Recently, the Congressional Budget Office (CBO), a non-partisan federal agency, published its report of tax rates for the 2008 and 2009 fiscal years, and what did it find? Tax rates are at a 30-year low, directly contradicting GOP claims to the contrary, especially coming from Republican presidential candidate Mitt Romney.
To properly let this data sink into one’s mind, note that the CBO’s findings mean the tax rates under Obama have been lower than those of Presidents Reagan, Clinton and Bush. That’s right: lower than the GOP icon Reagan, who is widely invoked by the GOP for his tax-cutting prowess.
Obama, however, doesn’t deserve all the credit. The tax cuts were triggered by George W. Bush, when all combined federal taxes (income, payroll, excise and individuals’ share of corporate income taxes) hit their highest rate in 2000 as a result of Clinton’s tax policy. It’s also worth noting that just as Bush was cutting taxes he was also ramping up spending (Afghanistan and Iraq wars, Department of Homeland Security, the overall Pentagon budget), which evaporated Clinton’s budget surplus (made possible by tax hikes on upper-income earners and the Dot-com and housing bubble revenues), leading to the deficits and high national debt that the GOP is constantly whining about.
Obama also made an additional $288 billion in tax cuts in 2009 under the Economic Recovery Act, lowering the overall tax rate yet again.
Some might point out that the CBO data is only for 2008 and 2009, not 2010 and 2011; and they would be correct. However, the CBO doesn’t expect much of a change.
“Although the detailed data that form the basis of CBO’s estimates in this report are available only through 2009, other data can provide some insight into changes in the distribution of income and federal taxes in 2010 and 2011,” reports the CBO. “Those data suggest that overall income continued to grow slowly in 2010 and 2011 and that income for households toward the higher end of the distribution increased more rapidly than income for households elsewhere in the income distribution in 2010. Average federal tax rates probably remained near their post-1979 low levels in both 2010 and 2011.”
It should be rather interesting to see how the GOP spins this data, especially given that federal spending has risen far slower under Obama than Bush.
Federal spending in Bush’s last year of office rose by 17.9% from $2.98 trillion to $3.52 trillion, according to the White House Office of Management & Budget. In 2010, spending fell 1.8% to $3.46 trillion under Obama. In 2011, spending rose 4.3% to $3.60 trillion. And, according to the CBO, federal spending is will rise 0.7% to $3.63 trillion, based on a budget created in August 2011.
Obama ended the War in Iraq, which will save untold billions, and he is planning to do the same in Afghanistan. The Pentagon is also being forced to trim its budget by $500 billion over ten years. A July 11 CBO report stated, “Even with that cut, however, DoD’s base budget in 2013 would still be larger than it was in 2006 (in 2013 dollars) and larger than the average base budget during the 1980s.” To hear it from the GOP, one would get the impression that national defense is being fatally crippled.
If the Obama campaign wants to beat Romney, they will have to emphasize the 30-year low tax rates and contrast his spending with the GOP’s federal spending increases from 2000 to 2008.