Via Politico, here are the White House numbers on its budget proposal:
Given that most of the descriptions of the initial White House offer on the fiscal cliff came from the GOP, there has been some misunderstanding of what’s actually in the plan. According to people close to the matter, the proposal includes: $1 trillion in previously enacted discretionary savings from the Budget Control Act; $250 billion in new non-mandatory spending cuts and $350 billion in health care-related savings (so $600 billion in new cuts; not $400); and $800 billion in savings from “overseas contingency operations” (war savings). The $1.6 trillion in new revenues includes those from the 2013 budget proposal and allowing the top-rate Bush tax cuts to expire.
OK, the president’s plan adds up to $4 trillion. Subtract the phony $800 billion from war savings and you get $3.2 trillion. Even if you give WH the $1 trillion for the previously passed BCA — you are still talking about a plan that is 50% tax hikes.
1. Research suggests fiscal consolidation plans should be more like $5 to $1 spending cuts over tax hikes, not $1 to $1.
2. This plan raises taxes in the worst way, by jacking up marginal tax rates on both labor and capital income.
3. The Obama plan ignores the big problem, which is spending. It is spending that’s the aberration here. According to the Congressional Budget Office, if we keep the 2001 and 2003 tax cuts, revenue from 2013-2022 will average 18.1% of GDP, right at the historical average of 18.2% from 1970-2007.
But spending, the CBO says, will average 23% of GDP, more than two points above the historical average of around 20.6% from 1970-2007. Spending is the problem.