Conservative Media Push Falsehood That Obama Wants To Balance Budget By Raising Taxes Alone

Conservative Media Push Falsehood That Obama Wants To Balance Budget By Raising Taxes Alone


The right-wing media are deceptively suggesting that, in the words of The New York Post, President Obama is "focused on raising income -- and possibly payroll -- taxes on the wealthiest Americans" rather than making cuts in spending to fix the current deficit problem. In fact, Obama has proposed significant spending cuts, and experts say it is impossible to balance the budget without some tax increases.

Right-Wing Media Ignore Obama's Proposed Spending Cuts, Suggest His Only Solution Is To Raise Taxes

New York Post: Obama Is Focused On "Raising Income -- And Possibly Payroll -- Taxes On The Wealthiest Americans." An April 25 New York Post editorial claims that President Obama is ignoring the need to "restrain growth in discretionary spending" since tax cuts on the richest Americans alone cannot bring the federal budget into balance and suggests the president is simply after taxing the "wealthiest Americans." From the post:

Standard & Poor's warning last week of a possible downgrading of America's credit rating sent tremors through markets worldwide -- and underscored the nation's short- and long-term deficit and debt woes.

The warning came just days after the speech in which President Obama basically dismissed the House GOP's comprehensive long-term budget outline -- which addresses the need to restrain growth in discretionary spending and entitlements.

Instead, the president just focused on raising income -- and possibly payroll -- taxes on the wealthiest Americans.

This analysis overlooks an essential fact: Hiking taxes on the "rich" won't rescue the nation from flooding red ink.

As The American Thinker's Steve McCann notes, even if the government decided that no American could have a net worth above $1.5 million, confiscating everything above that figure would net the Treasury $6.1 trillion in one fell swoop.

But the national debt is now nearly $14.5 trillion -- so Uncle Sam would still owe $8.4 trillion. [New York Post, 4/25/11]

Fox's Varney Falsely Claims That "So Far, President Obama Has Refused To Look At Even Modest Spending Cuts Of Any Kind." Fox Business host Stuart Varney appeared on the April 19 edition of Fox & Friends to discuss a report by Standard & Poor's that the outlook for federal government debt has been downgraded from stable to negative. During the segment, Varney falsely claimed that Obama's budget speech "was a direct attack on anybody who wanted to cut spending at all" and that Obama "has refused to look at even modest spending cuts of any kind." [Fox News, Fox & Friends, 4/19/11]

Hannity: "I Guess Deficit Reduction Is Really Code For Tax Increases." On his Fox News show, Sean Hannity reported on Obama's "plan to reduce the deficit" while all but ignoring the president's plan to reduce spending. Hannity suggested that Obama's deficit plan was designed to "[d]emonize people that he disagrees with." From Hannity:

HANNITY: The anointed one unveils his long awaited plan to reduce the deficit.


OBAMA: Today, I'm proposing a more balance approach.


HANNITY: And guess with what. He wants to raise your taxes. And the flip-flopper in chief reports for duty.


HANNITY: Oh, OK. So, I guess deficit reduction is really code for tax increases. And here with reaction, former RNC Chairman Ed Gillespie, from the FOX Business Network, Sandra Smith is here. I viewed today's speech as the first speech Obama gave for the 2012 election. This was a political speech, you agree?

ED GILLESPIE, FORMER RNC CHAIRMAN: It was agreed. You know, total lack of leadership. And the fact is, when you look at it, it is not going to be seen as very serious because it was not serious. These policy proposals raising taxes just in December when he extended the Bush tax cuts, he said we need to do this because, it will help grow our economy, spur job creation. And I guess we don't need to do that anymore. So, we're going to raise taxes by trillion dollars.

HANNITY: Well, this is it. Well, in fact, it's same old playbook. Demonize people that he disagrees with. You know, Republicans, they don't care about kids that need 24 hour care. They don't care about kids with autism and Down syndrome. They don't care about grandparents. They don't, you know.[Fox News, Hannity, 4/13/11, via Nexis]

Doocy Calls Obama's Deficit Reduction Tour The "Soak The Rich Tour." On the April 18 edition of Fox & Friends, co-host Steve Doocy reacted to reports that Obama was scheduled to travel to Nevada and California to promote his deficit reduction plan by failing to mention Obama's plans to cut spending and claiming, "Rather than the deficit reduction tour, call it the 'Soak the Rich Tour,' " thereby suggesting Obama only wants to raise taxes on the rich. [Fox News, Fox & Friends, 4/18/11]

In Fact, Obama Has Proposed Significant Spending Cuts

Obama Proposed Spending Cuts During Fiscal Policy Address. In his April 13 address on fiscal policy, Obama proposed increasing tax rates on the wealthy, while also cutting spending. From Obama's April 13 address:

The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week. That step alone will save us about $750 billion over 12 years. We will make the tough cuts necessary to achieve these savings, including in programs that I care deeply about, but I will not sacrifice the core investments that we need to grow and create jobs. We will invest in medical research. We will invest in clean energy technology. We will invest in new roads and airports and broadband access. We will invest in education. We will invest in job training. We will do what we need to do to compete, and we will win the future.

The second step in our approach is to find additional savings in our defense budget. Now, as Commander-in-Chief, I have no greater responsibility than protecting our national security, and I will never accept cuts that compromise our ability to defend our homeland or America's interests around the world. But as the Chairman of the Joint Chiefs, Admiral Mullen, has said, the greatest long-term threat to America's national security is America's debt. So just as we must find more savings in domestic programs, we must do the same in defense. And we can do that while still keeping ourselves safe.

Over the last two years, Secretary Bob Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again. We need to not only eliminate waste and improve efficiency and effectiveness, but we're going to have to conduct a fundamental review of America's missions, capabilities, and our role in a changing world. I intend to work with Secretary Gates and the Joint Chiefs on this review, and I will make specific decisions about spending after it's complete.

The third step in our approach is to further reduce health care spending in our budget. Now, here, the difference with the House Republican plan could not be clearer. Their plan essentially lowers the government's health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government's health care bills by reducing the cost of health care itself.

Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion. My approach would build on these reforms. We will reduce wasteful subsidies and erroneous payments. We will cut spending on prescription drugs by using Medicare's purchasing power to drive greater efficiency and speed generic brands of medicine onto the market. We will work with governors of both parties to demand more efficiency and accountability from Medicaid. [, 4/13/11]

Washington Post: Obama's Plan "Combine[s] Deep Cuts ... With Higher Taxes On The Wealthy." In an April 13 article, The Washington Post reported that Obama "offer[ed] a plan to trim borrowing by $4 trillion over the next 12 years by combining deep cuts in military and domestic spending with higher taxes on the wealthy." [The Washington Post, 4/13/11]

Geithner Advocated "Spending Savings" In Addition To Ending Tax Breaks. In an April 17 interview on ABC's This Week, Treasury Secretary Timothy Geithner advocated a "balanced way" of reducing the deficit, including "spending savings." From This Week:

GEITHNER: But I think, you know, Chairman Ryan's budget helps explain why this is going to be essential, because if you want to extend these tax breaks for the top 2 percent, then either you have to ask me to go out and borrow trillions of dollars from the Chinese or from foreign investors or from Americans, from our children, or you have to cut -- as he proposes to do -- very, very deeply into basic benefits for seniors, the disabled, the poor. And we don't need to do that in order to restore balance for our fiscal position.

CHRISTIANE AMANPOUR (host): Will raising taxes on the wealthy be enough to really make a dent in the deficit? Many economists are saying that you're going to have raise taxes on the middle class as well.

GEITHNER: Yes, very important question, and I'm glad you raised it.

And think about it this way. If you -- it's true we have to bring these deficits down, but if you do it in a balanced way, that includes spending savings, reforms to health care and tax reform, then you can do it in a way that has acceptable costs for the economy, preserves our capacity to invest, and doesn't add to the burden of the middle class.

And the reason why that's true is because a -- we have a huge amount of spending in the tax code, special tax breaks that go disproportionately to the most fortunate Americans.

So it is possible to do this, the president believes we can do this, I believe we can do this, without adding to the burden on the middle class. [ABC, This Week, 4/17/11, emphasis added]

Experts Say It's Impossible To Balance The Budget Without Some Tax Increases

Krugman On The Budget: "Shouldn't We Be Raising Taxes, Not Cutting Them?" In an April 24 New York Times column headlined, "Let's Take a Hike," Nobel Prize-winning economist Paul Krugman warned against the idea that "savage cuts in spending" will get us out of the budget problem. He pointed out the need to avoid "tear[ing] up our current social contract" and "turning the clock back 80 years under the guise of necessity" through excessive, politically motivated spending cuts. Krugman added that by "making tax increases part of the solution, we can avoid savaging the poor and undermining the security of the middle class." [The New York Times, 4/24/11]

Fiscal Commission Plan Would Increase Tax Revenue To 21 Percent Of GDP By 2022. In a December 2010 report, President Obama's National Commission on Fiscal Responsibility and Reform -- co-chaired by former Wyoming Republican Senator Alan Simpson and former Clinton chief of staff Erskine Bowles -- suggested a number of ways to reduce the deficit through tax reform that include tax increases.

Reduce the deficit. To escape our nation's crushing debt and deficit problem, we must have shared sacrifice -- and that means a portion of the savings from cutting tax expenditures must be dedicated to deficit reduction. At the same time, revenue cannot constantly increase as a share of the economy. Deficit reduction from tax reform will be companied by deficit reduction from spending cuts -- which will come first. Under our plan, revenue reaches 21 percent of GDP by 2022 and is then capped at that level.

Maintain or increase progressivity of the tax code. Though reducing the deficit will require shared sacrifice, those of us who are best off will need to contribute the most. Tax reform must continue to protect those who are most vulnerable, and eliminate tax loopholes favoring those who need help least. [, December 2010]

Former Reagan Budget Director Stockman: "We Can't Afford The Bush Tax Cuts." From an August 2010 interview on NPR's All Things Considered with David Stockman, a former director of the Office of Management and Budget under President Ronald Reagan:

MR. STOCKMAN: We've had a rolling referendum on what we want in government and what we don't, ever since the first Reagan spending cut program -- which I was part of in 1981. And it seems pretty clear to me that by 2010, we've decided a lot of things that cost a lot of money, the American people want. I might not agree with that but apparently, they do.

So we're spending $3.8 trillion in defense, non-defense, entitlements, everything else, and we're taking in only 2.2 trillion. So we got a massive gap. You have to pay your bills; you can't keep borrowing from the rest of the world at that magnitude, year after year after year. So in light of all of those facts, I say we can't afford the Bush tax cuts.


GUY RAZ (co-host): Now, Republicans -- David Stockman in the Senate, led by, obviously, the Minority leader, Mitch McConnell -- they say they're simply following, you know, the Reagan philosophy of supply-side economics, a policy that you pushed. Do you think they're being disingenuous?

MR. STOCKMAN: Utterly disingenuous. I find it unconscionable that the Republican leadership, faced with a 1.5 trillion deficit, could possibly believe that good public policy is to maintain tax cuts for the top 2 percent of the population who, after all, have benefited enormously from this phony boom we've had over the last 10 years as a result of the casino on Wall Street. [NPR, All Things Considered, 8/7/10]

Stockman: "It Is Simply Unrealistic To Say That Raising Revenue Isn't Part Of The Solution. " 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 by saying: "I think the biggest problem is revenues. It is simply unrealistic to say that raising revenue isn't part of the solution." From Talking Points Memo:

While the government teetered on the brink of a shutdown last week over short term funding, economists across the ideological spectrum weighed in on the GOP's long-term plan with negative reviews. The biggest shock came from high-profile economists with GOP leanings, who also criticized it on the merits.

"It doesn't address in any serious or courageous way the issue of the near and medium-term deficit," David Stockman told me in a Thursday phone interview. "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."

Stockman, who directed Ronald Reagan's Office of Management and Budget, approves of Ryan's entitlement proposals, but breaks faith over taxes and the GOP's unwillingness to slash defense spending. [Talking Points Memo, 4/11/11]

Report: A "Realistic Solution" To The "Long-Term Budget Outlook" Includes "Rebalancing The Tax Code And Increasing Tax Revenue From Those Most Able To Pay." In a November 2010 report titled, Investing in America's Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility, Demos, Economic Policy Institute, and The Century Foundation laid out a "blueprint" for a "strong economic recovery" and "deficit reduction." From the report:

Any realistic solution to the long-term budget outlook must confront the real drivers of the growth of the national debt, namely the rapid rise in healthcare costs and the lack of adequate revenue. Projected increases in health care costs are not just a threat to the national budget, but also to the viability of American businesses and the health of family budgets. We propose a variety of policies that will reduce the growth in health care costs. These changes would not only help reduce the deficit, but could also improve the quality of care and reduce costs for businesses and families.

On the revenue side, changes in tax policy have significantly eroded federal receipts over the past decade. We cannot face national challenges and meet national priorities without adequate funding. Our suggested path demands responsibility by rebalancing the tax code and increasing tax revenue from those most able to pay. The plan also reduces or eliminates tax preferences while maintaining or increasing tax reductions for low- and moderate-income families.[Economic Policy Institute, 11/29/10]

Numerous Economic Experts Say That We Have A Revenue Problem

Krugman: "Government Spending Has Continued To Rise More Or Less On Its Pre-Crisis Trend" While "Revenue Has Plunged." In an October 17, 2010, blog post, 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. [, 10/17/10]

Krugman: Since 2007, "Revenue Plunged, Leading To Big Deficits." In an October 18, 2010, post, 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. [, 10/18/10]

Krugman also included this chart:


[, 10/18/10]

David Cay Johnston: "There Is A Simple, Factual Way To Describe What Is Happening To Our Government: We Have A Revenue Problem." In a March 4 column, Pulitzer Prize winner and economics author David Cay Johnston wrote: "There is a simple, factual way to describe what is happening to our government: We have a revenue problem." From Johnston's column:

Right after the midterm elections, when false claims that lower tax rates increased revenues helped win votes, Fox News captured the lockstep approach perfectly in a piece on its website about how Republican leaders were "on message."

Notice these almost identical quotes from the Sunday morning talk shows five days after the midterms:

We don't have a revenue problem. We have a spending problem.

-- Senate Minority Leader Mitch McConnell, R-Ky.

Washington does not have a revenue problem. It's got a spending problem.

-- House Majority Leader Eric Cantor, R-Va.

We do not have a revenue problem. We have a spending problem.

-- House Budget Committee Chair Paul Ryan, R-Wis.

I think it's not a revenue problem; it's a spending problem.

-- Sen. Rand Paul, R-Ky.

As framed, these advertising lines are matters of opinion, but how many Americans recognize them for what they are -- opinions, not facts?


When members of Congress will fight to protect a $53 billion mistake that benefits one industry, giving away our commonwealth for free, it is not just unconscionable. It is part of a pattern of wrecking our government and our economy for short-term political gain. And in this one, the oil companies won the day in the House.

There is a simple, factual way to describe what is happening to our government: We have a revenue problem. [Nieman Watchdog, 3/4/11]

Harvard Business Review Group Director: "[T]he Giant Deficit Is Mainly The Result Of The Collapse In Tax Receipts Brought On By The Recession." In an October 2010 post on his Reuters blog, Justin Fox, editorial director of the Harvard Business Review Group, analyzed the deficit and concluded that it was "mainly the result of the collapse in tax receipts brought on by the recession":

The Treasury Department reported on Oct. 15 that the deficit in fiscal 2010, which ended Sept. 30, was $1.294 trillion. That's less than FY 2009's $1.416 trillion, but it's still really really big. Why is it so big, though? Is it because of all that stimulus and bailout spending? Or is something else going on?

To find out, I created a fantasy world. I figured out how fast federal spending and revenue grew over the last business cycle, from 2000 through 2007, and calculated where we'd be today if those growth rates had continued through 2010. I was originally motivated to do this for a commentary that's supposed to air tomorrow night on Nightly Business Report. But I'm thinking there's not a huge overlap between Felix Salmon readers and Nightly Business Report viewers, so I'll go ahead and share what I learned.

In my no-financial-crisis, no-bailout, no-recession, no-stimulus scenario, spending kept growing at 6.22% a year, and revenue kept growing at 3.45%. You can see from the difference between the two numbers that this was an unsustainable path. But it clearly could have been sustained for a few more years.

Where would it have left us in fiscal 2010? With $2.843 trillion in federal revenue and $3.270 trillion in spending, leaving a deficit of $427 billion. The actual revenue and spending totals for 2010 were $2.162 trillion and $3.456 trillion. So spending was $186 billion higher than if we'd stuck to the trend, and revenue was $681 billion lower. In other words, the giant deficit is mainly the result of the collapse in tax receipts brought on by the recession, not the increase in spending. Nice to know, huh? [, 10/25/10, emphasis added]

Lawrence Haas: "Sorry, The Federal Deficit Isn't A Spending Problem." In a February 3 Fiscal Times column headlined, "Sorry, the Federal Deficit Isn't a Spending Problem," Fiscal Times contributor Lawrence Haas wrote: "What's driving our future budget deficits is not spending, per se, but two societal realities. First, like most of Europe as well as China and Japan, the United States is growing older as a society. Second, health care costs continue to grow far faster than inflation and even faster than the economy." Haas stated that the "deficit problem" is not a "revenue problem." He also wrote: "[I]f you want to blame our looming deficits on policy changes, you would look not to spending but, rather, taxes -- specifically, to President Bush's huge tax cuts of 2001 and 2003." From Haas' column:

What's driving our future budget deficits is not spending, per se, but two societal realities. First, like most of Europe as well as China and Japan, the United States is growing older as a society. Second, health care costs continue to grow far faster than inflation and even faster than the economy.

To be sure, those realities have major impacts on existing federal programs. The combination of an aging America and soaring health care costs will drive up the costs of Medicare and Medicaid, while an aging America also will swell the budget of Social Security. Nevertheless, the fact that demographic and technological factors expand the costs of key federal programs that, in their basic elements, have been around for decades doesn't merit the conclusion that "spending is out of control."


Frankly, if you want to blame our looming deficits on policy changes, you would look not to spending but, rather, taxes -- specifically, to President Bush's huge tax cuts of 2001 and 2003 that Congress recently extended until 2012 and will likely extend either wholly or in large measure again after that.

Simply letting the Bush tax cuts expire would reduce annual deficits to about 3 percent of GDP (which is considered economically sustainable) over the next decade, though they would start rising again later on due to soaring health care costs.

Does that mean "the deficit problem is a revenue problem?" No, it means the deficit is what it always is -- a mismatch between revenues and spending. Policymakers can address it by cutting spending, raising revenues, or some combination of the two. What they choose to do is a political matter, nothing more and nothing less. [The Fiscal Times, 2/3/11]

Posted In
New York Post, Fox News Channel
Sean Hannity, Steve Doocy, Stuart Varney
FOX & Friends, Hannity
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