Obama's Lower Taxes Will Slow Economic Growth: CBO

WASHINGTON -- Republicans have pounced on a Congressional Budget Office report Friday that says President Barack Obama's budget would add to deficits and slow the economy, but without mentioning a key reason why: Obama's lower tax rates.

“It’s official: President Obama’s idea of a ‘balanced approach’ leads to an unstable economy," said House Speaker John Boehner (R-Ohio) in a statement. "This CBO report confirms the president’s policies will hurt long-term job creation and economic growth, and proves we have to do everything possible to stop Washington from spending money it doesn’t have, get control of our debt, and get government out of the way."

The Karl Rove-linked American Crossroads also took a shot.

"Decreased growth. Increased deficits," Crossroads spokesman Jonathan Collegio said in a statement. "Not exactly an optimistic or resonant policy platform for the administration."

The CBO said that compared to current law, Obama's 2013 budget would at first improve economic output, but then lower it by between .5 percent and 2.2 percent from 2018 to 2022.

The CBO report's summary explained it this way:

CBO estimates that the President’s budgetary proposals would boost overall output initially but reduce it in later years. For the 2013–2017 period, under most of the estimates CBO produced using alternative models and assumptions, the President’s proposals would increase real (inflation-adjusted) output (relative to that under current law) primarily because taxes would be lower than those under current law, and, therefore, people’s disposable income and their demand for goods and services would be greater. Over time, however, the proposals would reduce real output (relative to that under current law) because the deficits would exceed those projected under current law, and the effects of increasing government debt would more than offset the favorable effects of lower marginal tax rates on labor income.

The reason Obama's proposed taxes are lower -- and his projected deficit higher -- than under current law is because the Bush-era tax cuts that Obama extended for two years in 2010 are about to expire. If that current law is followed and the Bush cuts are allowed to end, it would raise an extra $4 trillion from taxes, lowering the deficit. But Obama proposes letting the cuts expire only for people earning more than $250,000 a year, taking in less revenue than would be brought in under current law after the expiration of all the Bush era cuts.

House Republicans estimate their spending plan, authored by Rep. Paul Ryan (R-Wis.), would cut about $5 trillion more than Obama's budget. But the GOP plan also cuts taxes more, especially on the high end, by not only keeping all the Bush cuts, but also dropping rates further. Millionaires would average an annual windfall of about $187,000, according to an analysis by Citizens for Tax Justice.

The CBO will not conduct a similar macroeconomic analysis of that Ryan proposal.

Also on HuffPost:

Comments

[janmB]

06:28 PM on 04/23/2012

Why republicans and a few blue-dog democrats vote against the people they represent....-- Just one of many examples All Republicans voted "no," along with Ben Nelson of Nebraska, the lone dissenting Democrat .....when Democrats were unable to overcome a Republican filibuster of the Paycheck Fairness Act with the chamber falling two votes short of the 60 needed to end debate and proceed to a vote on the measure that would help combat wage discrimination on the basis of gender.

[tatt]

06:27 PM on 04/23/2012

The CBO will not be scoring Ryans budget. How convieniant for the GOP

[ennis438]

05:31 AM on 04/22/2012

Anyone and everyone should appreciate any serious effort to make suggestions on how to get the economy going again, but you must check out who is giving the advice. In this case, we have Boehner blabbering. The same Boehner who remained silent while Bushrag sent this country into a depression. The same Boehner who remained silent while Bushrag destroyed Bill Clinton's surplus but now seems to yell every day about excess spending and the evils of deficits. The same Boehner who just got done voting for a corporate welfare bill this week (hidden as a bill to assist small business) without paying for it, but screams bloody murder about any effort to help the poor or unemployed caused by his and Bushrag's policies. So, although advice is usually good, coming from these losers their advice should be discarded at the nearest toxic waste dump ASAP.

[wsdave]

06:01 PM on 04/21/2012

I'm frankly surprised that anyone even pays attention to the CBO anymore.

[wtf is this]

03:05 PM on 04/21/2012

If Obama proposes tax cuts, its bad for the economy.
If the republicans propose tax cuts its good for the economy.
Huh?

[nixthetrix]

01:39 PM on 04/21/2012

Mr. Boehner has some nerve claiming that Mr. Obama's 'balanced approach' would lead to an unstable economy . 30 some years of republicans hogging the created wealth for themselves and their corporate backers sure haven't led to what I would call a stable economy . Does Mr. Boehner actually think that the rollercoaster ride in the markets was stable ? Does he think that 10% unemployment was stable ?
His idea of raw capitalism is inherently unstable . The voters in his district need to rethink their support for this clown and his obvious lies .

[vicla1942]

01:09 PM on 04/21/2012

Last time I checked Congress has a 10% approval rating,does Boehner
know he is the leader of the house of representatives?

[feelingdisposable]

12:45 PM on 04/21/2012

Why is it that the CBO isn't appraising the Ryan proposal? I still say that cutting $5 trillion from SNAP, etc., and then giving over $4 trillion in tax breaks to the most wealthy is no damn way to run a country. Don't tell me about the job creators - they aren't doing what they're supposed to be doing. Some of the tax breaks are going to the so-called "Small Businesses", like Trump, Paris Hilton, etc. I would say these people can truly live without another tax break.

[kiksadi50]

12:21 PM on 04/21/2012

blah blah blah, lower taxes; blah blah blah, lower taxes; blah, blah, blah, lower taxes. It's like the GOP were victims of the body snatchers. get some ideas, would ya?

[lrcdnc]

11:48 AM on 04/21/2012

I think if you ask most of the 1%ers that didn't have much money when they started their business, "what is the main reason your business has made it" they probably would say "You have to spend money to make money".
Keep up the good work Obama

[olderthan]

11:34 AM on 04/21/2012

Boehner "slams" anyone or anything else for being unstable? Very funny.

[treadway123]

11:30 AM on 04/21/2012

the Tax code worked well under Bill Clinton an the economy thrived! It has only gone to heck sense Bush put his tax code into place! Both Tax Codes have been tried an only ONE works. So how the CBO can put down a plan that already been tried an worked well is beyond me!

[dennidus1680]

01:14 PM on 04/21/2012

Because it continues a portion of the Bush Tax cuts. It is amusing that the Republicans are complaining about their own policy and using a bait and switch to do more of the same.

[wsdave]

06:00 PM on 04/21/2012

If only it were that easy. But it's not. Economics is more complicated than tax rates.

[Waiting4Something]

11:09 AM on 04/21/2012

"Republicans have pounced on a Congressional Budget Office report Friday that says President Barack Obama's budget would add to deficits and slow the economy, but without mentioning a key reason why: Obama's lower tax rates."

they have learned well from their master, Limbaugh, who speaks for ALL republicans: leave out key facts and twist the rest into unrecognizable lies.

[ObamaSupporterPete]

11:05 AM on 04/21/2012

So all tax cuts are good unless proposed by a democrat. All of those bastards needs to be replaced. It's no wonder nothing can get done. For one party, every day is opposite day and for the other party, we're trying to reason with lunatics. Congress and the Senate are just swamps. Some of the democrats are also not hitting for the middle class. You'd better believe there's a class war going on. We're so outgunned it's really sad. The people who are supposed to protect us from this kind of thing are shoving us off the cliff with reckless abandon.

[carlsays]

10:56 AM on 04/21/2012

Doh!

[treadway123]

11:32 AM on 04/21/2012

The middle class that grows an feeds the engine of the United States is all but disappearing thanks to Bush's Tax Code of giving MORE/MORE to the Rich an less an less to the middle class.