On State of the Union, John King did not challenge Rep. Tom Price's false claim that President Obama's budget proposal “will remove the ability to make charitable contributions deductible.” In fact, the provision would, beginning in fiscal year 2011, reduce the tax rate at which families earning over $250,000 can take itemized deductions from the current rates of 33 percent and 35 percent to 28 percent.
On the March 1 edition of CNN's State of the Union, host John King did not challenge Rep. Tom Price's (R-GA) false claim that President Obama's fiscal year 2010 budget proposal “will remove the ability to make charitable contributions deductible.” Price added, “That means that churches across this nation and synagogues across this nation and community groups all across this nation will not be receiving the same kind of support from their citizens in their communities. That's not the kind of change that the American people desire.” In fact, rather than “remov[ing] the ability to make charitable contributions deductible,” the provision would, beginning in fiscal year 2011, reduce the tax rate at which families earning over $250,000 can take itemized deductions from the current rates of 33 percent and 35 percent to 28 percent.
Price was not alone in misrepresenting the effect of Obama's budget proposal on charitable deduction during State of the Union. Later in the show, senior congressional correspondent Dana Bash stated of Obama's budget, "[T]here are already things that some Democrats don't like -- many of them don't like. Like, for example, getting rid of some of the deductions that people can take for charity, just for one example." Neither Bash, White House correspondent Suzanne Malveaux, nor King noted that the provision applies only to families earning over $250,000.
From Obama's budget proposal:
Reducing Itemized Deduction Rate for Families With Incomes Over $250,000. Lowering health care costs and expanding health insurance coverage will require additional revenue. In the health reform policy discussions that have taken place over the past few years, a wide range of revenue options have been discussed -- and these options are all worthy of serious discussion as the Administration works with the Congress to enact health care reform. The Administration's Budget includes a proposal to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent -- and the initial reserve fund would be funded in part through this provision. This provision would raise $318 billion over 10 years.
Addressing the question, “Is our budget proposal uncharitable?” in a February 27 blog post, Office of Management and Budget director Peter Orszag wrote that “we are not eliminating the deduction -- just reducing it to 28 percent ... for the 5 percent of families at the very top of the income distribution” :
Non-profits play a critical role in our society (indeed, I have worked at several of them in the past). But let's look at how the tax code treats two different contributors to a non-profit. If you're a teacher making $50,000 a year and decide to donate $1,000 to the Red Cross or United Way, you enjoy a tax break of $150. If you are Warren Buffet or Bill Gates and you make that same donation, you get a $350 deduction -- more than twice the break as the teacher.
This proposal walks that difference back some of the way -- it would limit the tax benefit for Buffet or Gates to $280. In other words, we are not eliminating the deduction -- just reducing it to 28 percent (or $280 on the hypothetical $1,000 contribution) for the 5 percent of families at the very top of the income distribution. That is the same tax benefit that they would have enjoyed at the end of the Reagan Administration.
KING: He has a point, Congressman Price, in that you do not have any; we could not find any in your name. But many of your leaders, the Republican side in Congress, have loaded their share of earmarks in this, too.
PRICE: Well, I believe the whole earmarking process and the budgetary process right now is corrupt, and it's corrupting. The fact that the president said that he won't sign a bill with any earmarks in it and then is embracing the bill that's on the floor right now is just disingenuous.
Going back to his budget -- the budget that he has put on the table will change the very character of the nation because it will remove the ability to make charitable contributions deductible. That means that churches across this nation and synagogues across this nation and community groups all across this nation will not be receiving the same kind of support from their citizens in their communities. That's not the kind of change that the American people desire.
So, what we need to do is to step back, say in a cooperative fashion, “Look, there are good ideas on both sides. But let's come together and come up with solutions as opposed to keep throwing these stones on past times.”
KING: Gentlemen, we're out of time, unfortunately. We'll invite you back in the weeks and months ahead because this is a discussion worth having. I thank you both for joining us this morning.
KING: Joining me now to continue our Sunday conversation, senior congressional correspondent Dana Bash and White House correspondent Suzanne Malveaux.
Let's start with the president's budget proposal -- $3.6 trillion. Republicans are out saying, “Too much spending, too much deficits.” The number two Republican in the Senate, Jon Kyl [AZ], was on Fox News Sunday, and he says unlike the stimulus battle, he hopes Republicans can keep enough unity to block this budget. Let's listen.
KYL [video clip]: I hope that we can, but that means that all of us will have to be together on this, and there are only 41 of us. So we have to be absolutely united on this, and we will be if the American people convey to all of us their desire that we get a handle on this budget.
KING: Senators [Arlen] Specter [R-PA], [Susan] Collins [R-ME], and [Olympia] Snowe [R-ME] were the three Republicans who defected on the stimulus, Dana. Can the Republican leadership hold them on the budget?
BASH: It's going to be hard. And I think, really, a lot of it depends on what the “it” is. You know, the president put out a blueprint, a rough outline, but it is obviously Congress that is going to write the details of the budget. And there are already things that some Democrats don't like -- many of them don't like. Like, for example, getting rid of some of the deductions that people can take for charity, just for one example.
So it just depends on what happens at the end of the day, because we are a long way away from actually seeing legislation on this. But those three Republicans are so incredibly powerful, and Jon Kyl is going to have a little bit of a hard time keeping them in check.
KING: And as Jon Kyl tries to keep them in check, what are we learning about the new president and his ability to court the other side?