Refuting the myths

Portman: CBO Tears Down Yet Another Of President Obama's Straw Men

Washington, D.C. – U.S. Senator Rob Portman (R-Ohio) today released the following statement on President Barack Obama’s call for increased taxes on America’s small businesses:

“While President Obama calls for higher taxes on jobs creators, two new government reports undercut his class warfare argument and the basis for calls for higher taxes. While I doubt these new studies will cause President Obama to change his tune, because too often, with this President, politics trumps good policy, yet another of his straw men has fallen flat. As the nation careens toward a fiscal cliff, real leadership, not more rhetoric and finger pointing, is necessary to reform our tax code and address Washington’s out of control spending.”

Analysis of the Congressional Budget Office’s (CBO) final report on what caused the January 2001 projection of a $5.6 trillion 10-year surplus to turn into an actual $6.1 trillion deficit over that 10-year period shows that:

The tax policies enacted a decade ago are responsible for just 16 percent of the swing from surplus to deficit. Furthermore, given that only about one-fourth of the tax cuts went to upper-income earners, just 1/25^th of the decline from surpluses to deficits resulted from upper-income tax cuts. (NOTE: Given that CBO does not take into account any of the positive impact of tax cuts on investment, savings and economic growth, the percentage was actually even smaller than the 1/25^th estimate)

The CBO report has shown that new spending and net interest were three times as responsible for the deficits as the 2001 and 2003 tax cuts – and 12 times as responsible as the upper-income portion of the tax cuts.

In a second report, the CBO said that in both 2008 and 2009, the highest-earning 20 percent of taxpayers paid 94 percent of the total income tax burden – up from 86 percent in 2007, and 81 percent before the 2001 tax cuts. In other words, higher-income Americans have been paying a bigger and bigger part of the total tax burden under the so-called “Bush tax cuts.”