When President Obama outlined his $450 billion jobs plan in a speech before Congress last week, he promised it would all be “paid for,” and assured us he would present another plan outlining how he planned to do so. Well, here you have it:
The White House said Monday that President Obama wants to pay for his $447 billion jobs bill by raising taxes on the wealthy and businesses.
Jack Lew, director of the Office of Management and Budget (OMB), said the tax hikes would pay for Obama’s entire bill, which the administration is sending to Congress Monday evening.
So much for the “balanced approach” Obama was so fond of during the debt ceiling debate. The administration will cover the cost of the spending in its new jobs proposal solely by increasing taxes. Here’s a look at where they plan to get the money, via The Hill:
$400 billion by limiting itemized deductions, including the one for charitable giving, for individuals earning more than $200,000 a year ($250,000 for couples).
$40 billion by eliminating tax breaks for oil-and-gas companies.
$18 billion by taxing “carried interest” income (common among hedge fund managers) as regular income as opposed to capital gains, which are taxed at a much lower rate.
$3 billion by adjusting the depreciation rate on corporate jets.
Sound familiar? Recall this line from Obama’s speech last week: “This isn’t political grandstanding. This isn’t class warfare. This is simple math.” Republicans chuckled when he said that. And now the administration has shown why their laughter was warranted.
All told, the White House claims its tax package will bring in $467 billion in new revenue, $20 billion more than the spending called for in the jobs plan. White House press secretary Jay Carney told reporters that the president will formally introduce his recommendations to the deficit reduction supercommittee next Monday, and challenge its members to “overachieve” by going beyond the $1.5 trillion target set by the Budget Control Act. “The president is asking Congress to make choices,” Carney said.
As Michael Barone quips: “Obama is like the guy in the bar who says, ‘I’ll stand drinks for everyone in the house,’ and then adds, ‘Those guys over there are going to pay for them.’”
Just as Carney and Lew were announcing the White House tax plan, House Majority Leader Eric Cantor (R., Va.) was holding a press conference in his office on Capitol Hill. When asked about the White House proposal, Cantor said he hadn’t seen it yet, but as you might expect, was not thrilled at the suggestion. “I sure hope that the president is not suggesting that we pay for his proposals with a massive tax increase at the end of 2012 on job creators that we’re actually counting on to reduce unemployment,” he said.
David Chalian points out that President Obama floated a similar proposal back in 2009 during the health-care negotiations. The White House wanted to cover the cost of extending health coverage in part by raising $318 billion in new taxes by limiting deductions for wealthy earners. But the idea encountered “stiff resistance” in Congress even then, when Democrats enjoyed complete control. And yet the administration still pushing the same idea, only this time the price tag has jumped to $400 billion.
“It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past,” said Michael Steel, spokesman for House Speaker John Boehner (R., Ohio). “We remain eager to work together on ways to support job growth, but this proposal doesn’t appear to have been offered in that bipartisan spirit.”
For an administration that has repeatedly proven itself an unserious arbiter when it comes to the federal budget, this is par for the course. Even its spending proposals are mostly warmed-over retreads of policies previously rejected by both parties.
UPDATE: Regarding the disparity between the $400 billion (over a decade) the White House now claims it can raise by limiting deductions on wealthy earners and the $318 billion figure used in 2009, it turns out that both the Office of Management and Budget and the Joint Committee on Taxation have already weighed in on the issue this year. OMB estimated that limiting certain tax deductions would bring in just $321 billion in new revenue (over 10 years), while JCT put the figure at $293 billion. So where, exactly, does the White House get this extra $80-100 billion? As Obama himself said: “This is simple math.”