Tea Party Candidate's Proposals will add $3.5 trillion to the federal deficit

Discussion in 'Politics' started by hermit, Jul 24, 2010.

  1. "On Tuesday, Marco Rubio announced 12 simple ways to grow the economy and create jobs," the ad, called "Maddow" begins. "How can you know the plan is right? Rachel Maddow thinks it's wrong."

    On July 19, Maddow issued her reply to Rubio's ad -- in her own "ad" that mimics Rubio's.

    "Marco Rubio has proposals for cutting the deficit and growing the economy. He wants to: Make Bush's '01 and '03 tax cuts permanent, end the estate tax, prevent cap-and-trade energy legislation, repeal health reform," Maddow's ad says. "How does Marco Rubio say you can know his plan is right? 'Rachel Maddow thinks it's wrong.' Seriously. That's his argument. That's it.

    The question we're after: Will Rubio's economic ideas add $3.5 trillion to the federal deficit?

    Maddow's case

    The CBO produced a series of revenues estimates in February should Congress enact three Republican-held tax cutting ideas -- extend the set to expire 2001 and 2003 tax cuts, repeal the federal estate tax and continue indexing the Alternative Minimum Tax for inflation (The AMT was enacted in 1969 to make sure wealthy people couldn't avoid taxes altogether, but it wasn't indexed for inflation. Congress manually adjusts the AMT for inflation each year).

    All three proposals are part of Rubio's 12 ideas -- specifically Ideas 1, 3 and 5.

    Together, the CBO found that they would increase the federal deficit by $3.4 trillion from 2011-2020, "mostly from lower revenues but also from increased outlays for refundable tax credits."

    Preventing cap and trade legislation, Rubio's Idea 9, also would have a negative effect on the federal deficit, according to the CBO. The theory behind cap-and-trade is that the government sets a limit on how much carbon different companies, such as electric utilities or manufacturers, can emit (the cap). The government then issues permits to companies and allows them to buy and sell the permits as needed so they can conduct business (the trade). If the policy works as planned, overall emissions decline, companies determine for themselves the best way to lower emissions, and the free market rewards those who lower emissions most effectively.

    In a letter dated July 7, 2010, CBO Director Douglas W. Elmendorf said that opposing cap and trade legislation would have the effect of raising the federal deficit by about $19 billion from 2011-2010.

    Those are the four major ideas Maddow uses in making her claim. But we wanted to at least consider Rubio's other ideas. Many of them, it turns out, come with deficit impacts that are difficult to measure, or at least appear to have no impact on the deficit. Rubio proposes reducing the corporate tax rate, for instance, but he doesn't say how much -- making it impossible to judge the revenue impact.

    Another Rubio idea is to repeal the federal health care bill (you can see all 12 here). The federal health care bill enacted is estimated to reduce the deficit slightly -- about $143 billion from 2010-2019 -- according to the CBO. But a substitute health care bill -- something Rubio favors -- could reduce the deficit as much. So we've decided to discount the deficit reduction for the sake of this fact check.

    Excluding the health care repeal, that's about $3.4 trillion that we can verify that will be added to the federal deficit between now and 2020 if Rubio's economic ideas are put in place.

    Our ruling

    We realize we're not going to be able to change people's basic economic philosophies. We're not here today trying to disprove supply-side economics, or boost another economic thought. Based on our analysis, we do think it's a stretch for someone like Senate Minority Leader Mitch McConnell to suggest the Bush 2001 and 2003 tax cuts were revenue neutral. And yet we also see the logic in the argument that lower taxes could stimulate investment in the economy, creating an army of new taxpayers.

    Rubio, himself, realizes spending cuts also will be necessary to offset at least some of the tax cuts he's proposed -- and to shrink the federal deficit. Rubio's campaign announced he would roll out ideas to cut government spending on July 26 in Jacksonville.

    And we'll be ready to examine them.

    But in this case, we're sticking to Maddow's claim that Rubio's "economic proposals will add $3.5 trillion to the federal deficit." The nonpartisan Congressional Budget Office says that extending the 2001 and 2003 Bush tax cuts, repealing the estate tax and continuing to adjust the Alternative Minimum Tax for inflation will increase the federal deficit $3.4 trillion between now and 2020.

    That's right about on the mark, and only measures the impact of three of Rubio's tax cutting ideas. But unlike Maddow, we do want to leave some leeway for the economic growth those broad-based tax reforms could generate, as well as Rubio's spending cuts, still to be revealed. We rate her statement Mostly True.

  2. Those are great ideas. The so-called CBO analysis means nothing. These are the same people who somehow concluded that the ruinously expensive obongo-care would save money. Yeah right, that'll happen. Or that cap and trade would save money. Who cares when your utility bills have tripled. The CBO geniuses still haven;t figured out that in the real world, people respond to incentives and in the case of this regime, disincentives.
  3. Too much ignorant and deceptive garbage to debunk at once.
    But trying to describe cap'n trade and it's implementation as a free market concept is just asinine.