The Urban Institute’s Howard Gleckman reads into the few hints President Obama has provided regarding his plan for reducing the deficit, and crunches the numbers. Gleckman assumes, as Obama has stated since proposing the 2012 budget, that he wants to close the deficit without raising more revenues from corporate taxation or increasing rates on individuals making less than $200,000 per year, and that he wants total deficit reduction to be one-third tax hikes to two-thirds spending cuts.
Considering that Obama’s budget already calls for the expiration of the Bush tax cuts, Gleckman calculates that the top bracket on individual income would have to rise to 67 percent, and the rate on gains to near 50 percent, to fulfill Obama’s goals. He writes: “Note to president: This isn’t going to happen.”
Gleckman doesn’t mention this, but the Obamacare payroll tax hikes, which will increase rates on those earning more than $200,000 by almost a percentage point (and more on investment income), are also already taken as assumed.
In other words, Obama is probably severely underestimating the limitations of revenue-side options for deficit reduction.
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