Debt reduction plan doesn't add up.
The Simpson-Bowles commission recommended that the federal government undertake $4 trillion in debt reduction. So did President Obama. The president's advocates want to make it appear that the two $4 trillion figures are equivalent.
"He put forward a budget ... that would get to the $4 trillion goal that came from Bowles-Simpson," Obama economic adviser Austan Goolsbee said on "Fox News Sunday."
Not exactly. First of all, the Simpson-Bowles plan envisioned $4 trillion in debt reduction over nine years; the president's plan would spread the cuts over 10 years -- a difference that matters because the value of the savings piles up at the end of the window.
Second, Simpson-Bowles assumed the expiration of the Bush tax cuts for the wealthiest Americans before laying out its $4 trillion in reductions. In budget-speak, that was built into the baseline. The Obama plan counts as "savings" allowing the top-end Bush tax cuts to expire ($849 billion from 2013 to 2022) along with keeping the estate tax at its 2009 level ($119 billion over the same 10 years). Again, another huge difference.
Lastly, Simpson-Bowles assumed lower spending on the wars in Iraq and Afghanistan. The president's plan pads his debt reduction with "savings" in comparison to the wars continuing at the same pace for a decade. This amounts to an $800 billion difference.
When the president released his budget in February, the Committee for a Responsible Federal Budget assessed its savings to be "far below those" of Simpson-Bowles. After aligning assumptions, the nonpartisan committee found Obama's $4.3 trillion to be comparable to $6.6 trillion of Simpson-Bowles savings.
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