Jason Furman on the Tax Policy Center's Analysis of McCain

Jason writes http://obama.3cdn.net/20badf9c4471379fcc_h3m6bxsaa.pdf, from BOfPWHQ:

To: Interested parties
Fr: Jason Furman, Economic Policy Director, Obama Campaign
Re: John McCain’s tax plan is $2.8 trillion more expensive than his advisors previously admitted
Dt: July 23, 2008

In recent months, Senator McCain and his campaign staff have offered several different, and often conflicting, descriptions of the McCain tax plan. As the New York Times concluded, “Mr. McCain is having it both ways. On the campaign trail, he has sounded like a bold tax cutter. To budget wonks, though, his campaign has gingerly inched away from those plans, saying details will be forthcoming. In the meantime, the most-cited analysis of his proposed budget doesn’t square with what he is saying on the stump.”

To take just one example, on the McCain website, it states that “John McCain will permanently repeal the AMT” and the McCain campaign touts this as a $2,700 tax cut for 25 million families. Yet in July when the Tax Policy Center undertook an analysis that threatened to show the true fiscal cost and the full extent of the regressivity of Senator McCain’s tax plans, his aides apparently told the Tax Policy Center that this was not his plan and their analysis accordingly stated “Senator McCain does not plan to repeal the individual AMT.” According to the McCain campaign’s own estimates, the difference between these two positions is $60 billion per year.

Today, the Tax Policy Center released a new analysis of the McCain and Obama tax plans, which provides a comparison between what each of the candidates says on taxes (their actual plans) and what their campaign advisors claim. It finds that the true cost of Senator McCain’s tax proposals is $2.8 trillion larger than what his advisors have acknowledged. And most of that $2.8 trillion is the cost of yet more tax cuts for corporations and the wealthy. The plan still offers very little for ordinary Americans.

While the Tax Policy Center analysis has some flaws, it confirms a number of important points about the candidates’ tax plans:

1. John McCain’s actual tax policies are $2.8 trillion more expensive than his advisors previously admitted.
2. Even the extra $2.8 trillion in tax cuts does not change the fact that, as the National Review editorialized, “the McCain plan… offers very little in the way of direct benefits to Americans in the middle of the income scale.” McCain’s true, expensive tax cut offers only half as much to the middle class as the Obama tax plan. (The original plan described by advisers offered one-third as much to the middle class as the Obama plan.)
3. McCain’s true tax policies are even more stacked against typical families than his campaign previously admitted – giving a total of $1.8 trillion in tax cuts to corporations and more than a half-million dollars ($577,000) per year to the 0.1 percent of taxpayers who make more than $2.8 million per year. A different analysis shows that the oil companies would get $4 billion of these tax cuts, including $1.2 billion for Exxon-Mobil alone.
4. IRS data shows that McCain’s only middle class tax cut provides $0 in direct relief to 101 million households. Ninety seven percent of seniors would get nothing from McCain’s middle class tax cut.
5. Obama’s numbers add up – while McCain’s plan would add $3.4 trillion to the deficit over the next decade and would require cutting Social Security and Medicare by 56 percent to meet McCain’s goal of balancing the budget in 2013.

Comments

[anne]

http://krugman.blogs.nytimes.com/2008/06/18/baselines-shmaselines/

June 18, 2008

Baselines, Shmaselines
By Paul Krugman

Wise words from the Tax Policy Center: *

"There is an easy way to cut through this palaver. Forget the baseline. Just think about three numbers: How much would either candidate collect in taxes as a share of the Gross Domestic Product? How much is government likely to spend? And, how much would they have to cut that spending to keep the national debt from ballooning.

"TPC estimates that in 2013, Obama would collect revenues of 18.2 percent of GDP. McCain would bring in about 17.8 percent. Spending that year would be about 19.5 percent, according to the Congressional Budget Office, assuming the Iraq war will be winding down."

The key point, again: because of all those middle-class tax cuts in the Obama plan, he collects only 0.4% of GDP more in taxes than McCain. The tax collection comes from different people: lower and middle-income Americans would be substantially better off under the Obama plan. But where is the money for health care reform?

* http://taxvox.taxpolicycenter.org/blog/_archives/2008/6/17/3749641.html

[anne]

http://www.nytimes.com/2008/07/23/us/23health.html?hp

July 23, 2008

Health Plan From Obama Spurs Debate
By KEVIN SACK

It is one of the most audacious promises in a campaign that has been thick with them.

In speech after speech, Senator Barack Obama has vowed that he will lower the country's health care costs enough to "bring down premiums by $2,500 for the typical family." Moreover, Mr. Obama, the presumptive Democratic nominee, has promised that his health plan will be in place "by the end of my first term as president of the United States."

Whether Mr. Obama can deliver is a matter of considerable dispute among health analysts and economists. While there is consensus that the American health care system is bloated with waste, eliminating enough to save $2,500 per family would require simultaneous and synergistic solutions to a host of problems that have proved intractable for decades.

Even if the next president and Congress can muster the political will, analysts question whether significant savings would materialize in as little as four years, or even in 10. But as Mr. Obama confronts an electorate that is deeply unsettled by escalating health costs, he is offering a precise "chicken in every pot" guarantee based on numbers that are largely unknowable. Furthermore, it is not completely clear what he is promising.

His words about lowering "premiums" by $2,500 for the average family of four have been fairly consistent. But the health policy advisers who formulated the figure say it actually represents the average family's share of savings not only in premiums paid by individuals, but also in premiums paid by employers and in tax-supported health programs like Medicare and Medicaid.

"What we're trying to do," said one of the advisers, David M. Cutler, in explaining the gap between Mr. Obama's words and his intent, "is find a way to talk to people in a way they understand."

The original arithmetic was somewhat basic. In May 2007, three Harvard professors who are unpaid advisers to the Obama campaign — Mr. Cutler, David Blumenthal and Jeffrey Liebman — produced a memorandum offering their "best guess" that a menu of changes would produce savings of at least $200 billion a year (it has since been revised to $214 billion). That would amount to about 8 percent of the $2.5 trillion in health care spending projected for 2009, when the next president takes office.

The memorandum attributed specific savings to several broad initiatives, with the numbers plucked from recent studies. Investments in computerized medical records would save $77 billion a year, the advisers wrote. Reducing administrative costs in the insurance industry would yield up to $46 billion. Improving prevention programs and chronic disease management would be worth $81 billion.

The total savings were then divided by the country's population, multiplied for a family of four, and rounded down slightly to a number that was easy to grasp: $2,500. The average cost of family coverage bought through an employer was $12,106 in 2007, with workers paying $3,281 of that amount, according to the Kaiser Family Foundation, a health research group.

Mr. Obama aspires to cover the country's 47 million uninsured by requiring insurers to accept all comers, regardless of their health status, and by providing generous tax credits to low-income workers. The tax credits could be used to buy into a new federal health plan or private plans marketed through a government exchange.

The subsidies are expensive, estimated at well over $100 billion. Other components of the Obama plan also bear up-front costs, like a pledge to spend $50 billion over five years to speed the computerization of health records, $6 billion a year on tax credits to small businesses that provide coverage to workers, and an unspecified amount to buffer businesses from high-cost insurance claims....

[anne]

The idea that without mandates Obama can come anywhere close to saving a family $2,500 a year on health insurance is absurd; even with mandates such a saving would be impossible without a single-payer system but that is not even being suggested by Obama.

[anne]

"Obama’s numbers add up." Where is the money for universal healthcare coming from, especially without mandates which will not even be universal then?

[anne]

http://www.nber.org/papers/w13758

January, 2008

Covering the Uninsured in the U.S.
By Jonathan Gruber

Without a Mandate

Reduction in number of uninsured
23 million

Total cost
$102 billion

Cost per newly insured
$4,400

With a Mandate

Reduction in number of uninsured
45 million

Total cost
$124 billion

Cost per newly insured
$2,700

[Tuco]

McCain really is looking more like Bush's third term everyday.

War War War, no matter the cost in human treasure and $$$.

Take care of the rich.

Leave the burden on the little people and the children of the little people.

Lie about what you're up to.

"Fooling-Some-of-the-People-All-of-the-Time" -- Vote McSame

[piotr]

anne sound like one of those algebra extremists.

Should EVERYTHING add up? Surely, there is some golden center between all rows and columns adding up to purported balances, and using actual real numbers, and soaring flights of budgetary imagination that were Republican contribution to the national marketplace of ideas.