agrees that any realistic solution requires a combination of spending cuts and revenue increases.
Democrats and Republicans on the Simpson-Bowles Commission knew that both revenue increases and spending cuts were necessary to deal effectively with our deficit problem.
N. Gregory Mankiw, the chairman of George Bush's Council of Economic Advisers, knows both tax increases and spending cuts are required. Indeed, Mankiw argues, "The distinction between spending and taxation is often murky and sometimes meaningless." [The Hill, 6/28/11]
Former Reagan OMB Official: "I Think The Biggest Problem Is Revenues." In an interview with Talking Points Memo, David Stockman, a former Office of Management and Budget director under President Reagan, responded to Rep. Paul Ryan's (R-WI) budget plan and stated: "I think the biggest problem is revenues. It is simply unrealistic to say that raising revenue isn't part of the solution. It's a measure of how far off the deep end Republicans have gone with this religious catechism about taxes." [Talking Points Memo, 4/11/11]
Krugman: "Government Spending Has Continued To Rise More Or Less On Its Pre-Crisis Trend" While "Revenue Has Plunged." In an October 17, 2010, post on his New York Times blog, Nobel Prize-winning economist Paul Krugman wrote:
For all those commenters saying that we must have had a surge in government spending -- I mean, look at the deficit! -- a simple picture:
Government spending has continued to rise more or less on its pre-crisis trend. Revenue has plunged, because the economy is deeply depressed. [NYTimes.com, 10/17/10]
Krugman: Since 2007, "Revenue Plunged, Leading To Big Deficits." In an October 18, 2010, post on his New York Times blog, Krugman wrote:
During the pre-crisis period, spending grew slightly faster than GDP -- that's Medicare plus the Bush wars -- while revenue grew more slowly, presumably reflecting tax cuts.
What happened after the crisis? Spending continued to grow at roughly the same rate -- a bulge in safety net programs, offset by budget-slashing at the state and local level. GDP stalled -- which is why the ratio of spending to GDP rose. And revenue plunged, leading to big deficits.
But I'm sure that the usual suspects will find ways to keep believing that it's all about runaway spending.
Krugman also included this chart:
For more experts who say that increasing government revenue must be part of a deficit solution, click here.
... Which Is The Solution Obama Has Called For
Obama's Deficit Reduction Plan "Would Cut $2.50 In Spending Allowances For Every $1 Of Increased Tax Revenue." A September 9 CBS article reported that Obama's plan for reducing the deficit "would cut $2.50 in spending allowances for every $1 of increased tax revenue - the same deal House Republicans turned down during last year's near-government shutdown episode." The article continued:
"You can't reduce the deficit unless you take a balanced approach that says, 'We've gotta make government leaner and more efficient,'" the president said. "But we've also got to ask people - like me or Gov. Romney, who have done better than anybody else over the course of the last decade, and whose taxes are just about lower than they've been in the last 50 years - to do a little bit more. [CBSNews.com, 9/9/12]
Obama: "We've Got To Reduce Our Deficit, But We've Got To Do It In A Balanced Way" During the October 17 presidential debate, Obama said that he wanted to lower the deficit by both taxing the wealthiest Americans and cutting spending:
OBAMA: We've got to reduce our deficit, but we've got to do it in a balanced way -- asking the wealthy to pay a little bit more along with cuts so that we can invest in education like yours. And let's take the money that we've been spending on war over the last decade to rebuild America -- roads, bridges, schools. We do those things, not only is your future going to be bright, but America's future is going to be bright as well. [WhiteHouse.gov, 10/17/12]
Obama: "I Am Going To Reduce The Deficit In A Balanced Way." During a July 13 campaign stop in Roanoke, Virginia, Obama advocated balanced deficit reduction:
OBAMA: I do believe we can cut -- we've already made a trillion dollars' worth of cuts. We can make some more cuts in programs that don't work, and make government work more efficiently. (Applause.) Not every government program works the way it's supposed to. And frankly, government can't solve every problem. If somebody doesn't want to be helped, government can't always help them. Parents -- we can put more money into schools, but if your kids don't want to learn it's hard to teach them. (Applause.)
But you know what, I'm not going to see us gut the investments that grow our economy to give tax breaks to me or Mr. Romney or folks who don't need them. So I'm going to reduce the deficit in a balanced way. We've already made a trillion dollars' worth of cuts. We can make another trillion or trillion-two, and what we then do is ask for the wealthy to pay a little bit more. (Applause.) And, by the way, we've tried that before -- a guy named Bill Clinton did it. We created 23 million new jobs, turned a deficit into a surplus, and rich people did just fine. We created a lot of millionaires. [WhiteHouse.gov, 7/13/12]