One of the most remarkable features of this graphic appears under the heading "Revenue Proposals in the President's Budget." Given that the vast majority of these proposals consist of increased taxes to be extracted from the American people, the characterization of this as "10 Year Savings" is extraordinary. Rush Limbaugh often says that the government considers all money its own, and tax rates just determine how much of its money we citizens will get to keep. By referring to tax increases as "savings," the Obama administration is saying exactly that. Current tax law has cost the government so much, so these increases represent a "savings" to Uncle Sam.
A closer look at the details, however, reveals a more striking fact. The amount of new taxes detailed here is not $1.6 trillion, but is rather closer to $2 trillion. Here's a closer look at that portion of the graphic:
Note the first line under Total Tax Reforms and Savings: "Tax cuts for families, individuals, and businesses (negative savings)". I addressed the Orwellian term "negative savings" in an earlier post. But what are these "tax cuts" totaling $359 billion? Is the president proposing some new tax cut heretofore unrevealed? None that I have heard of, so I can only assume this $359 billion represents the extension of the Bush tax rates for those the president doesn't consider "wealthy." But this is not a "cut" in taxes - those taxpayers will simply continue to pay what they pay now. Therefore, the continuation of the tax cuts for the lower 98% of taxpayers is a non-factor when calculating "new revenue." The true tax increases ("savings" in the president's vernacular) total $1.92 trillion, not $1.6 trillion.
The Treasury Department's explanation as to why the $359 billion in "negative savings" lowers the revenue total is most likely related to the phrase "10 Year Savings Against FY2013 OMB Adjusted Baseline." [emphasis mine] But whatever the comparison, the reality is that there are no new tax cuts that will cost the government anything, but the tax increases are all real. So rather than dipping into American's pockets for $1.6 trillion, the president has his eye on $1.92 trillion. Oh, and that doesn't count the payroll tax holiday expiration, mysteriously missing from the chart above. And that's $120 billion in 2013 alone. By my calculations, that puts the 10-year "savings" above $3 trillion. The president doubled the government's take without breaking a sweat. At least until taxpayers get their first paychecks in January.
UPDATE: A commenter below wrote "I think the tax cut number is something else (though what I do not know). The dollar value of the tax cuts in the lower two brackets far exceeds the 849 you get from reinstating the top two brackets - I've seen figures showing it as 3X to 4X more." This certainly makes sense, but it highlights the lack of clarity. What is this new tax cut, and why isn't the White House trumpeting it? And why isn't the end of the payroll tax holiday part of the calculation? The $120 billion "cost" of the payroll tax holiday is an annual amount and as the Social Security Administration notes on page 15 of its 2013 budget, "The general funds reimburse the trust funds for this loss in tax revenue." In other words, this is about $1.2 trillion for which the general fund will not have to reimburse the Social Security Trust fund over the next 10 years. So while this will "save" the general fund $1.2 trillion, it does so at a cost of $1.2 trillion in resumed full payroll taxes over the next 10 years. Any way you look at it, the Obama administration has its eye on way more than $1.6 trillion, and not just from the "wealthy."
I think the tax cut number is something else (though what I do not know). The dollar value of the tax cuts in the lower two brackets far exceeds the 849 you get from reinstating the top two brackets - I've seen figures showing it as 3X to 4X more.
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