Had a rousing debate with Doug Holtz-Eakin the other night on the NewsHour and wanted to highlight an important factual disagreement.
Toward the end, Doug argues that the $4 trillion dollars of deficit reduction over 10 years in the President’s budget is smoke and mirrors. He’s wrong, but to be fair, he’s not alone. Influential fact checkers have gotten this one wrong too.
Here’s my colleague Paul Van de Water’s explanation, and it’s pretty straightforward. First, Doug’s just wrong, as I stressed in the segment, that the $4 trillion includes war savings. Those are not counted here. He’s right that $1.7 trillion in spending cuts (including interest savings) over ten years have already been enacted. But he and some of the fact checkers apparently, and IMHO very weirdly, object to counting them because Congress and the administration have already agreed on them.
There’s every reason to count those savings. Imagine you began a diet six months ago and, with great effort, self-control, and exercise, you’d lost 20 pounds since then. If someone asks you now today how much you’d lost on your diet, you don’t start counting yesterday and respond, “Um…seven ounces.” You take credit for the savings weight loss that’s occurred since your diet began.
The President’s budget reduces discretionary spending by $1.5 trillion (not including $250 billion in interest savings), largely reflecting spending caps from last year’s Budget Control Act. It is important to recognize that these spending reductions are relative to the Congressional Budget Office baseline used by the Bowles-Simpson commission. In fact, as Richard Kogan shows here, these cuts account for 70% of the deficit commission’s discretionary cuts.
To bemoan, as many do, the President’s alleged rejection of Bowles-Simpson and at the same time, refuse to give him credit for working with Congress to implement $1.5 trillion of those cuts makes zero sense. It’s like refusing to give a dieter credit for all the weight she lost since she went on the weight-loss plan that you insisted she go on.
The rest of the President’s deficit savings ($2.2 trillion; 1.7+2.2=3.9) come from other proposals in his budget that have yet to be enacted. By the critics’ logic, somehow these savings are more real even though they haven’t occurred. So now our dieter gets no credit for the weight she’s lost but does get credit for pounds she promises to lose in coming years. Is it any wonder the public tunes out this stuff?
It seems clear that the refusal to accept the $4 trillion in deficit savings in President’s budget is politically motivated…I know…you’re shocked. To admit that Obama’s been party to significant deficit reduction is as painful as admitting the unemployment rate went down last month.
Also, you’ll notice our little dust up at the beginning, where Doug mistakenly claimed that Gov. Romney plans to partially pay for his tax cut by letting the Bush tax cuts expire. For budget wonks, this would imply that Mitt’s working off of current law vs. current policy. The reason that matters, as Doug pointed out, is because it means Gov. R would have a lot more revenue from the full sunset of the Bush cuts with which to offset the $5 trillion 10-year cost of his big tax cut.
Problem is, as I asserted in the segment, that’s false, as Doug himself realized the next day (and was mensch enough to correct himself (right before the transcript)—don’t see too much of that in these here parts). Both Romney and Ryan have of course constantly pledged to extend the Bush cuts. The implication is that Romney still has fundamental math problems. He can’t cut taxes 20% across the board, protect the middle class from any tax increases, and achieve revenue neutrality (i.e., not increase the budget deficit).
Them’s the facts. They may not win the day everyday on TV. They may not even survive the election cycle. But here at OTE, they will continue to rule.