I am not sure if I have missed anything in all of this but I have been reading the Obama speech as reported in the Washington Post and cited by BAC: and the CBO report he also cited. What I notice is this:
~Washington Post said:
As a result of the actions we took in those first weeks, we've been able to pull our economy back from the brink.
CBO said:
the enactment of the American Recovery and Reinvestment Act and very aggressiveactions by the Federal Reserve and the Treasury are projected to help end the recession in the fall of 2009
So one question which arises is what are the projected figures without those measures? This is no criticism of the CBO projection because clearly it must include the effect of legislation already enacted: but in order to make the case
I think BAC is making it seems to me that one must compare like with like: and that seems to me to mean one must compare the deficit figures if Obama had done nothing.
CBO said:
Much of that projected increase in revenues results from the growing impact of the alternative minimum tax (AMT) and, even more significant, the scheduled expiration in December 2010 of provisions enacted in the recent economic stimulus legislation and in the Economic Growth and Tax Relief Reconcil-iation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003
Now I am not American so you will correct me if I am wrong. Some of this legislation was enacted under the previous administration and it was fixed term provisions with the given expiry dates. So current law projections are based on not ending those programmes as originally provided. Since they were enacted before the current financial crisis it seems reasonable to reconsider that decision as circumstances change.
http://useconomy.about.com/od/fiscalpolicy/p/EGTRRA.htm
http://en.wikipedia.org/wiki/Jobs_and_Growth_Tax_Relief_Reconciliation_Act_of_2003
EGTRRA was a "stimulus package" which reduced income tax. JGTRAA reduced tax on dividends and capital gains. It is quite surprising to find BAC resting his argument on the abolition of tax reducing legislation, given my understanding of his position: but if stimulus were needed in 2001 and 2003, how much more now? Course I am not convinced that the reduction of tax is a good way to do this; but I am a little bemused to find that BAC agrees.
Yet the CBO report says
The proposals with the greatest effect on the budget include modifications to and the per-manent extension of provisions of the 2001 and 2003 tax legislation (EGTRRA and JGTRRA); extension ofthe Making Work Pay tax credit; indexing of theexemption amounts for the AMT; implementation ofa cap-and-trade program to reduce greenhouse-gas emissions; and limits on itemized deductions
Thus the increased revenues from abolition of these measures is a large part of the reduced deficit based on current legislation projections: and the proposed extension of these measures leads to increased deficit in the period under consideration. This has nothing at all to do with health reform, so far as I can see. Personally I think I would stick with current expiration dates and use the increased income to do more effective things: but I am not Obama and I do not have to balance different interests groups. Practical politics makes a difference and perhaps he even believes these bits of legislation work as intended. I do not know.
but the CBO report says
Proposed changes in tax policy would reduce revenues by an estimated $2.1 trillion
largely through extension of those programmes: while
Proposed changes in spending programs would add $1.7 trillion
<snip>
Interest costs associated with greater borrowing would add another $1.0 tril-lion to deficits over the 2010–2019 period
So it seems to me that a net increase in deficit would be turned into a break even or even a net decrease if the programmes were ended as originally envisaged. Is that what you want BAC?
Then there is the difference between CBO projections on the effect of the proposed changes Obama wishes to make. The CBO says:
CBO’s estimates of deficits under the President’s budget exceed those anticipated by the Administrationby $2.3 trillion over the 2010–2019 period. The differences arise largely because of differing projec-tions of baseline revenues and outlays. CBO’s projec-tion of baseline deficits exceeds the Administration’s estimate (prepared on a comparable basis) by about $1.6 trillion
This is wholly a projection and there is nothing in the CBO report which seems to take account of the proposals included in the Obama speech as reported in the Washington post:
I put forward what I thought was the best proposal, which was to limit the deductions, the itemized deductions, for the wealthiest Americans.
People like myself could take the same percentage deduction that middle class families do. And that would raise sufficient funds for that final one-third.
<snip
The House suggested a surcharge on wealthy Americans. And my understanding, although I haven't seen the final versions, is that there has been talk about making that basically only apply to families whose joint income is $1 million.
Perhaps that is included in the CBO projections but since their comparison is with current legislation I doubt it. I have no idea if Obama is right about this but those figures will not be included in the comparison BAC wishes to make. They may or may not be included in their projection of the deficit on the basis of the proposed legislation: not been able to see them in the report.
In short BAC, I do not think you case is made on the basis of what you have cited.
But I will be interested to hear other views because this is all quite foreign to me
