Wall Street Journal's Review and Outlook explains:
But what about the liberal claim, repeated constantly, that the Bush tax cuts of 2001 and 2003 caused today's deficits? CBO has shown this to be demonstrably false. On May 12, the budget arm of Congress examined the changes in its baseline projections from 2001 through 2011. In 2001, it had predicted a surplus in 2011 of $889 billion. Instead, it expects a deficit of $1.4 trillion.
What explains that $2.29 trillion budget reversal? Well, the direct revenue loss from the combination of the 2001 and 2003 Bush tax cuts contributed roughly $216 billion, or only about 9.5% of the $2.29 trillion. And keep in mind that even this low figure is based on a static revenue model that assumes almost no gains from faster economic growth.
After the Bush investment tax cuts of 2003, tax revenues were $786 billion higher in 2007 ($2.568 trillion) than they were in 2003 ($1.782 trillion), the biggest four-year increase in U.S. history. So as flawed as it is, the current tax code with a top personal income tax rate of 35% is clearly capable of generating big revenue gains.
CBO's data show that by far the biggest change in its deficit forecast is the spending bonanza, with outlays in 2011 that are $1.135 trillion higher than the budget office estimated a decade ago. One-third of that is higher interest payments on the national debt, notwithstanding record low interest rates. But $523 billion is due to domestic spending increases, including defense, education, Medicaid and the Obama stimulus. Mr. Bush's Medicare drug plan accounts for $53 billion of this unanticipated spending in 2011.
The other big revenue reductions come from the "temporary" tax changes of the Obama stimulus and 2010 bipartisan tax deal. CBO says the December tax deal—which includes the one-year payroll tax cut and the annual fix on the alternative minimum tax—will reduce revenues by $196 billion this year. The temporary speedup in business expensing will cost another $55 billion.
The payroll tax cut was sold in the name of stimulating growth and hiring, yet the economy has grown more slowly this year than in last year's fourth quarter. As we've long argued, the "temporary, targeted and timely" tax cuts favored by Keynesians and the White House don't do much for growth because they don't permanently change incentives to save and invest. Mr. Obama was hawking more of those yesterday, even as he wants to raise taxes overall.
Bloomberg points out that that in yesterday's speech, the same speech that MSNBC senior political analyst Mark Halperin is catching flack for calling Barack Obama a "dick" for, Obama mentioned corporate jet benefits and ending tax breaks for corporate jet owners, six times, yet as the article informs it's readers, that would account for "less than one-tenth of 1 percent of his target for reducing the federal deficit."
Obama's purpose in specifying that one item is to feed into a class warfare mindset, an "everyone should hate the rich because we are not rich too" type of thought.
Heritage seems to find it ironic that the very benefits Obama was criticizing in his speech, were "created by his own stimulus package."
But the corporate jet tax break to which Obama was referring – called “accelerated depreciation,” and a popular Democratic foil of late – was created by his own stimulus package.
Proponents of the tax break lauded it as a means to spur economic activity by encouraging purchases of large manufactured goods (planes). So the president’s statement today – and his call to repeal that tax break generally – is either a tacit admission that the stimulus included projects that did not, in fact, stimulate the economy, or an attempt to “soak the rich” without regard for the policy’s effects on the economy.
Redistribution of wealth is Obama's meme again,, where those that earn more money than others should be soaked for more than 35 percent of their income to provide for those who make less, is popular among liberals and Barack Obama, but even if the government stole 100% of the so-called rich's money, our debt would still not be paid off.
Obama is desperate for a platform for his 2012 reelection campaign since his actual record is weak because his policies have failed to stimulate the economy, failed to bring unemployment down but has seen it rise during his term, failed to cut government spending, and has instead created more debt and more spending.
Obama has simply failed across the board so he cannot run on his "success" because he has none economically and polling shows the public knows it and severely disapproves of his whole handling of the economy and deficit problem as I noted and linked to various polls from multiple organizations in the "by the numbers" portion of yesterdays post showing Obama is losing yet another portion of a demographic, pro-Israel Jewish Democrats, approval.
His swan song is old and I seriously doubt the majority of the American public, aside from his most liberal base, is going to join him in singing the chorus this time around.