MEMO: What Budgets Tell Us About Priorities
To: Interested Parties
From: Bill Burton, Priorities USA Action
Sunday Memo: What Budgets Tell Us About Priorities
The priority of President Obama’s budget is to provide lasting economic opportunity for the middle class. The priority of Romney’s budget proposals is to reduce taxes on wealthy Americans masked in a false cloak of debt reduction.
By releasing his tax plan last year, far in advance of any larger budget proposal, Romney has made clear that his goal of tax cuts for the wealthy will guide his budget proposal and not the other way around. And, because of his singular focus on cutting taxes for the wealthy, the plan would do nothing for the debt other than increase it.
If, like Romney, the priority of your budget proposal is large tax cuts for the wealthy, other issues inherently are less important:
Romney’s empty rhetoric about the deficit is obviated by a $7.6 trillion gap between revenues under his tax plan and projected spending from 2014 to 2021. His tax cuts - which almost exclusively benefit the very wealthy - add $180 billion to the deficit in just 2015. [Center for Budget and Policy Priorities, 1/23/12]
In order to pay for his agenda guided by tax cuts, Romney would have to cut Social Security, Medicare and domestic spending by 36%. If, as he claims, Social Security would be exempt from cuts, Medicare and domestic spending would have to be cut by 53%. [Washington Post, 2/10/12]
Because of his focus on reducing taxes for the very wealthiest, the Romney plan would mean higher tax rates for middle- and low-income Americans compared to President Obama’s plan. [Wall Street Journal, 1/5/12]
Romney’s budget serves to reinforce what is already a critical problem for him: large majorities of American voters do not believe Romney understands their concerns and do not trust Romney to protect the middle class. The recent Pew Poll found that 61% of voters believe Romney does not understand their needs, 65% believe his policies favor the rich in a CNN poll, his unfavorable rating has spiked among middle class voters in ABC/Washington Post polling and voters by a nearly 20-point margin prefer President Obama when asked which candidate will protect the middle class.
In contrast, when building a budget President Obama first outlined his priorities on job creation, affordable education, and protecting Medicare. His budget specifies how to pay for those priorities and reduce the deficit, including asking the wealthy to pay their fair share in taxes.
The President’s focus on economic opportunity for the middle class means other areas of the budget will be affected. As the President has said, “it’s math.” In order to protect Medicare, Social Security and education for the middle class, President Obama’s budget states that the wealthiest should not be able to pay a lower tax rate than the middle class. In order to avoid tax increases on the middle class, the budget removes some subsidies for oil companies and special tax breaks for Wall Street.
Background
Mitt Romney’s budget proposal would entail a massive transfer of resources to the rich. According to the Washington Post’s Ezra Klein citing an analysis by the Center for Budget and Policy Priorities, “Romney’s numbers imply cutting more than $500 billion from food stamps and related programs for the poorest Americans, cutting $2.3 trillion from Social Security, cutting $174 billion from veteran’s benefits and so forth. These cuts are so deep in part because they are paying for trillions of dollars in relatively regressive tax cuts. So he’s not simply proposing to cut spending. He’s proposing to transfer resources from those who rely on government programs — namely, the poor and seniors — to those who will benefit from his tax cuts.” [Washington Post, 2/10/12]
Mitt Romney’s tax proposals would increase rates for some middle class families and deliver tax cuts to the rich. According to the Washington Post’s Ruth Marcus, “Romney’s tax plan would exacerbate the unfairness. He would continue the Bush tax cuts for the wealthiest Americans and provide extra breaks that would primarily help the rich. According to a new analysis by the nonpartisan Tax Policy Center, taxpayers with incomes of $1million or more would see an average tax cut of $287,000 compared to letting the Bush tax cuts for the wealthy expire. At the same time, Romney would do away with recent increases in the child tax credit and the earned-income tax credit — provisions that help low-income families. As a consequence, between 16 and 20 percent of those with incomes of $50,000 or less would actually see their taxes rise under a President Romney.” [Washington Post, 1/17/12]
Because of Tax Cuts, Mitt Romney’s budget proposal would require cutting Medicare and Social Security by over a third. According to the Washington Post’s Ezra Klein, “In the first scenario, Romney follows through on his promise to balance the budget and cuts spending to 17 percent of GDP. If you assume Romney is balancing the budget by 2021 — the end of his second term — that requires cutting expected spending on every domestic program, including Social Security and Medicare, by 36.4 percent. If Social Security is spared, as Romney has suggested it will be for the next 10 years, that rises to 53.4 percent.” [Washington Post, 2/10/12]
Difference Between Romney Tax Plan and Spending is $7.6 trillion from 2014-2021. According to the Center for Budget and Policy Priorities, “Limiting spending to 20 percent of GDP, setting defense spending at 4 percent of GDP, and enacting Romney's tax cuts (as the Tax Policy Center has estimated their costs) — but not also balancing the budget — would require cutting nondefense programs by $537 billion in 2016 alone (a level of cuts that Romney's own statements essentially confirm, as explained below) and by $4.8 trillion over the 2014-2021 period… Balancing the budget would require much deeper cuts in nondefense programs. In this case, the cuts would total $7.6 trillion over the 2014-2021 period (in addition to the nondefense cuts made to comply with the BCA's discretionary caps and sequestration requirement).” [Center for Budget and Policy Priorities, 1/23/12]
Mitt Romney’s tax plan would significantly cut taxes for the wealthy while raising taxes for some of the poorest Americans. According to the Associated Press, “Taxes would fall for the country's wealthiest and rise for some of the poorest under the tax plan proposed by former Massachusetts governor Mitt Romney, according to an analysis released yesterday by the nonpartisan Tax Policy Center. The reduced government revenue could widen the country's budget deficit by at least $180 billion, according to the analysis of Romney's 59-point, 160-page economic plan. […] While millions of households would see tax cuts, thousands of poor Americans would see their tax bills rise, by an average of $1,000, because of changes to child and earned income credits. Those making more than $1 million a year would get a tax cut of about $150,000 - amounting to about half of the total tax cuts he proposes, according to Howard Gleckman, a fellow at the Urban Institute.” [Associated Press, 1/6/12]
Mitt Romney’s tax proposal would cut taxes for the wealthy while raising them for lower income Americans. According to the Wall Street Journal, “The analysis by the Washington-based Tax Policy Center concluded that Mr. Romney’s plan would reduce taxes significantly for high-income earners (by 6.9% or $146,000 for households making more than $1million), and increase federal deficits by $180 billion in 2015 compared to current tax levels. […] The TPC analysis also concluded Mr. Romney’s plan would raise taxes slightly for low-income families, largely because the former Massachusetts governor would allow some Obama-era tax breaks to expire.” [The Wall Street Journal, 1/5/12]
Pew Poll: Large Majority Believe Romney Doesn’t Understand Their Needs. By a 61-29 margin, voters do not believe Romney “Understands the needs of people like you.” [Pew People and the Press, 2/13/12]
ABC/Washington Post Poll: Decisive Margin for President Obama on Protecting the Middle Class. By a 56-37 margin, voters trust President Obama over Mitt Romney on “protecting the middle class.” [Washington Post, 2/5/12]
ABC/Washington Post Poll: Romney Losing Support Quickly from Middle and Lower Income Voters. Among those making under $50,000 per year, Romney unfavorable ratings jumped 20 points in the month of January. [Washington Post, 1/24/12]
CNN Poll: 65% of Voters Believe Romney’s policies favor the rich. According to a CNN poll this week, 65% of voters believe Romney’s policies favor the rich. [CNN, 2/16/12]