President Obama announces $3 trillion deficit plan
U.S. President Barack Obama speaks in the Rose Garden at the White House in Washington on Sept. 19, 2011.
Kai Ryssdal: It was once more into the Rose Garden for President Obama this morning for his big deficit announcement: $3 trillion or so out of the deficit over the next 10 years, and another $1.5 trillion in new taxes targeting mostly the rich.
At which point a note must be made of the political realities behind the proposed policies. Republicans say they're a non-starter. But we asked Marketplace's Nancy Marshall Genzer to do the due diligence all the same.
Nancy Marshall Genzer: President Obama wants to apply what's become known as the Buffett Rule: Tax people like billionaire Warren Buffett a lot more -- something Buffett himself proposed. The president says everyone, including millionaires and billionaires, has to pay their fair share.
Barack Obama: This is not class warfare. It's math.
OK, Mr. President, let's do the numbers.
Well, we really can't. Three of every thousand taxpayers are millionaires. But the president doesn't say exactly how much more they would pay in taxes. The Buffett Rule doesn't lay out a minimum tax rate for Buffett and his buddies. The president just says the rule is a guiding principle.
Roberton Williams is an economist with the Tax Policy Center. Asked to grade the president's math, Williams gives him an incomplete.
Roberton Williams: And the reason he gets an incomplete is he hasn't completed the answer. He has the outlines of an answer, but not the details necessary to determine exactly what he's saying.
The president did say clearly that he would end the Bush tax cuts for families making more than $250,000 a year. That would bring in $800 billion of the president's proposed $1.5 trillion in new taxes.
Maya MacGuineas heads the Committee for a Responsible Federal Budget.
Maya MacGuineas: The bulk of his new taxes come from letting those Bush tax cuts expire. Now keep in mind, that's actually already the current law.
MacGuineas says the president has to go way beyond that and change the tax code. Warren Buffett has complained that he's taxed at a lower rate than his secretary. That's because he makes most of his money from investments, only taxed at 15 percent. So if we raised the tax rate on investment earnings to say, 25 percent, would that fill in our budget hole? Nope, according to Roberton Williams.
Williams: The bottom line, though, is there's not that much income at the top end to solve our budget problems. We'd have to raise rates very high on high-income folks, and it's unlikely that's going to happen.
Hmm. That leaves the rest of us who aren't millionaires. Williams and MacGuineas say we might have to give up some of our favorite tax deductions. Something the president left out today.
In Washington, I'm Nancy Marshall Genzer for Marketplace.